-----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, MEcSvtbVagvGr5nP/uJzo5ETv/EPvjJwGtQZsSWTWCaOUeMkgxgbYC5zXA8Tik9P n+iqa6N/gBuYHtL5OPthyg== 0000863210-97-000007.txt : 19971117 0000863210-97-000007.hdr.sgml : 19971117 ACCESSION NUMBER: 0000863210-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD 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: SEC FILE NUMBER: 000-18597 FILM NUMBER: 97718696 BUSINESS ADDRESS: STREET 1: 49 DANTON DR CITY: METHUEN STATE: MA ZIP: 01844 BUSINESS PHONE: 5086866417 10-Q 1 10-Q FILING FOR QUARTER ENDED SEPTEMBER 30, 1997 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 September 30, 1997 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 Identification Number) DELAWARE 31-1295113 49 DANTON DRIVE, METHUEN, MA 0184 (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 number of shares of Common Stock outstanding on November 12, 1997 was 9,971,175. The total number of sequentially numbered pages is 12. Page 1 of 13 NSC CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED September 30, 1997 PART I FINANCIAL INFORMATION Page Number Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets -As of September 30, 1997 and December 31, 1996 3 Consolidated Statements of Income -For the Three and Nine Months Ended September 30, 1997 and 1996 4 Consolidated Statements of Cash Flows -For the Nine Months Ended September 30, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II OTHER INFORMATION Item 1. Legal Proceedings 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 Page 2 of 13 NSC Corporation Consolidated Balance Sheets (In thousands, except share and per-share data) September 30, December 31, 1997 1996 ---------- --------- ASSETS (Unaudited) (Note) Current assets: Cash and cash equivalents $ 2,842 $ 3,975 Accounts receivable, net 26,564 26,859 Costs and estimated earnings on contracts in process in excess of billings 5,994 7,739 Inventories 981 878 Prepaid expenses and other current assets 930 1,672 ---------- --------- 37,311 41,123 Property and equipment: Land 767 767 Buildings and improvements 4,269 4,311 Machinery and equipment 7,751 9,868 Projects in Process 646 558 ---------- --------- 13,433 15,504 Less accumulated depreciation (6,456) (8,152) ---------- --------- 6,977 7,352 Other noncurrent assets: Goodwill, net of accumulated amortization 35,450 36,275 Other Assets 488 475 ---------- --------- Total Assets 80,226 85,225 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,528 $ 3,448 Billings in excess of costs and estimated earnings on contracts in process 4,930 5,237 Accrued compensation and related costs 2,334 3,898 Federal, state and local taxes (1,038) 887 Other accrued liabilities 890 1,089 Reserve for self insurance claims and other contingencies 4,966 5,410 ---------- --------- 16,610 19,969 Noncurrent liabilities: Payable to affiliate 4,520 4,520 Deferred income taxes 3,109 3,090 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 100 100 Additional paid-in capital 56,079 56,079 Retained Earnings (192) 1,467 ---------- --------- 55,987 57,646 ---------- --------- Total Liabilities and Stockholders' Equity $ 80,226 $ 85,225 ========== ========= Note: The balance sheet at December 31, 1996 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying notes are an integral part of these consolidated financial statements. Page 3 of 13 NSC Corporation Consolidated Statements of Income (In thousands, except per-share data) (Unaudited)
Three months ended Nine months ended September 30, September 30, --------------------- ------------------ 1997 1996 1997 1996 --------- --------- -------- ------- Revenue $30,643 $30,014 $91,540 $97,984 Cost of services 30,156 24,693 82,219 81,372 --------- --------- -------- ------- Gross profit 487 5,321 9,321 16,612 Selling, general and administrative expenses 4,147 3,849 11,713 12,344 Other operating expenses (568) 154 (642) 443 Goodwill amortization 275 276 825 824 --------- --------- -------- ------- (3,367) 1,042 (2,575) 3,001 --------- --------- -------- ------- Other: Interest expense - - - 112 Other (69) (83) (198) (195) --------- --------- -------- ------- (69) (83) (198) (83) --------- --------- -------- ------- Income before income taxes (3,298) 1,125 (2,377) 3,084 Income tax (benefit) expense (1,179) 671 (718) 1,513 --------- --------- -------- ------- Net (loss) income $ (2,119) $ 454 $(1,659) $1,571 ========= ========= ======== ======= Net (loss) income per share $ (0.21) $ 0.05 $ (0.17) $ 0.16 ========= ========= ======== ======= Weighted-average number of common 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 13 NSC Corporation Consolidated Statements of Cash Flow (In thousands) (Unaudited) Nine months ended September 30, ----------------------- 1997 1996 ---------- ---------- Cash flows from operating activities: Net (loss)income $(1,659) 1,571 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 1,055 1,302 Goodwill amortization 825 824 Deferred income taxes 19 (505) Gain on disposition of property and equipment (21) (16) Changes in current assets and liabilities, net of effects of business acquisition: Accounts receivable 295 (319) Costs and estimated earnings on contracts in process in excess of billings 1,745 124 Other current assets 626 1,280 Accounts payable 1,080 23 Billings in excess of costs and estimated earnings on contracts in process (307) 925 Other current liabilities (3,688) 437 Reserve for self insurance claims and other contingencies (444) (1,535) ---------- ---------- Net cash (used in) provided by operating activities (474) 4,111 ---------- ---------- Cash flow from investing activities: Purchases of property and equipment (731) (1,442) Proceeds from the sale of property and equipment 72 47 Business acquisition - (718) ---------- ---------- Net cash used in investing activities (659) (2,113) ---------- ---------- Cash flow from financing activities: Payments on long-term debt - (5,850) Payable to affiliate - 2,949 ---------- ---------- Net cash used in financing activities - (2,901) ---------- ---------- Net decrease in cash and cash equivalents (1,133) (903) Cash and cash equivalents at beginning of periods 3,975 4,094 ---------- ---------- Cash and cash equivalents at end of periods $ 2,842 $ 3,191 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. Page 5 of 13 Notes to Consolidated Financial Statements For the Quarter Ended September 30, 1997 (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 nine month periods ended September 30, 1997 and 1996, 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, 1996. The results of operations for the three and nine month periods ended September 30, 1997 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. Revenue and operating results of asbestos-abatement activities may be affected by the timing of some contracts. Because of this change in demand, the Company's quarterly revenues can fluctuate, especially if all or a substantial part of the performance of such contracts occurs within one or two quarters. The revenue and operating results of the demolition and dismantling activities may be affected by fluctuations in the price of scrap metals and the demand for process equipment. 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 shares outstanding during the respective periods. In February 1997, the Financial Accounting Standards Board issued Statement No.128, "Earnings per Share," which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of statement 128 on the calculation of fully diluted earnings per share for these quarters is not expected to be material. Reclassifications. Certain reclassifications have been made to prior quarter financial statements to conform with the current quarter presentation. Page 6 of 13 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Three Months Ended September 30, 1997 Versus Three Months Ended September 30, 1996 Revenue. Revenue for the three months ended September 30, 1997 increased 2% to $30,643,000 from $30,014,000 for the same period in 1996. The increase in revenue was due to an increase in asbestos-abatement related revenue of $2,061,000 offset by a decrease in demolition related revenue of $1,432,000. Gross Profit. Gross profit as a percentage of revenue for the three months ended September 30, 1997 decreased to 2% from 18% for the same period in 1996. The decrease in the gross profit margin was the combined result of losses on certain projects and the downward adjustment of the scrap value of process equipment removed from certain demolition projects. Selling, General and Administrative Expenses. Selling, general and administrative expenses (SG&A) for the three months ended September 30, 1997 increased 8% to $4,147,000 from $3,849,000 for the same period in 1996. The SG&A expenses, as a percentage of revenue, for the three months ended September 30, 1997 were 14% compared to 13% for the same period in 1996. The increase in SG&A costs is the result of the increase of certain receivable reserve balances. Other Operating Expenses. Olshan Demolishing Management, Inc.(ODMI) is required to share with Rust any operating profits or operating losses, in exchange for the right to operate Olshan Demolishing Company (ODC). For the three month period ended September 30, 1997 the amount due from Rust was $568,000 compared to $154,000 due to Rust for the same period in 1996. Other (Income) and Expenses. Other (income) and expenses for the three months ended September 30, 1997 were ($69,000) compared to ($83,000) for the same period in 1996. Net Income. Net income (loss) for the three months ended September 30, 1997 decreased to $(2,119,000) from $454,000 for the same period in 1996. Net income as a percentage of revenues for the three month period ended September 30, 1997 decreased to (7%) from 2% for the same period in 1996 primarily due to reduced gross profit margins and increased SG&A expenses. Page 7 of 13 Nine Months Ended September 30, 1997 Versus Nine Months Ended September 30, 1996 Revenue. Revenue for the nine months ended September 30, 1997 decreased 7% to $91,540,000 from $97,984,000 for the same period in 1996. The decrease in revenue is the combined result of a decrease in asbestos-abatement related revenue of $2,786,000 and a decrease in demolition related revenue of $3,658,000. The decrease in revenue was the result of the Company's decreased success in securing new work. Gross Profit. Gross profit as a percentage of revenue for the nine months ended September 30, 1997 decreased to 10% from 17% for the same period in 1996. The decrease in the gross profit margin was the combined result of losses on certain projects, a decrease in the price of scrap metals, and the write down adjustment of scrap process equipment offset by the reduction in the Company's insurance claims and their respective settlement reserves. Selling, General and Administrative Expenses. Selling, general and administrative expenses (SG&A) for the nine months ended September 30, 1997 decreased 5% to $11,713,000 from $12,344,000 for the same period in 1996. The SG&A expenses as a percentage of revenue for the nine month period ended September 30, 1997 were 13% compared to 13% for the same period in 1996. The decrease in SG&A costs was the result of the Company's continued cost containment efforts. Other Operating Expenses. Olshan Demolishing Management, Inc.(ODMI) is required to share with Rust any operating profits or operating losses, in exchange for the right to operate Olshan Demolishing Company (ODC). For the nine month period ended September 30, 1997 the amount due from Rust was $642,000 compared to $443,000 due to Rust for the same period in 1996. Other (Income) and Expenses. Other (income) and expenses for the nine months ended September 30, 1997 were ($198,000) compared to ($83,000) for the same period in 1996. The decrease is primarily attributable to the elimination of the interest expense associated with the Company's long-term debt which was repaid in full on March 21, 1996. Net (loss)income. Net (loss)income for the nine months ended September 30, 1997 decreased 206% to ($1,659,000) from $1,571,000 for the same period in 1996. Net income as a percentage of revenue for the nine month period ended September 30, 1997 decreased to (2%) from 2% for the same period in 1996. The decrease in net income for the nine month period ended September 30, 1997 was primarily due to the reduction in revenue and losses on certain asbestos-abatement and demolition projects. Page 8 of 13 Liquidity and Capital Resources. Working capital at September 30, 1997 was $20,701,000 compared to $21,154,000 at December 31, 1996. The current ratio was 2.2/1 at September 30, 1997 compared to 2.1/1 at December 31, 1996. Cash used in operating activities was $474,000 for the nine month period ended September 30, 1997 compared to cash provided by operating activities of $4,111,000 for the same period in 1996. The decrease in cash provided by operations was due to the decrease in accrued liabilities and the reserve for self insurance claims. During the first nine months of 1997, cash of $731,000 was used for purchases of property and equipment. 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 ten year 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 and planned capital expenditures. 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 Company is currently reviewing its operations to identify ways to cut costs and maximize productivity and profitability. The Company is considering re- structuring certain operating units and centralizing its financial and admin- istrative functions. Costs associated with this initiative are expected to include, but not be limited to, lease buy-out, severance and relocation costs, as well as write down of fixed assets no longer necessary in the business. These costs are expected to be accrued in future periods. As the Company repositions itself in the specialty contracting industry, business opportunities in areas other than asbestos-abatement may receive more emphasis. Consequently, asbestos removal revenues may decline in terms of actual dollars and as a relative proportion of total revenues. The Company is currently re-evaluating the carrying value of the goodwill associated with the asbestos-abatement business. This re-evaluation effort could result in a write down of the goodwill in a future period. These changes could have a material adverse impact on the results of the Company's operations for the fourth quarter and for the year. 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, which is defended in the normal course of business. Management has recorded an estimate of any losses it expects to incur in connection with the resolution of the claims. 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 these claims at September 30, 1997 of $4,966,000 and at December 31, 1996 of $5,410,000. Page 9 of 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is subject to certain legal proceedings, including those relating to regulatory compliance, in the ordinary course of business. Management believes that such proceedings are either adequately covered by insurance or if uninsured, will not, in the aggregate, have a material adverse effect upon the Company. Item 6. Exhibits and Reports on Form 8-K (a.) EXHIBITS Exhibit 11. Statement Re-Computation of Per-Share Earnings. Page 10 of 13 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: November 12, 1997 By _____/s/ Efstathios A. Kouninis_____ Efstathios A. Kouninis Corporate Controller, Secretary and Treasurer Signing on behalf of the registrant and as principal accounting officer. Page 11 of 13 EX-11 2 STATEMENT 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)
Three months ended Nine months ended September 30, September 30, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Primary: Average shares outstanding 9,971 9,971 9,971 9,971 -------- -------- -------- -------- Total 9,971 9,971 9,971 9,971 ======== ======== ======== ======== Net (loss)income (2,119) 454 (1,659) 1,571 ======== ======== ======== ======== Per share amounts: Net (loss)income (0.21) 0.05 (0.17) 0.16 ======== ======== ======== ======== Fully Diluted: Average shares outstanding 9,971 9,971 9,971 9,971 -------- -------- -------- -------- Total 9,971 9,971 9,971 9,971 ======== ======== ======== ======== Net (loss)income (2,119) 454 (1,659) 1,571 ======== ======== ======== ======== Per share amounts: Net (loss)income (0.21) 0.05 (0.17) 0.16 ======== ======== ======== ======== Page 12 of 13
EX-27 3 ART. 5 FDS FOR SEPTEMBER 30, 1997, 10Q
5 1000 9-mos DEC-31-1997 SEP-30-1997 2,842 0 27,468 904 981 37,311 13,433 6,456 80,226 16,610 0 0 0 100 55,887 80,226 93,556 91,540 82,218 94,114 (198) 0 0 (2,377) (718) (1,659) 0 0 0 (1,659) (0.17) (0.17)
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