<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDMENT TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) - February 15, 2000
EARTHCARE COMPANY
Commission file number 000-24685
A Delaware Corporation IRS Employer No. 58-2335973
14901 Quorum Drive, Suite 200
Dallas, Texas 75240
Telephone Number (972) 858-6025
<PAGE> 2
EarthCare Company (the "Registrant") amends and restates the following
items, financial statements, exhibits or other portions of its Current Report on
Form 8-K dated February 15, 2000, as set forth in the pages attached hereto:
<TABLE>
<CAPTION>
<S> <C> <C>
Item 7. Financial Statements and Exhibits
(a) Historical Financial Statements of Business Acquired
Set forth below are the historical financial statements of
International Petroleum Corporation and Related Entities
appearing in this report:
Report of Independent Accountants F-1
Combined Balance Sheets as of March 31, 1999
and 1998 and December 31, 1999 (Unaudited) F-2
Combined Statements of Operations for the Years Ended
March 31, 1999 and 1998 and for the Nine Month Periods
Ended December 31, 1999 and 1998 (Unaudited) F-3
Combined Statements of Stockholder's Equity for the Years
Ended March 31, 1999 and 1998 F-4
Combined Statements of Cash Flows for the Years Ended
March 31, 1999 and 1998 and for the Nine-Month Periods
Ended December 31, 1999 and 1998 (Unaudited) F-5
Notes to Combined Financial Statements F-6
(b) Unaudited Pro Forma Financial Information
Set forth below is the unaudited pro forma financial information
appearing in this report:
Unaudited Pro Forma Condensed Combined Balance Sheet
as of December 31, 1999 P-2
Unaudited Pro Forma Condensed Combined Statement of
Operations for the Year Ended December 31, 1999 P-3
Notes to Unaudited Pro Forma Condensed Combined
Financial Statements P-4
(c) Exhibits
23.1 Consent of PricewaterhouseCoopers LLP
</TABLE>
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Historical Financial Statements of Business Acquired
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
EarthCare Company
In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, stockholder's equity and cash flows present
fairly, in all material respects, the combined financial position of
International Petroleum Corporation and Related Entities, as defined in Note 2,
(the "Company") at March 31, 1999 and 1998, and the results of their operations
and their cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
April 28, 2000
F-1
<PAGE> 4
INTERNATIONAL PETROLEUM CORPORATION
AND RELATED ENTITIES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31
----------------------------- December 31,
1999 1998 1999
----------- ----------- ------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 78,754 $ 89,205 $ 126,182
Accounts receivable, net of allowances of
$119,795, $81,003 and $164,480 3,283,776 2,543,353 3,438,032
Inventory 881,236 791,021 771,899
Prepaid expenses 170,618 164,422 201,161
----------- ----------- -----------
Total current assets 4,414,384 3,588,001 4,537,274
----------- ----------- -----------
Property and equipment - net 16,757,078 15,627,079 17,017,648
Other assets 145,313 148,997 142,550
----------- ----------- -----------
Total assets $21,316,775 $19,364,077 $21,697,472
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,537,187 $ 1,445,164 $ 1,797,058
Current portion of long-term debt 113,321 93,572 103,574
Book overdrafts 223,585 308,858 274,658
----------- ----------- -----------
Total current liabilities 1,874,093 1,847,594 2,175,290
----------- ----------- -----------
Long-term debt, less current portion 192,680 298,269 122,586
Advances from Parent 19,946,072 17,365,175 19,637,396
Deferred tax liability 2,774,656 2,327,741 3,151,137
Stockholder's equity:
Common stock (Note 8) 3,030 3,030 3,030
Retained earnings (deficit) (3,473,756) (2,477,732) (3,391,967)
----------- ----------- -----------
Total stockholder's equity (deficit) (3,470,726) (2,474,702) (3,388,937)
----------- ----------- -----------
Total liabilities and stockholder's equity $21,316,775 $19,364,077 $21,697,472
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 5
INTERNATIONAL PETROLEUM CORPORATION
AND RELATED ENTITIES
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended For the Nine Months Ended
March 31, December 31,
---------------------------- ----------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Gross revenues $23,620,844 $25,146,322 $20,188,524 $18,156,971
----------- ----------- ----------- -----------
Operating expenses:
Cost of operations 16,353,062 17,016,421 13,547,809 12,694,210
General and administrative 3,569,507 2,890,878 2,837,327 2,641,869
Depreciation and amortization 1,098,190 1,019,212 911,112 804,363
----------- ----------- ----------- -----------
Total operating expenses 21,020,759 20,926,511 17,296,248 16,140,442
----------- ----------- ----------- -----------
Income from operations 2,600,085 4,219,811 2,892,276 2,016,529
Other income (loss) (5,263) 982 50,711 (15,123)
Interest expense (1,676,245) (1,569,666) (1,337,643) (1,230,914)
----------- ----------- ----------- -----------
Income before taxes 918,577 2,651,127 1,605,344 770,492
Income tax expense 349,059 1,007,428 610,031 292,787
----------- ----------- ----------- -----------
Net income $ 569,518 $ 1,643,699 $ 995,313 $ 477,705
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 6
INTERNATIONAL PETROLEUM CORPORATION
AND RELATED ENTITIES
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
Common Retained
Stock Earnings
(Note 8) (Deficit) Total
-------- ----------- -----------
<S> <C> <C> <C>
Balance, March 31, 1997 $3,030 $(2,970,370) $(2,967,340)
Net income -- 1,643,699 1,643,699
Dividend to Parent -- (1,151,061) (1,151,061)
------ ----------- -----------
Balance, March 31, 1998 3,030 (2,477,732) (2,474,702)
Net income -- 569,518 569,518
Dividend to Parent -- (1,565,542) (1,565,542)
------ ----------- -----------
Balance, March 31, 1999 $3,030 $(3,473,756) $(3,470,726)
====== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 7
INTERNATIONAL PETROLEUM CORPORATION
AND RELATED ENTITIES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended For the Nine Months Ended
March 31, December 31,
------------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ---------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 569,518 $ 1,643,699 $ 995,313 $ 477,705
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,098,190 1,019,212 911,112 804,363
(Gain) loss on disposal of property 10,062 1,922 -- --
Deferred income taxes 446,915 438,408 376,481 335,186
Change in assets and liabilities:
Accounts receivable (740,423) (416,798) (154,256) (118,505)
Prepaid expenses (6,196) (63,061) (30,543) (31,119)
Inventories (90,215) (252,442) 109,337 (19,478)
Other assets -- (19,893) -- --
Accounts payable and accrued expenses 92,023 29,095 259,871 (5,365)
------------ ------------ ----------- -----------
Net cash provided by operating activities 1,379,874 2,380,142 2,467,315 1,442,787
------------ ------------ ----------- -----------
Cash flows from investing activities:
Cash payments for the purchase of
property and equipment (2,273,999) (1,792,062) (1,168,919) (1,949,747)
Cash proceeds from the sale of
property and equipment 39,432 7,028 -- --
------------ ------------ ------------ -----------
Net cash used in investing activities (2,234,567) (1,785,034) (1,168,919) (1,949,747)
------------ ------------ ------------ -----------
Cash flows from financing activities:
Net proceeds from (payments on) advances from Parent 1,015,355 (489,519) (1,222,200) 482,626
Payments on long-term debt and notes payable (85,840) (138,247) (79,841) (70,538)
Cash overdrafts (85,273) 93,428 51,073 141,413
------------ ------------ ----------- -----------
Net cash provided by (used in) financing activities 844,242 (534,338) (1,250,968) 553,501
------------ ------------ ----------- -----------
Net increase (decrease) in cash and cash equivalents (10,451) 60,770 47,428 46,541
Cash and equivalents, beginning of period 89,205 28,435 78,754 89,205
------------ ------------ ----------- -----------
Cash and cash equivalents, end of period $ 78,754 $ 89,205 $ 126,182 $ 135,746
============ ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 8
INTERNATIONAL PETROLEUM CORPORATION
AND RELATED ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION
OPERATIONS - International Petroleum Corporation and Related Entities
were wholly-owned subsidiaries of World Fuel Services Corporation
("Parent") until February 15, 2000 (See Note 10). The Company collects,
blends, and recycles non-hazardous petroleum products and petroleum
contaminated liquids. The recycled oil products are sold primarily to
industrial and commercial customers throughout the Southern and
Mid-Atlantic United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
PRINCIPLES OF COMBINATION - The accompanying financial statements
reflect the combined financial statements of International Petroleum
Corporation, International Petroleum Corporation of Louisiana,
International Petroleum of Maryland, International Petroleum Corporation
of Delaware, International Petroleum Corporation of Georgia,
International Petroleum Corporation of Lafayette, International
Petroleum Corporation of Pennsylvania and International Environmental
Services, Inc. The individual entities share common ownership and
management and collectively are International Petroleum Corporation and
Related Entities (the "Company"). All significant intercompany
transactions have been eliminated.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
investments with maturities of three months or less at the date of
purchase as cash equivalents.
INVENTORY - Consists of used, virgin and recycled oil and is valued at
the lower of cost or market.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost and
are depreciated using the straight-line method over the estimated useful
lives of 10 to 40 years for plant facilities, machinery and equipment, 5
to 7 years for furniture and fixtures, 5 to 10 years for transportation
equipment, 5 to 10 years for autos and trucks, 3 to 5 years for computer
equipment and 40 years for office buildings. When depreciable property
is retired or otherwise disposed of, the related assets and accumulated
depreciation are removed from the accounts and any resultant gain or
loss is included in operations.
PREPAID EXPENSES - Prepaid expenses consist of advance payments for
licenses and vehicle registrations on transportation vehicles and
consulting contracts. Also included are insurance policies for which
coverage extends into the following year.
F-6
<PAGE> 9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
INCOME TAXES - The accounts of the Company are included in the
consolidated income tax return filed by its Parent. The provision for
income taxes reflected in these combined financial statements is
calculated on a separate company basis using statutory tax rates with
the current income tax liability recorded as an increase in Advances
from Parent.
CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of cash and receivables. Concentration of credit risk with
respect to trade receivables are limited due to the Company's large
number of customers.
REVENUE RECOGNITION - The Company recognizes revenues as services are
provided or upon the shipment of recycled oil to customers.
USE OF ESTIMATES - In preparing the Company's financial statements in
conformity with generally accepted accounting principles, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. RELATED PARTY TRANSACTIONS
For the years ended March 31, 1999 and 1998, the Company leased
properties from an officer of its Parent company which totaled
$103,999 and $99,047, respectively.
In addition, the Company's Parent performs or administers various
services on behalf of the Company. The allocated cost of certain
overhead functions such as payroll services, information technology
services, telecommunications services, tax services, human resource
services, and certain accounting services were charged to the Company
in the amounts of $328,413 and $296,400 during the years ended March
31, 1999 and 1998, respectively.
Costs for insurance totalling $1,248,631 and $1,124,978 were charged
to the Company by the Parent during 1999 and 1998, respectively.
Interest costs totalling $1,648,806 and $1,524,180 were charged to the
Company by the Parent related to the advance from the Parent during
1999 and 1998, based on the Parent's bank prime rate.
F-7
<PAGE> 10
4. PROPERTY AND EQUIPMENT
At March 31, 1999 and 1998, property and equipment consisted of the
following:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Leasehold improvements $ 817,820 $ 779,911
Plant facilities, machinery and equipment 11,940,841 11,387,866
Furniture and fixtures 68,100 67,345
Transportation equipment 7,187,046 5,864,748
Computer equipment 222,882 96,702
Autos and trucks 300,160 194,202
Office buildings 2,114,043 2,114,043
Land 1,054,006 1,054,006
Construction-in-progress 196,193 230,023
------------ ------------
23,901,091 21,788,846
Less accumulated depreciation and amortization (7,144,013) (6,161,767)
------------ ------------
Property and equipment, net $ 16,757,078 $ 15,627,079
============ ============
</TABLE>
Depreciation expense was $1,094,506 and $954,897 for the years ended
March 31, 1999 and 1998, respectively.
5. LONG-TERM DEBT
Long-term debt consisted of the following at March 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Note payable to bank. Monthly payment of $2,589
including interest at 6.755%. Note matured in May 1998.
Note was collateralized by transportation equipment. $ -- $ 2,573
Note payable to bank. Monthly payment of $1,735
including interest at 7.0%. Note matured in May 1998.
Note was collateralized by transportation equipment. -- 1,725
Note payable to bank. Monthly payment of $7,924
including interest at 8.52%. Note matures in January 2002.
Note is collateralized by transportation equipment. 244,801 310,034
Note payable to bank. Monthly payment of $1,981
including interest at 8.52%. Note matures in January 2002.
Note is collateralized by transportation equipment. 61,200 77,509
--------- ---------
306,001 391,841
Less current portion (113,321) (93,572)
--------- ---------
Total long-term debt $ 192,680 $ 298,269
--------- ---------
</TABLE>
F-8
<PAGE> 11
5. LONG-TERM DEBT, Continued
Future aggregate annual maturities of long-term debt are as follows as
of March 31, 1999:
<TABLE>
<CAPTION>
March 31:
---------
<S> <C>
2000 $ 113,321
2001 97,391
2002 95,289
</TABLE>
6. LEASE COMMITMENTS
The Company leases its facilities and certain transportation and
office equipment under operating leases. Expiration dates vary
throughout. In the normal course of business, operating leases are
generally renewed or replaced by other leases.
Minimum future rental payments for each of the next five years and in
the aggregate are as follows:
<TABLE>
<CAPTION>
March 31:
---------
<S> <C>
2000 $ 385,578
2001 120,664
2002 15,300
2003 2,380
</TABLE>
Rent expense under operating leases was $346,845 and $289,650 for the
years ended March 31, 1999 and 1998, respectively.
7. INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED MARCH 31,
-----------------------
1999 1998
---------- -----------
<S> <C> <C>
Current expense (benefit) $ (97,856) $ 569,020
Deferred expense 446,915 438,408
--------- -----------
$ 349,059 $ 1,007,428
========= ===========
</TABLE>
F-9
<PAGE> 12
7. INCOME TAXES, Continued
Income tax expense approximates the amounts computed by applying the
combined U.S. federal statutory tax rate including applicable state
income taxes to pre-tax income.
The components of the net deferred tax liability include cumulative
temporary differences relating to depreciation on property and
equipment, accounts receivable allowance, and accrued liabilities.
8. COMMON STOCK
Common stock of the combined companies consisted of the following at
March 31, 1999 and 1998:
International Petroleum Corporation: $1.00 par value, 1,000 shares
authorized, 250 shares issued and outstanding
International Petroleum Corporation of Louisiana: no par value, 1,000
shares authorized, 250 shares issued and outstanding
International Petroleum Corporation of Maryland: $1.00 par value, 1,000
shares authorized, 1,000 shares issued and outstanding
International Petroleum Corporation of Delaware: $.01 par value, 3,000
shares authorized, 3,000 shares issued and outstanding
International Petroleum Corporation of Georgia: $1.00 par value, 1,000
shares authorized, 250 shares issued and outstanding
International Petroleum Corporation of Lafayette: $1.00 par value,
1,000 shares authorized, 250 shares issued and outstanding
International Petroleum Corporation of Pennsylvania: $1.00 par value,
1,000 shares authorized, 1,000 shares issued and outstanding
International Environmental Services, Inc.: $1.00 par value, 7,500
shares authorized, 250 shares issued and outstanding
9. CONTINGENCY
The Company may spend an estimated $1,000,000 sometime in the future,
if required to clean up contamination which was present at one of the
Company's sites when it was acquired by the Company. The clean-up
costs will be capitalized as part of the cost of the site, up to the
fair market value of the site.
F-10
<PAGE> 13
10. SUBSEQUENT EVENT
Effective February 15, 2000, EarthCare Company, ("EarthCare") acquired
all of the outstanding capital stock of the Company in exchange for
$28,000,000 cash and 750,458 shares of EarthCare common stock. This
transaction was consummated pursuant to a Stock Purchase Agreement,
dated as of January 12, 2000.
On April 19, 2000, the Parent filed a Demand For Arbitration against
EarthCare. The demand is for damages in the amount of $3,721,201, plus
interest, late fees, court costs and attorney's fees. Pursuant to the
provisions of a stock purchase agreement between the Parent and
EarthCare dated January 12, 2000, the parties have agreed to arbitrate
this dispute within Miami-Dade County, Florida. Currently, the outcome
of this dispute cannot be determined.
11. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management of the Company, the December 31, 1999 and
1998 interim financial statements contain all adjustments, none of
which were other than normal recurring accruals, necessary to present
fairly the financial position of the Company as of December 31, 1999,
and the results of their operations and cash flows for the nine-month
periods ended December 31, 1999 and 1998. The results of operations
for the periods represented are not necessarily indicative of the
results of operations to be expected for the full year.
F-11
<PAGE> 14
(b) Unaudited Pro Forma Financial Information
The Unaudited Pro Forma Financial Information required by Article 11 of
Regulation S-X is presented herewith:
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
On February 15, 2000, EarthCare Company, ("EarthCare") acquired all of the
outstanding capital stock of World Fuel Services Corporation's ("WFS") oil
recycling services division in exchange for $28.0 million in cash and 750,458
shares of EarthCare common stock. The oil recycling services division consists
of International Petroleum Corporation, International Petroleum Corporation of
Louisiana, International Petroleum of Maryland, International Petroleum
Corporation of Delaware, International Petroleum Corporation of Georgia,
International Petroleum Corporation of Lafayette, International Petroleum
Corporation of Pennsylvania and International Environmental Services, Inc. The
individual entities share common ownership and management and collectively are
International Petroleum Corporation and Related Entities ("IPC"). In addition,
concurrently therewith, the Company acquired from an officer of WFS certain
land for approximately $2.0 million. The cash used to fund the IPC and related
land acquisitions was provided by $10.0 million from EarthCare's Credit
Agreement and $20.0 million from EarthCare's 12% subordinated notes. IPC
operates major recycling centers in Wilmington, DE, Plant City, FL, and New
Orleans, LA, and satellite collection centers strategically located near its
customer base. IPC collects and receives, directly from customers, nonhazardous
used oil, oil filters and oily wastewater.
The actual allocation of the purchase price and the resulting effect on income
or loss from operations may differ significantly from the unaudited pro forma
amounts included herein. These unaudited pro forma adjustments represent the
Company's preliminary determination of purchase accounting adjustments and are
based upon available information and certain assumptions that the Company
believes to be reasonable. Consequently, the amounts reflected in the Unaudited
Pro Forma Condensed Combined Financial Statements are subject to change, and the
final amounts may differ substantially.
The accompanying Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 1999 assumes that the acquisition of IPC took
place on January 1, 1999, the beginning of the Company's fiscal year. The
Unaudited Pro Forma Condensed Combined Balance Sheet gives pro forma effect to
the acquisition of IPC as if the transaction occurred on December 31, 1999.
The accompanying unaudited pro forma information is presented for illustrative
purposes only and is not indicative of the financial position or results of
operations that may be reported in the future. The accompanying Unaudited Pro
Forma Condensed Combined Financial Statements should be read in conjunction with
the historical financial statements and related notes thereto of EarthCare as
reported in the annual Form 10-K and the audited annual and unaudited interim
financial statements of IPC included herein.
P-1
<PAGE> 15
Unaudited Pro Forma Condensed Combined Balance Sheet
At December 31, 1999
<TABLE>
<CAPTION>
IPC Transaction
---------------------------
Historical Historical Pro Forma Pro Forma
EarthCare IPC Adjustments Consolidated
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 282,003 $ 126,182 $ -- $ 408,185
Accounts receivable, net of allowance for doubtful accounts 8,582,145 3,438,032 -- 12,020,177
Prepaid expense 1,882,654 201,161 -- 2,083,815
Other current assets 15,375 771,899 -- 787,274
------------ ------------ ------------ ---------------
Total current assets 10,762,177 4,537,274 -- 15,299,451
Property and equipment, net 30,877,976 17,017,648 2,008,747(a) 49,904,371
Intangibles - net of accumulated amortization 29,582,485 118,440 16,525,381(d) 46,226,306
Other assets 3,938,054 24,110 1,405,000(b) 5,367,164
------------ ------------ ------------ ---------------
Total assets $ 75,160,692 $ 21,697,472 $ 19,939,128 $ 116,797,292
============ ============ ============= ===============
Current liabilities:
Accounts payable and accrued expenses $ 8,057,380 $ 2,071,716 $ -- $ 10,129,096
Current portion of long-term debt 278,434 103,574 (103,574)(c) 278,434
------------ ------------ ------------ ---------------
Total current liabilities 8,335,814 2,175,290 (103,574) 10,407,530
Long-term debt, net of current portion 47,209,154 122,586 30,611,161 (c) 77,942,901
Advances from Parent -- 19,637,396 (19,637,396)(f) --
Deferred tax liability -- 3,151,137 -- 3,151,137
Stockholders' equity:
Preferred stock -- -- -- --
Common stock 1,124 3,030 (2,955)(e) 1,199
Additional paid-in capital 37,661,401 -- 4,999,925(e) 43,341,326
680,000(b)
Retained earnings (deficit) (18,046,801) (3,391,967) 3,391,967(e) (18,046,801)
------------ ------------ ------------ ---------------
Total stockholders' equity 19,615,724 (3,388,937) 9,068,937 25,295,724
------------ ------------ ------------ ---------------
Total liabilities and stockholders' equity $ 75,160,692 $ 21,697,472 $ 19,939,128 $ 116,797,292
============ ============ ============ ===============
</TABLE>
P-2
<PAGE> 16
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Pro Forma IPC Transaction
Effect of Other ----------------------------
Historical 1999 Historical Pro Forma Pro Forma
EarthCare Acquisitions(a) IPC Adjustments Consolidated
------------ --------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 41,813,333 $7,394,447 $25,652,397 -- $ 74,860,177
------------ ---------- ----------- ----------- ------------
Expenses:
Cost of operations 27,601,273 4,492,246 17,206,661 -- 49,300,180
General, administrative, sales and marketing 13,766,694 1,810,745 3,764,965 -- 19,342,404
Depreciation and amortization 2,663,286 593,873 1,204,939 878,443(b) 5,340,541
Provision for impairment of intangible assets 11,261,000 -- -- -- 11,261,000
------------ ---------- ----------- ----------- ------------
Total operating expenses 55,292,253 6,896,864 22,176,565 878,443 85,244,125
------------ ---------- ----------- ----------- ------------
Income (loss) from operations (13,478,920) 497,583 3,475,832 (878,443) (10,383,948)
Other expense (income):
Interest expense 2,256,373 723,846 1,782,974 1,636,719(c) 6,968,245
568,333(d)
Interest income (86,022) -- -- -- (86,022)
Other 225,845 -- (60,571) -- 165,274
------------ ---------- ----------- ----------- ------------
Income (loss) before income taxes and
extraordinary item (15,875,116) (226,263) 1,753,429 (3,083,495) (17,431,445)
Income tax provision (benefit) 571,060 -- 666,303 (666,303)(f) 571,060
------------ ---------- ----------- ----------- ------------
Income (loss) before extraordinary item $(16,446,176) $ (226,263) $ 1,087,126 $(2,417,192) $(18,002,505)
============ ========== =========== =========== ============
Income (loss) per share
before extraordinary item:
Basic and diluted $ (1.59) $ (1.59)
============ ============
Average weighted shares
Basic and diluted 10,321,164 261,260 750,458(e) 11,332,882
============ ========== =========== ============
</TABLE>
P-3
<PAGE> 17
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
1. BACKGROUND
EarthCare Company ("EarthCare") was formed to act as a consolidator of
nonhazardous liquid waste businesses. From its inception on March 19, 1997
through April 28, 2000, EarthCare has acquired 19 businesses.
2. HISTORICAL FINANCIAL STATEMENTS
The historical financial statements of the businesses acquired were derived
from the respective acquired businesses' financial statements. All acquired
businesses have a December 31 year-end, or their financial results have been
recast to a December 31 year-end. The audited historical financial statements
of IPC are included elsewhere herein and the other 1999 acquired businesses
have been audited, as required, and filed previously with the Securities and
Exchange Commission.
3. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS
The acquisition of IPC was accounted for by the purchase method of accounting.
Under purchase accounting, the total purchase price is allocated to the
tangible and intangible assets and liabilities of IPC based upon their
respective fair values as of the closing date based upon valuations and other
studies.
The estimated purchase price and preliminary allocation of the purchase price
in excess of the net assets acquired as a result of the acquisition is as
follows:
<TABLE>
<S> <C>
Purchase price:
Fair Value of Registered Common Stock Issued $ 5,000,000
Cash Paid 30,008,747
Estimated Sellers Working Capital Adjustment 219,180
------------
Total Purchase Price $ 35,227,927
============
Preliminary Allocation of Purchase Price to Fair Value of
Net Assets Acquired:
Working Capital $ 219,180
Property and equipment 19,026,395
Intangibles 15,982,352
------------
Total $ 35,227,927
============
</TABLE>
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(a) Reflects the adjustment for the allocation of the purchase price of
IPC to the estimated fair value of property and equipment purchased.
(b) Reflects debt issue costs of $725,000 associated with $10.0 million
drawn from EarthCare's Credit Agreement and warrants to purchase
EarthCare common stock valued at $680,000 associated with EarthCare's
12%, $20.0 million subordinated notes, both related to the IPC
acquisition.
(c) Reflects $10.0 million of the purchase price and $725,000 for debt
issue costs in borrowings from EarthCare's Credit Agreement and $20.0
million from EarthCare's 12% subordinated notes, net of repayment of
IPC's debt balances.
(d) Reflects the goodwill recorded by EarthCare in conjunction with its
acquisition.
(e) Adjustment to record the issuance of 750,458 shares of EarthCare
Common Stock, par value $.0001, to the stockholders of IPC in
connection with the acquisition and the adjustment to remove the
equity of IPC in conjunction with the acquisition by EarthCare.
(f) Reflects the elimination of advances from IPC's Parent, World Fuel
Services, in connection with the IPC acquisition.
4. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
ADJUSTMENTS
(a) The other 1999 purchase business acquisitions included in the pro forma
financial presentation are as follows:
<TABLE>
<CAPTION>
Business Date Acquired
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<S> <C>
Reifsneider Transportation, Inc. ("Reifsneider") March 1, 1999
Magnum Environmental, Inc. ("Magnum") September 1, 1999
</TABLE>
(b) Reflects additional goodwill amortization of $795,000 related to the
IPC acquisition using a 20-year life and additional depreciation
expense of $83,000.
(c) Reflects additional interest expense on the borrowings discussed above
related to the IPC acquisition at a weighted average annual rate of
approximately 11.1%, net of historical IPC interest expense on
intercompany borrowings.
(d) Reflects amortization of debt issue costs related to the IPC
acquisition, discussed under note 3(b) above.
(e) Reflects 750,458 shares of EarthCare common stock issued in connection
with the IPC acquisition.
(f) Reflects the elimination of IPC tax expense.
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<PAGE> 19
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.
EARTHCARE COMPANY
(Registrant)
Date: April 28, 2000 By: /s/ Harry Habets
--------------------------------------------
Harry Habets
President and Chief Operating Office
By: /s/ Dan Self
--------------------------------------------
Dan Self
Controller and Chief Accounting Officer
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
23.1 Consent of PricewaterhouseCoopers LLP
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-85785) of EarthCare Company of our report dated
April 28, 2000 relating to the combined financial statements, which appears in
this form 8-K/A.
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
April 28, 2000
