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 March 31, 1996
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 0-27508
SUPERIOR SERVICES, INC.
(exact name of Registrant as specified in its charter)
Wisconsin 39-1733405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10150 West National Avenue, Suite 350, West Allis, Wisconsin 53227
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (414) 328-2800
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 and
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 No X/1
__________________
1/ The registrant has only been subject to the filing requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934 since March 8,
1996, the date of its initial public offering of Common Stock.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes 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 practicable date.
The number of shares of Common Stock of the registrant, par value
$.01 per share, outstanding on May 10, 1996 was 16,737,249.
<PAGE>
SUPERIOR SERVICES, INC.
FORM 10-Q INDEX
For the Quarter Ended March 31, 1996
Page Number
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Consensed Consolidated Statements of
Shareholders' Investment 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial
Statements 7-9
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-13
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security
Holders 14
Item 6 Exhibits and Reports on Form 8-K 14
SIGNATURES
<PAGE>
Superior Services, Inc.
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
December 31, March 31,
1995 1996
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $1,373 $18,875
Trade accounts receivable 14,518 14,443
Prepaid expenses and other
current assets 2,826 2,523
Net assets of discontinued
operations 849 920
-------- ---------
Total current assets 19,566 36,761
Property and equipment, net 81,026 80,995
Restricted funds held in trust 7,009 7,613
Other assets 4,202 4,256
Intangible assets, net 10,960 11,455
-------- --------
Total assets $122,763 $141,080
======== ========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current liabilities:
Current maturities of
long-term debt $3,251 $2,048
Trade accounts payable 4,737 4,155
Accrued payroll and related
expenses 2,329 1,398
Other accrued expenses 3,494 3,849
Accrued income taxes 1,045 508
--------- ---------
Total current liabilities 14,856 11,958
Long-term debt, net of current
maturities 20,168 1,952
Disposal site closure and
long-term care obligations 20,079 20,680
Deferred income taxes 11,581 11,297
Other liabilities 5,077 5,596
Commitments and Contingencies
Convertible preferred stock 15,000 -
Shareholders' investment:
Common stock, $.01 par
value; 100,000,000 shares
authorized; 9,886,815 and
16,737,205 issued and
outstanding, respectively 198 167
Additional paid-in capital 23,902 76,163
Retained earnings 11,902 13,267
-------- ---------
Total shareholders' investment 36,002 89,597
-------- ---------
Total liabilities and
shareholders' investment $122,763 $141,080
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share amounts)
(Unaudited)
For the three months ended March 31,
1995 1996
Revenues $20,341 $22,315
Expenses:
Cost of operations 11,259 12,378
Selling, general and
administrative expenses 3,643 4,060
Depreciation and amortization 2,776 3,432
-------- --------
17,678 19,870
--------- --------
Operating income from continuing
operations 2,663 2,445
Other income (expense):
Interest expense (851) (390)
Other income 423 268
--------- ---------
Income from continuing operations
before income taxes 2,235 2,323
Provision for income taxes 944 958
--------- ---------
Income from continuing operations 1,291 1,365
Discontinued operations:
Income from disposition of
discontinued operations,
net of income tax 5 -
-------- --------
Net income $1,296 $1,365
======== ========
Earnings per share:
Income from continuing
operations $0.09 $0.10
Income from discontinued
operations - -
-------- ---------
Net income $0.09 $0.10
======== ========
Weighted average number of common
and common equivalent shares
outstanding 13,586,524 14,082,519
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
Superior Services, Inc.
Condensed Consolidated Statements of Shareholders' Investment
(In Thousands, Except Share Amounts)
(Unaudited)
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 9,886,815 $99 $24,001 $11,902 $36,002
Net Income - - - 1,365 1,365
Conversion of convertible
preferred stock 3,317,890 33 14,967 - 15,000
Issuance of common stock,
net 3,532,500 35 37,195 - 37,230
----------- ------- ----------- --------- ---------
16,737,205 $167 $76,163 $13,267 $89,597
Balance at March 31, 1996 ========= ====== ========= ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
For the three months ended March 31,
1995 1996
OPERATING ACTIVITIES
Net income $1,296 $1,365
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 2,776 3,432
Deferred income taxes - (284)
Gain on sale of assets (205) (128)
Changes in operating assets and
liabilities, net of effects of
acquired businesses:
Accounts receivable (160) 577
Prepaid expenses and other current
assets 1,562 304
Accounts payable and accrued
expenses (645) (2,260)
Disposal site closure and
long-term care obligation 527 601
Other (1,029) (14)
----------- ---------
Net cash provided by
operating activities 4,122 3,593
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired (23) (600)
Purchases of property and equipment (2,758) (2,847)
Proceeds from sale of property and
equipment 435 188
Funds held in trust - (604)
-------- ----------
Net cash used in investing activities (2,346) (3,863)
FINANCING ACTIVITIES
Net decrease in short-term borrowings (59) (1,203)
Proceeds from long-term debt - -
Payments of long-term debt (1,979) (18,255)
Issuance of common stock, net of issuance
costs - 37,230
--------- --------
Net cash provided by (used in) financing
activities (2,038) 17,772
--------- --------
Net increase (decrease) in cash and cash
equivalents (262) 17,502
Cash and cash equivalents at beginning of
year 2,034 1,373
--------- -----------
Cash and cash equivalents at end of year $1,772 $18,875
======== =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Basis of Presentation
Superior Services, Inc. ("Superior" or the "Company") is a regional
integrated solid waste services company providing solid waste collection,
transfer, recycling, and disposal services to customers primarily in
Wisconsin and also in parts of Minnesota, Illinois, Iowa, and Michigan.
The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). As
applicable under such regulations, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. The Company believes that the presentations and
disclosures in the financial statements included herein are adequate to
make the information not misleading. The financial statements reflect all
elimination entries and normal adjustments which are necessary for a fair
statement of the results for the interim periods presented. Operating
results for interim periods are not necessarily indicative of the results
for full years or other interim periods. It is suggested that the
condensed consolidated financial statements included herein be read in
conjunction with the consolidated financial statements of Superior for the
year ended December 31, 1995 and the related notes thereto (the "Financial
Statements") included in the Company's Form S-1 Registration Statement
(No. 333-240).
The accompanying condensed consolidated financial statements include
the accounts of Superior and its subsidiaries. All significant
intercompany transactions and balances have been eliminated. Certain
reclassifications have been made to the 1995 financial statements to
conform to the 1996 presentation.
2. Significant Accounting Policies
There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1995. For a description of
these policies, see Note 2 of Notes to Consolidated Financial Statements
in the Company's Form S-1 Registration Statement (No. 333-240).
3. Discontinued Operations
In May 1996, the Company completed the sale of the customer contracts
and certain assets of its biomedical waste collection, transportation, and
disposal operations for approximately $750,000. The biomedical waste
operations have been reported as discontinued since September 1994. No
material adjustments have been required to the estimated loss on
disposition of these operations recorded at that time.
4. Acquisitions
In late March 1996, the Company acquired two solid waste collection
businesses which were accounted for as purchases. Aggregate consideration
for these acquisitions was approximately $850,000, consisting of $600,000
in cash and $250,000 in notes payable. These acquisitions have been
accounted for as purchases and, accordingly, the results of their
operations have been included in the Company's financial statements from
their respective dates of acquisition. Pro forma results of operations are
not presented as the amounts do not differ significantly from historical
Company results.
5. Shareholders' Investment
In March 1996, the Company completed an initial public offering in
which it issued 3,532,500 shares of common stock at a price of $11.50 per
share resulting in net proceeds after deduction of underwriting discounts
and commissions and other offering expenses to the Company of
approximately $37,230,000.
A one-for-two reverse stock split declared by the Company's Board of
Directors became effective on March 8, 1996, the effective date of the
initial public offering of the Company's common stock.
Pursuant to the Series A Convertible Preferred Stock Purchase
Agreement, the Series A Preferred Stock holders exercised their rights to
convert their preferred stock into 3,317,890 shares of common stock at the
time of the offering. Upon the conversion, all cumulative dividends in
connection with the Preferred Stock were defeased.
On March 8, 1996, the Company granted employees incentive stock
options exercisable for 135,000 shares of common stock at an $11.50 per
share exercise price. These options generally become exercisable 25%
after one year and an additional 6.25% for each quarter thereafter. The
Company also granted non-qualified stock options exercisable for a total
of 40,000 common shares at an $11.50 per share exercise price
to newly elected independent directors serving on the Company's Board of
Directors. These options vest ratably over an approximate three-year
period.
6. Commitments and Contingencies
Two of the Company's subsidiaries have been named by the Wisconsin
Department of Natural Resources (WDNR) as potentially responsible parties
(PRPs) as a result of their use of a closed landfill. The closed landfill
has been identified by the WDNR to have caused groundwater contamination,
including the contamination or potential contamination of local drinking
water wells. The Company's subsidiaries allegedly transported industrial
waste for third party generators to the site in the 1970's. A group of
PRPs has conducted an extensive investigation of the environmental
conditions at the site and performed interim remedial action including the
installation of an improved landfill cap. In January 1994, the WDNR
issued notices to the PRPs, including the Company's subsidiaries,
requiring that they agree to undertake additional remedial action,
including the extension of a municipal water supply system to replace the
contaminated wells. As of March 31, 1996, total costs for the
investigation of environmental conditions at the site and interim remedial
action performed to date have been approximately $2.0 million, and the
WDNR has estimated the total costs of future phases of remediation at the
site will be approximately $4.0 million. The PRPs have not agreed to the
plan for either additional interim action or final remedial action nor
have the Company's subsidiaries negotiated their allocable share of the
cost of interim or final remediation action with the other PRPs.
Therefore, the Company's subsidiaries' allocable share of these costs
cannot be reasonably estimated at this time. In addition, the
subsidiaries have been named as defendants in a suit commenced by a group
of residents living in the vicinity of the landfill which suit alleges
that private drinking water wells have been contaminated by the releases
of pollutants from the site. The Company is entitled to indemnification
in various limited and unlimited amounts from the former shareholders of
the subsidiaries against liabilities arising out of the site. Such
indemnification obligations are secured by escrowed Common Stock. In
addition, the Company's subsidiaries have tendered the defense of the
residents' suit to the general liability insurance carriers which provided
coverage during the relevant periods. One of the insurers has accepted
the defense of the subsidiaries in the residents' suit, subject to a
reservation of rights. Neither the total costs of remediation at the site
nor the subsidiaries' potential liability in the residents' suit can be
reasonable estimated as of the date of this report. The Company has not
established a specific financial reserve for the potential costs relating
to this remediation or the residents' suit. The Company currently
believes that ultimate resolution of these matters will not have a
material adverse effect on the Company's financial condition or results of
operations.
In connection with an acquisition in March 1993, the Company was
required to accept the transfer of an adjacent closed landfill that is
listed on the National Priorities List (NPL). A remedial investigation
performed by the PRPs (including the Company) has determined the scope and
nature of the contamination at the site and the PRPs have submitted a
feasibility study to the Environmental Protection Agency and WDNR which
describes the alternatives for remediating the associated groundwater
contamination. The WDNR has formally approved the remedial alternative
recommended by the PRPs which calls for the installation of two to four
additional gas extraction wells (which would be connected to the existing
gas extraction system at the site) and continued groundwater monitoring.
As of March 31, 1996, the estimated one-time capital costs for the
additional extraction wells was $107,000, together with estimated annual
operating, maintenance and monitoring costs for the new extraction wells,
the landfill cap, the existing gas extraction system and groundwater
monitoring system of $90,000. The operating duration of the proposed
remediation is uncertain, but could be 30 years or longer. In December
1995, the Company entered into a settlement agreement with certain of the
PRPs which allocates the costs of the remediation. Under the settlement
agreement, two generator PRPs agreed to contribute a total of 38% of
future costs for remedial action and the annual operating, maintenance,
and monitoring costs related to the site. Additional generator PRPs may
join in the settlement agreement, which would further reduce the share of
costs allocated to the Company and the former owners of the closed
landfill. The seller has agreed to indemnify the Company up to $2.8
million for any site liabilities, including the annual costs of operating,
maintaining and monitoring the closed landfill and any costs the Company
may incur as a PRP. The seller's potential indemnification obligation is
collateralized currently by 266,677 shares of the Company's common stock
held in escrow. The $2.8 million recoverable from the seller is included
in other assets. The Company has established reserves which it believes
are adequate to cover the estimate of identified potential remediation
costs.
The Company carries a range of insurance, including a commercial
general liability policy and a property damage policy. The Company
maintains a limited environmental impairment liability policy on its
landfills and transfer stations that provides coverage, on a "claims made"
basis, against certain third party off-site environmental damage. There
can be no assurance that the limited environmental impairment policy will
remain in place or provide sufficient coverage for existing, but not yet
known, third party, off-site environmental liabilities. The Company is
also a party to various legal proceedings arising in the normal course of
business. The Company believes that the ultimate resolution of these
other matters will not have a material adverse effect on the Company's
financial condition or results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Superior provides solid waste collection, transfer, recycling, and
disposal services to customers primarily in Wisconsin and also in parts of
Minnesota, Illinois, Iowa, and Michigan. The Company also provides other
integrated waste services, most of which are project-based and many
provide additional waste volumes to the Company's landfills and recycling
facilities. Solid waste operations consist of five Company-owned solid
waste landfills, three managed third party landfills, 19 solid waste
collection operations, ten recycling facilities, and six solid waste
transfer stations.
As described more fully below, revenues for the periods presented were
comprised of fees received for the following services:
Three Months Ended
March 31
1995 1996
Collection 51% 50%
Disposal 15% 17%
Recycling 13% 13%
Other integrated waste services 21% 20%
------ ------
100% 100%
====== ======
Results of Operations
Overview
Revenues in the 1996 first quarter of $22.3 million increased 9.7% over
the comparable period in the prior year due primarily to increased volumes
of waste received at the Company's landfills. Operating income from
continuing operations as a percentage of revenue decreased reflecting the
impact of significantly lower average prices received for recyclable waste
paper products in 1996 compared to the same quarter last year. Net income
from continuing operations increased 5.3% to $1.4 million in the 1996 first
quarter while earnings per share increased to $0.10 in the first quarter of
1996 compared to $0.09 reported for the same period last year.
The following tables sets forth for the periods indicated the
percentage of revenues represented by the individual line items reflected
in the Company's condensed consolidated statements of operations:
Three months ended March 31
1995 1996
Revenues 100.0% 100.0%
Cost of operations 55.4 55.4
Selling, general and administrative 17.9 18.2
expenses
Depreciation and amortization 13.6 15.4
-------- -------
Operating income from continuing operations 13.1 11.0
Interest expense (4.2) (1.8)
Other income 2.1 1.2
-------- ---------
Income from continuing operations before 11.0 10.4
income taxes
Income taxes 4.6 4.3
-------- ---------
Income from continuing operations 6.4% 6.1%
====== =========
Revenues
Revenues for the 1996 first quarter compared to the 1995 first
quarter increased approximately $2.0 million primarily due to a 58%
increase in volumes of wastes collected and disposed at the Company's
landfills and approximately $650,000 from the impact of businesses
acquired since March 31, 1995. These increases were achieved despite a
decrease of approximately $680,000 in revenues from recyclable waste
paper sales. Daily disposal volume at the Company's landfills rose to
an average of more than 4,100 tons per day in the 1996 first quarter
compared to an average of 2,600 tons per day in the corresponding period
last year. The higher landfill volume was the result of increased
volumes received from a disposal contract for a customer's Milwaukee
collection operations which began to take full effect in the first quarter,
higher solid waste volumes from collection operations, and increased
volumes of special waste streams from the Company's project-driven other
integrated waste services.
The approximately $680,000 decrease in revenues from sales of
recyclable waste paper products was comprised of an over $1 million
decrease in recycling revenues resulting from a 60% decline in prices
received for these products compared to the first quarter of 1995,
partially offset by a 38% increase in volumes of recyclable waste paper
products processed and sold. The resale prices of, and demand for,
recyclable waste products, particularly wastepaper, can be volatile and
subject to changing market conditions. If resale prices for recyclable
waste products remain at current levels, the Company will likely continue
to realize similar reductions in recycling revenues in the second and third
quarters of 1996 compared to the corresponding 1995 periods. The Company's
recycling operations remained profitable during the first quarter of 1996
due to the Company's floor-pricing arrangement with a national paper
company coupled with the cost effectiveness of the Company's processing
facilities and fees received for providing recyclable waste collection
services to its customers.
Cost of Operations
Cost of operations for the three months ended March 31, 1996
increased $1.1 million, or 9.9%, to $12.4 million from $11.3 million for
the three months ended March 31, 1995. As a percentage of revenues, cost
of operations remained constant between the comparable quarters. The
increase in the dollar amount of cost of operations was primarily
attributable to the costs of collecting and disposing of the increased
volumes of wastes received from additional products and services provided
to new customers, including the operation of new the businesses acquired
after March 31, 1995, and the costs associated with processing the increased
volumes of recyclable products.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $417,000, or 11.4%, to $4.1 million for the three-
month period ended March 31, 1996 from $3.7 million for the three-month
period ended March 31, 1995. As a percentage of revenues, SG&A increased
from 17.9% to 18.2% in the 1996 first quarter due primarily to increased
costs for personnel necessary to support the acquisition program and to
service new customers, including those associated with the businesses
acquired after March 31, 1995.
Depreciation and Amortization
Depreciation and amortization increased $656,000, or 23.6%, to $3.4
million from $2.8 million for the three-month period ended March 31, 1996
compared to the three-month period ended March 31, 1995, primarily as a
result of increased landfill depletion costs and increased depreciation
costs of the additional assets and businesses acquired after March 31, 1995.
As a percentage of revenues, depreciation and amortization increased to
15.4% from 13.6% reflecting the increase in disposal revenue as a percent-
age of total revenue which results in additional depletion costs and the
depreciation of the additional assets of businesses acquired after March
31, 1995.
Interest Expense
Interest expense decreased $461,000, or 54.2%, to $390,000 from
$851,000 in the three-month period ended March 31, 1996 compared to the
three-month period ended March 31, 1995. The reduction in interest expense
was due primarily to the reduction in debt between the first quarter of 1996
and the first quarter of 1995 resulting primarily from the application of a
portion of the net proceeds from its March 1996 initial public offering.
Additionally, the Company benefitted from a lower overall interest rate on
outstanding borrowings in the first quarter of 1996 as a result of the
successful renegotiation of its revolving credit agreement in December 1995.
Income Taxes
The Company's effective tax rate decreased to 41.3% in the three
months ended March 31, 1996 compared to 42.2% in the three months ended
March 31, 1995. The decrease was primarily the result of increased
earnings which reduced the impact of the non-deductible amortization of
intangibles related to businesses acquired.
Liquidity and Capital Resources
In March 1996, the Company completed an initial public offering in
which it issued 3,532,500 shares of common stock at a price of $11.50 per
share. The $37.2 million of net proceeds to the Company from this offering
after deduction of underwriting discounts and commissions and other
offering expenses were used to reduce outstanding debt by $17.1 million.
The remainder of the net proceeds will be used for potential future
acquisitions, capital expenditures, and working capital. The Company's
balance sheet at March 31, 1996, reflects approximately $18.9 million in
cash and cash equivalents. Pending specific application, the Company has
invested the unused net proceeds in short-term interest bearing
securities.
At March 31, 1996, the Company had approximately $4.0 million of
long-term and short-term borrowings outstanding and approximately $1.3
million in letters of credit. At March 31, 1996, the ratio of the
Company's long-term debt to total capitalization was 2.1% compared to
28.3% at December 31, 1995. The reduction is attributable to the use of
the net proceeds from the recent public offering and net cash flow from
operations applied to reduce outstanding indebtedness.
Superior's principal strategy for future growth is through the
acquisition of additional solid waste disposal and collection operations.
Although there can be no assurance that the Company will be able to complete
successfully any such acquisitions, the Company intends to fund any such
future acquisitions in 1996 through the use of one or more of the following:
cash, issuance of capital stock, assumption of indebtedness, future
royalties, and/or contingent payments. The cash required to fund any
future acquisitions in 1996 will likely be provided from one or more of the
following sources: remaining proceeds from the Company's initial public
stock offering, cash flow from operations, and/or borrowings under the
Company's $50 million revolving credit facility (substantially all of
which is currently available).
Capital expenditures for the three months ended March 31, 1996 and
the three months ended March 31, 1995 were constant at $2.8 million.
Capital expenditures for 1996 are currently expected to be approximately
$13.6 million compared to $11.6 million in 1995. The Company intends to
fund its planned 1996 capital expenditures principally through internally
generated funds and, to a lesser extent, equipment lease financing. In
addition, the Company also anticipates that it may require substantial
additional capital expenditures to facilitate its growth strategy of
acquiring additional solid waste collection and disposal businesses. If
the Company is successful in acquiring additional landfill disposal
facilities, the Company may also be required to make significant
expenditures to bring any such newly acquired disposal facilities into
compliance with applicable regulatory requirements, obtain permits for any
such newly acquired disposal facilities or expand the available disposal
capacity at any such newly acquired disposal facilities. The amount of
these expenditures cannot be currently determined, since they will depend
on the nature and extent of any acquired landfill disposal facilities, the
condition of any facilities acquired and the permitting status of any
acquired sites. In the past, the Company has been able to obtain other
types of financing arrangements, such as equipment lease financing, to
fund its various capital requirements. The Company believes it can
readily access such additional sources of financing as necessary to
facilitate the Company's growth.
Net cash provided by operations for the three months ended March 31,
1996 decreased to $3.6 million from $4.1 million in the three months ended
March 31, 1995. The decrease was primarily due to the change in accounts
payable and accrued expenses between March 31, 1995 and 1996. During the
first quarter of 1995, no tax payments were made reflecting the impact of
the net loss in 1994, however, during the first quarter of 1996, payments
of $1.6 million were made.
Net cash used in investing activities for the three months ended
March 31, 1996 increased to $3.9 million from $2.3 million in the three
months ended March 31, 1995. The increase was primarily due to $604,000
of payments under its environmental protection program and contributions
of funds held in trust to satisfy the Company's financial assurance
obligations to various regulatory agencies for landfill facility closure
and long-term care requirements and $600,000 of cash payments for
businesses acquired in the first quarter of 1996. Under the environmental
protection program, a large insurance carrier guarantees the Company's
financial assurance obligations to the State of Wisconsin. The Company
pays an annual premium to the carrier, a substantial portion of which is
applied to a loss commutation fund which accumulates at a current market
rate of interest and is made available to the Company to fund its final
closure and long-term care costs.
Net cash provided by financing activities in the three months ended
March 31, 1996 totaled $17.8 million, compared to net cash used in
financing activities of $2.0 million in the three months ended March 31,
1995, reflecting the receipt of $37.2 million in net proceeds from the
initial public offering of the Company's stock in March 1996, a
significant portion of which was used to reduce the Company's outstanding
debt.
Seasonality
The Company's results of operations tend to vary seasonally, with the
first quarter of the year typically generating the least amount of
revenues, and with revenues higher in the second and third quarters,
followed by a decline in the fourth quarter. This seasonality reflects
the lower volume of waste, as well as decreased revenues from project-
based and other integrated waste services during the fall and winter
months, as well as, the operating difficulties experienced during the
protracted periods of cold and inclement weather typically experienced
during the winter in the Upper Midwest. Also, certain operating and other
fixes costs remain relatively constant throughout the calendar year,
resulting in a similar seasonality of operating income.
PART II
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1996 annual meeting of shareholders was held on
February 13, 1996, prior to the Company's March 8, 1996 initial public
offering of its Common Stock. The actions taken at the annual meeting
were previously reported in the Company's final prospectus for its initial
public offering and such matters are herein incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibits filed with this Form 10-Q report are incorporated herein by
reference to the Exhibit Index accompanying this report.
(b) No reports on Form 8-K were filed during the quarter ended March 31,
1996.
<PAGE>
SIGNATURE
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.
Superior Services, Inc.
----------------------------
(Registrant)
Date May 15, 1996 /s/ George K. Farr
George K. Farr
Chief Financial Officer
<PAGE>
SUPERIOR SERVICES, INC.
EXHIBIT INDEX
Exhibit
Number Exhibit Description
10.14 Employment Agreement between the Company and G.W. Dietrich
dated January 1, 1996.
10.15 Employment Agreement between the Company and George K. Farr
dated January 1, 1996.
10.16 Second Amendment to Employment Agreement between the Company
and Peter J. Ruud dated January 1, 1996.
27 Financial Data Schedule
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January
1, 1996, by and between Superior Services, Inc, a Wisconsin corporation
(the "Company"), and G. W. "Bill" Dietrich (sometimes referred to herein
as the "Employee" or the "Executive").
RECITALS:
The Company recognizes that the efforts of its officers and key management
employees have contributed and will continue to contribute to the growth
and success of the Company.
The Company believes that, in the Company's best interest, it is essential
that its officers and key management employees, including the Employee, be
retained and that the Company be in a position to rely on their ongoing
dedication and commitment to render services to the Company.
The Company wishes to take steps to assure that the Company will continue
to have the Employee's services available to the Company by entering into
an agreement with the Employee concerning his employment by the Company.
In consideration of the foregoing, the mutual provisions contained herein,
and for other good and valuable consideration, the parties agree with each
other as follows:
1. EMPLOYMENT
A. The Company hereby employs the Employee and the Employee hereby
accepts employment as the Company's President and Chief Executive Officer
on the terms and conditions hereinafter set forth. The Employee shall
perform such duties, and have such powers, authority, functions, and
responsibilities as may be assigned to him by the Company's Board of
Directors which are not (except with the Employee's consent) inconsistent
with or which interfere with or detract from those vested in or being
performed by the Employee for the Company.
B. The Employee shall devote his full time and effort to the
performance of his services to the Company. The Employee shall not,
during the term of his employment under this Agreement, be engaged in any
other activities if such activities interfere materially with the
Employee's duties, authority, and responsibilities for the Company, except
for those other activities as shall hereafter be carried on with the
Company's consent.
2. TERM
A. Subject only to the provisions of Section 4 of this Agreement,
the term of the Employee's employment under this Agreement shall be for an
initial term of three (3) years. This Agreement shall be automatically
renewed for additional three (3) year terms at the end of each year (or
any renewal term thereafter), unless either party delivers notice of
termination 30 days prior to the end of such initial term (or any renewal
term thereafter).
3. COMPENSATION
For all services rendered by the Employee under this Agreement, the
Company agrees to compensate the Employee for each compensation year
(January 1 through December 31) during the term hereof, as follows:
A. Base Salary; Annual Bonuses. A base salary shall be payable to
the Employee by the Company as a guaranteed annual amount under this
Agreement equal initially to One Hundred Eighty Two Thousand Dollars
($182,000) for each compensation year (as the same may be adjusted as
provided herein, the "Base Salary"), which shall be payable in intervals
consistent with the Company's normal payroll schedules (but in no event
less frequently than semi-monthly). The Base Salary shall be subject to
being increased in the sole discretion of the Compensation Committee of
the Board of Directors of the Company (the "Compensation Committee") but
only in such form and to such extent as the Compensation Committee may
from time to time approve. The official action of the Compensation
Committee increasing the Base Salary payable to the Employee shall modify
the amount of Base Salary stated in this Section 3(A). The Base Salary,
as in effect from time to time, may not be reduced without the written
consent of the Employee.
In addition to the Base Salary, the Company shall pay Employee, upon
achievement of the criteria and targets described below, an annual cash
bonus or other incentive cash compensation of an amount to be determined
by the Compensation Committee, which amount shall be not less than one
hundred percent (100%) of the Base Salary for fiscal 1996, together with
grants of incentive stock options to purchase shares of the Company's
Common Stock, at a price equal to the fair market value on the date of
grant. The Employee shall be eligible to receive such annual cash bonus
and any stock option grant upon achievement of the criteria and targets
established by the Company for the Employee's 1996 incentive compensation,
adjusted annually to reflect the Company's budgeted and targeted financial
performance. The number of options which Employee shall be eligible to
receive upon achievement of the performance criteria established by the
Compensation Committee from time to time may be adjusted by the
Compensation Committee each year during the term of this Agreement, but
shall not be less than forty thousand (40,000) for any year. The Company
shall not be obligated to increase the number of options which Employee
shall be entitled to receive each year.
B. Fringe Benefits. The Employee shall have the right to
participate in the other fringe benefit plans generally provided by the
Company to its full-time employees; subject to the Employee's
qualification for participation in such benefit plans pursuant to the
terms and conditions under which such benefit plans are offered.
Specifically, but without limiting the benefits and compensation the
Employee may be eligible to receive from the Company, the Employee shall
be entitled to the following:
(i) The Employee shall be entitled to participate in the
Company's pension, group life, medical, and other insurance, thrift,
savings, deferred compensation an automobile allowance (in no event less
than $500 per month), and all other Company employee benefit plans, fringe
benefits and allowances, as may from time to time be made available to the
Company's full-time employees. The Company shall use its reasonable best
efforts to maintain a life insurance policy on the life of the Employee
for beneficiaries to be named by the Employee in an amount equal to at
least two times the Base Salary of Employee. The Company shall also use
its reasonable best efforts to make available to the Employee the
opportunity to purchase additional life insurance coverage equal to two
times the Base Salary of Employee.
(ii) The Employee may incur reasonable business expenses while
on Company business, including expenses for hotels, meals, air travel,
telephone, gasoline, and similar items. The Company shall either pay such
reasonable expenses directly or promptly reimburse Employee for such
reasonable out-of-pocket expenses incurred by the Employee upon
presentation of receipts and an itemized accounting of the expenses for
which such reimbursement is sought and any other documentation necessary
to comply with applicable Internal Revenue Service rules and regulations.
(iii) The Employee shall be entitled to four (4) weeks of
paid vacation during each twelve-month period of his employment hereunder
plus two (2) "personal days", to be scheduled for times mutually
acceptable to the Employee and the Company and otherwise in accordance
with policies established by the Company.
(iv) The Company shall maintain short term disability insurance
coverage which would pay disability benefits to the Employee equal to no
less than two-thirds (2/3) of the Employee's Base Salary (not to exceed
$2,500 per week) for a period of thirteen (13) weeks.
(v) The Company shall maintain long term disability insurance
coverage which would pay disability benefits to the Employee equal to no
less than two-thirds (2/3) of the Employee's Base Salary (not to exceed
$10,000 per month) commencing one week after the final short-term
disability payment described in paragraph 2B(iv).
4. TERMINATION
A. Termination By The Company. The employment of the Employee
under this Agreement, while the Employee is on active status, may be
terminated at any time by the Company, acting through its Board of
Directors (and not a committee thereof),
(i) for cause in the event of the Employee's willful failure to
perform, or gross negligence in the performance of, his duties and
obligations under this Agreement (except by reason of incapacity due to
disability) if he shall have either failed to remedy such alleged breach
within thirty (30) days from his receipt of written notice either from the
Secretary of the Company or the Board of Directors, demanding that he
remedy such alleged breach, and provided further that the Employee
thereafter shall have received a certified copy of a resolution of the
Board of Directors of the Company adopted by the affirmative vote of a
majority of the entire membership of the Board of Directors (excluding for
all such purposes, including determination of the entire membership, the
Employee if he is then serving on the Board) at a meeting at which the
Employee was given an opportunity to be heard finding that the Employee
was guilty of conduct set forth in this paragraph, and specifying the
particulars thereof in detail,
(ii) upon a determination that the Employee (A) has engaged in
willful fraud or defalcation involving material funds or other assets of
the Company, or (B) has been convicted of, or has pled nolo contendere to,
a felony or other crime involving moral turpitude,
(iii) for any reason in its sole discretion upon written
notice to the Employee effective on the date that is three (3) years after
the date on which such notice is received by the Employee or
(iv) upon termination of the initial three (3) year term or any
renewal term if the Company has delivered notice to the Employee at least
thirty (30) days prior to such date.
B. Termination Payment. In the event of termination of the
Employee's employment under this Agreement by the Company under either
Section 4(A)(i) or (ii), the Employee shall only be entitled to receive
the monthly installment of his Base Salary being paid at the time of such
termination. If this Agreement is terminated pursuant to Section
4(A)(iii) or 4(A)(iv), the Company shall be obligated to pay to the
Employee a severance payment equal to three (3) years of the Employee's
Base Salary, together with an amount equal to the Employee's annual bonus
for the year preceding the year of such termination prorated to the time
of termination, which severance payment shall be payable in a lump sum
payment within fifteen (15) days of the termination of the Employee's
employment. In addition, the Employee shall be allowed to continue to
participate in the Company's medical and dental plans for that period of
time following termination of employment pursuant to Section 4(A)(iii) or
(iv) the Employee is entitled to continue participation under applicable
state and federal laws, at the same level of benefits and cost to the
Employee as was in effect while he was actively employed.
C. Termination By Employee. Employee shall have the right at any
time during his employment, by giving written notice to the Secretary of
the Company, to terminate the Employee's employment under this Agreement
effective ninety (90) days after the date on which such notice is given by
the Employee. In the event the Employee shall make such election under
this Section 4(C), the Employee shall, in addition to all other
reimbursements, payments, or other allowances required to be paid under
this Agreement or under any other plan, agreement, or policy which
survives the termination of this Agreement, be entitled to be paid, the
Base Salary payable during such ninety (90) day period after the giving of
such notice. Thereupon, this Agreement shall terminate and Employee shall
have no further rights under or be entitled to any other benefits of this
Agreement, provided that the provisions of Section 5 shall survive such
termination.
D Death. In the event of the Employee's death during the term of
his employment hereunder, the Company shall pay to the Employee's
surviving spouse or to the executor or administrator of the Employee's
estate (if his spouse shall not survive him) an amount equal to the
installments of his Base Salary then payable pursuant to Section 3(A),
solely for the month in which he dies. Except for such payment, all other
payments and obligations of the Company shall cease upon the Employee's
death.
E. Disability. In the event because of physical or mental illness
or personal injury the Employee shall become permanently disabled (as
defined in the long-term disability insurance policy maintained by the
Company for the benefit of the Employee) the Company may elect to
terminate the Employee's employment under this Agreement on a date which
is not less than one hundred eighty (180) days after the date on which
written notice of such termination is received by the Employee in which
event the Company shall continue to pay to the Employee the Base Salary
payable during such 180 day period reduced, in any case however, by the
amount of any payments made to such Employee under the coverage then
afforded to the Employee by the Company's disability benefit plan in
effect at the time such disability determination is made. The Employee
shall, during such disability and until the effective date of the
termination of this Agreement and of payments hereunder by the Company to
the Employee, be allowed to continue to participate in the Company's
health insurance plan to the extent permitted by the then-current terms of
the applicable benefit plans, at the same level of benefits and cost to
the Employee as was in effect while he was actively employed.
F. Effect of KEESA. This Agreement shall be subject in all
respects to the provisions of the Key Executive Employment and Severance
Agreement dated as of August 15, 1995, between the Company and the
Employee (the "KEESA"). This Agreement (other than Section 5) shall
terminate upon a Change In Control as defined in the KEESA. In such
event, the Employee shall have no further rights under or be entitled to
any other benefits of this Agreement, other than compensation or benefits
accrued through the date of termination of this Agreement, provided that
the Employee shall continue to be bound by the provisions of Section 5.
5. CONFIDENTIALITY OBLIGATIONS OF THE EXECUTIVE; NONCOMPETITION
A. During and following the Executive's employment by the Company,
the Executive shall hold in confidence and not directly or indirectly
disclose or use or copy or make lists of any confidential information or
proprietary data of the Company, except to the extent authorized in
writing by the Board of Directors of the Company or required by any court
or administrative agency (provided the Company it given prompt notice of
any such requirement and the Executive shall cooperate with the Company in
any effort to obtain relief from such request or to obtain confidential
treatment by such court or administrative agency), other than to an
employee of the Company or a person to whom disclosure is necessary,
appropriate, and in the best interest of the Company in connection with
the performance by the Executive of duties as an executive of the Company.
Confidential information shall not include any information known generally
to the public or any information of a type not otherwise considered
confidential by the Company. All records, files, documents, and
materials, or copies thereof, relating to the business of the Company
which the Executive shall prepare, or use, or come into contact with,
shall be and remain the sole property of the Company and shall be promptly
returned to the Company upon termination of employment with the Company.
B. The Executive agrees that, for a period of three (3) years after
the termination date of the Executive's employment under this Agreement
the Employee shall not, within a one hundred (100) mile radius of any
office, landfill, or facility of the Company, except as permitted by the
Company's prior written consent (as evidenced by a vote of the majority of
the Board of Directors after full disclosure of the proposed activities by
the Employee) participate in, directly or indirectly, along or as partner,
contractor or stockholder of any company or business organization, any
business activity which is related to the business in which the Company is
engaged, or which it proposes to engage in at the time of termination of
employment. The ownership of less than one percent of securities of any
corporation listed on a national securities exchange or regularly traded
over the counter even though such corporation may be a competitor of the
Company as specified above, shall not be deemed as constituting a
financial interest in such competitor.
6. ASSIGNMENT; SUCCESSORS
This Agreement shall not be assignable, or the duties delegatable, by the
Employee or the Company. This Agreement and all rights of the Employee
shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, heirs, and
beneficiaries.
7. SEVERABILITY
The provisions of this Agreement shall be regarded as divisible, and if
any of said provisions or any part hereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
8. AMENDMENT
This Agreement may not be amended or modified at any time except by
written instrument executed by the Company and the Employee.
9. WITHHOLDING
The Company shall be entitled to withhold from amounts to be paid to the
Employee hereunder any federal, state, or local withholding or other taxes
or charges which it is from time to time required to withhold; provided,
that the amount so withheld shall not exceed the minimum amount required
to be withheld by law in light of the circumstances. The Company shall be
entitled to rely on an opinion of tax counsel if any question as to the
amount or requirement of any such withholding shall arise.
10. CERTAIN RULES OF CONSTRUCTION
No draft of this Agreement shall be taken into account in construing this
Agreement. Any provision of this Agreement which requires an agreement in
writing shall be deemed to require that the writing in question be signed
by the Employee and an authorized representative of the Company (other
than the Employee).
11. GOVERNING LAW; RESOLUTION OF DISPUTES
This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Wisconsin.
Any dispute arising out of this Agreement shall, at the Employee's or the
Company's election, be determined by arbitration under the rules of the
American Arbitration Association then in effect or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for
the arbitration or litigation shall be Milwaukee, Wisconsin. The parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in the
manner provided hereunder for the giving of notices.
12. NOTICE
Notices given pursuant to this Agreement shall be in writing and shall be
deemed given when actually received by the Employee or actually received
by the Company's Secretary or any executive officer of the Company other
than the Employee. If mailed, such notices shall be mailed by United
States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to Superior Services, Inc.,
Attention: Secretary, 10150 West National Avenue, Suite 350, West Allis,
Wisconsin 53227, or if to the Employee , at the address set forth below
the Employee's signature to this Agreement, or to such other address as
the party to be notified shall have theretofore given to the other party
in writing. Copies of all notices sent to the Company shall be mailed to
the attention of the Compensation Committee of the Board of Directors
(same address).
13. NO WAIVER
No waiver by either party at any time of any breach by the other party of,
or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior or
subsequent time.
14. HEADINGS
The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
EMPLOYEE SUPERIOR SERVICES, INC.
_____________________________ ____________________________________
G. W. "Bill" Dietrich Joseph P. Tate
President and Chief Chairman
Executive Officer
Address:
____________________________________
____________________________________
Approved by the Compensation Committee of the Board of Directors:
By: ______________________________
Francis J. Podvin, Chairman
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January
1, 1996, by and between Superior Services, Inc, a Wisconsin corporation
(the "Company"), and George K. Farr (sometimes referred to herein as the
"Employee" or the "Executive").
RECITALS:
The Company recognizes that the efforts of its officers and key management
employees have contributed and will continue to contribute to the growth
and success of the Company.
The Company believes that, in the Company's best interest, it is essential
that its officers and key management employees, including the Employee, be
retained and that the Company be in a position to rely on their ongoing
dedication and commitment to render services to the Company.
The Company wishes to take steps to assure that the Company will continue
to have the Employee's services available to the Company by entering into
an agreement with the Employee concerning his employment by the Company.
In consideration of the foregoing, the mutual provisions contained herein,
and for other good and valuable consideration, the parties agree with each
other as follows:
1. EMPLOYMENT
A. The Company hereby employs the Employee and the Employee hereby
accepts employment as the Company's Treasurer and Chief Financial Officer
on the terms and conditions hereinafter set forth. The Employee shall
perform such duties, and have such powers, authority, functions, and
responsibilities as may be assigned to him by the Company's Chief
Executive Officer which are not (except with the Employee's consent)
inconsistent with or which interfere with or detract from those vested in
or being performed by the Employee for the Company.
B. The Employee shall devote his full time and effort to the
performance of his services to the Company. The Employee shall not,
during the term of his employment under this Agreement, be engaged in any
other activities if such activities interfere materially with the
Employee's duties, authority, and responsibilities for the Company, except
for those other activities as shall hereafter be carried on with the
Company's consent.
2. TERM
A. Subject only to the provisions of Section 4 of this Agreement,
the term of the Employee's employment under this Agreement shall be for an
initial term of three (3) years. This Agreement shall be automatically
renewed for additional three (3) year terms at the end of each year (or
any renewal term thereafter), unless either party delivers notice of
termination 30 days prior to the end of such initial term (or any renewal
term thereafter).
3. COMPENSATION
For all services rendered by the Employee under this Agreement, the
Company agrees to compensate the Employee for each compensation year
(January 1 through December 31) during the term hereof, as follows:
A. Base Salary; Annual Bonuses. A base salary shall be payable to
the Employee by the Company as a guaranteed annual amount under this
Agreement equal initially to One Hundred Thirty Five Thousand Dollars
($135,000) for each compensation year (as the same may be adjusted as
provided herein, the "Base Salary"), which shall be payable in intervals
consistent with the Company's normal payroll schedules (but in no event
less frequently than semi-monthly). The Base Salary shall be subject to
being increased in the sole discretion of the Compensation Committee of
the Board of Directors of the Company (the "Compensation Committee") but
only in such form and to such extent as the Compensation Committee may
from time to time approve. The official action of the Compensation
Committee increasing the Base Salary payable to the Employee shall modify
the amount of Base Salary stated in this Section 3(A). The Base Salary,
as in effect from time to time, may not be reduced without the written
consent of the Employee.
In addition to the Base Salary, the Company shall pay Employee, upon
achievement of the criteria and targets described below, an annual cash
bonus or other incentive cash compensation of an amount to be determined
by the Compensation Committee, which amount shall be not less than fifty
percent (50%) of the Base Salary for fiscal 1996, together with grants of
incentive stock options to purchase shares of the Company's Common Stock,
at a price equal to the fair market value on the date of grant. The
Employee shall be eligible to receive such annual cash bonus and any stock
option grant upon achievement of the criteria and targets established by
the Company for the Employee's 1996 incentive compensation, adjusted
annually to reflect the Company's budgeted and targeted financial
performance. The number of options which Employee shall be eligible to
receive upon achievement of the performance criteria established by the
Compensation Committee from time to time may be adjusted by the
Compensation Committee each year during the term of this Agreement, but
shall not be less than twenty thousand (20,000) for any year. The Company
shall not be obligated to increase the number of options which Employee
shall be entitled to receive each year.
B. Fringe Benefits. The Employee shall have the right to
participate in the other fringe benefit plans generally provided by the
Company to its full-time employees; subject to the Employee's
qualification for participation in such benefit plans pursuant to the
terms and conditions under which such benefit plans are offered.
Specifically, but without limiting the benefits and compensation the
Employee may be eligible to receive from the Company, the Employee shall
be entitled to the following:
(i) The Employee shall be entitled to participate in the
Company's pension, group life, medical, and other insurance, thrift,
savings, deferred compensation an automobile allowance (in no event less
than $500 per month), and all other Company employee benefit plans, fringe
benefits and allowances, as may from time to time be made available to the
Company's full-time employees. The Company shall use its reasonable best
efforts to maintain a life insurance policy on the life of the Employee
for beneficiaries to be named by the Employee in an amount equal to at
least two times the Base Salary of Employee. The Company shall also use
its reasonable best efforts to make available to the Employee the
opportunity to purchase additional life insurance coverage equal to two
times the Base Salary of Employee.
(ii) The Employee may incur reasonable business expenses while
on Company business, including expenses for hotels, meals, air travel,
telephone, gasoline, and similar items. The Company shall either pay such
reasonable expenses directly or promptly reimburse Employee for such
reasonable out-of-pocket expenses incurred by the Employee upon
presentation of receipts and an itemized accounting of the expenses for
which such reimbursement is sought and any other documentation necessary
to comply with applicable Internal Revenue Service rules and regulations.
(iii) The Employee shall be entitled to four (4) weeks of
paid vacation during each twelve-month period of his employment hereunder
plus two (2) "personal days", to be scheduled for times mutually
acceptable to the Employee and the Company and otherwise in accordance
with policies established by the Company.
(iv) The Company shall maintain short term disability insurance
coverage which would pay disability benefits to the Employee equal to no
less than two-thirds (2/3) of the Employee's Base Salary (not to exceed
$2,500 per week) for a period of thirteen (13) weeks.
(v) The Company shall maintain long term disability insurance
coverage which would pay disability benefits to the Employee equal to no
less than two-thirds (2/3) of the Employee's Base Salary (not to exceed
$10,000 per month) commencing one week after the final short-term
disability payment described in paragraph 2B(iv).
4. TERMINATION
A. Termination By The Company. The employment of the Employee
under this Agreement, while the Employee is on active status, may be
terminated at any time by the Company, acting through its Board of
Directors (and not a committee thereof),
(i) for cause in the event of the Employee's willful failure to
perform, or gross negligence in the performance of, his duties and
obligations under this Agreement (except by reason of incapacity due to
disability) if he shall have either failed to remedy such alleged breach
within thirty (30) days from his receipt of written notice either from the
Secretary of the Company, the Board of Directors or the Chief Executive
Officer, demanding that he remedy such alleged breach, and provided
further that the Employee thereafter shall have received a certified copy
of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of a majority of the entire membership of the Board of
Directors (excluding for all such purposes, including determination of the
entire membership, the Employee if he is then serving on the Board) at a
meeting at which the Employee was given an opportunity to be heard finding
that the Employee was guilty of conduct set forth in this paragraph, and
specifying the particulars thereof in detail,
(ii) upon a determination that the Employee (A) has engaged in
willful fraud or defalcation involving material funds or other assets of
the Company, or (B) has been convicted of, or has pled nolo contendere to,
a felony or other crime involving moral turpitude,
(iii) for any reason in its sole discretion upon written
notice to the Employee effective on the date that is three (3) years after
the date on which such notice is received by the Employee or
(iv) upon termination of the initial three (3) year term or any
renewal term if the Company has delivered notice to the Employee at least
thirty (30) days prior to such date.
B. Termination Payment. In the event of termination of the
Employee's employment under this Agreement by the Company under either
Section 4(A)(i) or (ii), the Employee shall only be entitled to receive
the monthly installment of his Base Salary being paid at the time of such
termination. If this Agreement is terminated pursuant to Section
4(A)(iii) or 4(A)(iv), the Company shall be obligated to pay to the
Employee a severance payment equal to three (3) years of the Employee's
Base Salary, together with an amount equal to the Employee's annual bonus
for the year preceding the year of such termination prorated to the time
of termination, which severance payment shall be payable in a lump sum
payment within fifteen (15) days of the termination of the Employee's
employment. In addition, the Employee shall be allowed to continue to
participate in the Company's medical and dental plans for that period of
time following termination of employment pursuant to Section 4(A)(iii) or
(iv) the Employee is entitled to continue participation under applicable
state and federal laws, at the same level of benefits and cost to the
Employee as was in effect while he was actively employed.
C. Termination By Employee. Employee shall have the right at any
time during his employment, by giving written notice to the Secretary of
the Company, to terminate the Employee's employment under this Agreement
effective ninety (90) days after the date on which such notice is given by
the Employee. In the event the Employee shall make such election under
this Section 4(C), the Employee shall, in addition to all other
reimbursements, payments, or other allowances required to be paid under
this Agreement or under any other plan, agreement, or policy which
survives the termination of this Agreement, be entitled to be paid, the
Base Salary payable during such ninety (90) day period after the giving of
such notice. Thereupon, this Agreement shall terminate and Employee shall
have no further rights under or be entitled to any other benefits of this
Agreement, provided that the provisions of Section 5 shall survive such
termination.
D Death. In the event of the Employee's death during the term of
his employment hereunder, the Company shall pay to the Employee's
surviving spouse or to the executor or administrator of the Employee's
estate (if his spouse shall not survive him) an amount equal to the
installments of his Base Salary then payable pursuant to Section 3(A),
solely for the month in which he dies. Except for such payment, all other
payments and obligations of the Company shall cease upon the Employee's
death.
E. Disability. In the event because of physical or mental illness
or personal injury the Employee shall become permanently disabled (as
defined in the long-term disability insurance policy maintained by the
Company for the benefit of the Employee) the Company may elect to
terminate the Employee's employment under this Agreement on a date which
is not less than one hundred eighty (180) days after the date on which
written notice of such termination is received by the Employee in which
event the Company shall continue to pay to the Employee the Base Salary
payable during such 180 day period reduced, in any case however, by the
amount of any payments made to such Employee under the coverage then
afforded to the Employee by the Company's disability benefit plan in
effect at the time such disability determination is made. The Employee
shall, during such disability and until the effective date of the
termination of this Agreement and of payments hereunder by the Company to
the Employee, be allowed to continue to participate in the Company's
health insurance plan to the extent permitted by the then-current terms of
the applicable benefit plans, at the same level of benefits and cost to
the Employee as was in effect while he was actively employed.
F. Effect of KEESA. This Agreement shall be subject in all
respects to the provisions of the Key Executive Employment and Severance
Agreement dated as of August 15, 1995, between the Company and the
Employee (the "KEESA"). This Agreement (other than Section 5) shall
terminate upon a Change In Control as defined in the KEESA. In such
event, the Employee shall have no further rights under or be entitled to
any other benefits of this Agreement, other than compensation or benefits
accrued through the date of termination of this Agreement, provided that
the Employee shall continue to be bound by the provisions of Section 5.
5. CONFIDENTIALITY OBLIGATIONS OF THE EXECUTIVE; NONCOMPETITION
A. During and following the Executive's employment by the Company,
the Executive shall hold in confidence and not directly or indirectly
disclose or use or copy or make lists of any confidential information or
proprietary data of the Company, except to the extent authorized in
writing by the Board of Directors of the Company or required by any court
or administrative agency (provided the Company it given prompt notice of
any such requirement and the Executive shall cooperate with the Company in
any effort to obtain relief from such request or to obtain confidential
treatment by such court or administrative agency), other than to an
employee of the Company or a person to whom disclosure is necessary,
appropriate, and in the best interest of the Company in connection with
the performance by the Executive of duties as an executive of the Company.
Confidential information shall not include any information known generally
to the public or any information of a type not otherwise considered
confidential by the Company. All records, files, documents, and
materials, or copies thereof, relating to the business of the Company
which the Executive shall prepare, or use, or come into contact with,
shall be and remain the sole property of the Company and shall be promptly
returned to the Company upon termination of employment with the Company.
B. The Executive agrees that, for a period of three (3) years after
the termination date of the Executive's employment under this Agreement
the Employee shall not, within a one hundred (100) mile radius of any
office, landfill, or facility of the Company, except as permitted by the
Company's prior written consent (as evidenced by a vote of the majority of
the Board of Directors after full disclosure of the proposed activities by
the Employee) participate in, directly or indirectly, along or as partner,
contractor or stockholder of any company or business organization, any
business activity which is related to the business in which the Company is
engaged, or which it proposes to engage in at the time of termination of
employment. The ownership of less than one percent of securities of any
corporation listed on a national securities exchange or regularly traded
over the counter even though such corporation may be a competitor of the
Company as specified above, shall not be deemed as constituting a
financial interest in such competitor.
6. ASSIGNMENT; SUCCESSORS
This Agreement shall not be assignable, or the duties delegatable, by the
Employee or the Company. This Agreement and all rights of the Employee
shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, heirs, and
beneficiaries.
7. SEVERABILITY
The provisions of this Agreement shall be regarded as divisible, and if
any of said provisions or any part hereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
8. AMENDMENT
This Agreement may not be amended or modified at any time except by
written instrument executed by the Company and the Employee.
9. WITHHOLDING
The Company shall be entitled to withhold from amounts to be paid to the
Employee hereunder any federal, state, or local withholding or other taxes
or charges which it is from time to time required to withhold; provided,
that the amount so withheld shall not exceed the minimum amount required
to be withheld by law in light of the circumstances. The Company shall be
entitled to rely on an opinion of tax counsel if any question as to the
amount or requirement of any such withholding shall arise.
10. CERTAIN RULES OF CONSTRUCTION
No draft of this Agreement shall be taken into account in construing this
Agreement. Any provision of this Agreement which requires an agreement in
writing shall be deemed to require that the writing in question be signed
by the Employee and an authorized representative of the Company (other
than the Employee).
11. GOVERNING LAW; RESOLUTION OF DISPUTES
This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Wisconsin.
Any dispute arising out of this Agreement shall, at the Employee's or the
Company's election, be determined by arbitration under the rules of the
American Arbitration Association then in effect or by litigation. Whether
the dispute is to be settled by arbitration or litigation, the venue for
the arbitration or litigation shall be Milwaukee, Wisconsin. The parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in the
manner provided hereunder for the giving of notices.
12. NOTICE
Notices given pursuant to this Agreement shall be in writing and shall be
deemed given when actually received by the Employee or actually received
by the Company's Secretary or any executive officer of the Company other
than the Employee. If mailed, such notices shall be mailed by United
States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to Superior Services, Inc.,
Attention: Secretary, 10150 West National Avenue, Suite 350, West Allis,
Wisconsin 53227, or if to the Employee , at the address set forth below
the Employee's signature to this Agreement, or to such other address as
the party to be notified shall have theretofore given to the other party
in writing. Copies of all notices sent to the Company shall be mailed to
the attention of the Compensation Committee of the Board of Directors
(same address).
13. NO WAIVER
No waiver by either party at any time of any breach by the other party of,
or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior or
subsequent time.
14. HEADINGS
The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
EMPLOYEE SUPERIOR SERVICES, INC.
_______________________ _________________________________
George K. Farr G. W. "Bill" Dietrich
Treasurer and Chief President and Chief Executive Officer
Financial Officer
Address:
____________________________________
____________________________________
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment made as of the 1st day of January, 1996, by and
between Superior Services, Inc., a Wisconsin Corporation (the
"Corporation"), and Peter J. Ruud (the "Employee").
Witnesseth
Whereas, the Corporation and the Employee previously entered into an
Employment Agreement dated as of September 1, 1993, as previously amended
(the "Agreement"); and
Whereas, the parties desire to further amend the Agreement as set
forth herein.
Now, Therefore, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. Section 2 of the Agreement is amended in its entirety to read as
follows:
"2. Term. Subject only to the provisions of Section 11 of this
Agreement, the term of the Employee's employment under this
Agreement shall be for an initial term of three (3) years. This
Agreement shall be automatically renewed for three (3) year
terms at the end of each year (or any renewal term thereafter),
unless either party delivers notice of termination 30 days prior
to the end of such initial term (or any renewal term
thereafter). "
2. Section 4 of the Agreement is amended in its entirety to read as
follows:
"4. Base Salary; Annual Bonuses. A base salary shall be
payable to the Employee by the Corporation as a guaranteed
annual amount under this Agreement equal initially to One
Hundred Forty Thousand Dollars ($140,000) for each compensation
year (as the same may be adjusted as provided herein, the "Base
Salary"), which shall be payable in intervals consistent with
the Corporation's normal payroll schedules (but in no event less
than semi-monthly). The Base Salary shall be subject to being
increased in the sole discretion of the Compensation Committee
of the Board of Directors of the Corporation (the "Compensation
Committee") but only in such form and to such extent as the
Compensation Committee may from time to time approve. The
official action of the Compensation Committee increasing the
Base Salary payable to the Employee shall modify the amount of
Base Salary stated in this Section 4. The Base Salary, as in
effect from time to time, may not be reduced without the written
consent of the Employee.
In addition, to the Base Salary, the Corporation shall pay
Employee, upon achievement of the criteria and targets described
below, an annual cash bonus or other incentive cash compensation
of an amount to be determined by the Compensation Committee,
which amount shall be not less than fifty percent (50%) of the
Base Salary for fiscal year 1996, together with grants of
incentive stock options to purchase shares of the Corporation's
Common Stock, at a price equal to the fair market value on the
date of grant. The Employee shall be eligible to receive such
annual cash bonus and any stock option grant upon achievement of
the criteria and targets established by the Corporation for the
Employee's 1996 incentive compensation, adjusted annually to
reflect the Corporation's budgeted and targeted financial
performance. The number of options which Employee shall be
eligible to receive upon achievement of the performance criteria
established by the Compensation Committee from time to time may
be adjusted by the Compensation Committee each year during the
term of this Agreement, but shall not be less than twenty
thousand (20,000) for each year. The Corporation shall not be
obligated to increase the number of options which Employee shall
be entitled to receive each year."
3. Section 5 of the Agreement shall be amended in its entirety to
read as follows:
5. Fringe Benefits. The Employee shall have the right to
participate in the other fringe benefit plans generally provided
by the Corporation to its full-time employees; subject to the
Employee's qualification for participation in such benefit plans
pursuant to the terms and conditions under which such benefit
plans are offered. Specifically, but without limiting the
benefits and compensation the Employee may be eligible to
receive from the Corporation, the Employee shall be entitled to
the following:
(a) The Employee shall be entitled to participate in
the Corporation's pension, group life, medical, and other
insurance, thrift, savings, deferred compensation an automobile
allowance (in no event less than $500 per month), and all other
Corporation employee benefit plans, fringe benefits and
allowances, as may from time to time be made available to the
Corporation's full-time employees. The Corporation shall use its
reasonable best efforts to maintain a life insurance policy on
the life of the Employee for beneficiaries to be named by the
Employee in an amount equal to at least two times the Base
Salary of Employee. The Corporation shall also use its
reasonable best efforts to make available to the Employee the
opportunity to purchase additional life insurance coverage equal
to two times the Base Salary of Employee.
(b) The Employee may incur reasonable business
expenses while on Corporation business, including expenses for
hotels, meals, air travel, telephone, gasoline, and similar
items. The Corporation shall either pay such reasonable
expenses directly or promptly reimburse Employee for such
reasonable out-of-pocket expenses incurred by the Employee upon
presentation of receipts and an itemized accounting of the
expenses for which such reimbursement is sought and any other
documentation necessary to comply with applicable Internal
Revenue Service rules and regulations.
(c) The Employee shall be entitled to four (4) weeks
of paid vacation during each twelve-month period of his
employment hereunder plus two (2) "personal days", to be
scheduled for times mutually acceptable to the Employee and the
Corporation and otherwise in accordance with policies
established by the Corporation.
(d) The Corporation shall maintain short term
disability insurance coverage which would pay disability
benefits to the Employee equal to no less than two-thirds (2/3)
of the Employee's Base Salary (not to exceed $2,500 per week)
for a period of thirteen (13) weeks.
(e) The Corporation shall maintain long term
disability insurance coverage which would pay disability
benefits to the Employee equal to no less than two-thirds (2/3)
of the Employee's Base Salary (not to exceed $10,000 per month)
commencing one week after the final short-term disability
payment described in paragraph 5(d).
(f) The Corporation shall pay the annual dues to
continue the Employee's membership in the American Bar
Association, Wisconsin Bar Association, and Milwaukee Bar
Association. In addition, the Corporation shall pay the fees
and reasonable travel expenses for the Employee's attendance at
seminars and conferences to enable the Employee to complete
fifteen (15) hours of continuing education credits each calendar
year as required to keep in force and effect Employee's license
to practice law in the State of Wisconsin."
4. Section 7(b) of the Agreement shall be amended by deleting the
reference to "two (2) years" and substituting therefor the words "three
(3) years".
5. Section 11(a) of the Agreement shall be amended in its entirety
and the following subsections substituted therefore:
"(a) Termination By The Corporation. The employment of the
Employee under this Agreement, while the Employee is on active
status, may be terminated at any time by the Corporation, acting
through its Board of Directors (and not a committee thereof),
(i) for cause in the event of the Employee's willful
failure to perform, or gross negligence in the performance of,
his duties and obligations under this Agreement (except by
reason of incapacity due to disability) if he shall have either
failed to remedy such alleged breach within thirty (30) days
from his receipt of written notice either from the Board of
Directors or the Chief Executive Officer of the Corporation,
demanding that he remedy such alleged breach, and provided
further that the Employee thereafter shall have received a
certified copy of a resolution of the Board of Directors of the
Corporation adopted by the affirmative vote of a majority of the
entire membership of the Board of Directors (excluding for all
such purposes, including determination of the entire membership,
the Employee if he is then serving on the Board) at a meeting at
which the Employee was given an opportunity to be heard finding
that the Employee was guilty of conduct set forth in this
paragraph, and specifying the particulars thereof in detail,
(ii) upon a determination that the Employee (A) has
engaged in willful fraud or defalcation involving material funds
or other assets of the Corporation, or (B) has been convicted
of, or has pled nolo contendere to, a felony or other crime
involving moral turpitude,
(iii) for any reason in its sole discretion upon
written notice to the Employee effective on the date that is
three (3) years after the date on which such notice is received
by the Employee or
(iv) upon termination of the initial three (3) year
term or any renewal term if the Corporation has delivered notice
to the Employee at least thirty (30) days prior to such date.
(b) Termination Payment. In the event of termination of
the Employee's employment under this Agreement by the
Corporation under either Section 4(A)(i) or (ii), the Employee
shall only be entitled to receive the monthly installment of his
Base Salary being paid at the time of such termination. If this
Agreement is terminated pursuant to Section 11(a)(iii) or
11(a)(iv), the Corporation shall be obligated to pay to the
Employee a severance payment equal to three (3) years of the
Employee's Base Salary, together with an amount equal to the
Employee's annual bonus for the year preceding the year of such
termination prorated to the time of termination, which severance
payment shall be payable in a lump sum payment within fifteen
(15) days of the termination of the Employee's employment. In
addition, the Employee shall be allowed to continue to
participate in the Corporation's medical and dental plans for
that period of time following termination of employment pursuant
to Section 11(a)(iii) or 11(a)(iv) the Employee is entitled to
continue participation under applicable state and federal laws,
at the same level of benefits and cost to the Employee as was in
effect while he was actively employed.
(c) Termination By Employee. Employee shall have the
right at any time during his employment, by giving written
notice to the Chief Executive Officer of the Corporation, to
terminate the Employee's employment under this Agreement
effective ninety (90) days after the date on which such notice
is given by the Employee. In the event the Employee shall make
such election under this Section 11(c), the Employee shall, in
addition to all other reimbursements, payments, or other
allowances required to be paid under this Agreement or under any
other plan, agreement, or policy which survives the termination
of this Agreement, be entitled to be paid, the Base Salary
payable during such ninety (90) day period after the giving of
such notice. Thereupon, this Agreement shall terminate and
Employee shall have no further rights under or be entitled to
any other benefits of this Agreement, provided that the
provisions of Section 7 shall survive such termination.
(d) Death. In the event of the Employee's death during
the term of his employment hereunder, the Corporation shall pay
to the Employee's surviving spouse or to the executor or
administrator of the Employee's estate (if his spouse shall not
survive him) an amount equal to the installments of his Base
Salary then payable pursuant to Section 4, solely for the month
in which he dies. Except for such payment, all other payments
and obligations of the Corporation shall cease upon the
Employee's death.
(e) Disability. In the event because of physical or
mental illness or personal injury the Employee shall become
permanently disabled (as defined in the long-term disability
insurance policy maintained by the Corporation for the benefit
of the Employee) the Corporation may elect to terminate the
Employee's employment under this Agreement on a date which is
not less than one hundred eighty (180) days after the date on
which written notice of such termination is received by the
Employee in which event the Corporation shall continue to pay to
the Employee the Base Salary payable during such 180 day period
reduced, in any case however, by the amount of any payments made
to such Employee under the coverage then afforded to the
Employee by the Corporation's disability benefit plan in effect
at the time such disability determination is made. The Employee
shall, during such disability and until the effective date of
the termination of this Agreement and of payments hereunder by
the Corporation to the Employee, be allowed to continue to
participate in the Corporation's health insurance plan to the
extent permitted by the then-current terms of the applicable
benefit plans, at the same level of benefits and cost to the
Employee as was in effect while he was actively employed.
(f) Effect of KEESA. This Agreement shall be subject in
all respects to the provisions of the Key Executive Employment
and Severance Agreement dated as of August 15, 1995, between the
Corporation and the Employee (the "KEESA"). This Agreement
(other than Section 7) shall terminate upon a Change In Control
as defined in the KEESA. In such event, the Employee shall have
no further rights under or be entitled to any other benefits of
this Agreement, other than compensation or benefits accrued
through the date of termination of this Agreement, provided that
the Employee shall continue to be bound by the provisions of
Section 7."
6. Section 11(b) of the Agreement shall be renumbered as Section
11(g).
7. Section 13(a) of the Agreement is amended by deleting the
reference to "paragraph 11(a)(iii) or (iv)" from the second sentence in
such Section and by substituting therefor the words "paragraph 11(a)(i) or
(ii)".
8. Except as set forth herein the terms of the Employment Agreement
shall remain unaltered and in full force and effect.
In Witness Whereof, the parties have entered into this Second
Amendment as of the day and year set forth above.
Superior Services, Inc. Employee
By: ______________________________ ______________________________
G.W. "Bill" Dietrich, President Peter J. Ruud
and Chief Executive Officer
Approved by the Compensation Committee of the Board of Directors:
By: ______________________________
Francis, J. Podvin, Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF SUPERIOR SERVICES, INC.
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 18,875
<SECURITIES> 0
<RECEIVABLES> 15,160
<ALLOWANCES> (717)
<INVENTORY> 718
<CURRENT-ASSETS> 36,761
<PP&E> 122,547
<DEPRECIATION> 41,552
<TOTAL-ASSETS> 141,080
<CURRENT-LIABILITIES> 11,958
<BONDS> 1,952
0
0
<COMMON> 167
<OTHER-SE> 89,430
<TOTAL-LIABILITY-AND-EQUITY> 141,080
<SALES> 0
<TOTAL-REVENUES> 22,315
<CGS> 0
<TOTAL-COSTS> 15,810
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 164
<INTEREST-EXPENSE> 390
<INCOME-PRETAX> 2,323
<INCOME-TAX> 958
<INCOME-CONTINUING> 1,365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,365
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
