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 HOUSTON, Nov. 29 /PRNewswire/ -- Envirofil, Inc. (NASDAQ-NMS: EFIL) announced today its results of operations for the three months ended Sept. 30, 1993, its first fiscal 1994 quarter.
 The quarter's results reflect the company's existing Missouri and Illinois landfill operations as well as the company's collection and recycling operation in Sacramento, Calif., which the company acquired in April 1993. Results for the quarter do not reflect the company's newly acquired disposal and collection operation in the Seattle area or its collection operations in Stockton, Calif. These operations were acquired after the end of the quarter.
 Results of Operations
 Revenues for the three months ended Sept. 30, 1993 were $3,621,664, compared to revenues of $643,057 for the three months ended Sept. 30, 1992. The increase in revenues was due primarily to the inclusion in the fiscal 1994 quarter of approximately $2.6 million of revenues from the company's Sacramento operations. Revenues for the fiscal 1994 quarter also reflect a $326,433, or approximately 475 percent increase in disposal fees at the company's Missouri landfill due primarily to volume increases.
 Gross profit was $821,649, or 22.5 percent of revenues for the three months ended Sept. 30, 1993 compared to $196,206, or 30.5 percent of revenues for the fiscal 1993 quarter. The $625,443 increase in gross profit was due primarily to the increase in revenues. The decrease in the gross profit percentage was primarily due to the inclusion of the Sacramento collection operations, the margins for which are lower than those in the landfill disposal business. The decrease in gross margin was partially offset by an improvement in the margin at the Missouri landfill due to volume increases.
 General and administrative expenses were $1,202,017 in the fiscal 1994 quarter, compared to $499,863 for the fiscal 1993 quarter. General and administrative expenses for the 1993 period were actually $624,863 but were reduced through the receipt by the company of a $125,000 fee for providing acquisition assistance to another company. After excluding this fee, the net increase in general and administrative expenses was $577,154. Approximately $330,000 of this increase was the result of increased travel, personnel costs and professional fees at the corporate level incurred in conjunction with the increased acquisition activity in the current period and the addition of personnel experienced in the solid waste industry following the company's December 1992 management reorganization. The inclusion of the Sacramento disposal operation, including amortization of acquisition intangibles, accounted for $219,333 of the remaining increase.
 On July 1, 1993, the company adopted SFAS No. 109. Under SFAS No. 109, a deferred income tax asset or liability is recognized based on the difference in financial reporting and tax bases of acquired assets and liabilities. As a result of the adoption of SFAS No. 109, the company recognized $494,167 of expense as of July 1, 1993, which was included in the statement of operations as a cumulative effect of change in accounting for income taxes.
 For the three months ended Sept. 30, 1993, the company recorded a tax benefit of $122,000 which includes $105,000 of tax benefit on its current loss realizable as an offset to deferred tax liabilities and $17,000 as a result of a reduction of deferred tax liabilities. As of Sept. 30, 1993, the company had approximately a $2,250,000 net operating loss carryforward for tax purposes which may be utilized to offset future taxable income.
 Liquidity and Capital Resources
 As of Sept. 30, 1993, the company has $5,704,484 of cash and cash equivalents and working capital of $4,468,887. In addition, subsequent to Sept. 30, the company raised net proceeds of approximately $5.2 million through the private placement of 5,678 shares of 8 percent Series D convertible preferred stock (Series D Shares). Additionally, the company arranged a $20 million revolving credit facility with The First National Bank of Boston (Bank of Boston). Borrowings under the credit facility bear interest at Bank of Boston's "base rate" plus one percent, resulting in a current rate approximately 7 percent. Borrowings under the facility are secured by a pledge of the stock of the company's subsidiaries.
 Net proceeds from the November 1993 sale of Series D Shares and borrowings under the company's Bank of Boston credit facility were used to finance the acquisitions in November 1993 of Environmental Waste of America, Inc., Brem-Air Disposal, Inc. and Kitsap County Sanitary
Landfill, Inc. (the Brem-Air Companies). The aggregate purchase price for the Brem-Air Companies consisted of approximately $21 million in cash and 2.7 million shares of the company's common stock. In October 1993, the company completed its acquisition of Stockton Scavenger Association (Stockton). The purchase price for Stockton consisted of $5 million in cash and 100,000 shares of common stock. Funds for this acquisition were derived from the private placement in August 1993 of 3,350,000 shares of the company's common stock.
 As result of the acquisition described above, the company will carry substantially more debt on its balance sheet than at Sept. 30, 1993, and its debt service requirements will be substantially increased in the future. The company's borrowings under its revolving credit facility totaled approximately $19 million immediately following the completion of the acquisition of the Brem-Air Companies. The company anticipates that cash flow from its operations and existing cash balances will be sufficient to support current levels of debt. The company anticipates that it may incur additional debt in the future to finance future acquisitions, which could affect the profitability of the company and may impair its ability to raise additional equity capital for further acquisitions or for capital investments in existing operations. In addition, there can be no assurance that the company will be able to borrow sufficient funds, or borrow on terms acceptable to the company, to complete any further acquisitions, although the company is confident of its ability to do so. The company's inability to finance future acquisitions could materially affect the company's implementation of its business plan, which includes growth through the acquisition of other solid waste operations.
 Three months ended Sept. 30 1992 1993
 Revenues $643,057 $3,621,664
 Cost of Operations 446,851 2,800,015
 Gross profit 196,206 821,649
 General and administrative expenses 499,863 1,202,017
 Loss from operations (303,657) (380,368)
 Interest expense, net (368,069) (8,329)
 Loss before income taxes (671,726) (388,697)
 Income tax benefit --- 122,000
 Loss from operations before the
 cumulative effect of change in
 accounting principle (671,726) (266,697)
 Cumulative effect of change in
 accounting for income taxes --- (494,167)
 Net loss before preferred dividends (671,726) (760,864)
 Preferred dividends --- 186,019
 Net loss available to common
 shareholders (671,726) (946,883)
 Loss per common share and common
 equivalent shares:
 Continuing operations (0.21) (0.01)
 Cumulative effect of change in
 accounting principle --- (0.02)
 Net loss (0.21) (0.03)
 Weighted average common and common
 equivalent shares 3,214,564 30,376,880
 -0- 11/29/93
 /CONTACT: Kevin Chernoff of Envirofil, 713-224-3345/

CO: Envirofil, Inc. ST: Texas IN: ENV SU: ERN

MJ-JM -- PH034 -- 8488 11/29/93 18:24 EST
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Publication:PR Newswire
Date:Nov 29, 1993

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