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 Period Ended March 31, 1997
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 0-28652
AMERICAN DISPOSAL SERVICES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3858494
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
745 McClintock - Ste 305
Burr Ridge, Illinois 60521
-----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(630) 655-1105
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X 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 practical date.
Common Stock, $.01 Par Value - 13,472,501 shares as of May 15, 1997
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 1997 and December 31, 1996
Condensed Consolidated Statements of Operations - Three months ended
March 31, 1997 and 1996
Condensed Consolidated Statements of Cash Flows - Three months ended
March 31, 1997 and 1996
Notes to the Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
<PAGE>
PART I. FINANCIAL INFORMATION
AMERICAN DISPOSAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31,
1997 December 31,
(Unaudited) 1996
--------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,949 $ 2,301
Cash held in escrow 17 -
Trade receivables, net 12,898 9,741
Prepaid expenses and other 2,733 1,248
Inventory 461 354
--------------- ---------------
Total current assets 18,058 13,644
Property, plant, and equipment, net 117,471 93,692
Other assets:
Cost over fair value of net assets of acquired businesses,
net of accumulated amortization of $1,597 and $1,374 44,281 31,237
Other intangible assets, net of accumulated amortization
of $487 and $439 2,025 1,610
Debt issuance costs, net of accumulated amortization
of $301 and $204 2,548 2,392
Other assets 2,134 2,411
--------------- ---------------
$ 186,517 $ 144,986
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,218 $ 3,359
Accrued liabilities 4,990 4,249
Deferred revenues 2,769 2,245
Current portion of long-term debt and capital lease
obligations 6,309 2,572
--------------- ---------------
Total current liabilities 17,286 12,425
Long-term debt and capital lease obligations, net of
current portion 100,511 65,445
Accrued environmental and landfill costs 8,761 7,603
Deferred income taxes 1,416 1,416
Total stockholders' equity (8,872,501 and 8,872,381
shares of common stock issued and outstanding) 58,543 58,097
--------------- ---------------
$ 186,517 $ 144,986
================ ===============
</TABLE>
See accompanying notes.
3
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
Revenues $ 18,511 $ 11,724
Cost of operations 9,892 6,108
Selling, general and administrative expenses 2,685 1,935
Depreciation and amortization 3,784 2,718
--------- ---------
Operating income 2,150 963
Interest expense, net 1,552 1,539
Other income 21 -
--------- ---------
Income (loss) before income taxes 619 (576)
Income tax benefit (expense) (173) 160
--------- ---------
Net income (loss) 446 (416)
Preferred stock dividend - (63)
--------- ---------
Net income (loss) applicable to common
stockholders $ 446 $ (479)
========= =========
NET INCOME (LOSS) PER SHARE:
Net income (loss) $ 0.05 $ (0.07)
Preferred stock dividend - (0.01)
--------- ---------
Net income (loss) applicable to common
stockholders $ 0.05 $ (0.08)
========= =========
Weighted average common stock and
common stock equivalent shares
outstanding 9,514,097 5,864,078
========= =========
</TABLE>
See accompanying notes.
4
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Operating activities:
Net income (loss) $ 446 $ (416)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 3,784 2,718
Provision for environmental and landfill costs 113 118
Deferred income taxes - (160)
Gain on sale of fixed assets (13) -
Changes in operating assets and liabilities, net of effects from acquisitions:
Trade receivables (1,998) (232)
Prepaid expenses, cash held in escrow and other assets (1,523) (144)
Inventory (7) (7)
Accounts payable, accrued liabilities and accrued environmental
and landfill costs 227 105
Deferred revenue 297 (22)
---------- ----------
Net cash provided by operating activities 1,326 1,960
---------- ----------
Investing activities:
Capital expenditures (3,599) (2,674)
Cost of acquisitions (36,598) -
---------- ----------
Net cash used in investing activities (40,197) (2,674)
---------- ----------
Financing activities:
Preferred stock dividend - (63)
Proceeds from issuance of long-term debt 39,053 1,200
Repayments of indebtedness (281) (256)
Debt issuance costs (253) -
---------- ----------
Net cash provided by financing activities 38,519 881
---------- ----------
Net increase (decrease) in cash and cash equivalents (352) 167
Cash and cash equivalents, at beginning of period 2,301 6,383
---------- ----------
Cash and cash equivalents, at end of period $ 1,949 $ 6,550
========== ==========
</TABLE>
See accompanying notes.
5
<PAGE>
AMERICAN DISPOSAL SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 and 1996
(Unaudited)
1. FORMATION AND BASIS OF PRESENTATION
ADS, Inc. (ADS) was organized on January 15, 1991, to acquire, develop, and
operate non-hazardous municipal solid waste disposal, collection, and transfer
operations and provide non-hazardous solid waste disposal management services to
commercial, industrial, and residential customers. During 1993, an affiliate of
Charterhouse Equity Partners, L.P. (CEP) purchased a controlling interest in
ADS.
County Disposal, Inc. (County) was incorporated by Charterhouse Equity
Partners II, L.P. (CEPII) on April 27, 1995, for the purpose of acquiring
certain net assets of Envirite Corporation (Envirite). On April 28, 1995,
Envirite and County entered into an Asset Purchase Agreement whereby County
agreed to purchase from Envirite certain landfill facilities and waste
transportation and collection equipment located in Livingston County, Illinois,
and Wyandot County, Ohio; all of the issued and outstanding capital stock of
County Environmental Services, Inc., a wholly-owned subsidiary of Envirite,
which owned and operated a landfill facility and waste transportation and
collection equipment located in Clarion County, Pennsylvania; and certain
related assets and assumption of certain liabilities.
Effective January 1, 1996, the stockholders of ADS and County exchanged
their shares for shares of a newly created holding company by the name of
American Disposal Services, Inc. (the Company). This share exchange (the
Exchange) qualified as a transfer of companies under common control as
affiliates of Charterhouse Group International, Inc. are the general partners
and in control of CEP and CEPII and, accordingly, the transaction was accounted
for at historical cost in a manner similar to pooling of interests accounting.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
1997, are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1997. These financial statements should be read
in conjunction with the consolidated financial statements, including the notes
thereto, for the fiscal year ended December 31, 1996 included in the Company's
Annual Report on Form 10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. RELATED PARTY INTEREST EXPENSE
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1997 1996
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Charterhouse Equity Partners II, L.P.................$ - $ 359
======== ========
</TABLE>
6
<PAGE>
3. ENVIRONMENTAL MATTERS
See the Company's Annual Report on Form 10-K for a description of
environmental matters.
4. ACQUISITIONS
On March 31, 1997 the Company acquired certain net assets of Waste
Management, Inc.'s Evansville, Indiana Operations for approximately $29.0
million. The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the results of operations will be included in the
Company's results of operations from the acquisition date. The purchase price
has been allocated to the assets acquired and liabilities assumed based on their
fair values at the acquisition date with the residual allocated to cost over
fair value of net assets acquired. The following unaudited pro forma results of
operations for the three months ended March 31, 1997 and 1996 assumes the
acquisition occurred on January 1, 1996 (dollars in thousands, except per share
data):
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Revenue $ 21,532 $ 14,699
Operating income 3,164 1,882
Net income applicable to common
stockholders 1,176 183
Pro forma net income per share of
common stock 0.10 0.02
Weighted average common stock and
common stock equivalent shares
outstanding (1) 11,373 7,723
</TABLE>
(1) Adjusted to give effect to the issuance of 1.8 million shares of common
stock as if the foregoing occurred on January 1, 1996 (see footnote 5).
5. PUBLIC OFFERING
Effective May 13, 1997 the Company completed a public offering of 4,600,000
shares (including the underwriters' over-allotment option) at $16.50 per share.
This resulted in net proceeds to the Company of approximately $70.8 million
which were used to pay down a portion of the Company's Credit Facility.
Immediately following the offering, the Company had 13,472,501 shares of common
stock outstanding.
6. RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which is required to be adopted in the fourth
quarter of 1997; earlier adoption is not allowed. At that time, the Company will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
basic earnings per share, the dilutive effect of stock options will be excluded.
The impact of Statement 128 on the calculation of primary earnings per share for
the quarters ended March 31, 1997 and 1996 is not expected to be material.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
unaudited Condensed Consolidated Financial Statements and the related notes
thereto included elsewhere herein.
INTRODUCTION
The Company has adopted an acquisition-based growth strategy that focuses
on: (i) the identification and acquisition of solid waste landfills located in
secondary markets that are within approximately 125 miles of significant
metropolitan centers; and (ii) securing dedicated waste streams for such
landfills by the acquisition or development of transfer stations and the
acquisition of collection companies. The Company has completed 37 acquisitions
from January 1993 through March 1997, including four hauling companies, one
landfill, and one transfer station acquired in the three months ended March 31,
1997 (the "1997 Acquisitions"). All of these acquisitions were accounted for
under the purchase method of accounting for business combinations. Accordingly,
the amortization of goodwill and landfill airspace reflects the fair market
value of the Company's assets at the time of their acquisition rather than their
historical cost basis, and the results of operations for such acquired
businesses are included in the Company's financial statements only from the
applicable date of acquisition. As a result, the Company believes its historical
results of operations for the periods presented are not directly comparable.
FORWARD LOOKING STATEMENTS
Certain information contained in this Quarterly Report on Form 10-Q,
including, without limitation information appearing under Part I, Item 2,
"Managements' Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements (within the meaning of Section 27A
of the Securities Act of 1934 and Section 21E of the Securities Exchange Act of
1934). Factors set forth under the caption "Risk Factors" in the Company's
Registration Statement on Form S-1 could affect the Company's actual results and
could cause the Company's actual results to differ materially from those
expressed in any forward-looking statements made by, or on behalf of, the
Company in this Quarterly Report on Form 10-Q.
GENERAL
The Company's revenues are attributable primarily to fees charged to
customers for waste collection, transfer and disposal services. The Company's
collection services are generally provided under direct agreements with its
customers or pursuant to contracts with municipalities. Commercial and municipal
contract terms, where used, generally range from one to five years and commonly
have automatic renewal options. A relatively small portion of such agreements
also provide for the prepayment of certain fees, which are reflected as deferred
revenues. The table below shows for the periods indicated, the percentage of the
Company's total revenues attributable to services provided:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Collection (1) 48.9% 39.4%
Transfer 3.8 1.9
Landfill (1) 46.4 58.5
Other 0.9 0.2
-------- --------
Total Revenues 100.0% 100.0%
======== ========
</TABLE>
(1) The portion of collection revenues attributable to disposal charges for
waste collected by the Company and disposed of at the Company's landfills
has been excluded from collection revenues and included in landfill
revenues.
8
<PAGE>
A component of the Company's business strategy is to maximize
internalization of waste it collects and thereby realize higher margins from its
operations. By disposing of waste at Company-owned landfills, the Company
retains the margin generated through disposal operations that would otherwise be
earned by third-party landfills. For the three months ended March 31, 1997,
approximately 89% of the total tonnage collected by the Company was disposed of
at Company-owned landfills. This represents approximately 31% of the total
tonnage disposed of at Company- owned landfills in the three months ended March
31, 1997. During such period, the Company's captive waste (consisting of waste
collected by the Company and delivered to any of its landfills and waste
delivered to any of the Company's landfills by third-party haulers under
long-term collection contracts) constituted an average of approximately 63% of
the solid waste disposed of at its landfills.
The Company has estimated that, as of December 31, 1996, closure costs
expected to occur during the operating lives of these facilities and expensed
over these facilities' useful lives will approximate $35.2 million. In addition,
the Company has estimated that, as of December 31, 1996, total costs for
post-closure activities, including cap maintenance, groundwater monitoring,
methane gas control and recovery and leachate treatment/disposal for up to 30
years after closure in certain cases, will be approximately $10.9 million. The
December 31, 1996 and March 31, 1997, accruals for landfill closure and
post-closure costs (including costs assumed through acquisitions) were
approximately $7.6 million and $8.8 million, respectively. The accruals reflect
relatively young landfills with estimated remaining lives, based on current
waste flows, that range from approximately three to 50 years, and an estimated
average remaining life of greater than 20 years.
RESULTS OF OPERATIONS
The following table sets forth items in the Company's consolidated
statement of operations as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Revenues................................................. 100.0 % 100.0 %
Cost of operations....................................... 53.4 52.1
Selling, general and administrative expenses............. 14.5 16.5
Depreciation and amortization expenses................... 20.5 23.2
-------- --------
Operating income......................................... 11.6 8.2
Interest expense, net.................................... 8.4 13.1
Other income............................................. 0.1 -
Income tax (provision) benefit........................... (0.9) 1.4
-------- --------
Net income (loss)...................................... 2.4 % (3.5)%
======== =========
EBITDA margin (1) 32.1 % 31.4 %
======== =========
</TABLE>
(1) EBITDA margin represents operating income plus depreciation and amortization
divided by revenues.
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
REVENUES. Revenues for the three months ended March 31, 1997 were $18.5
million compared to $11.7 million for the three months ended March 31, 1996. Of
the increase in revenues, $4.6 million is due primarily to the effects of
nineteen companies acquired during 1996 and the first quarter of 1997, while
approximately $2.2 million is attributable to increases in revenues in
operations acquired prior to 1996.
9
<PAGE>
COST OF OPERATIONS. Cost of operations for the three months ended March 31,
1997 was $9.9 million compared to $6.1 million for the three months ended March
31, 1996. This increase in costs was attributable primarily to increases in the
Company's revenues described above. As a percentage of revenues, cost of
operations was 53.4% in the 1997 period compared to 52.1% in the 1996 period.
The increased costs as a percentage of the Company's overall revenue are due to
the impact of more substantial collection versus landfill operations in the 1997
period compared to the same period in 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were $2.7
million for the three months ended March 31, 1997 compared to $1.9 million for
the three months ended March 31, 1996. This increase in costs was attributable
primarily to increases in the Company's revenues described above. As a
percentage of revenues, SG&A expenses decreased to 14.5% in the 1997 period from
16.5% in the 1996 period. The decrease in SG&A expenses as a percentage of
revenues is due primarily to a significant increase in revenue producing assets,
while corporate and other related administrative expenses increased moderately.
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense for the three months ended March 31, 1997 was $3.8 million compared to
$2.7 million for the three months ended March 31, 1996. The increase in
depreciation and amortization expense is due primarily to increases in the
Company's revenues described above. As a percentage of revenues, depreciation
and amortization expense was 20.5% and 23.2% for the three months ended March
31, 1997 and 1996, respectively. The decline as a percent of revenues in the
March 1997 period compared to the March 1996 period is due primarily to the
diminished concentration of landfill assets, which typically have higher
depreciation and amortization expense than collection operations.
NET INTEREST EXPENSE. Net interest expense was $1.6 million for the three
months ended March 31, 1997 compared to $1.5 million for the three months ended
March 31, 1996, which reflects the debt structure of the Company during the
respective periods offset by an overall improvement in the Company's effective
borrowing rate.
INCOME TAXES. The Company recorded an income tax provision of $173,000 for
the three months ended March 31, 1997 compared to a $160,000 income tax benefit
for the three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Due to the capital intensive nature of the solid waste industry, the
Company has used, and expects to continue using, substantially all cash
generated from operations to fund acquisitions, capital expenditures and
landfill development. Certain operating equipment has also been acquired using
leases which have short and medium-term maturities. As a result, the Company has
incurred working capital deficits in the past, and there can be no assurance
that its available working capital will be sufficient in the future as it
pursues its acquisition-based growth strategy. Historically, the Company has
satisfied its acquisition, capital expenditure and working capital needs
primarily through equity and bank financings. There can be no assurance that
such financing will continue to be available.
Operating activities in the quarter provided net cash of $1.3 million
compared to $2.0 million in the three months ended March 31, 1996, reflecting
the additional operating contribution of the Company, partially offset by an
increase in receivables as a result of increased revenues.
Investing activities used net cash of $40.2 million and $2.7 million in the
three months ended March 31, 1997 and 1996, respectively. The Company's capital
expenditure and working capital requirements have increased significantly,
reflecting the Company's rapid growth by acquisition and development of revenue
producing assets, and will increase further as the Company continues to pursue
its acquisition-based growth strategy. During the three months ended March 31,
1997, the Company spent $3.6 million in capital expenditures, of which $1.7
million was for cell development. In fiscal year 1997, the Company expects to
spend approximately $14.5 million for capital expenditures of which $9.0 million
is anticipated to be used for cell development. In connection with the 1997
Acquisitions, the Company invested $36.6 million.
10
<PAGE>
In the three months ended March 31, 1997, financing activities provided net
cash of $38.5 million, drawn principally from the Company's Credit Facility to
fund the 1997 Acquisitions, compared to $881,000 for the three months ended
March 31, 1996.
In March 1997, the Company increased the amount of its revolving and term
loan credit facility with ING (U.S.) Capital Corporation, as administrative
agent for the lenders, and Morgan Guaranty Trust Company of New York, as
documentation agent for the lenders, from $110 million to $125 million. The
Credit Facility provides the Company with a term loan of $25 million, a $5
million revolving credit facility for working capital purposes, and a $95
million expansion facility that may only be used for acquisitions. The various
loans and lines of credit under the Credit Facility bear interest at rates per
annum equal to, at the Company's discretion, either: (i) the higher of (a) the
federal funds rate plus 0.5% and (b) the prime rate, plus an applicable margin
ranging from 0% to 1.5%; or (ii) the London Interbank Offered Rate ("LIBOR"),
plus an applicable margin ranging from 1.5% to 3.25%, and have maturities
ranging from 2001 to 2003. As of March 31, 1997, the Company had borrowed $102.7
million under the Credit Facility. At such date, the interest rates on the
various loans and lines of credit under the Credit Facility ranged from 7.9% to
9.5% and the total unused availability under the Credit Facility was $22.0
million, of which $1.7 million may be used for working capital purposes and
$20.3 million may be used for acquisitions. The Company's ability to use the
expansion facility is based upon a number of covenants, including the
maintenance of specified debt to equity and fixed charge coverage ratios. At
March 31, 1997 the Company was in compliance with the terms of these covenants.
Effective May 13, 1997, the Company completed a public offering of
4,600,000 shares (including the underwriters' over-allotment option) at $16.50
per share. This resulted in net proceeds to the Company of approximately $70.8
million which were used to pay down a portion of the Company's Credit Facility.
Immediately following the offering, the Company had 13,472,501 shares of common
stock outstanding.
The Company intends to satisfy its interest obligations as well as future
capital expenditures and working capital requirements, with cash flows from
operations and borrowings under the Credit Facility. However, the Company may
need to raise additional capital to fund the acquisition and integration of
additional solid waste businesses. The Company may raise such funds through bank
financings or public or private offerings of its securities. There can be no
assurance that the Company will be able to secure such funding, if necessary, on
favorable terms, if at all. If the Company is not successful in securing such
funding, the Company's ability to pursue its business strategy may be impaired
and results of operations for future periods may be adversely affected.
The Company expects that Subtitle D and other regulations that apply to the
non-hazardous waste disposal industry will require the Company, as well as
others in the industry, to alter operations and to modify or replace existing
facilities. Such expenditures have been and will continue to be substantial.
Regulatory changes could accelerate expenditures for closure and post-closure
monitoring and obligate the Company to spend sums in addition to those presently
reserved for such purposes. The factors, together with the other factors
discussed above, could substantially increase the Company's operating costs.
INFLATION AND PREVAILING ECONOMIC CONDITIONS
To date, inflation has not had a significant impact on the Company's
operations. Consistent with industry practice, most of the Company's contracts
provide for a pass through of certain costs, including increases in landfill
tipping fees and, in some cases, fuel costs. The Company therefore believes it
should be able to implement price increases sufficient to offset most cost
increases resulting from inflation. However, competitive factors may require the
Company to absorb at least a portion of these cost increases, particularly
during periods of high inflation. The Company is unable to determine the future
impact of a sustained economic slowdown.
SEASONALITY
The Company's revenues tend to be somewhat lower in the winter months. This
is primarily attributable to the fact that: (i) the volume of waste relating to
construction and demolition activities tends to increase in the spring and
summer months; and (ii) the volume of industrial and residential waste in the
regions where the Company operates
11
<PAGE>
tends to decrease during the winter months. In addition, particularly harsh
weather conditions may delay the development of landfill capacity and otherwise
result in the temporary suspension of certain of the Company's operations and
could materially adversely affect the Company's overall business, financial
condition and results of operations.
12
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Financial Data Schedule (filed electronically only).
b. Reports on Form 8-K: none.
13
<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 hereunto duly authorized.
AMERICAN DISPOSAL SERVICES, INC.
Date: May 15, 1997 /s/ Stephen P. Lavey
---------------------
Stephen P. Lavey
Vice President and Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,966
<SECURITIES> 0
<RECEIVABLES> 12,898
<ALLOWANCES> 0
<INVENTORY> 461
<CURRENT-ASSETS> 2,733
<PP&E> 117,471
<DEPRECIATION> 0
<TOTAL-ASSETS> 186,517
<CURRENT-LIABILITIES> 17,286
<BONDS> 100,511
0
0
<COMMON> 58,543
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 186,517
<SALES> 0
<TOTAL-REVENUES> 18,511
<CGS> 0
<TOTAL-COSTS> 16,361
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,552
<INCOME-PRETAX> 619
<INCOME-TAX> 173
<INCOME-CONTINUING> 446
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 446
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0
</TABLE>
