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 March 31, 1998
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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.
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(Exact name of registrant as specified in its charter)
Delaware 76-0519797
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(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. [X] 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
8,516,211 shares as of May 14, 1998
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U S LIQUIDS INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1 - Financial Statements:
- Unaudited Condensed Consolidated Balance Sheets as
of December 31, 1997 and March 31, 1998................... 3
- Unaudited Condensed Consolidated Statements of Income for the
three months ended March 31, 1997 and March
31, 1998.................................................. 4
- Unaudited Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 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.............................................. 16
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............ 18
Item 5 - Other Information.............................................. 18
Item 6 - Exhibits and Reports on Form 8-K............................... 19
Signature................................................................ 22
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
U S LIQUIDS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
DECEMBER 31, MARCH 31,
ASSETS 1997 1998
---- ----
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 2,203 $ 5,733
Accounts receivable, less allowances of $342 and
$353 (unaudited) .................................. 5,436 7,155
Inventories ......................................... 567 447
Prepaid expenses and other current assets ........... 621 955
------- -------
Total current assets .......................... 8,827 14,290
PROPERTY, PLANT AND EQUIPMENT, net ......................... 39,110 40,501
INTANGIBLE ASSETS, net ..................................... 6,078 14,402
OTHER ASSETS, net .......................................... 1,001 1,047
------- -------
Total assets .................................. $55,016 $70,240
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ......... $ 792 $1,258
Accounts payable .................................... 2,154 3,081
Accrued liabilities ................................. 3,759 4,473
------- -------
Total current liabilities ..................... $ 6,705 $ 8,812
LONG-TERM OBLIGATIONS, net of current maturities ........... 16,644 25,346
CELL PROCESSING RESERVE .................................... 7,330 7,129
CLOSURE AND REMEDIATION RESERVES ........................... 3,275 3,221
DEFERRED INCOME TAXES ...................................... 156 308
------- -------
Total liabilities ............................. $34,110 $44,816
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 7,499,022
(unaudited) shares issued and outstanding ......... 73 75
Additional paid-in capital .......................... 17,190 20,171
Retained earnings ................................... 3,643 5,178
------- -------
Total stockholders' equity .................... $20,906 $25,424
------- -------
Total liabilities and stockholders' equity .... $55,016 $70,240
======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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U S LIQUIDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1998
---- ----
(UNAUDITED)
REVENUES ................................................... $ 7,862 $ 12,343
OPERATING EXPENSES (exclusive of $608 and $924 of
depreciation and amortization) ........................ 4,675 7,011
DEPRECIATION AND AMORTIZATION .............................. 633 987
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (exclusive of $25 and $63 of depreciation and
amortization) ......................................... 690 1,467
------- -------
INCOME FROM OPERATIONS ..................................... $ 1,864 $ 2,878
INTEREST EXPENSE, net ...................................... 509 346
OTHER INCOME, net .......................................... (28) (5)
-------- --------
INCOME BEFORE PROVISION FOR INCOME
TAXES ................................................... $ 1,383 $ 2,537
PROVISION FOR INCOME TAXES ................................. 504 1,002
-------- --------
NET INCOME ................................................. $ 879 $ 1,535
======== ========
BASIC EARNINGS PER COMMON SHARE ............................$ 0.17 $ 0.21
======== ========
DILUTED EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE .......................................$ 0.16 $ 0.18
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ................. 5,239 7,439
======== ========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING ..................................... 5,418 8,737
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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U S LIQUIDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1998
---- ----
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income ..................................................$ 879 $ 1,535
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ............................. 633 987
Net gain on sale of property, plant, and equipment ........ -- (1)
Deferred income tax provision (benefit) ................... (226) 152
Changes in operating assets and liabilities, net of
amounts acquired:
Accounts receivable, net .................................. 1,107 (1,508)
Inventories ............................................... (83) 120
Prepaid expenses and other current assets ................. 18 (326)
Intangible assets ......................................... -- (36)
Other assets .............................................. (41) (46)
Accounts payable and accrued liabilities .................. (178) 1,350
Closure, remediation and cell processing reserves ......... (153) (255)
------- -------
Net cash provided by operating activities ...............$ 1,956 $ 1,972
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ..................$ (544) $(1,485)
Proceeds from sale of property, plant, and equipment ........ -- 9
Net cash paid for acquisitions .............................. -- (5,101)
------- -------
Net cash used in investing activities ...................$ (544) $(6,577)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments to stockholders and related parties ................$ (27) $ --
Proceeds from issuance of long-term obligations ............. 97 9,500
Principal payments on long-term obligations ................. (4,329) (1,365)
Interest accrued on related-party notes payable ............. 14 --
------- -------
Net cash provided by (used in) financing activities .....$(4,245) $ 8,135
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ..............................................$(2,833) $ 3,530
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................. 5,604 2,203
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................$ 2,771 $ 5,733
======= =======
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest ......................................$ 599 $ 345
Cash paid for income taxes .................................. 23 670
Liabilities assumed related to acquisitions ................. -- 950
Common stock, warrants and options issued for
acquisitions .............................................. -- 2,983
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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U S LIQUIDS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited 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 March 31, 1998, consisted of finished grease products of $435,000
and $388,000, respectively, and unprocessed grease of $132,000 and $59,000,
respectively. Cost is determined using the first-in, first-out (FIFO) method.
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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 months ended March
31, 1997 and 1998 is illustrated below:
THREE MONTHS ENDED
MARCH 31,
1997 1998
------------------- -----------
(UNAUDITED)
Numerator:
For basic and diluted earnings per share -- $ 879 $ 1,535
Income available to common stockholders ========== ==========
Denominator:
For basic earnings per share --
Weighted-average shares............... 5,238,875 7,438,910
Effect of dilutive securities:
Stock options and warrants............ 179,055 1,298,028
---------- ----------
Denominator:
For diluted earnings per share --
Weighted-average shares and assumed
conversions........................... $ 5,417,930 $ 8,736,938
=========== ===========
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.
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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 March 31, 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 (approximately $31,125,000 of pre-tax income) are met is approximately
$27,880,000. 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 QUARTER 1998 ACQUISITIONS
During the three months ended March 31, 1998, the Company acquired four
businesses engaged in the collection, treatment and disposal of liquid wastes
for approximately $4,420,000 in cash, $1,781,000 in assumed debt, 20,000 stock
warrants and 189,865 shares of the Company's common stock using the purchase
method of accounting. 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 $7,989,000.
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 (approximately $17,800,000 of pre-tax income) are met is approximately
$2,500,000 The contingent consideration is payable, with certain limitations,
in shares of the Company's common stock.
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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 as if the acquisitions 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.
THREE MONTHS ENDED MARCH 31,
1997 1998
------ ------
(In thousands, except for per share data)
(UNAUDITED)
Revenue................................... $ 10,756 $ 12,646
Net income................................ 848 1,498
Basic earnings per common share........... 0.11 0.20
Diluted earnings per common share......... 0.10 0.17
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
In December 1996, 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. Prior to the closing of the Campbell Wells Acquisition, four
lawsuits were brought against Campbell Wells based upon the operations of the
Bourg, Louisiana and Mermentau, Louisiana landfarms purchased by the Company as
part of the Campbell Wells Acquisition. As part of the Campbell Wells
Acquisition, Sanifill agreed to retain responsibility for the contingent
liabilities associated with each of these lawsuits. Sanifill also agreed in the
Campbell Wells Acquisition to indemnify the Company from and against, among
other things, the contingent liabilities associated with these lawsuits. The
obligation of Sanifill to indemnify the Company is limited to $10 million.
In one of the lawsuits filed against Campbell Wells, approximately 300
individuals residing in and around Grand Bois, Louisiana are seeking unspecified
monetary damages allegedly suffered as a result of (i) odors allegedly emitted
by oilfield waste received from Exxon Company U.S.A. ("Exxon") at the landfarm
in March 1994, and (ii) alleged air, water and soil contamination in connection
with ongoing operations at the landfarm. Trial in this matter on the claims of
ten plaintiffs is set to commence in the 17th Judicial District Court for the
Parish of Lafourche, Louisiana on July 13, 1998. A second lawsuit, brought by
one individual, seeks unspecified monetary damages allegedly suffered as a
result of odors allegedly emitted by oilfield waste received from Exxon at the
landfarm in March 1994. This lawsuit is also pending in the 17th Judicial
District Court for the Parish of Lafourche, Louisiana and trial is set to
commence on July 13, 1998. A third lawsuit, filed as a class action in the Civil
District Court for the Parish of Orleans, Louisiana, seeks unspecified
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monetary damages allegedly suffered as a result of alleged air, water and soil
contamination in connection with ongoing operations at the Mermentau, Louisiana
landfarm. No trial date has been set for this matter. In a fourth lawsuit, six
individuals filed suit on March 7, 1996 against Campbell Wells in the 17th
Judicial District Court for the Parish of Lafourche, Louisiana seeking
preliminary and permanent injunctive relief against certain treatment operations
conducted at the Bourg, Louisiana landfarm which the plaintiffs contend have
resulted and will result in adverse health effects by way of emissions of
alleged air pollutants. The plaintiffs' request for a preliminary injunction was
heard during the summer of 1996. On December 30, 1996, the court entered an
order granting in part and denying in part the relief requested by the
plaintiffs. Specifically, the court found that there was no evidence that
emissions resulting from the treatment operations equalled or exceeded any
relevant safety standard, health standard or occupational standard and,
therefore, denied the plaintiffs' request for a temporary injunction prohibiting
such treatment operations. The court did, however, preliminarily enjoin Campbell
Wells (and, thus, indirectly the Company) from treating oilfield waste received
from Exxon in March 1994 in one particular treatment cell located within 500
feet of a building in which one of the plaintiffs resides. In connection
therewith, the court ordered that the Commissioner of the Louisiana Department
of Conservation be made a party to the litigation and substituted for the
plaintiffs on the limited issue of whether Campbell Wells has violated the
location criteria for the particular treatment cell involved. No trial date has
been set for the plaintiffs' request for permanent injunctive relief; however,
based upon the court's rulings from the preliminary injunction trial and initial
discussions with the Louisiana Department of Conservation, the Company believes
that permanent injunctive relief that might be entered will not have a material
adverse effect upon the Company's consolidated financial position or results of
operations.
In January 1998, the Company was named as a defendant in two of the
lawsuits arising out of the operations of the Bourg landfarm (i.e. the lawsuit
seeking injunctive relief and the lawsuit brought by the approximately 300
individuals residing in and around Grand Bois, Louisiana). The Company has not
yet been named as a defendant in the remaining lawsuit arising out of the
operations of the Bourg landfarm or the class action arising out of the
operations of the Mermentau landfarm; however, there can be no assurance that
the Company will not subsequently be named as a defendant in these lawsuits as
well.
In February 1997, an action entitled JUDY GARCIA, ET AL. V. RE-CLAIM
ENVIRONMENTAL was filed in the 51st Judicial District Court of Harris County,
Texas. This action was brought by the residents of an apartment complex located
adjacent to one of the Company's processing facilities and alleges that the
Company is guilty of nuisance, trespass, negligence and gross negligence by
reason of its pollution of the air, soil and ground and surface water and the
release of noxious odors. The plaintiffs have requested unspecified monetary
damages. The Company denies liability and intends to vigorously defend this
action.
In March 1998, the Company was dismissed as a defendant in a lawsuit
originally filed by Waste Facilities, Inc. in 1994 against Campbell Wells and
others in the District Court of Jim Wells County, Texas.
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.
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7. SUBSEQUENT EVENTS
On April 10, 1998 the Company revised its Revolving Credit Facility to
increase the maximum borrowings amount to $100,000,000.
Subsequent to March 31, 1998, the Company has acquired or contracted to
aquire eleven businesses engaged in the processing and disposal of liquid waste
for approximately $54,941,000 in cash, $6,422,000 in assumed debt, the repayment
of approximately $6,500,000 of working capital, $14,629,000 of other obligations
and 1,017,188 shares of the Company's common stock using the purchase method of
accounting.
On May 7, 1998, U S Liquids filed a registration statement on Form S-1
for the sale of 3,750,000 shares of its common stock.
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 collects, processes, recovers and disposes of liquid waste
through a number of subsidiaries that are organized into two divisions. The
Industrial Wastewater Division collects, processes and disposes of liquid waste
and whenever feasible recovers saleable by-products from the waste streams. The
Company formed its Industrial Wastewater Division when it acquired two companies
in June 1997 in transactions that were accounted for under the
pooling-of-interests method of accounting. The Oilfield Waste Division processes
and disposes of waste generated in oil and gas exploration and production. It
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.,
each of which is now a wholly-owned subsidiary of USA Waste Services, Inc.
During the three months ended March 31, 1998, the Company acquired four
businesses engaged in the management of liquid wastes for approximately $6.2
million in cash and assumed debt, 20,000 stock warrants and 189,865 shares of
the Company's Common Stock using the purchase method of accounting. The
following discussion addresses the results of operations and financial condition
of the Company as shown in the unaudited consolidated financial statements for
the three-month periods ended March 31, 1997 and 1998.
The Industrial Wastewater Division generated $7.3 million, or 59.3%, of
the Company's revenues for the quarter ended March 31, 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 and feed proteins, recovered from
waste streams. 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. 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.
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The Oilfield Waste Division generated $5.0 million, or 40.7%, of the
Company's revenues for the quarter ended March 31, 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. 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 Disposal Agreement with Newpark
(the "Disposal Agreement"), through June 30, 2021, 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. Deliveries under the
Disposal Agreement accounted for approximately 34.4% of the Oilfield Waste
Division's revenues for the quarter ended March 31, 1998. The contract price is
$5.50 per barrel, adjusted semi-annually beginning June 30, 1998, with a price
floor of $5.50 per barrel. Although the contract price is lower than the current
market price for comparable waste, Newpark's delivery obligations under the
Disposal Agreement allow the Company to eliminate virtually all marketing and
transfer expenses on waste delivered under the Disposal Agreement and,
consequently, the Company believes that operating margins on waste volume from
Newpark and other customers are comparable. The Company expects a disparity
between the contract price and the market price to continue for the duration of
the Disposal Agreement. There is no absolute floor on the variable minimum
delivery requirements under the Disposal Agreement and, therefore, a significant
reduction in the volume of waste generated in the territory or in Newpark's
market share could have a material adverse effect on the Company's results of
operations. Due to certain noncompete restrictions with Newpark related to waste
generated offshore, the Company is focusing its future marketing efforts toward
inland waste generators. If its marketing efforts are successful, the Company
believes that both gross and operating margins will improve.
Since March 31, 1998, the Company has acquired or contracted to acquire
eleven businesses (the "Acquisitions"), which collectively had 1997 revenues of
approximately $100.2 million. All of these Acquisitions have been consummated
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 is under definitive agreement. Pending the
consummation of the Universal Waste Acquisition, which is expected to occur upon
issuance of certain regulatory permits, USA Waste will operate the business on
terms that have the same effect on the Company's financial condition and results
of operations as if the acquisition had been consummated. Each of the
Acquisitions has been or will be accounted for under the purchase method of
accounting. Results of operations of these eleven businesses are not included in
the Company's operating results for the periods discussed. The total
consideration for the Acquisitions (including the Universal Waste Acquisition)
involved approximately $67.9 million in cash and assumed debt and 1,017,188
shares of the Company's Common Stock. In addition, one acquisition provides for
additional payments of approximately $14.6 million. 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.
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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 64.1% 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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
REVENUES. Revenues for the quarter ended March 31, 1998 increased $4.5
million, or 57.0%, from $7.9 million for the quarter ended March 31, 1997 to
$12.3 million for the quarter ended March 31, 1998. The Industrial Wastewater
Division contributed $3.6 million, or 45.6%, of first quarter 1997 revenues and
$7.3 million, or 59.3%, of first quarter 1998 revenues. Tipping and collection
fees generated $824,000, or 22.2%, and $4.3 million, or 58.9%, of the Industrial
Wastewater Division's revenues for the first quarters of 1997 and 1998,
respectively. By-product sales generated the remaining $2.8 million, or 77.8%,
and $3.0 million, or 41.1%, of the Industrial Wastewater Division's revenues for
the first quarters of 1997 and 1998, respectively. The Oilfield Waste Division
contributed $4.3 million, or 54.4%, of first quarter 1997 revenues and $5.0
million, or 40.7%, of first quarter 1998 revenues. Businesses acquired since the
Company's initial public offering in August 1997 accounted for $2.9 million, or
23.6%, of revenues for the first quarter of 1998.
The revenues of the Industrial Wastewater Division increased $3.7
million, or 102.8%, from $3.6 million for the quarter ended March 31, 1997 to
$7.3 million for the quarter ended March 31, 1998 due to acquisitions completed
during the fourth quarter of 1997 and the first quarter 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 increased $759,000, or 17.7%, from $4.3 million for the quarter ended
March 31, 1997 to $5.0 million for the quarter ended March 31, 1998 due to an
increase in the volume of waste processed resulting from increased drilling
activity in the Gulf Coast region and an increase in tipping fees which became
effective in the third quarter of 1997.
OPERATING EXPENSES (Excluding Depreciation and Amortization). Operating
expenses increased $2.3 million, or 50.0%, from $4.7 million for the quarter
ended March 31, 1997 to $7.0 million for the quarter ended March 31, 1998. As a
percentage of revenues, operating expenses decreased from 59.5% in the first
quarter of 1997 to 56.8% in the first quarter of 1998. This improvement was due
primarily to an increase in tipping and collection revenues, which have higher
margins than by-product sales, in the 1998 period, as well as increased
efficiencies resulting from higher volumes and operational enhancements.
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DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased $354,000, or 55.9%, from $633,000 for the quarter ended March 31, 1997
to $987,000 for the quarter ended March 31, 1998. As a percentage of revenues,
depreciation and amortization expenses remained relatively constant at a rate of
8.1% for the first quarter of 1997 and 8.0% for the first quarter of 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Excluding Depreciation and
Amortization). Selling, general and administrative expenses increased $777,000,
or 112.6%, from $690,000 for the quarter ended March 31, 1997 to $1.5 million
for the quarter ended March 31, 1998. As a percentage of revenues, selling,
general and administrative expenses increased from 8.8% for the first quarter of
1997 to 11.9% for the first quarter of 1998. This increase was primarily due to
higher personnel costs and professional fees associated with being a public
company and the establishment of the Company's corporate offices in Houston in
May of 1997.
INTEREST AND OTHER EXPENSES. Net interest and other expenses decreased
$140,000, or 29.1%, from $481,000 for the quarter ended March 31, 1997 to
$341,000 for the quarter ended March 31, 1998. This decrease resulted primarily
from the use of a portion of the proceeds from the Company's initial public
offering in August 1997 to reduce debt.
INCOME TAXES. The provision for income taxes increased $498,000, or 98.8%,
from $504,000 for the quarter ended March 31, 1997 to $1.0 million for the
quarter ended March 31, 1998 as a result of increased taxable income. The
effective tax rate for the period ended March 31, 1997 was 36.4% compared to a
39.5% rate for the period ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net working capital increased from $2.1 million at
December 31, 1997 to $5.5 million at March 31, 1998. Improvement in the working
capital position was attributable primarily to an increase in current assets
resulting from borrowings at the end of the first quarter under the Company's
credit facility to fund acquisitions completed in the second quarter of 1998.
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 March 31,
1998, approximately $1.3 million of principal payments on debt obligations were
payable during the next twelve months. Capital expenditures for the last three
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 March 31, 1998, the Company had established a $3.2 million reserve to
provide for the cost of future closures of landfarms. 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 $4.0 million of
financial assurance in the form of letters of credit and bonds.
In December 1997, the Company entered into a $50 million credit
agreement with a group of banks under which the Company may borrow to fund
working capital requirements and acquisitions. In April 1998, the amount of this
credit facility (the "Credit Facility") was increased to $100 million. Amounts
outstanding
14
<PAGE>
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 March 31, 1998, the Company had borrowed approximately $24.8 million
under the Credit Facility. Between April 1, 1998 and May 14, 1998, the Company
borrowed an additional $62.5 million under the Credit Facility, the vast
majority of which was used to fund the cash purchase price of the Acquisitions.
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. Accordingly, on May 7, 1998, the Company filed a
registration statement with the Securities and Exchange Commission for the sale
of 3,750,000 shares of Common Stock. If completed, the net proceeds of this
offering will be applied against the outstanding balance of the Credit Facility.
If this offering is not completed, the implementation of the Company's
acquisition program could be adversely affected.
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 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.
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.
15
<PAGE>
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 of 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.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Prior to the closing of the Campbell Wells Acquisition, four lawsuits
were brought against Campbell Wells based upon the operations of the Bourg,
Louisiana and Mermentau, Louisiana landfarms purchased by the Company as part of
the Campbell Wells Acquisition. As part of the Campbell Wells Acquisition,
Sanifill, Inc. ("Sanifill"), a wholly-owned subsidiary of USA Waste Services,
Inc., agreed to retain responsibility for the contingent liabilities associated
with each of these lawsuits. Sanifill also agreed in the Campbell Wells
Acquisition to indemnify the Company from and against, among other things, the
contingent liabilities associated with these lawsuits. The obligation of
Sanifill to indemnify the Company is limited to $10 million.
In one of the lawsuits filed against Campbell Wells, approximately 300
individuals residing in and around Grand Bois, Louisiana are seeking unspecified
monetary damages allegedly suffered as a result of (i) odors allegedly emitted
by oilfield waste received from Exxon Company U.S.A. ("Exxon") at the landfarm
in March 1994, and (ii) alleged air, water and soil contamination in connection
with ongoing operations at the landfarm. Trial in this matter on the claims of
ten plaintiffs is set to commence in the 17th Judicial District Court for the
Parish of Lafourche, Louisiana on July 13, 1998. A second lawsuit, brought by
one individual, seeks unspecified monetary damages allegedly suffered as a
result of odors allegedly emitted by oilfield waste received from Exxon at the
landfarm in March 1994. This lawsuit is also pending in the 17th Judicial
District Court for the Parish of Lafourche, Louisiana and trial is set to
commence on July 13, 1998. A third lawsuit, filed as a class action in the Civil
District Court for the Parish of Orleans, Louisiana, seeks unspecified monetary
damages allegedly suffered as a result of alleged air, water and soil
contamination in connection with ongoing operations at the Mermentau, Louisiana
landfarm. No trial date has been set for this matter. In a fourth lawsuit, six
individuals filed suit on March 7, 1996 against Campbell Wells in the 17th
Judicial District Court for the Parish of Lafourche, Louisiana seeking
preliminary and permanent injunctive relief against certain treatment operations
conducted at the Bourg, Louisiana landfarm which the plaintiffs contend have
resulted and will result in adverse health effects by way of emissions of
alleged air pollutants. The plaintiffs' request for a preliminary injunction was
heard during the summer of 1996. On December 30, 1996, the court entered an
order granting in part and denying in part the relief requested by the
plaintiffs. Specifically, the court found that there was no evidence that
emissions resulting from the treatment operations equalled or exceeded any
relevant safety standard, health standard or occupational standard and,
therefore,
16
<PAGE>
denied the plaintiffs' request for a temporary injunction prohibiting such
treatment operations. The court did, however, preliminarily enjoin Campbell
Wells (and, thus, indirectly the Company) from treating oilfield waste received
from Exxon in March 1994 in one particular treatment cell located within 500
feet of a building in which one of the plaintiffs resides. In connection
therewith, the court ordered that the Commissioner of the Louisiana Department
of Conservation be made a party to the litigation and substituted for the
plaintiffs on the limited issue of whether Campbell Wells has violated the
location criteria for the particular treatment cell involved. No trial date has
been set for the plaintiffs' request for permanent injunctive relief; however,
based upon the court's rulings from the preliminary injunction trial and initial
discussions with the Louisiana Department of Conservation, the Company believes
that any permanent injunctive relief that might be entered will not have a
material adverse effect upon the Company's operations at the Bourg landfarm.
In January 1998, the Company was named as a defendant in two of the
lawsuits arising out of the operations of the Bourg landfarm (i.e. the lawsuit
seeking injunctive relief and the lawsuit brought by the approximately 300
individuals residing in and around Grand Bois, Louisiana). The Company has not
yet been named as a defendant in the remaining lawsuit arising out of the
operations of the Bourg landfarm or the class action arising out of the
operations of the Mermentau landfarm; however, there can be no assurance that
the Company will not subsequently be named as a defendant in these lawsuits as
well.
The Company believes that the ultimate disposition of the
above-referenced lawsuits will not have a material adverse effect on the
Company's business, results of operations or financial condition. This belief is
based upon, among other things, the following reasons: (i) Sanifill has agreed
to retain responsibility for the contingent liabilities associated with these
lawsuits, (ii) Sanifill has agreed to indemnify the Company against such
contingent liabilities up to a maximum of $10 million, (iii) the Company has
been operating the Bourg and Mermentau landfarms only since December 1996,
approximately four months after the last of the three lawsuits seeking monetary
damages was originally filed, and (iv) the results of air, water and soil
testing conducted in and around the Bourg landfarm by the Louisiana Department
of Health and Hospitals, the Louisiana Department of Natural Resources and the
Louisiana Department of Environmental Quality indicate that the Company's
operations at the landfarms are in compliance with all applicable rules and
regulations. There can be no assurance, however, that a judgment will not
ultimately be entered against the Company in one or more of these lawsuits. In
the event a monetary judgment is entered against the Company, Sanifill is not
required or is unable to completely indemnify the Company against such judgment
and the judgment is not covered by insurance, such a judgment could have a
material adverse effect on the Company's business, results of operations and
financial condition. In addition, notwithstanding any indemnification to be
provided by Sanifill, an adverse ruling against the Company in the lawsuit
seeking injunctive relief could have a material adverse effect on the Company's
operations at the Bourg landfarm (which operations contributed 12.2% of the
Company's revenues for the year ended December 31, 1997 and 3.7% of the
Company's revenues for the first three months of 1998) and, therefore, the
Company's business, results of operations and financial condition.
In February 1997, an action entitled JUDY GARCIA, ET AL. V. RE-CLAIM
ENVIRONMENTAL was filed in the 51st Judicial District Court of Harris County,
Texas. This action was brought by the residents of an apartment complex located
adjacent to one of the Company's processing facilities and alleges that the
Company is guilty of nuisance, trespass, negligence and gross negligence by
reason of its pollution of the air, soil and ground and surface water and the
release of noxious odors. The plaintiffs have requested unspecified monetary
damages. The Company denies liability and intends to vigorously defend this
action.
In March 1998, the Company was dismissed as a defendant in a lawsuit
originally filed by Waste Facilities, Inc. in 1994 against Campbell Wells and
others in the District Court of Jim Wells County, Texas.
17
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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.
On January 2, 1998, the Company issued to Glenn Pratt and John Bailey
warrants to purchase a total of 20,000 shares of Common Stock as part of the
purchase price paid for an acquired business. These sales were exempt from
registration under Section 4(2) of the Securities Act, no public offering being
involved.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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.
18
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Description
- ------ --------------
3.1 Second Amended and Restated Certificate of Incorporation of U S Liquids
Inc. (Exhibit 3.1 of the U S Liquids Inc. Registration Statement on Form
S-1 (File No. 333-30065), effective August 19, 1997, is hereby
incorporated by reference).
3.2 Amended and Restated Bylaws of U S Liquids Inc. (Exhibit 3.2 of the U S
Liquids Inc. Registration Statement on Form S-1 (File No. 333-30065),
effective August 19, 1997, is hereby incorporated by reference).
4.1 Form of Certificate Evidencing Ownership of Common Stock of U S Liquids
Inc. (Exhibit 4.1 of the U S Liquids Inc. Registration Statement on Form
S-1 (File No. 333-30065), effective August 19, 1997, is hereby
incorporated by reference).
4.2 Amended and Restated Credit Agreement, dated April 10, 1998, among U S
Liquids Inc., Bank of America National Trust and Savings Association,
BankBoston, N.A. and Wells Fargo Bank, N.A. (Exhibit 4.2 of the U S
Liquids Inc. Registration Statement on Form S-1 (File No. 333-52121), as
amended, is hereby incorporated by reference).
4.3 Note, dated April 10, 1998, of U S Liquids Inc. payable to Bank of
America National Trust and Savings Association. (Exhibit 4.3 of the U S
Liquids Inc. Registration Statement on Form S-1 (File No. 333-52121), as
amended, is hereby incorporated by reference).
4.4 Note, dated April 10, 1998, of U S Liquids Inc. payable to BankBoston,
N.A. (Exhibit 4.4 of the U S Liquids Inc. Registration Statement on Form
S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
4.5 Note, dated April 10, 1998, of U S Liquids Inc. payable to Wells Fargo
Bank, N.A. (Exhibit 4.5 of the U S Liquids Inc. Registration Statement
on Form S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.15 Employment Agreement, dated February 13, 1998, between U S Liquids Inc.
and W. Gregory Orr. (Exhibit 10.15 of the Form 10-K for the year ended
December 31, 1997 is hereby incorporated by reference).
10.16 Employment Agreement, dated February 13, 1998, between U S Liquids Inc.
and Earl J. Blackwell. (Exhibit 10.16 of the Form 10-K for the year
ended December 31, 1997 is hereby incorporated by reference).
10.41 Warrant, dated January 1, 1998, issued by U S Liquids Inc. to Glenn A.
Pratt. (Exhibit 10.41 of the Form 10-K for the year ended December 31,
1997 is hereby incorporated by reference).
10.48 Warrant, dated January 1, 1998, issued by U S Liquids Inc. to John
Bailey. (Exhibit 10.48 of the Form 10-K for the year ended December 31,
1997 is hereby incorporated by reference).
10.49 Purchase and Sale of Assets Agreement, dated January 1, 1998, among
Environment Management, Inc., Enviro-Plumbing, Inc., Michael L. Briggle
and Mark A. Emmert. (Exhibit 10.49 of the U S Liquids Inc. Registration
Statement on Form S-1 (File No. 333-52121), as amended, is hereby
incorporated by reference).
10.50 Agreement and Plan of Reorganization, dated January 1, 1998, among U S
Liquids Inc., U S Liquids/EMI Acquisition Corporation, Environment
Management, Inc., Michael L. Briggle and Mark A. Emmert. (Exhibit 10.50
of the U S Liquids Inc. Registration Statement on Form S-1 (File No.
333-52121), as amended, is hereby incorporated by reference).
10.51 Stock Purchase Agreement, dated January 1, 1998, among U S Liquids Inc.,
Environment Management, Inc., Enviro-Waste Type V of Texas, Inc.,
Michael L. Briggle and Mark A. Emmert.
19
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(Exhibit 10.51 of the U S Liquids Inc. Registration Statement on Form
S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.52 Purchase and Sale of Assets Agreement, dated January 1, 1998, among U S
Liquids Inc., U S Liquids Northeast, Inc., Suburban Wastewater Services,
Inc., Glenn A. Pratt, James D. Baird, Peter J. Collins and John J.
Bailey. (Exhibit 10.52 of the U S Liquids Inc. Registration Statement on
Form S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.53 First Amendment to Purchase and Sale of Assets Agreement, dated as of
January 1, 1998, among U S Liquids Inc., U S Liquids Northeast, Inc.,
Suburban Wastewater Services, Inc., Glenn A. Pratt, James D. Baird,
Peter J. Collins and John J. Bailey. (Exhibit 10.53 of the U S Liquids
Inc. Registration Statement on Form S-1 (File No. 333-52121), as
amended, is hereby incorporated by reference).
10.54 Purchase and Sale of Assets Agreement, dated March 15, 1998, among
Environment Management, Inc., Trapmaster, Inc., Joel Curtis, Sid Ankrom
and Scott Ankrom. (Exhibit 10.54 of the U S Liquids Inc. Registration
Statement on Form S-1 (File No. 333-52121), as amended, is hereby
incorporated by reference).
10.55 Purchase and Sale of Assets Agreement, dated March 15, 1998, among
Environment Management, Inc., Bug Master Exterminating Service, Inc. and
Ned Ewart. (Exhibit 10.55 of the U S Liquids Inc. Registration Statement
on Form S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.56 Purchase and Sale of Assets Agreement, dated April 1, 1998, among Mesa
Processing, Inc., Reclamation Technology Management, Inc. and Don E.
Henley. (Exhibit 10.56 of the U S Liquids Inc. Registration Statement on
Form S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.57 Purchase and Sale of Assets Agreement, dated April 1, 1998, among Mesa
Processing, Inc., Betts Pump Service, Inc. and Keith Betts. (Exhibit
10.57 of the U S Liquids Inc. Registration Statement on Form S-1 (File
No. 333-52121), as amended, is hereby incorporated by reference).
10.58 Agreement for Purchase and Sale of Assets, dated April 2, 1998, among U
S Liquids Northeast, Inc., South Shore Pumping Corp. and Randy F. Bern.
(Exhibit 10.58 of the U S Liquids Inc. Registration Statement on Form
S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.59 Estoppel and Waiver Agreement, dated April 10, 1998, between U S Liquids
Inc. and Sanifill, Inc. (Exhibit 10.59 of the U S Liquids Inc.
Registration Statement on Form S-1 (File No. 333-52121), as amended, is
hereby incorporated by reference).
10.60 Agreement and Plan of Merger, dated April 15, 1998, among The National
Solvent Exchange Corp., U S Liquids Inc., NS Acquisition Corp., Ronald
T. Calloway and Maxwell R. Calloway (Exhibit 2.1 to the Form 8-K filed
on April 30, 1998 is hereby incorporated by reference).
10.61 Amendment No. 1 to Warrant Agreement, dated April 20, 1998, among U S
Liquids Inc., Van Kasper & Company and Sanders Morris Mundy Inc.
(Exhibit 10.61 of the U S Liquids Inc. Registration Statement on Form
S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.62 Agreement for Purchase and Sale of Assets, dated April 21, 1998, among
USL Parallel Products of California, Parallel Products of Kentucky,
Inc., Parallel Products of Florida, Inc., Parallel Products, DWA of
Belvedere Company, the Estate of David W. Allen, David W. Allen Trust
No. 1, Peter Allen, Neal Koehler and Richard Eastman (Exhibit 2.1 to the
Form 8-K filed on May 6, 1998 is hereby incorporated by reference).
10.63 Stock Purchase Agreement, dated April 21, 1998, among U S Liquids
Northeast, Inc., U S Liquids Inc., Waste Stream Environmental, Inc., C.
Wesley Gregory III, C. Wesley Gregory, Jr. and Donald E. Gordon (Exhibit
2.2 to the Form 8-K filed on May 6, 1998 is hereby incorporated by
reference).
20
<PAGE>
10.64 Stock Purchase Agreement, dated April 21, 1998, among U S Liquids
Northeast, Inc., U S Liquids Inc., Earth Blends, Inc., C. Wesley Gregory
III, C. Wesley Gregory, Jr. and Donald E. Gordon (Exhibit 2.3 to the
Form 8-K filed on May 6, 1998 is hereby incorporated by reference).
10.65 Agreement and Plan of Reorganization, dated April 21, 1998, among U S
Liquids Inc., Amigo Acquisition, Inc., Amigo Diversified Services, Inc.,
Raoul Garza and Alex Salas (Exhibit 2.4 to the Form 8-K filed on May 6,
1998 is hereby incorporated by reference).
10.66 Purchase and Sale of Assets Agreement, dated May 8, 1998, among USL City
Environmental, Inc., City Management Corporation and USA Waste Services,
Inc. (Exhibit 10.66 of the U S Liquids Inc. Registration Statement on
Form S-1 (File No. 333-52121), as amended, is hereby incorporated by
reference).
10.67 Purchase and Sale of Assets Agreement, dated May 8, 1998, among USL City
Environmental Services of Florida, Inc., City Management Corporation and
USA Waste Services, Inc. (Exhibit 10.67 of the U S Liquids Inc.
Registration Statement on Form S-1 (File No. 333-52121), as amended, is
hereby incorporated by reference).
10.68 Stock Purchase Agreement, dated May 8, 1998, among U S Liquids Inc.,
United Waste Systems, Inc. and USA Waste Services, Inc. (Exhibit 10.68
of the U S Liquids Inc. Registration Statement on Form S-1 (File No.
333-52121), as amended, is hereby incorporated by reference).
10.69 Leachate Treatment Agreement, dated May 8, 1998, between City Management
Corporation and USL City Environmental, Inc. (Exhibit 10.69 of the U S
Liquids Inc. Registration Statement on Form S-1 (File No. 333-52121), as
amended, is hereby incorporated by reference).
10.70 Disposal Agreement, dated May 8, 1998, between City Management
Corporation and USL City Environmental, Inc. (Exhibit 10.70 of the U S
Liquids Inc. Registration Statement on Form S-1 (File No. 333-52121), as
amended, is hereby incorporated by reference.
+27.1 Financial Data Schedule
- ---------------------------------
+ Filed herewith.
(b) The Company did not file any reports on Form 8-K during the quarter ended
March 31, 1998.
21
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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.
US LIQUIDS INC.
---------------
(Registrant)
Date: May 14, 1998 /s/ MICHAEL P. LAWLOR
---------------------
Michael P. Lawlor, Chairman and CEO
Date: May 14, 1998 /s/ EARL J. BLACKWELL
---------------------
Earl J. Blackwell, Senior Vice
President and Chief Financial Officer
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM US LIQUIDS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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