UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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 2, 2004
AMERICAN ECOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11688 95-3889638
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification
Number)
Lakepointe Centre I,
300 E. Mallard, Suite 300
Boise, Idaho 83706
(Address of principal executive -----
offices) (Zip Code)
(208) 331-8400
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS AND REGULATION FD
On July 2, 2004 personnel at the Company's hazardous waste treatment and
disposal facility located in Robstown, Texas ("US Ecology Texas" or "USET"),
reported to the Company's executive management that there had been an
after-hours fire the previous evening in the permitted containment building
where waste treatment is performed. The building is out of service as a result.
No one was injured and no waste constituents have been detected outside the
containment building.
Executive management immediately commenced an internal investigation, including
but not limited to appointing the Corporate Director of Environmental Health and
Safety and USET's facility manager to investigate the causes of the incident and
identify corrective actions to prevent a recurrence. The Company has also
notified its Board of Directors, insurance carriers, and responsible State of
Texas regulatory officials. It more likely than not that the State of Texas
regulatory agency with jurisdiction will issue a notice of enforcement against
the Company. The timing and amount of any potential fine is not known and cannot
be estimated at this time and the extent of any additional enforcement by the
State of Texas regulatory agency, if any, cannot be determined without further
investigation.
The Company maintains property and business interruption insurance on its
operations, including those at USET, subject to certain limits and deductibles.
Management expects the adverse financial impact of the fire to be reflected in
its results in the second half of 2004. The amount of such financial impact
cannot currently be estimated.
The Company currently has net book assets of $586,000 associated with the
containment building and related equipment. An engineering firm has been
retained to assist the Company in determining the extent of damage and
recoverability of these assets. Depending upon the extent of damage, the Company
may need to impair these assets. Costs for repairs or replacements and the
extent of insurance coverage cannot be estimated at this time.
Approximately 50% of USET's year-to-date revenue has been derived from waste
treatment performed utilizing the containment building and equipment. USET's
remaining business involves direct disposal of waste without any required
treatment. Direct disposal was not interrupted and continues to take place. At
this time, the Company does not know when it will resume USET treatment
operations. In certain cases, the Company may divert USET treatment business to
its other hazardous waste disposal facilities.
While the Company is working with its customers to minimize the impact of this
service interruption, the suspension of treatment operations will adversely
impact USET revenue and earnings in future periods. Of its four operating
facilities, USET is the least profitable through March 31, 2004. Management does
not believe that the reduced revenue and earnings at USET will significantly
impact the consolidated results of operations for the Company during 2004 or
cause the Company's 2004 results of operations to fall short of its previously
issued operating earnings guidance of greater than 15% operating profit growth
for 2004 as compared to 2003 operating results.
This Form 8-K contains forward-looking statements that are based on our current
expectations, beliefs, and assumptions about the industry and markets in which
American Ecology Corporation and its subsidiaries operate. Actual results may
differ materially from what is expressed herein and no assurance can be given
that the company can generate future earnings, repair or recover burned assets
or receive insurance proceeds for the loss of their use, limit the impact on
operations due to any State of Texas notice of enforcement, or limit the impact
on sales and operations due to USET's current inability to treat waste in the
containment building. For additional information on factors that could cause
actual results to differ from expectations, please refer to American Ecology
Corporation's Report on Form 10-K, and most recent Form 10-Q filed with the
Securities and Exchange Commission.
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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.
AMERICAN ECOLOGY CORPORATION
(Registrant)
Date: July 7, 2004 By:/S/ James R. Baumgardner
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James R. Baumgardner
Senior Vice President,
Chief Financial Officer,
Secretary and Treasurer
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