10-Q 1 j8372801e10-q.txt PDG ENVIRONMENTAL 1 (conformed) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 31, 2000 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 0-13667 PDG ENVIRONMENTAL, INC. (Exact name of registrant as specified in its charter) DELAWARE 22-2677298 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 300 OXFORD DRIVE, MONROEVILLE, PENNSYLVANIA 15146 (Address of principal executive offices) (Zip Code) 412-856-2200 (Registrant's 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 --- --- As of September 3, 2000, there were 8,782,644 shares of the registrant's common stock outstanding. 2 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Consolidated Financial Statements and Notes to Consolidated Financial Statements (a) Condensed Consolidated Balance Sheets as of July 31, 2000 (unaudited) and January 31, 2000 3 (b) Consolidated Statements of Operations for the Three Months Ended July 31, 2000 and 1999 (unaudited) 4 (c) Consolidated Statements of Operations for the Six Months Ended July 31, 2000 and 1999 (unaudited) 5 (d) Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2000 and 1999 (unaudited) 6 (e) Notes to Consolidated Financial Statements (unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16 2 3 PART I. FINANCIAL INFORMATION PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

JULY 31, JANUARY 31, 2000 2000* ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and short-term investments $ 173,000 $ 282,000 Accounts receivable - net 6,715,000 6,101,000 Costs and estimated earnings in excess of billings on uncompleted contracts 2,021,000 1,055,000 Inventory 363,000 291,000 Other current assets 517,000 329,000 ----------- ----------- TOTAL CURRENT ASSETS 9,789,000 8,058,000 PROPERTY, PLANT AND EQUIPMENT 6,265,000 5,845,000 Less: accumulated depreciation (4,791,000) (4,462,000) ----------- ----------- 1,474,000 1,383,000 OTHER ASSETS 1,247,000 912,000 ----------- ----------- TOTAL ASSETS $12,510,000 $10,353,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 2,290,000 $ 2,263,000 Accrued liabilities 1,647,000 1,299,000 Billings in excess of costs and estimated earnings on uncompleted contracts 1,019,000 1,015,000 Current portion of long-term debt 161,000 173,000 ----------- ----------- TOTAL CURRENT LIABILITIES 5,117,000 4,750,000 OTHER LONG-TERM LIABILITIES 184,000 166,000 LONG-TERM DEBT 1,755,000 376,000 STOCKHOLDERS' EQUITY Cumulative convertible 2% preferred stock 14,000 14,000 Common stock 177,000 169,000 Additional paid-in capital 7,767,000 7,421,000 (Deficit) retained earnings (2,466,000) (2,505,000) Less treasury stock (38,000) (38,000) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 5,454,000 5,061,000 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,510,000 $10,353,000 =========== ===========

*Derived from audited financial statements. See accompanying notes to consolidated financial statements. 3 4 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED JULY 31, ----------------------------- 2000 1999 ---------- ---------- CONTRACT REVENUES $8,770,000 $7,869,000 CONTRACT COSTS 7,451,000 6,723,000 ---------- ---------- Gross margin 1,319,000 1,146,000 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,027,000 861,000 LITIGATION SETTLEMENT -- 379,000 ---------- ---------- Income (loss) from operations 292,000 (94,000) OTHER INCOME (EXPENSE): Interest expense (63,000) (39,000) Interest income 9,000 2,000 Other income 14,000 1,000 ---------- ---------- (40,000) (36,000) ---------- ---------- Income (loss) before income taxes 252,000 (130,000) INCOME TAX PROVISION (20,000) -- ---------- ---------- NET INCOME (LOSS) $ 232,000 $ (130,000) ========== ========== PER SHARE OF COMMON STOCK: BASIC $ 0.03 $ (0.02) ========== ========== DILUTIVE $ 0.03 $ (0.02) ========== ========== AVERAGE COMMON SHARES OUTSTANDING 8,783,000 8,398,000 AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS OUTSTANDING 265,000 -- ---------- ---------- AVERAGE COMMON SHARES AND DILUTIVE COMMON EQUIVALENTS OUTSTANDING FOR EARNINGS PER SHARE CALCULATION 9,048,000 8,398,000 ========== ==========

See accompanying notes to consolidated financial statements. 4 5 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)

FOR THE SIX MONTHS ENDED JULY 31, ------------------------------- 2000 1999 ----------- ----------- CONTRACT REVENUES $16,837,000 $13,022,000 CONTRACT COSTS 14,495,000 11,108,000 ----------- ----------- Gross margin 2,342,000 1,914,000 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,962,000 1,820,000 LITIGATION SETTLEMENT -- 379,000 ----------- ----------- Income (loss) from operations 380,000 (285,000) OTHER INCOME (EXPENSE): Interest expense (101,000) (68,000) Interest income 11,000 4,000 Other income 27,000 1,000 ----------- ----------- (63,000) (63,000) ----------- ----------- Income (loss) before income taxes 317,000 (348,000) INCOME TAX PROVISION (24,000) -- ----------- ----------- NET INCOME (LOSS) $ 293,000 $ (348,000) =========== =========== PER SHARE OF COMMON STOCK: BASIC $ 0.03 $ (0.04) =========== =========== DILUTIVE $ 0.03 $ (0.04) =========== =========== AVERAGE COMMON SHARES OUTSTANDING 8,678,000 8,394,000 AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS OUTSTANDING 408,000 -- ----------- ----------- AVERAGE COMMON SHARES AND DILUTIVE COMMON EQUIVALENTS OUTSTANDING FOR EARNINGS PER SHARE CALCULATION 9,086,000 8,394,000 =========== ===========

See accompanying notes to consolidated financial statements. 5 6 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JULY 31, ------------------------------- 2000 1999 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 293,000 $ (348,000) ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH: Depreciation and amortization 538,000 388,000 CHANGES IN ASSETS AND LIABILITIES OTHER THAN CASH: Accounts receivable (597,000) (1,618,000) Costs and estimated earnings in excess of billings on uncompleted contracts (966,000) (366,000) Inventory (34,000) 34,000 Other current assets 188,000 168,000 Accounts payable (332,000) 899,000 Billings in excess of costs and estimated earnings on uncompleted contracts 4,000 599,000 Accrued liabilities 226,000 13,000 Other -- (12,000) ----------- ----------- TOTAL ADJUSTMENTS IN ASSETS AND LIABILITIES (1,511,000) (283,000) ----------- ----------- NET CASH USED BY OPERATING ACTIVITIES (680,000) (243,000) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (236,000) (358,000) Acquisition of businesses (560,000) -- ----------- ----------- NET CASH USED BY INVESTING ACTIVITIES (796,000) (358,000) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options and warrants -- 19,000 Proceeds from debt 1,444,000 619,000 Purchase of common stock for treasury -- (13,000) Principal payments on debt (77,000) (91,000) ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,367,000 534,000 ----------- ----------- Net Decrease in Cash and Short-Term Investments (109,000) (67,000) Cash and Short-Term Investments, Beginning of Period 282,000 309,000 ----------- ----------- CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 173,000 $ 242,000 =========== ===========

See accompanying notes to consolidated financial statements. 6 7 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2000 (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements include PDG Environmental, Inc. (the "Corporation") and its wholly-owned subsidiaries. The accompanying financial statements of the Corporation are unaudited and prepared in accordance with generally accepted accounting principles which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, the financial statements include all adjustments necessary for a fair presentation of financial position, results of operations and cash flows. All adjustments made during the three and six months ended July 31, 2000 were of a normal, recurring nature. The amounts presented for the three and six months ended July 31, 2000 are not necessarily indicative of results of operations for a full year. Additional information is contained in the Annual Report on Form 10-KSB of the Corporation for the year ended January 31, 2000 dated May 15, 2000 and Quarterly Report on Form 10-QSB of the Corporation for the quarter ended April 30, 2000 dated June 13, 2000, and should be read in conjunction with this quarterly report. The Corporation does not have any items which would require adjustments to arrive at comprehensive income. NOTE 2 - FEDERAL INCOME TAXES No federal income taxes have been provided for the three and six months ended July 31, 2000 due to the existence of unused net operating loss carryforwards. The Company has provided a provision for state income taxes during the current six month period. No state income taxes were provided during the prior six month period due to the loss. Income taxes paid by the Corporation for the six months ended July 31, 2000 and 1999 totaled approximately $63,000 and $38,000, respectively. NOTE 3 - DEBT On August 3, 2000, the Corporation closed on a new $4.7 million credit facility with Sky Bank, an Ohio banking association, consisting of a 3-year $3 million revolving line of credit, a 5-year $1 million equipment note, a 15-year $0.4 million mortgage and a 5-year $0.3 million commitment for future equipment financing. The new financing repaid all of the Company's existing bank debt. The line of credit, equipment note and commitment for future equipment financing are at an interest rate of prime plus 1% with financial covenant incentives which may reduce the interest rate to either prime plus 1/2% or prime. The mortgage is at an interest rate of 9.15% fixed for three years and is then adjusted to 2.75% above the 3-year Treasury Index every three years. The new credit facility requires annual maintenance of a tangible net worth of $4 million, a leverage ratio (total liabilities to tangible net worth) of no greater than 2 to 1 and a debt service coverage ratio of at least 1.3 to 1. Additionally, the Chief Executive Officer of the Corporation provided a limited personal guarantee for the credit facility. As the Company had the new credit facility available, borrowings ($1,456,000 at July 31, 2000) on the line of credit were classified as long term. The Corporation paid interest costs totaling approximately $85,000 and $63,000 during the six months ended July 31, 2000 and 1999, respectively. 7 8 NOTE 4 - PREFERRED STOCK Cumulative dividends in arrears on the Corporation's 2% Series A Preferred Stock were approximately $8,000 at July 31, 2000. At July 31, 2000, there were 6,000 shares of Series A Preferred Stock outstanding. The Series A Preferred Stock is convertible into four shares of the Corporation's common stock at the option of the preferred stockholder. The conversion rate on the Series A Preferred Stock is also subject to adjustment as a result of certain changes in the Corporation's capital structure or distributions to common stockholders (except for cash dividends permissible under law). At the Corporation's Annual Meeting of Stockholders held on July 23, 1993, the following matters were approved by a majority of the Corporation's preferred and common stockholders which affected the Corporation's Series A Preferred stock and common stock: a reduction in the Series A Preferred Stock dividend rate from 9% to 2% and the cancellation of the accrued but unpaid dividends and the special voting rights associated with such preferred stock in the event of a certain accumulation of accrued but unpaid dividends thereon; and a recapitalization of the Corporation in order to effect a one for two reverse stock split (the "Recapitalization"). In exchange for the forfeiture of the accrued but undeclared and unpaid dividends, the holders of the Series A Preferred Stock were granted a common stock right which, if and when declared by the Board of Directors, grant to the holders of such common stock rights shares of the common stock of the Corporation. At the May 23, 1995 and March 6, 2000 Board of Directors meeting, the issuance of one third of the shares (280,071 and 259,696 common shares, respectively) covered by the aforementioned right was approved. At July 31, 2000, there were 280,071 common stock rights outstanding. The Recapitalization was contingent upon the Corporation's listing on the American Stock Exchange. The Corporation made a decision not to pursue such a listing; therefore, the Recapitalization was indefinitely postponed. NOTE 5 - NET EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share from continuing operations:

FOR THE SIX MONTHS ENDED JULY 31, 2000 1999 ----------------------------- NUMERATOR: Income (loss) from continuing operations $ 293,000 $ (348,000) Preferred stock dividends (1,000) -- ---------- ---------- Numerator for basic earnings per share--income available to common stockholders 292,000 (348,000) Effect of dilutive securities: Preferred stock dividends (1,000) -- ---------- ---------- Numerator for diluted earnings per share--income available to common stock after assumed conversions 293,000 (348,000) ---------- ---------- DENOMINATOR: Denominator for basic earnings per share--weighted average shares 8,678,000 8,394,000 Effect of dilutive securities: Employee stock options 376,000 -- Warrants 5,000 -- Convertible preferred stock 27,000 -- ---------- ---------- Dilutive potential common shares 408,000 -- ---------- ---------- Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions 9,086,000 8,394,000 ========== ========== BASIC EARNINGS PER SHARE $ 0.03 $ (0.04) ========== ========== DILUTED EARNINGS PER SHARE $ 0.03 $ (0.04) ========== ==========

8 9 The following table sets forth the computation of basic and diluted earnings per share from continuing operations:

FOR THE THREE MONTHS ENDED JULY 31, 2000 1999 ----------------------------- NUMERATOR: Income (loss) from continuing operations $ 232,000 $ (130,000) Preferred stock dividends -- -- ---------- ---------- Numerator for basic earnings per share--income available to common stockholders 232,000 (130,000) Effect of dilutive securities: Preferred stock dividends -- -- ---------- ---------- Numerator for diluted earnings per share--income available to common stock after assumed conversions 232,000 (130,000) ---------- ---------- DENOMINATOR: Denominator for basic earnings per share--weighted average shares 8,783,000 8,398,000 Effect of dilutive securities: Employee stock options 237,000 -- Warrants 1,000 -- Convertible preferred stock 27,000 -- ---------- ---------- Dilutive potential common shares 265,000 -- ---------- ---------- Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions 9,048,000 8,398,000 ========== ========== BASIC EARNINGS PER SHARE $ 0.03 $ (0.02) ========== ========== DILUTED EARNINGS PER SHARE $ 0.03 $ (0.02) ========== ==========

NOTE 6 - ACQUISITION Effective April 3, 2000, the Corporation entered into an agreement ("the Agreement") with Lincoln Cristi, Inc. ("Lincoln") and the majority owners of Lincoln for the purchase of selected assets and assumption of the contracts of Lincoln. Lincoln owned and operated a business that conducted asbestos abatement in the Northwestern United States. As consideration for the purchase, the Corporation paid Lincoln and the owners of Lincoln a combination of cash and the Corporation's Common Stock and entered into an employment agreement with the former majority owners of Lincoln that provides for a performance bonus in addition to annual salary. The performance bonus is for a minimum of one year and a maximum of three years, depending upon the continued employment of the two majority owners of Lincoln. 9 10 The goodwill associated with the acquisition is being amortized on a straight-line basis over 15 years, the covenant not to compete and customer lists is being amortized on a straight-line basis over 5 years, and the performance bonus is being amortized over the 3-year life of the bonus. Additionally, in April 2000, the Corporation acquired the fixed assets of an asbestos abatement company operating in the metropolitan Chicago area and an insulation company operating in the Houston area. 10 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED JULY 31, 2000 AND 1999 The Corporation's contract revenues increased to $8.8 million during the three months ended July 31, 2000 ("Fiscal 2001") compared to $7.9 million in the three months ended July 31, 1999 ("Fiscal 2000"). The increase in revenues is primarily due to revenues contributed by the operations acquired earlier in fiscal 2001. The Corporation's gross margin increased to $1.3 million in the second quarter of fiscal 2001 compared to $1.1 million in the second quarter of fiscal 2000. The increase in gross margin was attributable to the aforementioned increase in contract revenue. The gross margin as a percentage of revenue remained relatively constant. Selling, general and administrative expenses increased to $1.03 million in the three months ended July 31, 2000 compared to $0.86 million in the three months ended July 31, 1999. During the current fiscal quarter, the Corporation operated two additional branch offices. In June 1999, the Corporation reached a settlement with the Mason Tenders District Council Welfare Fund whereby the Corporation agreed to pay $500,000 to resolve all claims concerning contributions owed for the period January 1, 1995 through May 31, 1996 and related claims for interest, statutory damages, costs and attorneys' fees. The initial payment of $200,000 was made in June 1999, the second payment of $100,000 was paid on December 28, 1999 and the final payment of $200,000 on June 28, 2000. This resulted in a $379,000 charge in the second quarter of Fiscal 2000 which was net of amounts previously accrued and recoveries from third parties. As a result of the factors described above, the Corporation reported net income from operations of $0.3 million in the current three month period compared to loss from operations of $0.1 million for the same three months of the prior fiscal year. The Corporation's interest expense increased to $63,000 for the three months ended July 31, 2000 from $39,000 for the three months ended July 31, 1999 due to increased borrowings to fund a higher level of operations and the aforementioned acquisitions. During the three months ended July 31, 2000 and 1999, the Corporation made no provision for federal income taxes due to the utilization of net operating loss carryforwards for financial reporting purposes. A state income tax provision of $20,000 was made in the current fiscal quarter. No state income tax provision was made in the prior quarter due to the loss. SIX MONTHS ENDED JULY 31, 2000 AND 1999 The Corporation's contract revenues increased to $16.8 million for the six months ended July 31, 2000 compared to $13.0 million for the six months ended July 31, 1999. The gross margin reported by the Corporation in the six months ended July 31, 2000 increased to $2.3 million compared to $1.9 million for the six months ended July 31, 1999. The increase in gross margin related to the aforementioned increase in contract revenue. Selling, general and administrative expenses reported by the Corporation for the six months ended July 31, 2000 increased to $2.0 million as compared to $1.8 million for the same six month period of the prior fiscal year. The increase is primarily attributable to the addition of two new branch offices in Fiscal 2001. In June 1999, the Corporation reached a settlement with the Mason Tenders District Council Welfare Fund whereby the Corporation agreed to pay $500,000 to resolve all claims concerning contributions owed for the period January 1, 1995 through May 31, 1996 and related claims for interest, statutory damages, costs and attorneys' fees. The initial payment of $200,000 was made in June 1999, the second payment of $100,000 was paid on 11 12 December 28, 1999 and the final payment of $200,000 on June 28, 2000. This resulted in a $379,000 charge in the second quarter of Fiscal 2000 which was net of amounts previously accrued and recoveries from third parties. The Corporation reported income from operations of $0.4 million in the six months ended July 31, 2000 as a result of the factors discussed above compared to a loss from operations of $0.3 million in the same six month period last year. Interest expense increased to $0.1 million in the current six month period compared to $0.07 million in the six months ended July 31, 1999 due to increased borrowings to fund a higher level of operations and the aforementioned acquisitions. No provisions for federal income taxes were made during the six months ended July 31, 2000 and 1999 due to the utilization of net operating loss carryforwards for financial reporting purposes. A state income tax provision of $24,000 was made in the current six-month period. No state income tax provision was made in the prior six month period due to the loss. LIQUIDITY AND CAPITAL RESOURCES The Corporation's liquidity decreased during the six months ended July 31, 2000 as cash and short-term investments decreased by $0.11 million to $0.17 million. The decrease in fiscal 2000 was due to a $0.68 million cash outflow from operating activities and a $0.8 million outflow related to investing activities, which was partially offset by a $1.37 million inflow associated with financing activities. Cash outflows from operating activities of $0.68 million in the six months ended July 31, 2000 included a $0.6 million increase in accounts receivable, a $1.0 million increase in costs and estimated earnings in excess of billings on uncompleted contracts related to the timing of certain contract activity and a $0.3 million decrease in accounts payable. The aforementioned cash outflows from operating activities were offset, in part, by net income of $0.3 million generated during the six month period, a $0.2 million decrease in other current assets, a $0.2 million increase in accrued liabilities due to the timing of payments and $0.5 million of depreciation and amortization. The Corporation's cash outflows from investing activities of $0.8 million in the six months ended July 31, 2000 was attributable to $0.24 million for the purchase of property, plant and equipment and $0.56 million to purchase the businesses acquired. Cash inflows associated with financing activities during the six months included $1.44 million of borrowings on the line of credit which was partially offset by $0.08 million of principal payments on debt. At July 31, 2000, the Corporation's backlog associated with its asbestos abatement business totaled $15.0 million ($6.2 million on fixed fee contracts and $8.8 million on time and materials or unit price contracts). The Corporation's liquidity decreased during the six months ended July 31, 1999 as cash and short-term investments decreased by $0.07 million to $0.24 million During the six months ended July 31, 1999, the $0.07 million decrease in the Corporation's liquidity resulted from cash used by operating activities of $0.24 million and cash utilized by investing activities of $0.36 million. These cash outflows were offset in part by cash provided by financing activities of $0.53 million. Cash flows used by operations totaled $0.24 million in the six months ended July 31, 1999. Cash outflows included $0.35 million related to the net loss during the current six months, a $1.6 million increase in receivables and a $0.37 million increase in costs and estimated earnings in excess of billings on uncompleted contracts. These cash outflows were partially offset by cash inflows which principally included $0.4 million of depreciation and amortization, a $0.9 million increase in accounts payable, a $0.17 million decrease in other current assets and a $0.6 million increase in billings in excess of costs and estimated earnings on uncompleted contracts. During the six months ended July 31, 1999, cash outflows associated with investing activities of $0.36 million were due to the purchase of property, plant and equipment. 12 13 The Corporation's cash inflows related to financing activities included $0.6 million in net borrowings on the line of credit and $0.02 million from the exercise of employee stock options partially offset by $0.09 million of principal repayments of debt and $0.01 million for the purchase of common stock for the treasury. 13 14 PART II-- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The registrant is subjected to disputes and litigation in the ordinary course of business. None of these matters, in the opinion of management, is likely to result in a material effect on the registrant based upon information available at this time. ITEM 3. DEFAULTS UPON SENIOR SECURITIES The registrant is currently in arrears with respect to the payment of dividends on its Series A Preferred Stock. At July 31, 2000, the cumulative dividends in arrears on the Series A Preferred Stock were approximately $8,000. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ANNUAL MEETING OF STOCKHOLDERS On July 7, 2000 the Annual Meeting of the Stockholders of PDG Environmental, Inc. was held in Pittsburgh, PA. At the meeting all of management's nominees were elected directors of the Corporation with the following vote: Votes For 7,604,467 to 7,604,727 Votes Against 52,542 to 52,802 Stokes Kelly & Hinds, LLC was ratified as the Corporation's auditors as follows: Votes For 7,624,092 Votes Against 8,963 Abstained 24,214 The extension of the 1990 Stock Option Plan for Non-Employee Directors until December 14, 2010 was ratified as follows: Votes For 3,763,900 Votes Against 402,134 Abstained 40,221 The amendment to the PDG Environmental, Inc. Incentive Stock Option Plan increasing the number of shares of Common Stock which may be granted by 500,000 to 2,300,000 and extending the Plan until December 14, 2010 was ratified as follows: Votes For 3,932,710 Votes Against 438,872 Abstained 34,713 The extension of the 1990 Stock Option Plan for Employee Directors until December 14, 2010 was ratified as follows: Votes For 3,732,459 Votes Against 432,604 Abstained 41,232 14 15 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: EXHIBIT INDEX EXHIBIT NO. AND DESCRIPTION PAGES OF SEQUENTIAL NUMBERING SYSTEM 10 Employee Agreement dated June 20, 2000 for John C. Regan 27 Financial Data Schedule (b) The registrant did not file any current reports on Form 8-K during the three months ended July 31, 2000. 15 16 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. PDG ENVIRONMENTAL, INC. By /s/ John C. Regan ---------------------------------------- John C. Regan Chairman and Chief Executive Officer Date: September 13, 2000 16