SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------
FORM 10-Q
[Mark One]
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________.
Commission File No. 1-11822
------------------------------------------------
TRANSCOR WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0369288
(State of incorporation) (I.R.S. Employer Identification Number)
1502 Second Avenue, East, Tampa, Florida 33605
(Address of registrant's principal executive offices, including zip code)
------------------------------------------------
(Registrant's telephone number, including area code): (813) 248-3878
Not applicable
------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since
last report)
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 Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by a check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes [X] No [ ]
Applicable Only to Corporate Issuers
The number of shares of Common Stock outstanding on May 10, 1996, was
4,010,000 shares.<PAGE>
TRANSCOR WASTE SERVICES, INC.
FORM 10-Q
INDEX
PAGE
------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated balance sheets at December 31,
1995 and March 31, 1996 (unaudited) . . . . . 1 - 2
Consolidated statements of operations for
the three months ended March 31, 1995
and 1996 (unaudited) . . . . . . . . . . . . . . . 3
Consolidated statements of cash flows for
the three months ended March 31, 1995
and 1996 (unaudited) . . . . . . . . . . . . . . . 4
Notes to consolidated financial statement . . 5 - 6
Item 2. Management's discussion and analysis of
financial condition and results of operation . 7 - 8
PART II. OTHER INFORMATION
Item 1. Legal proceedings . . . . . . . . . . . . . . . . 9
Item 2. Changes in securities . . . . . . . . . . . . . . 9
Item 3. Defaults upon senior securities . . . . . . . . . 9
Item 4. Submission of matters to a vote of security holders 9
Item 5. Other information . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and reports on Form 8-K . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . 10
Exhibit 11 Calculation of income (loss) per share . . . . . 11<PAGE>
SECURITIES AND EXCHANGE COMMISSION FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1995 1996
ASSETS ------------ ------------
------ (unaudited)
Current assets:
Cash . . . . . . . . . . . . . . . $ 3,414,479 $ 3,571,438
Accounts receivable-trade, net . . 6,337,941 5,904,985
Costs and estimated earnings in
excess of billings on uncompleted
contracts . . . . . . . . . . . . 785,473 360,805
Income tax refund receivable . . . 731,951 783,984
Deferred income taxes . . . . . . . 441,596 441,596
Other current assets . . . . . . . 255,514 718,011
------------ ------------
Total current assets . . . . . . 11,966,954 11,780,819
------------ ------------
Property and equipment, net . . . . . 27,116,350 26,912,995
Intangible assets, net . . . . . . . 785,175 910,400
Due from affiliate . . . . . . . . . 6,019,112 5,365,128
Other assets . . . . . . . . . . . . 963,611 533,901
------------ ------------
$46,851,202 $45,503,243
============ ============
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1995 1996
LIABILITIES AND STOCKHOLDERS' EQUITY ------------ ------------
------------------------------------- (unaudited)
Current liabilities:
Accounts payable, trade . . . . . . $ 3,942,274 $ 3,029,273
Accrued expenses . . . . . . . . . 4,002,056 4,191,760
Billings in excess of costs and
estimated earnings on uncompleted
contracts . . . . . . . . . . . . 184,871 5,888
Due to affiliate . . . . . . . . . 368,199 368,199
Current portion of long-term debt . 3,770,219 3,860,787
------------ ------------
Total current liabilities . . . . 12,267,619 11,455,907
------------ ------------
Long-term debt, including debt owed
to KVN of $2,003,258 at December
31, 1995 and March 31, 1996 . . . . 17,972,049 17,554,432
Deferred income taxes . . . . . . . . 3,026,244 3,026,244
Commitments and contingencies . . . . - -
Stockholders' equity:
Preferred stock, $.001 par value;
1,000,000 shares authorized; none
issued and outstanding . . . . . - -
Capital stock, $.001 par value;
10,000,000 shares authorized;
4,000,000 shares issued in 1995
and 4,010,000 shares issued in
1996 . . . . . . . . . . . . . . 4,000 4,010
Capital in excess of par value . . 12,133,557 12,193,547
Retained earnings . . . . . . . . . 1,495,739 1,317,109
------------ ------------
13,633,296 13,514,666
Less treasury stock, at cost . . . (48,006) (48,006)
------------ ------------
Total stockholders' equity . . . 13,585,290 13,466,660
------------ ------------
$46,851,202 $45,503,243
============ ============
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31,
----------------------------
1995 1996
------------ -------------
(unaudited) (unaudited)
Revenue . . . . . . . . . . . . . . . $ 8,798,397 $11,058,965
Expenses:
Operating expenses . . . . . . . . 6,817,584 9,305,113
Selling, general, and
administrative expenses . . . . . 1,241,410 1,720,797
------------ ------------
Operating income . . . . . . . . . . 739,403 33,055
Interest expense . . . . . . . . . . 111,412 325,891
------------ ------------
Income before provision for income
taxes . . . . . . . . . . . . . . . 627,991 (292,836)
Provision for income taxes . . . . . 241,870 (114,206)
------------ ------------
Net income (loss) . . . . . . . . . . $ 386,121 $ (178,630)
============ ============
Share data:
Primary income (loss) per share . . $ .10 $ (.04)
Fully diluted income (loss) per ============ ============
share . . . . . . . . . . . . . . $ .09 $ (.04)
============ ============
Weighted average number of shares
outstanding used
in computations:
Primary . . . . . . . . . . . . . . 4,015,031 4,061,675
============ ============
Fully diluted . . . . . . . . . . . 4,423,985 4,061,675
============ ============
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
Three months ended March 31,
----------------------------
1995 1996
------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income (loss) . . . . . . . . . $ 386,121 $ (178,630)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 471,034 828,312
(Gain) loss on disposal of
equipment . . . . . . . . . . (391) 28,787
Changes in operating assets
and liabilities:
Accounts receivable . . . . . (128,052) 432,956
Costs and estimated earnings
in excess of billings on
uncompleted contracts . . . - 424,668
Income tax refund receivable - (52,033)
Other assets . . . . . . . . (89,446) (32,787)
Accounts payable . . . . . . (504,345) (913,001)
Income tax payable . . . . . 21,230 -
Costs and estimated earnings
in excess of billings on
uncompleted contracts . . . - (178,983)
Accrued expenses . . . . . . 525,186 189,704
------------- -------------
Total adjustments . . . . . . . . . 295,216 727,623
------------- -------------
Net cash provided by operating
activities . . . . . . . . . . . . 681,337 548,993
------------- -------------
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(continued)
Three months ended March 31,
----------------------------
1995 1996
------------- -------------
(unaudited) (unaudited)
Cash flows from investing activities:
Capital expenditures . . . . . . . (2,901,296)
Proceeds from sale of property and (794,369)
equipment . . . . . . . . . . . . 59,000 15,400
------------- -------------
Net cash used by investing activities (2,842,296) (778,969)
------------- -------------
Cash flows from financing activities:
Proceeds from long-term debt . . . 2,286,309 611,259
Repayment of long-term debt . . . . (268,015) (938,308)
Repayment of advances from KVN . . 86,825 653,984
Proceeds from stock warrants . . . - 60,000
------------- -------------
Net cash provided by financing
activities . . . . . . . . . . . . 2,105,119 386,935
------------- -------------
Net increase (decrease) in cash . . . (55,840) (156,959)
Cash, beginning of period . . . . . . 3,211,795 3,414,479
------------- -------------
Cash, end of period . . . . . . . . . $ 3,155,955 $ 3,571,438
============= =============
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
Basis of presentation - TransCor Waste Services, Inc. (the
"Company") was formed on November 6, 1992, as a holding company and a
wholly-owned subsidiary of Kimmins Corp. ("KVN") (f/k/a Kimmins
Environmental Service Corp.). Effective on such date, KVN contributed
all of the outstanding common stock of six of its other wholly-owned
subsidiaries to Kimmins Recycling Corp. ("KRC"). KVN then contributed
all of the outstanding common stock of KRC to the Company. These
transactions have been treated as a reorganization of companies under
common control in a manner similar to a pooling of interests so that the
consolidated financial statements include the accounts of the Company
and its subsidiaries as if they had been consolidated from the beginning
of the period presented.
These financial statements of the Company omit or condense certain
footnotes and other information normally included in the financial
statements prepared in accordance with generally accepted accounting
principles. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) necessary for fair presentation of
the financial information for the interim periods reported have been
made.
Intangible assets - Intangible assets consist primarily of the
excess of cost over fair market value of the net assets of the acquired
business, which will be amortized on a straight-line basis over twenty
years, and customer contracts, which will be amortized on a straight-
line basis over five years. Accumulated amortization was $91,600 at
March 31, 1996 ($66,825 at December 31, 1995).
Earnings per share - Net income (loss) per share is computed based
on the weighted average number of shares of capital stock and stock
options outstanding. Fully diluted earnings per share assumes that the
convertible subordinated debt was converted into common stock as of the
beginning of the year and that the interest expense thereon, net of
taxes, was added to net income (loss).<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Property and equipment, net
December 31, March 31,
1995 1996
------------- -------------
(unaudited)
Land . . . . . . . . . . . . . . . $ 4,596,622 $ 4,597,368
Buildings and improvements . . . . 5,092,686 5,137,988
Vehicles . . . . . . . . . . . . . 12,939,015 12,942,426
Waste containers and equipment . . 11,024,246 11,852,667
Furniture and fixtures . . . . . . 482,091 470,297
Construction in progress . . . . . 615,846 332,860
------------- -------------
34,750,506 35,333,606
Less accumulated depreciation . . . (7,634,156) (8,420,611)
------------- -------------
$ 27,116,350 $ 26,912,995
============= =============
Property and equipment are recorded at cost. Depreciation is
provided using the straight-line method over estimated useful lives
ranging from 3 to 30 years. <PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Long-term debt
December 31, March 31,
1995 1996
------------- -------------
(unaudited)
Notes payable, due through March 1,
2001, payable in monthly
installments with interest at
varying rates up to 13 percent,
collateralized by equipment . . . . $ 14,927,277 $ 14,648,884
Convertible subordinated term note
with KVN, interest payable in
monthly installments, principal due
December 1, 2003, interest at
bank's base rate plus 1 percent . . 2,003,258 2,003,258
Mortgage notes, principal and
interest payable in monthly
installments through August 1,
2010, interest at varying rates up
to prime plus 1-1/2 percent,
collateralized by land and
buildings . . . . . . . . . . . . . 3,411,733 3,363,077
Mortgage notes - $500,000 with
related parties (Note 3), interest
payable in quarterly installments
at 10 percent, plus a performance
based return not to exceed 6
percent, principal due on January
9, 1997, principal and interest
guaranteed by KVN, collateralized
by land and buildings . . . . . . . 1,400,000 1,400,000
------------- -------------
21,742,268 21,415,219
Less current portion . . . . . . . (3,770,219) (3,860,787)
------------- -------------
$ 17,972,049 $ 17,554,432
============= =============
At March 31, 1996, $1,400,000 of the Mortgage Notes is classified as
long-term debt since it is the Company's intent to refinance the debt on
a long-term basis.<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Stockholders' equity
The Company has authorized 1,000,000 shares of preferred stock with
a par value of $.001 per share, none of which has been issued. Such
preferred stock may be issued in series and will have such designations,
rights, preferences, and limitations as may be fixed by the Board of
Directors.
The convertible subordinated term note is convertible into 400,652
shares of the Company's capital stock at the time the market value per
share equals or exceeds $9.00 for twenty consecutive trading days.
Warrants to purchase 100,000 shares of the Company's common stock at
$6.00 per share were issued to the underwriters of the Company's initial
public offering. Warrants to purchase 10,000 shares of common stock
were exercised during March 1996.<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Revenue for the three months ended March 31, 1996, was $11,059,000,
representing an increase of $2,261,000 or approximately 26 percent from
$8,798,000 for the three months ended March 31, 1995. The increase in
revenue was attributable primarily to an increase in the Company's
transfer and recycling solid waste management services during this
period. A substantial portion of the increase in transfer and recycling
services was attributable to increased activity in the Fort Myers,
Tampa and Jacksonville collection markets. The increase in total revenue
was attributable also to the Company's demolition operations, which
generated revenue of approximately $2,502,000 for the three months ended
March 31, 1996, compared to approximately $1,826,000 for the same period
in 1995.
Operating expenses for the three months ended March 31, 1996, were
$9,305,000, representing an increase of $2,487,000 or approximately 36
percent from $6,818,000 for the three months ended March 31, 1995.
Operating expenses include fees charged by landfills for waste disposal
(which to date has been the largest component of the Company's operating
expenses), direct labor costs associated with the collection, transfer,
and recycling of waste, and depreciation. The increase in operating
expenses was attributable primarily to volume-related increases in
certain major operational expenses; such as, landfill fees and direct
labor costs.
Selling, general, and administrative expenses for the three months
ended March 31, 1996, were $1,721,000, representing an increase of
$480,000 or 39 percent from $1,241,000 for the three months ended March
31, 1995. The dollar increase in selling, general, and administrative
expenses is attributable primarily to increased overhead costs, such as
office salaries, management fees, and marketing costs that are
associated with higher levels of operations.
Interest expense for the three months ended March 31, 1996, was
$326,000, compared to $111,000 for the three months ended March 31,
1995. The increase in interest expense was due primarily to a
significant increase in the average amount of debt outstanding between
periods.
The Company's income tax provision was calculated using a rate of
approximately 39 percent for the three-month periods ended March 31,
1996 and 1995.
As a result of the foregoing, the Company recorded a net loss of
$179,000 for the three months ended March 31, 1996, as compared to net
income of $386,000 for the three months ended March 31, 1995.<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had working capital of $325,000
compared to a working capital deficit of $301,000 at December 31, 1995.
Current financial resources, anticipated funds from operations, and
repayment of receivables from affiliate (if needed) are expected to be
adequate to meet cash requirements in the year ahead and the foreseeable
future. At March 31, 1996, the Company had cash of $3,571,000.
Net cash provided by operating activities during the three months
ended March 31, 1996, was $549,000, compared with net cash provided by
operating activities of $681,000 for the three months ended March 31,
1995. The decrease in cash provided by operating activities was due
primarily to the net loss incurred during 1996, net of changes in
certain operating assets and liabilities (primarily accounts payable and
accounts receivable). Net cash used by investing activities during the
three months ended March 31, 1996, was $779,000, as compared to
$2,842,000 during the three months ended March 31, 1995. For three
months ended March 31, 1996, the Company had $794,000 of capital
expenditures compared to $2,901,000 during 1995. The capital
expenditures during 1995 related primarily to the purchase of certain
assets in the Company's Jacksonville, Florida, operations. Net cash
provided by financing activities during the three months ended March 31,
1996, was $387,000 as compared to net cash used by financing activities
of $2,105,000 for the three months ended March 31, 1995, as a result of
the Company's long-term debt borrowings.
During the three months ended March 31, 1996 and 1995, the Company's
average trade receivables were outstanding for 48 and 59 days,
respectively. Both averages were based on first quarter revenue
annualized and compared to the trade receivable balances at quarter end.
Management believes that the number of days outstanding for its
receivables approximates industry norms. Credit is extended based on an
evaluation of the customer's financial condition. Credit losses are
provided for in the financial statements and have been within
management's expectations.
During the three months ended March 31, 1996 and 1995, the Company's
average trade payables were extended for 25 and 28 days, respectively.
Both averages were based on first quarter operating and selling,
general, and administrative expenses annualized and compared to trade
payable balances at quarter end.
The Company intends to expand the range of services offered, while
increasing the size and scope of the customer base for its current
operations. Expansion of the Company's operations, however, will be
dependent upon, among other things, its ability to attract new
customers, successfully manage growth, provide additional services on a
profitable basis, and obtain the resources necessary to pursue other
opportunities. The Company has not current material commitments for
capital expenditures relating to any other new facilities.
Historically, inflation has not had a material effect on the<PAGE>
Company's operations.<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security holders
None
Item 5. Other information
None
Item 6. Exhibits and reports on Form 8-K
(a) The following documents are filed as exhibits to this
Form 10-Q:
11. - Calculation of income per share
27. - Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.<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.
TRANSCOR WASTE SERVICES, INC.
Date: May 10, 1996 By: /s/ Francis M. Williams
----------------- ---------------------------
Francis M. Williams
President and Chairman of
the Board of Directors
(President and Principal
Executive Officer)
Date: May 10, 1996 By: /s/ Norman S. Dominiak
----------------- ---------------------------
Norman S. Dominiak
Treasurer and
Chief Financial Officer
(Principal Accounting and
Financial Officer)<PAGE>
EXHIBIT 11
TransCor Waste Services, Inc.
Calculation of Income (Loss) Per Share
Three Months Ended March 31, 1995 and 1996
1995 1996
------------- -------------
Primary income (loss) per
common share:
Net income (loss) . . . . . . . . . . $ 386,121 $ (178,630)
============= =============
Weighted average shares of common
stock outstanding:
Average shares outstanding . . . . 4,000,000 3,991,319
Assumed exercise of stock options . 15,031 60,356
Assumed exercise of stock warrants . - 10,000
------------- -------------
Weighted average shares of common
stock outstanding - primary . . . . 4,015,031 4,061,675
============= =============
Primary income (loss) per share . . . $ .10 $ (.04)
============= =============
Fully diluted income (loss) per
common share:
Net income (loss) . . . . . . . . . . $ 386,121 $ (178,630)
Interest on convertible debt, net of
tax benefit . . . . . . . . . . . . 25,021 -
------------- -------------
Adjusted net income (loss) applicable
to common stock on a fully diluted
basis . . . . . . . . . . . . . . . $ 411,942 $ (178,630)
============= =============
Weighted average shares of common
stock outstanding:
Average shares outstanding . . . . 4,000,000 3,991,319
Assumed exercise of stock options . 23,333 60,356
Assumed exercise of stock warrant . - 10,000
Assumed conversion of convertible
debt . . . . . . . . . . . . . . 400,652 -
------------- -------------
Weighted average shares of common
stock outstanding - fully diluted . 4,423,985 4,061,675
============= =============
Fully diluted income (loss) per share $ .09 $ (.04)
============= =============<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,571,438
<SECURITIES> 0
<RECEIVABLES> 6,213,467
<ALLOWANCES> (308,482)
<INVENTORY> 197,144
<CURRENT-ASSETS> 11,780,819
<PP&E> 35,333,606
<DEPRECIATION> (8,420,611)
<TOTAL-ASSETS> 45,503,243
<CURRENT-LIABILITIES> 11,455,907
<BONDS> 0
0
0
<COMMON> 4,010
<OTHER-SE> 13,462,650
<TOTAL-LIABILITY-AND-EQUITY> 45,503,243
<SALES> 11,058,965
<TOTAL-REVENUES> 11,058,965
<CGS> 9,305,113
<TOTAL-COSTS> 9,305,113
<OTHER-EXPENSES> 1,720,797
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 325,891
<INCOME-PRETAX> (292,836)
<INCOME-TAX> (114,206)
<INCOME-CONTINUING> (178,630)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (178,630)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
