U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
__
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 1996
__
__ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934 FOR THE TRANSITION PERIOD FROM ____________
TO ____________
Commission file number 0-5887
RTI INC.
(Exact name of small business issuer as specified in its
charter)
NEW YORK 11-2163152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
108 Lake Denmark Road, Rockaway, New Jersey 07866
(Address of principal executive offices) (Zip Code)
(201) 625-8400
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be
filed by Section l3 or l5(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
July 31, 1996 - 1,101,359 shares of common stock
Transitional Small Business Disclosure Form Yes No x
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Part I. Financial Information
Item I. Financial Statements
RTI Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
1996 1995
Assets (unaudited)
----------------------------------------- ----------- -----------
Current:
Cash and cash equivalents $ 27,190 $ 77,631
Accounts receivable, net of allowance
for doubtful accounts of $10,000
in 1996 and 1995 645,768 562,811
Prepaid expenses and other 51,382 31,949
Restricted deposits 15,771 15,771
---------- ----------
Total current assets 740,111 688,162
Property, plant, equipment and Cobalt 60,
net of accumulated depreciation and
amortization 7,203,968 7,006,886
Certificates of financial assurance -
restricted 150,000 150,000
Deferred financing costs 30,696 36,960
Other assets (Note 10) 82,106 --
---------- ----------
Total assets $8,206,881 $7,882,008
========== ==========
See accompanying notes to consolidated financial statements.
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RTI Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
1996 1995
Liabilities and Stockholders' Equity (unaudited)
----------------------------------------- ----------- -----------
Current:
Current portion of long-term debt
(Note 5) $ 961,981 $ 1,047,264
Accounts payable 186,331 138,178
Accrued expenses (Note 4) 541,300 618,748
Current portion of redeemable
preferred stock, Series A (Note 8(b)) 236,000 --
----------- -----------
Total current liabilities 1,925,612 1,804,190
Long-term debt, net of current portion
and discount of $33,000 and $44,000
(Note 5) 1,957,258 2,024,050
Preferred stock, $.05 par value,
Series A, shares authorized 200,000;
issued and outstanding, 118,000,
net of current portion (Note 8(b)) -- --
Other liabilities (Note 6) 1,178,957 883,713
----------- -----------
Total liabilities 5,061,827 4,711,953
----------- -----------
Commitments and contingencies
(Notes 2,3,4,5,6 and 8)
Stockholders' equity (Note 8):
Preferred stock, $.05 par value -
shares authorized 2,000,000;
issued and outstanding, 118,000 Series A -- --
Common stock, $.08 par value -
shares authorized 15,000,000;
issued and outstanding, 1,101,359 88,109 86,153
Additional paid-in capital 16,054,089 16,013,851
Deficit (12,997,144) (12,929,949)
----------- -----------
Total stockholders' equity 3,145,054 3,170,055
----------- -----------
Total liabilities and
stockholders' equity $ 8,206,881 $ 7,882,008
=========== ===========
See accompanying notes to consolidated financial statements.
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RTI Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
Three Months Ended June 30,
1996 1995
---------- ----------
Net sales $1,226,521 $1,034,310
Cost of sales 769,591 722,038
---------- ----------
Gross profit 456,930 312,272
Operating expenses:
Selling, general and
administrative expenses 400,982 419,144
Expenses of Rockaway Industrial
Park - Parcel I, including
interest expense of $5,500
in 1996 and 1995 (Note 2) 26,353 24,074
---------- ----------
Income (loss) from operations 29,595 (130,946)
Other income (expense):
Investment income, net 2,836 2,700
Other interest expense (Note 7) (59,051) (71,302)
Other income (Note 9) 2,750 1,200
---------- ----------
Net loss $ (23,870) $ (198,348)
========== ==========
Net loss per share $ (.02) $ (.18)
========== ==========
Weighted average number of common
shares outstanding (Note 8(c)) 1,085,427 1,072,688
========== ==========
See accompanying notes to consolidated financial statements.
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RTI Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
Six Months Ended June 30,
1996 1995
---------- ----------
Net sales $2,312,692 $2,156,790
Cost of sales 1,509,855 1,427,265
---------- ----------
Gross profit 802,837 729,525
Operating expenses:
Selling, general and
administrative expenses 815,213 826,348
Expenses of Rockaway Industrial
Park - Parcel I, including
interest expense of $11,000
in 1996 and 1995 (Note 2) 47,610 58,077
Environmental investigation and
remediation (Note 3) 480,000 --
---------- ----------
Income (loss) from operations (539,986) (154,900)
Other income (expense):
Investment income, net 5,931 6,594
Other interest expense (Note 7) (127,470) (129,687)
Other income (Note 9) 594,330 1,200
---------- ----------
Net loss $ (67,195) $ (276,793)
========== ==========
Net loss per share $ (.06) $ (.26)
========== ==========
Weighted average number of common
shares outstanding (Note 8(c)) 1,080,894 1,072,688
========== ==========
See accompanying notes to consolidated financial statements.
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RTI Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
( Note 11 )
Six Months Ended June 30,
1996 1995
Cash flows from operating activities: ---------- ----------
Net loss $ (67,195) $(276,793)
---------- ----------
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 437,889 427,451
Allowance for doubtful accounts -- 14,500
Discount of note payable 11,000 11,004
(Increase) decrease in:
Accounts receivable (82,957) 32,954
Prepaid expenses and other (13,169) 23,257
Restricted deposits -- 37,211
Increase (decrease) in:
Accounts payable 48,153 (69,227)
Accrued expenses (77,448) (92,132)
Other liabilities 293,743 --
---------- ----------
Total adjustments 617,211 385,018
---------- ----------
Net cash provided by operating activities 550,016 108,225
---------- ----------
Cash flows from investing activities:
Purchases of fixed assets (634,971) (36,112)
Purchases of other assets (82,106) --
---------- ----------
Net cash used in
investing activities (717,077) (36,112)
---------- ----------
Cash flows from financing activities:
Payments on notes payable (125,000) --
Payments on long-term debt (38,075) (140,417)
Payments on other liabilities -- (38,317)
Proceeds from sale of preferred
stock (Note 8(b)) 236,000 --
Proceeds from exercise of warrant 43,750 --
Payments for fractional shares
of common stock (Note 8(a)) (55) (360)
---------- ----------
Net cash provided by (used in)
financing activities 116,620 (179,094)
---------- ----------
Net decrease in cash and
cash equivalents (50,441) (106,981)
Cash and cash equivalents, beginning
of year 77,631 172,198
---------- ----------
Cash and cash equivalents, end of quarter $ 27,190 $ 65,217
========== ==========
See accompanying notes to consolidated financial statements.
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RTI Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of June 30, 1996 and 1995, and for
the six and three months then ended is unaudited)
1. Unaudited Information
In the opinion of management of RTI Inc. (with its Subsidiaries,
the "Company"), the accompanying unaudited consolidated financial
statements include all adjustments necessary to present fairly, in
all material respects, the Company's financial position as of June
30, 1996, its results of operations for the three and six months
ended June 30, 1996 and 1995, and its cash flows for the six months
ended June 30, 1996 and 1995. Results of operations for the three
and six month periods ended June 30, 1996 are not necessarily
indicative of the results to be expected for the year ending December
31, 1996. Information included in the consolidated balance sheet as
of December 31, 1995 has been derived from the Company's audited
consolidated financial statements in its Annual Report on Form
10-KSB/A for the year ended December 31, 1995, to which reference is
made. Certain information included in the audited consolidated
financial statements and related notes prepared in accordance with
generally accepted accounting principles may have been condensed or
omitted.
2. Rockaway Industrial Park
The Company owns a 248 acre parcel of land ("Parcel I") in
Rockaway, New Jersey, that is contiguous to the 15 acre operating
parcel that is the site of one of its irradiation processing
facilities ("Parcel II" and, with Parcel I, the "Rockaway Industrial
Park"). Since 1985, the Company has been seeking a buyer for Parcel
I. However, the Company's ability sell Parcel I is impaired until
the completion of an environmental cleanup and remediation program
(Note 3), and its ability to recover its net investment in Parcel I
is impaired by liabilities accruing from outstanding property taxes
on approximately 222 acres of Parcel I for the years 1993, 1994,
1995, and 1996, which have been accrued in the financial statements.
3. Environmental Investigation and Remediation
As a result of engineering tests that commenced in 1981, the New
Jersey Department of Environmental Protection (the "DEP") issued a
directive in 1986 ordering a remedial investigation and feasibility
study (the "Study") designed to determine the nature and extent of
contamination on the Rockaway Industrial Park property. The Company
agreed to pay the costs of the Study and entered into an
Administrative Consent Order with the DEP. In 1989, the DEP issued a
Second Directive to pay for an additional environmental study and DEP
oversight costs. In 1993, the Company entered into an Administrative
Consent Order ("ACO") with the DEP. Cost reimbursement to the DEP
under the ACO includes applicable DEP expenditures beginning July 1,
1982 and future DEP oversight costs. In April 1996, the DEP agreed
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RTI Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of June 30, 1996 and 1995, and for
the six and three months then ended is unaudited)
to accept an aggregate payment of $575,000 as settlement of all
outstanding claims asserted under the ACO, as well as all claims
which could be asserted for the period ended June 30, 1996. The
total accrued for reimbursement due the DEP under the ACO at June 30,
1996, was $720,306, which consisted of outstanding billed DEP
expenditures for the period July 1, 1982 to January 20, 1995, and
estimated unbilled DEP expenditures (Notes 4 and 6).
In April 1996, the DEP responded to the Company's petition to
change the Remedial Action Work Plan under the Record of Decision,
and advised the Company that a pilot test of the CleanOx remediation
program, undertaken by the Company on its Rockaway property, was not
considered conclusive. As a result, the Company has increased its
estimate of groundwater remediation programs by $460,000 to provide
for a second pilot test and the possible implementation of a
groundwater remediation plan required by the DEP's Record of
Decision.
In addition, the Company has been named a respondent in an
environmental proceeding relating to a New Jersey disposal site
("Nascolite") to which the Company shipped a small amount of
materials in 1978. The Company has recorded an accrual of $50,000
for such potential liability and related expenses.
As a result of ongoing remediation and DEP involvement in these
matters, there can be no assurances that the cleanup, remediation,
and DEP oversight accruals will represent the Company's ultimate
liability.
Environmental accruals consisted of the following at June 30,
1996:
Current:
1983 Consent Order (restricted) $ 15,771
ACO, current portion 160,140
----------
175,911
Long-term:
ACO, net of current portion 544,395
Groundwater remediation 584,562
Nascolite site 50,000
----------
1,178,957
----------
Total $1,354,868
==========
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RTI Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of June 30, 1996 and 1995, and for
the six and three months then ended is unaudited)
4. Accrued Expenses
Accrued expenses consisted of the following at June 30 1996:
Property taxes (Note 2) $ 184,382
Current portion of remedial investigation
and environmental cleanup costs (Note 3) 175,911
Professional fees and other 107,426
Payroll and related costs 46,625
Interest expense 26,956
---------
Total $ 541,300
=========
5. Long-term Debt
Long-term debt consisted of the following at June 30, 1996:
City of Salem Municipal Port Authority,
Port Development Revenue Bonds $1,000,000
Note payable 100,000
Note payable, net of $33,000 discount 254,024
Secured Cobalt 60 financing and capital
lease agreements 1,565,215
----------
Total 2,919,239
Less: Current portion 961,981
----------
Total long-term debt $1,957,258
==========
6. Other Liabilities
Other liabilities of $1,178,957 at June 30, 1996 consisted of
the aggregate accrual of $1,354,868 for outstanding billed and
estimated DEP ACO costs, estimated costs of site remediation to be
performed at the Company's Rockaway property, and a reserve related
to involvement with the Nascolite site, less the current portion of
$175,911 included in accrued expenses (Notes 3 and 4).
7. Other Interest Expense
Other interest expense is primarily related to long-term debt
and includes amortization of deferred financing costs.
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RTI Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of June 30, 1996 and 1995, and for
the six and three months then ended is unaudited)
8. Stockholders' Equity
(a) Common Stock Authorized, Issued and Outstanding - Effective
May 25, 1995, the Company's Certificate of Incorporation was amended
to effect a one for eight reverse stock split of the common stock.
The outstanding common stock at June 30, 1996 was based on the actual
number of shares converted one for eight and the remaining
unconverted shares less calculated fractional shares.
(b) Preferred Stock Authorized, Issued and Outstanding -
Effective May 25, 1995, the Company's Certificate of Incorporation
was amended to authorize 2,000,000 shares of preferred stock.
Effective February 27, 1996 the Company's Certificate of
Incorporation was amended to designate 200,000 of such shares as
Series A Preferred Stock and to establish the relative rights,
preferences, and limitations, of the Series A Preferred Stock, which
include:
(i) the shares of Series A Preferred Stock, upon issuance
for a consideration of $2.00 per share, shall be fully-paid and
non-assessable,
(ii) the holders of Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors out of funds legally available for the purpose,
dividends in cash at the rate of $0.16 per share per annum.
Dividends on shares of Series A Preferred Stock will be payable
annually on December 31 of each year. Dividends on shares of
Series A Preferred Stock will be cumulative whether or not
earned or declared and whether or not there shall be funds of
the Company legally available for the payment of such dividends,
(iii) in the event of any liquidation, dissolution, or
winding up of the Company, whether voluntary or involuntary,
after payment or provision for the payment of the debts and
other liabilities of the Company, the Company shall pay to the
holders of Series A Preferred Stock, before any distribution
shall be made to the holders of any other capital stock of the
Company, an amount equal to $2.00 per share of Series A
Preferred Stock held by each such holder, plus an amount equal
to all accrued dividends unpaid thereon to the date of final
distribution to such holders,
(iv) the holders of record of Series A Preferred Stock
shall be entitled to vote at any election of directors and on
any other matter submitted to the holders of common shares
voting together with the holders of common shares as a single
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RTI Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of June 30, 1996 and 1995, and for
the six and three months then ended is unaudited)
class, and shall be entitled to one vote per share of Series A
Preferred Stock held by them,
(v) each share of Series A Preferred Stock shall be
convertible at any time, at the option of the holder thereof,
into one common share,
(vi) a holder of Series A Preferred Stock shall have the
option, but not the obligation, to require the Company to redeem
all, but not less than all, of such holder's shares of Series A
Preferred Stock at a redemption price of $2.00 per share. Such
redemption price is payable in cash, except that if redemption
is made before January 31, 1997, the Company may, at its option,
pay the redemption price by delivery of a note in the principal
amount of the redemption price, payable ten days after demand,
which may not be made prior to January 31, 1997.
(vii) the Series A Preferred Stock may be redeemed, at the
option of the Company, in whole but not in part, at any time
after January 31, 1997, at a price of $2.00 per share, in cash.
On March 4, 1996, the Company issued 118,000 shares of
Series A Preferred Stock at $2.00 per share. Since the issued
Series A Preferred Stock is redeemable, at the holder's option,
for cash at any time on and after January 31, 1997, the
aggregate redemption price is considered to be a current
liability.
(c) Weighted Average Number of Common Shares Outstanding - The
computation of the weighted average number of common shares
outstanding for the three and six month periods ended June 30, 1996
and 1995 considered the one for eight reverse stock split, and
excluded outstanding preferred stock, warrants, and options which
were considered antidilutive.
(d) Warrant - On November 29, 1995, the Company granted to
Frellum Corporation (an affiliated party), in connection with a
short-term credit line provided to the Company, a warrant for the
purchase of 25,000 shares of common stock at the exercise price of
$1.75 per share, which warrant was exercised on June 7, 1997.
(e) Stock Options - The Company's 1987 stock option plan (the
"Plan") authorizes the issuance of options for common stock until
November 3, 1997. The options granted may be either incentive stock
options which are exercisable one year or more from the date of grant
or nonqualified stock options which may be exercisable immediately.
Details of stock option transactions for the six month period ended
June 30, 1996 under the Plan are as follows:
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Price per Exercisable
Options Share Options
Outstanding at December 31, 1995 4,936 $4.00 - $7.76 3,686
Granted --
Exercised --
Canceled 375 7.76
-----------------------------
Outstanding at June 30, 1996 4,561 $4.00 - $6.50 3,936
9. Other Income
Other income in the three month periods of 1996 and 1995 and the
six month period of 1995, resulted primarily from storage space
rentals. Other income of $594,330 in the six month period of 1996
included a $580,000 settlement of prior environmental insurance
claims.
10. Other Assets
Other assets of $82,106 consisted of the purchase price of
discounted, defaulted consumer debt and a related contract for
collection of such debt.
11. Statement of Cash Flows
Supplemental disclosures of cash flow information are as
follows:
Six months ended June 30,
1996 1995
-------- --------
Interest paid $121,881 $111,561
Income taxes paid 4,985 4,985
The Company financed a purchase of Cobalt 60 amounting to
approximately $314,000 in 1996.
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Item 2. Management's Discussion and Analysis or Plan of Operation
General
Reference is made to Item 6 - "Management's Discussion and
Analysis or Plan of Operation" contained in the Company's Annual
Report on Form 10-KSB/A for its fiscal year ended December 31, 1995
(the "1995 Form 10-KSB") for a discussion of the Company's financial
condition as of December 31, 1995, including a discussion of the
Company's anticipated liquidity and working capital requirements
during 1996.
Except for the historical information contained in this Item 2,
the following discussion contains forward looking statements that
involve risks and uncertainties. The Company's actual results could
differ materially from those discussed herein. Factors that could
cause or contribute to such differences include, but are not limited
to, those discussed herein, as well as in the 1995 Form 10-KSB,
including Item 1 ("Description of Business") and Item 3 ("Legal
Proceedings") thereof.
Comparison of Operations for the Three Month Periods Ended June 30,
1996 and 1995
Net sales for the three months ended June 30, 1996 (the "1996
quarter") were $1,226,521, an increase of 19% from net sales of
$1,034,310 for the three months ended June 30, 1995 (the "1995
quarter"). Increased net sales in the 1996 quarter were primarily a
result of increased product volume from existing customers.
Cost of sales in the 1996 quarter increased 7% to $769,591 from
$722,038 in the 1995 quarter. The increase was primarily due to
direct processing costs related to increased product volume. As a
result of increased processing volume, the gross profit percentage in
the 1996 quarter increased to 37% from 30% in the 1995 quarter.
Selling, general and administrative ("SG&A") expenses of
$400,982 in the 1996 quarter decreased 4% from $419,144 in the 1995
quarter. Certain SG&A expenses, such as executive salaries, were
reduced in the 1996 quarter compared to the same expenses in the 1995
quarter, but were partially offset by increased legal expenses in the
1996 quarter relating to the proposed sale of substantially all of
the Company's assets to SteriGenics International.
Expenses of Rockaway Industrial Park - Parcel I increased to
$26,353 in the 1996 quarter as compared to $24,074 in the 1995
quarter due to increased maintenance costs.
As a result of the foregoing, the income from operations in the
1996 quarter was $29,595 as compared to a loss from operations of
$130,946 in the 1995 quarter.
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Other interest expense of $59,051 in the 1996 quarter decreased
by $12,251 from other interest expense in the 1995 quarter primarily
due to lower debt in the 1996 quarter.
For the three month period ending June 30, 1996, the Company
reported a net loss of $23,870 or $.02 per share, as compared to a
net loss of $198,348 or $.18 per share in the same period of 1995.
Comparison of Operations for the Six Month Periods Ended June 30,
1996 and 1995
Net sales for the six months ended June 30, 1996 (the "1996
period") were $2,312,692, an increase of 7% from net sales of
$2,156,790 for the six months ended June 30, 1995 (the "1995
period"). Increased net sales in the 1996 period were primarily a
result of higher processing volume from existing customers.
Cost of sales in the 1996 period increased 6% to $1,509,855 from
$1,427,265 in the 1995 period. The increase was primarily a result
of higher direct processing costs related to increased product
volume, and increased Cobalt amortization. As a result, the gross
profit percentage in the 1996 period increased to 35% from 34% in the
1995 period.
Selling, general and administrative expenses of $815,213 in the
1996 period decreased 1% from $826,348 in the 1995 period. Certain
SG&A expenses, such as executive salaries, were reduced in the 1996
period compared to the same expenses in the 1995 period, but were
partially offset by increased legal expenses in the 1996 period
relating to the proposed sale of substantially all of the Company's
assets to SteriGenics International.
Expenses of Rockaway Industrial Park - Parcel I decreased to
$47,610 in the 1996 period as compared to $58,077 in the 1995 period.
The decrease was due primarily to lower maintenance and consultant
costs incurred in the 1996 period.
Environmental investigation and remediation expenses in the 1996
period of $480,000 were the result of a $460,000 increase in the
Company's estimates of the costs to be incurred for groundwater
remediation programs at the Rockaway, New Jersey site and a $20,000
increase in the Company's estimate for involvement at the Nascolite
site (Note 3). No such increases occurred in the 1995 period.
As a result of the foregoing, the loss from operations in the
1996 period was $539,986 as compared to a loss from operations of
$154,900 in the 1995 period.
Investment income was $5,931 in the 1996 period as compared to
$6,594 in the 1995 period, a result of lower amounts available for
investing.
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Other interest expense of $127,470 in the 1996 period decreased
by $2,217 from other interest expense in the 1995 period primarily
due to lower debt in the 1996 period.
Other income of $594,330 in the 1996 period was primarily the
result of a $580,000 settlement of prior environmental insurance
claims.
As a result, the Company reported a net loss of $67,195 or $.06
per share in the 1996 period, as compared to a net loss of $276,793
or $.26 per share in the 1995 period.
Financial Condition
At June 30, 1996, the Company had a working capital deficit of
$1,185,501, as compared to a working capital deficit of $1,116,028 at
December 31, 1995. The $69,473 increase in the working capital
deficit was primarily the result of purchases of Cobalt 60 and other
capital assets, ongoing environmental remediation, and an investment
in discounted, defaulted consumer debt, partially offset by $580,000
received from an insurance settlement of prior environmental claims.
The Company's ability to improve its working capital position is
dependent on increasing the current level of sales revenues or
obtaining external financing.
As discussed in the 1995 Form 10-KSB, the Company has entered
into an Asset Acquisition Agreement ("Asset Sale") with SteriGenics
International to sell substantially all of the Company's operating
assets, subject to a number of conditions including shareholder
approval and removal of Spill Act Liens obtained by the DEP. In
April 1996, as a condition to releasing such liens, the DEP agreed to
accept $575,000 as settlement of all outstanding claims asserted
under ACO, as well as all claims which could be asserted for the
period ended June 30, 1996. Also, on July 24, 1996 the United States
Environmental Protection Agency (the "EPA") offered to settle the
Company's involvement in the Nascolite Corporation Superfund Site
(see Note 3) for a one time payment of $32,247 within 30 days of the
effective date of a consent decree. The Company accepted the offer
in its response to the EPA. The Company does not currently have
available funds to pay the DEP or EPA settlements, but anticipates
fund such settlements with proceeds from the Asset Sale.
During the second quarter, the Company borrowed $100,000 from
its short-term credit line for additional working capital. The
Company anticipates that no additional financing will be needed for
ongoing operations, other than short-term borrowings under an
existing $315,000 credit line, unless the Asset Sale is not
consummated within the terms of the agreement.
In the 1996 period, the Company acquired additional Cobalt 60
under an existing lease agreement and for cash terms of sixty days.
Other capital expenditures in the 1996 period included a warehouse
addition at one facility and purchases of plant processing equipment.
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The Company's net cash provided by operating activities in the
1996 period was $550,016 as compared to $108,225 in the 1995 period.
Cash provided by operations in the 1996 period increased primarily
due to the receipt of $580,000 from an insurance settlement.
Investing activities in the 1996 period used net cash of $717,077
primarily for the purchase of Cobalt 60, a warehouse expansion, other
plant processing equipment, and an investment in discounted defaulted
consumer debt, as compared to net cash used of $36,112 in the 1995
period. Net cash provided by financing activities in the 1996 period
was $116,620, which primarily resulted from the sale of preferred
stock and the exercise of a warrant, which was partially offset by
payments on the short-term credit line and long-term debt, as
compared to net cash used in financing activities of $179,094 in the
1995 period. The resulting net decrease in cash and cash equivalents
in the 1996 period was $50,441, as compared to a net decrease of
$106,981 for the 1995 period.
Part II. Other Information
Item 1. Legal Proceedings.
Reference is made to Item 3 - "Legal Proceedings" contained in
the Company's Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1995 for a discussion of environmental proceedings
relating to the Company.
As of June 30, 1996, the Company had accrued a total of $720,000
for New Jersey Department of Environmental Protection (the "NJDEP")
billed expenditures for the period through January 20, 1995 and the
Company's estimate of unbilled expenditures, which expenditures are
in accordance with a 1992 Administrative Consent Order (the "ACO")
between the NJDEP, the Company, and Thiokol Corporation. In April
1996, the NJDEP agreed to accept an aggregate payment of $575,000 in
full satisfaction of all financial obligations of the Company accrued
during the period ended June 30, 1996 under the ACO. The NJDEP also
agreed, upon receipt of such payment, to initiate proceedings to
remove its Spill Act lien on the Company's Rockaway property.
In the second quarter of 1996, the NJDEP agreed to permit the
Company to expand its pilot study, utilizing the "Clean-Ox" hydrogen
peroxide-based remedial system. Groundwater remediation using the
CleanOx system was performed during July 1996 at a cost of $220,000.
Assuming positive conclusive test results from the expanded pilot
test, the Company may again petition the NJDEP for a change in the
Remedial Action Work Plan under the 1995 Record of Decision.
On July 24, 1996, the U.S. Environmental Protection Agency (the
"EPA") offered to settle the Company's involvement in the Nascolite
Corporation superfund site for a one time payment of $32,247 within
30 days of the effective date of a consent decree. The Company has
advised the EPA that it will accept the offer.
-16-
<PAGE>
Item 2. Changes in Securities. - none
Item 3. Defaults Upon Senior Securities. - not applicable.
Item 4. Submission of Matters to a Vote of Securityholders. - not
applicable
Item 5. Other Information - none
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fiscal quarter
with respect to which this report is filed.
-17-
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RTI INC.
Date: August 8, 1996 By: THEO W. MULLER
Theo W. Muller
President
Date: August 8, 1996 By: R. STEPHEN MAICO
R. Stephen Maico
Treasurer, Accounting and
Financial Officer
-18-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE REGISTRANT'S
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF JUNE
30, 1996 AND UNAUDITED CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE THREE MONTHS AND SIX
MONTHS THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 27,190
<SECURITIES> 0
<RECEIVABLES> 655,768
<ALLOWANCES> 10,000
<INVENTORY> 0
<CURRENT-ASSETS> 740,111
<PP&E> 15,882,246
<DEPRECIATION> 8,678,278
<TOTAL-ASSETS> 8,206,881
<CURRENT-LIABILITIES> 1,925,614
<BONDS> 1,957,258
0
0
<COMMON> 88,107
<OTHER-SE> 16,054,089
<TOTAL-LIABILITY-AND-EQUITY> 8,206,881
<SALES> 2,312,692
<TOTAL-REVENUES> 2,312,692
<CGS> 1,509,855
<TOTAL-COSTS> 1,342,823
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,470
<INCOME-PRETAX> (67,195)
<INCOME-TAX> 0
<INCOME-CONTINUING> (67,195)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,195)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
