As filed with the Securities and Exchange Commission on May 7, 1998
Registration No. 333-48887
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
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 Industrial (I.R.S. Employer
incorporation) Classification Code Number) Identification No.)
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)
_______________________
Scott S. Cramer, Esq. copy to:
Vice President, General Counsel Steven R. Barth, Esq.
and Assistant Secretary Foley & Lardner
Superior Services, Inc. 777 East Wisconsin Avenue
10150 West National Avenue, Milwaukee, Wisconsin 53202
Suite 350 (414) 297-5662
West Allis, Wisconsin 53227 Facsimile (414) 297-4900
(414) 328-2800
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 [_]
_______________________
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]
_______________________
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.
<PAGE>
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 Cover
Prospectus . . . . . . . . . . . . . . Page
2. Inside Front and Outside Back Cover Inside Front Cover
Pages of Prospectus . . . . . . . . . . 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 and Counsel Validity of Securities;
Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Not Applicable
Liabilities . . . . . . . . . . . . . .
10. Information with Respect to S-3 Incorporation of
Registrants . . . . . . . . . . . . . . certain
information by
reference
11. Incorporation of Certain Information by Incorporation of
Reference . . . . . . . . . . . . . . . certain
information by
reference
12. Information with Respect to S-2 or S-3 Not Applicable
Registrants . . . . . . . . . . . . . .
13. Incorporation of Certain Information by Not Applicable
Reference . . . . . . . . . . . . . . .
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants . . . Not Applicable
15. Information with Respect to S-3 Not Applicable
Companies . . . . . . . . . . . . . . .
16. Information with Respect to S-2 or S-3 Not Applicable
Companies . . . . . . . . . . . . . . .
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 Not Applicable
or in an Exchange Offer . . . . . . . .
_______________
* 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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion
May 7, 1998
5,000,000 Shares
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."
The Company will use this Prospectus only in connection with
acquisitions by the Company pursuant to which the offering and issuance of
Common Stock would be exempt from registration under the Securities Act,
but for the possibility of integration under the Securities Act with other
offers and issuances of Common Stock. For acquisitions that would have a
material financial effect upon the Company as determined under the rules
and regulations of the Securities and Exchange Commission, the Company
will file either a post-effective amendment to the Registration Statement
as to which this Prospectus is a part, or a report containing all the
information specified by Form S-4 under the Securities Act which will be
incorporated by reference into this Registration Statement, subsequent to
such an acquisition that will contain all the financial and other
information about the acquisition material to subsequent purchasers under
the Registration Statement, including pro forma information about the
surviving entity and historical financial information about the acquired
business as determined under the rules and regulations of the Securities
and Exchange Commission. The Company will follow the same procedure when
an acquisition, aggregated with other acquisitions since the Company's
most recent audited financial statements, would have a material effect
upon the Company as determined under the rules and regulations of the
Securities and Exchange Commission, even though such an acquisition, when
taken alone, would not have a material effect. With respect to
acquisitions by the Company where no exemptions from registration would be
available under the Securities Act even if integration was not taken into
account, regardless of the materiality to the Company of the acquisition
as determined under the rules and regulations of the Securities and
Exchange Commission, offerees will be furnished with a prospectus, filed
as a post-effective amendment to the Registration Statement as to which
this Prospectus is a part, containing all the information required by
Form S-4 under the Securities Act.
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 April 30, 1998, the Company had 26,718,176 shares of Common Stock
outstanding. The Company's Common Stock is traded on the Nasdaq National
Market ("Nasdaq"). On April 30, 1998, the last sale price of the Common
Stock on Nasdaq was $32.50 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 __, 1998.
<PAGE>
PROSPECTUS SUMMARY
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 December 31, 1997.
Company
Superior Services, Inc. ("Superior" or the "Company") is an
acquisition-oriented integrated solid waste services company providing
solid waste collection, transfer, recycling and disposal services. As of
December 31, 1997, the Company served over 465,000 residential, commercial
and industrial customers in Wisconsin and in Alabama, Illinois, Iowa,
Michigan, Minnesota, Missouri, Ohio, Pennsylvania and West Virginia.
As of December 31, 1997, Superior owned and operated 14 landfills,
including a greenfield landfill and a municipal solid waste landfill
subject to a definitive purchase agreement, 29 solid waste collection
operations, 14 recycling facilities and 10 transfer stations. The Company
also manages four other landfills for third parties. The Company also
provides other integrated waste services, most of which are project-based
and a substantial number of which provide additional waste volumes to the
Company's landfills.
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 operations and customer base in
its existing markets and to enter new markets through the acquisition of
other solid waste operations; (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, transfer and
collection operations. The Company believes that its reputation,
strategy, culture and financial strength make it an attractive buyer to
acquisition candidates. The Company's operating strategy emphasizes the
integration of its solid waste collection and disposal operations and the
internalization of waste collected. The Company believes its growth and
operating strategies will lead to sustainable growth in revenue and
profitability. The Company is continually engaged in various stages of
ongoing discussions and negotiations with potential acquisition
candidates. The Company generally does not publicly announce specific
potential or pending material acquisitions unless and until they are
subject to a definitive purchase agreement or are otherwise completed.
The Company is a Wisconsin corporation with its principal executive
offices located at 10150 West National Avenue, Suite 350, West Allis,
Wisconsin 53227, and its telephone number is (414) 328-2800.
Offering
This Prospectus relates to the offering and issuance from time to
time by the Company of up to 5,000,000 shares of its Common Stock in
connection with the acquisition, directly or indirectly, by the Company of
various businesses or properties, or interests therein. See "Outstanding
Securities Covered by this Prospectus."
Risk Factors
An investment in the shares of Common Stock offered hereby is subject
to certain risks. See "Risk Factors."
Price Range of Common Stock
The Company's Common Stock is traded on the Nasdaq National Market
System under the symbol "SUPR." The high and low sales prices of the
Common Stock since the Company's initial public offering in March 1996 are
set forth under "Price Range of Common Stock."
Dividend Policy
The Company has never paid cash dividends on its Common Stock and has
no present intention to pay cash dividends. See "Dividend Policy."
Summary Consolidated Financial and Operating Data
Selected consolidated statement of operations, balance sheet and
other operating data of the Company for and at the end of certain periods
is set forth in this Prospectus under "Selected Consolidated Financial and
Operating Data." A further discussion and explanation of such data is set
forth under "Management's Discussion and Analysis of Financial Condition
and Results of Operation."
Business
A further discussion of the Company's business; industry; strategy;
operations; competition; property and equipment; employees; risk
management, insurance and performance bonds; regulation; and legal
proceedings are all set forth under "Business."
Management
Certain information regarding the directors, executive officers and
key employees of the Company is set forth under "Management."
Description of Capital Stock
Certain information regarding the capital stock of the Company is set
forth under "Description of Capital Stock."
Outstanding Securities Covered by This Prospectus
Certain information relating to the securities covered by this
Prospectus is set forth under "Outstanding Securities Covered by This
Prospectus."
<PAGE>
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 or incorporated by reference in this Prospectus
are "forward-looking statements" intended to qualify for the safe harbors
from liability established by the Private Securities Litigation Reform Act
of 1995. These forward-looking statements can generally be identified as
such because the context of the statement will include words such as the
Company "believes," "anticipates," "expects" or words of similar import.
Similarly, statements that describe the Company's future plans, objectives
or goals are also forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties, including
particularly the risk factors described below, which may cause actual
results to differ materially from those anticipated as of the date of this
Prospectus. Shareholders, potential investors and other readers are urged
to consider these factors in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included or incorporated by
reference herein are only made as of the date of this Prospectus and the
Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances. 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. Since the Company's March 1996 initial
public offering through December 31, 1997, the Company has acquired 39
solid waste collection, transfer and disposal operations (including one
greenfield landfill). A single acquisition transaction may involve the
purchase of multiple business operations. As a result of the Company's
past acquisitions and its potential additional future acquisitions, the
Company has experienced, and may continue to experience, a period or
periods of rapid growth and expansion which has placed, and could continue
to place, additional demands on the Company's management, personnel,
resources and management information systems. To support and continue
this potential growth, the Company will need to continue to attract,
train, motivate, retain and supervise its management and key employees.
Any failure by the Company 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. Any failure to recruit appropriate
additional personnel in an efficient manner and at a pace consistent with
the Company's business growth could 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 Acquisition Targets. Superior's
strategy envisions that a substantial part of its future growth will
result from acquiring and integrating additional solid waste collection,
transfer and disposal operations. There can be no assurance that the
Company will be able to continue 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 any of such 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 operations, or manage or improve the operating or administrative
efficiencies or productivity of any acquired operations. As the Company
continues to pursue acquisition opportunities in new market areas, the
potential additional geographic expansion of the Company's operations
resulting from the successful completion of some of those acquisition
opportunities will make it more difficult for the Company to successfully
and efficiently integrate such operations with the Company's existing
operations. Similarly, the Company may not realize as many synergies and
efficiencies from acquiring operations outside its existing market areas.
Failure by the Company to implement successfully its acquisition strategy
will limit, and may limit materially, the Company's growth potential and
may adversely affect the Company's results of operations. See "Business-
Strategy."
The ongoing 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 has resulted, and may continue to result, in
fewer attractive 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. Several 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 additional
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. See "Limited Public
Trading History; Possible Stock Price Volatility" below and "Price Range
of Common Stock."
Restrictions on Landfill Expansion and Development. 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 and new development is
lengthy, difficult, expensive and subject to substantial uncertainty.
Even when granted, final permits are often not approved until an existing
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 in markets where expansion
and additional disposal capacity 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."
Competition. The solid waste services industry is highly
competitive, very fragmented and requires substantial labor and capital
resources. Virtually all of the markets in which the Company competes or
will likely compete in the near future are 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 operations 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
solid waste collection 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 in the competition 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
operations, there can be no assurance that the Company will be able to
retain the customers of the acquired operations. 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. See "Business-
Competition."
Geographic Concentration. A substantial majority of the Company's
operations and customers continue to be located in the Upper Midwest and,
in particular, in Wisconsin. As a consequence, the Company's results of
operations remain susceptible to downturns in the general economy in this
geographic region. From the Company's March 1996 initial public offering
through December 31, 1997, the Company has completed acquisitions of solid
waste collection, transfer and disposal operations in five new states:
Alabama, Missouri, Ohio, Pennsylvania and West Virginia; 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 "Availability and Integration of Acquisition
Targets" above and "Business-Strategy; Expansion Through Acquisitions."
Commodity Risk Upon Resale of Recyclables. One of the components of
the Company's business is providing 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 have been and will continue to 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 historical results of
operations have tended to vary seasonally, with the first quarter of the
year typically generating the least amount of revenues, 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 have remained relatively constant
throughout the calendar year, resulting in a similar seasonality of
operating income. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Seasonality."
Potential Charges Related to Capitalized Expenditures. In accordance
with generally accepted accounting principles, the Company capitalizes
certain expenditures and advances directly associated with landfill
expansion and development projects and pending acquisitions. Indirect
costs, such as executive salaries, market development personnel 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 or development project not completed successfully. The Company
recognized charges against its net income in the year ended December 31,
1997 relating to a terminated acquisition attempt. There can be no
assurance that the Company will not be required to incur additional
charges in the future against its net income in accordance with this
policy. Any such charges against net income, if significant, could have a
material adverse effect on the Company's results of operations and
possibly its financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-General."
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, as well
as through the assumption of debt of the acquired operations. To the
extent that the Company's then available resources are insufficient to
fund such cash requirements, the Company will require additional equity
and/or debt financing in order to provide the cash to effect such
acquisitions. 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."
Use of Alternatives to Landfill Disposal/Waste Reduction Programs.
Alternatives to landfill disposal, such as recycling, incineration and
composting, are used throughout the United States. There also has been a
trend at the state and local levels to mandate recycling and waste
reduction at the source and to prohibit the disposal of certain types of
wastes at landfills. Many states (including states in which the Company
operates) have enacted laws that require counties to adopt comprehensive
plans to reduce the volume of solid waste deposited in landfills through
waste planning, composting, recycling or other programs. Some states
(including states in which the Company operates) have adopted legislation
that prohibits the disposal of yard waste, tires and other items in
landfills. These developments have resulted, and could continue to
result, in a reduction in the volume of waste destined for landfills in
certain areas, which may affect the Company's ability to operate its
landfills at their full capacity and/or affect the prices that can be
charged for landfill disposal services. Such effects could have a
material adverse effect on the Company's results of operations. See
"Business-Current Operations; Recycling Services" and "-Regulation; State
and Local Regulations."
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 the ways set forth below and
under "Business-Regulation," and will continue to impose substantial costs
on the Company. The Company believes it is currently in compliance in all
material respects with all currently applicable material regulations and
except where any noncompliance would not have a material adverse effect on
the Company's results of operations or financial condition. There can be
no assurance that the Company will be able to remain in material
compliance with all material applicable regulations. The Company may not
be aware of current circumstances where it is not in material compliance
with all material applicable regulations.
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
results 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."
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 citizens groups or 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. The Company has been subject,
and may continue to be subject, to actions brought by individuals or
community groups in connection with the permitting or licensing of its
operations, and alleged violation of such permits or licenses or other
matters. Any adverse outcome in the types of proceedings described in
this paragraph 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 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 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, the
transportation, treatment or disposal of which 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 upon
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 temporary
storage facility 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 operation 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
operations, 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-Strategy; Expansion Through
Acquisitions."
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 it owns. 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 operations. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations-Liquidity and Capital Resources."
Potential Uninsured Risks and Performance Bonds. 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, an 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."
Additionally, the Company carries only limited insurance coverage
against general liability, personal injury and property damage which could
result from the Company's business operations, including its collection
and transportation operations. As a result, a number of uninsured claims
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. See "Management Discussion and Analysis of Financial
Condition and Results of Operations."
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. The Company has entered into
employment agreements with Mr. Dietrich and certain other of its executive
officers. See "Management-Directors, Executive Officers and Key
Employees."
Potential Anti-Takeover Provisions. Each currently outstanding share
of Common Stock includes, and each newly issued share of Common Stock will
include, one common share purchase right (a "Right"). 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 the section of this Prospectus 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.
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-Certain Statutory and Other Provisions."
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-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
any person or persons acting as a group representing 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. See
"Description of Capital Stock-Certain Statutory and Other Provisions."
Possible Stock Price Volatility. 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 future earnings of the Company or other
companies in the solid waste and environmental services industries,
conditions in the economy or overall market 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.
Subsequent Share Issuances; Shares Eligible for Future Sale. 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, or the market price 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 cause dilution to existing shareholders and could
adversely affect the prevailing market price of the Common Stock and the
future ability of the Company to raise equity capital or issue its Common
Stock to effect business acquisitions. Similarly, sales of substantial
amounts of Common Stock in the public market following this offering, or
the perception that such sales could occur, could adversely affect the
prevailing market price of the Common Stock.
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 to be issued by the Company from time to time in connection with its
acquisition of operations or properties. On May 30, 1997, the Company
filed a combined new Registration Statement and post-effective amendment
to its existing registration statement which, among other things,
increased the number of shares issuable thereunder to effect business
acquisitions from 2,500,000 to 5,000,000 ("Combined Registration
Statement"). As of April 30, 1998, approximately 197,964 shares remaining
eligible for issuance under the Combined Registration Statement were
subject to issuance to complete acquisitions of additional solid waste
collection, transfer and disposal operations under either preliminary,
non-binding letters of intent or definitive purchase agreements. In
addition, as of April 30, 1998, approximately 230,346 shares of Common
Stock covered by this Registration Statement were subject to issuance
under preliminary non-binding letters of intent, but will not be issued
unless and until this Registration Statement is declared effective under
the Securities Act. Shares issued under the Combined Registration
Statement, as well as this Registration Statement, will generally be
eligible for public sale under the federal securities laws immediately
after issuance. On August 7, 1997, the Company filed a registration
statement with the Securities and Exchange Commission covering 5,000,000
shares of its Common Stock which may be issued by the Company from time to
time in connection with capital-raising transactions. On September 12,
1997, the Company sold to the public 4,403,500 of such 5,000,000 shares.
All of such shares are eligible for public resale.
No Dividends. The Company has never paid, and does not anticipate
paying any cash dividends on its Common Stock for the foreseeable future.
In addition, the Company's revolving 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 "Dividend
Policy."
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on Nasdaq 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
the Company's initial public offering, through May 5, 1998.
High Low
1996
First Quarter (from March 8, 1996) . . . $15.00 $12.75
Second Quarter . . . . . . . . . . . . . 19.00 12.75
Third Quarter . . . . . . . . . . . . . . 17.75 13.25
Fourth Quarter . . . . . . . . . . . . . 20.50 15.50
1997
First Quarter . . . . . . . . . . . . . . 24.00 17.50
Second Quarter . . . . . . . . . . . . . 23.75 20.13
Third Quarter . . . . . . . . . . . . . . 29.00 22.75
Fourth Quarter . . . . . . . . . . . . . 29.50 20.88
1998
First Quarter . . . . . . . . . . . . . 31.88 24.69
Second Quarter (through May 5, 1998) . . 33.25 28.50
On May 5, 1998, the last sale price of the Common Stock as reported
by the Nasdaq was $33.25 per share. See "Description of Capital Stock" in
the accompanying Prospectus for additional information regarding the
Company's Common Stock.
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
revolving 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 "Management's Discussion and Analysis
of Financial Condition and Results of Operations-Liquidity and Capital
Resources."
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table presents selected consolidated statement of
operations, balance sheet and other operating data of the Company for the
periods presented. The following selected financial and operating data
were derived from the Company's consolidated financial statements, which
have been audited by Ernst & Young LLP, independent auditors. The
selected consolidated financial data below should be read in conjunction
with the Company's audited consolidated financial statements and notes
thereto incorporated by reference in this Prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
All financial data for 1995, 1996, and 1997 have been restated and give
retroactive effect to reflect the Company's June 27, 1997 merger with
Resource Recovery Transfer & Transportation, Inc. ("R2T2") in a
transaction accounted for as a pooling of interests. Periods prior to
1995 have not been restated to include the accounts and operation of R2T2
as combined results are not materially different from the results as
previously presented.
<TABLE>
<CAPTION>
Years ended December 31,
1993 1994 1995 1996 1997
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues . . . . . . . . . . . . . . . . . . $67,304 $ 76,297 $ 96,175 $117,121 $177,833
Cost of operations . . . . . . . . . . . . . 39,262 46,417 49,897 60,593 97,187
Selling, general and administrative expenses. 12,106 15,054 16,561 18,677 25,132
Merger costs . . . . . . . . . . . . . . . . - - - - 1,035
Depreciation and amortization . . . . . . . . 6,180 9,488 13,357 16,767 23,861
------- ------- -------- ------- -------
Operating income from continuing operations . 9,756 5,338 16,360 21,084 30,618
Interest expense . . . . . . . . . . . . . . (1,531) (2,245) (2,853) (859) (1,277)
Other income . . . . . . . . . . . . . . . . 228 27 290 478 1,120
------- ------- -------- ------- -------
Income from continuing operations
before income taxes . . . . . . . . . . . . 8,453 3,120 13,797 20,703 30,461
Income taxes . . . . . . . . . . . . . . . . 3,343 1,389 5,733 8,540 12,706
------- ------- -------- ------- -------
Income from continuing operations . . . . . . 5,110 1,731 8,064 12,163 17,755
Income (loss) from discontinued
operations, net of income tax(1) . . . . . . 56 (5,735) (329) - -
------- ------- -------- ------- -------
Net income (loss) . . . . . . . . . . . . . . $ 5,166 $ (4,004) $ 7,735 $12,163 $17,755
======= ======== ======== ======= =======
Earnings (loss) per share:
Basic . . . . . . . . . . . . . . . . . . . $ 0.43 $ ( 0.30) $ 0.52 $ 0.68 $ 0.87
======= ======== ======== ======= =======
Diluted . . . . . . . . . . . . . . . . . . $ 0.42 $ ( 0.30) $ 0.51 $ 0.67 $ 0.85
======= ======== ======== ======= =======
Operating Data:
Net cash provided by operating activities . . $ 8,970 $ 10,428 $ 27,117 $ 30,902 $ 36,161
Net cash used in investing activities . . . . (24,378) (20,954) (9,558) (37,601) (131,697)
Net cash provided by (used in) financing . . . 17,459 9,538 (17,207) 20,177 119,092
EBITDA(2) . . . . . . . . . . . . . . . . . . 15,936 14,826 29,717 37,851 54,479
EBITDA margin(3) . . . . . . . . . . . . . . . 23.7% 19.4% 30.9% 32.3% 30.6%
<CAPTION>
Years ended December 31,
1993 1994 1995 1996 1997
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . $ 3,022 $ 2,034 $ 3,101 $ 16,579 $ 40,135
Working capital . . . . . . . . . . . . . . . 8,906 12,818 5,403 15,825 44,501
Property and equipment, net . . . . . . . . . 76,546 80,592 88,409 115,691 210,969
Total assets . . . . . . . . . . . . . . . . 116,398 126,785 132,503 190,026 366,992
Long-term debt, net of current maturities . . 27,388 35,794 20,168 4,907 3,282
Total common shareholders' investment . . . . 32,922 29,331 38,798 107,045 259,409
_______________
(1) Includes losses on disposition of discontinued operations, net of income taxes of $5,042,000 and $329,000 for 1994 and
1995, respectively.
(2) EBITDA is defined as operating income from continuing operations plus depreciation and amortization. EBITDA should not
be considered an alternative to (i) operating income or net income (as determined in accordance with generally accepted
accounting principles ("GAAP")) as an indicator of the Company's operating performance or (ii) cash flows from operating
activities (as determined in accordance with GAAP) as a measure of operating performance or liquidity. However, the
Company has included EBITDA data (which are not a measure of financial performance under GAAP) because it understands
that such data are commonly used by certain investors to evaluate a company's performance in the solid waste industry.
Furthermore, the Company believes that EBITDA data are relevant to an understanding of the Company's performance because
they reflect the Company's ability to generate cash flows sufficient to satisfy its debt service, capital expenditure and
working capital requirements. The Company therefore interprets the trends that EBITDA depicts as one measure of the
Company's operating performance. However, funds depicted by the EBITDA measure may not be available for debt service,
capital expenditures or working capital due to legal or functional requirements to conserve funds or other commitments or
uncertainties. EBITDA, as measured by the Company, might not be comparable to similarly titled measures reported by
other companies. Therefore, in evaluating EBITDA data, investors should consider, among other factors: the non-GAAP
nature of EBITDA data; actual cash flows; the actual availability of funds for debt service, capital expenditures and
working capital; and the comparability of the Company's EBITDA data to similarly titled measures reported by other
companies.
(3) EBITDA margin represents EBITDA expressed as a percentage of revenues for the indicated period.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's consolidated financial statements and notes thereto incorporated
by reference herein.
Results of Operations
General
As of December 31, 1997, the Company provided solid waste collection,
transfer, recycling and disposal services to over 465,000 residential,
commercial and industrial customers in Wisconsin and in Alabama, Illinois,
Iowa, Michigan, Minnesota, Missouri, Ohio, Pennsylvania and West Virginia.
As of December 31, 1997, Superior owned and operated 14 landfills,
including a greenfield landfill and a municipal solid waste landfill
subject to a definitive purchase agreement, 29 solid waste collection
operations, 14 recycling facilities and 10 solid waste transfer stations.
The Company also manages four landfills for third parties. The Company
also provides other integrated waste services, most of which are
project-based and provide additional waste volumes to the Company's
landfills.
As described more fully below, revenues for the periods presented
were comprised of fees received for the following services:
Years ended December 31,
1995 1996 1997
Collection . . . . . . . . . . . . 46% 45% 52%
Third party disposal . . . . . . . 19 24 21
Recycling . . . . . . . . . . . . . 14 12 11
Other integrated waste services . . 21 19 16
--- --- ---
100% 100% 100%
=== === ===
The percentage of revenue obtained from collection services increased to
52% in 1997 compared to 45% in 1996 due to a greater portion of revenue
being generated from collection operations acquired. The Company believes
that future operations acquired will continue the trend in its revenue mix
away from recycling and other integrated waste services and towards solid
waste collection and disposal.
The Company's solid waste collection operations earn revenues from
fees collected from commercial and industrial collection and transfer
stations and residential customers. The Company derives a substantial
portion of its collection revenues from commercial and industrial
customers. Commercial and industrial waste streams generally help improve
the Company's operating efficiencies and provide additional volume for the
Company's landfills. Commercial and industrial contracts typically have
terms of one to three years and are individually negotiated. Residential
collection services are typically provided on a contract basis in which
the Company contracts with a municipal authority to collect the solid
waste of all or a portion of the residential homes in a specified
community. These contracts, which are usually competitively bid,
generally have terms of one to three years and provide consistent cash
flow during the term of the contract since the Company is paid regularly
by the municipality or its residents based on a specified fixed rate per
household. The Company also provides residential collection services on a
subscription basis, whereby the Company contracts directly with individual
households. Residential subscription customers are billed in advance and
provide the Company with a stable source of revenues and an efficient
means to utilize the Company's resources, particularly its collection
equipment, manpower and management information systems.
As part of its collection operations, the Company's transfer stations
receive solid waste collected primarily by its various collection
operations, compact the waste and transfer the waste to larger Company-
owned vehicles for transport to landfills. This procedure reduces the
Company's costs by improving its utilization of collection personnel and
equipment.
The Company currently operates 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's recycling facilities earn revenues
from the collection, processing and resale of recycled waste products,
particularly recycled wastepaper. 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. The Company has a wastepaper purchase
agreement effective through April 2000 with a national paper company
pursuant to which the paper company purchases 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 this agreement helps mitigate some of the
variability associated with the resale of its collected and recyclable
wastepaper.
The Company's owned solid waste landfills earn revenues from disposal
fees (known as "tipping fees") charged to third parties. The Company's
landfills receive solid waste from its own collection companies and
transfer stations, as well as from independent collection operators. In
1997, approximately 65% of the solid waste collected by the Company was
delivered for disposal at its own landfills compared to 81% in 1996.
Solid waste collection and transfer services accounted for approximately
52% of the Company's revenues for 1997, including revenues from disposal
services provided to customers of the Company's collection and transfer
units, compared to approximately 45% in 1996. These trends reflect the
impact of the Company's acquisition of collection operations during the
year, some of which are located in service areas where the Company does
not, as yet, have its own landfill or transfer station. Tipping fees
earned by the Company's landfills from its own collection operations are
considered intercompany revenues, and are eliminated from the Company's
consolidated disposal revenues. The Company earns management fees from
its management of third party landfills.
The Company's prices for its solid waste services are typically
determined by the volume, weight and type of waste collected, treatment
requirements, risks involved in handling, recycling or disposing of waste,
frequency of collection, cost of disposal or recycling, distance to final
disposal sites, amount and type of equipment furnished to the customer and
prices charged for similar service by competitors. The Company's ability
to pass on cost increases is sometimes limited by the terms of its
contracts. Long-term solid waste collection contracts typically contain a
formula, generally based on published price indices, for automatic
adjustment of fees to cover increases in some, but not all, operating
costs.
Revenues from the Company's hazardous waste management services are
included within the percentage of revenues from other integrated waste
services referenced in the table above and alone represented less than 2%
of the Company's revenues in 1997 compared to less than 4% in 1996.
Although the Company may under certain conditions from time to time
acquire additional operations which focus on providing other integrated
waste services, including hazardous waste services, the Company expects
this trend to continue as it pursues its strategy of acquiring solid waste
operations.
Operating expenses for the Company's collection operations include
direct labor, fuel, equipment maintenance and tipping fees paid to third-
party landfills. Operating expenses for the Company's landfill operations
include labor, equipment costs, legal and administrative costs of ongoing
environmental compliance, royalties to former owners, site maintenance and
accruals for future closure and post-closure maintenance costs.
Engineering, legal, permitting, construction and other costs directly
associated with expansions of existing landfills or development of new
landfills, together with associated interest, are capitalized. The
Company also capitalizes certain expenditures related to pending
acquisitions. Indirect project development costs, such as executive and
corporate overhead, salaries of market development personnel, public
relations 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 that the Company
estimates will be recoverable, through sale or otherwise) relating to any
landfill that is permanently closed, any pending acquisition that is not
consummated and any landfill expansion or development project that is not
completed. At December 31, 1997, the Company had recorded $59.4 million
of capitalized costs in connection with its landfill expansions and
developments at its current sites, including $15.7 million for its seven
currently pending permit applications and $43.7 million for the purchase
of land and development rights for potential future development sites. As
of December 31, 1997, the Company's largest single capitalized expenditure
was $16.0 million for the purchase of land and development rights for
future expansion adjacent to an existing landfill.
The Company accrues the estimated landfill closure and post-closure
maintenance costs expected to be incurred upon and subsequent to the
closing of existing operating landfill areas ratably as the permitted
airspace is consumed during any given period. 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. The Company's estimates of these costs are stated
in current dollars and are not discounted to present value. The Company
believes it has accrued adequately for its landfill closure and post-
closure costs. See "Liquidity and Capital Resources" below.
Selling, general and administrative expenses ("SG&A") include
management salaries, clerical and administrative overhead, costs
associated with the Company's sales force, and community relations
expense.
Upon receipt of necessary operating permits, capitalized landfill
costs are amortized based on utilization of available airspace under the
units-of-production method. Successful permitting of additional landfill
disposal capacity improves the Company's profitability by extending the
time period over which the Company may amortize the capitalized costs of
the expanded landfill. Property and equipment is depreciated over the
estimated useful life of the assets using the straight line method.
Other income and expense is comprised primarily of direct costs
associated with unsuccessful acquisition activities as well as interest
income and gains and losses on sales of equipment and certain other
charges against net income.
To date, inflation has not had a significant impact on the Company's
operations.
Comparative Information
1997 vs. 1996
Revenues. Revenues increased approximately $60.7 million, or 51.8%,
to $177.8 million in 1997 from $117.1 million in 1996 due primarily to the
impact of operations acquired which were accounted for under the purchase
method of accounting. During 1997, the Company acquired or merged with 26
businesses with expected annualized revenues of approximately $75 million.
The Company expects its revenues and income from operations to increase in
1998 in comparison to those reported historically due to the inclusion of
a full year of revenue and income in 1998 from these acquired businesses,
as well as a result of its ongoing acquisition program. The increase in
revenue was also due, to a much lesser extent, to increases in volumes of
wastes collected and disposed at the Company's landfills. Internal growth
from sales activities increased approximately 5% over 1996, exclusive of
the impact of an increase in recyclable commodity prices which caused an
approximately 1% increase in total revenues compared to the previous year.
Daily disposal volume at the Company's landfills rose to an average of
approximately 10,100 tons per day in 1997 compared to an average of 7,200
tons per day in 1996. The higher landfill volume was predominantly the
result of waste received at disposal sites acquired, as well as increased
volumes of special waste streams from the Company's project-driven other
integrated waste services. The Company expects to continue to increase
disposal volumes in 1998 due primarily to the inclusion of a full year of
disposal income from landfills acquired during 1997 and continued internal
sales growth activities.
Cost of Operations. Cost of operations increased $36.6 million, or
60.4%, for 1997 compared to 1996. As a percentage of revenues, cost of
operations increased to 54.7% from 51.7% in 1996. The increase in cost of
operations as a percentage of revenues was due to the higher relative
percentage of non-integrated collection revenues from businesses acquired
resulting in a lower overall percentage of waste collected by the Company
which is disposed of at its own facilities and a higher relative
percentage of business recognized from collection operations (which
typically have higher costs of operations as a percentage of revenues than
disposal operations). Changes in this trend are dependent on the timing
and mix of potential future business acquisitions, the ability to
internalize waste streams from new and planned transfer stations, and the
seasonality of the Company's operations. See "Seasonality." The increase
in the dollar amount of cost of operations was primarily attributable to
the costs of collecting and disposing of the increased volumes of wastes
received from services provided to new customers, including the operation
of new businesses acquired.
Selling, General and Administrative Expense ("SG&A")
SG&A increased $6.5 million, or 34.6%, for 1997 compared to 1996. As
a percentage of revenues, SG&A decreased to 14.1% in 1997 from 16.0% in
1996. The percentage decline in SG&A was primarily due to the significant
increase in revenues acquired without a need to correspondingly increase
SG&A support functions, particularly at the home office. This trend is
expected to continue in 1998 as the Company continues to pursue further
SG&A efficiencies. While SG&A decreased as a percentage of revenues, the
actual dollars increased primarily due to increased costs for personnel
necessary to support service to new customers, including those associated
with the operations acquired and increased expenditures for 6 additional
market development personnel.
Depreciation and Amortization
Property and equipment costs are depreciated using the straight-line
method over 20 years or the life of the lease for buildings or leasehold
improvements, and over 5 to 10 years for vehicles and equipment. Landfill
costs are amortized using the units-of-production method, which is
calculated using the total units of airspace filled during the year in
relation to total estimated permitted airspace capacity. Goodwill is
amortized over 15 to 25 year periods. Covenants not to compete are
amortized over 3 to 10 year periods. The Company believes its
depreciation and amortization accounting policies and practices are
consistent with industry practice.
Depreciation and amortization increased $7.1 million, or 42.3%, for
1997 compared to 1996 primarily as a result of increased depreciation
costs of the additional assets and businesses acquired, increased landfill
depletion costs, and increased goodwill amortization as a result of
acquisitions completed during 1997. As a percentage of revenues,
depreciation and amortization decreased to 13.4% in 1997 compared to 14.3%
in 1996 reflecting the change in revenue mix towards collection operations
which typically reflect lower depreciation as a percentage of revenue.
Changes in this trend are dependent on the timing and mix of potential
future business acquisitions and the seasonality of the Company's
operations. See "Seasonality."
Interest Expense. Gross interest expense (exclusive of interest
income) increased $418,000, or 48.7%, for 1997 compared to 1996. The
lower interest expense in 1996 was due to the application of a portion of
the net proceeds from the Company's March 1996 initial public offering to
repay indebtedness. Indebtedness was also repaid in 1997 through the use
of proceeds from the 4,403,500 shares offered and sold to the public by
the Company on September 12, 1997 (the "1997 Public Offering"), but this
occurred much later in the year resulting in more interest expense than
had been incurred than in 1996. Interest expense as a percentage of
revenues was 0.7% in both 1997 and 1996. Interest of $950,000 was
capitalized during 1997 related to landfills under development.
Income Taxes. The Company's effective tax rate increased to 41.7%
for 1997 compared to 41.3% in 1996. The increase in the effective tax
rate in 1997 is due to the non-deductible amortization of intangibles
related to businesses acquired.
1996 vs. 1995
Revenues. Revenues increased approximately $20.9 million, or 21.8%,
to $117.1 million in 1996 from $96.2 million in 1995. This increase was
attributable primarily to a 63.2% increase in volumes of wastes disposed
at the Company's landfills. Revenues for 1996 compared to 1995 increased
$10.6 million from the impact of operations 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 approximately
7,200 tons per day in 1996 compared to an average of almost 4,500 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.
Cost of operations increased $10.7 million, or 21.4%, for 1996
compared to 1995. As a percentage of revenues in 1996, cost of operations
improved to 51.7% from 51.9% 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 projects and services provided
to new customers, including the operation of new operations acquired.
SG&A. SG&A increased $2.1 million, or 12.8%, for 1996 compared to
1995. As a percentage of revenues, SG&A decreased to 16.0% in 1996 from
17.2% 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 operations
acquired.
Depreciation and Amortization. Depreciation and amortization
increased $3.4 million, or 25.5%, for 1996 compared to 1995, primarily as
a result of increased landfill depletion costs and increased depreciation
costs of the additional assets and operations acquired. As a percentage
of revenues, depreciation and amortization increased to 14.3% in 1996
compared to 13.9% 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 operations acquired.
Interest Expense. Interest expense decreased $2.0 million, or 69.9%,
for 1996 compared to 1995. Interest expense as a percentage of revenues
was 0.7% 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 facility in December 1995.
Liquidity and Capital Resources
On August 7, 1997, the Company filed a Form S-3 "Shelf" Registration
statement with the Securities and Exchange Commission to register
5,000,000 shares of common stock of which 4,403,500 shares were sold in
September 1997 at a price of $28.00 per share. The $116.7 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 $51.7 million. The remainder of the net proceeds have
been and will continue to be used for potential future acquisitions,
capital expenditures, and working capital. The Company's balance sheet at
December 31, 1997 reflected approximately $40.1 million in cash and cash
equivalents compared to $16.6 million at December 31, 1996. Pending
specific application, the Company has invested the unused proceeds in
short-term interest bearing securities.
At December 31, 1997, the Company had no outstanding borrowings and
approximately $2.3 million in letters of credit outstanding under its $110
million revolving credit facility. Outstanding long-term indebtedness at
December 31, 1997 consists primarily of equipment loan facilities. At
December 31, 1997, the ratio of the Company's long-term debt to total
capitalization was 1.25% compared to 4.4% at December 31, 1996. The
reduction was attributable to the use of the net proceeds from the 1997
Public Offering and net cash flow from operations applied to further
reduce outstanding indebtedness.
The Company's principal strategy for future growth is through the
acquisition of additional solid waste disposal and collection operations.
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. During 1997, the Company acquired 23 businesses,
including four operational landfills, which were accounted for as
purchases. Consideration for these acquisitions was $104.9 million in
cash (net of cash acquired), $6.1 million in future payments or notes
payable, and 384,893 shares of Common Stock. Although there can be no
assurance that the Company will be able to successfully continue its
acquisition program as the same pace as in 1997, 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 $110 million facility was
available at December 31, 1997. 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 matures in March
2002.
Capital expenditures for 1998 currently are expected to be
approximately $38 million compared to $26.9 million in 1997. These
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 landfill disposal operations. If the
Company is successful in acquiring additional landfill disposal
operations, 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
operations or for which it is or may become responsible. While the
precise amounts of these future obligations cannot be determined, at
December 31, 1997, the Company estimated the total costs (on a current
dollar as opposed to a discounted present value basis) to be approximately
$85 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, 1997, the Company had accrued $38.3 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.
Seasonality
The Company's historical 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. Certain operating and other fixed
costs remain relatively constant throughout the calendar year, resulting
in a similar seasonality of operating income.
Year 2000 Initiative
The Company has determined that it will need to modify or replace
portions of its software so that its computer systems will function
properly with respect to dates in the year 2000 and beyond. The Company
also has initiated discussions with its significant suppliers and
financial institutions to ensure that those parties have appropriate plans
to remediate Year 2000 issues where their systems interface with the
Company's systems or otherwise impact its operations. The Company is
assessing the extent to which its operations are vulnerable should those
organizations fail to properly remediate their computer systems.
The Company's comprehensive Year 2000 initiative is being managed by
a team of internal staff. The team's activities are designed to ensure
that there is no adverse effect on the Company's core business operations
and that transactions with customers, suppliers and financial institutions
are fully supported. While the Company believes its planning efforts are
adequate to address its Year 2000 concerns, there can be no guarantee that
the systems of other companies on which the Company's systems and
operations rely will be converted on a timely basis and will not have a
material effect on the Company. The Company currently estimates that it
will cost approximately $250,000 and that will take approximately 18
months for the Company to fully execute its Year 2000 initiative. [Based
on the Company's initial assessments,] the cost of Year 2000 initiatives
is not expected to be material to the Company's results of operations or
financial position.
<PAGE>
BUSINESS
Introduction
Superior is an acquisition-oriented integrated solid waste services
company providing solid waste collection, transfer, recycling and disposal
services. As of December 31, 1997, the Company served over 465,000
residential, commercial and industrial customers in Wisconsin and in
Alabama, Illinois, Iowa, Michigan, Minnesota, Missouri, Ohio, Pennsylvania
and West Virginia. As of December 31, 1997, the Company owned and
operated 14 landfills, including a greenfield landfill and a municipal
solid waste landfill subject to a definitive purchase agreement, 29 solid
waste collection operations, 14 recycling facilities and 10 transfer
stations. The Company also manages four other landfills. The Company
also provides other integrated waste services, most of which are project-
based and a substantial number of which provide additional waste volumes
to the Company's landfills.
Industry Overview
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 four
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; (iii) the evolution of an industry competitive model which
emphasizes providing both collection and disposal/recycling capabilities;
and (iv) the continued privatization of solid waste collection and
disposal services by municipalities and other governmental bodies and
authorities. 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 a substantial number of potential acquisition
opportunities remain.
The increasingly stringent industry regulations, such as the Subtitle
D Regulations, have resulted in rising operating and capital costs. Many
of the smaller industry participants have found these costs difficult to
bear. Additionally, the required permits for landfill development,
expansion or construction have become increasingly more difficult to
obtain. 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.
Larger integrated operators achieve economies of scale in the solid
waste collection and disposal industry through vertical integration of
their operations. These integrated companies have increased their
acquisition activity levels to expand the breadth of services and density
in their market area. Control of the waste stream in these market areas
coupled with access to significant financial resources to make
acquisitions has given larger solid waste collection and disposal
companies the ability to be more cost effective and competitive.
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. City and county
governments have historically provided a variety of solid waste services
using their own personnel; however, some municipalities have not been able
to operate efficiently enough to compete with these integrated operators
and have discontinued their collection and/or disposal operations and have
opted to privatize or contract out their collection and disposal services
to 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. See "Regulation; State and
Local Regulation" below.
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 operations and customer base in
its existing markets and to enter new markets through the acquisition of
other solid waste operations; (ii) pursue internal growth opportunities in
its current markets; and (iii) achieve continuing operating improvements
in its business. The Company believes that its reputation, strategy,
culture and financial strength make it an attractive buyer to acquisition
candidates. The Company's operating strategy emphasizes the integration
of its solid waste collection and disposal operations and the
internalization of waste collected. The Company believes its growth and
operating strategies will lead to sustainable growth in revenue and
profitability.
Expansion Through Acquisitions. Since the Company's March 1996
initial public offering through December 31, 1997, the Company has
acquired 39 solid waste collection, transfer and disposal operations,
including seven landfills, one greenfield landfill, two recycling
operations and 29 collection operations, taking the Company into 14 new
service markets in five new states. During 1997, the Company acquired or
merged with 26 solid waste, transfer and disposal operations, including
five landfills, one greenfield landfill, two recycling operations and 18
solid waste collection operations, with annualized revenues of
approximately $75 million. A single acquisition transaction may involve
the purchase of multiple business operations.
The Company intends to continue to expand through acquisitions by (i)
expanding into adjacent and new markets by pursuing principally a "hub and
spoke" acquisition strategy and (ii) increasing its revenues and
operational and administrative efficiencies through "tuck-in" and other
acquisitions of profitable solid waste collection operations in its
existing markets. The Company has established a targeted internal rate of
return on investment and pricing parameters which it uses to evaluate
potential acquisitions. In connection with each of its acquisitions, the
Company attempts to implement a number of cost saving measures, including
reductions (in certain instances) in management levels and other
personnel, the imposition of centralized management and cost controls and
the elimination of duplicative collection routes.
When entering new markets, the Company emphasizes a "hub and spoke"
acquisition strategy, involving the acquisition of solid waste landfills
in its targeted new markets followed by the acquisition of nearby solid
waste collection and transfer station operations in order to secure a
captive waste stream for internal disposal into the acquired landfill.
The Company may also acquire solid waste collection operations in new
market areas in which it does not own a landfill or transfer station if
there are sufficient disposal alternatives to ensure competitive disposal
pricing or if it believes it may subsequently be able to acquire or
develop a nearby landfill.
The Company believes "tuck-in" acquisition opportunities exist within
each market it serves and within each of its existing potential new
markets, to allow the Company to further improve its market penetration
and density. (A tuck-in acquisition is one in which the Company acquires
a collection company's vehicles and certain other assets and assumes the
service rights and obligations relating to such company's customers, which
are then fully integrated into one of the Company's existing collection
operations. This generally allows the Company to use the same core
business infrastructure, minimizing costs and enhancing profit margins.)
The Company believes that its reputation, strategy, culture and
financial strength make it an attractive buyer to certain acquisition
candidates. The profiles of acquired companies must fit strategically
into the Company's overall plan for growth within its targeted new and
existing markets. In determining whether to proceed with a business
acquisition, the Company evaluates a number of factors, including: (i)
the acquisition candidate's historical and projected financial results;
(ii) the experience, reputation and personality of the acquisition
candidate's management and the candidate's customer service reputation and
relationships with the local communities; (iii) the anticipated purchase
price and the Company's expected resultant internal rate of return on
investment; (iv) the composition and size of the candidate's customer
base; (v) whether the candidate will augment or increase the Company's
market share or help protect existing market share; (vi) any expected
synergistic effects with one or more of the Company's existing operations;
(vii) whether the candidate will enhance or expand the Company's
geographic market area and will allow the Company to effect other
acquisitions in the vicinity or whether the candidate would involve entry
into a new service market with additional growth potential; (viii) the
types of services provided by the candidate; and (ix) whether the
candidate has definable and controllable liabilities.
Prior to acquiring a business, Superior performs extensive
environmental, operational, engineering, legal, human resource and
financial due diligence. All acquisitions are subject to initial
evaluation and approval by the Company's management. All material
acquisitions are subject to final approval by the Company's Board of
Directors.
The Company has an established integration procedure for newly
acquired companies designed to effect prompt and efficient integration of
the acquired operations and minimize disruption to the ongoing business of
both the Company and the acquired company. Once a solid waste collection
operation is acquired, programs designed to improve collection and
disposal routing, equipment utilization, employee productivity, operating
efficiencies and overall profitability are implemented. The Company also
solicits new commercial, industrial and residential customers in areas
surrounding acquired collection markets as a means of further improving
operating efficiencies and increasing the volumes of solid waste collected
by the acquired operation. The Company typically attempts to retain the
acquired company's management and key employees and decentralized
operations, while consolidating administrative and management information
systems through the Company's corporate offices.
The following table sets forth the Company's acquisitions of
operations completed since the Company's March 1996 initial public
offering through December 31, 1997:
Month Principal
Acquired company acquired business Location Market area
Certain assets of December Lamp recycling, St. Paul, Minnesota and
Dynex Industries, 1997 on-site lab MN Wisconsin
Inc. pack, liquid
waste brokerage
Month Principal
Acquired company acquired business Location Market area
Noble Road Landfill, December Solid waste Shiloh, OH Central Ohio
Inc. (Superior 1997 landfill
Oakland Marsh
Landfill)
Chicago Underwater, October Underwater Chicago, ILIllinois and
Inc. 1997 industrial and Indiana
maintenance Valpariso,
IN
St. Marys Garbage October Solid waste St. Marys, Central
Disposal, Inc. 1997 collection PA Pennsylvania
Teter Sanitary October Solid waste Macon, MO Northern and
Landfill and Refuse 1997 landfill, solid Central
Hauling, Inc. waste Missouri
(Superior Maple Hill collection,
Landfill) transportation
and transfer
station
Speedway Recycle & October Roll-off and Milwaukee, Southeastern
Disposal, Inc. 1997 lugger WI Wisconsin
operation
High Ridge Disposal October Solid waste Jefferson Eastern
1997 collection, County, MO Missouri
recycling and
transportation
Olosky Sanitation August Solid waste Clearfield,Eastern
1997 collection and PA Pennsylvania
transportation
D & S Disposal July Solid waste Mauston, Central
1997 collection, WI Wisconsin
recycling and
transportation
Facchine Sanitation July Solid waste DuBois, PA Eastern
1997 collection, Pennsylvania
recycling and
transportation
Holt Landfill Co., June Construction Tuscaloosa,Central
Inc.(1) 1997 and demolition AL Alabama
landfill
Urban Sanitation June Solid waste Pell City, Central
Corporation(1) 1997 landfill and AL Alabama
collection
Speedway Sanitation, June Solid waste Tarrant, Central
Inc.(1) 1997 collection, AL Alabama
recycling and
transportation
Milliron Industries June Solid waste Mansfield, Central
1997 collection, OH Ohio
recycling and
transportation
Ohio Disposal June Solid waste Columbus, Central
Systems, Inc. 1997 collection, OH Ohio
recycling and
transportation
Burggraff Sanitation May Solid waste St. Cloud, Central
1997 collection, MN Minnesota
recycling and
transportation
Certain assets of May Solid waste Buffalo andCentral
Randy's Sanitation, 1997 collection, St. Cloud, Minnesota
Inc. recycling and MN
transportation
Certain assets of April Solid waste DuBois and Eastern
Browning-Ferris 1997 collection College Pennsylvania
Industries of Station,
Pennsylvania, Inc.(2) PA
Homestand Land April Solid waste Kersey, PA Central
Corp.(2) 1997 landfill Pennsylvania
Certain assets of BFIApril Solid waste Columbus, Central Ohio
Waste Systems of 1997 collection Zanesville
Ohio, Inc.(2) and transfer and
Marietta,
OH
Certain assets of April Solid waste Green Bay Northeastern
Browning-Ferris 1997 collection and Wisconsin
Industries of Chilton,
Wisconsin, Inc.(2) WI
M&N Disposal, Inc.(2)April Solid waste Chilton, WINortheastern
(Superior Hickory 1997 landfill under Wisconsin
Meadows Landfill, development
Inc.)
Certain assets of March Solid waste and Horicon, Southeastern
Ideal Disposal 1997 recyclable WI Wisconsin
Service, Inc. collection
Rest and Recoup March Solid waste Horicon, Southeastern
Resource Recovery, 1997 collection WI Wisconsin
Inc.
Madison Pallet March Recycling Madison, Southeastern
1997 operation WI Wisconsin
Eagle Waste Systems, February Solid waste St. Louis, Eastern
Inc. 1997 collection MO Missouri
D&K Refuse and December Solid waste St. Cloud, Central
Recycling, Inc. 1996 collection MN Minnesota
G.D. LaPlant December Solid waste Buffalo, Central
Sanitation, Inc. 1996 collection MN Minnesota
Peninsula Dump-All, November Solid waste Sturgeon Northeastern
Inc. 1996 collection Bay, Wisconsin
WI
Wilson Refuse, Inc. October Solid waste Maryland Eastern
1996 collection Heights, Missouri
MO
West County Disposal,September Solid waste Ballwin, Eastern
Ltd. (Superior Oak 1996 landfill MO Missouri
Ridge Landfill)
Eau Claire County September Solid waste Eau Claire,Northwestern
Landfill (Superior 1996 landfill WI Wisconsin and
Seven Mile Creek Eastern
Landfill) Minnesota
Vasko Rubbish August Solid waste St. Cloud, Central
Removal, Inc. 1996 collection MN Minnesota
All Waste Disposal, August Solid waste Milwaukee, Southeastern
Inc. (Rearload 1996 collection WI Wisconsin
Commercial Routes)
Superior Lamp June Recycling Port Southeastern
Recycling, Inc. 1996 Washington,Wisconsin
WI
DC Refuse Service June Solid waste Sturgeon Northeastern
& Recycling, Inc. 1996 collection Bay, Wisconsin
WI
Tom Kraemer June Solid waste St. Cloud, Central
Sanitation, Inc. 1996 collection MN Minnesota
Arrow Disposal March Solid waste Mequon, Southeastern
Service, Inc. 1996 collection WI Wisconsin
Wittstock Services, March Solid waste Dubuque, Northeastern
Inc. 1996 collection IA Iowa
______________
(1) Holt Landfill Co., Inc., Urban Sanitation Corporation and Speedway
Sanitation, Inc. are the wholly-owned subsidiaries of R2T2, acquired
on June 27, 1997 in a transaction accounted for as a pooling of
interests.
(2) These operations were acquired in April 1997 in a single acquisition
transaction from BFI and certain of its subsidiaries.
Internal Growth. Superior believes its internal growth will come
from additional sales penetration in several of its current and adjacent
markets, marketing additional services to existing customers, including
particularly recycling services, and selective price adjustments.
Utilizing a decentralized operations strategy, the Company has a 64-person
sales force (29 of the 64 positions have been added since the Company's
March 1996 initial public offering) dedicated to increasing the Company's
sales to new and existing commercial, industrial and municipal customers.
The Company believes it has been successful and will continue to succeed
in both retaining existing customers and attracting new customers through
the personal contact its sales force has with both existing and potential
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 "Risk Factors-Competition."
An integral part of the Company's internal growth strategy is to
establish new transfer stations within a 150-mile radius of its existing
landfills to increase its collection and transportation efficiencies and
improve the Company's internalization of collected solid waste.
Operating Improvements. 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.
Current Operations
Introduction
As of December 31, 1997, the Company provided the following
integrated waste services to its customers in Wisconsin and in Alabama,
Illinois, Iowa, Michigan, Minnesota, Missouri, Ohio, Pennsylvania and West
Virginia:
- Solid waste collection and transfer
- Recycling services
- Solid waste landfill disposal
- Management of third party landfills
- Other integrated waste services
As of December 31, 1997, Superior owned and operated 14 landfills,
including a greenfield landfill and a municipal solid waste landfill
subject to a definitive purchase agreement, 29 solid waste collection
operations, 14 recycling facilities and 10 transfer stations. The Company
also manages four other landfills. The Company also provides other
integrated waste services, most of which are project-based and a
substantial number of which provide additional waste volumes to the
Company's landfills.
The Company's operations originated in Wisconsin and a substantial
part of the Company's operations continue to be located in 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, "Risk Factors-Competition" and "-Geographic
Concentration."
Solid Waste Collection and Transfer
As of December 31, 1997, the Company provided solid waste collection
services to over 465,000 residential, commercial and industrial customers.
The Company's collection operations are conducted generally within a 150-
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 the year ended December 31, 1997, approximately
65% of the solid waste collected by the Company was delivered for disposal
at its own landfills, compared to approximately 81% in 1996. The
Company's waste internalization rate has declined since 1996 and may
continue to do so as a result of the Company's acquisition activities.
The Company believes, however, that its internalization rate should
continue to remain among the highest of its publicly traded competitors in
the solid waste industry, since achieving full vertical integration of the
Company's solid waste operations will continue to be a key element of the
Company's business growth strategy. Solid waste collection and transfer
services accounted for approximately 52% of the Company's revenues for
1997, including revenues from disposal services provided to customers of
the Company's collection and transfer units, compared to approximately 45%
in 1996. These trends reflect the impact of the Company's acquisition of
collection operations during the year, some of which are located in
service areas where the Company does not, as yet, have its own landfill or
transfer station.
The Company's commercial and industrial collection services are
generally 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. The Company's commercial and
industrial customers generally utilize portable containers that
temporarily hold solid waste, thereby enabling the Company to service many
customers with fewer collection vehicles. Commercial and industrial
collection vehicles normally need only one employee for operation. The
portable containers range from two to 40 cubic yards in size and are
provided by the Company. Stationary containers that compact waste prior
to collection may also be installed on the premises of large volume
customers.
A majority 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
320 municipal contracts in place as of December 31, 1997, compared to over
240 as of December 31, 1996. 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
landfills. This procedure reduces the Company's costs by improving its
utilization of collection personnel and equipment. Approximately 25% of
the solid waste accepted for transfer at the Company's transfer stations
in 1997 was from third parties, compared to approximately 21% in 1996.
Recycling Services
The Company provides recycling services to its customers in most
markets as part of its strategy to be a full service integrated solid
waste services company. Recycling involves the removal of reusable
materials from the waste stream for processing and sale in various
applications. The Company believes that recycling will 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 December 31, 1997, the Company operated 14 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 and curbside residential recycling programs in
connection with its residential collection operations in many communities.
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. The Company has a five-year wastepaper purchase agreement
effective through April 2000 with a national paper company pursuant to
which the paper company purchases certain grades of recyclable wastepaper
from the Company at or 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 this agreement helps mitigate some of the variability
associated with the resale of its collected and recyclable wastepaper.
In 1997, the Company processed an average of approximately 8,400 tons
of recyclable paper and cardboard per month, compared to approximately
7,200 tons per month in 1996. The increase of the average price received
for recyclable wastepaper caused total revenues in 1997 to increase by
approximately 1% compared to 1996. The Company expects this trend to
continue, assuming resale prices are similar to 1997 levels.
Solid Waste Landfill Disposal
The Company owns and operates 14 solid waste landfills in Alabama,
Minnesota, Missouri, Ohio, Pennsylvania, West Virginia, and Wisconsin.
This includes one greenfield landfill and one landfill subject to a
definitive purchase agreement, which the Company is operating pending
final regulatory approval. 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 are in
compliance with current applicable state and federal Subtitle D
Regulations in all material respects. None of the Company's landfills are
permitted to accept hazardous waste. In 1997, approximately 36% of the
solid waste disposed of at the Company's landfills was delivered by the
Company compared to approximately 34% in 1996.
The average daily volume of waste accepted for disposal at the
Company's open landfills increased to approximately 10,100 tons per day in
1997 from approximately 7,200 tons per day in 1996 in each case as
restated to reflect the Company's June 27, 1997 acquisition of R2T2 in a
transaction accounted for as a pooling of interests. The increase in
revenues from landfill disposal operations is the result of waste received
at six new disposal sites acquired since June 30, 1996 and increased
volumes of special waste from the Company's project-driven other
integrated waste services.
The following table provides certain information with respect to
Superior landfills which are owned, under development, or subject to
purchase under a definitive purchase agreement:
Approximate
Landfill name and Month Year Permitted total
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 1993 1986 59(3) 560
Landfill, Mayville, WI
(Eastern Wisconsin)
Superior Emerald Park November 1994 35 340
Landfill, Muskego, WI 1993
(Milwaukee metropolitan
area)
Superior FCR Landfill, July 1994 1965 24 357(4)
Buffalo, MN (Minneapolis
metropolitan area)
Superior Seven Mile Creek September 1978 37 160(5)
Landfill, Eau Claire, WI 1996
(Northwestern Wisconsin)
Superior Oak Ridge September 1975 126 180(6)
Landfill, Ballwin, MO (St. 1996
Louis metropolitan area)
Superior Hickory Meadows April 1997 Greenfield 59 317
Landfill, Chilton, WI (7) landfill
(Northeastern Wisconsin) under
development
scheduled
to open
late 1998
Superior Greentree April 1997 1986 91 1,336
Landfill, Kersey, PA
(Central Pennsylvania)
Superior Eagle Bluff June 1997 1988 24 87
Landfill (8) Tuscaloosa,
AL (Central Alabama)
Superior Cedar Hill June 1997 1975 25 418
Landfill (9) Pell City, AL
(Central Alabama)
Superior Maple Hill October 1976 30 380
Landfill (10) Macon, MO 1997
(Northeastern Missouri)
Superior Oakland Marsh December 1997 102 288
Landfill (11) Mansfield, 1997
OH (Central Ohio)
Sycamore Landfill(12), Acquisitio 1975 25 93
Hurricane, WV (Central n pending
West Virginia)
_______________
* 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) In November 1997, the WDNR approved the Company's application for a
horizontal and vertical expansion of approximately 15 acres at this
site.
(4) Does not include approximately 40 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(5) Does not include approximately 80 acres currently subject to
acquisition by the Company upon exercise of a purchase option.
(6) Includes approximately 125 acres leased by the Company. See
"Properties." Does not include approximately 58 acres subject to
acquisition by the Company upon exercise of a purchase option.
(7) Formerly M & N Disposal, Inc. In February 1998, the WDNR approved
the Company's application for 58.7 permitted acres at this site. In
December 1997, the Company entered into an interim construction
agreement and is proceeding with preliminary site development. The
Company is currently negotiating a local host community agreement.
(8) Construction and demolition landfill, formerly Holt landfill.
(9) Formerly Urban landfill.
(10) Formerly Teter Sanitary landfill.
(11) Formerly Noble Road landfill. This facility opened in November 1997.
(12) The Company has entered into an interim operating agreement to
operate this municipal solid waste landfill pending final regulatory
approval of the Company's proposed purchase of this landfill.
Superior Cranberry Creek Landfill. The Superior Cranberry Creek
landfill is located northwest of Wisconsin Rapids, Wisconsin (Central
Wisconsin). As of December 31, 1997, this landfill had approximately 1.39
million cubic yards of estimated remaining disposal capacity available.
For any horizontal expansion, a royalty amount of $0.40 per cubic yard,
less associated expenses, is payable to the former owners, subject to a
maximum of $2.0 million.
Superior Valley Meadows Landfill. The Superior Valley Meadows
landfill is located south of Fort Atkinson, Wisconsin (50 miles southwest
of Milwaukee). As of December 31, 1997, this landfill had approximately
157,000 cubic yards of estimated remaining disposal capacity available.
In November 1995, the Company filed its initial site report to add an
additional 10.4 million cubic yards of horizontal expansion capacity
adjacent to the current landfill. In September 1997, the feasibility
report filed by the Company in connection with the proposed expansion was
deemed complete. In connection with the feasibility report, the Wisconsin
Department of Natural Resources ("WDNR") required an Environmental Impact
Statement ("EIS") be performed. The EIS process was initiated in December
1997 and results are expected during 1998. The Company is obligated to
make cash royalty payments to the landfill's former owners for permitted
expansions of the landfill. For any vertical expansion, a royalty amount
of $2.00 per cubic yard, less associated expenses, is payable to the
former owners. For any horizontal expansion, a royalty amount of $0.40
per cubic yard, less associated expenses, is payable to the former owners,
subject to a maximum of $2.0 million.
Superior Glacier Ridge Landfill. The Superior Glacier Ridge landfill
is located south of Mayville, Wisconsin (40 miles northwest of Milwaukee).
As of December 31, 1997, the Superior Glacier Ridge landfill had
approximately 1.06 million cubic yards of estimated remaining disposal
capacity available. In March 1994, the Company initiated horizontal and
vertical expansion plans which would add approximately 2.3 million cubic
yards of additional disposal capacity. Following an administrative
contested case hearing challenging the environmental feasibility of the
proposed expansion, the WDNR approved the feasibility of the project.
Local citizens then petitioned for judicial review of the WDNR decision.
WDNR is the defendant in this pending action and the Company has joined in
the defense. Royalty payments to the landfill's former owners are payable
in connection with a portion of a horizontal expansion into the adjacent
120-acre parcel of property equal to $0.50 per cubic yard of permitted
expansion, less land acquisition costs if the permitted expansion is less
than 2.75 million cubic yards, up to a maximum of $1.0 million.
Superior Emerald Park Landfill. The Superior Emerald Park landfill
is located in Muskego, Wisconsin (15 miles southwest of Milwaukee). As of
December 31, 1997, this landfill had approximately 1.90 million cubic
yards of estimated remaining disposal capacity available. In September
1995, the Company initiated the permitting process for a vertical and
horizontal expansion at this landfill. The feasibility report for this
proposed expansion was deemed to be complete in January 1998. The
expansion plans provide for a 13.8 million cubic yard expansion of the
site. The Company is obligated to make royalty payments of $0.40 per
cubic yard of permitted expanded capacity, less associated expenses, to
the former owners of this landfill. Certain of such royalty payments are
payable in shares of Common Stock.
Superior FCR Landfill. The Superior FCR landfill is located near
Buffalo in Wright County, Minnesota (50 miles northwest of Minneapolis).
As of December 31, 1997, the landfill had approximately 714,000 cubic
yards of estimated remaining disposal capacity available. In connection
with a previous expansion, the Company is obligated to make royalty
payments equaling approximately 5% of the gross revenues generated from
the expanded capacity. In June 1996, the Company began the permitting
process for a vertical and horizontal expansion. In March 1998, Wright
County adopted local zoning ordinances which affect landfill expansion
design and operations. The Company is preparing an application for local
zoning approval. The Company is obligated to make additional royalty
payments to the landfill's former owners for the proposed horizontal
expansion and for other additional potential future horizontal expansions.
Superior Seven Mill Creek Landfill. The Superior Seven Mile Creek
landfill is located east of Eau Claire, Wisconsin (70 miles east of
Minneapolis/St. Paul). As of December 31, 1997, the landfill had
approximately 2.03 million cubic yards of estimated disposal capacity
available.
Superior Oak Ridge Landfill. The Superior Oak Ridge landfill is
located near Ballwin, Missouri (15 miles southwest of St. Louis). As of
December 31, 1997, the landfill had approximately 3.2 million cubic yards
of estimated remaining disposal capacity available. Approximately 125
acres occupied in connection with landfill activities is leased from a
third party. Under the terms of the lease, the Company pays the property
owner monthly rental equal to the greater of 3% of the landfill's gross
operating receipts or $3,650. In December 1996, the Company initiated the
permitting process for a horizontal expansion of up to 1.46 million cubic
yards at this landfill, and for certain operational changes. St. Louis
County authorities approved modification of the conditional use permit for
the expansion; plan modification approved by the Missouri Department of
Natural Resources is pending. The Company is obligated to pay an
additional purchase price to the landfill's former owner in the event the
Company receives the necessary permits and approvals to expand the site.
The amount of additional purchase price varies between $0.50 and $1.25 per
cubic yard, depending upon the volume of additional approved airspace. A
portion of the additional purchase price is payable in shares of Common
Stock.
Superior Hickory Meadows Landfill. Superior Hickory Meadows landfill
is located near Chilton, Wisconsin (35 miles south of Green Bay). The
Company acquired this greenfield site from Browning-Ferris Industries,
Inc. in April 1997. In February 1998, the WDNR approved the Company's
Plan of Operation for 59.7 permitted acres at this site which results in
the landfill having approximately 7.5 million cubic yards of estimated
disposal capacity available. In December 1997, the Company entered into
an interim construction agreement and is proceeding with preliminary site
development. The landfill is anticipated to be operational in late 1998.
The Company is obligated to pay a royalty to former owners equal to 2.5%
of the Company's net revenues.
Superior Greentree Landfill. Superior Greentree landfill is located
in Kersey, Pennsylvania (75 miles northeast of Pittsburgh). The Company
acquired the landfill from Browning-Ferris Industries, Inc. in April 1997.
As of December 31, 1997, the landfill has approximately 2.3 million cubic
yards of estimated disposal capacity. The Company is currently in the
permitting process for a non-contiguous landfill expansion with an
approximate capacity of 23 million cubic yards. In the event that a non-
contiguous horizontal expansion of 10 million cubic yards or more is
permitted, a contingent payment will be due the former owner. The payment
is based on the expansion size, and will not be less than $1 million, nor
more than $2 million. Further, in the event of an expansion outside the
original 90 acre permitted area, the Company is obligated to make payments
equaling 3% of net gate revenue to another former owner.
Superior Eagle Bluff Landfill. Superior East Bluff landfill is a
construction and demolition debris facility located north of Tuscaloosa,
Alabama (40 miles southeast of Birmingham). As of December 31, 1997, the
landfill has approximately 820,000 cubic yards of estimated disposal
capacity.
Superior Cedar Hill Landfill. Superior Cedar Hill landfill is
located northeast of Pell City, Alabama (30 miles east of Birmingham). As
of December 31, 1997, the landfill had approximately 1.3 million cubic
yards of estimated disposal capacity. The Company has applied for a 4.5
million cubic yard horizontal and vertical expansion of the site.
Approval of the expansion plan by the Alabama Department of Environmental
Management is pending the results of a hydro geological study.
Superior Maple Hill Landfill. The Superior Maple Hill Landfill is
located near Macon, Missouri (130 miles northwest of St. Louis). As of
December 31, 1997, this landfill had approximately 520,000 cubic yards of
estimated disposal capacity remaining. The Company is currently in the
permitting process for an 8.0 million cubic yard horizontal expansion.
The Company has already received initial regulatory approval of a detailed
site investigation plan and is in the process of developing a detailed
engineering design plan.
Superior Oakland Marsh Landfill. The Superior Oakland Marsh landfill
is located near Mansfield, Ohio (70 miles southwest of Cleveland). This
facility opened in November 1997. As of December 31, 1997, this landfill
had approximately 15.5 million cubic yards of estimated disposal capacity
remaining. During the first five years of operations, the Company is
obligated to make royalty payment of $1.50 per ton to the former owner on
all tons in excess of 400,000 annually. After the first five years, the
royalty applies to all tonnage, with a guarantee of $600,000 annually.
Sycamore Landfill. Sycamore landfill is located in Hurricane, West
Virginia (20 miles northwest of Charleston). The Company has signed a
definitive agreement to purchase this landfill and is presently operating
the landfill under an interim operating agreement pending final regulatory
approval. As of December 31, 1997, this landfill had approximately 1.2
million cubic yards of estimated disposal capacity remaining.
All of these potential landfill expansion plans are in varying stages
of planning and development. The permitting process is lengthy, difficult
and expensive, and is often subject to substantial uncertainty and there
can be no assurance that any such permits will be granted.
Management of Third Party Landfills
As of December 31, 1997, the Company managed four landfills owned by
third parties including a fly ash monofill in Oak Creek, Wisconsin, a
bottom ash monofill in Port Washington, Wisconsin, and two paper sludge
and ash captive monofills owned by separate paper companies. A monofill
is a landfill which only accepts one type of waste. The fly ash and
bottom ash monofills are managed with a Wisconsin public electric utility
company under agreements which expire in April 2000. One of the paper
company 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 remaining monofill is located in Quinnesec, Michigan, and
is managed under an agreement which expires in July 1999.
Other Integrated Waste Services
In order to provide integrated solid waste services to a wide range
of customers, Superior provides a variety of other waste services, most of
which are project-based and many of which provide additional waste volumes
to the Company's landfills. 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 16% of the Company's revenues in 1997
and 19% in 1996. This trend is expected to continue as the Company
pursues its growth strategy of acquiring additional solid waste disposal,
transfer and collection operations.
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 clean out 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
Wisconsin Department of Natural Resources ("WDNR") in Eastern and Central
Wisconsin, the United States Coast Guard in District Nine, and is a
subcontractor to the U.S. Environmental Protection Agency ("EPA") in
Region V.
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
and food wastes. 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 built a one 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 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 from its
fully-permitted temporary storage facility ("TSF") located in Port
Washington, Wisconsin (approximately 25 miles north of Milwaukee), and
operates a hazardous household waste collection and transfer facility in
St. Paul, Minnesota. 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 2% of the Company's revenues in 1997 and
less than 4% of the Company's revenues in 1996. Although the Company may
under certain conditions from time to time acquire additional operations
which focus on providing other integrated waste services, including
certain hazardous waste services, this trend is expected to continue over
the long term as the Company pursues its growth strategy of acquiring
additional solid waste disposal, transfer and collection operations.
Marketing and Sales
Superior markets its services on a decentralized basis principally
through its general managers and direct sales representatives. 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. USAMaintenance 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 intends to continue
emphasizing 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 either the year
ended December 31, 1997 or 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 operations.
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 includes five large national waste companies: Waste
Management, Inc.; Browning-Ferris Industries, Inc.; USA Waste Services,
Inc.; Allied Waste Industries, Inc.; and Republic Industries, Inc. As
of the date of this Prospectus, USA Waste Services, Inc. has announced its
intention to acquire Waste Management, Inc. The Company also competes
with a number of regional and local companies.
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. 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 a
substantial portion 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.
Property and Equipment
As of December 31, 1997, the Company owned solid waste landfills,
solid waste collection operations, recycling facilities, solid waste
transfer facilities, a TSF, a waste water treatment plant and other
operating facilities in Alabama, Illinois, Indiana, Michigan, Minnesota,
Missouri, Ohio, Pennsylvania, West Virginia and Wisconsin. The Company
leases its various offices and facilities, including its executive offices
in suburban Milwaukee under a lease expiring in August 1998. The Company
is presently negotiating a lease for its executive offices in Milwaukee to
commence in June 1998. The Company also leases property which provides
access to its Superior Oak Ridge landfill in Ballwin, 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.
Employees
At December 31, 1997, the Company employed approximately 1,470
full-time employees. A union was selected to represent approximately 19
drivers at one of the Company's subsidiaries in a representation election
held on March 13, 1998. These employees are not yet covered by a
collective bargaining agreement. No other employees are members of a
collective bargaining unit. 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
laws compliance and operating procedures. An environmental risk
assessment was performed on each of the Company's predecessor entities
prior to their 1993 consolidation into the Company 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.
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 and Performance Bonds." 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;
liabilities substantially in excess of policy limits or a substantial
number of claims resulting in liabilities not insured against because of
policy deductibles or co-insurance provisions), 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. Some of the
federal statutes discussed below contain provisions authorizing, under
certain circumstances, the institution of lawsuits by private citizens to
enforce the provisions of the statutes.
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 treatment/storage facility, 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
reviewed periodically 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.
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, as amended
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
transfer/storage facilities 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. Groundwater 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 and various states into
which the Company has entered, or may enter, have adopted regulations or
programs as stringent as, or more stringent than, the Subtitle D
Regulations. The Company believes that all of its present landfill
operations are in compliance with current applicable state and federal
Subtitle D Regulations in all material respects.
The Federal Water Pollution Control Act of 1972, as amended ("Clean
Water Act")
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 surface water
run off 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 storm water. The Company believes it has secured or has
applied for all material 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 state standards in
its market areas in administering the Clean Water Act.
The Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA")
CERCLA establishes 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, however, 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. In addition, CERCLA 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 requires the EPA to establish a National Priorities List
("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 identified as a
CERCLA site and listed on the NPL. The Company believes that it has not
been identified as a potential responsible party at any other CERCLA
landfill site.
The Clean Air Act
Through state implementation of federal requirements, the Clean Air
Act provides for regulation of the emission of air pollutants from certain
landfills based upon the date of the landfill construction, reconstruction
or modification, and volume of emissions of regulated pollutants or
capacity of the landfill. The EPA has issued new source performance
standards regulating air emissions of methane and non-methane organic
compounds from municipal solid waste landfills with certain capacity,
constructed or reconstructed after May 1991. States are required to
develop regulations for landfills that existed prior to that date and the
regulations are in various stages of development in the states where the
Company operates. The state regulations will require installation of
pollution controls for pre-1991 landfills that emit over certain amounts
of non-methane organic compounds. In addition to these requirements,
landfills may be subject to more extensive pollution controls, emission
limitations, and pre-construction permitting requirements, depending on
the amount of air pollutants the landfill emits or has the potential to
emit; these requirements are more stringent for landfills located in areas
with air pollution problems. Some states may require a permit to install
pollution controls at landfills, particularly gas extraction and flaring
systems. EPA has also issued standards to regulate the disposal of
asbestos-containing wastes. The landfill may be required to obtain a
federal operating permit under Title V. Finally, future regulations under
development by EPA for the control of emissions of hazardous air
pollutants from landfills may apply; EPA plans to issue these rules in
November 2000.
The Occupational Safety and Health Act of 1970, as amended ("OSHA").
OSHA authorizes the Occupational Safety and Health Administration to
promulgate occupational safety and health standards. Various of these
promulgated standards, including standards for notices of hazards, safety
in excavation and the handling of asbestos, may apply to the Company's
operations. 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 operations
receive asbestos-containing waste materials which have already been
packaged and labeled. 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 sitting, 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 facilities, laws that grant the right to establish franchises
for collection services and then put out for bid the right to provide
collection services and bans or other restrictions on the movement of
solid wastes into a municipality.
Certain permits and approvals may limit the types of waste that may
be accepted at a landfill or the quantity of waste that may be accepted at
a landfill during a given time period. In addition, certain permits and
approvals, as well as certain state and local regulations, may limit a
landfill to accepting waste that originates from specified geographic
areas or seek to restrict the importation of out-of-state waste or
otherwise discriminate against out-of-state waste. Generally,
restrictions on the importation of out-of-state waste have not withstood
judicial challenge. However, from time to time federal legislation is
proposed which would allow individual states to prohibit the disposal of
out-of-state waste or to limit the amount of out-of-state waste that could
be imported for disposal and would require states, under certain
circumstances, to reduce the amounts of waste exported to other states.
Although such legislation has not yet been passed by Congress, if this or
similar legislation is enacted, states in which the Company operates
landfills could act to limit or prohibit the importation of out-of-state
waste. Such state actions could materially adversely affect landfills
within those states that receive a significant portion of waste
originating from out-of-state.
In addition, certain states and localities may for economic or other
reasons restrict the exportation of waste from their jurisdiction or
require that a specified amount of waste be disposed of at facilities
within their jurisdiction. In 1994, the United States Supreme Court held
unconstitutional, and therefore invalid, a local ordinance that sought to
impose flow controls on taking waste out of the locality. However,
certain state and local jurisdictions continue to seek to enforce such
restrictions and, in certain cases, the Company may elect not to challenge
such restrictions based upon various considerations. In addition, the
aforementioned proposed federal legislation would allow states and
localities to impose certain flow control restrictions. These
restrictions could result in the volume of waste going to landfills being
reduced in certain areas, which may materially adversely affect the
Company's ability to operate its landfills at their full capacity and/or
affect the prices that can be charged for landfill disposal services.
These restrictions may also result in higher disposal costs for the
Company's collection operations. If the Company were unable to pass such
higher costs through to its customers, the Company's business, financial
condition and result of operations could be materially adversely affected.
The permits or other land use approvals with respect to a landfill,
as well as state or local laws and regulations, may (i) specify the
quantity of waste that may be accepted at the landfill during a given time
period; and/or (ii) 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. The enactment of regulations
reducing the volume and types of wastes available for transport to and
disposal in landfills has reduced the volume of waste disposed of by the
Company's continuing customers. The Company has responded to these trends
by increasing its emphasis on providing recycling services to its
customers.
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 extractions wells
(which would be connected to the existing gas extraction system at the
site) and continued groundwater monitoring. As of December 31, 1997, the
estimated one-time capital cost for the additional extraction wells was
$107,000. Annual operating, maintenance and monitoring costs for the new
extraction wells, the landfill cap, the existing gas extraction system and
groundwater monitoring system are estimated at $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 42% of future costs for remedial action and the
annual operating, maintenance and monitoring costs related to the site.
Additional generator PRPs may join in the settlement agreement, which
would further reduce the share of costs allocated to the Company and the
former owners of the closed landfill. The seller has agreed to indemnify
the Company up to $2.8 million for any site liabilities, including the
annual costs of operating, maintaining and monitoring the closed landfill
and any costs the Company may incur as a PRP. The Company has been paid
$482,755 by the seller. The seller's remaining potential indemnification
obligation was collateralized as of December 31, 1997 by $2,317,245
million held in escrow. The $2,317,245 million recoverable from the
seller is included on the Company's balance sheet as part of "other
assets". On August 15, 1997, an engineer selected by the seller
determined that the reasonable present value of the cost of a likely
remedial action plan for the closed landfill approximates $688,000. The
Company and seller are in dispute regarding the cost of a likely remedial
action plan. The seller has demanded arbitration and has filed a
declaratory judgment action in state court. If the seller's position is
accepted or upheld in the pending proceedings, the Company may be required
to return to the seller substantially all or a substantial portion of the
current amount held in escrow. This would result in a reduction of the
Company's "other asset" and the related liability account on its balance
sheet. Although the engineer's estimate of such potential costs was
substantially less than the Company's current estimate, the Company
believes its existing financial reserves, together with the amounts paid
and remaining payable by the seller and the contribution obligations of
the generator PRPs, are adequate to cover the currently anticipated
remediation costs of such landfill. As is the case with all sites on the
NPL, the performance of the selected remedy at the closed landfill will be
subject to periodic review by the WDNR and the EPA. In the event the
selected remedy does not perform adequately to meet applicable state and
federal standards, additional remedial measures beyond those currently
anticipated could be required by the WDNR and EPA. Implementation of any
of such additional remedial measures may involve substantial additional
costs beyond those currently anticipated.
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 operations or
financial condition.
The Company's 1993 federal income tax return is currently the subject
of an Internal Revenue Service audit.
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. In particular, landfill expansion permitting process is lengthy,
difficult and expensive, and is often subject to substantial uncertainty
and there can be no assurance that any such permits will be granted. From
time to time the Company also may be subjected to actions brought by
citizens groups in connection with the permitting or expansion of
landfills, the permitting of 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.
The Company carries a range of insurance, including a commercial
general liability policy and a property damage policy. The Company
maintains a limited environmental impairment liability policy on its
landfills and transfer stations that provides coverage, on a "claims made"
basis, against certain third party off-site environmental damage. There
can be no assurance that the limited environmental impairment policy will
remain in place or provide sufficient coverage for existing, but not yet
known, third party, off-site environmental liabilities.
MANAGEMENT
Directors, Executive Officers and Key Employees
The following table sets forth information, as of December 31, 1997,
regarding the directors, executive officers and certain key employees of
the Company:
Name Age Company Position
Joseph P. Tate . . . . 54 Chairman and Director
G. William Dietrich . . 52 President, Chief Executive Officer and
Director
George K. Farr . . . . 39 Chief Financial Officer and Treasurer
Gary Blacktopp . . . . 50 Senior Vice President - Operations
Peter J. Ruud . . . . . 44 Vice President - Administration and
Corporate Secretary
Scott S. Cramer . . . . 45 Vice President, General Counsel and
Assistant Secretary
Dale O. Nolder . . . . 45 Vice President - Market Development
B. Todd Watermolen . . 38 Vice President - Director of Environmental
Engineering and Chief Compliance Officer
John H. King . . . . . 41 Operating Vice President
Mike Leannah . . . . . 45 Operating Vice President
Gary G. Edler . . . . . 51 Director
Francis J. Podvin . . . 56 Director
Donald Taylor . . . . . 70 Director
Walter G. Winding . . . 56 Director
Warner C. Frazier . . . 65 Director
Joseph P. Tate is a co-founder of the Company. Mr. Tate has more
than 30 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 Company's formation was a shareholder, officer and director of each of
these companies. Since the Company's formation, 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 of Directors since the Company's original incorporation in July 1992
and has been Chairman of the Board of the Company since January 1993.
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,
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.
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.
Gary Blacktopp has more than 11 years of experience in the solid
waste services industry. Mr. Blacktopp joined the Company in June 1994 in
the dual role of General Manager of the Superior-Sheboygan solid waste
collection and transfer operations and Vice President-
Equipment/Maintenance. In November 1995, Mr. Blacktopp was promoted to
the position of Operating Vice President-Lake Region, with responsibility
for the Company's solid waste operations in Eastern and Southern Wisconsin
and Northern Illinois. In May 1997, Mr. Blacktopp's area of
responsibility was increased to include the Company's operations located
in the Northwest Region, including Northwest Wisconsin, Minnesota and
Iowa. The Lake Region and Northwest Region have been combined and are now
known as the Midwest Region. In August 1997 Mr. Blacktopp was promoted to
the position of Senior Vice President-Operations, with responsibility for
all of the Company's operations. Prior to his employment by the Company,
Mr. Blacktopp was employed for two and one-half years by BFI as Assistant
District Manager of its Toronto, Canada District, overseeing operations,
maintenance, three transfer stations and various recycling facilities.
Prior thereto, Mr. Blacktopp was Regional Maintenance Manager for Laidlaw
Waste Systems-Canada, a division of Laidlaw, for one year, and Maintenance
Manager for Waste Management, Inc. in Toronto, Canada for seven years.
Peter J. Ruud joined the Company in September 1993 as Vice President-
General Counsel and Corporate Secretary. In November 1995, Mr. Ruud also
assumed oversight responsibility for the Company's human resources and
health and safety functions. In July 1997, Mr. Ruud became Vice
President-Administration, with responsibility for human resources, health
and safety, administration, special projects, public relations and
governmental relations. 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.
Scott S. Cramer joined the Company in July 1997 as Vice President-
General Counsel, with responsibility for all of the Company's legal
matters. Prior to joining the Company, Mr. Cramer served in various legal
capacities for more than 13 years with BFI. Most recently Mr. Cramer was
Senior Corporate Counsel to BFI. Mr. Cramer also was European Regional
Counsel, Vice President and Director of Legal Affairs as well as Corporate
Secretary for Browning-Ferris Industries Europe, Inc. in Utrecht, The
Netherlands from July 1989 to January 1993. Prior to joining BFI, Mr.
Cramer was counsel to Pennzoil Company (a major oil and gas concern) which
followed his tenure in private practice.
Dale O. Nolder has more than 12 years of experience in the solid
waste services industry. Mr. Nolder was named Vice President-Market
Development for Superior in November 1996 responsible for all external
growth activities of the Company. Immediately prior to joining the
Company, Mr. Nolder headed BFI's growth program in the Greater New York
market with responsibility for all market development activity in his
region, including acquisitions, municipal marketing, infrastructure
development and marketplace planning. Prior thereto, he was the southern
regional market development manager for BFI. Mr. Nolder also served in
various financial and market development capacities with Chambers
Development Company, Inc. from May 1985 to November 1993.
B. Todd Watermolen joined the Company as Director of Environmental
Engineering and was promoted to Chief Compliance Officer in 1994, with
responsibility for environmental planning, management and compliance.
Prior to his employment by the Company, Mr. Watermolen was employed for
approximately three years as senior environmental engineer at Creative
Resource Ventures, Ltd. (a solid waste landfill development company),
Madison, Wisconsin. Prior thereto, he was employed by RMT, Inc. (an
engineering consulting firm), Madison, Wisconsin, as a design Group
Leader/Senior Project Engineer for four years.
John H. King has more than 13 years of experience in the solid waste
services industry. In June 1994, Mr. King joined the Company as Vice
President-Operations and was promoted to the position of Operating Vice
President-Special Services in September 1994, with responsibility for
managing the Company's other integrated waste services group. In April
1997, Mr. King's area of responsibility was expanded to include solid
waste operations in the Company's central region. Prior to his employment
by the Company, Mr. King was employed for five years by Laidlaw as
Director of Operations for its Ohio and Michigan regions, with
responsibility for the management of Laidlaw's collection operations
throughout that territory. For six years prior thereto, Mr. King served
in various capacities with BFI.
Mike Leannah has more than 11 years of experience in the solid waste
services industry and 12 years in the transportation industry. Mr.
Leannah joined the Company in June 1997 in the role of Operating Vice
President, with responsibility for managing the Company's operations in
its Southeast Region. Prior to his employment by the Company, Mr. Leannah
was employed for 11 years by Waste Management, Inc. (a solid waste
services company). During his 11 years with Waste Management, Inc., he
served in various capacities, including State President, Georgia; Vice
President Operations, Pennsylvania; Director of Solid Waste Operations,
Italy; Director of Operations Training, Waste Management International,
London, England; International Special Projects Manager, Stockholm,
Sweden; Division President, Oklahoma and Division President, Washington.
Prior to that, Mr. Leannah worked at numerous executive positions with
McLean Trucking Company, a long haul motor carrier.
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 its formation 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
Company's formation. Mr. Edler has been a director of the Company since
the Company's original incorporation in July 1992.
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 is a director of several privately held
companies. 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 has served as a member of the
Board of Directors since the Company's March 1996 initial public offering.
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 has
served as a member of the Board of Directors since the Company's March
1996 initial public offering.
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 was elected
to the Board of Directors at the Company's 1997 annual shareholders
meeting.
Employment and Noncompetition Agreements
The Company has entered into employment agreements with Messrs.
Dietrich, Farr and Ruud. The employment agreements provide for three-year
terms which are renewable automatically for successive three-year terms,
unless either party gives 30 days advance notice of nonrenewal. The
Company may also terminate any of the employment agreements at any time
for "cause" as defined in the executive officer's KEESA described below.
See "Severance and Change in Control Arrangements." If the Company
terminates the officer's employment other than for cause or the officer's
death or disability or if the Company elects not to renew the officer's
employment agreement, the officer is entitled to receive a severance
payment equal to three years base salary plus an amount equal to the
officer's annual bonus for the year preceding termination prorated to the
time of termination.
The Company has also entered into employment agreements with Messrs.
Blacktopp and Cramer. The employment agreements provide for a two-year
and one-year term, respectively, which are renewable automatically for
successive two-year and one-year terms, respectively, unless either party
gives 60 days advance notice of nonrenewal. The Company may also
terminate either of the employment agreements at any time for "cause" as
defined in the employment agreements. If the Company elects to terminate
Messrs. Blacktopp's or Cramer's employment other than for cause or his
death or disability such individual is entitled to receive a severance
payment equal to the unpaid balance of the employee's base salary through
the expiration of the initial term or the renewal term within which
termination takes place, subject to the change of control provisions
described below.
If the employment of any of the above officers is terminated as a
result of his death, his estate or representative is entitled to receive
an amount equal to the officer's base salary for the month in which he
dies. If the employment of any of the above officers is terminated as a
result of his disability, the officer is entitled to receive his base
salary for a period of 180 days after the Company notifies the officer of
such termination, reduced by the amount of any disability benefits
received under the Company's disability benefit plan.
Mr. Dietrich is subject to a noncompetition agreement which prohibits
him during the term of his employment and for one year thereafter from
competing with the Company within 50 miles of any Company facility or from
using or disclosing confidential information of the Company. Messrs.
Ruud, Farr, Cramer and Blacktopp are also subject to noncompetition
agreements substantially identical to Mr. Dietrich's, except that the
noncompetition term extends for two years following the termination of
their respective employment with the Company.
Severance and Change in Control Arrangements
The Company has Key Executive Employment and Severance Agreements
("KEESAs") with Messrs. Dietrich, Farr and Ruud which provide that,
following a "change in control" of the Company (as defined in the KEESAs)
such named Executive Officer will be employed for three years in the same
position, performing equivalent duties, and at the same location as in
effect immediately prior to the change of control.
Under the terms of the KEESAs, the executive officer is entitled to
receive compensation at the same rate in effect at the date of change in
control (subject to increase by the Compensation Committee) during the
officer's three-year employment period following the change in control and
to be included in the Company's benefit plans available to employees of
comparable status. If, during the employment period, the officer's
employment is terminated by the Company, other than for "cause" (as
defined in the KEESAs) or the officer's disability, or the officer's
duties are changed substantially without his written consent and the
officer terminates his employment as a result, the officer is entitled to
receive a lump sum payment equal to three times the officer's average
annual total compensation for the five years prior to the change in
control (or, if employed for less than three years, three times the
officer's highest amount of total annual compensation), plus the
actuarially determined present value of the benefit accruals that would
have been made through the end of the employment period under the
Company's retirement plans applicable to the officer. Each of the KEESAs
provide that the present value of the total amounts received by any
officer thereunder will be limited so as not to constitute an "excess
parachute payment" as defined in Section 280G of the Internal Revenue
Code. The officer and his eligible dependents are also entitled to
coverage under the Company's medical benefit plans through the end of the
employment period. Each officer also has the right under the KEESAs to
voluntarily terminate his employment with the Company for any reason
whatsoever during the 90-day period commencing on and after the occurrence
of a change in control and still be entitled to receive the lump sum
termination payments and benefits described above.
Under the terms of the employment agreements with Mr. Blacktopp and
Mr. Cramer, if either officer is terminated due to a "change in control"
(as defined in the employment agreements) the officer is entitled to
receive a lump sum severance payment equal to two years or one year,
respectively, of his base salary in effect on the effective date of the
change in control.
<PAGE>
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 $.01 per share. All currently
outstanding and newly issued shares of Common Stock include an attached
Common Stock Purchase Right which trades with each such share of Common
Stock.
Common Stock
As of April 30, 1998, there were 26,718,176 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 Wisconsin
Business Corporation Law ("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 Company's Restated Articles of Incorporation
("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. 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
and any Prospectus Supplement 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 April 30, 1998, 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 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) (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) of 15% or
more of such outstanding shares), the Rights will be transferred with and
only with the shares. The Rights are not exercisable until the
Distribution Date. 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").
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.
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 Agreement 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 Combination
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.
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, 1997
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,
1996 and 1997, and for each of the three years in the period ended
December 31, 1997, 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, 1997. Quarterly interim period financial
statements and year-end financial statements filed with the Commission
subsequent to December 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:
A. Annual Report on Form 10-K for the year ended December 31, 1997.
All other reports filed by the Company with the Commission pursuant
to Section 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 and to be part hereof from the date of filing of such
documents.
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 any Prospectus Supplement relating to the shares
of Common Stock offered hereby 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 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 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
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . 2
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PRICE RANGE OF COMMON STOCK . . . . . . . . . . . . . . . . . . . . . 12
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA . . . . . . . . . 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . 15
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . 52
OUTSTANDING SECURITIES COVERED BY THIS PROSPECTUS . . . . . . . . . . 57
VALIDITY OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 58
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 58
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 58
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . 59
5,000,000 SHARES
COMMON STOCK
___________________
PROSPECTUS
___________________
May 7, 1998
<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, 1997.
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 Amendment to the 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 7th day of May,
1998.
SUPERIOR SERVICES, INC.
By: /s/ George K. Farr
George K. Farr
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below as of May 7,
1998 by the following persons in the capacities indicated.
* * /s/ George K. Farr
Joseph P. Tate G. William Dietrich George K. Farr
Chairman of the President, Chief Chief Financial
Board and Director Executive Officer Officer (Principal
and Director Financial and
(Principal Executive Accounting Officer)
Officer)
* * *
Gary G. Edler Walter G. Winding Francis J. Podvin
Vice President and Director Director
Director
* *
Warner C. Frazier Donald Taylor
Director Director
/s/ George K. Farr
George K. Farr
Attorney-in-Fact
<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 Amended and Restated Revolving Credit Agreement, dated
as of March 26, 1997, between the Company and its
subsidiaries, and The First National Bank of Boston,
LaSalle National Bank and Bank One, Wisconsin, and Bank
of America, Illinois. [Incorporated by reference to
Exhibit 4.5 filed with the Company's Form 10-Q for the
period ended March 31, 1997, 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 First Amendment to the Revolving Credit Agreement,
dated as of April 21, 1997, between the Company Amended
and Restated, and The First National Bank of Boston,
LaSalle National Bank and Bank One and its
subsidiaries. [Incorporated by reference to Exhibit
4.2 of the Company's Form 10-K, for the year ended
December 31, 1997.]
4.6 Second Amendment to the Amended and Restated Revolving
Credit Agreement, dated as of May 30, 1997, between the
Company and The First National Bank of Boston, LaSalle
National Bank and Bank One Wisconsin. [Incorporated by
reference to Exhibit 4.3 of the Company's Form 10-K for
the year ended December 31, 1997.]
4.7 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.]
4.8 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. [Previously filed with 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.]
10.14 Employment Agreement between the Company and Scott S.
Cramer dated as of July 1, 1997. [Incorporated by
reference to Exhibit 10.14 filed with the Company's
Form 10-K for the year ended December 31, 1997.]
10.15 Employment Agreement between the Company and Gary
Blacktopp dated as of January 1, 1997, and amended as
of August 26, 1997. [Incorporated by reference to
Exhibit 10.15 filed with the Company's Form 10-K, for
the year ended December 31, 1997.]
10.16 Form of Amendment of Key Executive Employment and
Severance Agreements entered into by each of G. William
Dietrich, George K. Farr, and Peter J. Ruud.
[Incorporated by reference to Exhibit 10.16 filed with
the Company's Form 10-K for the year ended December 31,
1997.]
21 List of subsidiaries as of December 31, 1997.
[Incorporated by reference to Exhibit 21 filed with the
Company's Form 10-K for the year ended December 31,
1997.]
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 the Registration
Statement as originally filed).
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Superior
Services, Inc. for the registration of 5,000,000 shares of its common
stock and to the incorporation by reference therein of our report dated
February 5, 1998, with respect to the consolidated financial statements
and schedule of Superior Services, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
Milwaukee, Wisconsin
May 7, 1998
