<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1997
--------------
Commission File Number 1-10668
-------
ITEQ, INC.
----------
(Exact name of registrant as specified in its charter)
Delaware 41-1667001
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2727 Allen Parkway, Suite 760 Houston, Texas 77019
-----------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 713-285-2700
------------
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of share of each of the issuer's classes of common stock,
as of the latest practicable date.
11,845,793
(Shares of common stock outstanding as of April 24, 1997)
================================================================================
<PAGE> 2
ITEQ, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarterly Period Ended
March 31, 1997
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1996
and March 31, 1997 (unaudited) 3
Consolidated Statements of Operations for the
three months ended March 31, 1996 (unaudited)
and 1997 (unaudited) 4
Consolidated Statements of Cash Flow for the
three months ended March 31, 1996 (unaudited)
and 1997 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 10
PART II - OTHER INFORMATION 14
</TABLE>
<PAGE> 3
ITEQ, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31,
December 31, 1997
1996 (unaudited)
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $6,331 $1,759
Restricted cash 144 155
Due on contracts and other receivables, net 34,230 33,261
Costs and estimated earnings in excess of billings
on uncompleted contracts 20,690 23,759
Inventories 10,649 6,268
Prepaid expenses, deposits and other assets 881 1,106
Deferred tax asset 1,979 1,166
-------- --------
Total Current Assets 74,904 67,474
-------- --------
Property and Equipment, net 13,661 13,775
Other Assets, net 47,823 47,045
-------- --------
TOTAL ASSETS $136,388 $128,294
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $14,568 $13,550
Accrued liabilities:
Job costs 8,171 9,004
Warranties 353 343
Compensation 5,067 4,927
Other 4,260 2,978
Billings in excess of costs and estimated earnings
on uncompleted contracts 958 952
Progress billings 5,137 6,496
Current maturities of long-term debt 6,012 6,012
Income taxes payable 527 506
-------- --------
Total Current Liabilities 45,053 44,768
LONG-TERM LIABILITIES:
Borrowings under line of credit 25,400 17,000
Other long-term obligations, less current
maturities 29,029 27,548
Subordinated notes 12,712 12,796
Deferred tax liability 941 941
-------- --------
Total Liabilities 113,135 103,053
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,000 shares
authorized, no shares issued or outstanding -- --
Common stock, $.001 par value; 30,000 shares
authorized, 11,510 and 11,838 shares issued and
outstanding at December 31, 1996 and
March 31, 1997, respectively 11 12
Additional paid-in capital 23,161 24,400
Retained earnings (deficit) (44) 1,129
Translation adjustment 125 (300)
-------- --------
Total Stockholders' Equity 23,253 25,241
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $136,388 $128,294
======== ========
</TABLE>
See Notes To Consolidated Financial Statements
3
<PAGE> 4
ITEQ, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1996
as
restated 1997
--------- -------
<S> <C> <C>
Revenues $22,129 $48,494
Cost of revenues 17,430 38,870
------- -------
Gross profit 4,699 9,624
Selling, general and administrative expenses 2,647 4,807
Sales commissions 1,047 645
Depreciation and amortization 245 481
Merger costs, restructuring charges and
other nonrecurring costs 3,500 --
------- -------
Operating profit (2,740) 3,691
------- -------
Other income (expense):
Interest expense, net (385) (1,807)
Other income 18 102
------- -------
Total other expense (367) (1,705)
------- -------
Earnings (loss) before provision for
income taxes (3,107) 1,986
Provision (benefit) for income taxes (1,210) 813
------- -------
Net earnings (loss) per
common share ($1,897) $1,173
======= =======
Net earnings (loss) per common share ($0.17) $0.10
======= =======
Weighted average common and common
equivalent shares outstanding 11,462 12,272
======= =======
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
ITEQ, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1996
as restated 1997
----------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(1,897) $ 1,173
Adjustments to reconcile net earnings (loss) to
net cash provided (used) by operating activities:
Non Cash Interest -- 218
Depreciation and amortization 376 730
Provision (benefit) for income taxes (115) 813
Changes in assets and liabilities:
Restricted cash (156) (27)
Due on contracts and other receivables 6,909 780
Inventories 453 4,359
Costs and estimated earnings in excess of
billings on uncompleted contracts (858) (3,523)
Prepaid expenses, deposits and other assets (397) (225)
Refundable income taxes (1,210)
Accounts payable and accrued liabilities (5,377) (1,144)
Billings in excess of costs and estimated earnings
on uncompleted contracts 42 46
Progress Billings -- 1,359
Income taxes payable -- (21)
Other 4 (20)
------- -------
Net cash provided (used) by operating activities (2,226) 4,518
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (44) (490)
------- -------
Net cash used by investing activities (44) (490)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term obligations (4) (9,881)
Net borrowings under line of credit 102 --
Proceeds from exercise of stock options 43 1,240
------- -------
Net cash provided (used) by financing activities 141 (8,641)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (16) 41
------- -------
Net decrease in cash and cash equivalents (2,145) (4,572)
Cash and cash equivalents, beginning of period 2,216 6,331
------- -------
Cash and cash equivalents, end of period $ 71 $ 1,759
======= =======
</TABLE>
See Notes To Consolidated Financial Statements
5
<PAGE> 6
ITEQ, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with regulation S-X pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading.
In the opinion of management, the unaudited financial statements contain all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the financial position as of March 31, 1997, the results of
operations for the three months ended March 31, 1996 and 1997, and the cash
flows for the three months ended March 31, 1996 and 1997.
During the fourth quarter of 1996, effective January 1, 1996, the Company
estimated percentage-of-completion for the materials portion of its long-term
contracts at its Allied Industries, Inc. subsidiary, based on when purchased
material was placed into production, whereas previously, such estimates were
based on when the liability for the cost of the material was legally incurred.
The new method of applying the percentage-of- completion accounting principle
was adopted to better reflect the economics of Allied's revenue and profit
earnings process. Financial statements of prior years and interim periods have
been restated to apply the revised method retroactively. The effect of the
accounting change on previously reported March 31, 1996 net earnings is as
follows (in thousands):
<TABLE>
<CAPTION>
Increase/Decrease
-----------------
March 31,
1996
----
<S> <C>
Net earnings (loss) ...................... $12
Net earnings (loss) per common share ..... --
</TABLE>
NOTE 2 - DUE ON CONTRACTS AND OTHER RECEIVABLES
At December 31, 1996 and March 31, 1997, due on contracts and other receivables
consist of (in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
------- -------
<S> <C> <C>
Billings on completed contracts and contracts in progress ... $34,273 $33,232
Retained contract receivables ............................... 544 628
Other miscellaneous receivables ............................. 125 134
Allowance for doubtful accounts ............................. (712) (733)
------- -------
$34,230 $33,261
======= =======
</TABLE>
6
<PAGE> 7
NOTE 3 - INVENTORIES
Inventories consist of costs for which no related revenue has been recognized.
Inventories include materials used in the manufacturing process, purchased
parts and equipment held for resale and are valued at the lower of cost or
market. Cost is determined by the average cost method for materials and the
first-in, first-out (FIFO) method for purchased parts. At December 31, 1996 and
March 31, 1997, inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
----------- ---------
<S> <C> <C>
Raw Materials .................................. $ 3,514 $3,524
Work in Progress................................ 7,135 2,744
------- ------
Total .......................................... $10,649 $6,268
======= ======
</TABLE>
NOTE 4 - OTHER ASSETS
At December 31, 1996 and March 31, 1997, other assets consist of the following
items (in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
------- -------
<S> <C> <C>
Excess of costs over net assets acquired, net of accumulated amortization, of
$1,789 and $1,995 at December 31, 1996 and March 31, 1997, respectively ........ $32,941 $32,449
Licenses, trademarks and tradenames, net of accumulated amortization of
$878 and $1,050 at December 31, 1996 and March 31, 1997, respectively .......... 11,880 11,708
Debt issuance costs, net of accumulated amortization of $45 and $179 at
December 31, 1996 and March 31, 1997, respectively .............................
2,957 2,843
Other .......................................................................... 45 45
------- -------
Other Assets, net .................................................. $47,823 $47,045
======= =======
</TABLE>
NOTE 5 - BUSINESS ACQUISITIONS
In March 1997, the Company entered into a letter of intent to purchase Exell,
Inc. and an affiliated partnership (collectively, "Exell") for a combined cash
purchase price of approximately $10.4 million, subject to reduction for certain
adjustments. A definitive purchase agreement was entered into in April 1997.
Exell is a manufacturer of shell and tube heat exchangers and a competitor of
the Company's Ohmstede heat exchanger manufacturing operation. For its fiscal
year ended September 30, 1996, Exell reported revenues of $25.0 million. The
transaction, if consummated, will be accounted for using the purchase method of
accounting and is presently scheduled to close by June 1997, but remains subject
to the satisfaction of customary contractual conditions and certain regulatory
approvals, and there can be no assurance that the transaction will be
consummated.
NOTE 6 - RESTRUCTURING COSTS
A restructuring charge of $4,200,000 was taken during the three months ended
March 31, 1996, of which $3.5 million and $0.7 million were recorded as
restructuring charges and cost of revenues, respectively. The charge included
(i) a provision for the contractually required severance obligations to the
former president and chief executive officer who was replaced in March 1996,
and (ii) the cost of implementing new management's plan to reduce the Company's
overall cost structure including employee severance, lease and other contract
buyouts, inventory and other asset impairments, losses related to termination
of unprofitable product lines, excess machinery disposal and other related
costs.
7
<PAGE> 8
NOTE 7 - RECENT DEVELOPMENTS
As planned when acquired, Ohmstede has initiated foreign sales, which
typically have longer production times and more units per order in production
and shipment than Ohmstede's historical domestic business. Accordingly, such
sales were recognized under the percentage-of-completion revenue recognition
method, resulting in revenues and gross margin of $3,564,000 and $658,000,
respectively, during the three months ended March 31, 1997. Also, at March 31,
1997, Ohmstede had more jobs substantially complete but not shipped than in
prior periods, which under the Company's completed contract policy resulted in
revenues and gross margin of $1,961,000 and $627,000, respectively, during the
three months ended March 31, 1997.
In March 1997, a vessel at the Company's Allied subsidiary was damaged by a
subcontractor during the final stages of completion. The Company entered into a
second contract with the customer to construct a replacement vessel and expects
to recover the cost of the original vessel either from the subcontractor or from
insurance proceeds. The Company does not expect to incur a loss on the
contracts.
The Company has filed a registration statement on Form S-2 to register for sale
5.1 million shares of common stock (4.3 million from the Company and 0.8 million
form certain selling stockholders). The primary use of the offering proceeds to
the Company will be to reduce debt incurred in acquisitions and for potential
future acquisitions. Subsequent to March 31, 1997 the Company incurred $117,000
in expenses to date in conjunction with the offering which will be capitalized
and recorded as a reduction of offering proceeds.
<PAGE> 9
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Since its inception in 1990 the Company has acquired seven businesses. Due
to the magnitude of these acquisitions and the integration of the acquired
operations with the Company's existing business, results of operations for
prior periods are not necessarily comparable with or indicative of results of
operations for current or future periods.
In December 1995, the Company acquired Allied Industries, Inc. ("Allied")
in a transaction that was accounted for as a pooling-of-interests. Effective
November 1, 1996, the Company completed the acquisition of Ohmstede, Inc.
("Ohmstede") in a transaction that was accounted for as a purchase. In 1997,
the Company combined the Allied and Ohmstede operations to (i) permit Ohmstede
to efficiently manufacture large heat exchangers at Allied's plant and thus
enter a product class which Ohmstede was not previously equipped to handle,
(ii) encourage a unified cross-selling effort to customers of both product
lines; (iii) utilize Allied's international distribution network to enhance
Ohmstede's international marketing efforts; and (iv) reduce combined operating
costs.
The Company records revenues from long-term contracts using the
percentage-of-completion method. Under this method, the Company recognizes as
revenues that portion of the total contract price which the cost of work
completed to date bears to the estimated total cost of the work included in the
contract. Because contracts may extend over more than one fiscal period,
revisions of cost and profit estimates are made periodically and are reflected
in the accounting period in which they are determined. If the estimate of
total costs on a contract indicates a loss, the total anticipated loss is
recognized immediately. Contract costs include all direct material, labor and
subcontracting costs and those indirect costs related to contract performance,
such as supplies, tools and repairs.
The Company recognizes revenue from certain short-term contracts using the
completed contract method. Revenue is recognized when a project is
substantially complete. The contracts under this revenue recognition method
are typically less than three months in duration.
During the fourth quarter of 1996, effective January 1, 1996, the Company
estimated percentage-of-completion for the materials portion of its long-term
contracts at Allied based on when the material was placed into production,
whereas previously such estimates were based on when the liability for the cost
of material was legally incurred. The new method of applying the
percentage-of-completion accounting method was adopted to better reflect the
economics of Allied's revenue and profit earnings process, and financial
statements of prior years and interim periods have been restated to apply the
revised method retroactively.
The Company historically has experienced quarterly fluctuations in its
operating results. Operating results in any quarter are dependent upon the
timing of equipment and system sales, which may vary considerably among
periods.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
REVENUES
Revenues for the three months ended March 31, 1997 increased $26.4
million, or 119%, to $48.5 million from $22.1 million for the three months
ended March 31, 1996. The increase was primarily attributable to the November
1996 acquisition of Ohmstede, which contributed revenues of $30 million for the
three months ended March 31, 1997. This increase was partially offset by the
10
<PAGE> 10
disposition in November 1996 of Air-Cure, Inc. ("ACI") and Pipkorn, Inc.
("Pipkorn"), both of which were formerly subsidiaries of the Company. In the
first quarter of 1996, ACI and Pipkorn contributed $1.2 million in revenues. The
revenues of the Company's Singapore subsidiary declined $1.0 million in 1997 to
$1.1 million compared to $2.1 million in 1996, due to a temporary decrease in
sales to the microelectronics industry.
GROSS PROFITS
The Company's gross profits for the three months ended March 31, 1997
increased $4.9 million, or 104%, to $9.6 million compared to $4.7 million in
1996. Ohmstede's gross profit of $6.7 million for the three months ended March
31, 1997 was partially offset by (i) the sale of ACI and Pipkorn, which
contributed $0.2 million of gross profits during the three months ended March
31, 1996, and (ii) a decrease in gross profits of $1.8 million at certain of the
Company's other operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (SG&A) expenses increased by $2.2
million from $2.6 million to $4.8 million, which was attributable to the
Ohmstede acquisition. Ohmstede's SG&A expense for the three months ended March
31, 1997 was $2.5 million, which was partially offset by a $0.2 million
reduction in SG&A expense related to the sale of ACI and Pipkorn.
SALES COMMISSIONS
Sales commissions represent commissions paid to third party sales
representatives or distributors. The commissions vary from period to period
with the projects and products sold and the arrangement between the Company and
the sales representative.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense (excluding amounts included in cost
of revenues) for the three months ended March 31, 1997 increased $0.3 million
to $0.5 million. The increase was as a result of the Ohmstede acquisition.
INTEREST EXPENSE
Interest expense for the three months ended March 31, 1997 and 1996 was
$1.8 million and $0.4 million, respectively. The borrowings required to
finance the Ohmstede acquisition, which aggregated $56.1 million, caused the
increase in interest expense.
INCOME TAXES
The effective rate for the three months ended March 31, 1997 and 1996 was
41% and 39%, respectively.
OTHER
As planned when acquired, Ohmstede has initiated foreign sales,
which typically have longer production times and more units per order in
production and shipment than Ohmstede's historical domestic business.
Accordingly, such sales were recognized under the percentage-of-completion
revenue recognition method, resulting in revenues and gross margin of $3,564,000
and $658,000, respectively, during the three months ended March 31, 1997. Also,
at March 31, 1997, Ohmstede had more jobs substantially complete but not shipped
than in prior periods, which under the Company's completed contract policy
resulted in revenues and gross margin of $1,961,000 and $627,000, respectively,
during the three months ended March 31, 1997.
In March 1997, a vessel at the Company's Allied subsidiary was damaged by
a subcontractor during the final stages of completion. The Company entered
into a second contract with the customer to construct a replacement vessel and
expects to recover the cost of the original vessel either from the
subcontractor or from insurance proceeds. The Company does not expect to incur
a loss on the contracts.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997 the Company's cash position was $1.8 million compared
with $6.3 million at December 31, 1996. Typically, the Company maintains cash
levels of $1 million to $3 million for general corporate purposes, with any
additional amounts being used to reduce borrowings under the Company's line of
credit. The cash level at December 31, 1996 resulted from large customer
payments received at year end. Working capital at March 31, 1997 was $23.0
million compared to $29.9 million at December 31, 1996, resulting from the
difference in cash position.
11
<PAGE> 11
The Company's existing capital resources consist of cash balances, cash
provided by its operating activities and funds available under its line of
credit. The Company's operating activities provided $4.5 million in cash
during the three months ended March 31, 1997.
The Company's cash requirements consist of its general working capital
needs, capital expenditures, obligations under its leases and promissory notes,
and capital required for future acquisitions. The Company's general working
capital requirements consist of salary costs and related overhead and the
purchase price of materials and components, and may also include subcontracts
with respect to which such costs are incurred. Management anticipates that the
Company will make capital expenditures of approximately $2.4 million in 1997 as
compared to $1.0 million in 1996. The increase in capital expenditures relates
to a full year of Ohmstede operations. Excluding payments under the
Company's revolving line of credit, principal payments made under promissory
notes totaled approximately $2.5 million for the year ended 1996.
Approximately $6.0 million and $7.3 million in principal will be payable under
the terms of the promissory notes during 1997 and 1998, respectively.
In November 1996, the Company amended its principal credit agreement to
increase the commitment in conjunction with the Ohmstede acquisition. The
financing consisted of a $35 million term loan and a $38 million revolving line
of credit facility (under which $17.0 million was outstanding at March 31,
1997). In addition to the bank financing, in November 1996, the Company issued
Senior Subordinated Notes ("Subordinated Notes") to two institutional lenders
in an aggregate amount of $15 million. The Subordinated Notes mature November
18, 2003, and bear interest at 12% through December 31, 1997, which rate
increases by 0.5% per year for each year the Subordinated Notes remain
outstanding. As additional consideration, the Subordinated Note holders
received warrants to purchase an aggregate of 1,760,000 shares of the Company's
common stock at $5.10 per share, subject to adjustment. The warrants may be
exercised at any time prior to expiration on November 18, 2003. The $2.3
million warrant value was reflected as equity and as debt discount that is
being amortized as additional interest expense over the seven year life of the
Subordinated Notes.
The Company's principal credit facility and the Subordinated Notes require
the Company to maintain certain levels of working capital and stockholders'
equity and contain other restrictive covenants. Such instruments also limit
the ability of the Company to incur additional indebtedness and to make
acquisitions and certain investments. At March 31, 1997, the Company was in
compliance with the provisions of its debt agreements.
Except with respect to the funding of any future acquisitions, management
believes that funds available under its credit facilities, together with cash
generated from operations, will be sufficient to meet the Company's anticipated
cash requirements for 1997. Management further believes that the Company could
obtain additional capital to make acquisitions primarily through either
issuances of common or preferred stock, or debt or lease financing, although
no assurance can be given with respect to whether such financing would be
available when required or whether such financing can be obtained on terms
acceptable to the Company.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Although the Company believes that its
expectations are based on reasonable assumptions, it can give no assurance that
such expectations will be achieved. Important factors that could cause actual
results to differ materially from those in the forward looking statements
herein.
12
<PAGE> 12
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On March 5, 1997, the Company held a special meeting of stockholders,
the purpose of which was to approve an amendment to the Company's certificate
of incorporation to change its name to ITEQ, Inc. The results of the vote on
such proposal were as follows: (a) For - 8,804,744, (b) Against - 57,488 and
(c) Abstaining - 18,950.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K. (i) The Company filed a report on Form 8-K/A
dated February 3, 1997 with respect to the financial statements
required to be filed in connection with the acquisition of Ohmstede,
Inc.
(ii) The Company filed a report on Form 8-K dated March 7, 1997
with respect to the change of the Company's name to ITEQ, Inc.
<PAGE> 13
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.
ITEQ, INC.
Date: April 30, 1997
/s/ LAWRANCE W. MCAFEE
---------------------------------------
Lawrance W. McAfee, Executive Vice
President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,914
<SECURITIES> 0
<RECEIVABLES> 33,994
<ALLOWANCES> 733
<INVENTORY> 6,268
<CURRENT-ASSETS> 67,474
<PP&E> 16,809
<DEPRECIATION> 3,034
<TOTAL-ASSETS> 128,294
<CURRENT-LIABILITIES> 44,768
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 25,229
<TOTAL-LIABILITY-AND-EQUITY> 128,294
<SALES> 48,494
<TOTAL-REVENUES> 48,494
<CGS> 38,870
<TOTAL-COSTS> 38,870
<OTHER-EXPENSES> 5,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,807
<INCOME-PRETAX> 1,986
<INCOME-TAX> 813
<INCOME-CONTINUING> 1,173
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,173
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
