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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
APRIL 3, 2000 (MARCH 17, 2000)
ITEQ, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 1-10668 41-1667001
(State of Incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
2727 ALLEN PARKWAY, SUITE 760
HOUSTON, TEXAS 77019
(Address of Registrant's principal executive offices)
713-285-2700
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 17, 2000, ITEQ, Inc. (the "Company") completed the previously
announced sale of its HMT operating unit to HMT Inc., a Delaware corporation
organized by Nassau Point Investors LLC, a private equity firm, for $40 million,
less an approximate $660,000 adjustment. The HMT division is engaged in the
business of above ground storage tank repair and maintenance, tank service, tank
inspection and engineering and the design, manufacture, assembly, sale and
installation of tank products. The transaction was structured as a sale by three
subsidiaries of the Company: ITEQ Storage Systems, Inc., ITEQ Construction
Services, Inc., and ITEQ Tank Services, Inc., of substantially all of the assets
relating to the HMT operating unit. The sale of the HMT division is part of the
Company's previously announced restructuring plan.
A copy of the press release issued by the Company relating to the
foregoing matters is attached as an exhibit to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) The following unaudited financial statements of the Company are filed with
this report:
Pro Forma Condensed Consolidated Balance Sheet at December 31, 1999
Pro Forma Condensed Consolidated Statement of Earnings for the following
periods:
Year Ended December 31, 1999
Year Ended December 31, 1998
The Pro Forma Condensed Consolidated Balance Sheet at December 31, 1999 shows
the pro forma financial position of the Company after giving effect to (i) the
sale effective December 31, 1999 of the HMT division and (ii) the use of the net
proceeds from the sale to reduce the Company's outstanding debt.
The Pro Forma Condensed Consolidated Income Statement for the Years ended
December 31, 1999 and 1998 assumes that the sale of the HMT division occurred on
the first day of each respective year and that the net sales proceeds were used
in the manner indicated effective on that day.
(c) Exhibits.
EXHIBIT No. EXHIBIT
----------- -------
99.1 Press Release issued by the Company on
March 20, 2000
99.2 Pro Forma financial statements
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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.
DATED this 3rd day of April, 2000.
ITEQ, Inc.
By: /s/ WILLIAM P. REID
--------------------------------------
William P. Reid
President and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- ----------- -------
99.1 Press Release issued by the Company on March 20, 2000.
99.2 Pro Forma financial statements
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EXHIBIT 99.1
PRESS RELEASE - DATED MARCH 20, 2000
HOUSTON, March 20 / PRNewswire/ -- ITEQ, Inc. (Nasdaq: ITEQ - news) today
announced that it has completed the previously announced sale of its HMT
operating unit to a company organized by Nassau Point Investors LLC for $40
million. The net proceeds of the sale will be utilized by ITEQ to further reduce
its indebtedness. For the year ended December 31, 1999, HMT generated revenue of
approximately $54.0 million and operating income of approximately $6.0 million.
Bill Reid, CEO of ITEQ stated, "This sale represents the last step in ITEQ's
announced restructuring and debt reduction plan. ITEQ has reduced its debt by
over 50% since the adoption of the restructuring plan in September 1999." Reid
went on to say, "With a lower debt level and a more narrow business focus, the
Company should be well positioned to capitalize on the expected industry
recovery in its markets." ITEQ has been experiencing increasing levels of
business activity in its filtration business; however, the petrochemical markets
have yet to respond to the increased price of crude. Reid is optimistic that by
focusing on the heat exchanger and air filtration business units, ITEQ can begin
to rebuild shareholder value.
ITEQ manufactures engineered equipment and provides after-market parts and
technical services to industrial customers worldwide. The Company's products
include heat exchangers, storage tanks, air filtration equipment and related
services.
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All forward-looking statements
are subject to certain risks, uncertainties and assumptions. These risks and
uncertainties, which are more fully described in ITEQ's Annual and Quarterly
Reports filed with the Securities and Exchange Commission, include changes in
market conditions in the industries in which the Company operates. Should one or
more of these risks or uncertainties materialize, or should the assumptions
prove incorrect, actual results may vary in material aspects from those
currently anticipated.
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EXHIBIT 99.2
ITEQ, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------- -------------- -------------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 5,287 $ -- $ 5,287
Due on contracts and other receivables, net 25,072 -- 25,072
Costs and estimated earnings in excess of
billings, on uncompleted contracts 11,053 -- 11,053
Inventories, net 12,425 -- 12,425
Prepaid expenses, deposits and other assets 3,476 -- 3,476
Assets of businesses held for sale 53,211 (28,563) 24,648
-------- -------- --------
Total current assets 110,524 (28,563) 81,961
Property and equipment, net 20,620 -- 20,620
Other assets, net 48,986 -- 48,986
-------- -------- --------
Total Assets $180,130 $(28,563) $151,567
======== ======== ========
Current Liabilities
Long-term obligations classified as current $102,687 $(38,000) $ 64,687
Accounts payable 11,349 -- 11,349
Accrued liabilities and other current
liabilities 22,212 -- 22,212
Liabilities of businesses held for sale 18,720 (4,965) 13,755
-------- -------- --------
Total current liabilities 154,968 (42,965) 112,003
Stockholders' Equity 25,162 14,402 39,564
-------- -------- --------
Total Liabilities and Stockholders' Equity $180,130 $(28,563) $151,567
======== ======== ========
</TABLE>
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ITEQ, Inc.
Pro Forma Condensed Consolidated Income Statement
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------- -------------- -------------
<S> <C> <C> <C>
Revenues $280,417 $ (54,933) $225,484
Cost of Revenues 255,948 (42,269) 213,679
Selling, general and administrative expenses 36,234 (5,329) 30,905
Depreciation and amortization 8,472 (1,453) 7,019
Merger, acquisition and strategic charges 3,543 -- 3,543
Impairment of long-lived assets held for sale 20,670 -- 20,670
Impairment of long-lived assets 21,556 -- 21,556
-------- --------- ---------
Operating profit (loss) (66,006) (5,882) (71,888)
Interest expense, net (9,354) 2,390 (6,964)
Miscellaneous income, net 2,664 (14) 2,650
-------- --------- ---------
Loss before income tax provision (72,696) (3,506) (76,202)
Income tax provision 4,373 (32) 4,341
-------- --------- ---------
Net Loss $(77,069) $ (3,474) $ (80,543)
======== ========= =========
Loss Per Share
Basic $ (2.73) $ (2.86)
======== =========
Diluted $ (2.73) $ (2.86)
======== =========
Weighted average common shares outstanding
Basic 28,193 28,193
======== =========
Diluted 28,222 28,222
======== =========
</TABLE>
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ITEQ, Inc.
Pro Forma Condensed Consolidated Income Statement
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------- -------------- -------------
<S> <C> <C> <C>
Revenues $342,794 $ (61,909) $280,885
Cost of Revenues 275,569 (43,108) 232,461
Selling, general and administrative expenses 37,793 (7,207) 30,586
Depreciation and amortization 8,313 (1,542) 6,771
Merger, acquisition and strategic charges 12,528 12,528
-------- --------- --------
Operating profit (loss) 8,591 (10,052) (1,461)
Interest expense, net (7,821) 2,224 (5,597)
Miscellaneous income, net 402 14 416
-------- --------- --------
Earnings (loss) from continuing operations 1,172 (7,814) (6,642)
before income tax provision
Income tax provision 431 (168) 263
-------- --------- --------
Earnings (loss) from continuing operations $ 741 $ (7,646) $ (6,905)
======== ========= ========
Earnings per share from continuing operations
Basic $ 0.03 $ (0.25)
======== ========
Diluted $ 0.03 $ (0.25)
======== ========
Weighted average common shares outstanding
Basic 27,686 27,686
======== ========
Diluted
27,982 27,982
======== ========
</TABLE>
