UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-16225
EMCON
(Exact name of Registrant as specified in its charter)
California 94-1738964
-------------------------------------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 South El Camino Real, Suite 1200
San Mateo, California 94402
- ---------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 375-1522
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 [ ]
8,528,454 shares of Common Stock Issued and Outstanding as of November 6, 1996.
1
<PAGE>
EMCON
INDEX
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
Page
Number
FACING SHEET...................................................... 1
TABLE OF CONTENTS................................................. 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995.......... 3
Consolidated Statements of Income -
Three months and nine months ended
September 30, 1996 and 1995....................... 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1996 and 1995..... 5
Notes to Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 9
PART II. OTHER INFORMATION...................................... 12
Signatures........................................................ 13
Index Exhibits.................................................... 14
2
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EMCON
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
September 30, December 31,
1996 1995
(In thousands, except share amounts) (Unaudited) (Audited)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ..................................................................... $ 5,183 $ 9,451
Marketable securities ......................................................................... -- 501
Accounts receivable, net of allowance for doubtful accounts of $1,162
and $1,052 at September 30,1996 and December 31, 1995, respectively ........................ 40,876 34,925
Prepaid expenses and other current assets ..................................................... 5,053 3,066
-------- --------
Total Current Assets ....................................................................... 51,112 47,943
Net property and equipment, at cost ........................................................... 21,522 16,690
Other assets .................................................................................. 4,938 3,579
Deferred tax assets ........................................................................... 1,823 1,677
Intangible assets, net of amortization ........................................................ 21,247 8,747
-------- --------
Total Assets ............................................................................... $100,642 $ 78,636
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:
Accounts payable .............................................................................. $ 5,183 $ 4,174
Accrued payroll and related benefits .......................................................... 6,760 4,975
Other accrued liabilities ..................................................................... 2,044 2,109
Non-current obligations due within one year ................................................... 1,647 372
-------- --------
Total Current Liabilities .................................................................. 15,634 11,630
Non-current obligations ....................................................................... 18,368 1,700
Commitments and contingencies ................................................................. -- --
Shareholders' Equity:
Preferred stock, no par value, 5,000,000 shares authorized; no shares issued
or outstanding ............................................................................. --
Common stock, no par value, 15,000,000 shares authorized; 8,528,454
and 8,329,343 shares issued and outstanding at September 30, 1996 and
December 31, 1995, respectively ............................................................ 42,064 41,401
Retained earnings ............................................................................. 24,576 23,918
Unrealized losses on marketable securities .................................................... -- (13)
-------- --------
Total Shareholders' Equity ................................................................. 66,640 65,306
-------- --------
Total Liabilities and Shareholders' Equity ................................................. $100,642 $ 78,636
======== ========
</TABLE>
See accompanying notes
3
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EMCON
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
------------------------------- ------------------------------
(In thousands, except per share amounts) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross revenue .......................................... $ 36,416 $ 32,106 $ 100,861 $ 93,591
Outside services, at cost .............................. 4,856 5,470 14,152 14,226
--------- --------- --------- ---------
Net revenue ......................................... 31,560 26,636 86,709 79,365
Costs and expenses:
Direct expenses ..................................... 14,894 10,237 37,613 30,273
Indirect expenses ................................... 16,084 15,608 47,605 46,763
--------- --------- --------- ---------
Income from operations ........................... 582 791 1,491 2,329
Interest income (expense), net ......................... (266) 71 (565) 166
Equity in income (loss) of affiliates .................. 83 (3) 86 (53)
--------- --------- --------- ---------
Income before provision for income taxes ............... 399 859 1,012 2,442
Provision for income taxes ............................. 140 209 354 684
--------- --------- --------- ---------
Net income ............................................. $ 259 $ 650 $ 658 $ 1,758
========= ========= ========= =========
Income per share ....................................... $ 0.03 $ 0.08 $ 0.08 $ 0.22
========= ========= ========= =========
</TABLE>
See accompanying notes
4
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EMCON
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Nine months ended
September 30,
----------------------------
Increase (decrease) in cash and cash equivalents (in thousands) 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net income .................................................................... $ 658 $ 1,758
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization ............................................... 4,922 3,867
Loss on sale/disposal of property and equipment ............................. 122 149
Increase in salary continuation plan ........................................ 97 52
Changes in operating assets and liabilities:
Accounts receivable ....................................................... (1,759) 1,160
Prepaid expenses and other current assets ................................. (662) 1,094
Other assets .............................................................. (2,780) (647)
Accounts payable .......................................................... (651) (3,886)
Accrued payroll and related benefits ...................................... 1,401 (972)
Other accrued liabilities ................................................. (1,766) (375)
- ---------------------------------------------------------------------------------- ------- -------
Net cash provided by (used for) operating activities .......................... (418) 2,200
- ---------------------------------------------------------------------------------- ------- -------
Cash flow from investing activities:
Additions to property and equipment ........................................... (2,722) (2,693)
Purchases of available for sale securities .................................... -- (1)
Maturities of available for sale securities ................................... 514 1,454
Acquisitions, net of cash acquired ........................................... (3,827) --
Proceeds from sale of property and equipment .................................. 176 59
- ---------------------------------------------------------------------------------- ------- -------
Net cash used for investing activities ........................................ (5,859) (1,181)
- ---------------------------------------------------------------------------------- ------- -------
Cash flow from financing activities:
Proceeds of new debt obligation ............................................... 8,348 --
Payment of current and noncurrent obligations ................................. (7,002) 145
Issuance of common stock for cash ............................................. 663 501
- ---------------------------------------------------------------------------------- ------- -------
Net cash provided by financing activities ..................................... 2,009 646
- ---------------------------------------------------------------------------------- ------- -------
Increase (decrease) in cash and cash equivalents ................................. (4,268) 1,665
Cash and cash equivalents, beginning of year ..................................... 9,451 5,152
- ---------------------------------------------------------------------------------- ------- -------
Cash and cash equivalents, end of period ......................................... $ 5,183 $ 6,817
- ---------------------------------------------------------------------------------- ------- -------
</TABLE>
See accompanying notes
5
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EMCON
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries after elimination of all
significant intercompany accounts and transactions.
While the financial information is unaudited, the statements in this report
reflect all adjustments, which are normal and recurring, that are necessary
for a fair presentation of the results of operations for the interim
periods covered and of the financial condition of the Company at the dates
of the balance sheets. The operating results for the interim periods
presented are not necessarily indicative of performance for the entire
year.
These financial statements and notes should be read in conjunction with the
Company's consolidated financial statements for the fiscal year ended
December 31, 1995.
2. Restructuring Charges
In December 1994, as a result of changes in senior management, the Company's
Board of Directors approved a corporate restructuring plan which included
the write off of employment contracts with no current or future value,
termination of personnel, and the elimination or abandonment of excess and
underperforming assets and facilities. During the nine months ended
September 30, 1996, $91,000 of cash charges related to the restructuring
were incurred and charged against the established reserve. At September 30,
1996, $61,000 of accrued restructuring costs remained and were included in
other accrued liabilities. To date, $1,103,000 of restructuring costs
related to this action have been incurred.
3. On February 29, 1996, EMCON acquired all of the outstanding capital stock of
Organic Waste Technologies, Inc. ("OWT"), a Cleveland based construction,
equipment and operations and maintenance company with significant expertise
in solid waste management. The Company purchased OWT for $13,859,000 in cash
plus the issuance of convertible notes held by certain senior OWT management
in the aggregate principal amount of $1,747,000 and other direct acquisition
costs of $77,000. The notes bear interest at the rate of 8% per annum with
all principal due and payable in full on March 1, 2001. The notes may be
converted into shares of OWT common stock upon an underwritten public
offering of OWT's common stock in an amount in excess of $10,000,000. In the
event that the notes have not been converted into OWT shares, they may
instead be converted into shares of EMCON common stock for a period of
ninety days after November 30, 2001, at a conversion price of $6.50 per
share.
Specifically identifiable intangible assets and goodwill of approximately
$11,786,000 resulting from this acquisition are included in intangible
assets and are being amortized over periods not exceeding thirty years.
Accumulated amortization related to this acquisition as of September 30,
1996 was approximately $229,000.
6
<PAGE>
The following summarizes the unaudited pro forma net revenue, net income,
and income per share for the combined company for the nine month period
ended September 30, 1996 and 1995 had the acquisition occurred at the
beginning of the period presented.
(unaudited)
Nine months ended
September 30,
--------------------------------
(in thousands) 1996 1995
------------------------------------------------------------------------
Net revenue $89,608 $92,341
Net income 342 1,585
Income per share $ 0.05 $ 0.20
------------------------------------------------------------------------
The above proforma results of operations do not purport to reflect the
actual results of operations had the Company actually acquired OWT as of the
beginning of the period presented.
On May 31, 1996, EMCON acquired the operations of Cascade Pacific
Engineering, Inc. ("Cascade"). The transaction was structured as an asset
acquisition with EMCON acquiring substantially all of the assets of Cascade
for $546,000 in cash plus the assumption of substantially all of Cascade's
liabilities. The tangible net assets acquired were valued at $84,000. The
$462,000 excess of cost over the fair value of net assets acquired is
included in intangible assets and is being amortized over three years.
Accumulated amortization related to this acquisition as of September 30,
1996 was approximately $51,000.
4. Credit Agreement
In conjunction with the acquisition of OWT, the Company entered into a
$20,000,000 secured credit agreement with its existing commercial bank,
replacing its previous $10,000,000 unsecured line of credit. Under the new
agreement, the Company borrowed $10,000,000 on a long term basis with an
interest rate not to exceed the prime rate. Principal is to be amortized
over seven years, but with any unpaid amount finally due and payable on
June 30, 2001. The remaining $10,000,000 under the credit agreement is
available on a line of credit basis for working capital purposes (with up
to $5,000,000 available for non-working capital purposes). The line of
credit component of the credit agreement expires on May 31, 1997.
5. Litigation
As a professional services firm engaged in environmental-related matters,
the Company encounters potential liability, including claims for significant
environmental damage in the normal course of business. The Company is party
to lawsuits and is aware of potential exposure related to certain claims,
but in the opinion of management the resolution of these matters will not
have a material adverse effect on the Company's financial position, results
of operations or cash flows.
7
<PAGE>
6. Income Per Share
Income per share is based on the weighted average number of common and
dilutive common equivalent shares outstanding using the modified treasury
stock method for the three months and nine months ended September 30, 1996
and 1995.
7. Other
In 1994, the Company converted to a fifty-two/fifty-three week fiscal year
which will result in a fifty-three week year in 1996. The Company's year end
falls on the Friday closest to the last day of the calendar year. The
Company also follows a five-four-four week quarterly cycle. For convenience,
the accompanying financial statements have been shown as ending on the last
day of the calendar period.
8
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EMCON
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
Of Operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS. Statements in this
report that are forward-looking are based on current expectations, and actual
results may differ materially. Forward-looking statements involve numerous risks
and uncertainties that could cause actual results to differ materially,
including, but not limited to, the possibilities that the demand for the
Company's services may decline as a result of possible changes in general and
industry specific economic conditions and the effects of competitive services
and pricing; one or more current or future claims made against the Company may
result in substantial liabilities; and such other risks and uncertainties as are
described in reports and other documents filed by the Company from time to time
with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
CURRENT YEAR-TO-DATE VERSUS PRIOR YEAR-TO-DATE. Net revenue for the first nine
months of 1996 totalled $86,709,000, including $14,440,000 contributed by OWT
following its acquisition on February 29, 1996. Excluding OWT, net revenue
totalled $72,269,000, an 8.9% decrease compared with $79,365,000 for the first
nine months of 1995. The decrease was attributable to significant
underperformance of the Company's Laboratory Division in the Alaska and
Northeast markets and the Consulting Division in the Alaska, Washington and
Southeast markets combined with a decrease in revenue due to a reduced headcount
following recent reductions in force in those markets. The decrease was, to a
lesser extent, also attributable to particularly difficult weather conditions in
the Northeast and Northwest areas during the first quarter.
Direct expenses for the first nine months of 1996 totalled $37,613,000,
including direct expenses from OWT of $10,002,000. Direct expenses include
compensation for billable hours for technical and professional staff and other
project related expenses and direct labor and materials for laboratory testing.
Excluding OWT, direct expenses for the first nine months of 1996 totalled
$27,611,000 a decrease of 8.8% compared with $30,273,000 for the same period in
1995. Excluding OWT, direct expenses as a percent of net revenue in the first
nine months of 1996 increased slightly to 38.2% from 38.1% in the same period in
1995.
Indirect expenses for the first nine months of 1996 totalled $47,605,000,
including indirect expenses from OWT of $2,112,000. Indirect expenses include
nonbillable hours for professional, technical and administrative staff and
general expenses such as rent, bonuses, benefits, insurance, severance, legal
and depreciation. Excluding OWT, indirect expenses for the first nine months of
1996 totalled $45,493,000; a decrease of 2.7% compared with $46,763,000 for the
same period in 1995. Excluding OWT, indirect expenses as a percent of net
revenue increased to 62.9% in the first nine months of 1996 from 58.9% in the
same period in 1995. The increase in indirect expenses as a percent of net
revenue was principally due to the above noted decrease in net revenue combined
with the effect of significant severance costs and expenses related to closing
several small offices, combined with higher start up costs associated with the
expansion of the Company's Operation and Construction (EOC) division. This
increase was offset in part by prior reductions in force and continued
implementation of the Company's previously announced cost containment measures.
9
<PAGE>
Income from operations for the first nine months of 1996 totalled $1,491,000 a
36.0% decrease compared to $2,329,000 for the comparable period in 1995.
The Company recorded interest expense net of interest income of $565,000 and
interest income net of interest expense $166,000 for the first nine months of
1996 and 1995, respectively. The net increase in interest expense was primarily
attributable to an increase in the Company's long term indebtedness (including
assumption of the outstanding OWT convertible notes and other project/equipment
related indebtedness and the $10,000,000 loan undertaken to partially fund the
OWT acquisition), and a reduction in the Company's cash available for investment
as a result of the OWT acquisition.
QUARTERS ENDED SEPTEMBER 30, 1996 AND 1995. For the quarter ended September 30,
1996, net revenue totalled $31,560,000, including $6,817,000 contributed by OWT.
Excluding OWT, net revenue in the quarter totalled $24,743,000, a 7.1% decrease
compared with $26,636,000 in the third quarter of 1995. The decrease on the
quarter was attributable to significant underperformance of the Company's
Laboratory Division in the Alaska and Northeast markets and the Consulting
Division in the Alaska, Washington and Southeast markets combined with a
decrease in revenue due to reduced headcount following recent reductions in
force in those markets.
Direct expenses in the quarter ended September 30, 1996 totalled $14,894,000,
including direct expenses from OWT of $5,184,000. Excluding OWT, direct expenses
for third quarter totalled $9,710,000; a decrease of 5.1% compared with
$10,237,000 for the same period in 1995. Excluding OWT, direct expenses as a
percent of net revenue in the third quarters of 1996 and 1995 remained
relatively constant at 39.2% and 38.4%, respectively.
Indirect expenses in the quarter ended September 30, 1996 totalled $16,084,000,
including indirect expenses from OWT of $792,000. Excluding OWT, indirect
expenses for the third quarter of 1996 totalled $15,292,000; a decrease of 2.0%
compared with $15,608,000 for the same period in 1995. Excluding OWT, indirect
expenses as a percent of net revenue increased to 61.8% in the third quarter of`
1996 from 58.6% in the same period in 1995. The increase in indirect expenses as
a percent of net revenue was principally due to the above noted decrease in net
revenue combined with the effect of significant severance costs and expenses
related to closing several small offices, combined with higher start up costs
associated with the expansion of the Company's Operation and Construction (EOC)
Division. This increase was offset in part by cost savings from prior reductions
in force and continued implementation of the Company's previously announced cost
containment measures.
Income from operations for the quarter ended September 30, 1996 totalled
$582,000; a 26.4% decrease compared to $791,000 for the comparable period in
1995.
The Company recorded interest expense net of interest income of $266,000 and
interest income net of interest expense of $71,000 for the quarters ended
September 30, 1996 and 1995, respectively. The net increase in interest expense
was primarily attributable to an increase in the Company's long term
indebtedness (including assumption of the outstanding OWT convertible notes and
other project/equipment related indebtedness and the $10,000,000 loan undertaken
to partially fund the OWT acquisition), and a reduction in the Company's cash
available for investment as a result of the OWT acquisition.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1996, the Company financed its operations
principally from cash and marketable securities on hand, cash generated by
operations and the issuance of common stock under the Company's Employee Stock
Purchase Plan, and from the return on investment on its cash, cash equivalents
and marketable securities. Net cash used by operations during the nine months
ended September 30, 1996 was $418,000. At September 30, 1996, the Company had
cash and cash equivalents of $5,183,000.
The Company invested $2,722,000 for the purchase of property and equipment in
the first nine months of 1996, primarily for field equipment, computers and
communication systems and laboratory equipment. In conjunction with the
acquisition of OWT, the Company entered into a $20,000,000 secured credit
agreement with its existing commercial bank, replacing its previous $10,000,000
unsecured line of credit. Under the new agreement, the Company borrowed
$10,000,000 on a term loan basis with interest at a variable rate, generally not
to exceed the prime rate. Principal is to be amortized over seven years, but
with any unpaid amount finally due and payable on June 30, 2001. The remaining
$10,000,000 under the credit agreement is available on a line of credit basis
for working capital purposes (with up to $5,000,000 of this amount also being
available for non-working capital purposes). The line of credit component of the
credit agreement expires on May 31, 1997.
11
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EMCON
PART II OTHER INFORMATION
Items 1. - 5. Not applicable.
Item 6. Exhibits and Reports
(a) Exhibits - See Index to Exhibits on Page 14
(b) Reports on Form 8-K - No reports on Form 8-K were filed with the Securities
and Exchange Commission during the quarter ended September 30, 1996.
12
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EMCON
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 6, 1996 EMCON
R. Michael Momboisse
-------------------------------------
R. MICHAEL MOMBOISSE
Chief Financial Officer,
Vice President - Legal, and Secretary
(Duly authorized and principal
financial and accounting officer)
13
<PAGE>
EMCON Sequentially
Exhibit Numbered
Number INDEX TO EXHIBITS Page
- -------------- ------------
2.1 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiary, Wehran/Emcon
Northeast, Inc., into Registrant effective December
20,1994, incorporated by reference from Exhibit 2.2
of the Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (the "1994 10-K").
2.2 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiary, Wehran
Engineering Corporation, into Registrant effective
December 23, 1994, incorporated by reference from
Exhibit 2.3 of the 1994 10-K.
2.3 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiary, EA
Associates, into Registrant effective December 31,
1994, incorporated by reference from Exhibit 2.4 of
the 1994 10-K.
2.4 Certificate of Ownership reflecting the merger of *
Registrant's wholly-owned subsidiaries, EMCON
Northwest, Inc., EMCON Southeast, Inc., EMCON
Baker-Shiflett, Inc., and Eldredge Engineering
Associates, Inc., into Registrant effective
December 31, 1994, incorporated by reference from
Exhibit 2.5 of the 1994 10-K.
2.5 Stock Purchase Agreement dated January 30, 1996, *
among Organic Waste Technologies, Inc. ("OWT"),
Registrant and the selling shareholders and option
holders of OWT, incorporated by reference from
Exhibit 2.1 of the Amendment No. 1 to Form 8-K /A
dated April 15, 1996.
3.1 Articles of Incorporation, as amended, incorporated *
by reference from Exhibit 3.1 of the Registrant's
Registration Statement on Form S-1 (File No.
33-16337) effective September 16, 1987 (the "Form
S-1 Registration Statement").
3.2 Certificate of Amendment of Restated Articles of *
Incorporation as filed on May 24, 1988,
incorporated by reference from Exhibit 3.2 of the
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 (the "1988 10-K").
3.3 Certificate of Amendment of Restated Articles of *
Incorporation as filed on June 4, 1991,
incorporated by reference from Exhibit 4.1 of the
Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1991 (the "June 1991 10-Q").
3.4 Bylaws, as amended, incorporated by reference from *
Exhibit 4.2 of the June 1991 10-Q.
10.1 EMCON 1986 Incentive Stock Option Plan and *(1)
Amendment, incorporated by reference from Exhibit
10.15 of the Form S-1 Registration Statement.
10.2 Form of Agreement pursuant to Salary Continuation *(1)
Plan, incorporated by reference from Exhibit 10.17
of the Form S-1 Registration Statement.
14
<PAGE>
Sequentially
Exhibit Numbered
Number INDEX TO EXHIBITS (Continued) Page
- -------------- ------------
10.3 Schedule identifying Agreements pursuant to Salary *(1)
Continuation Plan between Registrant and certain
employees, incorporated by reference from Exhibit
10.7 of the Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (the "1995
10-K").
10.4 Form of Indemnity Agreement between the Registrant *
and each of the Registrant's officers and
directors, incorporated by reference from Exhibit
10.20 of the Annual Report on Form 10-K for the
fiscal year ended December 31, 1988 (the "1988
10-K").
10.5 EMCON 1988 Stock Option Plan, amended by *(1)
shareholder approval on May 25,1994, including form
of Nonqualified Stock Option Agreement (Outside
Directors), incorporated by reference from Exhibit
10.9 of the Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1994 (the "June 30,
1994 10-Q").
10.6 EMCON Employee Stock Purchase Plan incorporated by *(1)
reference from Exhibit 10.10 of the Quarterly
Report on Form 10-Q for the fiscal quarter ended
June 30, 1995.
10.7 EMCON Restricted Stock Plan incorporated by *(1)
reference from Exhibit 10.15 of the Annual Report
on Form 10-K for the fiscal year ended December 31,
1990.
10.8 EMCON Deferred Compensation Plan effective *(1)
January 1, 1994, incorporated by reference from
Exhibit 10.12 of the 1993 10-K.
10.9 Trust Agreement for the EMCON Deferred Compensation *(1)
Plan and Salary Continuation Plan Trust dated
February 19, 1994, between Registrant and Wells
Fargo Bank, N.A. incorporated by reference from
Exhibit 10.13 of the 1993 10-K.
10.10 Credit Agreement between The Bank of California, *
N.A. and Registrant dated September 20, 1991 with
Amendment dated May 31, 1992, incorporated by
reference from Exhibits 10.11 and 10.12 of the 1992
10-K.
10.11 Second Amendment to Credit Agreement between The *
Bank of California, N.A. and Registrant dated
effective May 31, 1993, incorporated by reference
from Exhibit 10.13 of Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993.
10.12 Third Amendment to Credit Agreement between The *
Bank of California, N.A. and Registrant dated
effective June 2, 1994, incorporated by reference
from Exhibit 10.16 of Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993.
10.13 Fourth Amendment to Credit Agreement between the *
Bank of California, N.A. and Registrant dated
effective May 31, 1995, incorporated by reference
from Exhibit 10.17 of the June 30, 1995 10-Q.
10.14 Letter Agreement between H. Lee Fortier and *(1)
Registrant dated March 14, 1994, incorporated by
reference from Exhibit 10.21 of the September 30,
1994 Form 10-Q.
10.15 Agreement between Eugene M. Herson and Registrant *(1)
dated November 30, 1995, incorporated by reference
from Exhibit 10.21 of the 1995 10-K.
15
<PAGE>
Sequentially
Exhibit Numbered
Number INDEX TO EXHIBITS (Continued) Page
- -------------- ------------
10.16 Agreement between R. Michael Momboisse and *(1)
Registrant dated November 10, 1995, incorporated by
reference from Exhibit 10.22 of the 1995 10-K.
10.17 Credit Agreement between The Bank of California, *
N.A. and Registrant dated February 29, 1996,
incorporated by reference from Exhibit 10.2 of the
Current Report on Form 8-K dated February 29, 1996
(the "February 1996 8-K.").
10.18 Security Agreement between The Bank of California, *
N.A. and Registrant dated February 29, 1996,
incorporated by reference from Exhibit 10.3 of the
February 1996 8-K.
10.19 Pledge Agreement between The Bank of California, *
N.A. and Registrant dated February 29, 1996,
incorporated by reference from Exhibit 10.4 of the
February 1996 8-K.
10.20 Eurodollar Rate Option Agreement between The Bank *
of California, N.A. and Registrant dated February
29, 1996, incorporated by reference from Exhibit
10.5 of the February 1996 8-K.
10.21 Fixed Rate Amortization Option Agreement between *
The Bank of California, N.A. and Registrant dated
February 29, 1996, incorporated by reference from
Exhibit 10.6 of the February 1996 8-K.
10.22 Note Agreement among the Registrant, OWT, Mark H. *
Shipps, and certain employees of OWT, incorporated
by reference from Exhibit 10.1 of the February 1996
8-K.
11.1 Computation of Income Per Share, incorporated as 17
part of this submission as document type EX-11.1.
* Incorporated by reference
(1) Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14(c) of the instructions to
Form 10-K.
16
<PAGE>
EXHIBIT 11.1
EMCON
COMPUTATION OF INCOME PER SHARE
(In thousands except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income ......................................................... $ 259 $ 650 $ 658 $1,758
Proforma interest income related to modified
treasury stock method ........................................... 58 59 74 194
------ ------ ------ ------
Adjusted net income ................................................ $ 317 $ 709 $ 732 $1,952
====== ====== ====== ======
Weighted average number of common shares
outstanding during the period ...................................... 8,512 8,296 8,483 8,255
Common equivalent share from outstanding
stock options using the modified treasury
stock method .................................................... 691 657 744 660
Incremental shares to reflect full dilution (1) ................. 0 0 0 0
------ ------ ------ ------
Total shares for purposes of calculating diluted
income per share (1) ............................................... 9,203 8,953 9,227 8,915
====== ====== ====== ======
Primary income per share ........................................... $ 0.03 $ 0.08 $ 0.08 $ 0.22
====== ====== ====== ======
Fully diluted income per share ..................................... $ 0.03 $ 0.08 $ 0.08 $ 0.22
====== ====== ====== ======
- -----------------------
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not required by footnote 2 to paragraph 14 to APB
opinion No. 15, because it results in dilution of less than 3%.
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets, consolidated statements of income and consolidated
statements of cash flows included in the Company's Form 10-Q for the nine month
period ended September 30, 1996, and is qualified in its entirety by reference
to such financial statements and the notes thereto.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 5,183,000
<SECURITIES> 0
<RECEIVABLES> 42,038,000
<ALLOWANCES> 1,162,000
<INVENTORY> 0
<CURRENT-ASSETS> 51,112,000
<PP&E> 48,067,000
<DEPRECIATION> 26,545,000
<TOTAL-ASSETS> 100,642,000
<CURRENT-LIABILITIES> 15,634,000
<BONDS> 0
<COMMON> 42,064,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 100,642,000
<SALES> 86,709,000
<TOTAL-REVENUES> 86,709,000
<CGS> 37,613,000
<TOTAL-COSTS> 37,613,000
<OTHER-EXPENSES> 47,094,000
<LOSS-PROVISION> 204,000
<INTEREST-EXPENSE> 786,000
<INCOME-PRETAX> 1,012,000
<INCOME-TAX> 354,000
<INCOME-CONTINUING> 658,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 658,000
<EPS-PRIMARY> $0.08
<EPS-DILUTED> $0.08
