SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: OCTOBER 25, 1996
Commission File No.
0-18899
TANKNOLOGY ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0284783
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5225 HOLLISTER
HOUSTON, TEXAS 77040
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 690-8265
Page 1
Index to Exhibits appears
on page 9
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
INDEX
Page(s)
Item 2. Acquisition or Disposition of Assets....................... 3
Item 7. Financial Statements and Exhibits.......................... 3
SIGNATURES............................................................. 8
Page 2
TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 24, 1996, Tanknology Environmental, Inc. ("the Company"), a
Texas corporation, disposed of certain assets and liabilities, ("the Tank
Testing Group"), which consisted of the stock of the following wholly owned
subsidiaries, Tanknology Corporation International, including its cathodic
protection division d/b/a Tanknology Cathodic Protection, USTMAN Industries,
Inc., and Tanknology Canada (1988), Inc. to NDE Environmental Corporation
("NDE"), a Delaware corporation, an unrelated third party.
The disposition of the Tank Testing Group was made pursuant to a Stock
Purchase Agreement (the "Agreement") between the Company and NDE dated October
7, 1996. The terms of the Agreement were determined by arm's length negotiation
between the Company and NDE.
The Company disposed of the Tank Testing Group in consideration of the
receipt of $12,000,100 in cash. The agreement calls for adjustments to the
purchase price of up to $1,000,000 for working capital deficiencies and of up to
$1,250,00 for liabilities relating to services performed by the Tank Testing
Group prior to October 24, 1996. Such consideration was determined following
negotiation between the parties as to the value of the assets. The Company will
report a gain on this sale during the fourth quarter of 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
statements set forth the results of operations for the year ended
December 31, 1995, and the six months ended June 30, 1996, as if the
disposition of the Tank Testing Group had occurred as of the beginning
of the respective periods presented. The pro forma condensed
consolidated balance sheet presented gives effect to the disposition
as if it occurred on the balance sheet date, June 30, 1996.
The pro forma information is based upon the historical financial
statements of the Company and all material adjustments necessary to
the historical financial statements to reflect the assumptions.
The pro forma financial information is not necessarily indicative of
the results that actually would have occurred had the sale been in
effect on the dates and for the periods indicated or that may be
obtained in the future. The pro forma financial information should be
read in connection with the
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TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
Financial Statements included in Item 8 of the Company's Form 10-K for
the fiscal year 1995 and in Item 1 of the Company's Form 10-Q for the
quarter ended June 30, 1996.
(c) Exhibits
Stock Purchase Agreement dated as of October 7, 1996, between the
Company and NDE.
Press Release dated October 25, 1996, announcing the completion by the
Company of its disposition of subsidiaries.
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TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
TANKNOLOGY ENVIRONMENTAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
June 30, Pro Forma
1996 Adjustments Pro Forma
------------ ------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................$ 16,195,556 $ 12,000,100 b $ 28,195,656
Short-term investments ....................................... 1,989,917 1,989,917
Accounts receivable, net ..................................... 4,602,376 (4,184,908)a 417,468
Inventories, net ............................................. 244,997 (206,911)a 38,086
Current deferred tax asset ................................... 768,578 (638,075)c 130,503
Income tax receivable ........................................ 2,347,320 (1,428,444)c 918,876
Other current assets ......................................... 429,952 (252,458)a 177,494
------------ ------------- -------------
Total current assets ........................... 26,578,696 5,289,304 31,868,000
PROPERTY AND EQUIPMENT, NET ........................................ 9,269,087 (4,265,305)a 5,003,782
INTANGIBLE ASSETS, LESS ACCUMULATED AMORTIZATION ................... 3,576,764 (978,694)a 2,598,070
DEFERRED TAX ASSET ................................................. 647,926 450,519 c 1,098,445
NET ASSETS OF DISCONTINUED OPERATIONS AND
OTHER ASSETS .......................................... 1,973,662 (222,566)a 1,751,096
------------ ------------- -------------
Total assets.................................................$ 42,046,135 $ (273,258) $ 42,319,393
============ ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.............................................$ 752,485 $ (703,100)a $ 49,385
Accrued liabilities .......................................... 1,726,976 (1,649,783)a 77,193
------------ ------------- -------------
Total current liabilities ...................... 2,479,461 (2,352,883) 126,578
DEFERRED INCOME .................................................... 10,080 (10,080)a 0
------------ ------------- -------------
Total liabilities .............................. 2,489,541 (2,362,963) 126,578
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value ................................. 151,922 151,922
Additional paid-in capital ................................... 33,109,657 33,109,657
Retained earnings ............................................ 10,482,686 2,636,221 c 13,118,907
Treasury stock at cost ....................................... (4,187,671) (4,187,671)
------------ ------------- -------------
Total shareholders' equity ..................... 39,556,594 2,636,221 42,192,815
------------ ------------- -------------
Total liabilities and shareholders' equity...................$ 42,046,135 $ (273,258) $ 42,319,393
============ ============= =============
The accompanying notes are an integral part of the consolidated pro forma
financial statements.
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TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Twelve Months Ended December 31, 1995 Six Months Ended June 30, 1996
------------------------------------------- -----------------------------------------
Pro Forma Pro Forma
Consolidated Adjustments Pro Forma Consolidated Adjustments Pro Forma
------------- -------------- ------------- ------------- ------------- ------------
REVENUES...................................... $ 26,981,957 $ (24,607,321)e $ 2,374,636 $ 11,838,405 $(10,733,682)d $ 1,104,723
COST OF SERVICES.............................. 15,757,110 (14,440,611)e 1,316,499 7,423,007 (6,745,144)d 677,863
Gross profit................................ 11,224,847 (10,166,710) 1,058,137 4,415,398 (3,988,538) 426,860
SELLING, GENERAL & ADMINISTRATIVE
EXPENSES.................................... 10,426,733 (7,081,313)e 3,345,420 5,014,324 (3,266,318)d 1,748,006
Income (loss) from operations............... 798,114 (3,085,397) (2,287,283) (598,926) (722,220) (1,321,146)
OTHER INCOME: ................................ 728,859 12,495 e 741,354 482,131 23,625 d 505,756
Income (loss) from continuing operations
before income taxes...................... 1,526,973 (3,072,902) (1,545,929) (116,795) (698,595) (815,390)
INCOME TAX PROVISION (BENEFIT)................ 710,936 (1,333,599)e (622,663) 4,484 (299,567)d (295,083)
------------- -------------- ------------- ------------- ------------- ------------
Income (loss) from continuing operations... 816,037 (1,739,303) (923,266) (121,279) (399,028) (520,307)
Loss from discontinued operations,
net of tax............................... (9,405,142) -- (9,405,142) -- -- --
------------- -------------- ------------- ------------- ------------- ------------
Net income (loss).......................... $ (8,589,105) $ (1,739,303) $(10,328,408) $ (121,279) $ (399,028) $ (520,307)
============= ============== ============= ============= ============= ============
Earnings (loss) per share from continuing
operation.................................. $ 0.06 $ (0.12) $ (0.06) $ (0.01) $ (0.03) $ (0.04)
Loss per share from discontinued operations... (0.66) -- (0.66) -- -- 0.00
------------- -------------- ------------- ------------- ------------- ------------
NET EARNINGS (LOSS) PER SHARE................. $ (0.60) $ (0.12) $ (0.72) $ (0.01) $ (0.03) $ (0.04)
============= ============== ============= ============= ============= ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.............................. 14,230,012 14,230,012 14,230,012 14,239,379 14,239,379 14,239,379
============= ============== ============= ============= ============= ============
The accompanying notes are an integral part of the consolidated financial
statements.
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TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
a Adjustment to eliminate the assets and liabilities of the Tank Testing
Group in the Company's consolidated balance sheet as of June 30, 1996,
which were sold to NDE.
b Adjustment to reflect proceeds from the sale of the Tank Testing Group
to NDE.
c Adjustment to reflect the effect of the sale of the Tank Testing Group
on tax assets and liabilities. Tax expense of approximately $1,616,000
is expected to result from the sale using an effective tax rate of 38%.
Proceeds from sale ........................... $12,000,100
Net assets of the Tank Testing Group ......... 7,747,879
-----------
Estimated gain on sale before income taxes.... 4,252,221
Tax expense .................................. 1,616,000
-----------
Estimated gain on sale ....................... $ 2,636,221
===========
d Adjustment to eliminate the Tank Testing Group for the six-month period
ended June 30, 1996.
e Adjustment to eliminate the Tank Testing Group for the twelve-month period
ended December 31, 1995.
NOTE The unaudited proforma condensed consolidated statement of operations
does not reflect anticipated reductions in selling, general &
administrative expenses.
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TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
TANKNOLOGY ENVIRONMENTAL, INC.
Date: November 8, 1996 By /s/ RICK BERRY
Rick Berry
Executive Vice President and
Chief Financial Officer
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TANKNOLOGY ENVIRONMENTAL, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- --------- --------------------------------------------------- ------------
2 Stock Purchase Agreement between Tanknology
Environmental, Inc. and NDE Environmental
Corporation dated October 7, 1996. 10
28 Press Release dated October 25, 1996. 75
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