1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1994
----------------
Commission File Number 0-16379
CLEAN HARBORS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2997780
(State of Incorporation) (IRS Employer Identification No.)
1200 Crown Colony Drive, Quincy, MA 02269-9137
(Address of Principal Executive Offices) (Zip Code)
(continued on next page)
(617) 849-1800 ext. 4454
(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
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value 9,431,282
---------------------------- --------------------------------
(Class) (Outstanding at November 9, 1994)
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2
(Continued from previous page)
ADDITIONAL REGISTRANTS
Clean Harbors Environmental Services, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-2698999
(I.R.S. employer identification number)
Clean Harbors of Braintree, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-2507498
(I.R.S. employer identification number)
Clean Harbors of Natick, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-2481234
(I.R.S. employer identification number)
Clean Harbors of Baltimore, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or organization)
23-2091580
(I.R.S. employer identification number)
Clean Harbors of Chicago, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
06-1287127
(I.R.S. employer identification number)
Clean Harbors of Cleveland, Inc.
(Exact name of registrant as specified in its charter)
Illinois
(State or other jurisdiction of incorporation or organization)
06-1335175
(I.R.S. employer identification number)
Murphy's Waste Oil Service, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-2490849
(I.R.S. employer identification number)
3
Clean Harbors Kingston Facility Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-3074299
(I.R.S. employer identification number)
Clean Harbors of Connecticut, Inc.
(Exact name of registrant as specified in its charter)
Connecticut
(State or other jurisdiction of incorporation or organization)
06-1025746
(I.R.S. employer identification number)
Mr. Frank, Inc.
(Exact name of registrant as specified in its charter)
Illinois
(State or other jurisdiction of incorporation or organization)
36-2542803
(I.R.S. employer identification number)
Clean Harbors Technology Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-3172766
(I.R.S. employer identification number)
Spring Grove Resource Recovery, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
76-0313183
(I.R.S. employer identification number)
4
CLEAN HARBORS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS PAGES
-----
Consolidated Statements of Income 1
Consolidated Balance Sheets 2-3
Consolidated Statements of Cash Flows 4-5
Consolidated Statement of Stockholders' Equity 6
Notes to Consolidated Financial Statements 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8-13
PART II: OTHER INFORMATION
Items No. 1 through 6 14
Signatures 15
5
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(in thousands; except for earnings per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
1994 1993 1994 1993
-------- -------- -------- --------
Revenues $ 53,258 $ 52,038 $154,226 $147,337
Cost of revenues 37,459 35,537 106,764 97,564
Selling, general and
administrative expenses 9,374 11,501 28,902 32,092
Depreciation and amortization 2,570 2,609 7,697 7,697
-------- -------- -------- --------
Income from operations 3,855 2,391 10,863 9,984
Interest expense, net 1,942 1,836 5,528 5,371
-------- -------- -------- --------
Income before provision for income
taxes and extraordinary item 1,913 555 5,335 4,613
Provision for income taxes 831 280 2,405 2,063
-------- -------- -------- --------
Income before extraordinary
item 1,082 275 2,930 2,550
Extraordinary loss related to
early retirement of debt, net of
income tax benefit of $823,000 $ 1,220 --- $ 1,220 ---
-------- -------- -------- --------
Net income (loss) $ (138) $ 275 $ 1,710 $ 2,550
-------- -------- -------- --------
Net income per common and common
equivalent share before
extraordinary item $ .10 $ .02 $ .27 $ .23
Extraordinary item $ (.13) --- $ (.13) ---
-------- -------- -------- --------
Net income (loss) per common and
common equivalent share $ (.03) $ .02 $ .14 $ .23
-------- -------- -------- --------
Weighted average common and
common equivalent shares
outstanding 9,593 9,828 9,649 10,101
-------- -------- -------- --------
The accompanying notes are an integral part of these consolidated financial
statements.
(1)
6
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1994 1993
(Unaudited)
---------------- ---------------
ASSETS
Current Assets:
Cash $ 929 $ 816
Restricted cash 878 1,037
Accounts receivable, net of
allowance for doubtful accounts 46,192 46,736
Prepaid expenses 2,010 2,353
Supplies inventories 2,607 2,428
Income tax receivable 41 607
-------- --------
Total current assets 52,657 53,977
Property, plant and equipment:
Land 8,209 8,209
Buildings and improvements 32,576 31,737
Vehicles and equipment 72,615 70,946
Furniture and fixtures 2,207 2,201
Construction in progress 2,305 1,903
-------- --------
117,912 114,996
Less - Accumulated depreciation
and amortization 46,907 40,925
-------- --------
Net fixed assets 71,005 74,071
-------- --------
Other Assets:
Goodwill, net 23,107 23,650
Permits, net 14,444 14,906
Other 819 754
-------- --------
Other Assets 38,370 39,310
-------- --------
Total Assets $162,032 $167,358
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
(2)
7
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1994 1993
(Unaudited)
---------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
obligations $ 772 $ 8,917
Accounts payable 10,039 9,564
Accrued disposal costs 6,317 6,724
Other accrued expenses 12,150 10,452
-------- --------
Total current liabilities 29,278 35,657
-------- --------
Long-term obligations, less
current maturities 62,483 62,507
Deferred income taxes 1,485 1,823
Stockholders' equity:
Preferred Stock, $.01 par value:
Series A Convertible;
Authorized-2,000,000 shares; Issued and
outstanding - none --- ---
Series B Convertible;
Authorized-156,416 shares; Issued and outstanding
112,000 shares at September 30, 1994 (liquidation
preference of $5.6 million) 1 1
Common Stock, $.01 par value
Authorized - 20,000,000 shares;
Issued and outstanding - 9,431,282 shares
at September 30, 1994 and 9,425,829 shares
at December 31, 1993 95 95
Additional paid-in capital 58,590 58,556
Retained earnings 10,100 8,719
-------- --------
Total stockholders' equity 68,786 67,371
-------- --------
$162,032 $167,358
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
(3)
8
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(in thousands)
NINE MONTHS ENDING
SEPTEMBER 30,
----------------------------
1994 1993
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,710 $2,550
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,697 7,697
Deferred taxes payable (332) (173)
(Gain) loss on sale of fixed assets (93) 35
Write-off of deferred financing fees 963 ---
Amortization of deferred financing fees 274 283
Changes in assets and liabilities, net of businesses acquired:
Accounts receivable 344 (7,689)
Refundable income taxes 566 235
Prepaid expenses 343 356
Supplies inventories (174) (359)
Accounts payable 475 (2,645)
Accrued disposal costs (407) 2,789
Other accrued expenses 1,686 (753)
Taxes payable --- 44
------ -------
Net cash provided by operating activities 13,052 2,370
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (2,994) (6,087)
Decrease (increase) in restricted cash 159 (15)
Increase in permits --- (132)
Increase in other assets (73) (94)
Proceeds from sale of fixed assets 104 ---
Payment for business acquired,
net of cash acquired (200) (1,394)
------ -------
Net cash used in investing activities (3,004) (7,722)
------ -------
The accompanying notes are an integral part of these consolidated
financial statements.
(4)
9
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Unaudited
(in thousands)
NINE MONTHS ENDING
SEPTEMBER 30,
-------------------------
1994 1993
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred stock dividend distribution (317) (161)
Issuance of long-term debt 50,000 ---
Net (payments) borrowings under
long-term revolver (24,069) 6,567
Payments on long-term debt (33,246) (1,408)
Additions to deferred financing costs (2,331) (282)
Proceeds from exercise of stock options 28 645
-------- ------
Net cash (used in) provided by
financing activities (9,935) 5,361
-------- ------
INCREASE IN CASH AND CASH EQUIVALENTS 113 9
Cash and equivalents, beginning of year 816 625
-------- ------
Cash and equivalents, end of period $ 929 $ 634
======== ======
SUPPLEMENTAL INFORMATION:
NONCASH INVESTING AND FINANCING ACTIVITIES:
Capital lease obligations incurred $ 240 $ 154
On February 16, 1993, the Company acquired all the outstanding
capital stock of Spring Grove Resource Recovery, Inc., in exchange for
cash and 112,000 shares of Series B Convertible Preferred Stock of Clean
Harbors, Inc., with a liquidation value of $5,600,000.
On September 30, 1994 the Company acquired all the assets of a
hazardous and nonhazardous oil reclamation facility for $200,000 in cash
and $200,000 in credits for future services.
The accompanying notes are an integral part of these consolidated
financial statements.
(5)
10
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
UNAUDITED
(in thousands)
Series B
Preferred Stock Common Stock
-------------------- ----------------
Number $0.01 Number $0.01 Additional Total
of Par of Par Paid-In Retained Stockholders'
Shares Value Shares Value Capital Earnings Equity
-------- ------- -------- ----- ------- ----------- -------------
Balance at
December 31, 1993 112 $ 1 9,425 $95 $58,556 $8,719 $67,371
Preferred stock dividends:
Series B --- --- --- -- --- (329) (329)
Proceeds from exercise
of stock options --- --- 6 -- 28 --- 28
Tax benefit from exercise
of stock options --- --- --- -- 6 --- 6
Net Income --- --- --- -- --- 1,710 1,710
--- --- ----- --- ------- ------- -------
Balance at
September 30, 1994 112 $ 1 9,431 $95 $58,590 $10,100 $68,786
=== === ===== === ======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
(6)
11
CLEAN HARBORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
The consolidated interim financial statements included herein have
been prepared by the Company, pursuant to the rules and regulations of
the Securities and Exchange Commission, and include, in the opinion of
management, all adjustments (consisting of only normal recurring
accruals) necessary for the fair presentation of interim period
results. The operating results for the nine months ended September 30,
1994 are not necessarily indicative of those to be expected for the
full fiscal year. Reference is made to the audited consolidated
financial statements and notes thereto included in Clean Harbors'
Report on Form 10-K for the year ended December 31, 1993 as filed with
the Securities and Exchange Commission.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
Net Income Per Common and Common Equivalent Share
Net income per common and common equivalent share is based on net
income less preferred stock dividend requirements divided by the
weighted average number of common and common equivalent shares
outstanding during each of the respective periods. Fully diluted net
income per common share has not been presented as the amount would not
differ significantly from that presented.
NOTE 3 EXTRAORDINARY ITEM
During the third quarter of 1994, the Company recorded an
extraordinary loss of $1,220,000 after taxes ($0.13 per share) for the
early retirement of debt. The extraordinary loss consists primarily of
redemption premiums paid to the holders of $22,500,000 senior
subordinated notes bearing interest at 13.25% and a $1,800,000 secured
note bearing interest at 8%, and the write-off of deferred finance
costs.
(7)
12
CLEAN HARBORS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Revenues for the three months ended September 30, 1994 were
$53,258,000, an increase of 2% compared to revenues of $52,038,000 for
the three months ended September 30, 1993. Revenues for the nine
months ended September 30, 1994 were $154,226,000, an increase of 5%
compared to revenues of $147,337,000 for the nine months ended
September 30, 1993.
The Company continues to penetrate the Southern region of the country,
by expanding its network of sales offices and service centers. The Company
recently opened its twenty third service center in Charleston, South Carolina,
and established three new sales offices in Atlanta, Georgia; Chattanooga,
Tennessee; and Houston, Texas. The Company has nine sales offices, after
consolidating the offices in Minneapolis, Minnesota and Columbus, Ohio with
other locations. The Company now operates in 16 of the 20 largest industrial
waste producing states.
The above reflects the Company's strategy to expand its service
area with low risk capital investment, increase utilization of its
eleven waste management facilities with minimal incremental cost, and
capitalize on industry consolidation. The following table sets forth,
for the periods indicated, the Company's revenues by region, based upon
the locations of its 23 service centers as of September 30, 1994.
Service Center Revenues By Region
For The Quarter and Nine Months Ended
September 30, 1994 and 1993
(in thousands; unaudited)
Quarter Ended Nine Months
----------------- -------------------
9/30/94 9/30/93 1994 1993
------- ------- -------- --------
Northeast $23,012 $21,628 $ 60,931 $ 62,041
Mid-Atlantic 15,689 17,113 53,673 47,388
Central 8,084 6,888 21,175 19,880
Midwest 6,473 6,409 18,447 18,028
------- ------- -------- --------
Total $53,258 $52,038 $154,226 $147,337
(8)
13
CLEAN HARBORS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The principal services provided by the Company fit within three
categories: treatment and disposal of industrial wastes; field
services provided at customer sites; and specialized repackaging,
treatment and disposal services for laboratory chemicals and household
hazardous wastes ("LabPacks").
Revenues By Product Line
(in thousands; unaudited)
Three Months Ended September 30,
Type of Service 1994 1993
--------------- --------------- ---------------
Treatment and Disposal $ 21,633 41% $ 23,644 45%
Field Services 24,633 46 20,331 39
LabPacks 6,992 13 8,063 16
-------- --- -------- ---
$ 53,258 100% $ 52,038 100%
Treatment and disposal services revenue in the third quarter fell 8.5% from
1993 to 1994, reflecting the competitive pricing trends in the hazardous waste
industry. Field services revenue in the third quarter of 1994 was 21% higher
than it was in the prior year. During the third quarter of 1994, the Company
completed several large remediation projects in the Northeast Region which
involved direct shipment of waste to disposal sites. For purposes of reporting
revenue by product line, these jobs are classified as field services, even
though in some cases a substantial portion of the revenue relates to the
disposal of waste.
The Company believes its ability to handle, store and dispose of waste from
field service projects gives it a competitive advantage over other contractors,
who do not have permitted waste management facilities.
LabPack product line revenue fell 13% from the third quarter of 1993 to the
third quarter of 1994, in part because of price competition, particularly in
collecting hazardous waste from households, which is competitively bid by the
municipalities sponsoring the town-wide or city-wide collection programs.
COST OF REVENUES
For the three months ended September 30, 1994, the cost of
revenues as a percentage of revenue increased to 70.3%, as compared to
68.3% for the same period of the prior year, reflecting the competitive
pricing trends in the hazardous waste industry and an increased use of
transportation subcontractors for remediation work during the quarter.
For the nine months ended September 30, 1994, the cost of revenues as a
percentage of revenues increased to 69.2% of revenues as compared to
66.2% for the same period of the prior year. One of the largest
components of cost of revenues is the cost of sending waste to other
companies for disposal. The Company's outside disposal costs were
13.6% of revenue in the third quarter of 1994, compared to 14.4% of
revenue in the third quarter of 1993.
(9)
14
CLEAN HARBORS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three
months ended September 30, 1994 decreased to 17.6% of revenue as
compared to 22.1% for the three months ended September 30, 1993.
Selling, general and administrative expenses for the nine months ended
September 30, 1994 decreased to 18.7% of revenue as compared to 21.8%
for the nine months ended September 30, 1993. This decrease is
primarily due to the cost control efforts begun in the summer of 1993,
and the Company's focus on improving productivity and its ratio of
billable to nonbillable staff. Selling, general and administrative
expenses may increase modestly in future quarters due to the Company's
efforts to expand its service territory, particularly in the Southern
region of the United States, and as it continues to gain market share
in all regions.
INTEREST EXPENSE
During the third quarter of 1994, the Company completed a public
offering of $50 million of Senior Notes, and used the net proceeds to prepay
substantially all of the Company's debt, in order to reduce its reliance on
floating rate bank debt and to refinance other higher interest rate debt. The
refinancing resulted in approximately $2,043,000 of expense relating to the
early retirement of the outstanding debt, which is reflected as an
extraordinary charge net of income tax benefit of $1,220,000.
INCOME TAXES
The effective income tax rates for the three and nine months ended September
30, 1994, were 43% and 45%, respectively, as compared to 51% and 45% for the
comparable periods of 1993. The rates are higher than the combined state and
federal statutory rate due in part to the amortization of goodwill on
acquisitions prior to July 1991, which is non-deductible for income tax
reporting purposes. The Company expects its effective income tax rate for
the fourth quarter of 1994 to be approximately 43%. The rate fluctuates
depending on the amount of income before taxes, as compared to the fixed
amount of goodwill and other non-deductible items.
RECENT DEVELOPMENTS
On September 30, 1994, the Company acquired the assets of a
hazardous and nonhazardous oil processing facility from Chemical Waste
Management, Inc. ("ChemWaste") for $400,000. The facility is located
near Richmond, Virginia and operates under RCRA interim status. This
facility will complement the Company's three existing waste oil
reclamation facilities, all of which are located in New England, and
will support the Company's field service operations in the Mid-Atlantic
region.
The Company is proceeding with its previously announced plans to
expand its Chicago hazardous waste management facility by acquiring an
adjoining site now leased by ChemWaste. In October 1994, the Company
and ChemWaste signed a revised letter of intent, further defining the
terms of the proposed arrangement, under which the Company will acquire
ChemWaste's existing improvements on the site in exchange for sharing
the costs of dismantling an existing hazardous waste incinerator and
cleaning up the site. To date, the Company has obtained the needed
regulatory approvals to begin decontamination and closure work on
certain assets prior to construction of improvements in preparation for
transfer of the site to the Company. Additional regulatory approvals
are necessary, and certain definitive agreements must be negotiated
before the transaction is completed, which is expected in the first
half of 1995.
(10)
15
CLEAN HARBORS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
One of the Company's seven hazardous waste management facilities
is located in Natick, Massachusetts. The Natick facility has a state
Hazardous Waste Facility License (the state equivalent of a federal
Part B license), which was issued in 1986 and expired in 1991. The
Company, in timely fashion, applied to the Massachusetts Department of
Environmental Protection for a new license. At the same time the
Company requested a modification to the license, to add approximately
100 new hazardous waste codes, construct a new loading dock, add new
storage bays, and reconfigure the storage space within the facility.
Although the total number of gallons of hazardous waste allowed to be
stored would not change, these modifications were designed to increase
the facility's throughput capacity and allow more high-margin waste to
be handled. Under the law, the facility continued to operate under the
expired license while the state reviewed the renewal application and
modification request. On October 24, 1994, the DEP issued a new
license for a five-year term, incorporating the modifications requested
by the Company.
The Company also has a hazardous waste management facility
located in Bristol, Connecticut, which has a Part B license issued by
the federal EPA and the Connecticut Department of Environmental
Protection. The license was issued in 1987 and expired in 1991.
Similar to the Natick facility described above, a new license was
applied for and the facility continued to operate while the EPA and DEP
reviewed the renewal application. The Company also applied for
approval to expand the number of hazardous waste codes allowed to be
handled, expand container storage capacity from 1,000 drums to 3,500
drums, and add eight tanks for storage of sludge and stabilization
materials. In October 1994, the DEP issued a draft of the renewal
license, with the additions requested by the Company, and invited
comments from the public. If comments were submitted, then a public
hearing would have been necessary. No public comments were received,
and no hearing was required. The Company expects to receive the final
renewal license shortly. The term of the license will be five years.
The Bristol facility also treats hazardous industrial wastewater, and
has a permit to discharge to the publicly owned sewage treatment works
an average of 50,000 gallons per day of treated water. These treatment
activities are licensed by the Connecticut DEP pursuant to the Clean Water
Act, and are not subject to Part B licensing requirements. In 1990 the
Company applied for renewal and modification of its Clean Water Act
license, to allow construction of additional tanks for wastewater
treatment and installation of new wastewater treatment technologies,
such as reverse osmosis and ultrafiltration. The discharge limit would
remain at 50,000 gallons average per day. The facility currently
discharges an average of approximately 30,000 gallons per day. In
November 1994, the DEP issued a draft of the renewal license, with
the additions requested by the Company, and invited comments from the
public. The Company expects that public comments will be submitted and
that a public hearing will be held.
(11)
16
CLEAN HARBORS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company's future operating results may be affected by a
number of factors, including the Company's ability to: make permanent
the cost reduction benefits associated with its reengineering program
initiated in the summer of 1993; utilize its facilities and workforce
profitably, in the face of intense price competition; successfully
increase market share in its existing service territory while expanding
its product offerings into other markets; and integrate additional
hazardous waste management facilities and generate incremental volumes
of waste to be handled through such facilities from existing sales
offices and service centers and others which may be opened in the
future.
The Company's operations may be affected by the commencement and
completion of major site remediation projects; seasonal fluctuations
due to weather and budgetary cycles influencing the timing of
customers' spending for remedial activities; the timing of regulatory
decisions relating to hazardous waste management projects; secular
changes in the process waste industry towards waste minimization and
the propensity for delays in the remedial market; suspension of
governmental permits; and fines and penalties for noncompliance with
the myriad regulations governing the Company's diverse operations. As
a result of these factors, the Company's revenue and income could vary
significantly from quarter to quarter, and past financial performance
should not be considered a reliable indicator of future performance.
Typically during the first quarter of each calendar year there
is less demand for environmental remediation due to the cold weather,
particularly in the Northeast and Midwest regions. In addition,
factory closings for the year-end holidays reduce the volume of
industrial waste generated, which results in lower volumes of waste
handled by the Company during the first quarter of the following year.
The Company participates in a highly volatile industry, with
multiple competitors, many of which have recently taken large
write-offs and asset write-downs and undergone major restructurings,
while others have announced they will undergo such restructurings and
incur special charges in the near future. The Company's participation
in a highly dynamic industry often results in significant volatility of
the Company's common stock price, as well as that of its competitors.
(12)
17
CLEAN HARBORS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
The Company has financed its operations and capital expenditures
primarily by cash flow from operations and additions to long-term debt.
Cash provided by operations, before changes in current assets and
current liabilities, was $10,219,000 for the nine months ended September
30, 1994, as compared to $10,392,000 for the nine months ended
September 30, 1993.
During the nine months ended September 30, 1994, the Company
spent $3,234,000 (excluding the cost to acquire the oil processing
facility on September 30, 1994) on additions to plant and equipment and
construction in progress, as compared to the same period of the prior
year when its capital expenditures were $6,241,000 (excluding the cost
to acquire Spring Grove Resource Recovery, Inc., a hazardous waste
treatment, storage and disposal facility acquired by the Company in
February 1993). The Company anticipates that its capital expenditures
for the year 1994 will be approximately $6,000,000. The Company
expects to finance these requirements through cash flow from
operations. The Company also continues to investigate the possibility
of acquiring additional hazardous waste treatment, storage and disposal
facilities, which would be financed by a variety of sources.
At September 30, 1994, the Company had a $35,000,000 Revolving
Credit Agreement with three banks (the "Revolver"). On October 1,
1994, the loans outstanding under the Revolver were $8,640,174
(exclusive of letters of credit), and the Company had borrowing
availability of $15,830,146. The Company believes it has adequate
resources available to fund its future operations and anticipated
capital expenditures.
(13)
18
CLEAN HARBORS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
- --------------------------
No reportable events have occurred which would require
modification of the discussion under Item 3--Legal Proceedings
contained in the Company's Report on Form 10-K for the Year Ended
December 31, 1993, as modified by Item 1--Legal Proceedings contained
in the Company's Report on Form 10-Q for the Quarterly Period Ended
June 30, 1994.
ITEM 2 - CHANGES IN SECURITIES
- ------------------------------
None
ITEM 3 - DEFAULTS UPON SENIOR DEBT
- ----------------------------------
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None
ITEM 5 - OTHER INFORMATION
- --------------------------
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
A) Exhibit 11.1 - Computation of Net Income per Share.
Reports on Form 8-K - None
(14)
19
CLEAN HARBORS, 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 on its
behalf by the undersigned thereunto duly authorized.
Clean Harbors, Inc.
-----------------------------
Registrant
Dated: November 10, 1994 By: Alan S. McKim
-----------------------------
Alan S. McKim
President and
Chief Executive Officer
Dated: November 10, 1994 By: James A. Pitts
-----------------------------
James A. Pitts
Executive Vice President and
Chief Financial Officer
Dated: November 10, 1994 By: Mary-Ellen Drinkwater
-----------------------------
Mary-Ellen Drinkwater
Vice President and Controller
(15)
20
ADDITIONAL REGISTRANT SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, each of the Additional Registrants has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Clean Harbors Environmental Services, Inc.
Clean Harbors of Braintree, Inc.
Clean Harbors of Natick, Inc.
Clean Harbors of Baltimore, Inc.
Clean Harbors of Chicago, Inc.
Clean Harbors of Cleveland, Inc.
Murphy's Waste Oil Service, Inc.
Clean Harbors Kingston Facility Corporation
Clean Harbors of Connecticut, Inc.
Mr. Frank, Inc.
Clean Harbors Technology Corporation
Spring Grove Resource Recovery, Inc.
Dated: November 10, 1994 By: James A. Pitts
-------------------
James A. Pitts
Vice President, Treasurer and
Chief Financial Officer
(16)
1
EXHIBIT 11.1
CLEAN HARBORS, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 1994
(in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------- ----------------
1994 1993 1994 1993
------ ------ ------ ------
Net income (loss) $ (138) $ 275 $1,710 $2,550
Less preferred dividends accrued 117 100 329 250
------ ------ ------ ------
Adjusted net income (loss) $ (255) $ 175 $1,381 $2,300
====== ====== ====== ======
Earning per common and common
equivalent share:
Weighted average number of
shares outstanding 9,431 9,426 9,429 9,404
Incremental shares for stock options
under treasury stock method 162 402 220 697
------ ------ ------ ------
Weighted average number of
common and common equivalent
shares outstanding 9,593 9,828 9,649 10,101
====== ====== ====== ======
Net earnings (loss) per common and
common equivalent share $ (.03) $ .02 $ .14 $ .23
====== ====== ====== ======
Earnings per common and common
equivalent share - assuming full
dilution:
Weighted average number of
shares outstanding 9,431 9,426 9,429 9,404
Incremental shares for stock options
under treasury stock method 162 402 220 697
------ ------ ------ ------
Weighted average number of common and
common equivalent shares outstanding
- assuming full dilution 9,593 9,828 9,649 10,101
====== ====== ====== ======
Net earnings (loss) per common and
common equivalent share - assuming
full dilution $ (.03) $ .02 $ .14 $ .23
====== ====== ====== ======
5
0000822818
CLEAN HARBORS, INC.
1,000
U.S. DOLLARS
9-MOS
DEC-31-1994
SEP-30-1994
1
929
0
47,763
1,571
2,607
52,657
117,912
46,907
162,032
29,278
62,483
95
0
1
68,690
162,032
53,258
53,258
37,459
37,459
0
177
1,942
1,913
831
1,082
0
1,220
0
(138)
(.03)
(.03)
