<PAGE>
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 June 30, 1997
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) 248-5885
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 [ ]<PAGE>
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 [ ] No [ ]
Applicable Only to Corporate Issuers
The number of shares of Common Stock outstanding on August 12, 1997, 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, 1996 and June 30, 1997
(unaudited) . . . . . . . . . . . . . . . . . . . 1 - 2
Consolidated statements of operations for
the three months and six months ended
June 30, 1996 and 1997 (unaudited) . . . . . . . 3 - 4
Consolidated statements of cash flows for the
six months ended June 30, 1996 and 1997
(unaudited) . . . . . . . . . . . . . . . . . . . . . 5
Notes to consolidated financial statement . . . . 6 - 8
Item 2. Management's discussion and analysis
of financial condition and results of
operation . . . . . . . . . . . . . . . . . . . 9 - 12
PART II. OTHER INFORMATION
Item 1. Legal proceedings . . . . . . . . . . . . . . . . . 13
Item 2. Changes in securities . . . . . . . . . . . . . . . 13
Item 3. Defaults upon senior securities . . . . . . . . . . 13
Item 4. Submission of matters to a vote of
security holders . . . . . . . . . . . . . . . . . 13
Item 5. Other information . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and reports on Form 8-K . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . 14
Exhibit 11 - Calculation of income (loss)
per share . . . . . . . . . . . . . . . . . . . 15 - 16<PAGE>
SECURITIES AND EXCHANGE COMMISSION FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, 1996 June 30, 1997
----------------- -----------------
(unaudited)
Current assets:
Cash . . . . . . . . . . . . . . $ 1,437,788 $ 1,875,247
Due from affiliate . . . . . . . 1,953,236 1,202,729
Accounts receivable -
trade, net . . . . . . . . . . . 6,230,484 5,972,538
Costs and estimated earnings in
excess of billings on
uncompleted contracts . . . . . 230,869 654,005
Income tax refund receivable . . 422,567 370,814
Deferred income taxes . . . . . . 639,079 639,079
Other current assets . . . . . . 255,552 99,822
----------------- -----------------
Total current assets . . . . . . 11,169,575 10,814,234
----------------- -----------------
Property and equipment, net . . . . 26,115,277 25,974,992
Intangible assets, net . . . . . . 898,853 651,525
Due from affiliate . . . . . . . . 6,840,516 5,959,363
Other assets . . . . . . . . . . . 985,608 1,567,579
----------------- -----------------
$ 46,009.829 $ 44,967,693
================= =================
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, 1996 June 30, 1997
----------------- -----------------
(unaudited)
Current liabilities:
Accounts payable, trade . . . . . $ 4,255,150 $ 3,732,872
Accrued expenses . . . . . . . . 4,536,778 4,446,356
Billings in excess of costs and
estimated earnings on
uncompleted contracts . . . . . 170,771 56,162
Due to affiliate . . . . . . . . 368,199 483,915
Current portion of long-term
debt . . . . . . . . . . . . . . 3,453,168 4,050,322
----------------- -----------------
Total current liabilities . . . 12,784,066 12,769,627
----------------- -----------------
Long-term debt, net of current
maturities (including debt
owed to KVN of $2,003,258 at
December 31, 1996 and June 30,
1997) . . . . . . . . . . . . . . 16,807,059 15,912,311
Deferred income taxes . . . . . . . 3,299,355 3,299,355
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;
4,010,000 shares issued and
outstanding . . . . . . . . . . 4,010 4,010
Capital in excess of par value . 12,193,547 12,193,547
Retained earnings . . . . . . . . 969,798 836,849
----------------- -----------------
Less treasury stock, at cost 13,167,355 13,034,406
(10,000 shares) . . . . . . . . (48,006) (48,006)
----------------- -----------------
Total stockholders' equity . . . 13,119,349 12,986,400
----------------- -----------------
$ 46,009,829 $ 44,967,693
================= =================
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended June 30,
-----------------------------------
1996 1997
----------------- -----------------
(unaudited) (unaudited)
Revenue . . . . . . . . . . . . . . $ 10,567,523 $ 11,494,963
Expenses:
Operating expenses . . . . . . . 8,278,628 9,486,812
Selling, general, and
administrative expenses . . . . 1,750,976 2,364,530
----------------- -----------------
Operating income (loss) . . . . . . 537,919 (356,379)
Non-operating gain (loss) on
disposal of equipment . . . . . . (5,172) 367,688
Interest expense, net . . . . . . . (323,934) (262,514)
----------------- -----------------
Income (loss) before provision for
income taxes . . . . . . . . . . 208,813 (251,205)
Provision for income taxes
(benefit) . . . . . . . . . . . . 81,439 (97,971)
----------------- -----------------
Net income (loss) . . . . . . . . . $ 127,374 $ (153,234)
================= =================
Share data:
Primary income (loss) per
share . . . . . . . . . . . . . $ .03 $ (.04)
Fully diluted income (loss) ================= =================
per share . . . . . . . . . . . $ .03 $ (.04)
================= =================
Weighted average number of shares
outstanding used in computations:
Primary . . . . . . . . . . . . 4,055,028 4,000,000
================= =================
Fully diluted . . . . . . . . . 4,055,028 4,000,000
================= =================
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended June 30,
-----------------------------------
1996 1997
----------------- -----------------
(unaudited) (unaudited)
Revenue . . . . . . . . . . . . . . $ 21,626,488 $ 23,837,931
Expenses:
Operating expenses . . . . . . . 17,583,741 19,380,068
Selling, general, and
administrative expenses . . . . . 3,442,986 4,523,952
----------------- -----------------
Operating income (loss) . . . . . . 599,761 (66,089)
Non-operating gain (loss) on
disposal of equipment . . . . . . (33,959) 354,739
Interest expense, net . . . . . . . (649,825) (506,600)
----------------- -----------------
Loss before provision for income
taxes . . . . . . . . . . . . . . (84,023) (217,950)
Provision for income taxes
(benefit) . . . . . . . . . . . . (32,767) (85,001)
----------------- -----------------
Net loss . . . . . . . . . . . . . $ (51,256) $ (132,949)
================= =================
Share data:
Primary loss per share . . . . . $ (.01) $ (.03)
================= =================
Fully diluted loss per share . . $ (.01) $ (.03)
================= =================
Weighted average number of shares
outstanding used in computations:
Primary . . . . . . . . . . . 3,995,659 4,000,000
================= =================
Fully diluted . . . . . . . . 3,995,659 4,000,000
================= =================
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30,
-----------------------------------
1996 1997
----------------- -----------------
(unaudited) (unaudited)
Cash flows from operating
activities:
Net loss . . . . . . . . . . . . $ (51,256) $ (132,949)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and
amortization . . . . . . . . 1,756,659 2,114,766
(Gain) loss on disposal of
equipment . . . . . . . . . 33,959 (354,739)
Changes in operating assets
and liabilities:
Accounts receivable . . . 907,243 257,946
Costs and estimated
earnings in excess of
billings on uncompleted
contracts . . . . . . . . 447,328 (423,136)
Income tax refund
receivable . . . . . . . 529,406 51,753
Other assets . . . . . . . (363,614) (509,094)
Accounts payable . . . . . (1,181,275) (522,278)
Accrued expenses . . . . . (579,631) (90,422)
Billings in excess of costs
and estimated earnings on
uncompleted contracts . . (137,252) (114,609)
----------------- -----------------
Total adjustments . . . . . . . 1,412,823 410,187
----------------- -----------------
Net cash provided by operating
activities . . . . . . . . . . . 1,361,567 277,238
----------------- -----------------
Cash flows from investing
activities:
Capital expenditures . . . . . . (1,490,672) (2,398,444)
Proceeds from sale of property
and equipment . . . . . . . . 15,475 1,108,883
Net cash used by investing ----------------- -----------------
activities . . . . . . . . . . (1,475,197) (1,289,561)
----------------- -----------------
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
Six months ended June 30,
-----------------------------------
1996 1997
----------------- -----------------
(unaudited) (unaudited)
Cash flows from financing
activities:
Proceeds from long-term debt . . $ 1,212,414 $ 2,088,212
Repayment of long-term debt . . (1,902,075) (2,385,806)
Repayment of advances from KVN . 961,620 1,747,376
Proceeds from stock warrants . . 60,000 -
Net cash provided by financing ----------------- -----------------
activities . . . . . . . . . . . 331,959 1,449,782
----------------- -----------------
Net increase in cash . . . . . . . 218,329 437,459
Cash, beginning of period . . . . . 3,414,479 1,437,788
----------------- -----------------
Cash, end of period . . . . . . . . $ 3,632,808 $ 1,875,247
================= =================
See accompanying notes.<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
Organization - TransCor Waste Services, Inc. (the "Company") was
formed on November 6, 1992, as a subsidiary of Kimmins Corp. ("KVN").
KVN owns approximately 74 percent of the outstanding common stock of the
Company. The Company provides solid waste management services to
commercial, industrial, residential, and municipal customers in the state
of Florida.
Basis of presentation - The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do
not include all of the information and notes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six-month periods ended
June 30, 1997, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information,
refer to the consolidated financial statements and notes thereto as of
and for the year ended December 31, 1996, included in the Company's Form
10-K dated December 31, 1996, as filed with the United States Securities
and Exchange Commission.
Certain amounts in the 1996 consolidated financial statements have
been reclassified to conform to the 1997 presentation.
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. Amortization expense was approximately $56,000
and $247,000 for the six months ended June 30, 1996 and 1997,
respectively. Accumulated amortization was $191,000 and $438,000 at
December 31, 1996, and June 30, 1997, respectively.
Other assets - Other assets consist primarily of pre-contract costs
associated with residential solid waste management contracts obtained
during 1995 and 1996, which are being amortized on a straight-line basis
over five years, the term of the contracts, and loan costs, which are
amortized over the term of the loans. Amortization expense was $59,000
and $83,000 for the six months ended June 30, 1996 and 1997,
respectively. Accumulated amortization was $296,000 and $379,000 at
December 31, 1996, and June 30, 1997, respectively.<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and summary of significant accounting policies
(continued)
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).
2. Property and equipment, net
December 31, 1996 June 30, 1997
----------------- -----------------
(unaudited)
Land . . . . . . . . . . . . . $ 4,610,323 $ 4,610,323
Buildings and improvements . . 5,621,962 5,641,656
Vehicles . . . . . . . . . . . 13,459,891 13,634,396
Waste containers and
equipment . . . . . . . . . . 12,508,751 13,184,227
Furniture and fixtures . . . . 547,739 675,085
Construction in progress . . . 33,462 184,384
----------------- -----------------
36,782,128 37,930,071
Less accumulated depreciation (10,666,851) (11,955,079)
----------------- -----------------
$ 26,115,277 $ 25,974,992
================= =================
Property and equipment is recorded at cost. Depreciation is
provided using the straight-line method over estimated useful lives,
which range from 3 to 30 years. Depreciation expense was $1,641,000 and
$1,785,000 for the six months ended June 30, 1996 and 1997, respectively.<PAGE>
TRANSCOR WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Long-term debt
December 31, 1996 June 30, 1997
----------------- -----------------
(unaudited)
Notes payable, due through
April 1, 2002, payable in
monthly installments with
interest at varying rates up to
9.75 percent, collateralized by
equipment . . . . . . . . . . $ 13,055,213 $ 12,903,803
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 January 1,
2012, interest at varying rates
up to prime plus 1.5 percent,
collateralized by land and
buildings . . . . . . . . . . 5,201,756 5,055,572
----------------- -----------------
20,260,227 19,962,633
Less current portion . . . . . (3,453,168) (4,050,322)
----------------- -----------------
$ 16,807,059 $ 15,912,311
================= =================
As of June 30, 1997, the Company has guaranteed a loan agreement on
behalf of KVN and other subsidiaries of KVN in connection with the
Kimmins Employee Stock Ownership Plan, which had an outstanding balance
of $1,680,000 that is recorded in the financial statements of KVN.
The debt agreements contain certain covenants, the most restrictive
of which require, for KVN, maintenance of a consolidated tangible net
worth, as defined, of not less than $6,500,000. In addition, the
covenants prohibit the payment of dividends by the Company without lender
approval. For all periods presented, the Company believes that KVN had
complied with all loan covenants.<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 in 1993 to the underwriters of the Company's
initial public offering. Warrants to purchase 10,000 shares of common
stock were exercised during March 1996. The remaining warrants are
exercisable through March 25, 1998.<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Revenue for the three months ended June 30, 1997, was $11,495,000,
representing an increase of $927,000 or approximately 9 percent from
$10,568,000 for the three months ended June 30, 1996. The increase in
total revenue was primarily attributable to the Company's demolition
operations, which generated revenue of approximately $3,123,000 for the
three months ended June 30, 1997, compared to approximately $2,044,000
for the same period in 1996.
Operating expenses for the three months ended June 30, 1997, were
$9,487,000, representing an increase of $1,208,000 or approximately 15
percent from $8,279,000 for the three months ended June 30, 1996.
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 June 30, 1997, were $2,365,000, representing an increase of
$614,000 or 35 percent from $1,751,000 for the three months ended June
30, 1996. The dollar and percentage increase in selling, general, and
administrative expenses is primarily attributable to increased overhead
costs, such as administrative, sales, and marketing costs that are
associated with higher expected levels of operations.
The Company sold certain vehicles, waste containers, and equipment
during the three months ended June 30, 1997, resulting in a non-operating
gain of approximately $368,000. These assets were primarily utilized in
the Company's commercial and residential waste collection services.
Interest expense, net of interest income, for the three months ended
June 30, 1997, was $265,000 as compared to $324,000 for the three months
ended June 30, 1996. Interest expense associated with debt decreased
from $453,000 to $428,000 as a result of the decrease in the amount of
interest-bearing debt outstanding. Interest income related to
receivables from affiliates increased from $130,000 to $165,000.
The Company's income tax provision was calculated using a rate of
approximately 39 percent for the three month periods ended June 30, 1997
and 1996.
As a result of the foregoing, the Company recorded a net loss of
$153,000 for the three months ended June 30, 1997, as compared to net
income of $127,000 for the three months ended June 30, 1996.<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Revenue for the six months ended June 30, 1997, was $23,838,000,
representing an increase of $2,211,000 or approximately 10 percent from
$21,626,000 for the six months ended June 30, 1996. The increase in
total revenue was primarily attributable to the Company's demolition
operations, which generated revenue of approximately $7,059,000 for the
six months ended June 30, 1997, compared to approximately $4,497,000 for
the same period in 1996.
Operating expenses for the six months ended June 30, 1997, were
$19,380,000, representing an increase of $1,796,000 or approximately 10
percent from $17,584,000 for the six months ended June 30, 1996.
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 six months
ended June 30, 1997, were $4,524,000, representing an increase of
$1,081,000 or 31 percent from $3,443,000 for the six months ended June
30, 1996. The dollar and percentage increase in selling, general, and
administrative expenses is primarily attributable to increased overhead
costs, such as administrative, sales, and marketing costs that are
associated with higher expected levels of operations.
The Company sold certain vehicles, waste containers, and equipment
during the six months ended June 30, 1997, resulting in a non-operating
gain of approximately $355,000. These assets were primarily utilized in
the Company's commercial and residential waste collection services.
Interest expense, net of interest income, for the six months ended
June 30, 1997, was $507,000 as compared to $650,000 for the six months
ended June 30, 1996. Interest expense associated with debt decreased
from $914,000 to $810,000 as a result of the decrease in the amount of
interest-bearing debt outstanding. Interest income related to
receivables from affiliates increased from $264,000 to $303,000.
The Company's income tax provision was calculated using a rate of
approximately 39 percent for the six month periods ended June 30, 1997
and 1996.
As a result of the foregoing, the Company recorded a net loss of
$133,000 for the six months ended June 30, 1997, as compared to a net
loss of $51,000 for the six months ended June 30, 1996.<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had a working capital deficit of
$1,955,000 compared to a working capital deficit of $1,614,000 at
December 31, 1996. Working capital was impacted by a decrease in
accounts receivable - trade and an increase in the current portion of
long-term debt. 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 June 30, 1997, the Company had cash of
$1,875,000.
Net cash provided by operating activities during the six months
ended June 30 1997, was $277,000 compared to $1,362,000 for the six
months ended June 30, 1996. The decrease in cash provided by operating
activities was due primarily to the net loss incurred during 1997, net of
changes in certain operating assets and liabilities (primarily costs and
estimated earnings in excess of billings on uncompleted contracts, other
assets, and accounts payable). Net cash used by investing activities
during the six months ended June 30, 1997, was $1,290,000, as compared to
$1,475,000 during the six months ended June 30, 1996, primarily due to
capital expenditures for the purchase of vehicles and equipment. Net cash
provided by financing activities during the six months ended June 30,
1997, was $1,450,000 as compared to $332,000 for the six months ended
June 30, 1996, primarily as a result of higher levels of debt borrowings
and the repayment of advances from KVN.
During the six months ended June 30, 1997 and 1996, the Company's
average trade receivables were outstanding for 46 days. Both averages
were based on the six-month revenue annualized and compared to the trade
receivable balances at June 30. 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 six months ended June 30, 1997 and 1996, the Company's
average trade payables were extended for 29 and 24 days, respectively.
Both averages were based on the six-month operating and selling, general,
and administrative expenses annualized and compared to trade payable
balances at June 30.
In addition to its own debt, the Company has also guaranteed the
indebtedness (an aggregate of approximately $1,920,000 and $1,680,000 at
December 31, 1996, and June 30, 1997, respectively) of the Kimmins'
Employee Stock Ownership Plan Trust, in which employees of the Company
participate.<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (continued)
Certain of KVN's debt agreements with a financial institution
contain certain covenants, the most restrictive of which requires, for
KVN, maintenance of a consolidated tangible net worth, as defined, of not
less than $6,500,000. In addition, the covenants prohibit the payment of
dividends by the Company without lender approval. For all periods
presented, the Company believes that KVN had complied with all loan
documents.
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.
Historically, inflation has not had a material effect on the
Company's operations. If inflation increases, the Company will attempt
to increase its prices to offset its increased expenses. No assurance
can be given, however, that the Company will be able to adequately
increase its prices in response to inflation.
Forward-Looking Information
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements that reflect management's current views with respect to future
events and financial performance. Such statements involve risks and
uncertainties, and there are certain important factors that could cause
actual results to differ materially from those anticipated. Some of the
important factors that could cause actual results to differ materially
from those anticipated. Some of the important factors that could cause
actual results to differ materially from those anticipated include, but
are not limited to, economic conditions, competitive factors, and other
uncertainties, all of which are difficult to predict and many of which
are beyond the control of the Company. Due to such uncertainties and
risk, readers are cautioned not to place undue reliance on such forward-
looking statements, which speak only as of the date hereof.
Effect of Inflation
Inflation has not had, and is not expected to have, a material
impact upon the Company's operations. If inflation increases, the
Company will attempt to increase its prices to offset its increased
expenses. No assurance can be given, however, that the Company will be
able to adequately increase its prices in response to inflation.<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings
During April 1997, Kimmins Recycling Corp. ("KRC"), a subsidiary of
the Company, filed a claim in the Fourth Judicial Circuit Court of
Florida against the Consolidated City of Jacksonville, Duval County,
Florida. This action challenged the propriety of the City of
Jacksonville, Non-Residential Solid Waste Collection and Transportation
Franchise Ordinance (the "Franchise Ordinance"). KRC sought declaratory
and injunctive relief within the jurisdiction of the court and recovery
of damages in excess of $15,000. KRC's request for declaratory and
injunctive relief was denied, and the Company is currently reviewing its
options.
During June 1997, KRC, St. Lucie County, a political subdivision of
the State of Florida, and the City of Fort Pierce, a municipality
organized under the laws of the State of Florida, were notified of a
class action lawsuit filed in the Nineteenth Judicial Circuit Court of
Florida by three residents of St. Lucie County. This action challenged
the propriety of certain contract provisions included in KRC's solid
waste and recyclable materials collection service agreement with St.
Lucie County. KRC believes that it has a valid agreement with St. Lucie
County and intends to defend its position.
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 (loss) 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: August 12, 1997 By: /s/ Ira D. Cohen
------------------- ------------------------
Ira D. Cohen
President
(Principal Executive Officer)
Date: August 12, 1997 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 and Six Months Ended June 30, 1996 and 1997 (unaudited)
Three months ended June 30,
-----------------------------------
1996 1997
----------------- -----------------
Primary income (loss) per
common share:
Net income (loss) . . . . . . . . . $ 127,374 $ (153,234)
================= =================
Weighted average shares of common
stock outstanding:
Average shares outstanding . . . 4,000,000 4,000,000
Assumed exercise of
stock options . . . . . . . . . 55,028 -
----------------- -----------------
Weighted average shares of common
stock outstanding - primary . . . 4,055,028 4,000,000
================= =================
Primary income (loss) per share . . $ .03 $ (.04)
================= =================
Fully diluted income (loss) per
common share:
Net income (loss) . . . . . . . . . $ 127,374 $ (153,234)
================ =================
Weighted average shares of common
stock outstanding:
Average shares outstanding . . . 4,000,000 4,000,000
Assumed exercise of
stock options . . . . . . . . . 55,028 -
----------------- -----------------
Weighted average shares of common
stock outstanding -
fully diluted . . . . . . . . . . 4,055,028 4,000,000
================= =================
Fully diluted income (loss)
per share . . . . . . . . . . . . $ .03 $ (.04)
================= =================<PAGE>
EXHIBIT 11
TransCor Waste Services, Inc.
Calculation of Income (Loss) Per Share
Three and Six Months Ended June 30, 1996 and 1997 (unaudited)
Six months ended June 30,
-----------------------------------
1996 1997
----------------- -----------------
Primary loss per common share:
Net loss . . . . . . . . . . . . . $ (51,256) $ (132,949)
================= =================
Weighted average shares of common
stock outstanding:
Average shares outstanding . . . . 3,995,659 4,000,000
Assumed exercise of stock
options . . . . . . . . . . . . . - -
Assumed exercise of stock
warrents . . . . . . . . . . . . - -
----------------- -----------------
Weighted average shares of common
stock outstanding - primary . . . 3,995,659 4,000,000
================= =================
Primary loss per share . . . . . . $ (.01) $ (.03)
================= =================
Fully diluted loss per common share:
Net loss . . . . . . . . . . . . . $ (51,256) $ (132,949)
================= =================
Weighted average shares of common
stock outstanding:
Average shares outstanding . . . 3,995,659 4,000,000
Assumed exercise of
stock options . . . . . . . . . - -
Assumed exercise of
stock warrants . . . . . . . . . - -
----------------- -----------------
Weighted average shares of common
stock outstanding - 3,995,659 4,000,000
fully diluted . . . . . . . . . . ================= =================
Fully diluted loss per share . . . $ (.01) $ (.03)
================= =================<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> $1,875,247
<SECURITIES> $0
<RECEIVABLES> $6,370,327
<ALLOWANCES> ($397,789)
<INVENTORY> $0
<CURRENT-ASSETS> $10,814,234
<PP&E> $37,930,071
<DEPRECIATION> ($11,955,079)
<TOTAL-ASSETS> $44,967,693
<CURRENT-LIABILITIES> $12,769,627
<BONDS> $0
$0
$0
<COMMON> $4,010
<OTHER-SE> $12,982,390
<TOTAL-LIABILITY-AND-EQUITY> $44,967,693
<SALES> $23,837,931
<TOTAL-REVENUES> $23,837,931
<CGS> $19,380,068
<TOTAL-COSTS> $19,380,068
<OTHER-EXPENSES> $4,169,213
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $506,600
<INCOME-PRETAX> ($217,950)
<INCOME-TAX> ($85,001)
<INCOME-CONTINUING> ($132,949)
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> ($132,949)
<EPS-PRIMARY> ($.03)
<EPS-DILUTED> ($.03)
</TABLE>
