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 June 30, 1997
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 X No
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 August 5, 1997 was 19,259,238.
<PAGE>
SUPERIOR SERVICES, INC.
FORM 10-Q INDEX
For the Quarter Ended June 30, 1997
Page Number
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations . . . . . . 4
Condensed Consolidated Statements of Shareholders'
Investment . . . . . . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . 7-11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 11-17
PART II. OTHER INFORMATION
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 18
Item 4 Submission of Matters to a Vote of Securities Holders . . . 18
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
Superior Services, Inc.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
December 31, June 30,
1996 1997
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $16,579 $5,064
Trade accounts receivable 19,226 27,695
Prepaid expenses and other
current assets 2,817 4,091
-------- -------
Total current assets 38,622 36,850
Property and equipment, net 115,691 164,180
Restricted funds held in trust 8,035 8,161
Other assets 4,044 5,782
Intangible assets, net 23,634 58,047
-------- -------
Total assets $190,026 $273,020
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $2,529 $1,956
Trade accounts payable 6,966 10,899
Accrued payroll and related expenses 3,178 3,266
Other accrued expenses 9,825 10,808
Accrued income taxes 299 1,518
-------- -------
Total current liabilities 22,797 28,447
Long-term debt, net of current maturities 4,907 60,565
Disposal site closure and long-term
care obligations 30,470 37,800
Deferred income taxes 13,679 13,399
Other liabilities 11,128 11,844
Commitments and contingencies
Shareholders' investment:
Common stock 187 193
Additional paid-in capital 81,754 89,334
Retained earnings 25,104 31,438
-------- -------
Total shareholders' investment 107,045 120,965
-------- -------
Total liabilities and
shareholders' investment $190,026 $273,020
======== ========
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)
Three months ended June 30, Six months ended June 30,
1996 1997 1996 1997
(Restated) (Restated)
Revenues $28,710 $45,291 $52,085 $75,974
Expenses:
Cost of operations 14,582 24,697 27,346 41,230
Selling, general and
administrative costs 4,325 6,242 8,502 11,830
Merger costs - 1,035 - 1,035
Depreciation and
amortization expenses 4,235 5,827 7,894 10,301
------ ------ ------ ------
23,142 37,801 43,742 64,396
------ ------ ------ ------
Operating income 5,568 7,490 8,343 11,578
Other income (expense):
Interest expense (146) (366) (543) (559)
Other income (expense) 210 (249) 486 2
------ ------ ------ ------
Income before income taxes 5,632 6,875 8,286 11,021
Provision for income taxes 2,323 2,977 3,418 4,687
------ ------ ------ ------
Net income $3,309 $3,898 $4,868 $6,334
====== ====== ====== ======
Earnings per share $0.18 $0.20 $0.28 $0.33
====== ====== ====== ======
Weighted average number
of common and common
equivalent shares
outstanding 18,788,711 19,525,115 17,328,023 19,427,082
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Superior Services, Inc.
Condensed Consolidated Statements of Shareholders' Investment
(In Thousands, Except Share Amounts)
(Unaudited)
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
Balance at
December 31, 1996,
as previously
reported 17,021,449 $170 $80,015 $23,683 $103,868
Shares issued for
pooling of interests 1,705,000 17 1,739 1,421 3,177
---------- ---- ------- ------- --------
Balance at
December 31, 1996,
as restated 18,726,449 187 81,754 25,104 107,045
Net income - - - 6,334 6,334
Issuance of common
stock:
Stock options 395,252 4 5,059 - 5,063
Acquisitions 136,138 2 2,521 - 2,523
---------- ---- ------- ------- --------
Balance at
June 30, 1997 19,257,839 $193 $89,334 $31,438 $120,965
========== ==== ======= ======= ========
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 six months ended June 30,
1996 1997
(Restated)
OPERATING ACTIVITIES
Net income $4,868 $6,334
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,894 10,301
Deferred income taxes (615) (280)
Gain on sale of assets (76) (21)
Changes in operating assets and
liabilities, net of effects of
acquired businesses:
Accounts receivable (1,395) (4,593)
Prepaid expenses and other current assets (295) (1,148)
Accounts payable and accrued expenses (2,137) 3,453
Disposal site closure and long-term
care obligation 1,389 1,747
Other (296) (1,604)
------- -------
Net cash provided by operating activities 9,337 14,189
INVESTING ACTIVITIES
Acquisition of businesses, net of
cash acquired (2,949) (75,766)
Capital expenditures (6,218) (11,816)
Proceeds from sale of discontinued operations 562 -
Proceeds from sale of property and equipment 394 700
Increase in restricted funds held in trust (810) (126)
------- -------
Net cash used in investing activities (9,021) (87,008)
FINANCING ACTIVITIES
Net decrease in short-term borrowings (1,697) (573)
Proceeds from long-term debt 1,685 60,024
Payments of long-term debt (18,589) (3,179)
Issuance of common stock 37,248 5,032
------- -------
Net cash provided by financing activities 18,647 61,304
------- -------
Net increase (decrease) in cash and cash
equivalents 18,963 (11,515)
Cash and cash equivalents at beginning
of period 3,101 16,579
------- -------
Cash and cash equivalents at end of period $22,064 $5,064
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 an
integrated solid waste services company providing solid waste collection,
transfer, transportation, disposal and recycling services to generators of
solid waste and special waste in nine states. 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. The Company has also restated the
previously issued financial statements for the three and six months ended
June 30, 1996 and the consolidated balance sheet presented as of December
31, 1996 to reflect the acquisition of Resource Recovery Transfer &
Transportation, Inc. ("R2T2") consummated on June 27, 1997 and accounted
for using the pooling of interests method. 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 and the related notes
thereto (the "Financial Statements") included in the Company's Form 10-K
for the year ended December 31, 1996.
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 1996 financial statements to
conform to the 1997 presentation.
2. Significant Accounting Policies and Use of Estimates
There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1996. For a description of
these policies, see Note 2 of Notes to Consolidated Financial Statements
in the Company's Form 10-K for the year ended December 31, 1996.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements, basic earnings per share will
exclude the dilutive effect of stock options. Basic earnings per share
for the six months ended June 30, 1997 and June 30, 1996 would have been
the same as previously reported primary earnings per share. The impact of
Statement 128 on the calculation of fully diluted earnings per share for
these quarters is not expected to be material.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3. Acquisitions
In the first six months of 1997, the Company acquired 12 solid waste
businesses which were accounted for as purchases. Aggregate consideration
for these acquisitions was approximately $74.6 million in cash. 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.
During the first six months of 1997, in addition to the shares issued
to effect the R2T2 acquisition discussed below, 136,138 shares of Common
Stock were issued under the Company's Form S-4 Registration Statement.
77,024 shares were issued and $1.2 million of cash was paid in settlement
of final valuation computations on certain acquisitions which occurred in
1996. In addition, 59,114 shares were issued as payment of debt of
entities acquired in 1997.
On June 27, 1997, the Company consummated its acquisition of R2T2
accounted for as a pooling of interests, pursuant to which the Company
issued 1,705,000 shares of Common Stock in the transaction under the
Company's Form S-4 Registration Statement. The Company incurred
nonrecurring merger costs of approximately $1.0 million during the second
quarter of 1997 as a result of the merger consummated with R2T2. The
merger costs include severance and bonuses, professional fees, and other
merger related costs. As of June 30, 1997, $510,000 had been accrued for
merger costs expected to be paid by the end of 1997. Periods prior to
1995 have not been restated to include the accounts and operations of the
acquired company as combined results are not materially different from the
results as previously presented. Combined and separate results of
operations of the Company prior to consummation of the merger, and R2T2
for the restated periods, are as follows (in thousands):
Superior R2T2 Combined
Three months ended June 30, 1996
(unaudited):
Revenue $26,553 $2,157 $28,710
Income before income taxes $5,158 $474 $5,632
Net income $3,030 $279 $3,309
Six months ended June 30, 1996
(unaudited):
Revenue $48,868 $3,217 $52,085
Income before income taxes $7,481 $805 $8,286
Net income $4,395 $473 $4,868
The unaudited pro forma results of operations below assume that 1996
and 1997 acquisitions accounted for as purchases occurred at the beginning
of 1996. In addition to combining the historical results of all such
acquired entities, the pro forma calculations include adjustments for
amortization of various intangibles acquired in conjunction with the
acquisitions. However, no adjustments have been reflected for
nonrecurring expenses as a result of the acquisition of the entities.
Six Months Ended June 30,
1996 1997
(Unaudited and in thousands, except per share amounts)
Total net revenue $84,034 $91,601
Net income $5,571 $6,900
Earnings per share $0.32 $0.35
The above pro forma financial information is based on certain
assumptions and preliminary estimates which are subject to change. The
above pro forma financial information reflects the consideration paid at
closing for all 1996 and 1997 acquisitions accounted for as purchases. It
does not reflect the payments of any contingent consideration. The above
pro forma financial information also does not reflect anticipated volume
or price increases, synergies or other potential operational improvements.
The pro forma financial information does not purport to be indicative of
the results which would actually have been recognized had the purchase
transactions been completed on January 1, 1996 or which may be obtained in
the future.
4. Shareholders' Investment
On February 11, 1997, the Company granted employee incentive stock
options exercisable for 302,935 shares of Common Stock at an exercise
price of either $21.50 or $23.65 per share (fair market value on grant
date was $21.50). During the three months ended June 30, 1997, an
additional 45,000 employee incentive stock options were granted at an
exercise price of either $21.50 or $22.25 per share. The options become
exercisable 25% after one year and an additional 6.25% for each quarter
thereafter.
On May 13, 1997, the Company granted non-qualified common stock
options for 17,500 shares at an exercise price of $21.25 per share to
independent directors serving on the Company's Board of Directors. These
options vest ratably over an approximate three-year period.
5. Commitments and Contingencies
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 EPA 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 June 30, 1997, the
estimated one-time capital cost 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. As the duration is uncertain, the
accrual was not measured on a discounted basis. 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 Company has been paid $482,755 by the seller. The seller's
remaining potential indemnification obligation was collateralized as of
June 30, 1997 by $2,317,245 in cash held in escrow. The $2,317,245
recoverable from the seller is included on the Company's balance sheet as
part of "other assets." The Company has established reserves which it
believes are adequate to cover the estimate of identified potential
remediation costs.
In connection with the formation of the Company in 1993 through the
consolidation of three groups of independent waste services companies,
certain potential environmental liabilities associated with the previously
filled portion of the Superior Valley Meadows landfill were identified.
At the time of the consolidation of these companies into the Company, a
contingent liability escrow was established to cover the then estimated
costs of remediation and monitoring with respect to these contingent
liabilities. To indemnify the Company against up to $1,308,000 of these
contingent liabilities, 130,800 shares of the Company's Common Stock
otherwise issuable as part of the consolidation to the individual who was
the principal shareholder of the prior owner of the site and who is now a
director, executive officer and significant shareholder of the Company,
were withheld from issuance. In order to preserve the Company's rights
under this indemnification arrangement prior to the February 24, 1997
expiration date for advancing such types of indemnification claims, the
Company formally notified the individual of the Company's claim against
the withheld shares for the entire amount of the originally established
liability escrow. The Company believes any liability in excess of the
indemnification obligation of the shareholder is expected to be
immaterial.
The Missouri Department of Natural Resources ("MDNR") has alleged
that the prior owner of the Company's Oak Ridge Landfill in Ballwin,
Missouri exceeded the permitted vertical elevation of the landfill by
allowing disposal of solid waste outside the permitted contours of the
landfill. The MDNR has also alleged that the landfill has not complied
with the terms of a settlement agreement with the MDNR addressing these
allegations. A Company subsidiary purchased the landfill in September
1996. The Company is unable to assess the cost, if any, of correcting
this alleged violation, or the extent of any fine which may be imposed by
MDNR. The Company believes that any expense associated with correcting
the alleged violation as well as any such fine imposed would be covered by
the indemnification obligations of the landfill's prior owner.
A group of local citizens has filed a petition with the WDNR for an
administrative contested case hearing with respect to one of Superior's
Wisconsin landfills. The petition challenges the environmental
feasibility of the proposed expansion at the landfill.
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.
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Management's Discussion and
Analysis are "forward-looking statements" intended to qualify for the safe
harbors from liability established by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can generally be
identified as such because the context of the statement will include words
such as the Company "believes," "anticipates," "expects" or words of
similar import. Similarly, statements that describe the Company's future
plans, objectives, strategies or goals are also forward-looking
statements. Such forward-looking statements are subject to certain risks
and uncertainties which are described in close proximity to such
statements and which could cause actual results to differ materially from
those currently anticipated. Shareholders, potential investors and other
readers are urged to consider these factors carefully in evaluating the
forward-looking statements and are cautioned not to place undue reliance
on such forward-looking statements. The forward-looking statements made
herein are only made as of the date of this report and the Company
undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.
General
As of June 30, 1997, the Company provided solid waste collection,
transfer, recycling and disposal services to over 400,000 residential,
commercial and industrial customers in Wisconsin and in Alabama, Illinois,
Iowa, Michigan, Minnesota, Missouri, Ohio and Pennsylvania. As of June
30, 1997, solid waste operations consisted of ten Company-owned and
operated landfills, 29 collection operations, 14 recycling facilities and
nine solid waste transfer stations. The Company also manages five other
landfills for third parties. The Company also provides other integrated
waste services, most of which are project-based and provide additional
waste volumes to the Company's landfills.
As described more fully below, revenues for the periods
presented were comprised of fees received for the following services:
Three Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
Collection 45% 51% 46% 52%
Third party disposal 25% 21% 23% 21%
Recycling 12% 11% 12% 12%
Other integrated waste services 18% 17% 19% 15%
100% 100% 100% 100%
The Company believes that future operations acquired will continue
the trend in its revenue mix away from recycling and other integrated
waste services and more towards solid waste collection and disposal. The
percentage of revenue obtained from collection services increased to 52%
in the first six months of 1997 compared to 46% in the first six months of
1996 due to a greater portion of revenue being generated from collection
operations acquired since June 30, 1996.
As of the date of this report, the Company had entered into
preliminary, nonbinding letters of intent and purchase agreements relating
to the possible acquisition of three additional solid waste landfills (two
of which are in new markets) and several collection companies (one in a
new market) which businesses the Company estimates represent aggregate
annualized revenue of more than $15 million. The Company cannot predict
whether these letters of intent and purchase agreements will result in
consummated acquisitions or whether the terms of any such consummated
acquisitions will be the same as the terms contemplated. There can be no
assurance that actual revenues realized by the Company from the successful
acquisition of these potential acquisition candidates will not differ or
differ materially from such estimate.
All financial data for the three- and six-month periods ended
June 30, 1996 and 1997 have been restated and give retroactive effect to
reflect the Company's June 27, 1997 acquisition of R2T2 in a transaction
accounted for as a pooling of interests.
Results of Operations
Overview
Revenues in the 1997 second quarter of $45.3 million increased 57.8%
over the comparable period in the prior year, as restated, primarily due
to businesses acquired and successfully integrated into the Company during
the latter half of 1996 and in the second quarter of 1997. Earnings per
share, excluding one-time merger costs resulting from the acquisition of
R2T2 increased 33.3% to $0.24 per share from $0.18 per share for the
second quarter of 1996. The one-time merger costs related to the
Company's acquisition of R2T2 totaled approximately $0.04 per share,
reducing reported net earnings to $0.20 per share. Earnings per share,
including the merger costs, increased 11.1% to $0.20 per share from $0.18
per share for the second quarter of 1996. Net income, exclusive of these
merger costs, increased 40.8% to $4.7 million in the 1997 second quarter,
from $3.3 million in the same period of 1996, as restated. Net income,
including the merger costs, increased 17.8% to $3.9 million in the 1997
second quarter from $3.3 million in the same period of 1996, as restated.
For the first six months of 1997, revenues increased 45.9% to $76.0
million compared to $52.1 million for the same period in the prior year,
as restated, largely reflecting the impact of operations acquired since
June 30, 1996. Operating income as a percentage of revenue decreased
reflecting the $1.0 million of merger costs incurred in June 1997 related
to the R2T2 acquisition accounted for as a pooling of interests. Despite
the $1.0 million of merger costs incurred, net income increased 30.1% to
$6.3 million in the first half of 1997 from $4.9 million in the first half
of 1996, as restated. Earnings per share increased to $0.33 for the first
six months of 1997 from $0.28 per share for the same period in 1996.
The following table 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 June 30, Six months ended June 30,
1996 1997 1996 1997
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of Operations 50.8 54.5 52.5 54.3
Selling, general and 15.1 13.8 16.3 15.6
administrative expenses
Merger costs - 2.3 - 1.4
Depreciation and amortization 14.7 12.9 15.2 13.5
Operating income 19.4 16.5 16.0 15.2
Interest expense 0.5 0.8 1.0 0.7
Other (income) expense (0.7) 0.5 (0.9) -
Income before income taxes 19.6 15.2 15.9 14.5
Income taxes 8.1 6.6 6.6 6.2
Net income 11.5% 8.6% 9.3% 8.3%
Revenues
Revenues increased $16.6 million, or 57.8%, and $23.9 million, or
45.9%, for the three- and six-month periods, respectively, ended June 30,
1997 compared with the same periods in 1996, as restated. These increases
for each 1997 period were primarily due to the impact of operations
acquired since June 30, 1996. Revenues for each 1997 period compared to
the same periods in 1996, as restated, increased $14.8 million and $21.6
million, respectively, from the impact of operations acquired and
accounted for under the purchase method. The increase in revenue was also
due, to a much lesser extent, to increases in volumes of wastes collected
and disposed at the Company's landfills. Daily disposal volume at the
Company's landfills rose to an average of more than 9,900 tons per day in
the 1997 second quarter compared to an average of 7,000 tons per day in
the corresponding period last year, including the average daily tonnage of
the two landfills owned by R2T2. The higher landfill volume was
predominantly the result of waste received at three new disposal sites
acquired since June 30, 1996, as well as increased volumes of special
waste streams from the Company's project-driven other integrated waste
services and increased volumes received from a disposal contract for a
customer's Milwaukee collection operations.
Revenue from other integrated waste services as a percentage of total
revenue decreased from 19% in the first six months of 1996 to 15% in the
first six months of 1997. While growth in volumes of special waste
generated by the Company's Special Services increased on a comparable
basis between periods, project-based revenues declined approximately $1.0
million in the first half of 1997 primarily due to the impact of a large
project performed in the first quarter of 1996.
The impact of prices for recyclable wastepaper had essentially no
effect on revenues in the 1997 second quarter compared to the 1996 second
quarter. The Company expects this trend to continue for the remainder of
1997 assuming average resale prices remain at levels similar to 1996. The
resale prices of, and demand for, recyclable waste products, particularly
wastepaper, can be volatile and subject to changing market conditions.
The Company's recycling operations continued to be profitable in the 1997
second quarter 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 increased $10.1 million, or 69.4%, and $13.9
million, or 50.8%, for the three- and six-month periods ended June 30,
1997, respectively, compared to the same periods in 1996, as restated. As
a percentage of revenues, cost of operations increased from 50.8% in the
second quarter of 1996, as restated, to 54.5%, in the second quarter of
1997 and from 52.5% in the first six months of 1996, as restated, to 54.3%
in the first six months of 1997, in each case primarily due to the higher
relative percentage of business recognized from collection operations
(which typically have higher costs of operations as a percentage of
revenues than disposal operations). Changes in this trend are dependent on
the timing and mix of potential future business acquisitions, as well as
the seasonality of the Company's operations. See "Seasonality." 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 services provided to new customers,
including the operation of new businesses acquired after June 30, 1996.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $1.9 million, or 44.3%, and $3.3 million, or 39.1%,
for the three- and six-month periods ended June 30, 1997, respectively,
compared to the same periods in 1996, as restated. As a percentage of
revenues, SG&A decreased to 13.8% in the second quarter of 1997 compared
to 15.1% the second quarter of 1996, as restated, and to 15.6% in the
first six months of 1997 compared to 16.3% in the first six months of
1996. This trend is expected to continue in the near term due primarily
to the impact of spreading corporate SG&A costs over a larger revenue base
as the Company integrates its recent acquisitions and continues to pursue
its acquisition growth strategy. While SG&A decreased as a percentage of
revenues, the actual dollar amount of SG&A increased primarily due to
increased costs for personnel necessary to support the Company's
acquisition program and to service new customers, including those
associated with the operations acquired after June 30, 1996.
Merger Costs
The Company incurred nonrecurring merger costs of approximately $1.0
million during the second quarter of 1997 as a result of the merger
consummated June 27, 1997 with R2T2. The merger costs included severance
and bonuses, professional fees, and other related merger costs. As of
June 30, 1997, $510,000 had been accrued for merger related costs expected
to be paid by the end of 1997.
Depreciation and Amortization
Depreciation and amortization increased $1.6 million, or 37.6%, and
$2.4 million, or 30.5%, for the three- and six-month periods ended June
30, 1997, respectively, compared to the same periods in 1996, as restated,
primarily as a result of increased landfill depletion costs and increased
depreciation costs of the additional assets and operations acquired after
June 30, 1996. As a percentage of revenues, depreciation and amortization
decreased to 12.9% in the second quarter of 1997 compared to 14.7% in the
second quarter of 1996, as restated, and to 13.5% in the first six months
of 1997 compared to 15.2% in the first six months of 1996, as restated,
due to the lower relative percentage of revenues received from disposal
operations (which typically have higher depreciation and amortization
costs as a percentage of revenue compared to collection operations) and
due to lower depletion rates at several landfills. These lower depletion
rates reflect an increase in special waste volumes which typically
utilizes fewer cubic yards of air space due to the density of this type of
waste.
Interest Expense
Interest expense increased $220,000, or 150.7%, and $16,000, or 2.9%,
for the three- and six-month periods ended June 30, 1997, respectively,
compared to the same periods in 1996, as restated. Interest of $457,000
was capitalized during the first half of 1997 related to land being
developed.
Other Income (Expense)
Other income (expense) increased $459,000 from other income of
$210,000 in the three-month period ended June 30, 1996, as restated, to an
expense of $249,000 in the three-month period ended June 30, 1997. Other
income decreased $484,000 from other income of $486,000 in the six-month
period ended June 30, 1996, as restated, to $2,000 in the six-month period
ended June 30, 1997. Approximately $500,000 of direct costs associated
with acquisition activity primarily related to one unsuccessful
acquisition bid for a significant company being liquidated in a bankruptcy
auction process were charged against earnings in the second quarter of
1997.
Liquidity and Capital Resources
The Company's balance sheet at June 30, 1997 reflected approximately
$5.1 million in cash and cash equivalents compared to $16.6 million at
December 31, 1996, as restated.
At June 30, 1997, the Company had approximately $60.0 million of
long-term borrowings and $2.3 million in letters of credit outstanding
under its revolving credit facility, with $47.7 million remaining
available under its credit facility for future borrowings. Total
long-term debt at June 30, 1997 was $60.6 million. At June 30, 1997, the
ratio of the Company's long-term debt to total capitalization was 33.4%
compared to 4.4% at December 31, 1996, as restated. This increase was
attributable primarily to acquisition activity.
On August 7, 1997, the Company filed a Form S-3 "shelf" registration
statement with the Securities and Exchange Commission to register
5,000,000 shares of common stock. The shares registered may be offered by
the Company and sold to the public from time to time or at any time, as
determined by market conditions and other factors. The Company registered
the shares on the shelf registration statement in order to provide it with
the ability and flexibility to raise equity capital by issuing additional
shares of common stock quickly to take advantage of favorable market
conditions and to facilitate its growth strategy of acquiring additional
solid waste operations. The shares may be offered and sold directly by
the Company or through agents, underwriters or dealers designated from
time to time, as will be offered and further set forth in any prospectus
supplement with respect to the registered shares.
The Company's principal strategy for future growth is through the
acquisition of additional solid waste disposal, transfer and collection
operations. As of the date of this report, the Company had entered into
preliminary, nonbinding letters of intent and purchase agreements relating
to the possible acquisition of three additional solid waste landfills (two
of which are in new markets) and several collection companies (one in a
new market). If all definitive purchase agreements were completed on the
terms set forth in such agreements, the Company would be required to pay
approximately $17.8 million in cash purchase price and assumption of
indebtedness. There can be no assurance such acquisitions will be
completed or, if completed, will be completed on the same terms as set
forth in such purchase agreements. The cash required to fund any future
acquisitions in 1997 will likely be provided from one or more of the
following sources: net proceeds from common stock offered under the
Company's Form S-3 "shelf" registration statement, existing cash balances,
cash flow from operations and/or borrowings under the Company's revolving
credit facility. During the first half of 1997, the Company paid $74.6
million to complete 12 acquisitions of solid waste operations.
Capital expenditures for the six months ended June 30, 1997 were
$11.8 million compared to $6.2 million for the six months ended June 30,
1996, as restated, primarily due to increased spending for trucks and
other revenue producing assets. Capital expenditures for 1997 are
currently expected to be approximately $23.0 million compared to $17.5
million in 1996, as restated. The Company intends to fund future capital
expenditures principally through internally generated funds and 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 six months ended June 30,
1997 increased to $14.2 million from $9.3 million in the six months ended
June 30, 1996, as restated. The increase was primarily due to an increase
in accounts payable and accrued expenses of $5.6 million, the increase in
net income of $1.5 million, and the increase in depreciation and
amortization, a noncash expense, of $2.4 million between the first six
months of 1996, as restated, and the first six months of 1997. These
increased cash amounts were offset by the increase in accounts receivable
of $3.2 million between the first six months of 1996, as restated, and the
first six months of 1997.
Net cash used in investing activities for the six months ended June
30, 1997 increased to $87.0 million from $9.0 million in the six months
ended June 30, 1996, as restated. The increase was primarily due to the
Company's $75.8 million of net cash payments for operations acquired and
the $5.6 million increase in capital expenditures in the six months ended
June 30, 1997 compared to the six months ended June 30, 1996, as restated.
Net cash provided by financing activities in the six months ended
June 30, 1997 totaled $61.3 million, compared to $18.6 million in the six
months ended June 30, 1996, as restated, reflecting proceeds from
borrowings under the Company's $110 million revolving credit facility in
the second quarter of 1997 and proceeds from the exercise of employee
stock options. The cash provided by financing activities in 1996, as
restated, reflected the receipt of $37.2 million in net proceeds from the
initial public offering of the Company's stock in March 1996 and the
subsequent reduction of the Company's outstanding debt.
Seasonality
The Company's historical results of operations have tended 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
fixed costs remain relatively constant throughout the calendar year,
resulting in a similar seasonality of operating income.
<PAGE>
PART II
Item 1. Legal Proceedings
See Note 5 of Notes to Condensed Consolidated Financial
Statements included in this Form 10-Q for information regarding certain
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1997 annual meeting of shareholders was held on
Tuesday, May 13, 1997. At the meeting, the shareholders elected each of
Gary G. Edler and Warner C. Frazier to the Company's Board of Directors
for three-year terms expiring at the Company's 2000 annual meeting of
shareholders and until their successors are duly qualified and elected.
The terms of all other then serving directors continued after the meeting,
including Joseph P. Tate, G. William Dietrich, Francis J. Podvin, Donald
Taylor and Walter G. Winding. As of the April 2, 1997 record date for the
annual meeting, 17,485,140 shares of Common Stock were outstanding and
eligible to vote. Of the 13,562,278 shares of Common Stock voted at the
meeting in person or by proxy, the following votes were recorded for each
nominee:
For Withheld
Name Votes Percentage Votes Percentage
Gary G. Edler 13,555,478 99.9% 6,800 0.1%
Warner C. Frazier 13,553,610 99.9% 8,668 0.1%
The tabulation of votes for the election of directors resulted
in no broker non-votes or abstentions.
No other matters were brought before the meeting for a
shareholder vote.
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) The following reports on Form 8-K were filed during the
quarter ended June 30, 1997:
1. Form 8-K, dated May 2, 1997, reporting the Company's
acquisition of net assets from Browning-Ferris
Industries, Inc.
2. Form 8-K/A (Amendment No. 1), dated June 27, 1997,
amending the Current Report on Form 8-K, dated May 2,
1997.
3. Form 8-K/A (Amendment No. 2), dated June 30, 1997,
amending the Current Report on Form 8-K, dated May 2,
1997.
<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 August 14, 1997 /s/ George K. Farr
George K. Farr
Chief Financial Officer
<PAGE>
SUPERIOR SERVICES, INC.
EXHIBIT INDEX
Exhibit Number Exhibit Description
10.14 Employment Agreement dated July 10, 1997 between the
Company and Scott S. Cramer
27 Financial Data Schedule
Exhibit 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of July
10, 1997, by and between Superior Services, Inc, a Wisconsin corporation
(the "Company"), and Scott S. Cramer ("Employee").
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 one of the Company's Vice Presidents 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 President and Chief Executive
Officer.
B. 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 current 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 a
term of one (1) year. The term of this Agreement shall renew
automatically for successive one (1) year terms, subject to termination as
set forth in Section 4.
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. A base salary shall be payable to the Employee
equal initially to One Hundred Twenty Thousand Dollars ($120,000) for each
compensation year (as the same may be adjusted by the Company from time to
time, the "Base Salary"), which shall be payable in intervals consistent
with the Company's normal payroll schedules.
In addition to the Base Salary, the Employee shall be eligible to
receive such annual cash bonus and any stock option grant upon achievement
of the criteria and targets established adjusted annually to reflect the
Company's budgeted and targeted financial performance.
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.
C. Expenses. 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.
D. Vacation. The Employee shall be entitled to paid vacation and
"personal days", to be scheduled at times mutually acceptable to the
Employee and the Company and otherwise in accordance with policies
established by the Company.
4. TERMINATION
A. Termination By The Company. The employment of the Employee
under this Agreement, may be terminated at any time by the Company,
(i) for cause in the event of the Employee's deliberate and
intentional continuing refusal to substantially perform his duties and
obligations under this Agreement (except by reason of incapacity due to
illness or accident),
(ii) upon a determination that the Employee (A) has engaged in
willful fraud or defalcation involving 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, or
(iii) without cause, upon sixty (60) days prior written
notice.
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
his Base Salary through the date of such termination. If this Agreement
is terminated pursuant to Section 4(A)(iii) the Company shall be obligated
to pay to the Employee a severance payment equal to one year of the
Employee's Base Salary, in effect on the date the notice is given. In the
event that Employee's employment is terminated due to a "change of
control", Employee's employment shall be deemed to have been terminated
under Section 4(A)(iii), and Company shall pay Employee, a severance
payment equal to one year of the Employee's Base Salary at the rate in
effect on the effective date of the change in control. A "change in
control" shall be deemed to have occurred if:
(a) any person (other than any employee benefit plan of the
Company, any subsidiary of the Company or any person
organized, appointed, or established pursuant to the terms
of any such benefit plan) is or becomes the beneficial
owner of securities of the Company representing at least
50% of the combined voting power of the Company's then
outstanding securities; or
(b) there shall be consummated (x) any consolidation, merger,
share exchange or other business combination of the Company
in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's
capital stock would be converted into cash, securities, or
other property, other than a merger of the Company in which
the holders of the Company's capital stock immediately
prior to the merger have the same proportionate ownership
of capital stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange, or
other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the
consolidated assets of the Company.
C. Termination By Employee. Employee shall have the right at any
time during his employment, by giving written notice to the President and
Chief Executive Officer of the Company, to terminate the Employee's
employment under this Agreement effective thirty (30) days after the date
on which such notice is given by the Employee (unless such effective date
shall be accelerated at the option of the Company). 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 through the
effective date of termination. 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.
E. Disability. (i) If during the first six (6) months of the term
of this Agreement the Employee shall become permanently disabled (as
defined in the group long-term disability insurance policy maintained by
the Company) because of physical or mental illness or personal injury,
this Agreement shall terminate as of the date of such permanent
disability. In such event the Company shall pay to the Employee or his
guardian an amount equal to the installments of his Base Salary then
payable pursuant to Section 3(A), solely for the month in which he becomes
permanently disabled. (ii) In the event the Employee shall become
permanently disabled (as defined in the group long-term disability
insurance policy maintained by the Company) after the first six (6) months
of the term of this Agreement, the Employee shall receive disability
insurance benefits in accordance with the Company's disability insurance
policy. (iii) If during the first six (6) months of the term of this
Agreement the Employee shall become temporarily disabled (as defined in
the group short-term disability insurance policy maintained by the
Company) because of physical or mental illness or personal injury, this
Agreement shall not terminate, and all payments of Base Salary shall
continue during said six (6) month period. Thereafter, the Employee shall
receive disability insurance benefits in accordance with the Company's
disability insurance policy.
5. CONFIDENTIALITY OBLIGATIONS OF THE EMPLOYEE; NONCOMPETITION
A. During and following the Employee's employment by the Company,
the Employee 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 President and Chief Executive Officer of the Company or
required by any court or administrative agency other than to an employee
of the Company or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Employee of duties
as an executive of the Company. Confidential information shall not
include any information known generally to the public. 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 Employee agrees that, for a period of one (1) year after the
termination date of the Employee's employment under this Agreement for any
reason the Employee shall not:
(i) Directly or indirectly, either individually or as an
employee, agent, partner, shareholder, consultant, or in any other
capacity, participate in, engage in, or have a financial or other interest
in any Venture in Competition; provided, however, that ownership of less
than one percent (1.0%) interest in a corporation whose shares of stock
are traded on a recognized stock exchange or traded on the over-the-
counter markets shall not be deemed a violation of this section.
(ii) Directly or indirectly, individually, or as an employee,
agent, partner, shareholder, consultant, or in any other capacity, canvas,
contact, solicit, or accept any of Superior's customers for the purpose of
providing services that are substantially similar to the services or
business of Superior. (For purposes of this Agreement, "customer" shall
include, on any given date, any customer who was serviced by Superior
during the last two (2) years of employee's employment.)
(iii) In any manner induce, attempt to induce, or assist
others to induce any customer, client, employee, insurer, or any other
person having a business or employment relationship with Superior to
terminate such relationship.
(iv) Directly or indirectly, either as an employee, agent,
partner, shareholder, consultant, or in any other capacity, use or
disclose, or cause to be used or disclosed, any confidential or
proprietary information acquired by Employee during Employee's employment
with Superior, including but not limited to customer lists, price lists,
agreements, procedures, sales techniques, marketing strategies, matters
relating to operations, business software and computer programs and
printouts, techniques, engineering information or financial information
relating to Superior.
C. "Venture in Competition" is defined to mean any business that,
at any given date, owns or operates a landfill business, or in any manner
collects, stores, transports, recycles, or disposes of solid, hazardous,
or other waste products or provides hazardous material emergency response
or environmental remediation services, within one hundred (100) miles of
any location in which duties were assigned to Employee during the last two
(2) years of Employee's employment.
6. ASSIGNMENT; SUCCESSORS
This Agreement shall not be assignable by 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. Company shall be entitled to rely on an opinion of
nationally recognized tax counsel if any question as to the amount or
requirement of any such withholding shall arise.
10. CERTAIN RULES OF CONSTRUCTION
No party shall be considered as being responsible for the drafting of this
Agreement for the purpose of applying any rule construing ambiguities
against the drafter or otherwise. 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.
11. GOVERNING LAW
This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of Wisconsin. .
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 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:
President and Chief Executive Officer, 10150 West National Avenue, Suite
350, West Allis, Wisconsin 53227, or if to the Employee , at the
Employee's current address according to the Company's payroll records, or
to such other address as the party to be notified shall have theretofore
given to the other party in writing.
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.
/s/ Scott S. Cramer By: /s/ G.W. Dietrich
Scott S. Cramer G. W. "Bill" Dietrich
President and Chief Executive Officer
<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 SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,064
<SECURITIES> 0
<RECEIVABLES> 28,831
<ALLOWANCES> (1,136)
<INVENTORY> 1,162
<CURRENT-ASSETS> 36,850
<PP&E> 226,532
<DEPRECIATION> (62,352)
<TOTAL-ASSETS> 273,020
<CURRENT-LIABILITIES> 28,447
<BONDS> 60,565
0
0
<COMMON> 193
<OTHER-SE> 120,772
<TOTAL-LIABILITY-AND-EQUITY> 273,020
<SALES> 0
<TOTAL-REVENUES> 75,974
<CGS> 0
<TOTAL-COSTS> 51,531
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 364
<INTEREST-EXPENSE> 559
<INCOME-PRETAX> 11,021
<INCOME-TAX> 4,687
<INCOME-CONTINUING> 6,334
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,334
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
