As filed with the Securities and Exchange Commission on May 30, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Superior Services, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 4953 39-1733405
(State of (Primary Standard (I.R.S. Employer
incorporation) Industrial Classification Identification No.)
Code Number
10150 West National Avenue, Suite 350
West Allis, Wisconsin 53227
(414) 328-2800
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
_______________________
Peter J. Ruud, Esq. copy to:
Vice President, General Counsel and Steven R. Barth, Esq.
Secretary Foley & Lardner
Superior Services, Inc. 777 East Wisconsin Avenue
10150 West National Avenue, Suite 350 Milwaukee, Wisconsin 53202
West Allis, Wisconsin 53227 (414) 297-5662
(414) 328-2800 Facsimile (414) 297-4900
Facsimile (414) 328-2899
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_______________________
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box [_]
CALCULATION OF REGISTRATION FEE
Proposed
Maximum Proposed
Title of Each Offering Maximum
Class of Amount to Price Aggregate Amount of
Securities be per Offering Registration
to be Registered Registered Share(1) Price(1) Fee(2)
Common Stock, $.01
par value . . . . 2,500,000 $22 $55,000,000 $16,666.67
Common Stock
Purchase Rights . 2,500,000 (2) (2) (2)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based on the average high and low sales
prices of the Common Stock reported by the Nasdaq National Market on
May 27, 1997.
(2) The value attributable to the Common Stock Purchase Rights is
reflected in the market price of the Common Stock to which the Rights
are attached.
_______________________
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [X]
_______________________
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
which is a part of this Registration Statement includes all the
information currently required in a prospectus relating to the securities
covered by Registration Statement No. 333-06443 of Superior Services, Inc.
This Registration Statement also constitutes Post-Effective Amendment
No. 1 with respect to Registration Statement No. 333-06443 and such post-
effective amendment shall hereafter become effective concurrently with the
effectiveness of this Registration Statement in accordance with Section
8(c) of the Securities Act of 1993.
_______________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUPERIOR SERVICES, INC.
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
Showing the Location in the Prospectus of Information Required by Items in
Form S-4
Caption or Location
Pursuant to Item Number in Form S-4 in Prospectus
1. Forepart of the Registration Statement
and Outside Front Cover Page of Outside Front
Prospectus . . . . . . . . . . . . . . . . . Cover Page
2. Inside Front and Outside Back Cover Inside Front
Pages of Prospectus . . . . . . . . . . . . Cover Page; Back
Cover Page
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information . . . . Risk Factors
4. Terms of the Transaction . . . . . . . . . . *
5. Pro Forma Financial Information . . . . . . . *
6. Material Contracts with Company
Being Acquired . . . . . . . . . . . . . . . *
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . . . . . *
8. Interests of Named Experts Validity of
and Counsel . . . . . . . . . . . . . . . . Securities; Experts
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities . . . . . . . . . . . . . . Not Applicable
10. Information with Respect to Incorporation of
S-3 Registrants . . . . . . . . . . . . . . certain information
by reference
11. Incorporation of Certain Incorporation of
Information by Reference . . . . . . . . . . certain information
by reference
12. Information with Respect to
S-2 or S-3 Registrants . . . . . . . . . . . Not Applicable
13. Incorporation of Certain
Information by Reference . . . . . . . . . . Not Applicable
14. Information with Respect to
Registrants Other Than S-3
or S-2 Registrants . . . . . . . . . . . . . Not Applicable
15. Information with Respect to
S-3 Companies . . . . . . . . . . . . . . . Not Applicable
16. Information with Respect to
S-2 or S-3 Companies . . . . . . . . . . . . Not Applicable
17. Information with Respect to
Companies other than S-3 or
S-2 Companies . . . . . . . . . . . . . . . Not Applicable
18. Information if Proxies, Consents
or Authorizations are to be
Solicited . . . . . . . . . . . . . . . . . Not Applicable
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange Offer . . . . . Not Applicable
_______________
* Inapplicable in connection with the filing of this
Registration Statement. Information, however, may be included
in subsequent post-effective amendments filed under certain
circumstances pursuant to General Instruction H of Form S-4 or
in one or more prospectus supplements, filed pursuant to
Rule 424(b)(2) under the Securities Act of 1933, as amended,
or otherwise incorporated by reference from documents
subsequently filed by the Company under the Securities
Exchange Act of 1934, as amended.
<PAGE>
INTRODUCTORY NOTE
This Form S-4 Registration Statement is being filed to (i) register
an additional 2,500,000 shares of Common Stock which may be offered and
issued by Superior Services, Inc. ("Company") from time to time in
connection with the acquisition, directly or indirectly, by the Company of
various businesses or properties or interests therein, in addition to the
original 2,500,000 shares of Common Stock registered by the Company under
the Company's Form S-4 Registration Statement No. 333-06443 initially
filed on June 20, 1996, (ii) submit the Prospectus included in this
Registration Statement as a combined prospectus relating it to both this
Registration Statement and to the Company's Form S-4 Registration
Statement No. 333-06443 and thereby reflect that 5,000,000 shares are
subject to issuance under such combined Prospectus, and (iii) reflect the
fact that the Company has now become eligible to utilize a Form S-3
Registration Statement.
<PAGE>
5,000,000 SHARES
[Logo]
COMMON STOCK
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
This Prospectus covers 5,000,000 shares of common stock, $.01 par
value ("Common Stock"), which may be offered and issued by Superior
Services, Inc. (the "Company") from time to time in connection with the
acquisition, directly or indirectly, by the Company of various businesses
or properties, or interests therein. It is expected that the terms of
acquisitions involving the issuance of Common Stock covered by this
Prospectus will be determined by direct negotiations with the owners or
controlling persons of the businesses or properties to be merged with or
acquired by the Company, and that the shares of Common Stock issued will
be valued at prices reasonably related to market prices which are current
either at the time a merger or acquisition is agreed upon or at or about
the time of delivery of such shares. No underwriting discounts or
commissions will be paid, although finder's fees may be paid from time to
time with respect to specific mergers or acquisitions. Any person
receiving any such fees may be deemed to be an underwriter within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
The term "Common Stock" shall include the Common Stock Purchase Rights
which are attached to and trade with all shares of Common Stock. See
"Description of Capital Stock - Common Stock Purchase Rights."
With the written consent of the Company, this Prospectus, as amended
or supplemented if appropriate, has also been prepared for use by persons
who have received or will receive, from the Company, Common Stock covered
by this Prospectus in connection with acquisitions and who may wish to
sell such stock under circumstances requiring or making desirable its use.
See "Outstanding Securities Covered by this Prospectus" for information
relating to resales pursuant to this Prospectus of shares of Common Stock
issued under the Registration Statement.
At May 1, 1997, the Company had 17,488,084 shares of Common Stock
outstanding. The Company's Common Stock is traded on the Nasdaq National
Market ("NASDAQ"). On May 27, 1997, the last sale price of the Common
Stock on NASDAQ was $22-1/2 per share.
All expenses of this offering will be paid by the Company.
The term "Company" refers to Superior Services, Inc., a Wisconsin
corporation and its subsidiaries, affiliates and predecessors, unless the
context requires otherwise. The executive offices of the Company are
located at 10150 West National Avenue, Suite 350, West Allis,
Wisconsin 53227. The telephone number is (414) 328-2800.
The date of this Prospectus is May 30, 1997.
<PAGE>
THE COMPANY
Unless the context indicates otherwise, references to the number
of the Company's various facilities and other Company-specific statistical
data set forth in this Prospectus are as of May 1, 1997. References to
footnotes to the Company's financial statements are references to the
specified footnotes to the Company's audited financial statements at and
for the periods ended December 31, 1996, which are incorporated by
reference herein from the Company's Annual Report on Form 10-K for the
year ended December 31, 1996. See "Financial Statements."
Superior Services, Inc. ("Superior" or the "Company") is an
integrated solid waste services company providing solid waste collection,
transfer, recycling and disposal services. As of May 1, 1997, the Company
served over 300,000 residential, commercial and industrial customers
primarily in Wisconsin and also in parts of Minnesota, Missouri, Illinois,
Michigan, Iowa, Ohio and Pennsylvania.
As of May 1, 1997, Superior's solid waste operations consisted
of 11 Company-owned or managed solid waste landfills, 28 solid waste
collection operations, 13 recycling facilities and eight solid waste
transfer stations. The Company's operating strategy emphasizes the
integration of its solid waste collection and disposal operations and the
internalization of waste collected. 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. These other integrated waste services include the remediation
and disposal of contaminated soils and similar materials; wastewater
biosolids management; full container consumer product recycling; and
temporary storage and transportation of special and hazardous waste,
including household hazardous waste.
Superior's objective is to be one of the largest and most
profitable fully integrated providers of solid waste collection and
disposal services in each market it serves. The Company's strategy to
achieve this objective is to (i) continue to expand its markets and enter
new markets through the acquisition of other solid waste businesses;
(ii) pursue internal growth opportunities in its current markets; and
(iii) achieve continuing operating improvements in its business.
Superior's principal strategy for future growth is through the acquisition
of additional solid waste disposal and collection operations. The Company
is primarily focused on expanding the geographic scope and residential and
commercial/industrial customer base of its solid waste collection and
disposal operations. The Company believes that its reputation, strategy,
culture and focus make it an attractive buyer to certain acquisition
candidates. From the time the Company was formed through May 1, 1997, the
Company acquired and retained more than 40 businesses.
On March 13, 1996, the Company completed its initial public
offering of a total of 4,082,500 shares of its Common Stock, of which
3,532,500 shares were sold by the Company and 550,000 shares were sold by
certain shareholders of the Company at a price of $11.50 per share. On
June 20, 1996, the Company filed a Registration Statement with the
Securities and Exchange Commission covering 2,500,000 shares of its Common
Stock which may be issued by Superior from time to time in connection with
the acquisition by the Company of businesses or properties. On May 30,
1997, the Company filed a combined new Registration Statement and post-
effective amendment to its existing Registration Statement (of which this
Prospectus is a part) which, among other things, increased the number of
shares issuable thereunder from 2,500,000 to 5,000,000. As of May 30,
1997, 4,808,595 shares remained eligible for issuance under this combined
new and amended Registration Statement. The shares issuable under this
amended Registration Statement (and this Prospectus) are generally freely
tradeable by the recipient under the federal securities laws. See "Risk
Factors-Potential Restrictions on Resale of Common Stock."
RISK FACTORS
In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating an
investment in the shares of Common Stock offered by this Prospectus.
Certain matters discussed in this Prospectus are forward-looking
statements that involve risks and uncertainties. Forward-looking
statements include the information concerning possible or future results
of operations of the Company set forth under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."
To that extent, the Company claims the protection of the disclosure
liability safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. Such statements are
subject to certain risks and uncertainties, including particularly those
important factors set forth below, that could cause actual results to
differ materially from those projected. Potential investors are cautioned
not to place undue reliance on such forward-looking statements, which are
made only as of the date hereof. The Company undertakes no obligations to
publicly update or release the results of any revision to such forward-
looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the accuracy of subsequent events.
Readers are cautioned that the following important Risk Factors, in
addition to those discussed elsewhere herein, could affect the future
results of the Company and cause those results to differ materially from
those expressed in such forward-looking statements.
Ability to Manage Growth. The Company began operations as a
consolidated entity in February 1993 upon completion of the consolidation
("Consolidation") of three groups of independent waste companies
(collectively, "Consolidated Group"). From the time the Company was
formed through May 1, 1997, the Company has acquired and retained over 40
businesses. As a result of the Company's recent acquisitions and
potential additional future business acquisitions, the Company may
experience a period of rapid growth and expansion which could place
additional demands on the Company's management, personnel, resources and
management information systems. Any failure by the Company's management
team to manage its growth and potential additional future growth
effectively would be likely to have an adverse effect on the Company's
results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Management."
Availability and Integration of Acquisitions. Superior's
strategy envisions that a substantial part of its future growth will come
from acquiring and integrating additional independent solid waste
collection, transfer and disposal operations. There can be no assurance
that the Company will be able to identify additional suitable acquisition
candidates or, if identified, negotiate successfully their acquisition. If
the Company is successful in identifying and negotiating additional
suitable acquisitions, there can be no assurance that any debt or equity
financing necessary to complete the acquisitions can be arranged on terms
satisfactory to the Company or that any such financing will not
significantly increase the Company's leverage or result in additional
dilution to existing shareholders. See "Potential Inability to Finance
the Company's Growth" below. Moreover, there can be no assurance that the
Company will be able to continue to integrate successfully any acquired
business, or manage or improve the operating or administrative
efficiencies or productivity of any acquired business. As the Company
continues to pursue acquisition opportunities in new existing market
areas, it will become more difficult for the Company to successfully and
efficiently integrate such businesses with the Company's existing
operations. Similarly, the Company may not be able to realize as many
synergies and efficiencies from acquiring businesses outside its existing
market areas. Failure by the Company to implement successfully its
acquisition strategy will limit the Company's growth potential and may
adversely affect the price of its Common Stock. See "Business-Strategy."
The recent consolidation and integration activity in the solid
waste industry, as well as the difficulties, uncertainties and expense
relating to the development and permitting of solid waste landfills and
transfer stations, has increased competition for the acquisition of
existing solid waste collection, transfer and disposal operations.
Increased competition for acquisition candidates may result in fewer
acquisition opportunities being made available to the Company as well as
less advantageous acquisition terms, including particularly increased
purchase prices. These circumstances may increase acquisition costs to
levels beyond the Company's financial capability or pricing parameters or
which, as to acquisitions made by the Company, may have an adverse effect
on the Company's results of operations. Many of the Company's competitors
for acquisitions are larger, better known companies with greater resources
than the Company. The Company also believes that a significant factor in
its ability to consummate acquisitions will be the relative attractiveness
of its Common Stock as an investment instrument to potential acquisition
candidates. This attractiveness may, in large part, be dependent upon the
relative market price and capital appreciation prospects of the Common
Stock compared to the equity securities of the Company's competitors.
There can be no assurance that the Company's Common Stock will continue to
appreciate in value or will not decrease in value. See "Limited Public
Trading History; Possible Stock Price Volatility" below and "Price Range
of Common Stock."
Restrictions on Landfill Expansion. As its various landfills
approach their respective allowed permitted disposal capacity, Superior
will need to obtain permits to expand, obtain additional disposal capacity
or dispose of its collected waste at landfills owned by others. The
permitting process for landfill expansion is lengthy, difficult, expensive
and subject to substantial uncertainty. Even when granted, final permits
are often not approved until the landfill's remaining disposal capacity is
very low. There can be no assurance that the Company will be able to
successfully add additional disposal capacity when needed or, if added,
that such capacity can be added on satisfactory terms or at its landfills
where expansion is most immediately needed. Failure to successfully add
additional landfill capacity when and where needed could have a material
adverse effect on the Company's results of operations and financial
condition. See "Business-Regulation" and "Business-Current Operations;
Solid Waste Landfill Disposal."
Potential Inability to Finance the Company's Growth. Superior
anticipates that future business acquisitions will be financed principally
through the issuance of Common Stock and/or the payment of cash, and
possibly through the assumption of debt of the acquired business. If
acquisition candidates are unwilling to accept Common Stock as part of the
consideration for the sale of their business, the Company would be
required to utilize more of its available cash resources or borrowings
under its credit facilities in order to effect such acquisitions. To the
extent that then available sources are insufficient to fund such
requirements, the Company will require additional equity and/or debt
financing in order to provide the cash to effect such acquisitions.
Additionally, growth through the expansion of its existing or any newly
acquired landfills, as well as the ongoing maintenance of its landfills,
will require substantial capital expenditures. There can be no assurance
that the Company will have sufficient existing capital resources or will
be able to raise sufficient additional capital resources on terms
satisfactory to the Company, if at all, in order to meet any or all of the
foregoing capital requirements. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations-Liquidity and Capital
Resources."
Competition. The solid waste services industry is highly
competitive, very fragmented and requires substantial labor and capital
resources. Each of the markets in which the Company competes or will
likely compete is served by one or more of the large national solid waste
companies, as well as numerous regional and local solid waste companies of
varying sizes and resources. Intense competition exists not only to
provide services to customers but also to acquire other businesses within
each market. The national solid waste companies and some of the large
regional companies have significantly greater financial and other
resources than the Company. From time to time, these or other competitors
may reduce the price of their services in an effort to expand market share
or to win a competitively bid municipal contract. These practices may
either require the Company to reduce the pricing of its services or result
in its loss of business. Historically, the Company has provided
substantially all of its residential collection services under municipal
contracts. As is generally the case in the industry, these contracts are
subject to periodic competitive bidding. There can be no assurance that
the Company will be the successful bidder to obtain or retain these
contracts. The Company's inability to compete with larger and better
capitalized companies, or to replace a significant number of municipal
contracts lost through the competitive bidding process with comparable
contracts or other revenue sources within a reasonable time period, could
have a material adverse effect on the Company's results of operations.
Also, as the Company continues to acquire other solid waste collection
businesses, there can be no assurance that the Company will be able to
retain the customers of the acquired businesses. See "Business-Com-
petition."
Geographic Concentration. Immediately prior to April 1997, the
Company's operations and customers were primarily located in Wisconsin,
Northern Illinois, Northeast Iowa, the Upper Peninsula of Michigan, the
Minneapolis-St. Paul, Minnesota metropolitan area and the St. Louis,
Missouri metropolitan area. As a consequence, the Company's results of
operations are susceptible to downturns in the general economy in this
geographic region. In April 1997, the Company completed acquisitions of
solid waste collection, recycling and disposal operations in two new
market areas: Ohio and Pennsylvania; however, there can be no assurance
that the Company will be able to complete a sufficient number of
additional acquisitions in these new markets or in other markets to
achieve a significant level of geographic diversification. Moreover, if
the Company is successful in effecting business acquisitions outside of
its current market areas, there can be no assurance that the Company will
be able to successfully manage or fully realize operating efficiencies
from such operations. See "Risk Factors-Availability and Integration of
Acquisitions and Business-Acquisition Program."
Commodity Risk Upon Resale of Recyclables. One of the principal
components of the Company's internal growth strategy is its commitment to
provide recycling services to customers. The resale prices of, and demand
for, recyclable waste products, particularly wastepaper, have been, and
may continue to be, volatile and subject to changing market conditions.
Accordingly, the Company's results of operations will be affected, and may
be affected materially, by changing resale prices or demand for certain
recyclable waste products, particularly wastepaper. These changes may also
contribute to significant variability in the Company's period-to-period
results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Seasonality of Business. 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 quarter, followed by a decline in the fourth quarter.
This seasonality reflects the lower volume of waste generated and
decreased revenues from project-based and other integrated waste services
during the fall and winter months, as well as the operating difficulties
experienced from the protracted periods of cold and inclement weather
typically experienced during the winter in the Upper Midwest. Certain
operating and other fixed costs remain relatively constant throughout the
calendar year, resulting in a similar seasonality of operating income.
Potential Write-off of Capitalized Expenditures. In accordance
with generally accepted accounting principles, the Company capitalizes
certain expenditures and advances directly associated with landfill
expansion projects and pending acquisitions. Indirect costs, such as
executive salaries, general corporate overhead, public affairs and other
corporate services, are expensed as incurred. The Company's policy is to
charge against net income any unamortized capitalized expenditures and
advances (net of any portion thereof that the Company estimates will be
recoverable, through sale or otherwise) relating to any landfill that will
be permanently closed, any pending acquisition that is not consummated and
any landfill expansion project not completed successfully. There can be
no assurance that the Company will not be required to incur a charge in
the future against its net income in accordance with this policy. Any such
charges against net income, if significant, would have a material adverse
effect on the Company's results of operation and possibly its financial
condition. At December 31, 1996, the Company had recorded $30.7 million
of capitalized costs in connection with landfill expansion or development
at its current sites, including $14.2 million for its seven then pending
landfill expansion applications and $16.5 million of land acquisition
costs for potential future development sites. As of December 31, 1996,
the Company's largest single capitalized expenditure was $8.6 million for
the purchase of land for future expansion adjacent to an existing
landfill. See "Business-Current Operations; Solid Waste Landfill
Disposal" and Note 5 of Notes to Consolidated Financial Statements.
Government Regulation. The Company is subject to extensive and
evolving environmental laws and regulations which have become increasingly
stringent in recent years as a result of greater public interest in
protecting the environment. These laws and regulations affect the
Company's business in many ways, including in the ways set forth below and
under "Business-Regulation," and will continue to impose substantial costs
on the Company.
In order to develop, operate and expand solid waste facilities,
it is necessary to obtain and maintain in effect one or more licenses or
permits, as well as zoning, environmental and/or other land use approvals.
These licenses or permits and approvals are difficult and time consuming
to obtain and renew and are frequently subject to opposition by various
elected officials or citizens groups. See "Business-Legal Proceedings."
There can be no assurance that the Company will be successful in obtaining
and maintaining in effect the permits and approvals required for the
successful operation and growth of its business, and the failure by the
Company to obtain or maintain in effect a permit or approval significant
to its business would have a material adverse effect on the Company's
result of operations and financial condition.
The design, operation and closure of landfills is extensively
regulated. These regulations include, among others, the regulations
("Subtitle D Regulations") establishing minimum federal requirements
adopted by the United States Environmental Protection Agency ("EPA") in
October 1991 under Subtitle D of the Resource Conservation and Recovery
Act of 1976 ("RCRA"). Most states maintain extensive landfill regulations
which have been updated or replaced with new regulations consistent with,
or more stringent than, the Subtitle D Regulations. Failure to comply
with these regulations could require the Company to undertake
investigatory or remedial activities, to curtail operations or to close a
landfill temporarily or permanently. Future changes in these regulations
may require the Company to modify, supplement or replace equipment or
facilities at costs which may be substantial. The failure of regulatory
agencies to enforce these regulations vigorously or consistently may give
an advantage to competitors of the Company whose facilities do not comply
with the Subtitle D Regulations or its state counterparts. The Company's
ultimate financial obligations relating to any failure to comply with
these regulations could have a material adverse effect on the Company's
results of operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources."
In addition, Wisconsin and several other states and
municipalities in which the Company operates or may operate have adopted
laws or requirements which limit or ban certain categories of waste or
mandate the disposal or recycling of local refuse. These recycling laws
and requirements have the effect of reducing landfill disposal tonnage.
See "Business-Regulation; State and Local Regulations" and "Current
Operations; Recycling Services."
Companies in the solid waste services business, including the
Company, are frequently subject in the normal course of business to
judicial and administrative proceedings involving federal, state or local
agencies or citizen groups. These governmental agencies may seek to
impose fines or penalties on the Company or to revoke or deny renewal of
the Company's operating permits or licenses for violations or alleged
violations of environmental laws or regulations or require that the
Company make expenditures to remediate potential environmental problems
relating to waste disposed of or stored by the Company or its
predecessors, or resulting from its or its predecessors' transportation
and collection operations. Any adverse outcome in these proceedings could
have a material adverse effect on the Company's financial condition or
results of operations and may subject the Company to adverse publicity.
See "Potential Environmental Liability" below and "Business-Legal
Proceedings."
Potential Environmental Liability. The Company is subject to
liability for any environmental damage that its solid waste facilities or
hazardous waste transfer and temporary storage facility ("TSF") may cause
to neighboring landowners, particularly as a result of the contamination
of drinking water sources or soil, including damage resulting from
conditions existing prior to the Consolidation or the acquisition of such
facilities by the Company. The Company may also be subject to liability
for any off-site environmental contamination caused by pollutants or
hazardous substances whose transportation, treatment or disposal was
arranged by the Company or its predecessors. Any substantial liability
for environmental damage incurred by the Company could have a material
adverse effect on the Company's financial condition and results of
operations. See "Business-Regulation."
The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("Superfund" or "CERCLA"), imposes
strict, joint and several liability on the present owners and operators of
facilities from which a release of hazardous substances into the
environment has occurred, as well as any party that owned or operated the
facility at the time of disposal of the hazardous substances regardless of
when the hazardous substance was first detected. Similar liability is
imposed upon the generators of waste which contains hazardous substances
and hazardous substance transporters that select the treatment, storage or
disposal site. All such persons, who are referred to as potentially
responsible parties ("PRPs"), generally are jointly and severally liable
for the expense of waste site investigation, waste site cleanup costs and
natural resource damages, regardless of whether they exercised due care
and complied with all relevant laws and regulations. These costs can be
very substantial. Furthermore, such liability can be based upon the
existence of even very small amounts of the more than 700 "hazardous
substances" listed by the EPA and is not limited to the disposal of
"hazardous wastes," as statutorily defined. It is likely that hazardous
substances have in the past come to be located in landfills with which the
Company has been associated as an owner or operator. Moreover, the Comp-
any's solid waste collection operations may have transported hazardous
substances in the past and may do so inadvertently on occasion in the
future. Additionally, the Company temporarily holds at its TSF and
transports to third party disposal facilities certain types of hazardous
wastes. If any of these sites or operations ever experience environmental
problems, the Company could be subject to substantial liability which
could have a material adverse effect on its financial condition and
results of operations. See "Business-Regulation."
With respect to each business that Superior acquires, there may
be liabilities that it fails or is unable to discover, including
liabilities arising from noncompliance with environmental laws by prior
owners, and for which the Company, as a successor owner, may be legally
responsible. Representations, warranties and indemnities from the sellers
of such businesses, if obtained and if legally enforceable, may not cover
fully the resulting environmental liabilities due to their limited scope,
amount or duration, the financial limitations of the warrantor or
indemnitor or other reasons. Certain environmental liabilities, even
though expressly not assumed by the Company, may nonetheless be imposed on
the Company under certain legal theories of successor liability, including
particularly under CERCLA. See "Business-Acquisition Program." For
certain information regarding legal proceedings See "Business-Legal
Proceedings."
Potential Inadequacy of Accruals For Closure and Post-Closure
Costs. The Company has material financial obligations relating to closure
and post-closure costs of the landfills and disposal facilities it
operates. There can be no assurance that the Company's ultimate financial
obligations for actual closing or post-closing costs will not exceed the
amount then accrued and reserved or amounts otherwise receivable pursuant
to insurance policies or trust funds. Such a circumstance could have a
material adverse effect on the Company's financial condition and results
of operation. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources" and
Note 2 of Notes to Consolidated Financial Statements.
Potential Uninsured Risks. The Company's limited environmental
impairment liability insurance does not cover liabilities associated with
any environmental cleanup or remediation on the Company's own sites. As a
result, a partially or completely uninsured claim against the Company, if
successful and of sufficient magnitude, could have a material adverse
effect on the Company's results of operations and financial condition.
Any future difficulty in obtaining insurance could also impair the
Company's ability to secure future contracts conditioned upon the
contractor having adequate insurance coverage. See "Business-Risk
Management, Insurance and Performance Bonds."
Municipal solid waste collection contracts typically require
performance bonds or other means of financial assurance to secure
contractual performance. If the Company were unable to obtain surety
bonds or letters of credit in sufficient amounts or at acceptable rates,
it may be precluded from entering into additional municipal solid waste
collection contracts or obtaining or retaining landfill operating permits.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources."
Dependence on Management. The Company is highly dependent upon
the services of the members of its senior management team, the loss of any
of whom may have an adverse effect on the Company. Other than a "key-man"
life insurance policy on the life of its President and Chief Executive
Officer, G. William Dietrich, the Company does not maintain key-man life
insurance on any other executive officers. See "Management-Executive
Officers and Directors."
Control by Management. As of May 1, 1997, executive officers
and directors of the Company as a group beneficially owned approximately
21.2% of the outstanding Common Stock. As a result, these existing
shareholders, if acting together, will be able to influence significantly
the election of individuals to the Board of Directors and the outcome of
other matters submitted for shareholder consideration.
Potential Anti-Takeover Provisions. On February 21, 1997, the
Board of Directors of the Company declared a dividend of one common share
purchase right (a "Right") for each outstanding share of Common Stock.
The dividend was paid on March 24, 1997 to the shareholders of record on
March 10, 1997. The Rights are attached to and trade with the shares of
Common Stock and are not exercisable until there occurs a "Distribution
Date," as described and defined in this Prospectus under the section
entitled "Description of Capital Stock-Common Stock Purchase Rights."
Generally, a Distribution Date will occur when 15% or more of the Common
Stock is acquired by a third party or 10 business days following the
commencement of, or an announcement of an intention to make, a tender or
exchange offer for at least 15% of the Common Stock. Upon a Distribution
Date, the Rights will become exercisable and will allow the holders of
Rights (other than the person or entity which caused the Distribution
Date, whose Rights shall become void) to purchase, for half-price, shares
of the Company's Common Stock or the stock of the acquiror. See
"Description of Capital Stock-Common Stock Purchase Rights."
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on redemption of the Rights,
amendment of the Rights to exclude the acquiror or on a substantial number
of Rights being acquired. The Rights could have the effect of delaying,
deferring or preventing a change in control, or the removal of the Board
of Directors or existing management of the Company. See "Description of
Capital Stock-Common Stock Purchase Rights."
The Company's Restated Articles of Incorporation ("Restated
Articles") and Restated By-Laws contain provisions that, among other
things, provide for staggered terms for members of the Company's Board of
Directors, place certain restrictions on the removal of directors,
authorize the Board of Directors to issue undesignated preferred stock in
one or more series without shareholder approval, incorporate the limits of
the Wisconsin Business Corporation Law ("WBCL") on certain types of
business combinations, establish certain procedures to call a special
meeting of shareholders, require advance notice for director nominations
and certain other matters to be considered at meetings of shareholders and
impose supermajority voting requirements on certain amendments to the
Restated Articles and By-Laws. These provisions could have the effect of
delaying, deferring or preventing a change in control, or the removal of
the Board of Directors or existing management, of the Company. See
"Description of Capital Stock-Restated Articles of Incorporation and
Restated By-Laws of the Company."
As described under "Description of Capital Stock-Certain
Statutory and Other Provisions," the WBCL contains several statutory
provisions which could also have the effect of discouraging non-negotiated
takeover proposals for the Company or impeding a business combination
between the Company and a major shareholder of the Company. Such
provisions as they relate to the Company include (i) limiting the voting
power of certain shares which are held by a person in excess of 20% of the
Company's voting power to 10% of the full voting power of such excess
shares; (ii) requiring a supermajority vote of shareholders, in addition
to any vote otherwise required, to approve certain business combinations
not meeting certain adequacy of price standards; (iii) prohibiting certain
business combinations between the Company and a major shareholder for a
period of three years, unless such acquisition has been approved by the
Company's Board of Directors prior to the time such major shareholder
became a 10% beneficial owner of shares or under certain other
circumstances; and (iv) limiting certain actions which can be taken by the
Company while a takeover offer for the Company is being made or after a
takeover offer for the Company has been publicly announced.
Limited Public Trading History; Possible Stock Price Volatility.
The Company's Common Stock has been traded on NASDAQ only since the
Company's initial public offering of shares of its Common Stock on
March 8, 1996. Accordingly, there is a limited trading history of the
Common Stock. The initial public offering price of the Company's Common
Stock in its initial public stock offering was $11.50 per share. As of
May 27, 1997, the last sale price of the Company's Common Stock was $22-
1/2 per share. There can be no assurance that the future market price of
the Common Stock will not be lower than the closing sale price of the
Common Stock on May 27, 1997 or that the price of the Company's Common
Stock will increase, if at all, to the same extent as between the
Company's initial public offering and May 27, 1997. The Company's stock
price may decrease. See "Price Range of Common Stock."
The market price of the Common Stock may be subject to
significant fluctuations in response to numerous factors, including
variations in the annual or quarterly financial results of the Company or
its competitors, changes by financial research analysts in their estimates
of the earnings of the Company or other companies in the solid waste and
environmental services industries, conditions in the economy in general or
in the Company's industry in particular, unfavorable publicity or changes
in applicable laws and regulations (or judicial or administrative
interpretations thereof) affecting the Company or the solid waste
industry.
Potential Restrictions on Resale of Common Stock. While shares
of Common Stock issued by the Company pursuant to this Prospectus in
connection with the acquisition by the Company of various businesses or
properties or interests therein will generally be freely resalable by
recipients under the federal securities laws, there may be certain other
restrictions on the recipients' ability to sell such shares. Certain
procedures need to be followed if the recipient desires to sell shares
received hereunder from the Company through a block trade, special
offering, exchange distribution or secondary distribution. See
"Outstanding Securities Covered by this Prospectus." If shares are issued
by the Company to recipients hereunder in connection with an acquisition
which qualifies as a "tax-free reorganization," under current rules a
recipient may not be able to dispose of a substantial portion of the
received shares for a significant time period in order to maintain the
acquisition as a tax-free reorganization. Similarly, if shares are issued
by the Company to recipients hereunder in connection with an acquisition
which is to be accounted for by the Company under the "pooling-of-
interests" accounting method, then affiliates of the acquired company will
generally be restricted by the relevant acquisition agreement from selling
virtually all of their received shares until such time as the Company
publishes its consolidated results of operation covering at least 30 days
of post-acquisition combined operations. Additionally, should any
recipient of shares issued by the Company hereunder become an affiliate of
the Company by reason of stock ownership or by becoming an executive
officer or director of the Company, such individual's ability to dispose
of shares of Common Stock will be subject to various restrictions under
the federal securities laws and the Company's corporate policies and
practices. Further, if a recipient of shares received hereunder is in
possession of material, non-public information relating to the Company,
the recipient may be restricted under applicable securities laws from
engaging in transactions in the Company's Common Stock or from advising
others to engage in such transactions. Recipients of shares received
hereunder from the Company should consult their professional and legal
advisors for advice on any applicable restrictions on their ability to
dispose of shares of Common Stock received under this Prospectus.
Subsequent Share Issuances. No prediction can be made as to the
effect, if any, of the offer and sale of additional shares of Common
Stock, or the availability of additional shares for sale, on the market
prices of the Common Stock prevailing from time to time. Nevertheless,
issuances of substantial amounts of newly issued shares of Common Stock in
the public market or to effect business acquisitions could adversely
affect prevailing market prices of the Common Stock and the ability of the
Company to raise equity capital in the future.
Dilution. Purchasers of shares of Common Stock pursuant to this
Prospectus may experience dilution as a result of additional shares of
Common Stock being issued by the Company to raise capital, for potential
future business acquisitions, as a result of the exercise of employee
stock options or other purposes.
No Dividends. The Company does not anticipate paying any cash
dividends on its Common Stock for the foreseeable future. See "Dividend
Policy."
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the Nasdaq National
Market under the symbol "SUPR." The following table sets forth the range
of high and low sale prices for the Common Stock for the period from March
8, 1996, the date of its initial public stock offering, through March 31,
1997. The prices below may reflect interday trading prices and may
include intradealer prices without retail mark up, mark down, or
commission and may not reflect actual transactions.
High Low
---- ----
1996
First quarter ended March 31, 1996 $15 $11 1/2
(from March 8, 1996)
Second quarter ended June 30, 1996 $19 $12 3/4
Third quarter ended September 30, 1996 $17 3/4 $13 1/4
Fourth quarter ended December 31, 1996 $20 1/2 $15 1/2
1997
First quarter ended March 31, 1997 $24 $17 1/2
Second quarter ended June 30, 1997 $23 3/4 $20 1/8
(through May 27, 1997)
On May 27, 1997, the last sale price of the Common Stock as
reported by NASDAQ was $22-1/2 per share. As of March 10, 1997, the
Company believes there were approximately 240 holders of record of the
Company's Common Stock and there were in excess of 2,800 beneficial
owners.
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock
and has no present intention to pay cash dividends. In addition, the
Company's credit facility prohibits the payment of cash dividends on its
Common Stock. It is the Company's intention to retain earnings to finance
the expansion of its business. See Note 6 of Notes to Consolidated
Financial Statements.
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following selected consolidated financial and operating data
are derived from the consolidated financial statements of Superior
Services, Inc. which have been audited by Ernst & Young LLP, independent
auditors. The data should be read in conjunction with the consolidated
financial statements, related notes and other financial information
incorporated by reference herein from the Company's Form 10-K for the year
ended December 31, 1996 and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION> Years ended December 31,(1)
1992 1993 1994 1995 1996
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . $44,943 $67,304 $76,297 $92,592 $109,659
Cost of Operations . . . . . . . . . . . . . . . . . 28,430 39,262 46,417 49,133 57,187
Selling, general and administrative expenses . . . . 8,425 12,106 15,054 15,013 17,272
Depreciation and amortization . . . . . . . . . . . . 4,131 6,180 9,488 12,704 15,511
------- ------ ------ ------ -------
Operating income from continuing operations . . . . . 3,957 9,756 5,338 15,742 19,689
Interest expense . . . . . . . . . . . . . . . . . . (1,293) (1,531) (2,245) (2,829) (654)
Other income . . . . . . . . . . . . . . . . . . . . 165 228 27 610 1,017
------- ------ ------ ------ -------
Income from continuing operations before
income taxes . . . . . . . . . . . . . . . . . . . 2,829 8,453 3,120 13,523 20,052
Income taxes(2) . . . . . . . . . . . . . . . . . . . 1,431 3,343 1,389 5,609 8,271
------- ------ ------ ------ -------
Income from continuing operations(2) . . . . . . . . 1,398 5,110 1,731 7,914 11,781
Income (loss) from discontinued operations,
net of income tax(3) . . . . . . . . . . . . . . . 108 56 (5,735) (329) ---
------- ------ ------ ------ -------
Net income (loss)(2) . . . . . . . . . . . . . . . . $1,506 $5,166 $(4,004) $7,585 $11,781
====== ====== ======= ====== =======
Earnings per share from continuing operations(2) . . $0.18 $0.42 $0.13 $0.59 $0.72
====== ====== ======= ====== =======
Earnings (loss) per share(2) . . . . . . . . . . . . $0.19 $0.42 $(0.30) $0.56 $0.72
====== ====== ======= ====== =======
Weighted average shares outstanding . . . . . . . . . 7,921 12,213 13,534 13,474 16,444
Other Operating Data:
EBITDA(4) . . . . . . . . . . . . . . . . . . . . . . $8,088 $15,936 $14,826 $28,446 $35,200
December 31,
1992 1993 1994 1995 1996
(in thousands)
Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . $971 $3,022 $2,034 $1,373 $16,389
Working capital (deficiency) . . . . . . . . . . . . (4,391) 8,906 12,818 4,710 17,026
Property and equipment, net . . . . . . . . . . . . . 31,259 76,546 80,592 81,026 106,960
Total assets . . . . . . . . . . . . . . . . . . . . 47,273 116,398 126,785 122,763 175,806
Long-term debt, net of current maturities . . . . . . 10,382 27,388 35,794 20,168 1,388
Series A convertible preferred stock . . . . . . . . --- 15,000 15,000 15,000 ---
Total common shareholders' investment . . . . . . . . 8,185 32,922 29,331 36,002 103,868
____________
(1) All financial data for periods ending prior to and on December 31, 1994 have been restated to reflect separately the
results of discontinued operations.
(2) Substantially all of the Company's predecessors were S Corporations for federal and state income tax purposes through
December 31, 1992. As a result, the responsibility for the Company's income taxes for 1992 was passed through to its
shareholders rather than being a corporate responsibility. Income taxes, income from continuing operations, net income
and earnings per share for 1992 reflect income tax expense on a pro forma basis as if the Company was a C Corporation.
(3) Includes estimated losses on disposition of discontinued operations, net of income taxes of $5,042,000 and $329,000 for
1994 and 1995, respectively.
(4) EBITDA is defined as operating income from continuing operations, plus depreciation and amortization and is relevant to
an understanding of the Company's performance because it reflects the Company's ability to generate cash flows sufficient
to satisfy its debt service, capital expenditure and working capital requirements. EBITDA should not be considered an
alternative to (i) operating income (as determined in accordance with generally accepted accounting principles) as an
indicator of the Company's operating performance or (ii) cash flows from operating activities (as determined in
accordance with generally accepted accounting principles) as a measure of liquidity.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company's financial
condition and results of operations relates to the Company's results of
operations for the year ended, and financial condition at, December 31,
1996 and the two years prior thereto as set forth in the Company's audited
consolidated financial statements for such period incorporated by
reference herein from the Company's Annual Report on Form 10-K for the
year ended December 31, 1996. Where appropriate, subsequent management's
discussion and analysis of the Company's financial results and condition
are incorporated by reference from the management's discussion and
analysis sections of the Company's Quarterly Reports on Form 10-Q and
Annual Reports on Form 10-K filed by the Company with the Securities and
Exchange Commission after March 31, 1997. The following discussion should
be read in conjunction with the Company's consolidated financial state-
ments and notes thereto incorporated by reference herein from the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
See "Financial Statements."
General
As of December 31, 1996, Superior provided solid waste
collection, transfer, recycling and disposal services to customers
primarily in Wisconsin and also in parts of Minnesota, Illinois, Iowa,
Michigan and Missouri. The Company also provides other integrated waste
services, most of which are project-based and many of which provide
additional waste volumes to the Company's landfills and recycling
facilities. As of December 31, 1996, solid waste operations consisted of
eight Company-owned solid waste landfills, three managed third party
landfills, 23 solid waste collection operations, 11 recycling facilities
and seven solid waste transfer stations.
As described more fully below, revenues for the periods
presented were comprised of fees received for the following services:
1994 1995 1996
---- ---- ----
Collection . . . . . . . . . . . 54% 48% 45%
Disposal . . . . . . . . . . . . 18% 16% 22%
Recycling . . . . . . . . . . . . 5% 15% 13%
Other integrated waste services . 23% 21% 20%
---- ---- ----
100% 100% 100%
==== ==== ====
The Company's strategy for future revenue growth anticipates an
accelerated acquisition program and continued internal growth.
Results of Operations
Overview
In 1996, revenues increased 18.4% to $109.7 million compared to
$92.6 million in 1995 due primarily to increased volumes of waste received
at the Company's landfills. Income from continuing operations increased
48.9% to $11.8 million in 1996 from $7.9 million in 1995. Earnings per
share from continuing operations increased 22.0% to $0.72 for 1996 from
$0.59 per share for 1995. The weighted average number of common and
common equivalent shares outstanding were 16.4 million for 1996 and 13.5
million for 1995.
The following table sets forth for the years indicated the
percentage of revenues represented by the individual line items reflected
in the Company's condensed consolidated statements of operations:
Period-to-Period
Percentage Relationship Change
to Total Revenues Years Ended
Years Ended December 31, December 31,
1995 vs. 1996 vs.
1994 1995 1996 1994 1995
Revenues 100.0% 100.0% 100.0% 21.4% 18.4%
Cost of operations 60.9 53.1 52.1 5.8% 16.4%
Selling, general
and administrative
expenses 19.7 16.2 15.8 0.0% 15.0%
Depreciation and
amortization 12.4 13.7 14.1 33.9% 22.1%
---- ---- ---- ----- -----
Operating income from
continuing operations 7.0 17.0 18.0 195.0% 25.1%
Interest expense (2.9) (3.0) (0.6) 26.0% (76.9%)
Other income --- 0.6 0.9 2,159.2% 66.7%
---- ---- ---- ------- -----
Income from continuing
operations before
income taxes 4.1 14.6 18.3 333.4% 48.3%
Income taxes 1.8 6.1 7.6 303.8% 47.5%
--- ---- ---- ----- ----
Income from continuing
operations 2.3% 8.5% 10.7% 357.1% 48.9%
=== === ==== ===== ====
Revenues
Revenues increased approximately $17.1 million, or 18.4%, to
$109.7 million in 1996 from $92.6 million in 1995. This increase was
attributable primarily to a 66.6% increase in volumes of wastes collected
and disposed at the Company's landfills. Revenues for 1996 compared to
1995 increased $7.6 million from the impact of businesses acquired. These
increases were achieved despite a decrease of $3.8 million in revenues
from recyclable waste paper sales for 1996 compared to 1995. Daily
disposal volume at the Company's landfills rose to an average of almost
6,400 tons per day in 1996 compared to an average of 3,800 tons per day in
1995. The higher landfill volume was the result of increased volumes
received from a disposal contract for a customer's Milwaukee collection
operations, increased volumes of special waste streams from the Company's
project-driven other integrated waste services, increased third party
disposal volume and higher solid waste volumes from its collection
operations. The Company expects to continue to increase disposal volumes
in 1997, but at a somewhat slower rate of growth.
The $3.8 million decrease in revenues in 1996 from sales of
recyclable waste paper products was comprised of an over $5.6 million
decrease in recycling revenues resulting from a 66% decline in prices
received for these products compared to 1995, partially offset by a 28%
increase in volumes of recyclable waste paper products processed and sold
in 1996 compared to 1995. The resale prices of, and demand for,
recyclable waste products, particularly wastepaper, can be volatile and
subject to changing market conditions. The Company believes that the
adverse effects of the significant decline in recyclable waste paper
products will mitigate in 1997 since average resale prices are expected to
be similar to 1996 levels. The Company's recycling operations remained
profitable in 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. Recycling as a percentage of
total revenue decreased to 13% in 1996 from 15% in 1995 as a result of the
decreased prices received for recyclable waste paper products. An
increase in disposal revenue as a percentage of total revenue from 16% in
1995 to 22% in 1996 should result in a more stable revenue base less
affected by changing market conditions for recyclables.
The Company acquired businesses with expected annualized
revenues of approximately $21 million during the course of 1996, with the
majority of the businesses acquired in late third quarter and early fourth
quarter. The Company expects its revenues and income from operations to
increase in 1997 in comparison to those reported historically as a result
of the consummation of these transactions.
Revenues increased approximately $16.3 million, or 21.4%, to
$92.6 million in 1995 from $76.3 million in 1994. This increase was
attributable primarily to the impact of businesses acquired, a significant
increase in the volumes and prices received for recyclable waste products,
primarily wastepaper, the opening of the Superior Emerald Park landfill in
November 1994, the impact of increased collection and disposal volumes
resulting from new municipal and commercial contracts, and price increases
for the Company's environmental remediation and wastewater biosolids
project-related services resulting from its implementation of an improved
job costing system.
Cost of Operations
Cost of operations increased $8.1 million, or 16.4% for 1996
compared to 1995. As a percentage of revenues, cost of operations
improved to 52.1% from 53.1% in 1995. The decrease in cost of operations
as a percentage of revenues resulted primarily from cost efficiencies
generated from vertical expansions at two of the Company's landfills. 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 the new businesses acquired
after January 1, 1996.
Cost of operations increased $2.7 million, or 5.8%, for 1995
compared to 1994. As a percentage of revenues, cost of operations
improved to 53.1% in 1995 from 60.9% in 1994. This improvement was the
result of the sale of non-profitable operations, cost controls including
the Company's full implementation of its improved job costing system used
to manage its project-based other integrated waste services, a change in
the mix of project-related other integrated waste services to higher
margin services and new customer contracts.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $2.3 million, or 15.0%, for 1996 compared to
1995. As a percentage of revenues, SG&A decreased to 15.8% in 1996 from
16.2% in 1995. The percentage decline in SG&A was due to the significant
increase in disposal revenues without a need to correspondingly increase
SG&A support functions. While SG&A decreased as a percentage of revenues,
the actual dollars 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 businesses
acquired.
SG&A remained constant at $15.0 million in both 1995 and 1994,
and decreased as a percentage of revenues to 16.2% in 1995 from 19.7% in
1994. The percentage decline in SG&A was due to cost and workforce
reductions and operational consolidations.
Depreciation and Amortization
Depreciation and amortization increased $2.8 million, or 22.1%,
for 1996 compared to 1995, primarily as a result of increased landfill
depletion costs and increased depreciation costs of the additional assets
and businesses acquired. As a percentage of revenues, depreciation and
amortization increased to 14.1% in 1996 compared to 13.7% in 1995,
reflecting the increase in disposal revenue as a percentage of total
revenue which resulted in additional depletion costs, and also the
depreciation and amortization of the additional assets of businesses
acquired.
Depreciation and amortization increased by $3.2 million, or
33.9%, for 1995 compared to 1994 primarily as a result of the full year
effect of airspace depletion at the Superior Emerald Park and Superior FCR
landfill sites and the depreciation and amortization of the additional
assets of businesses acquired during 1994 and 1995.
Interest Expense
Interest expense decreased $2.2 million, or 76.9%, for 1996
compared to 1995. Interest expense as a percentage of revenues was 0.6% in
1996 compared to 3.0% in 1995. The reduction in interest expense was due
to the application of a portion of the net proceeds from the Company's
March 1996 initial public offering to repay indebtedness. Additionally,
the Company benefitted from a lower overall interest rate on outstanding
borrowings in 1996 as a result of the successful renegotiation of its
revolving credit agreement in December 1995.
Interest expense increased $584,000 to $2.8 million in 1995 from
$2.2 million in 1994. Interest expense as a percentage of revenues was
3.0% in 1995 compared to 2.9% in 1994. This increase was due to higher
interest rates paid by the Company on its outstanding indebtedness, the
allocation of interest expense to its discontinued operations in 1994 and
the capitalization of $332,000 of interest during the 1994 construction
phase of its Emerald Park landfill.
Income Taxes
The Company's effective tax rate decreased to 41.2% for 1996
compared to 41.5% in 1995 and 44.5% in 1994. The decreases were 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 has been and will continue to
be used for potential future acquisitions, capital expenditures and
working capital. The Company's balance sheet at December 31, 1996
reflected approximately $16.4 million in cash and cash equivalents
compared to $1.4 million at December 31, 1995. Pending specific
application, the Company has invested the unused net proceeds in
short-term interest bearing securities.
At December 31, 1996, the Company had approximately $2.6 million
of long-term and short-term borrowings outstanding and approximately $2.3
million in letters of credit. At December 31, 1996, the ratio of the
Company's long-term debt to total capitalization was 1.3% compared to
28.3% at December 31, 1995. The reduction was attributable to the use of
the net proceeds from the March 1996 public offering and net cash flow
from operations applied to further reduce outstanding indebtedness.
Superior's principal strategy for future growth is through the
acquisition of additional solid waste disposal and collection operations.
During 1996, the Company acquired 12 solid waste businesses, including two
landfills. The Company also acquired the remaining 50% equity interest in
a joint venture owned by a subsidiary of the Company. Consideration for
these acquisitions was $15.3 million in cash (net of cash acquired), $8.3
million in future payments or notes payable, and 114,381 shares of Common
Stock. Although there can be no assurance that the Company will be able
to complete successfully any acquisitions, the Company intends to fund any
such future acquisitions through the use of cash, capital stock,
assumption of indebtedness, future royalties and/or contingent payments.
The cash required to fund any future acquisitions will likely be provided
from one or more of the following sources: existing cash balances, cash
flow from operations and/or borrowings under the Company's revolving
credit facility. Substantially all of the $50 million facility was
available at December 31, 1996. The revolving credit facility requires
the Company to maintain certain financial ratios and satisfy other
requirements, including a prohibition on the payment of cash dividends.
Availability under this facility is based on the Company's liquidity, cash
flow and leverage. Interest is payable monthly based on the agent bank's
base rate or quarterly based on a Eurodollar borrowing rate, depending
upon how advances are drawn, plus a margin. The facility was increased to
$110 million in March, 1997, and matures in March, 2002.
Capital expenditures for 1997 currently are expected to be
approximately $21 million compared to $16.5 million in 1996, which amounts
are primarily allocated to continued spending for landfill expansions.
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.
The Company also has material financial obligations relating to
closure and post-closure costs or remediation of disposal facilities it
operates or for which it is or may become responsible. While the precise
amounts of these future obligations cannot be determined, at December 31,
1996, the Company estimated the total costs (on a current dollar as
opposed to a discounted present value basis) to be approximately $46
million for final closure of its operating facilities and post closure
monitoring costs pursuant to applicable regulations (generally for a term
of 30 to 40 years after final closure), as well as ongoing remediation.
At December 31, 1996, the Company had accrued $28.1 million for such
projected costs. The Company will provide additional accruals based on
engineering estimates of consumption of permitted landfill airspace over
the useful lives of its landfills. At December 31, 1996, the Company
satisfied its financial assurance obligations to various regulatory
agencies for facilities closure and post-closure obligations, in
Wisconsin, through an environmental protection program underwritten by a
large insurance carrier, in Minnesota, through the use of trust funds on
deposit and, in Missouri, through the use of a corporate guarantee.
Net cash provided by operations for the year ended December 31,
1996 increased to $29.8 million from $25.7 million during 1995. The
increase was primarily due to the $4.2 million increase in net income as
well as the increase in depreciation and amortization, a noncash expense,
of $2.8 million between 1995 and 1996.
Net cash used in investing activities for the year ended
December 31, 1996 increased to $31.5 million from $9.0 million for the
year ended December 31, 1995. The increase was primarily due to $15.3
million of net cash payments for businesses acquired in 1996 compared to
$1.7 million in 1995. Purchases of property and equipment increased $5.0
million to $16.5 million for 1996, primarily due to landfill expansions.
The increase was also due to the absence in 1996 of $4.3 million proceeds
from the 1995 sale of assets of discontinued operations.
Proceeds from the sale of assets of discontinued operations in
1996 were $562,000.
Net cash provided by financing activities in the year ended
December 31, 1996 totaled $16.8 million compared to net cash used in
financing activities of $17.4 million in the year ended December 31, 1995.
This increase reflected 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. Revenues increased during the
fourth quarter of 1996 compared to the third quarter due to the revenue
from acquisitions closed by the Company at the end of the third quarter
and the beginning of the fourth quarter, masking somewhat the effect of
seasonality. Also, certain operating and other fixed costs remain
relatively constant throughout the calendar year, resulting in a similar
seasonality of operating income.
BUSINESS
Introduction
Superior is an integrated solid waste services company providing
solid waste collection, transfer, recycling and disposal services. As of
May 1, 1997, the Company served over 300,000 residential, commercial and
industrial customers primarily in Wisconsin and also in parts of
Minnesota, Illinois, Michigan, Iowa, Missouri, Ohio and Pennsylvania and
the Company's solid waste operations consisted of 11 Company-owned or
managed solid waste landfills, 28 solid waste collection operations, 13
recycling facilities and eight solid waste transfer stations.
Industry Overview
The United States non-hazardous solid waste collection and
disposal industry generated estimated revenues in excess of $35 billion in
1996. Approximately, 40% of the solid waste industry revenue is
accounted for by major public companies, the remaining two-thirds is
split roughly evenly between municipal government operations and
thousands of smaller private concerns.
In recent years, the solid waste collection and disposal
industry has undergone significant consolidation and integration. The
Company believes that this consolidation and integration has been caused
primarily by three factors: (i) increasingly stringent environmental
regulation and enforcement resulting in increased capital requirements;
(ii) the inability of many smaller operators to achieve the economies of
scale necessary to compete effectively with large integrated solid waste
service providers; and (iii) the evolution of an industry competitive
model which emphasizes providing both collection and disposal/recycling
capabilities. Despite the considerable consolidation and integration that
has occurred in the solid waste industry in recent years, the Company
believes the industry remains primarily regional in nature and highly
fragmented, and that there remains a substantial number of potential
acquisition opportunities within the industry.
The increasingly stringent industry regulations, such as the
Subtitle D Regulations, have resulted in rising costs. Many of the
smaller industry participants have found these costs difficult, if not
impossible, to bear. Additionally, the required permits for landfill
development, expansion or construction have become increasingly more
difficult to acquire. Consequently, many smaller, independent operators
have decided to either close their operations or sell them to larger
operators.
Increasing economies of scale in the solid waste collection and
disposal industry have the benefit of allowing larger integrated companies
to compete more effectively and to comply more effectively with the in-
creasing industry regulatory requirements. The high fixed costs of
landfill assets and the associated profitability of each incremental ton
of disposal waste has led to the development of high volume, regional
landfills. The economies of scale associated with larger regional land-
fills allow them to compete more effectively against smaller, local
landfills.
Many remaining operators have attempted to become more efficient
by establishing an integrated network of solid waste collection operations
and transfer stations through which they secure captive solid waste
streams for internal disposal into their own landfills. Some
municipalities have not been able to operate efficiently enough to compete
with these integrated operators and have chosen to discontinue their
collection and/or disposal operations and have contracted the management
of their solid waste services with private entities, such as the Company.
There is an increasing trend at the state and local levels to
mandate waste reduction at the source and to prohibit the disposal of
certain types of wastes, such as yard wastes and recyclable materials, at
landfills. The Company believes that these trends and laws have created
significant opportunities for fully integrated solid waste companies to
provide additional recycling services to generators of solid waste who are
not otherwise able to dispose of such waste.
Strategy
Superior's objective is to be one of the largest and most
profitable fully integrated providers of solid waste collection and
disposal services in each market it serves. The Company's strategy to
achieve this objective is to (i) continue to expand its markets through
acquisitions of other solid waste businesses; (ii) pursue internal growth
opportunities in its current markets; and (iii) achieve continuing
operating improvements in its business. Superior intends to implement this
strategy in three principal ways:
Expansion Through Acquisitions. From the time the Company was
formed through May 1, 1997, the Company has acquired and retained over 40
businesses. The Company intends to continue to expand through
acquisitions by (i) increasing its revenues and operational and
administrative efficiencies through "tuck-in" and other acquisitions of
profitable solid waste collection operations in its existing markets and
(ii) expanding into adjacent and new markets by pursuing principally a
"hub and spoke" acquisition strategy. The Company has established a
targeted internal rate of return on investment and pricing parameters
which it uses to evaluate potential acquisitions.
Internal Growth. Superior believes its internal growth will
come from additional sales penetration in its current and adjacent
markets, marketing additional services to existing customers, including
particularly recycling services, and selective price adjustments. The
Company has a sales force dedicated to increasing the Company's sales to
new and existing commercial, industrial and municipal customers. A
principal component of the Company's internal growth strategy is to become
the sole-provider of solid waste services to its customers, including
solid waste, other integrated waste and recycling services. See, however,
"Risk Factors-Competition."
An integral part of the Company's internal growth strategy is to
establish new transfer stations within a 50-mile radius of its existing
landfills to increase its collection and transportation efficiencies and
improve the Company's internalization of collected solid waste.
Operating Improvement. The Company has implemented programs and
benchmarking systems designed to improve the operational productivity,
administrative efficiency and profitability of its operations through
improved collection and disposal routing efficiency, equipment
utilization, cost controls, employee training and safety. The Company's
benchmarking system establishes and tracks key statistical measurement
criteria for its collection, transfer and disposal operations to
facilitate improvement in each operation's profitability. The Company has
also implemented an improved job-costing system designed to enhance the
profitability of its project-based other integrated waste services through
improved pricing and more efficient utilization of assets and personnel.
See, however, "Risk Factors; Ability to Manage Future Growth."
Acquisition Program
In recent years, the solid waste collection and disposal
industry has undergone a period of significant consolidation and
integration. The Company believes that this consolidation and integration
has been caused primarily by three factors: (i) increasingly stringent
environmental regulation and enforcement resulting in increased capital
requirements; (ii) the inability of many smaller operators to achieve the
economies of scale necessary to compete effectively with large integrated
solid waste service providers; and (iii) the evolution of an industry
competitive model which emphasizes providing both collection and
disposal/recycling capabilities. Despite the considerable consolidation
and integration that has occurred in the solid waste industry in recent
years, the Company believes the industry remains primarily regional in
nature and highly fragmented and that there remain a substantial number of
potential acquisition opportunities within the industry.
The Company's management focuses a substantial part of its time
on identifying acquisition candidates and consummating acquisitions.
During 1996, the Company expanded its senior management team to include a
Vice President of Market Development who is responsible for directing the
activities of eight full-time market development managers, five of whom
were added to the Company's market development group in 1996.
From the time the Company was formed through May 1, 1997, the
Company acquired and retained more than 40 businesses. The following
table sets forth the Company's acquisitions completed and
retained from February 1993 through May 1, 1997:
Acquired Month Principal
Company Acquired Business Location Market Area
Hechimovich March Solid waste Mayville, Eastern
Sanitary 1993 collection, WI and Wisconsin
Landfill, Inc. transfer West Bend, WI
(Superior and landfill
Glacier Ridge
Landfill)
Laidlaw Waste March Solid waste Delafield, Southeastern
Systems, Inc.- 1993 collection WI Wisconsin
Delafield, WI
Division
Expert Disposal April Solid waste Hartland, Southeastern
Service, Inc. 1993 collection WI Wisconsin
J&S Dredging May Biosolids Arpin, WI Central
and J&S Liquid 1993 collection Wisconsin
Systems, Inc.
Reliable November Solid waste Fond du Lac, Eastern
Rubbish 1993 collection WI Wisconsin
Emerald Park, November Solid waste Muskego, Eastern
Inc. (Superior 1993 landfill WI Wisconsin
Emerald Park
Landfill)
Midway December Third party Portage County, Northcentral
Transport, 1993 landfill WI, Brokaw, WI Wisconsin and
Inc. management and Quinnesec, Upper Peninsula
MI of Michigan
Economy January Solid waste Wisconsin Central
Disposal 1994 collection Rapids, WI Wisconsin
American April Solid waste Sheboygan, Eastern
Waste & 1994 collection WI Wisconsin
Recycling
Systems, Inc.
J.P. Funk May Solid waste Waukesha, Southeastern
Trucking, Inc. 1994 collection WI Wisconsin
Ploeckelman May Solid waste Brookfield, Southeastern
Trucking, Inc. 1994 collection WI Wisconsin
Wiederhold May Solid waste Cuba City, Southwestern
Transfer, Inc. 1994 collection, WI Wisconsin
transfer and
recycling
Forest City July Solid waste Buffalo, Minneapolis-
Road Landfill, 1994 landfill MN St. Paul,
Inc. Minnesota
(Superior FCR
Landfill)
Ray Schreiber September Solid waste Elgin, IL Northern
Disposal Co. 1994 collection Illinois
Vande Kolk January Solid waste Waupun, Central
Sanitation 1995 collection WI Wisconsin
Remus January Solid waste Waupun, Central
Sanitation 1995 collection WI Wisconsin
Manitowoc June Solid waste Manitowoc, Northeastern
Disposal, 1995 collection WI and Wisconsin
Inc./Lakeshore Algoma, WI
Recycling &
Disposal
Mastalir October Solid waste Kewaunee, Northeastern
Services, Inc. 1995 collection WI Wisconsin
Wittstock March Solid waste Dubuque, Northeast
Services, Inc. 1996 collection IA Iowa
Arrow Disposal March Solid waste Mequon, Southeastern
Service, Inc. 1996 collection WI Wisconsin
Tom Kraemer June Solid waste St. Cloud, Central
Sanitation, 1996 collection MN Minnesota
Inc.
DC Refuse June Solid waste Sturgeon Bay, Northeastern
Service & 1996 collection WI Wisconsin
Recycling, Inc.
Superior Lamp June Recycling Port Southeastern
Recyling, Inc. 1996 Washington, WI Wisconsin
All Waste August Solid waste Milwaukee, Southeastern
Disposal, Inc. 1996 collection WI Wisconsin
(Rearload
Commercial
Routes)
Vasko Rubbish August Solid waste St. Cloud, Central
Removal, Inc. 1996 collection MN Minnesota
Eau Claire September Solid waste Eau Claire, Northwest
County 1996 landfill WI Wisconsin and
Landfill Eastern
(Superior Minnesota
Seven
Mile Creek
Landfill)
West County September Solid waste Ballwin, MO Eastern
Disposal, Ltd. 1996 landfill Missouri
(Superior Oak
Ridge Landfill)
Wilson Refuse, October Solid waste Maryland Eastern
Inc. 1996 collection Heights, MO Missouri
Peninsula November Solid waste Sturgeon Bay, Northeastern
Dump-All, 1996 collection WI Wisconsin
Inc.
G.D. LaPlant December Solid waste Buffalo, Central
Sanitation, 1996 collection MN Minnesota
Inc.
D&K Refuse and December Solid waste St. Cloud, Central
Recycling, Inc.1996 collection MN Minnesota
Eagle Waste February Solid waste St. Louis, Eastern
Systems, Inc. 1997 and recyclableMO Missouri
collection
Certain assets March Pallet Madison, Southeastern
of Madison 1997 operation WI Wisconsin
Pallet
Certain assets March Solid waste Horicon, Southeastern
of Rest and 1997 and recyclableWI Wisconsin
Recoup Resource collection
Recovery, Inc.
Certain assets March Solid waste Horicon, Southeastern
of Ideal 1997 and recyclableWI Wisconsin
Disposal collection
Service, Inc.
M&N Disposal, April Solid waste Green Bay, Northeast
Inc. 1997 landfill underChilton, WI Wisconsin
development
Certain assets April Solid waste Green Bay, Northeast
of Browning- 1997 collection Chilton, Wisconsin
Ferris WI
Industries of
Wisconsin, Inc.
Certain assets April Solid waste Columbus, Central Ohio
of BFI Waste 1997 collection Zanesville and
Systems of Marietta, OH
Ohio, Inc.
Homestand Land April Solid waste Kersey, Central
Corp. 1997 landfill PA Pennsylvania
Certain assets April Solid waste Du Bois and Eastern
of Browning- 1997 collection College Pennsylvania
Ferris Station,
Industries of PA
Pennsylvania,
Inc.
Certain assets May Solid waste Buffalo and Central
of Randy's 1997 collection St. Cloud, Minnesota
Sanitation, and recycling MN
Inc. transportation
Certain assets May Solid waste St. Cloud Central
of Burggraff 1997 collection, MN Minnesota
Sanitation recycling and
transportation
The Company's acquisition plan focuses on "hub and spoke"
acquisitions in new markets. For example, the acquisition of a landfill
represents the acquisition of a disposal "hub." Collection and transfer
operations are then acquired and integrated as "spokes." The Company's
acquisition program also focuses on "tuck in" acquisitions in its existing
markets or the extension of its existing operations into contiguous
markets that complete or expand the Company's service areas. This allows
the Company to use the same core business infrastructure, minimizing costs
and enhancing profit margins.
Current Operations
Introduction
The Company operates solid waste collection operations, solid
waste transfer stations, recycling facilities, Company-owned solid waste
landfills and managed third party landfills. 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. These other integrated waste services include the remediation
and disposal of contaminated soils and similar materials; wastewater
biosolids management; full container consumer product recycling; and
temporary storage and transportation of special and hazardous waste,
including household hazardous waste. Solid waste services have been and
will remain the Company's core business.
Prior to 1997, a substantial part of the Company's operations
took place in the State of Wisconsin. Wisconsin's environmental
regulatory climate can be characterized as rigorous, with broad public and
political support for environmental protection and mandatory recycling
laws. Wisconsin was among the first states to adopt a state counterpart to
the Subtitle D Regulations and has enacted additional laws of relatively
broad scope which restrict the types of waste that can be accepted by
Wisconsin landfills and which require the recycling of a number of waste
streams. The Company believes it has adapted to these operating
conditions successfully through a combination of (i) modified collection
and landfill operating practices; (ii) development of commercial recycling
and waste processing facilities; (iii) utilization of specialized
collection vehicles; and (iv) the introduction of new services which
assist customers in their own efforts to comply with environmental and
waste management regulations. The Company believes its experience
operating under these conditions in Wisconsin may provide it with a
competitive advantage as it enters into other states where environmental
regulations are becoming more stringent and where incumbent competitors
may have difficulty adapting to more restrictive operating conditions.
See, however, "Risk Factors-Competition" and "-Geographic Concentration."
Superior markets its services principally through its facility
managers and direct sales representatives under the direction of area
sales managers. The company also obtains new customers from referral
sources, reputation, and local print marketing. The Company has a diverse
customer base, with no single customer accounting for more than 6% of the
Company's revenues in 1996. The Company does not believe that the loss of
any single customer would have a material adverse effect on the Company's
results of operation.
Solid Waste Collection and Transfer
As of May 1, 1997, the Company provided solid waste collection
services to over 300,000 residential, commercial and industrial customers.
The Company's collection operations are conducted generally within a 50-
mile radius from its landfills or transfer stations. The Company contracts
with local generators of solid waste and directs the waste to either its
own landfill for disposal; to a third-party landfill; or, for additional
handling at one of its transfer stations or recycling facilities. After
compacting and/or separating at a transfer station, the Company has
historically directed the waste to either its own landfill or a third
party landfill. During 1995 and 1996, approximately 83% and 81%
respectively, of the solid waste collected by the Company was delivered
for disposal at its own landfills. Solid waste collection and transfer
services accounted for approximately 45% of the Company's revenues for
1996, including revenues from disposal services provided to customers of
the Company's collection and transfer units, compared to approximately 48%
in 1995.
The Company's commercial and industrial collection services have
historically generally been performed under one-year to three-year service
agreements, and fees are determined by such factors as collection
frequency, type of equipment and containers furnished, the type, volume
and weight of the waste collected, the distance to the disposal or
processing facility and the cost of disposal or processing.
Substantially all of the Company's municipal solid waste
collection services have historically been performed under contracts with
municipalities. These contracts grant the Company exclusive rights to
service all or a portion of the residential homes in a specified community
or provide a central repository for residential waste drop-off. The
Company had over 240 municipal contracts in place as of December 31, 1996,
compared to just over 200 as of December 31, 1995. No single municipal
contract is individually material to the Company's results of operations.
Municipal contracts in the Company's market areas are typically awarded,
at least initially, on a competitive bid basis and usually range in
duration from one to three years. Fees are based primarily on the
frequency and type of service, the distance to the disposal or processing
facility and the cost of disposal or processing. Municipal collection
fees are usually paid either by the municipalities from tax revenues or
through direct service charges to the residents receiving the service.
The Company also provides subscription residential collection services
directly to households.
The Company's transfer stations receive solid waste collected
primarily from its various collection operations, compact the waste and
transfer the waste to larger Company-owned vehicles for transport to land-
fills. This procedure reduces the Company's costs by improving its
utilization of collection personnel and equipment. Approximately, 21% of
the solid waste accepted for transfer at the Company's transfer stations
in 1996 was from third parties compared to approximately 23% in 1995.
Recycling Services
Providing recycling services to customers has been an important
component of the Company's strategy. Recycling involves the removal of
reusable materials from the waste stream for processing and sale in
various applications. The Company believes that recycling will continue
to be an increasingly important component of most major markets' solid
waste management plans as a result of the public's increasing
environmental awareness and expanding regulations mandating or encouraging
waste recycling.
As of May 1, 1997, the Company operated 13 recycling facilities
as part of its collection and transfer operations at which it processes,
sorts and recycles paper products, certain plastics, glass, aluminum and
tin cans and certain other items. The Company also operates a wood pallet
recycling operation at its Fort Atkinson collection facility and curbside
residential recycling programs in connection with its residential
collection operations in many communities. The Company also provides full
container consumer product recycling services and reclaims mercury from
fluorescent lamps and other discarded mercury containing items.
The Company attempts to resell recycled waste products in the
most commercially reasonable manner practicable and to pass on
contractually a portion of the commodity pricing risk to its commercial
and industrial clients. In April 1995, the Company entered into a five-
year wastepaper purchase agreement with a national paper company pursuant
to which the paper company agreed to purchase certain grades of recyclable
wastepaper from the Company at above-market prices, subject to certain
minimum floor resale pricing assurances. Under the terms of this
agreement, the Company has the ability to sell up to all, but not less
than 50%, of its supply of certain grades of recyclable wastepaper to such
company. The Company believes these protections help mitigate some of the
variability associated with the resale of its collected and recyclable
wastepaper.
During 1996, the Company processed an average of over 6,900 tons
of recyclable paper and cardboard per month, compared to approximately
5,400 tons per month in 1995. The prices received by the Company for its
recyclable wastepaper declined approximately 66% from 1995 to 1996. As a
result of these price declines, revenues from the collection, processing
and sale of recyclable waste products accounted for approximately 13% of
the Company's revenues in 1996, compared to 15% in 1995.
Solid Waste Landfill Disposal
As of May 1, 1997, the Company owned and operated solid waste
landfills in Wisconsin, Minnesota, Missouri and Pennsylvania. All of the
Company's landfills include leachate collection systems, groundwater
monitoring systems and active methane gas extraction and recovery systems.
The Company's landfill facilities are designed and operated to meet
federal, state and local regulations in all material respects and the
Company believes each of its landfill sites meets or exceeds current
applicable state and federal Subtitle D Regulations in all material
respects. None of the Company's landfills is permitted to accept
hazardous waste. In 1996, approximately 37% of the solid waste disposed
of at the Company's landfills was delivered by the Company compared to
approximately 54% in 1995, due to increased volumes from third party
customers in 1996. Other customers are charged "tipping fees" based on
the amount and type of solid waste deposited. The Company operates
licensed bioremediation facilities at several of its landfills where the
concentrations of volatile organic compounds in contaminated soils are
reduced through microbial activities enhanced by pumping air through the
soils. The bioremediated soils are then reused as cover material at the
Company's landfills.
The average daily volume of waste accepted for disposal at the
Company's landfills increased from approximately 3,800 tons per day in
1995 to approximately 6,400 tons per day in 1996. Revenues from landfill
disposal operations increased to approximately 22% of the Company's
revenues in 1996 from approximately 16% of the Company's 1995 revenues,
and does not include revenues from disposal services provided to customers
of the Company's collection, transfer and other integrated waste services
units. The increase in revenues from landfill disposal operations is due
to increased volumes from a disposal contract for a customer's Milwaukee
collection operations, increased volumes of special waste from the
Company's project-driven other integrated waste services, increased third
party disposal volume and higher solid waste volumes from its collection
operations.
The following table provides certain information with respect to
Superior's eight owned and operated landfills and one greenfield site as
of May 1, 1997:
Approximate
Month Year Permitted total
Landfill name and location Acquired opened acreage(1) acreage(1)
Superior Cranberry Creek * 1986 34 1,060
landfill, Wisconsin Rapids,
WI (Central Wisconsin)
Superior Valley Meadows * 1979 29 600(2)
landfill, Fort Atkinson, WI
(Southeastern Wisconsin)
Superior Glacier Ridge March 1986 44 560
landfill, Mayville, WI 1993
(Eastern Wisconsin)
Superior Emerald Park November 1994 35 340
landfill, Muskego, WI 1993
(Milwaukee metropolitan
area)
Superior FCR landfill, July 1994 1965 24 357(3)
Buffalo, MN (Minneapolis
metropolitan area)
Superior Seven Mile Creek September 1978 37 160(4)
landfill, Eau Claire, WI 1996
(Northwest Wisconsin)
Superior Oak Ridge landfill, September 1975 126 180(5)
Ballwin, MO (St. Louis 1996
metropolitan area)
M&N landfill, Chilton, WI April Greenfield N/A(6) 317
(Northeast Wisconsin) 1997 landfill
under
development
Greentree landfill, Kersey, April 1986 91 1,336
PA (Central Pennsylvania) 1997
_______________
* Acquired as part of the Company's original consolidation in 1993.
(1) Permitted acreage represents the portion of the total acreage on
which disposal cells have been constructed (including any that may
have been filled or capped) or may be constructed based upon an
approval issued by the regulatory agency generally authorizing the
development of a landfill on the acreage. The portion of total
acreage that is not currently permitted is not available for waste
disposal.
(2) Does not include approximately 80 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(3) Does not include approximately 40 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(4) Does not include approximately 80 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(5) Includes approximately 125 acres leased by the Company. Does not
include approximately 58 acres subject to acquisition by the Company
upon exercise of a purchase option.
(6) Currently under development, pending application is for 58.7
permitted acres.
Management of Third Party Landfills
As of May 1, 1997, the Company managed two biosolid captive
monofills owned by large paper companies and one county-owned municipal
solid waste landfill. A monofill is a landfill which only accepts one
type of waste. One of the monofills is located in Brokaw, Wisconsin and
is managed under a two-year waste hauling and landfill operation agreement
that expires in May 1998. The other monofill is located in Quinnesec,
Michigan and is managed under an agreement which was extended in 1996 so
that it now expires in July 1999. The Company also operates the Portage
County municipal solid waste landfill in Central Wisconsin under an
agreement that expires in December 1997. These management contracts are
not individually or in the aggregate material to the Company's results of
operations.
Other Integrated Waste Services
In order to provide integrated solid waste services to a wide
range of customers, Superior provides a variety of other integrated waste
services, most of which are project-based and many provide additional
waste volumes to the Company's landfills and recycling facilities. These
services include the remediation and disposal of contaminated soils and
similar materials; wastewater biosolids management; full container
consumer product recycling; and temporary storage and transportation of
special and hazardous waste, including household hazardous waste. Revenues
from these other integrated waste services constituted approximately 20%
of the Company's revenues in 1996, compared to approximately 21% in 1995.
The Company's project-based remediation services involve the
removal and transportation of contaminated soil from environmental
remediation projects for disposal at the Company's landfills in compliance
with applicable regulations. The Company also provides value-added
services to bioremediate contaminated soils at its landfills prior to
final disposal. After excavation, the Company uses nutrients and micro-
organisms to naturally remove or reduce contaminants from contaminated
soil before disposing of the remediated soils in its landfills or using
the remediated soils in landfill construction. The Company's
environmental field services, which are provided principally to industrial
clients in Wisconsin, include the containment and cleanup of actual and
threatened releases of hazardous materials into the environment on both a
planned and an emergency response basis. These services include cleanout
of wastewater treatment tanks, cleanup of abandoned oil recycling
facilities, cleanup and demolition of manufacturing facilities and removal
and remediation of underground storage tanks. The Company is the primary
standby provider of environmental emergency spill response services to the
WDNR in Eastern and Central Wisconsin.
The Company's wastewater biosolids operations consist
principally of the removal, transportation, storage and beneficial reuse
through land application of industrial and municipal nonhazardous
wastewater biosolids. The Company contracts with municipalities, paper
mills and food processing plants to remove, transport and dispose of both
municipal and industrial wastewater biosolids. In most cases,
municipalities or industrial processors have on-site wastewater treatment
facilities which pretreat and concentrate biosolid wastes prior to removal
and reuse. In other cases, the Company will transport a generator's
wastewater biosolids from holding tanks or lagoons to a third party
wastewater treatment facility. Land application is generally limited by
state regulations to six months out of the year in Wisconsin.
Consequently, the Company constructed a 1 million gallon permitted
wastewater biosolid storage tank in which it stores certain liquid and
biosolid wastes until they can be land applied during the spring and fall.
The Company operates a full container consumer products
recycling facility at its Fort Atkinson, Wisconsin location. This
operation separates and removes off-specification food and other
nonconforming consumer products from their containers; crushes, cleans,
collects and resells the recyclable containers; and collects, stores and
reuses the liquid and solid contents of the food or other products as
organic fertilizer.
The Company provides nonhazardous "special" waste and hazardous
waste (including household hazardous waste) services, transportation and
temporary storage services to industrial clients principally in Wisconsin.
The Company provides its hazardous waste services principally
from its fully-permitted temporary storage facility ("TSF") located in
Port Washington, Wisconsin (approximately 25 miles north of Milwaukee).
Hazardous waste collected by the Company is transported to third party
treatment or disposal facilities which have been selected by the customer
in virtually all cases. The Company also reclaims mercury at its TSF from
discarded mercury-containing items such as utility meters, fluorescent
lights and thermometers. The Company does not typically take title to
collected hazardous waste nor does it handle or accept radioactive wastes,
explosives, certain poisons, certain PCBs and certain other types of
hazardous wastes. The Company does not own or operate, or intend to own
or operate, a hazardous waste disposal facility. Revenues from hazardous
waste transportation and temporary storage services accounted for less
than 5% of the Company's revenues in 1995 and less than 4% of the
Company's revenues in 1996.
Marketing and Sales
Superior markets its services principally through its facility
general managers and direct sales representatives under the direction of
area sales managers. The Company also obtains new customers from referral
sources, reputation and local market print advertising.
The Company's sales representatives visit customers on a regular
basis and each sales representative calls upon potential new customers
within a specified territory or service area, including new market areas
not currently being served by the Company. The Company emphasizes
providing quality services and customer satisfaction and retention, and
believes that its focus on quality service will help it to retain existing
and attract additional customers. Maintenance of a local presence and
identity is another important aspect of the Company's marketing plan for
its various operations. Many of the Company's managers are involved in
local governmental, civic and business organizations.
The Company has a solid waste sales program which calls for
additional sales coverage of key urban markets under the direction of area
sales managers and facility general managers. This sales program is
focused on improving market density. The Company also emphasizes the
development of preferred provider relationships with industrial and
commercial customers, thereby helping it to secure a greater proportion of
such customers' various waste streams. To further facilitate internal
sales growth, the Company's solid waste sales program also contains a
specific customer retention plan. The Company's sales representatives
also market the Company's landfill disposal services to generators of
contaminated soil. The Company seeks to maintain a local identity and
image and a high degree of involvement in each community in which it
operates.
The Company has a diverse customer base, with no single customer
accounting for more than 6% of the Company's revenues in 1996. The
Company does not believe that the loss of any single customer would have a
material adverse effect on the Company's results of operation.
Competition
The solid waste management industry is highly competitive, very
fragmented and requires substantial labor and capital resources. Intense
competition exists within the industry not only for collection,
transportation and disposal volume, but also for acquisition candidates.
The industry is currently dominated by four large national waste
companies, WMX Technologies, Inc., Browning-Ferris Industries, Inc., USA
Waste Services, Inc. and Allied Waste Industries, Inc. The Company also
competes with a number of regional and local companies. There can be no
assurance that the Company can compete successfully against these
companies. See "Risk Factors-Competition."
Superior competes for landfill disposal business primarily on
the basis of disposal fees, geographical location and quality of
operations. The Company's ability to obtain landfill disposal volume may
be limited by the fact that some major collection companies also own or
operate their own landfills in the Company's market areas, to which they
send their waste. The Company also competes, to a lesser extent, with
certain municipalities that maintain their own solid waste disposal
operations. These municipalities may have certain advantages over the
Company in financing their operations due to the availability of tax
revenues and tax-exempt financing and there can be no assurance that the
Company can compete successfully against such municipalities.
The Company competes for collection and recycling accounts
primarily on the basis of price and quality of its services. From time to
time, competitors may reduce the price of their services in an effort to
expand market share or to win a competitively bid municipal contract.
These practices may also lead to reduced pricing for the Company's
services or the loss of business. The Company provides substantially all
of its residential collection services under municipal contracts. As is
generally the case in the industry, these contracts are subject to peri-
odic competitive bidding. There can be no assurance that the Company will
be the successful bidder to obtain or retain these contracts.
Incineration of solid waste is not currently a significant
disposal alternative in Wisconsin, but may be in other states which the
Company enters.
Property and Equipment
As of May 1, 1997, the Company owned solid waste landfills,
solid waste collection operations, recycling facilities, solid waste
transfer facilities, TSF and other operating facilities in Wisconsin,
Illinois, Michigan, Minnesota, Missouri, Ohio and Pennsylvania. The
Company leases its executive offices in suburban Milwaukee under a lease
expiring in 1998. The Company also leases an office in Fond du Lac,
Wisconsin under a seven-year lease and leases several other offices and
truck maintenance facilities, each under shortterm leases of one year or
less. The Company also leases approximately 125 acres of property
occupied by its Superior Oak Ridge landfill in Bellwin, Missouri. The
real estate owned by the Company is not subject to material encumbrances.
The Company believes that its existing facilities are generally adequate
for its current needs and requirements.
The Company has numerous waste collection vehicles, trucks and
other equipment used in the removal, transportation and disposal of
wastewater biosolids and numerous bulldozers, compactors, earthmovers and
related heavy equipment and vehicles used in landfill operations.
Employees
At May 1, 1997, the Company employed approximately 1,100 full-
time employees. Three employees of one of the Company's subsidiaries are
members of a collective bargaining unit. These employees are not yet
covered by a collective bargaining agreement. The Company considers its
employee relations to be satisfactory.
Risk Management, Insurance and Performance Bonds
The Company's risk management program includes evaluating both
existing facilities, as well as potential acquisitions, for environmental
law compliance and operating procedures. An environmental risk assessment
was performed on each of the Consolidated Group entities prior to the
Consolidation and included a regulatory review and file check, interviews
with regulators, a review of prior disposal sites, a site assessment
visit, identification of risk factors, review of existing environmental
monitoring programs, evaluation and investigation of risk items and
compilation and assessment of environmental liabilities. This procedure
also included technical analysis of hydrogeological and regulatory
compliance issues by an independent environmental consultant.
Operating practices at all existing Company operations stress
minimizing the possibility of environmental contamination and litigation.
The Company believes that all of its facilities are in compliance in all
material respects with the Subtitle D Regulations and applicable state
regulations, including design criteria, environmental monitoring,
financial assurance and long-term care provisions. See, however, "Risk
Factors-Government Regulation" and "-Potential Environmental Liability."
The Company carries a range of insurance intended to help
protect its assets and operations, including a commercial general
liability policy and a property damage policy. The Company maintains a
limited environmental impairment liability policy on its landfills and TSF
that provides coverage, on a "claims made" basis, against certain third
party off-site environmental damage. This insurance does not provide
protection against on-site environmental liabilities. See "Risk Factors-
Potential Uninsured Risks." The Company also maintains contractor's
pollution liability insurance which covers certain environmental
liabilities arising out of the Company's hazardous waste emergency
response and remediation services, and pollution endorsements to its
automobile liability policies which cover certain environmental
liabilities to third parties from the Company's transportation operations.
A partially or completely uninsured claim against the Company (including
liabilities associated with cleanup or remediation at its own sites), if
successful and of sufficient magnitude, could have a material adverse
effect on the Company's results of operations or financial condition. Any
future difficulty in obtaining insurance could also impair the Company's
ability to secure future contracts, which may be conditioned upon the
availability of adequate insurance
coverage.
Municipal solid waste collection contracts typically require
performance bonds or other means of financial assurance to secure
contractual performance. The Company has not experienced difficulty in
obtaining performance bonds or letters of credit for its current
operations. If the Company were unable to obtain surety bonds or letters
of credit in sufficient amounts or at acceptable rates, it may be
precluded from entering into additional municipal solid waste collection
contracts or obtaining or retaining landfill operating permits.
Regulation
Introduction
The Company is currently subject to extensive and evolving
federal, state and local environmental laws and regulations that have been
enacted in response to technological advances and increased concern over
environmental issues. These regulations not only strictly regulate the
conduct of the Company's operations but also are related directly to the
demand for many of the services offered by the Company.
The regulations affecting the Company are administered by the
EPA and various other federal, state and local environmental, zoning,
health and safety agencies. The Company believes that it is currently in
substantial compliance with applicable federal, state and local laws,
permits, orders and regulations. The Company believes there will continue
to be increased regulation, legislation and regulatory enforcement actions
related to the solid waste services industry. As a result, the Company
attempts to anticipate future regulatory requirements and to plan
accordingly to remain in compliance with the regulatory framework.
In order to develop and operate a landfill, a biosolid storage
facility, a transfer station, most other solid waste facilities or a
hazardous waste TSF, the Company must typically go through several
governmental review processes and obtain one or more permits and often
zoning or other land use approvals. Obtaining these permits and zoning or
land use approvals is difficult, time consuming and expensive and is often
opposed by various local elected officials and citizens' groups. Once
obtained, operating permits generally must be periodically renewed and are
subject to modification and revocation by the issuing agency.
The Company's operating facilities are subject to a variety of
operational, monitoring, site maintenance, closure, post-closure and
financial assurance obligations which change from time to time and which
could give rise to increased capital expenditures and operating costs. In
connection with the Company's expansion of its existing or any newly
acquired landfills, it is often necessary to expend considerable time,
effort and money in complying with the governmental review and permitting
process necessary to maintain or increase the capacity of these landfills.
Governmental authorities have broad power to enforce compliance with these
laws and regulations and to obtain injunctions or impose civil or criminal
penalties in the case of violations. In the ordinary course of its
landfill, transfer station and TSF operations, the Company has from time
to time received notices from regulatory authorities that its operations
may not be in compliance with certain applicable environmental laws and
regulations. Upon receipt of any notices, the Company generally
cooperates with the authorities in an attempt to resolve the issues raised
by such notices and pays the agreed upon fine or penalty. Failure to
correct the problems to the satisfaction of the authorities could lead to
curtailed operations, fines and penalties or even closure of a landfill or
other facility.
In order to transport waste, it is necessary for the Company to
possess one or more permits from state or local agencies. These permits
also must be periodically renewed and are subject to modification and
revocation by the issuing agency.
See "Risk Factors-Government Regulation" and "-Potential
Environmental Liability" for a discussion of certain of the material
potential risks and liabilities applicable to the Company and an
investment therein relating to governmental regulation.
The principal federal, state and local statutes and regulations
applicable to the Company's various operations are as follows:
The Resource Conservation and Recovery Act of 1976
RCRA regulates the generation, treatment, storage, handling,
transportation and disposal of solid waste and requires states to develop
programs to ensure the safe disposal of solid waste. RCRA divides solid
waste into two groups, hazardous and nonhazardous. Wastes are generally
classified as hazardous if they (i) either (a) are specifically included
on a list of hazardous wastes or (b) exhibit certain hazardous
characteristics and (ii) are not specifically designated as nonhazardous.
Wastes classified as hazardous under RCRA are subject to much stricter
regulation than wastes classified as nonhazardous. Among the wastes that
are specifically designated as nonhazardous waste are household waste and
"special" waste, including items such as petroleum contaminated soils,
asbestos, foundry sand, shredder fluff and most nonhazardous industrial
waste products.
The EPA regulations issued under Subtitle C of RCRA impose a
comprehensive "cradle to grave" system for tracking the generation,
transportation, treatment, storage and disposal of hazardous wastes. The
Subtitle C regulations provide standards for generators, transporters and
disposers of hazardous wastes, and for the issuance of permits for sites
where such material is treated, stored or disposed. Subtitle C imposes
detailed operating, inspection, training and emergency preparedness and
response standards, as well as requirements for manifesting, record
keeping and reporting, facility closure, post-closure and financial
responsibilities. These regulations require the Company's TSF to
demonstrate financial assurance for sudden and nonsudden pollution
occurrences. Financial assurance for future closure and post-closure
expenses must also be maintained. The Company believes that its hazardous
waste transportation activities and its TSF comply in all material
respects with the applicable requirements of Subtitle C of RCRA.
In October 1991, the EPA adopted the Subtitle D Regulations
governing solid waste landfills. The Subtitle D Regulations, which
generally became effective in October 1993, include location restrictions,
facility design standards, operating criteria, closure and post-closure
requirements, financial assurance requirements, groundwater monitoring
requirements, groundwater remediation standards and corrective action
requirements. In addition, the Subtitle D Regulations require that new
landfill sites meet more stringent liner design criteria (typically,
composite soil and synthetic liners or two or more synthetic liners)
designed to keep leachate out of groundwater and have extensive collection
systems to carry away leachate for treatment prior to disposal. Grou-
ndwater monitoring wells must also be installed at virtually all landfills
to monitor groundwater quality and, indirectly, the leachate collection
system operation. The Subtitle D Regulations also require, where
threshold test levels are present, that methane gas generated at landfills
be controlled in a manner that protects human health and the environment.
Each state is required to revise its landfill regulations to meet these
requirements or such requirements will be automatically imposed upon it by
the EPA. Each state is also required to adopt and implement a permit
program or other appropriate system to ensure that landfills within the
state comply with the Subtitle D Regulations criteria. Wisconsin,
Minnesota and various states into which the Company may enter have adopted
regulations or programs as stringent as, or more stringent than, the
Subtitle D Regulations. Since the Company's operating landfills are
believed by the Company to be in compliance in all material respects with
the strict WDNR and Minnesota Pollution Control Agency regulations, the
Company believes that all of its present landfill operations meet or
exceed the Subtitle D Regulations in all material respects.
The Federal Water Pollution Control Act of 1972
The Federal Water Pollution Control Act of 1972, as amended
("Clean Water Act"), establishes rules regulating the discharge of
pollutants from a variety of sources, including solid waste disposal sites
and transfer stations, into waters of the United States. If runoff or
collected leachate from the Company's landfills or transfer stations is
discharged into streams, rivers or other surface waters, the Clean Water
Act would require the Company to apply for and obtain a discharge permit,
conduct sampling and monitoring and, under certain circumstances, reduce
the quantity of pollutants in such discharge. Also, virtually all
landfills are required to comply with the EPA's storm water regulations
issued in November 1990, which are designed to prevent possibly
contaminated landfill storm water runoff from flowing into surface waters.
The Company believes that its facilities are in compliance in all material
respects with Clean Water Act requirements, particularly as they apply to
treatment and discharge of leachate and storm water. The Company has
secured or has applied for the required discharge permits under the Clean
Water Act or comparable state-delegated programs. In those instances
where the Company's applications for discharge permits are pending and a
final discharge permit has not been issued, the Company believes it is in
substantial compliance with the applicable substantive standards set by
Wisconsin, Minnesota and adjacent states in its market areas in
administering the Clean Water Act.
The Comprehensive Environmental Response, Compensation and Liability
Act of 1980
CERCLA established a regulatory and remedial program intended to
provide for the investigation and cleanup of facilities from which there
has been, or is threatened, a release of any hazardous substance into the
environment. CERCLA's primary mechanism for remedying such problems is to
impose strict joint and several liability for cleanup of facilities on
current owners and operators of the site, former owners and operators of
the site at the time of the disposal of the hazardous substances, as well
as the generators of the hazardous substances and the transporters who
arranged for disposal or transportation of the hazardous substances. The
costs of CERCLA investigation and cleanup can be very substantial.
Liability under CERCLA does not depend upon the existence or disposal of
"hazardous waste" as defined by RCRA, but can also be founded upon the
existence of even very small amounts of the more than 700 "hazardous
substances" listed by the EPA, many of which can be found in household
waste. If the Company were to be found to be a responsible party for a
CERCLA cleanup, the enforcing agency could hold the Company, or any other
generator, transporter or the owner or operator of the facility,
completely responsible for all investigative and remedial costs even if
others may also be liable. CERCLA also authorizes the imposition of a
lien in favor of the United States upon all real property subject to, or
affected by, a remedial action for all costs for which a party is liable.
CERCLA provides a responsible party with the right to bring legal action
against other responsible parties for their allocable share of
investigative and remedial costs. The Company's ability to get others to
reimburse it for their allocable share of such costs would be limited by
the Company's ability to find other responsible parties and prove the
extent of their responsibility and by the financial resources of such
other parties.
CERCLA requires the EPA to establish an NPL of sites at which
hazardous substances have been or are threatened to be released into the
environment and which require investigation or cleanup. As one of the
sellers' conditions to the Company's March 1993 acquisition of the
Superior Glacier Ridge landfill, Superior was required to accept the
transfer of an adjacent closed landfill listed on the NPL.
The Clean Air Act
The Clean Air Act provides for regulation, through state
implementation of federal requirements, of the emission of air pollutants
from certain landfills based upon the date of the landfill construction
and volume per year of emissions of regulated pollutants. The EPA has
proposed new source performance standards regulating air emissions of
certain regulated pollutants (methane and non-methane organic compounds)
from municipal solid waste landfills. Landfills located in areas with air
pollution problems may be subject to even more extensive air pollution
controls and emission limitations. In addition, the EPA has issued
standards regulating the disposal of asbestos containing materials.
Some of the federal statutes described above contain provisions
authorizing, under certain circumstances, the institution of lawsuits by
private citizens to enforce the provisions of the statutes.
The Occupational Safety and Health Act of 1970
The Occupational Safety and Health Act of 1970, as amended
("OSHA"), authorizes the Occupational Safety and Health Administration to
promulgate occupational safety and health standards. Various of those
promulgated standards, including standards for notices of hazards, safety
in excavation and the handling of asbestos, may apply to certain of the
Company's operations. OSHA regulations set forth requirements for the
training of employees handling, or who may be exposed in the workplace to,
concentrations of asbestos-containing materials that exceed specified
action levels. The OSHA regulations also set standards for employee
protection, including medical surveillance, the use of respirators,
protective clothing and decontamination units, during asbestos demolition,
removal or encapsulation as well as its storage, transportation and
disposal. In addition, OSHA specifies a maximum permissible exposure
level for airborne asbestos in the workplace. The Company has no direct
involvement in asbestos removal or abatement projects. However, asbestos-
containing waste materials are accepted at certain of the Company's
landfills that are authorized to accept such materials, and some of the
Company's collection businesses receive asbestos-containing waste
materials which have already been packaged and labelled. These packages
are loaded onto the Company's vehicles by employees of the asbestos
abatement contractors for transportation to and disposal at the Company's
authorized landfills. Accordingly, OSHA regulations designed to minimize
employees' exposure to airborne asbestos fibers and provide employees with
proper training and protection generally apply to the Company's operations
in the transportation and handling of the asbestos waste. The Company's
employees are trained to respond appropriately in the event there is an
accidental spill or release of the packaged asbestos-containing materials
during transportation or landfill disposal.
State and Local Regulations
Each state in which the Company currently operates, or may
operate in the future, has laws and regulations governing the generation,
storage, treatment, handling, transportation and disposal of solid and
hazardous waste, water and air pollution and, in most cases, the siting,
design, operation, maintenance, closure and post-closure maintenance of
landfills and other solid and hazardous waste management facilities. In
addition, many states have programs that require investigation and clean
up of sites containing hazardous materials in a manner comparable to
CERCLA. These statutes impose requirements for investigation and cleanup
of contaminated sites and liability for costs and damages associated with
such sites, and some provide for the imposition of liens on property owned
by responsible parties. Furthermore, many municipalities also have
ordinances, local laws and regulations affecting the Company's operations.
These include zoning and health measures that limit solid waste management
activities to specified sites or activities. In the past, municipalities
have enacted flow control provisions that direct the delivery of solid
wastes to specific facilities, or ban or otherwise restrict the movement
of solid wastes into, or out of, a municipality or state. While such
measures have been previously held to be unconstitutional by the United
States Supreme Court, there are several bills pending in Congress which,
if enacted as law, would authorize states or municipalities to impose some
form of flow control. Any such legislation could limit the Company's
ability to route waste in the most profitable manner.
The permits or other land use approvals with respect to a
landfill, as well as state or local laws and regulations, may (i) limit a
landfill to accepting waste that originates from a specified geographic
area; (ii) specify the quantity of waste that may be accepted at the
landfill during a given time period; and/or (iii) specify the types of
waste that may be accepted at the landfill. Once an operating permit for
a landfill is obtained, it is generally necessary to renew the permit
periodically.
There has been an increasing trend at the state and local level
to mandate and encourage waste reduction at the source and to provide
waste recycling and limit or prohibit the disposal of certain types of
solid wastes, such as yard wastes, in landfills.
Legal Proceedings
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 March 31, 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. In December 1995, the Company entered
into a settlement agreement with certain of the PRPs which allocated 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 $2,317,245 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.
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 that the entire amount of such
environmental liabilities will either be covered by the foregoing
indemnification arrangement or otherwise is not expected to have a
material adverse effect on the Company's results of operation or financial
condition.
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 extent of this
alleged violation, or the extent of any fine which may be imposed by MDNR.
The Company believes that 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 is also a party to various legal proceedings arising
in the ordinary course of its businesses. 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. In the normal course of its businesses, and as a result of
the extensive government regulation of the solid waste services industry,
the Company may periodically become subject to various judicial and
administrative proceedings involving federal, state or local governmental
agencies. From time to time the Company also may be subjected to actions
brought by citizens groups in connection with the permitting of landfills
or transfer stations, or alleging violations of the permits pursuant to
which the Company operates. The Company also may be subject to claims for
personal injury or property damage arising out of accidents involving its
vehicles or at its facilities.
MANAGEMENT
Executive Officers and Directors
The Company's Board of Directors consists of seven directors
divided into three classes. The following table sets forth information,
as of May 13, 1997, regarding the executive officers and directors of the
Company:
Name Age Company Position Director Since
Joseph P. Tate . . 53 Chairman and Director (Class III) July, 1992
G. William Dietrich 51 President, Chief Executive Sept., 1994
Officer and Director (Class II)
Gary G. Edler . . . 50 Vice President-Projects and July, 1992
Director (Class I)
Francis J. Podvin . 55 Director (Class II) July, 1992
Donald Taylor . . . 69 Director (Class II) March, 1996
Walter G. Winding . 55 Director (Class III) March, 1996
Warner C. Frazier . 65 Director (Class I) May, 1997
George K. Farr . . 38 Chief Financial Officer and
Treasurer
Peter J. Ruud . . . 43 Vice President, General Counsel
and Secretary
Joseph P. Tate is a co-founder of the Company. Mr. Tate has
more than 26 years of experience in the solid waste services industry. In
1967, Mr. Tate founded the "Valley Group" of companies that was part of
the original Consolidation which created the Company in 1993 and, prior to
the Consolidation, was a shareholder, officer and director of each of
these companies. Since the Consolidation he has continued to serve in
various executive capacities with certain of the Company's subsidiaries.
From January 1993 until August 1994, Mr. Tate served as Chief Executive
Officer of the Company. Mr. Tate has been a member of the Board since the
Company's original incorporation in July 1992 and has been Chairman of the
Board of the Company since January 1993. Mr. Tate serves as a member of
Class III of the Board, with a term through the Company's 1999 annual
shareholders meeting.
G. William Dietrich joined the Company in February 1994 as Vice
President-Solid Waste and was promoted to President and Chief Operating
Officer in September 1994, with management responsibility for all of the
Company's operations. Mr. Dietrich was promoted to President and Chief
Executive Officer in November 1995. Prior to his employment by the
Company, Mr. Dietrich was employed for over two and one-half years by BFI
(a national solid waste company), as a divisional vice president
responsible for BFI's solid waste collection, transportation and disposal
operations in Eastern and Northern Ontario. Prior thereto, Mr. Dietrich
was a district manager for Laidlaw (a national solid waste company) for
three years with principal responsibility for Laidlaw's solid waste
operations in a substantial portion of the Northeastern United States.
Mr. Dietrich has been a director of the Company since September 1994 and
serves as a member of Class II of the Board, with a term through the
Company's 1998 annual shareholders meeting.
Gary G. Edler is a co-founder of the Company and has more than
28 years of experience in the solid waste services industry. Mr. Edler
joined the Company at the time of the Consolidation as Vice President in
charge of the Company's wastewater biosolids and nonhazardous liquid waste
management operations. For 25 years prior to joining the Company, he
served as President of the "E&K Group" of companies that was a part of the
Consolidation. Mr. Edler has been a director of the Company since the
Company's original incorporation in July 1992 and serves as a member of
Class I of the Board, with a term through the Company's 2000 annual
shareholders meeting.
Francis J. Podvin has been a principal in the law firm of Nash,
Podvin, Tuchscherer, Huttenberg, Weymouth & Kryshak, S.C., Wisconsin
Rapids, Wisconsin, since 1965, currently serving as its President, and
specializes in business combinations, banking and corporate finance. Mr.
Podvin has been a director of the Company since the Company's original
incorporation in July 1992 and serves as a member of Class I of the Board,
with a term through the Company's 1998 annual shareholders meeting. Nash,
Podvin, Tuchscherer, Huttenberg, Weymouth & Kryshak, S.C. has from time to
time performed, and is expected to continue to perform, legal services for
the Company.
Donald Taylor has been a principal in Sullivan Associates
(specialists in board of directors searches), Milwaukee, Wisconsin, since
1992. Mr. Taylor served as Managing Director of U.S.A. Anatar
Investments, Ltd. (a venture capital firm) from 1989 to 1992, and prior
thereto as Chairman and Chief Executive Officer of Rexnord, Inc. (a
manufacturer of power transmission equipment), Milwaukee, Wisconsin. Mr.
Taylor is a director of Johnson Controls, Inc., Banta Corporation and
Harnischfeger Industries, Inc. Mr. Taylor serves as a member of Class II
of the Board of Directors, with a term through the Company's 1998 annual
shareholders meeting.
Walter G. Winding has been the owner and Chief Executive Officer
of Winding and Company (business consultants for closely-held companies),
Hartland, Wisconsin, since 1995. From January 1994 to January 1996 Mr.
Winding was Senior Vice President of HM Graphics Inc. (commercial printing
company), West Allis, Wisconsin. For six years prior thereto, Mr. Winding
served as President and Chief Executive Officer of Schweiger Industries,
Inc. (furniture manufacturer), Jefferson, Wisconsin, and prior thereto was
Schweiger's Vice President-Administration for four years. Prior thereto,
Mr. Winding served in various management positions with Jos. Schlitz
Brewing Company, Milwaukee, Wisconsin. Mr. Winding currently serves on
numerous boards of directors of privately-held companies. Mr. Winding
serves as a member of Class III of the Board, with a term through the
Company's 1999 annual shareholders meeting.
Warner C. Frazier has been the Chairman and Chief Executive
Officer of Simplicity Manufacturing, Inc. (a manufacturer of lawn and
garden power equipment), Port Washington, Wisconsin, since 1983, and also
served as President of that firm from 1980 to 1996 and as Vice President
of Marketing from 1976 to 1980. Prior thereto, Mr. Frazier served in
various management positions with Allis-Chalmers, in Milwaukee, Wisconsin.
Los Angeles, California, and Seattle, Washington. Mr. Frazier currently
serves on the board of directors of Rexworks, Inc. and Northwestern Steel
& Wire Co. and several privately-held companies. Mr. Frazier has been
elected to serve as a member of Class I of the Board, with a term through
the Company's 2000 annual shareholders meeting.
George K. Farr joined the Company in February 1993 as Corporate
Controller, with financial reporting responsibility for all of Superior's
operating locations. In December 1994 he was promoted to Chief Financial
Officer of the Company, with responsibility for the oversight of all of
the Company's financial matters. Prior to joining the Company, he served
as the Market Development Controller for Sanifill, Inc. (a solid waste
service company), Houston, Texas, from February 1991 to July 1992, where
he was responsible for supervising the financial due diligence process and
subsequent integration of Sanifill's major acquisitions. Prior thereto,he
held various financial management positions, including Executive Vice
President-Finance and Administration, as BancPlus Savings Association (a
savings and loan institution), Houston, Texas, for five years.
Peter J. Ruud joined the Company in September 1993 as Vice
President-General Counsel and Corporate Secretary, with responsibility for
all of the Company's legal matters. In November 1995, Mr. Ruud also
assumed oversight responsibility for the Company's human resources and
health and safety functions. Prior to joining the Company, Mr. Ruud was
in private practice with the law firm of Davis & Kuelthau;, S.C.,
Milwaukee, Wisconsin, since 1978, specializing in environmental and
corporate law and regulatory compliance. Mr. Ruud also served as a member
of the firm's managing Board of Directors. While a shareholder of Davis &
Kuelthau, S.C., Mr. Ruud was actively involved in the formation of the
Company and the Consolidation.
Board Committees
The Board has established two standing committees, the Audit
Committee and the Compensation Committee to exercise certain of the
Board's functions and to assist the Board in the discharge of its
responsibilities. The Board as a whole nominates directors for election
and will consider nominees recommended in writing by shareholders,
together with appropriate background data, if such recommendations
are made in accordance with the Company's By-laws.
The Audit Committee's principal functions are to recommend
annually a firm of independent certified public accountants to serve as
the Company's auditor, to meet with and review reports of the Company's
auditor, approve the audit fee payable to the auditors, to recommend to
the Board such actions within the scope of its authority as it deems
appropriate, and to approve related party transactions. The Audit
Committee currently consists of Warner C. Frazier, Donald Taylor
(Chairman) and Walter Winding.
The Compensation Committee is responsible for reviewing and
approving the compensation, bonuses, and benefits of officers and other
key employees of the Company and its subsidiaries and the administration
of the Company's 1993 Incentive Stock Option Plan and 1996 Equity
Incentive Plan. The Compensation Committee currently consists of entirely
independent directors, including Francis J. Podvin (Chairman), Warner C.
Frazier, Donald Taylor and Walter Winding.
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, par value $0.01 per share, and 500,000
shares of undesignated preferred stock, par value $0.01 per share. In
addition, each share of Common Stock includes an attached Common Stock
Purchase Right as described below under "Common Stock Purchase Rights."
Common Stock
As of May 1, 1997, there were 17,488,084 shares of Common Stock
outstanding. Holders of Common Stock are entitled to one vote for each
share of Common Stock held by them on all matters properly submitted to a
vote of shareholders, subject to Section 180.1150 of the WBCL described
below. Shareholders have no cumulative voting rights, which means that
the holders of shares entitled to exercise more than 50% of the voting
power are able to elect all of the directors to be elected. The Restated
Articles and Restated By-Laws provide that the Board of Directors are
divided into three substantially equal classes, with staggered three-year
terms. Subject to the prior rights of the holders of any class or series
of preferred stock then outstanding, and any contractual restrictions on
the payment of dividends, the Board of Directors may in its discretion
declare and pay dividends on the Common Stock out of legally available
earnings or assets of the Company. See Note 6 of Notes to Consolidated
Financial Statements. Subject to the prior rights of the holders of any
class or series of preferred stock then outstanding, in the event the
Company is liquidated, any amounts remaining after the discharge of all
outstanding debt will be paid pro rata to the holders of Common Stock.
The outstanding shares of Common Stock are, and the Common Stock to be
issued pursuant to this Prospectus will be, legally issued, fully paid and
nonassessable, except for certain statutory liabilities which may be
imposed by Section 180.0622(2)(b) of the WBCL for unpaid employee wages.
Holders of Common Stock have no preemptive rights to acquire unissued
shares of capital stock of the Company.
Preferred Stock
The Board of Directors is authorized to issue from time to time,
without shareholder authorization, up to 500,000 shares of preferred stock
in one or more designated series, with such voting, dividend, redemption,
conversion and exchange provisions as are provided in the particular
series. No dividends or other distributions are to be payable on the
Common Stock unless dividends are paid in full on any then outstanding
preferred stock and all sinking fund obligations for any then outstanding
preferred stock, if any, are fully funded. In the event of a liquidation
or dissolution of the Company, the outstanding shares of any then
outstanding preferred stock would have priority over the Common Stock to
receive the amount specified in each particular series out of the
remaining assets of the Company. Any future issuance of preferred stock
may have the effect of deferring, delaying or preventing a change in
control of the Company, or decreasing the market price of the Common
Stock, and may adversely affect the voting and other rights of the holders
of Common Stock. As of May 1, 1997, no shares of preferred stock were
outstanding.
Common Stock Purchase Rights
On February 21, 1997, the Board of Directors of the Company
declared a dividend of one common share purchase right (a "Right") for
each outstanding share of Common Stock. The dividend was paid on March
24, 1997 to the shareholders of record on March 10, 1997. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and LaSalle National Bank, as Rights Agent
(the "Rights Agent"). The description of the Rights contained herein is
qualified in its entirety by reference to the Rights Agreement set forth
in the Form 8-A Registration Statement dated February 28, 1997.
The Rights Agreement provides that, until the Distribution Date
(defined as the earlier to occur of (i) the public announcement that a
person or group of affiliated or associated persons (other than the
Company, a subsidiary of the Company, an employee benefit plan of the
company or a subsidiary, or certain existing shareholders as described
below) (an "Acquiring Person") has acquired beneficial ownership of 15% or
more of the outstanding shares of Common Stock (the "Shares Acquisition
Date") or (ii) 10 business days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person
or group (other than the Company, a subsidiary of the Company, an employee
benefit plan of the Company or a subsidiary, or certain existing
shareholders as described below) of 15% or more of such outstanding
shares), the Rights will be transferred with and only with the shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new share certificates issued upon transfer or new issuance of
shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
for shares even without such notation, will also constitute the transfer
of the Rights associated with the Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on February 21, 2007 (the "Final Expiration Date"),
unless the Rights are earlier redeemed or exchanged by the Company, or the
Rights Agreement is amended, in each case as described below. Upon a
Distribution Date, each Right entitles the registered holder to purchase
from the Company one share at a price of $90.00 per share, subject to
adjustment (the "Purchase Price").
The Purchase Price payable, and the number of shares of Common
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares; (ii) upon the grant to holders of the
shares of certain rights or warrants to subscribe for or purchase shares
at a price, or securities convertible into shares with a conversion price,
less than the then current market price of the shares; or (iii) upon the
distribution to holders of the shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends or dividends payable in
shares) or of subscription rights or warrants (other than those referred
to above).
The number of outstanding rights and the number of shares of
Common Stock issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the shares or a stock dividend
on the shares payable in shares or subdivisions, consolidations or
combinations of the shares occurring, in any such case, prior to the
Distribution Date.
In the event that any person becomes an Acquiring Person (a
"Flip-In Event"), each holder of a Right will thereafter generally have
the right to receive upon exercise that number of shares of Common Stock
having a market value of two times the then current Purchase Price.
Notwithstanding any of the foregoing, following the occurrence of a Flip-
In Event all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, or subsequently becomes beneficially owned by
an Acquiring Person, related persons and transferees will be null and
void.
In the event that, at any time following the Shares Acquisition
Date, (i) the Company is acquired in a merger or other business
combination transaction or (ii) 50% or more of its consolidated assets or
earnings power are sold (the events described in clauses (i) and (ii) are
herein referred to as "Flip-Over Events"), proper provision will be made
so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price, that number
of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the then current
Purchase Price.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. No fractional shares of Common Stock
will be issued. In lieu thereof, an adjustment in cash will be made based
on the market price of the shares on the last trading day prior to the
date of exercise.
At any time after a person becomes an Acquiring Person and prior
to the acquisition by any Acquiring Person of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by any Acquiring Person
which have become void), in whole or in part, at an exchange ratio of one
share, per Right (subject to adjustment).
At any time prior to a person becoming an Acquiring Person, the
Board of Directors of the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Other than provisions relating to principal economic terms of
the Rights, the terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to lower the threshold for exercisability of the
Rights from 15% to not less than 10%, with appropriate exceptions for any
person then beneficially owning a percentage of the number of shares of
Common Stock then outstanding equal to or in excess of the new threshold,
except that from and after the Distribution Date no such amendment may
adversely affect the interests of the holders of the Rights. The Board of
Directors of the Company may also amend the Rights Plan to exclude certain
potential acquirors proposing to acquire the Company in a transaction that
the Board of Directors deems to be in the best interests of the Company,
its shareholders and other constituencies of the Company.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
Certain Statutory and Other Provisions
Statutory Provisions
Section 180.1150 of the WBCL provides that the voting power of
shares of public Wisconsin corporations, such as the Company, held by any
person or persons acting as a group in excess of 20% of the voting power
in the election of directors is limited to 10% of the full voting power of
those shares. This statutory voting restriction does not apply to shares
acquired directly from the Company or shares for which full voting power
has been restored pursuant to a vote of shareholders.
Sections 180.1140 to 180.1144 of the WBCL (the "Wisconsin
Business Combination Statute") regulate a broad range of "business
combinations" between a Wisconsin corporation and an "interested
stockholder." The Wisconsin Business Combination Statute defines a
"business combination" to include a merger or share exchange, sale, lease,
exchange, mortgage, pledge, transfer or other disposition of assets equal
to at least 5% of the market value of the stock or assets of a corporation
or 10% of its earning power, issuance of stock or rights to purchase stock
with a market value equal to at least 5% of the outstanding stock,
adoption of a plan of liquidation, and certain other transactions
involving an "interested stockholder." An "interested stockholder" is
defined as a person who beneficially owns, directly or indirectly, 10% of
the voting power of the outstanding voting stock of a corporation or who
is an affiliate or associate of the corporation and beneficially owned 10%
of the voting power of the then outstanding voting stock within the last
three years. The Wisconsin Business Combination Statute prohibits a
corporation from engaging in a business combination (other than a business
combination of a type specifically excluded from the coverage of the
statute) with an interested stockholder for a period of three years
following the date such person becomes an interested stockholder, unless
the board of directors approved the business combination or the
acquisition of the stock that resulted in a person becoming an interested
stockholder before such acquisition. Business combinations after the
three-year period following the stock acquisition date are permitted only
if (i) the board of directors approved the acquisition of the stock prior
to the acquisition date; (ii) the business combination is approved by a
majority of the outstanding voting stock not beneficially owned by the
interested stockholder; or (iii) the consideration to be received by
shareholders meets certain requirements of the Wisconsin Business
Combination Statute with respect to form and amount. The Restated
Articles include a provision substantially identical to the Wisconsin
Business Corporation Statute.
Sections 180.1130 to 180.1133 of the WBCL provide that certain
"business combinations" not meeting specified adequacy-of-price standards
must be approved by a vote of at least 80% of the votes entitled to be
cast by all shareholders and by two-thirds of the votes entitled to be
cast by shareholders other than a "significant shareholder" who is a party
to the transaction. The term "business combination" is defined to
include, subject to certain exceptions, a merger or consolidation of the
corporation (or any subsidiary thereof) with, or the sale or other
disposition of substantially all of the assets of the corporation to, any
significant shareholder or affiliate thereof. "Significant shareholder"
is defined generally to include a person that is the beneficial owner of
10% or more of the voting power of the corporation.
Section 180.1134 of the WBCL (the "Wisconsin Defensive Action
Restrictions") provides that, in addition to the vote otherwise required
by law or the articles of incorporation of an issuing public corporation,
the approval of the holders of a majority of the shares entitled to vote
is required before such corporation can take certain action while a
takeover offer is being made or after a takeover offer has been publicly
announced and before it is concluded. Under the Wisconsin Defensive
Action Restrictions, shareholder approval is required for the corporation
to (i) acquire more than 5% of its outstanding voting shares at a price
above the market price from any individual or organization that owns more
than 3% of the outstanding voting shares and has held such shares for less
than two years, unless a similar offer is made to acquire all voting
shares or (ii) sell or option assets of the corporation which amount to at
least 10% of the market value of the corporation, unless the corporation
has at least three independent directors or a majority of the independent
directors vote not to have this provision apply to the corporation. The
restrictions described in clause (i) above may have the effect of
deterring a shareholder from acquiring shares of the Company with the goal
of seeking to have the Company repurchase such shares at a premium over
the market price.
Restated Articles of Incorporation and Restated By-Laws of the
Company
The Restated Articles and Restated By-Laws of the Company divide
the Board of Directors of the Company into three substantially equal
classes with staggered terms. The Restated Articles provide that any
vacancies on the Board of Directors may be filled only by the affirmative
vote of the "requisite number" of directors then in office, even if less
than a quorum exists. Any director so elected will serve until the next
election of the class for which such director is chosen and until his or
her successor is duly elected. The "requisite number" of directors is
defined in the Restated Articles to constitute two-thirds of the then
serving directors.
The Restated Articles incorporate the provisions of the
Wisconsin Business Combination Statute and require that, for the Wisconsin
Business Combination Statute provisions not to apply, the Board of
Directors must approve a business combination with an "interested
stockholder" before the stock acquisition date. The affirmative vote of
at least 66 % of the voting power of shares entitled to vote is required
to amend, repeal or adopt any provision inconsistent with the Wisconsin
Business Combination Statute provisions contained in the Restated
Articles.
In addition, the Restated By-Laws of the Company establish a
procedure which must be satisfied by shareholders seeking to call a
special meeting of shareholders. This procedure involves notice to the
Company, the receipt by the Company of a written demand for a special
meeting from holders of 10% or more of the issued and outstanding shares
of Common Stock, a review of the validity of any such demand by an
independent inspector appointed by the Company and the fixing of the
record and meeting dates by the Board of Directors. In addition,
shareholders demanding such a special meeting must deliver to the Company
a written agreement to pay the costs incurred by the Company in holding a
special meeting, including the costs of preparing and mailing the notice
of meeting and the proxy materials for the solicitation by the Company of
proxies for use at such meeting, in the event such shareholder are
unsuccessful in their proxy solicitation. The Restated By-Laws also
contain strict time deadlines and procedures applicable to shareholders
seeking to nominate a person for election as a director or to otherwise
bring business before a meeting. A shareholder may nominate a person for
election to the Board of Directors of the Company at an annual meeting or
bring other business before an annual meeting only by giving notice to the
Secretary of the Company not less than 60 days nor more than 90 days prior
to the second Tuesday in the month of May and such notice must also be
received not earlier than the 90th day prior to the date of such annual
meeting and not later than the close of business or the later of (i) the
60th day prior to such annual meeting and (ii) the 10th day following the
day on which public announcement of the date of such meeting is first
made. In order to nominate a person for election to the Board of
Directors at a special meeting of shareholders, a shareholder must deliver
written notice to the Secretary of the Company not more than 90 days prior
to the special meeting and not later than the close of business on the
later of (i) the sixtieth day prior to such special meeting or (ii) the
tenth day following the date on which a public announcement is first made
of such special meeting and of the nominees proposed by the Board of
Directors to be elected at the meeting.
OUTSTANDING SECURITIES COVERED BY THIS PROSPECTUS
This Prospectus, as appropriately amended or supplemented, may
be used from time to time by persons who have received shares of Common
Stock covered by the Registration Statement in acquisitions of businesses
or properties by the Company, or their transferees, and who wish to offer
and sell such shares (such persons are herein referred to as the "Selling
Shareholder" or "Selling Shareholders") in transactions in which they and
any broker-dealer through whom such shares are sold may be deemed to be
underwriters within the meaning of the Act.
The Company will receive none of the proceeds from any such
sales. Any commissions paid or concessions allowed to any broker-dealer
and, if any broker-dealer purchases such shares as principal, any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Act. Printing, certain legal, filing
and other similar expenses of this offering will be paid by the Company.
Selling Shareholders will bear all other expenses of this offering,
including any brokerage fees, underwriting discounts or commissions.
At May 1, 1997, there were no arrangements or understandings,
formal or informal, pertaining to the distribution of the shares as
described herein known to the Company. Upon the Company's being notified
by a Selling Shareholder that any material arrangement has been entered
into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution, a
supplemental Prospectus will be filed, pursuant to Rule 424 under the Act,
setting forth (i) the name of such Selling Shareholder and of the
participating broker-dealer(s); (ii) the number of shares involved;
(iii) the price at which such shares were sold; (iv) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), where
applicable; (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out in this Prospectus; and
(vi) other facts material to the transaction.
Selling Shareholders may sell the shares being offered hereby
from time to time in transactions on NASDAQ or on a securities exchange on
which the Company's Common Stock may then be listed, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale
or at negotiated prices. Selling Shareholders may sell some or all of the
shares in transactions involving broker-dealers, who may act solely as
agent and/or may acquire shares as principal. Broker-dealers
participating in such transactions as agent may receive commissions from
Selling Shareholders (and, if they act as agent for the purchaser of such
shares, from such purchaser). Participating broker-dealers may agree with
Selling Shareholders to sell a specified number of shares at a stipulated
price per share and, to the extent such broker-dealer is unable to do so
acting as agent for Selling Shareholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer's
commitment to Selling Shareholders.
In addition or alternatively, shares may be sold by Selling
Shareholders and/or by or through other broker-dealers in special
offerings, exchange distributions or secondary distributions pursuant to
and in compliance with the governing rules of NASDAQ or on a securities
exchange on which the Company's Common Stock may then be listed, and in
connection therewith, commissions in excess of the customary commission
prescribed by the rules of such securities exchange may be paid to
participating broker-dealers, or, in the case of certain secondary
distributions, a discount or concession from the offering price may be
allowed to participating broker-dealers in excess of such customary
commission. Broker-dealers who acquire shares as principal thereafter may
resell such shares from time to time in transactions (which may involve
crosses and block transactions and which may involve sales to and through
other broker-dealers, including transactions of the nature described in
the preceding two sentences) on NASDAQ or on a securities exchange on
which the Company's Common Stock may be listed, in negotiated transactions
or otherwise, at market prices prevailing at the time of sale or at
negotiated prices and, in connection with such resales, may pay to or
receive commissions from the purchasers of such shares.
Each Selling Shareholder may indemnify any broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Act.
VALIDITY OF SECURITIES
The legality of the Common Stock issuable hereunder by the
Company will be passed upon for the Company by Foley & Lardner, Milwaukee,
Wisconsin.
EXPERTS
The consolidated financial statements of the Company appearing
in the Company's Annual Report on Form 10-K for its year ended
December 31, 1996 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements
are incorporated by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company at
December 31, 1995 and 1996, and for each of the three years in the period
ended December 31, 1996, are incorporated by reference in this Prospectus
and in the Registration Statement from the Company's Annual Report on Form
10-K for its year ended December 31, 1996. Quarterly interim period
financial statements and year-end financial statements filed with the
Commission subsequent to March 31, 1997 are incorporated by reference
herein to the Company's filed Quarterly Reports on Form 10-Q and Annual
Reports on Form 10-K.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 ("Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission ("Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copies at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at its Regional
Offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission, 450
Fifth Street, N.W. Plaza, Washington, D.C. 20549. In addition, such
reports and proxy statements can be inspected at the offices of the Nasdaq
National Market, 1735 K Street, Washington, D.C. 20006.
In addition, the Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of
such Web site is http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-4, amended by a combined new Registration Statement
which also constitutes a post-effective amendment to the original
Registration Statement. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in
the Registration Statement and reference is hereby made to the
Registration Statement and the exhibits thereto for further information
with respect to the Company and the Common Stock (and Rights).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
1. Quarterly Report on Form 10-Q, dated May 14, 1997.
2. Current Report on Form 8-K, dated May 2, 1997.
3. Current Report on Form 8-K, dated February 28, 1997.
4. Registration Statement on Form 8-A, dated February 28,
1997.
5. Annual Report on Form 10-K for the year ended December 31,
1996.
6. All other reports filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common
Stock offered hereby shall be deemed to be incorporated
herein by reference.
Any statement contained herein or in a document all or a portion
of which is incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated
by reference herein or in the Prospectus Supplement modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will furnish without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
the request of such person, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Superior Services, Inc., 10150 West
National Avenue, Suite 350, West Allis, Wisconsin 53227, Attention:
Investor and Public Relations Manager, telephone number 414/328-2800.
<PAGE>
========================================== ============================
No person has been authorized to give
information or make any representation
not contained or incorporated by reference
in this Prospectus in connection with the
offer made hereby. If given or made, such
information or representation must not be
relied upon as having been authorized by
the Company, any Selling Shareholders, or 5,000,000 SHARES
any underwriter, agent or dealer. This
Prospectus does not constitute an offer
to sell or a solicitation of an offer to
buy any of the securities offered hereby
in any jurisdiction to any person to whom
it is unlawful to make such offer in such [LOGO]
jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder
shall, under any circumstances, create any
implication that there has been no change
in the affairs of the Company since the date
hereof.
TABLE OF CONTENTS
Page COMMON STOCK
THE COMPANY ............................ 2
RISK FACTORS ........................... 3
PRICE RANGE OF COMMON STOCK ............ 12
----------
DIVIDEND POLICY ........................ 12 PROSPECTUS
----------
SELECTED CONSOLIDATED FINANCIAL
AND OPERATING DATA ................... 13
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ............ 14
BUSINESS ............................... 20
MANAGEMENT ............................. 41
DESCRIPTION OF CAPITAL STOCK ........... 44
OUTSTANDING SECURITIES COVERED
BY THIS PROSPECTUS ................... 49
VALIDITY OF SECURITIES ................. 50 May 30, 1997
EXPERTS ................................ 50
FINANCIAL STATEMENTS ................... 51
AVAILABLE INFORMATION .................. 51
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE ............. 51
========================================== ============================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Pursuant to the Wisconsin Business Corporation Law and the
Company's Restated By-Laws, directors and officers of the Company are
entitled to mandatory indemnification from the company against certain
liabilities and expenses (i) to the extent such officers or directors are
successful in the defense of a proceeding; and (ii) in proceedings in
which the director or officer is not successful in defense thereof, unless
(in the latter case only) it is determined that the director or officer
breached or failed to perform his duties to the Company and such breach or
failure constituted: (a) a willful failure to deal fairly with the
Company or its shareholders in connection with a matter in which the
director or officer had a material conflict of interest; (b) a violation
of the criminal law unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to
believe his or her conduct was unlawful; (c) a transaction from which the
director or officer derived an improper personal profit; or (d) willful
misconduct. The Wisconsin Business Corporation Law specifically states
that it is the public policy of Wisconsin to require or permit
indemnification, allowance of expenses and insurance in connection with a
proceeding involving securities regulation, as described therein, to the
extent required or permitted as described above. Additionally, under the
Wisconsin Business Corporation Law, directors of the Company are not
subject to personal liability to the Company, its shareholders or any
person asserting rights on behalf thereof for certain breaches or failures
to perform any duty resulting solely from their status as directors,
except in circumstances paralleling those in subparagraphs (a) through (d)
outlined above.
Expenses for the defense of any action for which indemnification
may be available are required to be advanced by the Company under certain
circumstances.
The Company also maintains director and officer liability
insurance against certain claims and liabilities which may be made against
the Company's former, current or future directors or officers.
The indemnification provided by the Wisconsin Business
Corporation Law and the Company's Restated By-Laws is not exclusive of any
other rights to which a director or officer may be entitled. The general
effect of the foregoing provisions may be to reduce the circumstances
under which an officer or director may be required to bear the economic
burden of the foregoing liabilities and expense.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits. The exhibits filed herewith are as specified on
the Exhibit Index included herein.
(b) Financial Statement Schedule. Incorporated by reference to
Schedule II filed with the Company's Form 10-K, for the year ended
December 31, 1996.
Item 22. Undertakings
(A) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed by
the Act and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(B) The undersigned registration hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
for the most recent post-effective amendment thereof) which
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(C) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(D) To respond to requests for information that is incorporated
by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of
this form, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent
to the effective date of the registration statement through the date of
responding to the request.
(E) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective, except where the
transaction in which the securities being offered pursuant to this
registration statement would be exempt from registration (but for the
possibility of integration) and which have an immaterial effect on the
registrant.
(F) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that
such reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(G) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of West
Allis, and State of Wisconsin, on this 30th day of May, 1997.
SUPERIOR SERVICES, INC.
By: /s/ G. William Dietrich
G. William Dietrich
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below as of May 30, 1997 by the
following persons in the capacities indicated. Each person whose
signature appears below constitutes and appoints G. William Dietrich,
George K. Farr and Peter J. Ruud, and each of them individually, his or
her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any all amendments and
any further post-effective amendments and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
/s/ Joseph P. Tate /s/ G. William Dietrich /s/ George K. Farr
Joseph P. Tate G. William Dietrich George K. Farr
Chairman of the Board President, Chief Executive Chief Financial Officer
and Director Officer and Director (Principal Financial
(Principal Executive and Accounting
Officer) Officer)
/s/ Gary G. Edler /s/ Walter G. Winding /s/ Francis J. Podvin
Gary G. Edler Walter G. Winding Francis J. Podvin
Vice President and Director Director
Director
/s/ Warner C. Frazier /s/ Donald Taylor
Warner C. Frazier Donald Taylor
Director Director
<PAGE>
SUPERIOR SERVICES, INC.
EXHIBIT INDEX
Exhibit No. Exhibit Description
3.0 Restated Articles of Incorporation. [Incorporated by
reference to Exhibit 3.0 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
3.1 Restated By-Laws. [Incorporated by reference to
Exhibit 3.1 filed with the Company's Form S-1 Registration
Statement No. 333-240, dated January 9, 1996, as amended.]
4.0 Revolving Credit Agreement, dated as of September 1, 1993
between the Company and The First National Bank of Boston,
LaSalle National Bank and Bank One, Texas, National
Association. [Incorporated by reference to Exhibit 4.0
filed with the Company's Form S-1 Registration Statement
No. 333-240, dated January 9, 1996, as amended.]
4.1 First Amendment to Revolving Credit Agreement, dated as of
June 24, 1994 between the Company and The First National
Bank of Boston, LaSalle National Bank and Bank One, Texas,
National Association. [Incorporated by reference to
Exhibit 4.1 filed with the Company's Form S-1 Registration
Statement No. 333-240, dated January 9, 1996, as amended.]
4.2 Second Amendment to Revolving Credit Agreement, dated as
of August 28, 1995, between the Company and the First
National Bank of Boston, LaSalle National Bank and Bank
One, Texas, National Association. [Incorporated by
reference to Exhibit 4.2 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
4.3 Third Amendment to Revolving Credit Agreement, dated as of
December 29, 1995, between the Company and the First
National Bank of Boston, LaSalle National Bank and Bank
One, Texas, National Association. [Incorporated by
reference to Exhibit 4.3 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
4.4 Amended and Restated Revolving Credit Agreement among the
Company, First National Bank of Boston, Bank One
Wisconsin, Bank of America Illinois, including First
National Bank of Boston as agent dated March 26, 1997.
[Incorporated by reference to Exhibit 4.5 filed with the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997.]
4.5 Form of Certificate for Common Stock. [Incorporated by
reference to Exhibit 4.4 to Amendment No. 1 to the
Company's Form S-1 Registration Statement No. 333-240,
dated January 9, 1996, as amended.]
4.6 Rights Agreement dated February 21, 1997 between the
Company and LaSalle National Bank, Chicago, Illinois.
[Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K, dated February 28, 1997.]
5.0 Opinion of Foley & Lardner regarding the validity of
Common Stock and associated Common Stock Purchase Rights
issuable by the Company under this Registration Statement.
10.0 Stock Option Agreement, dated as of February 25, 1993 and
as amended as of May 5, 1995 and August 15, 1995, and
November 29, 1995 between George K. Farr and the Company.
[Incorporated by reference to Exhibit 10.1 filed with the
Company's Form S-1 Registration Statement No. 333-240,
dated January 9, 1996, as amended.]
10.1 Stock Option Agreement, dated as of February 14, 1995 and
as amended as of May 16, 1995, August 15, 1995 and
November 29, 1995 between G. William Dietrich and the
Company. [Incorporated by reference to Exhibit 10.2 filed
with the Company's Form S-1 Registration Statement
No. 333-240, dated January 9, 1996, as amended.]
10.2 Amendment to Restated Option Agreement dated November 26,
1996 between G. William Dietrich and the Company.
[Incorporated by reference to Exhibit 10.2 filed with the
Company's Form 10-K, for the year ended December 31,
1996.]
10.3 Employment Agreement, dated as of September 1, 1993, and
as amended August 15, 1995 between Peter J. Ruud and the
Company. [Incorporated by reference to Exhibit 10.3 filed
with the Company's Form S-1 Registration Statement
No. 333-240, dated January 9, 1996, as amended.]
10.4 Noncompetition Agreement, dated February 14, 1995, between
G. William Dietrich and the Company. [Incorporated by
reference to Exhibit 10.4 filed with the Company's Form
S-1 Registration Statement No. 333-240, dated January 9,
1996, as amended.]
10.5 Key Executive Employment and Severance Agreement, dated
August 15, 1995, between G. William Dietrich and the
Company. [Incorporated by reference to Exhibit 10.5 filed
with the Company's Form S-1 Registration Statement
No. 333-240, dated January 9, 1996, as amended.]
10.6 Key Executive Employment and Severance Agreement, dated
August 15, 1995, between George K. Farr and the Company.
[Incorporated by reference to Exhibit 10.6 filed with the
Company's Form S-1 Registration Statement No. 333-240,
dated January 9, 1996, as amended.]
10.7 Key Executive Employment and Severance Agreement, dated
August 15, 1995, between Peter J. Ruud and the Company.
[Incorporated by reference to Exhibit 10.7 filed with the
Company's Form S-1 Registration Statement No. 333-240,
dated January 9, 1996, as amended.]
10.8 1993 Incentive Stock Option Plan. [Incorporated by
reference to Exhibit 10.8 filed with the Company's Form
S-1 Registration Statement No. 333-240, dated January 9,
1996, as amended.]
10.9 Form of Stock Option Agreement under 1993 Incentive Stock
Option Plan. [Incorporated by reference to Exhibit 10.9
filed with the Company's Form S-1 Registration Statement
No. 333-240, dated January 9, 1996, as amended.]
10.10 1996 Equity Incentive Plan. [Incorporated by reference to
Exhibit 10.10 filed with the Company's Form S-1
Registration Statement No. 333-240, dated January 9, 1996,
as amended.]
10.11 Form of Non-Employee Director Non-Qualified Stock Option
Agreement under 1996 Equity Incentive Plan. [Incorporated
by reference to Exhibit 10.11 filed with the Company's
Form S-1 Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.12 Form of Key Employee Non-Qualified Stock Option Agreement
under 1996 Equity Incentive Plan. [Incorporated by
reference to Exhibit 10.12 filed with the Company's
Form S-1 Registration Statement No. 333-240, dated
January 9, 1996, as amended.]
10.13 Form of Key Employee Incentive Stock Option Agreement
under 1996 Equity Incentive Plan. [Incorporated by
reference to Exhibit 10.13 filed with the Company's Form
S-1 Registration Statement No. 333-240, dated January 9,
1996, as amended.]
11 Statement regarding computation of per share earnings.
[Incorporated by reference to Exhibit 11 filed with the
Company's Form 10-K, for the year ended December 31,
1996.]
21 List of subsidiaries as of December 31, 1996.
[Incorporated by reference to Exhibit 21 filed with the
Company's Form 10-K, for the year ended December 31,
1996.]
23.1 Consent of Foley & Lardner (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24 Power of Attorney relating to subsequent amendments
(included on the signature page of this Registration
Statement).
EXHIBIT 5
F O L E Y & L A R D N E R
A T T O R N E Y S A T L A W
CHICAGO FIRSTAR CENTER SAN DIEGO
JACKSONVILLE 777 EAST WISCONSIN AVENUE SAN FRANCISCO
LOS ANGELES MILWAUKEE, WISCONSIN 53202-5367 TALLAHASSEE
MADISON TELEPHONE (414) 271-2400 TAMPA
ORLANDO FACSIMILE (414) 297-4900 WASHINGTON, D.C.
SACRAMENTO WEST PALM BEACH
WRITER'S DIRECT LINE
May 30, 1997
Superior Services, Inc.
10150 West National Avenue, Suite 350
Milwaukee, Wisconsin 53227
Ladies and Gentlemen:
We have acted as counsel for Superior Services, Inc., a
Wisconsin corporation (the "Company"), in connection with the preparation
of a joint Registration Statement on Form S-4 constituting both a new
Registration Statement and Post Effective Amendment No. 1 to the Company's
Form S-4 Registration Statement originally filed June 20, 1996 (the
"Registration Statement"), including the joint prospectus constituting a
part thereof (the "Prospectus"), to be filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), relating to the proposed issuance from time to time
by the Company of up to 2,500,000 shares ("Shares") of the Company's
Common Stock, $.01 par value (the "Common Stock"), and the associated
rights to purchase shares of Common Stock accompanying each share of
Common Stock (the "Rights"). The terms of the Rights are as set forth in
that certain Rights Agreement, dated February 21, 1997, by and between the
Company and LaSalle National Bank (the "Rights Agreement"). In connection
with our representation, we have examined: (a) the Registration
Statement, including the Prospectus; (b) the Rights Agreement; (c) the
Company's Articles of Incorporation and By-laws, as amended to date and as
proposed to be restated on the effective date of the Registration
Statement; (d) proceedings of the Board of Directors of the Company
relating to the authorization for issuance of the Shares; and (e) such
other proceedings, documents and records as we have deemed necessary to
enable us to render this opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing under the
Wisconsin Business Corporation Law ("WBCL").
2. The Shares when issued as described in the Registration
Statement and Prospectus and pursuant to the definitive acquisition
agreement applicable to such issuance, if any, will be legally issued,
fully paid and nonassessable and no personal liability will attach to the
ownership thereof, except for debts owing to employees of the Company for
services performed, but not exceeding six months' service in any one case,
as provided in Section 180.0622(2)(b) of the WBCL. (See Local 257 of
Hotel and Restaurant Employees and Bartenders International Union v.
Wilson Street East Dinner Playhouse, Inc., Case No. 82-CV-0023, Cir. Ct.
Branch 1, Dane County, Wisconsin); provided that prior to issuance of the
Shares there shall be taken various actions or proceedings in the manner
contemplated by us as counsel, which shall include the following:
(a) the completion of the requisite procedures under the
applicable provisions of the Act and applicable state
securities laws and regulations; and
(b) to the extent we determine necessary under applicable
law, any applicable agreements and/or the Company's
governing documents, the adoption of resolutions by
the Board of Directors of the Company authorizing the
issuance of any such Shares.
3. The Rights when issued pursuant to the terms of the Rights
Agreement will be validly issued.
We consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference of this firm therein. In
giving our consent, we do not admit that we are "experts" within the
meaning of Section 11 of the Securities Act or within the category of
persons whose consent is required by Section 7 of the Securities Act.
Very truly yours,
/s/ FOLEY & LARDNER
FOLEY & LARDNER
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial and Operating Data" and to the use of our
report dated January 31, 1997 in the Registration Statement on Form S-4
and related Prospectus of Superior Services, Inc. for the registration of
5,000,000 shares of its common stock.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
May 29, 1997
