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, 1999
------------------
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)
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 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
15,873,370 shares as of May 11, 1999
<PAGE>
U S LIQUIDS INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1- Financial Statements:
- Condensed Consolidated Balance Sheets as
of December 31, 1998 and March 31, 1999 (unaudited)................ 3
- Condensed Consolidated Statements of Income for the
three month periods ended March 31, 1998 and
1999 (unaudited)................................................... 4
- Condensed Consolidated Statements of Cash Flows for
the three month periods ended March 31, 1998
and 1999 (unaudited)............................................... 5
- Notes to Condensed Consolidated Financial Statements............... 6
Item 2- Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 12
Item 3- Quantitative and Qualitative Disclosures About Market Risk........ 18
PART II - OTHER INFORMATION
Item 1- Legal Proceedings................................................. 18
Item 2- Changes in Securities and Use of Proceeds......................... 20
Item 3- Defaults Upon Senior Securities................................... 20
Item 4- Submission of Matters to a Vote of Security Holders............... 20
Item 5- Other Information................................................. 20
Item 6- Exhibits and Reports on Form 8-K.................................. 20
Signatures................................................................. 21
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, MARCH 31,
ASSETS 1998 1999
------------ ---------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 3,285 $ 4,570
Accounts receivable, less allowances of $1,677 and
$2,123 (unaudited), respectively .......................... 29,123 39,698
Inventories ................................................. 672 1,573
Prepaid expenses and other current assets ................... 5,416 6,278
------------ ---------
Total current assets ................................... 38,496 52,119
PROPERTY, PLANT AND EQUIPMENT, net ................................ 85,958 104,896
INTANGIBLE ASSETS, net ............................................ 125,871 157,144
OTHER ASSETS, net ................................................. 1,840 2,650
------------ ---------
Total assets ........................................... $ 252,165 $ 316,809
============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ................. $ 4,004 $ 2,270
Accounts payable ............................................ 11,611 13,766
Accrued liabilities ......................................... 15,445 14,546
Current portion of contract reserve ......................... 4,500 4,500
------------ ---------
Total current liabilities .............................. $ 35,560 $ 35,082
LONG-TERM OBLIGATIONS, net of current maturities .................. 64,390 56,395
PROCESSING RESERVE ................................................ 5,747 5,358
CLOSURE AND REMEDIATION RESERVES .................................. 4,952 8,014
CONTRACT RESERVE .................................................. 14,421 13,559
DEFERRED INCOME TAXES ............................................. 2,151 3,578
------------ ---------
Total liabilities ...................................... $ 127,221 $ 121,986
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,
12,497,946 and 15,873,370 (unaudited) shares
issued and outstanding, respectively ...................... 125 159
Additional paid-in capital .................................. 110,404 176,069
Retained earnings ........................................... 14,415 18,595
------------ ---------
Total stockholders' equity ............................. $ 124,944 $ 194,823
------------ ---------
Total liabilities and stockholders' equity .......... $ 252,165 $ 316,809
============ =========
</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)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------
1998 1999
-------- --------
REVENUES ................................. $ 12,343 $ 55,302
OPERATING EXPENSES ....................... 7,011 37,605
DEPRECIATION AND AMORTIZATION ............ 987 3,560
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES .............................. 1,467 5,475
-------- --------
INCOME FROM OPERATIONS ................... $ 2,878 $ 8,662
INTEREST EXPENSE, net .................... 346 1,613
OTHER INCOME, net ........................ (5) (96)
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES . $ 2,537 $ 7,145
PROVISION FOR INCOME TAXES ............... 1,002 2,965
-------- --------
NET INCOME ............................... $ 1,535 $ 4,180
======== ========
BASIC EARNINGS PER COMMON SHARE .......... $ 0.21 $ 0.31
======== ========
DILUTED EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE ...................... $ 0.18 $ 0.28
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,439 13,553
======== ========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING ......... 8,737 14,900
======== ========
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)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-------------------
1998 1999
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................................... $ 1,535 $ 4,180
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization ................................................. 987 3,560
Net gain on sale of property, plant, and equipment ............................ (1) 41
Deferred income tax provision ................................................. 152 1,427
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable, net ...................................................... (1,508) (5,177)
Inventories ................................................................... 120 (192)
Prepaid expenses and other current assets ..................................... (326) 523
Intangible assets ............................................................. (36) (115)
Other assets .................................................................. (46) (799)
Accounts payable and accrued liabilities ...................................... 1,350 (5,134)
Closure, remediation and cell processing reserves ............................. (255) (1,595)
------- --------
Net cash provided by (used in) operating activities ...................... $ 1,972 $ (3,281)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ...................................... $(1,485) $ (4,160)
Proceeds from sale of property, plant and equipment ............................. 9 520
Net cash paid for acquisitions .................................................. (5,101) (35,698)
------- --------
Net cash used in investing activities ................................... $(6,577) $(39,338)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term obligations ................................. 9,500 45,500
Principal payments on long-term obligations ..................................... (1,365) (58,287)
Proceeds from additional public offering of common stock, net of
offering costs ................................................................ 0 56,659
Proceeds from exercise of stock options ......................................... 0 32
------- --------
Net cash provided by financing activities ............................. $ 8,135 $ 43,904
------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS .......................................... $ 3,530 $ 1,285
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................... 2,203 3,285
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................................... $ 5,733 $ 4,570
======= ========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest .......................................................... $ 345 $ 1,723
Cash paid for income taxes ...................................................... 670 226
Common stock, warrants and options issued for acquisitions ...................... 2,983 9,008
Liabilities assumed related to acquisitions ..................................... 950 3,058
</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 Securities and Exchange Commission (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 we believe 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 our Annual Report on Form 10-K for the year ended December
31, 1998, as filed with the SEC.
2. INVENTORIES
Inventories are stated at the lower of cost or market and, at December 31,
1998 and March 31, 1999, consisted of processed by-products of $378,000 and
$1,144,000, respectively, and unprocessed by-products of $294,000 and $429,000,
respectively. Cost is determined using the first-in, first-out (FIFO) method.
3. DEPRECIATION AND AMORTIZATION EXPENSES
Depreciation and amortization expenses excluded from operating expenses and
selling, general and administrative expenses in the condensed consolidated
statements of income are presented as follows:
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1999
---------- -----------
(IN THOUSANDS)
Operating expenses.............................. $ 924 $ 3,354
Selling, general and administrative expenses.... 63 206
---------- -----------
Total depreciation and amortization expenses. $ 987 $ 3,560
========== ==========
6
<PAGE>
4. EARNINGS PER SHARE
The weighted average number of shares used to compute basic and diluted
earnings per share for the three months ended March 31, 1998 and 1999,
respectively, is illustrated below:
THREE MONTHS ENDED
MARCH 31,
------------------------
1998 1999
---------- -----------
(IN THOUSANDS,
EXCEPT SHARE DATA)
(UNAUDITED)
Numerator:
For basic and diluted earnings per share --
Income available to common stockholders ....... $ 1,535 $ 4,180
========== ===========
Denominator:
For basic earnings per share --
Weighted-average shares ....................... 7,438,910 13,553,052
---------- -----------
Effect of dilutive securities:
Stock options and warrants .................... 1,298,028 1,347,133
---------- -----------
Denominator:
For diluted earnings per share --
Weighted-average shares and assumed conversions 8,736,938 14,900,185
========== ===========
5. NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
was issued in June 1998 and requires companies to recognize all derivative
instruments as assets or liabilities in the balance sheet and to measure those
instruments at fair value. SFAS No. 133 must be adopted by the Company no later
than January 1, 2000, although earlier application is permitted. We are
currently evaluating the potential impact of implementing SFAS No. 133.
6. ACQUISITIONS
1999 ACQUISITIONS
During the three months ended March 31, 1999, we acquired seven businesses
engaged in the collection, processing and disposal of liquid wastes for
approximately $36,313,000 in cash and assumed debt and 431,588 shares of our
common stock using the purchase method of accounting. The excess of the
aggregate purchase price over the fair value of the net assets acquired was
approximately $32,275,000.
7
<PAGE>
The unaudited pro forma information set forth below presents our revenues,
net income and earnings per share plus the 1998 and 1999 acquisitions, and the
public offerings of our common stock in June 1998 and March 1999, as if these
transactions were each effective on January 1, 1998 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, net of a reduction in interest expense on
debt repaid in connection with the Company's public offerings of common stock,
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,
----------------------------------------
1998 1999
------------ --------
(In thousands, except for per share data)
(Unaudited)
Revenues ........................ $ 59,694 $ 55,823
Net income ...................... 4,335 4,847
Basic earnings per common share . 0.28 0.31
Diluted earnings per common share 0.25 0.28
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 and offering been
consummated at the beginning of the periods presented.
7. LEGAL PROCEEDINGS
On August 7, 1998, we settled substantially all of the claims asserted
against us in the four lawsuits relating to our Bourg, Louisiana landfarm. Under
the terms of the settlement, we agreed to expand the buffer zone and build a
berm along the western boundary of our landfarm. The cost of these actions will
not be material to our operating results. The settlement did not resolve certain
claims asserted against us by Acadian Shipyard, Inc., a local barge company, 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, we asserted various claims for indemnity and/or contribution against
Acadian. Thereafter, in July 1998, Acadian filed various counterclaims against
us 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. We deny that we have any liability to Acadian and
intend to vigorously defend against these claims. We do not believe that this
action will have a material adverse effect on our business, results of
operations or financial condition.
Prior to its acquisition by the Company in January 1999, Romic Environmental
Technologies Corporation had entered into an administrative consent order with
the Environmental Protection Agency (the "EPA") relating to the cleanup of soil
and groundwater contamination at its facility in East Palo Alto, California. A
remedial investigation of the facility has been completed by Romic and forwarded
to the EPA. In March 1999, Romic submitted a corrective measures study for the
facility to the EPA. The EPA will review the corrective measures study and
select a plan for final site remediation. Based upon the information gathered
from these studies, Romic's estimated discounted costs for
8
<PAGE>
this site are expected to be $2.3 million, paid over the next 30 years. Romic's
total estimated costs for this site have been discounted for present value
considerations at a rate of 5.6% and have been accrued by the Company as closure
and remediation reserves and included in the condensed consolidated balance
sheet at March 31, 1999. However, due to the complex, ongoing and evolving
process of investigating and remediating the facility, Romic's actual costs may
exceed the amount reserved.
Prior to its acquisition by the Company, Romic had been notified by the EPA
and the California Department of Toxic Substances Control that it was a
potentially responsible party under applicable environmental legislation with
respect to the Bay Area Drum Superfund Site in San Francisco, California, the
Lorentz Barrel and Drum Superfund Site in San Jose, California and the Casmalia
Resources Hazardous Waste Management Facility located near Santa Barbara,
California, each of which was a drum reconditioning or disposal site previously
used by Romic. With respect to each of these sites, Romic and a number of other
potentially responsible parties have entered into administrative consent orders
and agreements allocating each party's respective share of the cost of
remediating the sites. Romic's share under these consent orders and agreements
is as follows: Bay Area - 6.872%; Lorentz - 5.62%; and Casmalia Resources -
0.29%. Based upon the studies and remedial actions completed, Romic's discounted
share of the costs for these sites is expected to be $800,000, paid over the
next ten years. Romic's total estimated costs for these sites have been
discounted for present value considerations at a rate of 5.6% and have been
accrued by the Company as closure and remediation reserves and included in the
condensed consolidated balance sheet at March 31, 1999. However, due to the
complex, ongoing and evolving process of investigating and remediating these
sites, Romic's actual costs may exceed the amount reserved.
With regard to the Casmalia Resources site, if adequate funding is not
obtained by the EPA from certain sources to fund additional remedial phases for
which Romic and other potentially responsible parties have not been released
from liability, Romic could incur additional costs of up to $400,000 which would
likely be disbursed over 30 years. No reserve has been established for this loss
contingency.
Prior to its acquisition by the Company in May 1998, Waste Stream
Environmental, Inc. had signed a document which purported to be a letter of
intent with Pocono Grow Fertilizer Corporation relating to the development of a
waste treatment and recycling facility in eastern Pennsylvania. After the Waste
Stream acquisition was completed, we notified Pocono Grow that Waste Stream did
not intend to pursue the project. Pocono Grow asserted that the document was a
binding agreement and that Waste Stream was in breach of the agreement. On July
14, 1998, Waste Stream filed a suit for declaratory judgment in the United
States District Court for the Western District of New York asking the court to
determine whether the document was binding or non-binding. On August 14, 1998,
Pocono Grow filed a counterclaim against Waste Stream and a third party
complaint against the Company alleging breach of contract and claiming damages
in excess of $10.0 million. Waste Stream and the Company intend to vigorously
defend the counterclaim and third party complaint and pursue the declaratory
judgment action. We do not believe that this action will have a material adverse
effect on our business, results of operations or financial condition.
We are, from time to time, a party to litigation arising in the normal course
of our business, most of which involves claims for personal injury or property
damage incurred in connection with our operations. We are not currently involved
in any litigation that we believe will have a material adverse effect on our
business, results of operations or financial condition.
9
<PAGE>
8. SEGMENT INFORMATION
We operate with two business segments -- Oilfield Waste and Wastewater.
The Oilfield Waste segment treats and disposes of waste that is generated in
the exploration for and production of oil and natural gas. In addition, the
Oilfield Waste segment cleans tanks, barges and other vessels used in the
storage and transportation of oilfield waste.
The Wastewater segment receives fees to collect, process and dispose of
liquid waste such as industrial wastewater, grease and grit trap waste, bulk
liquids and dated beverages, and certain hazardous wastes. In addition, the
Wastewater segment generates revenues from the sale of by-products recovered
from certain waste streams (including fats, oils, feed proteins, industrial and
fuel grade ethanol, solvents, aluminum, glass, plastic and cardboard).
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. For purposes of this
presentation, general corporate expenses have been allocated between operating
segments on a pro rata basis based on income from operations before such
expenses.
The following is a summary of key business segment information:
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1999
---------- ----------
(IN THOUSANDS)
(UNAUDITED)
Revenue --
Oilfield Waste .................................... $ 5,015 $ 4,825
Wastewater ........................................ 7,328 50,477
---------- ----------
Total .......................................... $ 12,343 $ 55,302
========== ==========
Income from operations --
Oilfield Waste .................................... $ 2,078 $ 2,231
Wastewater ........................................ 800 6,431
---------- ----------
Total ......................................... $ 2,878 $ 8,662
========== ==========
December 31, March 31,
1998 1999
------------ ---------
(UNAUDITED)
(IN THOUSANDS)
Identifiable assets --
Oilfield Waste .................................... $ 33,513 $ 36,518
Wastewater ........................................ 211,702 272,948
Corporate ......................................... 6,950 7,343
---------- ----------
Total ......................................... $ 252,165 $ 316,809
========== ==========
10
<PAGE>
9. CREDIT FACILITY
We have a $225.0 million credit facility with a group of banks under which we
may borrow to fund working capital requirements and acquisitions. The amount of
this credit facility was increased in February 1999 from $100.0 million to
$225.0 million. Amounts outstanding under the credit facility are secured by a
lien on all or substantially all of our assets. The credit facility prohibits
the payment of dividends and requires us to comply with certain financial
covenants. The credit facility also places certain restrictions on, among other
things, acquisitions and other business combination transactions which we may
consummate. We do not believe that these restrictions will have a material
adverse effect on our ability to fulfill our 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, 1999,
we had borrowed approximately $54.0 million under the credit facility.
We also have a $10.0 million credit facility with BankBoston, N.A. under
which we may borrow to purchase equipment. As of March 31, 1999 and as of the
date of this report, no amounts were outstanding under this equipment credit
facility.
10. SUBSEQUENT EVENTS
From April 1, 1999 through May 11, 1999, we acquired three additional
businesses, which had 1998 revenues of approximately $14.6 million, for
approximately $16.6 million in cash and assumed debt. Each of these acquisitions
was accounted for under the purchase method of accounting.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO
INCLUDED ELSEWHERE IN THIS REPORT.
OVERVIEW
We collect, process, recover and dispose of liquid waste through a number of
subsidiaries that are organized into two divisions. The Wastewater Division
collects, processes and disposes of liquid waste and recovers saleable
by-products from certain waste streams. We formed our Wastewater Division when
we 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 we purchased five of our
Louisiana and Texas landfarms from certain subsidiaries of Waste Management,
Inc.
The Wastewater Division generated $50.5 million, or 91.3%, of our revenues
for the quarter ended March 31, 1999. This Division derives revenues from two
principal sources: fees received for collecting and processing liquid waste
(such as industrial wastewater, grease and grit trap waste, bulk liquids and
dated beverages, and certain hazardous wastes) 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 our by-product sales involve the brokering of industrial
and fuel grade ethanol produced by third parties. Collection and processing 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.
On December 31, 1998, we sold to a company owned by Thomas B. Blanton, a
director of the Company at the time of the sale, substantially all of the assets
used in the distribution of various grades of fats, oils and feed proteins.
These by-products had previously been sold by the Company to producers of
livestock feed and various chemicals located in Mexico. The purchase price for
these assets was approximately $1.7 million, of which approximately $1.1 million
was paid in March 1999. The remainder of the purchase price is payable in
monthly installments continuing through February 1, 2004. In connection with
this sale, we also agreed, for a period of one year, to sell to Mr. Blanton's
company all fats, oils and feed proteins that we recover from certain waste
streams and that conform to certain specifications. Mr. Blanton's company may
extend this supply agreement for four additional one-year terms. We believe that
the terms of this transaction were as favorable to us as could have been
negotiated with an unaffiliated party.
12
<PAGE>
The Oilfield Waste Division generated $4.8 million, or 8.7%, of our revenues
for the quarter ended March 31, 1999. This Division derives revenues from fees
charged to customers for (i) processing and disposing of oil and gas exploration
and production waste, and (ii) cleaning tanks, barges and other vessels and
containers used in the storage and transportation of oilfield waste. The fees
charged for processing and disposing of oilfield waste are based on the
composition of the waste and vary significantly. Accordingly, we believe that
total revenues are a better indicator of performance than is the average fee
charged. In order to match revenues with their related costs, when waste is
unloaded at one of our sites, we recognize the related revenue and record a
reserve for the estimated amount of expenses to be incurred to process and
dispose of the waste. As processing occurs, generally over nine to twelve
months, the reserve is depleted as expenses are incurred. Our operating margins
in the Oilfield Waste Division are typically higher than in the Wastewater
Division.
Newpark Resources, Inc. is the largest customer of the Oilfield Waste
Division. As previously disclosed, in September 1998, we entered into a new
33-month agreement with Newpark. In this agreement, Newpark agreed to pay us at
least $30.0 million. Newpark paid us $6.0 million in 1998 and an additional $3.0
million during the first quarter of 1999. The remaining amounts are required to
be paid to us in monthly installments continuing through June 2001. These
payments will permit Newpark to deliver to us at no additional cost specified
amounts of oilfield waste for processing and disposal.
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 our corporate offices and
each of our operating sites, as well as professional services and costs.
Depreciation and amortization expenses relate to our landfarms and other
depreciable or amortizable assets. Landfarms, which constitute approximately
12.9% of our 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 increased
over time as a result of amortization of goodwill recorded in connection with
our acquisitions.
In connection with potential acquisitions, we incur and capitalize certain
transaction costs which include stock registration, legal, accounting,
consulting, engineering and other direct costs to complete the acquisitions.
Additionally, we incur charges for integration costs which include uncollectible
accounts receivable write-offs, employee termination, severance and relocation,
lease termination and other one-time charges related to the acquisitions. When
an acquisition is completed
13
<PAGE>
and is accounted for using the pooling-of-interests method for business
combinations, these costs are charged to the statement of operations as
acquisition related and non-recurring costs. When a completed acquisition is
accounted for using the purchase method for business combinations, these costs
are capitalized. We routinely evaluate capitalized transaction and integration
costs and expense those costs related to acquisitions not likely to occur.
Indirect acquisition costs, such as executive salaries, general corporate
overhead and other corporate services, are expensed as incurred.
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 MARCH 31, 1998 AND 1999
REVENUES. Revenues for the quarter ended March 31, 1999 increased $43.0
million, or 348.0%, from $12.3 million for the quarter ended March 31, 1998 to
$55.3 million for the quarter ended March 31, 1999. The Wastewater Division
contributed $7.3 million, or 59.4%, of first quarter 1998 revenues and $50.5
million, or 91.3%, of first quarter 1999 revenues. Collection and processing
fees generated $4.3 million, or 59.1%, and $41.0 million, or 81.1%, of the
Wastewater Division's revenues for the first quarters of 1998 and 1999,
respectively. This increase was due primarily to acquisitions completed during
1998 and the first quarter of 1999. The "same store" revenues for collection and
processing of waste increased due to increased pricing and increased volumes.
By-product sales generated the remaining $3.0 million, or 40.9%, and $9.5
million, or 18.9%, of the Wastewater Division's revenues for the first quarters
of 1998 and 1999, respectively. Revenues from the sale of by-products increased
$6.5 million, or 217.6%, as a result of acquisitions completed in 1998; however,
revenues from the sale of fats and oils decreased approximately $2.0 million due
to a reduction in commodities prices and the sale of the fats and oils
distribution business.
The Oilfield Waste Division contributed $5.0 million, or 40.7%, of first
quarter 1998 revenues and $4.8 million, or 8.7%, of first quarter 1999 revenues.
The Oilfield Waste Division's revenues decreased $190,000, or 3.8%, due to a
decline in drilling activity in the Gulf Coast region.
OPERATING EXPENSES. Operating expenses increased $30.6 million, or 436.4%,
from $7.0 million for the quarter ended March 31, 1998 to $37.6 million for the
quarter ended March 31, 1999. As a percentage of revenues, operating expenses
increased from 56.8% in the first quarter of 1998 to 68.0% in the first quarter
of 1999. This increase was due primarily to our 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 $2.6 million, or 260.7%, from $987,000 for the quarter ended March 31,
1998 to $3.6
14
<PAGE>
million for the quarter ended March 31, 1999. As a percentage of revenues,
depreciation and amortization expenses decreased from 8.0% in the first quarter
of 1998 to 6.4% in the first quarter of 1999. This decrease was also
attributable to our transition from operating primarily as an oilfield waste
disposal company into a less capital-intensive integrated liquid waste
management company.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $4.0 million, or 273.2%, from $1.5 million for
the quarter ended March 31, 1998 to $5.5 million for the quarter ended March 31,
1999. As a percentage of revenues, selling, general and administrative expenses
were 11.9% for the first quarter of 1998 and 9.9% for the first quarter of 1999.
This improvement was attributable to our ability to integrate business
acquisitions without a proportionate increase in general and administrative
expenses.
INTEREST AND OTHER EXPENSES. Net interest and other expenses increased $1.1
million, or 344.9%, from $341,000 for the quarter ended March 31, 1998 to $1.5
million for the quarter ended March 31, 1999. 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 $2.0 million, or
195.9%, from $1.0 million for the quarter ended March 31, 1998 to $3.0 million
for the quarter ended March 31, 1999 as a result of increased taxable income.
The effective tax rate for the period ended March 31, 1998 was 39.5% compared to
a 41.5% rate for the period ended March 31, 1999. This increase was due
primarily to state income taxes associated with acquisitions completed during
1998 and the first quarter of 1999.
LIQUIDITY AND CAPITAL RESOURCES
In March 1999, we completed a public offering of 3,000,000 shares of our
common stock. The $56.7 million of net proceeds that we received from the
2,875,000 shares that we sold in this offering were applied against the
outstanding balance of our credit facility, the vast majority of which
indebtedness was incurred in connection with acquisitions completed in 1998 and
1999.
We had net working capital of $17.0 million at March 31, 1999, compared to
net working capital of $2.9 million at December 31, 1998. Improvement in the
working capital position was attributable to an increase in accounts receivable
resulting in part from first quarter 1999 acquisitions and to a decrease in
current maturities of long-term obligations and accrued acquisition costs.
Our capital requirements for our continuing operations consist of our general
working capital needs, scheduled principal payments on our debt obligations and
capital leases, and planned capital expenditures. At March 31, 1999,
approximately $2.3 million of principal payments on debt obligations were
payable during the next twelve months. Capital expenditures for our continuing
operations during the three months ended March 31, 1999 were $4.2 million. The
majority of the capital expenditures were for plant expansions, equipment and
vehicle upgrades. Capital expenditures for our continuing operations for the
last three quarters of 1999 are budgeted at approximately $10.8 million.
Approximately $10.4 million of this amount is budgeted to be invested in the
Wastewater Division for plant expansions, equipment and vehicle upgrades. The
remaining amounts are budgeted to be invested in the Oilfield Waste Division for
equipment.
At March 31, 1999, we had established a $4.9 million reserve to provide for
the cost of future closures of facilities. The amount of this unfunded reserve
is based on our estimated total cost to
15
<PAGE>
close the facilities as calculated in accordance with the applicable
regulations. Regulatory agencies require us to post financial assurance to
assure that all waste will be treated and the facilities closed appropriately.
We have in place a total of $5.4 million of financial assurance in the form of
letters of credit and bonds to provide for the cost of future closures of
facilities. At March 31, 1999, we had also established a $3.1 million reserve to
provide for (i) the cost to remediate soil and groundwater contamination at our
facility in East Palo Alto, California, and (ii) our share of the costs to
remediate drum reconditioning or disposal sites previously used by our
subsidiaries.
We have a $225.0 million credit facility with a group of banks under which we
may borrow to fund working capital requirements and acquisitions. The amount of
this credit facility was increased in February 1999 from $100.0 million to
$225.0 million. Amounts outstanding under the credit facility are secured by a
lien on all or substantially all of our assets. The credit facility prohibits
the payment of dividends and requires us to comply with certain financial
covenants. The credit facility also places certain restrictions on, among other
things, acquisitions and other business combination transactions which we may
consummate. We do not believe that these restrictions will have a material
adverse effect on our ability to fulfill our 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, 1999,
we had borrowed approximately $54.0 million under the credit facility. Between
April 1, 1999 and May 11, 1999, we had net borrowing activity of $14.0 million
under the credit facility, the vast majority of which was used to fund the cash
purchase price of acquisitions.
We also have a $10.0 million credit facility with BankBoston, N.A. under
which we may borrow to purchase equipment. As of March 31, 1999 and as of the
date of this report, no amounts were outstanding under this equipment credit
facility.
Our capital resources consist of cash reserves, cash generated from
operations and funds available under our $225.0 million credit facility and the
equipment credit facility. We expect that these resources will be sufficient to
fund continuing operations for at least the next twelve months. In addition to
capital required for our ongoing operations, we will require additional capital
to pursue our long-term acquisition program. We anticipate 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 $225.0 million credit
facility. In addition, we 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 our debt.
In certain of our acquisitions, we agreed to pay additional consideration to
the owners of the acquired business if the future pre-tax earnings of the
acquired business exceed certain negotiated levels or other specified events
occur. To the extent that any contingent consideration is required to be paid in
connection with an acquisition, we anticipate that the cash flows of the
acquired business will be sufficient to pay the contingent consideration.
ACQUISITIONS
During the three months ended March 31, 1999, we acquired seven businesses,
which collectively had 1998 revenues of approximately $55.8 million. Each of
these acquisitions has been accounted for under the purchase method of
accounting. The total consideration for these seven acquisitions involved
approximately $36.3 million in cash and assumed debt and 431,588 shares of
16
<PAGE>
our common stock. The excess of the aggregate purchase price over the fair
market value of the net assets acquired was approximately $32.3 million.
From April 1, 1999 through May 11, 1999, we acquired three additional
businesses, which had 1998 revenues of approximately $14.6 million, for
approximately $16.6 million in cash and assumed debt. Each of these acquisitions
was accounted for under the purchase method of accounting.
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. We
are currently identifying which of our information technology and
non-information technology systems will be affected by Year 2000 issues.
Our Year 2000 compliance program consists of three phases: identification and
assessment; remediation; and testing. For any given system, the phases occur in
sequential order, from identification and assessment of Year 2000 problems, to
remediation and, finally, to testing our solutions. However, as we acquire
additional businesses, each information technology and non-information
technology system of the acquired business must be independently identified and
assessed. As a result, all three phases of our Year 2000 compliance program may
occur simultaneously as they relate to different systems. Each phase may have a
varying timetable to completion, depending upon the system and the date when a
particular business was acquired by us.
We have completed the identification and assessment of most of our
information technology systems, and those systems address or have been modified
to address Year 2000 problems. We will continue to assess the information
technology systems of businesses that we have recently acquired and that we may
acquire in the future. We are in the identification and assessment phase with
respect to non-information technology systems of currently-owned businesses. We
anticipate completing all phases of our Year 2000 compliance program by June 30,
1999, with the possible exception of the remediation and testing phases for
certain of our non-information technology systems. We cannot assure you,
however, that recently acquired businesses will be Year 2000 compliant. However,
to the extent feasible, we review the Year 2000 status of acquisition candidates
before we complete an acquisition.
Our costs to date for our Year 2000 compliance program have not been
material. Although we have not completed our assessment of non-information
technology systems, we do not currently believe that the future costs associated
with our Year 2000 compliance program will be material.
We are currently unable to determine our most reasonably likely worst case
Year 2000 scenario, because we have not identified and assessed all of our
non-information technology systems. Because most of our information technology
systems address or have been modified to address Year 2000 problems and because
most of our businesses do not employ a high degree of process or plant
automation, we do not anticipate that the Year 2000 will have a significant
impact on our operations. However, a failure to address all of our Year 2000
issues successfully could have a material adverse effect on our business,
results of operations and financial condition.
17
<PAGE>
This is a Year 2000 readiness disclosure statement within the meaning of the
Year 2000 Information and Readiness Disclosure Act (P.L. 105-271).
FORWARD LOOKING STATEMENTS
Statements of our 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. Certain of these factors are discussed under "Factors Influencing Future
Results and Accuracy of Forward-Looking Statements" included in Part I, Item 1
of our Annual Report on Form 10-K for the year ended December 31, 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not utilize financial instruments for trading purposes and we do not
hold any derivative financial instruments that could expose us to significant
market risks. Our exposure to market risk for changes in interest rates relates
primarily to our obligations under our $225.0 million credit facility and our
$10.0 million equipment credit facility. As of March 31, 1999, $54.0 million and
$0 had been borrowed under the $225.0 million credit facility and the equipment
credit facility, respectively. As of March 31, 1999, amounts outstanding under
the $225.0 million credit facility were accruing interest at approximately 7.9%
per year.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 7, 1998, we settled substantially all of the claims asserted
against us in the four lawsuits relating to our Bourg, Louisiana landfarm. Under
the terms of the settlement, we agreed to expand the buffer zone and build a
berm along the western boundary of our landfarm. The cost of these actions will
not be material to our operating results. The settlement did not resolve certain
claims asserted against us by Acadian Shipyard, Inc., a local barge company, 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, we asserted various claims for indemnity and/or contribution against
Acadian. Thereafter, in July 1998, Acadian filed various counterclaims against
us 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. We deny that we have any liability to Acadian and
intend to vigorously defend against these claims. We do not believe that this
action will have a material adverse effect on our business, results of
operations or financial condition.
Prior to its acquisition by the Company in January 1999, Romic Environmental
Technologies Corporation had entered into an administrative consent order with
the EPA relating to the cleanup of soil and groundwater contamination at its
facility in East Palo Alto, California. A remedial investigation of the facility
has been completed by Romic and forwarded to the EPA. In March 1999, Romic
submitted a corrective measures study for the facility to the EPA. The EPA will
review the corrective measures study and select a plan for final site
18
<PAGE>
remediation. Based upon the information gathered from these studies, Romic's
discounted estimated costs for this site are expected to be $2.3 million, paid
over the next 30 years. Romic's total estimated costs for this site have been
discounted for present value considerations at a rate of 5.6% and have been
accrued by the Company as closure and remediation reserves and included in the
condensed consolidated balance sheet at March 31, 1999. However, due to the
complex, ongoing and evolving process of investigating and remediating the
facility, Romic's actual costs may exceed the amount reserved.
Prior to its acquisition by the Company, Romic had been notified by the EPA
and the California Department of Toxic Substances Control that it was a
potentially responsible party under applicable environmental legislation with
respect to the Bay Area Drum Superfund Site in San Francisco, California, the
Lorentz Barrel and Drum Superfund Site in San Jose, California and the Casmalia
Resources Hazardous Waste Management Facility located near Santa Barbara,
California, each of which was a drum reconditioning or disposal site previously
used by Romic. With respect to each of these sites, Romic and a number of other
potentially responsible parties have entered into administrative consent orders
and agreements allocating each party's respective share of the cost of
remediating the sites. Romic's share under these consent orders and agreements
is as follows: Bay Area - 6.872%; Lorentz - 5.62%; and Casmalia Resources -
0.29%. Based upon the studies and remedial actions completed, Romic's discounted
share of the costs for these sites is expected to be $800,000, paid over the
next 10 years. Romic's total estimated costs for these sites have been
discounted for present value considerations at a rate of 5.6% and have been
accrued by the Company as closure and remediation reserves and included in the
condensed consolidated balance sheet at March 31, 1999. However, due to the
complex, ongoing and evolving process of investigating and remediating these
sites, Romic's actual costs may exceed the amount reserved.
With regard to the Casmalia Resources site, if adequate funding is not
obtained by the EPA from certain sources to fund additional remedial phases for
which Romic and other potentially responsible parties have not been released
from liability, Romic could incur additional costs of up to $400,000 which would
likely be disbursed over 30 years. No reserve has been established for this loss
contingency.
Prior to its acquisition by the Company in May 1998, Waste Stream
Environmental, Inc. had signed a document which purported to be a letter of
intent with Pocono Grow Fertilizer Corporation relating to the development of a
waste treatment and recycling facility in Eastern Pennsylvania. After the Waste
Stream acquisition was completed, we notified Pocono Grow that Waste Stream did
not intend to pursue the project. Pocono Grow asserted that the document was a
binding agreement and that Waste Stream was in breach of the agreement. On July
14, 1998, Waste Stream filed a suit for declaratory judgment in the United
States District Court for the Western District of New York asking the court to
determine whether the document was binding or non-binding. On August 14, 1998,
Pocono Grow filed a counterclaim against Waste Stream and a third party
complaint against the Company alleging breach of contract and claiming damages
in excess of $10.0 million. Waste Stream and the Company intend to vigorously
defend the counterclaim and third party complaint and pursue the declaratory
judgment action. We do not believe that this action will have a material adverse
effect on our business, results of operations or financial condition.
We are, from time to time, a party to litigation arising in the normal course
of our business, most of which involves claims for personal injury or property
damage incurred in connection with our operations. We are not currently involved
in any litigation that we believe will have a material adverse effect on our
business, results of operations or financial condition.
19
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In February 1999, we issued 53,002 shares of our common stock to Sanders
Morris Mundy, Inc. These shares were issued in accordance with the terms of two
warrants that we issued to Sanders Morris in 1997 as consideration for (i)
serving as a co-manager of our initial public offering, and (ii) assisting us in
developing and implementing our acquisition program. Sanders Morris exercised
these warrants through a "cashless exercise" by surrendering its right to
purchase an additional 40,748 shares under the warrants and, therefore, we did
not receive any cash proceeds in connection with the issuance of the shares.
This sale was exempt from registration under Section 4(2) of the Securities Act
of 1933, no public offering being involved.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
No. Description
- ------- -----------
10.41 Stock Purchase Agreement between U S Liquids, Romic Environmental
Technologies Corporation, H. Michael Schneider, Peter D. Schneider,
Thomas R. Schneider, Barbara Morrison, Custodian for Justin W.
Morrison, Barbara Morrison, Custodian for Melissa L. Morrison, Barbara
Morrison, Michael R. Schneider, Custodian for Bridgette M. Schneider,
Laura Schneider, Peter D. Schneider, Custodian for Patrick Keil
Schneider, Peter D. Schneider, Custodian for Keil Patrick Schneider,
Thomas R. Schneider, Custodian for Jessica L. Schneider, Thomas R.
Schneider, Custodian for Brandon T. Schneider, Loreen Schneider, John
Morrison, and H. Michael Schneider and Lisa L. Schneider, Trustees for
Schneider Living Trust dated 12/28/81 (Exhibit 2.1 to the Form 8-K
filed on January 29, 1999 is hereby incorporated by reference).
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
On January 15, 1999, we filed a report on Form 8-K disclosing our acquisition
of Romic Environmental Technologies Corporation. On February 16, 1999, we
amended this Form 8-K to include the financial statements and pro forma
financial information required by Item 7 of Form 8-K.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U S LIQUIDS INC.
Date: May 12, 1999 /s/ MICHAEL P. LAWLOR
----------------------------------------
Michael P. Lawlor, Chairman and CEO
Date: May 12, 1999 /s/ EARL J. BLACKWELL
----------------------------------------
Earl J. Blackwell, Senior Vice President
and Chief Financial Officer
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM U S LIQUIDS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,570
<SECURITIES> 0
<RECEIVABLES> 41,821
<ALLOWANCES> 2,123
<INVENTORY> 1,573
<CURRENT-ASSETS> 52,119
<PP&E> 104,896
<DEPRECIATION> 0
<TOTAL-ASSETS> 316,809
<CURRENT-LIABILITIES> 35,082
<BONDS> 56,395
0
0
<COMMON> 159
<OTHER-SE> 194,664
<TOTAL-LIABILITY-AND-EQUITY> 316,809
<SALES> 55,302
<TOTAL-REVENUES> 55,302
<CGS> 37,605
<TOTAL-COSTS> 46,640
<OTHER-EXPENSES> (96)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,613
<INCOME-PRETAX> 7,145
<INCOME-TAX> 2,965
<INCOME-CONTINUING> 4,180
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,180
<EPS-PRIMARY> .31
<EPS-DILUTED> .28
</TABLE>
