UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended August 31, 1997
Commission File number 0-l87l6
MATRIX SERVICE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 73-1352l74
(State of incorporation) (I.R.S. Employer Identification No.)
l070l E. Ute St., Tulsa, Oklahoma 74ll6-l5l7
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
(9l8) 838-8822
Indicate by check mark whether the registrant (l) has filed all
reports required to be filed by Section l3 or l5(d) of the
Securities Exchange Act of 1934 during the preceding l2 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 [ ]
As of October 14, 1997, there were 9,491,153 shares of the
Company's common stock, $.0l par value per share, issued and
9,407,139 shares outstanding.
<PAGE>
PART I.- FINANCIAL INFORMATION
ITEM 1. Financial Statements
Matrix Service Company
Condensed Consolidated Statements of Income
(in thousands, except share and per share data)
[CAPTION]
Three Months Ended
August 31
(unaudited)
-----------------
1997 1996
------- -------
<TABLE>
<S> <C> <C>
Revenues $49,519 $39,630
Cost of revenues 44,777 35,665
-------- --------
Gross profit 4,742 3,965
Selling, general and
administrative expenses 3,006 2,459
Goodwill and noncompete
amortization 296 216
-------- --------
Operating income 1,440 1,290
Other income (expense):
Interest income 43 29
Interest expense (258) (114)
Other 9 (49) -------- ----
-------- --------
Inome before income tax expense 1,234 1,156
Provision for federal and state
income tax expense 465 524
-------- --------
Net Income $ 769 $ 632
======== ========
Net income per common and
common equivalent shares:
Primary $ 0.08 $ 0.07
Fully diluted 0.08 0.07
Weighted average common and
common equivalent shares outstanding:
Primary 9,965,765 9,523,982
Fully diluted 9,965,765 9,523,982
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
Matrix Service Company
Condensed Consolidated Balance Sheets
(in thousands)
<CAPTION>
August 31, May 31,
---------- ---------
1997 1997
---------- ---------
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 1,184 $ 1,877
Accounts receivable 38,211 37,745
Costs and estimated earnings
in excess of billings on
uncompleted contracts 14,224 11,349
Inventories 5,720 4,989
Prepaid expenses 463 456
Deferred taxes 1,075 1,021
Income tax receivable 1,033 317
--------- ---------
Total current assets $ 61,910 $ 57,754
Investment in undistributed equity
of a foreign joint venture 174 174
Property, plant and equipment
at cost:
Land and buildings 19,099 15,097
Construction equipment 24,308 24,444
Transportation equipment 5,761 5,504
Furniture and fixtures 3,298 3,164
Construction in progress 2,950 2,614
--------- ---------
Less accumulated depreciation 24,398 20,861
--------- ---------
Net property, plant and equipment 31,018 29,962
Goodwill, net of accumulated 30,925 28,721
amortization
Other assets 811 261
--------- --------
Total assets $124,838 $116,872
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
Matrix Service Company
Condensed Consolidated Balance Sheets
(in thousands)
<CAPTION>
August 31, May 31,
----------- ---------
1997 1997
----------- ---------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 12,620 $ 12,307
Billings on uncompleted contracts in
excess of costs and estimated earnings 6,943 6,325
Accrued expenses 7,057 6,583
Earnout payable 0 2,400
Income taxes payable 774 431
Deferred income taxes 177 0
Current portion of long-term debt 2,093 1,495
--------- ---------
Total current liabilities 29,664 29,541
Long-term debt:
Bank credit agreement 7,750 5,000
Equipment note payable 20 0
Acquisition notes payable 131 407
Term note payable 5,441 955
--------- ---------
Total long-term debt 13,342 6,362
Deferred income taxes 4,757 4,757
Stockholders' equity:
Common stock 95 95
Additional paid-in capital 50,903 50,903
Retained earnings 26,913 26,269
Cumulative translation adjustment (166) (145)
--------- ---------
77,745 77,122
Less: Treasury stock, at cost 670 910
--------- ---------
Total stockholders' equity 77,075 76,212
--------- ---------
Total liabilities and
stockholders' equity $124,838 $116,872
========= =========
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
Matrix Service Company
Condensed Consolidated
Cash Flow Statements
(in thousands)
<CAPTION>
Three Months Ended
August 31
(unaudited)
------------------
1997 1996
------- -------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 769 $ 632
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,546 1,392
Changes in current assets and
liabilities increasing
(decreasing) cash:
Accounts receivable 4,129 3,120
Costs and estimated earnings
in excess of billings on
uncompleted contract (1,741) 417
Inventories 494 (634)
Prepaid expenses (16) (99)
Accounts payable (2,900) (1,881)
Billings on uncompleted
contracts in excess of
costs and estimated earnings 151 755
Taxes and other accruals (2,141) (1,432)
Other (3) (2)
-------- --------
Net cash provided by
by operating activities 288 2,268
Cash flow from investing activities:
Capital expenditures (932) (1,459)
Proceeds from sale of equipment 36 21
Acquisition of subsidiary,
net of cash acquired (4,129) 47
-------- --------
Net cash used in
investing activities (5,025) (1,391)
<PAGE>
Matrix Service Company
Condensed Consolidated Cash Flow Statements
(in thousands)
<CAPTION>
Three Months Ended
August
(unaudited)
------------------
1997 1996
------- ------
<S>
<C> <C>
Cash flows from financing activities:
Issuance of acquisition notes 197 -
Repayment of acquisition payables (132) (133)
Issuance of equipment notes 39 -
Repayment of equipment notes (3) (10)
Issuance of long-term debt 9,750 1,000
Repayment of long-term debt (5,910) (2,272)
Issuance of stock 116 14
------- -------
Net cash used in financing activities 4,057 (1,401)
Cumulative translation adjustment (13) 1
------- -------
Decrease in cash and cash equivalents (693) (523)
Cash and cash equivalents at beginning
of period 1,877 1,899
------- -------
Cash and cash equivalents at end
of period $1,184 $1,376
======= =======
<FN> See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
MATRIX SERVICE COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE A - BASIS OF PRESENTATION
The condensed consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are
wholly-owned. All significant inter-company balances and
transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with Rule 10-0l of
Regulation S-X for interim financial statements required to be
filed with the Securities and Exchange Commission and do not
include all information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, the information furnished reflects all adjustments,
consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair statement of the
results for the interim periods.
The accompanying financial statements should be read in
conjunction with the audited financial statements for the year
ended May 3l, 1997, included in the Company's Annual Report on
Form 10-K for the year then ended. The Company's business is
seasonal; therefore, results for any interim period may not
necessarily be indicative of future operating results.
NOTE B - BUSINESS ACQUISITIONS
On June 17, 1997, the Company acquired all of the outstanding
common stock of General Service Corporation and its affiliated
companies, Maintenance Services, Inc., Allentech, Inc., and
Environmental Protection Services (collectively "GSC") for up to
$7.8 million, subject to certain adjustments. The purchase price
consisted of $4.75 million in cash and a $250 thousand, prime
rate (currently 8.25%) promissory note payable in 12 equal
quarterly installments. In addition, the stockholders of GSC are
entitled to receive in the future up to an additional $2.75
million in cash if GSC satisfies certain earnings requirements.
The transaction was accounted for as a purchase and created
approximately $3.0 million of goodwill and non-competition
covenants.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Three Months Ended August 31, 1997 Compared to Three Months Ended
August 31, 1996
General Service Corporation ("GSC") was acquired by Matrix
Service Company (the "Company") on June 17, 1997. Accordingly,
the results of operations of GSC, for two and one-half months are
included for the current period, but none of GSC's operations are
included in the prior year period.
Revenues for the quarter ending August 31, 1997 were $49.5
million as compared to revenues of $39.6 million for the quarter
ended August 31, 1996, representing an increase of approximately
$9.9 million or 25%. The increase is due primarily to the
inclusion in first quarter data of revenues of $5.3 million from
the operations of GSC (referred to above) and increased revenues
from refinery capital projects as compared with the same period
in 1996.
Gross profit for the quarterly period ending August 31, 1997 was
$4.7 million, an increase of $777 thousand over the period ended
August 31, 1996. Gross profit as a percentage of revenues
decreased to 9.6% for the 1997 period compared to 10.0% for the
1996 period. The decrease results mainly from revenue being
generated from capital work rather than repair and maintenance
which generally produces higher profit margins.
Selling, general and administrative expenses increased to $3.0
million for the quarterly period ending August 31, 1997 from
expenses of $2.5 million for the quarterly period ended August
31, 1996, an increase of $547 thousand or approximately 22% and
representing as a percentage of revenues, a decrease to 6.1% for
the 1997 period as compared to 6.2% for the 1996 period. The
principal amount of increase is due to the inclusion of expenses
of GSC.
Operating income increased to $1.4 million for the quarterly
period ending August 31, 1997 from income of $1.3 million for the
quarterly period ended August 31, 1996, an increase of $150
thousand. The increase was due to higher revenues combined with
stable cost of revenues and selling, general and administrative
expense offset by increased amortization of goodwill. The
increased goodwill is attributed to the GSC acquisition.
Interest expense increased to $258 thousand for the quarterly
period ending August 31, 1997 from $114 thousand of interest
expense for the quarterly period ended August 31, 1996. The
increase resulted primarily from increased borrowing under the
Company's revolving credit facility and term loans established on
August 24, 1994 as amended. During the period there was an
average of $6.3 million outstanding under the revolver loan. The
term loan increase was due primarily to the GSC acquisition.
Net income increased to $769 thousand for the quarterly period
ending August 31, 1997 from net income of $632 thousand for the
quarterly period ended August 31, 1996. The increase was due to
increased revenues and decreased provision for income tax for the
1997 period as compared to the 1996 period. The lower income tax
provision for the 1997 period resulted from a net operating loss
carry forward acquired with GSC.
Liquidity and Capital Resources
The Company has financed its operations recently with cash
generated by operations and advances under the Company's credit
facility. The Company has a credit facility with a commercial
bank under which the Company may borrow a total of $25.0 million.
The Company may borrow up to $15.0 million under a revolving
credit agreement based on the level of the Company's eligible
receivables. The agreement provides for interest at the Prime
Rate minus three quarters of one percent (3/4 of 1%), or a LIBOR
based option, and matures on October 31, 1999. At August 31,
1997, the interest rate was 7.75% and the outstanding advances
under the revolver totaled $7.75 million. The credit facility
also provides for two term loans up to $5.0 million each. On
October 5, 1994, and June 19, 1997 term loans of $4.9 million and
$5.0 million, respectively, were made to the Company. The 1994
term loan is due on August 31, 1999 and is to be repaid in 54
equal payments beginning in March 1995 at an interest rate based
upon the Prime Rate or a LIBOR option. The 1997 term loan is due
January 23, 2002 and is to repaid in 54 equal payments beginning
January 7, 1998 at an interest rate based upon the prime rate or
a LIBOR option. At August 31, 1997, the interest rate on the
term loans was 8.25%, and the outstanding balance was $2.2
million and $5.0 million, respectively. The rates reflected
above are based on an agreement made after August 31, 1997.
Operations of the Company provided $288 thousand of cash for the
three months ended August 31, 1997 as compared with providing
cash from operations of $2.3 million for the three months ended
August 31, 1996, representing a decrease of approximately $2.0
million. The decrease was primarily the result of a net decrease
of $2.8 million in billings on uncompleted contracts in excess of
costs and estimated earnings in excess of billings.
Capital expenditures during the three month period ended August
31, 1997 totaled approximately $932 thousand. Of this amount
approximately $413 thousand was used to purchase welding and
construction equipment for field operations. The Company has
invested approximately $245 thousand for office expansion for
support of field operations. In addition, the Company has
currently budgeted approximately $2.6 million for additional
capital expenditures primarily to be used to purchase
construction equipment during the remainder of fiscal year 1998.
The Company expects to be able to finance any such expenditures
with available working capital.
The Company believes that its existing funds, amounts available
for borrowing under its credit facility, and cash generated by
operations will be sufficient to meet the Company's working
capital needs at least through fiscal 1998 and possibly
thereafter unless significant expansions of operations not now
planned are undertaken, in which case the Company would arrange
additional financing as a part of any such expansion.
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K:
A. Exhibit 10.1 - Second Amendment to Credit Agreement
B. Exhibit 11 - Computation of earnings per share.
C. Reports on Form 8-K: None
Signature
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.
MATRIX SERVICE COMPANY
Date: October 15, 1997
By: /s/C. William Lee
--------------------
C. William Lee
Vice President-Finance
Chief Financial Officer Signing on behalf of the
registrants the registrant's chief financial officer.
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment") is made
and entered into this 15th day of September, 1997, by and among
MATRIX SERVICE COMPANY, a Delaware corporation (hereinafter
referred to as "Matrix"), MATRIX SERVICE, INC., an Oklahoma
corporation (hereinafter to as "MSI"), MIDWEST INDUSTRIAL
CONTRACTORS, INC., a Delaware corporation (hereinafter referred
to as "MIC"), MATRIX SERVICE MID-CONTINENT, INC., an Oklahoma
corporation (hereinafter referred to as "MSM"), PETROTANK
EQUIPMENT, INC., an Oklahoma corporation (hereinafter referred
to as "PEI"), TANK SUPPLY INC., an Oklahoma corporation
(hereinafter referred to as "TSI"), SAN LUIS TANK PIPING
CONSTRUCTION CO., INC., a Delaware corporation (hereinafter
referred to as "SLT"), COLT CONSTRUCTION CO., INC., a Delaware
corporation (hereinafter referred to as "CCC"), MIDWEST
INTERNATIONAL, INC., a Delaware corporation (hereinafter
referred to as "MII"), GEORGIA STEEL ACQUISITION CORPORATION, an
Oklahoma corporation (hereinafter referred to as "GSAC"), GEORGIA
STEEL FABRICATORS, INC., a Georgia corporation (hereinafter
referred to as "GSF"), BROWN STEEL CONTRACTORS, INC., a Georgia
corporation (hereinafter referred to as "BSC"), WEST COAST
INDUSTRIAL COATINGS, INC., a California corporation (hereinafter
referred to as "WCI"), MIDWEST SERVICE COMPANY, a Delaware
corporation (hereinafter referred to as "MSC"), HEATH
ENGINEERING, LTD., an Ontario corporation (hereinafter referred
to as "HEL"), HEATH (TANK MAINTENANCE) ENGINEERING, LTD., a
United Kingdom corporation (hereinafter referred to as "HTM"),
MAYFLOWER VAPOR SEAL CORPORATION, an Oklahoma corporation
(hereinafter referred to as ("MVS"), GENERAL SERVICE CORPORATION,
a Delaware corporation (hereinafter referred to as "GSC"),
MAINSERVE-ALLENTECH, INC., a Delaware corporation (hereinafter
referred to as "MA"), MAINTENANCE SERVICES, INC., a Delaware
corporation (hereinafter referred to as "MSERV"), and LIBERTY
BANK AND TRUST COMPANY OF TULSA, NATIONAL ASSOCIATION
(hereinafter referred to as the "Bank"). Matrix, MSI, MIC, MSM,
PEI, TSI, SLT, CCC, MII, GSAC, GSF, BSC, WCI, MSC, HEL, HTM,
MVS, GSC, MA and MSERV are hereinafter collectively referred to
as the "Borrowers" and individually as a "Borrower."
RECITALS
A. The Borrowers are parties to that certain Credit Agreement
dated August 30, 1994, as amended by that certain First
Amendment to Credit Agreement dated June 19, 1997 (the same as
further amended, supplemented or otherwise modified from time to
time, being hereinafter referred to as the "Credit Agreement"),
pursuant to which the Bank has established in favor of the
Borrowers, on the terms and conditions set forth therein, (i) a
revolving credit facility in the principal amount not to exceed
$15,000,000.00, (ii) a term loan facility in the original
principal amount not to exceed $5,000,000.00, and (iii) a term
acquisition facility in the original principal amount not to
exceed $5,000,000.00
B. The Borrowers have requested that the Bank: (i) reduce the
rates of interest under the Revolving Note, the Term Note and
the Acquisition Note, (ii) modify Rate Election, Continuation
and Conversion Options, (iii) allow for optional prepayments
under any Tranche, and (iv) expand the time period under which
the Borrowers must provide certain monthly certificates and
reports to the Bank.
C. The Bank has agreed to the foregoing, subject to the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and subject to the terms and
conditions set forth herein, the parties agree to amend the
Credit Agreement, effective as of the date hereof, as follows:
1. TERMS DEFINED IN THE CREDIT AGREEMENT. Capitalized terms
used herein and not otherwise defined have the respective
meanings assigned to them in the Credit Agreement.
2. MODIFICATIONS TO APPLICABLE INTEREST RATES. The Bank hereby
agrees to modify the applicable rates of interest chargeable
under the Revolving Note, the Term Note and the Acquisition
Note. In order to effectuate the foregoing, the Credit
Agreement shall be modified in accordance with the following:
A. Modifications to Subsections 2.7.1(a) and 2.7.1(b).
Subsections 2.7.1(a) and 2.7.1(b) of the Credit Agreement,
governing interest rates under the Revolving Note, are hereby
deleted and replaced in their entirety, respectively, by the
following:
(a) Advances included within the Prime Tranche shall bear
interest at a fluctuating rate per annum equal to the Prime Rate
minus three-quarters of one percent (3/4 of 1%), adjusted as of
the date of each change therein.
(b) Advances included within each LIBOR Tranche shall bear
interest at a rate per annum equal to the sum of the LIBOR Rate
applicable to such LIBOR Tranche plus one and one-quarter percent
(1-1/4%).
B. Modifications to Subsections 2.7.2(d)(i) and 2.7.2(d)(ii).
Subsections 2.7.2(d)(i) and 2.7.2(d)(ii) of the Credit Agreement,
governing interest rates under the variable rate option of the
Term Note, are hereby deleted and replaced in their entirety,
respectively, by the following:
(i) Advances included within the Prime Tranche shall bear
interest at a fluctuating rate per annum equal to the Prime Rate
minus one quarter of one percent (1/4 of 1%), adjusted as of the
date of each change therein.
(ii) Advances included within a LIBOR Tranche shall bear
interest at a rate per annum equal to the sum of the LIBOR Rate
applicable to such LIBOR Tranche plus one and three quarters
percent (1-3/4%).
C. Modifications to Subsections 2.7.6(c)(i) and
2.7.6(c)(ii). Subsections 2.7.6(c)(i) and 2.7.6(c)(ii) of the
Credit Agreement (as established in the First Amendment to Credit
Agreement dated June 19, 1997), governing interest rates under
the variable rate option of the Acquisition Note, are hereby
deleted and replaced in their entirety, respectively, by the
following:
(i) Amounts outstanding under the Acquisition Note
included within the Prime Tranche shall bear interest at a
fluctuating rate per annum equal to the Prime Rate minus one
quarter of one percent (1/4 of 1%), adjusted as of the date of
each change therein.
(ii) Amounts outstanding under the Acquisition Note
included within the LIBOR Tranche shall bear interest at a rate
per annum equal to the sum of the LIBOR Rate applicable to such
LIBOR Tranche plus one and three quarters percent (1-3/4%).
3. MODIFICATION OF RATE ELECTIONS. The Bank hereby agrees to
modify the requirements governing Rate Elections under each of
the Credit Facilities. In order to effectuate the foregoing,
the Credit Agreement shall be modified in accordance with the
following:
A. Modifications to Subsection 2.7.3(f). Subsection 2.7.3(f)
of the Credit Agreement is hereby deleted and replaced in its
entirety by the following:
(f) there shall be no limit to the maximum number of
Tranches outstanding under any of the Credit Facilities at any
time; and
B. Modifications to Subsection 2.7.4. Subsections 2.7.4 of the
Credit Agreement is hereby deleted and replaced in its entirety
by the following:
2.7.4 Continuation and Conversion Options. Subject to the
limitations set forth in Subsection 2.7.3 hereof, the Borrowers
may from time to time: (i) elect to continue, on the last day of
the Interest Period therefor, any LIBOR Tranche (or any portion
thereof) to a subsequent Interest Period, (ii) elect to convert,
on the last day of the Interest Period therefor, any LIBOR
Tranche in the Prime Tranche; or (iii) elect to convert, on any
Business Day, the Prime Tranche (or any portion thereof) into a
LIBOR Tranche. The Borrowers shall give the Bank irrevocable
notice of each conversion or continuation either orally or in
writing (by delivering to the Bank a properly completed and
executed Disbursement Request) no later than 5:00 p.m., Tulsa
time, at least one (1) Business Day prior to the conversion or
continuation date; provided, however, that the Borrowers shall
confirm all oral conversion or continuation notices under any of
the Credit Facilities by delivering to the Bank a properly
completed and executed Disbursement Request within three (3)
Business Days after the date of the oral request. Each
conversion or
continuation notice shall specify (i) the proposed conversion or
continuation date (which shall be a Business Day), (ii) the
aggregate amount of the Advances to be converted or continued,
(iii) the nature of the proposed conversion or continuation, and
(iv) in the case of conversion to or continuation as a LIBOR
Tranche, the requested Interest Period. No LIBOR Tranche may be
converted or continued (i) at any time other than on the last
day of the Interest Period applicable thereto, or (ii) at any
time that a Default or Event of Default has occurred and is
continuing.
4. MODIFICATIONS PERMITTING OPTIONAL PREPAYMENTS. The Bank
hereby agrees to permit the Borrowers to make prepayments under
any of the three Notes regardless of the applicable Tranche(s).
In order to effectuate the foregoing, Subsection 2.10 of the
Credit Agreement is hereby deleted and replaced in its entirety
with the following:
2.10 Optional Prepayments. The Borrowers may, at any time
and from time to time, prepay the outstanding principal amount
under any of the Notes, in whole or in part, without premium or
penalty, provided, however, that any partial prepayment on any
Note shall be accompanied by payment of all unpaid accrued
interest. Amounts prepaid on the Term Note or the Acquisition
Note will be applied to the unpaid principal installments of such
Note in the inverse order of maturity.
5. EXPANSION OF TIME PERIOD FOR CERTIFICATES AND REPORTS. The
Bank hereby agrees to expand the time period after the end of
each calendar month in which the Borrowers must furnish to the
Bank completed Borrowing Base and Compliance Certificates and
Accounts Aging Reports. In order to effectuate the foregoing,
the first sentence of Subsection 6.2 of the Credit Agreement
shall be modified by replacing the time reference of "fifteen
(15) days" with the time reference of "thirty (30) days."
6. CONDITIONS. The amendments to the Credit Agreement set
forth in this Amendment shall be effective from and after the
date hereof, but subject to the Borrowers' satisfaction of each
of the following conditions precedent:
6.1 Amendment. The Borrowers shall have duly and validly
authorized, executed and delivered to the Bank this Amendment.
6.2 Resolutions. With respect to each of the Borrowers, the
Bank shall have received a true and correct copy of the
resolutions adopted by its Board of Directors duly authorizing
the borrowings contemplated hereunder and the execution,
delivery and performance of this Amendment.
6.3 Other Matters. The Borrowers shall have provided the Bank
with such reports, information, financial statements, and other
documents as the Bank has reasonably requested to evidence the
Borrowers' compliance with the terms and conditions of this
Amendment and the Credit Agreement.
6.4 Legal Matters. All legal matters incident to this Amendment
and the Credit Facilities shall be satisfactory to the Bank and
its counsel.
6.5 No Defaults. There shall not have occurred and be
continuing any Default or Event of Default.
7. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Borrowers contained in Section 5 of the Credit
Agreement are hereby remade and restated as the date hereof and
shall survive the execution and delivery of this Amendment. The
Borrowers further represent and warrant to the Bank that:
7.1 Authority. The Borrowers have all corporate power and
authority and have been duly authorized to execute, deliver and
perform its obligations under this Amendment and the Credit
Agreement.
7.2 Binding Obligations; Enforceability. This Amendment, the
Credit Agreement (as amended by this Amendment), and each of the
Notes are valid and legally binding obligations of the
Borrowers, enforceable in accordance with their respective
terms, except as limited by applicable bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights
generally.
7.3 No Conflicts. The execution, delivery and performance of
this Amendment and the Credit Agreement (as amended by this
Amendment) by the Borrowers do not and will not (a) conflict
with, result in a breach of the terms, conditions or provisions
of, constitute a default under, or result in any violation of
the Borrowers' Certificates of Incorporation, as amended, or
Bylaws, or any agreement, instrument, undertaking, judgment,
decree, order, writ, injunction, statute, law, rule or
regulation to which either of the Borrowers is subject or by
which the assets of either of the Borrowers are bound or
affected, (b) result in the creation or imposition of any lien,
charge or encumbrance on, or security interest in, any property
now or hereafter owned by the Borrowers, pursuant to the
provisions of any mortgage, indenture, security agreement,
contract, undertaking or other agreement to which either of the
Borrowers is a party, other than the obligations of the
Borrowers in favor of the Bank created by the Loan Documents, or
(c) require any authorization, consent, license, approval or
authorization of, or other action by, notice or declaration to,
registration with, any court or any administrative or
governmental body (domestic or foreign), or, to the extent any
such consent or other action may be required, it has been validly
procured or duly taken.
8. MISCELLANEOUS.
8.1 Effect of Amendment. Except as expressly modified and
amended by this Amendment, all other terms of the Credit
Agreement shall continue in full force and effect in accordance
with their original stated terms and are hereby reaffirmed in
every respect as of the date hereof. To the extent that the
terms of this Amendment are inconsistent with the terms of the
Credit Agreement, this Amendment shall control and the Credit
Agreement shall be amended, modified or supplemented so as to
give full effect to the transactions contemplated by this
Amendment.
8.2 Descriptive Headings. The descriptive headings of the
several paragraphs of this Amendment are inserted for
convenience only and shall not be used in the construction or
the content of this Amendment.
8.3 Reimbursement of Expenses. The Borrowers agree to pay all
reasonable out-of-pocket expenses, including, without limitation,
filing fees, recording costs and reasonable attorney's fees and
expenses, incurred by the Bank in connection with the
preparation of this Amendment.
8.4 Reaffirmation of Security Agreements. By signing below, the
Borrowers hereby ratify and reaffirm the Security Agreements and
agree that the Security Agreements shall continue in full force
and effect in accordance with their terms as security for
payment and performance of all Indebtedness arising under or in
connection with the Credit Agreement (as amended hereby). All
references to the term "Indebtedness" contained in the Credit
Agreement, the Security Agreements and other Loan Documents
shall hereafter be deemed to include all liabilities,
obligations and indebtedness of the Borrowers to the Bank
arising out of or relating to this Amendment.
IN WITNESS WHEREOF, the Borrowers and the Bank have caused this
Agreement to be duly executed in multiple counterparts, each of
which shall be considered an original, effective the date and
year first above written.
MATRIX SERVICE COMPANY,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MATRIX SERVICE, INC.,
an Oklahoma corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MIDWEST INDUSTRIAL CONTRACTORS, INC.,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MATRIX SERVICE MID-CONTINENT, INC.,
an Oklahoma corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
PETROTANK EQUIPMENT, INC.,
an Oklahoma corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
TANK SUPPLY, INC.,
an Oklahoma corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
SAN LUIS TANK PIPING CONSTRUCTION CO., INC.,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
COLT CONSTRUCTION CO., INC.,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MIDWEST INTERNATIONAL, INC.,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
GEORGIA STEEL ACQUISITION CORPORATION,
an Oklahoma corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
GEORGIA STEEL FABRICATORS, INC.,
a Georgia corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
BROWN STEEL CONTRACTORS, INC.,
a Georgia corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
WEST COAST INDUSTRIAL COATINGS, INC.,
a California corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MIDWEST SERVICE COMPANY,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
HEATH ENGINEERING, LTD.,
an Ontario corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
HEATH (TANK MAINTENANCE) ENGINEERING, LTD.,
an United Kingdom corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MAYFLOWER VAPOR SEAL CORPORATION,
an Oklahoma corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
GENERAL SERVICE CORPORATION,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MAINSERVE-ALLENTECH, INC.,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
MAINTENANCE SERVICES, INC.,
a Delaware corporation
By: /s/C. William Lee
- -------------------------
Name: C. William Lee
Title: Secretary
LIBERTY BANK AND TRUST COMPANY
OF TULSA, NATIONAL ASSOCIATION
By: /s/Mark A. Poole
- -------------------------
Name: Mark A. Poole
Title: Senior Vice President
[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] May-31-1998
[PERIOD-START] Jun-01-1997
[PERIOD-END] Aug-31-1997
[COMMON] 9,966
[NET-INCOME] 769
[EPS-PRIMARY] 0.08
[COMMON] 9,966
[NET-INCOME] 769
[EPS-DILUTED] 0.08
[FISCAL-YEAR-END] May-31-1997
[PERIOD-START] Jun-01-1996
[PERIOD-END] Aug-31-1996
[COMMON] 9,524
[NET-INCOME] 632
[EPS-PRIMARY] 0.07
[COMMON] 9,524
<NET INCOME> 632
[EPS-DILUTED] 0.07
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> AUG-31-1997
<CASH> 1,184
<SECURITIES> 0
<RECEIVABLES> 38,211
<ALLOWANCES> 0
<INVENTORY> 5,720
<CURRENT-ASSETS> 61,910
<PP&E> 55,416
<DEPRECIATION> 24,398
<TOTAL-ASSETS> 124,838
<NOTES PAYABLE> 7,685
<CURRENT-LIABILITIES> 29,664
<BONDS> 0
<COMMON> 95
0
0
<OTHER-SE> 76,980
<TOTAL-LIABILITY-AND-EQUITY> 124,838
<SALES> 49,519
<TOTAL-REVENUES> 49,519
<CGS> 44,777
<TOTAL-COSTS> 44,777
<OTHER-EXPENSES> 3,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3258
<INCOME-PRETAX> 1,234
<INCOME-TAX> 465
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 769
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
