Page 1 of 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
/___/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8368
ROLLINS ENVIRONMENTAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0228924
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Rollins Plaza, Wilmington, Delaware 19803
(Address of principal executive offices) (Zip Code)
(302) 426-3314
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
The number of shares of the registrant's common stock outstanding as of
December 31, 1993 was 60,375,811.
FORM 10-Q Page 2 of 7
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and 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 months ended December 31, 1993 are not necessarily indicative of the
results that may be expected for the year ending September 30, 1994. These
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report to Shareholders and Form 10-K
for the year ended September 30, 1993.
ROLLINS ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENT OF EARNINGS
($000 Omitted Except for Per Share Amounts)
Three Months Ended
December 31,
1993 1992
Operating revenues $47,515 $58,985
Operating expenses 34,601 36,978
Depreciation 5,530 5,135
Selling and administrative expenses 7,015 7,288
Interest expense 142 120
47,288 49,521
Earnings before income taxes and
cumulative effect of change in
accounting principle 227 9,464
Income taxes 121 3,398
Earnings before cumulative effect of
change in accounting principle 106 6,066
Cumulative effect (to September 30, 1993)
of adoption of SFAS No. 109 543 -
Net earnings $ 649 $ 6,066
Earnings per share:
Earnings before cumulative effect of
change in accounting principle $ - $ .10
Cumulative effect of adoption of
SFAS No. 109 .01 -
$ .01 $ .10
Average common shares and equivalents
outstanding (000) 60,376 60,577
Dividends paid per common share None $ .02 1/2
FORM 10-Q
ROLLINS ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
($000 Omitted)
December 31, September 30,
ASSETS 1993 1993
Current assets
Cash and cash equivalents (includes short-term
investments of: $42,517-December;
$44,218-September) $ 44,578 $ 47,487
Accounts receivable, net 32,814 30,311
Deferred income taxes 3,909 3,514
Other current assets 9,696 8,058
Total current assets 90,997 89,370
Property and equipment, at cost
Land 28,696 27,861
Buildings 28,569 28,150
Equipment and vehicles 187,380 186,075
Site improvements 27,182 25,406
Construction in progress 19,254 20,409
Accumulated depreciation (112,135) (106,903)
178,946 180,998
Other assets 7,974 8,273
$277,917 $278,641
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,930 $ 7,067
Accrued liabilities 11,251 12,119
Accrued remediation and other costs 4,276 4,697
Income taxes payable 245 -
Current maturities of long-term debt 623 623
Total current liabilities 23,325 24,506
Long-term debt 4,632 4,632
Deferred income taxes 15,219 15,374
Accrued remediation and other costs 16,088 16,358
Other liabilities 5,109 4,964
Commitments and contingent liabilities
See Part II, Item 1 Legal Proceedings
Shareholders' equity
Preferred stock, $1 par value,
1,000,000 shares authorized; issued and
outstanding - None
Common stock, $1 par value, 120,000,000 shares
authorized; issued and outstanding:
December-60,375,811; September-60,350,254 60,376 60,350
Capital in excess of par value 4,650 4,588
Retained earnings 148,518 147,869
Total shareholders' equity 213,544 212,807
$277,917 $278,641
FORM 10-Q
ROLLINS ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($000 Omitted)
Three Months Ended
December 31,
1993 1992
Cash flows from operating activities:
Net earnings $ 649 $ 6,066
Reconciliation of net earnings to net cash
flows from operating activities:
Expenditures charged to accrued remediation
and other costs (691) (1,113)
Depreciation 5,530 5,135
Current and deferred income taxes (305) 977
(Increase) in accounts receivable (2,503) (2,710)
(Decrease) in accounts payable and accrued
liabilities (1,005) (1,349)
Other, net (1,116) (1,061)
Net cash flows from operating activities 559 5,945
Cash flows from investing activities:
Purchase of property and equipment (3,571) (11,728)
Proceeds from sale of equipment 15 -
Net cash flows used in investing activities (3,556) (11,728)
Cash flows from financing activities:
Repayment of long-term debt - (268)
Dividend payments - (1,507)
Exercise of stock options 88 193
Net cash flows from (used in)
financing activities 88 (1,582)
Net (decrease) in cash and cash equivalents (2,909) (7,365)
Cash and cash equivalents:
Beginning of period 47,487 55,120
End of period $44,578 $47,755
Supplemental information:
Interest paid $ 172 $ 102
Income taxes (recovered) paid $ (983) $ 2,293
FORM 10-Q Page 5 of 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations: Three Months Ended December 31, 1993 vs. Three Months
Ended December 31, 1992
Revenues decreased by $11,470,000 (19.4%) due mainly to lower average
prices and reduced incineration volume resulting from the increased competition
and continued softness in the commercial hazardous waste incineration industry.
Operating expenses decreased by $2,377,000 (6.4%) reflecting in part the
decreased revenues along with the impact of personnel cutbacks and other cost
reduction efforts. Operating expenses as a percentage of revenues increased to
72.8% from 62.7% in 1992 due mainly to the reduced revenues.
The increase in depreciation of $395,000 (7.7%) is attributable to the
Company's capital expenditure program to upgrade its equipment, improve its
operating efficiency and comply with changing regulations.
Selling and administrative expenses decreased $273,000 (3.7%) primarily as
a result of lower commissions and other compensation expenses related to the
lower level of revenues and personnel cutbacks. As a percentage of revenues,
selling and administrative expenses were 14.8% in 1993 and 12.4% in 1992.
Earnings before income taxes and the cumulative effect of a change in
accounting principle decreased sharply mainly as a result of the lower revenues.
The estimated effective income tax rate for the first quarter of fiscal
year 1994 was 53.3% due to the low level of consolidated pretax income combined
with the impact of certain state income taxes. The effective income tax rate
for the first quarter of fiscal year 1993 was 35.9%.
The cumulative effect to September 30, 1993 of the adoption of SFAS No.
109, Accounting For Income Taxes, under which deferred income tax accounts were
adjusted to reflect current income tax rates, resulted in a favorable adjustment
to net earnings of $543,000 or $.01 per share.
After giving effect to the change in accounting principle, net earnings
were $649,000 or $.01 per share in fiscal year 1994 compared with $6,066,000 or
$.10 per share for the first quarter of fiscal year 1993. The reduction in net
earnings was due mainly to the lower revenues.
The Company is continuing its comprehensive program to improve its
competitive position and increase profitability. This program includes Company-
wide cost reductions including salary decreases, elimination of salary increases
and personnel cutbacks where appropriate. In addition, the Company is moving
aggressively to reduce procurement costs and is directing capital expenditures
at improving material handling and other capabilities.
FORM 10-Q Page 6 of 7
Liquidity and Capital Resources
The Company's financial condition continues to be strong as evidenced by
its cash position and low level of debt which relates solely to land
acquisitions. The Company financed its property and equipment additions during
the first quarter with available cash and its cash flow from operations.
Otherwise, there have been no material changes in the Company's financial
condition and its liquidity and capital resources since September 30, 1993. For
further details, see page 14 of the Company's 1993 Annual Report to
Shareholders.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no additional significant legal proceedings nor any
material changes in the legal proceedings reported on pages 3 through 5 of the
Company's Form 10-K for the fiscal year ended September 30, 1993.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
FORM 10-Q Page 7 of 7
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.
DATE: January 25, 1994 ROLLINS ENVIRONMENTAL SERVICES, INC.
(Registrant)
/s/ Nicholas Pappas
Nicholas Pappas
President and Chief Operating Officer
/s/ Leo F. Rattigan, Jr.
Leo F. Rattigan, Jr.
Vice President-Finance and Treasurer
Chief Financial Officer
Chief Accounting Officer