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U.S. Securities & Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A - 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the transition period...........to..................
Commission file number.................000-24470
NATIONAL ENVIRONMENTAL SERVICE CO.
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(Exact name of small business issuer as specified in its charter)
Oklahoma 73-1296420
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12331 East 60th Street, Tulsa, Oklahoma 74l46
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(Address of principal executive offices)
(918)-250-2227
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 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_____.
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of July 31, 1999:
Number of shares
Title of Class Outstanding
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Common Stock, $.01 Par Value 7,621,652
Transitional Small Business Issuer Format (Check one): Yes___ No X
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NATIONAL ENVIRONMENTAL SERVICE CO.
TABLE OF CONTENTS
Part I - Financial Information
Financial Information:
Item 1. Financial Statements Page
Consolidated Balance Sheet
June 30, 1999 3
Consolidated Statements of Income
Three Months Ended June 30, 1999 and 1998 4
Consolidated Statements of Income
Six Months Ended June 30, 1999 and 1998 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
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NATIONAL ENVIRONMENTAL SERVICE CO.
CONSOLIDATED BALANCE SHEET
June 30, 1999
(In Thousands)
(Unaudited)
ASSETS
Current assets:
Cash $ 201
Accounts Receivable and costs in Excess of Billings 10,985
Materials and Supplies 2,271
Prepaid Expenses 106
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Total current assets 13,563
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Property and equipment, at cost 5,528
Less accumulated depreciation (2,216
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Property and equipment, net (3,312
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Other assets 1,890
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Total assets $18,765
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long term obligations
and revolving line of credit $ 1,578
Accounts payable 3,186
Accrued liabilities 376
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Total current liabilities 5,140
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Long-term obligations 7,027
Deferred income taxes 198
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Total Liabilities 12,365
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Shareholders' equity:
Preferred stock: 1,000,000 shares authorized;
none issued
Common stock, par value $.01; authorized 20,000,000
shares;
issued 7,888,643 shares, including treasury
shares 79
Additional paid-in capital 3,912
Retained Earnings 2,897
Common stock in Treasury, at cost, 266,991 shares (488)
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Total shareholders' equity 6,400
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Total liabilities and shareholders' equity $18,765
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The accompanying notes are an integral part of the financial statements.
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NATIONAL ENVIRONMENTAL SERVICE CO.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(In thousands except per share amounts)
(Unaudited)
1999 1998
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Revenues $ 5,992 $ 2,944
Costs and Expenses 4,054 1,872
Selling, general and administrative expenses 1,401 913
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Income from operations 537 159
Other income 79 2
Interest expense 135 90
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Income before provision for income taxes 481 71
Provision for income taxes 183 27
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Net Income $ 298 $ 44
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Basic Net Income per share $ 0.04 $ 0.01
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Diluted Net Income per share $ 0.04 $ 0.01
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The accompanying notes are an integral part of the financial statements.
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NATIONAL ENVIRONMENTAL SERVICE CO.
CONSOLIDATED STATEMENT OF INCOME
FOR SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(In thousands except per share amounts)
(Unaudited)
1999 1998
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Revenues $12,482 $6,632
Cost and expenses 7,954 4,653
Selling, general and administrative expenses 2,926 1,696
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Income from operations 1,602 283
Other Income 137 23
Interest Expense 240 197
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Income before provision for income taxes 1,499 109
Provision for taxes on income 570 39
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Net Income $ 929 $ 70
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Basic Net Income per share $ 0.12 $ 0.01
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Diluted Net Income per share $ 0.12 $ 0.01
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The accompanying notes are an integral part of the financial statements.
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NATIONAL ENVIRONMENTAL SERVICE CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(In thousands)
(Unaudited)
1999 1998
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Operating activities
Net Income $ 929 $ 70
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 260 217
Change in:
Accounts receivable (699) (6)
Materials and supplies (317) (187)
Prepaid expenses (64) 38
Accounts payable 809 (387)
Accrued liabilities (334) (323)
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Net cash provided by (used in) operating activities 584 (578)
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Investing activities
Business Acquisitions (3,114) -
Purchases of property, plant and equipment (830) (141)
Other (152) 16
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Net cash provided by (used in) investing activities (4,096) (125)
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Financing activities:
Proceeds from notes payable and long-term obligations 7,032 2,430
Principal payments on notes and long term obligations (3,065) (2,421)
Proceeds from sale (purchase) of treasury stock (406) 712
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Net cash provided by financing activities 3,561 721
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Increase in cash 49 18
Cash, beginning of period 152 93
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Cash, end of period $ 201 $ 111
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The accompanying notes are an integral part of the financial statements.
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NATIONAL ENVIRONMENTAL SERVICE CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
In the opinion of management, the accompanying condensed financial
statements contain all adjustments of a normal recurring nature necessary to
present fairly the financial position of the Company as of June 30, 1999 and the
results of operations for the three and six month periods ended June 30, 1999
and 1998. Cash flows are shown, as permitted, for only the six months ended
June 30, 1999 and 1998.
2. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings Per Share" (see Note 10). SFAS 128 replaced primary earnings
per share ("EPS") with basic EPS and fully diluted EPS with diluted EPS. Basic
EPS is calculated by dividing net earnings available to common shares by the
weighted average common shares outstanding. Diluted EPS is calculated
similarly, except that it includes the dilutive effect of the assumed exercise
of all dilutive potential common shares outstanding. SFAS 128 also requires
previously reported EPS to be restated.
Basic and diluted EPS for the six months ended June 30, 1999 and 1998, were
computed as follows:
Six Months Ended June 30
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1999 1998
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Basic EPS Computation:
Net income $ 929 $ 70
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Weighted average shares outstanding 7,805,120 7,270,764
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Basic EPS $ .12 $ .01
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Diluted EPS Computation:
Net income $ 929 $ 70
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Weighted average shares outstanding 7,805,120 7,270,764
Incremental shares for assumed
exercise of securities:
Warrants 6,584 3,367
Options 37,631 26,455
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7,849,335 7,300,586
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Diluted EPS $ .12 $. 01
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The 230,703 shares in 1999 and the 212,000 shares in 1998 of employee stock
options were not included in the computation of diluted EPS as their effect is
anti-dilutive.
3. SEGMENT INFORMATION
The Company's business segments have been grouped as follows:
1999 Thousands of Dollars
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Inter-
Segment Pre-tax
Segment Sales Sales Income Assets
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Fueling Installations $ 9,495 $ 1,085 $ 9,868
Environmental 2,485 287 5,249
FRS 427 51 1,404
Other 502 267 78 2,244
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$ 12,482 $ 694 $ 1,499 $18,765
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1998 Thousands of Dollars
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Inter- Pre-tax
Segment Income
Segment Sales Sales (Loss) Assets
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Fueling Installations $ 5,711 $ (189) $ 6,194
Environmental 550 (35) 1,129
FRS 363 235 337
Other 371 303 98 2,923
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$ 6,632 $ 666 $ 109 $10,583
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4. 1999 ACQUISITIONS
On January 1, 1999, the Company acquired the assets of a company in Largo,
Florida, for $50,000 cash and the assumption of certain liabilities totaling
$95,590. The acquired business is a provider of environmental, drilling, and
related services to the owners and operators of fueling systems as well as other
businesses.
On January 11, 1999, the Company acquired the assets, subject to certain
liabilities assumed, of a group of companies based in Greenville, North
Carolina, which provides services to the owners and operators of fueling
systems. The purchase price of the assets acquired was $791,000 consisting of
$250,000 cash, notes payable in the aggregate principal amount of $419,000, and
the issuance of 40,000 shares of Company stock, and options to purchase 45,000
shares of Company stock.
On April 30, 1999, the Company acquired the assets of a division of Arizona
Instrument Corporation, Phoenix, Arizona, for cash in the amount of $1,061,531.
The assets included all inventory, related patents, trademarks, test equipment,
computer software, computers, contracts, and such other assets related to the
manufacture and marketing of the Soil Sentry and Encompass Systems. The acquired
business is a provider of tank monitoring equipment and service to the owners
and operators of fueling systems as well as other businesses.
On May 11, 1999, the company acquired the assets, subject to certain
liabilities assumed, of TET Environmental Services, Inc., Columbia, South
Carolina, for cash in the amount of $2,200,000. The acquired business is a
provider of environmental and related services to the owners and operators of
fueling systems as well as other businesses.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this amendment to the report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NATIONAL ENVIRONMENTAL SERVICE CO.
Date: August 19, 1999 /s/ Eddy L. Patterson
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EDDY L. PATTERSON, Chairman
Date: August 19, 1999 /s/ Larry G.Johnson
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LARRY G. JOHNSON, Vice President & Secretary-
Treasurer & Chief Financial
Officer
