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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 29, 2003
Stericycle, Inc.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Exact name of registrant as specified in its charter)
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28161 North Keith Drive
Lake Forest, Illinois 60045
(847) 367-5910
Not Applicable
Item 12. Results of Operations and Financial Condition
On July 29, 2003 Stericycle, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2003. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated by reference.
The press release and accompanying balance sheet refer to Stericycle's total debt to capitalizaton percentage ratio. The total debt to capitalization percentage ratio is calculated by dividing total debt (numerator) by the sum of total debt, preferred stock, and shareholders' equity (denominator). We consider this leverage ratio to be a good indicator of the strength of a company's balance sheet and its ability to service its debt. Total debt to capitalization percentage is not a measure in accordance with accounting principles generally accepted in the United States. The ratio should not be considered as an alternative to net income, as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity.
The income statement accompanying the press release shows EBITDA for the second quarter. EBITDA is calculated as the sum of net income, plus net interest expense, income tax expense, depreciation expense and amortization expense. We consider EBITDA to be a widely accepted financial indicator of a company's ability to service debt, fund capital expenditures and expand its business. EBITDA is not calculated in the same way by all companies and therefore may not be comparable to similarly titled measures reported by other companies. EBITDA is not a measure in accordance with accounting principles generally accepted in the United States. EBITDA should not be considered as an alternative to net income, as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity. The funds depicted by this measure may not be available for management's discretionary use due to legal or functional requirements, debt service, other commitments and uncertainties.
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 therunto duly authorized.
Stericycle, Inc. |
By: | /s/ Frank J.M. ten Brink |
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Frank J.M. ten Brink | |
Executive Vice President and Chief Financial Officer |
Dated: July 29, 2003
EXHIBIT INDEX
Exhibit |
Description |
Exhibit 99.1 |
Press Release dated July 29, 2003. |
Exhibit 99.1
July 29, 2003
STERICYCLE, INC. REPORTS RECORD RESULTS
FOR SECOND QUARTER 2003
Lake Forest, Illinois, July 29, 2003 - Stericycle, Inc. (NASDAQ:SRCL), the United States' leading provider of medical waste management and compliance services for the healthcare community today reported record quarterly financial results for the second quarter of 2003. "The second quarter was another record breaking quarter for our company, with across-the-board growth and record results," said Mark Miller, Stericycle president and chief executive officer. "The solid growth in revenues, operating income, and net income all reflect our disciplined focus on strategically growing and managing our business."
SECOND QUARTER AND YEAR-TO-DATE RESULTS
Net income for the second quarter of 2003 rose 34.7% to $15.5 million, up from $11.5 million in the second quarter of 2002.
Earnings per diluted share for the second quarter of 2003 were $0.34, up 29.5% from $0.26 in the second quarter of 2002. Weighted shares outstanding used to determine earnings per diluted share were 46,105,360 for the second quarter of 2003 and 45,146,640 for the second quarter of 2002.
For the six months ended June 30, 2003, revenues increased to $225.4 million, an increase of 14.8% from the same period a year ago. Gross profit as a percent of revenues increased to 42.6% for the six months ended June 30, 2003 from 40.3% for the same period in 2002. Earnings per share increased 34.1% to $0.66 from $0.49 per diluted share in the same period a year ago.
As previously reported on May 27, 2003, we repurchased $6.6 million of our 12-3/8% senior subordinated bonds. We repurchased an additional $2.0 million of our 12-3/8% senior subordinated bonds on June 30, 2003. The total redemption premium to repurchase the $8.6 million senior subordinated bonds was a pre-tax charge of $1.4 million and the write-off of associated deferred financing fees was a pretax charge of $0.2 million. On an after-tax basis, the charges totaled approximately $1.0 million or $0.02 per diluted share.
During the second quarter of 2003, we continued to improve our balance sheet position. Our total debt to capitalization percentage ratio improved from 39.1% at December 31, 2002 to 34.1% at June 30, 2003.
Miller said, "During the quarter we continued to execute our proven business model and reported strong sales growth and record income from operations. The cash flow of $59.8 million generated from operations for the first six months of the year, was used to strengthen the business by repurchasing senior subordinated bonds, paying down the senior bank debt and investing in the company's future."
Stericycle provides
medical waste collection, transportation, treatment and disposal services
and safety and compliance programs to healthcare companies nationwide,
including hospitals, physician and dental offices, laboratories and
clinics. Medical waste includes single-use disposables such as needles,
syringes, gloves and other supplies that have been in contact with blood
or other bodily fluids, as well as blood, blood products and other items
that could harbor infectious agents.
Safe Harbor Statement: Statements in this press release may contain forward-looking statements that involve risks and uncertainties, some of which are beyond Stericycle's control (for example, general economic conditions). Our actual results could differ significantly from the results described in the forward-looking statements. Factors that could cause such differences include difficulties in completing the integration of acquired businesses, changes in governmental regulation of medical waste collection and treatment, and increases in transportation and other operating costs, as well as the various other factors identified in our filings with the U.S. Securities and Exchange Commission. As a result, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. The Company makes no commitment to disclose any subsequent revisions to forward-looking statements.
Stericycle Financial Statements for Second Quarter 2003
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
June 30, December 31 2003 2002 ------------ ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents.............................. $ 6,099 $ 8,375 Short-term investments................................. 700 512 Accounts receivable, less allowance for doubtful accounts of $4,556 in 2003 and $3,779 in 2002........ 64,730 62,013 Parts and supplies..................................... 4,820 4,494 Prepaid expenses....................................... 4,011 7,170 Notes receivable....................................... 823 823 Deferred tax asset..................................... 7,363 6,720 Other.................................................. 3,820 4,249 ------------ ------------ Total current assets............................ 92,366 94,356 ------------ ------------ Property, plant and equipment, net....................... 92,938 88,501 Other assets: Goodwill............................................... 466,159 447,272 Intangible assets, less accumulated amortization of $7,496 in 2003 and $3,609 in 2002.................... 29,368 20,110 Notes receivable....................................... 7,717 7,717 Other.................................................. 7,302 9,139 ------------ ------------ Total other assets.............................. 510,546 484,238 ------------ ------------ Total assets.......................................... $ 695,850 $ 667,095 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt...................... $ 18,576 $ 3,933 Accounts payable....................................... 11,281 14,330 Accrued liabilities.................................... 39,164 31,810 Deferred revenue....................................... 4,783 3,681 ------------ ------------ Total current liabilities....................... 73,804 53,754 ------------ ------------ Long-term debt, net of current portion................... 185,822 224,124 Deferred income taxes.................................... 37,386 30,729 Other liabilities........................................ 4,435 3,710 Redeemable preferred stock: Series A convertible preferred stock (par value $.01 share, 75,000 shares authorized, 22,799 outstanding in 2003 and 29,326 in 2002, liquidation preference of $24,814 at June 30, 2003 and $31,919 at December 31, 2002)..... 21,032 28,049 Common shareholders' equity: Common stock (par value $.01 per share, 80,000,000 shares authorized, 41,752,873 issued and outstanding in 2003, 40,437,023 issued and outstanding in 2002).... 418 404 Additional paid-in capital............................... 293,808 277,531 Treasury stock of 50,000 shares.......................... (1,435) (1,435) Accumulated other comprehensive loss..................... (81) (229) Retained earnings........................................ 80,661 50,458 ------------ ------------ Total shareholders' equity...................... 373,371 326,729 ------------ ------------ Total liabilities and shareholders' equity............. $ 695,850 $ 667,095 ============ ============ Total debt to capitalization percentage ratio............ 34.1 % 39.1 % Calculation of total debt to capitalization percentage ratio: Total debt............................................... $ 204,398 $ 228,057 Redeemable preferred stock............................... 21,032 28,049 Shareholders' equity..................................... 373,371 326,729 ------------ ------------ Capitalization........................................... $ 598,801 $ 582,835
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30, ------------------------------------------- --------------------------------------------- 2003 2002 2003 2002 -------------------- -------------------- --------------------- --------------------- $ % of Rev $ % of Rev $ % of Rev $ % of Rev ----------- -------- ----------- -------- ----------- --------- ----------- --------- Revenues.................................. $ 113,135 100.0 % $ 99,269 100.0 % $ 225,446 100.0 % $ 196,333 100.0 % Cost of revenues........................ 64,293 56.8 59,042 59.5 129,460 57.4 117,217 59.7 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Gross profit 48,842 43.2 40,227 40.5 95,986 42.6 79,116 40.3 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Selling, general and administrative expenses............... 17,098 15.1 14,360 14.5 33,472 14.8 28,547 14.5 Amortization............................ 365 0.3 508 0.5 686 0.3 1016 0.5 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Total SG&A expenses and amortization. 17,463 15.4 14,868 15.0 34,158 15.2 29,563 15.1 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Acquisition-related costs............... 123 0.1 22 -- 214 0.1 175 0.1 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Income from operations.................... 31,256 27.6 25,337 25.5 61,614 27.3 49,378 25.2 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Other income (expense): Interest income......................... 71 0.1 98 0.1 260 0.1 261 0.1 Interest expense........................ (3,385) (3.0) (5,516) (5.6) (7,312) (3.2) (11,325) (5.8) Debt extinguishments and restructuring.. (1,640) (475) (3,268) (475) Other expense........................... (561) (1.9) (350) (0.8) (1,206) (2.0) (1,021) (0.7) ----------- -------- ----------- -------- ----------- --------- ----------- --------- Total other income (expense)......... (5,515) (4.8) (6,243) (6.3) (11,526) (5.1) (12,560) (6.4) ----------- -------- ----------- -------- ----------- --------- ----------- --------- Income before income taxes................ 25,741 22.8 19,094 19.2 50,088 22.2 36,818 18.8 Income tax expense........................ 10,219 9.1 7,571 7.6 19,885 8.8 14,664 7.5 ----------- -------- ----------- -------- ----------- --------- ----------- --------- Net income................................ $ 15,522 13.7 % $ 11,523 11.6 % $ 30,203 13.4 % $ 22,154 11.3 % =========== ======== =========== ======== =========== ========= =========== ========= Earnings per share - diluted.............. $ 0.34 $ 0.26 $ 0.66 $ 0.49 =========== =========== =========== =========== Weighted average number of common shares outstanding - diluted............ 46,105,360 45,146,640 45,976,560 44,959,087 =========== =========== =========== =========== Calculation of EBITDA: Net Income................................ $ 15,522 $ 11,523 $ 30,203 $ 22,154 Interest Income........................... (71) (98) (260) (261) Interest Expense.......................... 3,385 5,516 7,312 11,325 Debt extinguishments and restructuring.... 1,640 475 3,268 475 Income tax expense........................ 10,219 7,571 19,885 14,664 Depreciation and amortization............. 4,035 $ 3,648 $ 8,299 $ 7,210 ----------- ----------- ----------- ----------- EBITDA.................................... $ 34,730 30.7 % $ 28,635 28.8 % $ 68,707 30.5 % $ 55,567 28.3 %
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
For the Six Months Ended June 30, ---------------------- 2003 2002 ---------- ---------- OPERATING ACTIVITIES: Net income............................................. $ 30,203 $ 22,154 Adjustments to reconcile net income to net cash provided by operating activities: Ineffective portion of cash flow hedges............ -- (381) Write off of deferred financing costs.............. 484 -- Stock compensation expense......................... 76 -- Tax benefit of disqualifying dispositions of stock options................................. 3,537 1,168 Loss on sale of property and equipment............. 72 201 Depreciation....................................... 7,613 6,194 Amortization....................................... 686 1,016 Deferred income taxes.............................. 6,014 -- Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable................................ 930 5,381 Parts and supplies................................. 144 1,453 Prepaid expenses and other assets.................. 7,105 2,032 Accounts payable................................... (3,978) (1,931) Accrued liabilities................................ 6,406 13,956 Deferred revenue................................... 547 (1,805) ---------- ---------- Net cash provided by operating activities.............. 59,839 49,438 ---------- ---------- INVESTING ACTIVITIES: Payments for acquisitions and international investments, net of cash acquired.................. (33,713) (10,070) Purchases of short-term investments.................. (188) (358) Proceeds from sale of property and equipment......... 183 55 Capital expenditures................................. (9,158) (7,413) ---------- ---------- Net cash used in investing activities.................. (42,876) (17,786) ---------- ---------- FINANCING ACTIVITIES: Proceeds from issuance of note payable............... 1,132 1,181 Repayment of senior subordinated debt................ (17,775) (1,626) Payments of deferred financing costs................. (395) -- Repayment of long-term debt.......................... (3,093) (894) Net proceeds from (repayments of) senior credit facil (4,186) (37,687) Principal payments on capital lease obligations...... (496) (376) Proceeds from other issuances of common stock........ 5,661 3,817 ---------- ---------- Net cash used in financing activities.................. (19,152) (35,585) ---------- ---------- Effect of exchange rate changes on cash................ (87) 106 ---------- ---------- Net decrease in cash and cash equivalents.............. (2,276) (3,827) Cash and cash equivalents at beginning of period....... 8,375 12,737 ---------- ---------- Cash and cash equivalents at end of period............. $ 6,099 $ 8,910 ========== ========== Non-cash activities: Net issuances of common stock for certain acquisitions. $ 70 $ 2,298
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