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
Commission file No.
0-18899
TANKNOLOGY ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0284783
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5225 HOLLISTER
HOUSTON, TEXAS 77040-6294
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (713) 690-8265
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period than 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, par value $0.01 per share,
outstanding as of May 1, 1996 was 14,237,012.
<PAGE>
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996
(UNAUDITED) AND DECEMBER 31, 1995
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE
MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
PART III. SIGNATURES
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................................ $ 16,953,472 $ 14,967,107
Short-term investments ........................................... 2,180,470 3,694,873
Accounts receivable, net ......................................... 3,653,536 5,023,019
Inventories, net ................................................. 313,576 350,275
Current deferred tax asset ....................................... 592,430 576,002
Income tax receivable ............................................ 2,251,676 2,106,678
Other current assets ............................................. 737,921 789,627
------------ -----------
Total current assets ........................................ 26,683,081 27,507,581
PROPERTY AND EQUIPMENT, NET ............................................ 9,062,535 9,049,510
INTANGIBLE ASSETS, LESS ACCUMULATED
AMORTIZATION ....................................................... 3,663,961 3,765,400
DEFERRED TAX ASSET ..................................................... 944,739 872,610
NET ASSETS OF DISCONTINUED OPERATIONS AND
OTHER ASSETS ....................................................... 1,552,051 1,081,509
------------ -----------
Total assets ..................................................... $ 41,906,367 $ 42,276,610
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable .................................................... $ -- $ 28,939
Accounts payable ................................................. 787,652 1,009,814
Accrued liabilities .............................................. 1,768,842 1,552,564
------------ -----------
Total current liabilities ................................... 2,556,494 2,591,317
DEFERRED INCOME ........................................................ 15,120 20,160
------------ -----------
Total liabilities ................................................ 2,571,614 2,611,477
------------ -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.10 par value; 10,000,000 shares
authorized; no shares issued and outstanding ................. -- --
Common stock, $.01 par value; 100,000,000 shares
authorized; 15,192,237 and 15,185,237 shares issued
at March 31, 1996 and December 31, 1995, respectively ....... 151,922 151,852
Additional paid-in capital ....................................... 33,109,657 33,096,987
Retained earnings ................................................ 10,260,845 10,603,965
Treasury stock at cost, 955,225 shares, at March 31, 1996 and
December 31, 1995 ........................................... (4,187,671) (4,187,671)
------------ -----------
Total shareholders' equity ....................................... 39,334,753 39,665,133
------------ -----------
Total liabilities and shareholders' equity....................... $ 41,906,367 $ 42,276,610
============ ===========
<FN>
The accompanying notes are an integral part of the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1995
1996 (Restated)
----------- -----------
<S> <C> <C>
REVENUES ......................................... $ 5,353,941 $ 6,239,930
COST OF SERVICES ................................. 3,715,115 3,420,309
----------- -----------
Gross profit ................................ 1,638,826 2,819,621
SELLING, GENERAL & ADMINISTRATIVE EXPENSES ....... 2,421,711 2,761,544
----------- -----------
Income (loss) from operations ............... (782,885) 58,077
OTHER INCOME (EXPENSE): .......................... 283,837 198,325
----------- -----------
Income (loss) from continuing operations
before income taxes ..................... (499,048) 256,402
INCOME TAX PROVISION (BENEFIT) ................... (155,928) 93,483
----------- -----------
Income (loss) from continuing operations .... (343,120) 162,919
LOSS FROM DISCONTINUED OPERATIONS, NET ........... -- (348,504)
----------- -----------
Net income (loss) ........................... (343,120) (185,585)
=========== ===========
Earnings (loss) per share from continuing
operations .................................. $ (0.02) $ 0.01
Loss per share from discontinued operations ...... -- (0.02)
------------ ------------
NET EARNINGS (LOSS) PER SHARE .................... (0.02) (0.01)
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING ................................. 14,237,012 14,230,012
============ ============
<FN>
The accompanying notes are an integral part of the condensed consolidated financial statements
</FN>
</TABLE>
<PAGE>
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................. $ (343,120) $ (185,585)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization ............................. 778,803 998,889
Net amortization of premiums and discounts on short-term
investments ............................................. (39,500) (83,984)
Loss on disposal of assets ................................ 3,736 --
Deferred income taxes ..................................... (88,557) (118,523)
Deferred income ........................................... (5,040) (5,040)
Change in assets and liabilities:
Decrease in accounts receivable, net .................... 1,369,483 1,786,321
Decrease in costs and estimated earnings
in excess of billings on uncompleted contracts ....... -- 45,066
Decrease in inventories, net ............................ 36,699 110,919
Increase in income tax receivable ....................... (144,998) --
Decrease in other current assets ........................ 51,706 97,895
Increase in net assets of discontinued operations ....... (533,595) --
Decrease in accounts payable and accrued
liabilities .......................................... (5,884) (29,719)
------------ ------------
Total adjustments .................................. 1,422,853 2,801,824
------------ ------------
Net cash provided by operating activities .......... 1,079,733 2,616,239
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .......................................... (637,178) (221,950)
Proceeds from the sale of assets .............................. 22,000 --
Purchase of short-term investments ............................ (1,579,287) (3,068,723)
Proceeds from maturities of short-term investments ............ 3,133,194 3,520,994
Increase in intangible assets ................................. (3,158) (10,094)
------------ ------------
Net cash provided by investing activities .......... 935,571 220,227
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable ........................... (28,939) (32,331)
------------ ------------
Net cash used in financing activities .............. (28,939) (32,331)
------------ ------------
Net increase in cash and cash equivalents .......... 1,986,365 2,804,135
------------ ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD ........................................................ 14,967,107 6,249,636
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................... $ 16,953,472 $ 9,053,771
============ ============
<FN>
The accompanying notes are an integral part of the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The unaudited condensed consolidated financial statements include the
accounts of Tanknology Environmental, Inc. and its wholly owned subsidiaries
(the "Company"). The unaudited condensed consolidated financial statements have
been prepared consistent with the accounting policies reflected in the audited
consolidated financial statements included in the Company's Form 10-K filed with
the Securities and Exchange Commission on March 27, 1996, and should be read in
conjunction therewith.
In management's opinion, the unaudited condensed consolidated financial
statements include all adjustments necessary for a fair presentation of the
Company's consolidated financial position at March 31, 1996, the consolidated
results of its operations for the three-month periods ended March 31, 1996 and
1995, and its consolidated cash flows for the three-month periods ended March
31, 1996 and 1995. All such adjustments are of a normal recurring nature.
Interim results are not necessarily indicative of results for a full year.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts
of Tanknology Environmental, Inc. and its wholly owned subsidiaries. All
material intercompany transactions and balances have been eliminated in
consolidation. Prior year amounts in the consolidated statement of operations
and related notes thereto have been restated to reflect the Company's Mankoff,
Inc. ("Mankoff") and Engineered Systems, Inc. ("ESI") subsidiaries as
discontinued operations as discussed in Note 4. All amounts related to the
statement of operations are from continuing operations unless otherwise
indicated.
SHORT-TERM INVESTMENTS
Short-term investments are those with maturities greater than three months
when purchased. The Company has classified all investments as
available-for-sale. When purchased, securities are recorded at cost and adjusted
for unrealized holding gains and losses due to market fluctuations. Gains and
losses are recorded upon the sales of short-term investments based upon the
specific identification method.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Reserves are established against inventories for excess, slow moving and
obsolete items and for items where net realizable value is less than cost. At
March 31, 1996 and December 31, 1995, the inventory reserve balance was
$510,480.
INCOME TAXES
The provision for income taxes includes federal, foreign, state, and local
income taxes currently payable and those deferred because of temporary
differences between the financial statements and tax bases of assets and
liabilities.
EARNINGS PER COMMON SHARE
Primary earnings per share is based on the weighted average number of
shares outstanding during the period after consideration of the dilutive effect
of stock options or warrants reflected under the treasury stock method. Fully
diluted earnings per share are not presented because such amounts would be the
same as amounts computed for primary earnings per share.
NEW ACCOUNTING STANDARDS
Effective January 1, 1996, the Company adopted SFAS No. 121, entitled
"Accounting for the Impairment of Long-lived Assets and for Long-Lived Assets to
be Disposed of." The effect of this adoption was not material to the Company's
financial position or results of operations.
The Financial Accounting Standards Board issued SFAS No. 123, entitled
"Accounting for Stock-Based Compensation," in October 1995. Effective January 1,
1996, the Company has elected to adopt the disclosure requirements of SFAS No.
123.
2. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS:
Additional information regarding certain balance sheet accounts at March
31, 1996 and December 31, 1995 is presented below:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
Other current assets:
Interest receivable .............. $ 29,916 $ 53,800
Prepaid expenses ................. 511,125 563,641
Employee travel advances ......... 68,482 85,267
Deposits ......................... 17,869 20,219
Other ............................ 110,529 66,700
----------- -----------
Total other current assets..... $ 737,921 $ 789,627
----------- -----------
Accrued liabilities:
Compensation ..................... $ 695,233 $ 630,265
Litigation and claims reserves ... 761,500 630,000
Other taxes ...................... 51,809 86,019
Other ............................ 260,300 206,280
----------- -----------
Total accrued liabilities...... $ 1,768,842 $ 1,552,564
=========== ===========
</TABLE>
3. NOTES PAYABLE:
The Company has a $10 million unsecured revolving credit facility with a
bank. The Company is required to maintain certain financial covenants regarding
net worth and debt to cash flow. No borrowings were outstanding under such bank
credit facility at March 31, 1996. The amounts available under the credit
facility are reduced by amounts outstanding under letters of credit issued on
behalf of the Company by the same bank. At March 31, 1996, $106,000 was issued
under letter of credit agreements. This credit facility matures in July 1996.
At December 31, 1995, the Company had outstanding notes payable of $28,939
issued for the financing of insurance premiums. The notes matured in February
1996.
4. DISCONTINUED OPERATIONS:
During 1995, the Board of Directors of the Company elected to discontinue
operations at its Mankoff and ESI subsidiaries and put the assets of the
businesses up for sale.
Mankoff's operations were discontinued as of June 30, 1995. Mankoff's
revenues were $6,353,000 for the year ended December 31, 1995. Mankoff was sold
on December 21, 1995, for $1,500,000 in cash and two twenty-four month
non-interest bearing notes receivable totalling $805,000. The purchaser has also
assumed the performance of all contract obligations of Mankoff. A provision for
loss on disposition of Mankoff of $3,610,000 net of an income tax benefit of
$1,892,000 has been recorded as a result of the sale.
ESI's operations were discontinued as of December 31, 1995. ESI's revenues
were $3,718,000, for the year ended December 31, 1995. A provision for estimated
loss on disposition of ESI of $3,715,000, including write-off of goodwill and
estimated losses through the expected date of sale, has been recorded net of an
income tax benefit of $1,914,000. The amounts the Company will ultimately
realize could differ materially from the amounts assumed in arriving at the
estimated loss from discontinued operations. The remaining net assets of ESI
principally consist of accounts receivable, inventories and property, plant and
equipment offset by accrued liabilities including estimated losses through the
expected date of sale. The Company will fulfill all contract obligations of ESI
unless a buyer of the business assumes performance of its contracts.
5. COMMON STOCK AND STOCK OPTIONS:
On January 1, 1996, the Company issued 7,000 shares of Restricted Stock
with a market value of $12,740 to seven directors of the Company, in accordance
with its 1991 Nonemployee Director Plan.
6. COMMITMENTS AND CONTINGENCIES:
The Company is involved in litigation and routine claims from time to time.
Certain of the Company's litigation and claims are covered by insurance with a
maximum deductible of $150,000, or in some cases, $200,000. In Management's
opinion, the total estimated litigation liability and related insurance claims
are not material to the Company's consolidated financial position, results of
operations or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 Compared to Three Months
Ended March 31, 1995
Revenues declined from $6,240,000 during the three months ended March 31,
1995 to $5,354,000 during the three months ended March 31, 1996, a decline of
14%. Underground storage tank ("UST") testing service revenues decreased from
$4,962,000 during the first quarter of 1995 to $4,271,000 during the same period
in 1996. The number of USTs tested using the Company's VacuTect process dropped
to 5,727 during the first three months of 1996 from 7,094 during the first three
months of 1995, primarily due to a change in method of compliance with EPA
regulations to monthly monitoring of tanks rather than annual tightness testing
by some owners and operators of USTs. Revenues declined to $981,000 during the
first quarter of 1996 from $1,228,000 during the prior-year period at the
Company's USTMAN subsidiary, principally due the sale of a license that occurred
during the 1995 first quarter and was not repeated in the current year. Revenues
at the Company's Energy Recovery Resources, Inc. ("ERRI") subsidiary declined to
$517,000 during the three months ended March 31, 1996 from $626,000 during the
same period in 1995, mainly due to operational delays caused by the relocation
of ERRI's processing equipment to the newly constructed treatment facility in
the Charlotte, North Carolina area.
Gross profit declined by $1,181,000 to $1,639,000 during the January to
March 1996 period from $2,820,000 during the same period in 1995. When measured
as a percentage of revenues, the gross margin declined to 30.6% during the first
quarter of 1996 from 45.2% in 1995. The decrease in gross margin and in gross
profit was attributable to the revenue decline noted above, as well as to higher
costs associated with a change in the testing services revenue mix away from the
higher margin tank testing services to lower margin ancillary services such as
tank system repairs. In addition, the utilization rate of the Company's fleet of
tank testing units dropped from 51.2% of capacity during the first quarter of
1995 to 45.3% during the first quarter of the current year.
Selling, general and administrative expenses declined $340,000 to
$2,422,000 during the first three months of 1996 from $2,762,000 during the
first three months of 1995, principally due to expense reductions made in the
Company's overhead structure.
Other income and expense, consisting mainly of interest earned on the
Company's investments, and gains and losses on the disposition of fixed assets
grew from $198,000 during the first quarter of 1995 to $284,000 during the same
period in the current year chiefly due to an increase in the amount invested
from 1995 to 1996.
During the first three months of 1995, the Company's discontinued
operations of Mankoff, Inc. and Engineered Systems, Inc. recorded losses
totalling $349,000. The assets of Mankoff were sold in December of 1995, while
Engineered Systems is currently owned by Tanknology but is treated as a
discontinued operation. The Company reported no income or loss from discontinued
operations during the first three months of 1996, as estimated losses through
the expected date of sale were previously accrued.
During the three months ended March 31, 1996, the Company recorded a net
loss from continuing operations of $343,000 (6.4% of revenues) compared to
income from continuing operations of $163,000 (2.6% of revenues) for the three
months ended March 31, 1995. After consideration of losses from discontinued
operations, the Company recorded a net loss of $186,000 during the first quarter
of 1995.
Seasonality
The Company experiences certain seasonal fluctuations in its business.
Management believes that revenues are weakest in the first fiscal quarter and
improve in the second and third quarters, with the peak demand occurring during
the fall. Management believes this seasonality is due in part to the yearly
phase-in of EPA regulations, which require compliance by December 22 of each
year, cold weather conditions during the early months of the year, which inhibit
construction activities, and to the internal capital budgeting procedures of the
Company's major customers, which entail lower levels of expenditures for
environmental services by such customers in the first quarter of each year and
higher levels of expenditures during subsequent quarters.
Liquidity and Capital Resources
At March 31, 1996, the Company had cash, cash equivalents and short-term
investments of $19,134,000. Additionally, the Company has a $10 million
unsecured revolving credit facility with a bank. The Company is required to
maintain certain financial covenants regarding net worth and debt to cash flow.
No borrowings were outstanding under such bank credit facility at March 31,
1996, or subsequently. The amounts available under the credit facility are
reduced by amounts outstanding under letters of credit issued on behalf of the
Company by the same bank. At March 31, 1996, $106,000 was issued under letter of
credit agreements. The credit facility matures in July 1996. The Company expects
to renew the credit facility under similar terms.
For the three months ended March 31, 1996, net cash flow from operations
totaled $1,080,000 versus $2,616,000 during the same period in 1995. Current
year cash flow from operations is the result of a net loss of $343,000, offset
by non-cash revenue and expenses of $649,000, and adjusted for working capital
changes totalling $774,000. Prior year cash flow from operations is the result
of a net loss of $186,000, offset by non-cash revenue and expenses of $791,000,
and adjusted for working capital changes totalling $2,011,000.
Current year non-cash revenue and expenses include depreciation and
amortization of $779,000, compared to $999,000 during the first quarter of 1995.
Current year working capital changes include a decrease in accounts receivable
of $1,369,000, offset by an increase in income taxes receivable of $428,000, and
an increase in net assets of discontinued operations of $250,000. The decline in
accounts receivable is primarily due to a drop in revenues from continuing
operations from $7,466,000 during the fourth quarter of 1995 to $5,354,000
during the seasonally slow first quarter of 1996. The increase in net assets of
discontinued operations is attributable to the discontinuance of operations at
the Company's Engineered Systems division and the reclassification of the
related balance sheet accounts. Prior year working capital changes include a
decrease in accounts receivable of $1,786,000, chiefly due to a drop in revenues
from continuing operations from $8,240,000 during the fourth quarter of 1994 to
$6,240,000 during the first three months of 1995.
Capital expenditures for the first quarter of 1996 totaled $637,000,
compared to $222,000 during the first quarter of the prior year. Expenditures in
both periods are mainly for the construction of a new facility that will expand
the Company's wastewater treatment capacity at its ERRI subsidiary.
Capital expenditures for the next year are expected to be approximately
$1,000,000, primarily for the purchase and construction of machinery and the
expansion of the Company's wastewater treatment capacity at ERRI. Possible
additional expenditures to buy back the Company's Common Stock and to acquire
new service technologies are not expected to exceed $10 million during the next
year. The Company expects to be able to finance its working capital requirements
and future acquisitions during the next 12 months through its cash flow from
operations, cash and cash equivalents, short-term investments and bank credit
facility.
Factors That May Affect Future Results
EPA regulations require that owners and operators of USTs must conduct leak
detection testing through one of the following three methods: (i) monthly
release detection, (ii) monthly inventory control and annual tank tightness
testing (with this alternative only being available until December 1998), or
(iii) monthly inventory control and tank tightness testing once every five years
(with this alternative only being available for USTs that have been upgraded
with corrosion protection and spill and overfill prevention equipment and then
only until 10 years after such upgrade or until December 1998, whichever is
later).
By December 22, 1998, owners and operators of all USTs (other than upgraded
USTs that have been installed after December 22, 1988) must monitor tanks at
least once every 30 days to detect leaks.
During the first quarter of 1996, the Company derived 79.8% of total
revenues from UST testing services. Approximately 76.7% of such testing service
revenue resulted from tank tightness testing utilizing the Company's patented
VacuTect process. The VacuTect process is principally used as a form of annual
tank tightness testing.
The Company continues to experience a decline in demand for annual tank
testing using its VacuTect process as a result of an apparent change in the
method of compliance with EPA regulations to monthly monitoring of tanks rather
than annual tightness testing by some owners and operators of USTs. The Company
expects that such revenues will continue to decline from year to year as the
industry approaches the December 22, 1998 date.
The Company has retained the investment banking firm of Raymond James and
Associates, Inc. to evaluate strategic and financial alternatives for maximizing
shareholder value. This may include, but is not limited to, a sale of part or
all of the Company, an acquisition or merger with another company that may or
may not be in a business complementary to that of the Company, a "going private"
transaction in which current Directors and/or management would acquire the
outstanding publicly-held shares of the Company, or some combination of the
above alternatives. The Company has not necessarily determined to pursue any of
the above alternatives at this time.
Accounting Standards
Effective January 1, 1996, the Company adopted SFAS No. 121, entitled
"Accounting for the Impairment of Long-lived Assets and for Long-Lived Assets to
be Disposed of." The effect of this adoption was not material to the Company's
financial position or results of operations.
The Financial Accounting Standards Board issued SFAS No. 123, entitled
"Accounting for Stock-Based Compensation," in October 1995. Effective January 1,
1996, the Company has elected to adopt the disclosure requirements of SFAS No.
123.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation and routine claims from time to time.
Certain of the Company's litigation and claims are covered by insurance with a
maximum deductible of $150,000, or in some cases, $200,000. In Management's
opinion, the total estimated litigation liability and related insurance claims
are not material to the Company's consolidated financial position, results of
operations, or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on April 25, 1996. At
such meeting, the shareholders elected directors of the Company and no other
matters were voted on at the meeting.
The tabulation for the nominees is as follows:
Nominee For Against Abstained Non votes
--------------- ---------- ---------- ---------- ----------
T. G. Bogle 10,335,950 0 356,870 0
James H. Greer 10,606,119 0 86,701 0
R. L. Waltrip 10,606,119 0 86,701 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 11.1A Computation of Earnings Per Common Share for
the Three Months Ended March 31, 1996 and 1995.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three-month
period ended March 31, 1996.
<PAGE>
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.
TANKNOLOGY ENVIRONMENTAL, INC.
By /s/ RICK BERRY
-------------------------------------------
Rick Berry
Executive Vice President,
Chief Financial Officer and
Treasurer
Date May 10, 1996
-------------------------------------------
By /s/DONALD R. CAMPBELL
-------------------------------------------
Donald R. Campbell
President,
Chief Executive Officer and
Chief Operating Officer
Date May 10, 1996
-------------------------------------------
<PAGE>
Exhibit 11.1A
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
for the Three Months Ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Computation of earnings per common share for the three months
ended March 31:
Net loss applicable to common stock .................................... $ (343,120) $ (185,585)
============ ============
Weighted average number of common shares outstanding ................... 14,237,012 14,230,012
Common shares issuable under employee stock option plan ................ -- --
Less shares assumed repurchased with proceeds .......................... -- --
------------ ------------
Weighted average common shares outstanding ......................... 14,237,012 14,230,012
============ ============
Loss per common share ........................................ (0.02) (0.01)
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tanknology
Environmental, Inc.'s financial statements as of and for the three month period
ended March 31, 1996, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000867888
<NAME> Rick Berry
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<CASH> 16,953,472
<SECURITIES> 2,180,470
<RECEIVABLES> 4,029,031
<ALLOWANCES> (375,495)
<INVENTORY> 313,576
<CURRENT-ASSETS> 3,582,027
<PP&E> 19,278,361
<DEPRECIATION> 10,215,824
<TOTAL-ASSETS> 41,906,367
<CURRENT-LIABILITIES> 2,556,494
<BONDS> 0
0
0
<COMMON> 151,922
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 41,906,367
<SALES> 0
<TOTAL-REVENUES> 5,353,941
<CGS> 3,715,115
<TOTAL-COSTS> 6,136,826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (499,048)
<INCOME-TAX> (155,928)
<INCOME-CONTINUING> (343,120)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343,120)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
