Filed Pursuant to Rule 424(b)(3)
Registration No. 333-34875
Prospectus Supplement No. 2 dated August 17, 1998 to
Prospectus dated June 25, 1998
U S LIQUIDS INC.
This Supplement is a part of the Prospectus, dated June 25, 1998, relating
to the offering of up to 3,000,000 shares of common stock, par value $.01 per
share (the "Common Stock"), of U S Liquids Inc. (the "Company") that may be
issued from time to time by the Company in acquisitions of other businesses,
properties and/or assets in business combination transactions and the offering
of up to 1,990,000 shares of Common Stock by the holders thereof.
SECOND QUARTER RESULTS
A copy of the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1998 is attached hereto.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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: 001-13259
U S LIQUIDS INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 76-0519797
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
411 N. Sam Houston Parkway East, Suite 400
Houston, TX 77060-3545
281-272-4500
(Address and telephone number of registrant's principal executive offices)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 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. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
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
12,133,488 shares as of August 13, 1998
1
<PAGE>
U S LIQUIDS INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Page
<S> <C>
Item 1 - Financial Statements:
- Condensed Consolidated Balance Sheets as
of December 31, 1997 and June 30, 1998....................................... 3
- Condensed Consolidated Statements of Income for the
three and six month periods ended June 30, 1997 and 1998..................... 4
- Condensed Consolidated Statements of Cash Flows for
the six month periods ended June 30, 1997
and 1998..................................................................... 5
- Notes to Condensed Consolidated Financial Statements.............................. 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings................................................................ 18
Item 2 - Changes in Securities and Use of Proceeds........................................ 18
Item 3 - Defaults Upon Senior Securities.................................................. 18
Item 4 - Submission of Matters to a Vote of Security Holders.............................. 19
Item 5 - Other Information................................................................ 19
Item 6 - Exhibits and Reports on Form 8-K................................................. 19
Signature.................................................................................. 21
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
U S LIQUIDS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1997 1998
------- --------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 2,203 $ 9,197
Accounts receivable, less allowances of $342 and
$1,307 (unaudited) ........................................ 5,436 25,852
Inventories ................................................. 567 1,041
Prepaid expenses and other current assets ................... 621 2,611
------- --------
Total current assets .................................. 8,827 38,701
PROPERTY, PLANT AND EQUIPMENT, net ................................. 39,110 73,868
INTANGIBLE ASSETS, net ............................................. 6,078 92,348
OTHER ASSETS, net .................................................. 1,001 1,775
------- --------
Total assets .......................................... $55,016 $206,692
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ................. $ 792 $ 1,923
Accounts payable ............................................ 2,154 8,115
Accrued liabilities ......................................... 3,759 12,843
Current portion of contract reserve and deferred revenue .... -- 6,206
------- --------
Total current liabilities ............................. $ 6,705 $ 29,087
LONG-TERM OBLIGATIONS, net of current maturities ................... 16,644 39,972
CELL PROCESSING RESERVE ............................................ 7,330 6,728
CLOSURE AND REMEDIATION RESERVES ................................... 3,275 6,176
CONTRACT RESERVE ................................................... -- 11,972
DEFERRED INCOME TAXES .............................................. 156 575
------- --------
Total liabilities ..................................... $34,110 $ 94,510
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized,
none issued ............................................... $ -- $ --
Common stock, $.01 par value, 30,000,000 shares authorized,
7,303,164 and 12,121,870 (unaudited) shares
issued and outstanding .................................... 73 121
Additional paid-in capital .................................. 17,190 104,800
Retained earnings ........................................... 3,643 7,261
------- --------
Total stockholders' equity ............................ $20,906 $112,182
------- --------
Total liabilities and stockholders' equity ........ $55,016 $206,692
======= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
U S LIQUIDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
----------------- ------------------
1997 1998 1997 1998
------ -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES ................................. $9,873 $ 27,973 $17,734 $ 40,316
OPERATING EXPENSES (exclusive of $607
and $1,869, and $1,215 and $2,793,
respectively, of depreciation and
amortization) .......................... 5,473 17,919 10,147 24,930
DEPRECIATION AND AMORTIZATION ............ 641 2,038 1,274 3,026
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (exclusive of $34 and $169,
and $59 and $233, respectively,
of depreciation and amortization) ..... 1,967 3,405 2,657 4,872
------ -------- ------- --------
INCOME FROM OPERATIONS ................... $1,792 $ 4,611 $ 3,656 $ 7,488
INTEREST EXPENSE, net .................... 458 1,244 967 1,590
OTHER (INCOME) EXPENSE, net .............. 199 (163) 170 (168)
------ -------- ------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES . $1,135 $ 3,530 $ 2,519 $ 6,066
PROVISION FOR INCOME TAXES ............... 528 1,447 1,033 2,449
------ -------- ------- --------
NET INCOME ............................... $ 607 $ 2,083 $ 1,486 $ 3,617
====== ======== ======= ========
BASIC EARNINGS PER COMMON SHARE .......... $ 0.12 $ 0.23 $ 0.28 $ 0.43
====== ======== ======= ========
DILUTED EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE ...................... $ 0.10 $ 0.20 $ 0.25 $ 0.37
====== ======== ======= ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,239 9,228 5,239 8,338
====== ======== ======= ========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING ......... 5,983 10,610 5,983 9,675
====== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
U S LIQUIDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1998
------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................ $ 1,486 $ 3,617
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ....................................... 1,285 3,026
Net gain on sale of property, plant, and equipment .................. -- (60)
Deferred income tax provision ....................................... 152 419
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable, net .......................................... 647 (5,210)
Inventories ....................................................... (107) 618
Prepaid expenses and other current assets ......................... 4 (1,312)
Other assets ...................................................... (151) (750)
Accounts payable and other current liabilities .................... (575) 1,165
Closure, remediation and cell processing reserves ................. 154 (503)
------- --------
Net cash provided by operating activities ...................... $ 2,895 $ 1,010
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ............................ $(1,676) $ (4,267)
Proceeds from sale of property, plant and equipment ................... -- 109
Net cash paid for acquisitions ........................................ -- (68,760)
------- --------
Net cash used in investing activities ........................ $(1,676) $(72,918)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to stockholders and related parties .......................... $ 8 $ 0
Proceeds from issuance of long-term obligations ....................... 305 76,160
Principal payments on long-term obligations ........................... (4,361) (58,191)
Interest accrued on related-party notes payable ....................... 28 --
Issuance of common stock .............................................. -- 60,933
Distributions equal to current income taxes of the limited
liability corporation ............................................... (171) --
------- --------
Net cash provided by (used in) financing activities ......... $(4,119) $ 78,902
------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................... $(2,900) $ 6,994
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......................... 5,604 2,203
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................ $ 2,704 $ 9,197
======= ========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest ................................................ $ 1,028 $ 1,593
Cash paid for income taxes ............................................ 1,030 2,724
Assets acquired under capital leases .................................. 46 --
Assets acquired with stock warrants ................................... -- 2,983
Notes issued related to acquisitions .................................. -- 1,226
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
U S LIQUIDS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared pursuant
to the rules and regulations of the SEC. Certain information and footnote
disclosures, normally included in annual financial statements prepared in
accordance with generally accepted accounting principles, have been condensed or
omitted pursuant to those rules and regulations; although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present the financial
position, results of operations and cash flows with respect to the interim
consolidated financial statements, have been included. The results of operations
for the interim periods are not necessarily indicative of the results for the
entire year.
It is suggested that these condensed consolidated financial statements be
read in conjunction with the audited consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, as filed with the SEC.
2. INVENTORIES
Inventories are stated at the lower of cost or market and, at December 31,
1997 and June 30, 1998, consisted of processed by-products of $435,000 and
$805,000, respectively, and unprocessed by-products of $132,000 and $236,000,
respectively. Cost is determined using the first-in, first-out (FIFO) method.
6
<PAGE>
3. EARNINGS PER SHARE
Effective December 15, 1997, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share". Under
these provisions, earnings per share amounts are based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
the period. The weighted average number of shares used to compute basic and
diluted earnings per share for the three and six months ended June 30, 1997 and
1998, respectively, is illustrated below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ -----------------------
1997 1998 1997 1998
---------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Numerator:
For basic and diluted earnings per
share -- Income available to
common stockholders .............. $ 607 $ 2,083 $ 1,486 $ 3,617
========== =========== ========== ==========
Denominator:
For basic earnings per share --
Weighted-average shares .......... 5,238,875 9,227,864 5,238,875 8,338,329
Effect of dilutive securities:
Stock options and warrants ....... 744,435 1,381,940 744,435 1,336,844
---------- ----------- ---------- ----------
Denominator:
For diluted earnings per share --
Weighted-average shares and
assumed conversions .............. 5,983,310 10,609,804 5,983,310 9,675,173
========== =========== ========== ==========
</TABLE>
4. NEW ACCOUNTING PRONOUNCEMENTS
In March 1998, the AICPA issued Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use". The SOP provides guidance with respect to accounting for the
various types of costs incurred for computer software developed or obtained for
the Company's use. The Company intends to adopt SOP 98-1 in the first quarter of
1999 and believes that adoption will not have a significant effect on its
consolidated financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities". At adoption, SOP 98-5 requires the Company to write off
any unamortized start-up costs as a cumulative change in accounting principle
and expense all future start-up costs as they are incurred. The Company intends
to adopt SOP 98-5 in the first quarter of 1999 and believes that adoption will
not have a significant effect on its consolidated financial statements.
7
<PAGE>
5. ACQUISITIONS
FOURTH QUARTER 1997 ACQUISITIONS
During the fourth quarter of 1997, the Company completed four acquisitions
that were accounted for under the purchase method of accounting. Results of
operations of companies that were acquired and subject to purchase accounting
are included in the consolidated financial statements from the dates of such
acquisitions. The total costs of acquisitions accounted for under the purchase
method were $6,819,000. The accompanying condensed consolidated balance sheet as
of June 30, 1998 includes allocations of the respective purchase prices and is
subject to final adjustment. The excess of the aggregate purchase price over the
fair value of the net assets acquired was approximately $5,726,000.
In addition, the Company has agreed in connection with certain transactions
to pay additional amounts to the sellers upon the achievement by the acquired
businesses of certain negotiated goals, such as targeted earnings levels.
Although the amount and timing of any payments of additional contingent
consideration depend on whether and when these goals are met, the maximum
aggregate amount of contingent consideration potentially payable if all targeted
goals are met is approximately $27,880,000 (payable through 2002) with the
achieved goals providing approximately $31,125,000 of pre-tax income over a
five-year period. The contingent consideration is payable in cash or, in some
instances, cash and stock, at the Company's option.
On October 1, 1997, the Company completed a merger accounted for as a
pooling-of-interests, pursuant to which the Company issued 241,410 shares of its
common stock in exchange for all outstanding shares of the acquired company.
Periods prior to consummation of this merger were not restated to include the
accounts and operations of the acquired company as combined results are not
materially different from the results as presented.
FIRST AND SECOND QUARTER 1998 ACQUISITIONS
During the six months ended June 30, 1998, the Company acquired or
contracted to acquire seventeen businesses engaged in the collection, treatment
and disposal of liquid wastes for approximately $69,033,000 in cash, $1,226,000
in debt issued, 20,000 stock warrants and 1,355,039 shares of the Company's
common stock using the purchase method of accounting. In addition, one
acquisition provides for additional payments of approximately $15,004,000 in
connection with a five-year disposal agreement entered into with the seller,
which the Company has accrued for as a contract reserve. All of these
acquisitions were consummated during the first six months of 1998 except for the
acquisition from USA Waste Services, Inc. ("USA Waste") of one business in
Florida with approximately $6.6 million in 1997 revenues (the "Universal Waste
Acquisition"), which was consummated on August 1, 1998. Pending the consummation
of the Universal Waste Acquisition, USA Waste operated the business on terms
that had the same effect on the Company's financial condition and results of
operations as if the acquisition had been consummated on May 1, 1998. The
accompanying condensed consolidated balance sheet includes allocations of the
respective purchase prices and is subject to final adjustment. The excess of the
aggregate purchase price over the fair value of the net assets acquired was
approximately $85,773,000.
In addition, the Company has agreed in connection with certain transactions
to pay additional amounts to the sellers upon the achievement by the acquired
businesses of certain negotiated goals, such as targeted earnings levels, or the
occurrence of other specified events. Although the amount and timing of any
payments of additional contingent consideration depend on whether and when these
goals or other conditions are met, the maximum aggregate amount of contingent
consideration potentially payable if all targeted goals are met is approximately
$14,225,000 (payable through 2001) with the achieved goals providing
approximately $25,988,000 of pre-tax income or earnings before
8
<PAGE>
interest, taxes, depreciation and amortization over a three-year period. The
contingent consideration is generally payable in cash, however, in three of the
acquisitions, the contingent consideration involves shares of the Company's
common stock.
The unaudited pro forma information set forth below presents the revenues,
net income and earnings per share of the Company, plus the 1997 and 1998
acquisitions, the initial public offering and the secondary offering of common
stock, as if these transactions were effective on the first day of the period
being reported and includes certain pro forma adjustments, including the
adjustment of amortization expenses to reflect purchase price allocations,
recording of interest expense to reflect debt issued in connection with the
acquisitions, and certain reductions of salaries and benefits payable to the
previous owners of the businesses acquired which were agreed to in connection
with the acquisitions and the related income tax effects of these adjustments.
SIX MONTHS ENDED JUNE 30,
1997 1998
---------- ----------
(In thousands, except for per share data)
(Unaudited)
Revenue .............................. $ 76,724 $ 79,802
Net income ........................... 5,076 6,450
Basic earnings per common share ...... 0.42 0.53
Diluted earnings per common share .... 0.39 0.48
The unaudited pro forma information is presented for informational purposes
only and is not necessarily indicative of the results of operations that
actually would have been achieved had the acquisitions been consummated at the
beginning of the periods presented.
6. LEGAL PROCEEDINGS
On August 7, 1998, the Company settled substantially all of the claims
asserted against it in the three previously reported lawsuits relating to its
Bourg, Louisiana landfarm and a fourth lawsuit filed against the Company in July
1998 seeking injunctive relief against certain operations of the Bourg,
Louisiana landfarm. Under the terms of the settlement, the Company agreed to
expand the buffer zone along the western boundary of its landfarm. In addition,
the Company agreed to construct a berm along the property line closest to the
residences of the plaintiffs. The costs of these actions had previously been
reserved for by the Company and, thus, did not have any impact on earnings. This
settlement does not resolve certain claims asserted against the Company by
Acadian Shipyard, Inc., a local barge company ("Acadian"), in the FRILOUX ET AL.
V. CAMPBELL WELLS CORPORATION case pending in the 17th Judicial District Court
for the Parish of Lafourche, Louisiana. In the FRILOUX case, the Company has
asserted claims for indemnity and/or contribution against Acadian. Thereafter,
in July 1998, Acadian filed various counterclaims against the Company including,
without limitation, claims for defamation of business reputation and conspiracy
to damage Acadian's business reputation. In addition, Acadian requested
unspecified monetary damages allegedly suffered as a result of alleged
environmental contamination in connection with the ongoing operations at the
Bourg, Louisiana landfarm. The Company denies that it has any liability to
Acadian and intends to vigorously defend itself against these claims. In
addition, this settlement does not resolve the claims asserted in the class
action filed in the Civil District Court for the Parish of Orleans, Louisiana
seeking
9
<PAGE>
unspecified monetary damages allegedly suffered as a result of alleged air,
water and soil contamination in connection with ongoing operations at the
Company's Mermentau, Louisiana landfarm. The Company has not been named as a
defendant in this class action; however, there can be no assurance that the
Company will not subsequently be named as a defendant.
In July 1998, the Company commenced an arbitration proceeding against
Newpark Resources, Inc. ("Newpark") for failing to satisfy its delivery and
payment obligations under a long-term disposal agreement (the "Disposal
Agreement") that the Company acquired in connection with its acquisition of its
Louisiana and Texas landfarms in December 1996. Specifically, the Company has
alleged that Newpark has fallen short of its delivery obligations under the
Disposal Agreement by approximately 635,000 barrels of oilfield waste valued at
approximately $3.5 million. The Company has requested that the arbitrators enter
an order (i) declaring that Newpark has breached the Disposal Agreement and no
condition existed or exists which would excuse Newpark's breach and (ii)
awarding the Company approximately $3.5 million in damages. The arbitrators for
the arbitration proceeding have not yet been selected and, thus, Newpark has not
responded to the claims asserted by the Company.
The Company is, from time to time, a party to litigation arising in the
normal course of its business, most of which involves claims for personal injury
or property damage incurred in connection with its operations. Except as
described above, the Company is not currently involved in any litigation that it
believes will have a material adverse effect on its business, results of
operations or financial condition.
7. SUBSEQUENT EVENTS
Since June 30, 1998, the Company has acquired four additional businesses,
which collectively had 1997 revenues of approximately $1.5 million. Each of
these acquisitions has been accounted for under the purchase method of
accounting. The total consideration for these four acquisitions involved
approximately $1.9 million in cash and assumed debt and 7,786 shares of the
Company's common stock. In two of these acquisitions, the Company agreed to make
additional payments of cash to the sellers upon the achievement by the acquired
businesses of targeted earnings levels. In addition, on August 1, 1998, the
Company consummated the Universal Waste Acquisition.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
OVERVIEW
The Company is a rapidly growing provider of integrated liquid waste
management services, including collection, processing, recovery and disposal
services. Since its formation in November 1996, the Company has pursued an
aggressive acquisition program, acquiring 29 liquid waste management businesses.
The Company provides liquid waste management services through a number of
subsidiaries that are organized into two divisions. The Industrial Wastewater
Division collects, processes and disposes of liquid waste (such as industrial
wastewater, grease and grit trap waste, bulk liquids and unsaleable beverages
and certain hazardous wastes) and whenever feasible recovers saleable
by-products from the waste streams. Typically, the Company uses a variety of
physical, chemical, thermal and biological techniques to break down the liquid
waste into constituent components. Water extracted from the liquid waste is
pretreated and then discharged into the local publicly-owned treatment works and
solid materials are dried and disposed of in a solid waste landfill. The
Oilfield Waste Division processes and disposes of waste generated in oil and gas
exploration and production. The Oilfield Waste Division was formed in December
1996 when the Company purchased its Louisiana and Texas landfarms (the "Campbell
Wells Acquisition") from Campbell Wells, L.P. and Campbell Wells Norm, L.P.
(collectively, "Campbell Wells") and Sanifill, Inc. ("Sanifill"), each of which
is now a wholly-owned subsidiary of USA Waste Services, Inc. ("USA Waste").
The Industrial Wastewater Division generated $24.6 million, or 87.9%, of the
Company's revenues for the quarter ended June 30, 1998. This Division derives
revenues from two principal sources: tipping and collection fees received for
processing and disposing of waste, and revenue obtained from the sale of
by-products, including fats, oils, feed proteins, industrial and fuel grade
ethanol, solvents, aluminum, glass, plastic and cardboard recovered from waste
streams. Some of the Company's by-product sales involve the brokering of
industrial and fuel grade ethanol produced by third parties in order to meet its
customers' volume and quality requirements. Tipping and collection fees charged
to customers vary per gallon by waste stream according to the constituents of
the waste, expenses associated with processing the waste and competitive
factors. By-products are commodities and their prices fluctuate based on market
conditions. The Company anticipates that revenues from tipping and collection
fees, which have higher margins than by-product sales, will increase at a faster
rate than revenues from sales of by-products and brokering of ethanol. The
Company anticipates that the Industrial Wastewater Division will represent a
growing share of the Company's business because of its projected internal growth
and future acquisitions.
The Oilfield Waste Division generated $3.4 million, or 12.1%, of the
Company's revenues for the quarter ended June 30, 1998. This Division derives
revenues from fees charged to customers for processing and disposing of oil and
gas exploration and production waste. These fees are based on the composition of
the waste and currently range from $0.40 per barrel for saltwater to $6.75 to
$10.75 per barrel for oil-based drilling fluids, depending upon the makeup of
the waste. Accordingly, the Company believes that total revenues are a better
indicator of performance than is the average fee charged. When waste is unloaded
at a given site, the Company recognizes the related revenue and records a
reserve for the estimated amount of expenses to be incurred to process the waste
in order to match revenues with their related costs. As processing occurs,
generally over nine to twelve months, the reserve is depleted as expenses are
incurred.
11
<PAGE>
The Company's operating margins in the Oilfield Waste Division are typically
higher than in the Industrial Wastewater Division.
Newpark Resources, Inc. ("Newpark") is the largest customer of the Oilfield
Waste Division. Under the terms of a long-term disposal agreement (the "Disposal
Agreement") that the Company acquired in connection with the Campbell Wells
Acquisition, Newpark is obligated to deliver to the Company annually the lesser
of (i) one-third of the barrels of oilfield waste that Newpark receives for
processing and disposal in Louisiana, Texas, Mississippi, Alabama and the Gulf
of Mexico, and (ii) 1,850,000 barrels of oilfield waste, in each case excluding
saltwater. The contract price is $5.50 per barrel, adjusted semi-annually
beginning June 30, 1998, with a price floor of $5.50 per barrel. As further
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and in "Legal Proceedings" below, a dispute has arisen
with respect to Newpark's obligations under the Disposal Agreement and the
Company has initiated an arbitration proceeding seeking declaratory relief,
specific performance of the Disposal Agreement and monetary damages.
Operating expenses include compensation and overhead related to operations
workers, supplies and other raw materials, transportation charges, disposal fees
paid to third parties, real estate lease payments and energy and insurance costs
applicable to waste processing and disposal operations.
Selling, general and administrative expenses include management, clerical
and administrative compensation and overhead relating to the Company's corporate
offices and each of its operating sites, as well as professional services and
costs.
Depreciation and amortization expenses relate to the Company's landfarms and
other depreciable or amortizable assets. Landfarms, which constitute
approximately 20.8% of the Company's net property, plant and equipment, are
amortized over 25 years. Other depreciable or amortizable assets are expensed
over periods ranging from three to 40 years. Amortization expenses relating to
acquisitions have not been significant in the past, but will increase as a
result of amortization of goodwill recorded in connection with acquisitions
completed since December 31, 1997 and future acquisitions.
The timing and magnitude of acquisitions, assimilation costs and the
seasonal nature of the operations of the Oilfield Waste Division may materially
affect operating results. Accordingly, the operating results for any period are
not necessarily indicative of the results that may be achieved for any
subsequent period.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1998
REVENUES. Revenues for the quarter ended June 30, 1998 increased $18.1
million, or 183.3%, from $9.9 million for the quarter ended June 30, 1997 to
$28.0 million for the quarter ended June 30, 1998. The Industrial Wastewater
Division contributed $4.2 million, or 42.8%, of second quarter 1997 revenues and
$24.6 million, or 87.9%, of second quarter 1998 revenues. Tipping and collection
fees generated $1.2 million, or 28.2%, and $18.2 million, or 73.9%, of the
Industrial Wastewater Division's revenues for the second quarters of 1997 and
1998, respectively. By-product sales generated the remaining $3.0 million, or
70.7%, and $6.4 million, or 25.8%, of the Industrial Wastewater Division's
revenues for the second quarters of 1997 and 1998, respectively. The Oilfield
Waste Division contributed $5.7 million, or 57.2%, of second quarter 1997
revenues and $3.4 million, or 12.1%, of second quarter 1998 revenues.
The revenues of the Industrial Wastewater Division increased $20.4 million,
or 484.1%, from $4.2 million for the quarter ended June 30, 1997 to $24.6
million for the quarter ended June 30, 1998 due to acquisitions
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completed during the fourth quarter of 1997 and the first six months of 1998 and
an increase in the volume of waste processed resulting primarily from the
enactment of state-wide "full-pump" regulations in Texas. The Oilfield Waste
Division's revenues decreased $2.3 million, or 40.3%, from $5.7 million for the
quarter ended June 30, 1997 to $3.4 million for the quarter ended June 30, 1998.
The revenues of the Oilfield Waste Division were down due to lower receipts of
oilfield waste from Newpark under the Disposal Agreement. During the three month
period ended June 30, 1998, Newpark delivered approximately 133,500 barrels of
oilfield waste (excluding saltwater) to the Company's landfarms, as compared to
approximately 393,200 barrels of oilfield waste (excluding saltwater) delivered
during the three month period ended June 30, 1997. Pending the resolution of the
arbitration proceeding described in "Legal Proceedings" below, the Company
anticipates that Newpark's deliveries of oilfield waste to the Company will be
substantially less than that mandated by the Disposal Agreement. While the
Company believes that it will prevail in the arbitration proceeding, it has
elected to record the dollar value associated with the volume shortfall,
utilizing the rate set in the Disposal Agreement, as deferred revenue.
OPERATING EXPENSES. Operating expenses increased $12.4 million, or 227.4%,
from $5.5 million for the quarter ended June 30, 1997 to $17.9 million for the
quarter ended June 30, 1998. As a percentage of revenues, operating expenses
increased from 55.4% in the second quarter of 1997 to 64.1% in the second
quarter of 1998. This increase was due primarily to the Company's transition
from operating primarily as an oilfield waste disposal company into an
integrated liquid waste management company providing collection, processing,
recovery and disposal services.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased $1.4 million, or 217.9%, from $641,000 for the quarter ended June 30,
1997 to $2.0 million for the quarter ended June 30, 1998. As a percentage of
revenues, depreciation and amortization expenses increased from 6.5% in the
second quarter of 1997 to 7.3% in the second quarter of 1998. This increase was
primarily due to an increase in capital expenditures and additional amortization
associated with the acquisitions completed in 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $1.8 million, or 117.3%, from $1.6 million for
the quarter ended June 30, 1997 to $3.4 million for the quarter ended June 30,
1998. As a percentage of revenues, selling, general and administrative expenses
decreased from 15.9% for the second quarter of 1997 to 12.2% for the second
quarter of 1998. This decrease was primarily due to the Company's ability to
integrate new business acquisitions without a proportionate increase in general
and administrative expenses.
INTEREST AND OTHER EXPENSES. Net interest and other expenses increased
$424,000, or 64.5%, from $657,000 for the quarter ended June 30, 1997 to $1.1
million for the quarter ended June 30, 1998. This increase resulted primarily
from interest expense incurred on borrowings used to fund the purchase price for
acquisitions completed in 1998.
INCOME TAXES. The provision for income taxes increased $919,000, or 174.1%,
from $528,000 for the quarter ended June 30, 1997 to $1.4 million for the
quarter ended June 30, 1998 as a result of increased taxable income. The
effective tax rate for the period ended June 30, 1997 was 46.5% compared to a
41.0% rate for the period ended June 30, 1998.
SIX MONTHS ENDED JUNE 30, 1997 AND 1998
REVENUES. Revenues for the six month period ended June 30, 1998 increased
$22.6 million, or 127.3%, from $17.7 million for the six months ended June 30,
1997 to $40.3 million for the six months ended June 30, 1998. The Industrial
Wastewater Division contributed $7.9 million, or 44.3%, of revenues for the
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six months ended June 30, 1997 and $31.9 million, or 79.2%, of revenues for the
six months ended June 30, 1998. Tipping and collection fees generated $2.0
million, or 25.7%, and $22.4 million, or 70.3%, of the Industrial Wastewater
Division's revenues for the six month periods ended June 30, 1997 and 1998,
respectively. By-product sales generated the remaining $5.9 million, or 74.3%,
and $9.5 million, or 29.7%, of the Industrial Wastewater Division's revenues for
the 1997 and 1998 periods, respectively. The Oilfield Waste Division contributed
$9.9 million, or 55.7%, of revenues for the six month period ended June 30, 1997
and $8.4 million, or 20.8%, of revenues for the six month period ended June 30,
1998.
The revenues of the Industrial Wastewater Division increased $24.1 million,
or 306.2%, from $7.9 million for the six months ended June 30, 1997 to $31.9
million for the six months ended June 30, 1998. This increase was due primarily
to acquisitions completed during the fourth quarter of 1997 and the first six
months of 1998 and an increase in the volume of waste processed resulting
primarily from the enactment of state-wide "full-pump" regulations in Texas. The
Oilfield Waste Division's revenues decreased $1.5 million, or 15.0%, from $9.9
million for the six months ended June 30, 1997 to $8.4 million for the six
months ended June 30, 1998. This decrease resulted primarily from lower receipts
of oilfield waste from Newpark under the Disposal Agreement. Newpark delivered
approximately 879,500 and 450,700 barrels of oilfield waste (excluding
saltwater) to the Company's landfarms during the six month periods ended June
30, 1997 and 1998, respectively.
OPERATING EXPENSES. Operating expenses increased $14.8 million, or 145.7%,
from $10.1 million for the six months ended June 30, 1997 to $24.9 million for
the six months ended June 30, 1998. As a percentage of revenues, operating
expenses increased from 57.2% for the six month period ended June 30, 1997 to
61.8% for the six month period ended June 30, 1998. This increase was due
principally to the Company's transition from operating primarily as an oilfield
waste disposal company into an integrated liquid waste management company
providing collection, processing, recovery and disposal services.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased $1.8 million, or 137.5%, from $1.3 million for the six months ended
June 30, 1997 to $3.0 million for the six months ended June 30, 1998. As a
percentage of revenues, depreciation and amortization expenses increased
slightly from 7.2% for the six month period ended June 30, 1997 to 7.5% for the
six month period ended June 30, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $2.6 million, or 115.9%, from $2.3 million for
the six months ended June 30, 1997 to $4.9 million for the six months ended June
30, 1998. As a percentage of revenues, selling, general and administrative
expenses decreased from 12.7% for the six month period ended June 30, 1997 to
12.1% for the six month period ended June 30, 1998. This improvement resulted
primarily from the Company's ability to integrate new business acquisitions
without a proportionate increase in general and administrative expenses.
INTEREST AND OTHER EXPENSES. Net interest and other expenses increased
$285,000, or 25.1%, from $1.1 million for the six months ended June 30, 1997 to
$1.4 million for the six months ended June 30, 1998. This increase resulted
primarily from interest expense incurred on borrowings used to fund the purchase
price for acquisitions completed in 1998.
INCOME TAXES. The provision for income taxes increased $1.4 million, or
137.1%, from $1.0 million for the six months ended June 30, 1997 to $2.4 million
for the six months ended June 30, 1998 as a result of increased taxable income.
The effective tax rate for the six months ended June 30, 1997 was 41%, compared
to a 40.4% rate for the six months ended June 30, 1998.
14
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LIQUIDITY AND CAPITAL RESOURCES
In June 1998, the Company completed a secondary offering of 3,450,000 shares
of common stock, resulting in net proceeds of approximately $60.9 million. The
net proceeds were applied against the outstanding balance of the Company's
Credit Facility, the vast majority of which indebtedness was incurred in
connection with acquisitions previously consummated by the Company.
The Company had net working capital of $9.6 million at June 30, 1998,
compared to net working capital of $2.1 million at December 31, 1997.
Improvement in the working capital position was attributable primarily to an
increase in cash resulting from the exercise in late June of an over-allotment
option granted to the underwriters of the Company's secondary offering.
The Company's capital requirements for its continuing operations consist of
its general working capital needs, scheduled principal payments on its debt
obligations and capital leases, and planned capital expenditures. At June 30,
1998, approximately $1.9 million of principal payments on debt obligations were
payable during the next twelve months. Capital expenditures during the three
months and the six months ended June 30, 1998 were $3.0 million and $4.3
million, respectively. The majority of the capital expenditures were for plant
expansions, equipment and vehicle upgrades. Capital expenditures for the last
two quarters of 1998 are budgeted at approximately $11.0 million. Of this
amount, approximately $1.8 million is budgeted to be invested in the Oilfield
Waste Division on equipment replacements and landfarm expansions. The remaining
amount is budgeted to be invested in the Industrial Wastewater Division for
plant expansions, equipment and vehicle upgrades.
At June 30, 1998, the Company had established a $6.2 million reserve to
provide for the cost of future closures of facilities. The amount of this
unfunded reserve is based on the estimated total cost to the Company of closing
the facilities as calculated in accordance with the applicable regulations.
Applicable regulatory agencies require the Company to post financial assurance
with the agencies to assure that all waste will be treated and the facilities
closed appropriately. The Company has in place a total of $12.2 million of
financial assurance in the form of letters of credit and bonds.
The Company has a $100 million credit facility (the "Credit Facility") with
a group of banks under which the Company may borrow to fund working capital
requirements and acquisitions. Amounts outstanding under the Credit Facility are
secured by, among other things, a lien on all or substantially all of the
Company's assets. The Credit Facility prohibits the payment of dividends and
requires the Company to comply with certain financial covenants. The Credit
Facility also places certain restrictions on, among other things, acquisitions
and other business combination transactions which may be consummated by the
Company. The Company does not believe that these restrictions will have a
material adverse effect on the Company's ability to fulfill its current
acquisition program. The debt outstanding under the Credit Facility may be
accelerated at the option of the lenders in the event that, among other things,
a change in control of the Company occurs or Michael P. Lawlor, W. Gregory Orr
or Earl J. Blackwell ceases to serve as an executive officer of the Company and
is not replaced within sixty days by an individual reasonably satisfactory to
the lenders. At June 30, 1998, the Company had borrowed approximately $38.0
million under the Credit Facility.
The Company's capital resources consist of cash reserves, cash generated
from operations and funds available under the Credit Facility. The Company
expects that these resources will be sufficient to fund continuing operations
for at least the next twelve months. In addition to capital required for its
ongoing operations, the Company will require additional capital to pursue its
acquisition program. The Company anticipates that future acquisitions will be
made using a combination of common stock and cash, much of which is expected to
be derived from borrowings under the Credit Facility. In addition, the Company
may seek to raise additional equity capital for all or a substantial part of the
consideration to be paid for future
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acquisitions or to reduce its debt. In the event that the common stock does not
maintain a sufficient market value or potential acquisition candidates are
unwilling to accept common stock as part of the consideration for the sale of
their businesses, the Company would be required to utilize more of its cash
resources in order to continue its acquisition program. At the same time, the
Company may be unable to raise additional capital due to market conditions. As a
result, the timing of acquisitions over the longer term can be expected to be
affected by prevailing market conditions. In addition, if the Company were
unable to secure the capital necessary to carry out its acquisition program, the
implementation of the Company's growth strategy would be adversely affected.
ACQUISITIONS
During the three months ended June 30, 1998, the Company acquired or
contracted to acquire thirteen businesses, which collectively had 1997 revenues
of approximately $115.7 million. All of these acquisitions were consummated
during the three months ended June 30, 1998 except for the acquisition from USA
Waste of one business in Florida with approximately $6.6 million in 1997
revenues (the "Universal Waste Acquisition"), which was consummated on August 1,
1998. Pending the consummation of the Universal Waste Acquisition, USA Waste
operated the business on terms that had the same effect on the Company's
financial condition and results of operations as if the acquisition had been
consummated on May 1, 1998. Each of the acquisitions has been accounted for
under the purchase method of accounting. The total consideration for these
thirteen acquisitions (including the Universal Waste Acquisition) involved
approximately $64.1 million in cash and debt issued and 1,169,181 shares of the
Company's common stock. In addition, one acquisition provides for additional
payments of approximately $15,004,000 in connection with a five-year disposal
agreement entered into with the seller, which the Company has accrued for as a
contract reserve. In certain transactions, the Company agreed to issue
additional shares of common stock or make additional payments of cash to the
sellers upon the achievement by the acquired businesses of certain negotiated
goals, such as targeted earnings levels, or upon the occurrence of other
specified events.
Since June 30, 1998, the Company has acquired four additional businesses,
which collectively had 1997 revenues of approximately $1.5 million. Each of
these acquisitions has been accounted for under the purchase method of
accounting. The total consideration for these four acquisitions involved
approximately $1.9 million in cash and assumed debt and 7,786 shares of the
Company's common stock. In two of these acquisitions, the Company agreed to make
additional payments of cash to the sellers upon the achievement by the acquired
businesses of targeted earnings levels.
YEAR 2000 COMPLIANCE
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, such
computer applications could fail or create erroneous results by or at the Year
2000. The Company has determined that its computer programs are Year 2000
compliant. When the Company completes an acquisition, it replaces the acquired
company's system with its own management and reporting and control systems.
Accordingly, the Company does not believe that its acquisition program will be
adversely affected by Year 2000 compliance issues.
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FORWARD LOOKING STATEMENTS
Statements of the Company's or management's intentions, beliefs,
anticipations, expectations or similar statements concerning future events
contained in this report constitute "forward looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. As with any future event,
there can be no assurance that the events described in forward looking
statements made in this report will occur or that the results of future events
will not vary materially from those described herein. Important factors that
could cause the Company's actual performance and operating results to differ
materially from the forward looking statements include, among other factors,
changes in the regulatory environment in which the Company operates, changes in
the level economic activity in markets served by the Company, the availability
of capital to support the Company's growth strategy, the ability of the Company
to execute it business plan, changes in the level of exploration and production
of oil and gas, particularly in the Gulf Coast region, changes in the level of
competition faced by the Company in each of its markets, the loss of business or
inability to collect payment from one or more significant customers and the
adverse resolution of pending litigation affecting the Company's landfarms.
17
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PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 7, 1998, the Company settled substantially all of the claims
asserted against it in the three previously reported lawsuits relating to its
Bourg, Louisiana landfarm and a fourth lawsuit filed against the Company in July
1998 seeking injunctive relief against certain operations of the Bourg,
Louisiana landfarm. Under the terms of the settlement, the Company agreed to
expand the buffer zone along the western boundary of its landfarm. In addition,
the Company agreed to construct a berm along the property line closest to the
residences of the plaintiffs. The costs of these actions had previously been
reserved for by the Company and, thus, did not have any impact on earnings. This
settlement does not resolve certain claims asserted against the Company by
Acadian Shipyard, Inc., a local barge company ("Acadian"), in the FRILOUX ET AL.
V. CAMPBELL WELLS CORPORATION case pending in the 17th Judicial District Court
for the Parish of Lafourche, Louisiana. In the FRILOUX case, the Company has
asserted claims for indemnity and/or contribution against Acadian. Thereafter,
in July 1998, Acadian filed various counterclaims against the Company including,
without limitation, claims for defamation of business reputation and conspiracy
to damage Acadian's business reputation. In addition, Acadian requested
unspecified monetary damages allegedly suffered as a result of alleged
environmental contamination in connection with the ongoing operations at the
Bourg, Louisiana landfarm. The Company denies that it has any liability to
Acadian and intends to vigorously defend itself against these claims. In
addition, this settlement does not resolve the claims asserted in the class
action filed in the Civil District Court for the Parish of Orleans, Louisiana
seeking unspecified monetary damages allegedly suffered as a result of alleged
air, water and soil contamination in connection with ongoing operations at the
Company's Mermentau, Louisiana landfarm. The Company has not been named as a
defendant in this class action; however, there can be no assurance that the
Company will not subsequently be named as a defendant.
In July 1998, the Company commenced an arbitration proceeding against
Newpark Resources, Inc. for failing to satisfy its delivery and payment
obligations under the Disposal Agreement. Specifically, the Company has alleged
that Newpark has fallen short of its delivery obligations under the Disposal
Agreement by approximately 635,000 barrels of oilfield waste valued at
approximately $3.5 million. The Company has requested that the arbitrators enter
an order (i) declaring that Newpark has breached the Disposal Agreement and no
condition existed or exists which would excuse Newpark's breach and (ii)
awarding the Company approximately $3.5 million in damages. The arbitrators for
the arbitration proceeding have not yet been selected and, thus, Newpark has not
responded to the claims asserted by the Company.
The Company is, from time to time, a party to litigation arising in the
normal course of its business, most of which involves claims for personal injury
or property damage incurred in connection with its operations. Except as
described above, the Company is not currently involved in any litigation that it
believes will have a material adverse effect on its business, results of
operations or financial condition.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
SALES OF UNREGISTERED SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On May 5, 1998, the annual meeting of stockholders of the Company was
held in Houston, Texas. The items of business considered at the annual meeting
were as follows:
(1) The election of Alfred Tyler 2nd and James F. McEneaney, Jr. to serve as
directors of the Company for a term of three years.
(2) The ratification of the appointment of Arthur Andersen LLP as the
Company's independent accountants for 1998.
At the annual meeting 5,578,192 votes were cast by the stockholders FOR the
election of Alfred Tyler 2nd and 2,225 votes were voted AGAINST; 5,578,192 votes
were cast by the stockholders FOR the election of James F. McEneaney, Jr. and
2,225 votes were voted AGAINST; 5,531,445 votes were cast by the stockholders
FOR the ratification of the selection of Arthur Andersen LLP as the Company's
independent accountants for 1998, 44,547 votes were voted AGAINST and 4,425
shares ABSTAINED.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Description
- ------ --------------
10.71 Stock Purchase Agreement among U S Liquids Inc., MCS Transportation,
Inc., Charles C. Stout, Charlotte S. Lynch, James Scott Raimey, Danny
C. Hammond, Thomas E. Starustka, Brenda B. Savell, Janice S. Whalen,
and John Dwight Askeu.
10.72 Stock Purchase Agreement among U S Liquids Inc., Advanced Management
Systems, Inc. and Charles C. Stout.
27.1 Financial Data Schedule
(b) On April 30, 1998, the Company filed a report on Form 8-K with the
Securities and Exchange Commission. Under Item 2 of that report, the Company
described its acquisition of all of the capital stock of The National Solvent
Exchange Corp., a Georgia corporation.
On May 6, 1998, the Company filed a report on Form 8-K with the Securities
and Exchange Commission. Under Item 2 of that report, the Company described its
acquisition of substantially all of the assets of Parallel Products, a
California limited partnership, and all of the outstanding capital stock of
Waste Stream Environmental, Inc. and Earth Blends, Inc., each a New York
corporation, and Amigo Diversified Services, Inc., a Texas corporation.
On May 22, 1998, the Company filed a report on Form 8-K with the Securities
and Exchange Commission. Under Item 2 of that report, the Company described its
acquisition of all of the capital stock of Northern A-1 Sanitation Services,
Inc., a Michigan corporation, and certain assets of City Environmental, Inc. and
Universal Waste and Transit.
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On June 2, 1998, the Company amended both the May 6, 1998 Form 8-K and the
May 22, 1998 Form 8-K to include audited financial statements of City
Environmental, Inc., Waste Stream Environmental, Inc. (and its affiliate, Earth
Blend, Inc.), and Parallel Products, as well as certain pro forma financial
information .
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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.
U S LIQUIDS INC.
Date: August 13, 1998 /S/ MICHAEL P. LAWLOR
---------------------
Michael P. Lawlor, Chairman and CEO
Date: August 13, 1998 /S/ EARL J. BLACKWELL
---------------------
Earl J. Blackwell, Senior Vice President
and Chief Financial Officer
21
