-----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, GFc1A9y8yUifPD+Hiac/1Y8oVjdbax+nbQIRcq2L6JKm3U10B0MncnZasKped7w5 q2YOImCmh+D0C1OdSU5JJQ== 0000863210-96-000005.txt : 19960812 0000863210-96-000005.hdr.sgml : 19960812 ACCESSION NUMBER: 0000863210-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NSC CORP CENTRAL INDEX KEY: 0000863210 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 311295113 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18597 FILM NUMBER: 96607564 BUSINESS ADDRESS: STREET 1: 49 DANTON DR CITY: METHUEN STATE: MA ZIP: 01844 BUSINESS PHONE: 5086866417 10-Q 1 10Q FILING FOR QUARTER ENDING JUNE 30, 1996 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ------------------ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______ to _______ ------------------ Commission file number: 018597 NSC CORPORATION State or other jurisdiction of (I.R.S. Employer incorporation or organization Identifical No.) Delaware 31-1295113 49 DANTON DRIVE, METHUEN, MA 01844 (508) 557-7300 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 _____ The total number of shares of the registrant's Common Stock, $.01 par value, outstanding on August 9, 1996 was 9,971,175. Page 1 of 12 NSC CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED June 30, 1996 PART I FINANCIAL INFORMATION Page Number Item 1. Financial Statements Consolidated Balance Sheets (Unaudited) - As of June 30, 1996 and December 31, 1995 3 Consolidated Statements of Income (Unaudited) - For the Three and Six Months Ended June 30, 1996 and 1995 4 Consolidated Statements of Cash Flows (Unaudited) - For the Three and Six Months Ended June 30, 1996 and 1995 5 Notes to Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II OTHER INFORMATION Item 1. Legal Proceedings 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 Page 2 of 12 NSC Corporation Consolidated Balance Sheets (In Thousands, Except Share and Per-Share Data) June 30, December 31, 1996 1995 -------- -------- (Unaudited) ASSETS Current assets: Cash and cash equivalents ......................... $ 3,161 $ 4,094 Accounts receivable, net .......................... 24,979 27,125 Costs and estimated earnings on contracts in process in excess of billings ................ 8,686 7,894 Inventories ....................................... 1,064 1,041 Prepaid expenses and other current assets ......... 954 1,559 Refundable income taxes ........................... 87 92 -------- -------- 38,931 41,805 -------- -------- Property and equipment: Land .............................................. 998 998 Buildings and improvements ........................ 5,731 5,588 Machinery and equipment ........................... 9,783 8,813 -------- -------- 16,512 15,399 Less accumulated depreciation ..................... (7,725) (6,915) -------- -------- 8,787 8,484 -------- -------- Other noncurrent assets: Goodwill, net of accumulated amortization ......... 36,825 36,872 -------- -------- Total Assets ...................................... $ 84,543 $ 87,161 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable .................................. $ 3,472 $ 3,063 Billings in excess of costs and estimated earnings on contracts in process ................ 3,840 3,932 Accrued compensation and related costs ............ 3,681 3,751 Federal, state and local taxes .................... 1,085 250 Other accrued liabilities ......................... 798 926 Contingent liabilities ............................ 5,917 6,694 Current portion of long-term debt ................. -- 5,850 -------- -------- 18,793 24,466 -------- -------- Noncurrent liabilities: Payable to affiliate .............................. 4,520 1,571 Deferred income taxes ............................. 2,832 3,843 Stockholders' equity: Preferred stock $.01 par value, 10,000,000 shares authorized, none issued and outstanding ......... -- -- Common stock $.01 par value, 20,000,000 shares authorized, 9,971,175 issued and outstanding in 1996 and 1995 ................................ 100 100 Additional paid-in capital ........................ 56,079 56,079 Retained Earnings ................................. 2,219 1,102 -------- -------- 58,398 57,281 -------- -------- Total Liabilities and Stockholders' Equity ........ $ 84,543 $ 87,161 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. Page 3 of 12
NSC Corporation Consolidated Statements of Income (In Thousands, Except Per-Share Data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Revenues .............................................. $ 32,147 $ 31,966 $ 67,970 $ 61,510 Cost of services ...................................... 26,816 26,763 56,679 51,607 -------- -------- -------- -------- Gross Profit ....................................... 5,331 5,203 11,291 9,903 Selling, general and administrative expenses .......... 4,041 3,862 8,495 7,747 Other operating expenses .............................. 80 -- 289 -- Goodwill amortization ................................. 273 266 548 533 -------- -------- -------- -------- Operating Income ................................... 937 1,075 1,959 1,623 -------- -------- -------- -------- Other: Interest expense .................................... 13 85 112 179 Other ............................................... (53) (4) (112) 19 -------- -------- -------- -------- (40) 81 -- 198 -------- -------- -------- -------- Income Before Income Taxes .......................... 977 994 1,959 1,425 Income taxes ........................................... 420 501 842 712 ======== ======== ======== ======== Net Income .......................................... $ 557 $ 493 $ 1,117 $ 713 ======== ======== ======== ======== Net income per share .................................. $ 0.06 $ 0.05 $ 0.11 $ 0.07 ======== ======== ======== ======== Weighted-average number of common and common-equivalent shares outstanding .................. 9,971 9,971 9,971 9,971 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. Page 4 of 12 NSC Corporation Consolidated Statements of Cash Flow (In Thousands) (Unaudited) Six Months Ended June 30, ------------------ 1996 1995 ------- ------- Cash flows from operating activities: Net income ........................................... $ 1,117 $ 713 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation .................................... 890 962 Goodwill amortization ........................... 548 533 Deferred income taxes ........................... (1,011) (456) Gain on disposition of property and equipment ... (10) (16) Changes in current assets and liabilities, net of effects of business acquisitions: Accounts receivable .................................. 2,146 (3,140) Costs and estimated earnings on contracts in process in excess of billings ................... (792) (941) Other current assets ................................. 680 403 Accounts payable ..................................... 409 135 Billings in excess of costs and estimated earnings on contracts in process ................... (92) 39 Other ................................................ (138) 834 ------- ------- Net cash provided by (used in) operating activities ....................... 3,747 (934) ------- ------- Cash flows from investing activities: Purchases of property and equipment .................. (1,086) (173) Proceeds from the sale of property and equipment ..... 25 63 Decrease in other noncurrent assets .................. -- 17 Business acquisitions ................................ (718) -- ------- ------- Net cash used in investing activities ...... (1,779) (93) ------- ------- Cash flows from financing activities: Payments on long-term debt ........................... (5,850) (3,438) Payable to affiliate ................................. 2,949 -- ------- ------- Net cash used in financing activities ...... (2,901) (3,438) ------- ------- Net decrease in cash and cash equivalents .. (933) (4,465) Cash and cash equivalents at beginning of periods ....... 4,094 8,818 ======= ======= Cash and cash equivalents at end of periods ............. $ 3,161 $ 4,353 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. Page 5 of 12 Notes to Consolidated Financial Statements For the Quarter Ended June 30, 1996 (Unaudited) Note 1 - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by NSC Corporation (the "Company") and reflect all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of financial results for the three and six month periods ended June 30, 1996 and 1995, in accordance with generally accepted accounting principles for interim financial reporting and pursuant to Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in audited financial statements have been condensed or omitted pursuant to such rules and regulations. These interim consolidated financial statements should be read in conjunction with the Company's Annual Report to Stockholders on Form 10-K for the year ended December 31, 1995. The results of operations for the three and six month periods ended June 30, 1996 and 1995 are not necessarily indicative of the results for the full year. The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company is a Delaware corporation and is owned approximately 40% by OHM Corporation and approximately 40% by Rust International Inc.. Seasonality. The revenues derived from the Company's asbestos-abatement services are affected by the timing of its clients' planned asbestos-abatement work. Because of this change in demand, the Company's quarterly revenues can fluctuate. Revenues and operating results of asbestos-abatement activities may also be further affected by the timing of large contracts, especially if all or a substantial part of the performance of such contracts occurs within one or two quarters while the revenues and operating results of the demolition and dismantling activities may be affected by fluctuations in the price of scrap metals. Accordingly, quarterly or other interim results should not be considered indicative of results to be expected for any other quarter or for the full fiscal year. Net Income Per Share Information. The net income per share amounts have been computed by dividing net income by the weighted-average number of common and common-equivalent shares, if dilutive, outstanding during the respective periods. Reclassifications. Certain reclassifications have been made to prior year financial statements to conform with the current year presentation. Note 2 - Debt On May 1, 1996 the Company amended its May 4, 1993 revolving credit facility. Under this amendment the Company can borrow up to $25,000,000 on a revolving basis for a term expiring April 30, 1999. The amended revolving credit facility contains debt service coverage, leverage and interest covenants and allows for payment of dividends subject to certain conditions (See Exhibit 10 of the Quarterly Report on form 10Q for the quarter ended March 31, 1996). As of June 30, 1996 the Company had outstanding $8,000,000 in letters of credit. Note 3 - Litigation and Contingencies See item 1. Legal Proceedings Page 6 of 12 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations General. The following discussion should be read in conjunction with the information set forth in the Consolidated Financial Statements and related notes for the three and six month periods ended June 30, 1996 and 1995 included herein, and with the Company's Annual Report to Stockholders for the year ended December 31, 1995. The Company is a leading provider of asbestos-abatement and other other specialty contracting services to a broad range of commercial, industrial and institutional clients, which are located throughout the United States. The timing of revenues is dependent on the Company's backlog, contract awards and the performance requirements of each contract. Generally, cost of services as a percentage of net revenues fluctuates based on the amount and timing of revenues earned, the mix of projects requiring union or non-union labor, pricing and other factors. Three Months Ended June 30, 1996 Versus Three Months Ended June 30, 1995 Revenues. Revenues for the three months ended June 30, 1996 increased 1% to $32,147,000 from $31,966,000 for the same period in 1995. The increase in revenues is the net result of decreased asbestos-abatement related revenue and the inclusion of $5,138,000 revenues generated by Olshan Demolishing Management, Inc. (ODMI). The decrease in asbestos-abatement related revenue is the combined result of fewer market opportunities and increased selectivity in the Company's pursuit of contract opportunities for 1996 as compared to the same period in 1995. Gross Profit. Gross profit as a percentage of revenues for the three months ended June 30, 1996 and 1995 remained constant at approximately 17%. Selling, General and Administrative Expenses. Selling, general and administrative expenses (SG&A) for the three months ended June 30, 1996 increased 5% to $4,041,000 from $3,862,000 for the same period in 1995. The SG&A expenses as a percentage of revenue for the three month period in 1996 were 13% compared to 12% for the same period in 1995. The increase in SG&A costs is due to the inclusion of the ODMI activities. Other (Income) and Expenses. Other (income) and expenses for the three months ended June 30, 1996 were ($40,000) compared to $81,000 for the same period in 1995. The net decrease of $121,000 is primarily attributable to lower interest expense due to the repayment in full of the Company's long-term debt. Net Income. Net income for the three months ended June 30, 1996 increased 13% to $557,000 from $493,000 for the same period in 1995. Net income as a percentage of revenues for the three month period ended June 30, 1996 and 1995 remained constant at approximately 2%. The increase in Net Income for the three month period ended June 30, 1996 is primarily due to the reduction of interest expense. Page 7 of 12 Six Months Ended June 30, 1996 Versus Six Months Ended June 30, 1995 Revenues. Revenues for the six months ended June 30, 1996 increased 11% to $67,970,000 from $61,510,000 for the same period in 1995. The increase in revenues is the net result of decreased asbestos-abatement related revenue and the inclusion of $11,214,000 revenues generated by ODMI. The decrease in asbestos-abatement related revenue is the combined result of fewer market opportunities and increased selectivity in the Company's pursuit of contract opportunities for 1996 as compared to the same period in 1995. Selling, General and Administrative Expenses. Selling, general and administrative expenses (SG&A) for the six months ended June 30, 1996 increased 10% to $8,495,000 from $7,747,000 for the same period in 1995 primarily due to the inclusion of the ODMI activities. The SG&A expenses as a percentage of revenue for the six month period in 1996 and 1995 remained constant at 13%. Other (Income) and Expenses. Other (income) and expenses for the six months ended June 30, 1996 were $0 compared to $198,000 for the same period in 1995. The decrease is primarily attributable to lower interest expense due to the repayment in full of the Company's long-term debt. Net Income. Net income for the six months ended June 30, 1996 increased 57% to $1,117,000 from $713,000 for the same period in 1995. Net income as a percentage of revenues for the six month period ended June 30, 1996 increased to 2% from 1% for the same period in 1995. The increase in Net Income was the result of higher revenues and the reduction in interest expense. Liquidity and Capital Resources. Working capital at June 30, 1996 was $20,138,000 compared to $17,339,000 at December 31, 1995. The current ratio was 2.1/1 at June 31, 1996 compared to 1.7/1 at December 31, 1995. Cash provided by operating activities was $3,747,000 for the six month period ended June 30, 1996 compared to cash used in operating activities of $934,000 for the same period in 1995. During the first six months of 1996, cash of $1,086,000 was used for purchases of property and equipment, $618,000 was used for the acquisition of the assets of Safe Air Inc., $100,000 was used for other acquisition activities, and $5,850,000 was used for the repayment in full of the Company's long-term debt. Pursuant to the Olshan Business Operating Agreement, dated April 20, 1995 the Company has received to date a $4,520,000, interest-free working capital loan. The loan is payable according to the provisions contained in the agreement and is expected to remain outstanding for the full term of the agreement. The Company believes that its cash flows from operations and funds available under the existing senior revolving credit facilities, as amended on May 1, 1996, will be sufficient throughout the next twelve months to finance its working capital needs, planned capital expenditures and to service possible future indebtedness. While the Company's Board of Directors has not established a policy concerning payment of regular dividends, it intends to review annually the feasibility of declaring additional dividends depending upon the results of operations, financial condition and cash needs of the Company. The nature and scope of the Company's business bring it into regular contact with the general public, a variety of businesses and government agencies. Such activities inherently subject the Company to the hazards of litigation. While the outcome of all claims is not clearly determinable at the present time, management has recorded an estimate of any losses it expects to incur in connection with the resolution of the claims. Management believes that the resolution of these claims will not have a material effect on the financial condition of the Company; however, such resolutions could materially affect the results of operations or cash flows for either a quarterly or annual reporting period (See Item 1. Legal Proceedings). Page 8 of 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is currently cooperating in a grand jury investigation being conducted by the Department of Justice, Environmental Crimes Section, relating to operational activities involving a subsidiary of the Company as a subcontractor at the Weldon Springs Site Remedial Action Project. The Company cannot speculate what effects, if any, the results of such investigation will have on the Company. The Company is also subject to certain other legal proceedings, including those relating to regulatory compliance, in the ordinary course of business. Management believes that the resolution of these claims will not have a material effect on the financial condition of the Company; however, such resolutions could materially affect the result of operations or cash flows for either a quarterly or annual reporting period. Item 4. Submission of Matters to a Vote of Security Holders. The Company Held its annual meeting on May 16, 1996 at which the only matter to be voted on was the election of directors. The following nominees received the following votes at the annual meeting: Nominee For Withheld Abstained Eugene L. Barnett 9,517,344 0 4,525 Victor J. Barnhart 9,517,344 0 4,525 Robert J. Blackwell 9,517,344 0 4,525 Frank J. Fradella 9,517,344 0 4,525 Herbert A. Getz 9,517,344 0 4,525 William M.R. Mapel 9,517,344 0 4,525 John J. Ray III 9,517,344 0 4,525 Item 6. Exhibits and Reports on Form 8-K 1. EXHIBITS Exhibit 11. Statement Re-Computation of Per-Share Earnings. Exhibit 27. Financial Data Schedule 2. REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1996. Page 9 of 12 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. NSC CORPORATION Date: August 9, 1996 By ______/s/ J. DRENNAN LOWELL_____ J. Drennan Lowell Vice President, Chief Financial Officer, Treasurer and Secretary Signing on behalf of the registrant and as principal financial officer. Page 10 of 12 EX-11 2 STATEMENT OF RE COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 Statement Re Computation of Per-Share Earnings NSC CORPORATION COMPUTATION OF PER-SHARE EARNINGS (In Thousands, Except Per-Share Data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ----------------- ---------------- 1996 1995 1996 1995 ------- ------- ------- ------ Primary: Average shares outstanding 9,971 9,971 9,971 9,971 ======= ======= ======= ====== Total ................. 9,971 9,971 9,971 9,971 ======= ======= ======= ====== Net income .................. $ 557 $ 493 $ 1,117 $ 713 ======= ======= ======= ====== Per-Share amounts: Net income ............... $ 0.06 $ 0.05 $ 0.11 $ 0.07 ======= ======= ======= ====== Fully Diluted: Average shares outstanding 9,971 9,971 9,971 9,971 ======= ======= ======= ====== Total ................. 9,971 9,971 9,971 9,971 ======= ======= ======= ====== Net income .................. $ 557 $ 493 $ 1,117 $ 713 ======= ======= ======= ====== Per-Share amounts: ======= ======= ======= ====== Net income ............... $ 0.06 $ 0.05 $ 0.11 $ 0.07 ======= ======= ======= ====== Page 11 of 12 EX-27 3 ART. 5 FDS FOR 1ST QUARTER 10Q 1996
5 1,000 6-MOS DEC-31-1996 JUN-30-1996 3,161 0 25,528 549 1,064 38,931 16,512 7,725 84,543 18,793 0 0 0 100 58,298 84,543 67,311 67,970 56,679 66,011 (112) 0 112 1,959 842 1,117 0 0 0 1,117 .11 .11
-----END PRIVACY-ENHANCED MESSAGE-----