**0000000** **0000001** **0000002** UNITED STATES **0000003** SECURITIES AND EXCHANGE COMMISSION **0000004** Washington, D.C. 20549 **0000005** FORM 10-K **0000006** **0000007** **0000008** **0000009** (Mark One) **0000010** **0000011** [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE **0000012** SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) **0000013** **0000014** For the fiscal year ended: December 31, 1995 **0000015** **0000016** [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE **0000017** SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) **0000018** **0000019** For the transition period from __________ to __________ **0000020** **0000021** Commission File No. 2-30680 **0000022** **0000023** **0000024** AMETECH, INC. **0000025** ____________________________________________________________ **0000026** (Exact Name of Registrant as Specified in its Charter) **0000027** **0000028** **0000029** Oklahoma 73-0766924 **0000030** _____________ ___________________ **0000031** (State of (I.R.S. Employer **0000032** Incorporation) Identification No.) **0000033** **0000034** 1813 Southeast 25th **0000035** Oklahoma City, Oklahoma 73129 **0000036** _______________________ _________ **0000037** (Address of Principal (Zip Code) **0000038** Executive Offices) **0000039** **0000040** Registrant's Telephone Number, Including Area Code: **0000041** **0000042** (405) 677-8781 **0000043** ______________ **0000044** **0000045** Securities Registered Pursuant to Section 12(b) of the Act: **0000046** **0000047** None **0000048** _______ **0000049** **0000050** Securities Registered Pursuant to Section 12(g) of the Act: **0000051** **0000052** Common Stock, Par Value $.01 **0000053** ____________________________ **0000054** **0000055** **0000056** Indicate by check mark if disclosure of delinquent filers **0000057** pursuant to Item 405 of Regulation S-K (229.405) of this chapter is **0000058** not contained herein and will not be contained, to the best of **0000059** Registrant's knowledge, in definitive proxy or information **0000060** statements incorporated by reference in Part III of this Form 10-K **0000061** or any amendment to this Form 10-K. [ X ] **0000062** **0000063** As of April 9, 1996, the aggregate market value of the **0000064** 2,592,662 shares of voting stock of the Registrant held by non- **0000065** affiliates of the Company equaled approximately $ 648,166 based on **0000066** the mean between the closing bid and ask price for the common stock. **0000067** **0000068** Indicate by check mark whether the Registrant (1) has filed all **0000069** reports required by Section 13 or 15(d) of the Securities Exchange **0000070** Act of 1934 during the preceding 12 months (or for the shorter **0000071** period of that the Registrant has had to file the reports), and (2) **0000072** has been subject to the filing requirements for the past 90 days. **0000073** Yes X No **0000074** ___ ____ **0000075** **0000076** As of April 9, 1996, the Registrant had 13,785,032 shares of **0000077** common stock issued and outstanding (excluding 115,000 shares of **0000078** common stock held as treasury stock). **0000079** **0000080** Documents Incorporated by Reference **0000081** **0000082** None. **0000083** **0000084** **0000085** FORM 10-K OF AMETECH, INC. **0000086** **0000087** TABLE OF CONTENTS **0000088** **0000089** PART I **0000090** **0000091**
**0000092** Page **0000093** ____ **0000094** **0000095** Item 1. Business **0000096** **0000097** General................................... 1 **0000098** Subsequent Events......................... 2 **0000099** Segment Information and Foreign and **0000100** Domestic Operations and Export **0000101** Sales.................................. 2 **0000102** **0000103** Item 2. Properties...................................... 7 **0000104** **0000105** Item 3. Legal Proceedings............................... 8 **0000106** **0000107** Item 4. Submission of Matters to a Vote of **0000108** Security Holders.......................... 9 **0000109** **0000110** Item 4A. Executive Officers of the Company.............. 9 **0000111** **0000112** PART II **0000113** **0000114** Item 5. Market for Registrant's Common Stock and **0000115** Related Security Holders Matters........... 10 **0000116** **0000117** Item 6. Selected Financial Data......................... 11 **0000118** **0000119** Item 7. Management's Discussion and Analysis of Financial **0000120** Condition and Results of Operations........ 20 **0000121** **0000122** Item 8. Financial Statements and Supplementary Data...... 20 **0000123** **0000124** Item 9. Changes in and Disagreements with Accountants **0000125** on Accounting and Financial Disclosure...... 21 **0000126** **0000127** PART III **0000128** **0000129** Item 10. Directors and Executive Officers of the **0000130** Company.................................... 22 **0000131** **0000132** Item 11. Executive Compensation......................... 25 **0000133** **0000134** Item 12. Security Ownership of Certain Beneficial **0000135** Owners and Management..................... 25 **0000136** **0000137** Item 13. Certain Relationships and Related Transactions.. 28 **0000138** **0000139** **0000140** PART IV **0000141** **0000142** Item 14. Exhibits, Financial Statement Schedules, **0000143** and Reports on Form 8-K..................... 28 **0000144**
**0000145** **0000146** PART I **0000147** **0000148** Item 1. BUSINESS **0000149** **0000150** General. **0000151** **0000152** AMETECH, Inc. (the "Company") is an Oklahoma corporation and **0000153** was formed in 1967. **0000154** **0000155** Moorpark Holdings, Inc., a Delaware corporation ("Moorpark"), **0000156** and its parent company, Bank of America of Illinois, would be **0000157** considered to beneficially own 10,367,122 shares, or approximately **0000158** 75.2% of the 13,785,032 shares of voting securities of the Company **0000159** issued and outstanding as of April 9, 1996. As a result, Moorpark **0000160** and its parent companies would be considered to be the controlling **0000161** persons of the Company. Moorpark has advised the Company that it **0000162** has acquired such shares as a passive investor and will hold such **0000163** shares for investment purposes only. See "Security Ownership of **0000164** Certain Beneficial Owners and Management -- Security Ownership of **0000165** Certain Beneficial Owners". **0000166** **0000167** On August 17, 1995, the Company, through a wholly-owned **0000168** subsidiary, Environmental Transportation Services, Inc., an Oklahoma **0000169** corporation ("ETS"), acquired all of the outstanding capital stock **0000170** of Dwight Trucking, Inc., a California corporation ("Dwight **0000171** Trucking"). Dwight Trucking is a transporter of hazardous and non- **0000172** hazardous waste, with its principal offices and transportation **0000173** terminal located in Bakersfield, California. In February, 1996, the **0000174** Company merged Dwight Trucking into ETS and the Company intends to **0000175** continue to operate the business of transporting hazardous waste and **0000176** non-hazardous waste from the Bakersfield, California terminal **0000177** through its subsidiary, ETS. The accompanying combined financial **0000178** statements for the year ended December 31, 1995, aggregates the **0000179** results of operations for the Company and Dwight Trucking as if such **0000180** transaction has occurred on July 1, 1995. **0000181** **0000182** On July 20, 1995, the Company's wholly-owned subsidiary, ETS, **0000183** acquired substantially all of the assets of Arthur E. Smith & Son **0000184** Trucking, Inc., a Nebraska corporation ("Smith Trucking"). The **0000185** assets acquired from Smith Trucking are used in the transportation **0000186** of hazardous waste from a terminal located in Denver, Colorado. The **0000187** City of Denver requires a special use permit in order to operate a **0000188** hazardous waste transportation terminal and to transfer such waste **0000189** from one truck to another at such terminal. ETS is currently **0000190** operating its terminal in Denver without having obtained such a **0000191** special use permit. Failure to obtain such permit will require ETS **0000192** to relocate its Denver terminal to another city in Colorado in which **0000193** such a special use permit may be obtained. **0000194** **0000195** **0000196** Subsequent Events **0000197** **0000198** In March, 1996, the Company's subsidiary, Environmental **0000199** Transportation Services, Inc. ("ETS"), began leasing from Sullivan **0000200** Trucking Company, Inc. ("Sullivan"), a certain number of hazardous **0000201** waste tractors and trailers and has begun to utilize such equipment **0000202** to transport waste for Sullivan's and ETS' customers. In connection **0000203** with such lease, ETS is to pay Sullivan approximately $35,000 a **0000204** month to lease from Sullivan such tractors and trailers and a **0000205** certain number of roll-off boxes. **0000206** **0000207** In connection with the transaction with Sullivan, the Company **0000208** has reached a tentative agreement to acquire from Sullivan its **0000209** customer list, good will, inventory, and other business aspects of **0000210** Sullivan's hazardous waste transportation business. The Company **0000211** believes that, in addition to the above-described lease arrangement, **0000212** the Company will pay Sullivan approximately 1.4 million shares of **0000213** the Company's common stock and will lease from Sullivan its **0000214** transportation terminal in Ponca City, Oklahoma, for a term of **0000215** approximately four (4) years at a rental of $3,800 per month. The **0000216** Company and Sullivan are in the process of finalizing definitive **0000217** agreements relating to these transactions. **0000218** **0000219** Segment Information and Foreign and Domestic Operations and Export **0000220** Sales. **0000221** **0000222** The Company's principal business is providing environmental- **0000223** related activities consisting primarily of transporting hazardous **0000224** and non-hazardous waste, and, as a result, the Company believes that **0000225** it is in only one business segment. **0000226** **0000227** Other than its minority ownership (approximately 10%) in a **0000228** waste company in Mexico, the Company had no foreign operations or **0000229** export sales in 1995. **0000230** **0000231** (a) Environmental Business **0000232** **0000233** The Company's principal business (through its subsidiaries) is **0000234** the transportation of hazardous and non-hazardous waste. **0000235** **0000236** The Company's transportation business is provided primarily to **0000237** generators and brokers of and disposal companies handling hazardous **0000238** and non-hazardous waste. The Company's transportation subsidiary **0000239** generally transports waste from the generator's location to **0000240** disposal, storage or treatment sites operated and owned by others. **0000241** The Company currently has transportation terminals in California, **0000242** Colorado, Florida, Kansas, Ohio, Oklahoma, Tennessee, Texas, Utah, **0000243** Virginia, and Washington. See "PROPERTIES". In 1995, approximately **0000244** 95% of the Company's consolidated revenues were related to its **0000245** transportation operations. **0000246** **0000247** **0000248** The Company and its subsidiaries own or lease specifically **0000249** constructed multi-purpose vehicles which are used in the collection **0000250** and transportation of hazardous and non-hazardous waste. The **0000251** vehicles used to transport hazardous waste are specially designed **0000252** tractors and semi-trailers to comply with applicable regulations of **0000253** the U. S. Department of Transportation ("DOT") relating to the **0000254** transportation of hazardous waste. The transportation of hazardous **0000255** waste requires the Company to annually increase and/or update its **0000256** fleet of these specially designed vehicles. **0000257** **0000258** In the past, the Company, through subsidiaries, also performed **0000259** brokerage services for certain generator-customers. These services **0000260** required the Company to act as an intermediary for the generator- **0000261** customer with the disposal facility. In 1994, the Company decided **0000262** to deemphasize its brokering services due to the low margins and the **0000263** potential liability related to such business. As a result, less **0000264** than 1% of the Company's consolidated revenues for 1995 were related **0000265** to the Company's brokerage activities. **0000266** **0000267** A subsidiary of the Company operates a non-RCRA storage, **0000268** bulking and transfer facility located in Green Cove Springs, **0000269** Florida, under a permit granted by the State of Florida. This **0000270** facility began operation in May, 1994, and is used to collect, **0000271** store, and treat solid and semi-solid wastes which are non-hazardous **0000272** in nature. The waste is then separated, processed and shipped to **0000273** suitable disposal facilities. In connection with this permit, the **0000274** Company owns a building on four acres of land. See "PROPERTIES". **0000275** In addition to business explained above, this subsidiary also **0000276** brokers non-hazardous waste. Revenues from this subsidiary **0000277** accounted for approximately 3% and 1% of consolidated revenues in **0000278** 1995 and 1994, respectively. **0000279** **0000280** (b) Customers **0000281** **0000282** The major customers of the Company in the environmental related **0000283** business are hazardous waste management companies and hazardous **0000284** waste brokers. For 1995, approximately 31% of the Company's **0000285** consolidated revenues were derived from transportation-related **0000286** activities for Laidlaw Environmental Services, Inc. and its **0000287** affiliates, as compared to approximately 34% for 1994. **0000288** **0000289** (c) Competition **0000290** **0000291** The environmental services industry is highly fragmented and **0000292** competition is intense. Competition is based on, among other **0000293** factors, work quality and timeliness of performance, safety and **0000294** efficiency, availability of personnel and equipment, and pricing. **0000295** The Company believes that its expertise and its reputation within **0000296** the industry for providing timely services allow it to compete **0000297** effectively. The industry, however, is, and is likely to continue **0000298** to be, dominated by much larger and better capitalized companies **0000299** than the Company. Many of the major companies that own disposal **0000300** **0000301** **0000302** facilities for hazardous and non-hazardous waste, which the Company **0000303** does not, compete with the Company's transportation subsidiary by **0000304** offering to their customers transportation services of such waste **0000305** from the site of generation to their disposal facilities. **0000306** **0000307** (d) Environmental Damages and Personal Injury **0000308** **0000309** The environmental activities involve significant risks inherent **0000310** in the management of hazardous waste. Although the Company believes **0000311** that its operations are conducted in a safe and prudent manner, **0000312** spillage, uncontrolled release or mishandling of hazardous waste **0000313** could create liability for the Company as the result of **0000314** environmental damage or personal injury. Such an occurrence could **0000315** have a material adverse effect on the business and financial **0000316** condition of the Company. **0000317** **0000318** (e) Regulation and Permits **0000319** **0000320** The transportation business is subject to extensive and **0000321** increasing federal, state, and local laws and regulations. In **0000322** addition to imposing requirements on the Company's activities **0000323** regarding hazardous waste, these regulations require the Company to **0000324** maintain various permits in order to conduct its current **0000325** transportation business. Permits are generally required by most, **0000326** if not all, states for the transportation of hazardous waste in such **0000327** states. These permits need to be renewed periodically and may be **0000328** subject to revocation, modification, denial or nonrenewal for **0000329** various reasons, including failure of the Company's transportation **0000330** subsidiary to satisfy regulatory concerns. Regulations will require **0000331** the Company to obtain additional permits in the future to expand its **0000332** transportation business into new states. **0000333** **0000334** In addition, the State of Florida requires the Company's **0000335** subsidiary conducting the non-hazardous waste activities in Florida **0000336** to obtain and maintain a permit to store and process non-hazardous **0000337** waste at its facility in Florida. See "BUSINESS--Environmental **0000338** Business". **0000339** **0000340** The City of Denver, Colorado requires a special use permit to **0000341** operate a hazardous waste terminal to transfer such waste from one **0000342** truck to another at such terminal. ETS is currently operating its **0000343** terminal in Denver without having obtained such a special use **0000344** permit. Failure to obtain such permit will require ETS to relocate **0000345** its Denver terminal to another city in Colorado in which such a **0000346** special use permit may be obtained. **0000347** **0000348** Failure by the Company to obtain and maintain necessary permits **0000349** would have a material adverse effect on its business and financial **0000350** condition. The Company believes it is in substantial compliance **0000351** with existing regulatory requirements; however, the Company cannot **0000352** predict what impact future laws, rules or regulations will have on **0000353** its business or financial condition. Further, sometimes justifiable **0000354** **0000355** **0000356** differences in interpretations of laws and regulations could result **0000357** in unforeseen liabilities. A failure to comply with such laws, **0000358** rules and regulations could subject the Company to fines and **0000359** penalties and/or revocation of permits issued by a state, which **0000360** could have a material adverse effect on the Company. **0000361** **0000362** A discussion of the principal environmental laws affecting the **0000363** Company's Environmental Business is set forth below. **0000364** **0000365** (i) RCRA and Federal Transportation Laws. The Resource **0000366** Conservation and Recovery Act, as amended ("RCRA"), provides a **0000367** comprehensive framework to regulate the generation, transportation, **0000368** disposal, storage and treatment of hazardous waste. The purpose of **0000369** RCRA is to control hazardous waste from the time such is generated **0000370** to the time of disposal. RCRA requires that the Environmental **0000371** Protection Agency's ("EPA") regulations as to the transportation of **0000372** hazardous waste be consistent with the federal Department of **0000373** Transportation ("DOT") regulations under the Hazardous Materials **0000374** Transportation Act ("HWTA"). **0000375** **0000376** RCRA and HMTA regulate any party who transports hazardous **0000377** waste, whether in interstate or intrastate commerce. These laws and **0000378** the regulations promulgated thereunder regulate, among other things, **0000379** the transportation of hazardous waste and provide that such is **0000380** subject to a manifest system, regulates the record keeping **0000381** concerning the source and deliver points of hazardous waste, the **0000382** proper labeling of transported waste, equipment specifications and **0000383** insurance requirements. In addition, these laws and the regulations **0000384** promulgated thereunder require that a transporter must deliver waste **0000385** in accordance with the manifest prepared by the generator of the **0000386** waste and may only deliver such to a disposal, treatment or storage **0000387** facility having a RCRA permit or interim status under RCRA. **0000388** **0000389** Demand for the Company's transportation services is **0000390** substantially dependent upon the continuation of the regulation of **0000391** the treatment, disposal and transportation of hazardous waste under **0000392** federal and state laws and regulations. The repeal of these laws **0000393** or any significant relaxation of their requirements as to the **0000394** transportation of hazardous waste could significantly reduce the **0000395** demand for the transportation services offered by the Company and **0000396** could have a material adverse effect on its business and financial **0000397** condition. **0000398** **0000399** (ii) Non-Hazardous Waste Management Activities in Florida. **0000400** The State of Florida has adopted the Florida Solid and Hazardous **0000401** Waste Management Act ("Florida Act"), which provides, among other **0000402** things, that no non-hazardous waste management facility shall be **0000403** constructed, operated, maintained, modified or closed in Florida **0000404** without first obtaining a permit issued by the Florida Department **0000405** of Environmental Regulations ("Florida Department"), with certain **0000406** limited exceptions. In March, 1994, and before the Company's **0000407** subsidiary began construction or operation of the facility in **0000408** **0000409** **0000410** Florida, such subsidiary was granted a permit by the Florida **0000411** Department to construct and operate the non-hazardous waste storage, **0000412** bulking and transfer facility in Florida. This law and the **0000413** regulations promulgated thereunder regulate non-hazardous waste **0000414** management facilities, such as the non-hazardous waste facility **0000415** being operated by the Company's subsidiary in Florida. **0000416** **0000417** (iii) Health and Safety Regulations. The operations of the **0000418** Company's Environmental Business are subject to the requirements of **0000419** the Occupational Safety and Health Act ("OSHA") and comparable state **0000420** laws. Regulations promulgated under OSHA and the Department of **0000421** Labor require employers of persons in the transportation and **0000422** environmental industries, including independent contractors, to **0000423** implement work practices and personal protection programs in order **0000424** to protect employees from equipment safety hazards and exposure to **0000425** hazardous chemicals. It is also anticipated that oversight of the **0000426** Company's operations by regulatory agencies charged with protecting **0000427** health and safety will increase, resulting in increased cost and a **0000428** greater potential for imposition of penalties for noncompliance. **0000429** The Company has used its best efforts to establish programs for **0000430** complying with health and safety regulations. While the Company **0000431** believes it operates safely and prudently, there can be no assurance **0000432** that accidents will not occur or that the Company will not incur **0000433** substantial liability in connection with the operation of its **0000434** business. The Company could, for example, be subjected to **0000435** litigation in the event of an accident, such as a traffic accident **0000436** or inhalation of harmful chemicals. To the extent that any such **0000437** claim was not covered or only partially covered by insurance, the **0000438** Company could be materially adversely affected. **0000439** **0000440** (iv) Superfund. In 1980, the Comprehensive Environmental **0000441** Response, Compensation and Liability Act of 1980, commonly known as **0000442** "Superfund" or "CERCLA", was enacted. **0000443** **0000444** Superfund provides for EPA-coordinated response and removal **0000445** actions to releases of hazardous substances into the environment, **0000446** and authorizes the federal government either to clean up facilities **0000447** at which hazardous substances have created actual or potential **0000448** environmental hazards or to order persons responsible for the **0000449** situation to do so. Superfund also provides for the recovery of **0000450** cost in connection with the clean-up of a site where hazardous **0000451** substances have been released. Superfund attempts to allocate these **0000452** responses and other related costs among parties involved in the **0000453** generation, transportation and disposal of such hazardous **0000454** substances. Superfund has been interpreted as creating among liable **0000455** parties strict, joint and several liability for costs of removal and **0000456** remediation, other necessary response costs and damage to natural **0000457** resources. Liability under Superfund extends to four categories of **0000458** parties: (i) owners and operators of a facility from which a release **0000459** occurs, (ii) persons who owned or operated a facility at the time **0000460** the hazardous substances were disposed of at such a facility, (iii) **0000461** persons who arranged for disposal or treatment of a hazardous **0000462** **0000463** **0000464** substance at or transportation of a hazardous substance to such **0000465** facility (i.e., generators of such hazardous substances), and (iv) **0000466** transporters who selected such facility for treatment or disposal **0000467** of hazardous substances. **0000468** **0000469** Superfund also authorizes (i) private litigants who have **0000470** incurred response costs in the clean-up of a site contaminated with **0000471** hazardous substances to bring an action, under certain conditions, **0000472** for contribution against other parties who may be liable under **0000473** Superfund, and (ii) authorizes citizens suits under certain **0000474** conditions against any person, including the United States, who is **0000475** alleged to be in violation of any standard, regulation, condition **0000476** or order which has become effective under Superfund. **0000477** **0000478** In addition to Superfund, certain individual states have **0000479** enacted their own statutory schemes to respond to release of **0000480** hazardous substances, to order responsible parties to conduct **0000481** removal action from liable parties. Parties who could be liable **0000482** under the states' mini-Superfund statutes are generally the same **0000483** parties that are liable under Superfund. **0000484** **0000485** (f) Insurance **0000486** **0000487** The Company is required to maintain specified types and amounts **0000488** of insurance in order to conduct its current business of **0000489** transportation of hazardous and non-hazardous waste. The **0000490** availability of adequate insurance is a problem faced by the **0000491** hazarded waste industry as a whole due to the limited number of **0000492** insurers and the increasing cost of coverage. To the best of the **0000493** Company's knowledge, the Company currently has insurance sufficient **0000494** to satisfy all applicable regulatory requirements. Although the **0000495** Company believes that it will be able to obtain renewals of, or **0000496** replacements for its existing coverage, there can be no assurance **0000497** that the Company will be able to maintain insurance in compliance **0000498** with regulatory requirements. Failure to satisfy these regulatory **0000499** insurance requirements could have a material adverse effect on the **0000500** Company's business and financial condition. **0000501** **0000502** (g) Employees **0000503** **0000504** As of December 31, 1995, the Environmental Business of the **0000505** Company had approximately 150 full-time employees, none of whom were **0000506** represented by a union. **0000507** **0000508** Item 2. PROPERTIES **0000509** **0000510** The Company's environmental business is conducted through both **0000511** owned and leased facilities. The Company and/or one of its **0000512** subsidiaries owns a six-acre tract of land in Oklahoma City, **0000513** Oklahoma, subject to a mortgage, which contains an office building **0000514** of approximately 15,000 square feet. This facility is being used **0000515** by the Company as its executive office, as well as the Company's **0000516** **0000517** **0000518** Oklahoma City transportation terminal. In addition, the Company **0000519** owns approximately 7.2 acres of land in LaPorte, Texas, subject to **0000520** a mortgage, on which the Company's subsidiary has constructed a **0000521** 14,000 square foot truck terminal. The Company's subsidiary **0000522** completed construction of the LaPorte terminal in February, 1994. **0000523** **0000524** In addition, the Company and/or its subsidiaries leases **0000525** transportation terminals in Bakersfield, California; Denver, **0000526** Colorado; Jacksonville, Florida; Chanute, Kansas; Atoka, Tennessee; **0000527** Salt Lake City, Utah; Martinsville, Virginia; and, Centralia, **0000528** Washington. The Company's subsidiary also owns a terminal in **0000529** Chattanooga, Tennessee, subject to a mortgage. The facilities in **0000530** Bakersfield, California; Elyria, Ohio; Chattanooga, Tennessee; and **0000531** LaPorte, Texas, contain office facilities. See "Business-- **0000532** Regulations and Permits". **0000533** **0000534** Additionally, a subsidiary of the Company owns approximately **0000535** four acres of land and a 12,000 square foot building in Green Cove **0000536** Springs, Florida. This facility is used for the bulking and **0000537** transfer of non-hazardous waste under a permit granted by the State **0000538** of Florida. **0000539** **0000540** The Company believes that the above properties are suitable and **0000541** adequate for the Company's presently anticipated needs. **0000542** **0000543** Item 3. LEGAL PROCEEDINGS **0000544** **0000545** In March, 1993, the Company was advised that its insurance **0000546** carrier had denied coverage relating to a lawsuit filed by seven (7) **0000547** individuals against Dyna-Turn of Oklahoma Incorporated ("Dyna-Turn") **0000548** and a subsidiary of the Company, Environmental Transportation **0000549** Services, Inc. ("ETS"), styled Darrell Stafford, et al. v. Dyna-Turn **0000550** of Oklahoma Incorporated, et al., pending in the District Court of **0000551** Oklahoma County, Oklahoma (the "Lawsuit"). The Lawsuit was filed **0000552** in January, 1992. The plaintiffs were employees of a waste **0000553** incineration facility and allege that (i) Dyna-Turn generated **0000554** certain waste contaminated with toxic and hazardous chemicals; (ii) **0000555** that the waste was transported by ETS, and (iii) that Dyna-Turn was **0000556** negligent in the generation and ETS was negligent in the **0000557** transportation of such waste and in failing to warn these plaintiffs **0000558** of the hazardous nature of the waste. In the Lawsuit, the **0000559** plaintiffs are alleging that they sustained certain personal **0000560** injuries and are seeking unspecified damages in excess of $10,000 **0000561** and punitive damages. The Lawsuit is presently in the discovery **0000562** stage. The Company believes that it has defenses to the Lawsuit, **0000563** but at this stage is unable to determine the amount of any potential **0000564** exposure that it may incur as a result thereof. The Company intends **0000565** to vigorously defend itself in the Lawsuit. At this time, the **0000566** Company does not anticipate that the Lawsuit will have a material **0000567** adverse effect on the Company or its financial condition, but there **0000568** are no assurances to that effect. **0000569** **0000570** **0000571** **0000572** Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. **0000573** **0000574** Not applicable. **0000575** **0000576** Item 4A. EXECUTIVE OFFICERS OF THE COMPANY **0000577** **0000578** The following are the executive officers of the Company: **0000579** **0000580**
**0000581** Name and Position Date Elected **0000582** with Company(1) Age to Office **0000583** **0000584** Carl B. Anderson, Jr.(2) 74 January 10, 1991 **0000585** Chairman of the Board, **0000586** President, and Chief **0000587** Executive Officer **0000588** **0000589** Bill Baker(3) 48 June 8, 1995 **0000590** Vice President - Operations **0000591** and Secretary **0000592** **0000593** ______________________ **0000594** **0000595** (1) There is no familial relationship between any of the executive **0000596** officers. **0000597** **0000598** (2) Mr. Anderson served as Chairman of the Board and Chief **0000599** Executive Officer of American Environmental Technologies, Inc. **0000600** ("AET") from June, 1986, until AET's merger with and into the **0000601** Company in January, 1991 (the "Merger"). Since the Merger, **0000602** Mr. Anderson has served as Chairman of the Board and Chief **0000603** Executive Officer of the Company. In addition, for a period **0000604** in excess of five years, Mr. Anderson served as a general **0000605** partner of AnSon Partners Limited Partnership. Mark Helm **0000606** served as the President of the Company from April, 1995, until **0000607** his resignation in October, 1995. Upon Mr. Helm's resignation **0000608** from the Company, Mr. Anderson assumed the position of **0000609** President. **0000610** **0000611** (3) Mr. Baker was employed by the Company in January, 1995, and **0000612** was elected Vice President-Operations and Secretary of the **0000613** Company on June 8, 1995. From 1988 to January, 1995, **0000614** Mr. Baker served as the Western Regional Manager for Clean-Up **0000615** Transport, Inc. ("Clean-Up") and then for J. B. Hunt **0000616** Transport, Inc. following its acquisition of Clean-Up. Prior **0000617** to 1988, Mr. Baker was a driver trainer for American Resource **0000618** and Recovery, Inc. and owned and operated Baker Trucking **0000619** Company. **0000620** **0000621** **0000622** **0000623** PART II **0000624** **0000625** Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED **0000626** SECURITY HOLDER MATTERS **0000627** **0000628** As of February 24, 1994, the Company's common stock began **0000629** trading on the OTC Bulletin Board. Prior to that time the Company's **0000630** common stock was traded on the NASDAQ Small Cap Market. The **0000631** Company's common stock was removed from the NASDAQ Small Cap Market **0000632** as a result of the per share bid price of its common stock being **0000633** below the minimum required by NASDAQ. The following table gives the **0000634** range of inter-dealer bid and asked quotations during each calendar **0000635** quarter of 1995 and 1994, according to information supplied by a **0000636** market maker. These quotations are among dealers, do not include **0000637** markups, markdowns, or commissions, and may not represent actual **0000638** sales. **0000639** **0000640** **0000641**
**0000642** **0000643**
**0000644** BID ASKED **0000645** **0000646** High Low High Low **0000647** 1995 **0000648** **0000649** 1st Quarter $ .13 $ .06 $ .38 $ .13 **0000650** 2nd Quarter .40 .13 .75 .31 **0000651** 3rd Quarter .31 .13 .67 .25 **0000652** 4th Quarter .38 .13 .50 .25 **0000653** **0000654** 1994 **0000655** **0000656** 1st Quarter $ .34 $ .09 $ .56 $ .31 **0000657** 2nd Quarter .38 .19 .63 .31 **0000658** 3rd Quarter .38 .25 .63 .44 **0000659** 4th Quarter .38 .13 .63 .38 **0000660**
**0000661** **0000662** At April 9, 1996, there were 1,143 holders of record of the **0000663** Company's common stock, par value $.01. **0000664** **0000665** The Company did not declare a cash dividend on its common stock **0000666** in 1995 or 1994. It is anticipated that for the foreseeable future **0000667** any earnings which may be generated from the operations of the **0000668** Company will be used to finance its growth and that cash dividends **0000669** will not be paid to holders of the common stock of the Company. Any **0000670** decision by the Board of Directors of the Company to pay cash **0000671** dividends in the future will depend upon, among other factors, the **0000672** Company's earnings, financial condition and capital requirements. **0000673** **0000674** Pursuant to the terms of the loan agreement between ETS, the **0000675** principal operating subsidiary of the Company, and its lender, ETS **0000676** is prohibited from, among other things, (i) declaring and paying any **0000677** dividends, (ii) making any distributions on account of its stock, **0000678** (iii) making any loans to the Company, or (iv) invest in the **0000679** Company. Since the Company is a holding company, it is dependent **0000680** upon its subsidiaries to pay dividends and make distributions to the **0000681** Company before the Company is able to pay any dividends. **0000682** **0000683** **0000684** Item 6. SELECTED FINANCIAL DATA **0000685** **0000686**
**0000687** 1995 1994 1993 **0000688** ----------- ----------- ----------- **0000689** (In thousands except per share amounts) **0000690** **0000691** Revenues $ 17,650 $ 14,945 $ 14,377 **0000692** **0000693** Operating Earnings 11 573 878 **0000694** **0000695** Net Earnings (Loss) **0000696** Before change in **0000697** Accounting Principle (494) 80 (184) **0000698** **0000699** Net earnings (loss) $ (362) $ 80 $ (184) **0000700** **0000701** Earnings (Loss)Per **0000702** Common Share: **0000703** Net earnings (loss) **0000704** before change in **0000705** accounting principle $ (0.04) $ 0.01 $ (0.01) **0000706** Net earnings (loss) $ (0.03) $ 0.01 $ (0.01) **0000707** **0000708** Weighted Average Number **0000709** of Common Shares **0000710** Outstanding 13,735,203 13,655,901 13,585,191 **0000711** **0000712** Total Assets $ 16,726 $ 13,559 $ 11,887 **0000713** **0000714** Long-term Obligations **0000715** (excluding deferred **0000716** taxes) **0000717** Current portion 2,126 2,579 1,903 **0000718** Long-term portion 6,242 3,717 2,897 **0000719** **0000720** Cash Dividends **0000721** per Share $ - $ - $ - **0000722**
**0000723** **0000724** **0000725** **0000726**
**0000727** 1992 1991 **0000728** ----------- ----------- **0000729** (In thousands except **0000730** per share amounts) **0000731** **0000732** Revenues $ 15,918 $ 17,212 **0000733** **0000734** Operating Earnings 1,103 1,079 **0000735** **0000736** Net Earnings (Loss) **0000737** Before Change in **0000738** Accounting Principle 771 376 **0000739** **0000740** Net Earnings (Loss) 771 376 **0000741** **0000742** Earnings (Loss)Per **0000743** Common Share: **0000744** Net earnings (loss) **0000745** before change in **0000746** accounting principle $ 0.06 $ 0.03 **0000747** Net earnings (loss) $ 0.06 $ 0.03 **0000748** **0000749** Weighted Average Number **0000750** of Common Shares **0000751** Outstanding 13,647,567 13,666,108 **0000752** **0000753** Total Assets $ 12,424 $ 15,841 **0000754** **0000755** Long-term Obligations **0000756** (excluding deferred **0000757** taxes) **0000758** Current portion 2,034 1,643 **0000759** Long-term portion 3,242 3,755 **0000760** **0000761** Cash Dividends **0000762** per Share $ - $ - **0000763** **0000764**
**0000765** **0000766** **0000767** Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL **0000768** CONDITION AND RESULTS OF OPERATIONS **0000769** **0000770** The following Management's Discussion and Analysis should be **0000771** read in conjunction with a review of the Company's December 31, **0000772** 1995, Consolidated Financial Statements included elsewhere in this **0000773** Form 10-K. **0000774** **0000775** Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL **0000776** CONDITION AND RESULTS OF OPERATIONS **0000777** **0000778** The following Management's Discussion and Analysis should be **0000779** read in conjunction with a review of the Company's December 31, **0000780** 1995, Consolidated Financial Statements included elsewhere in this **0000781** Form 10-K. **0000782** **0000783** Results of Operations **0000784** Year Ended December 31, 1995 Compared to Year Ended December 31, **0000785** 1994. **0000786** **0000787** The net loss for 1995 was $362,000, as compared to net income **0000788** in 1994 of $80,000. This decrease was due primarily to a decrease **0000789** in the gross margin (revenues less operating costs) of $423,000, **0000790** increased general and administrative costs of $245,000 and higher **0000791** interest expense of $272,000. **0000792** **0000793** Total revenues were $17,650,000 and $14,945,000 for 1995 and **0000794** 1994, respectively, an increase of $2,705,000 or 18%. Revenues from **0000795** transportation and related activities increased $2,325,000 while **0000796** waste brokerage revenue decreased $160,000. Additionally, revenues **0000797** related to BMH Materials, Inc. ("BMH"), the Company's subsidiary **0000798** involved in the processing, brokering, and disposal of non-hazardous **0000799** waste in Florida increased $341,000 over 1994. BMH began operations **0000800** in May 1994. Other revenues consisting of site remediation and **0000801** training services increased from $174,000 in 1994 to $377,000 in **0000802** 1995, due to one remediation project. **0000803** **0000804** Transportation and related revenues were $16,751,000 and **0000805** $14,426,000 for 1995 and 1994, respectively; comprising 95% and 97% **0000806** of total revenues. This increase is primarily attributable to an **0000807** increase in transportation revenue of $2,398,000 resulting from the **0000808** purchase of additional tractors, the purchase of Dwight Trucking, **0000809** Inc.,("Dwight"), and the addition of tractors owned by **0000810** owner/operators. The Company's transportation fleet logged **0000811** 9,700,000 miles for 1995 as compared to 7,400,000 miles for 1994. **0000812** This increase in miles was partially offset by a decrease in the **0000813** running mile rate of $0.06. **0000814** **0000815** Waste brokerage revenue decreased $160,000 from 1994 to 1995 **0000816** as the Company continues to de-emphasize its brokerage business due **0000817** to the lower margins and the potential liability related to the **0000818** brokerage business. **0000819** **0000820** **0000821** Total operating costs increased from $10,082,000 in 1994 to **0000822** $13,210,000 in 1995. This translates to an increase of 7.3 **0000823** percentage points when expressed as a percentage of total revenue. **0000824** **0000825** Operating costs related to transportation services increased **0000826** $3,002,000 from 1994 to 1995. When expressed as a percentage of **0000827** transportation and related revenues, operating costs were 75% and **0000828** 66% of revenues for 1994 and 1995, respectively. This increase of **0000829** nine percentage points is primarily attributable to the lower **0000830** running mile rate as discussed earlier and to increased **0000831** owner/operator and trailer rental expenses. **0000832** **0000833** Operating costs for 1995 and 1994 related to waste brokerage **0000834** services were $8,000 and $133,000, respectively, a decrease of **0000835** $125,000, as a result of the Company de-emphasizing its brokerage **0000836** activity as discussed above. **0000837** **0000838** Operating costs related to the Company's non-hazardous waste **0000839** facility in Florida increased $167,000 from 1994 to 1995. This **0000840** facility began operations in May, 1994, and the increase is due **0000841** principally to such facility being in operation a full year for **0000842** 1995, as compared to seven months in 1994. **0000843** **0000844** Operating costs related to site remediation increased $218,000 **0000845** due to the project mentioned earlier. **0000846** **0000847** General and administrative expenses increased $245,000, from **0000848** 1994 to 1995 due primarily to increased travel and contract labor **0000849** expenses and also to the general and administrative expenses **0000850** incurred by Dwight. **0000851** **0000852** Other expense decreased $49,000 due primarily to lower **0000853** consulting fees. **0000854** **0000855** Depreciation expense decreased $106,000 from 1994 to 1995. **0000856** This decrease was due to increasing the useful life on tractors from **0000857** seven to ten years which decreased depreciation for 1995 by **0000858** $408,000. **0000859** **0000860** Interest expense increased $272,000 due to higher interest **0000861** rates and increased debt. **0000862** **0000863** Results of Operations **0000864** Year Ended December 31, 1994 Compared to Year Ended December 31, **0000865** 1993. **0000866** **0000867** The net income for 1994 was $80,000, as compared to a net loss **0000868** of $184,000 for 1993. This increase of $264,000 was largely attrib- **0000869** utable to a decrease in bad debt expense from 1993 to 1994 of **0000870** $595,000, partially offset by a decrease in the gross margin **0000871** (revenues less operating costs) of $208,000 from 1993 to 1994. **0000872** **0000873** **0000874** Total revenues were $14,945,000 and $14,377,000 for 1994 and **0000875** 1993, respectively, an increase of $568,000. Revenues from **0000876** transportation and related activities increased $997,000 while waste **0000877** brokerage revenue decreased $752,000. Additionally, revenues **0000878** related to BMH Materials, Inc. ("BMH"), the Company's subsidiary **0000879** involved in the processing, brokering, and disposal of non-hazardous **0000880** waste increased $176,000 over 1993. Other revenues consisting of **0000881** site remediation and training services increased from zero in 1993 **0000882** to $147,000 in 1994, due to one remediation project. **0000883** **0000884** Transportation and related revenues were $14,426,000 and **0000885** $13,429,000 for 1994 and 1993, respectively. These amounts **0000886** represent 97% and 93% of total revenues for 1994 and 1993. This **0000887** increase of $997,000 is attributable to 1) an increase in **0000888** transportation revenue of $322,000; 2) an increase in subcontract **0000889** and trip-leasing revenue of $518,000; and 3) an increase in other **0000890** accessorial revenues of $212,000. These increases were partially **0000891** offset by a decrease in roll-off box rental of $55,000. The **0000892** Company's transportation fleet logged 7,400,000 miles for 1994, as **0000893** compared to 7,200,000 for 1993. However, the running mile rate **0000894** decreased $.01 per mile, partially offsetting the increase in **0000895** volume. **0000896** **0000897** Waste brokerage revenue decreased $752,000 from 1993 to 1994 **0000898** as the Company continues to de-emphasize its brokerage business due **0000899** to the lower margins and the potential liability related to the **0000900** brokerage business. **0000901** **0000902** Total operating costs were $10,082,000 and $9,306,000 for 1994 **0000903** and 1993, respectively, an increase of $776,000 which translates to **0000904** an increase of 2.7 percentage points when expressed as a percentage **0000905** of sales. **0000906** **0000907** Operating costs related to transportation activities were **0000908** $9,573,000 in 1994 and $8,439,000 in 1993, an increase of **0000909** $1,134,000. These costs were 66.4% and 62.8% of transportation **0000910** revenues in 1994 and 1993, respectively. These costs increased due **0000911** to increased volume as well as higher operating costs. Some of the **0000912** higher operating costs include 1) drivers' wages; 2) repair and **0000913** maintenance costs; 3) owner/operator expenses; and 4) communications **0000914** costs. Additionally, transportation related operating costs were **0000915** higher in 1994 due to increased sub-contracting and trip-leasing **0000916** expenses. The Company anticipates that drivers' wages will continue **0000917** to increase, and it is unknown at this time whether such increased **0000918** cost can be offset by increases in transportation revenues. **0000919** **0000920** Operating costs for 1994 and 1993 related to waste brokerage **0000921** services were $133,0000 and $794,000, respectively, a decrease of **0000922** $661,000, as a result of the Company de-emphasizing its brokerage **0000923** activity as discussed above. **0000924** **0000925** **0000926** Operating costs related to BMH were $215,000 and $7,000 for **0000927** 1994 and 1993, respectively. This increase is primarily a result **0000928** of the opening of the Florida non-hazardous waste facility in 1994. **0000929** See "BUSINESS -- Environmental Business".. **0000930** **0000931** Operating costs related to site remediation and training **0000932** services were $193,000 and $68,000 for 1994 and 1993, respectively. **0000933** This increase was largely due to the one remediation project **0000934** mentioned earlier. **0000935** **0000936** General and administrative expenses decreased $19,000, from **0000937** $2,304,000 in 1993 to $2,285,000 in 1994. When expressed as a **0000938** percentage of sales, this results in a decrease of one percentage **0000939** point from 1993 to 1994. While general and administrative expenses **0000940** related to transportation activities actually decreased by $123,000, **0000941** this was offset by BMH's general and administrative costs which **0000942** increased in 1994 by $104,000, as a result of the start up of the **0000943** Florida non-hazardous waste facility. **0000944** **0000945** Other expense decreased $688,000 from 1993 to 1994 as shown in **0000946** the schedule below: **0000947** **0000948**
**0000949** Other (Income) Expense For **0000950** Years Ended December 31, **0000951** _____________________________ **0000952** 1994 1993 **0000953** __________ _________ **0000954** **0000955** Bad Debt Expense $ 37,000 $ 632,000 **0000956** Gain on Sale of Subsidiary (35,000) (26,000) **0000957** Interest Income (77,000) (111,000) **0000958** (Gain) Loss on Sale of Assets (96,000) (3,000) **0000959** Termination Costs 77,000 99,000 **0000960** Other 61,000 64,000 **0000961** __________ _________ **0000962** **0000963** $(33,000) $ 655,000 **0000964**
**0000965** **0000966** Bad debt expense was higher in 1993 than in 1994, due to the **0000967** write-off of the loans and accounts receivable related to Green **0000968** Alternatives, Inc. Additionally, the Company sold some older **0000969** tractors in 1994, resulting in a gain on sale of equipment of **0000970** approximately $96,000. **0000971** **0000972** Recently, several major waste management companies have **0000973** eliminated, or are in the process of eliminating, their trans- **0000974** portation operations. As a result, it is expected that those waste **0000975** management companies that have eliminated, or will eliminate, their **0000976** transportation operations will be employing the services of com- **0000977** panies, such as the Company, to transport their hazardous and non- **0000978** hazardous waste. The Company expects that such will have a favor- **0000979** **0000980** **0000981** able impact on the Company, but there are no assurances to that **0000982** effect. **0000983** **0000984** Subsequent Events **0000985** **0000986** In March, 1996, the Company's subsidiary, Environmental **0000987** Transportation Services, Inc. ("ETS"), began leasing from Sullivan **0000988** Trucking Company, Inc. ("Sullivan"), a certain number of hazardous **0000989** waste tractors and trailers and has begun to utilize such equipment **0000990** to transport waste for Sullivan's and ETS' customers. In connection **0000991** with such lease, ETS is to pay Sullivan approximately $35,000 a **0000992** month to lease from Sullivan such tractors and trailers and a **0000993** certain number of roll-off boxes. **0000994** **0000995** In connection with the transaction with Sullivan, the Company **0000996** has reached a tentative agreement to acquire from Sullivan its **0000997** customer list, good will, inventory, and other business aspects of **0000998** Sullivan's hazardous waste transportation business. The Company **0000999** believes that, in addition to the above-described lease arrangement, **0001000** the Company will pay Sullivan approximately 1.4 million shares of **0001001** the Company's common stock and will lease from Sullivan its **0001002** transportation terminal in Ponca City, Oklahoma, for a term of **0001003** approximately four (4) years at a rental of $3,800 per month. The **0001004** Company and Sullivan are in the process of finalizing definitive **0001005** agreements relating to these transactions. **0001006** **0001007** Liquidity and Capital Resources **0001008** **0001009** Working capital increased from $192,000 at December 31, 1994 **0001010** to $508,000 at December 31, 1995. This increase resulted primarily **0001011** from decreased current maturities of long-term debt but was **0001012** partially offset by cash used to fund certain capital expenditures **0001013** that were not financed through the Company's existing equipment **0001014** financing sources and to unprofitable operations. Additionally, **0001015** working capital increased due to an increase in prepaid expenses of **0001016** $200,000 related to capitalizing tires (see Note 3 of Notes to **0001017** Consolidated Financial Statements). **0001018** **0001019** In February 1996, the Company entered into a new credit **0001020** Agreement, (the "Agreement") with a new lender which provides for **0001021** a $3,000,000 line of credit for working capital purposes. This line **0001022** of credit 1) is collateralized by accounts receivable, deposit **0001023** accounts and certain intangible assets, 2) bears interest at the **0001024** prime rate published by The Chase Manhattan Bank, N.A. plus 1.875%, **0001025** and 3) provides for advances at 80% of eligible receivables. The **0001026** note is due February 6, 1998 and there are no financial covenants **0001027** associated with the Agreement. The interest on the note is payable **0001028** monthly and principal payments are made as accounts receivable are **0001029** collected. At December 31, 1995 and 1994, the Company had borrowed **0001030** $1,549,000 and $1,559,000, respectively, under the former credit **0001031** line. At April 10, 1996, the Company had borrowed $2,206,000 under **0001032** the new line and had $96,000 of unused available borrowing capacity. **0001033** **0001034** **0001035** In March 1995, the Company entered into a third amended **0001036** agreement with an equipment lender which was made a part of an **0001037** existing agreement between the Company and this lender. Under the **0001038** original agreement, the Company had refinanced a majority of its **0001039** transportation equipment with this lender in September 1993. The **0001040** third amended agreement provides for additional equipment financing **0001041** for up to approximately $2,200,000 of equipment purchases. The **0001042** terms under this third amendment are substantially the same as those **0001043** contained in the original agreement. At December 31, 1995, the **0001044** Company had borrowed $1,846,000 under this agreement. At **0001045** December 31, 1995, the Company was not in compliance with certain loan **0001046** covenants contained in the loan agreement. The Company has since **0001047** renegotiated the loan covenants to accommodate the lower earnings **0001048** expected in 1996 and is now in compliance with the loan covenants. **0001049** Additionally, the lender has increased the interest rate by one percentage **0001050** point. In 1996, The Company paid only the interest portion of the February **0001051** and March loan payments due to a temporary cash flow shortage. The lender **0001052** has agreed to let the Company pay the February and March principal payments **0001053** in September and October 1996. **0001054** **0001055** The Company made capital expenditures of $2,803,000 in 1995, **0001056** which consisted primarily of transportation equipment. Additionally **0001057** the Company purchased Dwight and certain assets of SST which **0001058** required expenditures of $1,626,000 (net of cash acquired). **0001059** **0001060** Effective July 20, 1995, the Company, wholly-owned **0001061** transportation subsidiary, Environmental Transportation Services, **0001062** Inc. ("ETS"), purchased from Smith Systems Transportation, Inc. **0001063** ("SST"), certain of SST's transportation-related assets, which **0001064** consisted primarily of assets comprising the hazardous waste **0001065** transportation activities of SST. The Company paid approximately **0001066** $519,000 for such assets, with approximately $495,000 borrowed by **0001067** the Company under its equipment line of credit and the balance paid **0001068** from working capital. In addition, ETS agreed that for a period of **0001069** three years from July 20, 1995, to pay SST an amount equal to 4% of **0001070** the net revenues collected and received by ETS from certain of SST's **0001071** existing customers at the time of such acquisition, with certain **0001072** limited exceptions, which will be paid from ETS' working capital. **0001073** ETS did not assume any of the debts, obligations or liabilities of **0001074** SST in connection with the acquisition of the assets. ETS leased **0001075** a terminal previously utilized by SST, located in Denver, Colorado. **0001076** **0001077** On August 17, 1995, ETS, the Company's wholly-owned **0001078** transportation subsidiary, acquired all of the outstanding capital **0001079** stock of Dwight, located in Bakersfield, California. Dwight is a **0001080** hazardous waste transporter. Although the transaction was **0001081** consummated on August 17, 1995 (the "Closing Date"), the parties **0001082** agreed that for all purposes the transaction was to be deemed **0001083** effective as of July 1, 1995 ("Effective Date"). The purchase price **0001084** for the stock of Dwight was approximately $1,272,029 ("Purchase **0001085** price"), which consisted of (i) $973,000, (ii) approximately **0001086** **0001087** **0001088** $160,657, which represented the aggregate amount of cash held by **0001089** Dwight as of the closing, less cash (a) relating to services **0001090** rendered or performed by Dwight on or after July 1, 1995, and (b) **0001091** which constitutes deposits for future services, trust funds, escrow **0001092** accounts or which is owned by parties other than Dwight, (iii) **0001093** approximately $108,244, which represented an amount equal to **0001094** ordinary and necessary business expenses of Dwight paid by Dwight **0001095** from July 1, 1995, to the closing, (iv) $55,229, which represented **0001096** an amount equal to the outstanding receivables of Dwight as of **0001097** June 30, 1995, not collected as of the Closing Date (the **0001098** "Receivables"), less (v) the liabilities of Dwight set forth on **0001099** Dwight's balance sheet, dated June 30, 1995. At the Closing Date **0001100** the Company paid approximately $1,216,800 of the Purchase Price, **0001101** with approximately $160,651 being from cash held by Dwight, $233,144 **0001102** from working capital and the balance through borrowings under the **0001103** Company's equipment line of credit. Approximately $55,229 of the **0001104** Purchase Price, being an amount equal to the Receivables, is to be **0001105** paid in installments on or before the fifth business day of each **0001106** month following the Closing Date. The amount of each installment **0001107** shall be equal to the Receivables actually collected, in good funds, **0001108** after the Closing Date by Dwight during the previous month. If any **0001109** Receivables have not been collected by July 31, 1996, Dwight is to **0001110** assign, without recourse and any representations or warranties, the **0001111** unpaid Receivables in full satisfaction of the Company's obligation **0001112** to pay the balance of the Purchase Price. In addition, the Company **0001113** leased from the sellers of the stock of Dwight the transportation **0001114** terminal located in Bakersfield, California, for a period of five **0001115** years, at a rental of $2,900 per month, with an option to extend for **0001116** another five-year term at a rental of $2,900 per month adjusted for **0001117** cumulative increase in the consumer price index for the Southern **0001118** California Region form commencement of the initial five-year lease **0001119** term. **0001120** **0001121** In February 1996, Carl Anderson, Jr., CEO and acting President, **0001122** loaned the Company $195,000 bearing interest at 10% per annum. The **0001123** loan is payable upon demand and the interest is payable monthly. **0001124** The loan was for the Company's working capital purposes and is **0001125** unsecured. The current outstanding balance on the loan is $195,000. **0001126** **0001127** In order to generate additional liquidity, the Company is **0001128** attempting to sell certain assets. With its present working capital **0001129** line of credit and the anticipated proceeds resulting from the sale **0001130** of certain assets, together with the collection of its receivables **0001131** and expected income tax refund, the Company believes that it will **0001132** be able to meet its presently foreseeable working capital **0001133** requirements. This is a forward-looking statement and involves a **0001134** number of uncertainties that could cause actual results regarding **0001135** the Company's ability to meet its presently foreseeable working **0001136** capital requirements to differ materially, including, but not **0001137** limited to, the inability of the Company to sell such assets, the **0001138** Company not being able to return to profitability in 1996 or its **0001139** revenues materially decreasing from that anticipated in 1996, the **0001140** **0001141** **0001142** Company's inability to generate sufficient eligible receivables in **0001143** order to fully utilize its present working capital line of credit, **0001144** a material amount of receivables are not collected when anticipated **0001145** and/or the Company does not receive the tax refund as expected. **0001146** **0001147** Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA **0001148** **0001149** The Company has included the financial statements and **0001150** supplementary financial information required by this item **0001151** immediately following Part IV of this report and hereby incorporates **0001152** by reference the relevant portions of those statements and **0001153** information into this Item 8. **0001154** **0001155** **0001156** Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON **0001157** ACCOUNTING AND FINANCIAL DISCLOSURE. **0001158** **0001159** Not applicable. **0001160** **0001161** **0001162** PART III **0001163** **0001164** Item 10. DIRECTORS AND EXECUTIVE OFFICERS **0001165** **0001166** Directors. **0001167** **0001168** The Certificate of Incorporation of the Company provides that **0001169** the number of directors shall be as set forth in the Bylaws, and the **0001170** Bylaws provide for no less than four (4) nor more than nine (9) **0001171** directors. Pursuant to the Bylaws, the Board of Directors has set **0001172** the number of directors at four (4). Each director serves for a **0001173** term of one (1) year or until their respective successors are duly **0001174** elected and qualified. **0001175** **0001176** **0001177**
**0001178** **0001179** Name Age Position **0001180** - ----------------------- --- ---------------------- **0001181** **0001182** **0001183** Carl B. Anderson, Jr.(1) 74 Chairman of the **0001184** Board, President **0001185** and Chief Executive **0001186** Officer **0001187** **0001188** James E. Brown(2) 44 Director **0001189** **0001190** Jay T. Edwards(3) 64 Director **0001191** **0001192** Allen G. Poppino(4) 70 Director **0001193** **0001194** ___________ **0001195** **0001196** **0001197** (1) Mr. Anderson has served as Chairman of the Board and Chief **0001198** Executive Officer of the Company since January, 1991. See **0001199** "Executive Officers of the Company" and footnote (1) **0001200** thereunder for a discussion as to Mr. Anderson. **0001201** **0001202** (2) Mr. Brown served as director of the Company from 1986 to **0001203** August, 1990, whereupon he resigned to avoid a conflict of **0001204** interest relative to the merger of AET with and into the **0001205** Company. He was reelected to the Board in January, 1991, upon **0001206** consummation of such merger. Mr. Brown is currently the Vice **0001207** President of Finance for AnSon Gas Corporation, where he has **0001208** been employed since 1982. **0001209** **0001210** (3) In November, 1993, General Edwards became the General **0001211** Administrator of the Oklahoma Corporation Commission. Prior **0001212** to taking this position, he was a senior management consultant **0001213** for Tennessee Associates, specializing in total quality **0001214** management programs from April, 1991, to November, 1993. From **0001215** January, 1986, to April, 1991, he served as President of CMI **0001216** Corporation, a publicly held manufacturer of road construction **0001217** equipment. Prior to January, 1986, General Edwards served as **0001218** Executive Director of the University of Oklahoma Energy Center **0001219** and as Commander of the United States Air Force Air Logistics **0001220** Center in Oklahoma City. He is a retired Air Force Major **0001221** General. **0001222** **0001223** (4) Mr. Poppino, currently is a consultant to The Benham Group and **0001224** is President and Chief Executive Officer of Poppino, Inc. **0001225** Mr. Poppino was formerly Vice Chairman of the Board of **0001226** Directors of the Benham Companies, where he was employed **0001227** (including its predecessors) from 1951 to 1990. **0001228** **0001229**
**0001230** Family Relationships. There are no family relationships **0001231** between the members of the Board of Directors of the Company. **0001232** **0001233** Compliance with Section 16(a) of the Exchange Act. Based **0001234** solely on review of copies of the Forms 3, 4 and 5 and amendments **0001235** thereto furnished to the Company with respect to 1995, or written **0001236** representations that no such reports were required to be filed with **0001237** the Securities and Exchange Commission, the Company believes that **0001238** during 1995 all directors and officers of the Company and beneficial **0001239** owners of more than ten percent (10%) of any class of equity **0001240** securities of the Company registered pursuant to Section 12 of the **0001241** Securities Exchange Act of 1934 (the "Exchange Act") filed timely **0001242** all Forms 3, 4, or 5, as required by Section 16(a) of the Exchange **0001243** Act, except (i) Jay T. Edwards filed one late Form 3 to report his **0001244** election to the Company's Board of Directors, and (ii) Mark Helm and **0001245** Craig Schroder each filed one late Form 3 to report their election **0001246** as officers of the Company. **0001247** **0001248** Item 11. EXECUTIVE COMPENSATION **0001249** **0001250** The following table shows the aggregate cash compensation which **0001251** the Company and its subsidiaries paid or accrued to the Chief **0001252** Executive Officer of the Company. None of the four most highly paid **0001253** executive officers of the Company received total compensation, **0001254** including salary and bonus, for the last completed fiscal year in **0001255** excess of $100,000. The table below includes cash distributed for **0001256** services rendered during 1995, plus any cash distributed during 1995 **0001257** for services rendered in a prior year, plus amounts deferred at the **0001258** election of the named executive officer, less any amount relating **0001259** to those services previously included in the cash compensation table **0001260** for a prior year. **0001261** **0001262** **0001263** **0001264**
**0001265** Annual Compensation **0001266** ---------------------------------- **0001267** **0001268** **0001269** Other Annual **0001270** Name and Salary Bonus Compensation **0001271** Principal Position Year ($) ($) ($) **0001272** - ------------------ ---- ------- ----- ------------- **0001273** **0001274** Carl B. Anderson 1995(1) 12,000(1) - 3,000(1) **0001275** Chairman of the 1994(1) 12,000(1) - - **0001276** Board, President 1993(1) 13,330(1) - - **0001277** and Chief Executive **0001278** Officer **0001279** **0001280** Mark Helm(2) 1995 30,750 **0001281** President **0001282** **0001283** **0001284** Long-term **0001285** Compensation **0001286** Awards **0001287** - ------------- **0001288** All Other **0001289** Stock Options Compensation ($) **0001290** - ------------- ---------------- **0001291** **0001292** - - **0001293** - - **0001294** - - **0001295** **0001296** ______________ **0001297** **0001298** **0001299** (1) The amount shown represents the compensation paid to **0001300** Mr. Anderson in his capacity as Chairman of the Board. The **0001301** Company does not compensate Mr. Anderson for his service as **0001302** CEO and President. In addition, beginning July, 1995, **0001303** Mr. Anderson received a monthly automobile allowance of **0001304** $500.00. **0001305** **0001306** (2) Mr. Helm served as President of the Company from April, 1995, **0001307** until his resignation in October, 1995. During his tenure, **0001308** Mr. Helm performed many of the same functions as a chief **0001309** executive officer, and, therefore, is included in the Summary **0001310** Compensation Table. **0001311** **0001312**
**0001313** **0001314** 401-K. The Company has adopted an Employee Savings Plan ("401- **0001315** K Plan") for its employees of the Company and its subsidiaries, with **0001316** certain exceptions. The 401-K Plan provides for employee **0001317** contribution, and further provides the Company may, in the Company's **0001318** sole discretion, contribute to the 401-K Plan matching contributions **0001319** in an amount determined by the Company. Under the 401-K Plan the **0001320** Company may choose not to make matching contributions. For an **0001321** employee to be eligible to participate under the 401-K Plan, the **0001322** employee must complete six months of service, attain the age of 21 **0001323** years and enter into a written salary reduction agreement with the **0001324** Company. An employee may not contribute more than 15% of his annual **0001325** compensation into the 401-K Plan. If the Company, in its sole **0001326** discretion, decides to make any matching contribution in a **0001327** particular year, such match will be allocated only to employee **0001328** participants who make a salary reduction contribution to the 401-K **0001329** Plan of at least 5% of their compensation during the plan year based **0001330** on a formula set forth in the 401-K Plan. The employee partici- **0001331** pants' contributions to the 401-K Plan are 100% vested when made, **0001332** and any match made by the Company becomes 100% vested when **0001333** allocated. The employee participant may, at his election, allocate **0001334** his contribution and the contributions of the Company among one or **0001335** more of four (4) investment alternatives, including the Company **0001336** common stock. The Company did not make matching contributions to **0001337** the 401-K Plan during 1995. **0001338** **0001339** Compensation Pursuant to Stock Option Plans. The Company has **0001340** adopted an incentive stock option plan (the "Plan") in order to **0001341** attract, retain and motivate, and to encourage stock ownership by **0001342** key employees and officers of the Company and its subsidiaries. A **0001343** Stock Option Committee of the Board of Directors administers the **0001344** Plan and selects the officers and employees to whom options may be **0001345** granted and determines the number of shares to be governed by each. **0001346** None of the executive officers of the Company named in the above **0001347** Summary Compensation Table were granted options in 1995. **0001348** **0001349** The total number of shares of Company common stock for which **0001350** options may be granted under the Plan shall be 400,000 shares, less **0001351** the number of shares subject to options outstanding as of October 3, **0001352** 1989, and granted on or after June 12, 1980, and prior to October 3, **0001353** 1989, under the stock option plan then in effect. In the event that **0001354** options granted under the Plan, or options outstanding on October 3, **0001355** 1989, under the predecessor to the Plan, shall lapse without being **0001356** exercised in whole or in part, other options may be granted covering **0001357** the shares not purchased under such lapsed options. The aggregate **0001358** fair market value of shares as of the date of the grant with respect **0001359** to which options are exercisable for the first time may not exceed **0001360** $100,000. The exercise price of each option granted under the Plan **0001361** may not be less than 100% of the fair market value of the common **0001362** stock on the date of the grant (110% in the case of options granted **0001363** to employees owning more than 10% of common stock of the Company). **0001364** Each option granted under the Plan will not be exercisable more than **0001365** 5 years from the date the option is granted. **0001366** **0001367** **0001368** In addition, the Company has adopted a stock option plan for **0001369** non-employee directors of the Company ("Non-Employee Director **0001370** Plan"). Under the Non-Employee Director Plan the Company may grant **0001371** options to non-employee directors of the Company to purchase up to **0001372** 100,000 shares of the Company's common stock. The maximum aggregate **0001373** number of shares of Company common stock which may be subject to **0001374** options granted under the Non-Employee Director Plan to any one non- **0001375** employee director may not exceed 20,000 shares. Any option granted **0001376** under the Non-Employee Director Plan may not exceed a term of five **0001377** (5) years and the exercise price of such option may not be less than **0001378** the fair market value of the Company's common stock on the date of **0001379** the grant. Under the Non-Employee Director Plan, a Stock Option **0001380** Committee of the Board of Directors supervises the administration **0001381** of such plan and determines the number of shares to be subject to **0001382** each option granted under the Non-Employee Director Plan. No **0001383** options were granted under the Non-Employee Director Plan in 1995. **0001384** **0001385** Compensation of Directors. In 1995, the Company compensated **0001386** the non-employee directors of the Company in the amount of $500.00 **0001387** for each meeting of the Board of Directors attended, and compensated **0001388** Mr. Anderson $1,000.00 per month for his services as Chairman of the **0001389** Board. Directors that also are employees of the Company or its sub- **0001390** sidiaries are not paid for serving as a director. The Board of **0001391** Directors held five (5) meetings during 1995. **0001392** **0001393** Compensation Committee Interlocks and Insider Participation. **0001394** The compensation of all officers of the Company is set by the Board **0001395** of Directors. As noted, Carl B. Anderson, Jr. is both a director **0001396** and an officer of the Company. **0001397** **0001398** Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS **0001399** **0001400** The following persons or entities are known to the Company to **0001401** be beneficial owners of more than 5% of the Company's common stock **0001402** as of April 9, 1996. Due to the requirements of the Securities and **0001403** Exchange Commission as to the method of determining the amount of **0001404** shares an individual or entity may beneficially own, the amounts **0001405** shown below for an individual or entity may also include shares also **0001406** considered beneficially owned by others. **0001407** **0001408** **0001409** **0001410**
**0001411** Amount and Nature of Beneficial Ownership(1) **0001412** **0001413** Shared **0001414** Name and Sole Voting Voting **0001415** Title Address of and and Percent **0001416** of Beneficial Investment Investment of **0001417** Class Owner Owner Power Class **0001418** - ------ ----------------- ------------ ---------- -------- **0001419** **0001420** Common Moorpark Holdings, 10,367,122(2) (2) 75.9% **0001421** Inc. **0001422** ______________ **0001423** **0001424** **0001425** (1) Information with respect to beneficial ownership is based on **0001426** information furnished by the named entity or contained in **0001427** filings made with the Securities and Exchange Commission by **0001428** such entity. **0001429** **0001430** (2) The Schedule 13D filed by this group shows Moorpark Holdings, **0001431** Inc., a Delaware corporation ("Moorpark"), owns of record and **0001432** has sole voting and dispositive power of the 10,367,122 shares **0001433** of Company common stock. However, the Schedule 13D further **0001434** notes that Moorpark is a wholly-owned subsidiary of **0001435** Continental Bank, National Association ("Continental Bank"). **0001436** Continental Bank is a wholly-owned subsidiary of Bank of **0001437** America of Illinois. As a result, Bank of America of Illinois **0001438** may be considered to have voting and dispositive power over **0001439** the 10,367,122 shares owned of record by Moorpark. The **0001440** address of Moorpark Holdings, Inc. and Bank of America of **0001441** Illinois is 231 South LaSalle Street, Chicago, Illinois **0001442** 60697. **0001443** **0001444**
**0001445** Security Ownership of Directors and Executive Officers. The **0001446** following table sets forth the number and percentage of the **0001447** outstanding shares of the Company's common stock beneficially owned **0001448** by each current director, each of the officers named in the "Summary **0001449** Compensation Table" and by all directors and officers as a group as **0001450** of April 9, 1996. Because of the requirements of the Securities and **0001451** Exchange Commission as to the method of determining the amount of **0001452** shares an individual or entity may beneficially own, the amounts **0001453** shown below for an individual or entity may include shares also **0001454** considered beneficially owned by others. **0001455** **0001456** **0001457** **0001458**
**0001459** Amount and Nature **0001460** Name of of Amount **0001461** Individual Beneficial Ownership of Class(1) **0001462** -------------------- -------------------- ---------- **0001463** **0001464** Carl B. Anderson, Jr.(2) 572,433 (2) 4.2% **0001465** **0001466** James E. Brown(3) 196,815 (3) 1.4% **0001467** **0001468** Jay T. Edwards(4) - * **0001469** **0001470** Allen G. Poppino(5) 56,000 (5) * **0001471** **0001472** Officers and directors 829,248(6) 6.0% **0001473** as a group (6 persons) **0001474** **0001475** ______________ **0001476** **0001477** **0001478** (1) Percent of Class is rounded to the nearest one-tenth. Any **0001479** shares which an individual has a right to acquire within sixty **0001480** (60) days after the record date are considered to be **0001481** outstanding for purposes of computing such individual's **0001482** percentage of shares beneficially owned and the percentage **0001483** ownership of officers and directors as a group. No percentage **0001484** (*) is indicated if less than one percent. **0001485** **0001486** (2) Mr. Anderson's address is 1813 Southeast 25th Street, Oklahoma **0001487** City, Oklahoma 73128. The amount shown includes 571,433 **0001488** shares for which Mr. Anderson has sole voting and investment **0001489** power and 1,000 shares owned by his wife. **0001490** **0001491** (3) Mr. Brown's address is 3814 North Santa Fe, Oklahoma City, **0001492** Oklahoma 73118. Mr. Brown shares voting and investment power **0001493** over 188,815 shares held by Santa Fe Investment Company, which **0001494** is wholly owned by Mr. Brown. The amount shown includes 8,000 **0001495** shares held by Mr. Brown as custodian for his children. **0001496** **0001497** (4) General Edwards' address is 2101 North Lincoln Boulevard, Room **0001498** 311, Oklahoma City, Oklahoma 73105. **0001499** **0001500** (5) Mr. Poppino's address is 9400 North Broadway, Post Office Box **0001501** 20400, Oklahoma City, Oklahoma 73156-0400. Mr. Poppino has **0001502** sole voting and investment power over the shares noted as **0001503** beneficially owned by him. **0001504** **0001505** (6) The amount shown includes 4,000 shares of common stock that **0001506** officers and directors of the Company have the right to **0001507** acquire within sixty (60) days. **0001508** **0001509**
**0001510** **0001511** Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS **0001512** **0001513** During the Company's course of business, the Company purchased **0001514** 20 roll-off boxes in 1995 at an aggregate purchase price of $120,844 **0001515** from 5-Star Fabrication, Inc. ("5-Star"). In addition, the Company **0001516** utilizes the services of 5-Star in the repair of the Company's roll-off **0001517** boxes. Mr. Anderson is the owner of approximately 50% of 5-Star. The **0001518** The Company believes that its transactions with 5-Star are on a basis **0001519** which is favorable to the Company. **0001520** **0001521** In February 1996, Carl Anderson, Jr., CEO and acting President, **0001522** loaned the Company $195,000 bearing interest at 10% per annum. The **0001523** loan is payable upon demand and the interest is payable monthly. **0001524** The loan was for the Company's working capital purposes and is **0001525** unsecured. The current outstanding balance on the loan is $195,000. **0001526** **0001527** PART IV **0001528** **0001529** Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON **0001530** FORM 8-K **0001531** **0001532** (a)(1) Financial Statements. The following consolidated **0001533** financial statements of the Company appear immediately following **0001534** this Part IV: **0001535** **0001536**
**0001537** **0001538** Pages **0001539** _____ **0001540** **0001541** AMETECH, Inc. **0001542** Auditors' Report - 1995, 1994, and 1993............. 29 **0001543** Balance Sheets, December 31, 1995 and 1994.......... 30 **0001544** Statements of Operations, Years ended December 31, **0001545** 1995, 1994, and 1993........................... 32 **0001546** Statements of Stockholders' Equity, Years ended **0001547** December 31, 1995, 1994, and 1993............... 34 **0001548** Statements of Cash Flows, Years ended December 31, **0001549** 1995, 1994 and 1993............................. 36 **0001550** Notes to Financial Statements........................ 38 **0001551** **0001552**
**0001553** **0001554** **0001555** Report of Independent Certified Public Accountants **0001556** **0001557** **0001558** **0001559** Board of Directors **0001560** AMETECH, Inc. **0001561** **0001562** We have audited the accompanying consolidated balance sheets of **0001563** AMETECH, Inc. (an Oklahoma corporation) and subsidiaries, as of **0001564** December 31, 1995 and 1994, and the related consolidated statements **0001565** of operations, stockholders' equity, and cash flows for each of the **0001566** three years in the period ended December 31, 1995. These financial **0001567** statements are the responsibility of the Company's management. Our **0001568** responsibility is to express an opinion on these financial **0001569** statements based on our audits. **0001570** **0001571** We conducted our audits in accordance with generally accepted **0001572** auditing standards. Those standards require that we plan and **0001573** perform the audit to obtain reasonable assurance about whether the **0001574** financial statements are free of material misstatement. An audit **0001575** includes examining, on a test basis, evidence supporting the amounts **0001576** and disclosures in the financial statements. An audit also includes **0001577** assessing the accounting principles used and significant estimates **0001578** made by management, as well as evaluating the overall financial **0001579** statement presentation. We believe that our audits provide a **0001580** reasonable basis for our opinion. **0001581** **0001582** In our opinion, the financial statements referred to above present **0001583** fairly, in all material respects, the consolidated financial **0001584** position of AMETECH, Inc. and subsidiaries, as of December 31, 1995 **0001585** and 1994, and the consolidated results of their operations and their **0001586** consolidated cash flows for each of the three years in the period **0001587** ended December 31, 1995 in conformity with generally accepted **0001588** accounting principles. **0001589** **0001590** As discussed in Note 3 to the consolidated financial statements, the **0001591** Company changed its method of accounting for tires in service in **0001592** 1995. **0001593** **0001594** **0001595** **0001596** **0001597** GRANT THORNTON LLP **0001598** **0001599** Oklahoma City, Oklahoma **0001600** February 9, 1996 (except for the penultimate paragraph of Note 6, **0001601** as to which the date is April 12, 1996) **0001602** **0001603** **0001604** **0001605**
**0001606** AMETECH, INC. AND SUBSIDIARIES **0001607** **0001608** CONSOLIDATED BALANCE SHEETS **0001609** **0001610** **0001611** December 31, **0001612** ________________________ **0001613** 1995 1994 **0001614** ________ ________ **0001615** **0001616** ASSETS **0001617** **0001618** CURRENT ASSETS: **0001619** Cash and cash equivalents $ 74,000 $ 45,000 **0001620** Accounts receivable 3,538,000 3,420,000 **0001621** Prepaid expenses 429,000 144,000 **0001622** Other 646,000 245,000 **0001623** ___________ ___________ **0001624** Total Current Assets 4,687,000 3,854,000 **0001625** ___________ ___________ **0001626** **0001627** PROPERTY AND EQUIPMENT, at cost, **0001628** net of accumulated depreciation **0001629** of $9,742,000 and $8,203,000 **0001630** at December 31, 1995 and 1994, **0001631** respectively: **0001632** Transportation equipment 9,479,000 7,446,000 **0001633** Buildings and other 2,061,000 1,995,000 **0001634** ___________ ___________ **0001635** 11,540,000 9,441,000 **0001636** ___________ ___________ **0001637** **0001638** OTHER ASSETS, net of accumulated **0001639** amortization of $325,000 and **0001640** $263,000 at December 31, 1995 **0001641** and 1994, respectively 499,000 264,000 **0001642** ___________ ___________ **0001643** **0001644** **0001645** $16,726,000 $13,559,000 **0001646** =========== =========== **0001647**
**0001648** **0001649** **0001650** **0001651** **0001652** **0001653** The accompanying notes are an integral part **0001654** of these financial statements. **0001655** **0001656** **0001657** **0001658**
**0001659** **0001660** December 31, **0001661** _________________________ **0001662** 1995 1994 **0001663** ___________ ___________ **0001664** **0001665** LIABILITIES AND STOCKHOLDERS' EQUITY **0001666** **0001667** **0001668** CURRENT LIABILITIES: **0001669** Accounts payable and accrued **0001670** liabilities $ 2,053,000 $ 1,083,000 **0001671** Current maturities of long-term **0001672** obligations 2,126,000 2,579,000 **0001673** ___________ ___________ **0001674** Total Current Liabilities 4,179,000 3,662,000 **0001675** ___________ ___________ **0001676** **0001677** DEFERRED INCOME TAXES 1,365,000 894,000 **0001678** ___________ ___________ **0001679** **0001680** LONG-TERM OBLIGATIONS, net of current **0001681** maturities 6,242,000 3,717,000 **0001682** ___________ __________ **0001683** **0001684** STOCKHOLDERS' EQUITY: **0001685** Common stock of $.01 par value; **0001686** 13,874,206 and 13,806,382 **0001687** shares issued at December 31, **0001688** 1995 and 1994, respectively. 139,000 138,000 **0001689** Additional paid-in capital 2,985,000 2,970,000 **0001690** Retained earnings 1,925,000 2,287,000 **0001691** ___________ _________ **0001692** 5,049,000 5,395,000 **0001693** **0001694** Less - Treasury Stock (115,000 shares at **0001695** December 31, 1995 and 1994), at cost 109,000 109,000 **0001696** ___________ ___________ **0001697** Total Stockholders' Equity 4,940,000 5,286,000 **0001698** ___________ __________ **0001699** **0001700** $16,726,000 $13,559,000 **0001701** =========== =========== **0001702**
**0001703** The accompanying notes are an integral part **0001704** of these financial statements. **0001705** **0001706** **0001707** **0001708**
**0001709** AMETECH, INC. AND SUBSIDIARIES **0001710** **0001711** CONSOLIDATED STATEMENTS OF OPERATIONS **0001712** **0001713** Years Ended December 31, **0001714** _______________________________________ **0001715** 1995 1994 1993 **0001716** ___________ ___________ ___________ **0001717** **0001718** **0001719** REVENUES $17,650,000 $14,945,000 $14,377,000 **0001720** ___________ ___________ ___________ **0001721** **0001722** COSTS AND EXPENSES: **0001723** Operating costs 13,210,000 10,082,000 9,306,000 **0001724** General and administrative **0001725** expense 2,530,000 2,285,000 2,304,000 **0001726** Depreciation and **0001727** amortization 1,899,000 2,005,000 1,889,000 **0001728** Interest expense 725,000 453,000 434,000 **0001729** Other expense (income), net (82,000) (33,000) 655,000 **0001730** ___________ ___________ ___________ **0001731** 18,282,000 14,792,000 14,588,000 **0001732** ___________ ___________ ___________ **0001733** **0001734** EARNINGS (LOSS) BEFORE INCOME **0001735** TAXES AND CUMULATIVE EFFECT **0001736** OF CHANGE IN ACCOUNTING **0001737** METHOD (632,000) 153,000 (211,000) **0001738** ____________ __________ __________ **0001739** **0001740** INCOME TAX EXPENSE (BENEFIT): **0001741** Current (288,000) 68,000 (93,000) **0001742** Deferred 150,000 5,000 62,000 **0001743** ____________ ___________ __________ **0001744** (138,000) 73,000 (31,000) **0001745** ____________ ___________ __________ **0001746** **0001747** EARNINGS (LOSS)BEFORE CUMU- **0001748** LATIVE EFFECT OF CHANGE **0001749** IN ACCOUNTING METHOD (494,000) 80,000 (180,000) **0001750** **0001751** CUMULATIVE EFFECT OF CHANGE **0001752** IN ACCOUNTING METHOD 132,000 - (4,000) **0001753** ____________ ___________ __________ **0001754** **0001755** NET EARNINGS (LOSS) $ (362,000) $ 80,000 $(184,000) **0001756** ============ ============ ========= **0001757**
**0001758** The accompanying notes are an integral part **0001759** of these financial statements. **0001760** **0001761** **0001762** **0001763**
**0001764** AMETECH, INC. AND SUBSIDIARIES **0001765** **0001766** CONSOLIDATED STATEMENTS OF OPERATIONS **0001767** **0001768** (CONTINUED) **0001769** **0001770** Years Ended December 31, **0001771** _______________________________________ **0001772** 1995 1994 1993 **0001773** ___________ ___________ ___________ **0001774** **0001775** EARNINGS (LOSS) PER **0001776** COMMON SHARE: **0001777** Earnings (loss) before **0001778** cumulative effect of **0001779** change in accounting **0001780** method $ (0.04) $ 0.01 $ (0.01) **0001781** Cumulative effect of **0001782** change in accounting **0001783** method 0.01 0.00 0.00 **0001784** ___________ ___________ ___________ **0001785** Earnings (loss) **0001786** per common share $ (0.03) $ 0.01 $ (0.01) **0001787** =========== =========== =========== **0001788** Weighted average shares **0001789** outstanding 13,735,203 13,655,901 13,585,191 **0001790** =========== =========== =========== **0001791** **0001792** PRO FORMA AMOUNTS ASSUMING **0001793** RETROACTIVE APPLICATION OF **0001794** THE ACCOUNTING CHANGE **0001795** Earnings (loss) before **0001796** accounting change $ (494,000) $ 105,000 $ (169,000) **0001797** ============ =========== ============ **0001798** Earnings (loss) per **0001799** share before **0001800** accounting change $ (0.04) $ 0.01 $ (0.01) **0001801** ============ =========== ============ **0001802**
**0001803** **0001804** **0001805** **0001806** **0001807** **0001808** **0001809** **0001810** **0001811** **0001812** **0001813** **0001814** The accompanying notes are an integral part **0001815** of these financial statements. **0001816** **0001817** **0001818** **0001819**
**0001820** AMETECH, INC. AND SUBSIDIARIES **0001821** **0001822** CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY **0001823** **0001824** Additional **0001825** Common Paid-in Retained **0001826** Stock Capital Earnings **0001827** ___________ ___________ ___________ **0001828** **0001829** **0001830** Balance at January 1, 1993 $ 137,000 $ 2,919,000 $ 2,391,000 **0001831** Net loss - - (184,000) **0001832** **0001833** Sale of 53,444 shares of **0001834** common stock - 30,000 - **0001835** ___________ ___________ ___________ **0001836** **0001837** Balance at December 31, 1993 137,000 2,949,000 2,207,000 **0001838** Net earnings - - 80,000 **0001839** **0001840** Sale of 76,662 shares of **0001841** common stock 1,000 21,000 - **0001842** ___________ ___________ ___________ **0001843** **0001844** Balance at December 31, 1994 138,000 2,970,000 2,287,000 **0001845** Net loss (362,000) **0001846** **0001847** Sale of 67,824 shares of **0001848** common stock 1,000 15,000 - **0001849** ___________ ____________ __________ **0001850** **0001851** $ 139,000 $ 2,985,000 $ 1,925,000 **0001852** =========== ============ ========= **0001853**
**0001854** **0001855** **0001856** **0001857** **0001858** **0001859** **0001860** **0001861** **0001862** **0001863** **0001864** **0001865** **0001866** **0001867** **0001868** **0001869** The accompanying notes are an integral part **0001870** of these financial statements. **0001871** **0001872** **0001873** **0001874**
**0001875** AMETECH, INC. AND SUBSIDIARIES **0001876** **0001877** CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY **0001878** **0001879** (CONTINUED) **0001880** **0001881** Treasury **0001882** Stock Total **0001883** ___________ __________ **0001884** **0001885** Balance at January 1, 1993 $ (109,000) $5,338,000 **0001886** Net loss - (184,000) **0001887** **0001888** Sale of 53,444 shares of **0001889** common stock - 30,000 **0001890** ___________ ___________ **0001891** **0001892** Balance at December 31, 1993 (109,000) 5,184,000 **0001893** Net earnings - 80,000 **0001894** **0001895** Sale of 76,662 shares of **0001896** common stock - 22,000 **0001897** ___________ __________ **0001898** **0001899** Balance at December 31, 1994 (109,000) 5,286,000 **0001900** Net loss (362,000) **0001901** **0001902** Sale of 67,824 shares of **0001903** common stock - 16,000 **0001904** ___________ __________ **0001905** **0001906** $ (109,000) $4,940,000 **0001907** ============ ========== **0001908**
**0001909** **0001910** **0001911** **0001912** **0001913** **0001914** **0001915** **0001916** **0001917** **0001918** **0001919** **0001920** **0001921** **0001922** **0001923** The accompanying notes are an integral part **0001924** of these financial statements. **0001925** **0001926** **0001927** **0001928**
**0001929** AMETECH, INC. AND SUBSIDIARIES **0001930** **0001931** CONSOLIDATED STATEMENTS OF CASH FLOWS **0001932** **0001933** Years Ended December 31, **0001934** ________________________________________ **0001935** 1995 1994 1993 **0001936** _____________ ____________ ___________ **0001937** **0001938** Cash Flows From Operating **0001939** Activities: **0001940** Cash collected from customers $ 17,670,000 $ 13,925,000 $ 14,094,000 **0001941** Interest paid (731,000) (447,000) (459,000) **0001942** Interest received 60,000 94,000 99,000 **0001943** Cash paid to employees and **0001944** other suppliers of goods **0001945** and services (14,972,000) (12,373,000) (11,779,000) **0001946** Income taxes refunded (paid) (101,000) 130,000 (222,000) **0001947** ____________ ___________ ___________ **0001948** Net Cash Provided by Operating **0001949** Activities 1,926,000 1,329,000 1,733,000 **0001950** ____________ ___________ ___________ **0001951** **0001952** Cash Flows From Investing **0001953** Activities: **0001954** Additions to property and **0001955** equipment (2,803,000) (3,172,000) (1,262,000) **0001956** Proceeds from disposal of **0001957** equipment 212,000 174,000 3,000 **0001958** Permit costs - (20,000) - **0001959** Purchase of businesses, net **0001960** of cash acquired (1,626,000) - - **0001961** Proceeds from sale of Academy **0001962** Computing Corporation 18,000 7,000 3,000 **0001963** Payments received on notes **0001964** receivable 214,000 190,000 170,000 **0001965** Advances to Green Alternatives, **0001966** Inc. - - (255,000) **0001967** ____________ ___________ __________ **0001968** **0001969** Net Cash Used in Investing **0001970** Activities (3,985,000) (2,821,000) (1,341,000) **0001971** ____________ __________ __________ **0001972**
**0001973** **0001974** **0001975** **0001976** **0001977** The accompanying notes are an integral part **0001978** of these financial statements. **0001979** **0001980** **0001981** **0001982**
**0001983** AMETECH, INC. AND SUBSIDIARIES **0001984** **0001985** CONSOLIDATED STATEMENTS OF CASH FLOWS **0001986** **0001987** **0001988** Years Ended December 31, **0001989** ________________________________________ **0001990** 1995 1994 1993 **0001991** _____________ ____________ ___________ **0001992** **0001993** Cash Flows From Financing **0001994** Activities: **0001995** Proceeds of long-term debt $ 4,065,000 $ 2,921,000 $ 5,083,000 **0001996** Payments on long-term debt (1,993,000) (1,425,000) (5,559,000) **0001997** Sale of unissued stock 16,000 22,000 30,000 **0001998** ___________ ___________ ___________ **0001999** Net Cash Provided by (Used in) **0002000** Financing Activities 2,088,000 1,518,000 (446,000) **0002001** ___________ ___________ ___________ **0002002** Net Increase (Decrease) in **0002003** Cash and Cash Equivalents 29,000 26,000 (54,000) **0002004** **0002005** Cash and Cash Equivalents at **0002006** Beginning of Year 45,000 19,000 73,000 **0002007** ___________ ___________ ___________ **0002008** Cash and Cash Equivalents at **0002009** End of Year $ 74,000 $ 45,000 $ 19,000 **0002010** =========== =========== ============ **0002011**
**0002012** **0002013** **0002014** SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES **0002015** **0002016** During the year ended December 31, 1994, the Company acquired property and **0002017** equipment at $62,000 through trade accounts payable. **0002018** **0002019** The Company purchased businesses in the year ended December 31, 1995. In **0002020** conjunction with the acquisitions, liabilities were assumed as follows: **0002021** **0002022** **0002023** **0002024** Assets acquired $ 2,053,000 **0002025** Cash paid, net of cash acquired (1,626,000) **0002026** ___________ **0002027** **0002028** Liabilities assumed $ 427,000 **0002029** =========== **0002030**
**0002031** **0002032** **0002033** **0002034** **0002035** The accompanying notes are an integral part **0002036** of these financial statements. **0002037** **0002038** **0002039** AMETECH, INC. AND SUBSIDIARIES **0002040** **0002041** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002042** **0002043** DECEMBER 31, 1995, 1994, and 1993 **0002044** **0002045** **0002046** 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF **0002047** OPERATIONS **0002048** **0002049** AMETECH, Inc., an Oklahoma corporation, and its subsidiaries **0002050** (the Company) are engaged primarily in the transportation of **0002051** hazardous and non-hazardous waste on a nation-wide basis. The **0002052** Company is a majority owned subsidiary of Moorpark Holding, **0002053** Inc., a Delaware Corporation. The Company's accounting **0002054** policies are described below. **0002055** **0002056** Basis of Consolidation - The consolidated financial statements **0002057** include the accounts of the Company and its wholly owned **0002058** subsidiaries, Environmental Transportation Services, Inc. **0002059** (ETS), Environmental Field Services, Inc. (EFS), BMH **0002060** Materials, Inc. (BMH), Dwight Trucking, Inc. (Dwight), and **0002061** Compliance Training Services, Inc. (CTS), after elimination of **0002062** significant intercompany transactions and balances. **0002063** **0002064** Accounts Receivable - The Company provides reserves on **0002065** specific accounts based upon whether the Company reasonably **0002066** believes that collection of a specific account is questionable **0002067** plus a general reserve on uncollected balances based on the **0002068** aging of accounts receivable. If the Company reasonably **0002069** believes that the collection of a specific account, or a **0002070** portion thereof, is questionable, after examination of that **0002071** account, then the Company will reserve that portion on which **0002072** it feels collection is questionable. The Company provides a **0002073** bad debt reserve each month based on historically **0002074** uncollectible amounts as adjusted for current economic **0002075** conditions. The allowance for estimated uncollectible amounts **0002076** was $79,000 and $58,000 at December 31, 1995 and 1994, **0002077** respectively. The Company grants credit to various customers, **0002078** primarily hazardous waste management companies and hazardous **0002079** waste brokers, under customary trade terms. To mitigate the **0002080** risk of credit loss, the Company performs a credit review of **0002081** new customers and establishes credit limits before extending **0002082** credit. **0002083** **0002084** Major Customers - At December 31, 1995, one customer accounted **0002085** for 19% of the accounts receivable balance. During 1995, one **0002086** customer accounted for 31% of the total revenue. During 1994, **0002087** one customer accounted for 34% of total revenue and during **0002088** 1993, one customer accounted for 28% of total revenue. **0002089** **0002090** **0002091** **0002092** AMETECH, INC. AND SUBSIDIARIES **0002093** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002094** **0002095** 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF **0002096** OPERATIONS (Continued) **0002097** **0002098** Property and Equipment - Depreciation of transportation and **0002099** other equipment is computed using the straight-line method **0002100** over the estimated useful lives of the respective assets, **0002101** which range from three to ten years. **0002102** **0002103** Buildings are depreciated on the straight-line method over 30 **0002104** years. Expenditures for repairs and maintenance are charged **0002105** to expense when incurred, whereas major betterments are **0002106** capitalized. **0002107** **0002108** Inventories - Supply inventory is priced at cost, not in **0002109** excess of market. Supplies are charged to expense when **0002110** utilized for repair or maintenance of equipment. Supply **0002111** inventory of $220,000 and $177,000 at December 31, 1995 and **0002112** 1994, respectively, are included in other current assets on **0002113** the Consolidated Balance Sheets. **0002114** **0002115** Income Taxes - Effective January 1, 1993, the Company adopted **0002116** the Statement of Financial Accounting Standards No. 109 (SFAS **0002117** 109), "Accounting for Income Taxes." SFAS 109 required a **0002118** change from the deferred method to the liability method of **0002119** accounting for income taxes. Under the liability method, **0002120** deferred taxes are recognized for the tax consequences of **0002121** temporary differences by applying enacted statutory tax **0002122** rates applicable to future years to differences between the **0002123** carrying amounts and the tax bases of existing assets and **0002124** liabilities. See note 8. **0002125** **0002126** Earnings (Loss) Per Share - Earnings (Loss) per common share **0002127** for 1995, 1994, and 1993 are based upon the weighted average **0002128** number of common shares and dilutive common share equivalents **0002129** outstanding during the respective years. **0002130** **0002131** Cash Equivalents - The Company considers all highly liquid **0002132** investments with original maturities of three months or less **0002133** to be cash equivalents. **0002134** **0002135** Intangible Assets - Cost in excess of net assets of businesses **0002136** acquired is amortized on the straight line basis over a **0002137** fifteen year period. The Company assesses the recoverability **0002138** of costs in excess of net assets of businesses acquired by **0002139** determining whether the amortization of the asset balance over **0002140** its remaining life can be recovered through the undiscounted **0002141** future operating cash flows of the acquired operation. The **0002142** amount of impairment, if any, is based on projected future **0002143** operating cash flows. The Company believes that no impairment **0002144** has occurred and that no reduction in the estimated useful **0002145** life is warranted. **0002146** **0002147** **0002148** AMETECH, INC. AND SUBSIDIARIES **0002149** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002150** **0002151** 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF **0002152** OPERATIONS (Continued) **0002153** **0002154** Tires in Service - The cost of new and replacement tires is **0002155** capitalized and included in prepaid assets and amortized on a **0002156** straight-line basis over the estimated useful life of the **0002157** tires of one to two years. **0002158** **0002159** Use of Estimates - The preparation of financial statements in **0002160** conformity with generally accepted accounting principles **0002161** requires management to make estimates and assumptions that **0002162** affect certain reported amounts and disclosures. Accordingly, **0002163** actual results could differ from those estimates. **0002164** **0002165** 2. FINANCIAL INSTRUMENTS **0002166** **0002167** The following table includes various estimated fair value **0002168** information as of December 31, 1995 as required by Statement **0002169** of Financial Accounting Standards No. 107, "Disclosures about **0002170** Fair Value of Financial Instruments" (SFAS 107). Such **0002171** information, which pertains to the Company's financial **0002172** instruments, is based on the requirements set forth in SFAS **0002173** 107 and does not purport to represent the aggregate net fair **0002174** value of the Company. The carrying amounts in the table are **0002175** the amounts at which the financial instruments are reported in **0002176** the consolidated financial statements. **0002177** **0002178** All of the Company's financial instruments are held for **0002179** purposes other than trading. **0002180** **0002181** The following methods and assumptions were used to estimate **0002182** the fair value of each class of financial instruments: **0002183** **0002184** 1. Cash and Cash Equivalents **0002185** **0002186** The carrying amount approximates fair value because the **0002187** Company has the contractual right to receive immediate payment **0002188** on the deposit accounts. **0002189** **0002190** 2. Notes Receivable **0002191** **0002192** The discounted amount of future cash flows using the rate that **0002193** the Company would expect to obtain on similar transactions is **0002194** used to estimate fair value. **0002195** **0002196** **0002197** **0002198** AMETECH, INC. AND SUBSIDIARIES **0002199** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002200** **0002201** 2. FINANCIAL INSTRUMENTS (Continued) **0002202** **0002203** 3. Fixed Rate Long-Term Debt **0002204** **0002205** The discounted amount of future cash flows using the Company's **0002206** current incremental rate of borrowing for similar liabilities **0002207** is used to estimate fair value. **0002208** **0002209** 4. Floating Rate Long-Term Debt **0002210** **0002211** The carrying amount approximates fair value because interest **0002212** rates adjust to market rates. **0002213** **0002214** The carrying amounts and estimated fair values of the **0002215** Company's financial instruments are as follows: **0002216** **0002217** **0002218**
**0002219** Carrying Estimated **0002220** Amount Fair value **0002221** ___________ ____________ **0002222** **0002223** Financial assets **0002224** Cash and cash **0002225** equivalents $ 74,000 $ 74,000 **0002226** Notes Receivable 328,000 319,000 **0002227** Financial liabilities **0002228** Fixed rate long-term debt (2,452,000) (2,548,000) **0002229** Floating rate long-term debt (5,916,000) (5,916,000) **0002230**
**0002231** **0002232** **0002233** 3. CHANGES IN ACCOUNTING PRINCIPLE AND ESTIMATE **0002234** **0002235** Effective January 1, 1993, the Company adopted Statement of **0002236** Financial Accounting Standards No. 109 (SFAS 109), "Accounting **0002237** for Income Taxes." SFAS 109 required a change from the **0002238** deferred method to the liability method of accounting for **0002239** income taxes. Prior years were not restated and the **0002240** cumulative effect of the change, which is $4,000, is shown as **0002241** a charge to earnings in the 1993 Statement of Operations. **0002242** **0002243** Additionally, the Company changed its method of accounting for **0002244** replacement tires effective January 1, 1995. The Company now **0002245** capitalizes the cost of replacement tires to more closely **0002246** approximate their useful lives. The capitalized cost of the **0002247** tires is included in prepaid assets and is amortized over the **0002248** estimated useful life of the tires of one to two years. **0002249** **0002250** Prior years were not restated and the cumulative effect of the **0002251** change is to decrease the net loss for 1995 by $132,000, net **0002252** of income taxes of $42,000, or $.01 per share. The pro forma **0002253** amounts on the income statement show the net earnings (loss) **0002254** and net earnings (loss) per share as if the new accounting **0002255** method had been in effect for the periods presented. **0002256** **0002257** **0002258** **0002259** AMETECH, INC. AND SUBSIDIARIES **0002260** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002261** **0002262** 3. CHANGES IN ACCOUNTING PRINCIPLE AND ESTIMATE (Continued) **0002263** **0002264** Effective January 1, 1995, the Company changed the estimated **0002265** useful life for tractors from seven to ten years to more **0002266** closely approximate the useful lives of such assets. The **0002267** effect of this change was to decrease the net loss for 1995 by **0002268** $319,000 ($.02 per share), summarized as follows: **0002269** **0002270** **0002271** **0002272** Effect of life of tractors $408,000 **0002273** Less: Tax effect of change 89,000 **0002274** ________ **0002275** **0002276** Decrease in net loss $319,000 **0002277** ======== **0002278**
**0002279** **0002280** 4. DISPOSITION OF SUBSIDIARY **0002281** **0002282** In January 1992, the Company sold its wholly owned subsidiary **0002283** which operated the "One-Call Business." The transaction was **0002284** valued at approximately $900,000 which included $200,000 in **0002285** cash, a note receivable for $485,000 payable in monthly **0002286** installments over seven years, 60,000 shares of the Company's **0002287** common stock, and an agreement requiring the purchaser to pay **0002288** an additional $125,000 in the future. The transaction **0002289** resulted in an approximate gain of $192,000 which is being **0002290** recognized over the term of the note (through February 1998). **0002291** $50,000, $27,000 and $23,000 of such gain was recognized in **0002292** 1995, 1994 and 1993, respectively. The balance of the note **0002293** receivable and the additional amount due in the future was **0002294** $290,000 and $388,000 at December 31, 1995 and 1994, **0002295** respectively. The long-term portion of such amounts are **0002296** included in Other Assets on the Consolidated Balance Sheets **0002297** ($197,000 and $288,000 at December 31, 1995 and 1994, **0002298** respectively) and the current portion of such amounts are **0002299** included in Accounts Receivable ($93,000 and $100,000 at **0002300** December 31, 1995 and 1994, respectively). **0002301** **0002302** **0002303** **0002304** AMETECH, INC. AND SUBSIDIARIES **0002305** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002306** **0002307** 5. PROPERTY AND EQUIPMENT **0002308** **0002309** Property and equipment consist of the following: **0002310** **0002311**
**0002312** December 31, **0002313** ___________________________ **0002314** **0002315** 1995 1994 **0002316** _____________ ____________ **0002317** **0002318** Transportation equipment $ 18,336,000 $ 14,919,000 **0002319** Land and buildings 1,952,000 1,938,000 **0002320** Furniture and fixtures 712,000 591,000 **0002321** Other 282,000 196,000 **0002322** ____________ ____________ **0002323** $ 21,282,000 $ 17,644,000 **0002324** ============ ============ **0002325** Less: Accumulated depreci- **0002326** ation and **0002327** amortization 9,742,000 8,203,000 **0002328** ____________ ___________ **0002329** $ 11,540,000 $ 9,441,000 **0002330** ============ =========== **0002331**
**0002332** **0002333** **0002334** AMETECH, INC. AND SUBSIDIARIES **0002335** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002336** **0002337** 6. LONG-TERM OBLIGATIONS **0002338** **0002339** Long-term obligations consist of the following: **0002340** **0002341**
**0002342** December 31, **0002343** _________________________ **0002344** **0002345** 1995 1994 **0002346** ___________ ___________ **0002347** **0002348** Series of notes payable, collateralized **0002349** by transportation equipment, due in **0002350** monthly installments totaling $33,058 **0002351** through November 11, 2000, including **0002352** interest at fixed rates between 8.50% **0002353** and 10% $ 1,313,000 $ 540,000 **0002354** **0002355** Series of notes payable, collateralized **0002356** by transportaion equipment, due in **0002357** monthly installments through August 31, **0002358** 2000, totaling $55,698 plus interest at **0002359** the London Interbank Offering Rate plus **0002360** 3.60% (9.41% at December 31, 1995) 2,748,000 1,409,000 **0002361** **0002362** Note payable due in monthly installments **0002363** of $3,106 including interest at 1.25% **0002364** over Chase Manhattan Bank's prime rate **0002365** of interest, collateralized by real **0002366** estate - 21,000 **0002367** **0002368** Note payable, collateralized by real **0002369** estate, due in monthly installments **0002370** of $5,354 through March 18, 1999, **0002371** including interest at 8.04% 509,000 529,000 **0002372** **0002373** Note payable due in monthly install- **0002374** ments of $3,187 through February 21, **0002375** 1996, including interest at 10%, **0002376** collateralized by real estate 3,000 39,000 **0002377**
**0002378** **0002379** **0002380** **0002381** AMETECH, INC. AND SUBSIDIARIES **0002382** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002383** **0002384** 6. LONG-TERM OBLIGATIONS (continued): **0002385** **0002386**
**0002387** December 31, **0002388** _________________________ **0002389** **0002390** 1995 1994 **0002391** ___________ ___________ **0002392** **0002393** Note payable, collateralized by **0002394** transportation equipment, due in **0002395** montly instalments through **0002396** September 30, 1997, of $83,333 plus **0002397** interest at the London Interbank **0002398** Offering Rate plus 3.55% (9.36% **0002399** at December 31, 1995) 1,532,000 2,578,000 **0002400** **0002401** Series of notes payable, collateralized **0002402** by transportation equipment, due in **0002403** monthly installments totaling $6,622 **0002404** through February 28, 1997, including **0002405** interest at 8.01% 83,000 153,000 **0002406** **0002407** Note payable, collateralized by trans- **0002408** portation equipment, due in monthly **0002409** installments through November 6, 2000, **0002410** of $5,164, including interest at 10.50% 191,000 - **0002411** **0002412** Notes payable, uncollateralized, due **0002413** in monthly installments of $987 **0002414** through October 4, 1995, bearing no **0002415** interest - 10,000 **0002416** **0002417** Note payable due in monthly install- **0002418** ments of $3,608 through February 1, **0002419** 1995, including interest at 9% - 7,000 **0002420** **0002421** Series of notes payable, collater- **0002422** alized by equipment, due in monthly **0002423** installments totaling $664 through **0002424** May 10, 1997, including interest at **0002425** 12.02% and 12.39% 10,000 16,000 **0002426** **0002427** Note payable collateralized by trans- **0002428** portation equipment, due in monthly **0002429** installments of $2,202 through **0002430** March 13, 2000, including interest **0002431** of prime plus 2.5% (11.50% at **0002432** December 31, 1995) 87,000 - **0002433** **0002434** Note payable collateralized by trans- **0002435** portation equipment, due in monthly **0002436** installments of $8,189 through **0002437** April 10, 2000, including interest **0002438** at 9.50% 343,000 - **0002439**
**0002440** **0002441** **0002442** **0002443** **0002444** AMETECH, INC. AND SUBSIDIARIES **0002445** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002446** **0002447** 6. LONG-TERM OBLIGATIONS (continued): **0002448** **0002449**
**0002450** December 31, **0002451** _________________________ **0002452** **0002453** 1995 1994 **0002454** ___________ ___________ **0002455** **0002456** **0002457** Note payable to bank under Credit **0002458** Agreement, collateralized by inven- **0002459** tories, receivable and contract **0002460** rights due April 30, 1996, with **0002461** monthly interest payments at the **0002462** national prime rate of interest **0002463** plus 3% (11.50% at December 31, **0002464** 1995). Subsequently refinanced **0002465** (see below) **0002466** 1,549,000 994,000 **0002467** ___________ ___________ **0002468** $ 8,368,000 $ 6,296,000 **0002469** Less: Current maturities 2,126,000 2,579,000 **0002470** ___________ ___________ **0002471** $ 6,242,000 $ 3,717,000 **0002472** =========== =========== **0002473**
**0002474** **0002475** At December 31, 1995, the aggregate yearly maturities due on long- **0002476** term obligations are as follows: **0002477** **0002478** **0002479** **0002480** Year Ending **0002481** December 31, Total **0002482** ___________ ___________ **0002483** **0002484** 1996 $ 2,126,000 **0002485** 1997 1,716,000 **0002486** 1998 2,721,000 **0002487** 1999 1,469,000 **0002488** 2000 336,000 **0002489** ___________ **0002490** $ 8,368,000 **0002491** =========== **0002492** **0002493** The Company's Credit Agreement (The "Agreement") provides for a **0002494** $2,000,000 line of credit for working capital purposes and letters **0002495** of credit. The note underlying this portion of the credit facility **0002496** bears interest at the national prime rate of interest (as published **0002497** in the Wall Street Journal), plus 1% to 3%, depending on certain **0002498** cash flow ratios (11.50% at December 31, 1995). The interest on **0002499** this note is payable monthly. No principal payment on this note is **0002500** required unless the outstanding amount of the loan exceeds the **0002501** defined borrowing base. The note is due April 30, 1996. At **0002502** December 31, 1995, there was $1,549,000 borrowed on this note. **0002503** **0002504** **0002505** **0002506** AMETECH, INC. AND SUBSIDIARIES **0002507** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002508** **0002509** 6. LONG-TERM OBLIGATIONS (continued): **0002510** **0002511** The terms of the Agreement include, among other things, a **0002512** minimum working capital requirement for ETS of $1,500,000 **0002513** (excluding current maturities of long-term debt), cash flow **0002514** coverage of not less than 1.10 to 1, and limitations on **0002515** additional debt, capital expenditures, and payment of **0002516** dividends. At December 31, 1995 the Company was not in **0002517** compliance with the covenants and restrictions of the **0002518** Agreement, but had secured a new line of credit with another **0002519** lender (see discussion below). The balance is reflected with **0002520** the maturities of the new credit line. **0002521** **0002522** At December 31, 1995, the Company had a net cash overdraft at **0002523** a bank of $608,000. This overdraft was paid by the Company's **0002524** line of credit in January, 1996. This amount is included in **0002525** Accounts Payable on the Consolidated Balance Sheet. **0002526** **0002527** Information regarding the Company's borrowings under the **0002528** Agreement for 1995, 1994, and 1993 is as follows: **0002529** **0002530** * Balance outstanding at December 31, 1995, 1994 and 1993 **0002531** was $1,549,000, $994,000, and $235,000, respectively. **0002532** **0002533** * The weighted average interest rate during each year ended **0002534** December 31, 1995, 1994, and 1993 was 11.21%, 8.58%, and **0002535** 8.69%, respectively. **0002536** **0002537** * The maximum outstanding during 1995, 1994, and 1993 was **0002538** $1,784,000, $1,095,000, and $931,000, respectively. **0002539** **0002540** * The average amount outstanding for 1995, 1994, and 1993 **0002541** was $944,000, $666,000, and $411,000, respectively. **0002542** **0002543** * The weighted average interest rate at December 31, 1995, **0002544** 1994, and 1993 was 11.50%, 10.50%, and 7%, respectively. **0002545** **0002546** In September 1993, the Company refinanced substantially all of **0002547** its transportation equipment with one lender. The amount of **0002548** the refinancing was $4,000,000 to be paid in 48 monthly **0002549** installments beginning on September 30, 1993. The loan is **0002550** collateralized by the Company's transportation equipment and **0002551** is guaranteed by the Company. Pursuant to the covenants **0002552** contained in the loan agreement, the Company must maintain **0002553** certain financial ratios. The Company was not in compliance **0002554** with all covenants in the loan agreement at December 31, 1995. **0002555** On April 12, 1996, the Company negotiated such loan covenants **0002556** and is now in compliance therewith. **0002557** **0002558** **0002559** **0002560** AMETECH, INC. AND SUBSIDIARIES **0002561** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002562** **0002563** 6. LONG-TERM OBLIGATIONS (continued): **0002564** **0002565** In February 1996, the Company entered into a new Credit **0002566** Agreement (the "New Agreement"), with a new lender which **0002567** provides for a $3,000,000 line of credit for working capital **0002568** purposes and letters of credit. The note underlying this **0002569** portion of this credit facility bears interest at the prime **0002570** rate announced by The Chase Manhattan Bank, N.A. plus 1.875% **0002571** and is collateralized by accounts receivable, deposit accounts **0002572** and certain intangible assets. The interest on this note is **0002573** payable monthly, and principal payments are made as accounts **0002574** receivable are collected. The note is due February 6, 1998 **0002575** and there are no financial covenants associated with the New **0002576** Agreement. **0002577** **0002578** 7. STOCK OPTIONS **0002579** **0002580** Under the Company's stock option plan, options to purchase up **0002581** to 400,000 common shares may be granted for exercise through **0002582** 1999. The options are exercisable in whole or in part in **0002583** equal annual installments and to the extent not exercised, **0002584** accumulate, provided all options must be exercised prior to **0002585** the expiration date which is five years after the execution **0002586** date of the individual stock option agreements. The Company **0002587** has also established a non-qualified stock option plan for **0002588** outside members of the Board of Directors. This plan has **0002589** 100,000 shares of common stock available and the term of the **0002590** plan runs to 1999. No options under the non-qualified plan **0002591** have been granted. **0002592** **0002593** On February 21, 1991, options for the purchase of 175,000 **0002594** shares of common stock were granted to certain key employees **0002595** of the Company at a price of $.50 per share. These options **0002596** become exercisable in equal installments between the first **0002597** anniversary date and the expiration date of the options **0002598** (February 21, 1996). Options for 160,000 shares have been **0002599** canceled due to employees' termination and options for 5,000 **0002600** shares were exercised in August 1992. At December 31, 1995, **0002601** options for 8,000 shares are exercisable. **0002602** **0002603** Options for 141,500 shares of common stock were granted to **0002604** certain employees at an exercise price of $.46 per share. **0002605** These options were granted on May 3, 1994 and become **0002606** exercisable in equal installments between the first **0002607** anniversary date and the expiration date of the options **0002608** (May 3, 1999). Options for 96,000 shares have been canceled **0002609** due to employee terminations. At December 31, 1995, options **0002610** for 13,000 shares are exercisable. **0002611** **0002612** **0002613** AMETECH, INC. AND SUBSIDIARIES **0002614** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002615** **0002616** 7. STOCK OPTIONS (continued): **0002617** **0002618** The Company is required to keep a sufficient number of shares **0002619** available to meet the requirements of the option agreement in **0002620** the form of either treasury stock or authorized and unissued **0002621** stock. **0002622** **0002623** A summary of transactions of the incentive stock option plan **0002624** is as follows: **0002625** **0002626**
**0002627** **0002628**
**0002629** Number of Shares **0002630** ___________________________ **0002631** 1995 1994 1993 **0002632** _______ _______ _______ **0002633** **0002634** Outstanding at beginning of year 111,500 132,500 182,500 **0002635** Granted - 141,500 20,000 **0002636** Exercised - - - **0002637** Canceled 56,000 162,500 70,000 **0002638** _______ _______ _______ **0002639** **0002640** Outstanding at end of year 55,500 111,500 132,500 **0002641** ======== ======== ======= **0002642**
**0002643** **0002644** In October, 1995, the Financial Accounting Standards Board **0002645** issued Statement of Financial Accounting Standards No. 123 **0002646** ("SFAS No. 123"), "Accounting for Stock-Based Compensation". **0002647** Application of SFAS 123 will require the Company to make an **0002648** election to value stock options under a fair value based **0002649** method as prescribed by SFAS No. 123 or continue using the **0002650** method as prescribed by APB Opinion No. 25, "Accounting For **0002651** Stock Issued to Employees". Initial adoption is required in **0002652** 1996. The Company has not yet decided on which valuation **0002653** method will be elected. **0002654** **0002655** **0002656** AMETECH, INC. AND SUBSIDIARIES **0002657** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002658** **0002659** 8. INCOME TAX EXPENSE **0002660** **0002661** Tax expense consists of the following: **0002662** **0002663**
**0002664** Years Ended December 31, **0002665** _______________________________ **0002666** 1995 1994 1993 **0002667** __________ ________ _________ **0002668** **0002669** Current Expense (Benefit) **0002670** Federal $(191,000) $ 41,000 $(73,000) **0002671** State (55,000) 27,000 (20,000) **0002672** __________ ________ ________ **0002673** Total Current (246,000) 68,000 (93,000) **0002674** Deferred Expense (Benefit) **0002675** Federal 69,000 21,000 52,000 **0002676** State 81,000 (16,000) 10,000 **0002677** _________ _________ _______ **0002678** Total Deferred 150,000 5,000 62,000 **0002679** _________ ________ _______ **0002680** Total $ (96,000) $ 73,000 $(31,000) **0002681** ========== ========= ======== **0002682**
**0002683** **0002684** The income tax provision reconciled to the tax computed at the **0002685** statutory Federal rate was: **0002686** **0002687**
**0002688** **0002689** Years Ended December 31, **0002690** _______________________________ **0002691** 1995 1994 1993 **0002692** __________ ________ _________ **0002693** **0002694** Tax expense (benefit) at **0002695** statutory rate $(155,000) $ 52,000 $ (74,000) **0002696** State income taxes 25,000 11,000 (13,000) **0002697** Other (19,000) - 14,000 **0002698** Non-deductible items 11,000 10,000 13,000 **0002699** Graduated rate differential 42,000 - 29,000 **0002700** _________ ________ ________ **0002701** $ (96,000) $ 73,000 $ (31,000) **0002702** ========= ======== ========= **0002703**
**0002704** **0002705** **0002706** AMETECH, INC. AND SUBSIDIARIES **0002707** **0002708** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002709** **0002710** 8. INCOME TAX EXPENSE (continued) **0002711** **0002712** Amounts of deferred tax assets, valuation allowance, and **0002713** deferred tax liabilities at December 31, 1995 and December 31, **0002714** 1994 are as follows: **0002715** **0002716**
**0002717** December 31, **0002718** ________________________ **0002719** 1995 1994 **0002720** __________ ________ **0002721** **0002722** **0002723** Deferred Tax Assets **0002724** Alternative minimum tax **0002725** credit carryforward $ 61,000 $ 21,000 **0002726** Excess financial account- **0002727** ing basis over tax **0002728** basis 21,000 79,000 **0002729** Excess financial account- **0002730** ing over tax bad debt **0002731** expense 34,000 22,000 **0002732** Accrued items not currently **0002733** deductible for tax 79,000 36,000 **0002734** _________ ________ **0002735** 195,000 158,000 **0002736** Less valuation allowance - - **0002737** ________ ________ **0002738** Deferred tax assets 195,000 158,000 **0002739** **0002740** Deferred Tax Liabilities **0002741** Excess financial account- **0002742** ing basis over tax basis **0002743** of fixed assets (624,000) (425,000) **0002744** Excess tax over financial **0002745** accounting depreciation (936,000) (627,000) **0002746** Deferred tax liabilities (1,560,000) (1,052,000) **0002747** ___________ ___________ **0002748** Net deferred tax liabilities $(1,365,000) $ (894,000) **0002749** =========== =========== **0002750**
**0002751** **0002752** At December 31, 1995, the Company has income tax refunds of **0002753** $312,000 for amounts paid for estimated income taxes and taxes **0002754** paid in prior years, primarily resulting from the net operating **0002755** loss carryback provisions of the Internal Revenue code. These **0002756** amounts are included in Other Current Assets on the Consolidated **0002757** Balance Sheet. **0002758** **0002759** **0002760** **0002761** AMETECH, INC. AND SUBSIDIARIES **0002762** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002763** **0002764** 9. RECONCILIATION OF NET EARNINGS (LOSS) TO NET CASH PROVIDED BY **0002765** OPERATING ACTIVITIES **0002766** **0002767** The reconciliation of net earnings (loss) to net cash provided **0002768** by operating activities for the years ended December 31, 1995, **0002769** 1994, and 1993, is as follows: **0002770** **0002771**
**0002772** Years Ended December 31, **0002773** ___________________________________ **0002774** 1995 1994 1993 **0002775** __________ _________ __________ **0002776** **0002777** Net Earnings (Loss) $ (362,000) $ 80,000 $ (184,000) **0002778** Adjustments to reconcile **0002779** net earnings (loss)to **0002780** net cash provided by **0002781** operating activities: **0002782** Depreciation and **0002783** amortization $1,899,000 $2,005,000 $1,889,000 **0002784** Gain on sale of property (3,000) (96,000) (3,000) **0002785** Gain on sale of subsidiaries (50,000) (34,000) (26,000) **0002786** Write-off of uncollectible **0002787** accounts 41,000 38,000 632,000 **0002788** Change in assets and **0002789** liabilities, net of **0002790** effects of purchases **0002791** of busineses: **0002792** (Increase) decrease **0002793** in accounts **0002794** receivable 20,000 (1,003,000) (295,000) **0002795** (Increase) decrease **0002796** in prepaid **0002797** expenses (250,000) 73,000 (108,000) **0002798** (Increase) decrease **0002799** in other current **0002800** assets (393,000) 61,000 (265,000) **0002801** Increase in accounts **0002802** payable and accrued **0002803** liabilities 874,000 196,000 27,000 **0002804** Deferred income taxes 150,000 5,000 66,000 **0002805** Other - 4,000 - **0002806** __________ __________ _________ **0002807** $1,926,000 $1,329,000 $1,733,000 **0002808** =========== =========== ========= **0002809**
**0002810** **0002811** **0002812** AMETECH, INC. AND SUBSIDIARIES **0002813** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002814** **0002815** 10. COMMITMENTS AND CONTINGENCIES **0002816** **0002817** At December 31, 1995, the Company had outstanding letters of **0002818** credit of $216,000. The letters of credit serve as security **0002819** to obtain licenses in certain states, for uninsured workman's **0002820** compensation deposits and for performance of services. Such **0002821** letters of credit reduce the amounts which can be drawn under **0002822** the Company's $2,000,000 line of credit (Note 6). **0002823** **0002824** The Company is partially uninsured on its workers' **0002825** compensation insurance for Oklahoma employees. The Company s **0002826** retention under this plan is $500,000, after which coverage **0002827** under the excess workers' compensation insurance plan becomes **0002828** effective. The Company accrues estimated losses monthly based **0002829** on a review of claims filed and claims incurred but not **0002830** reported. The claim and premium expense incurred under the **0002831** partially uninsured workers' compensation plan was $133,000, **0002832** $58,000 and $48,000 for 1995, 1994 and 1993, respectively. **0002833** **0002834** The Company is also partially uninsured for its employee group **0002835** health insurance coverage. Under this program, the Company is **0002836** liable for up to of $35,000 per covered person per year with **0002837** an aggregate liability not to exceed $450,000 per year for the **0002838** total group. The excess insurance coverage becomes effective **0002839** when the aforementioned limits are reached. The Company **0002840** accrues estimated losses monthly based on a review of claims **0002841** filed and claims incurred but not reported. The claim and **0002842** premium expense incurred under the Company's partially **0002843** uninsured group health insurance plan was $233,000, $250,000 **0002844** and $218,000 for 1995 1994 and 1993, respectively. **0002845** **0002846** The Company leases transportation terminals and office space **0002847** under operating lease arrangements. The following is a **0002848** schedule by year of future minimum lease payments under these **0002849** operating leases. **0002850** **0002851** Year Ending **0002852** December 31, Total **0002853** ___________ ___________ **0002854** **0002855** 1996 $ 85,000 **0002856** 1997 51,000 **0002857** 1998 30,000 **0002858** 1999 25,000 **0002859** 2000 10,000 **0002860** ___________ **0002861** $201,000 **0002862** =========== **0002863** **0002864** **0002865** AMETECH, INC. AND SUBSIDIARIES **0002866** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002867** **0002868** 10. COMMITMENTS AND CONTINGENCIES (Continued) **0002869** **0002870** Total lease expense for the years ended December 31, 1995, **0002871** 1994, and 1993 was approximately $135,000, $113,000, and **0002872** $128,000, respectively. **0002873** **0002874** The Company provides an employee savings plan ("401-K Plan") **0002875** for its employees. The 401-K Plan provides for employee **0002876** contributions, and further provides the Company may, at its **0002877** discretion, make a matching contribution to the 401-K Plan in **0002878** an amount determined by the Company. If the Company decides **0002879** to make any matching contribution, such match will be **0002880** allocated only to employee participants who make a salary **0002881** reduction contribution of at least 5% of their compensation. **0002882** Under the Company's Plan, up to 10% of the fair market value **0002883** of the Plan's assets may be used to purchase company stock. **0002884** The Plan purchased 67,824, 76,662, and 53,444, shares for **0002885** $16,000, $22,000, and $30,000 in 1995, 1994, and 1993, **0002886** respectively. There was no Company contribution to the 401-K **0002887** Plan for 1995, 1994, or 1993. **0002888** **0002889** The Company has employment agreements with certain of its key **0002890** employees which provide for salary continuation for a **0002891** specified number of months upon a change of control of the **0002892** Company. In addition, certain stock options to those **0002893** employees immediately vest upon a change of control. **0002894** **0002895** On January 3, 1992, seven individual plaintiffs filed a **0002896** Petition against the Company's transportation subsidiary, **0002897** Environmental Transportation Services, Inc. ("ETS"), and Dyna- **0002898** Turn of Oklahoma Incorporated ("Dyna-Turn"), in the District **0002899** Court of Oklahoma County. The seven plaintiffs, who were **0002900** employees at a waste incineration facility in Miami, Oklahoma, **0002901** claim that Dyna-Turn generated solid waste which was **0002902** contaminated with toxic and hazardous chemicals, and that this **0002903** solid waste was transported by ETS to the incineration **0002904** facility for disposal. The plaintiffs claim that Dyna-Turn **0002905** and ETS were engaged in ultra-hazardous activities during the **0002906** generation and transportation of the waste, were negligent **0002907** during the generation and transportation of the waste, and **0002908** failed to warn the plaintiffs of the hazardous nature of the **0002909** waste or of its harmful side effects. **0002910** **0002911** The plaintiffs claim they sustained personal injuries and lost **0002912** earnings and are seeking unspecified actual damages in excess **0002913** of $10,000 and punitive damages. **0002914** **0002915** **0002916** AMETECH, INC. AND SUBSIDIARIES **0002917** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002918** **0002919** 10. COMMITMENTS AND CONTINGENCIES (Continued) **0002920** **0002921** In March 1993, the Company learned that its insurance carrier **0002922** had denied coverage for the plaintiffs' claims. The Company **0002923** has instructed its attorneys to vigorously defend the **0002924** litigation. The case is in its early stages and involves **0002925** facts yet unknown to the Company. The Company believes that **0002926** ETS has valid defenses to the plaintiffs' claims, and while **0002927** the ultimate resolution is unknown, management believes the **0002928** final outcome will not have a material adverse impact on the **0002929** Company's financial position or results of operations. **0002930** **0002931** The Company is involved in various other legal actions arising **0002932** in the normal course of business. After taking into **0002933** consideration available insurance coverage, legal counsel s **0002934** evaluation of such actions, and other relevant information, **0002935** management is of the opinion that their outcome will not have **0002936** a significant effect on the Company s consolidated financial **0002937** position or results of operations **0002938** **0002939** 11. RELATED PARTY TRANSACTIONS **0002940** **0002941** During 1995, 1994 and 1993, the Company purchased certain **0002942** fixed assets totaling approximately $147,000, $187,000, and **0002943** $34,000, respectively from a company partially owned by a **0002944** director and officer of the Company. **0002945** **0002946** 12. ACQUISITION OF ASSETS OF SMITH SYSTEMS TRANSPORTATION, INC. **0002947** **0002948** Effective July 20, 1995, the Company purchased from Smith **0002949** Systems Transportation, Inc. ("SST"), certain of SST's **0002950** transportation-related assets, which consisted primarily of **0002951** assets comprising the hazardous waste transportation **0002952** activities of SST, for approximately $519,000. Pursuant to **0002953** the agreement between the Company and SST, the Company is to **0002954** also pay to SST an amount equal to 4% of net revenues **0002955** collected and received by ETS from certain of SST's existing **0002956** customers at time of closing, with certain limited **0002957** exceptions, during the period of the first three years from **0002958** the date of the agreement. In the purchase transaction, the **0002959** Company did not assume any of the liabilities of SST and the **0002960** operations of the acquisition have been included since **0002961** July 20, 1995. Such operations do not constitute a **0002962** significant business acquisition and pro forma results are not **0002963** presented. **0002964** **0002965** **0002966** **0002967** AMETECH, INC. AND SUBSIDIARIES **0002968** NOTES TO CONSOLIDATED FINANCIAL STATEMENTS **0002969** **0002970** 13. ACQUISITION OF DWIGHT TRUCKING, INC. **0002971** **0002972** Effective July 1, 1995, the Company acquired a hazardous and **0002973** non-hazardous waste transporter, Dwight Trucking, Inc. **0002974** ("Dwight"), located in Bakersfield, California. The purchase **0002975** price was approximately $1,204,000 and has been accounted for **0002976** as a purchase transaction. As a result the Company has **0002977** allocated the total cost of the acquisition to the acquired **0002978** assets and assumed liabilities, based on their relative fair **0002979** values. The results of operations of Dwight have been **0002980** included in the Company s consolidated financial statements **0002981** since July 1, 1995. Cost in excess of the net assets acquired **0002982** was approximately $323,000 which is included in other assets **0002983** at December 31, 1995. **0002984** **0002985** In addition, the Company leased from the sellers of the stock **0002986** of Dwight the transportation terminal located in Bakersfield, **0002987** California, utilized by Dwight, for a period of five years, at **0002988** a rental of $2,900 per month, with an option to extend for **0002989** another five-year term at a rental of $2,900 per month **0002990** adjusted for cumulative increase in the consumer price index **0002991** for the Southern California Region from commencement of the **0002992** initial five-year lease term. **0002993** **0002994** The following summarized pro forma unaudited information **0002995** assumes the acquisition had occurred on January 1, 1994: **0002996** **0002997**
**0002998** **0002999** Years Ended December 31, **0003000** _________________________ **0003001** **0003002** 1995 1994 **0003003** ___________ ___________ **0003004** **0003005** Revenues $ 18,604,000 $ 16,883,000 **0003006** ============ ============ **0003007** Net earnings (loss) before **0003008** cumulative effect of **0003009** change in accounting method (508,000) 9,000 **0003010** ============ ============ **0003011** Net earnings (loss) (376,000) 9,000 **0003012** ============ ============ **0003013** Earnings (loss) per share **0003014** before cumulative effect of **0003015** change in accounting method $ (0.04) $ 0.00 **0003016** ============ ============ **0003017** Earnings (loss) per share $ (0.03) $ 0.00 **0003018** ============ ============ **0003019** **0003020** **0003021** **0003022** (a)(3) Exhibits. The Company files the following exhibits **0003023** with this report: **0003024** **0003025** 2(a). Stock Purchase Agreement, dated August 17, 1995, **0003026** between Environmental Transportation Services, Inc. and Dale Dwight **0003027** and Sam Dwight was filed as Exhibit 2.2 to the Company's Form 10-Q **0003028** for the quarter ended June 30, 1995, and is incorporated herein by **0003029** reference. **0003030** **0003031** 2(b). Asset Purchase Agreement, dated July 20, 1995, **0003032** between Environmental Transportation Services, Inc. and Arthur E. **0003033** Smith & Son Trucking, Inc., Monte Smith and Mary C. Smith was filed **0003034** as Exhibit 2.1 to the Company's Form 10-Q for the quarter ended **0003035** June 30, 1995, and is incorporated herein by reference. **0003036** **0003037** 3(i). Amended Articles of Incorporation of the Company, **0003038** together with Certificate of Merger, was filed as Exhibit 2(b) to **0003039** the Company's Form 8-K, Date of Report (date of earliest event **0003040** reported): January 9, 1991, and is incorporated herein by **0003041** reference. **0003042** **0003043** 3(ii). Bylaws, as amended, of the Company, which have been **0003044** previously filed as Exhibit 2(c) to the Company's Form 8-A **0003045** Registration Statement No. 000-19009, and is incorporated herein by **0003046** reference. **0003047** **0003048** 4. Specimen copy of the Company's common stock certificate, **0003049** which has been previously filed as Exhibit 1 to the Company's Form **0003050** 8-A Registration Statement No. 000-19009, and is incorporated **0003051** herein by reference. **0003052** **0003053** 10(a). Company Stock Option Plan (Employee), which has been **0003054** filed as Exhibit 10(a) to the Company's Form 10-K for the year **0003055** ended December 31, 1990, and is hereby incorporated by reference. **0003056** **0003057** 10(b). Specimen copy of Option Agreement (Employees), which **0003058** has been filed as Exhibit 10(b) to the Company's Form 10-K for the **0003059** year ended December 31, 1990, and is hereby incorporated by **0003060** reference. **0003061** **0003062** 10(c). Company Stock Option Plan (Non-Employee Directors), **0003063** which has been filed as Exhibit 10(c) to the Company's Form 10-K **0003064** for the year ended December 31, 1990, and is hereby incorporated by **0003065** reference. **0003066** **0003067** 10(d). Specimen copy of Option Agreement (Non-Employee **0003068** Directors), which has been filed as Exhibit 10(d) to the Company's **0003069** Form 10-K for the year ended December 31, 1990, and is hereby **0003070** incorporated by reference. **0003071** **0003072** **0003073** 10(e). Non-Competition Agreement, dated December 2, 1992, **0003074** between the Company and Laidlaw which has been filed as Exhibit 2.3 **0003075** to the Company's 8-K dated December 2, 1992, and is incorporated **0003076** herein by reference. **0003077** **0003078** 10(f). Loan and Security Agreement, dated August 27, 1993, **0003079** between the CIT Group/Equipment Financing, Inc. and Environmental **0003080** Transportation Services, Inc., which has been filed as Exhibit **0003081** 10(i) to the Company's Form 10-K for the year ended December 31, **0003082** 1993, and is hereby incorporated by reference. **0003083** **0003084** 10(g). Guaranty Agreement dated August 27, 19983, between **0003085** the CIT Group/Equipment financing, Inc. and AMETECH, Inc., which **0003086** has been filed as Exhibit 10(j) to the Company's Form 10-K for the **0003087** year ended December 31, 1993, and is hereby incorporated by **0003088** reference. **0003089** **0003090** 10(h). First Amendment to Loan and Security Agreement dated **0003091** March 22, 1994, between the CIT Group/Equipment Financing, Inc. and **0003092** Environmental Transportation Services, Inc. has been filed as **0003093** Exhibit 10(k) to the Company's Form 10-K for the year ended **0003094** December 31, 1994, and is hereby incorporated by reference. **0003095** **0003096** 10(i). Second Amendment to Loan and Security Agreement **0003097** dated September 22, 1994, between the CIT Group/Equipment **0003098** Financing, Inc. and Environmental Transportation Services, Inc. has **0003099** been filed as Exhibit 10(l) to the Company's Form 10-K for the year **0003100** ended December 31, 1994, and is hereby incorporated by reference. **0003101** **0003102** 10(j). Third Amendment to Loan and Security Agreement dated **0003103** March 7, 1995, between the CIT Group/Equipment Financing, Inc. and **0003104** Environmental Transportation Services, Inc. has been filed as **0003105** Exhibit 10(m) to the Company's Form 10-K for the year ended **0003106** December 31, 1994, and is hereby incorporated by reference. **0003107** **0003108** 10(k). Promissory note between the CIT Group/Equipment **0003109** Financing, Inc. and Environmental Transportation Services, Inc., **0003110** which has been filed as Exhibit 10(l) to the Company's Form 10-K **0003111** for the year ended December 31, 1993, and is hereby incorporated by **0003112** reference. **0003113** **0003114** 10(l). Promissory note dated May 16, 1994, between the CIT **0003115** Group/Equipment Financing, Inc. and Environmental Transportation **0003116** Services, Inc. has been filed as Exhibit 10(o) to the Company's **0003117** Form 10-K for the year ended December 31, 1994, and is hereby **0003118** incorporated by reference. Substantially the same agreements have **0003119** been entered into by Environmental Transportation Services, Inc. **0003120** with the CIT Group/Equipment Financing, Inc. for the purpose of **0003121** financing other transportation equipment. Such omitted documents **0003122** will be filed with the Commission upon the Commission's request. **0003123** **0003124** **0003125** 10(m). Note and Security Agreement between NationsBanc **0003126** Leasing Corporation and Environmental Transportation Services, **0003127** Inc., dated December 17, 1992, which has been filed as Exhibit **0003128** 10(m) to the Company's Form 10-K for the year ended December 31, **0003129** 1993, and is hereby incorporated by reference. **0003130** **0003131** 10(n). Security Agreement between Associates Commercial **0003132** Corporation and Environmental Transportation Services, Inc. dated **0003133** July 20, 1994, has been filed as Exhibit 10(r) to the Company's **0003134** Form 10-K for the year ended December 31, 1994, and is hereby **0003135** incorporated by reference. Substantially the same agreements have **0003136** been entered into by Environmental Transportation Services, Inc. **0003137** with Associates Commercial Corporation for the purpose of financing **0003138** other transportation equipment. Such omitted documents will be **0003139** filed with the Commission upon the Commission's request. **0003140** **0003141** 10(o). Agreement between Associates Commercial Corporation **0003142** and Environmental Transportation Services, Inc. dated July 20, **0003143** 1994, has been filed as Exhibit 10(s) to the Company's Form 10-K **0003144** for the year ended December 31, 1994, and is hereby incorporated by **0003145** reference. Substantially the same agreements have been entered into **0003146** by Environmental Transportation Services, Inc. with Associates **0003147** Commercial Corporation for the purpose of financing other **0003148** transportation equipment. Such omitted documents will be filed **0003149** with the Commission upon the Commission's request. **0003150** **0003151** 10(p). Continuing Guaranty between AMETECH, Inc. and **0003152** Associates Commercial Corporation dated July 20, 1994, has been **0003153** filed as Exhibit 10(t) to the Company's Form 10-K for the year **0003154** ended December 31, 1994, and is hereby incorporated by reference. **0003155** Substantially the same agreements have been entered into by **0003156** AMETECH, Inc. with Associates Commercial Corporation for the **0003157** purpose of financing other transportation equipment. Such omitted **0003158** documents will be filed with the Commission upon the Commission's **0003159** request. **0003160** **0003161** 10(q). Change in Terms Agreement between First Interstate **0003162** Bank of Texas, N.A. and Environmental Transportation Services, **0003163** Inc., dated March 25, 1994, has been filed as Exhibit 10(u) to the **0003164** Company's Form 10-K for the year ended December 31, 1994, and is **0003165** hereby incorporated by reference. **0003166** **0003167** 10(r). Transportation Accounts Financing and Security **0003168** Agreement, dated February 6, 1996, between Associates Commercial **0003169** Corporation and Environmental Transportation Services, Inc. **0003170** **0003171** 21. Subsidiaries of the Company. **0003172** **0003173** 23. Consent of Experts. **0003174** **0003175** 27. Financial Data Schedule **0003176** **0003177** **0003178** (b) Reports on Form 8-K. One report on Form 8-K **0003179** was filed on September 8, 1996, to report under Item 2 of **0003180** the Form 8-K the acquisition by the Company's subsidiary **0003181** od Dwight Trucking, Inc. on August 17, 1996. The related **0003182** Form 8-K/A filed on October 31, 1996, set forth the **0003183** following financial statements under Item 7 of the Form **0003184** 8-K: **0003185** **0003186** (i) Financial statements of Dwight Trucking, Inc. **0003187** **0003188** (a) Balance Sheet: June 30, 1995; **0003189** **0003190** (b) Statement of Operations, Year Ended June 30, **0003191** 1995; **0003192** **0003193** (c) Statement of Stockholders' (Deficit) Equity; **0003194** **0003195** (d) Statement of Cash Flows, Year Ended June 30, **0003196** 1995; **0003197** **0003198** (e) Notes to Financial Statements; **0003199** **0003200** (ii) Unaudited Pro Forma Financial Statements: **0003201** **0003202** (a) Pro Forma Condensed Consolidated Balance Sheet, **0003203** June 30, 1995; **0003204** **0003205** (b) Pro Forma Condensed Consolidated Statement of **0003206** Operations, Year Ended December 31, 1994; **0003207** **0003208** (c) Pro Forma Condensed Consolidated Statement of **0003209** Operations, Six Months Ended June 30, 1995; **0003210** **0003211** (d) Notes to Pro Forma Condensed Consolidated **0003212** Financial Statements. **0003213** **0003214** **0003215** SIGNATURES **0003216** **0003217** Pursuant to the requirements of Section 13 or 15(d) of the **0003218** Securities Exchange Act of 1934, as amended, the Company has caused **0003219** the undersigned, duly authorized, to sign this report on its behalf **0003220** on this 12th day of April, 1996. **0003221** **0003222** AMETECH, Inc. **0003223** **0003224** **0003225** By: /s/ Carl B. Anderson, Jr. **0003226** _____________________________ **0003227** Carl B. Anderson, Jr. **0003228** President **0003229** (Chief Executive Officer) **0003230** **0003231** **0003232** By: /s/ Kerry Willingham **0003233** _____________________________ **0003234** Kerry Willingham **0003235** Controller **0003236** (Principal Financial Officer) **0003237** **0003238** Pursuant to the requirements of the Securities Exchange Act of **0003239** 1934, as amended, the undersigned has signed this report on behalf **0003240** of the Company, in the capacities and on the dates indicated: **0003241** **0003242** **0003243** **0003244** Dated: April 12, 1996 By: /s/ Carl B. Anderson, Jr. **0003245** _____________________________________ **0003246** Carl B. Anderson, Jr. **0003247** Chairman of the Board **0003248** **0003249** **0003250** Dated: April 12, 1996 By: /s/ James E. Brown **0003251** _____________________________________ **0003252** James E. Brown, Director **0003253** **0003254** **0003255** Dated: April 12, 1996 By: /s/ Jay Edwards **0003256** _____________________________________ **0003257** Jay Edwards, Director **0003258** **0003259** **0003260** Dated: April 12, 1996 By: /s/ Allen G. Poppino **0003261** _____________________________________ **0003262** Allen G. Poppino, Director **0003263** **0003264** **0003265** **0003266** MBEN:\A-C\AMETECH\10K\10K95.3 **0003267** **0003268**
**0003269** **0003270** CNAME:AMETECH INC **0003271** DOCTYPE:10K **0003272** SICCODE:7370 **0003273** FYEND:1231