<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE
SECURITIES EXCHANGE ACT OF 1934)
----------------
CHEMICAL WASTE MANAGEMENT, INC.
(NAME OF THE ISSUER)
WMX TECHNOLOGIES, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
----------------
163812 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
HERBERT A. GETZ, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
WMX TECHNOLOGIES, INC.
3003 BUTTERFIELD ROAD, OAK BROOK, ILLINOIS 60521
TELEPHONE: (708) 572-8800
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON FILING STATEMENT)
This statement is filed in connection with (check the appropriate box):
[X]a. The filing of solicitation materials or an information statement
subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation
14C [17 CFR 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [(S) 240.13e-
3(c)] under the Securities Exchange Act of 1934.
[_]b.The filing of a registration statement under the Securities Act of 1933.
[_]c.A tender offer.
[_]d.None of the above.
Check the following box if the soliciting materials referred to in checking
box (a) are preliminary copies: [X]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRANSACTION VALUATION: $423,416,986(1) AMOUNT OF FILING FEE: $83,362.15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for purposes of computing the filing fee. The
transaction valuation was determined by multiplying the number of shares
of the issuer's common stock to be acquired in the transaction by $9.4375
(the average of the high and low trading prices of such shares as reported
in the consolidated transaction reporting system on November 2, 1994). The
filing fee was determined by multiplying such valuation by 1/50 of 1%. The
actual transaction valuation will depend on the number of such shares
acquired in the transaction and the prices of such shares at the time of
acquisition.
[X]Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $83,362.15
Form or Registration No.: Schedule 14A
Filing Party: Chemical Waste Management, Inc.
Date Filed: November 4, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Pursuant to General Instruction F to Schedule 13E-3, the information
indicated below as contained in the Preliminary Proxy Statement-Prospectus of
Chemical Waste Management, Inc. and WMX Technologies, Inc., dated November 4,
1994 ("Preliminary Proxy Statement") is incorporated herein by reference. The
cross reference sheet included in this Statement shows the location in the
Preliminary Proxy Statement of the information required to be included in
response to the items of this Statement.
i
<PAGE>
WMX TECHNOLOGIES, INC.
SCHEDULE 13E-3
CROSS REFERENCE SHEET
PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3
<TABLE>
<CAPTION>
LOCATION OR CAPTION IN PRELIMINARY PROXY
STATEMENT-PROSPECTUS OF CHEMICAL WASTE
MANAGEMENT, INC.
ITEM IN SCHEDULE 13E-3 AND WMX TECHNOLOGIES, INC.
- ---------------------- ----------------------------------------
<S> <C>
1. Issuer and Class of Security
Subject to the Transaction
(a)Name of Issuer................ Cover Page; Summary--The Parties
(b) Title, Amount of Securities
Outstanding, and Approximate Cover Page; Summary--Record Date and Quo-
Number of Holders of Record.. rum; Information Concerning the Special
Meeting--Record Date; Quorum; Outstanding
CWM Shares Entitled to Vote
(c) Market Information........... Summary--Market Prices of CWM and Company
Shares; CWM Share and Company Share Market
Price Information; Dividend Information;
and CWM Share Purchase Information
(d) Dividends.................... CWM Share and Company Share Market Price
Information; Dividend Information; and CWM
Share Purchase Information
(e) Public Offerings............. None
(f) Purchases by Issuer.......... CWM Share and Company Share Market Price
Information; Dividend Information; and CWM
Share Purchase Information
2.Identity and Background......... Summary--The Parties; Business of the Com-
pany; Documents Incorporated By Reference
3.Past Contracts, Transactions or
Negotiations
(a) Transactions between Issuer
and Affiliate................ Certain Relationships and Transactions
(b)Negotiations.................. Special Factors--Background of The Merger
4.Terms of the Transaction
(a) Material Terms............... Summary--Terms of the Merger; Description
of Notes; The Merger Agreement; Descrip-
tion of Notes; Appendix A
(b) Non-Identical Arrangements... None
5. Plans or Proposals of the
Issuer or Affiliate
(a) Extraordinary Corporate Special Factors--Plans for CWM after the
Transactions................. Merger
(b) Sale or Transfer of Assets... Special Factors--Plans for CWM after the
Merger
(c) Change in Board of Directors Special Factors--Certain Consequences of
or Management................ the Merger
(d) Changes to Issuer............ Special Factors--Certain Consequences of
the Merger
(e) Change to Corporate Special Factors--Plans for CWM after the
Structure.................... Merger
(f) Termination of Registration.. Inapplicable
(g) Obligation to File Reports... Inapplicable
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
LOCATION OR CAPTION IN PRELIMINARY PROXY
STATEMENT-PROSPECTUS OF CHEMICAL WASTE
MANAGEMENT, INC.
ITEM IN SCHEDULE 13E-3 AND WMX TECHNOLOGIES, INC.
- ---------------------- ----------------------------------------
<S> <C>
6. Sources and Amounts of Funds
or Other Consideration
(a) Source of Funds............. Special Factors--Fees and Expenses and
Source of Funds
(b) Expenses.................... Special Factors--Fees and Expenses and
Source of Funds
(c) Borrowed Funds.............. Inapplicable
(d) Bank Loans.................. Inapplicable
7. Purpose(s), Alternatives,
Reasons and Effects
(a) Purpose..................... Special Factors--Background of the Merger
(b) Alternate Means............. Special Factors--Background of the Merger
(c) Reasons for Structure....... Special Factors--Background of the Merger
(d) Effects of Transactions..... Certain Tax Considerations; Special Fac-
tors--Certain Consequences of the Merger;
Special Factors--Plans for CWM after the
Merger; Special Factors--Background of the
Merger; Special Factors--Recommendation of
the Special Committee and the Board of Di-
rectors of CWM; Fairness of the Merger
8. Fairness of the Transaction
(a) Issuer's Belief............. Special Factors--Recommendation of the Spe-
cial Committee and the Board of Directors
of CWM; Fairness of the Merger
(b) Material Factors............ Special Factors--Recommendation of the Spe-
cial Committee and the Board of Directors
of CWM; Fairness of the Merger
(c) Approval Required........... Information Concerning the Special Meet-
ing--Vote Required; Certain CWM Shares
Voting in Favor of the Merger; Summary--
Vote Required; Certain CWM Shares Voting
in Favor of the Merger; The Merger Agree-
ment--Conditions
(d) Unaffiliated Representative. Special Factors--Background of the Merger;
Special Factors--Opinion of CWM's Finan-
cial
Advisor
(e) Independent Director Special Factors--Recommendation of the Spe-
Approval.................... cial Committee and the Board of Directors
of CWM; Fairness of the Merger
(f) Firm Offer.................. None
9. Reports, Opinions, Appraisals
and Certain Negotiations
Special Factors--Opinion of CWM's Financial
(a)Outside Fairness Opinion..... Advisor; Appendix B
(b) Outside Party............... Special Factors--Opinion of CWM's Financial
Advisor; Appendix B
(c) Statement of Availability... Special Factors--Opinion of CWM's Financial
Advisor; Appendix B
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
LOCATION OR CAPTION IN PRELIMINARY PROXY
STATEMENT-PROSPECTUS OF CHEMICAL WASTE
MANAGEMENT, INC.
ITEM IN SCHEDULE 13E-3 AND WMX TECHNOLOGIES, INC.
- ---------------------- ----------------------------------------
<S> <C>
10. Interest in Securities of the
Issuer
(a) Beneficial Ownership......... Securities Ownership--Ownership of CWM
Shares
(b) Transaction in Class of
Securities by Issuer and CWM Share and Company Share Market Price
Others....................... Information; Dividend Information; and CWM
Share Purchase Information; Securities Own-
ership--Ownership of CWM Shares
11. Contracts, Arrangements or
Understandings with Respect to
the Issuer's Securities........ Certain Relationships and Transactions
12. Present Intention and
Recommendation of Certain
Persons with Regard to the
Transaction
(a) Voting Intentions............ Special Factors--Interests of Certain Per-
sons in the Merger; Information Concerning
the Special Meeting--Vote Required; Cer-
tain CWM Shares Voting in Favor of the
Merger
(b) Recommendation............... Special Factors--Recommendation of the Spe-
cial Committee and the Board of Directors
of CWM; Fairness of the Merger
13.Other Provisions of the
Transaction
(a) Appraisal Rights............. Delaware Statutory Appraisal Rights; Appen-
dix C
(b)Access to Corporate Files..... None
(c)Exchange of Debt Securities... The Merger Agreement--Listing
14. Financial Information
(a)Financial Documents........... Documents Incorporated by Reference
(b) Pro Forma Financial Summary--Comparative Historical and Pro
Information.................. Forma Per Share Data; Capitalization
15. Persons and Assets Employed,
Retained or Utilized........... Information Concerning the Special Meet-
ing--Proxy Solicitation
16. Additional Information......... None
17. Material to be Filed as
Exhibits
(a)Loan Agreement................ Inapplicable
(b) Report, Opinion or Appraisal. Appendix B; Materials Prepared for the Spe-
cial Committee of Chemical Waste Manage-
ment, Inc. (filed separately as an Exhibit
to this
Statement)
(c) Contracts, Arrangements or
Understandings............... Appendix A
(d) Disclosure Materials......... The Preliminary Proxy Statement
(e) Appraisal Rights............. Delaware Statutory Appraisal Rights; Appen-
dix C
(f) Oral Solicitations........... Inapplicable
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
November 4, 1994
-------------------------------------
(Date)
/s/ Thomas A. Witt
-------------------------------------
(Signature)
Thomas A. Witt
-------------------------------------
Vice President, WMX Technologies,
Inc.
(Name and Title)
4
<PAGE>
WMX TECHNOLOGIES, INC.
SCHEDULE 13E-3
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S>
Item 17(a) Inapplicable
Item 17(b)(1) Fairness Opinion of CS First Boston Corporation (incorporated by
reference to Appendix B to the Preliminary Proxy Statement-Pro-
spectus of Chemical Waste Management, Inc. and the Registrant
dated November 4, 1994 (the "Preliminary Proxy Statement"))*
(2) Materials Prepared for the Special Committee of Chemical Waste
Management, Inc.
Item 17(c) Agreement and Plan of Merger by and among WMX Technologies,
Inc., WMX Merger Sub, Inc. and Chemical Waste Management, Inc.,
dated as of October 14, 1994, as amended and restated (incorpo-
rated by reference to Appendix A to the Preliminary Proxy State-
ment)
Item 17(d) Preliminary Proxy Statement-Prospectus (incorporated by refer-
ence to the Preliminary Proxy Statement)
Item 17(e) Section 262 of the Delaware General Corporation Law (incorpo-
rated by reference to Appendix C to the Preliminary Proxy State-
ment)
Item 17(f) Inapplicable
</TABLE>
- --------
*The file number of Chemical Waste Management, Inc. under the Securities
Exchange Act of 1934 is 1-9253
<PAGE>
EXHIBIT 17(b)(2)
OCTOBER 14, 1994 CONFIDENTIAL
[LOGO OF CS FIRST BOSTON]
MATERIALS PREPARED FOR THE SPECIAL COMMITTEE
CHEMICAL WASTE MANAGEMENT, INC.
<PAGE>
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
1. EXECUTIVE SUMMARY
2. VALUATION ANALYSIS OF CHW SHARES
3. VALUATION ANALYSIS OF WMX CONVERTIBLE SECURITIES
4. VALUATION ANALYSIS OF WMX SHARES
5. MARKET PRICE PREMIUM ANALYSIS
6. ANALYSIS OF SELECTED MINORITY BUY-OUTS
7. WMX EARNINGS DILUTION ANALYSIS
[LOGO OF CS FIRST BOSTON]
<PAGE>
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
- --------------------------------------------------------------------------------
1.
EXECUTIVE SUMMARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 1
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
FAIRNESS OF THE CONSIDERATION
- --------------------------------------------------------------------------------
THE ISSUE
CS First Boston is being asked to provide an opinion to the Special Committee of
the Board of Directors of Chemical Waste Management, Inc. (CHW) as to the
fairness, from a financial point of view, of the consideration to be received by
the public stockholders of CHW in connection with CHW's proposed merger into WMX
Technologies, Inc. (WMX) (the "Merger").
THE PROCESS
In assessing the fairness of the consideration to be received in the Merger,
from a financial point of view, we have, among other things:
. Reviewed business information, financial statements and forecasts of CHW,
WMX and other companies in the WMX family
. Completed due diligence on CHW and WMX and affiliated family companies
. Considered and reviewed expected operational benefits of the Merger with
the managements of CHW and WMX
. Assessed the financial impact of the Merger on WMX
. Reviewed the Merger Agreement and certain related documents
. Completed a valuation analysis of both CHW (including RST) and WMX based on
financial forecasts developed by the respective managements of each company
and on relevant market information
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 2
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
FAIRNESS OF THE CONSIDERATION
- --------------------------------------------------------------------------------
CONCLUSION
It is our opinion that, as of the date hereof, the consideration to be received
by the public holders of CHW Common Stock is fair to such holders from a
financial point of view.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 3
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
KEY TERMS OF THE TRANSACTION
- --------------------------------------------------------------------------------
Type of Transaction: Merger of CHW into WMX. All CHW common stock not
already owned by WMX will be exchanged for new
subordinated debt securities issued by WMX
convertible into common stock of WMX (the
"Securities")
Accounting Method: Purchase accounting
Exchange Ratio: One Security for every 81.1 shares of CHW common
stock exchanged
Issue Price/ Issue Price of $717.80 and Principal Amount due at
Principal Amount: maturity of $1,000
Maturity: 10 years, unless converted by the holder of the
Security or purchased or redeemed by WMX prior to
maturity
Yield to Maturity/ 5.75% per annum based on the Issue Price.
Interest: Interest will be payable semi-annually in cash at
a rate of 2% of the Principal Amount per annum.
Convertibility: Convertible at the option of the holder at any
time into WMX common stock based on a Conversion
Ratio derived by dividing $717.80 and the average
closing price of WMX common stock on the 10
trading days prior to the stockholders meeting.
The Conversion Ratio will be subject to a minimum
of 21.90 and a maximum of 26.76.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 4
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
KEY TERMS OF THE TRANSACTION
- --------------------------------------------------------------------------------
Listing: WMX will apply to list the Securities on the New
York Stock Exchange.
Optional Not redeemable by WMX prior to the fifth
Redemption (Call): anniversary of the Issue Date. Redeemable
thereafter in cash at the option of WMX, in whole
or in part, at any time at the Issue Price plus
accrued interest.
Purchase at the Option of WMX will purchase each security in cash, at the
the Holder (Put): option of the holder, on the third and fifth
anniversaries of the issue date at a price of
$786.38 and $839.03, respectively.
Subordination: The Securities will be subordinated to all
existing and future debt of WMX not designated as
subordinated debt.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 5
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
CONSIDERATIONS IN ASSESSING FAIRNESS
- --------------------------------------------------------------------------------
We have considered the following factors, among other things, in evaluating the
fairness of the consideration from a financial point of view:
. Management's assessment that the market for transportation, treatment and
disposal of hazardous waste is suffering from a significant reduction in
volume, overcapacity in incineration, increased competition from non-
traditional participants (e.g., cement kiln operators), and continued price
pressure.
. Management's assessment that the near-term revenue and profit outlook for CHW
is uncertain, due to the expected closing of Barnwell at the end of 1995 and
other factors.
. Management's expectation that the outlook for WMX, by contrast, appears
relatively stable.
. The Securities are expected to have a fully distributed value of $9.50 -
$10.00 per exchanged CHW share, as compared to an implied value range for CHW
shares of $5.62 to $8.46.
. At a value for the Securities of $9.50 - $10.00 per exchanged CHW share, CHW
shareholders will receive a premium of 17-23% over CHW's trading price of
$8.125 one week prior to the announcement of the Merger. The premium range is
consistent with purchase price premiums paid in other recent buy-outs of
public minority interests, which range from (21)% to 55%, with an average
premium of 17%.
. WMX would require approximately $26-$29 million of incremental annual pre-tax
cost savings in order to meet analysts' current WMX earnings per share
forecasts for 1994, 1995 and 1996 on a fully-diluted basis.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CHEMICAL WASTE MANAGEMENT, INC.
2.
VALUATION ANALYSIS OF CHW SHARES
<PAGE>
CONFIDENTIAL 6
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
CHW VALUATION OVERVIEW
- --------------------------------------------------------------------------------
CS First Boston has completed a valuation of the shares of CHW Common Stock to
be exchanged in the proposed buy-out. Our valuation analysis is based on
several methodologies:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUATION METHOD SUMMARY OF VALUATION APPROACH
- --------------------------------------------------------------------------------
<C> <S>
Comparable Company Analysis Values each company based on the trading multiples
of other public companies with comparable
financial and operating characteristics.
Comparable Acquisition Values each company based on purchase price
Analysis multiples paid in recent acquisitions of
comparable businesses to derive their implied
value in a sale.
Discounted Cash Flow Values each company based on the present value of
Analysis its forecasted free cash flows, discounted to the
present at each business's estimated average cost
of capital.
- --------------------------------------------------------------------------------
</TABLE>
Our valuation analysis takes into consideration the complexities of CHW's cross-
shareholdings and we have valued CHW's core hazardous waste operations and RST
separately.
CS First Boston's analysis derives a value for each share of CHW of $5.62 -
$8.46 per share.
<PAGE>
CONFIDENTIAL 7
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
KEY CHW VALUATION ISSUES
- --------------------------------------------------------------------------------
. The outlook for the hazardous waste industry is uncertain. Recent declines
in industry volumes and pricing reflect a number of long-term trends:
. Waste minimization by waste generators
. Industry overcapacity in incineration
. Increased competition from cement kiln operators
. Loss of some special waste volumes to Subtitle D landfills
. Potential for additional volume losses due to implementation of pending
Hazardous Waste Identification Rule ("HWIR") regulation
. Negative industry trends may be offset by several positive influences on
the hazardous waste market, however:
. Improved incineration market fundamentals with increased scrutiny of
non-traditional thermal treatment methods, cement kilns and Marine Shale
Processors
. Increased waste generation as part of overall economic recovery
. Potential for increased remediation disposal volumes resulting from
expected Superfund reauthorization
. Potential for increased disposal volumes resulting from RCRA
reauthorization
. Potential for increased disposal volumes from expiration of current waste
category exemptions
(CONTINUED ON NEXT PAGE)
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 8
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
KEY CHW VALUATION ISSUES
- --------------------------------------------------------------------------------
. CHW's revenues and profits are expected to stabilize as a result of several
offsetting factors:
. Ongoing cost reduction efforts, including significant headcount cuts,
reorganization of operations into profit centers tied to key facilities
. Increased incineration volumes at Port Arthur following resolution of
previous reliability problems
. Expected closing of Barnwell landfill at end of 1995 - offset in part by
significant price increases
. Steady growth expected for CHW's technical services business
. Anticipated rebound in RST's operating results
. Comparable company analysis of CHW entails certain limitations, due to the
lack of directly comparable public hazardous waste companies.
. Several recent acquisitions in the hazardous waste market provide indications
of CHW's value in a private market sale.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 9
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
CHW CONSOLIDATED VALUATION SUMMARY
- --------------------------------------------------------------------------------
CHW VALUATION SUMMARY
- --------------------------------------------------
SEGMENT VALUE RANGE
- --------------------------------------------------
CHW - Core $1,300 - $1,600
Rust - Core 1,500 - 1,800
WME (12.0%) 374 - 374
Cost Savings 30 - 160
-----------------
TOTAL ENTERPRISE VALUE $3,203 - $3,934
Less: Net Debt $1,397 - $1,397
Minority Interests 632 - 767
-----------------
EQUITY VALUE $1,175 - $1,770
EQUITY VALUE PER SHARE /(1)/ $5.62 - $8.46
- --------------------------------------------------
/(1)/ Based on 209.14 million CHW shares outstanding as of August 1, 1994 as
reported in CHW 10-Q.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 10
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
CHW CORE VALUATION SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPARABLE COMPANY ANALYSIS
- -----------------------------------------------------------------------------------------------
1994E COMPARABLE COMPANY
CHW CORE OPERATING MEASURE RESULTS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $626.3 1.4x - 1.6x $ 877 - $1,002
Operating Cash Flow (EBITDA) 153.6 6.8 - 7.7 1,044 - 1,183
Operating Income (EBIT) 83.6 12.2 - 12.8 953 - 1,053
COMPARABLE COMPANY VALUE $1,000 - $1,200
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMPARABLE ACQUISITIONS ANALYSIS
- -----------------------------------------------------------------------------------------------
LTM COMPARABLE ACQUISITION
CHW CORE OPERATING MEASURE RESULTS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $667.7 1.5x - 2.2x $1,002 - $1,469
Operating Cash Flow (EBITDA) 126.1 9.3 - 12.0 1,173 - 1,513
Operating Income (EBIT) 56.1 16.2 - 17.6 909 - 987
COMPARABLE ACQUISITION VALUE $1,200 - 1,500
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISCOUNTED CASH FLOW ANALYSIS
- -----------------------------------------------------------------------------------------------
1999 EBIT TERMINAL
DISCOUNT RANGE MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
10.5% 13.0x - 13.5x $1,514 - $1,560
11.0% 13.0 - 13.5 1,482 - 1,528
DISCOUNTED CASH FLOW VALUE $1,500 - $1,600
- -----------------------------------------------------------------------------------------------
REFERENCE ENTERPRISE VALUE RANGE $1,300 - $1,600
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 11
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
CHW TRADING MULTIPLES VS. SELECTED COMPARABLE COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MULTIPLES OF 1994E RESULTS
- ----------------------------------------------------------------------------------------------------
ENTERPRISE VALUE
AS A MULTIPLE OF 1994E: EQUITY VALUE
EQUITY ENTERPRISE -------------------------- AS A MULTIPLE
COMPANY VALUE VALUE SALES OPER. OPER. OF NET INCOME
CASH FLOW INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHW $1,620.8 $3,433.8 1.6X 10.7X 18.2X 25.0X
Clean Harbors 58.7 126.3 0.6 4.9 8.1 14.2
Envirosource 142.3 431.2 1.7 6.0 12.5 22.2
Laidlaw 2,182.9 3,407.6 1.6 7.5 16.5 22.5
Philip Environmental 274.1 667.2 1.3 6.8 10.2 9.7
Rollins Environmental 333.8 289.0 1.6 11.6 N.M. N.M.
Safety Kleen 778.7 1,042.3 1.3 6.1 10.3 16.1
- ----------------------------------------------------------------------------------------------------
MULTIPLES OF 1995E RESULTS
- ----------------------------------------------------------------------------------------------------
ENTERPRISE VALUE
AS A MULTIPLE OF 1995E: EQUITY VALUE
EQUITY ENTERPRISE -------------------------- AS A MULTIPLE
COMPANY VALUE VALUE SALES OPER. OPER. OF NET INCOME
CASH FLOW INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHW $1,620.8 $3,433.8 1.5X 10.3X 16.4X 22.1X
Clean Harbors 58.7 126.3 0.6 4.5 7.3 12.2
Envirosource 142.3 431.2 1.6 5.3 10.8 14.1
Laidlaw 2,182.9 3,407.6 1.4 6.2 12.3 15.1
Philip Environmental 274.1 667.2 1.2 6.0 8.5 7.8
Rollins Environmental 333.8 289.0 1.4 7.1 18.8 37.5
Safety Kleen 778.7 1,042.3 1.1 5.3 9.2 14.2
- ----------------------------------------------------------------------------------------------------
</TABLE>
Note: Based on October 11, 1994 CHW closing price of $7.750.
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 12
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE HAZARDOUS WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS
MULTIPLE OF: A MULTIPLE OF:
---------------------- ---------------
OPER.
EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET DESCRIPTION OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/23/94 Rollins Environmental Provides hazardous waste $120.0/(1)/ $120.0/(1)/ 1.3x 34.3x NM NM NA
Services / Aptus Inc. handling, transportation,
(Westinghouse treatment and
Electric) incineration services.
06/20/94 Earth Technology Provides hazardous waste $ 28.8 $ 28.8 0.6x NA NA NA NA
Corp. USA / HazWaste services.
Industries
10/08/93 Philip Environmental Provides hazardous waste $ 35.0 $ 44.5 1.1x NA 16.2x 51.5x 2.5x
Inc. / Nortru, Inc. materials recycling,
hazardous waste
collection and disposal
and testing, and
engineering services.
10/08/93 Philip Environmental Provides waste materials $ 45.8 $ 75.0 0.9x NA 31.6x NM 0.7x
Inc. / Burlington recycling, hazardous
Environmental, Inc. waste collection and
disposal and testing, and
engineering services.
12/30/91 Republic Waste Provides full-service $ 35.2 $ 43.6 0.6x 6.4x 9.2x 16.1x NM
Industries Inc./ waste management services
Stout Environmental
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Estimated fair market value of $160 million face amount of cash and
securities paid to Westinghouse.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 13
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE HAZARDOUS WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
--------------------- -----------------
OPER.
DESCRIPTION EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/11/91 Brambles USA Provides $301.2 $385.7 2.8x 9.3x 13.4x 22.9x 2.9x
(Brambles Ind. integrated
Ltd.) / hazardous
Environmental waste
Systems Co. /(1)/ management
services to
private
industry,
public
utilities and
governmental
entities.
08/02/91 EnviroSource Inc. Provides $ 52.1 $ 57.2 1.7x 7.2x NM NM 1.3x
/ Envirosafe hazardous
Services waste
(IU International management,
/ Envirosource) disposal and
(acquisition of treatment
remaining services.
interest)
05/13/91 Severn Trent plc / High quality, (Pounds) (Pounds) 2.1x NA 11.9x NA 2.5x
Biffa broadly based 212.0 212.0
waste
company.
Present in
waste
collection
and landfill
with strong
emphasis on
new treatment
for liquid
waste
disposal.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
/(1)/ Net debt includes preferred stock at a $57.5 million liquidation
preference.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 14
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
<TABLE>
<CAPTION>
SELECTED ACQUISITIONS IN THE HAZARDOUS WASTE INDUSTRY
- -----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
- -----------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
------------------------- -----------------
DESCRIPTION EQUITY ENTERPRISE OPER. OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES CASH FLOW INCOME INCOME VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/14/90 Shanks & McEwan Provides high $290.0 $284.8 6.8x 17.5x 19.6x 27.0x 13.3x
Group PLC/ temperature
Rechem incineration
Environmental services for the
Services PLC destruction of
hazardous
chemical waste
06/11/90 BUS Berzelius Provides $462.0 $493.6 10.4x 19.0x 20.8x 30.7x 17.5x
Umwelt hazardous waste
Service/Horsehead removal services.
Resource
Development (27%)
12/01/88 Clean Harbors Inc./ Treats liquid $ 29.1 $ 29.1 1.1x NM NM NM 5.4x
ChemClear Inc. and semi-liquid
hazardous and
non-hazardous
industrial
wastes to render
them suitable
for safe
disposal.
11/12/87 Laidlaw Transport./ Provides solid $445.1 $908.9 1.9x 7.8x 13.6x 24.0x 3.2x
Laidlaw Industries waste
collection,
transportation
and disposal
services to
commerical,
industrial and
residential
customers.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 15
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE HAZARDOUS WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
--------------------- -----------------
OPER.
DESCRIPTION EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/27/87 Union Pacific Provides $406.0/(1)/ $406.7 5.5x 16.5x 22.0x 44.8x 7.2x
Corp./ USPCI, Inc. disposal,
treatment,
transportation
and analysis of
hazardous and
non-hazardous
industrial
waste, including
chemical
destruction of
PCBs
------------------------------------------------------------------
High 6.8x 19.0x 31.6x 51.5x 17.5x
Average 2.2x 12.0x 17.6x 31.0x 5.7x
Median 1.5x 9.3x 16.2x 27.0x 3.1x
Low 0.6x 6.4x 9.2x 16.1x 0.7x
------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
/(1)/ Based on revised terms on December 18, 1987 for $28 per share. LTM
numbers are for period ending September 30, 1987.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 16
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
KEY RST VALUATION ISSUES
- --------------------------------------------------------------------------------
. The outlook for Rust's key markets appears favorable, due to a number of
positive factors:
. Recent federal programs success - i.e., INEL award and future potential
from Rocky Flats and Savannah River
. Renewed refinery turnarounds following a two year drop during a period of
unusually high refining margins
. Expected resurgence in remediation activity following Superfund
reauthorization
. Continued growth in environmental consulting resulting from new domestic
and international regulations
. Paper industry 1995 CAA compliance deadline and pending construction of
deinking plants, recycling mini mills and APC systems
. Continued delays in the TERC's III program dim Rust's outlook somewhat.
. Rust's limited liquidity results in a substantial trading discount to its
peers.
. An active acquisition market provides relevant guidelines for estimating
Rust's value in a private sale.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 17
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
RST VALUATION SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPARABLE COMPANY ANALYSIS
- -------------------------------------------------------------------------------------------------
1994E COMPARABLE COMPANY
RST/(1)/ OPERATING MEASURE RESULTS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues 1,677.0 0.6x - 0.7x $1,006 - $1,174
Operating Cash Flow (EBITDA) 184.2 7.7 - 7.9 1,418 - 1,455
Operating Income (EBIT) 124.9 10.4 - 10.7 1,299 - 1,336
Net Income 58.4 17.2 - 19.3 1,496 - 1,618
COMPARABLE COMPANY VALUE $1,300 - $1,450
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMPARABLE ACQUISITIONS ANALYSIS
- -------------------------------------------------------------------------------------------------
LTM COMPARABLE ACQUISITION
RST/(1)/ OPERATING MEASURE RESULTS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,598.7 0.7x - 0.8x $1,119 - $1,279
Operating Cash Flow (EBITDA) 198.2 8.8 - 9.4 1,744 - 1,863
Operating Income (EBIT) 135.3 11.1 - 11.4 1,501 - 1,542
Net Income 72.8 16.0 - 16.6 1,656 - 1,699
Book Value 425.6 3.2 - 3.3 1,853 - 1,896
COMPARABLE ACQUISITION VALUE $1,500 - $1,800
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DISCOUNTED CASH FLOW ANALYSIS
- -------------------------------------------------------------------------------------------------
1999 EBIT TERMINAL
DISCOUNT RANGE MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
12.5% 11.5x - 12.5x $1,737 - $1,848
13.0% 11.5 - 12.5 1,702 - 1,810
DISCOUNTED CASH FLOW VALUE $1,700 - $1,850
- -------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Excludes 12% equity stake in WME.
<TABLE>
<S> <C>
REFERENCE ENTERPRISE VALUE RANGE $1,500 - $1,800
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 18
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
RST TRADING MULTIPLES VS. SELECTED COMPARABLE COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MULTIPLES OF 1994E RESULTS
- -------------------------------------------------------------------------------------------
ENTERPRISE VALUE
AS A MULTIPLE OF 1994E: EQUITY VALUE
EQUITY ENTERPRISE ------------------------ AS A MULTIPLE
COMPANY VALUE VALUE SALES OPER. OPER. OF NET INCOME
CASH FLOW INCOME
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RST $1,081.5 $1,573.5 0.9x 7.5x 10.7x 12.5X
Dames & Moore 325.1 265.9 1.0 6.3 7.2 13.9
Fluor Corp. 3,964.1 3,593.5 0.4 8.6 12.2 20.3
Foster Wheeler 1,311.3 1,448.0 0.6 7.7 10.5 19.9
Jacobs Engineering 572.7 565.0 0.5 9.4 11.3 19.3
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MULTIPLES OF 1995E RESULTS
- -------------------------------------------------------------------------------------------
ENTERPRISE VALUE
AS A MULTIPLE OF 1995E: EQUITY VALUE
EQUITY ENTERPRISE ------------------------ AS A MULTIPLE
COMPANY VALUE VALUE SALES OPER. OPER. OF NET INCOME
CASH FLOW INCOME
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RST $1,081.5 $1,573.5 0.7x 6.2x 8.4x 9.6x
Dames & Moore 325.1 265.9 0.9 4.8 5.4 10.7
Fluor Corp. 3,964.1 3,593.5 0.4 7.1 9.9 17.2
Foster Wheeler 1,311.3 1,448.0 0.5 6.6 8.8 17.0
Jacobs Engineering 572.7 565.0 0.3 7.3 8.6 15.5
- -------------------------------------------------------------------------------------------
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 19
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE E&C INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
--------------------- -----------------
OPER.
DESCRIPTION EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/15/93 Bain Capital/ Environmental $130.0 $130.0 0.8x NA NA NA NA
Professional testing services
Services for construction
Industries Inc. sites.
(Adia S.A.)
11/17/93 Raytheon Provides $210.0 $210.0 0.2x 6.4x 7.8x 12.9x NM
Engineers & engineering,
Constructors/ design,
Ebasco Services construction,
Inc. (Enserch project
Corp.) management and
consulting
services in the
energy,
environmental
and
infrastructure
markets./(1)/
11/13/92 Rust Provides on-site $423.9 $577.9 1.3x 9.6x 13.7x 17.2x 5.9x
International / industrial and
Brand Cos related services
(Chemical Waste to clients in
Management) the chemical,
petrochemical,
nuclear,
utility, pulp
and paper,
automotive and
other
manufacturing
industries.
09/20/91 Tilbury Group PLC/ Civil $135.6 $126.0 0.3x 4.4x 6.6x 9.5x 1.6x
Robert M. Douglas engineering
Holdings PLC services
/(1)/ Financial results based on 1992 data, the last year Ebasco results were broken out, and excludes results from Ebasco's
Environmental Division (9 month sales of $94.5 million and EBIT of $4.3). Net income is EBIT taxed at 40%. Book value may
include a small portion of Dorsch Consult, another discontinued business.
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 20
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
<TABLE>
<CAPTION>
SELECTED ACQUISITIONS IN THE E&C INDUSTRY
- --------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
------------------------- -----------------
DESCRIPTION EQUITY ENTERPRISE OPER. OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES CASH FLOW INCOME INCOME VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/30/91 JWP Inc./ Provides $ 26.5 $ 23.3 0.5x 17.0x 35.9x NM 1.7x
Resource Recycling engineering,
Technologies Inc. construction,
(34% acquired) remediation and
consulting
services in
waste management
and recycling.
06/25/91 Trafalgar House Engineering and $ 186.2 $ 233.0 0.1x 6.3x 7.1x 11.9x NM
PLC/ construction
Davy Corp. PLC services
10/22/90 Ogden Corp./ Provides $ 98.7/(2)/ $ 102.3 1.3x 8.7x 12.2x 22.6x 4.5x
ERC Environmental environmental
and Energy and
Services Co. infrastructure
(ERCE)(remaining consulting,
38.8%) engineering,
and laboratory
services and
energy
consulting and
engineering
services.
07/10/90 Lyonnaise des Engineering and $1,304.8 $2,749.1 0.6x 13.9x 19.5x 16.3x 2.2x
Eaux/ construction
Dumez S.A. services
10/05/89 Ogden Corp./ERC Provides $ 85.1 $ 121.9 0.8x 7.1x 10.2x 13.8x 1.8X
International Inc. engineering,
data processing
and consulting
services to the
defense, energy,
environmental
sciences and
facilities
management
industries.
Owns ERC
Environmental
and Energy
Services
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(2)/ Assumes the $5.0 million 8.625% convertible subordinated
debentures are converted at $8.40 per share.
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 21
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
<TABLE>
<CAPTION>
SELECTED ACQUISITIONS IN THE E&C INDUSTRY
- ---------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
- ---------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
------------------------- -----------------
DESCRIPTION EQUITY ENTERPRISE OPER. OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES CASH FLOW INCOME INCOME VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/22/89 Thermo Instrument Provides $108.1 $110.2/(3)/ 1.9x 29.4x 54.4x 129.5x 4.8x
Systems, Inc./ environmental
Thermo laboratory
Environmental consulting and
Corp. support
services for
the detection,
measurement,
monitoring and
safe management
of hazardous
wastes and
radioactive
materials.
03/01/89 EG&G/Dynatrend Provides $ 8.3 $ 8.3 0.7x 10.5x 11.1x 17.7x 4.0x
technical,
engineering,
planning/
analysis and
management
services to
government
agencies.
09/02/88 W.R. Grace/ Constructs $108.4 $ 92.9 2.0x 8.8x 9.8x 16.9x 3.9x
Canonie waste disposal
Environmental plants and
Services Corp. provides
(33% acquired) hazardous waste
removal and
disposal
services.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/(3)/ Assumes that the $21.0 million 6 3/4% convertible subordinated
debentures are converted at $8.125 per TEV share ($16.25 per THI share).
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 22
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE E&C INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
---------------------- -------------------
OPER.
DESCRIPTION EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06/15/87 R-C Acquisition Provides $302.2 $245.5 0.6x 10.6x 13.3x 21.5x 2.5x
Inc. (Odyssey engineering,
Partners & Allen design,
Co.)/ Research financing,
Cottrell program
management and
maintenance
services. Also
construct
industrial
buildings and
warehouses.
11/27/87 Dresser Engineers, $100.0 $115.0 0.1x NA 14.4x NA NA
Industries/ MW constructs and
Kellogg co. maintains oil
(Henley Group) refineries and
petro-chemical
plants,
manufactures
chemicals and
fertilizers.
------------------------------------------------------------------
High 2.0x 17.0x 19.5x 22.6x 5.9x
Average 0.8x 9.4x 11.4x 16.0x 3.3x
Median 0.7x 8.8x 11.1x 16.6x 3.2x
Low 0.1x 4.4x 6.6x 9.5x 1.6x
------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 23
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
OVERVIEW OF POTENTIAL SYNERGIES
- --------------------------------------------------------------------------------
Management expects WMX's proposed buy-out of the CHW public minority to generate
cost savings from integrating CHW's operations with those of WMI.
Primary sources of savings identified by CHW management include:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SOURCE OF SAVINGS DESCRIPTION/EXAMPLES
- ---------------------------------------------------------------------------------------------------
<S> <C>
ADMINISTRATIVE COST REDUCTION . Elimination of all costs related to maintaining
CHW as a public company - SEC filing
costs, Board and Committee time and expenses, possible
elimination of management positions
SPECIAL WASTE PROFIT PROTECTION . Capture by WMI of profits on special waste
volumes which are currently disposed at CHW
landfills, but are at risk of loss to Subtitle D
landfills
OTHER POTENTIAL SAVINGS . Reduction of overlapping transportation costs
between CHW and WMI
. Elimination of duplicative market research,
environmental management and state/local
government affairs functions at CHW and WMX
. Rationalization of certain facility costs which
could be shared between the two companies
. Opportunities for further headcount reductions
below targeted levels of 3,000 employees by
year-end.
- ---------------------------------------------------------------------------------------------------
</TABLE>
"Other Potential Savings" were not quantifiable and have therefore not been
included in our analysis.
CS First Boston valued the quantifiable cost savings, as well as additional
labor savings which may result from headcount reductions below the 3,000
employee level targeted by management. Cost savings from planned staff
reductions are reflected in management's forecasts and have not been included
in our analysis of incremental cost savings.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 24
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
<TABLE>
<CAPTION>
SYNERGIES VALUATION SUMMARY
- --------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
ESTIMATED ANNUAL SAVINGS
-------------------------------------------
SOURCE OF SAVINGS 1994 1995 1996 THEREAFTER
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADMINISTRATIVE COST SAVINGS $2.0 $ 2.1 $ 2.1 $ 2.2
SPECIAL WASTE PROFIT PROTECTION
. CHW Annual Special Waste Volumes 705,000 705,000 705,000 705,000
(Tons)
. % CHW Volumes at Risk of 15% 25% 33% 33%
Loss to Subtitle D Landfills
. CHW Annual Special Waste 105,750 780,650 233,100 233,100
Volumes at Risk (tons)
. Profit Retained on at Risk $1.0 $ 1.8 $ 2.3 $ 2.3
Volumes ($ millions)/(1)/
ADDITIONAL LABOR SAVINGS
CASE 1:
-------
. 200 Operations Positions -- $12.0 $12.4 $12.7
Eliminated at $60K/Position/(2)/
. Estimated Severance Cost at -- (3.0) -- --
3 Months Salary/Employee
CASE 2:
-------
. 300 Operations positions -- $18.0 $18.5 $19.1
Eliminated at $60K/Position/(2)/
. Estimated Severance Cost at -- (4.5) -- --
3 Months Salary/Employee
TOTAL NET ANNUAL SAVINGS
. Without Additional Labor Savings $3.0 $ 3.9 $ 4.4 $ 4.5
. With Case 1 Additional 3.0 12.9 16.8 17.2
Labor Savings
. With Case 2 Additional 3.0 17.4 23.0 23.6
Labor Savings
DISCOUNTED CASH FLOW VALUE OF SAVINGS
. Without Additional Labor
Savings $ 30 - $ 32
. With Case 1 Additional Labor
Savings 110 - 116
. With Case 2 Additional Labor
Savings 151 - 158
- -------------------------------------------------------------------------------------
</TABLE>
/(1)/ Assumes WMI Subtitle D disposal price of $30/ton and 30%
contribution margin.
/(2)/ Annual salary + benefit expense forecast to rise at 3% per year.
[LOGO OF CS FIRST BOSTON]
<PAGE>
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
- --------------------------------------------------------------------------------
3.
VALUATION ANALYSIS OF WMX CONVERTIBLE SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 25
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
WMX SECURITY VALUATION OVERVIEW
- --------------------------------------------------------------------------------
CS First Boston has valued the WMX convertible securities to be received by CHW
shareholders in the Merger based on their expected trading value once fully
distributed.
The Security which CHW shareholders will receive represents the combination of a
10-year Original Issue Discount (OID) bond and an embedded call option on WMX
common stock.
SECURITY'S BOND VALUE
The Security's underlying bond value is calculated as a straight (i.e., non-
convertible) bond based on several key determinants:
. Prevailing market interest rates (7.33% for 5-year Treasury)
. Security coupon (2.0%)
. Credit spread over Treasury (.55%)
. Security put and call features
OPTION VALUE
The value of the Security's conversion option is based on binomial option
valuation methods and is determined by several key variables:
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 26
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
WMX SECURITY VALUATION OVERVIEW
- --------------------------------------------------------------------------------
. Current and conversion prices of WMX common stock (i.e., the Security's
conversion ratio)
. Future volatility of WMX common stock
. Option's remaining term (5 years of call protection)
. Annual dividend yield on WMX stock
. Risk-free interest rate
Projected volatility is one of the most important determinants of the Security's
option value. CS First Boston has used two sources to estimate WMX's future
stock price volatility:
. historical volatility, which ranges from 20 - 35%, depending on the length
of the period; and
. implied volatility of long-term traded options on WMX stock, which range
from 26 - 28%.
The implied volatility at which newly issued convertible securities trade is
typically at some discount to expected future volatility. For this reason, we
assume a median volatility for WMX of 20% within a range of volatilities of 15 -
23%.
Based on these assumptions, CS First Boston values the Security at an equivalent
of $9.50 (at 15% volatility) to $10.00 (at 23% volatility) per CHW share.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 27
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
ANALYSIS OF COMPARABLE CONVERTIBLE SECURITIES
- --------------------------------------------------------------------------------
AS OF OCTOBER 12, 1994
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
PAR ISSUE YIELD
AMT. DATE/ INITIAL YIELD TO TO NEXT CONV. TRADING
ISSUER PUTS CALLS OUTST. MATURITY COUPON RATINGS YTM/YTP MATURITY PUT PREMIUM LEVEL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ZERO COUPON CONVERTIBLES
Motorola, Inc. 5,10,15 5HNC $ 480.0 9/27/83 0% A1/AA- 2.25% 2.05% 1.28% 13.2% 68
9/27/13
Automatic Data 5,10,15 4HNC $ 805.0 2/20/92 0% Aa3/AA 5.25% 5.21% 4.95% 12.8% 41
Processing 2/20/12
Alza Corporation 5,10,15 3HNC $ 948.8 7/14/94 0% Baa3/BBB- 5.25% 6.31% 5.50% 36.1% 34 1/4
1/14/14
OID CONVERTIBLES
Lowe's Companies None 3HNC $ 287.5 7/22/93 3.00% Baa1/BBB+ 4.50% (2.58)% - 2.7% 155 1/8
7/22/03
Chiron Corporation /(1)/ None 3HNC $ 243.8 11/17/93 1.90% Ba3/BB- 4.50% 4.98% - 51.8% 84
11/17/00
Hanson America /(1)/ None 3HNC $1,000.0 3/11/94 2.39% A3/A+ 6.00% 7.80% - 23.9% 73 1/4
3/1/01
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ 144A private placement.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 28
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
VOLATILITY ANALYSIS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WMX VOLATILITY
- --------------------------------------------------------------------------------
HISTORICAL VOLATILITY/(1)/
-------------------------- IMPLIED
WMX SECURITY 1993 LTM VOLATILITY/(2)/
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
WMX Common Stock 36% 35% -
WMX Long Term Call Options - -
January '96/$30 strike - - 26%
January '96/$35 strike - - 25%
January '97/$30 strike - - 27%
January '97/$35 strike - - 27%
- --------------------------------------------------------------------------------
</TABLE>
/(1)/ Based on an annualization factor of 260 days.
/(2)/ Average of bid and ask implied volatility.
<TABLE>
<CAPTION>
IMPLIED VOLATILITY DISCOUNTS IN CURRENT CONVERTIBLE BOND PRICING
- -----------------------------------------------------------------------------------------------------------------------------------
ISSUE DATE/ PAR AMOUNT CONV. HISTORICAL IMPLIED
MATURITY ISSUER (MM) RATINGS COUPON YTM PUTS CALLS PREMIUM VOLATILITY/(1)/ VOLATILITY DISCOUNT %
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/28/94
7/01/04 INCO Ltd. $150 BBB- 5.75% 5.75% - 5HNC 21.2% 32% 9% 72%
8/24/94
9/01/99 Pep Boys 75 Baa3/BBB- 4.00% 4.00% - 3HNC 24.2% 30% 27% 10%
9/28/94 Hospitality
10/01/99 Franchise 130 Baa3/BBB+ 4.50% 4.50% - 3HNC 23.5% 42% 24% 43%
Systems
Proposed Security - 10 Year Maturity 2.00% 5.75%/(2)/ 3, 5 5HNC 7.3-13.0% 35% 15-23% 43-49%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ LTM volatility of the underlying common stock.
/(2)/ Stated yield to maturity at issue price of 71.8% of par.
/(3)/ Assumes a price of 77.0-81.1% of par.
(LOGO OF CS FIRST BOSTON)
<PAGE>
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
- --------------------------------------------------------------------------------
4.
VALUATION ANALYSIS OF WMX SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 29
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
WMX VALUATION OVERVIEW
- --------------------------------------------------------------------------------
CS First Boston has also valued the shares of WMX Common Stock into which the
Securities may be converted.
Our valuation of WMX shares employs the same three methodologies used to value
CHW and RST: comparable company, comparable acquisition and discounted cash flow
analysis.
Our valuation of WMX is based on a blending of valuation approaches, as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMPANY WMX OWNERSHIP % VALUATION APPROACH
<S> <C> <C>
- --------------------------------------------------------------------------------
Waste Management, Inc. 100% Comp. Co; Comp. Acq; DCF
Chemical Waste Core Business 79 Comp. Co; Comp. Acq; DCF
Rust International 96 Comp. Co; Comp. Acq; DCF
Wheelabrator Technologies 56 Current Market Value
Waste Management International 80 Current Market Value
- --------------------------------------------------------------------------------
</TABLE>
CS First Boston's analysis derives a value per share for WMX Common Stock of
$28.37 - $33.72 per share.
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 30
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
KEY WMX VALUATION ISSUES
- --------------------------------------------------------------------------------
. The general outlook for WMX's core solid waste business appears favorable,
based on:
. Volume growth due to an improving economy
. Continued consolidation of capacity due to increased capital
requirements from new regulations (i.e., Subtitle D)
. Annual price growth equal to inflation
. Cost cutting and improved productivity
. Rationalization of non-performing assets
. These positive trends are partially offset by certain negatives:
. Top line growth limited to 7-10% without significant acquisitions
. Cyclical business, no longer uninterupted growth
. Comparable acquisition analysis provides clear guidelines for private market
values of small and medium-sized solid waste collection and disposal
companies. No precedent exists for the sale of a business of WMI's size,
however.
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 31
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
WMX CONSOLIDATED VALUATION SUMMARY
- --------------------------------------------------------------------------------
WMX VALUATION SUMMARY
- --------------------------------------------------------------------------------
SEGMENT ENTERPRISE VALUE VALUE RANGE
- --------------------------------------------------------------------------------
WMI $13,000 - $15,000
CHW - Core/(1)/ 1,330 - 1,760
RST - Core 1,500 - 1,800
WTI - Less: 40% RST, 12% WME 2,626 - 2,626
WME 4,271 - 4,271
----------------
TOTAL ENTERPRISE VALUE $22,727 - $25,457
Less: Net Debt $ 6,808 - $ 6,808
Less: Minority Interests
EQUITY PUBLIC
VALUE OWNERSHIP
CHW $1,175 - $1,642 21% $ 247 - $ 372
RST 1,382 - 1,682 4 55 - 67
WTI 2,626 44 1,248 - 1,248
WME 3,115 20 623 - 623
-----------------
EQUITY VALUE $13,747 - $16,340
EQUITY VALUE PER SHARE /(2)/ $28.37 - $33.72
- -------------------------------------------------------------------------------
/(1)/ Includes projected savings from integrating CHW's operations with those
of WMI.
/(2)/ Based on 484.53 million WMX shares outstanding as of July 31, 1994 as
reported in WMX 10-Q.
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 32
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
WMI VALUATION SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPARABLE COMPANY ANALYSIS
- ---------------------------------------------------------------------------------------------------
1994E COMPARABLE COMPANY
WMI CORE OPERATING MEASURE RESULTS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $4,995.9 1.6x - 1.8x $ 7,993 - $ 8,993
Operating Cash Flow (EBITDA) 1,412.8 7.3 - 7.5 10,313 - 10,596
Operating Income (EBIT) 1,028.8 13.0 - 14.4 13,374 - 14,815
COMPARABLE COMPANY VALUE $12,000 - $14,000
- ---------------------------------------------------------------------------------------------------
COMPARABLE ACQUISITIONS ANALYSIS
- ---------------------------------------------------------------------------------------------------
LTM COMPARABLE ACQUISITION
WMI CORE OPERATING MEASURE RESULTS MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- ---------------------------------------------------------------------------------------------------
Revenues $4,813.8 2.2x - 2.6x $10,590 - $12,516
Operating Cash Flow (EBITDA) 1,410.0 11.1 - 11.7 15,651 - 16,497
Operating Income (EBIT) 944.5 15.6 - 19.0 14,754 - 17,946
COMPARABLE COMPANY VALUE $15,000 - $16,500
- ---------------------------------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
- ---------------------------------------------------------------------------------------------------
1999 EBIT TERMINAL
DISCOUNT RANGE MULTIPLE RANGE IMPLIED ENTERPRISE VALUE
- ---------------------------------------------------------------------------------------------------
10.5% 13.5x - 14.0x $14,442 - $14,888
11.0% 13.5 - 14.0 14,219 - 14,564
DISCOUNTED CASH FLOW VALUE 14,000 - 15,000
- ---------------------------------------------------------------------------------------------------
REFERENCE ENTERPRISE VALUE RANGE $13,000 - $15,000
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 33
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
WMX TRADING MULTIPLES VS. SELECTED COMPARABLE COMPANIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MULTIPLES OF 1994E RESULTS
- ------------------------------------------------------------------------------------------------
ENTERPRISE VALUE EQUITY VALUE
EQUITY ENTERPRISE AS A MULTIPLE OF 1994E: AS A MULTIPLE
COMPANY VALUE VALUE ----------------------- OF NET INCOME
SALES OPER. OPER.
CASH FLOW INCOME
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WMX $13,974.8 $22,270.0 2.2X 8.6X 13.0X 17.5X
Attwoods Plc 504.1 775.7 1.4 8.0 16.9 26.2
Browning Ferris 6,221.0 7,508.1 1.8 7.8 14.4 21.8
Chambers Development 141.9 378.7 1.5 5.9 15.3 30.2
Laidlaw 2,182.9 3,407.6 1.6 7.5 16.5 22.5
Mid-American Waste 126.9 472.0 2.8 6.6 12.1 11.2
Western Waste 259.8 343.2 1.3 7.1 13.0 20.7
- ------------------------------------------------------------------------------------------------
MULTIPLES OF 1995E RESULTS
- ------------------------------------------------------------------------------------------------
ENTERPRISE VALUE EQUITY VALUE
EQUITY ENTERPRISE AS A MULTIPLE OF 1995E: AS A MULTIPLE
COMPANY VALUE VALUE ----------------------- OF NET INCOME
SALES OPER. OPER.
CASH FLOW INCOME
- ------------------------------------------------------------------------------------------------
WMX $13,974.8 $22,270.0 1.9X 7.6X 11.2X 15.6X
Attwoods Plc 504.1 775.7 1.3 7.0 13.5 14.9
Browning Ferris 6,221.0 7,508.1 1.5 6.6 11.3 17.8
Chambers Development 141.9 378.7 1.4 4.8 9.9 8.9
Laidlaw 2,182.9 3,407.6 1.4 6.2 12.3 15.1
Mid-American Waste 126.9 472.0 2.6 6.1 11.1 9.3
Western Waste 259.8 343.2 1.3 6.2 12.5 16.7
- ------------------------------------------------------------------------------------------------
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 34
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE SOLID WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ---------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
-------------------------- -----------------
DESCRIPTION EQUITY ENTERPRISE OPER. OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES CASH FLOW INCOME INCOME VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/20/94 Browning-Ferris/ London-based $489.0 $742.0 1.4x 6.6x 25.2x 78.9x 3.0x
Atwoods plc waste management
company with
sizable American
operations.
01/24/94 USA Waste Services Develops and $116.4 $133.9 1.9x 17.0x 690.1x NM 4.1x
Inc. / Envirofil operates
Inc./(1)/ on-hazardous
solid waste
landfills and
related
collection and
recycling
operations.
9/02/93/(2)/ Browning Ferris Provides solid $366.5 $453.6 2.0x 18.0x 70.0x 79.8x 3.7x
(terminated) Industries Inc. / waste
Western Waste collection,
Industries Inc. transfer, and
disposal
services to
commercial,
institutional
and residential
customers in
California,
Texas,
Louisiana,
Florida,
Colorado and
Arkansas.
09/93 Browning Ferris Large German $750.0 $750.0 1.5x NA NA NA NA
(pending) Industries Inc. / waste-handling /(3, 4)/
Otto Holding company, which
International B. V. operates 19
sorting plants
and 32 landfills.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ The exchange ratio was 0.2. Assumes conversion of all outstanding
convertible preferred stock. Operating results include all acquisitions
made since January 1, 1993.
/(2)/ Deal terminated by Browning Ferris on 10/8/93. Exchange ratio was 1.02.
/(3)/ Adjusted market value assumed to be same as equity value.
/(4)/ Terms of the deal are Browning Ferris' paying $375 million for a 50%
stake in Otto. Figures have been grossed up, though, to reflect 100%
acquisition.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 35
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE SOLID WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS
MULTIPLE OF: A MULTIPLE OF:
---------------------- ---------------
OPER.
EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET DESCRIPTION OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/12/93 /(5)/ Envirofil / Sacramento Operates waste collection $ 9.0 $10.7 1.2x 11.3x 40.3x NM NM
Valley Environmental and recycling business
Waste Company for Sacramento area.
03/02/93 Allied Waste Owns landfill and $10.6 $10.2 1.5x 4.4x 7.0x 8.0x 3.3x
Industries Inc. / operates two other
Lemons Landfill Corp., landfills in SE
Lemons Waste System Missouri, collects and
and other assets transfers non-hazardous
wastes in SE Missouri
and owns real estate,
trucks, trailers, and
gravel moving equipment.
09/24/92 United Waste Systems Provides non-hazardous $14.3 $19.7 2.2x 5.2x 8.2x 10.8x 4.7x
Inc. / Kelly Run solid waste collection
Sanitation Inc. services for
residential, commercial,
and industrial customers
in the Elizabeth, PA
area. Also operates a
non-hazardous solid
waste landfill in
Elizabeth, PA.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(5)/ Represents effective date.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 36
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE SOLID WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS
MULTIPLE OF: A MULTIPLE OF:
---------------------- ---------------
OPER.
EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET DESCRIPTION OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/03/92 USA Waste / Best Pak Largest independent solid $16.7 $18.4 1.1x 5.7x 10.8x 16.4x 2.9x
Disposal /(6)/ waste collection and
hauling entity operating
in the Houston market.
Also has operations in
Beaumont, Texas.
01/08/92 Allied Waste Industries National Scavenger is a $24.7 $31.1 2.5x 19.9x 45.2x NM 18.7x
Inc. / National waste hauling, transfer
Scavenger Services and recycling company
Inc., W.J. Flyte Corp. in Chicago. Flyte Corp.
is a solid waste
collection company in
Arizona.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(6)/ USA Waste acquired 55% of Best Pak for $7.5 million cash and 100,000
shares of common stock. The price of the stock is assumed to be $17.00
per share based upon 03/02/93 closing price. Figures have been grossed
up to reflect 100% acquisition.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 37
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE SOLID WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- -------------------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
------------------------ -----------------
DESCRIPTION EQUITY ENTERPRISE OPER. OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES CASH FLOW INCOME INCOME VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/91 USA Waste / North Shore Operates solid $15.0 $21.6 2.6x 13.9x 23.9x 61.8x 13.6x
Waste Control waste collector
(Mid-American Waste) business in and
around Lake
County, Illinois.
12/05/91 Allied Waste Industries Engaged in solid $ 8.8 $11.4 2.8x 13.0x 27.0x NM 5.2x
/ Super Services Waste and liquid waste
collection
primarily in the
commercial and
construction
industries.
09/24/91 Sanifill / Redwood Operates a $24.5 $27.4 3.1x 6.6x 9.4x 15.2x 10.6x
Landfill Inc. sanitary
(municipal solid
waste) disposal
and sludge
processing
facility in Marin
County, California.
6/14/91/(7)/ Sanifill / Nu-Way Operates $13.2 $14.9 3.9x 10.8x 15.6x 10.8x 6.8x
Industries non-hazardous
construction and
demolition
disposal facility
located in
Irwindale,
California.
6/14/91/(7)/ Sanifill / Delaware Operates a $20.3 $22.3 4.4x 19.9x 32.8x 44.5x 86.1x
Recyclable Products non-hazardous
construction and
demolition
disposal facility
near Minquadale,
Delaware.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
/(7)/ Represents effective date.
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 38
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED ACQUISITIONS IN THE SOLID WASTE INDUSTRY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
- -----------------------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE AS A EQUITY VALUE AS A
MULTIPLE OF: MULTIPLE OF:
---------------------- ------------------
OPER.
DESCRIPTION EQUITY ENTERPRISE CASH OPER. NET BOOK
DATE ACQUIROR/TARGET OF TARGET VALUE VALUE SALES FLOW INCOME INCOME VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/10/90 Republic Waste Owns and $ 20.7 $ 23.1 /(8)/ 7.9x 16.5x 18.7x 18.2x 20.0x
Industries Inc. / operates a
Anderson Solid landfill located
Waste Inc. on approximately
300 acres in
Shasta County,
CA. Company
owns
approximately
1200 acres
(including the
300 permitted
acres.)
12/29/89 BET PLC/Anglo Group of waste $ 43.1 $ 51.3 NA NA NA 22.3x 6.7x
United management and
industrial
cleaning
companies
07/05/89 Attwoods PLC / Provides solid $ 57.6 $ 57.6 /(9)/ 2.4x 9.8x 14.5x 22.3x 6.7x
Laidlaw waste management
Transportation services; owns
Ltd.-Florida Solid and operates a
Waste Management landfill.
Operation Consists of 4
waste disposal
units.
11/12/87 Laidlaw Transport. / Provides solid $445.1 $908.9 1.9x 7.8x 13.6x 24.0x 3.2x
Laidlaw Industries waste
collection,
transportation
and disposal
services to
commercial,
industrial and
residential
customers.
-------------------------------------------------------------------
High 7.9x 19.9x 40.3x 44.5x 20.0x
Average 2.6x 11.7x 19.0x 19.3x 7.5x
Mean 2.2x 11.1x 15.6x 17.3x 5.2x
Low 1.1x 4.4x 7.0x 8.0x 2.9x
-------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
/(8)/ Includes $535,937 of landfill closure and post-closure costs. Deal
consisted of 1,780,000 shares of stock and $4,050,000 of cash. Assumed
stock price of $9.375 as of closing date of transaction on March 18, 1991.
/(9)/ Assumes net debt is zero.
[LOGO OF CS FIRST BOSTON]
<PAGE>
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
- --------------------------------------------------------------------------------
5.
MARKET PRICE PREMIUM ANALYSIS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 39
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
MARKET PRICE PREMIUM SUMMARY
- --------------------------------------------------------------------------------
We have analyzed CHW's recent market prices at various points over the past year
and calculated the implied purchase premiums derived from market prices at each
point in time, based on a fully distributed value for WMX Securities of $9.50 -
$10.00 per exchanged CHW share.
<TABLE>
<CAPTION>
EXCHANGE RATIOS IMPLIED BY RECENT MARKET PRICES
- ------------------------------------------------------------------------------
MARKET PRICE MEASURE PRICE PER CHW SHARE OFFER PRICE PREMIUM
- ------------------------------------------------------------------------------
<S> <C> <C>
Price 1 Week Prior to Announcement $ 8.125 17% - 23%
(7/21/94)
Current Market Price (10/11/94) $ 7.750 23% - 29%
36 Week Trading Range
High Price $11.250 (16)% - (11)%
Low Price 7.500 27% - 33%
Average Price 8.615 10% - 16%
52 Week Trading Range
High Price $11.250 (16)% - (11)%
Low Price 7.125 33% - 40%
Average Price 8.583 11% - 17%
At 6/1/94 (prior to Barnwell $ 9.000 6% - 11%
announcement)
- ------------------------------------------------------------------------------
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 40
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
CHW AND WMX DAILY CLOSING PRICES -- JUNE 1 THROUGH OCTOBER 12, 1994
June 6 - Barnwell announcement
July 18 - Rust reports weak 2nd quarter earnings
July 28 - WMX buyout proposal announced
- --------------------------------------------------------------------------------
CHW WMX Implied Exchange Ratio
1-Jun 9 28 1/2 0.32x
2-Jun 9 3/8 28 5/8
3-Jun 9 3/8 29
6-Jun 9 3/4 28 1/2 0.34x
7-Jun 9 1/4 28 1/2
8-Jun 9 28 1/8
9-Jun 9 1/8 27 7/8
10-Jun 9 3/8 27 7/8
13-Jun 9 1/8 27 3/4
14-Jun 9 1/8 27 3/4
15-Jun 8 7/8 27 3/8
16-Jun 8 5/8 27 1/4
17-Jun 8 1/2 26 7/8
20-Jun 8 3/8 26 3/4
21-Jun 8 5/8 26 5/8
22-Jun 8 1/2 27 1/8
23-Jun 8 1/2 26 5/8
24-Jun 8 1/2 26 5/8
27-Jun 8 5/8 27
28-Jun 8 3/4 27
29-Jun 8 3/4 26 7/8
30-Jun 8 3/4 26 1/2
1-Jul 8 7/8 26 1/2 0.33x
4-Jul 8 7/8 26 1/2
5-Jul 8 7/8 26 3/4
6-Jul 9 26 7/8
7-Jul 8 7/8 27 5/8
8-Jul 8 7/8 27 3/8
11-Jul 9 1/8 26 3/4
12-Jul 9 1/8 27
13-Jul 9 1/8 27 5/8
14-Jul 9 28
15-Jul 9 1/4 27 3/4
18-Jul 8 3/4 27 5/8 0.32x
19-Jul 8 27 3/4
20-Jul 8 1/4 28 7/8
21-Jul 8 1/8 29 5/8
22-Jul 8 28
25-Jul 8 1/8 29 1/2
26-Jul 8 1/8 29
27-Jul 8 28 7/8
28-Jul 7 7/8 29 1/8 0.27x
29-Jul 8 1/4 29 0.28x
1-Aug 8 1/2 29 5/8
2-Aug 8 1/2 29
3-Aug 8 1/2 28 7/8
4-Aug 8 1/2 28 3/4
5-Aug 8 1/2 28 7/8
8-Aug 8 3/8 28 1/2
9-Aug 8 1/4 28 1/2
10-Aug 8 1/4 28 7/8
11-Aug 8 1/4 28 1/2
12-Aug 8 1/4 28 3/4
15-Aug 8 1/4 28 5/8
16-Aug 8 1/4 28 5/8
17-Aug 8 1/8 29 1/2
18-Aug 8 1/8 29
19-Aug 7 3/4 29 3/8
22-Aug 7 3/4 29 1/8
23-Aug 8 29 1/2
24-Aug 7 7/8 29 1/2
25-Aug 7 7/8 29 3/4
26-Aug 7 3/4 29 3/4
29-Aug 7 7/8 29 3/4
30-Aug 7 7/8 30
31-Aug 7 7/8 30
1-Sep 7 3/4 29 1/2 0.26x
2-Sep 7 7/8 29 3/4
5-Sep 7 7/8 29 3/4
6-Sep 7 7/8 29 3/8
7-Sep 7 3/4 29 3/8
8-Sep 7 3/4 29 1/8
9-Sep 7 3/4 28 3/8
12-Sep 7 3/4 28 1/8
13-Sep 7 5/8 28 1/8
14-Sep 7 1/2 28 1/2
15-Sep 7 7/8 29
16-Sep 7 5/8 28 5/8
19-Sep 7 7/8 29 3/8
20-Sep 7 5/8 28 3/4
21-Sep 7 3/4 29 1/8
22-Sep 7 3/4 29
23-Sep 7 3/4 28 5/8
26-Sep 7 3/4 29
27-Sep 7 3/4 28 7/8
28-Sep 7 7/8 29
29-Sep 7 7/8 28 3/4
30-Sep 7 7/8 28 7/8
3-Oct 7 3/4 28 5/8 0.27x
4-Oct 7 5/8 28
5-Oct 7 5/8 27 5/8
6-Oct 7 5/8 27 5/8
7-Oct 7 3/4 27 3/4
10-Oct 7 5/8 28 1/8
11-Oct 7 3/4 28 3/4
12-Oct 7 3/4 28 5/8 0.27x
[LOGO OF CS FIRST BOSTON]
<PAGE>
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
- --------------------------------------------------------------------------------
6.
ANALYSIS OF SELECTED MINORITY BUY-OUTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(LOGO OF CS FIRST BOSTON)
<PAGE>
CONFIDENTIAL 41
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
OVERVIEW OF MINORITY BUY-OUT ANALYSIS
- --------------------------------------------------------------------------------
. We have analyzed the prices paid to minority shareholders in 18 recent
buy-outs of public minority interests to gauge the relative fairness of
the WMX proposal.
. Purchase prices paid in previous buy-outs vary widely in relation to target
company stock prices prior to announcement of the transaction, reflecting
varying:
. Circumstances surrounding the particular buy-out
. Size of the minority interest acquired (ranging from 5% - 46%)
. Size of the buy-out transaction (ranging from $9 million
to $1.2 billion)
. Offer prices for recent minority buy-outs have commonly been set at premiums
over target company share prices prior to announcement:
. 72% of the buy-outs analyzed (13 out of 18) were priced at a premium
. Prices paid ranged from a discount of 21% to a premium of 55% (based on
share prices 1 week prior to announcement)
. The purchase price premiums paid to CHW shareholders in the merger (17% -23%)
are consistent with premiums paid in other recent buy-outs of public minority
interests.
MINORITY BUY-OUT ANALYSIS SUMMARY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Range of Premiums Paid in Recent Minority Buy-outs (21)% - 55%
Median Purchase Price Paid 17%
Premium Proposed to be Paid in CHW Buy-out 17% - 23%
Median Purchase Premium Proposed 20%
- --------------------------------------------------------------------------------
/(1)/ Based on WMX price of $28.75 on 10/11/94.
</TABLE>
[LOGO OF CS FIRST BOSTON]
<PAGE>
CONFIDENTIAL 42
- --------------------------------------------------------------------------------
CHEMICAL WASTE MANAGEMENT, INC.
SELECTED RECENT BUY-OUTS OF MINORITY INTERESTS
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<TABLE>
<CAPTION>
PREMIUM OVER STOCK PRICE
PERCENT OF PER SHARE TRANS. PRIOR TO ANNOUNCEMENT
ANNOUNCEMENT TARGET/ SHARES OWNED PERCENT OFFER/ VALUE ------------------------ INDEPENDENT
DATE ACQUIROR PRE-TRANSACTION SOUGHT CONSIDER. (MM) 1 DAY 1 WEEK 1 MONTH STATUS COMMITTEE
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<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/29/94 Intergroup Healthcare 62.6% 37.4% $65.00 $255.7 49.7% 51.6% 30.3% Pending NA
Corp./Foundation Health
Corp.
06/06/94 Ogden Projects Inc./ 84.2 15.8 17.85 144.2 2.7 14.2 17.0 Pending Yes
Ogden Corporation
03/01/94 FoxMeyer Corp./ 80.5 19.5 15.75 86.78 2.8 3.7 6.7 Pending Yes
National Intergroup Inc.
02/17/94 Scripps Howard 86.0 14.0 82.8 115.9 9.3 NM 9.3 Pending Yes
Broadcasting/EW Scripps Co.
01/07/94 Holnam Inc./ 95.0 5.0 7.65 54.0 13.3 15.5 5.5 Completed No
Holderbank Financiere
Gloris Ltd.
10/13/93 Medical Marketing Group/ 54.2 45.8 27.25 157.0 (22.6) (12.2) (7.6) Completed Yes
Medco Containment Services
09/20/93 Valley Fashions Inc./ 95.0 5.0 46.00 64.4 (7.8) (7.1) (4.2) Completed No
Westpoint-Pepperell Inc.
08/17/92 PHLCorp, Inc./ 63.1 36.9 25.78 139.9 7.4 13.9 5.8 Completed No
Leucadia National Corp.
07/24/92 Frank B. Hall & Co., Inc/ 70.6 29.4 2.97 43.9 (32.1) (20.8) (17.3) Completed NA
Reliance Group Holdings
Inc.
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</TABLE>
(CONTINUED ON NEXT PAGE)
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<PAGE>
CONFIDENTIAL 43
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CHEMICAL WASTE MANAGEMENT, INC.
SELECTED RECENT BUY-OUTS OF MINORITY INTERESTS
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<TABLE>
<CAPTION>
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PERCENT OF PREMIUM OVER STOCK PRICE
SHARES OWNED PER SHARE TRANS. PRIOR TO ANNOUNCEMENT
ANNOUNCEMENT TARGET/ PRE- PERCENT OFFER/ VALUE ------------------------ INDEPENDENT
DATE ACQUIROR TRANSACTION SOUGHT CONSIDER. (MM) 1 DAY 1 WEEK 1 MONTH STATUS COMMITTEE
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/02/92 Grace Energy Corp./ 83.4% 16.6% $19.00 $ 77.3 11.8% 55.1% 60.0% Completed Yes
WR Grace & Co.
02/24/92 Unocal Exploration 96.0 4.0 11.68 117.7 18.3 18.3 19.8 Completed Yes
Corp./ (Unocal
Corp.)/(1)/
02/06/92 Spelling 82.3 17.6 7.25 42.1 (9.4) (7.9) (6.4) Completed Yes
Entertainment Inc./
The Charter Company
10/29/91 American Television 82.0 18.0 62.00 1,217.2 21.6 20.7 26.5 Completed Yes
and Communications/
Time Warner
09/16/91 Arkla Exploration 82.0 18.0 15.56 93.3 23.2 29.6 31.0 Completed Yes
Co./ Arkla Inc.
07/30/91 Jiffy Lube 82.4 17.6 6.00 9.2 20.0 4.3 14.3 Completed Yes
International,
Inc./ Pennzoil
Acquisition Corp.
07/26/91 Country Lake Foods 67.7 32.3 15.30 21.9 39.1 45.7 56.9 Completed Yes
Inc./ Land O'Lakes,
Inc.
06/13/91 Weigh-Tronix Inc./ 57.0 43.0 22.00 25.3 46.7 41.9 47.9 Completed Yes
Stavely Industries
PLC
02/28/91 Metcalf & Eddy 82.0 18.0 18.27 47.9 21.8 16.0 27.1 Completed Yes
Companies/ Air &
Water Tech. Corp.
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</TABLE>
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<PAGE>
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CHEMICAL WASTE MANAGEMENT, INC.
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7.
WMX EARNINGS DILUTION ANALYSIS
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<PAGE>
CONFIDENTIAL 44
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CHEMICAL WASTE MANAGEMENT, INC.
OVERVIEW OF DILUTION ANALYSIS
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CS First Boston has analyzed the financial consequences to WMX of a buy-out of
the CHW minority interest based on the range of values of the per share
consideration from $9.50 to $10.00.
We assume that WMX will record the convertible debt securities issued to CHW
shareholders at an estimated fair market value of $9.50 to $10.00 per CMW share.
Other key assumptions used in our analysis include:
Transaction Closing Date December 31, 1994
Accounting Treatment Purchase accounting
Tax Treatment Taxable sale
WMX Earnings Forecasts First Call
CHW Earnings Forecasts First Call
Based on these assumptions, WMX would require approximately $26-$29 million of
incremental annual pre-tax cost savings in order to meet analysts' current WMX
earnings per share forecasts for 1994, 1995 and 1996 on a fully-diluted basis.
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<PAGE>
CONFIDENTIAL 45
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CHEMICAL WASTE MANAGEMENT, INC.
WMX EARNINGS DILUTION ANALYSIS
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<TABLE>
<CAPTION>
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<S> <C> <C>
PURCHASE PRICE PER CHW SHARE $ 9.50 $ 10.00
- -----------------------------------------------------------------------------------
Purchase Price Premium For CHW 22.6% 29.0%
Total Implied Price for CHW Equity $2,160.5 $2,274.2
Number of Equivalent WMX Shares Issued/(1)/ 13.8 13.8
New Shares as a % of Pro Forma WMX Shares Outstanding 2.8% 2.8%
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PRO FORMA INCOME STATEMENT EFFECTS $ 9.50 $ 10.00
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WMX Stand-Alone E.P.S./(1)/
1994 $ 1.63 $ 1.63
1995 1.87 1.87
1996 2.15 2.15
WMX Pro Forma Fully Diluted E.P.S. After Transaction/(3)/
1994 $ 1.60 $ 1.59
1995 1.83 1.83
1996 2.12 2.12
E.P.S. Accretion (Dilution)
1994 (2.1)% (2.2)%
1995 (1.9) (1.9)
1996 (1.5) (1.5)
Pre-tax Synergies Required to Offset Dilution
1994 $ 27.9 $ 28.9
1995 28.2 29.2
1996 25.8 26.8
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PRO FORMA BALANCE SHEET EFFECTS $ 9.50 $ 10.00
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WMX Total Debt at 6/30/94 $ 6,927 $ 6,927
CHW Total Debt at 6/30/94 1,400 1,400
WMX Stand-Alone Total Debt/Total Capital 54.7% 54.7%
WMX Pro Forma Total Debt/Total Capital 57.0% 57.1%
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</TABLE>
[FN]
/(1)/ Number of new WMX shares issuable upon conversion of the consideration
security.
/(2)/ Source: First Call.
/(3)/ 1994 Pro Forma. Assumes transaction closes 12/31/94.
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