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
March 31, 2003
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 twelve 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). 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 |
13,432,599 | |
| (Class) |
(Outstanding at May 7, 2003) |
CLEAN HARBORS, INC.
QUARTERLY REPORT ON FORM 10-Q
| Page No. | ||
| PART I: FINANCIAL INFORMATION | ||
| ITEM 1: Financial Statements |
||
| 1-2 | ||
| 3 | ||
| 4 | ||
| 5 | ||
| 6-26 | ||
| ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations |
27-54 | |
| ITEM 3: Quantitative and Qualitative Disclosures About Market Risk |
55 | |
| 56-57 | ||
| PART II: OTHER INFORMATION | ||
| 58 | ||
| 59-62 | ||
CLEAN HARBORS, INC. AND SUBSIDIARIES
ASSETS
(in thousands)
| March 31, 2003 |
December 31, 2002 | |||||
| (Unaudited) |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ |
6,779 |
$ |
13,682 | ||
| Accounts receivable, net of allowance for doubtful accounts of $2,813 and $2,388 respectively |
|
112,390 |
|
125,626 | ||
| Due from Safety-Kleen |
|
11,150 |
|
15,261 | ||
| Unbilled accounts receivable |
|
11,118 |
|
13,556 | ||
| Deferred costs |
|
3,550 |
|
4,430 | ||
| Prepaid expenses |
|
6,237 |
|
8,438 | ||
| Supplies inventories |
|
9,764 |
|
9,629 | ||
| Total current assets |
|
160,988 |
|
190,622 | ||
| Property, plant, and equipment: |
||||||
| Land |
|
14,284 |
|
17,775 | ||
| Landfill assets |
|
14,479 |
|
14,781 | ||
| Buildings and improvements |
|
83,475 |
|
90,694 | ||
| Vehicles and equipment |
|
153,413 |
|
158,820 | ||
| Furniture and fixtures |
|
2,288 |
|
2,282 | ||
| Asset retirement costs |
|
1,535 |
|
— | ||
| Construction in progress |
|
12,731 |
|
7,438 | ||
|
|
282,205 |
|
291,790 | |||
| Less—accumulated depreciation and amortization |
|
115,255 |
|
110,116 | ||
|
|
166,950 |
|
181,674 | |||
| Other assets: |
||||||
| Restricted cash and cash equivalents |
|
60,731 |
|
60,509 | ||
| Deferred financing costs |
|
6,499 |
|
7,036 | ||
| Goodwill, net |
|
19,032 |
|
19,032 | ||
| Permits and other intangibles |
|
80,550 |
|
95,694 | ||
| Other |
|
6,221 |
|
5,123 | ||
|
|
173,033 |
|
187,394 | |||
| Total assets |
$ |
500,971 |
$ |
559,690 | ||
The accompanying notes are an integral part of these consolidated financial statements.
1
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(dollars in thousands)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| Current liabilities: |
||||||||
| Uncashed checks |
$ |
4,966 |
|
$ |
7,233 |
| ||
| Revolving credit facility |
|
14,915 |
|
|
17,709 |
| ||
| Current portion of long term obligations |
|
436 |
|
|
396 |
| ||
| Accounts payable |
|
54,741 |
|
|
56,360 |
| ||
| Accrued disposal costs |
|
2,024 |
|
|
1,998 |
| ||
| Deferred revenue |
|
19,405 |
|
|
24,273 |
| ||
| Other accrued expenses |
|
30,641 |
|
|
33,863 |
| ||
| Current portion of environmental liabilities |
|
20,256 |
|
|
19,821 |
| ||
| Income taxes payable |
|
2,520 |
|
|
1,560 |
| ||
| Total current liabilities |
|
149,904 |
|
|
163,213 |
| ||
| Other liabilities: |
||||||||
| Environmental liabilities, less current portion |
|
142,905 |
|
|
184,790 |
| ||
| Long-term obligations, less current maturities |
|
154,649 |
|
|
155,000 |
| ||
| Long-term capitalized lease obligations, less current portion |
|
1,358 |
|
|
1,245 |
| ||
| Deferred tax liability |
|
3,610 |
|
|
3,330 |
| ||
| Other long-term liabilities |
|
16,705 |
|
|
16,194 |
| ||
| Accrued pension cost |
|
623 |
|
|
593 |
| ||
| Total other liabilities |
|
319,850 |
|
|
361,152 |
| ||
| Commitments and contingent liabilities |
||||||||
| Redeemable Series C Convertible Preferred Stock, $.01 par value: Authorized – 25,000 shares; Issued and outstanding 25,000 shares (liquidation preference of $25.0 million), net of issuance costs and fair value of embedded derivative |
|
13,860 |
|
|
13,543 |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock, $.01 par value: |
||||||||
| Series A convertible preferred stock Authorized 894,585 shares; issued and outstanding – none |
|
— |
|
|
— |
| ||
| Series B convertible preferred stock Authorized 156,416 shares; issued and outstanding 112,000 shares (liquidation preference of $5.6 million) |
|
1 |
|
|
1 |
| ||
| Common stock, $.01 par value: |
||||||||
| Authorized 20,000,000 shares; issued and outstanding 13,401,550 and 12,307,043 shares, respectively |
|
134 |
|
|
123 |
| ||
| Additional paid-in capital |
|
65,239 |
|
|
65,630 |
| ||
| Accumulated other comprehensive income |
|
2,703 |
|
|
(396 |
) | ||
| Accumulated deficit |
|
(50,720 |
) |
|
(43,576 |
) | ||
| Total stockholders’ equity |
|
17,357 |
|
|
21,782 |
| ||
| Total liabilities, redeemable convertible preferred stock and stockholders’ equity |
$ |
500,971 |
|
$ |
559,690 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
2
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands except per share amounts)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
$ |
142,305 |
|
$ |
53,319 |
| ||
| Cost of revenues |
|
106,614 |
|
|
38,942 |
| ||
| Selling, general and administrative expenses |
|
27,251 |
|
|
10,090 |
| ||
| Accretion of environmental liabilities |
|
2,733 |
|
|
— |
| ||
| Depreciation and amortization |
|
6,648 |
|
|
2,695 |
| ||
| Restructuring |
|
(124 |
) |
|
— |
| ||
| Income (loss) from operations |
|
(817 |
) |
|
1,592 |
| ||
| Other income |
|
17 |
|
|
— |
| ||
| Interest expense, net |
|
5,348 |
|
|
2,114 |
| ||
| Loss before provision for (benefit from) income taxes and cumulative effect of change in accounting principle |
|
(6,148 |
) |
|
(522 |
) | ||
| Provision for (benefit from) income taxes |
|
988 |
|
|
(280 |
) | ||
| Loss before cumulative effect of change in accounting principle |
|
(7,136 |
) |
|
(242 |
) | ||
| Cumulative effect of change in accounting principle, net of $0 taxes |
|
8 |
|
|
— |
| ||
| Net loss |
|
(7,144 |
) |
|
(242 |
) | ||
| Dividends and accretion on preferred stock |
|
804 |
|
|
112 |
| ||
| Net loss attributable to common shareholders |
$ |
(7,948 |
) |
$ |
(354 |
) | ||
| Basic loss per share: |
||||||||
| Loss before cumulative effect of change in accounting principle |
$ |
(0.60 |
) |
$ |
(0.03 |
) | ||
| Cumulative effect of change in accounting principle, net of income tax |
$ |
— |
|
$ |
— |
| ||
| Loss attributable to common shareholders |
$ |
(0.60 |
) |
$ |
(0.03 |
) | ||
| Diluted loss per share: |
||||||||
| Loss before change in accounting principle |
$ |
|||||||