<PAGE> 1
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, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 1-12282
CORRPRO COMPANIES, INC.
(Exact name of registrant as specified in its charter)
OHIO 34-1422570
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1090 ENTERPRISE DRIVE, MEDINA, OHIO 44256
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (330) 723-5082
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
----- -----
As of August 7, 2000, 7,687,213 Common Shares, without par value, were
outstanding.
1
<PAGE> 2
CORRPRO COMPANIES, INC. AND SUBSIDIARIES
----------------------------------------
INDEX
-----
Page
----
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Shareholders' Equity 6
Notes to the Consolidated Financial Statements 7-10
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-13
PART II. OTHER INFORMATION
---------------------------
ITEM 1. Legal Proceedings 14
ITEM 6. Exhibits and Reports on Form 8-K 14
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CORRPRO COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
June 30, March 31,
2000 2000
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,048 $ 1,965
Accounts receivable, net 40,840 38,561
Inventories 23,855 24,118
Other current assets 11,613 9,203
-------- --------
Total current assets 78,356 73,847
-------- --------
Property, plant and equipment, net 15,828 16,153
Other Assets:
Goodwill 39,395 40,437
Other assets 10,187 10,427
-------- --------
Total other assets 49,582 50,864
-------- --------
$143,766 $140,864
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and current portion of long-term debt $ 2,114 $ 1,316
Accounts payable 14,642 15,157
Accrued liabilities and other 8,164 7,891
-------- --------
Total current liabilities 24,920 24,364
-------- --------
Long-term debt, net of current portion 63,966 61,070
Deferred income taxes 1,120 1,039
Commitments and contingencies -- --
Minority interest 192 156
Shareholders' Equity:
Serial preferred shares -- --
Common shares 2,276 2,276
Additional paid-in capital 51,486 51,486
Accumulated earnings 10,607 10,247
-------- --------
64,369 64,009
Accumulated other comprehensive loss (2,726) (1,699)
Common shares in treasury, at cost (8,075) (8,075)
-------- --------
Total shareholders' equity 53,568 54,235
-------- --------
$143,766 $140,864
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
3
<PAGE> 4
<TABLE>
CORRPRO COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
For the Three Months Ended
June 30,
--------------------------
2000 1999
------- -------
<S> <C> <C>
Revenues $40,760 $40,924
Cost of sales 27,045 27,272
------- -------
Gross profit 13,715 13,652
Selling, general & administrative expenses 11,660 9,951
------- -------
Operating income 2,055 3,701
Interest expense 1,456 1,266
------- -------
Income from continuing operations
before income taxes 599 2,435
Provision for income taxes 239 974
------- -------
Income from continuing operations 360 1,461
Discontinued operations:
Loss from operations, net -- (52)
------- -------
Net income $ 360 $ 1,409
======= =======
Earnings per share - Basic:
Income from continuing operations $ 0.05 $ 0.19
Discontinued operations:
Loss from operations, net -- (0.01)
------- -------
Net income $ 0.05 $ 0.18
======= =======
Earnings per share - Diluted:
Income from continuing operations $ 0.05 $ 0.18
Discontinued operations:
Loss from operations, net -- --
------- -------
Net income $ 0.05 $ 0.18
======= =======
Weighted average shares -
Basic 7,687 7,706
Diluted 7,748 8,007
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
4
<PAGE> 5
<TABLE>
CORRPRO COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
Three Months Ended
June 30,
--------------------
2000 1999
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 360 $ 1,409
Adjustments to reconcile net income to net cash
provided by (used for) continuing operations:
Depreciation and amortization 1,372 1,348
Deferred income taxes 52 (74)
Loss on sale of assets (44) (33)
Minority interest 50 (11)
Changes in assets and liabilities:
Accounts receivable (1,999) 2,927
Inventories 256 (635)
Prepaid expenses and other (2,185) (1,304)
Other assets (28) (230)
Accounts payable and accrued expenses 295 (3,181)
------- -------
Total adjustments (2,231) (1,193)
------- -------
Net cash provided by (used for) continuing operations (1,871) 216
Net cash used for discontinued operations -- (180)
------- -------
Net cash provided by (used for) operating activities (1,871) 36
------- -------
Cash flows from investing activities:
Additions to and disposals of property, plant and equipment, net (527) (716)
Acquisitions, net of cash acquired -- (5,060)
------- -------
Net cash used for investing activities (527) (5,776)
------- -------
Cash flows from financing activities:
Long-term debt, net 2,945 8,520
Short-term borrowings, net 841 262
Net proceeds from issuance of Common Shares -- 17
Repurchase of Common Shares -- (1,056)
------- -------
Net cash provided by financing activities 3,786 7,743
------- -------
Effect of changes in foreign currency exchange rates (1,305) (597)
Net increase in cash 83 1,406
Cash and cash equivalents at beginning of period 1,965 3,957
------- -------
Cash and cash equivalents at end of period $ 2,048 $ 5,363
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 580 $ 597
Interest $ 1,216 $ 1,121
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
5
<PAGE> 6
<TABLE>
CORRPRO COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Accumulated
Serial Common Additional Other Common
Preferred Shares ($0.26 Paid-In Accumulated Comprehensive Shares in
Shares Stated Value) Capital Earnings Income (Loss) Treasury* Total
------ ------------- ------- -------- ------------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
March 31, 2000 $ -- $2,276 $51,486 $10,247 $(1,699) $(8,075) $54,235
Comprehensive income (loss):
Net income -- -- -- 360 -- -- 360
Cumulative translation
adjustment -- -- -- -- (1,027) -- (1,027)
-------
Total comprehensive
income (loss) -- -- -- -- -- -- (667)
------ ------ ------- ------- ------- ------- ------
June 30, 2000 $ -- $2,276 $51,486 $10,607 $(2,726) $(8,075) $53,568
====== ====== ======= ======= ======= ======= =======
</TABLE>
* Shares held in treasury totaled 849 at March 31, 2000 and June 30, 2000.
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
6
<PAGE> 7
CORRPRO COMPANIES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying interim consolidated financial statements include the
accounts of Corrpro Companies, Inc. and subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain fiscal 2000 amounts have been reclassified to conform
with the fiscal 2001 presentation.
The information furnished in the accompanying interim consolidated
financial statements has not been audited by independent accountants, however,
in the opinion of management, the interim consolidated financial statements
include all adjustments, consisting only of normal and recurring adjustments,
necessary for a fair presentation of the consolidated financial position,
results of operations and cash flows for the interim periods presented. The
results of operations for the three months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the fiscal year
ending March 31, 2001 or any other period. The interim consolidated financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 2000.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 2 - INVENTORY
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
---- ----
<S> <C> <C>
Inventories consist of the following:
Component parts and raw material $ 9,946 $ 9,825
Work in process 2,365 2,609
Finished goods 14,513 14,316
------- -------
26,824 26,750
Inventory reserve (2,969) (2,632)
------- -------
$23,855 $24,118
======= =======
</TABLE>
7
<PAGE> 8
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
---- ----
<S> <C> <C>
Property, plant and equipment consists of the following:
Land $ 615 $ 598
Buildings and improvements 7,459 7,523
Equipment, furniture and fixtures 20,564 20,234
-------- --------
28,638 28,355
Less: Accumulated depreciation (12,810) (12,202)
-------- --------
$ 15,828 $ 16,153
======== ========
</TABLE>
NOTE 4 - EARNINGS PER SHARE
Basic earnings per share ("EPS") is computed by dividing net income for the
period by the weighted average number of common shares outstanding for the
period which was 7,687 and 7,706, for the three months ending June 30, 2000 and
1999, respectively. Diluted EPS for the period has been determined by dividing
net income by the weighted average number of shares of common shares and
potential common shares outstanding for the period which was 7,748 and 8,007,
for the three months ending June 30, 2000 and 1999, respectively. Stock options
are the only potential common shares included in the Company's diluted EPS
calculations. Potential common shares are computed using the treasury stock
method.
NOTE 5 - STOCK PLANS
The Company granted options to purchase 420 common shares at exercise
prices ranging from $3.69 to $3.75 per share under the 1997 Long-Term Incentive
Plan of Corrpro Companies, Inc. (the "1997 Option Plan") during the three months
ended June 30, 2000.
NOTE 6 - SHAREHOLDERS' EQUITY
In November 1996, the Board of Directors authorized a program to repurchase
up to 750 shares of the Company's outstanding common shares. In April 1999, the
Board of Directors authorized the repurchase of up to an additional 750
outstanding common shares. The Company repurchased 105 shares, at a total cost
of $1,056 during the three months ended June 30, 1999. There were no stock
repurchases during the three months ended June 30, 2000.
NOTE 7 - COMPREHENSIVE INCOME
Comprehensive income includes net income and other comprehensive income.
Other comprehensive income is comprised of other revenues, expenses, gains and
losses that are excluded from net income but included as a component of total
shareholders' equity. Other comprehensive loss for the quarters ended June 30,
2000 and June 30, 1999 was $1,027 and $335, respectively, which is comprised of
the effects of foreign currency translation adjustments in accordance with SFAS
No. 52, "Foreign Currency Translation." The accumulated balance of foreign
currency translation adjustments, excluded from net income, is presented in the
Consolidated Balance Sheets and Statements of Shareholders' Equity as
"Accumulated other comprehensive income (loss)."
8
<PAGE> 9
NOTE 8 - BUSINESS SEGMENTS
In fiscal 1999, the Company adopted SFAS 131, "Disclosures About Segments
of an Enterprise and Related Information," which changes the way the Company
reports information about its operating segments. The Company will now be
reporting the following operating segments: Domestic Core Operations, Canadian
Operations, Middle East Operations and Other Operations. Prior period operating
segment information has been reconfigured to conform with the current period
presentation. The Company's operating segments and a description of the products
and services they provide are described below:
Domestic Core Operations. The Domestic Core Operations consist of the Company's
offices in the United States which provide products and services including
corrosion control, coatings, pipeline integrity and non-destructive testing
("NDT"). This segment provides corrosion control products and services to a
wide-range of customers in a number of industries including the following:
energy, utilities, water and wastewater treatment, chemical and petrochemical,
pipelines, defense and municipalities. In addition, this segment provides
coatings services to customers in the entertainment, aerospace, transportation,
petrochemical and electric power industries as well as NDT services to customers
in the pharmaceutical, chemical and energy industries.
Canadian Operations. The Canadian Operations provide corrosion control, pipeline
integrity and NDT product and services to customers who are primarily in the oil
and gas industries. These customers include pipeline operators, petrochemical
plants and refineries. In addition, the Canadian Operations provide specialty
coatings application services through the Company's CSI Coatings Services
subsidiary that was acquired in April 1999. The Canadian Operations also include
a production facility that assembles products such as anodes, rectifiers, coke
breeze and remote monitoring units.
Middle East Operations. The Middle East Operations provide corrosion control
products and services to customers in the petroleum and utility industries as
well as to governmental entities in connection with infrastructure assets. One
of the largest components of the Middle East Operations' revenues is related to
reinforced concrete structures.
Other Operations. The Company's Other Operations consist of all of the Company's
other businesses including those in Europe, Australia and Asia as well as the
Company's corrosion monitoring equipment business. In addition, Other Operations
include a production facility in the U.S. that assembles and distributes
cathodic protection products such as anodes primarily to the Company's
businesses in the U.S. The Company's operations in Europe and Asia primarily
provide corrosion control products and services to customers in the marine,
offshore and industrial markets. In addition to corrosion control products and
services, the Company's operations in Australia are also beginning to provide
coatings, NDT and pipeline integrity services to its customer base which include
oil and gas, water treatment, mining and marine. The Company's corrosion
monitoring equipment business assembles and sells products including probes,
instruments and access fittings to customers in the oil and gas and chemical
industries.
9
<PAGE> 10
The Company's operations by segment are presented below:
<TABLE>
<CAPTION>
For the Three Months Ended
June 30,
--------
2000 1999
---- ----
<S> <C> <C>
Revenue:
Domestic Core Operations $25,999 $24,761
Canadian Operations 5,148 5,430
Middle East Operations 3,037 3,887
Other Operations 8,833 8,708
Eliminations (2,257) (1,862)
------- -------
$40,760 $40,924
======= =======
Operating Profit:
Domestic Core Operations $ 3,708 $ 4,532
Canadian Operations 649 887
Middle East Operations 215 542
Other Operations 735 716
Corporate Related Costs and Other (3,252) (2,976)
------- -------
$ 2,055 $ 3,701
======= =======
</TABLE>
NOTE 9 - DISCONTINUED OPERATIONS
The Company completed the disposition of its UK and Asia foundry operations
during September 1999. The divested UK and Asia foundry operations are reported
as discontinued operations and the consolidated financial statements have been
reclassified to report separately the net assets and results of operations of
the divested foundries. Prior-period consolidated financial statements have been
reclassified to conform with the current period presentation.
For the three months ended June 30, 2000 and June 30, 1999 the Company
allocated interest of $0 and $34, respectively, based on the proceeds realized
from the divestiture. Revenues from the UK and Asia foundry operations, which
are excluded from consolidated revenues, totaled $0 and $3,389 for the three
months ended June 30, 2000 and 1999, respectively. The revenues included
intercompany sales of $0 and $1,162 for the three months ended June 30, 2000 and
1999, respectively. Loss from discontinued operations totaled $0 and $52 for the
three months ended June 30, 2000 and 1999, respectively.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This document contains certain statements, including those relating to
expectations regarding its earnings and growth plans that constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Factors which might affect such forward-looking
statements include the Company's mix of products and services, timing of jobs,
the availability and value of larger jobs, the impact of weather on the
Company's operations, the Company's ability to successfully integrate and
develop acquired businesses in a timely manner, the Company's ability to
successfully execute its sales and marketing initiatives, the impact of energy
prices on the Company's and its customers' businesses, and the impact of
existing, new or changed regulatory initiatives. Additional factors that may
affect the Company's business and performance are set forth in the Company's
fiscal year 2000 Form 10-K filed with the Securities and Exchange Commission.
The fiscal 2001 results include three small acquisitions that were
completed during fiscal 2000 subsequent to the effective dates of the
transactions. The results of these acquisitions are no longer separable as they
have been integrated into the Company's operations.
The sale of the Company's UK and Asia foundry operations was completed in
September 1999. The decision to divest these operations was consistent with the
Company's strategy of focusing on the higher margin service side of the
business. For financial reporting purposes, the UK and Asia foundry operations
are now reported as discontinued operations and the consolidated financial
statements have been reclassified to report separately the UK and Asia foundry
operations' net assets and results of operations.
A. RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE
MONTHS ENDED JUNE 30, 1999
REVENUES
--------
Revenues for the fiscal 2001 first quarter totaled $40.8 million compared
to $40.9 million in the fiscal 2000 first quarter, a decrease of $0.1 million or
0.4%.
Fiscal 2001 first quarter revenues relating to the Domestic Core Operations
totaled $26.0 million compared to $24.8 million in the fiscal 2000 first
quarter, an increase of $1.2 million or 5.0%. The revenue growth relates to
improvements with our energy customers as well as increased activity from our
domestic coatings services business.
The Canadian Operations' revenues for the first quarter of fiscal 2001
totaled $5.1 million compared to $5.4 million in the prior year first quarter, a
decrease of $0.3 million or 5.2%. The decrease is due to lower revenues relating
to our Canadian coating application business. The cathodic protection business
in Canada, however, increased between years as Canada is also starting to
benefit from the improving conditions in the energy segment.
11
<PAGE> 12
Fiscal 2001 first quarter revenues relating to the Middle East Operations
totaled $3.0 million compared to $3.9 million in the fiscal 2000 first quarter,
a decrease of $0.9 million or 21.9%. The decrease is due to the fact that there
are fewer large projects going on in this region. Our business in this region
has historically been characterized by large projects and the Middle East
Operations had a record year in fiscal 2000 as several large projects were in
progress at the same time.
Revenues relating to the Other Operations totaled $8.8 million in the
fiscal 2001 first quarter compared to $8.7 million in the fiscal 2000 first
quarter, an increase of $0.1 million or 1.4%. Other Operations experienced
revenue growth in Australia and Asia, which was offset, in part, by revenue
declines in Europe and at our corrosion monitoring business.
GROSS PROFIT
------------
Gross profit margins were 33.6% in the first quarter of fiscal 2001
compared with 33.4% in the prior-year first quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
Operating expenses totaled $11.7 million compared to $10.0 million, an
increase of $1.7 million or 17.2%. Our on-going investments in the sales and
marketing areas as well as investments in new technology have contributed to the
increase.
OPERATING INCOME
----------------
Operating income totaled $2.1 million, or 5.0% of revenues, down 44.5% from
$3.7 million last year. The decrease is primarily the result of the higher
operating expense levels.
INTEREST EXPENSE
----------------
Interest expense totaled $1.5 million in the first quarter of fiscal 2001
compared to $1.3 million in the first quarter of fiscal 2000. This increase
relates primarily to higher interest rates in the first quarter of fiscal 2001
as compared to the prior-year period.
INCOME TAX PROVISION
--------------------
The Company recorded a provision for income taxes of $0.2 million for the
fiscal 2001 first quarter compared to a provision of $1.0 million for the fiscal
2000 first quarter. The effective tax rate was 40.0% for both the fiscal 2001
and fiscal 2000 first quarters.
INCOME FROM CONTINUING OPERATIONS
---------------------------------
Income from continuing operations totaled $0.4 million in the first quarter
of fiscal 2001 compared to $1.5 million in the prior-year period, a decrease of
75.4%. Earnings per share on a diluted basis totaled $0.05 compared to $0.18 in
the prior-year period.
12
<PAGE> 13
B. LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had working capital of $53.4 million compared
to $49.5 million at March 31, 2000, a increase of $4.0 million or 8.0%.
Consistent with prior years, working capital increased during the first quarter
as we moved into the seasonally busiest time of the year. During the first three
months of fiscal 2001, cash used for continuing operating activities totaled
$1.9 million compared to a use of cash of $0.2 million in the prior-year three
month period. Cash used for investing activities totaled $0.5 million during
fiscal 2001, which represented net capital expenditures. Cash provided by
financing activities totaled $3.8 million during fiscal 2001, which represents
net borrowings.
The Company has a $50 million revolving credit facility that expires on
April 30, 2002. Initial borrowings were used to repay existing domestic bank
indebtedness. Borrowings under the facility are limited to borrowing base
amounts as defined in the credit agreement and are secured by the Company's
domestic accounts receivable, inventories, certain intangibles, machinery and
equipment and owned real estate as well as certain assets in Canada. The Company
has also pledged slightly less than two-thirds of the capital stock of two of
its foreign subsidiaries. The facility requires the Company to maintain certain
financial ratios and places certain limitations on the Company's ability to pay
cash dividends, incur additional indebtedness and to make investments including
acquisitions. As of June 30, 2000, the Company was in compliance with all debt
covenants.
In addition to the domestic bank credit facility, the Company has various
smaller lines of credit with foreign banks, which totaled approximately $5.2
million. Total availability under the domestic and foreign credit facilities at
June 30, 2000 was approximately $12.0 million after giving consideration to the
borrowing base limitations contained in the domestic credit facility.
The Company believes that cash generated by operations and amounts
available under its domestic bank credit facility and foreign lines of credit
will be sufficient to finance the Company's working capital requirements and
capital expenditures through the next twelve months.
C. EFFECT OF INFLATION AND FOREIGN CURRENCY TRANSLATION
The Company does not believe that inflation has had a significant effect on
the Company's results of operations for the periods presented.
The Company has not been significantly affected by currency fluctuations or
foreign exchange restrictions. Management believes that these risks resulting
from the Company's foreign sales are manageable.
13
<PAGE> 14
PART II. OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
As previously reported, the Company is a defendant in a suit filed in the
United States District Court, Northern District of Ohio, Eastern Division by
Armor Shield, Inc. and Doublewall Retrofit Systems, Inc. There have been no
material developments in that action during the fiscal quarter ended June 30,
2000. The Company believes that the claims made in the suit are without merit,
denies any allegations of wrongdoing and is vigorously defending the claims.
In January 2000, the Michigan Department of Environmental Quality ("MDEQ")
issued an administrative decision which could have the effect of modifying
MDEQ's 1995 approval of certain assessment methodologies utilized by the Company
in determining whether certain underground storage tanks meet Michigan's
regulatory requirements for upgrade by means of cathodic protection. These
assessment methodologies have been and remain recognized by the United States
Environmental Protection Agency and the other states in which the Company
utilized such methodologies for virtually identical purposes. The Company
believes that MDEQ's decision is in error and on January 24, 2000 filed a
complaint and claim of appeal in the Circuit Court for the County of Ingham,
Michigan seeking declaratory relief and appealing the decision on several
grounds. In addition, MDEQ has agreed not to enforce the administrative decision
pending the outcome of the appeal.
The Company is subject to other legal proceedings and claims which arise in
the ordinary course of business. In the opinion of management, the amount of
ultimate liability, if any, with respect to any such matters will not materially
affect future operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. No exhibits required
B. There were no reports on Form 8-K filed during the quarter
14
<PAGE> 15
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.
CORRPRO COMPANIES, INC.
(Registrant)
Date: August 14, 2000 /s/ Joseph W. Rog
--------------------------------
Joseph W. Rog
Chairman of the Board, President
and Chief Executive Officer
/s/ Neal R. Restivo
--------------------------------
Neal R. Restivo
Executive Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
15
