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Table of Contents
 
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
June 30, 2002
 
 
 
 
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.)
1501 Washington Street, Braintree, MA
   
02184-7535
(Address of Principal Executive Offices)
   
(Zip Code)
 
 
(781) 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
   
12,154,612
(Class)
   
(Outstanding at August 7, 2002)
 

Table of Contents
CLEAN HARBORS, INC. AND SUBSIDIARIES
 
TABLE OF CONTENTS
 
PART I:    FINANCIAL INFORMATION
 
    
    Pages    
ITEM 1:    FINANCIAL STATEMENTS
     
  
1
  
2-3
  
4-5
  
6
  
7-17
RESULTS OF OPERATIONS
   
18 - 33
  
34
  
35

Table of Contents
CLEAN HARBORS, INC. AND SUBSIDIARIES
 
CONSOLIDATED INCOME STATEMENT
Unaudited
(in thousands except for earnings per share amounts)
 
 
    
Three Months Ended
June 30,
   
Six Months Ended
June 30,
  
    
2002
   
2001
   
2002
   
2001
  
Revenues
   
$
60,105
   
$
62,300
   
$
113,424
   
$
114,118
 
Cost of revenues
   
 
42,048
   
 
43,110
   
 
80,990
   
 
81,561
 
Selling, general and administrative expenses
   
 
12,241
   
 
11,362
   
 
22,331
   
 
21,142
 
Depreciation and amortization
   
 
2,649
   
 
2,759
   
 
5,344
   
 
5,548
 
    
  
  
  
Income from operations
   
 
3,167
   
 
5,069
   
 
4,759
   
 
5,867
 
Interest expense, net
   
 
2,243
   
 
2,462
   
 
4,357
   
 
4,590
 
    
  
  
  
Income before provision for (benefit from) income taxes
   
 
924
   
 
2,607
   
 
402
   
 
1,277
 
Provision for (benefit from) income taxes
   
 
441
   
 
218
   
 
161
   
 
(80
)
    
  
  
  
Net income
   
$
483
   
$
2,389
   
$
241
   
$
1,357
 
    
  
  
  
Basic earnings per share
   
$
0.03
   
$
0.20
   
$
0.00
   
$
0.10
 
    
  
  
  
Diluted earnings per share
   
$
0.03
   
$
0.18
   
$
0.00
   
$
0.09
 
    
  
  
  
Weighted average common shares outstanding
   
 
12,064
   
 
11,396
   
 
11,932
   
 
11,349
 
    
  
  
  
Weighted average common shares plus potentially dilutive common shares
   
 
14,362
   
 
12,703
   
 
14,213
   
 
12,052
 
    
  
  
  
 
The accompanying notes are an integral part of these consolidated financial statements.

1

Table of Contents
CLEAN HARBORS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 
    
June 30,
2002
   
December 31,
2001
    
(Unaudited)
     
ASSETS
              
Current assets:
              
Cash and cash equivalents
   
$
1,713
   
$
6,715
Restricted investments
   
 
1,006
   
 
1,044
Accounts receivable, net of allowance for doubtful accounts of $1,990 and
    $1,698, respectively
   
 
39,235
   
 
46,545
CSD acquisition costs
   
 
11,668
   
 
—  
Prepaid expenses
   
 
2,375
   
 
1,962
Supplies inventories
   
 
4,072
   
 
4,115
Deferred tax assets
   
 
4,714
   
 
3,986
    
  
Total current assets
   
 
64,783
   
 
64,367
    
  
Property, plant and equipment:
              
Land
   
 
8,478
   
 
8,478
Buildings and improvements
   
 
45,254
   
 
44,152
Vehicles and equipment
   
 
98,159
   
 
94,840
Furniture and fixtures
   
 
2,279
   
 
2,230
Construction in progress
   
 
1,598
   
 
1,843
    
  
    
 
155,768
   
 
151,543
Less—Accumulated depreciation and amortization
   
 
102,495
   
 
98,119
    
  
Net property, plant and equipment
   
 
53,273
   
 
53,424
    
  
Other assets:
              
Goodwill, net
   
 
19,032
   
 
19,032
Permits, net
   
 
9,932
   
 
10,585
Other
   
 
4,409
   
 
4,313
    
  
Total other assets
   
 
33,373
   
 
33,930
    
  
Total assets
   
$
151,429
   
$
151,721
    
  
 
The accompanying notes are an integral part of these consolidated financial statements.

2

Table of Contents
CLEAN HARBORS, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
 
    
June 30,
2002
     
December 31,
2001
  
    
(Unaudited)
         
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Current liabilities:
                  
Uncashed checks
   
$
3,164
 
   
$
4,184
 
Current maturities of long-term obligations
   
 
3,648
 
   
 
3,814
 
Accounts payable
   
 
19,083
 
   
 
19,017
 
Accrued disposal costs
   
 
2,189
 
   
 
4,598
 
Deferred revenue
   
 
4,857
 
   
 
5,532
 
Other accrued expenses
   
 
12,404
 
   
 
15,518
 
Income taxes payable
   
 
36
 
   
 
425
 
    
  
Total current liabilities
   
 
45,381
 
   
 
53,088
 
    
  
Other liabilities:
                  
Long-term obligations, less current maturities
   
 
50,226
 
   
 
44,699
 
Deferred tax liability
   
 
2,933
 
   
 
2,933
 
Other
   
 
1,483
 
   
 
1,432
 
    
  
Total other liabilities
   
 
54,642
 
   
 
49,064
 
    
  
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 (liquidation preference of $5.6 million)
   
 
1
 
   
 
1
 
Common Stock, $.01 par value
                  
Authorized—20,000,000 shares;
                  
Issued and outstanding—12,142,013 and 11,484,654 shares, respectively
   
 
121
 
   
 
115
 
Additional paid-in capital
   
 
66,652
 
   
 
64,838
 
Accumulated deficit
   
 
(15,368
)
   
 
(15,385
)
    
  
Total stockholders’ equity
   
 
51,406
 
   
 
49,569
 
    
  
Total liabilities and stockholders’ equity
   
$
151,429
 
   
$
151,721
 
    
  
 
The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents
CLEAN HARBORS, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(in thousands)
 
 
    
SIX MONTHS
ENDED
JUNE 30,
  
    
2002
       
2001
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                    
Net income
   
$
241
 
     
$
1,357
 
Adjustments to reconcile net income to net cash provided by operating activities:
                    
Depreciation and amortization
   
 
5,344
 
     
 
5,548
 
Allowance for doubtful accounts
   
 
375
 
     
 
342
 
Amortization of deferred financing costs
   
 
321
 
     
 
210
 
Amortization of warrants
   
 
179
 
     
 
55
 
Deferred income taxes
   
 
291
 
     
 
(388
)
Gain on sale of fixed assets
   
 
(38
)
     
 
(19
)
Changes in assets and liabilities
                    
Accounts receivable
   
 
6,935
 
     
 
(1,338
)
Prepaid expenses
   
 
(413
)
     
 
(621
)
Supplies inventories
   
 
43
 
     
 
(390
)
Income taxes receivable
   
 
—  
 
     
 
81
 
Other assets
   
 
(96
)
     
 
48
 
Accounts payable
   
 
(216
)
     
 
(3,360
)
Deferred revenue
   
 
(675
)
     
 
415
 
Accrued disposal costs
   
 
(2,409
)
     
 
(443
)
Other accrued expenses
   
 
(3,114
)
     
 
(90
)
Income taxes payable
   
 
(389
)
     
 
171
 
Other liabilities
   
 
51
 
     
 
(114
)
    
    
Net cash provided by operating activities
   
 
6,430
 
     
 
1,464
 
    
    
CASH FLOWS FROM INVESTING ACTIVITIES:
                    
CSD acquisition costs
   
 
(11,668
)
 &nbs