UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB/A QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended MARCH 31, 2000 -------------- Commission file number 0-7099 ------ CECO ENVIRONMENTAL CORP. ------------------------ (Exact name of registrant as specified in its charter) NEW YORK 13-2566064 ------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 505 UNIVERSITY AVENUE, SUITE 1400, TORONTO, ONTARIO, CANADA M5G 1X3 ------------------------------------------------------------------- (Address of principal executive officers) (Zip Code) 416-593-6543 ------------ (Registrant's telephone number, including area code) NOT APPLICABLE -------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 and (2) has been subject to such filing requirements for the past 90 days. X Yes No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Class: COMMON, PAR VALUE $.01 PER SHARE -------------------------------- OUTSTANDING at March 31, 2000 8,485,471 This amendment of Form 10-QSB is being filed to give effect to the restatement of the Company's condensed consolidated financial statements included in Item 1 as discussed in Note 7.
CECO ENVIRONMENTAL CORP. QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 MARCH 31, 2000 - -------------------------------------------------------------------------------- INDEX Part I - Financial Information (unaudited): Item 1. Condensed consolidated balance sheet as of March 31, 2000 (as restated) and December 31, 1999 2 Condensed consolidated statement of operations for the three-month periods ended March 31, 2000 (as restated) and 1999 3 Condensed consolidated statement of cash flows for the three-month periods ended March 31, 2000 (as restated) and 1999 4 Notes to condensed consolidated financial statements 6 Item 2. Management's discussion and analysis of the financial condition and results of operations 10 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 15 Signature 16 - - 1 -
CECO ENVIRONMENTAL CORP. CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) - -------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, 2000 1999 ----------- ----------- as restated see note 7 ASSETS Current assets: Cash and cash equivalents $ 922,151 $ 1,134,792 Marketable securities - trading 2,428,813 2,690,919 Accounts receivable, net 14,371,751 17,204,539 Costs and estimated earnings in excess of billings on uncompleted contracts 4,948,169 2,951,773 Inventories 2,334,052 2,173,010 Prepaid expenses and other current assets 496,088 635,423 Deferred income taxes 647,600 647,600 ----------- ----------- Total current assets 26,148,624 27,438,056 Property and equipment, net 13,953,103 14,244,457 Goodwill, net 8,831,129 8,917,290 Other intangible assets, net 4,268,359 4,375,070 Deferred charges and other assets 1,405,694 1,473,054 Deferred income taxes - - ----------- ----------- Total assets $54,606,909 $56,447,927 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Debt $ 2,194,967 $ 2,788,054 Accounts payable and accrued expenses 7,778,316 9,569,882 Billings in excess of costs and estimated earnings on uncompleted contracts 1,235,639 460,092 Other current liabilities 166,053 116,056 ----------- ----------- Total current liabilities 11,374,975 12,934,084 Debt, less current portion 27,917,245 28,289,680 Deferred income taxes 5,363,751 5,374,501 Other liabilities 744,839 713,003 ----------- ----------- Total liabilities 45,400,810 47,311,268 ----------- ----------- Minority interest 92,999 98,541 ----------- ----------- Shareholders' equity: Preferred stock, $.01 par value; 10,000,000 shares authorized and none issued - - Common stock, $.01 par value; 100,000,000 shares authorized and 8,623,391 shares issued and outstanding 86,234 86,234 Capital in excess of par value 12,560,667 12,560,667 Accumulated deficit (3,185,132) (3,260,114) ----------- ----------- 9,461,769 9,386,787 Less treasury stock, at cost (348,669) (348,669) ----------- ----------- Net shareholders' equity 9,113,100 9,038,118 ----------- ----------- Total liabilities and shareholders' equity $54,606,909 $56,447,927 =========== =========== See accompanying notes to condensed consolidated financial statements. - - 2 -
CECO ENVIRONMENTAL CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) - -------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 2000 1999 ----------- ---------- as restated see note 7 Revenues: Contract revenues $19,849,776 $2,242,811 Net sales - products 3,704,044 2,529,846 ----------- ---------- Total revenues 23,553,820 4,772,657 ----------- ---------- Costs and expenses: Cost of revenues - contracts 16,653,298 1,496,715 Cost of sales - products 2,125,312 1,284,646 Selling and administrative 3,521,661 1,493,780 Depreciation and amortization 495,833 143,024 ----------- ---------- 22,796,104 4,418,165 ---------- --------- Income from continuing operations before investment income and interest expense 757,716 354,492 Investment income 294,186 38,179 Interest expense (876,154) (75,498) ----------- ----------- Income from continuing operations before provision for income taxes and minority interest 175,748 317,173 Provision for income taxes 106,308 143,560 ----------- ---------- Income from continuing operations before minority interest 69,440 173,613 Minority interest 5,542 (8,330) ----------- ---------- Income from continuing operations 74,982 165,283 Loss from operations and disposal of discontinued division, net of income tax benefit and minority interest - (136,927) ----------- ---------- Net income $ 74,982 $ 28,356 =========== ========== Net income (loss) per share, basic: Income from continuing operations $ .01 $ .02 (Loss) from discontinued operations - (.02) ----------- ---------- Net income per share $ .01 $ - =========== ========== Net income (loss) per share, diluted: Income from continuing operations $ .01 $ .02 (Loss) from discontinued operations - (.02) ----------- ---------- Net income per share $ .01 $ - =========== ========== Weighted average number of common shares outstanding: Basic 8,485,471 8,484,471 =========== ========= Diluted 8,825,859 9,709,337 =========== ========= See accompanying notes to condensed consolidated financial statements. - - 3 -
CECO ENVIRONMENTAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) - -------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 2000 1999 ----------- ---------- as restated see note 7 INCREASE (DECREASE) IN CASH Cash flows from operating activities: Net income $ 74,982 $ 28,356 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Loss from discontinued operations -- 136,927 Depreciation and amortization 495,833 143,024 Deferred income taxes (10,750) -- Minority interest (5,542) 8,330 Gain on sales of marketable securities, trading (178,679) (43,868) Changes in operating assets and liabilities, net of acquired businesses: Marketable securities 440,785 (154,343) Accounts receivable 2,832,788 591,099 Inventories (161,042) (87,499) Costs and estimated earnings in excess of billings on uncompleted contracts (1,996,396) (765,681) Prepaid expenses and other current assets 139,335 (136,230) Deferred charges and other assets 67,360 (304,790) Accounts payable and accrued expenses (1,791,566) 133,312 Billings in excess of costs and estimated earnings on uncompleted contracts 775,547 85,072 Other liabilities 81,833 (236,895) ----------- ----------- Net cash provided by (used in) continuing operations 764,488 (603,186) Net cash provided by discontinued operations -- 195,774 ----------- ----------- Net cash provided by (used in) operating activities 764,488 (407,412) ----------- ----------- Cash flows from investing activities: Acquisitions of property and equipment (11,607) (45,836) Acquisition of additional shares of CECO Filters, Inc. -- (42,015) ----------- ----------- Net cash (used in) continuing operations (11,607) (87,851) Net cash (used in) discontinued operations -- (2,356) ----------- ----------- Net cash (used in) investing activities (11,607) (90,207) ----------- ----------- Cash flows from financing activities: Net change in short-term debt (593,087) 800,000 Proceeds from issuance of long-term debt -- 1,412,155 Repayments of long-term debt (372,435) (1,717,389) ----------- ----------- Net cash provided by (used in) financing activities (965,522) 494,766 ----------- ----------- CONTINUED ON NEXT PAGE See accompanying notes to condensed consolidated financial statements. - - 4 -
CECO ENVIRONMENTAL CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED (unaudited) THREE MONTHS ENDED MARCH 31, 2000 1999 ---------- ---------- as restated see note 7 Net (decrease) in cash ($212,641) ($2,853) Cash and cash equivalents at beginning of the period 1,134,792 364,648 --------- ---------- Cash and cash equivalents at end of the period $ 922,151 $ 361,795 ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 573,223 $ 75,498 ---------- ---------- Income taxes $ 214,579 $ 349,960 ---------- ---------- See accompanying notes to condensed consolidated financial statements. - - 5 -
CECO ENVIRONMENTAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) - -------------------------------------------------------------------------------- 1. In the opinion of management, the accompanying unaudited condensed consolidated financial statements of CECO Environmental Corp. contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of March 31, 2000 and the results of operations and cash flows for the three-month periods ended March 31, 2000 and 1999. The results of operations for the three-month period ended March 31, 2000 are not necessarily indicative of the results to be expected for the full year. 2. Discontinued Operations On March 31, 1999, the Company's subsidiary, CECO Filters, Inc., sold the contracts and customer list of U.S. Facilities Management Arizona division for $250,000. The sales price was paid through a non-interest bearing promissory note from the purchaser. The following is a summary of operating activity for this discontinued operation for the three months ended March 31, 1999: Revenues $ 387,656 Cost of revenues (493,439) Selling and administrative (117,554) Depreciation and amortization (7,998) --------- Operating loss (231,335) Income tax benefit 97,500 Minority interest 9,390 --------- Loss from operations of discontinued operation ($124,445) ========= The following is a summary of the loss recorded from the disposal of this operation for the three months ended March 31, 1999: Net present value of note receivable from sale $174,493 Impairment of goodwill (166,932) Disposition costs (20,043) --------- Loss from disposal of discontinued operation ($ 12,482) ========= Net liabilities of discontinued operations as of March 31, 2000 and December 31, 1999 were $306,513. - - 6 -
CECO ENVIRONMENTAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (unaudited) - -------------------------------------------------------------------------------- 3. Inventories consisted of the following: MARCH 31, DECEMBER 31, 2000 1999 ---------- ------------ Raw materials $1,371,428 $1,328,175 Work in progress 22,106 - Finished goods 753,037 626,033 Parts for resale 187,481 218,802 ---------- ---------- $2,334,052 $2,173,010 ========= ========= 4. Acquisition of Business On December 7, 1999, the Company purchased all of the issued stock of The Kirk & Blum Manufacturing Company ("K & B") and kbd/Technic, Inc., two companies with related ownership. The purchase price was approximately $25 million plus the assumption of $5 million of existing indebtedness of the companies, in addition to acquisition costs the Company incurred. The transaction was accounted for as a purchase. K & B, headquartered in Cincinnati, Ohio, is a provider of turnkey engineering, design, manufacturing and installation services in the air pollution control industry. K & B's business is focused on designing, building and installing systems which remove airborne contaminants from industrial facilities, as well as equipment that control emissions from such facilities. K & B serves its customers from offices and plants in Cincinnati, Ohio; Indianapolis, Indiana; Louisville and Lexington, Kentucky; Columbia, Tennessee; and Greensboro, North Carolina. kbd/Technic, Inc. is a specialty engineering firm concentrating in industrial ventilation. Services offered include air system testing and balancing, source emission testing, industrial ventilation, engineering, turnkey project engineering (civil, structural and electrical), sound and vibration system engineering and other special projects. The excess of the aggregate purchase price over the fair value of the net assets acquired, based upon estimates of fair value resulted in goodwill of $4,019,450. On a pro forma basis, unaudited results of operations for the three months ended March 31, 1999 would have been as follows, if the acquisition had been made as of January 1, 1999: Total revenues $21,178,534 Net income 700,669 Net income per share: Basic $ .08 Diluted $ .08 - - 7 -
CECO ENVIRONMENTAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (unaudited) - -------------------------------------------------------------------------------- 5. Debt MARCH 31, DECEMBER 31, 2000 1999 ------------ ------------ Bank credit facilities $ 26,235,885 $ 26,673,384 Pennsylvania Industrial Development Authority, interest at 3%, due May, 2007, collateralized by mortgage on land and building 212,638 219,263 Subordinated debt, actual interest at 12% (effective interest at 17.75% with detachable warrants) 3,244,384 3,172,695 Loan payable to Green Diamond Oil Corp., interest at 10% 215,000 800,000 Other 204,305 212,392 ------------ ------------ 30,112,212 31,077,734 Less current portion (2,194,967) (2,788,054) ------------ ------------ $ 27,917,245 $ 28,289,680 ============ ============ 6. Segment and Related Information The Company has two reportable segments: Systems and Media. The Systems segment assembles and manufactures ventilation, environmental and process-related products. The Company provides standard and engineered systems and filter media for air quality improvement through its Media segment. Included in the "Corporate and Other" category are the corporate functional departments plus the discontinued operations disposed of in 1999. ELIMINATION CORPORATE OF INTER- AND SEGMENT SYSTEMS MEDIA OTHER ACTIVITY CONSOLIDATED ----------- ----------- --------- ----------- ------------ Three months ended March 31, 2000: Revenues $22,394,512 $ 1,231,750 $ -- ($ 72,442) $23,553,820 Operating income (loss) 1,218,910 (100,624) (360,570) 757,716 Three months ended March 31, 1999: Revenues $ 2,781,413 $ 2,179,720 $ 13,570 ($202,046) $ 4,772,657 Operating income 145,323 182,850 26,319 -- 354,492 - - 8 -
7. Restatement Subsequent to the issuance of the Company's condensed consolidated financial statements as of and for the three months ended March 31, 2000, the Company's management determined that in connection with the December 7, 1999 acquisition of K & B and kbd/Technic, Inc., deferred tax liabilities had not been established for the fair value adjustments to property, equipment, and inventory or for accrued workers compensation and accrued post-retirement benefits. The Company's management also determined that a portion of the purchase price of K & B was not allocated to the identifiable intangible assets acquired in the purchase based on the estimated fair values. In addition, the Company's management determined that warrants issued to a related party in August 1999 in conjunction with a demand loan should have been valued based on a proper valuation of their relative fair values and that the resulting debt discount should have been immediately amortized to interest expense. Additionally, the Company's management identified an error in the percentage of contract completion calculation that resulted in understatements of contract revenue and cost of contract revenue of $1,335,446. As a result, the condensed consolidated financial statements as of and for the three month period ended March 31, 2000 have been restated from amounts previously reported to correct the accounting for the above described items. A summary of the significant effects of the restatements is as follows: As Previously As Reported Restated ----------- ------------ At March 31, 2000: Current deferred income tax asset 485,800 647,600 Goodwill, net 6,489,627 8,831,129 Other intangibles assets, net 1,156,484 4,268,359 Deferred income tax asset 309,200 0 Deferred income tax liability 0 5,363,751 Common stock 83,888 86,234 Capital in excess of par 11,986,013 12,560,667 Accumulated deficit (2,550,358) (3,185,132) For the three months ended March 31, 2000: Contract revenues 18,514,330 19,849,776 Cost of contract revenues 15,317,852 16,653,298 Depreciation and amortization 427,309 495,833 Provision for income taxes 117,058 106,308 Net income 132,756 74,982 Net income per share-basic .02 .01 - - 9 -
CECO ENVIRONMENTAL CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited) - -------------------------------------------------------------------------------- Overview The principal operating units of CECO Environmental Corp. (the "Company") are comprised of The Kirk & Blum Manufacturing Company, kbd/Technic, Inc., CECO Filters, Inc., Air Purator Corporation and New Busch Co., Inc. which provide innovative solutions to industrial ventilation and air quality problems through dust, mist, and fume control systems, and particle and chemical control technologies. The Company's Systems segment consists of Kirk & Blum Manufacturing Company, kbd/Technic, Inc. and New Busch Co., Inc. Kirk & Blum is a leading provider of turnkey engineering, design, manufacturing and installation services in the air pollution control industry. Kirk & Blum's business is focused on designing, building and installing systems which remove airborne contaminants from industrial facilities as well as equipment that control emissions from such facilities. Busch is engaged in providing system-based solutions for industrial ventilation and air pollution control problems through its design, fabrication, supplying and installation of equipment used to control the environment in and around industrial plants with a variety of standard, proprietary and patented technologies including its JET*STAR(TM) cooling system. kbd/Technic, Inc. is a specialty-engineering firm concentrating in industrial ventilation. kbd/Technic provides air systems testing and balancing, source emissions testing, industrial ventilation engineering, turnkey project engineering (civil, structural and electrical), and sound and vibration systems engineering. These companies have extensive knowledge and experience in providing complete turnkey systems in new installations and renovating existing systems. The Company's Media segment consists of CECO Filters, Inc. ("Filters") and Air Purator Corporation. Filters manufactures and markets filters known as fiber bed mist eliminators, designed to trap, collect and remove solid soluble and liquid particulate matter suspended in an air or other gas stream whether generated from a point source emission or otherwise. Filters offers innovative patented technologies, Catenary Grid(R) and Narrow Gap Venturi Scrubbers, designed for use with heat and mass transfer operations and particulate control. Air Purator Corporation designs and manufactures high performance filter media and bags for use in high temperature pulse jet baghouses, a highly effective type of baghouse for capturing submicron particulate from gas streams. Results of Operations The Company's consolidated statement of operations for the three-month periods ended March 31, 2000 and 1999 reflects the operations of the Company consolidated with the operations of its subsidiaries. At March 31, 2000, the Company owned approximately 94% of CECO Filters, Inc. Minority interest in the consolidated statement of operations has been separately presented in the statement of operations. The Company's condensed consolidated balance sheet as of March 31, 2000 and the condensed consolidated statement of operation for the three month period ended March 31, 2000 have been restated. Refer to Note 7 in the accompanying condensed consolidated financial statements for further discussion. The information included in the following discussion reflects the effects of these restatements. - - 10 -
CECO ENVIRONMENTAL CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED (unaudited) - -------------------------------------------------------------------------------- Revenues Consolidated total revenues for the three months ended March 31, 2000, increased $18,781,000 (394%) to $23,554,000 versus comparable 1999 total revenues of $4,773,000. This increase was primarily the combination of increased revenues from the Systems segment of $19,613,000 (principally due to the positive impact from the acquisition of Kirk & Blum and kbd/Technic) offset by decreases in the Media segment of $948,000. Systems segment revenues reflect lower revenues from Busch in the first quarter of 2000 compared to 1999 as the result of a general decline in the metals industry. Demand at rolling mills for fume exhaust systems and Busch's proprietary JET*STAR(TM) cooling technology continued to decline in 2000. Media segment sales reflect a decline of $948,000 which was the result of decreased sales from the Company's high performance filter media unit, Air Purator Corporation, and a decline in sales from CECO Filters, Inc. Market conditions tightened for environmental service companies like the Company's during the first quarter of 2000, as sales declined to technology-based industries such as semi-conductor and printed circuit board companies. Gross Profit Gross profit increased $2,784,000 to $4,775,000 for the first quarter in 2000. Gross profit as a percentage of revenues was 20.3% in the first quarter of 2000 compared with 41.7% in the prior year. The decline is attributable to increased sales by lower margin Systems segment sales and decreased sales by the higher margin Media segment. Overall, margins as a percentage of sales will be impacted by the addition of Kirk & Blum to the Systems segment as this operating unit will continue to represent a larger factor in the Company's total revenues during calendar year 2000. Expenses Selling and administrative expenses increased from the first quarter of 1999 by $2,028,000 to $3,522,000 during the first quarter of 2000 due to the acquisition of Kirk & Blum and kbd/Technic. Selling and administrative expenses as a percentage of revenues for 2000 and 1999 were 15.0% and 31.3%, respectively. A substantial portion of these expenses, which are considered fixed, are under review by the Company for cost savings opportunities resulting from administrative efficiencies that may be realized from consolidating the Company's operating headquarters in Cincinnati, Ohio. Additionally, variable selling expenses are being reviewed to better align sales compensation with results. Savings that may be realized from this realignment and cost reduction efforts should favorably impact results in the third and fourth quarters of 2000. Depreciation and amortization increased $353,000 to $496,000 in the first quarter of 2000 primarily due to additional costs associated with the acquisition of Kirk & Blum and kbd/Technic. - - 11 -
CECO ENVIRONMENTAL CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED (unaudited) - -------------------------------------------------------------------------------- Investment Income Investment income increased $256,000 to $294,000 during the first quarter of 2000. The increase in investment income resulted from interest income, dividend income, and realized and unrealized net gains in investments. At March 31, 2000, the Company's most significant investment is 142,100 shares of Peerless Manufacturing Company common stock which is listed on the Nasdaq Stock Market(R) traded under the symbol PMFG. At March 31, 2000, the fair market value of the Company's Peerless common stock was $14 per share. Interest Expense Interest expense increased $801,000 to $876,000 during the first quarter of 2000 compared with $75,000 in the same period of 1999, principally due to higher borrowing levels and increased rates under the newly established bank credit facilities, and subordinated and related party debt. Income Taxes The provision for federal and state income taxes was $106,000 in the first quarter of 2000 compared with $144,000 in the first quarter of 1999. The effective income tax rate of 60.5% in the first quarter of 2000 was higher compared with the effective income tax rate of 45.3% in 1999 due primarily to non-deductible goodwill amortization relating to the Company's investments in CECO Filters, Inc., Kirk & Blum and kbd/Technic. Discontinued Operations Discontinued operations reflect the closure of the Company's operations in Arizona during the first quarter of 1999. Operating losses, net of income tax benefit and minority interest from this discontinued division, amounted to $124,000 in the first three months of 1999. The loss on the disposal of the discontinued division amounted to $13,000 in the first quarter of 1999. Net Income Net income for the three months ended March 31, 2000 was $74,982 compared with net income of $28,356 in the same period in 1999. - - 12 -
CECO ENVIRONMENTAL CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED (unaudited) - -------------------------------------------------------------------------------- Backlog The Company's backlog consists of purchase orders it has received from products it expects to ship within the next 12 months. The Company's backlog, as of March 31, 2000, was approximately $21,400,000, an increase of $5,800,000 over December 31, 1999. There can be no assurance that order backlog will be replicated or increased or translated into higher revenues in the future. The success of the Company's business depends on a multitude of factors that are out of the Company's control. The Company's operating results can be significantly impacted by the introduction of new products, new manufacturing technologies, rapid changes in the demand for its products, decrease in the average selling price over the life of the product as competition increases, and the Company's dependence on efforts of intermediaries to sell a significant portion of its product. Financial Condition, Liquidity and Capital Resources At March 31, 2000, the Company had total cash and cash equivalents and marketable securities of $3,351,000 compared to $3,826,000 at December 31, 1999. Cash provided by operating activities for the three months ended March 31, 2000 was $764,000 compared with cash used of $407,000 for the comparable period in 1999. In December 1999, the Company consummated new credit facilities totaling $38 million under a senior secured syndicated banking facility of $33 million expiring in 2004 - 2006, and $5 million of subordinated debt expiring in 2006. The Company's investment in marketable securities, which generated investment income of $294,000 in the three months ended March 31, 2000, consisted principally of its investment in Peerless Manufacturing Company and other investments with a fair market value of $2,429,000 on March 31, 2000. Total bank and related debt as of March 31, 2000 was $30,112,000 a decrease of $966,000, due to principal payments for its bank credit facilities and Green Diamond Oil Corp. The unused credit availability at March 31, 2000 was $4,327,000 under its bank line of credit. Investing activities consumed cash of $12,000 during the first quarter of 2000 compared with $90,000 used during the same period in 1999. Capital expenditures were $12,000 and $46,000 for the three months ended March 31, 2000 and 1999, respectively. Capital expenditures are expected to continue to increase and are anticipated to be in the range of $500,000 to $900,000 for fiscal year 2000. Financing activities used $966,000 during the first quarter of 2000 compared with cash provided of $495,000 during the same period of 1999. The 2000 financing activities were principal payments from borrowings under senior credit facilities and Green Diamond Oil Corp. The Company believes that its cash, cash equivalents and marketable securities, cash flows from operating activities, and existing credit facilities are adequate to meet the Company's cash requirements over the next twelve months. - - 13 -
CECO ENVIRONMENTAL CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED (unaudited) - -------------------------------------------------------------------------------- Forward-Looking Statements The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is making this cautionary statement in connection with such safe harbor legislation. This Form 10-QSB/A, the Annual Report to Shareholders, Form 10-KSB or Form 8-K of the Company or any other written or oral statements made by or on behalf of the Company may include forward-looking statements which reflect the Company's current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," "should" and similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forecasts and projections in this Form 10-QSB/A are "forward-looking statements," and are based on management's current expectations of the Company's near-term results, based on current information available pertaining to the Company, including the risk factors noted below. The Company wishes to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to: changing economic and political conditions in the United States and in other countries, changes in governmental spending and budgetary policies, governmental laws and regulations surrounding various matters such as environmental remediation, contract pricing, and international trading restrictions, customer product acceptance, and continued access to capital markets, and foreign currency risks. The Company wishes to caution investors that other factors may, in the future, prove to be important in affecting the Company's results of operations. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Investors are further cautioned not to place undue reliance on such forward-looking statements as they speak only to the Company's views as of the date the statement is made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. - - 14 -
CECO ENVIRONMENTAL CORP. OTHER INFORMATION (unaudited) - -------------------------------------------------------------------------------- Part II Item 6(b) EXHIBITS AND REPORTS ON FORM 8-K The Company filed on February 17, 2000 an amendment on Form 8-K to the Form 8-K filed on December 22, 1999. The original Form 8-K related to an acquisition by the Company that occurred on December 7, 1999. This amendment to Form 8-K contained financial statements and pro forma financial statements with respect to the acquisition. - - 15 -
CECO ENVIRONMENTAL CORP. SIGNATURE - -------------------------------------------------------------------------------- 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. CECO ENVIRONMENTAL CORP. /s/ M. J. Morris ------------------------------- M. J. Morris V.P., Finance and Administration Chief Financial Officer Date: April 2, 2001 - - 16 -
5 3-MOS DEC-31-2000 MAR-31-2000 922,151 2,428,813 14,371,751 0 2,334,052 26,148,624 16,554,498 2,601,395 54,606,909 11,374,975 30,112,212 0 0 86,234 9,026,866 54,606,909 3,704,044 23,553,820 2,125,312 23,796,104 0 0 876,154 175,748 106,308 74,982 0 0 0 74,982 .01 .01