-----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, TQ7/tc3PyqmPe2o5jekeVBu27P1HYpf1/d2h+TmmyeK7OoQF5Vs2HYIjJ7EuzePG TMnlWhmoaJKUJwlzdygEwg== 0000819977-96-000026.txt : 19961107 0000819977-96-000026.hdr.sgml : 19961107 ACCESSION NUMBER: 0000819977-96-000026 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961106 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: 96654943 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 10Q 3RD QTR. 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 September 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 [ ] 8,528,454 shares of Common Stock Issued and Outstanding as of November 6, 1996. 1 EMCON INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 Page Number FACING SHEET...................................................... 1 TABLE OF CONTENTS................................................. 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1996 and December 31, 1995.......... 3 Consolidated Statements of Income - Three months and nine months ended September 30, 1996 and 1995....................... 4 Consolidated Statements of Cash Flows - Nine months ended September 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........................................................ 13 Index Exhibits.................................................... 14 2 EMCON CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------------------------------------------------- September 30, December 31, 1996 1995 (In thousands, except share amounts) (Unaudited) (Audited) - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents ..................................................................... $ 5,183 $ 9,451 Marketable securities ......................................................................... -- 501 Accounts receivable, net of allowance for doubtful accounts of $1,162 and $1,052 at September 30,1996 and December 31, 1995, respectively ........................ 40,876 34,925 Prepaid expenses and other current assets ..................................................... 5,053 3,066 -------- -------- Total Current Assets ....................................................................... 51,112 47,943 Net property and equipment, at cost ........................................................... 21,522 16,690 Other assets .................................................................................. 4,938 3,579 Deferred tax assets ........................................................................... 1,823 1,677 Intangible assets, net of amortization ........................................................ 21,247 8,747 -------- -------- Total Assets ............................................................................... $100,642 $ 78,636 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable .............................................................................. $ 5,183 $ 4,174 Accrued payroll and related benefits .......................................................... 6,760 4,975 Other accrued liabilities ..................................................................... 2,044 2,109 Non-current obligations due within one year ................................................... 1,647 372 -------- -------- Total Current Liabilities .................................................................. 15,634 11,630 Non-current obligations ....................................................................... 18,368 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; 8,528,454 and 8,329,343 shares issued and outstanding at September 30, 1996 and December 31, 1995, respectively ............................................................ 42,064 41,401 Retained earnings ............................................................................. 24,576 23,918 Unrealized losses on marketable securities .................................................... -- (13) -------- -------- Total Shareholders' Equity ................................................................. 66,640 65,306 -------- -------- Total Liabilities and Shareholders' Equity ................................................. $100,642 $ 78,636 ======== ========
See accompanying notes 3 EMCON CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ------------------------------- ------------------------------ (In thousands, except per share amounts) 1996 1995 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Gross revenue .......................................... $ 36,416 $ 32,106 $ 100,861 $ 93,591 Outside services, at cost .............................. 4,856 5,470 14,152 14,226 --------- --------- --------- --------- Net revenue ......................................... 31,560 26,636 86,709 79,365 Costs and expenses: Direct expenses ..................................... 14,894 10,237 37,613 30,273 Indirect expenses ................................... 16,084 15,608 47,605 46,763 --------- --------- --------- --------- Income from operations ........................... 582 791 1,491 2,329 Interest income (expense), net ......................... (266) 71 (565) 166 Equity in income (loss) of affiliates .................. 83 (3) 86 (53) --------- --------- --------- --------- Income before provision for income taxes ............... 399 859 1,012 2,442 Provision for income taxes ............................. 140 209 354 684 --------- --------- --------- --------- Net income ............................................. $ 259 $ 650 $ 658 $ 1,758 ========= ========= ========= ========= Income per share ....................................... $ 0.03 $ 0.08 $ 0.08 $ 0.22 ========= ========= ========= =========
See accompanying notes 4 EMCON CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- ----------------------------------------------------------------------------------------------------------------- Nine months ended September 30, ---------------------------- Increase (decrease) in cash and cash equivalents (in thousands) 1996 1995 - ----------------------------------------------------------------------------------------------------------------- Cash flow from operating activities: Net income .................................................................... $ 658 $ 1,758 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization ............................................... 4,922 3,867 Loss on sale/disposal of property and equipment ............................. 122 149 Increase in salary continuation plan ........................................ 97 52 Changes in operating assets and liabilities: Accounts receivable ....................................................... (1,759) 1,160 Prepaid expenses and other current assets ................................. (662) 1,094 Other assets .............................................................. (2,780) (647) Accounts payable .......................................................... (651) (3,886) Accrued payroll and related benefits ...................................... 1,401 (972) Other accrued liabilities ................................................. (1,766) (375) - ---------------------------------------------------------------------------------- ------- ------- Net cash provided by (used for) operating activities .......................... (418) 2,200 - ---------------------------------------------------------------------------------- ------- ------- Cash flow from investing activities: Additions to property and equipment ........................................... (2,722) (2,693) Purchases of available for sale securities .................................... -- (1) Maturities of available for sale securities ................................... 514 1,454 Acquisitions, net of cash acquired ........................................... (3,827) -- Proceeds from sale of property and equipment .................................. 176 59 - ---------------------------------------------------------------------------------- ------- ------- Net cash used for investing activities ........................................ (5,859) (1,181) - ---------------------------------------------------------------------------------- ------- ------- Cash flow from financing activities: Proceeds of new debt obligation ............................................... 8,348 -- Payment of current and noncurrent obligations ................................. (7,002) 145 Issuance of common stock for cash ............................................. 663 501 - ---------------------------------------------------------------------------------- ------- ------- Net cash provided by financing activities ..................................... 2,009 646 - ---------------------------------------------------------------------------------- ------- ------- Increase (decrease) in cash and cash equivalents ................................. (4,268) 1,665 Cash and cash equivalents, beginning of year ..................................... 9,451 5,152 - ---------------------------------------------------------------------------------- ------- ------- Cash and cash equivalents, end of period ......................................... $ 5,183 $ 6,817 - ---------------------------------------------------------------------------------- ------- -------
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 nine months ended September 30, 1996, $91,000 of cash charges related to the restructuring were incurred and charged against the established reserve. At September 30, 1996, $61,000 of accrued restructuring costs remained and were included in other accrued liabilities. To date, $1,103,000 of restructuring costs related to this action 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 related to this acquisition as of September 30, 1996 was approximately $229,000. 6 The following summarizes the unaudited pro forma net revenue, net income, and income per share for the combined company for the nine month period ended September 30, 1996 and 1995 had the acquisition occurred at the beginning of the period presented. (unaudited) Nine months ended September 30, -------------------------------- (in thousands) 1996 1995 ------------------------------------------------------------------------ Net revenue $89,608 $92,341 Net income 342 1,585 Income per share $ 0.05 $ 0.20 ------------------------------------------------------------------------ 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 $84,000. The $462,000 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 related to this acquisition as of September 30, 1996 was approximately $51,000. 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 engaged in 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 nine months ended September 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. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS. Statements in this report that are forward-looking are based on current expectations, and actual results may differ materially. Forward-looking statements involve numerous risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the possibilities that the demand for the Company's services may decline as a result of possible changes in general and industry specific economic conditions and the effects of competitive services and pricing; one or more current or future claims made against the Company may result in substantial liabilities; and such other risks and uncertainties as are described in reports and other documents filed by the Company from time to time with the Securities and Exchange Commission. RESULTS OF OPERATIONS CURRENT YEAR-TO-DATE VERSUS PRIOR YEAR-TO-DATE. Net revenue for the first nine months of 1996 totalled $86,709,000, including $14,440,000 contributed by OWT following its acquisition on February 29, 1996. Excluding OWT, net revenue totalled $72,269,000, an 8.9% decrease compared with $79,365,000 for the first nine 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 nine months of 1996 totalled $37,613,000, including direct expenses from OWT of $10,002,000. 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 nine months of 1996 totalled $27,611,000 a decrease of 8.8% compared with $30,273,000 for the same period in 1995. Excluding OWT, direct expenses as a percent of net revenue in the first nine months of 1996 increased slightly to 38.2% from 38.1% in the same period in 1995. Indirect expenses for the first nine months of 1996 totalled $47,605,000, including indirect expenses from OWT of $2,112,000. 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 nine months of 1996 totalled $45,493,000; a decrease of 2.7% compared with $46,763,000 for the same period in 1995. Excluding OWT, indirect expenses as a percent of net revenue increased to 62.9% in the first nine months of 1996 from 58.9% in the same period in 1995. The increase in indirect expenses as a percent of net revenue was principally due to the above noted decrease in net revenue combined with the effect of significant severance costs and expenses related to closing several small offices, 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. 9 Income from operations for the first nine months of 1996 totalled $1,491,000 a 36.0% decrease compared to $2,329,000 for the comparable period in 1995. The Company recorded interest expense net of interest income of $565,000 and interest income net of interest expense $166,000 for the first nine months of 1996 and 1995, respectively. The net increase in interest expense 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. QUARTERS ENDED SEPTEMBER 30, 1996 AND 1995. For the quarter ended September 30, 1996, net revenue totalled $31,560,000, including $6,817,000 contributed by OWT. Excluding OWT, net revenue in the quarter totalled $24,743,000, a 7.1% decrease compared with $26,636,000 in the third 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 September 30, 1996 totalled $14,894,000, including direct expenses from OWT of $5,184,000. Excluding OWT, direct expenses for third quarter totalled $9,710,000; a decrease of 5.1% compared with $10,237,000 for the same period in 1995. Excluding OWT, direct expenses as a percent of net revenue in the third quarters of 1996 and 1995 remained relatively constant at 39.2% and 38.4%, respectively. Indirect expenses in the quarter ended September 30, 1996 totalled $16,084,000, including indirect expenses from OWT of $792,000. Excluding OWT, indirect expenses for the third quarter of 1996 totalled $15,292,000; a decrease of 2.0% compared with $15,608,000 for the same period in 1995. Excluding OWT, indirect expenses as a percent of net revenue increased to 61.8% in the third quarter of` 1996 from 58.6% in the same period in 1995. The increase in indirect expenses as a percent of net revenue was principally due to the above noted decrease in net revenue combined with the effect of significant severance costs and expenses related to closing several small offices, 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 September 30, 1996 totalled $582,000; a 26.4% decrease compared to $791,000 for the comparable period in 1995. The Company recorded interest expense net of interest income of $266,000 and interest income net of interest expense of $71,000 for the quarters ended September 30, 1996 and 1995, respectively. The net increase in interest expense 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. 10 LIQUIDITY AND CAPITAL RESOURCES During the first nine 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 nine months ended September 30, 1996 was $418,000. At September 30, 1996, the Company had cash and cash equivalents of $5,183,000. The Company invested $2,722,000 for the purchase of property and equipment in the first nine 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. - 5. Not applicable. Item 6. Exhibits and Reports (a) Exhibits - See Index to Exhibits on Page 14 (b) Reports on Form 8-K - No reports on Form 8-K were filed with the Securities and Exchange Commission during the quarter ended September 30, 1996. 12 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: November 6, 1996 EMCON R. Michael Momboisse ------------------------------------- R. MICHAEL MOMBOISSE Chief Financial Officer, Vice President - Legal, and Secretary (Duly authorized and principal financial and accounting officer) 13 EMCON Sequentially Exhibit Numbered Number INDEX TO EXHIBITS Page - -------------- ------------ 2.1 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"). 2.2 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. 2.3 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. 2.4 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. 2.5 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 EMCON 1986 Incentive Stock Option Plan and *(1) Amendment, incorporated by reference from Exhibit 10.15 of the Form S-1 Registration Statement. 10.2 Form of Agreement pursuant to Salary Continuation *(1) Plan, incorporated by reference from Exhibit 10.17 of the Form S-1 Registration Statement. 14 Sequentially Exhibit Numbered Number INDEX TO EXHIBITS (Continued) Page - -------------- ------------ 10.3 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"). 10.4 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"). 10.5 EMCON 1988 Stock Option Plan, amended by *(1) shareholder 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"). 10.6 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. 10.7 EMCON Restricted Stock Plan incorporated by *(1) reference from Exhibit 10.15 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1990. 10.8 EMCON Deferred Compensation Plan effective *(1) January 1, 1994, incorporated by reference from Exhibit 10.12 of the 1993 10-K. 10.9 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. 10.10 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. 10.11 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. 10.12 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. 10.13 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. 10.14 Letter Agreement between H. Lee Fortier and *(1) Registrant dated March 14, 1994, incorporated by reference from Exhibit 10.21 of the September 30, 1994 Form 10-Q. 10.15 Agreement between Eugene M. Herson and Registrant *(1) dated November 30, 1995, incorporated by reference from Exhibit 10.21 of the 1995 10-K. 15 Sequentially Exhibit Numbered Number INDEX TO EXHIBITS (Continued) Page - -------------- ------------ 10.16 Agreement between R. Michael Momboisse and *(1) Registrant dated November 10, 1995, incorporated by reference from Exhibit 10.22 of the 1995 10-K. 10.17 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."). 10.18 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. 10.19 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. 10.20 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. 10.21 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. 10.22 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 17 part 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. 16 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 Nine months ended September 30, September 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net income ......................................................... $ 259 $ 650 $ 658 $1,758 Proforma interest income related to modified treasury stock method ........................................... 58 59 74 194 ------ ------ ------ ------ Adjusted net income ................................................ $ 317 $ 709 $ 732 $1,952 ====== ====== ====== ====== Weighted average number of common shares outstanding during the period ...................................... 8,512 8,296 8,483 8,255 Common equivalent share from outstanding stock options using the modified treasury stock method .................................................... 691 657 744 660 Incremental shares to reflect full dilution (1) ................. 0 0 0 0 ------ ------ ------ ------ Total shares for purposes of calculating diluted income per share (1) ............................................... 9,203 8,953 9,227 8,915 ====== ====== ====== ====== Primary income per share ........................................... $ 0.03 $ 0.08 $ 0.08 $ 0.22 ====== ====== ====== ====== Fully diluted income per share ..................................... $ 0.03 $ 0.08 $ 0.08 $ 0.22 ====== ====== ====== ====== - -----------------------
(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%. 17 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 nine month period ended September 30, 1996, and is qualified in its entirety by reference to such financial statements and the notes thereto. U.S. DOLLARS 9-MOS DEC-31-1996 JAN-1-1996 SEP-30-1996 1 5,183,000 0 42,038,000 1,162,000 0 51,112,000 48,067,000 26,545,000 100,642,000 15,634,000 0 42,064,000 0 0 0 100,642,000 86,709,000 86,709,000 37,613,000 37,613,000 47,094,000 204,000 786,000 1,012,000 354,000 658,000 0 0 0 658,000 $0.08 $0.08 -----END PRIVACY-ENHANCED MESSAGE-----