-----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, RKLk25tta4o0Uaud7oJdjYjjnBaDrlCGwqxvfBrSwod0pKQIr3mgCpHQAVWScZEG pTo8bws3w9sPHI+flMkqQA== 0000950123-97-004367.txt : 19970520 0000950123-97-004367.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950123-97-004367 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KTI INC CENTRAL INDEX KEY: 0000931581 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 222665282 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25490 FILM NUMBER: 97606522 BUSINESS ADDRESS: STREET 1: 7000 BLVD E CITY: GUTTENBERG STATE: NJ ZIP: 07093 BUSINESS PHONE: 2018547777 MAIL ADDRESS: STREET 1: 7000 BOULEVARD EAST CITY: GUTTENBERG STATE: NJ ZIP: 07093 10-Q 1 FORM 10-Q 1 FORM 10-Q. - QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10Q (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 Commission File No. 0-25490 KTI, INC. (Exact name of registrant as specified in its charter) New Jersey 22-2665282 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 7000 Boulevard East Guttenberg, New Jersey 07093 (Address of principal executive offices) (Zip code) (201) 854-7777 (Registrants telephone number including area code) 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 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Common Stock, No Par Value 6,907,262 Shares as of May 12, 1997 2 TABLE OF CONTENTS Item Number and Caption Page Number - ----------------------- ----------- PART I Item 1. Financial Statements 2 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8K 12 1 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KTI, INC. CONSOLIDATED BALANCE SHEET
MARCH 31, DECEMBER 31, 1997 1996 -------------------- --------------------- ASSETS Current Assets Cash and cash equivalents $ 2,914,087 $ 5,227,381 Restricted funds - current portion 6,200,392 5,163,965 Accounts receivable, net of allowances of $295,844 and $291,939 4,675,423 4,080,503 Management fees receivable - current portion 566,634 566,634 Consumables and spare parts 2,810,575 2,100,311 Notes receivable--officers/shareholders and affiliates - current 263,204 57,629 Other receivables 347,487 398,320 Other current assets 1,260,223 480,034 -------------------- --------------------- Total current assets 19,038,025 18,074,777 Restricted funds 2,863,168 2,903,761 Management fees receivable--affiliates 2,269,672 2,175,203 Notes receivable - officers/shareholders and affiliates - 212,835 Other receivables 463,406 711,783 Investment in PERC 3,826,480 3,792,429 Deferred costs, net of accumulated amortization of $234,080 and $208,096. 1,141,400 1,020,120 Goodwill and other intangibles, net of accumulated amortization of $340,699 and $297,941. 2,136,708 2,179,466 Deferred project development costs 1,039,027 909,998 Other assets 215,989 238,893 Property, equipment and leasehold improvements, net of accumulated depreciation of $13,805,436 and $12,671,949 90,764,297 90,855,366 -------------------- --------------------- Total assets $ 123,758,172 $ 123,074,631 ==================== ===================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 2,972,732 $ 2,371,430 Accrued expenses 1,860,887 1,829,959 Current portion of long-term debt 3,864,105 4,123,840 Income taxes payable 200,000 200,000 Other current liabilities 416,135 465,585 -------------------- --------------------- Total current liabilities 9,313,859 8,990,814 Other liabilities 1,308,382 1,308,199 Long-term debt, less current portion 34,287,467 34,949,148 Minority interest 11,226,982 10,871,852 Deferred revenue 40,312,500 41,250,000 Commitments and contingencies Stockholders' equity Preferred stock; 10,000,000 shares authorized, no shares issued or outstanding Common stock, no par value (stated value $.01 per share); authorized 13,333,333; issued and outstanding 6,879,399 at March 31, 1997 and 6,836,766 at December 31, 1996 68,794 68,368 Additional paid-in capital 38,821,036 38,575,892 Accumulated (deficit) (11,580,848) (12,939,642) -------------------- --------------------- Total stockholders' equity 27,308,982 25,704,618 -------------------- --------------------- Total liabilities and stockholders' equity $ 123,758,172 $ 123,074,631 ==================== =====================
See accompanying notes. 2 4 KTI, INC. CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended March 31, 1997 1996 ----------- ----------- (Unaudited) Revenues: Electric power revenues $ 5,476,510 $ 7,401,470 Waste processing revenues 3,996,037 2,090,460 Other materials handling revenues 2,293,578 715,787 ----------- ----------- Total revenues 11,766,125 10,207,717 ----------- ----------- Costs and expenses: Electric power and waste processing operating costs 8,742,512 6,487,045 Selling, general and administrative 890,804 859,386 Interest - net 474,872 2,032,103 ----------- ----------- Total costs and expenses 10,108,188 9,378,534 Equity in net income of PERC 55,987 25,572 ----------- ----------- Income from continuing operations before minority interest 1,713,924 854,755 Minority interest 355,130 831,253 ----------- ----------- Income from continuing operations 1,358,794 23,502 Loss from discontinued operations -- 1,372 ----------- ----------- Net income $ 1,358,794 $ 22,130 =========== =========== Earnings per common share and common share equivalent: $ .19 $ 0.00 =========== =========== Weighted average number of common shares and common share equivalents outstanding 7,138,448 5,938,682 =========== ===========
See accompanying notes. 3 5 KTI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1997 1996 ----------- ----------- (Unaudited) OPERATING ACTIVITIES $ 1,358,794 $ 22,130 Net income Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 1,202,229 1,833,962 Minority interest 355,130 831,253 Amortization of deferred revenue (937,500) -- Provision for losses on accounts receivable 3,905 2,729 Interest accrued and capitalized on debt 428,687 183,892 Equity in net income of PERC, net of distributions (55,987) (25,572) (Gain) loss on sale of assets (547) 19,290 Changes in operating assets and liabilities Increasing (decreasing) cash: Accounts receivable (598,825) 394,898 Management fees receivable (94,469) (117,022) Other receivables 299,210 65,407 Consumables and spare parts (710,264) -- Other assets (757,285) (2,119,326) Accounts payable 601,302 1,060,832 Accrued expenses 30,928 (303,801) Other liabilities (49,267) 87,478 ----------- ----------- Net cash provided by operating activities 928,777 1,564,139 INVESTING ACTIVITIES Additions to property, equipment and leasehold improvements (1,049,371) (1,702,912) Proceeds from sale of assets 7,500 42,500 Increase in restricted cash and cash equivalents (995,834) (741,619) Deferred project costs (129,029) -- Notes receivable--officers/shareholders and affiliates 7,260 95,548 ----------- ----------- Net cash (used in) provided by investing activities (2,159,474) (2,306,483) FINANCING ACTIVITIES Proceeds from issuance of debt 423,795 1,034,314 Deferred financing costs (147,264) (372,011) Proceeds from sale of common stock 245,570 7,648 Principal payments on debt (1,751,962) (340,301) ----------- ----------- Net cash provided by (used in) financing activities (1,082,597) 701,661 ----------- ----------- Increase (decrease) in cash and cash equivalents (2,313,294) (40,683) Cash and cash equivalents at beginning of period 5,227,381 6,454,558 ----------- ----------- Cash and cash equivalents at end of period $ 2,914,087 $ 6,413,875 =========== =========== -Continued-
4 6 KTI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 318,006 $ 2,093,724 ================== ================== NON CASH INVESTING AND FINANCING ACTIVITIES - $ 500,000 Conversion of debt to equity
See accompanying notes. 5 7
KTI, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) COMMON STOCK ADDITIONAL ------------------------- PAID-IN ACCUMULATED SHARES AMOUNT CAPITAL DEFICIT TOTAL ------ ------ ------- ------- ----- Balance at December 31, 1995 5,946,973 $ 59,470 $33,427,091 $(26,605,994) $ 6,880,567 Net income 13,666,352 13,666,352 Issuance of common stock under exercise of stock options 55,346 553 280,107 280,660 Issuance of common stock from exercise of warrants 41,183 412 225,114 225,526 Issuance of common stock upon conversion of debt 725,015 7,250 4,044,697 4,051,947 Issuance of stock purchase warrants 143,738 143,738 Issuance of common stock in connection with business combination 68,249 683 455,145 455,828 ---------- ---------- ----------- ------------ ----------- Balance at December 31, 1996 6,836,766 $ 68,368 $38,575,892 $(12,939,642) $25,704,618 Net Income 1,358,794 1,358,794 Issuance of common stock from exercise of stock warrants 42,633 426 245,144 245,570 ---------- ---------- ----------- ------------ ----------- Balance at March 31, 1997 6,879,399 $ 68,794 $38,821,036 $(11,580,848) $27,308,982 ========== ========== =========== ============ ===========
See accompanying notes. 6 8 KTI, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1996. Certain 1996 financial information contained herein has been reclassified to conform with the 1997 presentation. 2. EARNINGS PER SHARE Earnings per share have been computed based on the weighted average number of shares outstanding as well as the dilutive effect of outstanding options and warrants during the periods presented. 3. INFORMATION REGARDING PENOBSCOT ENERGY RECOVERY COMPANY The following financial information of Penobscot Energy Recovery Company is provided in accordance with Article 10.01(b)(1) of Regulation S-X:
THREE MONTHS ENDED MARCH 31, 1997 1996 Revenues $6,664,819 $6,877,317 Operating expenses 4,018,932 4,100,031 Net income 956,058 581,902
7 9 4. DEBT AND ACCRUED INTEREST The Company's debt consists of the following:
MARCH 31, DECEMBER 31, -------------------------------- 1997 1996 ----------- ----------- 8% convertible subordinated note payable $ 5,000,000 $ 5,000,000 12% term note payable to bank 607,448 1,657,448 10% note payable to Energy National, Inc. 1,353,479 1,353,479 $1,000,000 bank line of credit at bank prime rate plus .25% 914,904 589,904 $300,000 bank line of credit at bank prime rate plus 1.5% -- 220,000 9.94% secured term notes payable 649,931 780,357 Notes payable to limited partners of Maine Energy 374,324 490,063 8.63% secured term note payable 383,819 400,000 9.9% secured term notes payable to GE Capital 139,469 190,368 10.13% secured term notes payable 160,955 179,997 Note payable to former shareholder 112,330 127,137 Other 72,177 108,250 ----------- ----------- 9,768,836 11,097,003 Resource Recovery Revenue Bonds Payable 13,400,000 13,400,000 12% Subordinated Notes Payable to Maine Energy Limited Partners 14,982,736 14,575,985 ----------- ----------- 38,151,572 39,072,988 Less current portion 3,864,105 4,123,840 ----------- ----------- $34,287,467 $34,949,148 =========== ===========
5. CONTINGENCIES The Company is a defendant in certain law suits alleging various claims incurred in the ordinary course of business. Management of the Company does not believe that the outcome of these matters, individually or in the aggregate, will have a material effect on the Company's financial condition, cash flows or results of operations. 8 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS REVENUES Electric power revenues decreased $1,925,000 or 26% for the quarter compared to the same period in 1996. The decrease results from a 4.4% decrease in electric power produced at Maine Energy and a 54.6% decrease in the contract rate paid per kilowatt hour. The contract rate reduction is a result of the Maine Energy restructured PPA contract with Central Maine Power Company which closed May 3, 1996. These decreases were partially offset by amortization of $937,500 of the deferred revenue and electric power revenues from Timber Energy of $1,344,000 which was acquired on November 22, 1996. Revenues from waste processing increased $1,906,000 or 91.2% compared to the 1996 quarter. The increase resulted from a 136.2% increase in tons of specialty waste processed which increased revenue by $106,000, SEMCO revenues of $145,000 from 4,947 tons brokered into PERC, AAR of Tennessee revenues of $635,000 from 20,256 tons of ash processed and $995,000 of revenues from tipping and processing fees at Timber Energy. Specialties Environmental Management Company, LLC ("SEMCO"), American Ash Recycling of Tennessee, Ltd. ("AAR of Tennessee") and Timber Energy were all acquired or formed after the first quarter of 1996. Other materials handling revenues increased $1,553,000 or 216.9% for the quarter ended March 31, 1997, compared to the 1996 quarter. The increase in the quarter resulted principally from an increase in revenues at KTI Bio Fuels of $416,000 or 152.7% and Manner Resins, Inc.'s sales of recyclable plastics of $1,273,000. KTI Bio Fuels was shutdown for four weeks during the 1996 quarter as the result of deminished supply of woodwaste and severe weather conditions. Manner Resins was acquired on November 24, 1996. These increases were offset by the reduction of revenues at KTI Transportation as the number of vehicles leased has been reduced. COSTS AND EXPENSES Electric power and waste handling operating costs increased by $2,255,000 or 34.8% for the quarter ended March 31,1997 compared to the 1996 quarter. The increase in 1997 results principally from the newly acquired entities of Timber Energy, Manner Resins and AAR of Tennessee which had operating costs of $1,672,000, $1,235,000 and $432,000, respectively for the first quarter of 1997. Also, KTI BioFuels increased operating costs by $248,000 or 70% due to the increased production at the site. These increases were offset by a decrease in operating costs at Maine Energy of $1,350,000 due to the new operating strategy focusing on reducing marginal production (4.4% decrease in power this quarter) under the restructured Central Maine PPA. The marginal production at Maine Energy is the most expensive power to produce. Selling, general and administrative expenses increased by $31,000 or 3.6% for the quarter ended March 31, 1997 compared to the 1996 quarter principally as result of increases in overhead items related to the acquisitions of AAR of Tennessee, Manner Resins and Timber Energy. INTEREST Interest expense decreased $1,557,000 or 76.6% principally because of the retirement of $64,500,000 of the Maine Energy bonds and related letter of credit, and a decrease in subordinated debt of $29,500,000 in 1996. 9 11 LIQUIDITY AND CAPITAL RESOURCES The Company is a holding company and receives cash flow from its subsidiaries. Receipt of cash flow from its affiliate PERC is currently restricted by covenants under loan agreements, distribution restrictions under partnership agreements with its equity investors, and put-or-pay agreements with municipalities. Maine Energy's cash flow is required to retire the remaining outstanding balance of $14,982,736 of Subordinated Notes Payable as of March 31, 1997 before partners cash distributions can begin. As a result, the following discussion is organized to present liquidity and capital resources of the Company separate from Maine Energy and PERC and liquidity and capital resources of each of Maine Energy and PERC independently. THE COMPANY Through March 31, 1997, the Company has accumulated management fees receivable from PERC in the amount of $2,374,000. These fees are payable by PERC only out of cash flow after all current operating costs and debt service payments of the project. PERC has significant restrictions on the amount of cash flow that can be distributed to the Company. Also, management fees are only paid annually and only if the partnership meets certain operating results set forth in its loan documents. The Company has pledged to ENI, the other general partner of PERC, a portion of the Company's share of PERC management fees as a means of repaying a $1,693,000 advance ENI made on the Company's behalf to PERC to cover the Company's additional partnership capital requirement in 1989. While no assurance can be given, based upon current conditions, management of the Company expects annual management fees to be received on a current basis and accrued management fees from prior years to be paid from PERC's distributable cash flow as the project continues its recent trend of distribution of cash to its partners. The future operating results of PERC will determine the exact term over which the accrued management fees will be received by the Company. As of March 31, 1997 the Company owed ENI $1,353,479. During 1996, the Company received $691,442 in current and accrued management fees on account of 1995 operations of which $298,311 was paid to ENI. The Company also received cash from PERC during May, 1997 on account of 1996 operations of $686,363 of which $389,381 was paid to ENI. Since February 28, 1991, the Company has been receiving operating and management fees from Maine Energy on a current basis. During 1996 the Company received $548,080 for operating and management fees from Maine Energy on account of 1996 operations. The Company also received $857,534 for accrued management fees through February 28, 1990. For the first quarter 1997, the Company received $145,000 for operating and management fees from Maine Energy. The Company has financed its operations and capital expenditures primarily from cash flow from its subsidiaries which are not contractually restricted from making distributions, collateralized equipment financing, unsecured subordinated debt, drawings under its lines of credit and proceeds from the sale of the Company's common stock. The Company and its subsidiaries, other than Maine Energy and PERC, at March 31, 1997 had indebtedness maturing in the next year of $3,864,000. During the first quarter of 1997, the Company, other than Maine Energy and PERC, incurred additional debt of approximately $424,000, primarily as a result of drawings under its lines of credit and retired approximately $1,752,000 of debt. As of March 31, 1997, the Company had cash on hand without regard to Maine Energy and PERC of approximately $1,319,000 and $385,000 available in lines of credit from a bank. Management of the Company believes that cash flow from its subsidiaries and affiliates and unused lines of credit will meet its current needs for liquidity. Moreover, management believes that the Company has the ability to access additional borrowing facilities if needed, although no assurance can be given in this regard. MAINE ENERGY 10 12 During the last three years Maine Energy has financed its operations and capital expenditures from cash flows from operations. Cash provided by operations was $89,259,000 in 1996, as compared to $8,987,000 in 1995. During 1996 Maine Energy sold its generating capacity to CL One for a period through May 31, 2007. In exchange CL One has agreed to make a series of quarterly payments to Maine Energy including an initial payment of $85 million. Maine Energy capital expenditures were $2,939,000 and $2,121,000 for additions to property, plant and equipment during 1996 and 1995, respectively. During May 1996, Maine Energy retired the entire outstanding principal balance of $64.5 million of its tax exempt variable rate revenue bonds and $29.5 million of its subordinated loan accrued interest and principal from the proceeds from the sale of capacity. As of March 31, 1997, in addition to Maine Energy's operating cash of $1,595,000, Maine Energy, as required under the terms of the credit agreement with its letter of credit, has on account an additional $3,473,000 of reserves to be used for capital improvements, debt service, operating shortfalls and working capital requirements. Management of the Company believes Maine Energy has adequate cash resources available to fund its future operations and anticipated capital expenditures. Capital expenditures for Maine Energy for the year ending December 31, 1997 are expected to be approximately $2,581,000, which has principally been set aside in the above mentioned reserves accounts. PERC PERC has financed its recent operations and capital expenditures primarily by cash flow from operations. Cash provided by operations was $8,493,000 in 1996 as compared to $10,328,000 in 1995. PERC's capital expenditures were $1,192,000 and $1,172,000 for additions to property, plant and equipment during 1996 and 1995, respectively. At March 31, 1997, PERC had outstanding tax-exempt, variable rate revenue bonds backed by bank letters of credit in the aggregate amounts of $52,300,000. The variable interest rate on the Orrington Bonds at March 31, 1997 was 3.5%. The bonds are payable pursuant to a schedule through May 2003. During the first quarter of 1997 PERC made principal payments to bondholders of $1,200,000. As of March 31, 1997, in addition to PERC's operating cash of $6,297,000, PERC, as required under the terms of the credit agreement with its letter of credit banks and the trust indenture governing the Orrington Bonds, had on account an additional $7,879,000 of cash reserves to be used for capital improvements, debt service, operating shortfalls and working capital requirements. Company management believes PERC has adequate cash resources available to fund its current project operations and currently anticipated capital expenditures. PERC plans capital expenditures for the year ending December 31, 1997 of approximately $782,000. PERC intends to finance the requirements through cash flow from operations. FORWARD LOOKING STATEMENTS All statements contained herein which are not historical facts including but not limited to statements regarding the Company's plans for future cash flow and its uses are based on current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause actual results to vary materially is the availability of sufficient capital to finance the Company's business plan and other capital needs on terms satisfactory to the Company. The Company wishes to caution readers not to place undue reliance on any such forward looking statements, which statements are made pursuant to the Private Litigation Reform Act of 1995 and as such speak only as of the date made. 11 13 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Anthony Buonaguro, a former officer of the Company, has instituted arbitration proceedings in New York, New York against the Company for alleged breaches of an employment agreement between Mr. Buonaguro and the Company more than five years prior to the filing of the arbitration proceedings. The amount of damages requested is approximately $220,000. The Company believes that it has meritorious defenses against this claim and will defend the matter. A fatality of an employee of PERC's operator, ESOCO, occurred when he was working under a conveyor belt in the plant. His widow has instituted a lawsuit against various parties. Her lawyer recently has moved to join the Company to the suit as additional defendants on the basis that the Company is an owner of PERC. PERC's insurance carrier has accepted the defense of this lawsuit. All actual owners of record are additional insureds. Under the operations and maintenance agreement with the operator, ESOCO, such operator is obligated to defend the Company. A lawsuit has been filed by David G. Stauffacher against Gerald L. Kuhr, and others, including the Company and Ross Pirasteh, a Director, Office and shareholder of the Company, alleging that Mr. Stauffacher purchased 400,000 shares of Company Stock on February 27, 1995 from Mr. Kuhr. Mr. Stauffacher further alleges that Mr. Kuhr failed to disclose that an agreement with KTI and Mr. Pirasteh whereby Mr. Kuhr lost the ownership of said stock prior to the date of such purchase. The plaintiff requests a judgment jointly and severally against the defendants, including KTI for $1,500,000 or alternately, for 400,000 shares of KTI stock. KTI has meritorious defenses against this claim and has retained counsel to defend the matter. The Company is a defendant in certain other law suits alleging various claims incurred in the ordinary course of business, none of which, either individually or in the aggregate, the Company believes will have a material adverse effect on the Company. Management of the Company does not believe that the outcome of the foregoing matters, individually or in the aggregate, will have a materially adverse effect on the Company's financial condition, cash flows or results of operations. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 12 14 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. KTI, Inc. (Registrant) By: /s/ Nicholas Menonna, Jr. ----------------------------------- Name: Nicholas Menonna, Jr. Title: Chairman of the Board and Chief Executive Officer By: /s/ Martin J. Sergi ----------------------------------- Name: Martin J. Sergi Title: President and Chief Financial Officer (Principal Accounting Officer) Date: May 12, 1997 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 MAR-31-1997 2,914,087 0 4,675,423 295,844 2,810,575 19,038,025 104,569,733 123,758,172 9,313,859 0 0 0 0 68,794 27,240,188 123,758,172 11,766,125 11,766,125 8,742,512 10,108,188 0 3,905 0 1,358,794 0 1,358,794 0 0 0 1,358,794 .19 0
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