SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
________________________
Date of Report
(Date of earliest
event reported): April 21, 1997
Superior Services, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 0-27508 39-1733405
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
10150 West National Avenue, Suite 350, West Allis, Wisconsin 53227
(Address of principal executive offices including zip code)
(414) 328-2800
(Registrant's telephone number)
Amendment No. One
The undersigned Registrant hereby amends the following
item of its Current Report filed on Form 8-K dated
April 30, 1997, in the pages attached hereto.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
Superior Services, Inc. ("Superior") acquired all or part of the Green
Bay, Wisconsin; Columbus, Ohio; and DuBois, Pennsylvania solid waste
collection, disposal, transfer, and recycling operations from Browning-
Ferris Industries, Inc. and certain of its wholly-owned subsidiaries
("Acquired Operations")
The following financial statements, pro forma financial information and
exhibits are filed as part of this report*.
A. Financial statements for the Acquired Operations.
1. Columbus, Ohio; Green Bay, Wisconsin; and DuBois,
Pennsylvania Operations Statements of Net Assets
Acquired by Superior Services, Inc. as of
September 30, 1996, and March 31, 1997 (unaudited).
2. Columbus, Ohio; Green Bay, Wisconsin; and DuBois,
Pennsylvania Operations Statements of Revenues and
Direct Operating Expenses of the Operations Acquired
by Superior Services, Inc. for the year ended
September 30, 1996 and the six month periods ended
March 31, 1997 (unaudited) and March 31, 1996 (unaudited).
B. Pro forma financial information.
1. Pro Forma Combined Condensed Balance Sheet at March 31,
1997, (unaudited).
2. Pro Forma Combined Condensed Statements of Earnings for the
year ended December 31, 1996 (unaudited) and the three
months ended March 31, 1997, (unaudited).
C. Exhibits
1. Independent Auditors' Consent
* Preparation of full financial statements in accordance with Rule 3.05
of Regulation S-X would be impractical because Superior is only
acquiring a portion of the Acquired Operations' assets and assuming
certain liabilities. As a result, it is not practical or meaningful
for Superior to prepare a full balance sheet for the Acquired
Operations. These facts also preclude the preparation of a combined
statement of cash flows.
Audited statements of revenues and direct operating expenses for each
of the periods specified by Rule 3.05 are furnished to satisfy the
requirements for audited statements of income.
Audited statements of net assets acquired for each of the periods
specified by Rule 3.05 are furnished to satisfy the requirements for
audited balance sheets.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To
Superior Services, Inc.
We have audited the accompanying statement of net assets acquired by
Superior Services, Inc. as of September 30, 1996, and the related
statements of revenues and direct operating expenses of the operations
acquired by Superior Services, Inc. for the year then ended. These
financial statements are the responsibility of the Acquired Operations'
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
As described in Note 1, the accompanying financial statements were
prepared pursuant to the purchase and sale agreement effective April 21,
1997 for the purpose of the complying with Rule 3-05 of Regulation S-X
of the Securities and Exchange Commission and are not intended to be a
complete presentation of assets and liabilities and results of operations
on a stand-alone basis of the Acquired Operations.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets acquired by Superior Services,
Inc. as of September 30, 1996, and the revenues less direct operating
expenses of the operations acquired by Superior Services, Inc. for the
year then ended, as described in Note 1, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
June 19, 1997
<PAGE>
COLUMBUS, OHIO; GREEN BAY, WISCONSIN; AND
DUBOIS, PENNSYLVANIA OPERATIONS
STATEMENT OF NET ASSETS ACQUIRED BY SUPERIOR SERVICES, INC.
(Notes 1 and 2)
March 31,
September 30, 1997
1996 (Unaudited)
ASSETS ACQUIRED:
Current assets-
Accounts receivable, net of
allowance of $206,500 and
$185,700, respectively $5,250,000 $4,929,000
Inventory 313,000 239,000
Prepaids and other assets 97,000 58,000
--------- ---------
Total current assets 5,660,000 5,226,000
Property and equipment, at cost-
Landfill, land and improvements 50,191,000 50,776,000
Buildings 1,284,000 1,284,000
Vehicles and equipment 21,868,000 21,868,000
---------- ----------
73,343,000 73,928,000
Less-Accumulated depreciation (42,832,000) (45,378,000)
---------- ----------
Total property and
equipment, net 30,511,000 28,550,000
---------- ----------
Other assets 47,000 33,000
Total assets acquired 36,218,000 33,809,000
---------- ----------
LIABILITIES ASSUMED:
Current Liabilities-
Accrued expenses 181,000 211,000
Portion of closure and post-closure
liabilities payable within one
year 629,000 ---
Deferred revenue 2,134,000 2,011,000
---------- ----------
Total current
liabilities 2,944,000 2,222,000
Closure and post-closure liabilities,
less portion payable within one year 3,872,000 4,128,000
Commitments and contingencies (Note 4)
---------- ----------
Total liabilities
assumed 6,816,000 6,350,000
---------- ----------
NET ASSETS ACQUIRED $29,402,000 $27,459,000
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLUMBUS, OHIO; GREEN BAY, WISCONSIN; AND
DUBOIS, PENNSYLVANIA OPERATIONS
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
OF THE OPERATIONS
ACQUIRED BY SUPERIOR SERVICES, INC.
(Notes 1 and 2)
For the For the Six-Month
Year Ended Period Ended March 31
September 30,
1996 1996 1997
(Unaudited)
REVENUES $32,222,000 $15,280,000 $16,555,000
DIRECT OPERATING EXPENSES
(Note 3):
Cost of Operations 19,625,000 9,079,000 9,948,000
Selling, General and
Administrative 5,611,000 2,540,000 2,378,000
Depreciation and
Amortization 4,956,000 2,379,000 2,546,000
--------- --------- ---------
Direct operating
profit $2,030,000 $1,282,000 $1,683,000
========= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
COLUMBUS, OHIO; GREEN BAY, WISCONSIN; AND
DUBOIS, PENNSYLVANIA OPERATIONS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. ORGANIZATION AND BASIS OF PRESENTATION:
On April 21, 1997, Superior Services, Inc. (Superior or the Company), and
Browning-Ferris Industries, Inc. and Subsidiaries (BFI) entered into a
purchase and sale agreement (the Agreement) whereby Superior agreed to
purchase from BFI certain assets and assume certain liabilities of BFI's
DuBois, Pennsylvania; Green Bay, Wisconsin; and Columbus, Ohio, operations
(collectively referred to as the Acquired Operations). The purchase price
was $56.7 million plus Final Net Working Capital (as defined) of each
respective business. The Final Net Working Capital statements must be
finalized approximately 120 days after the acquisition date based on the
value of the assets and liabilities included in the Final Net Working
Capital statements as determined by both Superior and BFI. Additionally,
there is a contingent payment related to the expansion permit for the
Greentree Landfill located in DuBois, Pennsylvania that requires Superior
to pay BFI up to an additional $2.0 million.
The accompanying statement of net assets acquired by Superior Services,
Inc. presents, as of September 30, 1996, the assets of the Acquired
Operations and certain liabilities of the Acquired Operations to be
assumed by Superior pursuant to the Agreement presented on a historical
cost basis. The assets acquired consist primarily of accounts receivable,
and collection, transfer, and disposal facilities and equipment located in
and around Green Bay, Wisconsin; Columbus, Ohio; and DuBois, Pennsylvania.
The liabilities assumed consist primarily of closure and post-closure
liabilities related to the landfills, accrued property taxes, customer
deposits and deferred revenues. The Acquired Operations' customer
accounts were assumed and certain municipal service contracts were
acquired by Superior. The accounts receivable and deferred revenue
related to these customer accounts and municipal service contracts are
included in the accompanying statement of net assets acquired by Superior
Services, Inc. However, cash, certain property and equipment, income tax
benefits and liabilities, accrued expenses and certain other assets and
liabilities related to the Acquired Operations will be retained by BFI and
are not included herein. Pursuant to the Agreement, Superior will assume
certain operating leases that are not required by generally accepted
accounting principles to be recorded as a liability in these financial
statements. The statement of revenues and direct operating expenses of
the operations acquired by Superior Services, Inc. represents those
revenues and expenses that are specifically identifiable to the Acquired
Operations and do not include certain expenses as described in Note 3.
As a result, the accompanying financial statements are not intended to be
a complete presentation of the Acquired Operations' assets and liabilities
and results of operations had they been operated as stand-alone entities
(see Note 3). Rather, these financial statements were prepared pursuant
to the Agreement for the purpose of complying with Rule 3-05 of Regulation
S-X of the Securities and Exchange Commission.
2. ACCOUNTING POLICIES AND SELECTED FINANCIAL STATEMENT INFORMATION:
Revenue Recognition
The Acquired Operations generate revenues principally by providing
collection, transportation, recycling, and disposal services to generators
of solid and special waste. Revenues are recorded as services are
provided. Certain customers are billed in advance and, accordingly,
recognition of the related revenues is deferred until the services are
provided.
Property and Equipment
Property and equipment are stated at cost. Depreciation for financial
reporting purposes is provided using the straight-line method over the
estimated useful lives of the respective assets.
Landfill costs, including engineering and other professional fees, are
amortized using the units-of-production method, which is calculated using
the total units of airspace filled during the year in relation to total
estimated permitted airspace capacity. The determination of airspace
usage and remaining airspace is an essential component in the calculation
of landfill asset depletion. This determination is performed by
conducting annual topographic surveys.
Disposal Site Closure and Post-Closure
The Company also has material financial obligations relating to closure
and post-closure costs of the disposal facilities acquired. While the
precise amounts of these future obligations cannot be determined at
September 30, 1996, the Acquired Operations have accrued the costs on a
units-of-production method based on the estimated total costs for final
closure of the acquired disposal facilities and post-closure monitoring
costs pursuant to applicable regulations. The Acquired Operations'
estimate of these costs is expressed in current dollars and is not
discounted to reflect anticipated timing of future expenditures. The
Acquired Operations had accrued approximately $4.5 million and $4.1
million (unaudited) for such projected costs at September 30, 1996, and
March 31, 1997, respectively. The Company will provide additional
accruals based on engineering estimates of consumption of airspace over
the useful lives of the facilities.
Use of Estimates
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.
Interim Financial Information
The interim financial statements included herein are unaudited; however,
they include all adjustments of a normal recurring nature, which, in the
opinion of management, are necessary to present fairly the net assets
acquired at March 31, 1997, and the revenues less direct operating
expenses for the six-month periods ended March 31, 1997, and 1996,
respectively. Accounting measurements at interim dates inherently involve
greater reliance on estimates than at year-end. The statements of
revenues less direct operating expenses for the interim periods presented
are not necessarily indicative of the results to be expected for the
entire year.
3. DIRECT OPERATING EXPENSES:
The direct operating expenses of the Acquired Operations include costs
associated with direct customer support to produce revenues. Such
expenses (including certain allocations) include costs of vehicle drivers,
vehicle operating expenses, disposal costs, landfill maintenance and
operation costs, depreciation and amortization, supplies, certain
occupancy costs and selling, general and administrative expenses. Certain
expenses such as interest expense, corporate overhead allocations and
provision for income taxes incurred by BFI on behalf of and to support the
Acquired Operations have not been included in these financial statements
since these costs have historically been included in BFI's consolidated
statement of operations or are used for internal tracking purposes and are
not representative of costs incurred by the individual operating
locations. Accordingly, as also indicated in Note 1, the accompanying
financial statements are not intended to be a complete presentation of the
Acquired Operations' assets and liabilities and results of operations had
they been operated as stand-alone entities.
4. COMMITMENTS AND CONTINGENCIES:
The Company has assumed the future obligation to pay additional
consideration to a former owner in the event of future permitted landfill
expansion at the Greentree Landfill in the amount of 3% of net gate
revenues (net of taxes, surcharges, and host fees) on the expanded
airspace.
Certain former owners of the M&N Landfill located in Chilton, Wisconsin
are entitled to receive additional consideration from the Company upon
final permitting of the landfill. The additional consideration of 50
cents per additional yard of permitted airspace not to exceed a total
value of $5 million payable in the Company's stock six months after
receipt of the permit. The Company is obligated to make royalty payments
to the former owners in the amount of 5% of Net Landfill Revenue (as
defined) generated from the landfill operations. The Company also assumed
an obligation to pay the former owners monthly payments totalling $200
thousand annually through July, 2000.
<PAGE>
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited Pro Forma Combined Condensed Financial Statements
(Pro Forma Financial Data) are based on the historical Consolidated
Financial Statements of Superior Services, Inc. ("Superior"), and the
Columbus, Ohio; Green Bay, Wisconsin; and DuBois, Pennsylvania operations
acquired from Browning-Ferris Industries, Inc. (the Acquired Operations),
adjusted to give effect to the acquisition.
The unaudited Pro Forma Combined Condensed Statements of Earnings for the
three month period ended March 31, 1997 and the year ended December 31,
1996 present pro forma operating results, as if the transaction had
occurred as of January 1, 1996. The unaudited Pro Forma Combined
Condensed Balance Sheet as of March 31, 1997 gives effect to the
transaction as if it had occurred on that date. The pro forma adjustments
are described in the notes thereto.
The Pro Forma Financial Data does not purport to represent what Superior's
results would actually have been had the acquisition in fact occurred on
such date or to project Superior's results of operations and financial
position for any future period or date. The pro forma financial
statements should be read in conjunction with Superior's and the Acquired
Operations' historical financial statements and related notes thereto.
The acquisition was accounted for using the purchase method of accounting.
Superior has not yet determined the final allocation of purchase price
and, accordingly, the amounts shown herein may differ from the amounts
ultimately determined. The pro forma adjustments are based on available
information and upon certain assumptions that management of Superior
believes are reasonable under the circumstances.
<PAGE>
<TABLE>
SUPERIOR SERVICES, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET (UNAUDITED)
March 31, 1997
(Thousands of Dollars)
<CAPTION>
Acquired Operations Pro Forma
Superior Historical Adjustments Adjusted (1) Combined
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $19,804 $--- $--- $--- $19,804
Trade accounts receivable 16,040 4,929 --- 4,929 20,969
Prepaid expenses and
other current assets 3,222 297 --- 297 3,519
------- ------- ------- ------- --------
Total current assets 39,066 5,226 --- 5,226 44,292
Property and equipment, net 107,116 28,550 10,199 38,749 145,865
Restricted funds held in trust 8,094 --- --- --- 8,094
Other assets 4,397 33 --- 33 4,430
Intangible assets, net 20,139 --- 22,979 22,979 43,118
------- ------- ------- ------- --------
Total assets $178,812 $33,809 $33,178 $66,987 $245,799
======= ======= ======= ======= ========
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities:
Current maturities of
long-term debt $1,219 $--- $--- $--- $1,219
Trade accounts payable 4,757 --- --- --- 4,757
Accrued payroll and
related expenses 2,231 --- --- --- 2,231
Other accrued expenses 6,072 2,222 3,037 5,259 11,331
Accrued income taxes
------- ------- ------- ------- -------
Total current liabilities 14,279 2,222 3,037 5,259 19,538
Long-term debt, net of current
maturities 1,100 --- 57,600 57,600 58,700
Disposal site closure and
long-term care obligation 28,788 4,128 --- 4,128 32,916
Deferred income taxes 10,935 --- --- --- 10,935
Other liabilities 11,349 --- --- --- 11,349
Shareholders' investment 112,361 27,459 (27,459) --- 112,361
------- ------- -------- -------- --------
Total liabilities and
shareholders' investment $178,812 $33,809 $33,178 $66,987 $245,799
======= ======= ======== ======== ========
</TABLE>
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO THE PRO FORMA COMBINED CONDENSED BALANCE SHEET (UNAUDITED)
March 31, 1997
(Dollars in Thousands)
(1) Reflects the acquisition of the Browning-Ferris, Inc. ("BFI") Green
Bay, Wisconsin; Columbus, Ohio; and DuBois, Pennsylvania acquired
operations accounted for using the purchase method. Superior has not
yet determined the final allocation of the purchase price and,
accordingly, the amounts shown below may differ from the amounts
ultimately determined.
Allocation of purchase price based on preliminary estimated values
excluding payment for net working capital which is subject to final
adjustment:
Property and equipment $ 6,804
Landfill and landfill development 31,945
Cost over fair value of net assets acquired 22,979
Long-term care and closure liability assumed (4,128)
-------
Total 57,600
=======
The entire purchase price of $57.6 million was assumed to be paid out
of long-term borrowing.
The increase in accrued expenses reflects the payment to BFI for net
working capital assumed. The purchase price does not include the
amount (up to $2.0 million) which Superior would be required to pay
BFI if an expansion permit is obtained for the Greentree Landfill
located in DuBois, Pennsylvania.
<PAGE>
<TABLE>
SUPERIOR SERVICES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS (UNAUDITED)
Year Ended December 31, 1996
(In Thousands, Except Share and Per Share Amounts)
<CAPTION>
Acquired Operations Pro Forma
Historical Adjustments
Superior (1) (2) Combined
<S> <C> <C> <C> <C>
Revenues $109,659 $32,222 $--- $141,881
Expenses:
Cost of operations 57,187 19,625 --- 76,812
Selling, general and
administrative
expenses 17,272 5,611 --- 22,883
Depreciation and
amortization 15,511 4,956 (3)(1,138) 19,329
------- ------- ------- --------
89,970 30,192 (1,138) 119,024
------- ------- ------- --------
Operating Income 19,689 2,030 1,138 22,857
Other income:
Interest Expense (654) --- (4)(2,229) (2,883)
Other income 1,017 --- --- 1,017
------- ------- ------- -------
Income before taxes 20,052 2,030 (1,091) 20,991
Provision for income tax 8,271 --- (5) 376 8,647
------- ------- ------- -------
Net Income $11,781 $2,030 ($1,467) $12,344
======= ======= ======= =======
Earnings per share: $0.72 $0.75
Weighted average number of
common and common
equivalent shares
outstanding 16,444,257 16,444,257
========== ==========
</TABLE>
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO THE PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
(UNAUDITED)
For the Year Ended December 31, 1996
(Dollars in Thousands)
(1) Reflects the historical statement of revenues and direct operating
expenses of the operations acquired by Superior Services, Inc. in
Green Bay, Wisconsin; Columbus, Ohio; and DuBois, Pennsylvania for
the fiscal year ended September 30, 1996, included herein.
(2) Adjustments to reflect the historical amounts as if the acquisition
occurred as of January 1, 1996.
(3) Reduction in depreciation and amortization due to:
Reduction in depreciation and amortization of assets
acquired as a result of preliminary purchase price
allocation $(2,117)
Amortization of excess purchase price over
twenty-five years 979
-------
Net reduction in depreciation and amortization $(1,138)
=======
(4) Incremental interest expense (net of capitalized interest
of $1,745) $ 2,229
=======
Interest was computed on the purchase price of $57,600 as
if the loan were outstanding for the entire period.
Capitalized interest relates to the landfill development
projects in Green Bay, Wisconsin, and DuBois, Pennsylvania.
Interest was not computed on the payment for working capital
as this amount was assumed to be paid out of Superior's
operating cash.
(5) Provision for income tax assuming an effective 40% rate resulting
from:
Provision for income tax on historical operations $ 812
Provision for income tax on pro forma adjustments (436)
------
$ 376
======
<PAGE>
<TABLE>
SUPERIOR SERVICES, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS (UNAUDITED)
Three Months Ended March 31, 1997
(In Thousands, Except Share and Per Share Amounts)
<CAPTION>
Acquired Operations Pro Forma
Historical Adjustments
Superior (1) (2) Combined
<S> <C> <C> <C> <C>
Revenues $27,721 $7,633 $--- $35,354
Expenses:
Cost of operations 15,070 4,799 --- 19,869
Selling, general and
administrative expenses 4,963 698 --- 5,661
Depreciation and
amortization 4,066 1,273 (3) (393) 4,946
------ ------ ------ ------
24,099 6,770 (393) 30,476
------ ------ ------ ------
Operating Income 3,622 863 393 4,878
Other Income:
Interest Expense (95) --- (4) (509) (604)
Other Income 321 --- --- 321
------ ------- ------ ------
Income before taxes 3,848 863 (116) 4,595
Provision for income tax 1,587 --- (5) 299 1,886
------ ------- ------- ------
Net Income $2,261 $863 ($415) $2,709
====== ======= ======= ======
Earnings per share: $0.13 $0.15
====== ======
Weighted average number of
common and common equivalent
shares outstanding 17,626,292 17,626,292
========== ==========
</TABLE>
<PAGE>
SUPERIOR SERVICES, INC.
NOTES TO THE PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
(UNAUDITED)
For the Three Months Ended March 31, 1997
(Dollars in Thousands)
(1) Reflects the historical income statement of revenues and direct
operating expenses for the operations acquired by Superior Services,
Inc. in Green Bay, Wisconsin; Columbus, Ohio; and DuBois,
Pennsylvania for the three months ended March 31, 1997, included
herein.
(2) Adjustments to reflect the historical amounts as if the acquisition
occurred as of January 1, 1997
(3) Reduction in depreciation and amortization due to:
Reduction in depreciation and amortization of assets
acquired as a result of preliminary purchase price
allocation $(638)
Amortization of excess purchase price over
twenty-five years 245
-----
Net reduction in depreciation and amortization $(393)
======
(4) Incremental interest expense (net of capitalized interest
of $398) $ 509
======
Interest was computed on the purchase price of $57,600 as if
the loan were outstanding for the entire period. Capitalized
interest relates to the landfill development projects in Green
Bay, Wisconsin, and DuBois, Pennsylvania.
Interest was not computed on the payment for working capital as
this amount was assumed to be paid out of Superior's operating
cash.
(5) Provision for income tax at an effective 40% rate resulting
from:
Provision for income tax on historical operations $ 345
Provision for income tax on pro forma adjustments (46)
-----
$299
=====
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUPERIOR SERVICES, INC.
Date: June 27, 1997 By: /s/ George K. Farr
George K. Farr
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE NO.
23.1 Consent of Accountants
