<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
{X} Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter period ended March 31, 1996
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 0-19497
-----------------
MOBLEY ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2242963
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
3800 STONE ROAD
KILGORE, TEXAS 75662
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (903) 984-0270
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
---- ----
The number of shares outstanding of the registrant's common stock, as of May
1, 1996 was 4,085,343 shares of Class A Common Stock, $.01 par value and
4,749,950 shares of Class B Common Stock, $.01 par value.
THIS ENTIRE FORM 10-Q IS SUBJECT TO FORM 12B-25 FILED MAY 16, 1996.
- -------------------------------------------------------------------------------
<PAGE>
MOBLEY ENVIRONMENTAL SERVICES, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
- Consolidated Balance Sheets - March 31,
1996 and December 31, 1995 3
- Consolidated Statements of Operations - Three
Months Ended March 31, 1996 and 1995 4
- Consolidated Statement of Stockholders' Equity -
Three Months Ended March 31, 1996 5
- Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1996 and 1995 6
- Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to
a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOBLEY ENVIRONMENTAL SERVICES, INC.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
MARCH 31, DECEMBER 31,
ASSETS 1996 1995
------ --------- ------------
Current assets:
Cash and cash equivalents $ 960 $ 1,476
Trade receivables, less allowance for
doubtful accounts of $255 and $257 at
March 31, 1996 and December 31, 1995,
respectively 2,725 2,836
Prepaid expenses and other current assets 856 582
------- -------
Total current assets 4,541 4,894
Property, plant and equipment, net 14,583 12,837
Excess of purchase price over fair value of
net assets acquired 1,106 1,122
Other assets, net 264 244
------- -------
$20,494 $19,097
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of notes payable $ 397 $ 70
Accounts payable 1,663 1,306
Accrued expenses 3,361 3,613
------- -------
Total current liabilities 5,421 4,989
Notes payable, less current portion 2,103 490
Other long-term liabilities 166 166
Deferred income taxes 846 846
------- -------
Total liabilities 8,536 6,491
------- -------
Stockholders' equity:
Preferred stock; $.01 par value; 2,000,000
shares authorized; none issued -- --
Common stock; $.01 par value:
Class A; 15,000,000 shares authorized,
4,085,343 shares issued and outstanding
at March 31, 1996 and December 31, 1995 41 41
Class B; 10,000,000 shares authorized,
4,834,657 shares issued and 4,749,950
shares outstanding at March 31, 1996 and
December 31, 1995 49 49
Additional paid-in capital 25,159 25,159
Accumulated deficit (12,923) (12,251)
Deferred compensation costs under
restricted stock agreements (360) (384)
Treasury stock, 84,707 shares of Class B
common stock, at cost (8) (8)
------- -------
Total stockholders' equity 11,958 12,606
Commitments and contingencies
------- -------
$ 20,494 $ 19,097
------- -------
------- -------
See accompanying notes to consolidated financial statements.
3
<PAGE>
MOBLEY ENVIRONMENTAL SERVICES, INC.
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
---- ----
Revenues:
Waste management services $ 3,530 $ 3,123
Oilfield services 977 1,083
--------- ---------
Total revenues 4,507 4,206
Cost of revenues:
Waste management services 2,790 2,053
Oilfield services 816 666
--------- ---------
Total cost of revenues 3,606 2,719
Gross profit:
Waste management services 740 1,070
Oilfield services 161 417
--------- ---------
Total gross profit 901 1,487
Selling, general and administrative
expenses 1,591 1,370
--------- ---------
Operating income (loss) (690) 117
Other expense, net -- (76)
Interest income, net 18 51
--------- ---------
Income (loss) before income taxes (672) 92
Income tax expense -- 11
--------- ---------
Net income (loss) $ (672) $ 81
--------- ---------
--------- ---------
Net income (loss) per share $ (0.08) $ 0.01
--------- ---------
--------- ---------
Weighted average number of common
shares outstanding 8,835,293 7,915,293
--------- ---------
--------- ---------
See accompanying notes to consolidated financial statements.
4
<PAGE>
MOBLEY ENVIRONMENTAL SERVICES, INC.
Consolidated Statement of Stockholders' Equity
Three Months Ended March 31, 1996
(dollars in thousands)
(unaudited)
Preferred Stock - none issued $ --
-------
Class A Common Stock - Balance at December 31, 1995 and
March 31, 1996 41
-------
Class B Common Stock - Balance at December 31, 1995 and
March 31, 1996 49
-------
Additional Paid-In Capital - Balance at December 31, 1995
and March 31, 1996 25,159
-------
Accumulated Deficit:
Balance at December 31, 1995 (12,251)
Net loss (672)
-------
Balance at March 31, 1996 (12,923)
-------
Deferred Compensation Costs Under Restricted Stock
Agreements:
Balance at December 31, 1995 (384)
Amortization of unearned compensation 24
-------
Balance at March 31, 1996 (360)
-------
Treasury Stock - Balance at December 31, 1995 and March
31, 1996 (8)
-------
Total stockholders' equity at March 31, 1996 $11,958
-------
-------
See accompanying notes to consolidated financial statements.
5
<PAGE>
MOBLEY ENVIRONMENTAL SERVICES, INC.
Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net income (loss) $ (672) $ 81
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization 636 558
Equity in loss of joint venture -- 80
Deferred compensation costs under
restricted stock agreements 24 --
Gain on disposal of assets -- (17)
Decrease in trade receivables 111 319
Increase in prepaid expenses and other
current assets (274) (347)
Increase in other assets -- (14)
Increase (decrease) in accounts payable 357 (1,837)
Decrease in accrued expenses (252) (755)
-------- -------
Net cash used by operating activities (70) (1,932)
Cash flows from investing activities:
Capital expenditures (2,366) (658)
Other investing activities, net (20) 25
-------- -------
Net cash used by investing activities (2,386) (633)
Cash flows from financing activities:
Net borrowings under short-term notes
payable -- 197
Proceeds from long-term borrowings 1,940 --
Principal payments on long-term debt -- (1,754)
-------- -------
Net cash provided (used) by financing
activities 1,940 (1,557)
-------- -------
Net decrease in cash and cash equivalents (516) (4,122)
Cash and cash equivalents at beginning of
period 1,476 7,471
-------- -------
Cash and cash equivalents at end of period $ 960 $ 3,349
-------- -------
-------- -------
See accompanying notes to consolidated financial statements.
6
<PAGE>
MOBLEY ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(unaudited)
(1) BASIS OF PRESENTATION
The accompanying financial statements present the consolidated accounts of
Mobley Environmental Services, Inc. (the "Company") and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated.
The unaudited consolidated financial statements reflect all adjustments which
are, in the opinion of management, of a normal and recurring nature and
necessary for a fair presentation of the consolidated financial position of the
Company as of March 31, 1996, and the consolidated results of operations and
cash flows for the periods presented herein. Interim results are not
necessarily indicative of results for a full year. The unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto presented in the Company's Annual Report
on Form 10-K for the year ended December 31, 1995.
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent liabilities to prepare these financial statements in accordance with
generally accepted accounting principles. Actual results could differ from
those estimates.
(2) NOTES PAYABLE
The Company has a credit agreement (the "Credit Agreement") with Bank One,
Texas, N.A. (the "Bank") that provides up to $6,500,000 in available credit for
the Company through June 1997. Under the terms of the Credit Agreement, the
Company may borrow, subject to a defined borrowing base, up to $4,000,000 under
a revolving line of credit (including up to $1,800,000 in letters of credit) for
working capital and general corporate purposes, and up to $2,500,000 under a
term loan facility for purposes of acquiring certain eligible equipment. At
March 31, 1996, the full $2,500,000 was outstanding under the term loan portion
of the Credit Agreement, consisting of two notes in the amounts of $700,000
(payable quarterly over five years) and $1,800,000 (payable quarterly over seven
years). Both notes bear interest at 8.25%.
At March 31, 1996, no borrowings were outstanding under the revolving credit
agreement and $1,633,000 in letters of credit had been issued under such line of
credit. As of May 17, 1996, the Company had borrowed $800,000 under the
revolving line of credit; such amount has a maturity date of June 2, 1997 and
bears interest, payable quarterly, at 8.625%.
The Credit Agreement contains restrictive covenants which include the
maintenance of minimum tangible net worth, as defined, and certain financial
ratios. At March 31, 1996, the Company was not in compliance with certain of
these covenants; however, it has received waivers from the Bank with respect to
such covenants and accordingly, a portion of the related debt is classified as
long-term. Additionally, certain of the restrictive covenants in the Credit
Agreement were subsequently modified to enable the Company to comply with the
provisions of such agreement. There can be no assurance that the Company will
not require additional waivers in the future, or, if required, that the Bank
will grant such waivers. Furthermore, in the event management determines that
it is probable that the Company will not be able to comply with any covenant
contained in a credit agreement within twelve months after the waiver of a
violation of such covenant, then certain long-term debt will be classified as
short-term.
(3) ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation", in the first quarter of
1996. SFAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. As allowed by SFAS 123, the Company
plans to continue to measure compensation cost for employee stock compensation
plans using the intrinsic value method prescribed by Accounting Principles Board
No. 25, "Accounting for Stock Issued to Employees", and will provide pro forma
disclosures in the notes to the consolidated financial statements as required by
SFAS 123 at December 31, 1996.
The Company adopted Statement of Financial Accounting Standards No. 121
("SFAS 121"), Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets To Be Disposed Of" in the first quarter of 1996. SFAS 121
establishes guidance for recognizing and measuring impairment losses and
requires that the carrying amount of an impaired asset be reduced to fair value
when events or circumstances indicate that the carrying value may not be
recoverable. Recoverability would generally be determined by estimating future
cash flows resulting from use and eventual disposition
7
<PAGE>
of the asset. The effect of adopting SFAS 121 did not have a material effect
on the Company's consolidated financial statements.
(4) COMMITMENTS AND CONTINGENCIES
LETTERS OF CREDIT. At March 31, 1996, letters of credit totaling
approximately $1,300,000 had been provided by the Company to its insurance
carrier in connection with its workers' compensation, general liability and auto
liability insurance policies. Additionally, the Company has provided a letter
of credit to the Texas Natural Resource Conservation Commission ("TNRCC") in the
amount of $333,000 to secure the payment of fines assessed Gibraltar Chemical
Resources, Inc. ("Gibraltar"), the Company's former subsidiary, by the TNRCC in
connection with the December 1994 settlement of certain litigation.
COMMITMENTS. In connection with its ongoing business expansion activities,
the Company has commitments under contracts for the engineering and construction
of new processing and recycling facilities. Portions of such contracts not
completed at March 31, 1996 are not reflected in the accompanying consolidated
financial statements. These unrecorded commitments approximated $600,000 at
March 31, 1996.
LITIGATION AND VARIOUS OTHER CLAIMS. The Company continues to defend various
claims resulting from the operations of its former subsidiary, Gibraltar, which
was sold effective December 31, 1994. As of May 1, 1996, six such lawsuits were
pending, one of which is asserted as a class action. Certain of the claimants
seek compensatory and punitive damages for alleged personal injury and property
damage caused by operations and emissions of Gibraltar's hazardous waste
disposal facility. An additional claimant seeks permanent closure of the
facility and civil penalties as the remedy for alleged violations by Gibraltar
of environmental protection statutes and endangerment to public health and the
environment.
These matters raise difficult and complex factual and legal issues, including
but not limited to, the nature and amount of the Company's liability, if any.
Although the Company is a defendant in some litigation, in other matters the
Company's potential liability arises from material contractual indemnifications
given by the Company to the purchaser of Gibraltar. These indemnifications may
include the potential liability of former customers of Gibraltar, approximately
50 of which have also become defendants in litigation involving Gibraltar's
operations. Accordingly, the Company is not able to estimate the nature and
precise amount of future liabilities with respect to such matters.
The Company, based on consultation with its legal counsel, believes that its
liability insurance coverage, combined with presently established accruals,
adequately address its potential exposure for the foregoing matters. However,
the Company has been notified by its insurance carrier that it disputes the
Company's interpretation of its pollution legal liability insurance coverage and
policy limitations applicable to the foregoing claims. While the Company is
vigorously pursuing a favorable resolution of this dispute through a declaratory
judgment action against its insurance carrier, it is unable to determine the
likelihood of an unfavorable outcome at this time.
The Company's contractual indemnity obligations to the purchaser of Gibraltar
also encompass various pending regulatory and permit renewal proceedings. The
failure of Gibraltar to prevail in these matters could result in significant
liabilities to the Company.
In addition to the foregoing matters, the Company is obligated to indemnify
the purchaser of Gibraltar for breaches of representations and warranties made
by the Company to such purchaser and for future claims against Gibraltar arising
from circumstances existing on or prior to the date of the sale of Gibraltar.
As the nature and scope of the Company's ultimate liability arising from
Gibraltar's operations and its sale become better defined, there will be changes
in estimates of the future costs relating thereto which could have a material
adverse effect on the Company's future financial condition, results of
operations, or liquidity.
The Company has been named as a potentially responsible party with respect to
a State of Texas superfund site. Due to the preliminary nature of this matter,
the Company is unable to estimate its potential exposure, if any, in this
regard.
There are various other claims and legal actions pending and threatened
against the Company which have arisen in the ordinary course of its business.
Where applicable, the Company has recorded accruals for estimated potential
damages and expenses associated with such matters. While the final outcome of
these matters cannot be predicted with certainty, management, upon consultation
with legal counsel and considering existing insurance coverage, believes that
any financial obligations of the Company arising from such claims would not be
material to its consolidated financial condition, results of operations, or
liquidity.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company provides diverse environmental and field-related services to
industrial, governmental, and commercial markets, and specializes in the
collection, transportation, treatment, recycling and management of a wide
variety of non-hazardous liquid hydrocarbons, oil filters, absorbents and
related materials. The Company also provides oilfield services for managing
liquids used or produced during the lifecycle of oil and gas wells.
The Company's revenues have historically consisted of fees collected from
customers, principally related to waste management and oilfield services and, to
a lesser extent, from product sales and equipment rentals. As a result of the
addition of new business lines associated with a July 1995 acquisition, a larger
percentage of the Company's future waste management services revenues will be
derived from sales of manufactured or recovered products. Revenues derived from
waste management services are closely associated with volumes of waste
collected, levels of service provided and the related pricing. Revenues from
oilfield services are derived from hourly and fixed charges for services
provided, equipment rentals and products sold. Cost of revenues include direct
costs of providing services to customers, such as labor, third party disposal,
supplies and other consumables, depreciation, utilities and fuel, equipment
maintenance, and repair. Selling, general and administrative expenses include
selling and marketing expenses, certain insurance and administrative salary
expenses, depreciation, amortization of goodwill, and legal and consulting fees.
RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 1996 AND 1995
The net loss for the quarter ended March 31, 1996 was $672,000, or $0.08 per
share, compared to net income of $81,000, or $.01 per share, in the
corresponding quarter of 1995.
Revenues for the 1996 quarter totaled $4,507,000 compared to $4,206,000 in
the same quarter a year ago, an increase of 7.2%. On a segment basis, waste
management services revenues increased 13.0% in 1996 from the year-ago quarter,
while oilfield services revenues declined 9.8% during this same period.
First quarter 1996 waste management services revenues included approximately
$750,000 related to the used oil gathering/sale and filter recycling businesses
acquired during July 1995. Excluding the effect of these new business lines,
segment revenues declined 10.9% during the 1996 quarter, reflecting
significantly lower volumes of fluids managed in the Company's hydrocarbon
recycling operations. Such volume shortfall was principally the result of
reduced fluid volumes associated with petroleum storage tank remediation
activities, largely attributable to the ongoing effects of a severe regional
drought. The drought began in late 1995 and has continued to negatively impact
recycling volumes in the 1996 second quarter. Oily waste volumes and related
recycling revenues, which tend to be more closely related to industrial
activity, were not impacted as severely by the lack of rainfall and decreased to
a lesser extent during the 1996 quarterly period. Pricing for recycling
services improved slightly in the 1996 quarter from 1995 levels, partially
offsetting the diminished volumes.
Revenues from the Company's oilfield services activities fell 9.8% to
$977,000 in the 1996 first quarter, reflecting intense competitive pressures,
relatively weak pricing, and, to a large extent, the delay of scheduled well
workover and pipeline cleaning projects due to extremely high natural gas
demand.
Total gross profit during the first quarter of 1996 amounted to $901,000
compared to $1,487,000 in the corresponding 1995 quarter. Gross profit from
waste management services totaled $740,000 during the 1996 three-month period,
including $122,000 derived from the acquired business lines referred to
previously. On a quarter-to-quarter comparative basis, segment gross profit was
$618,000, or 22.3% of related revenues, versus $1,070,000, or 34.3% of revenues,
in the year-ago quarter. Profitability in the oil/water separations business
was severely hampered in the quarter by the reduced volumes referred to
previously, as the relatively fixed cost structure of the Company's plant
operations translated into unusually high per-gallon processing costs.
Additionally, plant operating costs and gross profit continue to be impacted by
the ongoing transition in the relative mix of the types of fluids managed, with
an increasing proportion of more difficult-to-treat oily wastes and lower
volumes of less costly motor fuel/water mixtures.
Gross profit from oilfield services declined to $161,000 in 1996 from
$417,000 in the year-ago quarter. Stated as a percentage of revenue, gross
profit declined to 16.5% in 1996 from 38.5% in 1995. This diminished gross
profit margin, the lowest seen in recent years, was negatively influenced by an
unfavorable business mix, including reduced trucking and mobile storage tank
rental income and a higher proportion of lower-margin contract services revenue.
Segment profitability was further weakened by higher operating costs,
particularly those related to transportation services provided.
9
<PAGE>
Selling, general and administrative expenses ("SG&A") amounted to $1,591,000
for the three months ended March 31, 1996 compared to $1,370,000 in the same
period of 1995. As a percentage of revenues, SG&A expenses totaled 35.3% in
1996 compared to 32.6% in the corresponding 1995 quarter. Incremental overhead
costs associated with the aforementioned new business lines represented a
majority of the increase in costs quarter over quarter, and higher staffing
expenses, partially offset by lower insurance costs, also contributed to the
slightly higher level of SG&A spending in the 1996 quarter.
Other expense, net in the first quarter of 1995 primarily consisted of equity
losses associated with the Company's Mexican joint venture investment, which was
sold in the 1995 second quarter. Interest income amounted to $18,000 in the
1996 quarter compared to $51,000 in the same quarter of the prior year, owing to
reduced cash balances during the current year. Interest expense amounting to
approximately $25,000 related to the Company's outstanding bank indebtedness in
the 1996 first quarter was capitalized as part of the plant construction
projects underway at its Baytown, Texas processing complex.
As a result of the operating loss incurred in the 1996 three-month period, no
income taxes were recorded during the quarter. Income taxes in 1995 consisted
of state franchise taxes. Future effective income tax rates may be
significantly impacted by the Company's ability to utilize available net
operating loss carryforwards and thus could vary greatly from quarter to
quarter.
CAPITAL RESOURCES AND LIQUIDITY
Primarily as a result of the previously-mentioned loss, the Company used net
cash of $70,000 in its operating activities during the quarter ended March 31,
1996, including approximately $61,000 for the funding of expenses accrued in
prior periods for the expected costs of ongoing litigation related to a former
subsidiary, Gibraltar Chemical Resources, Inc.
Capital expenditures amounted to $2,366,000 during the quarter including
$1,870,000 related to the construction of two new process facilities as part of
the Company's ongoing expansion efforts. These include plants for the
production of distillate fuels from spent motor oil and motor fuel feedstocks,
and for the recycling of used oil filters. The distillate fuels plant began
start-up in late April 1996 and is expected to begin full-scale operations
during the second quarter of 1996. The filter recycling facility became
operational in April 1996. The Company anticipates spending approximately
$600,000 in the 1996 second quarter in connection with the completion of these
new facilities.
During the 1996 first quarter, the Company borrowed the remaining $1,940,000
available under its bank term loan facility to fund certain capital
expenditures, bringing the total term debt outstanding at March 31, 1996 to
$2,500,000. Such amount consists of two notes which are payable quarterly,
including interest, over periods of five and seven years, respectively. In
addition, the Company has a revolving credit facility with the Bank which
provides up to $4,000,000 (including letters of credit), subject to a borrowing
base as defined, for working capital and general corporate purposes. At March
31, 1996, no borrowings were outstanding under the revolving credit facility;
subsequently, the Company borrowed $800,000 under such revolving line of credit.
Principal amounts are due on June 2, 1997.
As discussed in Note 2 of Notes to Consolidated Financial Statements, the
Company was not in compliance with certain restrictive covenants required under
the terms of its bank credit agreement at March 31, 1996; however, the Company
has received waivers from the Bank with respect to such covenants and,
accordingly, a portion of the related debt is classified as long-term.
On March 11, 1996, the Company executed a letter of intent to acquire
substantially all of the assets and assume certain liabilities of PORI
International, Inc. ("PORI"), with completion of the transaction subject to,
among other things, the Company's ability to secure the necessary financing.
The terms of the letter of intent were subsequently modified in May 1996 to
incorporate certain performance incentives into the total purchase price. The
Company has commenced its "due diligence" investigation of PORI and such review
is ongoing. Additionally, management, assisted by the Company's investment
bankers and financial consultants, continues to pursue the financing of its
acquisition/expansion strategy and believes that such funding, if obtained, will
likely involve components of both debt and private placement equity financing.
While management believes that the Company should be able to obtain the
necessary financing for the acquisition, there can be no assurance that such
financing will be obtained or that the transaction will ultimately be
consummated.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as set forth below, there have been no material developments in the
legal proceedings described in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
On May 3, 1996, the Company filed a complaint against National Union Fire
Insurance Company of Pittsburgh, Pa. in the United States District Court for the
Eastern District of Texas seeking declaratory judgment that the defendant is
obligated to indemnify the Company under three pollution legal liability
insurance policies issued by the defendant and that certain claims previously
made by the Company with respect to such policies are not "related claims"
covered by a single policy as is alleged by the defendant.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As discussed in Note 2 of Notes to Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Capital Resources and Liquidity," the Company was not in compliance
with certain restrictive covenants required under the terms of its bank credit
agreement at March 31, 1996; however, the Company has received waivers from the
lender for the events of noncompliance and certain of the restrictive covenants
in the credit agreement were subsequently modified to enable the Company to
comply with the provisions of such agreement. The Company was not in default on
its scheduled payments of principal and interest with respect to its outstanding
bank indebtedness.
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
EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule (submitted only in electronic format)
REPORTS ON FORM 8-K
None.
11
<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.
MOBLEY ENVIRONMENTAL SERVICES, INC.
(Registrant)
/s/ MICHAEL M. STARK
--------------------------------------
Michael M. Stark
President and Chief Executive Officer
/s/ W. CHRISTOPHER CHISHOLM
--------------------------------------
W. Christopher Chisholm
Vice President and Chief Financial Officer
(Principal Accounting Officer)
Date: May 20, 1996
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1996
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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 960
<SECURITIES> 0
<RECEIVABLES> 2,980
<ALLOWANCES> 255
<INVENTORY> 0
<CURRENT-ASSETS> 4,541
<PP&E> 27,634
<DEPRECIATION> 13,051
<TOTAL-ASSETS> 20,494
<CURRENT-LIABILITIES> 5,421
<BONDS> 2,103
0
0
<COMMON> 90
<OTHER-SE> 11,868
<TOTAL-LIABILITY-AND-EQUITY> 20,494
<SALES> 0
<TOTAL-REVENUES> 4,507
<CGS> 0
<TOTAL-COSTS> 3,606
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (672)
<INCOME-TAX> 0
<INCOME-CONTINUING> (672)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (672)
<EPS-PRIMARY> $(0.08)
<EPS-DILUTED> $(0.08)
</TABLE>
