-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SxOi4w16ir7u54CbxKlQKGOAMCDM2DfxiuRLvl4/w2jUHzn0xyx5riHMMDTT0STP n79tpO/Fz7BfIGhZEUlTyg== 0000819977-96-000025.txt : 19960814 0000819977-96-000025.hdr.sgml : 19960814 ACCESSION NUMBER: 0000819977-96-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMCON CENTRAL INDEX KEY: 0000819977 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 941738964 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16225 FILM NUMBER: 96610120 BUSINESS ADDRESS: STREET 1: 400 S EL CAMINO REAL STE 1200 CITY: SAN MATEO STATE: CA ZIP: 94402 BUSINESS PHONE: 4153751522 MAIL ADDRESS: STREET 1: P O BOX 349014 CITY: SACRAMENTO STATE: CA ZIP: 95834-9014 FORMER COMPANY: FORMER CONFORMED NAME: EMCON ASSOCIATES /CA/ DATE OF NAME CHANGE: 19910611 10-Q 1 FORM 10-Q, 2ND QUARTER 1996 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-16225 EMCON (Exact name of Registrant as specified in its charter) California 94-1738964 ---------------------------------- ------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 South El Camino Real, Suite 1200 San Mateo, California 94402 - ---------------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 375-1522 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] 8,528,526 shares of Common Stock Issued and Outstanding as of July 31, 1996. 1 EMCON INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 Page Number ----- FACING SHEET.......................................................... 1 TABLE OF CONTENTS..................................................... 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1996 and December 31, 1995................... 3 Consolidated Statements of Income - Three months and six months ended June 30, 1996 and 1995................................ 4 Consolidated Statements of Cash Flows - Six months ended June 30, 1996 and 1995............... 5 Notes to Consolidated Financial Statements............ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........... 9 PART II. OTHER INFORMATION............................................ 12 Signatures............................................................ 14 Index to Exhibits..................................................... 15 2 EMCON CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------------------------------------------------- June 30, December 31, 1996 1995 (In thousands, except share amounts) (Unaudited) (Audited) - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents ..................................................................... $ 3,492 $ 9,451 Marketable securities ......................................................................... -- 501 Accounts receivable, net of allowance for doubtful accounts of $1,190 and $1,052 at June 30,1996 and December 31, 1995, respectively ............................. 42,191 34,925 Prepaid expenses and other current assets ..................................................... 5,341 3,066 -------- -------- Total Current Assets ....................................................................... 51,024 47,943 Net property and equipment, at cost ........................................................... 22,459 16,690 Other assets .................................................................................. 4,451 3,579 Deferred tax assets ........................................................................... 1,823 1,677 Intangible assets, net of amortization ........................................................ 20,539 8,747 -------- -------- Total Assets ............................................................................... $100,296 $ 78,636 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable .............................................................................. $ 5,528 $ 4,174 Accrued payroll and related benefits .......................................................... 6,453 4,975 Other accrued liabilities ..................................................................... 2,575 2,109 Non-current obligations due within one year ................................................... 1,627 372 -------- -------- Total Current Liabilities .................................................................. 16,183 11,630 Non-current obligations ....................................................................... 17,852 1,700 Commitments and contingencies ................................................................. -- -- Shareholders' Equity: Preferred stock, no par value, 5,000,000 shares authorized; no shares issued or outstanding ............................................................................. -- -- Common stock, no par value, 15,000,000 shares authorized; 8,483,346 and 8,329,343 shares issued and outstanding at June 30, 1996 and December 31, 1995, respectively ............................................................ 41,944 41,401 Retained earnings ............................................................................. 24,317 23,918 Unrealized losses on marketable securities .................................................... -- (13) -------- -------- Total Shareholders' Equity ................................................................. 66,261 65,306 -------- -------- Total Liabilities and Shareholders' Equity ................................................. $100,296 $ 78,636 ======== ========
See accompanying notes 3
EMCON CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - ----------------------------------------------------------------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, ------------------------------- ------------------------- (In thousands, except per share amounts) 1996 1995 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Gross revenue .............................................. $ 35,881 $ 31,116 $ 64,445 $ 61,485 Outside services, at cost .................................. 5,339 4,663 9,296 8,756 -------- -------- -------- -------- Net revenue ............................................. 30,542 26,453 55,149 52,729 Costs and expenses: Direct expenses ......................................... 13,030 10,050 22,719 20,036 Indirect expenses ....................................... 16,722 15,418 31,521 31,180 -------- -------- -------- -------- Income from operations ............................... 790 985 909 1,513 Interest income (expense), net ............................. (277) 36 (299) 95 Equity in income (loss) of affiliates ...................... 47 (5) 3 (25) -------- -------- -------- -------- Income before provision for income taxes ................... 560 1,016 613 1,583 Provision for income taxes ................................. 195 305 214 475 -------- -------- -------- -------- Net income ................................................. $ 365 $ 711 $ 399 $ 1,108 ======== ======== ======== ======== Income per share ........................................... $ 0.05 $ 0.09 $ 0.06 $ 0.14 ======== ======== ======== ========
See accompanying notes 4
EMCON CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - ------------------------------------------------------------------------------------------------------------------- Six months ended June 30, ------------------------------ Increase (decrease) in cash and cash equivalents (in thousands) 1996 1995 - ------------------------------------------------------------------------------------------------------------------- Cash flow from operating activities: Net income ..................................................................... $ 399 $ 1,108 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization ................................................ 3,234 2,562 Loss on sale/disposal of property and equipment .............................. 39 56 Increase in salary continuation plan ......................................... 53 35 Changes in operating assets and liabilities: Accounts receivable ...................................................... (3,074) 343 Prepaid expenses and other current assets ................................ (950) (153) Other assets ............................................................. (1,228) (288) Accounts payable ......................................................... (306) (3,633) Accrued payroll and related benefits ..................................... 1,094 (293) Other accrued liabilities ................................................ (1,608) 21 - ----------------------------------------------------------------------------------- ------- ------- Net cash used for operating activities ......................................... (2,347) (242) - ----------------------------------------------------------------------------------- ------- ------- Cash flow from investing activities: Additions to property and equipment ........................................... (2,095) (1,830) Purchases of available for sale securities .................................... -- (28) Maturities of available for sale securities ................................... 514 469 Acquisitions, net of cash acquired ........................................... (3,827) -- Proceeds from sale of property and equipment .................................. 70 52 - ----------------------------------------------------------------------------------- ------- ------- Net cash used for investing activities ......................................... (5,338) (1,337) - ----------------------------------------------------------------------------------- ------- ------- Cash flow from financing activities: Proceed of new debt obligation ................................................ 6,755 Payment of current and noncurrent obligations ................................. (5,572) (51) Issuance of common stock for cash ............................................. 543 286 - ----------------------------------------------------------------------------------- ------- ------- Net cash provided by financing activities ...................................... 1,726 235 - ----------------------------------------------------------------------------------- ------- ------- Decrease in cash and cash equivalents ............................................. (5,959) (1,344) Cash and cash equivalents, beginning of year ...................................... 9,451 5,152 - ----------------------------------------------------------------------------------- ------- ------- Cash and cash equivalents, end of period .......................................... $ 3,492 $ 3,808 - ----------------------------------------------------------------------------------- ------- -------
See accompanying notes 5 EMCON NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany accounts and transactions. While the financial information is unaudited, the statements in this report reflect all adjustments, which are normal and recurring, that are necessary for a fair presentation of the results of operations for the interim periods covered and of the financial condition of the Company at the dates of the balance sheets. The operating results for the interim periods presented are not necessarily indicative of performance for the entire year. These financial statements and notes should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended December 31, 1995. 2. Restructuring Charges In December 1994, as a result of changes in senior management, the Company's Board of Directors approved a corporate restructuring plan which included the write off of employment contracts with no current or future value, termination of personnel, and the elimination or abandonment of excess and underperforming assets and facilities. During the six months ended June 30, 1996, $62,000 of cash charges related to the restructuring were incurred and charged against the established reserve. At June 30, 1996, $90,000 of accrued restructuring costs remained and were included in other accrued liabilities. To date, $1,074,000 of restructuring costs have been incurred. 3. On February 29, 1996, EMCON acquired all of the outstanding capital stock of Organic Waste Technologies, Inc. ("OWT"), a Cleveland based construction, equipment and operations and maintenance company with significant expertise in solid waste management. The Company purchased OWT for $13,859,000 in cash plus the issuance of convertible notes held by certain senior OWT management in the aggregate principal amount of $1,747,000 and other direct acquisition costs of $77,000. The notes bear interest at the rate of 8% per annum with all principal due and payable in full on March 1, 2001. The notes may be converted into shares of OWT common stock upon an underwritten public offering of OWT's common stock in an amount in excess of $10,000,000. In the event that the notes have not been converted into OWT shares, they may instead be converted into shares of EMCON common stock for a period of ninety days after November 30, 2001, at a conversion price of $6.50 per share. Specifically identifiable intangible assets and goodwill of approximately $11,786,000 resulting from this acquisition are included in intangible assets and are being amortized over periods not exceeding thirty years. Accumulated amortization as of June 30, 1996 was approximately $131,000. 6 The following summarizes the unaudited pro forma net revenue, net income, and income per share for the combined company for the six month period ended June 30, 1996 and 1995 had the acquisition occurred at the beginning of the period presented. (unaudited) Six months ended June 30, -------------------------------- (in thousands) 1996 1995 --------------------------------------------------------------------------- Net revenue $58,048 $60,306 Net income 83 927 Income per share $ 0.02 $ 0.12 --------------------------------------------------------------------------- The above proforma results of operations do not purport to reflect the actual results of operations had the Company actually acquired OWT as of the beginning of the period presented. On May 31, 1996, EMCON acquired the operations of Cascade Pacific Engineering, Inc. ("Cascade"). The transaction was structured as an asset acquisition with EMCON acquiring substantially all of the assets of Cascade for $546,000 in cash plus the assumption of substantially all of Cascade's liabilities. The tangible net assets acquired were valued at $96,000. The $450,000 excess of cost over the fair value of net assets acquired is included in intangible assets and is being amortized over three years. Accumulated amortization as of June 30, 1996 was approximately $13,000. 4. Credit Agreement In conjunction with the acquisition of OWT, the Company entered into a $20,000,000 secured credit agreement with its existing commercial bank, replacing its previous $10,000,000 unsecured line of credit. Under the new agreement, the Company borrowed $10,000,000 on a long term basis with an interest rate not to exceed the prime rate. Principal is to be amortized over seven years, but with any unpaid amount finally due and payable on June 30, 2001. The remaining $10,000,000 under the credit agreement is available on a line of credit basis for working capital purposes (with up to $5,000,000 available for non-working capital purposes). The line of credit component of the credit agreement expires on May 31, 1997. 5. Litigation As a professional services firm engagedin environmental-related matters, the Company encounters potential liability, including claims for significant environmental damage in the normal course of business. The Company is party to lawsuits and is aware of potential exposure related to certain claims, but in the opinion of management the resolution of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows. 7 6. Income Per Share Income per share is based on the weighted average number of common and dilutive common equivalent shares outstanding using the modified treasury stock method for the three months and six months ended June 30, 1996 and 1995. 7. Other In 1994, the Company converted to a fifty-two/fifty-three week fiscal year which will result in a fifty-three week year in 1996. The Company's year end falls on the Friday closest to the last day of the calendar year. The Company also follows a five-four-four week quarterly cycle. For convenience, the accompanying financial statements have been shown as ending on the last day of the calendar period. 8 EMCON ITEM 2. Management's Discussion and Analysis of Financial Condition and Results Of Operations. RESULTS OF OPERATIONS CURRENT YEAR-TO-DATE VERSUS PRIOR YEAR-TO-DATE. Net revenue for the first six months of 1996 totalled $55,149,000, including $7,623,000 contributed by OWT following its acquisition on February 29, 1996. Excluding OWT, net revenue totalled $47,526,000, a 9.9% decrease compared with $52,729,000 for the first six months of 1995. The decrease was attributable to significant underperformance of the Company's Laboratory Division in the Alaska and Northeast markets and the Consulting Division in the Alaska, Washington and Southeast markets combined with a decrease in revenue due to a reduced headcount following recent reductions in force in those markets. The decrease was, to a lesser extent, also attributable to particularly difficult weather conditions in the Northeast and Northwest areas during the first quarter. Direct expenses for the first six months of 1996 totalled $22,719,000, including direct expenses from OWT of $4,818,000. Direct expenses include compensation for billable hours for technical and professional staff and other project related expenses and direct labor and materials for laboratory testing. Excluding OWT, direct expenses for the first six months of 1996 totalled $17,901,000; a decrease of 10.7% compared with $20,036,000 for the same period in 1995. Excluding OWT, direct expenses as a percent of net revenue in the first six months of 1996 decreased slightly to 37.7% from 38.0% in the same period in 1995. Indirect expenses for the first six months of 1996 totalled $31,521,000, including indirect expenses from OWT of $1,320,000. Indirect expenses include nonbillable hours for professional, technical and administrative staff and general expenses such as rent, bonuses, benefits, insurance, severance, legal and depreciation. Excluding OWT, indirect expenses for the first six months of 1996 totalled $30,201,000; a decrease of 3.1% compared with $31,180,000 for the same period in 1995. Excluding OWT, indirect expenses as a percent of net revenue increased to 63.5% in the first six months of 1996 from 59.1% in the same period in 1995. The increase was principally due to significant severance costs incurred during the period combined with higher start up costs associated with the expansion of the Company's Operation and Construction (EOC) division. This increase was offset in part by prior reductions in force and continued implementation of the Company's previously announced cost containment measures. Income from operations for the first six months of 1996 totalled $909,000; a 39.9% decrease compared to $1,513,000 for the comparable period in 1995. The Company recorded interest expense net of interest income of ($299,000) and interest income net of interest expense of $95,000 for the first six months of 1996 and 1995, respectively. The net decrease was primarily attributable to an increase in the Company's long term indebtedness (including assumption of the outstanding OWT convertible notes and other project/equipment related indebtedness and the $10,000,000 loan undertaken to partially fund the OWT acquisition), and a reduction in the Company's cash available for investment as a result of the OWT acquisition. 9 QUARTERS ENDED JUNE 30, 1996 AND 1995. For the quarter ended June 30, 1996, net revenue totalled $30,542,000, including $5,948,000 contributed by OWT. Excluding OWT, net revenue in the quarter totalled $24,594,000, a 7.0% decrease compared with $26,453,000 in the second quarter of 1995. The decrease on the quarter was attributable to significant underperformance of the Company's Laboratory Division in the Alaska and Northeast markets and the Consulting Division in the Alaska, Washington and Southeast markets combined with a decrease in revenue due to reduced headcount following recent reductions in force in those markets. Direct expenses in the quarter ended June 30, 1996 totalled $13,030,000, including direct expenses from OWT of $3,673,000. Excluding OWT, direct expenses for second quarter totalled $9,357,000; a decrease of 6.9% compared with $10,050,000 for the same period in 1995. Excluding OWT, direct expenses as a percent of net revenue in the second quarters of 1996 and 1995 remained relatively constant at 38.0%. Indirect expenses in the quarter ended June 30, 1996 totalled $16,722,000, including indirect expenses from OWT of $980,000. Excluding OWT, indirect expenses for the second quarter of 1996 totalled $15,742,000; an increase of 2.1% compared with $15,418,000 for the same period in 1995. Excluding OWT, indirect expenses as a percent of net revenue increased to 64.0% in the second quarter of` 1996 from 58.3% in the same period in 1995. The increase was principally due to significant severance costs incurred during the period combined with higher start up costs associated with the expansion of the Company's Operation and Construction (EOC) Division. This increase was offset in part by cost savings from prior reductions in force and continued implementation of the Company's previously announced cost containment measures. Income from operations for the quarter ended June 30, 1996 totalled $790,000; a 19.8% decrease compared to $985,000 for the comparable period in 1995. The Company recorded interest expense net of interest income of ($277,000) and interest income net of interest expense of $36,000 for the quarters ended June 30, 1996 and 1995, respectively. The net decrease was primarily attributable to an increase in the Company's long term indebtedness (including assumption of the outstanding OWT convertible notes and other project/equipment related indebtedness and the $10,000,000 loan undertaken to partially fund the OWT acquisition), and a reduction in the Company's cash available for investment as a result of the OWT acquisition. LIQUIDITY AND CAPITAL RESOURCES During the first six months of 1996, the Company financed its operations principally from cash and marketable securities on hand, cash generated by operations and the issuance of common stock under the Company's Employee Stock Purchase Plan, and from the return on investment on its cash, cash equivalents and marketable securities. Net cash used by operations during the six months ended June 30, 1996 was $2,347,000. The Company at June 30, 1996 had cash and cash equivalents of $3,492,000. 10 The Company invested $2,095,000 for the purchase of property and equipment in the first six months of 1996, primarily for field equipment, computers and communication systems and laboratory equipment. In conjunction with the acquisition of OWT, the Company entered into a $20,000,000 secured credit agreement with its existing commercial bank, replacing its previous $10,000,000 unsecured line of credit. Under the new agreement, the Company borrowed $10,000,000 on a term loan basis with interest at a variable rate, generally not to exceed the prime rate. Principal is to be amortized over seven years, but with any unpaid amount finally due and payable on June 30, 2001. The remaining $10,000,000 under the credit agreement is available on a line of credit basis for working capital purposes (with up to $5,000,000 of this amount also being available for non-working capital purposes). The line of credit component of the credit agreement expires on May 31, 1997. 11 EMCON PART II OTHER INFORMATION Items 1. - 3. Not applicable. Item 4. Submission of Matters to a Vote of Security-Holders On May 17, 1996, the Annual Meeting of the Shareholders of EMCON was held at 3:00 p.m., local time, at 1921 Ringwood Avenue, San Jose, California. Of the 8,480,158 shares outstanding as of the record date, 6,306,246 shares were present or represented by proxies at the meeting. ELECTION OF DIRECTORS. An election of directors was held with the following individuals being elected to the Board of Directors: For Withheld --------- -------- Douglas P. Crane 6,132,790 173,456 Eugene M. Herson 6,131,424 174,822 Stephen W. Vincent 6,132,511 173,735 H. Lee Fortier 6,121,891 184,355 Donald R. Andres 6,007,752 298,494 Richard A. Peluso 5,999,093 307,153 Jack M. Marzluft 6,011,551 294,695 Donald R. Kerstetter 6,132,836 173,410 Peter Vardy 6,133,535 172,711 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. The shareholders voted to ratify the appointment of Ernst & Young LLP as EMCON's independent auditors for the fiscal year ending December 31, 1996. The proposal received 6,263,034 affirmative votes, 34,077 negative votes, and 9,135 abstentions. Item 5. Other Information Effective May 1, 1996, Mr. R. Michael Momboisse was elected the Corporate Secretary of the Company to replace the retiring Mollie C. Mortyn. 12 Item 6. Exhibits and Reports (a) Exhibits - See Index to Exhibits on Page 15 (b) Reports on Form 8-K i) A Current Report on Form 8-K/A (Amendment No. 1) dated April 15, 1996 was filed with the Securities and Exchange Commission (the "Commission") on April 16, 1996, to amend certain information inadvertently left out of the Current Report on form 8-K dated February 29, 1996, announcing the completion of the OWT acquisition. ii) A Current Report on Form 8-K/A (Amendment No. 2) dated May 10, 1996 was filed with the Commission on May 13, 1996 to submit financial statements and other pro forma information relating to the acquisition of OWT. 13 EMCON SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 12, 1996 EMCON R. Michael Momboisse ----------------------- R. MICHAEL MOMBOISSE Chief Financial Officer, Vice President - Legal, and Secretary (Duly authorized and principal financial and accounting officer) 14 EMCON INDEX TO EXHIBITS Sequentially Exhibit Numbered Number Page - -------- -------- 2.1 Agreement and Plan of Reorganization dated effective * April 1, 1994, among Wehran Envirotech, Inc., Registrant and certain other related parties, incorporated by reference from Exhibit 2.1 of the Current Report on Form 8-K dated May 26, 1994. 2.2 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiary, Wehran/Emcon Northeast, Inc., into Registrant effective December 20,1994, incorporated by reference from Exhibit 2.2 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "1994 10-K"). 2.3 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiary, Wehran Engineering Corporation, into Registrant effective December 23, 1994, incorporated by reference from Exhibit 2.3 of the 1994 10-K. 2.4 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiary , EA Associates, into Registrant effective December 31, 1994, incorporated by reference from Exhibit 2.4 of the 1994 10-K. 2.5 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiaries, EMCON Northwest, Inc., EMCON Southeast, Inc., EMCON Baker-Shiflett, Inc., and Eldredge Engineering Associates, Inc., into Registrant effective December 31, 1994, incorporated by reference from Exhibit 2.5 of the 1994 10-K. 2.6 Stock Purchase Agreement dated January 30, 1996, among * Organic Waste Technologies, Inc. ("OWT"), Registrant and the selling shareholders and option holders of OWT, incorporated by reference from Exhibit 2.1 of the Amendment No. 1 to Form 8-K /A dated April 15, 1996. 3.1 Articles of Incorporation, as amended, incorporated by * reference from Exhibit 3.1 of the Registrant's Registration Statement on Form S-1 (File No. 33-16337) effective September 16, 1987 (the "Form S-1 Registration Statement"). 3.2 Certificate of Amendment of Restated Articles of * Incorporation as filed on May 24, 1988, incorporated by reference from Exhibit 3.2 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (the "1988 10-K"). 3.3 Certificate of Amendment of Restated Articles of * Incorporation as filed on June 4, 1991, incorporated by reference from Exhibit 4.1 of the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1991 (the "June 1991 10-Q"). 3.4 Bylaws, as amended, incorporated by reference from * Exhibit 4.2 of the June 1991 10-Q. 10.1 Standard Commercial Lease dated August 1, 1985, between * Archer Business Complex and Registrant (the "ABC Lease"), incorporated by reference from Exhibit 10.5 of the Form S-1 Registration Statement. 10.2 Amendment to the ABC Lease between Archer Business * Complex and Registrant dated September 30, 1992, incorporated by reference from Exhibit 10.10 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (the "1992 10-K"). 15 Sequentially Exhibit Numbered Number INDEX TO EXHIBITS (Continued) Page - --------- ------------ 10.3 Second and Third Amendment to the ABC Lease between * Archer Business Complex and Registrant dated October 4, 1993 and January 1, 1994, respectively, incorporated by referenced from Exhibit 10.2 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (the "1993 10-K"). 10.4 Standard Commercial Lease dated August 1, 1986, between * the Royal Partnership and Sweet-Edwards & Associates, Inc. (since merged into the Registrant) incorporated by reference from Exhibit 10.9 of the Form S-1 Registration Statement. 10.5 EMCON 1986 Incentive Stock Option Plan and Amendment, *(1) incorporated by reference from Exhibit 10.15 of the Form S-1 Registration Statement. 10.6 Form of Agreement pursuant to Salary Continuation Plan, *(1) incorporated by reference from Exhibit 10.17 of the Form S-1 Registration Statement. 10.7 Schedule identifying Agreements pursuant to Salary *(1) Continuation Plan between Registrant and certain employees, incorporated by reference from Exhibit 10.7 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the "1995 10-K"). 10.8 Form of Indemnity Agreement between the Registrant and * each of the Registrant's officers and directors, incorporated by reference from Exhibit 10.20 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (the "1988 10-K"). 10.9 EMCON 1988 Stock Option Plan, amended by shareholder *(1) approval on May 25,1994, including form of Nonqualified Stock Option Agreement (Outside Directors), incorporated by reference from Exhibit 10.9 of the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994 (the "June 30, 1994 10-Q"). 10.10 EMCON Employee Stock Purchase Plan incorporated by *(1) reference from Exhibit 10.10 of the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995. 10.11 EMCON Restricted Stock Plan incorporated by reference *(1) from Exhibit 10.15 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1990. 10.12 EMCON Deferred Compensation Plan effective January 1, *(1) 1994, incorporated by reference from Exhibit 10.12 of the 1993 10-K. 10.13 Trust Agreement for the EMCON Deferred Compensation *(1) Plan and Salary Continuation Plan Trust dated February 19, 1994, between Registrant and Wells Fargo Bank, N.A. incorporated by reference from Exhibit 10.13 of the 1993 10-K. 10.14 Credit Agreement between The Bank of California, N.A. * and Registrant dated September 20, 1991 with Amendment dated May 31, 1992, incorporated by reference from Exhibits 10.11 and 10.12 of the 1992 10-K. 10.15 Second Amendment to Credit Agreement between The Bank * of California, N.A. and Registrant dated effective May 31, 1993, incorporated by reference from Exhibit 10.13 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993. 16 Sequentially Exhibit Numbered Number INDEX TO EXHIBITS (Continued) Page - ---------- ------------ 10.16 Third Amendment to Credit Agreement between The Bank of * California, N.A. and Registrant dated effective June 2, 1994, incorporated by reference from Exhibit 10.16 of Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993. 10.17 Fourth Amendment to Credit Agreement between the Bank * of California, N.A. and Registrant dated effective May 31, 1995, incorporated by reference from Exhibit 10.17 of the June 30, 1995 10-Q. 10.18 Letter Agreement between H. Lee Fortier and Registrant *(1) dated March 14, 1994, incorporated by reference from Exhibit 10.21 of the September 30, 1994 Form 10-Q. 10.19 Letter Agreement between Thorley D. Briggs and *(1) Registrant dated July 19, 1994, incorporated by reference from Exhibit 10.20 of the 1994 10-K. 10.20 Letter Agreement between James M. Felker and Registrant *(1) dated October 31, 1994, incorporated by reference from Exhibit 10.21 of the 1994 10-K. 10.21 Agreement between Eugene M. Herson and Registrant *(1) dated November 30, 1995, incorporated by reference from Exhibit 10.21 of the 1995 10-K. 10.22 Agreement between R. Michael Momboisse and Registrant *(1) dated November 10, 1995, incorporated by reference from Exhibit 10.22 of the 1995 10-K. 10.23 Credit Agreement between The Bank of California, N.A. * and Registrant dated February 29, 1996, incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K dated February 29, 1996 (the "February 1996 8-K."). 10.24 Security Agreement between The Bank of California, N.A. * and Registrant dated February 29, 1996, incorporated by reference from Exhibit 10.3 of the February 1996 8-K. 10.25 Pledge Agreement between The Bank of California, N.A. * and Registrant dated February 29, 1996, incorporated by reference from Exhibit 10.4 of the February 1996 8-K. 10.26 Eurodollar Rate Option Agreement between The Bank of * California, N.A. and Registrant dated February 29, 1996, incorporated by reference from Exhibit 10.5 of the February 1996 8-K. 10.27 Fixed Rate Amortization Option Agreement between The * Bank of California, N.A. and Registrant dated February 29, 1996, incorporated by reference from Exhibit 10.6 of the February 1996 8-K. 10.28 Note Agreement among the Registrant, OWT, Mark H. * Shipps, and certain employees of OWT , incorporated by reference from Exhibit 10.1 of the February 1996 8-K. 11.1 Computation of Income Per Share, incorporated as part 18 of this submission as document type EX-11.1. * Incorporated by reference (1) Management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 14(c) of the instructions to Form 10-K. 17 EX-11 2 COMPUTATION OF INCOME PER SHARE
EXHIBIT 11.1 EMCON COMPUTATION OF INCOME PER SHARE (In thousands except per share data) Three months ended Six months ended June 30, June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net income ......................................................... $ 365 $ 711 $ 399 $1,108 Proforma interest income related to modified treasury stock method ........................................... 58 54 116 109 ------ ------ ------ ------ Adjusted net income ................................................ $ 457 $ 765 $ 515 $1,217 ====== ====== ====== ====== Weighted average number of common shares outstanding during the period ...................................... 8,481 8,245 8,463 8,235 Common equivalent share from outstanding stock options using the modified treasury stock method .................................................... 716 680 799 679 Incremental shares to reflect full dilution (1) ................. 0 0 0 0 ------ ------ ------ ------ Total shares for purposes of calculating diluted income per share (1) ............................................... 9,197 8,925 9,242 8,914 ====== ====== ====== ====== Primary income per share ........................................... $ 0.05 $ 0.09 $ 0.06 $ 0.14 ====== ====== ====== ====== Fully diluted income per share ..................................... $ 0.05 $ 0.09 $ 0.06 $ 0.14 ====== ====== ====== ======
- ----------------------- (1) This calculation is submitted in accordance with Regulation S-K Item 601(b)(11) although not required by footnote 2 to paragraph 14 to APB opinion No. 15, because it results in dilution of less than 3%. 18 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows included in the Company's Form 10-Q for the six month period ended June 30, 1996, and is qualified in its entirety by reference to such financial statements and the notes thereto. U.S. DOLLARS 6-MOS DEC-31-1996 JAN-1-1996 JUN-30-1996 1 3,492,000 0 43,381,000 1,190,000 0 51,024,000 48,227,000 25,768,000 100,296,000 16,183,000 0 0 0 41,944,000 0 100,296,000 55,149,000 55,149,000 22,719,000 22,719,000 31,520,000 (156,000) 453,000 613,000 214,000 399,000 0 0 0 399,000 $0.06 $0.06 -----END PRIVACY-ENHANCED MESSAGE-----