<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission file number 0-16498
-------
ADDINGTON RESOURCES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 61-1125039
(State or other jurisdiction (IRS Employer ID Number)
of incorporation or organization)
2343 Alexandria Drive, Suite 400
Lexington, KY 40504
--------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (606) 223-3824
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter periods that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No _____
---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class - Common stock, $1.00 Par Value
-----
Outstanding at November 13,1996 - 15,208,284 shares
-------------------------------- -------------------
<PAGE>
ADDINGTON RESOURCES, INC. AND SUBSIDIARIES
------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Consolidated Financial Information
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1996 (Unaudited)
and December 31, 1995 3-4
Consolidated Statements of Operations (Unaudited) Three
Months and Nine Months Ended September 30, 1996 and 1995 5
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements (Unaudited) 7-12
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13-20
PART II. Other Information 21
SIGNATURES 22
</TABLE>
2
<PAGE>
Item 1.
ADDINGTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(unaudited)
(in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,165 $ 3,387
Accounts receivable, net 8,567 9,090
Prepaid expenses and other 2,882 3,246
------------- ------------
Total current assets 12,614 15,723
------------- ------------
PROPERTY, PLANT AND EQUIPMENT, at cost 140,611 119,414
Less accumulated depreciation (18,563) (13,667)
------------- ------------
122,048 105,747
------------- ------------
OTHER 7,109 6,812
------------- ------------
Total assets $141,771 $128,282
============= ============
</TABLE>
3
<PAGE>
ADDINGTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(Unaudited)
(in thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,788 $ 4,743
Current portion of long-term debt 2,710 1,823
Accrued expenses and other 5,920 3,504
-------- --------
Total current liabilities 12,418 10,070
-------- --------
NON-CURRENT LIABILITIES:
Long-term debt, less current portion 17,073 14,407
Accrued closure and post-closure costs 6,738 5,168
Other long-term liabilities 7,544 7,451
-------- --------
Total non-current liabilities 31,355 27,026
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value; 30,000,000 shares
authorized, 16,194,034 shares and 16,054,301
shares outstanding at September 30, 1996 and
December 31, 1995, respectively 16,194 16,054
Paid-in capital 87,187 85,934
Retained earnings 8,242 2,823
Less treasury stock; 1,000,000 shares, at cost (13,625) (13,625)
-------- --------
Total stockholders' equity 97,998 91,186
-------- --------
Total liabilities and stockholders' equity $141,771 $128,282
======== ========
</TABLE>
4
<PAGE>
ADDINGTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
-------- -------- -------- --------
(In thousands, except share amounts)
<S> <C> <C> <C> <C>
REVENUES $ 16,317 $ 16,578 $ 46,012 $ 41,579
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of operations 9,174 9,377 26,680 23,370
Depreciation and amortization 1,873 2,081 5,752 5,272
Selling, general and administrative 1,939 1,811 4,100 4,922
-------- -------- -------- --------
12,986 13,269 36,532 33,564
-------- -------- -------- --------
Income from operations 3,331 3,309 9,480 8,015
-------- -------- -------- --------
INTEREST AND OTHER INCOME (EXPENSE):
Interest income 11 82 38 366
Interest expense (487) (210) (629) (384)
Other, net (569) (16) (777) 171
-------- -------- -------- --------
(1,045) (144) (1,368) 153
-------- -------- -------- --------
Income before income tax provision 2,286 3,165 8,112 8,168
INCOME TAX PROVISIONS:
Federal 960 1,076 2,191 2,777
State 160 190 502 490
-------- -------- -------- --------
1,120 1,266 2,693 3,267
-------- -------- -------- --------
Income from continuing operations 1,166 1,899 5,419 4,901
-------- -------- -------- --------
DISCONTINUED OPERATIONS:
Income from operations of discontinued segment -- 1,778 -- 5,707
(less applicable income taxes of $480 and $1,899
for the three and nine months ended September 30,
1995)
Loss on disposal of segment (less applicable income tax
benefit of $10,000) -- (30,537) -- (30,537)
-------- -------- -------- --------
Loss from discontinued operations -- (28,759) -- (24,830)
-------- -------- -------- --------
NET INCOME (LOSS) $ 1,166 $(26,860) $ 5,419 $(19,929)
======== ======== ======== ========
EARNINGS PER SHARE:
Income from continuing operations $ .08 $ .12 $ .35 $ .31
Income (loss) from discontinued operations -- .11 -- .36
Loss on disposal of segment -- (1.91) -- (1.92)
-------- -------- -------- --------
Net income (loss) $ .08 $ (1.68) $ .35 $ (1.25)
======== ======== ======== ========
Equivalent shares of stock outstanding 15,377 15,983 15,348 15,911
======== ======== ======== ========
</TABLE>
5
<PAGE>
ADDINGTON RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
1996 1995
--------- ---------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,419 $ (19,929)
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,146 5,164
Amortization 3,606 4,666
Loss on disposal of discontinued operations -- 30,537
Loss on sale of assets -- 614
Change in assets and liabilities, net of effects
from acquisitions and disposals-
(Increase) decrease in-
Cash held for disposal -- (91)
Accounts receivable 523 (5,661)
Inventories -- (489)
Prepaid expenses and other 364 925
Deferred income taxes -- (858)
Other assets (1,154) (3,051)
Increase (decrease) in-
Accounts payable (955) 5,490
Accrued expenses and other 3,397 5,310
Accrued closure and post-closure costs 1,570 --
--------- ---------
Total adjustments 9,497 42,556
--------- ---------
Net cash provided by operating activities 14,916 22,627
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets, net of disposition costs -- 5,892
Decrease in other assets -- 1,134
Decrease in short term investments -- 3,871
Additions to property, plant and equipment (21,197) (43,165)
--------- ---------
Net cash used in investing activities (21,197) (32,268)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt -- 11,129
Repayments of long-term debt (334) (263)
Issuance of common stock 1,393 339
Borrowings (repayments) on revolving line of credit 3,000 (2,400)
Financing costs incurred -- (275)
--------- ---------
Net cash provided by financing activities 4,059 8,530
--------- ---------
Less - increase in discontinued operations'
cash and cash equivalents -- 692
--------- ---------
Net decrease in cash and cash equivalents (2,222) (1,803)
CASH AND CASH EQUIVALENTS, beginning of period 3,387 2,719
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 1,165 $ 916
========= =========
</TABLE>
6
<PAGE>
ADDINGTON RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Amounts in thousands, except per share data)
1. Financial Statement Presentation
--------------------------------
The accompanying consolidated unaudited financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission for interim financial information. Accordingly, they do
not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements.
Therefore, it is suggested that the accompanying financial statements be
read in conjunction with the financial statements and notes thereto
included in the Company's latest annual report on Form 10-K.
The accompanying consolidated financial statements as of September 30, 1996
and 1995 include the accounts of Addington Resources, Inc. (the Company)
and its wholly-owned direct and indirect subsidiaries.
In the opinion of management, the accompanying consolidated unaudited
financial statements include all adjustments necessary to present fairly
the Company's financial position as of September 30, 1996, and results of
operations for the nine months ended September 30, 1996 and 1995. All
adjustments were of a normal recurring nature. The results of operations
for such interim periods are not necessarily indicative of the results to
be expected for the full year.
2. Merger Transaction
------------------
On June 25, 1996, the Company signed a definitive agreement to merge with
Republic Industries, Inc. ("Republic"). Under the terms of the merger
transaction, each outstanding share of the Company's common stock would be
converted into the right to receive .90 of a share of Republic common
stock.
The merger transaction, which will be accounted for on a pooling of
interests basis, is subject to customary terms and conditions, including
compliance with covenants, accuracy of representations by the companies to
the merger agreement, approval by the stockholders of the Company, the
clearance of the Republic registration statement and the Company's related
proxy statement by the Securities and Exchange Commission and the receipt
by the Company of confirmation of the fairness opinion by Oppenheimer &
Co., Inc. as of the date the proxy statement is mailed to Company
shareholders. The merger transaction received HSR clearance on July 31,
1996.
The Company's largest stockholders, HPB Associates, L.P., and Larry, Robert
and Bruce Addington, who collectively own approximately 45% of the
Company's outstanding common stock, has agreed to vote their shares in
favor of the merger transaction, and have delivered to Republic their
irrevocable proxies.
During the three and nine months ended September 30, 1996, $750 and $1,500,
respectively, is included in other expense in the accompanying September
30, 1996, Consolidated Statements of Operations in connection with
professional fees and related costs incurred by the Company related to this
merger transaction.
The Company anticipates that the merger transaction will be consummated in
the fourth quarter of 1996.
3. Discontinued Operations
-----------------------
During the third quarter of 1995, the Company implemented a formal plan to
dispose of all of its non-environmental operations. These discontinued
operations consisted primarily of the following: coal mining, mining
equipment manufacturing and licensing, citrus properties in Belize,
precious and industrial metals mining and incidental limestone properties.
Accordingly, the Company's continuing
7
<PAGE>
operations are comprised of integrated solid waste management, which
includes landfill operations and waste collection and recycling services.
During the quarter ended September 30, 1995 the Company recorded a loss on
the disposal of the discontinued operations of approximately $30,500 (net
of income tax benefits of approximately $10,000) which represents the
estimated loss on the disposal of the non-environmental operations and a
provision of approximately $2,000 for expected operating losses through the
final disposition of such operations.
Upon ultimate disposal of its discontinued operations, the Company
determined its initial estimates did not require adjustment.
As discussed in Note 4, as of December 31, 1995, the Company had sold all
of its subsidiaries included in discontinued operations, hence fully
disposing of all non-environmental operations. The recorded transactions
reflect the disposal of all of the Company's non-environmental segments
and, accordingly, the operating results of these segments have been
classified as discontinued operations for all periods presented in the
accompanying consolidated financial statements. Operating results from the
discontinued operations were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
Operating revenue $27,811 $92,486
------- -------
Income before income taxes 2,258 7,606
Income tax provision 480 1,899
------- -------
Net income from discontinued operations $ 1,778 $ 5,707
======= =======
</TABLE>
Most of the Company's revenues from discontinued operations were generated
under long-term coal sales contracts with electric utilities or other coal-
related organizations located in the Eastern U.S. Revenues were recognized
on coal sales in accordance with the sales agreement, which was usually
when the coal was shipped to the customer.
4. Sale of Subsidiaries (included in Discontinued Operations)
----------------------------------------------------------
a. Coal Mining, Mining Equipment Manufacturing and Licensing -
---------------------------------------------------------
On September 22, 1995, in a related party transaction, the Company
entered into a stock purchase agreement with Addington Enterprises,
Inc. (a company f/k/a Addington Acquisition Company, Inc., owned by
Larry Addington, Robert Addington and Bruce Addington; collectively,
the Addington Brothers) whereby the Company would receive $30,000,
subject to a working capital adjustment, in exchange for all the
issued and outstanding shares of common stock of its subsidiaries,
Addington Mining, Inc., Mining Technologies, Inc., Addwest Mining,
Inc. and Addington Coal Holding, Inc. This sale was consummated on
November 2, 1995, at which time the proceeds received were used by the
Company to pay down its revolving line of credit. In addition, the
Company retained the right to receive certain contingent payments due
under the Company's technology sale to BHP Australia Coal Pty. Ltd. As
of September 30, 1996, the Company estimates such payments may
aggregate $3,000.
Included in the transaction described above and pursuant to an option
agreement dated August 4, 1995, the Company sold to the Addington
Brothers all the issued and outstanding shares of common stock of its
subsidiary, Tennessee Mining, Inc. According to the terms of the
option agreement, the Addington Brothers will pay the Company a
royalty based on tons of coal delivered under a certain coal sales
contract, up to a maximum aggregate royalty of $12,500. During the
nine months ended September 30, 1996, the Company has recorded royalty
income of $613 (included in other income in the accompanying September
30,1996, Consolidated Statement of Operations) from the Addington
Brothers under this agreement.
8
<PAGE>
b. Citrus Properties -
-----------------
On September 22, 1995, in a related party transaction, the Company
entered into an agreement to sell all of the issued and outstanding
shares of common stock of its subsidiary, Belize River Fruit Co., to
Larry and Bruce Addington in exchange for 1,000 shares of common stock
of the Company owned by Larry and Bruce Addington. This transaction
was consummated on November 2, 1995, at which time the Company
acquired the 1,000 shares valued at $13,625 (based on quoted share
market price) and recorded them, at cost, as treasury stock. The
Company retained no obligations in connection with the sale and has
fully divested its investment in citrus operations.
c. Addwest Minerals, Inc. -
----------------------
Addwest Minerals, Inc. (Addwest), a wholly-owned subsidiary of the
Company, was organized to mine, extract and market precious and
industrial metals. On November 1, 1995, the Company entered into a
letter agreement, which was later finalized as a Stock Purchase
Agreement (the Agreement), that provided for the sale to an unrelated
party of all the capital stock of Addwest. On December 29, 1995, the
Company consummated the sale of Addwest.
The terms of the Agreement required the Company to contribute
additional capital to Addwest in an amount sufficient to pay
substantially all existing liabilities of Addwest through the date of
the Agreement, with the exception of the remaining balance on the
Rothschild gold loan. The proceeds received from the sale ($3,525)
were used to retire the remaining balance on the Rothschild gold loan
and the Company has been fully released from its obligations under
that loan.
d. New River Lime -
--------------
On November 17, 1995, the Company sold all of the real property, as
well as all buildings, structures and improvements of its wholly owned
subsidiary, New River Lime, Inc. (NRL), to an unrelated party for
$2,500 in cash. The Company retained no obligations in connection with
the sale and has fully divested its investment in NRL.
5. Commitments and Contingencies
-----------------------------
a. Legal Matters -
-------------
In the normal course of its operations, the Company may become
involved in a variety of legal disputes. Currently, the Company is a
party to certain litigation, including workers' compensation matters
and other minor business disputes.
While the final resolution of any matter may have an impact on the
Company's consolidated financial results for a particular reporting
period, management believes that the ultimate disposition of these
matters will not have a material adverse effect on the consolidated
financial position of the Company.
b. Environmental Proceedings -
-------------------------
The Company is involved in various environmental matters and
proceedings, including permit application proceedings, in connection
with the establishment, operation and expansion activities of certain
landfill facilities, as well as other matters or claims that could
result in additional environmental proceedings.
9
<PAGE>
While the final resolution of any matter may have an impact on the
Company's consolidated financial results for a particular reporting
period, management believes that the ultimate disposition of these
matters will not have a material adverse effect on the consolidated
financial position of the Company.
c. Environmental Service Contracts -
-------------------------------
The Company has commitments (primarily with municipalities) to operate
landfills and provide waste hauling services under various contracts
for terms of up to 40 years. Revenues for such contracts are generally
at stated rates but may be adjusted periodically for inflation.
d. Environmental Insurance -
-----------------------
In order to meet existing government requirements, the Company has
obtained environmental impairment liability insurance coverage for
certain environmental risks arising from the operation of its landfill
facilities. However, if an environmental impairment were of a
magnitude that exceeded the Company's coverage, it could have a
material adverse effect on the Company's business or its financial
condition and results of operations.
e. Sale of Certain Subsidiaries -
----------------------------
During January 1994, the Company sold the stock of five of its coal
subsidiaries to Pittston Minerals Group, Inc. (Pittston). In
connection with the sale, the Company provided certain guarantees of
indemnification to Pittston. In connection with the sale of coal
subsidiaries to the Addington Brothers (see Note 4), the Company
received indemnification related to its guarantees to Pittston as well
as other matters, including its guaranty of certain mineral lease
royalty obligations and workers' compensation benefits.
6. Related-Party Transactions
--------------------------
The Company has dealt with certain companies or individuals which are
related parties either by having stockholders in common or because they are
controlled by stockholders/officers or by relatives of
stockholders/officers of the Company. The Company recorded various expenses
(included in results of discontinued operations) to related parties
consisting of approximately $2,895 for trucking services, office rent and
flight fees for the nine months ended September 30, 1995. There were no
related party transactions during the nine months ended September 30, 1996.
The Company had amounts receivable from related parties of $5 as of
December 31, 1995.
7. Stockholders' Equity
--------------------
During the nine months ended September 30, 1996, and 1995, 124 and 46
respectively, shares of common stock were issued in connection with the
exercise of stock options.
During the nine months ended September 30, 1996 and 1995, 16 and 68
respectively, shares of common stock were issued in connection with stock
grants issued to employees in 1989 and 1990. These stock grants specified
that the recipient of the stock grant remain employed by the Company for
five years from the date of the grant in order to exercise the grant.
As a result of these options and grants being exercised and shares being
issued, common stock increased $140 and $114 respectively, and paid-in
capital increased $1,253 and $1,330 respectively, during the nine months
ended September 30, 1996 and 1995.
10
<PAGE>
8. Statement of Cash Flows
-----------------------
For purposes of this statement, the Company considers short-term
investments having maturation of income taxes paid by the Company during
the nine months ended September 30, 1996 and 1995 are three months or less
at the time of purchase to be cash equivalents. The cash amounts of as
follows:
<TABLE>
1996 1995
------ ------
<S> <C> <C>
Interest, net of amounts capitalized
of $1,133 and $1,739 $ 115 $ 384
Income taxes 375 1,093
</TABLE>
9. Income Taxes
------------
During the three and nine months ended September 30, 1996, the Company
reduced its deferred tax asset valuation reserve by approximately $0 and
$550, respectively. The reason for the change in the valuation allowance is
due to the Company's ongoing evaluation of the realization of its
alternative minimum tax (AMT) credit carry forwards, which are a component
of deferred tax assets. A valuation allowance is provided when it is more
likely than not that some portion of the deferred tax asset will not be
realized. The Company has recorded a valuation allowance against a portion
of these AMT credits due to uncertainties in realization using the "more
likely than not" valuation method.
10. New Accounting Pronouncements
-----------------------------
a. Long Lived Assets -
-----------------
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" (SFAS No. 121), effective for fiscal years beginning
after December 15, 1995. The new standard requires that long-lived
assets and certain identified intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In performing such
impairment review, companies are required to estimate the sum of
future cash flows from an asset and compare such amount to the asset's
carrying amount. Any excess of carrying amount over expected cash
flows will result in a possible write-down of an asset to its fair
value. The Company adopted the provisions of SFAS No. 121 as of
January 1, 1996. The adoption had no effect on the results of
operations or financial position of the Company.
b. Stock-Based Compensation -
------------------------
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123), effective for fiscal years
beginning after December 15, 1995. The new standard encourages, but
does not require, a fair value based method of accounting for employee
stock options or similar equity instruments. It also allows an entity
to elect to continue to measure compensation cost under Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees" (APB No. 25), but requires pro forma disclosures of net
income and earnings per share as if the fair value based method of
accounting had been applied. The Company expects to adopt SFAS No. 123
for its annual 1996 financial statements. In addition, the Company
will elect to continue to measure compensation cost under APB No. 25
and comply with the pro forma disclosure requirements.
11
<PAGE>
c. Environmental Remediation Liabilities -
-------------------------------------
In October 1996, the American Institute of Certified Public
Accountants issued Statement of Position (SOP) 96-1, "Environmental
Remediation Liabilities," effective for fiscal years beginning after
December 15, 1996. This statement provides that environmental
remediation liabilities should be accrued when the criteria of
Statement of Financial Accounting Standards (SFAS) No. 5, "Accounting
for Contingencies," are met, and it includes benchmarks to aid in the
determination of when environmental remediation liabilities should be
recognized in accordance with SFAS No. 5. SOP 96-1 also states that an
accrual for environmental liabilities should include incremental
direct costs of the remediation effort and costs of compensation and
benefits for those employees who are expected to devote a significant
amount of time directly to the remediation effort. The Company
believes that implementation of SOP 96-1 (which is expected during
1997) will not have a material adverse effect on its results of
operations or financial position.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(amounts in thousands, except per share data)
The following discussion reviews the Company's operations for the nine months
ended September 30, 1996 and 1995, and should be read in conjunction with the
Company's audited consolidated financial statements and related notes thereto
included in the Company's annual report on Form 10-K for the year ended December
31, 1995. The Company has restated its previously issued financial statements in
connection with the Company's determination to discontinue its operations
relating primarily to coal mining, mining equipment manufacturing and licensing,
citrus properties in Belize, precious and industrial metals mining and
incidental limestone properties. The Company's continuing operations are
comprised of integrated solid waste management including landfill operations,
waste collection and recycling services.
As part of the Company's plan to dispose of all of its non-environmental
operations, it has taken the following actions:
(1) On September 22, 1995, the Company entered into a stock purchase
agreement with Addington Acquisition Company, Inc., Larry Addington, Robert
Addington and Bruce Addington (collectively, the "Addingtons") whereby the
Company agreed to sell, for $30,000, subject to certain working capital
adjustments, all the issued and outstanding shares of common stock of its
subsidiaries, Addington Mining, Inc., Mining Technologies, Inc., Addwest
Mining, Inc. and Addington Coal Holding, Inc. In addition, the Company
retained the right to receive certain payments (anticipated to aggregate
$3,000 after September 30, 1996) due under the Company's technology sale to
BHP Australia Coal Pty. Ltd. The sale was consummated on November 2, 1995.
(2) Included in the above transaction and pursuant to an option agreement
dated August 4, 1995, the Company sold to the Addingtons all of the issued
and outstanding shares of common stock of its subsidiary, Tennessee Mining,
Inc. The Company is entitled to receive a royalty based on tons of coal
delivered under a certain coal sales contract, up to a maximum aggregate
royalty of $12,500.
(3) On September 22, 1995, the Company entered into an agreement to sell
all of the issued and outstanding shares of common stock of its subsidiary,
Belize River Fruit Co., to Larry and Bruce Addington in exchange for 1,000
shares of common stock of the Company owned by Larry and Bruce Addington.
The transaction was consummated on November 2, 1995.
(4) On November 17, 1995, the Company sold all of the real property, as
well as all buildings, structures and improvements of its wholly owned
subsidiary, New River Lime, Inc. (NRL), to an unrelated party for $2,500 in
cash.
(5) On November 1, 1995, the Company entered into a letter agreement that
provided for the sale to an unrelated party of all the capital stock of
Addwest Minerals, Inc. (Addwest). On December 29, 1995, the Company
consummated the sale of the capital stock of Addwest. The total amount of
proceeds received by the Company with the sale of Addwest was $3,525.
On June 25, 1996, the Company signed a definitive agreement to merge with
Republic Industries, Inc. ("Republic"). Under the terms of the merger
transaction, each outstanding share of the Company's common stock would be
converted into the right to receive .90 of a share of Republic common stock.
The merger transaction, which will be accounted for on a pooling of interests
basis, is subject to customary terms and conditions, including compliance with
covenants, accuracy of representations by the companies to the merger agreement,
approval by the stockholders of the Company, the filing of the Republic
registration statement and the Company's related proxy statement by the
Securities and Exchange Commission and the receipt by the Company of
confirmation of the fairness opinion by Oppenheimer & Co. as of the date the
proxy statement is mailed to Company shareholders. The merger transaction
received HSR clearance on July 31, 1996.
The Company's largest stockholders, HPB Associates, L.P., and Larry, Robert and
Bruce Addington, who collectively own approximately 45% of the Company's
outstanding common stock, have agreed to vote their shares in favor of the
merger transaction, and have delivered to Republic their irrevocable proxies.
The Company currently anticipates that the merger transaction will be
consummated in the fourth quarter of 1996.
13
<PAGE>
Results of Operations
Quarter Ended September 30, 1996 Compared with Same Period 1995
----------------------------------------------------------------
(amounts in thousands, except per share data)
Net income during the quarter ended September 30, 1996, was $1,166 or $.08 per
share, compared to net income from continuing operations of $1,899 or $.12 per
share for the quarter ended September 30, 1995.
Total revenues decreased from $16,578 generated during the quarter ended
September 30, 1995, to $16,317 during the quarter ended September 30, 1996. This
2% decrease in total revenues is a result of lower tonnage received at Company
owned landfills offset in part by the replacement of certain lower margin
tonnage with higher margin tonnage. During the quarter ended September 30, 1996
the Company received 528 tons at Company owned landfills compared to 535 tons
received during the quarter ended September 30, 1995. In September 1996, the
Company opened a new landfill in Bibb County, Georgia, outside Macon, Georgia.
The Company has another new landfill under development located in Person County,
North Carolina, which is currently expected to be completed in early 1997.
As a percentage of total revenues, cost of operations improved slightly to 56%
for the quarter ended September 30, 1996, as compared to 57% for the quarter
ended September 30, 1995.
Depreciation and amortization declined from $2,081 during the quarter ended
September 30, 1995, as compared to $1,873 for the quarter ended September
30, 1996, reflecting lower tons received at Company owned landfills during the
quarter ended September 30, 1996 compared to the similar 1995 period.
Capitalized landfill development costs are amortized as permitted airspace of
the landfill or the related cell, as applicable, is consumed.
Selling, general and administrative expenses increased $128 (or 7%) during the
quarter ended September 30, 1996, as compared to the quarter ended September
30, 1995. As a percentage of revenues, selling, general and administrative
expenses increased from 10.9% during the quarter ended September 30, 1995, to
11.9% during the quarter ended September 30, 1996. This increase is primarily
due to higher administrative expenses incurred during 1996 due to a new
incentive bonus program implemented in 1996 to compensate salaried employees.
Income from operations remained relatively unchanged at $3,331 during the
quarter ended September 30, 1996 compared to $3,309 during the quarter ended
September 30, 1995. As a percentage of revenues, income from operations remained
unchanged at 20% during the quarters ended September 30, 1995 and 1996.
Interest income decreased to $11 during the quarter ended September 30, 1996, as
compared to $82 during the quarter ended September 30, 1995. The Company has
from time to time paid amounts into escrow under state regulations related to
closure and post-closure cost of its landfills. The decrease in interest income
reflects the decrease in escrow cash balances outstanding during the quarter
ended September 30, 1996, as compared to 1995. During the fourth quarter of
1995, the Company issued letters of credit in exchange for reducing or
eliminating virtually all of its escrow accounts.
Interest expense increased 132% to $487 during the quarter ended September
30, 1996, compared to $210 during the quarter ended September 30, 1995. The
increase in interest expense is primarily attributable to the Company ceasing
the capitalization of interest expense on the Mid-State landfill for periods
following its opening in early September, 1996 and additional interest expense
in 1996 as a result of accelerated amortization of capitalized financing costs
related to the Company's line of credit. The line of credit will be repaid when
the Company is merged with Republic (See Note 2). The amount of interest
capitalized during the third quarter of 1996 was $375 compared to $570
capitalized during the third quarter of 1995.
Other expense was $569 during the quarter ended September 30,1996, compared to
other expense of $16 during the quarter ended September 30, 1995. Included in
other expense during the quarter ended September 30, 1996, are $750 of
professional fees related to the proposed merger with Republic (See Note 2) net
of royalty income of $210 related to the sale of Tennessee Mining, Inc. (See
Note 4).
14
<PAGE>
The Company's effective tax rate for continuing operations increased from 40%
during the quarter ended September 30, 1995, to 49% during the quarter ended
September 30, 1996.
As of December 31, 1995, the Company had sold all of its subsidiaries included
in discontinued operations, fully disposing of all non-environmental operations
(see Notes 3 and 4). The recorded transactions reflect the disposal of all of
the Company's non-environmental segments and accordingly, the operating results
of these segments have been classified as discontinued operations for all
periods presented in the accompanying consolidated financial statements.
Operating results from the discontinued operations were as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30, 1995
-------------------
<S> <C>
Operating revenue $27,811
-------
Income before income taxes 2,258
Income tax provision 480
-------
Net income from discontinued operations $ 1,778
=======
</TABLE>
During the quarter ended September 30, 1995 the Company recorded a loss on the
disposal of the discontinued operations of approximately $30,500 (net of income
tax benefits of approximately $10,000) which represents the estimated loss on
the disposal of the non-environmental operations and a provision of
approximately $2,000 for expected operating losses through the final disposition
of such operations.
Upon ultimate disposal of its discontinued operations, the Company determined
its initial estimates did not require adjustment.
Included in income from discontinued operations for the three months ended
September 30, 1995, is approximately $4,000 of pre-tax income from the sale of
the Company's mining technology patent rights in Australia. The effect of
hedging transactions during the period was insignificant.
15
<PAGE>
Results of Operations
Nine Months Ended September 30, 1996, Compared with Same Period 1995
--------------------------------------------------------------------
(amounts in thousands, except per share data)
Net income during the nine months ended September 30, 1996, was $5,419 or $.35
per share, compared to net income from continuing operations of $4,901 or $.31
per share for the nine months ended September 30, 1995.
Total revenues increased from $41,579 generated during the nine months ended
September 30, 1995, to $46,012 during the months ended September 30, 1996.
This 11% increase in total revenues primarily reflects the 7% increase in tons
of waste received at the Company's landfills. During the nine months ended
September 30, 1996, tonnage received at the Company's landfills increased to
1,424 tons from 1,331 tons received during the 1995 first nine months. This
increase in tons is primarily attributable to internal growth, including
additional tonnage received at the Company's East Carolina and Epperson sites
under new contracts entered into in May and June 1995, respectively. In
September 1996, the Company opened a new landfill in Bibb County, Georgia,
outside Macon, Georgia. The Company has another new landfill under development
located in Person County, North Carolina, which is currently expected to be
completed in early 1997.
As a percentage of total revenues, cost of operations increased slightly to 58%
for the nine months ended September 30, 1996, as compared to 56% for the nine
months ended September 30, 1995. As a percentage of total revenues, cost of
operations increased from 54% for the year ended December 31, 1995 as compared
to 58% for the nine months ended September 30, 1996. This increase is caused by
a combination of factors, including: seasonality, higher personnel related costs
and higher estimated landfill closure and post-closure costs.
Depreciation and amortization increased $480 (or 9%) during the nine months
ended September 30, 1996, as compared to the nine months ended September 30,
1995. This increase is primarily attributable to an increase in tonnage
received as well as the purchase and development of additional capital assets
within the environmental operations. Capitalized landfill development costs
are amortized as permitted airspace of the landfill or the related cell, as
applicable, is consumed.
Selling, general and administrative expenses decreased $822 (or 17%) during the
nine months ended September 30, 1996, as compared to the nine months ended
September 30, 1995. As a percentage of revenues, selling, general and
administrative expenses declined from 12% during the nine months ended September
30, 1995, to 9% during the nine months ended September 30, 1996. This decline
is primarily due to lower administrative expenses incurred during 1996 due to
lower corporate overhead incurred, primarily payroll related expenses, resulting
from overall improved operating efficiencies at the Company's environmental
operations partially offset by a new 1996 incentive bonus plan for salaried
personnel.
Income from operations increased $1,465 (or 18%) during the nine months ended
September 30, 1996, as compared to the nine months ended September 30, 1995.
Income from operations increased as a percentage of revenues from 19% during the
nine months ended September 30, 1995, to 21% during the nine months ended
September 30, 1996. The increase in income from operations in dollars and as a
percentage of revenues is attributable to the higher revenues generated by the
Company's landfill operations allowing the Company to spread its fixed costs
over a larger revenue base and also as a result of lower selling, general and
administrative expenses incurred during nine months ended September 30, 1996,
compared to the nine months ended September 30, 1995.
Interest income decreased to $38 during the nine months ended September 30,
1996, as compared to $366 during the nine months ended September 30, 1995. The
Company has from time to time paid amounts into escrow under state regulations
related to closure and post-closure cost of its landfills. The decrease in
interest income reflects the decease in escrow cash balances outstanding during
the nine months ended September 30, 1996, as compared to 1995. During the
fourth quarter of 1995, the Company issued letters of credit in exchange for
reducing or eliminating virtually all of its escrow accounts.
16
<PAGE>
Interest expense increased 64% to $629 during the nine months ended September
30, 1996, as compared to $384 during the nine months ended September 30, 1995.
The increase in interest expense was primarily attributable to the Company
ceasing the capitalization of interest expense on the Mid-State landfill for
periods following its opening in early September 1996 and additional interest
expense in 1996 as a result of accelerated amortization of capitalized financing
cost related to the Company's line of credit. The line of credit will be repaid
when the Company is merged with Republic (See Note 2). The amount of interest
capitalized during the nine months of 1996 was $1,133 compared to $1,739
capitalized during the first nine months of 1995.
Other expense was $777 during the nine months ended September 30, 1996, compared
to other income of $171 during the nine months ended September 30, 1995.
Included in other expense during the quarter ended September 30, 1996, are
approximately $1,500 of professional fees related to the proposed merger with
Republic (See Note 2) net of $613 of royalty income related to the sale of
Tennessee Mining, Inc. (See Note 4).
The Company's effective tax rate for continuing operations decreased from 40%
during the nine months ended September 30, 1995, to 33% during the nine months
ended September 30, 1996, primarily due to the reduction of deferred tax
valuation reserves.
As of December 31, 1995, the Company had sold all of its subsidiaries included
in discontinued operations, fully disposing of all non-environmental operations
(see Note 4). The recorded transactions reflect the disposal of all of the
Company's non-environmental segments and accordingly, the operating results of
these segments have been classified as discontinued operations for all periods
presented in the accompanying consolidated financial statements. Operating
results from the discontinued operations were as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1995
------------------
<S> <C>
Operating revenue $92,486
-------
Income before income taxes 7,606
Income tax provision 1,899
-------
Net income from discontinued operations $ 5,707
=======
</TABLE>
During the quarter ended September 30, 1995 the Company recorded a loss on the
disposal of the discontinued operations of approximately $30,500 (net of income
tax benefits of approximately $10,000) which represents the estimated loss on
the disposal of the non-environmental operations and a provision of
approximately $2,000 for expected operating losses through the final disposition
of such operations.
Upon ultimate disposal of its discontinued operations, the Company determined
its initial estimates did not require adjustment.
Included in income from discontinued operations for the nine months ended
September 30, 1995, is approximately $14,000 of revenue and $13,000 of pre-tax
income from the sale of the Company's mining technology patent rights in
Australia, offset by a $5,300 disposal loss accrual recorded for the Company's
precious and industrial metals mining subsidiary. The effect of hedging
transactions during the period was insignificant.
17
<PAGE>
Financial Condition
-------------------
(amounts in thousands, except per share data)
The Company's cash and cash equivalents and short-term investments totaled
$1,165 at September 30, 1996, compared to $3,387 at December 31, 1995. This 66%
decrease is primarily due to the timing of accounts receivable collections,
accounts payable payments and capital expenditures.
Accounts receivable at September 30, 1996, totaled $8,567 compared to the
balance of $9,090 at December 31, 1995. This 6% decrease is primarily due to the
timing of accounts receivable collections.
Prepaid expenses and other at September 30, 1996, totaled $2,882 compared to the
balance of $3,246 at December 31, 1995. This 11% decrease is primarily due to
the timing of payments on prepaid insurance and other prepaid expenses.
Property, plant and equipment, net, increased to $122,048 at September 30,
1996, as compared to $105,747 at December 31, 1995. This $16,301 (15%) increase
is primarily due to an increase in landfill equipment, cell construction at
existing landfills and other capitalized environmental related development
costs, net of depreciation charges.
Accounts payable at September 30, 1996, decreased to $3,788 as compared to the
December 31, 1995, balance of $4,743. This 20% decrease is primarily due to the
timing of payments on accounts payable.
The Company's current portion of long-term debt outstanding increased to $2,710
at September 30, 1996, as compared to $1,823 at December 31, 1995, primarily due
to timing of certain debt payments.
Accrued expenses and other liabilities increased to $5,920 at September 30,
1996, as compared to the $3,504 balance at December 31, 1995. This 69% increase
is primarily due to the timing of payments relating to income taxes and other
expenses.
The Company's long-term debt outstanding increased to $17,073 at September 30,
1996, as compared to $14,407 at December 31, 1995. During the first nine months
of 1996 the Company borrowed $3,000 on its line of credit to fund certain
landfill construction and development costs.
Accrued closure and post-closure costs at September 30, 1996, increased to
$6,738 as compared to $5,168 at December 31, 1995. The accrual for closure and
post-closure cost is based upon the estimated aggregate closure and post-closure
costs to be incurred at the time that the landfills cease to accept waste and
are closed. The amount of the accrual is calculated using the number of tons
received by the landfills each year. Therefore, the increase in this accrual is
due to the landfills receiving additional tons during the first nine months of
1996.
The Company's other long-term liabilities remained relatively unchanged at
$7,544 at September 30, 1996, as compared to $7,451 at December 31, 1995. This
accrual primarily relates to income taxes and the remaining reserve recorded to
cover costs associated with the disposal of the discontinued operations.
18
<PAGE>
Liquidity and Capital Resources
-------------------------------
(amounts in thousands, except per share data)
The working capital needs of the Company have been met primarily through a
combination of funds provided by banks, proceeds from the sale of non-
environmental operations, and cash generated through operations.
The overall net decrease in cash and cash equivalents from continuing operations
was $2,222 and $1,803 for the nine months ended September 30, 1996 and 1995,
respectively.
Net cash provided by operating activities was $14,916 and $22,627 for the nine
months ended September 30, 1996, and 1995, respectively. This fluctuation
between years is primarily a result of the disposal of discontinued operations
during the fourth quarter of 1995 as such discontinued operations provided
approximately $15,562 in cash flows from operating activities for the nine
months ended September 30, 1995.
Net cash used in investing activities was $21,197 and $32,268 for the nine
months ended September 30, 1996, and 1995, respectively. Both amounts primarily
represent acquisitions of environmental related assets as well as capitalized
landfill construction and development costs. During the nine months ended
September 30, 1995, net cash flows used in the discontinued operations were
approximately $18,903, which primarily represented property, plant and equipment
additions.
Net cash provided by financing activities was $4,059 and $8,530 for the nine
months ended September 30, 1996 and 1995, respectively. The 1996 amount
primarily represents the Company borrowing on its line of credit. The 1995
amount primarily represents borrowings on revolving lines of credit and issuance
of long-term debt. Included in the September 30, 1995 amount is approximately
$2,591 in net cash flows provided by discontinued operations, primarily from
long term debt borrowings.
Net working capital as of September 30, 1996, was approximately $196 compared to
approximately $5,653 as of December 31, 1995.
As of September 30, 1996, the Company had approximately $15,694 available under
its line of credit. The line of credit is secured by substantially all of the
Company's assets and bears interest at rates ranging from the Eurodollar rate
plus 1.75% to 2.75% to the bank's base rate plus 0% to .75%. The maximum amount
available under the line of credit, which expires October 31, 1997, is $50,000,
reduced by issued letters of credit of approximately $31,306 and borrowings of
$3,000.
The Company has various operating and capital leases for transportation and
other equipment. Total non-cancelable minimum lease payments for the remainder
of 1996 will be approximately $1,200.
There are certain environmental contingencies, primarily consisting of landfill
closure obligations, related to the Company's integrated solid waste disposal
system operations. The Company estimates and records its costs associated with
closure and post-closure monitoring and maintenance for operating landfills
based upon relevant government regulation. Accruals for these closure and post-
closure costs are provided as permitted airspace of the landfill is consumed.
The Company revises its estimates on a periodic basis. As of September 30, 1996,
the Company had accrued expenses for closure costs of approximately $6,738.
Because of the long-term nature of these obligations, there is a possibility
that such obligations, when ultimately paid, may differ substantially from the
recorded accrued expense, thus affecting the Company's liquidity.
Considering the existing accruals with respect to the Company's landfills at
September 30, 1996, and assuming significant additional future capital costs are
made to complete expansion efforts over the expected lives of the landfills,
approximately $98,800 of additional expense accruals are to be provided over the
remaining lives as permitted airspace of these facilities is consumed. Such
additional accruals to be provided have been estimated based on current costs
and existing regulatory requirements and assume that the landfills will be
filled to capacity. Due to uncertainties and significant judgments used in
determining the amount of additional accruals to be provided, the actual amount
to be expended may differ substantially.
19
<PAGE>
The Company is required to provide financial assurance to various regulatory
bodies for certain of its estimated closure and post-closure monitoring and
maintenance costs. The Company has provided letters of credit and established
trust funds in response to such requirements.
The Company projects capital expenditures for existing landfill facilities for
the remainder of 1996 to be $6.8 million, although the amounts expended may
differ substantially from this amount. The Company is actively pursuing
additional landfill facilities through acquisitions, privatization of
municipally owned facilities, as well as start-up facilities. In addition to
planned expenditures for existing facilities, the Company anticipates that the
Person County landfill will be completed in early 1997 at a cost of
approximately an additional $4.8 million, but there can be no assurance that
this landfill will become operational in 1997 nor that the amounts actually
expended will not differ substantially from this current estimate.
The Company believes that its present financial condition, considering the funds
available under the existing financing agreements and internal financial
resources, provides adequate capital reserves and liquidity.
Inflation has not had a significant effect on the Company's business, primarily
because the United States economy has been experiencing a period of relatively
low inflation.
The Company's capital needs, earnings and cash flow are somewhat dependent on
events beyond the Company's control, such as the state of the economy, changes
in existing governmental and environmental regulations and the availability of
expansion opportunities.
Environmental Matters
---------------------
The Company, during its normal course of business, is faced with the need to
expend funds for environmental protection and remediation, however, such
expenditures are not expected to have a materially adverse effect on its
financial condition or results of operations considering its business is based
upon compliance with environmental laws and regulations and its services are
priced accordingly. Though it is possible that such costs might increase in the
future, the Company believes that in general it benefits from increased
government regulation based on an increased demand for its services and adequate
resources and experience to manage environmental risk. As part of its ongoing
operations, the Company provides for its estimated closure and post-closure
monitoring and maintenance costs as remaining permitted airspace at its landfill
facilities are consumed. Closure and post-closure monitoring and maintenance
costs include final capping of the site, site inspections, groundwater
monitoring, leachate management, methane gas control and recovery, and operation
and maintenance costs as the remaining permitted airspace of such facilities is
consumed.
- -------------------------------------------------------------------------------
The statements contained in this Form 10-Q contain forward looking statements
which involve risks and uncertainties. The Company's actual results may vary
significantly from those stated in any forward looking statements. Factors that
may cause such difference include, but are not limited to, regulatory changes,
loss or failure to obtain governmental permits, competition, the ongoing
consolidation of the solid waste management business and the availability of
acquisition and expansion opportunities on attractive terms.
- -------------------------------------------------------------------------------
20
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None.
Item 2. Changes in Securities.
----------------------
None.
Item 3. Defaults upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
Item 5. Other Information.
------------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) List of Exhibits Filed.
-----------------------
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
During the quarter ended September 30, 1996, the Company filed a
Form 8-K Current Report dated June 25, 1996, Item 5 Other Events
(reporting execution of a definitive agreement with Republic
Industries, Inc. ("Republic") for Republic to acquire the Company
in a merger transaction and execution of voting agreement between
principal stockholders of the Company and Republic whereby they
have agreed to vote all shares owned by them in favor of the
merger). No financial statements were filed with the report.
21
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADDINGTON RESOURCES, INC.
(Registrant)
Date: November 13, 1996 By: /s/ R. Douglas Striebel
----------------- ------------------------
R. Douglas Striebel
Vice President and
Chief Financial Officer
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Consolidated Balance Sheet as of September 30, 1996 and Consolidated Statements
of Operations for the nine months then ended and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,165
<SECURITIES> 0
<RECEIVABLES> 8,567
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,614
<PP&E> 140,611
<DEPRECIATION> 18,563
<TOTAL-ASSETS> 141,771
<CURRENT-LIABILITIES> 12,418
<BONDS> 0
<COMMON> 16,194
0
0
<OTHER-SE> 81,804
<TOTAL-LIABILITY-AND-EQUITY> 141,771
<SALES> 46,012
<TOTAL-REVENUES> 46,012
<CGS> 26,680
<TOTAL-COSTS> 36,532
<OTHER-EXPENSES> 1,368
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 629
<INCOME-PRETAX> 8,112
<INCOME-TAX> 2,693
<INCOME-CONTINUING> 5,419
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,419
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
