<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------------
FORM 10-K/A
[MARK ONE]
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee required]
For the fiscal year ended December 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[No fee required]
For the transition period from _____________ to _____________.
Commission File No. 1-10489
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KIMMINS CORP.
(Exact name of registrant as specified in its charter)
Delaware 59-2763096
(State of incorporation) (I.R.S. Employer
Identification No.)
1501 Second Avenue, East, Tampa, Florida 33605
(Address of registrant's principal executive offices,
including zip code)
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Registrant's telephone number, including area code:
(813) 248-3878
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Each Class on Which Registered
-------------------- --------------------
Common Stock, New York
$.001 par value Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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
period 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 [ ]<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K/A or any amendment to this Form 10-K/A. [ ]
As of March 18, 1996, there were outstanding 4,447,397 shares of
Common Stock and 2,291,569 shares of Class B common stock. The aggregate
market value of the voting stock held by non-affiliates of the registrant
as of March 18, 1996, was $13,604,399.
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DOCUMENTS INCORPORATED BY REFERENCE:
NONE<PAGE>
PART I
Item 1. Business
THE COMPANY
During January 1996, Kimmins Environmental Service Corp. filed an
amendment to its Restated Certificate of Incorporation that changed the
name of the company to Kimmins Corp. Kimmins Corp. and its subsidiaries
(collectively, the "Company") is a solid waste management and specialty
contracting company that, through its subsidiaries, provides a full range
of solid waste management services and project-oriented services for
infrastructure development and the remediation of sites and facilities.
The Company's services are as follows:
* Solid waste management services - Transfer, resource recovery,
transportation, disposal of non-hazardous waste, and demolition
of residential and commercial facilities.
* Specialty contracting
* Environmental and utility contracting - Environmental and
utility contracting, including infrastructure services such
as sewer lines, water lines, and roads.
* Industrial demolition, dismantling, and abatement -
Dismantling of facilities or structures including offshore
oil platforms; draining liquid wastes from pipes and tanks;
asbestos removal, cleanup, disposal, and reinsulation;
removal of above- and below-ground tanks; removal and
disposal or sale of other equipment; and sale of scrap
materials.
* Hazardous waste services - On-site treatment, containment,
incineration, and excavation and removal.
The Company's surety services were spun-off from the Company through
the distribution of equity securities of the holding company of the
surety subsidiaries to its stockholders during October 1992.
The Company's services may be used individually or in combination as
required to meet the specific needs of customers. The Company's business
strategy is to draw upon its solid waste management and contracting
experience to perform complex projects requiring a broad range of
services. Although each of the Company's business lines can operate
independently from the other related services, the Company believes that
integration of these services gives it a competitive advantage by
relieving the customer of the burden of coordinating activities of
multiple contractors.
During its first years of operation, the Company emphasized, among
other services offered, a broad range of contracting services. As the
need for waste-related and specialty contracting services has grown in
response to heightened public concern and government regulation, the
Company has used its capabilities in facilities demolition and
dismantling and in the management of complex construction projects to
become increasingly involved in solid waste management and project-or-
iented activities.<PAGE>
The Company's services are provided to industrial, commercial,
institutional and governmental customers, which have included Shell Oil
Company, Mobil Oil Corporation, the City of Tampa, the United States Air
Force, and the U.S. Army Corps of Engineers. Operations and marketing
efforts are managed through the Company's subsidiaries, which are located
in the south and northeast.
The Company's strategy is to continue to focus on solid waste
management services and specialty contracting projects for large
manufacturing and governmental customers. To date, the Company's
activities in solid waste management have consisted of opening and
operating resource recovery and transfer facilities in various cities in
Florida and bidding on and obtaining industrial, commercial, and
municipal solid waste management contracts. The Company does not
consider its business to be highly seasonable.
SERVICES
Solid Waste Management Services:
The Company, through its majority-owned subsidiary, TransCor Waste
Services, Inc. ("TransCor"), provides solid waste management services to
commercial, industrial, residential, and municipal customers. In
connection with such services, the Company currently owns and operates
fully-permitted construction and demolition ("C&D") transfer and
recycling ("T&R") facilities in four of the largest metropolitan regions
in the state of Florida. The Company had also, pursuant to several
municipal contracts, commenced the residential curbside collection of a
variety of already segregated recyclable forms of solid waste, including
such materials as newspapers, cardboard, plastic, metals, and glass. In
addition to its T&R operations, the Company collects and disposes of all
types of non-hazardous solid waste for industrial and commercial
customers in its T&R regions. The Company also provides residential
garbage collection services for several municipalities located in
Pinellas County, St. Lucie County, Lee County and Hillsborough County,
Florida. In addition, the Company provides demolition and other related
services with, and as an economic complement to, its solid waste
management services.
The Company's permits allow it to segregate and recycle part of the
C&D debris and yard waste accepted at its T&R facilities (thereby
decreasing the Company's landfill disposal costs). The Company has the
capability to haul the non-recyclable waste economically to outlying
rural landfills (where disposal fees generally are much lower than those
charged by urban landfills). Consequently, the Company can charge lower
rates at its T&R facilities than those charged by landfill operators in
the same vicinities. In addition, disposal of debris at the Company's
T&R facilities generally requires less time and results in less damage to
waste collection vehicles than landfill disposal. As a result, waste
haulers, including those in competition with the Company's own collection
services, are provided strong economic and other incentives for disposing
of their C&D debris and yard waste at the Company's T&R facilities.
The Company provides demolition services for commercial and
residential customers. These services include the razing and dismantling
of facilities and structures, the recovery of demolished material for
reuse and recycling, and the disposal of non-recycled demolition debris.<PAGE>
The typical demolition projects of the Company are single and multistory
urban buildings and small warehouses, manufacturing plants, and other
facilities. Typically, the Company enters into separate demolition
contracts for each project, which are usually for a term of less than six
months.
Specialty Contracting:
Infrastructure and Utility Contracting Services
Prior to mid-1988, the Company's contracting business was directed
primarily at lower-margin general contracting for industrial, commercial,
institutional and governmental customers, including schools, apartments
and shopping centers. During 1988, the Company redirected its focus
toward environmental and utility contracting, including infrastructure
and reconstructive service work.
The Company, through its subsidiary, Kimmins Contracting Corp.,
continues to provide comprehensive non-hazardous contracting services,
including infrastructure services such as water and sewer line
installation, replacement and repair to private and government customers
primarily in the State of Florida. Related infrastructure development
includes road installation, repair and widening, and installation, repair
and enhancement of drainage and wastewater services.
Industrial Demolition, Dismantling, and Abatement Services
The Company, through its subsidiaries, Kimmins Industrial Service
Corp., Kimmins Abatement Corp., and Kimmins International, offers
demolition and dismantling of facilities or structures; asbestos removal;
cleanup, disposal, and reinsulation; removal of above- and below-ground
storage tanks; removal and disposal or sale of industrial equipment; and
the sale of equipment and scrap materials.
Demolition and dismantling projects result from the closing or
retooling of facilities due to such factors as technological obsolescence
of facilities, corporate mergers and consolidations of operations, and
the relocation of manufacturing operations to low-cost labor areas or
areas subject to less stringent regulation, primarily in foreign
countries. In addition, site remediation, particularly in the case of
environmental contamination of a site, frequently requires the demolition
or dismantling of a contaminated facility.
Dismantling is the precise disassembly of a manufacturing or
production facility on a piece-by-piece basis to recover equipment as
complete operating units that can be reinstalled at another location.
Dismantling enhances the value of the facility above scrap market values.
The Company is paid a fee for dismantling services and, usually, a
commission on the sale of non-relocated equipment.
Demolition usually requires wrecking services for which the Company
is paid a fee by the customer. In certain projects, the Company may also
receive additional revenue from selling the scrap material. The
Company's services in these areas include dismantling large structures
(including refineries, and utility plants); draining liquid wastes from
pipes and tanks; removing above- and below-ground tanks; cleaning and
disposing of contaminated equipment; and controlled demolition.<PAGE>
Certain demolition projects also involve asbestos removal, cleanup
and disposal. The Company is de-emphasizing asbestos abatement services
and generally will only perform these services with other environmental
demolition activities.
Hazardous Waste Services
The Company, through its subsidiary, ThermoCor Kimmins, Inc., offers
a full range of services for the removal, treatment, and disposal of
hazardous materials. The services offered include on-site incineration
(thermo-destruction) of hazardous waste, as well as other on-site
treatment methods, construction of containment systems, and the
excavation and removal of contaminated material.
On-site treatment. On-site remediation involves treating hazardous
materials at a customer's site to reduce or eliminate the need for off-
site transportation and disposal of hazardous materials, thus decreasing
the cost to and potential liability of the customer. On-site treatment,
which includes a variety of techniques, eliminates the substance
permanently, reduces its toxicity or volume, or stabilizes its
constituents for disposal on-site or off-site at a permitted disposal
facility. Treatment and disposal methods used by the Company include
incineration, stabilization and fixation, dechlorination, filtration,
dewatering, air stripping and carbon adsorption, precipitation, and
bioremediation.
Containment. Containment systems are constructed to prevent the
migration of hazardous materials from a site to the surrounding
groundwater, surface water, soil or air. While containment can be a
permanent remedial solution, it is also used as an interim step followed
by excavation and removal or on-site treatment. The Company installs
containment systems that include containment cells, surface caps, and
slurry walls.
Excavation and removal. Excavation and removal involve the
excavation of contaminated materials for containment, on-site treatment
or off-site disposal. When off-site disposal is required, the Company
subcontracts with licensed third parties for the transportation of the
material for off-site disposal. As part of its quality control program,
the Company regularly samples and analyzes excavated materials to verify
that the contaminants are consistent with those identified in the
remediation plan.
SEGMENT INFORMATION
See Note 18 of Notes to Consolidated Financial Statements of the
Company for the years ended December 31, 1993, 1994, and 1995 for the
Company's financial segment information.
PERFORMANCE BONDS
The Company is required to post performance bonds in connection with
certain asbestos abatement, waste remediation, demolition, and
construction contracts. For the year ended December 31, 1995, most of
the Company's revenue was derived from contracts or projects that
required the Company to post performance bonds. The Company's current
bonding coverage for non-environmental projects is $30 million for an<PAGE>
individual project ($100 million aggregate). The Company has obtained
bonding coverage in amounts up to $8.5 million for environmental
projects. However, the Company has experienced difficulties in prior
years in obtaining bonding coverage for environmental projects more than
this amount. However, some environmental projects either do not require
a bond or require a bond for less than the complete contract price of the
project value. The Company has obtained bonding coverage for
environmental projects more than $8.5 million as a result of personal
surety bonds or collateral furnished by Francis M. Williams, President of
the Company. Mr. Williams has no obligation to provide surety bonds,
collateral or otherwise to assist the Company in connection with bonding
coverage.
In addition to performance bond requirements, some jurisdictions in
the future may require the posting of substantial bonds or require
companies engaged in solid waste management and related activities to
provide other financial assurances covering the closure, post-closure
monitoring and corrective activities for certain solid waste management
facilities.
MARKETING
The Company, through its majority-owned subsidiary, TransCor Waste
Services, Inc., generally obtains solid waste collection contracts for
its services or for the operation of certain solid waste management
facilities through the process of competitive bidding, purchase orders,
or negotiations. The Company's marketing efforts include door-to-door
sales, monitoring trade journals and other industry sources for bid
solicitations by various entities, including government authorities and
related instrumentalities, and responding to such bid solicitations,
which may include requests for proposals ("RFPs") and requests for
qualifications ("RFQs"). The Company also attempts to be included on
lists of qualified bidders frequently contained in RFPs and RFQs. In
response to an RFP or RFQ, the soliciting entity requires a written
response within a specified period. Generally, in the case of an RFP, a
bidder submits a proposal detailing its qualifications, the services to
be provided, and the cost of the services to the soliciting entity; then,
such entity, based on its evaluation of the proposals submitted, awards
the contract to the successful bidder. In the case of an RFQ, a bidder
submits a response describing its experience and qualifications, the
soliciting entity then selects the bidder believed to be the most
qualified, and then negotiates all of the terms of the contract,
including the cost of the services. The Company's single largest solid
waste collection contract was derived through competitive bidding, and
the Company expects that future significant contracts will be obtained
through competitive bidding. The Company has also obtained customers
through recommendations and referrals from existing customers.
The Company's specialty contracting business results primarily from
customers for whom the Company has previously provided services, prior
customer references, and from direct marketing efforts. In particular,
the Company believes its national reputation as a leading demolition and
dismantling contractor has contributed significantly to its ability to
attract specialty service business.
The Company's specialty contracting subsidiaries direct their
marketing activities through regional offices in Tampa, Florida; Houston,<PAGE>
Texas; and Niagara Falls, New York. These offices are located in areas
with a high concentration of industrial facilities. The Company believes
that accurate bidding is crucial in securing new contracting projects and
completing them profitably. The Company uses computerized bidding
systems in conjunction with site visits to develop bids for contracting
projects. While bid price is an important factor in obtaining contracts,
potential clients also consider the reputation, experience, safety record
and financial strength of the bidders in awarding contracts.
CUSTOMERS
Customers for the Company's solid waste management services include
local and regional contractors, municipalities, institutions, other waste
haulers, and local businesses. The primary private customers for the
Company's specialty contracting services are Fortune 500 corporations
engaged in heavy manufacturing, such as chemical, petroleum,
petrochemical, paper, and steel companies as well as public utilities and
federal, state and local government agencies. For the year ended
December 31, 1995, 56 percent and 44 percent, respectively, of the
Company's gross revenue were derived from private and governmental
customers, respectively.
A substantial portion of the Company's gross revenue is derived from
services provided to federal, state and local government agencies
including the EPA. Government contracts are subject to legislation
mandating a balanced budget; delays in funding; lengthy review processes
for awarding contracts; delay or termination of contracts at the
convenience of the government; termination, reduction or modification of
contracts in the event of changes in the government's policies or because
of budgetary constraints. Furthermore, increased or unexpected costs
could result in losses or reduced profits under fixed-price government as
well as commercial contracts.
BACKLOG
As of December 31, 1995, the Company had a backlog of uncompleted
projects under contract aggregating approximately $95,661,000, (compared
to approximately $88,806,000 as of December 31, 1994) of which
approximately $35,882,000 is attributable to environmental and utility
contracting services, approximately $3,255,000 is attributable to
demolition and dismantling services, approximately $440,000 is
attributable to asbestos abatement services, approximately $10,244,000 is
attributable to site remediation services, and approximately $45,840,000
is attributable to solid waste management services. The Company
anticipates that it will recognize approximately $61,761,000 of revenues
from these projects by the end of 1996 with the remaining revenue to be
recognized through the year 2000.
COMPETITION
Although developments in the solid waste management industry have
resulted in the emergence of large private and public solid waste
management companies and in consolidating trends in the industry, the
solid waste management business is characterized by intense competition.
The Company believes that no single company has a dominant market share
of the solid waste management business in the United States or Florida.
Although competition varies by locality and type of services, the<PAGE>
Company's principal sources of competition are local and regional solid
waste management companies of varying size that primarily provide
collection or disposal services to customers in a limited geographic
area, large regional and national solid waste management companies that
operate over more extensive geographic areas and provide completely
integrated solid waste management services, own or operate disposal sites
and engage in various transfer and resource recovery activities, and
counties and municipalities that maintain their own solid waste
collection and disposal services for residents and businesses in the
locality. National companies that compete against the Company include,
among others, Waste Management, Inc., and Browning-Ferris Industries,
Inc.
The Company believes that the principal competitive factors in the
solid waste management industry are price, reputation, services,
managerial experience, financial assurance capability (particularly as it
relates to municipal contracts), and range of services offered.
The Company believes that its ability to offer a broad range of
specialty contracting services provides it with significant competitive
advantage. Nevertheless, the Company faces substantial competition from
national, regional and local competitors, many of which are well
established and have much greater marketing, financial, technological and
other resources than the Company. Furthermore, some of the Company's
competitors possess certain hazardous materials handling capabilities
that the Company does not possess, including engineering, laboratory and
off-site transportation and storage and disposal. However, it has been
the Company's experience that subcontractors are available to provide
these services.
The Company believes the principal competitive factors in the
specialty contracting services industry are safety, reputation, technical
proficiency, surety bonding capability, managerial experience, price, and
breadth of services offered.
INSURANCE COVERAGE
The Company, consistent with industry trends, has experienced
difficulties in obtaining adequate insurance coverage against liabilities
that may be incurred in connection with the conduct of certain aspects of
its specialty contracting services business. Such coverage is often a
prerequisite to obtaining government and commercial contracts. The
Company currently maintains comprehensive general liability insurance,
with total coverage of $16 million for any single occurrence and $18
million for aggregate claims relating to damage to persons or property.
These policies cover all activities of the Company and its subsidiaries
except for its asbestos-related activities and certain non-asbestos
related liabilities such as pollution liability damage (sudden or
gradual) caused by the discharge or release of any irritant or
contaminant. In addition, the Company has comprehensive general
liability coverage that covers, among other things, specific asbestos-
related risks up to $10 million. In addition, the Company has obtained a
$1 million per occurrence/$2 million aggregate blanket policy for
contractors pollution liabilities and can obtain additional coverage of
up to a total of $6 million is required on a project-by-project basis.<PAGE>
GOVERNMENT REGULATION
The Company is subject to an extensive and frequently evolving
statutory and regulatory framework of federal, state, and local
environmental, health, safety, and transportation authorities, which
framework imposes significant compliance burdens and risks upon the
Company. The Company believes it is in substantial compliance with all
material federal, state, and local laws governing its material business
operations. Nevertheless, amendments to existing statutes and
regulations, adoption of new statutes and regulations and the Company's
expansion into other jurisdictions and types of operations could result
not only in the additional risk of noncompliance, but also in the
increase in regulatory burden that could cause related increases in costs
and expenses.
Two of the statutes very important to the Company are the Resource
Conservation and Recovery Act of 1976, as amended, and the EPA's
implementing regulations of that statute (collectively, "RCRA"), and the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"). RCRA establishes a comprehensive framework
for state and federal regulation of hazardous waste management. It seeks
to prevent the release into the environment of hazardous wastes through
the development of solid waste management plans and the regulation of the
generation, transportation, treatment, storage and disposal of hazardous
wastes.
While RCRA was implemented to prevent the release of hazardous
wastes into the environment, CERCLA was designed to establish a national
strategy to remedy existing hazardous environmental conditions. CERCLA
establishes liability for clean up costs and environmental damages for
owners and operators of disposal sites, as well as for persons who
generate, transport or arrange for transportation of wastes to a
particular site. While CERCLA generally exempts responsible contractors
from liability arising from the release or threatened release to which
the contractor is responding, it can impose liability on a responsible
contractor for that contractor's negligent and grossly negligent acts.
On October 9, 1991, the EPA promulgated substantial revisions to its
existing RCRA Subtitle D implementing regulations. The revisions set
forth minimum national "open dump" criteria for publicly and privately
owned municipal solid waste landfills. They include location
restrictions, design and operating criteria, groundwater monitoring and
corrective action standards, closure and post closure care requirements,
and financial assistance criteria. Most revisions have become effective
October 9, 1993, and states have revised their own laws and regulations
to be consistent with the RCRA criteria. Some revisions (i.e.,
groundwater monitoring requirements) have been phased in over a five-year
period that began on October 9, 1991, and others relating to financial
responsibility became effective April 9, 1994.
Many states have enacted statutes similar to RCRA and CERCLA
regulating the handling of hazardous substances and wastes. The Company
could be subject to substantial liability under these statutes to private
parties and government entities for fines or penalties, in some instances
without any fault on the part of the Company, because of the mishandling
or release of any hazardous substances.<PAGE>
PERMITS AND LICENSES
Many states license such areas of the Company's operations as
asbestos abatement and general contracting. Licensing requires that
workers and supervisors receive training from EPA approved and state
certified organizations and pass required tests. The Company is
currently licensed to perform its services in 36 states. The Company
also operates in certain states that do not have a special asbestos
abatement or general contracting license requirement; however, these
states have adopted regulations regarding worker safety with which the
Company must comply.
The Company may need additional licenses to expand its operations.
Although there can be no assurance, based upon the level of training of
its employees and its experience, the Company currently believes that it
can obtain all such required licenses.
EMPLOYEES
At March 18, 1996, the Company had approximately 1,000 employees, of
which 8 were employed in executive capacities, 60 in professional
capacities, 97 in administrative capacities, 110 as field supervisors and
725 in field operations. A total of 35 of the Company's employees are
union members, covered by various collective bargaining agreements. The
Company has not experienced any strikes or work stoppages and considers
its relationship with its employees to be satisfactory.
The Company, through its subsidiaries, has implemented employee
safety programs that require each employee to complete a general training
and safety program. Training topics include approved work procedures and
instruction on personal safety and the use of protective equipment. In
addition, all employees engaged in asbestos abatement activities are
required to attend a minimum three- to four-day course approved by the
EPA and Occupational Safety and Health Administration, and all
supervisors of abatement projects are required to attend a 40-hour safety
course annually. Moreover, employees are issued detailed training
materials and are required to attend ongoing safety seminars. The
Company's subsidiaries also conduct job safety analysis in the job
bidding stage. Besides the precautions taken with respect to projects,
the Company takes additional measures to protect its asbestos and site
remediation workers, including providing them with additional protective
equipment and sponsoring periodic medical examinations.
Item 2. Properties
The Company owns its principal executive offices that are located in
approximately 20,600 square feet of office space at 1501 and 1502 Second
Avenue, East, Tampa, Florida 33605. The offices are subject to a
mortgage, securing indebtedness evidenced by a promissory note with an
outstanding principal amount at December 31, 1995, of $1,875,000. This
variable rate note matures on August 1, 1999, and currently bears
interest at 1.25 percent above the lender's prime rate.<PAGE>
The Company leases the following offices:
Annual
Location Lease Expiration Date Rental
----------------------- --------------------- -------
2609 Allen-Genoa Road
Pasadena, Texas Month-to-month $ 3,240
256 Third Street
Niagara Falls, New York Month-to-month $ 18,300
Item 3. Legal Proceedings
The Company is involved in various legal actions and claims arising
in the ordinary course of its business, none of which is expected to have
a material effect on the Company's financial position or results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
On October 2, 1995, the Board of Directors of the Company adopted an
amendment to the Company's restated Certificate of Incorporation that
effected a one-for-three reverse stock split of the Company's common
stock and Class B common stock. The amendment was approved on October
25, 1995, by the written consent of 61.5 percent of the combined voting
power of the Company's common stock and Class B common stock, and became
effective on January 11, 1996.<PAGE>
PART II
Item 5. Market for the Company's Common Equity and
Related Stockholder Matters
The Company's common stock has been traded on the New York Stock
Exchange (symbol "KVN") since March 30, 1990. From May 19, 1987, until
March 30, 1990, the Company's common stock traded in the over-the-counter
market and was quoted on NASDAQ's National Market System. The following
table sets forth for the periods indicated high and low sales prices of
the Company's common stock as reported by the New York Stock Exchange.
These prices do not give effect to the one-for-three reverse stock split
that became effective January 11, 1996.
1995 High Low
-------------------------- ----- ------
First Quarter . . . . . . 2 1 1/2
Second Quarter . . . . . 2 5/8 1 3/4
Third Quarter . . . . . . 6 1/4 2 3/8
Fourth Quarter . . . . . 3 3/8 2 1/8
1994 High Low
-------------------------- ----- ------
First Quarter . . . . . . 2 3/4 2 1/8
Second Quarter . . . . . 2 3/8 1 3/4
Third Quarter . . . . . . 2 1/8 1 1/2
Fourth Quarter . . . . . 1 7/8 1 3/8
On March 18, 1996, there were approximately 1,500 holders of record
of the common stock. Many of such holders are brokers and other
institutions holding shares in "street name" for more than one beneficial
owner.
Dividends
The payment by the Company of dividends, if any, in the future is
within the discretion of its Board of Directors and will depend upon the
Company's earnings, capital requirements (including working capital
needs), and financial condition, as well as other relevant factors.
Certain agreements between the Company and its lending institutions
prohibit the Company from paying cash dividends without the lenders'
consent. Other than a three and one-third cent per share of a common
stock cash dividend paid in July 1989, the Company has not paid any cash
dividends since its inception, and the Board of Directors does not plan
to declare or pay any cash dividends in the future.<PAGE>
Item 6. Selected Financial Data
During October 1995, the Board of Directors declared a one for three
reverse stock split of the Company's common stock and Class B common
stock. All share and per share information has been adjusted to reflect
the stock split on a retroactive basis.
During December 1991, the Company filed with the Securities and
Exchange Commission ("Commission") a registration statement for the
shares of common stock of Cumberland Holdings, Inc. ("Cumberland"), a
wholly-owned subsidiary that was a holding company for the Company's
surety operations, to spin-off Cumberland into a stand-alone, publicly-
held company. The registration statement became effective on February
10, 1992, and the spin-off was effected on October 1, 1992. The
historical balance sheet information presented on the following page has
been restated to present the surety operations as a discontinued
operation.<PAGE>
<TABLE>
HISTORICAL INCOME STATEMENT DATA:
<CAPTION>
Years ended December 31,
(In thousands, except per share data)
----------------------------------------------------
1991 1992 1993 1994 1995
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Gross revenue . . . . . . . . . $ 100,646 $87,442 $ 83,609 $96,755 $ 111,346
Net revenue . . . . . . . . . . 73,741 78,614 77,405 85,353 95,426
Operating income . . . . . . . 5,012 1,782 3,666 2,670 4,596
Litigation settlements (1) . . 296 (379) - - -
Income from continuing
operations before provision
for income taxes . . . . . . 4,216 99 3,196 1,533 2,833
Income from continuing
operations . . . . . . . . . 2,593 61 1,753 797 1,343
Income (loss) from discontinued
operations (2) . . . . . . . (271) 124 - - -
Net income . . . . . . . . . . 2,322 185 1,753 797 1,343
PER SHARE DATA:
Income from continuing
operations per share -
primary . . . . . . . . . . .57 - .39 .18 .30
Income (loss) from discontinued
operations per share -
primary . . . . . . . . . . (.06) .03 - - -
Net income per share -
primary . . . . . . . . . . .51 .03 .39 .18 .30
Weighted average number of
common shares outstanding -
primary . . . . . . . . . . 4,441 4,442 4,443 4,443 4,544
Income from continuing
operations per share -
fully diluted . . . . . . . .57 - .39 .18 .30
Income (loss) from discontinued
operations per share -
fully diluted . . . . . . . (.06) .03 - - -
Net income per share -
fully diluted . . . . . . . .51 .03 .39 .18 .30
Weighted average number of
common shares outstanding -
fully diluted . . . . . . . 4,441 4,442 4,474 4,449 4,544
Cash dividends per share . . . None None None None None
<FN>
<F1>
(1) Balances relate to the settlement of separate contract claims for work performed
in excess of the original contract amounts due to changes in conditions. Amounts
applied against the settlements included legal fees and other direct costs.
<F2>
(2) Balances relate to the Company's distribution of its surety services.
</FN>
/TABLE
<PAGE>
<TABLE>
HISTORICAL BALANCE SHEET DATA:
<CAPTION>
As of December 31,
(In thousands)
------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Current assets . . . . . . . $ 36,880 $33,068 $33,716 $36,200 $44,117
Working capital . . . . . . . 14,034 8,253 12,041 11,205 11,548
Total assets . . . . . . . . 70,712 68,381 70,192 72,689 93,629
Long-term debt . . . . . . . 23,680 21,206 19,454 17,032 26,540
Stockholders' equity . . . . 22,527 20,783 23,102 24,514 26,381
</TABLE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Introduction
The Company conducts its business in two segments: specialty
contracting services and solid waste management services. The specialty
contracting services segment provides comprehensive services including
facilities demolition and dismantling, mobile incineration, excavation,
removal and disposal of contaminated soil, groundwater treatment and
asbestos abatement. The solid waste management services segment offers
storage, collection, transfer, transportation, resource recovery and
disposal of non-hazardous waste.
During March 1993, the initial public offering of the Company's
subsidiary, TransCor, became effective. The offering consisted of
1,000,000 shares of TransCor's common stock, at a price of $5.00 per
share. This offering resulted in the Company owning 74 percent of
TransCor.<PAGE>
Results of Operations
The following table sets forth for the periods indicated (i) the
percentage of net revenue represented by certain items in the financial
statements of the Company, and (ii) the percentage change in the dollar
amount of such items from period to period.
<TABLE>
<CAPTION>
Percentage
Percentage of Net Revenue Increase (Decrease)
Year Ended December 31, Year ended December 31,
--------------------------- -----------------------
<C> <C> <C> <C> <C>
<S> 1995 vs. 1994 vs.
1993 1994 1995 1994 1993
------- ------- ------- ---------- ----------
Gross revenue . . . . . . . . 108.0% 113.4% 116.7% 15.1% 15.7%
Outside services . . . . . . 8.0% 13.4% 16.7% 39.6% 83.8%
------- ------- -------
Net revenue . . . . . . . . . 100.0% 100.0% 100.0% 11.8% 10.3%
Cost of revenue earned . . . 82.6% 85.8% 81.2% 5.8% 14.5%
------- ------- -------
Gross profit . . . . . . . . 17.4% 14.2% 18.8% 48.2% (9.9%)
Selling, general and
administrative expense . . 12.6% 11.1% 14.0% 41.5% (3.4%)
------- ------- -------
Operating income . . . . . . 4.7% 3.1% 4.8% 84.8% (27.2%)
Non-operating gain . . . . . 1.1% 0.0% 0.0% 0.0% (100.0%)
Minority interest in net
income of subsidiary . . . (0.3%) 0.0% (.03%) 469.6% 0.0%
Interest expense, net . . . . (1.4%) (1.3%) (1.5%) 31.6% 1.3%
------- ------- -------
Income before provision for
income taxes . . . . . . . 4.1% 1.8% 3.0% 84.8% (52.0%)
Provision for income taxes . 1.8% 0.9% 1.6%
------- ------- -------
Net income . . . . . . . . 2.3% 0.9% 1.4% 68.5% (54.5%)
======= ======= =======
</TABLE>
Year Ended December 31, 1995, Compared to Year Ended December 31, 1994
During the year ended December 31, 1995, net revenue increased by 12
percent to $95,426,000 from $85,353,000 for the year ended December 31,
1994. The increase in revenue associated with the Company's utility
contracting services ($14,329,000 increase in net revenue) is primarily
due to the Company's change in focus towards non-environmental projects.
The increase in revenue associated with the Company's solid waste
management services ($10,887,000 increase in net revenue) is primarily
due to the commencement of two municipal contracts during October 1995 to
provide residential collection services. The decrease in revenue
associated with the Company's industrial demolition services ($11,911,000
decrease in net revenue) is due to the completion of a major contract
during 1994. The decrease in revenue associated with the Company's
asbestos abatement services (1,751,000 decrease in net revenue) is due to
the Company deemphasizing these services and only performing this work in
conjunction with the Company's other environmental demolition activities.
The impact of price increases on net revenue is less than one percent.<PAGE>
Outside services, which primarily consist of payments to
subcontractors, increased as a percentage of net revenue from 13 percent
during the year ended December 31, 1994, to 17 percent during 1995. The
Company will use the services of a subcontractor when it determines that
an economic opportunity exists regarding internally providing the
services. The Company utilized the services of subcontractors to a
greater extent during 1995 than 1994 in order to meet established
minority requirements on certain municipal contracts.
Cost of revenue earned increased to $77,466,000 for the year ended
December 31, 1995, from $73,235,000 for the comparable period of 1994.
As a result, gross profit during the year ended December 31, 1995,
increased to $17,960,000 (19 percent of net revenue) from $12,117,000 (14
percent of net revenue) in 1994. The increase in the dollar amount and
percentage of gross profit primarily is associated with the growth of the
Company's utility contracting ($2,963,000 increase in gross profit) and
solid waste management services ($3,751,000 increase in gross profit).
The dollar and percentage increase in gross profit from solid waste
management services is directly related to the increase in industrial and
commercial solid waste services, which have historically had higher
profit margins than the Company's other solid waste management
operations. This increase offsets certain decreases in the Company's
industrial demolition services ($959,000 decrease in gross profit) and
asbestos abatement services ($228,000 decrease in gross profit).
During 1995, selling, general and administrative expenses increased
to $13,364,000 (14 percent of net revenue) from $9,447,000 (11 percent of
net revenue) for the year ended December 31, 1994. The dollar increase
in selling, general, and administrative expenses primarily is
attributable to increased overhead costs, such as office salaries and
marketing costs, associated with higher levels of operations. The
percentage increase in selling, general and administrative expenses
primarily is associated with the growth of the Company's solid waste
management operations, which has an overhead structure equal to 16
percent of its net revenue. These services have historically operated
with a higher overhead structure than the Company's specialty contracting
operations, which has an overhead structure equal to 13 percent of its
net revenue.
As a result of the foregoing, operating income increased to
$4,596,000 (5 percent of net revenue) during the year ended December 31,
1995, from $2,760,000 (3 percent of net revenue) during the same period
in 1994.
Minority interest in net income of the TransCor subsidiary was
$345,000 for the year ended December 31, 1995, compared to $61,000 for
the year ended December 31, 1994. The minority interest in net income of
such subsidiary reflects approximately 26 percent of TransCor's earnings
as a result of the March 25, 1993, initial public offering of TransCor's
common stock. The increase in TransCor's earnings between years is
attributable to the higher profit margins earned on certain solid waste
management services.<PAGE>
Net interest expense increased to $1,418,000 from $1,077,000, which
corresponds with the increase in the interest-bearing debt outstanding
between periods.
The Company's effective tax rate was 52.6 percent for the year ended
December 31, 1995, compared to a tax rate of 48.0 percent for the year
ended December 31, 1994. The increase in the effective tax rate was
primarily due to higher state income taxes and additional taxes on the
income of TransCor.
As a result of the foregoing, net income for the year ended December
31, 1995, was $1,343,000 (1 percent of net revenue) compared to a net
income of $797,000 (less than 1 percent of net revenue) during the same
period in 1994.
Year Ended December 31, 1994, Compared to Year Ended December 31, 1993
During the year ended December 31, 1994, net revenue increased by 10
percent to $85,353,000 from $77,405,000 for the year ended December 31,
1993. The increase primarily is due to the growth of the Company's
utility contracting services ($10,700,000 increase in net revenue) and to
the continued growth of the Company's solid waste management services
($4,098,000 increase in net revenue). This increase offsets certain
decreases in the Company's industrial demolition services ($2,789,000
decrease in net revenue) and hazardous waste services ($2,729,000
decrease in net revenue).
Outside services, which primarily consist of payments to
subcontractors, increased as a percentage of net revenue from 8 percent
during the year ended December 31, 1993, to 13 percent during 1994. The
Company will use the services of a subcontractor when it determines that
an economic opportunity exists with regards to internally providing the
services.
Cost of revenue earned increased to $73,235,000 for the year ended
December 31, 1994, from $63,959,000 for the comparable period of 1993.
As a result, gross profit during the year ended December 31, 1994,
decreased to $12,117,000 (14 percent of net revenue) from $13,496,000 (17
percent of net revenue) in 1993. The decrease in gross profit primarily
is associated with losses on two utility contracting projects during the
fourth quarter of 1994 that failed to perform to the Company's original
projections and lower profit margins earned on certain solid waste
management services. The percentage decrease in gross profit from solid
waste management services is directly related to the increase in
residential collection operations, which have historically had lower
profit margins due to higher labor costs, than the Company's other solid
waste management operations.
During 1994, selling, general and administrative expenses decreased
to $9,447,000 (11 percent of net revenue) from $9,780,000 (13 percent of
net revenue) for the year ended December 31, 1993. The dollar and
percentage decreases were primarily a result of consolidation of certain
field offices and the corresponding reduction of the Company's
administrative functions.<PAGE>
As a result of the foregoing, operating income decreased to
$2,760,000 (3 percent of net revenue) during the year ended December 31,
1994, from $3,666,000 (5 percent of net revenue) during the same period
in 1993.
Minority interest in net income of the TransCor subsidiary was
$61,000 for the year ended December 31, 1994, compared to $287,000 for
the year ended December 31, 1993. The minority interest in net income of
such subsidiary reflects approximately 26 percent of TransCor's earnings
as a result of the March 25, 1993, initial public offering of TransCor's
common stock. The decrease in TransCor's earnings between years is
attributable to the lower profit margins earned on certain solid waste
management services and to the effects of a fire at its Jacksonville
facility.
Net interest expense increased slightly to $1,077,000 from
$1,063,000. The average amount of interest-bearing debt outstanding was
consistent between periods.
The Company's effective tax rate was 48.0 percent for the year ended
December 31, 1994, compared to a tax rate of 45.2 percent for the year
ended December 31, 1993. The increase in the effective tax rate was
primarily due to higher state income taxes and additional taxes on the
income of TransCor.
As a result of the foregoing, net income for the year ended December
31, 1994, was $797,000 (less than 1 percent of net revenue) compared to a
net income of $1,753,000 (2 percent of net revenue) during the same
period in 1993.
Liquidity and Capital Resources
Cash provided by operating activities was $2,145,000, $3,884,000,
and $5,793,000 in 1993, 1994, and 1995, respectively. For 1995, the
increase in cash provided by operating activities is due primarily to the
increase in net income, plus the increase in depreciation and
amortization, net of changes in certain operating assets and liabilities
(primarily costs and estimated earnings in excess of billings on
uncompleted contracts, accounts payable, and accrued expenses). For
1994, the increase in cash provided by operating activities is due
primarily to cash provided by net income plus the effect of depreciation
and amortization, net of changes in certain operating assets and
liabilities (primarily accounts receivable, accounts payable, and accrued
expenses). For 1993, the cash provided by operating activities of
$2,145,000 is due primarily to cash provided by net income plus the
effect of depreciation and amortization, net of changes in certain
operating assets and liabilities (primarily costs and estimated earnings
on uncompleted contracts, accounts receivable, and accounts payable).
The Company had cash requirements related to capital expenditures of
$4,574,000, $5,804,000, and $16,277,000 in 1993, 1994, and 1995,
respectively. These expenditures were primarily related to the
acquisition of equipment associated with the Company's solid waste
management and utility contracting operations. During 1995, the Company
acquired approximately $7,000,000 of equipment for the commencement of
two municipal solid waste management contracts. Future capital
expenditures will be financed by available cash resources, cash flow from
operations and available credit resources, as needed.<PAGE>
The Company is subject to a variety of restrictive covenants under
various debt agreements with one of its institutional lenders. In 1995
the Company failed to meet the consolidated tangible net worth,
consolidated debt service coverage ratio and net income requirement with
regards to its bank debt. As of December 31, 1995, the Company obtained
waivers for these covenants and may be required to obtain similar waivers
for certain covenants in 1996. The Company has obtained the personal
guarantee of Mr. Francis M. Williams should waivers not be obtained
during 1996 and the lender accelerates the maturities of the Revolving
Term Bank Line of Credit, Bank Note Payable, and Mortgage Note on the
corporate office. This guarantee provides that Mr. Williams will lend
the necessary funds to the Company, or arrange for the Company to borrow
a similar amount under similar terms and maturities so that the Company
is not required to pay any principal payments during 1996 more than the
regularly scheduled maturities. Any inability to achieve future
compliance with the loan covenants could affect the Company's access to
further borrowings or require it to secure additional equity by other
means.
The Company's ratio of total debt to total equity was 1.83 : 1.00
and 2.41 : 1.00 at December 31, 1994 and 1995, respectively. The
increase in total debt is primarily due to an increase in equipment loans
associated with the capital expenditures required for the commencement of
two municipal solid waste management contracts.
As of December 31, 1995, the Company has borrowed $3,293,000 of its
revolving term bank line of credit, with $1,707,000 available for future
borrowings. Current financial resources and anticipated funds from
operations are expected to be adequate to meet cash requirements in the
year ahead and the foreseeable future. At December 31, 1995, the Company
had cash of $1,160,000.
During the years ended December 31, 1994 and 1995, the Company's
average contract and trade receivables were outstanding for 80 and 71
days, respectively. Both averages were based on fourth quarter gross
revenue annualized and compared to year end contract and trade
receivables. The reduction in the number of days outstanding is a result
of the Company's collection efforts in an attempt to control cash flow.
The Company anticipates sustaining this rate of collection for the year
ended December 31, 1996. Management believes that the number of days
outstanding for its receivables approximates industry norms. Part of the
Company's contracting operations is subcontracted, and any delay in
collections of receivables relating to primary contracts will generally
result in a delay of payment to subcontractors.
Mr. Francis M. Williams is the sole shareholder of the corporate
general partner and the sole limited partner of Sunshadow Apartments,
Ltd., and Summerbreeze Apartments, Ltd., two Florida real estate limited
partnerships (collectively, the "Apartments"). On June 30, 1993, the
Company, Citicorp Real Estate, Inc. ("Citicorp"), the Apartments, and Mr.
Williams entered into a settlement and note renewal agreement whereby the
Chapter 11 bankruptcy filings with respect to the Apartments were
voluntarily dismissed. In accordance with the terms of the settlement
agreement, $3,638,696 of the accounts receivable - affiliates balance
recorded by the Company was converted into a note receivable. The note
receivable originally accrued interest at prime plus 1 3/8 percent,
increasing to prime plus 2 percent on July 1, 1995, with principal and<PAGE>
interest payable in monthly installments through December 31, 1998, and
is guaranteed by Mr. Williams. Amounts due from the partnerships at
December 31, 1994 and 1995, are approximately $3,588,000 and $3,851,000,
respectively.
At December 31, 1994 and 1995, $4,937,000 and $5,301,000,
respectively, of the contract and trade - affiliates balance is due from
corporate affiliates of the Company's president. The affiliated
receivables relate to contract services performed and are guaranteed by
Mr. Williams.
During March 1993, the Company's solid waste management subsidiary,
TransCor Waste Services, Inc., completed an initial public offering of
1,000,000 shares, at a public offering price of $5.00 per share, of its
common stock, thereby decreasing the Company's percentage of ownership of
such subsidiary to approximately 74 percent.
Historically, the Company has obtained bonding coverage in amounts
up to $8.5 million for environmental projects. However, the Company has
experienced difficulties in obtaining bonding coverage for environmental
projects more than this amount. Although each project has its own
distinct and separate bond requirements, the Company may be unable to bid
on projects competitively that require a bond more than $8.5 million.
At December 31, 1995, the Company had no material commitments for
capital expenditures.
See Note 18 of Notes to Consolidated Financial Statements for the
Company's business segment information.
Effects of Change in Method of Accounting
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 ("SFAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed Of," which is effective for fiscal years beginning after
December 15, 1995. This statement establishes financial accounting and
reporting standards for the effects of potential impairment and what
disclosures are necessary in the financial statements. Effective January
1, 1995, the Company adopted SFAS No. 121. There was no cumulative
effect of that accounting change on operations, nor did the change affect
income for 1995.
Effect of Inflation
Inflation has not had, and is not expected to have, a material
impact upon the Company's operations.<PAGE>
Quarterly Results of Operations
The following is a summary of the quarterly results of operations
for the years ended December 31, 1994 and 1995. The per share data has
been adjusted to reflect the reverse stock split on a retroactive basis.
March 31 June 30 Sept. 30 Dec. 31
-------- -------- --------- --------
(In thousands, except per share data)
Year ended
December 31, 1994:
Gross revenue . . . . . . . . $20,810 $ 26,801 $ 24,678 $24,466
Net revenue . . . . . . . . . 18,837 23,467 22,022 21,027
Gross profit . . . . . . . . 3,113 3,987 3,392 1,625
Net income (loss) . . . . . . 377 519 347 (445)
Per share data:
Income (loss) per share . $ .09 $ .12 $ .09 $ (.09)
Year ended
December 31, 1995:
Gross revenue . . . . . . . . $25,750 $ 25,468 $ 29,808 $30,320
Net revenue . . . . . . . . . 21,045 22,893 25,171 26,317
Gross profit . . . . . . . . 4,335 4,036 5,178 4,411
Net income (loss) . . . . . . 663 224 562 (106)
Per share data:
Income (loss) per share . $ .15 $ .06 $ .12 $ (.03)<PAGE>
Item 8. Financial Statements and Supplementary Data
KIMMINS CORP.
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Page
----
Report of Independent Certified Public Accountants . . . . . . . . . 17
Consolidated balance sheets at December 31, 1994 and 1995 . . . . . . 18
Consolidated statements of operations for each of the three years
in the period ended December 31, 1995 . . . . . . . . . . . . . . . . 20
Consolidated statements of stockholders' equity for each of the
three years in the period ended December 31, 1995 . . . . . . . . . . 21
Consolidated statements of cash flows for each of the three years
in the period ended December 31, 1995 . . . . . . . . . . . . . . . . 22
Notes to consolidated financial statements . . . . . . . . . . . . . 24
Financial statement schedule:
Schedule II - Valuation and qualifying accounts . . . . . . . . . S-1
All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedule or
because the information required is included in the financial statements
and notes thereto.<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Kimmins Corp.
We have audited the accompanying consolidated balance sheets of
Kimmins Corp. (f/k/a/ Kimmins Environmental Service Corp.) as of December
31, 1994 and 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 1995. Our audits also included the financial
statement schedule listed in the index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Kimmins Corp. at December 31, 1994 and 1995, and
the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
ERNST & YOUNG LLP
Tampa, Florida
March 8, 1996<PAGE>
KIMMINS CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
---------------------------
1994 1995
------------- -------------
Current assets:
Cash . . . . . . . . . . . . . . . . . $ 479,106 $ 1,160,463
Accounts receivable:
Contract and trade . . . . . . . . . 22,081,973 22,152,197
Other receivables - affiliates . . . 1,464,369 1,903,832
Note receivable - affiliate . . . . . 54,167 56,667
Costs and estimated earnings in excess
of billings on uncompleted
contracts . . . . . . . . . . . . . 10,166,227 15,378,178
Income tax refund receivable . . . . . 679,538 1,050,625
Deferred income tax . . . . . . . . . - 742,130
Other current assets . . . . . . . . . 1,274,469 1,673,100
------------- -------------
Total current assets . . . . . . . . 36,199,849 44,117,192
------------- -------------
Property and equipment, net . . . . . . . 26,815,429 37,592,661
Intangible assets . . . . . . . . . . . . - 785,175
Accounts receivable - affiliates . . . . 1,349,058 1,450,716
Note receivable - affiliate . . . . . . . 3,533,696 3,794,060
Term note from affiliate (including
accrued interest of $51,983 and
$506,755 at December 31, 1994 and
1995, respectively) . . . . . . . . . 4,343,032 4,797,804
Other assets . . . . . . . . . . . . . . 447,716 1,090,942
------------- -------------
$ 72,688,780 $ 93,628,550
============= =============
See accompanying notes.<PAGE>
KIMMINS CORP.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
---------------------------
1994 1995
------------- -------------
Current liabilities:
Accounts payable - trade . . . . . . . $ 13,303,408 $ 17,358,270
Deferred income taxes . . . . . . . . 73,708 -
Accrued expenses . . . . . . . . . . . 3,473,775 7,049,132
Billings in excess of costs and
estimated earnings on
uncompleted contracts . . . . . . . 1,375,548 606,614
Current portion of long-term debt . . 6,168,006 7,074,857
Current portion of Employee Stock
Ownership Plan Trust debt . . . . . 600,000 480,000
------------- -------------
Total current liabilities . . . . . 24,994,445 32,568,873
------------- -------------
Long-term debt . . . . . . . . . . . . . 14,632,115 24,619,969
Employee Stock Ownership
Plan Trust debt . . . . . . . . . . . 2,400,000 1,920,000
Deferred income taxes . . . . . . . . . . 2,914,597 4,559,531
Minority interest in subsidiary . . . . . 3,233,421 3,578,741
Commitments and contingencies (Note 15) . - -
Stockholders' equity:
Preferred stock, $.001 par value;
1,000,000 shares authorized, none
issued and outstanding . . . . . . . - -
Common stock, $.001 par value;
32,500,000 shares authorized; shares
issued and outstanding 4,442,997 in
1994 and 4,447,397 in 1995 . . . . . 4,443 4,447
Class B common stock, $.001 par value;
10,000,000 shares authorized,
2,291,569 shares issued and
outstanding . . . . . . . . . . . . 2,292 2,292
Capital in excess of par value . . . . 18,710,378 18,730,173
Retained earnings . . . . . . . . . . 8,569,023 9,911,606
Unearned employee compensation from
Employee Stock Ownership (2,771,934) (2,267,082)
Plan Trust . . . . . . . . . . . . . ------------- -------------
Total stockholders' equity . . . . . 24,514,202 26,381,436
------------- -------------
$ 72,688,780 $ 93,628,550
============= =============
See accompanying notes.<PAGE>
KIMMINS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Revenue:
Gross revenue . . . . . . $83,608,764 $ 96,755,001 $111,346,075
Outside services, at cost (6,203,454) (11,402,286) (15,919,816)
------------ ------------ ------------
Net revenue . . . . . . . 77,405,310 85,352,715 95,426,259
Costs and expenses:
Cost of revenue earned . . 63,959,362 73,235,439 77,465,818
Selling, general and
administrative
expenses . . . . . . . . 9,779,815 9,447,064 13,364,168
------------ ------------ ------------
Operating income . . . . . . 3,666,133 2,670,212 4,596,273
Non-operating gain relating
to the public offering of
subsidiary . . . . . . . . 879,797 - -
Minority interest in net
income of subsidiary . . . (286,519) (60,624) (345,320)
Interest expense (net of
interest income from
affiliates of approximately
$848,000, $1,060,000, and
$1,005,000 for the years
ended December 31, 1993,
1994, and 1995,
respectively) . . . . . . (1,063,201) (1,076,911) (1,417,802)
------------ ------------ ------------
Income before provision for
income taxes . . . . . . . 3,196,210 1,532,677 2,833,151
Provision for income taxes:
Current . . . . . . . . . 360,107 650,788 661,472
Deferred . . . . . . . . . 1,083,440 84,897 829,096
------------ ------------ ------------
1,443,547 735,685 1,490,568
------------ ------------ ------------
Net income . . . . . . . . . $ 1,752,663 $ 796,992 $ 1,342,583
============ ============ ============
PER SHARE DATA:
Income per share . . . . . $ .39 $ .18 $ .30
============ ============ ============
Weighted average number of
shares outstanding used
in computation . . . . . 4,442,997 4,442,997 4,544,180
============ ============ ============
See accompanying notes.<PAGE>
KIMMINS CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1994, AND 1995
<TABLE>
<CAPTION>
Unearned
Employee
Compensation
from
Class B Capital Employee
Common Stock Common Stock in Stock Total
-------------------- ------------------- Excess of Retained Ownership Stockholder's
Shares Amount Shares Amount Par Value Earnings Plan Trust Equity
----------- -------- ----------- ------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1993 . 13,328,992 $13,329 6,874,706 $6,875 $18,696,909 $6,019,368 $ (3,953,159) $ 20,783,322
Effect of reverse
stock split . . (8,885,995) (8,886) (4,583,137) (4,583) 13,469 - - -
Employee compensation
from Employee Stock
Ownership Trust . - - - - - - 565,568 565,568
Net income . . . . . - - - - - 1,752,663 - 1,752,663
----------- -------- ----------- ------- ----------- ---------- ------------- -------------
Balance at
December 31, 1993 4,442,997 4,443 2,291,569 2,292 18,710,378 7,772,031 (3,387,591) 23,101,553
Employee compensation
from Employee Stock
Ownership Trust . - - - - - - 615,657 615,657
Net income . . . . . - - - - - 796,992 - 796,992
----------- -------- ----------- ------- ----------- ---------- ------------- -------------
Balance at
December 31, 1994 4,442,997 4,443 2,291,569 2,292 18,710,378 8,569,023 (2,771,934) 24,514,202
Stock options 4,400 4 - - 19,795 - - 9,799
exercised . . .
Employee compensation
from Employee Stock
Ownership Trust . - - - - - - 504,852 504,852
Net income . . . . . - - - - - 1,342,583 - 1,342,583
----------- -------- ----------- ------- ----------- ---------- ------------- -------------
Balance at
December 31, 1995 4,447,397 $ 4,447 2,291,569 $2,292 $18,730,173 $9,911,606 $ (2,267,082) $ 26,381,436
=========== ======== =========== ======= =========== ========== ============= =============
</TABLE>
See accompanying notes.<PAGE>
KIMMINS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Cash flows from operating
activities:
Net income . . . . . . . . $ 1,752,663 $ 796,992 $ 1,342,583
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization . . . 3,681,120 3,890,325 4,104,383
Provision for
uncollectible
accounts
receivable . . . . 961,325 495,375 404,455
Minority interest in
income of
subsidiary . . . . 286,519 60,624 345,320
(Gain) loss on
disposal of
property and
equipment . . . . . 6,940 407,325 (241,034)
Accrued interest on
term note/surplus
debenture . . . . . (117,361) 65,378 (454,772)
Deferred income taxes 1,083,440 84,897 829,096
Unearned employee
compensation from
Employee Stock
Ownership Plan
Trust . . . . . . . 565,568 615,657 504,852
Gain from sale of
subsidiary's common
stock . . . . . . . (879,797) - -
See accompanying notes.<PAGE>
KIMMINS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(continued)
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Changes in operating
assets and
liabilities:
Accounts
receivable . . 3,541,902 (4,518,539) (1,278,664)
Costs and estimated
earnings in
excess of
billings on
uncompleted
contracts . . . (4,837,773) (388,478) (5,211,951)
Income tax refund
receivable . . . (606,003) 253,963 (371,087)
Other assets . . . (433,785) 32,788 (1,041,857)
Accounts payable . (2,073,920) 823,160 4,054,862
Accrued expenses . (379,563) 920,094 3,575,357
Billings in excess
of costs and
estimated
earnings on
uncompleted
contracts . . . (405,858) 344,836 (768,934)
------------ ------------ ------------
Total adjustments . 392,754 3,087,405 4,450,026
------------ ------------ ------------
Net cash provided by
operating activities . . . 2,145,417 3,884,397 5,792,609
------------ ------------ ------------
See accompanying notes.<PAGE>
KIMMINS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(continued)
Years ended December 31,
---------------------------------------
1993 1994 1995
------------ ------------ ----------
Cash flows from investing
activities:
Capital expenditures
including $2,267,000 of
business acquisitions (16,277,379)
during 1995 . . . . . . (4,574,263) (5,803,781)
Proceeds from sale of
property and 851,623
equipment . . . . . . . 318,100 1,017,482 ------------
------------ ------------
Net cash used by investing
activities . . . . . . . . (4,256,163) (4,786,299) (15,425,756)
------------ ------------ ------------
Cash flows from financing
activities:
Proceeds from long-term
debt . . . . . . . . 7,094,085 16,604,165 19,611,436
Repayments of long-term
debt . . . . . . . . (8,447,818) (17,153,585) (8,716,731)
Repayments of Employee
Stock Ownership Plan (600,000) (600,000)
Trust debt . . . . . (550,000)
Proceeds from
subsidiary's issuance
of its common stock . 3,766,075 - -
Proceeds from stock
options . . . . . . . - - 19,799
------------ ------------ ------------
Net cash provided (used) by
financing activities . . . 1,862,342 (1,149,420) 10,314,504
------------ ------------ ------------
Net increase (decrease)
in cash . . . . . . . . . (248,404) (2,051,322) 681,357
Cash, beginning of year . . . 2,778,832 2,530,428 479,106
------------ ------------ ------------
Cash, end of year . . . . . . $ 2,530,428 $ 479,106 $ 1,160,463
============ ============ ============
See accompanying notes.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
Organization - Kimmins Corp. (f/k/a Kimmins Environmental Service
Corp.) ("Kimmins") and its subsidiaries (collectively, the "Company") is
a solid waste management and specialty contracting company that provides
a full range of solid waste handling, demolition, and project-oriented
services. The Company provides specialty contracting services including
infrastructure development, underground construction, roadwork, site
remediation services such as mobile incineration; excavation, removal and
disposal of contaminated soil; facilities demolition and dismantling; and
asbestos abatement.
Reverse stock split - During October 1995, the Board of Directors
declared a one-for-three reverse stock split of the Company's common
stock and Class B common stock. All share and per share information in
the consolidated financial statements has been adjusted to reflect the
reverse stock split on a retroactive basis.
Principles of consolidation - The consolidated financial statements
include the accounts of Kimmins and its subsidiaries, including TransCor
Waste Services, Inc. ("TransCor"), a 74 percent owned subsidiary after
March 25, 1993 (see Note 2). All material intercompany transactions have
been eliminated.
Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Intangible assets - Intangible assets consist principally of the
excess of costs over fair market value of the net assets of the acquired
solid waste management business, which are being amortized on a straight-
line basis over twenty years, and customer contracts, which are being
amortized on a straight-line basis over five years. Accumulated
amortization was $66,825 at December 31, 1995 (none during 1994).
Income taxes - Income taxes have been provided using the liability
method in accordance with Financial Accounting Standards Board ("FASB")
Statement No. 109, "Accounting for Income Taxes."<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
(continued)
Revenue recognition - Contracts generally range from 6 to 18 months
in duration, and earnings from contracting operations (including
contracts with affiliates) are reported under the percentage-of-
completion method for financial statement purposes. The estimated
earnings for each contract reflected in the accompanying financial
statements represent the percentage of estimated total earnings that
costs incurred to date bear to estimated total costs, based on the
Company's current estimates. With respect to contracts that extend over
one or more accounting periods, revisions in costs and earnings estimates
are reflected in the period the revisions become known. When current
estimates of total contract costs indicate a loss, provision is made for
the entire estimated loss. Revenue from claims against owners and
proceeds from negotiated settlements are recognized when realization is
probable and the amount can be reliably estimated. Outside services
represent subcontractor costs for which the Company is typically
reimbursed on a dollar-for-dollar basis.
Fees arising from services other than contracting activities are
recognized when the negotiated services are provided.
Stock based compensation - The Company grants stock options for a
fixed number of shares to employees with an exercise price equal to the
fair value of the shares at the date of grant. The Company accounts for
stock option grants in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No.
25"), and, accordingly, recognizes no compensation expense for the stock
option grants.
Earnings per share - Earnings per common share are computed based on
the weighted average number of shares outstanding. Any shares of Class B
common stock that are eligible for conversion (none for 1993, 1994, and
1995) would be included in the computation of earnings per share. The
effect of common stock equivalents is not material.
Statements of cash flows -
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Cash paid:
Interest . . . . . . $ 1,881,000 $ 2,007,000 $ 2,423,000
Income taxes . . . . $ 642,000 $ 499,000 $ 1,453,000<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
(continued)
Accounting standard - In March 1995, FASB issued Statement No. 121
("SFAS No. 121"), "Accounting for the Impairment of Long-Lived Assets and
for Long-Assets to be Disposed Of," which requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undisclosed cash flows estimated to be
generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets that
are expected to be disposed of. Effective January 1, 1995, the Company
adopted SFAS No. 121. There was no cumulative effect of that accounting
change on operations, nor did the change affect income for 1995.
In October 1995, the FASB issued Statement No. 123, ("Statement No.
123") "Accounting and Disclosure of Stock-Based Compensation," which
encourages but does not require companies to recognize stock awards based
on their fair value at the date of grant. The Company currently follows,
and expects to follow, the provisions of APB No. 25 and related
interpretations in accounting for its employee stock options. Under APB
No. 25, because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of
grant, no compensation expense is recognized. Although the Company is
permitted to continue to follow the provisions of APB No. 25, under
Statement No. 123, certain pro forma disclosure will be required
beginning in 1996 as if the Company had accounted for its stock options
under the Statement No. 123 fair value method.
2. Sale of common stock of subsidiary and business acquisition
On March 25, 1993, the initial public offering of the subsidiary,
TransCor, became effective. The offering consisted of 1,000,000 shares
of TransCor's common stock at $5 per share. The net proceeds from the
stock offering were received on April 2, 1993. The Company's 1993
statement of operations includes a gain of $879,797 resulting from this
transaction. In connection with this offering, TransCor issued a
convertible subordinated term note to Kimmins, which is eliminated in
consolidation, that may be converted into 400,652 shares of TransCor's
common stock.
On March 31, 1995, Kimmins Recycling Corp., a wholly-owned subsidiary
of TransCor acquired certain assets from County Sanitation, Inc., for
$2,267,000 relating to its solid waste management operations. This
acquisition has been accounted for under the purchase method of
accounting and, accordingly, the purchase price has been allocated to the
assets acquired (approximately $1,415,000) based on the estimated fair
values at the date of acquisition. The purchase price associated with
the acquisition exceeded the net assets acquired by approximately
$852,000, which was assigned to intangible assets, including goodwill.
The operating results associated with this business acquisition are
included in the Company's consolidated results of operations from April
1, 1995, to December 31, 1995.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Sale of common stock of subsidiary and business acquisition
(continued)
The pro forma unaudited results of operations for the years ended
December 31, 1994 and 1995, assuming this acquisition had been
consummated as of January 1, 1994, are as follows:
Year ended December 31,
---------------------------
1994 1995
------------- -------------
Revenue . . . . . . . . . . . . . . $ 100,475,000 $112,276,000
Net income . . . . . . . . . . . . . $ 817,000 $ 1,348,000
Net income per common share . . . . $ .18 $ .30
3. Related party transactions
During 1993, 1994, and 1995, the Company paid landfill fees of
approximately $288,000, $28,000, and $88,000, respectively, to a company
that is primarily owned by the brother of the Company's president. The
amounts paid approximated the fair market rate for the type of services
involved.
The Company's President and majority stockholder also controls
Cumberland Holdings, Inc. ("CHI"), a property and casualty insurance
company that provides insurance for specialty sureties and performance
and payment bonds for contractors. The Company has obtained through CHI
performance and payment bonds in connection with certain of its contracts
and projects. The fees that the Company paid for these services for the
years ended December 31, 1993, 1994 and 1995, were approximately
$116,000, $14,000 and $5,000, respectively (see Footnote 7 of the Notes
to the Consolidated Financial Statements).<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Accounts receivable
December 31,
---------------------------
1994 1995
------------- -------------
Contract and trade:
Billed contract receivables:
Completed and uncompleted
contracts . . . . . . . . . $ 12,241,873 $ 12,919,805
Retainage . . . . . . . . . . . 5,407,372 3,916,769
Unbilled contract receivables . . - 805,500
Trade receivables . . . . . . . 5,095,725 4,907,334
------------- -------------
22,744,970 22,549,408
Less allowance for doubtful
accounts . . . . . . . . . . . . (662,997) (397,211)
------------ -------------
$ 22,081,973 $ 22,152,197
============= =============
Contract and trade - affiliates:
Billed contract receivables . . . $ 1,349,058 $ 1,767,747
============= =============
All unbilled receivables relate to work performed or material
shipped by the balance sheet date and are billed as soon as is
administratively feasible.
Accounts receivable are comprised primarily of amounts due on
specialty contracting contracts and from solid waste management
customers. Credit is extended based on an evaluation of the customer's
financial condition. Collateral is generally not required; however, the
Company can usually file for a mechanic's lien to protect their interest
in contract accounts receivable. Credit losses are provided for in the
financial statements and have been within management's expectations.
On June 30, 1993, Sunshadow Apartments, Ltd., and Summerbreeze
Apartments, Ltd., two Florida real estate limited partnerships
(collectively, the "Apartments"), the Company, Citicorp Real Estate, Inc.
("Citicorp"), and Francis M. Williams entered into a settlement and note
renewal agreement whereby the Chapter 11 bankruptcy filings with respect
to the Apartments were voluntarily dismissed. In accordance with the
terms of the settlement agreement, $3,638,696 of the accounts receivable
- affiliates balance recorded by the Company was converted into a note
receivable. The note receivable originally accrued interest at prime
plus 1 3/8 percent, increasing to prime plus 2 percent on July 1, 1995,
with principal and interest payable in monthly installments through
December 31, 1998, and is guaranteed by Mr. Williams. Amounts due from
the Apartments at December 31, 1994 and 1995, are approximately
$3,588,000 and $3,851,000, respectively.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Accounts receivable (continued)
At December 31, 1994 and 1995, $4,937,000 and $5,301,000,
respectively, of the combined accounts receivable - affiliates and note
receivable - affiliate balances are due from corporate affiliates of the
Company's president. The affiliated receivables relate to contract
services performed and are guaranteed by Mr. Williams.
5. Costs and estimated earnings on uncompleted contracts
December 31,
---------------------------
1994 1995
------------- -------------
Expenditures on uncompleted
contracts . . . . . . . . . . . . $ 92,911,600 $ 65,767,913
Estimated earnings on uncompleted
contracts . . . . . . . . . . . . 17,028,013 7,456,516
------------- -------------
109,939,613 73,224,429
Less actual and allowable billings
on uncompleted contracts . . . . 101,148,934 58,452,865
------------- -------------
$ 8,790,679 $ 14,771,564
============= =============
Costs and estimated earnings in
excess of billings on uncompleted
contracts . . . . . . . . . . . . $ 10,166,227 $ 15,378,178
Billings in excess of costs and
estimated earnings on uncompleted
contracts . . . . . . . . . . . . (1,375,548) (606,614)
------------- -------------
$ 8,790,679 $ 14,771,564
============= =============
During the years ended December 31, 1993, 1994, and 1995, the
Company recognized revenue from contract claims of approximately $50,000,
$1,189,000 and $1,894,000, respectively. In addition, as of December 31,
1994 and 1995, the costs and estimated earnings in excess of billings on
uncompleted contracts includes the Company's cost associated with
unapproved or disputed contract change orders and costs claimed from
customers on completed contracts of $5,412,000 and $10,164,000,
respectively. During the performance of these contracts, the Company
encountered site conditions that differed from bid specifications. As a
result, the Company incurred additional labor and equipment costs in
performing the contract. By their nature, recovery of these amounts is
often subject to negotiation with the customer and, in certain cases,
resolution through litigation. As a result, the recovery of these
amounts may extend beyond one year.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Costs and estimated earnings on uncompleted contracts (continued)
Other current assets include certain legal costs of $683,000 and
$1,226,000 at December 31, 1994 and 1995, respectively, that are
capitalized as contract costs associated with the above contract claims.
6. Property and equipment
December 31,
---------------------------
1994 1995
------------- -------------
Land . . . . . . . . . . . . . . . . $ 4,699,480 $ 5,067,437
Buildings and improvements . . . . . 6,275,216 7,317,544
Construction and recycling
equipment . . . . . . . . . . . . 31,170,987 42,345,792
Furniture and fixtures . . . . . . . 1,258,249 1,463,600
Construction in progress . . . . . . 486,128 615,846
------------- -------------
43,890,060 56,810,219
Less accumulated depreciation . . . (17,074,631) (19,217,558)
------------- -------------
$ 26,815,429 $ 37,592,661
============= =============
Property and equipment is recorded at cost. Depreciation is
provided using the straight-line method over estimated useful lives
ranging from 3 to 30 years. Construction in progress will be depreciated
over the estimated useful lives when placed into service.
7. Term note from affiliate
In 1988, Cumberland Casualty & Surety Company ("CCS") issued a
surplus debenture to the Company that bears interest at 10 percent per
annum in exchange for $3,000,000. In 1992, such debenture was assigned
to Cumberland Holdings, Inc. ("Cumberland"). Cumberland entered into a
term note agreement with the Company for the outstanding amount of the
debenture, including accrued interest at September 30, 1992, as part of
the Distribution. The term note is pari passu with the other debts of
Cumberland, bears interest at 10 percent, and is due on October 1, 2002.
Interest and principal are due quarterly for five years, with minimum
interest payments equal to one-half of annual net earnings before
interest and income taxes. Payments for the second five years are due
quarterly and are payable in equal installments to amortize the remaining
balance. Each of these payments will be credited first to the accrued
interest and then to principal. Interest accrued on the term note at
December 31, 1995, is $506,755 ($51,983 at December 31, 1994).<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Term Note from Affliate (continued)
All payments are restricted unless Cumberland Casualty & Surety
Company's ("CCS") surplus, as defined, exceeds $4,000,000. Surplus funds
are defined as funds of CCS remaining after the deduction of capital,
insurance reserves and all other liabilities, in accordance with
accounting practices prescribed or permitted by the Florida Department of
Insurance. At December 31, 1995, no amounts could be paid under the
provisions of the Term Note. In addition, the Term Note is subordinate
in right to all policyholders of CCS.
8. Accrued expenses
December 31,
---------------------------
1994 1995
------------- -------------
Deferred revenue . . . . . . . . . . $ 1,285,112 $ 1,858,148
Accrued insurance . . . . . . . . . 1,249,858 3,130,582
Accrued real estate taxes . . . . . 275,660 332,725
Other . . . . . . . . . . . . . . . 663,145 1,727,677
------------- -------------
$ 3,473,775 $ 7,049,132
============= =============
9. Long-term debt
December 31,
---------------------------
1994 1995
------------- -------------
Notes payable, principal and interest
payable in monthly installments
through March 1, 2001, interest at
varying rates up to 13 percent,
collateralized by equipment . . . $ 10,220,373 $ 20,215,486
Revolving term bank line of credit,
$5,000,000 ($1,290,000 during
1994), maximum, due October 31,
1997, interest at lender's base
rate plus 1/2 percent . . . . . . - 3,292,607
Bank note payable, varying principal
and interest payments through
August 1, 1996, interest at prime
plus 1 3/4 percent, collateralized
by equipment . . . . . . . . . . 5,500,000 1,500,000
Mortgage notes, principal and
interest payable in monthly
installments through October 1,
2010, interest at varying rates up
to prime plus 1 3/4 percent,
collateralized by land and
buildings . . . . . . . . . . . . 3,679,748 5,286,733
Mortgage notes - $500,000 with
related parties, interest payable
in quarterly installments at 10
percent, plus a performance based
return not to exceed 6 percent,
principal due January 9, 1997,
collateralized by land and
buildings . . . . . . . . . . . . 1,400,000 1,400,000
------------- -------------
20,800,121 31,694,826
Less current portion . . . . . . . . 6,168,006 7,074,857
------------- -------------
$ 14,632,115 $ 24,619,969
============= =============<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Long-term debt (continued)
Annual principal maturities subsequent to December 31, 1995, are as
follows:
1996 . . . . . . . . . . . . . . . . . . . . $ 7,074,857
1997 . . . . . . . . . . . . . . . . . . . . 11,010,480
1998 . . . . . . . . . . . . . . . . . . . . 4,944,474
1999 . . . . . . . . . . . . . . . . . . . . 5,113,589
2000 . . . . . . . . . . . . . . . . . . . . 2,333,113
Thereafter . . . . . . . . . . . . . . . . . 1,218,313
------------
$31,694,826
============
The lenders' prime rate under the bank line at both December 31,
1994 and 1995, was 8.5 percent. At December 31, 1995, there was
approximately $1,707,000 of borrowings available under the revolving term
bank line of credit. The Company was also contingently liable for
letters of credit in the amount of approximately $3,500,000 at December
31, 1995.
The revolving term bank line of $5,000,000, the bank note payable of
$1,500,000, and the letter of credit facility of $5,000,000 are secured
by a pledge of all of the stock of the Company's subsidiaries, the
Cumberland term note, and substantially all of the assets of Kimmins.
The use of funds under these lines is limited among certain subsidiaries,
and repayment is guaranteed by Cumberland.
The debt agreements contain certain covenants, the most restrictive
of which require maintenance of a consolidated tangible net worth, as
defined, of not less than $15,900,000, maintenance of a debt to
consolidated tangible net worth ratio of no more than 4.0 to 1.0,
consolidated debt service coverage ratio of at least 0.9 to 1.0, and a
fixed charge coverage ratio of not less than 0.9 to 1.0. In addition,
the covenants prohibit the ability, without lender approval, of the
Company to pay dividends. As of December 31, 1995, the Company was in
compliance with or obtained waivers for all loan covenants, and the
Company may be required to obtain similar waivers for certain covenants
in 1996. The Company has obtained the personal guarantee of Mr. Francis
M. Williams should waivers not be obtained and the lender accelerates the
maturities of the Revolving Term Bank Line of Credit, Bank Note Payable,
and the Mortgage Note on the corporate office. This guarantee provides
that Mr. Williams will lend the necessary funds to the Company, or
arrange for the Company to borrow a similar amount under similar terms
and maturities so that the Company is not required to pay any principal
payments during 1996 more than the regularly scheduled maturities.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Employee Stock Ownership Plan Trust Debt
In March 1990, the Company's Employee Stock Ownership Plan Trust
("ESOP") (Note 13) originally was funded from a $5,100,000 loan. This
loan was refinanced during December 1995 and bears interest at prime plus
1/2 percent, with quarterly principal and monthly interest payments
through October 2000. The loan is guaranteed by the Company as to
payment of principal and interest and, therefore, the unpaid balance of
the borrowing is reflected as debt of the Company. An equivalent amount
representing unearned employee compensation, less the Company's accrued
contribution (Note 12), is recorded as a deduction from stockholders'
equity.
Annual principal maturities for each of the next five years are as
follows:
1996 . . . . . . . . . . . . . . . . . . . . . . $ 480,000
1997 . . . . . . . . . . . . . . . . . . . . . . 480,000
1998 . . . . . . . . . . . . . . . . . . . . . . 480,000
1999 . . . . . . . . . . . . . . . . . . . . . . 480,000
2000 . . . . . . . . . . . . . . . . . . . . . . 480,000
------------
$ 2,400,000
============
11. Leasing arrangements
The Company rents equipment, machinery, and office space for varying
periods. Rental expense for the years ended December 31, 1993, 1994, and
1995, was approximately $7,855,000, $9,500,000, and $9,079,000,
respectively.
12. Pension and other benefit plans
Employee Stock Ownership Plan. On January 1, 1989, the Company, for
the benefit of its employees, formed the ESOP to purchase shares of the
Company's common stock from time to time in the open market or in
negotiated transactions at prices deemed to be attractive. Contributions
to the ESOP are made at the discretion of the Board of Directors. During
1989, the ESOP acquired from the Company's president 257,371 shares of
common stock at a cost of $5,100,000. The shares were acquired in
exchange for a note payable to the Company's president. Simultaneous
with this purchase, the Company's president purchased certain receivables
and interests in certain investments from the Company for a purchase
price of $5,100,000, which was paid by the assignment to the Company of
the note received from the ESOP. The note originally was funded during
March 1990, through a long-term bank financing agreement guaranteed by
the Company (Note 10). As the debt is repaid, shares are released from
collateral and allocated to active employees, based on the proportion of
debt service paid in the current year. Debt of the ESOP is recorded as
debt, and the shares pledged as collateral are reported as unearned
employee compensation in the balance sheet. For financial statement
purposes, as of December 31, 1994 and 1995, the unearned employee
compensation (net of accrued contributions of approximately $228,000 and
$133,000, respectively) was reflected as a reduction in stockholders'
equity.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Pension and other benefit plans (continued)
Interest and compensation expenses relating to the ESOP are as
follows:
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Interest . . . . . . . . $ 287,577 $ 274,519 $ 354,449
Compensation . . . . . . $ 565,568 $ 615,657 $ 504,852
The ESOP shares were as follows:
December 31,
---------------------------
1994 1995
------------- -------------
Allocated shares . . . . . . . . . . 105,000 135,000
Shares released for allocation . . . - -
Unreleased shares . . . . . . . . . 150,000 120,000
------------- -------------
Total ESOP shares . . . . . . . . . 255,000 255,000
============= =============
Market value of unreleased shares $ 675,000 $ 900,000
============= =============
Stock Option Plan. The Company originally reserved 288,400 shares
of its common stock for issuance upon the exercise of options to be
granted under the Company's 1987 Stock Option Plan (the Company Plan).
The exercise price of an incentive stock option granted under the Company
Plan may not be less than the fair market value of the common stock at
the time the option is granted. The exercise price of a non-qualified
stock option granted under the Company Plan may be any amount determined
by the Board of Directors but not less than the par value of the common
stock on the date of the grant. Options granted under the Company Plan
must, in general, expire no later than ten years from the date of the
grant.
All options granted to date provide that the grantees' rights
therein vest over five years from the date of the grant. At December 31,
1995, options to purchase 208,243 shares of the Company's common stock
have been granted under the Company Plan, of which approximately 92,657
are currently exercisable at prices ranging from $3.33 to $4.50 per
share. Options for 4,400 shares, at a price of $4.50 per share, were
exercised during the year ended December 31, 1995. No options were
exercised during 1993 and 1994.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Pension and other benefit plans (continued)
The following is a summary of stock option transactions:
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Options outstanding at
beginning of the year 205,310 206,143 205,143
Options granted . . . . 833 182,643 7,500
Options cancelled . . . - (183,643) -
Options exercised . . . - - (4,400)
------------ ------------ ------------
Options outstanding at
end of year . . . . . 206,143 205,143 208,243
============ ============ ============
Options eligible at end
of year . . . . . . . 127,791 59,029 92,657
Options available for
future grants at end
of year . . . . . . . 44,057 45,057 37,557
Option price range:
Options granted . . . . $7.14 $4.50 $4.50
Options exercised . . . N/A N/A $4.50
Options outstanding at
end of year . . . . . $3.33-$13.74 $3.33-$4.50 $3.33-$4.50
Options cancelled during 1994 include 173,476 options with exercise
prices ranging from $6.00 to $13.74 that were subsequently reissued
during 1994 with an exercise price of $4.50.
Multi-Employer Defined Contribution Plan. The Company makes
payments to collectively bargained, multi-employer defined contribution
plans covering Company union employees. Under the Multi-Employer Pension
Plan Amendment Act, a withdrawing employer is required to continue
funding its share of the plan's unfunded vested benefits. The Company
does not possess sufficient information to determine its portion of the
unfunded vested benefits, if any. Contributions to such plans for the
years ended December 31, 1993, 1994, and 1995, were not significant.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Income taxes
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards 109, "Accounting for Income
Taxes." Under the asset and liability method required by Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
As of December 31, 1995, the Company has utilized all net operating
loss carryforwards. However, the Company has alternative minimum tax
credit carryforwards of approximately $299,000 available to offset future
regular tax liabilities.
As a result of TransCor's sale of its common stock in March 1993
(Note 2), it is no longer consolidated with the Company for income tax
purposes. The Company has provided deferred income taxes respect to
differences between its book and tax basis in TransCor. These
differences result from income recognized for book, not tax, for the gain
on the sale of TransCor and TransCor's post-offering earnings, which are
collectively referred to as the outside basis difference. The rate used
to provide taxes on the outside basis difference is the statutory rate
for the first $785,000 that represents the Company's share of TransCor's
accumulated deficit at the date of the sale of its common stock. The
rate for the remaining difference assumes the dividend received deduction
because the Company expects to recover its investment through dividends.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Income taxes (continued)
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax
liabilities and assets are as follows:
December 31,
---------------------------
1994 1995
Deferred tax assets: ------------- -------------
Allowance for doubtful accounts . $ 254,200 $ 152,222
Costs deferred for tax expensed
for books . . . . . . . . . . . 146,800 154,553
Alternative minimum tax credit
carryforwards . . . . . . . . . 339,000 299,172
Accrued workers' compensation . . - 750,552
Other . . . . . . . . . . . . . . 15,200 56,721
------------- -------------
755,200 1,413,220
------------- -------------
Deferred tax liabilities:
Excess of tax over book
depreciation . . . . . . . . . 2,911,365 3,842,918
Uncompleted long-term contracts . 395,400 655,975
Costs deferred for book expensed
for tax . . . . . . . . . . . . 74,740 301,250
Outside basis difference in
TransCor . . . . . . . . . . . 362,000 430,478
------------- -------------
3,743,505 5,230,621
------------- -------------
Net deferred tax liability . . . 2,988,305 3,817,401
Less current portion liability/
plus current portion asset . . (73,708) 742,130
------------- -------------
$ 2,914,597 $ 4,559,531
============= =============
<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Income taxes (continued)
Factors causing the effective tax rate to differ from the statutory
rate are as follows:
Years ended December 31,
-----------------------------------------
1993 1994 1995
------------ ------------ ------------
Federal statutory
rate . . . . . . . 34.0% 35.0% 34.0%
State income taxes . . 4.5% 7.5% 10.0%
Additional tax on the
Company's share of
TransCor's earnings
after March 25,
1993 . . . . . . . 2.0% 4.0% 8.0%
Other . . . . . . . . 4.7% 1.5% 0.6%
------------ ------------ ------------
Effective tax rate . . 45.2% 48.0% 52.6%
============ ============ ============
14. Stockholders' equity
The Company's Class B common stock has the same voting rights as
common stock and is not entitled to participate in cash dividends. Upon
liquidation or dissolution of the Company, the holders of common stock
are entitled to receive up to $9.00 per share, after which the holders of
Class B common stock are entitled to receive up to $9.00 per share.
Thereafter, all assets remaining for distribution will be distributed pro
rata to the holders of common stock and Class B common stock. The right
to convert Class B common stock to common stock occurs in any fiscal year
in which the Company achieves net earnings equal to a specified amount
(currently $.84 per share), which is calculated by adding the total
shares outstanding at fiscal year end to the number of shares that could
be converted during the fiscal year. The holders of the Class B common
stock will thereafter have the right to convert up to 625,000 shares of
Class B common stock into common stock on a share for share basis as
follows. Each cumulative incremental increase in net earnings in any
subsequent year of $.21 per share above the specified level of earnings
previously obtained will afford holders the right to convert up to an
additional 625,000 shares of Class B common stock into common stock on a
share for share basis. Holders of Class B common stock will not be
entitled to convert more than 625,000 of such shares in any fiscal year
unless the Company achieves earnings of $1.44 per share of common stock
in any fiscal year, which will entitle holders to convert all shares of
Class B common stock into common stock. No shares of Class B common
stock became eligible for conversion into common stock during the years
ended December 31, 1993, 1994, and 1995.
The Company has authorized 1,000,000 shares of preferred stock with
a par value of $.001, none of which is presently outstanding. Such
preferred stock may be issued in series and will have such designations,
rights, preferences, and limitations as may be fixed by the Board of
Directors.<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Contingencies
The Company is involved in various legal actions and claims arising
in the ordinary course of its business. After taking into consideration
legal counsel's evaluation of such actions and claims, management is of
the opinion that their outcome will not have a material adverse effect on
the consolidated financial position of the Company.
16. Fourth Quarter Adjustments (unaudited)
During the fourth quarter of 1995, the Company refined its estimate
of income tax expense, with an additional expense of $241,000. Also, in
the fourth quarter of 1995, the Company capitalized certain contract
costs. This refinement resulted in a credit to operations of $505,000 in
the fourth quarter of 1995. During the fourth quarter of 1993, TransCor
refined its estimate of bad debt expense, with the Company's share of the
expense being $442,000.
17. Fair Value of Financial Investment
The following estimated fair value amounts have been determined
using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize in a current
market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair
value amounts.
Cash. The carrying amount reported in the balance sheet for cash
approximates its fair value.
Long-term debt. The fair values of the Company's long-term debt are
estimated using discounted cash flow analyses, based on the Company's
current incremental borrowing rates for similar types of borrowing
arrangements.
The carrying amounts and fair values of the Company's financial
instruments at December 31, 1995, are as follows:
December 31, 1995
---------------------------
Carrying Fair
Amount Value
------------- -------------
Assets:
Cash . . . . . . . . . . . . . . $ 1,160,463 $ 1,160,463
Liabilities:
Notes payable . . . . . . . . . . $ 31,694,826 $ 31,230,000
Employee Stock Ownership Plan
Trust debt . . . . . . . . . . $ 2,400,000 $ 2,400,000<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Business segments and major customers
The Company conducts business in two segments: specialty
contracting services and solid waste management services. The specialty
contracting services segment provides comprehensive services including
infrastructure development, underground utility construction, roadwork,
dismantling, asbestos abatement, mobile incineration, excavation, removal
and disposal of contaminated soil. The solid waste management services
segment offers storage, collection, transfer, transportation, resource
recovery and disposal of non-hazardous waste and demolition services.
For the years ended December 31, 1993, 1994 and 1995, the Company's
specialty contracting services segment earned gross revenue of ap-
proximately $5,325,000, $5,887,000, and $1,727,000, respectively, on
contracts with the United States Government.
A summary of information about the Company's segments for the years
ended December 31, 1993, 1994 and 1995 is as follows (in thousands):
Specialty
Contracting Solid Waste
1993 Services Services Total
----------------------------- ------------ ------------ ------------
Gross revenue:
Unaffiliated customers . . $ 58,679 $ 24,909 $ 83,588
Affiliated customers . . . 21 - 21
------------ ------------ ------------
Total gross revenue . . $ 58,700 $ 24,909 $ 83,609
============ ============ ============
Operating income . . . . . $ 414 $ 3,252 $ 3,666
Interest income . . . . . 848 - 848
Interest expense . . . . . 1,096 814 1,910
Non-operating gain . . . . 879 - 879
Minority interest . . . . - (287) (287)
Income (loss) before ------------ ------------ ------------
income taxes . . . . . . $ 1,045 $ 2,151 $ 3,196
============ ============ ============
Identifiable assets . . . $ 38,737 $ 31,455 $ 70,192
Depreciation and ============ ============ ============
amortization . . . . . . $ 2,242 $ 1,439 $ 3,681
============ ============ ============
Capital expenditures . . . $ 1,045 $ 3,529 $ 4,574
============ ============ ============<PAGE>
KIMMINS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Business segments and major customers (continued)
Specialty
Contracting Solid Waste
1994 Services Services Total
---------------------------- ------------ ------------ ------------
Gross revenue:
Unaffiliated customers . . $ 67,748 $ 29,007 $ 96,755
Affiliated customers . . . - - -
------------ ------------ ------------
Total gross revenue . . $ 67,748 $ 29,007 $ 96,755
============ ============ ============
Operating income . . . . . $ 1,853 $ 817 $ 2,670
Interest income . . . . . 1,060 - 1,060
Interest expense . . . . . 1,590 547 2,137
Minority interest . . . . - (61) (61)
Income (loss) before ------------ ------------ ------------
income taxes . . . . . . $ 1,323 $ 210 $ 1,533
============ ============ ============
Identifiable assets . . . $ 42,448 $ 30,241 $ 72,689
Depreciation and ============ ============ ============
amortization . . . . . . $ 2,024 $ 1,866 $ 3,890
============ ============ ============
Capital expenditures . . . $ 3,365 $ 2,439 $ 5,804
============ ============ ============
Specialty
Contracting Solid Waste
1995 Services Services Total
---------------------------- ------------ ------------ ------------
Gross revenue:
Unaffiliated customers . . $ 70,227 $ 41,119 $ 111,346
Affiliated customers . . . - - -
------------ ------------ ------------
Total gross revenue . . $ 70,227 $ 41,119 $ 111,346
============ ============ ============
Operating income . . . . . $ 1,892 $ 2,704 $ 4,596
Interest income . . . . . 1,005 - 1,005
Interest expense . . . . . 1,875 548 2,423
Minority interest . . . . - (345) (345)
Income (loss) before ------------ ------------ ------------
income taxes . . . . . . $ 1,022 $ 1,811 $ 2,833
============ ============ ============
Identifiable assets . . . $ 46,778 $ 46,851 $ 93,629
Depreciation and ============ ============ ============
amortization . . . . . . $ 1,748 $ 2,355 $ 4,103
============ ============ ============
Capital expenditures . . . $ 2,429 $ 13,848 $ 16,277
============ ============ ============<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company are as follows:
Name Age Position
----------------------- --- -----------------------
Francis M. Williams 54 President and Director
Norman S. Dominiak 51 Vice President
Joseph M. Williams 39 Secretary/Treasurer
Michael Gold 47 Director
George Chandler 66 Director
All directors of the Company hold office until the next annual
meeting of stockholders and the election and qualification of their
successors. Officers of the Company are elected annually by the Board of
Directors and hold office at the discretion of the Board of Directors.
Francis M. Williams has been President and Chairman of the Board of
the Company since its inception. For more than five years prior to
November 1988, Mr. Williams had been Chairman of the Board and Chief
Executive Officer of Kimmins Corp. and its predecessors and sole owner of
K Management Corp. From June 1981 until January 1988, Mr. Williams was
also the President and a Director of College Venture Equity Corp., a
small business investment company. Mr. Williams has also been a Director
of the National Association of Demolition Contractors and a member of the
Executive Committee of the Tampa Bay International Trade Council.
Norman S. Dominiak, 51, has been the Vice President of the Company
since March 1995, and has been employed by the Company as its Chief
Financial Officer since January 1994. Mr. Dominiak served as controller
of ThermoCor Kimmins, Inc., a subsidiary of the Company, from October
1991 until January 1994. From May 1988 until September 1991, Mr.
Dominiak served as Senior Vice President of Creative Edge, a company
engaged in the manufacturing and distribution of educational products.
From October 1982 until April 1988, Mr. Dominiak served as senior vice
president of Cecos Environmental Services, Inc., a company engaged in
treatment, transportation, and disposal of hazardous waste. From 1965
until 1982, Mr. Dominiak was employed in various financial capacities for
the Carborundum Company.
Joseph M. Williams has been the Secretary and Treasurer of the
Company since October 1988. Since November 1991, Mr. Williams has served
as President and has been a Director of Cumberland Holdings, Inc., a
holding company whose wholly-owned subsidiaries provide reinsurance and
specialty sureties and performance and payment bonds. Since June 1986,
Mr. Williams has served as President and Vice President and has been a
Director of Cumberland Real Estate Holdings, Inc., the corporate general
partner of Sunshadow Apartments, Ltd. ("Sunshadow") and Summerbreeze
Apartments, Ltd. ("Summerbreeze"), both of which are limited
partnerships. In June 1992, both Sunshadow and Summerbreeze filed<PAGE>
voluntary petitions under Chapter 11 of the United States bankruptcy law,
and each entity submitted a prepackaged plan of reorganization. In June
1993, Sunshadow and Summerbreeze entered into a settlement and note
renewal agreement and the bankruptcy filings were voluntarily dismissed.
Mr. Williams has been employed by the Company and its subsidiaries in
various capacities since January 1984. From January 1982 to December
1983, he was the managing partner of Williams and Grana, a firm engaged
in public accounting. From January 1978 to December 1981, Mr. Williams
was employed as a senior tax accountant with Price Waterhouse & Co.
Joseph M. Williams is the nephew of Francis M. Williams.
Michael Gold has been a Director of the Company since November 1987.
For more than the past five years, Mr. Gold has been a partner in the
Niagara Falls, New York law firm of Gold and Gold.
George Chandler has been a Director of the Company since January
1990. Since November 1989, Mr. Chandler has been a business consultant.
Mr. Chandler was Chairman of the Board from July 1986 to November 1989,
and President and Chief Executive Officer from October 1985 to November
1989 of Aqua-Chem, Inc., a manufacturer of packaged boilers and water
treatment equipment. From May 1983 to October 1985, he was President,
Chief Executive Officer and a Director of American Ship Building Co.,
which is engaged in the construction, conversion and repair of cargo
vessels. Mr. Chandler is also a Director of The Allen Group Inc., and
DeVlieg Bullard, Inc.
Set forth below is information regarding certain key employees of
the Company:
Thomas C. Andrews, 55, a registered professional engineer, has been
employed as President of ThermoCor Kimmins, Inc., the Company's
subsidiary engaged in site remediation, since January 1989. From
November 1985 to January 1989, Mr. Andrews was employed as Vice President
of Operations for ENSCO Environmental Services, Inc., a company engaged
in hazardous waste incineration and remediation. From September 1981 to
November 1985, Mr. Andrews served as Operations Manager of Cecos
Environmental Services, Inc., a company engaged in treatment,
transportation and disposal of hazardous waste. From December 1964 to
September 1981, Mr. Andrews provided construction management services to
contractors throughout the eastern United States. Mr. Andrews has more
than 25 years experience in all phases of hazardous waste and
construction management.
Charles A. Baker Jr., 53, has been employed as Vice President of
TransCor Waste Services, Inc., the Company's subsidiary engaged in solid
waste management, since November 1989. From June 1981 to November 1989,
Mr. Baker was employed as Vice President of Kimmins Contracting Corp.,
one of the Company's principal operating subsidiaries.
Michael D. O'Brien, 45, has been employed by TransCor Waste
Services, Inc. (including its predecessor) as Vice President since
October 1992. From June 1987 to October 1992, Mr. O'Brien served as Vice
President of Kimmins Industrial Service Corp., a subsidiary of the
Company. From July 1983 to June 1987, Mr. O'Brien served as Vice
President of Jordan Foster Scrap Corporation in Buffalo, New York, a
company specializing in demolition and preparation of scrap for sale.
From November 1972 to July 1983, Mr. O'Brien was employed by a national
demolition contractor.<PAGE>
John V. Simon Jr., 40, has been President and General Manager of
Kimmins Contracting Corp., responsible for supervising utility construc-
tion, since May 1981, and served as a Vice President of the Company from
1981 until October 1988. From January 1978 to May 1981, Mr. Simon owned
Simon Construction Company, a company that performed site work and
utilities and demolition projects.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Officers,
directors, and greater than 10 percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on the Company's review of the copies of such forms
received by it, or written representations from certain reporting persons
that no Forms 5 were required for those persons, the Company believes
that, during the year ended December 31, 1995, all filing requirements
applicable to its officers, directors, and greater than 10 percent
beneficial owners were complied with except that one report was filed
late by Mr. Michael Gold.
Item 11. Executive Compensation
Summary Compensation Table. The following table provides certain
summary information concerning compensation paid or accrued by the
Company and its subsidiaries to the Chief Executive Officer and all other
executive officers whose salary and bonus exceeded $100,000 for the year
ended December 31, 1995 (the "Named Executives"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
--------------------------------- ------------------------- -----------
Other Securities
Annual Restricted Underlying All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary ($) Bonus ($) sation ($) Award(s) ($) SARs (#) Payouts ($) sation ($)
---------------------- ------ ---------- ---------- ---------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Francis M. Williams 1995 $ 271,137 $ 0 $0 $0 0 $0 $ 989 (*)
Chairman of the 1994 $ 171,139 $ 0 $0 $0 0 $0 $ 977 (*)
Board, President and 1993 $ 171,137 $ 0 $0 $0 0 $0 $ 498 (*)
Chief Executive
Officer
John V. Simon, Jr. 1995 $ 95,000 $ 81,489 $0 $0 0 $0 $1,647 (*)
President of Kimmins 1994 $ 95,000 $ 15,759 $0 $0 0 $0 $1,635 (*)
Contracting Corp. 1993 $ 95,000 $ 13,193 $0 $0 0 $0 $1,069 (*)<PAGE>
<FN>
<F1>
(*) Represents the Company's contribution to the employee's account of the Company's 401(k) Plan and premiums paid by
the Company for term life insurance and long-term disability. These plans, subject to the terms and conditions
of each plan, are available to all employees.
</FN>
</TABLE>
Stock Option/SAR Grants in the Last Fiscal Year. The
following table summarizes stock options granted to the Named Executives
in 1995. The amount shown as potentially realizable values of these
options are based on assumed annual rates of appreciation in the
price of the Company's common stock of 5 and 10 percent over the terms of
the options and are not intended to forecast future appreciation of
the Company's stock price:
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Percent of Stock Price
Total Options Appreciation for
Granted to Exercise Option Term
Options Employees in or Base Expiration -------------------------
Name Granted (#) Fiscal Year Price ($/SH) Date 5 Percent 10 Percent
--------------------- ------------- -------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Francis M. Williams 0 0.00% $ 0.00 - $ 0 $ 0
John V. Simon, Jr. 3,333 44.44% $ 4.50 03/15/05 $ 9,400 $ 23,900
</TABLE>
No stock options or stock appreciation rights were granted
to Francis M. Williams during the year ended December 31, 1995, and Mr.
Williams does not have any stock options or stock appreciation rights
that were granted in previous years.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-
End Option/SAR Values. The following table summarizes the net value
realized on the exercise of options in 1995 and the value of outstanding
options as of December 31, 1995, for the Named Executives.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
CAPTION
<PAGE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Year-End (#) Year-End ($) (1)
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---------------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Francis M. Williams 0 $0 0/0 $0/$0
John V. Simon, Jr. 0 $0 9,800/11,867 $10,970/$11,867
<FN>
<F1>
(1) Value is calculated using the Company's closing stock price on December 31, 1995, of $7.50 per share
(adjusted to reflect the reverse stock split on a retroactive basis) less the exercise price for such
shares.
</FN?
/TABLE
<PAGE>
No stock options or stock appreciation rights were exercised
by Francis M. Williams during the year ended December 31, 1995, and Mr.
Williams does not have any outstanding stock options or SAR at December
31, 1995.
<TABLE>
TEN YEAR OPTION/SAR REPRICINGS
<CAPTION)
Length of
Number of Market Original
Securities Price Exercise Option Term
Underlining of Stock at Price at Remaining
Options/SARs Time of Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended (#) Amendment ($) Amendment ($) Price ($) Amendment
--------------------------- --------- -------------- ----------------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman S. Dominiak 10/30/94 3,333 $4.50 $6.39 $4.50 4 years
Vice President 833 $4.50 $7.14 $4.50 4 years
Joseph M. Williams 10/30/94 10,333 $4.50 $6.75 $4.50 4 years
Secretary/Treasurer
Thomas C. Andrews 10/30/94 11,667 $4.50 $6.75 $4.50 4 years
President of
ThermoCor Kimmins, Inc.
Charles A. Baker, Jr. 10/30/94 12,833 $4.50 $6.75 $4.50 4 years
Vice President of
TransCor
Michael D. O'Brien 10/30/94 15,976 $4.50 $6.75 $4.50 4 years
Vice President of
TransCor
John V. Simon, Jr. 10/30/94 12,833 $4.50 $6.75 $4.50 4 years
President of Kimmins 2,500 $4.50 $6.00 $4.50 4 years
Contracting Corp.
</TABLE>
Compensation Committee Interlocks and Insider Participation.
During the year ended December 31, 1995, Francis M. Williams, the
Company's President and Chairman of the Board of Directors, has served as
President and Chairman of the Board of Directors of TransCor.
Compensation of Directors. During the year ended December 31, 1995,
the Company paid non-officer Directors an annual fee of $5,000 and $1,000
per board meeting attended. Directors are reimbursed for all out-of-
pocket expenses incurred in attending Board of Directors and committee
meetings.
Stock Option and Other Plans
1987 Stock Option Plan
The Company adopted a stock option plan (the "Plan") pursuant to
which 288,400 shares of common stock were originally reserved for
issuance to persons upon exercise of options designated as "incentive
stock options," within the meaning of Section 422A of the Internal<PAGE>
Revenue code of 1986 (the "Code"), and non-qualified stock options. The
purpose of the Plan is to attract, retain, and motivate officers and
other full-time employees of the Company, and certain other persons
instrumental to the success of the Company, and to provide them with a
means to acquire a proprietary interest in the Company. The Plan is
administered by a committee consisting of three members of the Board of
Directors. The exercise price of an incentive stock option granted under
the Plan may not be less than the fair market value of the common stock
at the time the option is granted (110 percent of fair market value in
the case of an incentive stock option granted to an employee owning more
than 10 percent of the voting stock of the Company). The exercise price
of a non-qualified stock option granted under the Plan may be any amount
determined by the Board of Directors but not less than the par value of
the common stock on the date of the grant. Options granted under the Plan
must, in general, expire no later than ten years from the date of the
grant (five years from the date of grant in the case of an incentive
stock option granted to an employee owning more than 10 percent of the
voting stock of the Company). All options granted to date provide that
the grantees' rights vest over five years from the date of grant.
At December 31, 1995, Joseph M. Williams held 13,333 options to
purchase the Company's stock at between $3.33 and $4.50 per share of
which 7,133 shares are exercisable. At December 31, 1995, John V.
Simon, Jr., held 21,667 options to purchase the Company's stock at
between $3.33 and $4.50 per share, of which 9,800 shares are exercisable.
Savings and Profit-Sharing Plan
The Company offers a savings and profit-sharing plan (the "401(k)
Plan"), which qualifies under Sections 401(a) and (k) of the Code.
Employees of the Company and certain affiliates who have been employed
for a specified period of time are eligible to participate in the 401(k)
Plan. All contributions made by the employees vest immediately. Amounts
contributed by the Company vest 20 percent after three years of service
and 20 percent each year thereafter.
Profit and Equity Participation Plan
The Company's Profit and Equity Participation Plan (the "Profit
Participation Plan"), a defined contribution plan, covers employees of
the Company and certain affiliates who have been employed for a specified
period of time. Contributions to the Profit Participation Plan are made
at the discretion of the Board of Directors. Employees' rights in the
Profit Participation Plan vest 20 percent after three years of service
and 20 percent each year thereafter. The Profit Participation Plan was
merged into The Kimmins Environmental Service Corp. Employee Stock
Ownership Plan Trust ("ESOP") on January 1, 1989.
Employee Stock Ownership Plan
Effective January 1, 1989, the Company formed the ESOP for the
benefit of the employees of the Company and its subsidiaries to purchase
shares of the Company's common stock from time to time on the open market
or in negotiated transactions at prices deemed to be attractive and,
simultaneously, the Profit Participation Plan was merged into the ESOP.
Contributions to the ESOP are made at the discretion of the Board of
Directors and, for the year ended December 31, 1989, was $200,000.
During 1989, the ESOP acquired from the Company's President approximately
772,000 shares of common stock at a cost of $5,100,000. The shares were
acquired in exchange for a note payable to the President. Simultaneously
with such purchase, the President purchased certain receivables and
interests in certain investments from the Company for a purchase price of
$5,100,000, which was paid by the assignment to the Company of the note
received from the ESOP. The note was funded, during March 1990, through
a long-term bank financing agreement guaranteed by the Company. Expenses
with respect to the ESOP include the recognition of interest expense
relating to the ESOP debt and to earned compensation. For the year ended
December 31, 1995,<PAGE>
interest expense and compensation expense relating to the ESOP were
$354,000 and $600,000, respectively. As of December 31, 1995, the unpaid
ESOP debt (net of the $113,000 accrued contribution) is also reflected as
a reduction in stockholders' equity.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's
common stock beneficially owned as of March 18, 1996, by (i) persons
known by the Company to own more than 5 percent of the Company's
outstanding common stock, (ii) by each Named Executive and director of
the Company, and (iii) all Named Executives and directors of the Company
as a group:
<TABLE>
<CAPTION>
Percent of
Percent Total
Name and Address of of Voting
Beneficial Owner (1) Title of Class Number of Shares Class Power
---------------------- -------------------- ------------------ ------- ----------
<S> <C> <C> <C> <C> <C>
Francis M. Williams Common Stock 1,856,081 (2) 41.7% 61.5%
Class B Common Stock 2,291,569 100.0%
Joseph M. Williams Common Stock 360,945 (3) 8.1% 5.4%
Michael Gold Common Stock 13,223 (4) * *
George Chandler Common Stock 6,314 (5) * *
All directors and Common Stock 2,236,563 (2)(3) 50.3%
executive officers as (4)(6) 67.2%
a group (four persons) Class B Common Stock 2,291,569 100.0%
<FN>
<F1>
(1) The addresses of all officers and directors of the Company above are in
care of the Company at 1501 Second Avenue, East, Tampa, Florida 33605.
<F2>
(2) Includes 1,479,136 shares owned directly by Mr. Francis M. Williams;
133,333 shares owned by Summerbreeze and 121,750 shares owned by Sunshadow,
both of which Mr. Williams is the sole shareholder of the corporate general
partner and the sole limited partner (see Item 13, "Certain Relationships
and Related Transactions"); 48,908 shares owned by Mr. Williams' wife;
30,493 shares held by Mr. Williams as Trustee for his wife and children;
37,913 shares held by Mr. Williams as Custodian under the New York Uniform
Gifts to Minors Act for his children; 3,482 shares held by the Company's
401(k) and ESOP Plans of which Mr. Williams is fully vested; and 1,067
shares held by Kimmins Realty Investment, Inc., of which is owned 100
percent by Mr. Williams.
<F3>
(3) Includes 10,000 shares owned by Mr. Joseph M. Williams; 7,133 shares
issuable upon exercise of currently exercisable stock options; 2,592 shares
held by the Company's 401(k) and ESOP Plans of which Mr. Williams is fully
vested; and 341,220 shares held by the Company's 401(k) Plan and ESOP of
which Mr. Williams is a trustee with shared voting and investment power.
<F4>
(4) Includes 1,150 shares owned by Mr. Gold; 5,775 shares currently owned by
Mr. Gold's wife; 2,898 held by Mr. Gold as trustee for Mr. Gold's minor
children; and 3,400 shares issuable upon exercise of currently exercisable
stock options.
<F5>
(5) Includes 3,114 shares owned by Mr. Chandler; and 3,200 shares issuable upon
exercise of currently exercisable stock options.<PAGE>
<F6>
(6) Includes 13,733 shares issuable upon exercise of currently exercisable
stock options; 6,074 shares held by the Company's 401(k) and ESOP Plans of
which certain officers of the Company are fully vested; and 341,471 shares
held by the Company's 401(k) and ESOP Plans of which the Secretary of the
Company is a trustee.
* Less than one percent.
</FN>
</TABLE>
Item 13. Certain Relationships and Related Transactions
During 1994 and 1995, the Company paid landfill fees of
approximately $28,000 and $88,000, respectively, to a company that is
owned primarily by the brother of Mr. Francis M. Williams. The amount
paid approximated fair market rates for the type of services involved.
Mr. Francis M. Williams is the sole shareholder of the corporate
general partner and the sole limited partner of Sunshadow Apartments,
Ltd., and Summerbreeze Apartments, Ltd., two Florida real estate limited
partnerships (collectively, the "Apartments"). On June 30, 1993, the
Company, Citicorp Real Estate, Inc. ("Citicorp"), the Apartments, and Mr.
Williams entered into a settlement and note renewal agreement whereby the
Chapter 11 bankruptcy filings with respect to the Apartments were
voluntarily dismissed. In accordance with the terms of the settlement
agreement, $3,638,696 of the accounts receivable - affiliates balance
recorded by the Company was converted into a note receivable. The note
receivable originally accrued interest at prime plus 1 3/8 percent,
increasing to prime plus 2 percent on July 1, 1995, with principal and
interest payable in monthly installments through December 31, 1998, and
is guaranteed by Mr. Williams. Amounts due from the partnerships at
December 31, 1994 and 1995, are approximately $3,588,000 and $3,851,000,
respectively.
At December 31, 1994 and 1995, $4,937,000 and $5,301,000,
respectively, of the contract and trade - affiliates balance is due from
corporate affiliates of the Company's president. The affiliated
receivables relate to contract services performed and are guaranteed by
Mr. Williams.<PAGE>
Item 14. Exhibits, Financial Statement, Schedules,
and Reports on Form 8-K
(a) List of documents filed as part of this Report
1. Financial Statements
- Report of Independent Certified Public Accountants
- Consolidated balance sheets at December 31, 1994 and 1995
- Consolidated statements of operations for each of the three
years in the period ended December 31, 1995
- Consolidated statements of stockholders' equity for each of
the three years in the period ended December 31, 1995
- Consolidated statements of cash flows for each
of the three years in the period ended December
31, 1995
- Notes to consolidated financial statements
2. Financial statement schedule
Schedule Page
Number Number
-------- ------
II - Valuation and Qualifying Accounts . . . . . . . . . . S-1
All other Schedules are omitted since the required information
is not present or is not present in amounts sufficient to require
submission of the Schedules, or because the information required is
included in the financial statements and notes thereto.
3. The following documents are filed as exhibits to this Annual
Report on Form 10-K/A:
3 (a) -- Restated Certificate of Incorporation of Regi-
strant, as amended.
3 (b) * -- By-laws of Registrant
10.1 ** -- Stock Option Plan
21 -- Subsidiaries of the Registrant.
23 -- Consent of Ernst & Young LLP
27 -- Financial Data Schedule (for SEC use only)
______________
* Previously filed on March 17, 1987, as part of Registrant's
Registration Statement on Form S-1, File No. 33-12677, and
incorporated herein by reference thereto.
** Previously filed on June 29, 1989, as part of Registrant's Form S-8,
File No. 33-29612, and incorporated herein by reference thereto.
(b) Reports on Form 8-K.
None<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunder duly
authorized.
KIMMINS CORP.
Date: September 30, 1996 By: /s/ Francis M. Williams
-------------------- ----------------------------
Francis M. Williams
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Date: September 30, 1996 By: /s/ Francis M. Williams
-------------------- ----------------------------
Francis M. Williams
President and Director
(Chief Executive Officer)
Date: September 30, 1996 By: /s/ Joseph M. Williams
-------------------- ----------------------------
Joseph M. Williams
Secretary/Treasurer
Date: September 30, 1996 By: /s/ Norman S. Dominiak
-------------------- ----------------------------
Norman S. Dominiak
Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
Date: September 30, 1996 By: /s/ Michael Gold
-------------------- ----------------------------
Michael Gold, Director
Date: September 30, 1996 By: /s/ George A. Chandler
-------------------- ----------------------------
George A. Chandler, Director
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
State or Providence
of Incorporation
Company or Organization
------------------------------------------- ------------------------
Kimmins Contracting Corp. . . . . . . . . . Florida
Kimmins Ltd. . . . . . . . . . . . . . . . Ontario, Canada
Kimmins Industrial Service Corp. . . . . . Delaware
Kimmins Abatement Corp. . . . . . . . . . . Delaware
ThermoCor Kimmins, Inc.
(f/k/a Kimmins Thermal Corp.) . . . . . . . Florida
TransCor Waste Services, Inc. . . . . . . . Florida
Kimmins Recycling Corp. . . . . . . . . . . Florida
Kimmins Incorporated . . . . . . . . . . . Texas
Kimmins International . . . . . . . . . . . Florida
Fourth Avenue Holdings, Inc. . . . . . . . Florida
40th Street, Inc. . . . . . . . . . . . . . Florida
Lantana Eighth Avenue Corp. . . . . . . . . Florida
Factory Street Corporation . . . . . . . . Tennessee
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-29612) pertaining to the 1987 Stock Option
Plan of Kimmins Corp. and in the related Prospectus, of our report dated
March 8, 1996, with respect to the consolidated financial statements and
schedule of Kimmins Corp. included in the Annual Report (Form 10-K/A) for
the year ended December 31, 1995.
ERNST & YOUNG LLP
Tampa, Florida
March 28, 1996<PAGE>
KIMMINS CORP.
Schedule II - Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
Balance at Additions Deductions
Beginning Charged from Balance at
of to Costs Allowances End of
Description Period and Expenses (a) Period
----------------- ---------- ------------ ----------- ----------
Year ended
December 31, 1993 $ 644,907 $ 961,325 $(1,168,216) $ 438,016
Year ended
December 31, 1994 $ 438,016 $ 495,375 $ (270,394) $ 662,997
Year ended
December 31, 1995 $ 662,997 $ 404,455 $ (670,241) $ 397,211
(a) Balance represents the write-off of uncollectible accounts.
S-1<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000811562
<NAME> KIMMINS CORP.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,160,463
<SECURITIES> 0
<RECEIVABLES> 24,317,155
<ALLOWANCES> (397,211)
<INVENTORY> 0
<CURRENT-ASSETS> 44,117,192
<PP&E> 56,810,219
<DEPRECIATION> (19,217,558)
<TOTAL-ASSETS> 93,628,550
<CURRENT-LIABILITIES> 32,568,873
<BONDS> 0
0
0
<COMMON> 4,447
<OTHER-SE> 26,376,989
<TOTAL-LIABILITY-AND-EQUITY> 93,628,550
<SALES> 111,346,075
<TOTAL-REVENUES> 111,346,075
<CGS> 93,385,634
<TOTAL-COSTS> 13,364,168
<OTHER-EXPENSES> 345,320
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,417,802
<INCOME-PRETAX> 2,833,151
<INCOME-TAX> 1,490,568
<INCOME-CONTINUING> 1,342,583
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,342,583
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
