UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998
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 number 0-23454
Total Containment, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2394872
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
422 Business Center, A130 North Dr., Oaks, PA 19456
(Address of principal executive offices) (Zip Code)
(610) 666-7777
(Registrant's telephone number, including area code)
N/A
(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 CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date: 4,649,600 shares of Common Stock, par value
$0.01 per share were outstanding at July 31, 1998.
PAGE 1
<PAGE>
Total Containment, Inc.
Index
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet -
December 31, 1997 and June 30, 1998 3
Condensed Consolidated Statement of Operations
and Comprehensive Income (Loss) - Three and
Six months ended June 30, 1997 and 1998 4
Condensed Consolidated Statement of Cash Flows -
Six months ended June 30, 1997 and 1998 5
Notes to Condensed Consolidated Financial
Statements - June 30, 1998 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10
Part II. Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security 15
Holders
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
PAGE 2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ --------
(Unaudited)
(In thousands)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 612 $ 674
Accounts receivable, net 7,887 11,256
Inventories - Note 2 7,306 8,930
Deferred income taxes 3,114 3,694
Other assets 2,277 3,183
------- -------
Total current assets 21,196 27,737
Molds and tooling costs, net 987 756
Property and equipment, net 3,870 4,207
Patents, patent rights, trademarks and licenses, net 4,293 4,132
Goodwill, net 5,379 5,295
Deferred income taxes 4,322 2,537
------- -------
Total Assets $40,047 $44,664
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of credit borrowings $ 3,197 $ 4,189
Current portion of long-term debt 744 618
Accounts payable, trade and accrued expenses 6,019 7,432
Other payable 4,020 4,020
Warranty reserve 6,088 7,558
------- -------
Total current liabilities 20,068 23,817
Long-term debt 2,305 2,027
Warranty reserve 11,234 6,698
------- -------
Total liabilities 33,607 32,542
======= =======
Shareholders' Equity:
Preferred stock - $10,000 par value; authorized
400 shares; 400 shares issued and outstanding 0.00 4,000
Common stock - $0.01 par value;
authorized 20,000,000 shares;
issued and outstanding December 31, 1997,
4,641,600 shares; June 30, 1998, 4,649,600 shares 46 46
Capital in excess of par value 13,729 13,749
Retained earnings (7,139) (5,428)
Equity adjustment from foreign
currency translation (196) (245)
------- -------
Total shareholders' equity 6,440 12,122
------- -------
Total Liabilities & Shareholders' Equity $40,047 $44,664
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 3
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
1997 1998 1997 1998
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net sales 12,080 14,259 20,339 24,480
Cost of sales (excluding warranty provision) 7,129 7,861 12,532 13,902
------ ------ ------ ------
4,951 6,398 7,807 10,578
Warranty Provision 391 428 610 730
------ ------ ------ ------
Gross profit 4,560 5,970 7,197 9,848
Selling, general and administrative 3,335 3,543 6,427 6,399
Amortization of patents, licenses and goodwill 136 125 272 244
------ ------ ------ ------
Income from operations 1,089 2,302 498 3,205
Interest expense 161 115 308 264
------ ------ ------ ------
Income before income taxes 928 2,187 190 2,941
Income tax expense 371 851 76 1,128
------ ------ ------ ------
Net income 557 1,336 114 1,813
Preferred stock dividends 0 88 0 102
------ ------ ------ ------
Net Income applicable to common shareholders 557 1,248 114 1,711
====== ====== ====== ======
Earnings per common share - basic 0.12 0.27 0.02 0.37
====== ====== ====== ======
Weighted average number of shares outstanding - basic 4,642 4,643 4,642 4,642
====== ====== ====== ======
Earnings per common share - diluted 0.12 0.25 0.02 0.36
====== ====== ====== ======
Weighted average number of shares outstanding - diluted 4,655 4,899 4,663 4,809
====== ====== ====== ======
Net income $ 557 $1,336 $ 114 $1,813
Other comprehensive income
Foreign currency translation adjustments 66 (49) 64 (49)
------ ------ ------ ------
Other comprehensive income before taxes 66 (49) 64 (49)
Income tax (expense) benefit on other comprehensive income (26) 19 (26) 19
------ ------ ------ ------
Other comprehensive income (loss) 40 (30) 38 (30)
------ ------ ------ ------
Comprehensive income $ 597 $1,306 $ 152 $1,783
====== ====== ====== ======
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 4
<PAGE>
TOTAL CONTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
------------------
1997 1998
---- ----
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income 114 1,813
Adjustment to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 680 1,013
Change in assets and liabilities 298 (3,432)
Change in warranty accrual (1,519) (3,066)
------ -------
Net cash (used for) operating activities ($427) ($3,672)
====== =======
Cash flows from investing activities:
Purchase of property and equipment (1,132) (874)
Other 121 0
------ -------
Net cash (used for) investing activities (1,011) (874)
------ -------
Cash flows from financing activities:
Proceeds from the sale of preferred stock 0 4,000
Proceeds from the sale of common stock 0 20
Net (repayments) borrowings on long-term debt 430 (404)
Net borrowings under line of credit 755 992
------ -------
Net cash provided by financing activities 1,185 4,608
------ -------
Net increase (decrease) in cash and cash equivalents ($253) $62
====== =======
</TABLE>
See notes to condensed consolidated financial statements.
PAGE 5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
Note 1 - Basis of Presentation
The unaudited Condensed Consolidated Financial Statements of
Total Containment, Inc. and its wholly owned subsidiaries (the
"Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have
been included. The results of operations of the Company for the
three and six months ended June 30, 1998, are not necessarily
indicative of the results that may be expected for any other
interim period or for a full year. For further information,
refer to the Consolidated Financial Statements and notes thereto
included in the Registrant Company's Annual Report and Form 10-K
for the year ended December 31, 1997.
Use of Estimates. 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 and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates. Realization of deferred tax assets associated
with state net operating loss (NOL) carryforwards is dependent
upon generating sufficient taxable income prior to their
expiration. The Company believes that there is a risk that
certain of these NOL carryforwards may expire unused and,
accordingly, has established a valuation allowance (approximately
$275,000 as of December 31, 1997 and June 30, 1998) against them.
Although realization is not assured for the deferred tax assets,
the Company believes it is more likely than not they will be
realized through future taxable earnings.
New Accounting Pronouncements. On January 1, 1998, the
Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income. SFAS No. 130
establishes standards to provide prominent disclosure of
comprehensive income items. Comprehensive income is the change
in equity of a business enterprise during a period from
transactions and other events and circumstances from non-owner
sources. Prior period amounts have been restated to conform to
the provisions of SFAS No. 130. The adoption of SFAS No. 130 had
no impact on the Company's financial position or results of
operations.
<PAGE 6>
On January 1, 1998, the Company adopted SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. SFAS
No. 131 requires that public business enterprises report certain
information about operating segments in a complete set of
financial statements of the enterprise and in condensed financial
statements of interim periods issued to shareholders. It also
requires the reporting of certain information about their
products and services, the geographic area in which they operate,
and their major customers. The adoption of SFAS No. 131 had no
impact on the Company's financial position or results of
operation.
The AICPA's Accounting Standards Executive Committee has issued
SOP 98-1, Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use. The SOP segments an internal use
software project into stages and the accounting is based on the
stage in which a cost is incurred. SOP 98-1 is effective for
fiscal years beginning after December 15, 1998 for costs incurred
in those fiscal years for all projects, including projects in
progress when the SOP is adopted. The adoption of SOP 98-1 is
not expected to have a material impact on the Company's financial
position or results of operations.
Note 2 - Inventories
The components of inventory consist of the following:
Dec. 31, June 30,
1997 1998
(In thousands)
Raw Materials $ 516 $1,586
Finished Goods 6,790 7,344
$7,306 $8,930
Note 3 - Line of Credit
In April, 1998, the Company increased its overall working capital
line of credit with its bank to $10.0 million. This facility
provides for financing of working capital needs and equipment
purchases and is secured by the Company's receivables, inventory
and other assets. The interest rate for this facility was the
prime rate plus one-quarter (1/4) percent and expires
December 31, 1999. As of June 30, 1998, the Company met certain
financial covenants contained in the line of credit agreement and
therefore received a reduction in the interest rate effective
July 1, 1998, down to the prime rate. This rate will remain in
effect until termination of the arrangement.
<PAGE 7>
Note 4 - Sale of Preferred Stock
On March 17, 1998, the Company's principal shareholder purchased
from the Company 400 shares of authorized perpetual Class A
Floating Rate Preferred Stock of the Company at $10,000, cash,
per share (the "Preferred Stock") or $4 million in the aggregate.
The perpetual Preferred Stock is entitled to receive, as and if
declared by the Company's Board, dividends at a floating rate
equal to the rate payable by the Company on its line of
credit with its commercial bank. Dividends are paid quarterly in
arrears, and if not declared or paid would cumulate at the line
of credit rate, plus 50 basis points. The preferred stock:
(i) does not possess voting rights, (ii) is not convertible into
common stock, and (iii) is not redeemable at the option of the
holder. The Preferred Stock is redeemable at the option of the
Company, but only (i) if and to the extent the Company's net
tangible assets at the end of any fiscal quarter and after such
dividend exceeds $4.5 million, or (ii) if at least a majority of
the independent and disinterested members of the audit committee
of the Company's Board of Directors approve such redemption. The
preceding provision relating to redemption constitutes a covenant
between the Company, the Company's principal shareholder and its
remaining shareholders and may not be changed without the
approval of at least a majority of the independent and
disinterested members of the audit committee of the Company's
Board of Directors.
Note 5 - Warranty Reserves
The Company's Tank Jacket product line carries a warranty of one
year for workmanship and materials. The Enviroflex product line
carries a ten year warranty for workmanship and materials. The
Tank Jacket product line also carries a thirty year warranty for
corrosion from certain specified materials. The Company's
warranties are limited to replacement of defective material; they
do not cover by their terms costs associated with leaks or
spillage of tank or pipe contents. Management has accrued a
reserve for anticipated warranty and other products liability
claims and associated legal fees based upon its industry
knowledge and actual claims experience.
As a result of a review of piping problems initiated in 1996, the
Company, during the third quarter of 1997, increased its warranty
reserve by approximately $18.6 million primarily to
cover the Company's estimate of the cost, anticipated to be
incurred over a two to three year period, of inspecting and
replacing pipe that had deteriorating cover material on the
retractable inner pipe portion of the Company's double-wall
underground fuel dispensing and containment systems installed
between 1990 and 1994 at approximately 3,000 sites. The
deterioration results from a microbiological fungus, which, under
certain conditions, affects the outer layers of the system's
primary (inner) retractable pipe. The Company has instituted
litigation against the supplier of the pipe to recover the cost
<PAGE 8> the Company has and will sustain to replace such pipe,
as well as other damages.
PAGE 9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is a Pennsylvania corporation organized in 1986.
The Company is a leading manufacturer and distributor of
underground systems and products for the conveyance and
containment of petroleum and alcohol based motor vehicle fuels
from underground storage tanks to aboveground fuel dispensers.
The principal end users of the Company's products are service
stations, convenience stores and other retail sellers of
gasoline, gasohol and other motor vehicle fuels, government
bodies, utilities and other fleet vehicle operators.
In addition to historical information, this Form 10-Q
contains forward-looking information. The forward-looking
information contained herein is subject to certain risk and
uncertainties that could cause actual results to differ
materially from those projected. For example, risk and
uncertainties can arise with changes in: general economic
conditions, including their impact on capital expenditures;
business conditions in the manufacturing and distribution
industry; the regulatory environment; rapidly changing technology
and industry standards; competitive factors, including increased
competition with both national and international companies, new
services and products offered by competitors; and price
pressures. Readers are cautioned not to place undue reliance on
the forward-looking information included within, which reflects
management's analysis only as of the date hereof. The Company
undertakes no obligation to publicly revise or update this
forward-looking information to reflect events or circumstances
that arise after the date hereof. Readers should carefully
review the risk factors described in other documents the Company
files from time to time with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS - Second Quarter of 1998 compared to Second
Quarter of 1997
Net Sales
The Company's net sales for the quarter ended June 30, 1998,
were $14.3 million compared to $12.1 million for the
corresponding quarter in 1997, an increase of 18%. The increase
was primarily attributable to increased sales from our field
operations at our American Containment, Inc. subsidiary, as well
as continued strong sales of our flexible underground piping
systems.
<PAGE 10>
Gross Profit
The primary component of the Company's cost of sales is the
product manufacturing costs paid to various third party
manufacturers. Other components are the variable and fixed costs
of operating the Company's manufacturing and warehousing
operations, depreciation of molds, tools and equipment, and
warranty expense. The Company's gross profit for the
quarter ended June 30, 1998, was $6.0 million compared to $4.6
million for the corresponding quarter in 1997. The increase
resulted primarily from increased sales and reduced costs of
producing our main piping products due to the integration of our
pipe manufacturing plant in October, 1997, coupled with lower
costs in certain other products due to our cost reduction program
initiated in the second half of 1997. Additionally, the Company
also experienced an increase in gross margin due to a decrease in
the costs of producing other products at its Bakersfield,
California operations.
The Company's gross profit percentage increased to 41.9% for
the quarter ended June 30, 1998, compared to 37.7% for the
corresponding quarter in 1997. The increase was primarily
attributable to the reduced costs of our main piping products as
well as lower costs in certain other products.
Operating Expense
Selling, general and administrative expenses consist
primarily of salaries and related benefits, payroll taxes,
commissions, royalties, legal expenses and other general,
administrative and overhead costs. Selling, general and
administrative expenses for the quarter ended June 30, 1998 were
$3.5 million compared to $3.3 million for the corresponding
quarter in 1997. The slight increase for the quarter resulted
mainly from an increase in bad debt expense as well as several
one time administrative costs.
Amortization of Intangibles
Amortization of intangibles consists of the amortization of
goodwill over a period of 40 years and the amortization of
various patents and licenses that are amortized on a straight-
line basis over the estimated lives of the patents (which range
from 13 to 17 years) at the acquisition date or subsequent
issuance date.
Interest Expense
Interest expense for the quarter ended June 30, 1998, was
$115,000 compared to $161,000 for the corresponding quarter in
1997. Interest expense is incurred on term loans that were used
for purchasing equipment and under the Company's working capital
line of credit. The decrease is due to lower balances
outstanding on the Company's term loans and the Company's line of
credit during the 1998 period as compared to the 1997 period.
<PAGE 11>
Income Taxes
Income taxes for the quarter ended June 30, 1998, were
$851,000 compared to 371,000 for the corresponding quarter in
1997. The Company recorded income taxes utilizing an effective
tax rate of 39% during the 1998 period as compared to an
effective tax rate of 40% in the 1997 period.
Net Income
The Company's net income for the quarter ended June 30,
1998, was $1.3 million compared to $557,000 for the corresponding
quarter in 1997. The increase of $779,000 was a result of
increased sales and an increase in gross margin percentage offset
by an increase in income tax expense.
Preferred Stock Dividends
The preferred stock dividend, approved by the Company's
Board of Directors, relates to the Company's sale, on March 17,
1998, of 400 shares of authorized perpetual Class A Floating Rate
Preferred Stock (the "Preferred Stock") to the Company's
principal shareholder at $10,000, cash, per share or $4.0 million
in the aggregate.
RESULTS OF OPERATIONS - Six Months Ended June 30, 1998 compared
to Six Months Ended June 30, 1997
Net Sales
The Company's net sales for the six months ended June 30,
1998, were $24.5 million compared to $20.3 million for the
corresponding six months ended June 30, 1997, an increase of 20%.
The increase was primarily attributable to increased sales from
our field operations at our American Containment, Inc.
subsidiary, as well as continued strong sales of our flexible
underground piping systems.
Gross Profit
The primary component of the Company's cost of sales is the
product manufacturing costs paid to various third party
manufacturers. Other components are the variable and fixed costs
of operating the Company's manufacturing and warehousing
operations, depreciation of molds, tools and equipment, and
warranty expense. The Company's gross profit for the
six months ended June 30, 1998, was $9.8 million compared to $7.2
million for the six months ended June 30, 1997. The increase
resulted primarily from increased sales and reduced costs of
producing our main piping products due to the integration of our
pipe manufacturing plant in October, 1997, coupled with lower
costs in certain other products due to our cost reduction program
<PAGE 12> initiated in the second half of 1997. Additionally,
the Company also experienced an increase in gross margin due to a
decrease in the costs of producing other products at its
Bakersfield, California operations.
The Company's gross profit percentage increased to 40.2% for
the six months ended June 30, 1998, compared to 35.4% for the
corresponding six months ended June 30, 1997. The increase was
primarily attributable to the reduced costs of our main piping
products as well as lower costs in certain other products.
Operating Expense
Selling, general and administrative expenses consist
primarily of salaries and related benefits, payroll taxes,
commissions, royalties, legal expenses and other general,
administrative and overhead costs. Selling, general and
administrative expenses for the six months ended June 30, 1998
were $6.39 million compared to $6.43 million for the
corresponding six months ended June 30, 1997. The decrease for
the period resulted mainly from a reduction in litigation expense
partially offset by several one time administrative costs.
Amortization of Intangibles
Amortization of intangibles consists of the amortization of
goodwill over a period of 40 years and the amortization of
various patents and licenses that are amortized on a straight-
line basis over the estimated lives of the patents (which range
from 13 to 17 years) at the acquisition date or subsequent
issuance date.
Interest Expense
Interest expense for the six months ended June 30, 1998, was
$264,000 compared to $308,000 for the corresponding six months
ended June 30, 1997. Interest expense is incurred on term loans
that were used for purchasing equipment and under the Company's
working capital line of credit. The decrease is due to lower
balances outstanding in the Company's term loans and the
Company's line of credit during the 1998 period as compared to
the 1997 period.
Income Taxes
Income taxes for the six months ended June 30, 1998, were
$1.1 million compared to $76,000 for the corresponding six months
ended June 30, 1997. The Company recorded income taxes utilizing
an effective tax rate of 39% during the 1998 period as compared
to an effective tax rate of 40% in the 1997 period.
<PAGE 13>
Net Income
The Company's net income for the six months ended June 30,
1998, was $1.8 million compared to $114,000 for the corresponding
six months ended June 30, 1997. The increase of $1.7 million
was a result of increased sales and an increase in gross margin
percentage offset by an increase in income tax expense.
Seasonality and Economic Conditions
The Company's sales are affected by the timing of planned
construction of new service stations and the retrofitting of
existing service stations by the end users, both of which are
influenced by inclement weather and general economic conditions.
During the quarter ended June 30, 1998, the Company did not
experience any adverse sales or operating results due to
inclement weather.
The Company's sales have been adversely affected to a slight
extent due to the Asian economic crisis.
Financial Condition
On March 17, 1998, the Company sold 400 shares of the
Preferred Stock to the Company's principal shareholder at
$10,000, cash, per share or $4.0 million in the aggregate. For
more information, see "Part II., Item 5. Other Information."
The increase in the Company's inventory to $8.9 million as
of June 30, 1998, as compared to $7.3 million as of December 31,
1997, is attributable to normal inventory increase due to
seasonality.
Liquidity and Capital Resources
The Company had working capital of $3.2 million and $1.1
million at June 30, 1998 and December 31, 1997, respectively.
The increase in working capital was due mainly to the proceeds
from the sale of the Preferred Stock for $4.0 million.
The Company satisfies its working capital needs primarily
through funds generated by operations and by borrowings under a
new $10.0 million secured credit facility with a commercial bank.
The Company believes that its presently available funds,
existing credit facility and the cash flow expected to be
generated from operations, will be adequate to satisfy its
anticipated working capital requirements for the foreseeable
future.
<PAGE 14>
Part II. Other Information
Item 1. Legal Proceedings
Two cases are pending in the Eastern District of
Pennsylvania, in which the Company, as exclusive licensee of
certain patents, seeks money damages and an injunction due to
patent infringement by Environ Products, Inc. ("Environ"). The
Company contends that two of Environ's secondarily contained
underground piping systems infringe on the licensor's patents.
Environ has filed a counterclaim asserting non-infringement,
invalidity, and other defenses. Environ has filed a declaratory
judgment action seeking a declaration of invalidity of the
patents, non-infringement and unenforceability. The cases await
trial in the Fall of 1998. The court will address the validity
of certain of the patent claims in pre-trial motions.
The Company capitalized the costs associated with the
original acquisition of the license. If the patents and/or
certain claims under these patents are determined to be invalid,
the assets associated with this license could be partially or
entirely impaired. The value of the license asset at
December 31, 1997 and June 30, 1998 is approximately $3.9
million.
A description of the Company's other pending legal
proceedings has been previously reported in the Company's Annual
Report and Form 10-K for the fiscal year ended December 31, 1997.
Item 4. Submission of Matters to a Vote of Security Holders
The 1998 Annual Meeting of Shareholders (the "Meeting") of
the Company was held on April 17, 1998. Notice of the Meeting
was mailed to shareholders on or about March 25, 1998, together
with proxy solicitation materials prepared in accordance with
Section 14(a) of the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder.
The Meeting was held for the following purposes:
1. To elect two Class I directors to hold office until the
2001 Annual Meeting of Shareholders and their
successors shall have been elected and qualified
(Matter No. 1);
2. To ratify the appointment by the Company's Board of
Directors of Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending
December 31, 1998 (Matter No. 2); and
PAGE 15
<PAGE>
There was no solicitation in opposition to the nominees
of the Board of Directors for election to the Board of
Directors. All nominees of the Board of Directors were
elected. The number of votes cast for or withheld, as
well as the number of abstentions and broker nonvotes
for each of the nominees for election to the Board of
Directors were as follows:
Abstentions
and Broker
Nominee For Withheld Nonvotes
Paul Gobeil 2,867,131 -- --
Nycol Pageau Goyette 2,867,131 -- --
Matter No. 2 was approved by shareholders at the Meeting.
The votes cast on this matter was as follows:
Abstentions
and Broker
For Against Nonvotes
No. 2 2,867,131 -- --
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement re: Computation of Earnings Per
Share (unaudited)
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
PAGE 16
<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.
Total Containment, Inc.
Date: August 14, 1998 By/s/ Pierre Desjardins
Pierre Desjardins
President and Chief Executive
Officer
Date: August 14, 1998 By/s/ Keith R. Ruck
Keith R. Ruck
Vice President Finance &
Chief Financial Officer
PAGE 17
<PAGE>
Exhibit Index
Exhibit No. Description
11 Statement re: computation of Earnings Per
Share (unaudited)
27 Financial Data Schedule <PAGE 18>
EXHIBIT 11
TOTAL CONTAINMENT, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
1997 1998 1997 1998
---- ---- ---- ----
(In thousands, except share data)
<S> <C> <C> <C> <C>
Basic:
Average shares outstanding 4,642 4,643 4,642 4,642
====== ====== ====== ======
Net income applicable to common shareholders $ 557 $1,248 $ 114 $1,711
====== ====== ====== ======
Net income per share amount $ 0.12 $ 0.27 $ 0.02 $ 0.37
====== ====== ====== ======
Assuming dilution:
Average shares outstanding 4,642 4,643 4,642 4,642
Effect of dilutive options 13 256 21 167
------ ------ ------ ------
Totals 4,655 4,899 4,663 4,809
====== ====== ====== ======
Net income applicable to common shareholders $ 557 $1,248 $ 114 $1,711
====== ====== ====== ======
Net income per share amount $ 0.12 $ 0.25 $ 0.02 $ 0.36
====== ====== ====== ======
</TABLE>
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0
4,000
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