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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD TO
COMMISSION FILE NUMBER 0-9278
GEOWASTE INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
STATE OF INCORPORATION: DELAWARE I.R.S. EMPLOYER ID. NO. 36-2751684
SUITE 700, 100 WEST BAY STREET
JACKSONVILLE, FL 32202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(904) 353-5033
(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, $0.10 Par Value, 21,286,549 shares outstanding as of November
7, 1997.
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<PAGE>
The registrant hereby amends Item I - Financial Statements in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997, to correct a
typographical error contained in the Consolidated Balance Sheets in the line
items "Costs in excess of net assets of acquired business, net of amortization"
and "Long term obligations, less current maturities."
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
Assets (UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 672,878 $ 3,058,067
Accounts receivable, net 2,095,484 2,214,061
Prepaid expenses 346,338 343,461
Prepaid income taxes 292,859 -
Deferred tax asset 220,488 221,000
-------------- ---------------
Total current assets 3,628,047 5,836,589
-------------- ---------------
Property and equipment:
Land, primarily disposal site 14,747,956 13,205,883
Buildings and improvements 605,148 433,025
Vehicles and equipment 11,502,895 8,830,438
-------------- -------------
26,855,999 22,469,346
Less: accumulated depreciation (11,068,636) (8,613,446)
--------------- -------------
Net property and equipment 15,787,363 13,855,900
---------------- -------------
Other Assets:
Cost in excess of net assets of
acquired businesses, net of
amortization 10,231,328 10,505,129
Funds held in escrow 318,000 318,000
Other 171,547 102,473
------------- -------------
Total other assets 10,720,875 10,925,602
------------- -------------
Total assets $ 30,136,285 $ 30,618,091
============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
Liabilities and Stockholders' Equity (UNAUDITED)
Current Liabilities:
<S> <C> <C>
Current maturities of long-term obligations $ 4,614,107 $ 4,672,950
Accounts payable 1,252,530 1,573,707
Accounts payable to related party - 400,000
Accrued payroll 281,239 198,619
Accrued fees 114,000 145,008
Accrued income taxes - 700,000
Accrued other 168,905 46,929
Deferred revenue 647,159 876,624
------------ ---------------
Total current liabilities 7,077,940 8,613,837
------------ ---------------
Long-term obligations, less current maturities 3,412,281 2,522,311
Accrued Royalties 782,014 962,061
Closure and post closure obligations 1,988,468 1,787,136
Deferred tax liability 826,596 750,000
-------------- -------------
Total liabilities 14,087,299 14,635,345
-------------- -------------
Stockholders' equity:
Preferred stock, authorized 5,000,000
shares, $.01 par value; none issued or
outstanding -- --
Common stock, authorized 50,000,000 shares,
$.10 par value; issued and
outstanding 21,286,549 shares in 1997
and 21,028,634 shares in
1996 2,128,655 2,102,863
Additional paid-in capital 13,198,202 12,910,437
Retained earnings 722,129 969,446
-------------- -------------
Total stockholders' equity 16,048,986 15,982,746
-------------- -------------
Total Liabilities and Stockholders' Equity $ 30,136,285 $30,618,091
============== =============
The accompanying notes are an integral part of the consolidated financial statement.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -----------------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net revenues $4,914,420 $3,776,099 $14,636,612 $9,014,790
Cost and expenses:
Operating 3,320,443 2,281,633 10,044,895 4,959,409
Unusual charges - - 1,083,000 -
Selling, general and administrative 1,012,351 723,445 3,138,818 1,687,245
-------------- ------------- ------------ -----------
Income from operations 581,626 771,021 369,899 2,368,136
Other income (expense):
Other income 2,583 41,252 155,965 224,697
Interest expense (166,529) (109,002) (497,064) (307,445)
-------------- ------------ ----------- -----------
Income from operations before income
taxes 417,680 703,721 28,800 2,285,388
Income tax provision 202,826 240,139 276,117 821,931
--------------- -------------- ---------- -----------
Net income (loss) $ 214,854 $ 463,132 $ (247,317) $1,463,457
=============== ============= ============== ============
Earnings per common and common
equivalent share $ 0.01 $ 0.02 $ (0.01) $ 0.07
================ =============== =============== ============
Weighted average common and
common equivalent shares 23,113,058 21,536,696 21,233,378 21,162,328
============= ============= =============== ===========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
SEPTEMBER 30,
-----------------------
1997 1996
------ -----
Cash Flows from operating activities:
<S> <C> <C>
Net income $ (247,317) $ 1,463,457
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 2,700,211 1,748,495
Goodwill writeoff 436,000 -
Impairment of property 201,000 -
Non cash closure costs 201,332 203,961
Loss (Gain) on sale of equipment 2,851 (1,179)
Deferred taxes 77,108 141,931
Gain on sale of business (125,945) -
Changes in assets and liabilities:
Accounts receivable 118,577 (787,105)
Prepaid expenses (295,736) (115,346)
Accounts payable and accrued liabilities (1,648,909) 536,525
Deferred revenue (229,465) (82,838)
-------------- ------------
Net cash provided by operating activities 1,189,707 3,107,901
------------- ------------
Cash flows from investing activities:
Additions to property and equipment (2,545,855) (2,657,247)
Proceeds from the sale of equipment 101,348 11,000
Funds held in escrow and other - 690,010
Cash paid for business acquisitions (291,321) (2,064,922)
Proceeds from the sale of business 204,761 -
------------- ------------
Net cash used in investing activities (2,531,067) (4,021,159)
------------- ------------
Cash flows from financing activities:
Proceeds from exercise of stock options 33,558 -
Payment of debt and capital lease obligations (1,077,387) (722,609)
Net cash used in financing activities (1,043,829) (722,609)
------------- ------------
Decrease in cash and cash equivalents (2,385,189) (1,635,867)
Cash and cash equivalents, beginning of period 3,058,067 3,985,459
------------- -------------
Cash and cash equivalents, end of period $ 672,878 $ 2,349,592
============= =============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, including normally recurring
accruals, necessary to present fairly the financial condition and results of
operations of the Company for and as of the periods and dates indicated. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted in accordance with the rules of the Securities and Exchange
Commission. Operating results for interim periods are not necessarily indicative
of the results that can be expected for a full year. These financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
2) SIGNIFICANT ACCOUNTING POLICIES
EARNINGS PER COMMON SHARE
Net income and loss per common share for the three months and the nine
months ended September 30, 1997 and 1996 are based on the weighted average
number of common and common equivalent shares (stock options and warrants)
outstanding in each period and is computed in accordance with APB Opinion No.
15.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share." Statement No. 128 will replace APB Opinion No. 15
and is effective for periods ending after December 15, 1997. Earlier application
is not permitted. When effective, Statement No. 128 requires restatement of all
prior period earnings per share ("EPS") data presented.
Statement No. 128 replaces the current EPS presentation with a dual
presentation of basic and diluted EPS for entities with complex capital
structures, such as the Company. Basic EPS includes no dilution and is computed
by dividing income (loss) by the weighted average number of common shares
outstanding during the period. Diluted EPS reflects the potential dilution of
securities, such as stock options, that could share in the earnings of an
entity. If Statement No. 128 had been applied for the three and nine month
periods ended September 30, 1997 and 1996, EPS and shares used in the
computation would have been the following pro forma amounts:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1997 1996
------ ----
Pro forma EPS:
<S> <C> <C>
Basic EPS $ 0.01 $ 0.02
============== =============
Diluted EPS $ 0.01 $ 0.02
============== =============
Pro forma shares:
Basic EPS - weighted average common shares
outstanding 21,286,549 20,926,021
Dilutive effect of stock options, warrants and
convertible debentures 1,826,509 5,262,094
-------------- ------------
Diluted EPS 23,113,058 26,118,115
============== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------
1997 1996
------ -----
Pro forma EPS:
<S> <C> <C>
Basic EPS $ (0.01) $ 0.08
=============== ==============
Diluted EPS $ (0.01) $ 0.06
=============== ==============
Pro forma shares:
Basic EPS - weighted average common shares
outstanding 21,233,378 19,062,229
Dilutive effect of stock options, warrants and
convertible debentures - 4,939,824
Diluted EPS 21,233,378 24,002,053
============ ============
</TABLE>
All options, warrants and convertible debentures outstanding for the nine
months ended September 30, 1997 were not included in the computation of diluted
EPS because the options, warrants and convertible debentures are considered
antidilutive. All convertible debentures outstanding for the three months ended
September 30, 1997 were not included in the computation of diluted EPS because
the convertible debentures were considered antidilutive.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, the Company considers all
certificates of deposit and time deposits with original maturities of three
months or less to be cash equivalents.
The Company paid approximately $761,000 and $445,000 for income taxes and
$497,000 and $198,000 for interest during the nine months ended September 30,
1997 and September 30, 1996, respectively.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
Significant non-cash transactions 1997 1996
------ -----
<S> <C> <C>
Purchase of equipment and vehicles financed by
notes payable. $ 1,803,209 -
Assumption of debt associated with purchase of
business 808,751 $ 3,310,647
Capital expenditures included in accounts payable but
not yet paid 313,931 -
Conversion of debentures to stock 280,000
Expenditures related to purchase of business included
in accounts payable but not yet paid 76,982 -
</TABLE>
3) ISSUANCE OF DEBT; CREDIT FACILITY
On March 5, 1992, the Company completed a private placement of $3 million
in Convertible Subordinated Debentures due March 31, 1997 (the "Debentures").
The Debentures had a term of five years and bore interest at the rate of 8.5%
per annum, payable quarterly. Interest was payable in either cash or additional
Debentures at the Company's option. The Company utilized the feature of issuing
additional Debentures in payment of interest for each quarter since the issuance
of the Debentures up to and including the quarter ended March 31, 1995.
Beginning with the second quarter of 1995, the Company chose to pay interest of
$83,000 per quarter rather than issue additional Debentures. Total interest paid
this year through September 30, 1997 on the Debentures amounts to $217,000.
Pursuant to the terms of the Debentures, the Company was obligated to
subordinate certain subsequent issuances of debt to the rights of the holders of
the Debentures. The Debentures subjected the Company to certain covenants,
certain prepayment and conversion obligations and certain restrictions with
respect to the declaration and payment of dividends. The Debentures were
convertible into shares of the Company's common stock at a conversion rate of
$1.40 per share. In March, 1997, the Company and the holder of the Debentures
agreed to extend the due date of the Debentures to September 30, 1997 and the
holder converted $280,000 of convertible debt.
On October 9, 1997 the Company entered into a $5 million revolving credit
facility (the "Credit Facility") with BankBoston, N.A. (the "Bank") and
immediately borrowed $3.8 million under the Credit Facility to repay in full the
principal and accrued interest on the Debentures. Borrowings under the Credit
Facility may be used for working capital, refinancing of outstanding debt,
capital expenditures and other general corporate purposes. Interest on
borrowings under the Credit Facility is payable at a rate of one-quarter of one
percent plus the higher of (i) the Bank's base rate or (ii) one percent above
the overnight federal funds effective rate, as published by the Board of
Governors of the Federal Reserve System, as in effect from time to time.
Borrowings under the Credit Facility mature on October 9, 2000. Under the terms
of the Credit Facility, the Company must maintain certain financial covenants on
a quarterly basis of which the most significant is the interest coverage ratio.
The financial covenant relating to the interest coverage ratio with which the
Company must comply requires the Company not to allow its interest coverage
ratio to be less than 2.25 to 1 through September 30, 1998 or less than 2.50 to
1 thereafter. On November 7, 1997 the Company borrowed $1.0 million under the
Credit Facility to finance its purchase of T. F. Mitchell & Sons, Inc.
Accordingly, as of November 7, 1997, $4.8 million was outstanding under the
Credit Facility.
4) ACQUISITION
On January 10, 1997, the Company acquired the waste related assets of Air
Sweep-A-Lot, Inc. ("ASAL") a solid waste collection and sweeping company located
in Valdosta, GA. The total purchase price of approximately $1,007,000 consisted
of cash in the amount of $200,000, assumption of debt in the amount of $485,000
and the issuance of a promissory note to the owners of ASAL with a principal
amount of $322,000, bearing interest at a rate of 8.0% per annum. This
acquisition was accounted for as a purchase. The value of the non-competition
agreement assigned to this transaction was $85,000 and is being amortized over 5
years. The excess of the purchase price over the net assets acquired of
approximately $348,000 is being amortized over 40 years. The operations of ASAL
are not material to the Company's consolidated operations and has been
integrated into the Company's collection business in Valdosta, Georgia.
On November 7, 1997, the Company purchased the assets of T.F. Mitchell &
Sons, Inc. d/b/a Mitchell Refuse ("Mitchell"), located in Cordele, GA. The total
purchase price of $1,500,000 consisted of cash in the amount of $1,306,000 plus
assumption of $194,000 in debt. This acquisition was accounted for as a
purchase. The Company acquired $597,000 in trucks and equipment. A value of
$150,000 was assigned to Mitchell's customer lists and $100,000 to the
non-competition agreement associated with this transaction. The value of both
the customer lists and the non-competition agreement are being amortized over
five years. The excess of the purchase price over the assets acquired of
approximately $653,000 is being amortized over 40 years. The operations of
Mitchell are not material to the Company's consolidated operations.
5) SALE OF ASSETS
On June 10, 1997, the Company sold its lawn care and certain of its
sweeping businesses in Florida to Sweeping Corp. of America. The assets sold
included selected lawn care and parking lot sweeping equipment together with
contracts obtained since April, 1996 with the Florida Department of
Transportation for highway sweeping and lawn edging in Dade, Leon, Holmes,
Washington, Jackson, Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All
of these contracts involved work being performed in geographically dispersed
locations, which were remote to the Company's existing service areas of
South/Central Georgia, Northeast Florida and North Central Florida and which the
Company believed had limited market share growth opportunities in the near
future. The aggregate purchase price of the sale was $210,000 and resulted in a
gain of approximately $120,000.
6) UNUSUAL CHARGES
On March 21, 1996 the Company acquired all of the capital stock of North
Florida Sweeping, Inc. ("NFS"), a street sweeping and roll-off collection
company based in Jacksonville, Florida. On December 31, 1996, the Company filed
suit in the United States District Court for the Middle District of Florida,
Jacksonville Division (the "Court"), against the former shareholders of NFS
seeking recission, abrogation and annulment of the transaction and damages. The
Company settled this suit with the former shareholders of NFS on October 9,
1997. Pursuant to the settlement, on October 14, 1997 the Court entered a
judgment declaring the acquisition of NFS "to be completely abrogated and
annulled, so as to never have had any force and effect whatsoever," including
the merger of NFS and a subsidiary of the Company and the transfer of the
capital stock of NFS to the Company. As part of the settlement, the Company
received a $50,000 cash payment, retained the assets of NFS and cancelled
warrants to purchase 75,000 shares of the Company's common stock at an exercise
price of $1.25 which were issued to the NFS shareholders in connection with the
nullified transaction.
As a result of the remedial actions taken with respect to the operations of
NFS during the first quarter of 1997, the Company: (a) estimated and accrued the
losses on the sweeping contracts; and (b) in accordance with Statement of
Financial Accounting Standard No. 121 - "Accounting for The Impairment of
Long-Lived Assets And For Long-Lived Assets To Be Disposed Of", concluded that
the goodwill associated with the NFS acquisition is not recoverable.
Accordingly, the Company has taken a charge of $436,000 to earnings.
Additionally, during the first quarter, the Company and the City of St.
Augustine, Florida mutually agreed to terminate the existing transfer,
transportation and disposal agreement. In connection with such termination the
Company has agreed to continue to transport and dispose of the solid waste
generated from the City of St. Augustine until October 31, 1997. The Company is
no longer required, however, to construct a permanent transfer station and
accordingly, wrote-off certain design and permitting costs which had been
previously deferred.
All of the above asset write-offs and expenses have been classified as
"Unusal Charges" in the Consolidated Statement of Operations, and are summarized
as follows:
Additional sweeping costs incurred and paid in the $ 68,000
nine months ended September 30, 1997
Legal and consulting expenses 282,000
Accrued Loss on sweeping contracts 96,000
Write-off of NFS goodwill 436,000
Write-down of NFS real estate 110,000
Write-off of transfer station development costs 91,000
--------------
Total $ 1,083,000
==========
7) NEW PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Both statements are
effective for fiscal years beginning December 15, 1997. The Company has not yet
determined the effect, if any, of these statements on its financial statements.
<PAGE>
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.
GEOWASTE INCORPORATED
(Registrant)
By: /S/ JOHN W. BALLENTINE
John W. Ballentine
Vice President and Chief Financial Officer
Dated: November 25, 1997
