<PAGE> 1
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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----- -----
Commission file no.
0-017888
SERV-TECH, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1398757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5200 CEDAR CREST BOULEVARD
HOUSTON, TEXAS 77087
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 644-9974
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
----- -----
The number of shares of Common Stock issued and outstanding, par value
$0.50 per share, as of May 8, 1996, was 6,666,597.
<PAGE> 2
SERV-TECH, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION> Page(s)
PART I. FINANCIAL INFORMATION ------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet
March 31, 1996 (Unaudited) and December 31, 1995........................... 3
Consolidated Statement of Operations (Unaudited)
Three Months Ended March 31, 1996 and 1995.................................. 4
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 1996 and 1995.................................. 5
Notes to Consolidated Financial Statements (Unaudited)...................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................. 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. ............................. 10
PART III. SIGNATURES. ............................................................ 11
</TABLE>
-2-
<PAGE> 3
SERV-TECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
----------- ------------
(unaudited)
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 7,345,707 $ 1,347,475
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . 52,928,092 48,945,540
Costs and estimated earnings in excess of billings on
uncompleted contracts . . . . . . . . . . . . . . . . . . . . . . 1,857,129 8,693,468
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,227,067 2,102,245
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,848,964 1,619,903
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 4,994,541 4,922,070
--------------- ---------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 71,201,500 67,630,701
PROPERTY, PLANT AND EQUIPMENT, NET . . . . . . . . . . . . . . . . . . . 32,367,497 32,414,756
INTANGIBLE ASSETS, NET . . . . . . . . . . . . . . . . . . . . . . . . . 17,180,290 17,442,812
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,323,993 2,015,984
--------------- ---------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,073,280 $ 119,504,253
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,015,030 $ 15,952,601
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 17,702,804 18,663,629
Billings in excess of costs and estimated earnings on
uncompleted contracts . . . . . . . . . . . . . . . . . . . . . . 1,808,296 1,343,826
Revolving line of credit . . . . . . . . . . . . . . . . . . . . . . 9,000,000 6,500,000
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . - 728,597
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,395 626,566
--------------- ---------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 47,417,525 43,815,219
LONG-TERM DEBT, LESS CURRENT MATURITIES . . . . . . . . . . . . . . . . . 16,595,000 16,594,998
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 5,168,076 5,095,608
MINORITY INTEREST AND OTHER . . . . . . . . . . . . . . . . . . . . . . . 1,309,848 1,068,582
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value; 2,000,000 shares
authorized; no shares issued and outstanding . . . . . . . . . . . - -
Common stock, par value $.50, authorized 20,000,000
shares; issued and outstanding shares of 6,816,849 and
6,752,671, respectively . . . . . . . . . . . . . . . . . . . . . 3,408,425 3,376,336
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 43,872,459 43,489,763
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 6,672,959 7,675,586
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . (116,362) (64,982)
Treasury stock, at cost, 156,833 and 193,358 shares, respectively . . (1,254,650) (1,546,857)
--------------- ---------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . 52,582,831 52,929,846
--------------- ---------------
Total liabilities and stockholders' equity . . . . . . . . . . $ 123,073,280 $ 119,504,253
=============== ===============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
-3-
<PAGE> 4
SERV-TECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
for the three months ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,626,437 $ 71,550,375
COSTS OF SERVICES . . . . . . . . . . . . . . . . . . . . . . . 53,801,865 59,001,813
--------------- ---------------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . 10,824,572 12,548,562
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES . . . . . . . . . 11,623,328 9,174,720
--------------- ---------------
Operating income (loss) . . . . . . . . . . . . . . . . . . (798,756) 3,373,842
OTHER INCOME (EXPENSE):
Interest expense . . . . . . . . . . . . . . . . . . . . . (600,675) (412,563)
Interest income . . . . . . . . . . . . . . . . . . . . . . 12,930 27,684
Other, net . . . . . . . . . . . . . . . . . . . . . . . . 10,140 59,078
--------------- ---------------
(577,605) (325,801)
--------------- ---------------
MINORITY INTEREST AND OTHER . . . . . . . . . . . . . . . . . . (241,266) (313,388)
EQUITY IN EARNINGS OF AFFILIATES . . . . . . . . . . . . . . . - (24,331)
--------------- ---------------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . . . . . (1,617,627) 2,710,322
PROVISION (BENEFIT) FOR INCOME TAXES . . . . . . . . . . . . . (615,000) 1,193,000
--------------- ---------------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . $ (1,002,627) $ 1,517,322
================ ===============
Earnings (loss) per share . . . . . . . . . . . . . . . . . . . $ (.15) $ .23
================ ===============
Weighted average common shares outstanding . . . . . . . . . . 6,627,517 6,718,224
=============== ===============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-4-
<PAGE> 5
SERV-TECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
for the three months ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,002,627) $ 1,517,322
Adjustments:
Depreciation and amortization . . . . . . . . . . . . . . . . . . 1,698,081 1,567,420
Provision for losses on accounts and notes receivable . . . . . . (201,656) 432,460
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . (3) (699,114)
Equity in earnings of affiliates . . . . . . . . . . . . . . . . - 24,331
Minority interest and other . . . . . . . . . . . . . . . . . . . 241,266 313,388
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,753 (1,691)
-------------- ------------
747,814 3,154,116
Change in assets and liabilities, net of effect from acquisi-
tion of a business:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . (3,780,896) (17,109,482)
Net change in billings, costs and estimated earnings on
uncompleted contracts . . . . . . . . . . . . . . . . . . . . . 7,300,809 15,147,882
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . (124,822) (130,768)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . (229,061) 548,230
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (208,009) (225,721)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 2,062,429 4,154,643
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . (353,833) 1,844,257
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . (728,599) -
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 885,295
-------------- ------------
Net cash provided by operating activities . . . . . . . . . . 4,685,832 8,268,452
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (1,355,529) (599,564)
Investments in and advances to affiliates . . . . . . . . . . . . - (550,301)
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . (87,901) (7,333)
-------------- ------------
Net cash used in investing activities . . . . . . . . . (1,443,430) (1,157,198)
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt . . . . . . . . . . . . . . . . . 4,801,245 10,000,000
Principal payments of debt . . . . . . . . . . . . . . . . . . . (2,045,415) (5,481,673)
-------------- ------------
Net cash provided by financing activities . . . . . . . 2,755,830 4,518,327
-------------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . 5,998,232 11,629,581
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . 1,347,475 1,851,431
-------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . $ 7,345,707 $13,481,012
============== ============
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
-5-
<PAGE> 6
SERV-TECH, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of
Serv-Tech, Inc., and its majority-owned subsidiaries ("Company"). The unaudited
consolidated financial statements have been prepared consistent with the
accounting policies reflected in the consolidated financial statements included
in the Company's Form 10-K filed with the Securities and Exchange Commission
for the year ended December 31, 1995, and should be read in conjunction
therewith.
In management's opinion, the unaudited consolidated financial
statements include all adjustments, consisting of normal recurring adjustments,
considered necessary for a fair presentation of the Company's consolidated
financial position at March 31, 1996, and the consolidated results of its
operations and cash flows for the three months ended March 31, 1996 and 1995.
Interim results are not necessarily indicative of results for a full year.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of: ("SFAS 121"). This
statement requires that long-lived assets and certain identifiable intangibles
to be held and used by an entity be reviewed for impairment whenever events or
changes indicate the carrying amount of an asset may not be recoverable. The
adoption of SFAS 121 had no effect on the consolidated financial statements for
the quarter ended March 31, 1996.
Certain reclassifications have been made to conform to current year
presentation with no effect on earnings.
2. FINCHAA SUGAR MILL PROJECT
During the first quarter of 1995, F. C. Schaffer & Associates
("Schaffer"), a subsidiary of the Company, secured an $83 million contract to
engineer, design, procure and construct a 4,000 metric ton cane-per-day sugar
factory and 45,000 liter-per-day ethanol plant in Finchaa, Ethiopia. The
project, which is financed by the African Development Bank, is expected to be
completed in the latter part of 1997 followed by a twelve month training and
warranty period. In conjunction with the effectiveness of the contract, the
Company received an advance payment equal to 20% of the contract value. The
Company has issued letters of credit to support performance and the 20% advance
payment. Such letters of credit total approximately $21.0 million at March 31,
1996. Contractual payment amounts to Schaffer will be supported by a revolving
letter of credit to be issued by the Ethiopian government via the African
Development Bank.
In accordance with the terms of the Schaffer acquisition agreement,
former shareholders of that company will participate in the earnings of the
Finchaa project. This deferred purchase price is estimated to be in the range
of 30-35% of the project profits and will be recognized as an expense, as
earned, over the life of the project. The amount accrued under this
arrangement for the three months ended March 31, 1996, totaled $0.2 million and
is reflected in the statement of operations as a component of minority interest
and other.
As of March 31, 1996, the Finchaa project was approximately 56%
complete. Revenues from the Finchaa project for the three months ended March
31, 1996, were $16.0 million. Gross profit recognized from the project for the
three months ended March 31, 1996, was $0.8 million. The first quarter 1995
included $4.0 million in revenue and no gross profit related to the Finchaa
project. Project-to-date revenues and gross profits for the Finchaa project
are $48.9 million and $2.6 million, respectively.
-6-
<PAGE> 7
3. DEBT
At March 31, 1996, the Company maintained a revolving line of credit
agreement with two banks (the "Revolving Note"). The Revolving Note provides
for borrowings up to $35.0 million and expires May, 1997. Interest is payable
monthly, at rates not exceeding the bank's prime rate. The Company's weighted
average borrowing rate at March 31, 1996, was 6.927%. The Revolving Note
contains certain covenants which require, among other things, that the Company
maintain (i) minimum consolidated tangible net worth, (ii) minimum consolidated
net worth, (iii) funded debt coverage ratio, and (iv) fixed charge coverage
ratio. The Revolving Note is not collateralized and the Company pays a
commitment fee of .25% on the unused portion. In addition, the Revolving Note
provides certain restrictions on the payment of dividends. At March 31, 1996,
working capital borrowings of $9.0 million were outstanding under the Revolving
Note.
At March 31, 1996, the Company had outstanding, against the Revolving
Note, irrevocable letters of credit amounting to approximately $5.9 million.
The letters of credit were issued to guarantee certain of the Company's
insurance programs and bid bonds.
4. BUSINESS SEGMENTS
Summarized financial information by business segment for the three
month periods ended March 31, 1996 and 1995, is set forth below (dollars in
thousands):
<TABLE>
<CAPTION>
Environmental
Specialty & Performance Corporate
Services EPC Chemicals & Other Consolidated
-------- --- --------- ------- ------------
<S> <C> <C> <C> <C> <C>
1996
- ----
Revenues $ 19,414 $ 41,901 $ 3,910 $ (599) $ 64,626
Operating income (loss) 1,465 (158) (167) (1,939) (799)
1995
- ----
Revenues $ 46,467 $ 22,031 $ 3,076 $ (24) $ 71,550
Operating income (loss) 3,385 1,305 124 (1,440) 3,374
</TABLE>
5. CONTINGENCIES
The Company is involved in various claims and disputes incidental to
its business. The Company believes that the disposition of all such claims and
disputes, individually or in the aggregate, should not have a material adverse
effect upon the Company's financial position, results of operations or cash
flows.
At March 31, 1996, the Company had irrevocable letters of credit
outstanding of approximately $32.1 million. The letters of credit were issued
primarily to (i) guarantee certain of the Company's insurance programs
amounting to $5.9 million, (ii) support Finchaa Sugar Mill Project
procurement amounting to $5.2 million, and (iii) to support job performance
on the Finchaa Sugar Mill Project amounting to $21.0 million (see Note 2).
6. SUBSEQUENT EVENT
On April 26, 1996, the Company announced the signing of a letter of
intent to merge with HydroChem Industrial Services, Inc. ("HydroChem") of
Houston. HydroChem shareholders would be issued shares representing 55% of the
total outstanding shares (including the Company's stock options) of a new
entity formed for such purposes. The Company's shareholders would receive
shares representing 45% of the new entity. The transaction would be tax-free
for shareholders of both companies. The letter of intent calls for both parties
to negotiate and finalize a definitive merger agreement by July 1, 1996.
Consummation of the merger will be subject to approval by the Board of
Directors and shareholders of each company, and upon usual and customary
conditions, including regulatory approval.
-7-
<PAGE> 8
HydroChem provides hydroblasting, chemical cleaning, vacuum, and other
specialty industrial cleaning services to the petrochemical, refinery, utility,
and pulp and paper industries. HydroChem generated $156.5 million in revenue,
$13.5 million in operating income, and $3.3 million in net income for the year
ended December 31, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated revenues for the first quarter of 1996 were $64.6
million, a decrease of $7.0 million, or 9.8% from first quarter 1995
consolidated revenues of $71.6 million. Revenues by operating group for the
first quarter of 1996 included $41.9 million from Serv-Tech EPC ("EPC"), $19.4
million from Specialty Services and $3.9 million for Environmental and
Performance Chemicals ("Environmental"). The decrease is attributable
primarily to lower levels of activity in the specialty turnaround business,
Specialty Services, resulting from delays in scheduled maintenance at refinery
facilities which were experiencing improved margins.
The $27.1 million decrease in Specialty Services was partially offset
by the $19.9 million increase in EPC revenues over first quarter 1995. The
first quarter revenues of EPC included $16.0 million attributable to the
Finchaa Sugar Factory and Ethanol Plant Project compared to $4.0 million for
the first quarter of 1995. Excluding the effect of the Finchaa Project
revenue, the first quarter gross profit percentage was 20.7%.
Consolidated selling, general and administrative expenses were $11.6
million in the first quarter of 1996, an increase of $2.4 million, or 26.1%
over the comparable period of 1995. The increase is attributable primarily to
the EPC operations which experienced higher overhead than that needed in light
of the lower than planned revenue activity due in part to lower than forecast
new orders and the cancellation of a major engineering project. Additionally,
overhead was adversely affected by research and development expenditures
related to the new paper-strengthening and welding technology, Mastiff(sm) and
Weldsmart(tm). Overhead also included severance charges of $0.5 million for
the first quarter of 1996.
SPECIALTY SERVICES
Specialty Services generated revenues of $19.4 million for the first
quarter of 1996, a decrease of $27.0 million, or 58.2%, over the first quarter
of 1995. As discussed above, this decrease was primarily due to reductions in
refinery shut-downs in a period of high demand for fuel and related products.
Operating income for the first quarter of 1996 was $1.5 million, a
decrease of $1.9 million, or 55.9%, over the same period of 1995. This
decrease is primarily attributable to the decrease in revenue. However,
operating income, as a percentage of Specialty Services revenues, increased
from 7.3% for the first quarter of 1995 to 7.6% for the first quarter of 1996.
EPC
EPC revenues increased $19.9 million to $41.9 million for the first
quarter of 1996. $12.0 million of this increase was attributable to the
Finchaa Sugar Factory and Ethanol Plant Project in Finchaa, Ethiopia, which
generated $16.0 million in revenue for the first quarter of 1996 versus $4.0
million for the corresponding quarter of 1995. Additionally, SECO Industries
(the electrical and instrumentation services subsidiary) experienced increased
revenues of $1.1 million to $11.9 in 1996 over the first quarter of 1995.
The operating loss for the first quarter of 1996 of $0.2 million, was
$1.5 million lower than $1.3 million of operating income generated during the
same period of 1995. This decrease is principally due to lower job level
profit margins coupled with increased overhead expenses resulting from lower
than anticipated EPC activity.
-8-
<PAGE> 9
ENVIRONMENTAL
Environmental revenues increased slightly to $3.9 million for the
first quarter of 1996 from $3.1 million for the first quarter of 1995.
Operating income decreased $0.3 million to a loss of $0.2 million in 1996. The
operating loss is a result of research and development expenditures related to
the development of the new paper-strengthening technology, Mastiff(SM).
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures for the first quarter of 1996 were approximately
$1.4 million. These purchases were primarily for the purchase and manufacture
of equipment necessary to support the Company's business activities. Capital
expenditures for the remainder of 1996, excluding acquisitions, are expected to
be approximately $3.0 million to $4.0 million.
At March 31, 1996, the Company's working capital totaled approximately
$23.8 million. The Company has been able to finance its working capital
requirements primarily through its cash flows from operations and bank
borrowings. The Company maintains a $35.0 million revolving line of credit
with two banks which expires in May 1997. At March 31, 1996, $9.0 million was
outstanding under the revolving line of credit and $6.7 million was available
for borrowing. In addition, the Company has $15.0 million in 8.41% Senior
Notes Payable due June 2003.
As further discussed in Note 2 of Notes to Consolidated Financial
Statements, the Company secured an $83.0 million contract to engineer, design,
procure and construct a 4,000 metric ton cane-per-day sugar factory and 45,000
liter-per-day ethanol facility in Finchaa, Ethiopia. The project, which is
financed by the African Development Bank, is expected to be completed in the
latter part of 1997. On February 7, 1995, the Company received an advanced
payment equal to 20% of the contract value. The Company issued letters of
credit to support performance and the 20% advance payment. Such letters of
credit total approximately $21.0 million. In addition, the Company has issued
approximately $5.2 million in commercial letters of credit to support vendor
purchases. Contractual payments to the Company are supported by a revolving
letter of credit issued by the Ethiopian government via the African Development
Bank. The project is expected to be self-funding and, therefore, should not
require working capital support other than that received from the project
owner.
For the three months ended March 31, 1996, net cash flows from
operations were $4.7 million resulting primarily from the $7.3 million decrease
in net excess billings, costs and estimated earnings on uncompleted contracts,
which was principally due to first quarter 1996 Finchaa project billings and
collections. Also, contributing to the cash flow from operations was
depreciation and amortization of $1.7 million, increase in accounts payable of
$2.1 million, offset partially by a $3.8 million increase in accounts
receivable, and a $1.1 decrease in accrued liabilities and income taxes
payable. The $3.6 million decrease in cash flow from operations from the first
quarter of 1995 is primarily attributable to the first quarter 1995 including
the receipt of the 20% advance payment on the Finchaa project discussed above.
Net expenditures used in investing activities amount to $1.4 million,
consisting primarily of capital expenditures. Cash flows provided by financing
activities totaled $2.8 million resulting from net borrowings under the
Company's revolving line of credit.
Backlog totaled $80.0 million at March 31, 1996, versus $96.1 million
at December 31, 1995, and $159.7 million at March 31, 1995. The March 31,
1996, backlog amount included $69.1 million and $10.2 million attributable to
EPC and Specialty Services, respectively. The EPC backlog amount included
$37.6 million from the Finchaa project and $19.1 million from SECO Industries.
The decrease in revenue backlog is primarily due to decreasing EPC backlog,
which included $48.0 million and $79.0 million related to the Finchaa Sugar
project as of December 31, 1995, and March 31, 1995, respectively.
Additionally, the decrease of Specialty Services backlog from $24.6 at March
31, 1995, is consistent with a slow starting 1996 turnaround season for
Specialty Services.
-9-
<PAGE> 10
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 -- Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated
April 26, 1996, with the Securities and Exchange Commission
in connection with the announcement of the letter of intent
to merge with HydroChem Industrial Services, Inc. of Houston,
Texas.
-10-
<PAGE> 11
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.
SERV-TECH, INC.
By David P. Tusa
---------------------------------------------------
David P. Tusa
Sr. Vice President,
Finance and Administration
Date May 15, 1996
-------------------------------------------------
By Dale W. Wilhelm
-------------------------------------------------
Dale W. Wilhelm
Corporate Controller
Date May 15, 1996
-------------------------------------------------
-11-
<PAGE> 12
INDEX TO EXHIBITS
Exhibit # Description
- --------- -------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (A) the
unaudited financial statements of Serv-Tech, Inc. and Subsidiaries as of March
31, 1996, and for the three months ended March 31, 1996 and is qualified in its
entirety by reference to such (B) consolidated financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,345,707
<SECURITIES> 0
<RECEIVABLES> 54,240,688
<ALLOWANCES> 1,312,596
<INVENTORY> 1,857,129
<CURRENT-ASSETS> 71,201,500
<PP&E> 52,180,896
<DEPRECIATION> 19,813,399
<TOTAL-ASSETS> 123,073,280
<CURRENT-LIABILITIES> 47,417,525
<BONDS> 25,595,000
<COMMON> 3,408,425
0
0
<OTHER-SE> 49,174,406
<TOTAL-LIABILITY-AND-EQUITY> 123,073,280
<SALES> 64,626,437
<TOTAL-REVENUES> 64,626,437
<CGS> 0
<TOTAL-COSTS> 53,801,865
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (201,656)
<INTEREST-EXPENSE> 600,675
<INCOME-PRETAX> (1,617,627)
<INCOME-TAX> (615,000)
<INCOME-CONTINUING> (1,002,627)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,002,627)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
