<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-7327
----------------
WMX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2660763
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3003 BUTTERFIELD ROAD, OAK BROOK, ILLINOIS 60521
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (708) 572-8800
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE ZURICH STOCK EXCHANGE
CHICAGO STOCK EXCHANGE GENEVA STOCK EXCHANGE
LONDON STOCK EXCHANGE BASLE STOCK EXCHANGE
FRANKFURT STOCK EXCHANGE
</TABLE>
<TABLE>
<S> <C>
LIQUID YIELD OPTION NOTES DUE 2001 NEW YORK STOCK EXCHANGE
8 3/4% DEBENTURES DUE 2018 NEW YORK STOCK EXCHANGE
LIQUID YIELD OPTION NOTES DUE 2012 NEW YORK STOCK EXCHANGE
CHEMICAL WASTE MANAGEMENT, INC.
LIQUID YIELD OPTION NOTES DUE 2010 NEW YORK STOCK EXCHANGE
CONVERTIBLE SUBORDINATED NOTES DUE 2005 NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY
STOCKHOLDERS WHO WERE NOT AFFILIATES (AS DEFINED BY REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION) OF THE REGISTRANT WAS APPROXIMATELY
$13,643,438,000 AT FEBRUARY 1, 1995 (BASED ON THE CLOSING SALE PRICE ON THE NEW
YORK STOCK EXCHANGE COMPOSITE TAPE ON JANUARY 31, 1995, AS REPORTED BY THE WALL
STREET JOURNAL (MIDWEST EDITION)). AT MARCH 22, 1995, THE REGISTRANT HAD ISSUED
AND OUTSTANDING AN AGGREGATE OF 484,393,478 SHARES OF ITS COMMON STOCK OF
RECORD.
DOCUMENTS INCORPORATED BY REFERENCE
THOSE SECTIONS OR PORTIONS OF THE REGISTRANT'S 1994 ANNUAL REPORT TO
STOCKHOLDERS AND OF THE REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 12, 1995 DESCRIBED IN PARTS II, III AND IV
HEREOF ARE INCORPORATED BY REFERENCE IN THIS REPORT.
--------------------------------------------------------------------------------
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<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
WMX Technologies, Inc. (formerly named Waste Management, Inc.) is a leading
international provider of environmental, engineering and construction,
industrial and related services. Unless the context indicates to the contrary,
as used in this report the terms "Company" and "WMX Technologies" refer to WMX
Technologies, Inc. and its subsidiaries.
Through Waste Management, Inc. (formerly named Waste Management of North
America, Inc.), a wholly owned subsidiary of the Company (referred to herein,
together with its subsidiaries and certain affiliated companies providing solid
waste management and related services, as "Waste Management" or "WMI"), the
Company provides integrated solid waste management services in North America to
commercial, industrial, municipal and residential customers, as well as to
other waste management companies. These services consist of solid waste
collection, transfer, resource recovery and disposal services. As part of these
services, the Company is engaged in providing, through its Recycle America(R)
and Recycle Canada(R) programs, paper, glass, plastic and metal recycling
services to commercial and industrial operations and curbside collection of
such materials from residences; in removing methane gas from sanitary landfill
facilities for use in electricity generation; and in providing medical and
infectious waste management services to hospitals and other health care and
related facilities. In addition, through WMI the Company provides street
sweeping and parking lot cleaning services and Port-O-Let(R) portable
sanitation services to municipalities and commercial and special event
customers.
The Company's wholly owned Chemical Waste Management, Inc. subsidiary
(referred to herein, together with its subsidiaries other than Rust (as defined
below), as "CWM"), is a leading provider of hazardous waste management services
in the United States. The Company's chemical waste management services provided
through CWM, including transportation, treatment, resource recovery and
disposal, are furnished to commercial and industrial customers, as well as to
other waste management companies and to governmental entities. Through CWM, the
Company also furnishes radioactive waste management services, primarily to
electric utilities and governmental entities. Prior to January 24, 1995, the
Company's ownership of CWM was approximately 79%, with the balance being
publicly held. On that date, the Company acquired the publicly held shares of
CWM in a merger of a Company subsidiary into CWM. See "Acquisitions and
Dispositions" below.
Wheelabrator Technologies Inc., an approximately 56%-owned subsidiary of the
Company (referred to herein, together with its subsidiaries, as "WTI"),
provides a wide array of environmental products and services in North America
and abroad. WTI's clean energy group is a leading developer of facilities and
systems for, and provider of services to, the trash-to-energy, energy, and
independent power markets. Through the clean energy group, WTI develops,
arranges financing for, operates and owns facilities that dispose of trash and
other waste materials in an environmentally acceptable manner by recycling them
into energy in the form of electricity and steam. WTI's clean water group is
principally involved in the design, manufacture and operation of facilities and
systems used to purify water, to treat municipal and industrial wastewater, to
treat and manage biosolids resulting from the treatment of wastewater by
converting them into useful fertilizers, and to recycle organic wastes into
compost material useable for horticultural and agricultural purposes. The clean
water group also designs and manufactures various products and systems used in
water and wastewater treatment facilities and industrial processes, precision
profile wire screens for use in groundwater wells and other industrial and
municipal applications, and certain other industrial equipment. WTI's clean air
group designs, fabricates and installs technologically advanced air pollution
emission control and measurement systems and equipment, including systems which
remove pollutants from
LOGO
Printed on Recycled Paper
2
<PAGE>
the emissions of WTI's trash-to-energy facilities as well as power plants and
other industrial facilities.
Rust International Inc., a subsidiary owned approximately 56% by CWM and 40%
by WTI (referred to herein, together with its subsidiaries, as "Rust"),
furnishes engineering, construction, environmental and infrastructure
consulting, hazardous and radioactive substance remediation and a variety of
other on-site industrial and related services primarily to clients in
government and in the chemical, petrochemical, nuclear, energy, utility, pulp
and paper, manufacturing, environmental services and other industries. Rust
also has an approximately 40% interest in NSC Corporation, a publicly traded
provider of asbestos abatement services ("NSC"). The Company has proposed to
acquire the shares of Rust not owned by CWM and WTI. In addition, Rust has
entered into an agreement to combine its hazardous and radioactive substance
remediation operations with a third party. See "Acquisitions and Dispositions"
herein.
The Company provides comprehensive waste management and related services
internationally, primarily through Waste Management International plc, a
subsidiary owned approximately 56% by the Company, 12% by Rust and 12% by WTI
(referred to herein, together with its subsidiaries, as "Waste Management
International"). Waste Management International provides a wide range of solid
and hazardous waste management services (or has interests in projects or
companies providing such services) in ten countries in Europe and in Argentina,
Australia, Brunei, Hong Kong, Indonesia, Malaysia, Taiwan, Singapore and New
Zealand. Waste Management International also has an approximately 20% interest
in Wessex Water Plc, an English publicly traded company providing water
treatment, water distribution, wastewater treatment and sewerage services
("Wessex").
On January 1, 1993, CWM and WTI formed Rust and acquired 58% and 42%,
respectively, of Rust's outstanding shares. Rust was created to serve the
engineering, construction, environmental and infrastructure consulting,
hazardous substance remediation and on-site industrial and related services
markets, which the managements of CWM, WTI and The Brand Companies, Inc.
(referred to herein as "Brand") believed could be served more effectively by
organizing the Company's several business units serving those markets into a
single integrated company. WTI contributed primarily its engineering and
construction and environmental and infrastructure consulting services
businesses and its then recently formed international engineering unit based in
London. CWM contributed primarily its hazardous substance remediation services
business, its approximately 56% ownership interest in Brand, and its 12%
ownership interest in Waste Management International. On May 7, 1993, Brand was
merged into a subsidiary of Rust, and shares of Brand (other than those owned
by Rust or exchanged for cash in the merger) were converted into shares of
Rust. As a result of such merger, Brand became a wholly owned subsidiary of
Rust.
The Company also owns an approximately 28% interest in ServiceMaster Consumer
Services L.P., a provider of lawn care, pest control and other consumer
services. The remaining ownership interest is held indirectly by ServiceMaster
Limited Partnership.
Through the end of 1992, the Company categorized its operations into four
industry segments--solid waste management and related services; hazardous waste
management and related services; energy, environmental and industrial projects
and systems; and international waste management and related services
(consisting of comprehensive waste management and related services provided
outside the United States, Canada and Mexico). Beginning in 1993, the Company
categorized the operations of Rust, which was formed from businesses
contributed by CWM and WTI, as a fifth industry segment--engineering,
construction, industrial and related services--and modified the name of its
energy, environmental and industrial projects and systems segment to "trash-to-
energy, water treatment, air quality and related services."
3
<PAGE>
The following table shows the respective revenues of these segments for the
Company's last three years, presented as if the above-described Rust
transaction had occurred prior to the periods presented.
<TABLE>
<CAPTION>
(000'S OMITTED)
-----------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
1992 1993 1994
---------- ---------- -----------
<S> <C> <C> <C>
Solid Waste Management and Related
Services................................. $4,309,614 $4,702,166 $ 5,117,871
Hazardous Waste Management and Related
Services................................. 755,088 661,860 649,581
Engineering, Construction, Industrial and
Related Services......................... 1,441,050 1,534,465 1,682,907
Trash-to-Energy, Water Treatment, Air
Quality and Related Services............. 928,313 1,142,219 1,324,567
International Waste Management and Related
Services................................. 1,445,734 1,411,211 1,710,862
Eliminations of Intercompany Revenue...... (218,772) (316,344) (388,470)
---------- ---------- -----------
Consolidated Revenue...................... $8,661,027 $9,135,577 $10,097,318
========== ========== ===========
</TABLE>
For information relating to expenses and identifiable assets attributable to
the Company's different industry segments, see Note 12 to the Company's
Consolidated Financial Statements filed as an exhibit to this report and
incorporated by reference herein. For interim periods, the revenues and net
income of certain of the Company's businesses may fluctuate for a number of
reasons, including there being for some businesses less activity during the
winter months.
Regulatory or technological developments relating to the environment may
require companies engaged in environmental services businesses, including the
Company, to modify, supplement or replace equipment and facilities at costs
which may be substantial. Because certain of the businesses in which the
Company is engaged are intrinsically connected with the protection of the
environment and the potential discharge of materials into the environment, a
material portion of the Company's capital expenditures is, directly or
indirectly, related to such items. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" set forth on pages 30 to 38 of
the Company's 1994 Annual Report to Stockholders (which discussion is filed as
an exhibit to this report and incorporated by reference herein) for a review of
property and equipment expenditures by the Company for the last three years.
The Company does not expect such expenditures, which are incurred in the
ordinary course of business, to have a materially adverse impact on its and its
subsidiaries' combined earnings or its or its subsidiaries' competitive
position in the foreseeable future because the Company's businesses are based
upon compliance with environmental laws and regulations and its services are
priced accordingly.
Although the Company strives to conduct its operations in compliance with
applicable laws and regulations, the Company believes that in the existing
climate of heightened legal, political and citizen awareness and concerns,
companies in the environmental services industry, including the Company, will
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend funds for remedial work and related activities
with respect to waste treatment, disposal and trash-to-energy facilities. Where
the Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Such estimates are subsequently revised, as necessary,
as additional information becomes available. While the Company does not
anticipate
4
<PAGE>
that the amount of any such revision will have a material adverse effect on the
Company's operations or financial condition, the measurement of environmental
liabilities is inherently difficult and the possibility remains that
technological, regulatory or enforcement developments, the results of
environmental studies, or other factors could materially alter this expectation
at any time. Such matters could have a material adverse impact on earnings for
one or more fiscal quarters or years.
While in general the Company's environmental services businesses have
benefited substantially from increased governmental regulation, the
environmental services industry itself has become subject to extensive and
evolving regulation by federal, state, local and foreign authorities. Due to
the complexity of regulation of the industry and to public pressure,
implementation of existing and future laws, regulations or initiatives by
different levels of government may be inconsistent and difficult to foresee. In
addition, the demand for certain of the Company's services may be adversely
affected by the amendment or repeal or reduction in enforcement of federal,
state and foreign laws and regulations on which the Company's businesses
engaged in providing such services are dependent. The Company makes a
continuing effort to anticipate regulatory, political and legal developments
that might affect its operations but is not always able to do so. The Company
cannot predict the extent to which any legislation or regulation that may be
enacted, amended, repealed or enforced, or any failure of legislation or
regulations to be enacted or enforced, in the future may affect its operations.
The Company was incorporated in Delaware in 1968 and subsequently succeeded
to certain businesses owned by its organizers and others. The Company's common
stock is listed on the New York Stock Exchange under the trading symbol "WMX"
and is also listed on the Frankfurt Stock Exchange, the London Stock Exchange,
the Chicago Stock Exchange and the Swiss Stock Exchanges in Basle, Zurich and
Geneva.
Unless the context indicates to the contrary, all statistical and financial
information under Item 1 and Item 2 of this report is given as of December 31,
1994 and, where such information relates to any period prior to 1994, it is
presented as if Rust had been in existence throughout such period. Statistical
and financial data appearing under the caption "Solid Waste Management and
Related Services" relate only to the Company's WMI group of subsidiaries and do
not include any data relating to CWM, Rust, WTI or Waste Management
International. See "Hazardous Waste Management and Related Services,"
"Engineering, Construction, Industrial and Related Services," "Trash-to-Energy,
Water Treatment, Air Quality and Related Services," and "International Waste
Management and Related Services."
SOLID WASTE MANAGEMENT AND RELATED SERVICES
At December 31, 1994, Waste Management conducted solid waste management and
related services operations in 48 states, the District of Columbia, four
Canadian provinces and Mexico. During 1992, 1993 and 1994, operations in
California, Florida and Pennsylvania together accounted for approximately 34%,
34% and 30%, respectively, of WMI revenue. No customer accounted for as much as
2% of WMI revenue in 1992 or 1993 or 1% in 1994.
Fees paid to Waste Management by its solid waste collection customers
(including charges paid by such customers for disposal and curbside collection
of recyclable materials) accounted for approximately 77% of WMI revenue in 1992
and 1993 and 76% in 1994. Transfer and disposal services provided to
municipalities, counties and other waste management companies and sales of
recyclable materials accounted for approximately 23% of such revenue in 1992
and 1993 and 24% in 1994.
COLLECTION
Waste Management provides solid waste collection services to approximately
1,009,100 commercial and industrial customers. Collection services are also
provided to approximately 11,779,500 homes and apartment units. Waste
Management's revenue from commercial, industrial
5
<PAGE>
and apartment collection services (including revenues from recycling services)
accounted for approximately 70% of its solid waste collection revenue in 1992
and 1993 and 71% in 1994. See "Recycling and Energy Recovery--Recycling" for a
description of recycling services.
Commercial and Industrial
Many of Waste Management's commercial and industrial customers utilize
containers to store solid waste. These containers, ranging from 1 to 45 cubic
yards in size, are usually provided to the customer as part of WMI's services.
Stationary compactors, which compact the volume of the stored waste prior to
collection, are frequently installed on the premises of large volume customers
and are usually provided to these customers in conjunction with WMI's
collection services. Containerization enables Waste Management to service most
of its commercial and industrial customers with collection vehicles operated by
a single employee. Compaction serves to decrease the frequency of collection.
Commercial and industrial collection services (which include containerized
service to apartment buildings) are generally performed under one- to three-
year service agreements. Fees are determined by such considerations as market
factors, collection frequency, type of equipment furnished, type and volume or
weight of the waste collected, distance to the disposal facility and cost of
disposal.
Residential
Most of Waste Management's residential solid waste collection services are
performed under contracts with, or franchises granted by, municipalities giving
WMI exclusive rights to service all or a portion of the homes in their
respective jurisdictions. Such contracts or franchises usually range in
duration from one to five years. The fees received by Waste Management are
based primarily on market factors, frequency and type of service, the distance
to processing or disposal facilities and cost of processing or disposal.
Residential collection fees are either paid by the municipalities out of tax
revenues or service charges or are paid directly by the residents receiving the
service.
TRANSFER
Waste Management operates 129 solid waste transfer stations. A transfer
station is a facility where solid waste is received from collection vehicles
and then transferred to, and in some cases compacted in, large, specially
constructed trailers for transportation to disposal or resource recovery
facilities. This procedure reduces costs by improving utilization of collection
personnel and equipment and improving the efficiency of transporting waste to
final disposal facilities.
The services of these facilities are provided to municipalities or counties
and in most instances are also used by Waste Management and by other collection
companies. Fees are generally based upon such considerations as market factors,
the type and volume or weight of the waste transferred, the extent of
processing of recyclable materials, the transport distance involved and the
cost of disposal.
RECYCLING AND ENERGY RECOVERY
Recycling
Waste Management provides recycling services in the United States and Canada
through its Recycle America(R) and Recycle Canada(R) programs. Recycling
involves the removal of reusable materials from the waste stream for processing
and sale or other disposition for use in various applications. Participating
commercial and industrial operations use containers to separate recyclable
paper, glass, plastic and metal wastes for collection, processing and sale by
WMI. Fees are
6
<PAGE>
determined by such considerations as market factors, frequency of collection,
type and volume or weight of the recyclable material, degree of processing
required, distance the recyclable material must be transported and value of the
recyclable material.
As part of its residential solid waste collection services, WMI engages in
curbside collection of recyclable materials from residences in the United
States and Canada, also through its Recycle America(R) and Recycle Canada(R)
programs. Curbside recycling services generally involve the use of specially
designed, compartmentalized vehicles to collect recyclable paper, glass,
plastic and metal waste materials, which may be separated by residents into
different waste containers or commingled and sorted by the curbside collector.
The recyclable materials are then typically deposited at a local facility where
they are sorted further and processed for resale. The prices received by the
Company for recyclable materials fluctuate substantially depending upon
domestic and foreign demand for such materials, prices for new materials and
other factors.
In 1994, WMI provided curbside recycling services to approximately 6,400,000
households pursuant to more than 850 contracts in the United States and Canada.
In 1993, WMI provided such services to more than 5,800,000 households. Waste
Management has approximately 119,000 commercial and industrial recycling
services customers.
Waste Management operates 116 materials recovery facilities for the receipt
and processing of recyclable materials. Such processing consists of separating
recyclable materials according to type and baling or otherwise preparing the
separated materials for sale.
Waste Management also participates in joint ventures with Stone Container
Corporation and American National Can Corporation to engage, respectively, in
the businesses of marketing paper fibre and aluminum, steel, and glass
containers for recycling. In each case WMI sells to the joint venture, or has
the joint venture market, the paper fibre or containers collected by WMI to
Stone Container, American National Can or other parties who will process them
for reuse. The joint venture with American National Can also owns and operates
three glass processing facilities. During 1994, the joint ventures processed
approximately 4,100,000 tons of recyclable materials. WMI also provides tire
recycling services.
Energy Recovery
At 33 WMI-owned or -operated sanitary landfill facilities, Waste Management
is engaged in methane gas recovery operations. These operations involve the
installation of a gas collection system into a sanitary landfill facility.
Through the gas collection system, gas generated by decomposing solid waste is
collected and transported to a gas-processing facility at the landfill site.
Through physical processes methane gas is separated from contaminants. The
processed methane gas is then either (i) sold directly to industrial users or
(ii) sold to an affiliate of the Company which uses it as a fuel to power
electricity generators. Electricity generated by these facilities is sold,
usually to public utilities under long-term sales contracts, often under terms
or conditions which are subject to approval by regulatory authorities.
WMX Technologies also engages in other resource recovery activities through
WTI's trash-to-energy and independent power operations and Waste Management
International's operations. See "Trash-to-Energy, Water Treatment, Air Quality
and Related Services" and "International Waste Management and Related
Services."
DISPOSAL
Waste Management operates 134 solid waste sanitary landfill facilities. Of
this number, 105 are owned by Waste Management and the remainder are leased
from, or operated under contract with, others. Additional facilities are in
various stages of development. Waste Management also provides
7
<PAGE>
yard-waste composting services at a number of its disposal facilities. All of
the sanitary landfill facilities are subject to governmental regulation. See
"Regulation--Solid Waste."
A sanitary landfill site must have geological and hydrological properties and
design features which limit the possibility of water pollution, directly or by
leaching. Sanitary landfill operations, which include carefully planned
excavation, continuous spreading and compacting of solid waste and covering of
the waste, are designed to maintain sanitary conditions, insure optimum
utilization of the airspace and prepare the site for ultimate use for other
purposes.
Suitable sanitary landfill facilities and permission to expand existing
facilities may be difficult to obtain in some areas because of land scarcity,
local resident opposition and expanding governmental regulation. As its
existing facilities become filled in such areas, the solid waste disposal
operations of Waste Management are and will continue to be materially dependent
on its ability to purchase, lease or obtain operating rights for additional
sites or expansion of existing sites and to obtain the necessary permits from
regulatory authorities to construct and operate them. To develop a new
facility, WMI must expend significant time and capital resources without any
certainty that a permit will ultimately be issued for such facility. In
addition, there can be no assurance that additional sites can be obtained or
that existing facilities can continue to be expanded or operated. However,
management believes that the facilities currently available to WMI are
sufficient to meet the needs of its current operations in most areas for the
foreseeable future.
In varying degrees, Waste Management utilizes its own sanitary landfill
facilities to accommodate its disposal requirements for collection and transfer
operations. In 1992, 1993, and 1994 approximately 50%, 52%, and 55%,
respectively, of the solid waste collected by WMI was disposed of in sanitary
landfill facilities operated by it. Usually these facilities are also used by
other companies and government agencies on a noncontract basis for fees
determined by such considerations as market factors and the type and volume or
weight of the waste.
RELATED SERVICES
Waste Management also provides several types of services which are compatible
with its solid waste collection operations. Included in these operations are
medical and infectious waste management services, portable sanitation services
and street sweeping and parking lot cleaning services.
Waste Management's medical and infectious waste management services consist
of collecting, transporting, treating and disposing of medical and infectious
waste generated by hospitals, pharmaceutical manufacturers, medical clinics,
physician and dentist offices and other sources.
Waste Management also provides portable sanitation services to municipalities
and commercial customers. The portable sanitation services, which are marketed
under the Port-O-Let(R) trade name, are also used at numerous special events
and public gatherings.
These related services are marketed and performed primarily by employees
operating out of WMI's solid waste operations facilities who also may have
responsibility for some phase of solid waste marketing or operations.
HAZARDOUS WASTE MANAGEMENT AND RELATED SERVICES
CWM's principal business (excluding Rust) is to provide hazardous waste
management services consisting of chemical and radioactive waste
transportation, treatment, resource recovery and disposal services. For each of
the three years in the period ended December 31, 1994, such services
8
<PAGE>
accounted for the following percentages of CWM's hazardous waste management and
related services revenue:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Treatment, resource recovery and disposal............... 68.5% 70.6% 72.6%
Special services........................................ 15.3 18.6 18.2
Transportation.......................................... 16.2 10.8 9.2
</TABLE>
Until December 31, 1992, CWM also provided environmental and industrial
specialty contracting services through a group of regional and local companies
owned by Brand, as well as hazardous and radioactive substance remediation
services, which businesses were contributed to Rust on January 1, 1993. See
"General."
CHEMICAL WASTE MANAGEMENT SERVICES
In the United States, most chemical wastes generated by industrial processes
are handled "on-site" at the generators' facilities. Since the mid-1970's,
public awareness of the harmful effects of unregulated disposal of chemical
wastes on the environment and health has led to extensive and evolving federal,
state and local regulation of chemical waste management activities. The major
federal statutes regulating the management of chemical wastes include the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the Toxic
Substances Control Act ("TSCA") and the Comprehensive Environmental Response,
Compensation and Liabilities Act of 1980, as amended ("CERCLA" or "Superfund"),
all primarily administered by the United States Environmental Protection Agency
("EPA"). CWM's business is heavily dependent upon the extent to which
regulations promulgated under these or similar state statutes and their
enforcement over time effectively require wastes to be managed in facilities of
the type owned and operated by CWM. See "Regulation--Hazardous Waste," "--RCRA"
and "--Superfund." The chemical wastes handled by CWM include industrial by-
products and residues that have been identified as "hazardous" pursuant to
RCRA, as well as other materials contaminated with a wide variety of chemical
substances. CWM operates chemical waste treatment, storage and disposal
facilities in 18 states and also owns a majority interest in a subsidiary which
operates a resource recovery facility, a disposal facility and storage
facilities in Mexico.
The hazardous waste services industry (other than the low-level radioactive
waste services industry) currently has substantial excess capacity caused by a
number of factors, including a decline in environmental remediation projects
generating hazardous waste for off-site treatment and disposal, continuing
efforts by hazardous waste generators to reduce volume and to manage it on-
site, and the uncertain regulatory environment regarding hazardous waste
management and remediation requirements. These factors have lead to reduced
demand and increased pressure on pricing for non-radioactive hazardous waste
management services, consequences which CWM expects to continue for the
foreseeable future.
Treatment, Resource Recovery and Disposal
CWM's treatment and resource recovery operations involve processing chemical
wastes through the use of thermal, physical, chemical or other treatment
methods at one or more of CWM's facilities. The residual material produced by
these interim processing operations is either disposed of by burial in a secure
disposal cell or by deep well injection, or it may be managed through one of
CWM's resource recovery programs.
Thermal treatment refers primarily to processes that use incineration as the
principal mechanism for waste destruction. Physical treatment methods include
distillation, evaporation and separation, all of which basically result in the
separation or removal of solid materials from liquids. Chemical
9
<PAGE>
treatment methods include chemical oxidation and reduction, chemical
precipitation of heavy metals, hydrolysis and neutralization of acid and
alkaline wastes and essentially involve the transformation of wastes into inert
materials through one or more chemical reaction processes.
CWM's secure land disposal facilities either have interim status or have been
issued permits under RCRA. See "Regulation--RCRA." In general, CWM's secure
land disposal facilities have received the necessary permits and approvals to
accept chemical wastes, although some of such sites may accept only certain
chemical wastes. Only chemical wastes in a stable, solid form which meet
applicable regulatory requirements may be buried in CWM's secure disposal
cells. These land disposal facilities are sited, constructed and operated in a
manner designed to provide long-term containment of such waste. At three of its
locations, CWM isolates treated chemical wastes in liquid form by injection
into deep wells. Deep well technology involves drilling wells in suitable rock
formations far below the base of fresh water and separated from it by other
substantial geological confining layers.
Transportation
Chemical waste may be collected from customers and transported by CWM or
contractors retained by CWM or delivered by customers to CWM's facilities.
Chemical waste is transported by CWM primarily in specially constructed tankers
and semi-trailers, including stainless steel and rubber or epoxy-lined tankers
and vacuum trucks, or in containers or drums on trailers designed to comply
with applicable regulations and specifications of the U.S. Department of
Transportation ("DOT") relating to the transportation of hazardous materials.
CWM operates numerous transportation centers from which its fleet is dispatched
or at which fleet maintenance operations are conducted. CWM also operates
several facilities at which waste collected from or delivered by customers may
be analyzed and consolidated prior to further shipment.
LOW-LEVEL AND OTHER RADIOACTIVE WASTE SERVICES
Radioactive wastes with varying degrees of radioactivity are generated by
nuclear reactors and by medical, industrial, research and governmental users of
radioactive material. Radioactive wastes are generally classified as either
high-level or low-level. High-level radioactive waste, such as spent nuclear
fuel and waste generated during the reprocessing of spent fuel from nuclear
reactors, contains substantial quantities of long-lived radionuclides and is
the ultimate responsibility of the federal government. Low-level radioactive
waste, which decays more quickly than high-level waste, largely consists of dry
compressible wastes (such as contaminated gloves, paper, tools and clothing),
resins and filters which have removed radioactive contaminants from nuclear
reactor cooling water, solidified wastes from power plants which have become
contaminated with radioactive substances and irradiated hardware.
CWM provides comprehensive low-level radioactive waste management services in
the United States consisting of disposal, processing and various other special
services. To a lesser extent, it provides services with respect to radioactive
waste that has become mixed with regulated chemical waste.
CWM's radioactive disposal operations involve low-level radioactive waste
only. Its Barnwell, South Carolina facility is one of two licensed commercial
low-level radioactive waste disposal facilities in the United States and has
been in operation since 1971. A trust has been established and funded to pay
the estimated cost of decommissioning the Barnwell facility. A second fund, for
the extended care of the facility, is funded by a surcharge on each cubic foot
of waste received. CWM may be liable for additional costs if the extra charges
collected to restore and maintain the facility are insufficient to cover the
cost of restoring or maintaining the site after its closure (which CWM has no
reason to expect).
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Eight southeastern states have joined together to form the Southeast
Interstate Low-Level Radioactive Waste Management Compact (the "Southeast
Compact"). The Southeast Compact initially designated the Barnwell site as the
disposal facility to receive all low-level radioactive waste generated in the
eight-state compact region through 1992, and designated North Carolina as the
next state to host the regional disposal facility. The North Carolina Low-Level
Radioactive Waste Management Authority has voted to select a site in that state
for development by CWM as a replacement regional disposal facility for the
Southeast Compact.
During 1992, South Carolina adopted legislation allowing the Barnwell site to
continue operating until December 31, 1995, at which time it must close unless
the closure date is extended by the South Carolina legislature, and to continue
receiving waste generated outside the Southeast Compact until June 30, 1994.
Effective June 30, 1994, the Barnwell Facility was required by South Carolina
law to cease accepting waste generated outside the Southeast Compact. The
closure of the Barnwell facility would adversely affect CWM's low-level
radioactive waste disposal operations.
CWM has entered into contracts with the responsible agencies representing
several groups of states to site, license, construct, operate and close new
regional low-level radioactive waste disposal facilities for those groups. The
terms of these contracts range from 20 to 30 years. Because of the difficulties
associated with the process of siting and licensing such facilities, their
development has not proceeded in the manner and on the schedule contemplated by
CWM and such agencies. At this time the Company and CWM are unable to predict
when, if ever, any additional such disposal facility would be completed.
CWM also processes low-level radioactive waste at its customers' plants to
enable such waste to be shipped in dry rather than liquid form to meet the
requirements for receipt at disposal facilities and to reduce the volume of
waste that must be transported. Processing operations include solidification,
demineralization, dewatering and filtration. Other services offered by CWM
include decommissioning nuclear facilities, which involves dismantling
buildings and equipment (projects that typically are nonrecurring), providing
electro-chemical, abrasive and chemical removal of radioactive contamination,
and providing management services for spent nuclear fuel storage pools.
ENGINEERING, CONSTRUCTION, INDUSTRIAL AND RELATED SERVICES
Rust is a leading provider, through its subsidiaries, of engineering,
construction and environmental and infrastructure consulting services,
hazardous and radioactive substance remediation services and other on-site
industrial and related services, primarily to clients in government and in the
chemical, petrochemical, nuclear, energy, utility, pulp and paper,
manufacturing, environmental services and other industries. The types of
engineering, construction and environmental and infrastructure consulting
services provided by Rust include process and design engineering, plant,
facility and related infrastructure construction, project and construction
management and oversight services, site analyses, remedial investigations,
feasibility studies, environmental assessments, and architectural services. The
types of remediation and other on-site industrial and related services provided
by Rust include on-site remediation of hazardous and radioactive substances,
scaffolding, industrial cleaning and maintenance services and nuclear and
utility services and maintenance. In addition, Rust provides engineering and
environmental and infrastructure consulting services to clients in several
countries outside North America.
Until May 1993, Brand engaged in the asbestos abatement business. In May
1993, Brand sold substantially all of its asbestos abatement business to NSC.
See "Acquisitions and Dispositions." As a result of that transaction, Rust has
an approximately 40% interest in NSC, of which the remaining ownership
interests are held approximately 40% by OHM Corporation and 20% by the public.
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ENGINEERING, CONSTRUCTION AND ENVIRONMENTAL AND INFRASTRUCTURE CONSULTING
SERVICES
Rust received 43%, 52%, and 57% of its total consolidated revenues in 1992,
1993 and 1994, respectively, from the performance of engineering, construction
and environmental and infrastructure consulting services.
The industrial engineering services provided by Rust are of two general
types, process engineering and facility design engineering. Process engineers
create the processes by which facilities operate, such as chemical,
petrochemical, energy and pulp and paper plants. Design engineering services
provided by Rust encompass the following disciplines: architectural;
electrical; control systems; process piping; mechanical; structural; heating,
ventilation and air conditioning ("HVAC"); and civil. The construction services
provided by Rust are generally performed in connection with projects on which
Rust has also provided the design engineering services. Rust also requisitions
and procures equipment and construction materials for clients and performs
quality assurance and quality control oversight of vendor manufacturing
practices and provides dismantling and demolition services. Rust's engineering
services are provided on a stand-alone basis but are also provided together
with its construction services under engineering, procurement and construction
contracts which include engineering services, procurement of facility equipment
and materials and construction services.
Rust's environmental and infrastructure consulting services provide
alternative solutions for client problems relating to removing and disposing of
hazardous and toxic substances; managing solid waste, water and wastewater,
groundwater and air resources; design and construction oversight of
transportation facilities; and photogrammetry. Such services are provided to
private industry, as well as federal, state and local governments, including
the Department of Defense (the "DOD") and the Department of Energy (the "DOE").
The services include performing remedial investigations for the purpose of
characterizing hazardous waste sites, preparing feasibility studies setting
forth recommended alternative remedial actions, and providing engineering
design and construction oversight services for remediation projects. The
services provided also include the siting, permitting, design and construction
oversight of solid and hazardous waste landfills and related facilities. Study,
design and construction oversight services are also provided, primarily to
municipalities, special government agencies and, to some extent, private
industry in connection with wastewater collection and treatment, potable water
supply treatment and distribution, stormwater management and the building of
streets, highways, airports, bridges, waterways and rail services. Additional
services provided through Rust include environmental assessment services, the
design of systems to properly and safely store, convey, treat and dispose of
industrial, hazardous and radioactive materials and consulting services
regarding disposal, waste minimization methods and techniques, air quality
regulation and industrial hygiene and safety.
Through a series of acquisitions completed during the period from 1992
through 1994, Rust has developed an international engineering and consulting
business performing projects in 24 countries. In Europe, Rust has offices in
the United Kingdom, Germany, Sweden and Turkey, and in the Asia-Pacific region,
in Australia, Hong Kong, China, Singapore, Malaysia and Indonesia. Rust also
has an office in Dubai, U.A.E. Rust's foreign subsidiaries provide process and
design engineering services, environmental and infrastructure engineering
services and construction management services to national, regional and local
governments and to clients in the utility and industrial power and general
manufacturing industries. In addition, Rust provides engineering and consulting
services to Waste Management International worldwide.
REMEDIATION AND OTHER ON-SITE INDUSTRIAL AND RELATED SERVICES
Rust received 57%, 48% and 43% of its total consolidated revenues in 1992,
1993 and 1994, respectively, from the performance of hazardous and radioactive
substance remediation and other on-site industrial and related services
(including asbestos abatement services until the May 1993 transfer of that
business, as described in "Acquisitions and Dispositions").
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Hazardous and Radioactive Substance Remediation Services
Rust performs on-site hazardous chemical and radioactive substance
remediation services for clients in the chemical, petrochemical, automotive and
other manufacturing industries and for federal, state and local government
entities, including the DOD and the DOE in connection with such projects as the
remediation of military bases and other government installations, the EPA in
connection with CERCLA projects and various state environmental agencies. Rust
treats hazardous substances on-site using a variety of methods and
technologies, including, among others, mobile incineration technology, thermal
desorption to separate organic contaminants from soils or solids for subsequent
treatment of the organic vapor stream, sludge drying, soil washing,
stabilization and, to a lesser extent, bioremediation, which involves the
breakdown of hazardous substances with microorganisms. Rust's hazardous
substance remediation services also include the containment and closure of
contaminated sites and the cleaning, relining and sealing of liquid containment
and treatment ponds, lagoons, and other surface impoundments.
Hazardous substance remediation services provided to Rust's private industry
clients often involve the implementation of "records of decision" promulgated
by the EPA in response to results of EPA environmental analysis and
investigation. In connection with the remediation of military bases and other
government installations, the DOD and DOE are experimenting with awarding
multi-disciplined remediation contracts to a single company capable of
providing the management services necessary to oversee the entire project. The
company selected is, in effect, the project's general contractor. In August
1993, the U.S. Army Corps of Engineers awarded to Rust two such contracts under
which Rust could be paid up to $350 million over a ten-year period. Under such
contracts, Rust will perform work pursuant to individual delivery orders
negotiated on a project-by-project basis, and there can be no assurance that
the delivery orders ultimately issued or successfully negotiated and performed
by Rust will aggregate $350 million in fees. Rust intends to utilize its
integrated approach to providing a full range of engineering, construction,
environmental consulting, on-site hazardous and radioactive substance
remediation and other industrial services to pursue additional comprehensive
federal government environmental services contracts.
Rust has entered into an agreement to combine its hazardous and radioactive
substance remediation business with a third party. See "Acquisitions and
Dispositions" below.
On-Site Industrial and Related Services
Rust provides various on-site industrial and related services. Rust provides
scaffolding services primarily to the chemical, petrochemical and utilities
industries, as well as other clients. In most cases, the scaffolding services
are provided in conjunction with periodic, routine cleaning and maintenance of
refineries, chemical plants and utilities, although such services are also
performed in connection with new construction projects. Rust also performs a
variety of types of other industrial services--water blasting, tank cleaning,
explosives blasting, chemical cleaning, industrial vacuuming, catalyst
handling, specialty chemicals and separation technologies--primarily for
clients in the petrochemical, chemical, and pulp and paper industries,
utilities and, to a lesser extent, the government sector. Rust also provides
on-site plant services, including providing personnel to perform mechanical and
electrical services, equipment installation, welding, HVAC, warehousing and
inventory management services and technical support in the area of industrial
hygiene and safety training. Rust assists clients in the nuclear and utility
industries in solving electrical, mechanical, engineering and related technical
services problems. Rust also provides spent fuel storage (rerack) services to
the nuclear power industry.
TRASH-TO-ENERGY, WATER TREATMENT, AIR QUALITY AND RELATED SERVICES
WHEELABRATOR CLEAN ENERGY
WTI, through Wheelabrator Environmental Systems Inc. and its subsidiaries, is
a leading developer, operator and owner of trash-to-energy and independent
power facilities in the United States. These facilities, either owned, operated
or under construction, give WTI approximately 850
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megawatts of electric generating capacity, which ranks it among the nation's
largest independent power producers.
WTI's trash-to-energy projects utilize proven boiler and grate technology
capable of processing up to 2,250 tons of trash per day per facility. The heat
from this combustion process is converted into high-pressure steam, which
typically is used to generate electricity for sale to public utility companies
under long-term contracts.
WTI's trash-to-energy development activities involve a number of contractual
arrangements with a variety of private and public entities, including
municipalities (which supply trash for combustion), utilities or other power
users (which purchase the energy produced by the facility), lenders, public
debtholders, joint venture partners and equity investors (which provide
financing for the project) and the contractors or subcontractors responsible
for building the facility. In addition, WTI often identifies and acquires sites
for the facility and for the disposal of residual ash produced by the facility
and obtains necessary permits and licenses from local, state and federal
regulatory authorities.
WTI also develops, operates and, in some cases, owns independent power
projects, which either cogenerate electricity and thermal energy or generate
electricity alone for sale to utilities. Cogeneration is a technology which
allows the consecutive use of two or more useful forms of energy from a single
primary fuel source, thus providing a more efficient use of a fuel's total
energy content.
WHEELABRATOR CLEAN WATER
Through its Wheelabrator Clean Water group ("Wheelabrator Clean Water"), WTI
develops projects that purify water, treat wastewater, treat and manage
biosolids, and compost organic wastes. WTI also provides technologies and
services used to treat drinking water as well as industrial and municipal
process water and wastewater. Wheelabrator Clean Water provides a range of
biosolids management services to approximately 350 communities, including land
application, drying, pelletizing, stabilization and composting of non-hazardous
biosolids. Wheelabrator Clean Water typically enters into multi-year contracts
with biosolids generators under which WTI is paid by the generator to
beneficially reuse the biosolids.
Land application involves the application of non-hazardous biosolids as a
natural fertilizer on farmland pursuant to rigorous site-specific permits
issued by applicable state authorities. Biosolids are also used in land-
reclamation projects such as strip mines. Regulations governing sludge
management were issued by the EPA in December 1992 under the Clean Water Act.
The regulations encourage the beneficial use of municipal sewage sludge by
recognizing the resource value of biosolids as a fertilizer and soil
conditioner, and establish requirements for land application designed to
protect human health and the environment.
Wheelabrator Clean Water also develops and operates facilities at which
biosolids are dried and pelletized. WTI has four facilities currently in
operation, including a recently completed facility in Baltimore, Maryland, and
one other facility in the advanced stages of development in Baltimore,
Maryland. WTI has approximately 565 dry-tons-per-day of biosolids drying
capacity either in operation or under construction. Sludge which has been dried
is generally used as fertilizer by farmers, commercial landscapers and
nurseries and as a bulking agent by fertilizer manufacturers. Development of
dryer facilities generally involves various contractual arrangements with a
variety of private and public entities, including municipalities (which
generate the biosolids), lenders, contractors and subcontractors which build
the facilities, and end-users of the fertilizer generated from the treatment
process.
Wheelabrator Clean Water is also a leading provider of a comprehensive range
of water and wastewater treatment services to municipalities throughout the
United States, including water and wastewater treatment plant start-up
assistance, plant operations and maintenance planning and
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management, training of plant supervisors, operators and laboratory and
maintenance personnel, refining process systems, management systems for process
control, and plant diagnostic evaluations and energy audits. WTI also provides
specialty environmental equipment repair and cleaning services for industrial
water and wastewater management. Wheelabrator Clean Water also designs and
supplies enclosed automated composting systems which recycle organic wastes
into beneficial products which are used by commercial landscapers, nurseries
and fertilizer manufacturers.
Through its Wheelabrator Engineered Systems Inc. subsidiary, Wheelabrator
Clean Water engineers and manufacturers a variety of environmental products and
systems. WTI provides single-source, advanced-systems solutions for the
treatment of municipal drinking water, industrial process water and wastewater
and for slurry pumping and high solids dewatering. It also provides systems
designed to remove solids from liquid streams through the use of self-cleaning
bar/filter screens, grinders, macerators, conveyors and compactor systems. WTI
also provides high technology water purification and wastewater treatment
systems which utilize a variety of technologies including demineralizers,
reverse osmosis and vacuum degasification products. In addition, WTI designs
and installs process technology systems utilizing evaporators, crystallizers,
electrodialysis, dialysis, reverse osmosis and ultrafiltration for treating
industrial process wastewater. Through other units, WTI produces profile wire
screen products for groundwater production, hydrocarbon processing, food
processing and coal/mineral processing.
WTI also manufactures a line of nonpolluting materials cleaning systems for
use by a variety of industrial customers, including foundries, steel
processors, automobile producers and rubber and plastics producers, in cleaning
and finishing metal and other materials. WTI also manufactures high-alloy
combustion grates used in the high-temperature furnaces of its trash-to-energy
facilities.
WHEELABRATOR CLEAN AIR
WTI's Wheelabrator Clean Air group ("Wheelabrator Clean Air") designs,
fabricates and installs advanced air pollution control and measurement
technologies. WTI offers electrostatic precipitators, flue-gas desulfurization
systems (scrubbers), fabric-filter systems (baghouses) and nitrogen oxide
("NOx") control systems, which remove pollutants from the emissions of WTI's
trash-to-energy systems, as well as power plants and other industrial
facilities. Wheelabrator Clean Air also designs, constructs and maintains tall
concrete chimneys and storage silos. Wheelabrator Clean Air's activities
involve both custom and pre-engineered systems for emission control. The custom
engineering division licenses a patented process for the removal of hydrogen
sulfide from gaseous and liquid streams. The process controls hazardous gases
and sulfur dioxide emissions, thereby reducing acid rain and odor problems.
Wheelabrator Clean Air also provides a full range of technologies and services
for destroying or recycling volatile organic compounds ("VOCs") from air and
liquid sources and NOx from air sources. Both VOCs and NOx are detrimental to
air quality and the environment generally. WTI's VOC and NOx control systems
are utilized by customers in a variety of industries, including oil refineries,
chemical plants and automobile production facilities. Complementing the
emission control divisions is a measurement division which designs and installs
continuous emissions monitoring systems ("CEMs") for the utility, trash-to-
energy, industrial furnace and petrochemical industries, all of which are
affected by regulations requiring the continuous monitoring of stack emissions.
WTI anticipates that enforcement of the Clean Air Act Amendments of 1990,
together with existing and proposed regulations issued thereunder, will
generate additional business opportunities for its expertise in VOC and NOx
control systems and scrubbers, as well as additional applications for CEMs. See
"Regulation--Trash-to-Energy, Water Treatment, Air Quality and Related
Services."
INTERNATIONAL WASTE MANAGEMENT AND RELATED SERVICES
The Company is a leading provider of comprehensive waste management and
related services internationally, primarily through Waste Management
International, which conducts essentially all of the waste management
operations of the Company located outside North America. The operations
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of Waste Management International are managed on a country by country basis and
are divisible into two broad categories: collection services and treatment and
disposal services. The following table shows the derivation of Waste Management
International's revenues for the years indicated:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Collection Services........................................ 73% 69% 64%
Treatment and Disposal Services............................ 27 31 36
</TABLE>
The Company has had international operations since the mid-1970's. However,
the bulk of the Company's international operations and revenues are derived
from the acquisition over the last seven years of numerous companies and
interests in Europe in various of its service lines, including 50 acquisitions
in 10 countries in 1994, most of which were small acquisitions which
complemented or expanded existing Waste Management International operations in
various markets. Notable acquisitions in 1992 included a French operator of
solid waste and construction and demolition debris landfills and a provider of
other landfill services; a Swedish hazardous waste company; and a leading solid
waste management company and one other solid waste collection company in
Finland. In 1993, major acquisitions included, in the UK, the acquisition by
the joint venture described below between Waste Management International and
Wessex of a solid waste collection and disposal company; in France, a company
engaged primarily in solid waste collection; in The Netherlands, a company
engaged in the collection and transportation of solid waste and the sorting of
demolition waste; and, in Germany, a group of companies providing waste
collection services and recyclables sorting.
Waste Management International is a party to a joint venture with Wessex to
provide waste management and related services in the United Kingdom. In
accordance with its objective of maintaining a local identity, Waste Management
International, in certain cases, also operates through other companies or joint
ventures in which Waste Management International and its affiliates own less
than a 100% interest.
Because of the size and timing of projects and acquisitions, Waste Management
International's revenue mix by country varies from year to year. Countries
where revenue exceeded 10% of Waste Management International's consolidated
total were: Italy (38%) and Sweden (10%) in 1992, Italy (32%) and The
Netherlands (11%) in 1993, and Italy (26%) and Germany (12%) in 1994.
While Waste Management International has considerable experience in
mobilizing for and managing foreign projects, its operations continue to be
subject generally to such risks as currency fluctuations and exchange controls,
the need to recruit and retain suitable local labor forces and to control and
coordinate operations in different jurisdictions, changes in foreign laws or
governmental policies or attitudes concerning their enforcement, political
changes, local economic conditions and international tensions. In addition,
price adjustment provisions based on certain formulas or indices may not
accurately reflect the actual impact of inflation on the cost of performance.
In August 1991, each of CWM and WTI acquired a 15% fully diluted interest in
a predecessor of Waste Management International from a subsidiary of the
Company pursuant to the exercise of previously granted options. See
"Acquisitions and Dispositions" below. In April 1992, Waste Management
International sold 75,000,000 ordinary shares (20% of the post-offering
outstanding shares) in an initial public offering. The proceeds of the
offering, approximately $700,000,000, were used to retire third party debt and
to repay advances from the Company. Immediately following the public offering,
Waste Management International was owned 56%, 12% and 12% by the Company, WTI
and CWM, respectively. CWM subsequently transferred its interest in Waste
Management International to Rust in connection with the formation of Rust in
January 1993.
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COLLECTION SERVICES
Collection services include collection and transportation of solid, hazardous
and medical wastes and recyclable material from residential, commercial and
industrial customers. The residential solid waste collection process, as well
as the commercial and industrial solid and hazardous waste collection process,
is similar to that utilized by the Company in the United States. Waste
Management International provided collection services as of December 31, 1994
to governmental and private customers in ten European countries, Argentina,
Australia, Brunei, Hong Kong, Indonesia, Malaysia, New Zealand and Taiwan.
Business is obtained through public bids or tenders, negotiated contracts, and,
in the case of commercial and industrial customers, direct contracts. Waste
Management International operates approximately 280 collection and staging
facilities and approximately 60 waste transfer facilities.
At December 31, 1994, Waste Management International's collection services
encompassed approximately 1,600 separate municipal contracts (the largest
number of which are in Italy) serving nearly 6,600,000 households (including
provision of recycling services to over one million households) and commercial
and industrial collection services to nearly 240,000 solid waste and
approximately 26,000 hazardous waste customers, as well as related services.
The size, specifications, provisions and duration of municipal contracts vary
substantially, with some such contracts also covering landfill disposal or
street-sweeping or other cleaning services. Pricing for municipal contracts is
generally based on volume of waste, number and frequency of collection pick-ups
and disposal arrangements. Longer-term contracts typically have formulas for
periodic price increases or adjustments.
Street, industrial premises, office, parking lot and port cleaning services
are also performed by Waste Management International, along with portable
sanitation/toilet services for such occasions as outdoor concerts and special
events.
Waste Management International's commercial and industrial solid and
hazardous waste collection services are generally contracted for by individual
establishments. In addition to solid waste collection customers, customers
include small quantity waste generators, as well as larger petrochemical,
pharmaceutical and other industrial customers, which may seek collection of
hazardous, chemical or medical wastes or residues. Contract terms and prices
vary substantially between jurisdictions and types of customer.
TREATMENT AND DISPOSAL SERVICES
Treatment and disposal services include processing of recyclable materials,
operation of both solid and hazardous waste landfills, operation of municipal,
trash-to-energy and hazardous waste incinerators, provision of hazardous waste
treatment and site remediation services and construction of treatment or
disposal facilities for third parties. The operation of solid waste landfills
is currently Waste Management International's most significant treatment and
disposal service. Treatment and disposal services are provided under contracts
which may be obtained through public bid or tender or direct negotiation, and
are also provided directly to other waste service companies. At December 31,
1994, Waste Management International operated 22 waste treatment facilities, 52
recycling and recyclables processing facilities, 11 incinerators and 57
landfills; 19 of the 22 waste treatment facilities are for hazardous waste and
4 of the 11 incinerators are hazardous waste incinerators.
Once collected, solid wastes may be processed in a recyclables processing
facility. Unprocessed solid wastes, or the portion of the waste stream
remaining after recovery of recyclable materials, require disposal, which may
be accomplished through incineration (in connection with which the energy value
may be recovered in a trash-to-energy facility) or through disposal in a solid
waste landfill. The relative use of landfills versus incinerators differs from
country to country and will
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depend on many factors, including the availability of land, geological and
hydrological conditions, the availability and cost of technology and capital,
and the regulatory environment. The main determinant of disposal method is
generally the disposal cost per cubic meter at local landfills, as incineration
is generally more expensive.
At present, in most countries in which Waste Management International
operates, landfilling is the predominant disposal method employed. Waste
Management International owns or operates solid waste landfills in Hong Kong,
Italy, Sweden, France, Spain, Australia, the United Kingdom, Germany, Denmark,
Argentina and New Zealand. Landfill disposal agreements may be separate
contracts or an integrated portion of collection or treatment contracts. In
addition, landfills may accept waste on a reserved space or per load basis.
Waste Management International believes it has access to sufficient solid waste
landfill capacity to meet its current needs.
Demand for solid waste incineration is affected by landfill disposal costs
and government regulations. The incineration process for non-hazardous solid
waste has also been influenced by two significant factors in recent years: (i)
increasingly strict control over air emissions from incinerators; and (ii)
increasing emphasis on trash-to-energy incinerators, which utilize heat
produced by incinerators to generate electricity and other energy. Incineration
generates approximately 30% residue (by weight), which is either landfilled or,
where permitted, recycled for use as a road base or in other construction uses.
Waste Management International's trash-to-energy incinerator in Hamm is a
German-designed plant and the only privately operated trash-to-energy facility
in Germany. It is among the first trash-to-energy facilities to fully comply
with that country's stringent new air pollution requirements. The facility
serves the household and commercial solid waste incineration needs of a
population of approximately 600,000 in Hamm and nearby towns. Under its current
permits, the facility is able to produce 18 megawatts of steam-generated
electricity and sold approximately 68,000 megawatt hours to the local power
grid in 1994 (enough power for about 17,000 homes). In 1992, Waste Management
International entered into a contract with the County of Gutersloh, Germany to
design, construct, own and operate a trash-to-energy facility. The facility is
being designed with a capacity of converting 268,000 metric tons per year of
municipal waste and sewage sludge into energy. The facility would be capable of
producing enough electricity to power more than 35,000 homes. Waste Management
International also operates seven small conventional municipal solid and other
waste incineration facilities.
Waste Management International owns or operates hazardous waste treatment
facilities in Italy, Sweden, France, Germany, the United Kingdom, The
Netherlands, Hong Kong, Indonesia, Australia and New Zealand and has entered
into agreements with respect to the development of hazardous waste treatment
facilities in Argentina, Spain and Thailand. The Brescia hazardous waste
treatment plant in Italy reduces and stabilizes waste through a number of
treatment processes, including physical-chemical treatment, biological
treatment, filtration and sludge stabilization, prior to final landfilling at
Waste Management International's nearby secure hazardous waste landfill or
other permitted disposal site. The facility has a modern laboratory for
analyzing waste streams. The SAKAB facility in Norrtorp, Sweden is the largest
hazardous waste treatment facility in Sweden and utilizes physical-chemical
treatment, incineration and landfilling technologies. Waste Management
International's ATM facility in Moerdijk, which is near Rotterdam in The
Netherlands, handles a broad range of chemical wastes, polluted liquids
(including wastewater associated with ship cleaning services) and contaminated
soils and sludges and operates a paint waste treatment facility.
REGULATION
While in general the Company's environmental services businesses have
benefited substantially from increased governmental regulation, the
environmental services industry itself has become subject to extensive and
evolving regulation by federal, state, local and foreign authorities. In
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particular, the regulatory process requires firms in the Company's industries
to obtain and retain numerous governmental permits to conduct various aspects
of their operations, any of which may be subject to revocation, modification or
denial. As a result of governmental policies and attitudes relating to the
industries, which are subject to reassessment and change, the Company believes
that its ability to obtain applicable permits from governmental authorities on
a timely basis, and to retain such permits, could be impaired. The Company is
not in a position at the present time to assess the extent of the impact of
such potential changes in governmental policies and attitudes on the permitting
processes, but it could be significant. In particular, adverse decisions by
governmental authorities on permit applications submitted by the Company may
result in abandonment of projects, premature closure of facilities or
restriction of operations, which could have a material adverse effect on the
Company's earnings for one or more fiscal quarters or years.
Federal, state, local and foreign governments have also from time to time
proposed or adopted other types of laws, regulations or initiatives with
respect to the environmental services industry. Included among them are laws,
regulations and initiatives to ban or restrict the international, interstate or
intrastate shipment of wastes, impose higher taxes on out-of-state waste
shipments than in-state shipments, reclassify certain categories of hazardous
wastes as non-hazardous and regulate disposal facilities as public utilities.
Certain state and local governments have promulgated "flow control"
regulations, which attempt to require that all waste generated within the state
or local jurisdiction must go to certain disposal sites. The United States
Congress has from time to time considered legislation that would enable or
facilitate such bans, restrictions, taxes and regulations. Due to the
complexity of regulation of the industry and to public pressure, implementation
of existing or future laws, regulations or initiatives by different levels of
government may be inconsistent and difficult to foresee. Many state and local
governments have enacted mandatory or voluntary recycling laws and bans on the
disposal of yard-waste in landfills. The effect of these and similar laws is to
reduce the volume of wastes that would otherwise be disposed in Company
landfills. In addition, municipalities and other governmental entities with
whom the Company contracts to provide solid waste collection or disposal
services, or both, may require the Company as a condition of securing the
business to provide recycling services and operate recycling and composting
facilities, which may cause the Company to incur substantial costs. The Company
makes a continuing effort to anticipate regulatory, political and legal
developments that might affect operations but is not always able to do so. The
Company cannot predict the extent to which any legislation or regulation that
may be enacted, amended, repealed or enforced, or any failure of legislation or
regulation to be enacted or enforced, in the future may affect its operations.
Such matters could have a material adverse impact on the Company's financial
condition or earnings for one or more fiscal quarters or years.
The demand for certain of the services provided by the Company, particularly
its hazardous waste management and remediation services, is dependent on the
existence and enforcement of federal, state and foreign laws and regulations
which govern the discharge of hazardous substances into the environment. Such
businesses will be adversely affected to the extent that such laws or
regulations are amended or repealed, with the effect of reducing the regulation
of, or liability for, such activity or that the enforcement of such laws and
regulations is lessened.
In addition to environmental laws and regulations, federal government
contractors, including the Company, are subject to extensive regulation under
the Federal Acquisition Regulation and numerous statutes which deal with the
accuracy of cost and pricing information furnished to the government, the
allowability of costs charged to the government, the conditions under which
contracts may be modified or terminated, and other similar matters. Various
aspects of the Company's operations are subject to audit by agencies of the
federal government in connection with its performance of work under such
contracts as well as its submission of bids or proposals to the government.
Failure to comply with contract provisions or other applicable requirements may
result in termination of the contract, the imposition of civil and criminal
penalties against the Company, or
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the suspension or debarment of all or a part of the Company from federal
government work, which could have a material adverse impact upon the Company's
financial condition or earnings for one or more fiscal quarters or years. Among
the reasons for debarment are violations of various statutes, including those
related to employment practices, the protection of the environment, the
accuracy of records and the recording of costs. Some state and local
governments have similar suspension and debarment laws or regulations.
Because of heightened public awareness of environmental issues, companies in
the environmental service business, including the Company, may in the normal
course of their business be expected periodically to become subject to judicial
and administrative proceedings. Governmental agencies may seek to impose fines
on the Company or revoke, deny renewal of, or modify the Company's operating
permits or licenses. The Company is also subject to actions brought by private
parties or special interest groups in connection with the permitting or
licensing of its operations, alleging violations of such permits and licenses,
or other matters. In addition, increasing governmental scrutiny of the
environmental compliance records of the Company, CWM, WTI, Rust, Waste
Management International or their affiliates could cause a private or public
entity seeking environmental services to disqualify the Company from competing
for one or more projects, on the grounds that these records display inadequate
attention to environmental compliance.
SOLID WASTE
Operating permits are generally required at the state and local level for
landfills, transfer stations and collection vehicles. Operating permits need to
be renewed periodically and may be subject to revocation, modification, denial
or non-renewal for various reasons, including failure of the Company to satisfy
regulatory concerns. With respect to solid waste collection, regulation takes
such forms as licensing of collection vehicles, truck safety requirements,
vehicular weight limitations and, in certain localities, limitations on rates,
area, time and frequency of collection. With respect to solid waste disposal,
regulation covers various matters, including landfill location and design,
groundwater monitoring, gas control, liquid runoff and rodent, pest, litter and
traffic control. Zoning and land use requirements and limitations are
encountered in the solid waste collection, transfer, recycling and energy
recovery and disposal phases of the Company's business. In almost all cases the
Company is required to obtain conditional use permits or zoning law changes in
order to develop transfer station, resource recovery or disposal facilities. In
addition, the Company's disposal facilities are subject to water and air
pollution laws and regulations. Noise pollution laws and regulations may also
affect the Company's operations. Governmental authorities have the power to
enforce compliance with these various laws and regulations and violators are
subject to injunctions, fines and revocation of permits. Private individuals
may also have the right to sue to enforce compliance. Safety standards under
the Occupational Safety and Health Act ("OSHA") are also applicable.
The EPA and various states acting pursuant to EPA-delegated authority have
promulgated rules pursuant to RCRA which serve as minimum requirements for land
disposal of municipal wastes. The rules establish more stringent requirements
than previously applied to the siting, construction, operation and closure of
all but the smallest municipal waste landfill facilities. In certain cases, the
failure of some states to adopt the federal requirements may increase costs to
meet inconsistent federal and state laws applicable to the same facility. The
Company does not believe that continued compliance with the more stringent
minimum requirements will have a material adverse effect on the Company's
operations. See also "RCRA" and "Superfund" below for additional regulatory
information.
HAZARDOUS WASTE
CWM is required to obtain federal, state, local and foreign governmental
permits for its chemical waste treatment (including resource recovery), storage
and disposal facilities. Such permits are difficult to obtain, and in most
instances extensive geological studies, tests and public hearings are
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required before permits may be issued. CWM's chemical waste treatment, storage
and disposal facilities are also subject to siting, zoning and land use
restrictions, as well as to regulations (including certain requirements
pursuant to federal statutes) which may govern operating procedures and water
and air pollution, among other matters. In particular, CWM's operations in the
United States are subject to the Safe Drinking Water Act (which regulates deep
well injection), TSCA (pursuant to which the EPA has promulgated regulations
concerning the disposal of PCBs), the Clean Water Act (which regulates the
discharge of pollutants into surface waters and sewers by municipal, industrial
and other sources) and the Clean Air Act (which regulates emissions into the
air of certain potentially harmful substances). In its transportation
operations, CWM is subject to the jurisdiction of the Interstate Commerce
Commission and regulated by the DOT and by regulatory agencies in each state.
Employee safety and health standards under OSHA are also applicable.
Of CWM's chemical waste treatment, resource recovery or disposal facilities
in the United States, all but three have been issued permits under RCRA. Such
facilities without RCRA permits continue to have interim status. Final permits
are to be issued jointly by authorized states, subject to EPA oversight, and by
the EPA. The regulations governing issuance of permits contain detailed
standards for hazardous waste facilities on matters such as waste analysis,
security, inspections, training, preparedness and prevention, emergency
procedures, reporting and recordkeeping. Once issued, a final permit has a
maximum fixed term of 10 years, and such permits for land disposal facilities
are required to be reviewed five years from the date of issuance. The issuing
agency (either the EPA or an authorized state) may review or modify a permit at
any time during its term.
The Company believes that CWM maintains each of its operating treatment,
storage or disposal facilities in substantial compliance with the applicable
requirements promulgated pursuant to RCRA, and CWM expects that each facility
with interim status ultimately can qualify to be issued a RCRA permit. It is
possible, however, that the issuance of a permit could be made conditional upon
the initiation or completion of modifications or corrective actions at
facilities, which might involve substantial additional capital expenditures on
the part of CWM. Although the Company is informed that CWM anticipates the
reauthorization of each permit at the end of its term if the facility's
operations are in compliance with applicable requirements, there can be no
assurance that such will be the case.
The radioactive waste services of CWM are also subject to extensive
governmental regulation. Due to the extensive geological and hydrological
testing and environmental data required, and the complex political environment,
it is difficult to obtain permits for radioactive waste disposal facilities.
Various phases of CWM's low-level radioactive waste management services are
regulated by various state agencies, the United States Nuclear Regulatory
Commission (the "NRC") and the DOT. Regulations applicable to CWM's operations
include those dealing with packaging, handling, labeling and routing of
radioactive materials, and prescribe detailed safety and equipment standards
and requirements for training, quality control and insurance, among other
matters. Employee safety and health standards under OSHA are also applicable.
See also "RCRA" and "Superfund" below for additional regulatory information.
ENGINEERING, CONSTRUCTION, INDUSTRIAL AND RELATED SERVICES
RCRA, state law analogues, TSCA and other environmental statutes and
regulations impose strict operational requirements on the performance of
certain aspects of hazardous substances remedial work. These requirements
specify complex methods for identification, storage, treatment and disposal of
wastes managed during a project. Failure to meet these requirements could
result in termination of contracts, substantial fines and other penalties. The
practice of engineering and architecture is regulated by state statutes. All
states require architects and engineers to be registered by their respective
state registration boards as a condition to offering or rendering
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professional services. Many states also require companies offering or rendering
professional services, such as Rust, to obtain certificates of authority.
Rust's businesses are also subject to OSHA and to DOT regulations concerning
the transportation of hazardous materials and to NRC regulations concerning
services provided to nuclear power plants.
TRASH-TO-ENERGY, WATER TREATMENT, AIR QUALITY AND RELATED SERVICES
WTI's business activities are subject to environmental regulation under
federal, state and local laws and regulations, including the Clean Air Act, the
Clean Water Act and RCRA. The Company believes that WTI's business is conducted
in an environmentally responsible manner in material compliance with applicable
laws and regulations. The Company does not anticipate that WTI's maintaining
compliance with current requirements will result in any material decrease in
earnings. There can be no assurance, however, that such requirements will not
change so as to require significant additional expenditures. In particular,
pursuant to the Clean Air Act Amendments of 1990 it is probable that the air
pollution control systems at certain trash-to-energy projects owned or operated
by WTI's subsidiaries will be required to be modified by the end of the decade
to comply with the more stringent regulations promulgated thereunder. Although
the expenditures related to such modifications, if required, will likely be
significant, they are not expected to have a material adverse effect on WTI's
liquidity or results of operations. While WTI frequently obtains the right to
pass on to the long-term contract users of its facilities increased capital and
operating costs resulting from changes in law, there can be no assurance that
in such event WTI would be able to recover, for each project, all such
increased costs from its customers. Moreover, it is possible that future
developments, such as increasingly strict requirements of environmental laws,
and enforcement policies thereunder, could affect the manner in which WTI
operates its projects and conducts its business, including the handling,
processing or disposal of the wastes, by-products and residues generated
thereby.
In May 1994, the U.S. Supreme Court ruled that residual ash from the
combustion of municipal solid waste is not exempt from federal hazardous waste
regulations. As a result of the Supreme Court's decision, the EPA announced
that ash from the combustion of municipal solid waste is subject to regulation
as a hazardous waste if it exhibits hazardous characteristics. In response to
these developments, WTI installed its patented WES-PHix technology at all of
its trash-to-energy facilities not previously subject to characterization
requirements and, as a result, may properly continue to manage its residual ash
as non-hazardous waste. Incremental expenditures, net of expected contractual
reimbursements from customers, required to treat and test residual ash at the
impacted facilities have not had and are not expected to have a material
adverse impact on WTI.
WTI's businesses are also subject to the provisions of various energy-related
laws and regulations, including the Public Utility Regulatory Policies Act of
1978 ("PURPA"). The ability of WTI's trash-to-energy and small power production
facilities to sell power to electric utilities on advantageous terms and
conditions and to avoid burdensome public utility regulation depends, in part,
upon the continuing applicability of certain provisions of PURPA, which
generally exempts WTI from state and federal regulatory control over
electricity prices charged by, and the finances of, WTI and its energy-
producing subsidiaries. While the recent changes in Congressional leadership
may increase the likelihood of a repeal or modification of PURPA, it is
unlikely that such action would abrogate the long-term contracts and orders
pursuant to which most of WTI's existing projects sell electricity.
Furthermore, the future growth of WTI's trash-to-energy and other small power
facilities business is not expected to be materially and adversely affected if
the various benefits of PURPA were repealed or substantially reduced on a
prospective basis, due to the passage of the Energy Policy Act of 1992
("EPACT"). EPACT created an alternative ownership mechanism by which
independent power producers can participate in the electricity generation
industry without the burdens of traditional public utility regulation.
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RCRA
Pursuant to RCRA, the EPA has established and administers a comprehensive,
"cradle-to-grave" system for the management of a wide range of industrial by-
products and residues identified as "hazardous" wastes. States that have
adopted hazardous waste management programs with standards at least as
stringent as those promulgated by the EPA may be authorized by the EPA to
administer their programs in lieu of RCRA.
Under RCRA and federal transportation laws, a transporter must deliver
hazardous waste in accordance with a manifest prepared by the generator of the
waste and only to a treatment, storage or disposal facility having a RCRA
permit or interim status under RCRA. Every facility that treats or disposes of
hazardous wastes must obtain a RCRA permit from the EPA or an authorized state
and must comply with certain operating standards. The RCRA permitting process
involves applying for interim status and also for a final permit. Under RCRA
and the implementing regulations, facilities which have obtained interim status
are allowed to continue operating by complying with certain minimum standards
pending issuance of a permit.
RCRA also imposes restrictions on land disposal of certain hazardous wastes
and prescribes standards for hazardous waste land disposal facilities. Under
RCRA, land disposal of certain types of untreated hazardous wastes has been
banned except where the EPA has determined that land disposal of such wastes
and treatment residuals should be permitted. The disposal of liquids in
hazardous waste land disposal facilities is also prohibited.
The EPA from time to time considers fundamental changes to its regulations
under RCRA that could facilitate exemptions from hazardous waste management
requirements, including policies and regulations that could implement the
following changes: redefine the criteria for determining whether wastes are
hazardous; prescribe treatment levels which, if achieved, could render wastes
non-hazardous; encourage further recycling and waste minimization; reduce
treatment requirements for certain wastes to encourage alternatives to
incineration; establish new operating standards for combustion technologies;
and indirectly encourage on-site remediation. To the extent such changes are
adopted, they can be expected to adversely affect the demand for CWM's
services.
In addition to the foregoing provisions, RCRA regulations require the Company
to demonstrate financial responsibility for possible bodily injury and property
damage to third parties caused by both sudden and nonsudden accidental
occurrences. See "Insurance" below. Also, RCRA regulations require WMI and CWM
to provide financial assurance that funds will be available when needed for
closure and post-closure care at their waste treatment, storage and disposal
facilities, the costs of which could be substantial. Such regulations allow the
financial assurance requirements to be satisfied by various means, including
letters of credit, surety bonds, trust funds, a financial (net worth) test and
a guarantee by a parent corporation. Under RCRA regulations, a company must pay
the closure costs for a waste treatment, storage or disposal facility owned by
it upon the closure of the facility and thereafter pay post-closure care costs.
If such a facility is closed prior to its originally anticipated time, it is
unlikely that sufficient funds will have been accrued over the life of the
facility to fund such costs, and the owner of the facility could suffer a
material adverse impact as a result. Consequently, it may be difficult to close
such facilities to reduce operating costs at times when, as is currently the
case in the hazardous waste services industry, excess treatment, storage or
disposal capacity exists.
SUPERFUND
Superfund provides for EPA-coordinated response and removal actions to
releases of hazardous substances into the environment, and authorizes the
federal government either to clean up facilities at which hazardous substances
have created actual or potential environmental hazards or to order
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persons responsible for the situation to do so. Superfund assigns liability for
these response and other related costs to parties involved in the generation,
transfer and disposal of such hazardous substances. Superfund has been
interpreted as creating strict, joint and several liability for costs of
removal and remediation, other necessary response costs and damage to natural
resources. Liability extends to owners and operators of waste disposal
facilities (and waste transportation vehicles) from which a release occurs,
persons who owned or operated such facilities at the time the hazardous
substances were disposed, persons who arranged for disposal or treatment of a
hazardous substance at or transportation of a hazardous substance to such a
facility, and waste transporters who selected such facilities for treatment or
disposal of hazardous substances, as well as to generators of such substances.
Liability may be trebled if the responsible party fails to perform a removal or
remedial action ordered under the law. For additional information concerning
potential Superfund liability, see "Legal Proceedings" below.
Superfund created a revolving fund to be used by the federal government to
pay for the cleanup efforts. In late 1990, federal Superfund spending through
the end of the government's 1994 fiscal year was authorized to a maximum of
$5.1 billion. For the federal government's 1995 fiscal year, a maximum of $1.4
billion of Superfund spending has been authorized.
The U. S. Congress may consider reauthorization and revision of the Superfund
statute in 1995. In addition to possible changes in the statute's funding
mechanisms and provisions for allocating cleanup responsibility, it is possible
that Congress also will fundamentally alter the statute's provisions governing
the selection of appropriate site cleanup remedies. For example, Congress may
consider whether to continue Superfund's current reliance on stringent
technology standards issued under other statutes (such as RCRA) to govern
removal and treatment of remediation wastes or to adopt new approaches such as
national or site-specific risk based standards. This and other potential policy
changes could significantly affect the stringency and extent of site
remediation, the types of remediation techniques that will be employed, and the
degree to which permitted hazardous waste management facilities will be used
for remediation wastes. In addition, Congress may consider revision of the
liability imposed by the Superfund law for remediation of contamination caused
prior to a party's acquisition of a contaminated site, which could reduce the
remediation obligations of the Company and others who currently are jointly and
severally liable for remediation obligations under Superfund.
INTERNATIONAL WASTE MANAGEMENT AND RELATED SERVICES
Waste Management International's operations are subject to the general
business and environmental laws and regulations of the countries where the
services are performed and, in Europe, to European Union regulations and
directives. In general, environmental laws and regulations and enforcement
thereof outside the United States are not as stringent as in the United States,
with certain exceptions. However, such laws and regulations vary markedly from
country to country and are evolving rapidly. The treaty on European Union,
signed in December 1991, came into force in November 1993 and will in the
future further strengthen the development and enforcement of European Union
environmental law. Increased privatization of solid waste services, increased
public awareness of the potentially harmful effects of unregulated disposal of
hazardous wastes on the environment and human health, and technological
advances have led to extensive and evolving national and European Union
regulation of waste management activities. While Waste Management International
believes that its waste management and related services operations are in
substantial compliance with applicable laws and regulations, Waste Management
International is unable to predict the course of development of such laws and
regulations.
COMPETITION
Waste Management is the largest provider of comprehensive solid waste
management services in North America and CWM is a leading provider of hazardous
waste management services in the United States.
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Waste Management encounters intense competition, primarily in the pricing and
rendering of services, from various sources in all phases of its solid waste
management and related operations. In the solid waste collection phase,
competition is encountered, for the most part, from national, regional and
local collection companies as well as from municipalities and counties (which,
through use of tax revenues, may be able to provide such services at lower
direct charges to the customer than can Waste Management) and some large
commercial and industrial companies which handle their own waste collection. In
the solid waste transfer, resource recovery and disposal phases of its
operations, competition is encountered primarily from municipalities, counties,
local governmental agencies, other national or regional waste management
companies and certain large corporations not primarily involved in the solid
waste management services business. The Company also encounters intense
competition in pricing and rendering of services in its medical and infectious
waste management, portable sanitation and street sweeping and parking lot
cleaning services businesses from numerous large and small competitors.
CWM encounters competition from a number of sources, including several
national or regional firms specializing primarily in chemical waste management,
local waste management concerns and, to a much greater extent, generators of
chemical wastes which seek to reduce the volume of or otherwise process and
dispose of such wastes themselves. The basis of competition is primarily
technical expertise and the price, quality and reliability of service.
The service industries in which Rust competes are highly competitive. Rust
encounters intense competition, primarily in pricing, quality and reliability
of services from various sources in all aspects of its engineering,
construction, environmental and infrastructure consulting, hazardous and
radioactive substance remediation, and on-site industrial and related services
operations.
WTI experiences substantial competition in all aspects of its business. It
competes with a large number of firms, both nationally and internationally,
some of which may have substantially greater financial and technical resources
than WTI. The principal competitive factors with respect to its project
development activities include technological performance, service, technical
know-how, price and performance guarantees. Competing for selection as a
project developer may require commitment of substantial resources over a long
period of time, without any certainty of being ultimately selected. Competition
for attractive development opportunities is intense, as there are a number of
competitors in the industry interested in such opportunities.
Waste Management International encounters intense competition from local
companies and governmental entities in particular countries, as well as from
major international companies. Pricing, quality of service and type of
equipment utilized are the primary methods of competition for collection
services, and proximity of suitable treatment or disposal facilities, technical
expertise, price, quality and reliability of services are the primary methods
of competition for treatment and disposal services.
Pursuant to the First Amended and Restated International Business
Opportunities Agreement, dated January 1, 1993, by and among CWM, WTI, Waste
Management International, Inc., Waste Management International, Rust and the
Company (as amended, the "IBOA"), which agreement is also a successor to
certain prior agreements among certain of the parties, each of CWM, WTI and
Rust has agreed that, until the later of July 1, 2000 or the date on which the
Company ceases to beneficially own a majority of the outstanding voting equity
interests of such subsidiary or ceases to beneficially own a majority of the
outstanding voting equity interests of Waste Management International, and in
each case no longer has an option to obtain such ownership, such subsidiary
will not engage in waste management services; design, development, construction
and operation of trash-to-energy facilities; collection, storage, processing,
treatment or disposal of hazardous wastes (including hazardous substance
remediation services); or design, engineering and construction (where the
customer is seeking third-party operation), operation and maintenance of water,
wastewater and
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sewage treatment facilities (including facilities for treating hazardous waste
streams whether or not the customer is seeking third-party operation) outside
North America (i.e., the United States, its territories and possessions, Canada
and Mexico) (the "Waste Management International Allocated Activities"), except
with respect to licensing of technology and minor interests of CWM, WTI or Rust
in publicly held entities. WTI may engage outside North America in the design,
engineering, construction, operation and maintenance of chimneys and air
pollution control facilities (the "WTI Allocated Activities"). Rust may engage
outside North America in activities relating to (i) architectural services,
(ii) engineering and design services and procurement, construction and
construction management services (including marine construction and dredging),
other than those relating to the Waste Management International Allocated
Activities and the WTI Allocated Activities, (iii) scaffolding services, (iv)
demolition and dismantling services, (v) environmental consulting services, and
(vi) industrial facility and power plant maintenance services (the "Rust
Allocated Activities"). Each of CWM, WTI, Rust and the Company have agreed
that, until the later of (x) July 1, 2000 or (y) the date on which the Company
ceases to beneficially own a majority of the outstanding voting equity
interests of Waste Management International (including ordinary shares owned by
Rust and WTI, if majority-owned by the Company), and no longer has an option to
obtain such ownership, it and its affiliated entities shall not participate
outside North America in the Waste Management International Allocated
Activities except through Waste Management International. Sales by the Company
of recyclables, licensing of technology and minor investments by the Company in
publicly held entities are also permitted activities of the Company outside
North America. Waste Management International has agreed that for the same time
periods as are applicable to CWM, WTI, Rust and the Company above in this
paragraph, it will not engage in North America in the type of activities
included within the Waste Management International Allocated Activities outside
North America and will not engage in the WTI Allocated Activities or the Rust
Allocated Activities. Businesses or assets acquired by a party to the IBOA
which are in the domain of another party thereto (according to the allocations
described above) must be offered for sale to the other party at fair market
value.
By agreement among the parties, the Company is responsible for determining
business allocations among CWM, WTI, Rust, the Company and Waste Management
International which are not controlled by the allocations set forth in the
preceding paragraph. In this connection CWM, WTI, Rust, the Company and Waste
Management International have agreed that in order to minimize the potential
for conflicts of interest among various subsidiaries under the common control
of the Company and for so long as the Company shall have beneficial ownership
of a majority of the outstanding voting equity interests of such subsidiary (or
an option to obtain such ownership), the Company has the right to direct future
business opportunities to the Company or the Company-controlled subsidiary
which, in the Company's reasonable and good faith judgment, has the most
experience and expertise in that line of business, provided that the Company
may not allocate a business opportunity to a particular subsidiary if such
business opportunity would involve the subsidiary in a breach of its agreement
not to compete as described in the immediately preceding paragraph.
Opportunities outside North America relating to the provision of future waste
management services are generally to be allocated to Waste Management
International, except that opportunities outside North America relating to the
WTI Allocated Activities and the Rust Allocated Activities are generally to be
allocated to WTI and Rust, as the case may be. Environmental opportunities
other than waste management activities are to be allocated in the Company's
good faith judgment. No party is liable for consequential damages, except for
lost profits, for any breach of the IBOA.
In addition, in connection with the proposed transfer by Rust of its
hazardous and radioactive substance remediation business (see "Acquisitions and
Dispositions" below), the Company, Rust and their respective wholly owned
affiliates would agree with the transferee for a period of seven years
following the close of such transfer not to engage in providing on-site
hazardous and radioactive substance remediation services in North America.
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INSURANCE
While the Company believes it operates professionally and prudently, its
business exposes it to risks such as the potential for harmful substances
escaping into the environment and causing damage or injuries, the cost of which
could be substantial. The Company currently maintains liability insurance
coverage for occurrences under various environmental impairment, primary
casualty and excess liability insurance policies.
Although the Company's insurance program includes coverage for sudden and
accidental Environmental Impairment Liability ("EIL") risk, insurance coverage
in large amounts for non-sudden and accidental EIL risk continues to be
unavailable at a cost which management believes is reasonable. The coverage
terms and cost of the limited risk transfer EIL insurance of this type which is
available to the Company are such that the insurance has not been purchased. To
satisfy existing governmental requirements, the Company has secured non-sudden
and accidental EIL insurance coverage in amounts believed to be in compliance
with federal and state law. Under that policy, losses paid by the carrier must
be reimbursed by the Company over a period of years. A claim under such an
insurance policy which does not transfer risk, if successful and of sufficient
magnitude, could have a material adverse effect on the Company's business,
results of operation or financial condition.
EMPLOYEES
WMX Technologies and its subsidiaries employ a total of approximately 74,400
persons in their worldwide operations. Of this number, the Company employs
approximately 32,200 persons in its WMI solid waste and related services
operations, including approximately 24,600 persons employed in solid waste
collection, transfer, resource recovery and disposal activities, and
approximately 7,600 persons employed in managerial, executive, sales, clerical,
data processing and other solid waste and related activities.
CWM (excluding Rust) employed approximately 3,600 persons at December 31,
1994. Approximately 230 of CWM's employees were employed as managers or
executives and approximately 2,500 were employed in hazardous waste
transportation, treatment, resource recovery and disposal activities (including
approximately 630 performing technical, analytical or engineering services),
and approximately 870 were employed in sales, clerical, data processing and
other hazardous waste-related activities.
At December 31, 1994, WTI had approximately 4,100 full-time employees. WTI
considers relations with its employees to be good .
Rust employed approximately 16,400 persons at December 31, 1994, of whom
approximately 5,700 provided technical or engineering services (excluding craft
personnel hired on a temporary basis).
As of December 31, 1994, Waste Management International employed
approximately 18,100 persons. Of this number, Waste Management International
employed approximately 13,700 persons in its collection service operations,
2,100 in its treatment and disposal services operations and 2,300 in
administrative functions.
At December 31, 1994, approximately 6,800 of the Company's employees in North
America were unionized, primarily in the Company's solid waste and related
services operations, under collective bargaining agreements expiring on various
dates through 2000. At December 31, 1994, approximately 13,800 Waste Management
International employees were represented by labor unions. The Company believes
its employee relations are good.
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ACQUISITIONS AND DISPOSITIONS
Since August 1971, the Company has acquired a number of companies, and
certain assets of other companies, engaged in various phases of the
environmental services industry. See Note 3 to the Company's Consolidated
Financial Statements filed as an exhibit to this report and incorporated herein
by reference. The amounts and types of consideration generally have been
determined by direct negotiations with the owners of the businesses acquired.
In most instances, the owners of the acquired businesses were few in number,
and often certain key former owners have continued to operate the businesses
following acquisition by the Company. During 1994, the Company continued to
acquire additional operations in the environmental services industry.
Acquisitions have historically contributed significantly to the Company's
growth. The Company's growth prospects may be affected by the availability of
additional business acquisitions at reasonable prices and the Company's ability
to finance such acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" filed as an exhibit to this
report and incorporated herein by reference for a discussion of capital
expenditures by the Company, including acquisitions. Other well-capitalized
companies also compete intensely for businesses available to be acquired. The
Company is continually engaged in the process of considering and negotiating
additional acquisitions. Some future acquisitions could be material. The
acquisition of businesses also entails certain inherent risks. Although the
Company reviews businesses to be acquired, because of the nature of the
liabilities involved in these businesses, there can be liabilities which will
not become known until after the transactions are consummated. The Company
seeks to minimize the impact of these liabilities and expenditures by obtaining
indemnities and warranties from the seller which may be supported by deferring
payment of a portion of the purchase price. These indemnities and warranties,
if obtained, may not, however, fully cover the liabilities due to their limited
scope, amount, or duration, the financial limitations of the indemnitor or
warrantor, or other reasons. Businesses purchased may require expenditures to
make up for deferred maintenance and to improve the quality or quantity of
assets acquired. In certain cases, the Company establishes reserves in respect
of the anticipated costs of remediation for acquired sites.
In September 1990, the Company engaged in a merger transaction whereby WTI
became a majority-owned subsidiary of the Company. In the transaction, each
share of WTI common stock (other than those held by the Company, WTI or their
respective affiliated companies) was converted into the right to receive .574
of a share of WTI common stock and .469 of a share of common stock of the
Company, which resulted in the Company's issuance of a total of 14,855,341
shares of its common stock. Prior to the merger, the Company owned
approximately 22% of the outstanding shares of common stock of WTI. The
Company's 22% interest in WTI was acquired as the result of the Company's
contribution of certain businesses to a subsidiary of WTI in 1988.
As part of the merger, the Company, WTI and CWM also entered into certain
ancillary agreements. The principal elements of the ancillary agreements
include (i) the Company's provision of certain financial assistance to WTI,
(ii) an option permitting WTI to purchase the Company's medical waste disposal
business at a 15% discount from the fair market value of such business, (iii)
provisions for the joint development by WTI and the Company of recycling
services and technology, and (iv) an agreement (A) pursuant to which the
Company will make various services available to WTI, WTI will lend its excess
cash to the Company, the Company will fund WTI's capital requirements (subject
to a limit of the amount of funds loaned by WTI to the Company plus, until
September 1995, $100 million), (B) which provided for the allocation of
business opportunities among the Company and its majority-owned subsidiaries
(such provisions having been superseded by the arrangements described above
under "Competition") and (C) which includes an option enabling the Company to
maintain its majority ownership of WTI.
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<PAGE>
The ancillary agreements also included certain options whereby in August
1991, CWM and WTI each acquired a 15% fully diluted equity interest in newly
issued common stock of a predecessor of Waste Management International, which
became interests in Waste Management International in 1991. Such interests were
reduced to 12% as a result of the Waste Management International initial public
offering in 1992. CWM financed the purchase by issuing a 10-year, convertible
subordinated debenture to the Company in the amount of $168,974,000 with
interest payable at 6% per year. In December 1992, the debenture was converted
in accordance with its terms into 8,046,380 shares of CWM common stock. WTI
acquired the Waste Management International shares by issuing approximately
12,000,000 shares (as adjusted for a two-for-one stock split) of its common
stock to the Company. In January 1993, CWM contributed its interest in Waste
Management International to Rust.
In May 1993, pursuant to an agreement (the "NSC Purchase Agreement") by and
among NSC, NSC's wholly owned subsidiary, NSC Industrial Services Corp., Brand,
the Company and OHM Corporation, previously an approximately 70% stockholder of
NSC ("OHM"), Brand transferred its asbestos abatement business to NSC in
exchange for an approximately 41% interest in NSC Corporation and two
industrial services companies of NSC. Rust assumed the rights and obligations
of Brand under the NSC Purchase Agreement upon consummation of the merger of
Brand into a subsidiary of Rust.
In August 1993, Rust acquired EnClean, Inc., an industrial and environmental
services business providing hydroblasting, industrial vacuuming, chemical
cleaning, separation technology, site remediation and catalyst handling
services. The acquisition expanded Rust's presence primarily in the Gulf Coast
area and added chemical cleaning and catalyst handling to the services already
provided by Rust.
In September 1993, CWM announced a strategic reconfiguration of its
operations to meet then-current market demand. Among the actions taken as part
of this program were the elimination of approximately 1,600 positions,
consolidation of operations, sale of selected service centers in marginal
service lines and geographies, and centralization of several functions to
improve efficiency. The restructuring was based on the assumption that future
base business revenue growth, if any, would not keep pace with the recovery in
the general economy and that CWM would not make investments which would be
primarily supported by non-recurring (event business) volumes. On March 14,
1995, the Company's Board of Directors approved a plan to further reduce the
scope of the chemical waste services business by selling or otherwise
eliminating technologies and service locations which are not meeting customer
service or performance objectives. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Outlook," incorporated by
reference in this report, for further information.
In March 1994, the Company sold its Modulaire(R) mobile office services
business to the GE Modular Space Division of Transport International Pool,
Inc., a subsidiary of General Electric Corporation.
In the fourth quarter of 1994, OHM agreed to acquire Rust's hazardous and
radioactive substance remediation business in exchange for a 40% interest in
OHM. Consummation of the transaction is subject to satisfaction of various
closing conditions, including the approval of OHM's stockholders.
On January 24, 1995, the Company acquired CWM common stock representing the
approximately 21% interest in CWM held at that time by public stockholders. The
acquisition occurred pursuant to a merger (the "Merger") in which all publicly
held shares of CWM common stock were converted into convertible subordinated
notes of the Company due January 24, 2005 and having a principal amount at
maturity of $1,000 per note (the "Notes"), subject to the payment of cash in
lieu of the issuance of
29
<PAGE>
fractional Notes. For a description of the terms of the Notes, see Note 16 to
the Company's Consolidated Financial Statements incorporated herein by
reference. The Merger was approved by a committee of independent directors of
CWM and by a majority of the public stockholders of CWM. As a result of the
Merger, CWM became a wholly owned subsidiary of the Company.
In February 1995, the Company offered to acquire the approximately 4% of
Rust's shares held by the public for $14 per share in cash. The transaction is
subject to approval by a special committee of independent directors appointed
by the Rust Board of Directors, but does not require stockholder approval. If
approved, the transaction is expected to be completed during the second quarter
of 1995.
The Company has also acquired numerous companies and interests in companies
internationally through Waste Management International or its predecessors. See
"International Waste Management and Related Services."
ITEM 2. PROPERTIES.
The principal property and equipment of the Company consists of land
(primarily disposal sites), buildings and waste treatment or processing
facilities (other than disposal sites), and vehicles and equipment, which as of
December 31, 1994 represented approximately 18%, 6% and 28%, respectively, of
the Company's total consolidated assets. The Company believes that its
vehicles, equipment and operating properties are well maintained and suitable
for its current operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" filed as an exhibit to this
report and incorporated by reference herein for a discussion of property and
equipment expenditures by the Company for the last three years and the capital
budget for 1995. The Company's subsidiaries lease numerous office and operating
facilities throughout the world. For the year ended December 31, 1994,
aggregate annual rental payments on real estate leased by the Company and its
subsidiaries approximated $130,366,000.
The principal fixed assets of Waste Management consist of vehicles and
equipment (which include, among other items, approximately 18,900 collection
and transfer vehicles, 1,495,000 containers and 20,500 stationary compactors in
the United States and Canada). WMI owns or leases real property in most states
and Canadian provinces in which it is doing business. At December 31, 1994, 105
solid waste disposal facilities, aggregating approximately 64,000 total acres,
including approximately 14,080 permitted acres, were owned by Waste Management
in the United States and Canada and 29 facilities, aggregating approximately
14,370 total acres, including approximately 6,040 permitted acres, were leased
from parties not affiliated with Waste Management under leases expiring from
1995 to 2085.
The principal fixed assets of CWM (excluding Rust) consist of its network of
transportation, treatment, storage and disposal facilities and its fleet of
transportation vehicles. At December 31, 1994, CWM owned or leased in the
United States a total of 20 treatment, resource recovery or disposal
facilities. At such date, CWM's chemical waste facilities with secure land
disposed sites aggregated approximately 10,500 acres, including approximately
3,050 permitted acres.
The principal property and equipment of Rust consist of Rust's vehicles,
equipment and scaffolding inventory, which as of December 31, 1994 represented
(including its subsequently sold headquarters buildings) approximately 19% of
Rust's total consolidated assets. The principal fixed assets utilized in Rust's
operations at December 31, 1994 consisted of vehicles and equipment (which
included, among other items, air monitoring equipment, decontamination
trailers, mobile laboratory trailers, vacuum trucks, office trailers, pieces of
heavy excavating machinery, mobile waste treatment units and scaffolding
inventory). Rust believes that its vehicles, equipment and scaffolding
inventory are well maintained and suitable for its current operations. Rust
leases its corporate offices in Birmingham, Alabama and numerous office,
warehouse and equipment and scaffolding yard facilities in various locations
throughout the United States.
30
<PAGE>
WTI currently owns, operates or leases 16 trash-to-energy facilities, six
cogeneration and small power production facilities, two coal handling
facilities, four biosolids drying and pelletizing facilities and various other
manufacturing, office and warehouse facilities. Facilities leased or operated
(but not owned) by WTI are under leases or agreements having terms expiring
from the years 1996 to 2011, subject to renewal options in certain cases.
The principal property and equipment of Waste Management International
consist of land (primarily disposal sites), buildings and other waste treatment
or processing facilities (other than disposal sites), vehicles and equipment.
Waste Management International believes that its vehicles, equipment, and
operating properties are well maintained and suitable for its current
operations, although, due to its many recent acquisitions, vehicles are not
standardized. The principal fixed assets utilized in Waste Management
International's collection services operations at December 31, 1994 consisted
of vehicles and equipment (which included, among other items, approximately
6,600 collection, transportation, and other route vehicles and approximately
300 pieces of landfill and other heavy equipment), and approximately 280,000
containers, including approximately 3,150 stationary compactors. In addition,
Waste Management International owns approximately 700 pieces of hazardous waste
equipment, consisting predominately of containers and collection vehicles. The
principal fixed assets utilized in Waste Management International's treatment
and disposal services operations at December 31, 1994 consisted of 49 solid
waste landfills owned, leased or operated by Waste Management International
aggregating approximately 3,400 acres, of which 2,470 are permitted, 8
hazardous waste landfills owned or leased by Waste Management International
aggregating approximately 1,120 acres, of which approximately 970 acres are
permitted, and trash-to-energy, other treatment, storage, or disposal and
various other manufacturing, office and warehouse facilities owned, leased or
operated by Waste Management International.
ITEM 3. LEGAL PROCEEDINGS.
Some of the businesses in which the Company is engaged are intrinsically
connected with the protection of the environment and the potential for the
unintended or unpermitted discharge of materials into the environment. In the
ordinary course of conducting its business activities, the Company becomes
involved in judicial and administrative proceedings involving governmental
authorities at the federal, state and local level including, in certain
instances, proceedings instituted by citizens or local governmental authorities
seeking to overturn governmental action where governmental officials or
agencies are named as defendants together with the Company or one or more of
its subsidiaries, or both. In the majority of the situations where proceedings
are commenced by governmental authorities, the matters involved relate to
alleged technical violations of licenses or permits pursuant to which the
Company operates or is seeking to operate or laws or regulations to which its
operations are subject or are the result of different interpretations of the
applicable requirements. From time to time the Company pays fines or penalties
in environmental proceedings relating primarily to waste treatment, storage or
disposal facilities. At December 31, 1994, CWM and its subsidiaries (other than
Rust) were involved in three such governmental proceedings, WTI was involved in
two such proceedings and Rust was involved in one such proceeding (described
below) where it is believed that sanctions involved in each instance may exceed
$100,000.
On October 4, 1994, the United States Department of Justice commenced
litigation against an indirect subsidiary of Rust and others in the United
States District Court for the District of Idaho alleging that the defendants
violated the National Emissions Standards for Hazardous Air Pollutants of the
Clean Air Act while engaged in asbestos removal activities in 1989 and 1990
prior to Rust's acquisition of the subsidiary. The lawsuit sought civil
penalties and injunctive relief. The Department of Justice and the subsidiary
negotiated a resolution of the matter, and on January 26, 1995, the District
Court approved a Consent Decree which conclusively resolved the lawsuit with
respect to the subsidiary. Pursuant to the Consent Decree, the subsidiary paid
a civil penalty of $353,800.
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<PAGE>
The Company or certain of its subsidiaries have been identified as
potentially responsible parties in a number of governmental investigations and
actions relating to waste disposal facilities which may be subject to remedial
action under Superfund. The majority of these proceedings are based on
allegations that certain subsidiaries of the Company (or their predecessors)
transported hazardous substances to the facilities in question, often prior to
acquisition of such subsidiaries by the Company. Such proceedings arising under
Superfund typically involve numerous waste generators and other waste
transportation and disposal companies and seek to allocate or recover costs
associated with site investigation and cleanup, which costs could be
substantial.
As of December 31, 1994, the Company or its subsidiaries had been notified
that they are potentially responsible parties in connection with 104 locations
listed on the Superfund National Priority List ("NPL"). Of the 104 NPL sites at
which claims have been made against the Company, 19 are sites which the Company
has come to own over time. All of the NPL sites owned by the Company were
initially sited by others as land disposal facilities. At each of the 19 owned
facilities, the Company is working in conjunction with the government to
characterize or to remediate identified site problems. In addition, at these 19
facilities the Company has either agreed with other legally liable parties on
an arrangement for sharing the costs of remediation or is pursuing resolution
of an allocation formula. The 85 NPL sites at which claims have been made
against the Company and which are not owned by the Company are at different
procedural stages under Superfund. At some, the Company's liability is well
defined as a consequence of a governmental decision as to the appropriate
remedy and an agreement among liable parties as to the share each will pay for
implementing that remedy. At others, where no remedy has been selected or the
liable parties have been unable to agree on an appropriate allocation, the
Company's future costs are substantially uncertain.
The Company periodically reviews its role, if any, with respect to each such
location, giving consideration to the nature of the Company's alleged
connection to the location (e.g., owner, operator, transporter or generator),
the extent of the Company's alleged connection to the location (e.g., amount
and nature of waste hauled to the location, number of years of site operation
by the Company or other relevant factors), the accuracy and strength of
evidence connecting the Company to the location, the number, connection and
financial ability of other named and unnamed potentially responsible parties at
the location, and the nature and estimated cost of the likely remedy. Where the
Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Sites subject to state action under state laws similar
to the federal Superfund statute are treated by the Company in the same way as
NPL sites.
The Company's estimates are subsequently revised, as deemed necessary, as
additional information becomes available. While the Company does not anticipate
that the amount of any such revisions will have a material adverse effect on
the Company's operations or financial condition, the measurement of
environmental liabilities is inherently difficult and the possibility remains
that technological, regulatory or enforcement developments, the results of
environmental studies, or other factors could materially alter this expectation
at any time. Such matters could have a material adverse impact on financial
condition or earnings for one or more fiscal quarters or years.
The Company and certain of its subsidiaries are currently involved in civil
litigation and governmental proceedings relating to the conduct of their
business. While the outcome of any
32
<PAGE>
particular lawsuit or governmental investigation cannot be predicted with
certainty, the Company believes that these matters will not have a material
adverse effect on its results of operations or financial condition.
Following an examination of WTI's federal income tax returns for the period
1986-1988, the Internal Revenue Service (the "IRS") in January 1993 proposed a
significant adjustment related to the 1988 sale of a former subsidiary, which
WTI disputed. In March 1994, WTI and the IRS filed a Stipulation of Settlement
with the U.S. Tax Court to resolve the dispute for an aggregate amount of
approximately $70,000,000. On April 15, 1994, WTI paid approximately
$29,800,000, its share of the stipulated settlement liability, and a former
affiliate of WTI paid approximately $19,200,000, to the IRS. The Tax Court
subsequently accepted the stipulation of settlement. Under a tax sharing
agreement between WTI and a second former affiliate of WTI, WTI was to be
indemnified by the second former affiliate for approximately $21,000,000 of the
total stipulated settlement liability beyond the $29,800,000 agreed WTI share.
After the second former affiliate of WTI refused to honor its indemnification
commitment to WTI, WTI instituted suit against it. In December 1994, after
trial, judgment was entered in favor of WTI against the second former
affiliate, requiring it to pay its obligation to WTI, which it did in February
1995.
The Company has brought suit against a substantial number of insurance
carriers in an action entitled Waste Management, Inc. et al. v. The Admiral
Insurance Company, et al. pending in the Superior court in Hudson County, New
Jersey. In this action the Company is seeking a declaratory judgment that
environmental liabilities asserted against the Company or its subsidiaries, or
that may be asserted in the future, are covered by insurance policies purchased
by the Company or its subsidiaries. The Company is also seeking to recover
defense costs and other damages incurred as a result of the assertion of
environmental liabilities against the Company or its subsidiaries for events
occurring over at least the last 25 years at approximately 130 sites and the
defendant insurance carriers' denial of coverage of such liabilities. The
defendants have denied liability to the Company and have asserted various
defenses, including that environmental liabilities of the type for which the
Company is seeking relief are not risks covered by the insurance policies in
question. The defendants are contesting these claims vigorously. Discovery is
currently underway in this proceeding and is expected to continue for several
years. No trial date has been set. The Company is unable at this time to
predict the outcome of this proceeding. No amounts have been recognized in the
Company's financial statements for any future recoveries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the Company's security holders during the fourth
quarter of 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages of the Company's executive officers
(as defined by regulations of the Securities and Exchange Commission), the
positions they hold with the Company and summaries of their business
experience. Executive officers are elected by the Board of Directors and serve
at the discretion of the Board.
J. Steven Bergerson, age 52, has been Senior Vice President--Law and
Compliance, since August 1992. He has been a Vice President of the Company
since 1984 and was General Counsel of the Company from 1974 until August 1992.
Mr. Bergerson has been employed by the Company since 1973 and intends to retire
from the Company effective March 31, 1995.
Dean L. Buntrock, age 63, has been a director of the Company and has served
as Chairman of the Board and Chief Executive Officer of the Company since 1968.
From September 1980 to November 1984, he also served as President. From May
1993 to January 1995, Mr. Buntrock was also Chairman
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<PAGE>
of the Board of CWM, a position he had also held from 1986 to 1991. Mr.
Buntrock is also a director of WTI, Rust, Waste Management International,
Boston Chicken, Inc. and First Chicago Corporation.
Herbert A. Getz, age 39, has been a Vice President of the Company since May
1990 and General Counsel since August 1992. He has also been Secretary of the
Company since January 1988. He also served as Assistant General Counsel of the
Company from December 1985 until August 1992. Mr. Getz has also held the
offices of Vice President, General Counsel and Secretary at WMI from April 1989
until December 1993, and Vice President and Secretary of Rust from January 1993
to May 1994. He served as Vice President, Secretary and General Counsel of WTI
from November 1990 until May 1993. Mr. Getz commenced employment with the
Company in 1983. He is a director of NSC.
Thomas C. Hau, age 59, has been a Vice President and the Controller and
Principal Accounting Officer of the Company since he commenced employment with
the Company in September 1990. From 1971 until his employment by the Company,
Mr. Hau was a partner of Arthur Andersen LLP.
James E. Koenig, age 47, has been a Senior Vice President of the Company
since May 1992, Treasurer of the Company since 1986 and its Chief Financial
Officer since 1989. Mr. Koenig first became a Vice President of the Company in
1986. From 1984 to 1986, Mr. Koenig was Staff Vice President and Assistant to
the Chief Financial Officer of the Company. Mr. Koenig has been employed by the
Company since 1977. Mr. Koenig also served as Vice President, Chief Financial
Officer and Treasurer of WTI from November 1990 to May 1993. He also serves as
a director of WTI, Waste Management International and Rust.
D. P. Payne, age 52, has been elected Senior Vice President of the Company
effective April 1, 1995, a position he previously held from 1990 to 1993. He
has also been Chairman of the Board of Directors of CWM since March 1995 and
served as President and Chief Executive Officer of CWM from 1991 to March 1995.
Prior to becoming employed by the Company in 1990, Mr. Payne had been Vice
President and Area General Manager of the Midwestern Area of International
Business Machines Corporation. He is also a director of Rust.
Phillip B. Rooney, age 50, has served as a director of the Company since 1981
and as its President and Chief Operating Officer since November 1984. Since
January 1994, he has also served as Chairman of the Board and Chief Executive
Officer of WMI. Mr. Rooney commenced employment with the Company in 1969 and
first became an officer of the Company in 1971. Since November 1990, he has
served as Chairman of the Board and Chief Executive Officer of WTI, and since
January 1993, as Chairman of the Board of Rust. Mr. Rooney is also a director
of Waste Management International, Rust, WTI, Illinois Tool Works, Inc.,
Caremark International Inc., Urban Shopping Centers, Inc., and ServiceMaster
Management Corporation, the general partner of ServiceMaster Limited
Partnership.
Donald A. Wallgren, age 53, has been Vice President and Chief Environmental
Officer of the Company since 1992. He held the same position at WMI from 1989
to May 1990. From 1990 to 1992 he served as Vice President-Recycling,
Development and Environmental Management of WMI. Mr. Wallgren has been employed
by the Company since 1979.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is traded on the New York Stock Exchange and the
Chicago Stock Exchange under the symbol "WMX." The following table sets forth
by quarter for the last two years the high and low sale prices of the Company's
common stock on the New York Stock Exchange Composite Tape as reported by the
Dow Jones News Retrieval Service, and the dividends declared by the Board of
Directors of the Company on its common stock.
<TABLE>
<CAPTION>
1993 QUARTERLY
SUMMARY
--------------- CASH DIVIDENDS
HIGH LOW DECLARED PER SHARE
------- ------- ------------------
<S> <C> <C> <C>
First.................................. $40 1/4 $33 5/8 $.13
Second................................. 36 3/8 29 1/4 .15
Third.................................. 33 1/8 29 1/2 .15
Fourth................................. 30 5/8 23 .15
<CAPTION>
1994 QUARTERLY
SUMMARY
--------------- CASH DIVIDENDS
HIGH LOW DECLARED PER SHARE
------- ------- ------------------
<S> <C> <C> <C>
First.................................. $30 3/4 $23 $.15
Second................................. 29 3/8 22 5/8 .15
Third.................................. 30 3/8 26 3/8 .15
Fourth................................. 30 24 1/2 .15
</TABLE>
At March 22, 1995, the Company had approximately 65,000 stockholders of
record.
Due in part to the high level of public awareness of the business in which
the Company is engaged, regulatory enforcement proceedings or other unfavorable
developments involving the Company's operations or facilities, including those
in the ordinary course of business, may be expected to engender substantial
publicity which could from time to time have an adverse impact upon the market
price for the Company's common stock.
In September 1990, WMX Technologies announced its authorization to purchase
up to 25,000,000 shares of its common stock from time to time over the
following 24-month period in the open market or in privately negotiated
transactions. This program has been extended through September 1996. During
1992 and 1993 the Company purchased approximately 7,600,000 shares and
8,400,000 shares, respectively, of its common stock under this program. No
Company shares were repurchased in 1994.
During 1994, the Company sold put options on 17,900,000 shares of its common
stock in conjunction with the repurchase program. The put options give the
holders the right at maturity to require the Company to repurchase its shares
at specified prices. In the event the options are exercised, the Company may
elect to pay the holder in cash the difference between the strike price and the
market price of the Company's shares, in lieu of repurchasing the stock.
Options on 9,000,000 shares expired unexercised in 1994, as the price of the
Company's stock was in excess of the strike price at maturity. Options on
4,700,000 shares were exercised in February 1995, and the Company elected to
settle them for cash. The remaining 4,300,000 options expire in July and August
1995, at strike prices ranging from $25.588 to $28.833 per share. The Company
sold additional put options in February and March 1995 to replace those which
matured. For additional information, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Capital Structure"
incorporated by reference herein.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The following selected consolidated financial information for each of the
five years in the period ended December 31, 1994 is derived from the Company's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants, whose report thereon is incorporated by
reference in this report. The information below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Company's Consolidated Financial Statements, and the
related Notes, and the other financial information which are filed as exhibits
to this report and incorporated herein by reference.
<TABLE>
<CAPTION>
(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1990/1/ 1991/2/ 1992/3/ 1993/4/ 1994/5/
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue................. $ 6,034,406 $ 7,550,914 $ 8,661,027 $ 9,135,577 $10,097,318
Net income.............. $ 684,762 $ 606,323 $ 850,036 $ 452,776 $ 784,381
Earnings per common and
common equivalent
share.................. $ 1.44 $ 1.23 $ 1.72 $ .93 $ 1.62
Total assets............ $10,518,243 $12,572,310 $14,114,180 $16,264,476 $17,538,914
Long-term debt, less
portion payable within
one year............... $ 3,139,623 $ 3,782,973 $ 4,312,511 $ 6,145,584 $ 6,044,411
Dividends per share..... $ .35 $ .42 $ .50 $ .58 $ .60
</TABLE>
--------
/1/The results for 1990 include an extraordinary charge of $24,547,000, or $.05
per share, representing the Company's percentage interest in the writedown
by WTI of WTI's investment in the stock of The Henley Group, Inc. and Henley
Properties Inc. to market value.
/2/The results for 1991 include a special charge of $296,000,000 (before tax
and minority interest) primarily to reflect then current estimates of the
environmental remediation liabilities at waste disposal sites previously
used or operated by the Company and its subsidiaries or their predecessors.
/3/The results for 1992 include a non-taxable gain of $240,000,000 (before
minority interest) resulting from the initial public offering of Waste
Management International; special charges of $219,900,000 (before tax and
minority interest) primarily related to writedowns of the Company's medical
waste business, CWM incinerators in Chicago, Illinois and Tijuana, Mexico
and Brand's investment in its asbestos abatement business and certain
restructuring costs incurred by Brand and CWM related to the formation of
Rust, and one time after-tax charges aggregating $71,139,000, or $.14 per
share, related to the cumulative effect of adopting two new accounting
standards. See Notes 2, 11 and 13 to the Company's Consolidated Financial
Statements.
/4/The results for 1993 include a non-taxable gain of $15,109,000 (before
minority interest) relating to the issuance of shares by Rust, as well as
the Company's share of a special asset revaluation and restructuring charge
of $550,000,000 (before tax and minority interest) recorded by CWM related
primarily to a revaluation of CWM's thermal treatment business, and a
provision of approximately $14,000,000 to adjust deferred income taxes
resulting from the 1993 tax law change. See Note 13 to the Company's
Consolidated Financial Statements.
/5/The results for 1994 include a charge of $9,200,000 (before tax and minority
interest) recorded by Rust to write off assets and recognize costs of
exiting certain of Rust's service lines and closing offices in a
consolidation of its engineering and construction groups. See Note 13 to the
Company's Consolidated Financial Statements.
/6/Certain amounts have been restated to conform to 1994 classifications.
Reference is made to the ratio of earnings to fixed charges for each of the
years ended December 31, 1990, 1991, 1992, 1993 and 1994, as set forth in
Exhibit 12 to this report, which ratios are incorporated herein by reference.
36
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Reference is made to Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth on pages 30 to 38 of the
Company's 1994 Annual Report to Stockholders (the "Annual Report"), which
discussion is filed as an exhibit to this report and incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
(a) The Consolidated Balance Sheets as of December 31, 1993 and 1994,
Consolidated Statements of Income, Stockholders' Equity and Cash Flows for each
of the years in the three-year period ended December 31, 1994 and Notes to
Consolidated Financial Statements set forth on pages 39 to 59 of the Annual
Report are filed as an exhibit to this report and incorporated herein by
reference.
(b) Selected Quarterly Financial Data (Unaudited) is set forth in Note 15 to
the Consolidated Financial Statements referred to in Item 8(a) above and
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Reference is made to the information set forth in the 14 paragraphs under the
caption "Election of Directors" beginning on page 2 of the Company's proxy
statement for the annual meeting scheduled for May 12, 1995 (the "Proxy
Statement") for a description of the directors of the Company, which paragraphs
are incorporated herein by reference. Information concerning the executive
officers of the Company is set forth above under "Executive Officers of the
Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
Reference is made to the information set forth under the caption
"Compensation" on pages 10 through 16 of the Proxy Statement, which
information, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to the information, including the tables and the footnotes
thereto, set forth under the caption "Securities Ownership of Management" on
pages 4 through 9 of the Proxy Statement, for certain information respecting
ownership of common stock of the Company, WTI, Waste Management International
and Rust, which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the second paragraph under the caption "Compensation of
Directors" on page 14 and the paragraph under the caption "Compensation
Committee Interlocks and Insider Participation" on page 16 of the Proxy
Statement and the information set forth under the caption "Certain
Transactions" beginning on page 23 of the Proxy Statement for certain
information with respect to certain relationships and related transactions,
which paragraphs are incorporated herein by reference.
37
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULE AND REPORTS ON FORM 8-K.
(a) Financial Statements, Schedule and Exhibits.
I. Financial Statements--filed as an exhibit hereto and incorporated
herein by reference.
(i) Consolidated Statements of Income for the years ended
December 31, 1992, 1993 and 1994;
(ii) Consolidated Balance Sheets--December 31, 1993 and 1994;
(iii) Consolidated Statements of Stockholders' Equity for the three
years ended December 31, 1994;
(iv) Consolidated Statements of Cash Flows for the years ended
December 31, 1992, 1993 and 1994;
(v) Notes to Consolidated Financial Statements; and
(vi) Report of Independent Public Accountants.
II. Schedule
(i) Schedule II--Reserves
(ii) Report of Independent Public Accountants on Schedule
All other schedules have been omitted because the required
information is not significant or is included in the financial
statements or the notes thereto, or is not applicable.
III. Exhibits.
The exhibits to this report are listed in the Exhibit Index elsewhere
herein. Included in the exhibits listed therein are the following exhibits
which constitute management contracts or compensatory plans or
arrangements/1/.
<TABLE>
<CAPTION>
<C> <S> <C>
(i) 1981 Stock Option Plan for Non-Employee Directors of reg-
istrant (Exhibit 19 to registrant's report on Form 10-Q
for the quarter ended June 30, 1982)
(ii) WMX Technologies, Inc. 1982 Stock Option Plan, as amended
to March 11, 1988 (Exhibit 10.3 to registrant's 1988 an-
nual report on Form 10-K)
(iii) Deferred Director's Fee Plan, as amended (Exhibit 10.3 to
registrant's 1990 annual report on Form 10-K)
(iv) Director's Phantom Stock Plan (Exhibit 10.9 to regis-
trant's 1984 annual report on Form 10-K)
(v) Employment Agreement, dated as of September 1, 1986, by
and between the registrant and Phillip B. Rooney (Exhibit
19.4 to registrant's report on Form 10-Q for the quarter
ended September 30, 1986)
(vi) WMX Technologies, Inc. Corporate Incentive Bonus Plan (Ex-
hibit B to registrant's Proxy Statement for its 1995 An-
nual Meeting of Stockholders)
(vii) WMX Technologies, Inc. Supplemental Executive Retirement
Plan, as amended and restated May 14, 1993 (Exhibit 10 to
the registrant's report on Form 8-K dated July 15, 1993)
(viii) Chemical Waste Management, Inc. 1992 Stock Option Plan
(Exhibit 10.19 to Chemical Waste Management, Inc.'s 1991
annual report on Form 10-K)
(ix) Supplemental Retirement Benefit Agreement, dated as of
January 1, 1989, by and between the registrant and Peter
H. Huizenga (Exhibit 10.16 to Post-Effective Amendment No.
2 to registrant's registration statement on Form S-1, Reg-
istration No. 33-13839)
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
(x) Chemical Waste Management, Inc. 1986 Stock Option Plan, as
amended (Exhibit 10.1 to Chemical Waste Management, Inc.'s
1989 annual report on Form 10-K)
(xi) Chemical Waste Management, Inc. 1986 Stock Option Plan for
Non-Employee Directors (Exhibit 10.2 to Chemical Waste
Management, Inc.'s registration statement on Form S-1,
Registration No. 33-8509)
(xii) Chemical Waste Management, Inc. Deferred Director's Fee
Plan (Exhibit 10.5 to Chemical Waste Management, Inc.'s
registration statement on Form S-1, Registration No. 33-
8509)
(xiii) WMX Technologies, Inc. Director's Charitable Endowment
Plan (Exhibit 10.20 to registrant's 1989 annual report on
Form 10-K)
(xiv) Supplemental Retirement Benefit Agreement dated as of Jan-
uary 1, 1991 by and between registrant and Donald F. Flynn
(Exhibit 10.17 to registrant's 1990 annual report on Form
10-K)
(xv) Restricted Unit Plan for Non-Employee Directors of
Wheelabrator Technologies Inc. as amended through June 10,
1991 (Exhibit 19.03 to the report on Form 10-Q of
Wheelabrator Technologies Inc. for the quarter ended June
30, 1991)
(xvi) 1988 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its subsidiaries (the "WTI 1988
Stock Plan") (Exhibit 28.1 to Amendment No. 1 to the reg-
istration statement of Wheelabrator Technologies Inc. on
Form S-8, Registration No. 33-31523)
(xvii) Amendments dated as of September 7, 1990 to the WTI 1988
Stock Plan (Exhibit 19.02 to the 1990 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
(xviii) Amendment dated as of November 1, 1990 to the WTI 1988
Stock Plan (Exhibit 19.04 to the 1990 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
(xix) 1986 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its subsidiaries (the "WTI 1986
Stock Plan") (Exhibit 28.2 to Amendment No. 1 to the reg-
istration statement of Wheelabrator Technologies Inc. on
Form S-8, Registration No. 33-31523)
(xx) Amendment dated as of November 1, 1990 to the WTI 1986
Stock Plan (Exhibit 19.03 to the 1990 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
(xxi) Description of consulting agreement between registrant and
Alexander B. Trowbridge (Exhibit 10.22 to registrant's
1989 annual report on Form 10-K)
(xxii) WMX Technologies, Inc. 1992 Stock Option Plan (Exhibit
10.31 to registrant's registration statement on Form S-1,
Registration No. 33-44849)
(xxiii) WMX Technologies, Inc. 1992 Stock Option Plan for Non-Em-
ployee Directors (Exhibit 10.32 to registrant's registra-
tion statement on Form S-1, Registration No. 33-44849)
(xxiv) Wheelabrator Technologies Inc. 1992 Stock Option Plan (Ex-
hibit 10.45 to the 1991 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xxv) Deferred Director's Fee Plan of Wheelabrator Technologies
Inc. adopted June 10, 1991 (Exhibit 19.02 to the quarterly
report on Form 10-Q of Wheelabrator Technologies Inc. for
the quarter ended June 30, 1991)
(xxvi) Waste Management International plc Share Option Plan (Ex-
hibit 10.1 to the registration statement on Form F-1 of
Waste Management International plc, Registration No. 33-
46511)
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
(xxvii) Amendment dated as of December 6, 1991 to the WTI 1986
Stock Plan (Exhibit 19.01 to the 1991 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
(xxviii) Amendment dated as of December 6, 1991 to the WTI 1988
Stock Plan (Exhibit 19.02 to the 1991 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
(xxix) Amendment dated as of December 6, 1991 to the Restricted
Unit Plan for Non-Employee Directors of Wheelabrator Tech-
nologies Inc. (Exhibit 19.05 to the 1991 annual report on
Form 10-K of Wheelabrator Technologies Inc.)
(xxx) Rust International Inc. 1993 Stock Option Plan (Exhibit
10.41 to the registrant's 1992 annual report on Form 10-K)
(xxxi) Rust International Inc. 1993 Stock Option Plan for Non-Em-
ployee Directors (Exhibit 10.42 to the registrant's 1992
annual report on Form 10-K)
(xxxii) WMX Technologies, Inc. Long Term Incentive Plan (as
amended and restated as of January 27, 1994) (Exhibit A to
registrant's Proxy Statement for its 1995 Annual Meeting
of Stockholders)
(xxxiii) Consulting Agreement dated as of February 9, 1995 between
the registrant and J. Steven Bergerson (filed with this
report)
</TABLE>
--------
/1/In the case of reference to documents filed under the Securities Exchange
Act of 1934, the registrant's file number under that Act is 1-7327, Chemical
Waste Management, Inc.'s file number under that Act was 1-9253, and
Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
(b) Reports on Form 8-K.
The registrant filed a report on Form 8-K dated October 14, 1994
reporting under Item 5 the issuance of a news release stating that a
definitive merger agreement had been reached for the Company's acquisition
of the shares of CWM not then owned by it and stating the terms of the
merger.
40
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE
($000'S OMITTED)
SCHEDULE II--RESERVES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EFFECT OF
BALANCE CHARGED ACCOUNTS FOREIGN BALANCE
BEGINNING TO WRITTEN CURRENCY END OF
OF YEAR INCOME OFF OTHER(A) TRANSLATION YEAR
--------- ------- -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
1992--Reserve for
doubtful accounts (B).. $49,151 $31,195 $(24,080) $ 6,301 $(4,732) $57,835
======= ======= ======== ======= ======= =======
1993--Reserve for
doubtful accounts (B).. $57,835 $33,326 $(33,518) $ 7,646 $(1,970) $63,319
======= ======= ======== ======= ======= =======
1994--Reserve for
doubtful accounts (B).. $63,319 $34,368 $(41,941) $10,199 $ 1,760 $67,705
======= ======= ======== ======= ======= =======
</TABLE>
--------
(A) Reserves of companies accounted for as purchases.
(B)Includes reserves for doubtful long-term notes receivable.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
41
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To WMX Technologies, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in the WMX Technologies, Inc.
(formerly Waste Management, Inc.) Annual Report to Stockholders for 1994 filed
as an exhibit to and incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 6, 1995 (except with respect to the
matter discussed in Note 17, as to which the date is March 14, 1995). Our audit
was made for the purpose of forming an opinion on those statements taken as a
whole. The schedule included on page 41 of this Form 10-K is the responsibility
of Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois,
February 6, 1995
42
<PAGE>
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
<C> <S> <C>
1. Inapplicable
2. Inapplicable
3.1(a) Restated Certificate of Incorporation of registrant, as
amended as of May 24, 1985 (incorporated by reference to Ex-
hibit 4.1 to registrant's report on Form 10-Q for the quarter
ended June 30, 1985)
3.1(b) Certificate of Amendment of Restated Certificate of Incorpora-
tion of registrant, recorded May 23, 1986 (incorporated by
reference to Exhibit 4(c) to registrant's registration state-
ment on Form S-8, Registration No. 33-6265)
3.1(c) Certificate of Designation of Preferred Stock of registrant,
filed January 30, 1987 (incorporated by reference to Exhibit
3.1(c) to registrant's 1986 annual report on Form 10-K)
3.1(d) Certificate of Amendment of Restated Certificate of Incorpora-
tion of registrant, recorded May 15, 1987 (incorporated by
reference to Exhibit 4.5(d) to registrant's registration
statement on Form S-4, Registration No. 33-15518)
3.1(e) Certificate of Amendment of Restated Certificate of Incorpora-
tion of registrant, filed May 19, 1989 (incorporated by refer-
ence to Exhibit 3(e) to registrant's registration statement on
Form S-3, Registration No. 33-30190)
3.1(f) Certificate of Amendment of Restated Certificate of Incorpora-
tion of registrant, filed May 18, 1990 (incorporated by refer-
ence to Exhibit 4(h) to registrant's registration statement on
Form S-8, Registration No. 33-35936)
3.1(g) Certificate of Amendment of Restated Certificate of Incorpora-
tion of registrant, filed May 14, 1993 (incorporated by refer-
ence to Exhibit 4(a) to registrant's report on Form 8-K dated
May 14, 1993)
3.1(h) Conformed copy of Restated Certificate of Incorporation of
registrant, as amended (incorporated by reference to Exhibit
4(b) to registrant's report on Form 8-K dated May 14, 1993)
3.2 By-laws of registrant, as amended and restated as of January
28, 1995
4.1(a) Rights Agreement dated as of February 6, 1987, between the
registrant and Harris Trust and Savings Bank, which includes
as Exhibit A the form of Certificate of Designation of Pre-
ferred Stock, as Exhibit B, the form of Rights Certificate
and, as Exhibit C, the Summary of Rights (incorporated by ref-
erence to Exhibit 4 to registrant's report on Form 8-K dated
January 26, 1987)
4.1(b) Certificate of Adjustment relating to April 1987 stock split
pursuant to Section 12 of the Rights Agreement (incorporated
by reference to Exhibit 4.3(b) to registrant's registration
statement on Form S-1, Registration No. 33-13839)
</TABLE>
--------
*In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act is
1-7327, Chemical Waste Management, Inc.'s file number under that Act was 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
<C> <S> <C>
4.1(c) Certificate of Adjustment relating to December 1989 stock
split pursuant to Section 12 of the Rights Agreement (incorpo-
rated by reference to Exhibit 4.3(c) to registrant's 1989 an-
nual report on Form 10-K)
4.2(a) Trust Indenture dated as of August 1, 1989 (incorporated by
reference to Exhibit 4.3(a) to registrant's 1990 annual report
on Form 10-K)
4.2(b) First Supplemental Indenture dated as of December 1, 1990 (in-
corporated by reference to Exhibit 4.3(b) to registrant's 1990
annual report on Form 10-K)
4.3 Trust Indenture dated as of June 1, 1993 (incorporated by ref-
erence to Exhibit 4 to the registrant's current report on Form
8-K dated July 15, 1993)
5. Inapplicable
6. Inapplicable
7. Inapplicable
8. Inapplicable
9. None
10.1 1981 Stock Option Plan for Non-Employee Directors of regis-
trant (incorporated by reference to Exhibit 19 to registrant's
report on Form 10-Q for the quarter ended June 30, 1982)
10.2 WMX Technologies, Inc. 1982 Stock Option Plan, as amended to
March 11, 1988 (incorporated by reference to Exhibit 10.3 to
registrant's 1988 annual report on Form 10-K)
10.3 Deferred Director's Fee Plan, as amended (incorporated by ref-
erence to Exhibit 10.3 to registrant's 1990 annual report on
Form 10-K)
10.4 Director's Phantom Stock Plan (incorporated by reference to
Exhibit 10.9 to registrant's 1984 annual report on Form 10-K)
10.5 Employment Agreement, dated as of September 1, 1986, by and
between the registrant and Phillip B. Rooney (incorporated by
reference to Exhibit 19.4 to registrant's report on Form 10-Q
for the quarter ended September 30, 1986)
10.6 WMX Technologies, Inc. Corporate Incentive Bonus Plan (incor-
porated by reference to Exhibit B to the registrant's Proxy
Statement for its 1995 Annual Meeting of Stockholders)
10.7 WMX Technologies, Inc. Supplemental Executive Retirement Plan,
as amended and restated as of May 14, 1993 (incorporated by
reference to Exhibit 10 to the registrant's current report on
Form 8-K dated July 15, 1993)
10.8 WMX Technologies, Inc. Long Term Incentive Plan, as amended
and restated as of January 27, 1994 (incorporated by reference
to Exhibit A to the registrant's Proxy Statement for its 1995
Annual Meeting of Stockholders)
</TABLE>
--------
*In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act is
1-7327, Chemical Waste Management, Inc.'s file number under that Act was 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
<C> <S> <C>
10.9 Supplemental Retirement Benefit Agreement, dated as of January
1, 1989, by and between the registrant and Peter H. Huizenga
(incorporated by reference to Exhibit 10.16 to Post-Effective
Amendment No. 2 to registrant's registration statement on Form
S-1, Registration No. 33-13839)
10.10 Chemical Waste Management, Inc. 1986 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.1 to Chemical
Waste Management, Inc.'s 1989 annual report on Form 10-K)
10.11 Chemical Waste Management, Inc. 1986 Stock Option Plan for
Non-Employee Directors (incorporated by reference to Exhibit
10.2 to Chemical Waste Management, Inc.'s registration state-
ment on Form S-1, Registration No. 33-8509)
10.12 Chemical Waste Management, Inc. Deferred Director's Fee Plan
(incorporated by reference to Exhibit 10.5 to Chemical Waste
Management, Inc.'s registration statement on Form S-1, Regis-
tration No. 33-8509)
10.13 WMX Technologies, Inc. Director's Charitable Endowment Plan
(incorporated by reference to Exhibit 10.20 to registrant's
1989 annual report on Form 10-K)
10.14 Supplemental Retirement Benefit Agreement dated as of January
1, 1991 by and between registrant and Donald F. Flynn (incor-
porated by reference to Exhibit 10.17 to registrant's 1990 an-
nual report on Form 10-K)
10.15 Restricted Unit Plan for Non-Employee Directors of
Wheelabrator Technologies Inc. as amended through June 10,
1991 (incorporated by reference to Exhibit 19.03 to the report
on Form 10-Q of Wheelabrator Technologies Inc. for the quarter
ended June 30, 1991)
10.16 1988 Stock Plan for Executive Employees of Wheelabrator Tech-
nologies Inc. and its subsidiaries (the "WTI 1988 Stock Plan")
(incorporated by reference to Exhibit 28.1 to Amendment No. 1
to the registration statement of Wheelabrator Technologies
Inc. on Form S-8, Registration No. 33-31523)
10.17 Amendments dated as of September 7, 1990 to the WTI 1988 Stock
Plan (incorporated by reference to Exhibit 19.02 to the 1990
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.18 Amendment dated as of November 1, 1990 to the WTI 1988 Stock
Plan (incorporated by reference to Exhibit 19.04 to the 1990
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.19 1986 Stock Plan for Executive Employees of Wheelabrator Tech-
nologies Inc. and its subsidiaries (the "WTI 1986 Stock Plan")
(incorporated by reference to Exhibit 28.2 to Amendment No. 1
to the registration statement of Wheelabrator Technologies
Inc. on Form S-8, Registration No. 33-31523)
10.20 Amendment dated as of November 1, 1990 to the WTI 1986 Stock
Plan (incorporated by reference to Exhibit 19.03 to the 1990
annual report on Form 10-K of Wheelabrator Technologies Inc.)
</TABLE>
--------
*In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act is
1-7327, Chemical Waste Management, Inc.'s file number under that Act was 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
<C> <S> <C>
10.21 Description of consulting agreement between registrant and Al-
exander B. Trowbridge (incorporated by reference to Exhibit
10.22 to registrant's 1989 annual report on Form 10-K)
10.22 WMX Technologies, Inc. 1992 Stock Option Plan (incorporated by
reference to Exhibit 10.31 to registrant's registration state-
ment on Form S-1, Registration No. 33-44849)
10.23 WMX Technologies, Inc. 1992 Stock Option Plan for Non-Employee
Directors (incorporated by reference to Exhibit 10.32 to reg-
istrant's registration statement on Form S-1, Registration No.
33-44849)
10.24 Wheelabrator Technologies Inc. 1992 Stock Option Plan (incor-
porated by reference to Exhibit 10.45 to the 1991 annual re-
port on Form 10-K of Wheelabrator Technologies Inc.)
10.25 Deferred Director's Fee Plan of Wheelabrator Technologies Inc.
adopted June 10, 1991 (incorporated by reference to Exhibit
19.02 to the quarterly report on Form 10-Q of Wheelabrator
Technologies Inc. for the quarter ended June 30, 1991)
10.26 Waste Management International plc Share Option Plan (incorpo-
rated by reference to Exhibit 10.1 to the registration state-
ment on Form F-1 of Waste Management International plc, Regis-
tration No. 33-46511)
10.27 Amendment dated as of December 6, 1991 to the WTI 1986 Stock
Plan (incorporated by reference to Exhibit 19.01 to the 1991
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.28 Amendment dated as of December 6, 1991 to the WTI 1988 Stock
Plan (incorporated by reference to Exhibit 19.02 to the 1991
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.29 Amendment dated as of December 6, 1991 to the Restricted Unit
Plan for Non-Employee Directors of Wheelabrator Technologies
Inc. (incorporated by reference to Exhibit 19.05 to the 1991
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.30 Rust International Inc. 1993 Stock Option Plan (incorporated
by reference to Exhibit 10.41 to registrant's 1992 annual re-
port on Form 10-K)
10.31 Rust International Inc. 1993 Stock Option Plan for Non-Em-
ployee Directors (incorporated by reference to Exhibit 10.42
to registrant's 1992 annual report on Form 10-K)
10.32 First Amended and Restated International Business Opportuni-
ties Agreement by and among registrant, Chemical Waste Manage-
ment, Inc., Wheelabrator Technologies Inc., Waste Management
International, Inc., Waste Management International plc and
Rust International Inc., dated as of January 1, 1993 (incorpo-
rated by reference to Exhibit 28 to the registration statement
on Form S-3 of Wheelabrator Technologies Inc., Registration
No. 33-59606)
</TABLE>
--------
*In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act is
1-7327, Chemical Waste Management, Inc.'s file number under that Act was 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
<C> <S> <C>
10.33 Amendment dated as of January 28, 1994 relating to the Inter-
national Business Opportunities Agreement (incorporated by
reference to Exhibit 10.19 to the 1993 annual report on Form
10-K of Chemical Waste Management, Inc.)
10.34 Chemical Waste Management, Inc. 1992 Stock Option Plan (incor-
porated by reference to Exhibit 10.19 to the 1991 annual re-
port on Form 10-K of Chemical Waste Management, Inc.)
10.35 Consulting Agreement dated as of February 9, 1995 between the
registrant and J. Steven Bergerson.
11. None
12. Computation of ratio of earnings to fixed charges
13.1 Management's Discussion and Analysis of Financial Condition
and Results of Operations
13.2 Financial Statements, Supplementary Data and Report of Inde-
pendent Accountants
14. Inapplicable
15. Inapplicable
16. None
17. Inapplicable
18. None
19. Inapplicable
20. Inapplicable
21. List of subsidiaries of registrant
22. Inapplicable
23. Consent of Independent Public Accountants
24. None
25. Inapplicable
26. Inapplicable
27. Financial Data Schedule
28. None
</TABLE>
--------
*In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act is
1-7327, Chemical Waste Management, Inc.'s file number under that Act was 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-5
<PAGE>
EXHIBIT 3.2
WMX TECHNOLOGIES, INC.
______________________________
BY-LAWS
______________________________
AMENDED AND RESTATED AS OF: January 28, 1995
<PAGE>
ARTICLE I
OFFICES
SECTION 1. DELAWARE OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors shall be held in the Village of Oak Brook, State of
Illinois, at such place as may be fixed from time to time by the board of
directors, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the board of directors and stated in
the notice of the meeting. Meetings of stockholders for any other purpose may
be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
SECTION 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be held
on the second Friday in May if not a legal holiday, and if a legal holiday, then
on the next business day following, at 10:00 a.m., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which the stockholders shall elect
directors as provided in the restated certificate of incorporation, and transact
such other business as may properly be brought before the annual meeting (a) in
accordance with applicable statutes, (b) by or at the direction of the board of
directors or (c) by any stockholder who complies with the procedures set forth
in this Section 2. For business properly to be brought before an annual meeting
of stockholders by a stockholder pursuant to this Section 2, the stockholder
must have given timely notice thereof in proper written form to the secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of
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the Corporation not less than 30 days nor more than 60 days prior to
the date of the annual meeting; provided, however, that in the event that less
than 40 days notice or prior public disclosure of the date of the annual meeting
is given or made to stockholders, for such notice by the stockholder to be
timely, it must be so received prior to the date of the annual meeting and not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. To be in proper written form, a stockholder's notice to the
secretary shall set forth in writing as to each matter the stockholder proposes
to bring before the annual meeting: (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting; (ii) the name and address, as they appear
on the Corporation's books, of the stockholder proposing such business; (iii)
the class and number of shares of capital stock of the Corporation which are
owned by the stockholder as of the record date for the annual meeting; and (iv)
any material interest of the stockholder in such business. The chairman of the
annual meeting shall have the sole authority to determine whether business was
properly brought before the annual meeting in accordance with the provisions of
this Section 2 and, if the chairman should determine that such business was not
so properly brought, he or she shall so declare to the annual meeting, and any
such business not properly brought before the annual meeting shall not be
transacted.
SECTION 3. ANNUAL MEETING NOTICE. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than 60
days before the date of the meeting.
SECTION 4. STOCKHOLDER MEETING LIST. The secretary of the Corporation
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept
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at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present for any purpose germane to the
meeting.
SECTION 5. INSPECTORS. The board of directors shall, in advance of any
meeting of stockholders, appoint one or more inspectors of election and may
designate one or more persons as alternate inspectors to replace any inspector
who fails to act. If any inspector or alternate so appointed shall be unwilling
or unable to serve, the chairman of the meeting shall appoint the necessary
inspector or inspectors. The inspectors so appointed, before entering upon the
discharge of their duties, shall be sworn faithfully to execute the duties of
inspectors with strict impartiality and according to the best of their ability,
and the oath so taken shall be subscribed by them. Such inspectors shall: (a)
determine the number of shares of capital stock of the Corporation outstanding
and the voting power of each; (b) determine the shares represented at the
meeting, the existence of a quorum, and the validity of proxies and ballots; (c)
count and tabulate all votes and ballots; (d) determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors; (e) certify their determination of the number
of shares represented at the meeting and their count of all votes and ballots;
and (f) do such acts as are proper to conduct the election or vote with fairness
to all stockholders. The date and time of the opening and closing of the polls
for each matter upon which stockholders will vote at a meeting shall be
announced at the meeting, and no ballots, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls. No director or candidate for the office of director shall
act as an inspector of election of directors. Inspectors need not be
stockholders.
SECTION 6. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
restated certificate of incorporation, may be called by the chairman of the
board, the president or the secretary or by resolution of the board of
directors, subject to the provisions of Article Sixth of the restated
certificate of incorporation, and shall be called by the chairman of the board,
president or secretary at the request in writing of a majority of the board of
directors, subject to the provisions of Article Sixth of the restated
certificate of incorporation.
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SECTION 7. SPECIAL MEETING NOTICE. Written notice of a special meeting
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more than 60
days before the date of the meeting to each stockholder entitled to vote at such
meeting.
SECTION 8. SPECIAL MEETING PURPOSE. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
SECTION 9. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
restated certificate of incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
SECTION 10. VOTING. (a) When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question (other than the
election of directors) brought before such meeting, unless the question is one
upon which by express provision of the General Corporation Law of the State of
Delaware or of the restated certificate of incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
(b) Each share of common stock shall entitle the holder thereof to one
vote, in person or by proxy, at any and all meetings of the stockholders of the
Corporation, on all propositions before the
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meeting. No proxy shall be voted or acted upon after three years from its date
unless the proxy provides for a longer period.
SECTION 11. MEETING PROCEDURE. The chairman of any meeting of
stockholders shall have full and complete authority over matters of procedure
and there shall be no appeal from the ruling of the chairman. If disorder or
any other event should arise which prevents continuation of the legitimate
business of the meeting, the chairman may announce the adjournment of the
meeting; and upon his or her doing so, the meeting is immediately adjourned.
The chairman may ask or require anyone who is not a bona fide stockholder or
holder of a valid proxy, or who is disrupting or inhibiting the orderly conduct
of the meeting, to leave the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER. The number of directors which shall constitute the
whole board shall be twelve. Only directorships with terms expiring in any year
(as provided in Article Fifth of the restated certificate of incorporation)
shall be filled at the annual meeting of stockholders in that year. Directors
shall be at least 21 years of age and need not be stockholders.
SECTION 2. ELECTION, TERM AND VACANCIES. At each meeting of stockholders
for the election of directors at which a quorum is present, the persons
receiving a plurality of the votes cast shall be elected directors. Each
director shall serve until the annual meeting of stockholders for the year in
which his term expires and until his successor is duly elected and
qualified, subject, however, to his prior death, retirement, resignation or
removal for cause. Should a vacancy occur or be created, whether arising
through death, retirement, resignation or removal of a director for cause, or
through an increase in the number of directors of any class, such vacancy shall
be filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director. A director so elected to fill a
vacancy shall serve for the then present term of office of the class of
directors to which he was elected. Subject to the provisions of Article IX of
these by-laws, if there are no directors in office, then an election may be held
in the manner provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office shall constitute
less
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than a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
SECTION 3. NOMINATIONS. Nominations for any election of a director may be
made by the board of directors, a committee appointed by the board or by any
stockholder entitled to vote generally in the election of directors who complies
with the procedures set forth in this Section 3. All nominations by
stockholders must be made pursuant to timely notice in proper written form to
the secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 30 days nor more than 60 days prior to the date of the
meeting; provided, however, that in the event that less than 40 days notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, for such notice by the stockholder to be timely, it must be so
received prior to the date of the meeting and not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. To be in proper
written form, such stockholder's notice shall set forth in writing (a) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the Corporation's books, of such stockholder
and (ii) the class and number of shares of the Corporation which are
beneficially owned by such stockholder. At the request of the board of
directors, any person nominated by the board, or a committee appointed by the
board, for election as a director shall furnish to the secretary of the
Corporation the information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by this Section 3, and the
defective nomination shall thereupon be disregarded.
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SECTION 4. POWERS. The business of the Corporation shall be managed by
its board of directors which may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute or by the restated
certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
SECTION 5. PLACE OF MEETINGS. The board of directors of the Corporation
and committees thereof may hold meetings, both regular and special, either
within or without the State of Delaware.
SECTION 6. REGULAR MEETINGS. Regular meetings of the board of directors
or any committee thereof may be held without notice at such time and at such
place as shall from time to time be determined by the board or such committee.
SECTION 7. SPECIAL MEETINGS. Special meetings of the board or committees
thereof may be called by the chairman of the board or, in the case of a
committee meeting, by the committee chairman on one day's notice to each
director, either personally or by mail, telegram, telex, or facsimile
transmission; special meetings of the board shall be called by the chairman of
the board or secretary in like manner and on one day's notice on the written
request of two directors.
SECTION 8. QUORUM. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the restated certificate of
incorporation. If a quorum shall not be present at any meeting of the board of
directors the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 9. WRITTEN CONSENT. Unless otherwise restricted by the restated
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the
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board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the board or
committee.
SECTION 10. TELEPHONIC MEETINGS. Unless otherwise restricted by the
restated certificate of incorporation, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
SECTION 11. COMMITTEES. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee, provided, however, that in the event of the absence or
disqualification of any member and alternate member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member or alternate
member. Any such committee, to the extent provided in the resolution
designating such committee and not limited by the General Corporation Law of the
State of Delaware, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors. A resolution passed by a majority of the whole board which
designates a committee or committees as provided above may be amended or
repealed only by a majority of the whole board. Unless its authorizing
resolution otherwise specifies, two members of a committee shall be required to
constitute a quorum, except that only one member shall be required in the case
of any committee having only one member.
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SECTION 12. COMMITTEE MINUTES. Each committee shall keep regular minutes
of its meetings and report the same to the board of directors when required.
SECTION 13. COMPENSATION. The directors may be paid their expenses if
any, of attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors, a stated
salary as director, or any combination thereof. No such payment shall preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like expenses and compensation for attending committee meetings.
SECTION 14. RESIGNATION. A resignation of a director shall be effective
upon receipt by the chairman of the board of a signed written notice of such
resignation, or, should such notice contain a specified date of resignation, at
such specified date. No acceptance by the board of directors is required for
such resignation to be effective.
ARTICLE IV
NOTICES
SECTION 1. FORM AND TIMING. Whenever any notice is required to be given
to any director or stockholder pursuant to the provisions of the General
Corporation Law of the State of Delaware, the restated certificate of
incorporation, these by-laws or the resolutions or other governing provisions of
a committee of the board of directors, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given on the second business day next following the day when the same shall be
deposited in the United States mail. Notice to a director may also be given by
telegram addressed to such director at such address, and such notice shall be
deemed to be given on the business day next following the day of the delivery of
such notice for transmission to such director. Notice to a director may also be
given by telex or facsimile transmission to such number as shall appear on the
records of the Corporation as the number of such director and shall be deemed to
be given on the day of transmission.
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SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be given
under the provisions of the General Corporation Law of the State of Delaware,
the restated certificate of incorporation, these by-laws or the resolutions or
other governing provisions of a committee of the board of directors, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. Attendance by a person at a meeting shall constitute a waiver of the
required notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
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ARTICLE V
OFFICERS
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
shall be chosen by the board of directors and shall be a chairman of the board,
a president, one or more vice presidents (the number and designation thereof to
be determined by the board of directors), a secretary, a treasurer, a
controller, a general counsel, and such assistant secretaries, assistant
treasurers or other officers, including, without limitation, one or more vice
chairmen of the board, as may be elected or appointed by the board of directors.
Any number of offices may be held by the same person, unless the restated
certificate of incorporation or these by-laws otherwise provide.
SECTION 2. ANNUAL ELECTION. The board of directors, at its meeting held
in conjunction with or after each annual meeting of stockholders, shall choose a
chairman of the board, a president, one or more vice presidents, a secretary, a
treasurer, a controller, a general counsel and may choose one or more vice
chairmen of the board, assistant officers or other officers as it may deem
advisable.
SECTION 3. APPOINTMENT OF OTHER OFFICERS. The board of directors may
appoint such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
SECTION 4. COMPENSATION. The salaries and other compensation of all
officers (other than assistant officers, unless the board otherwise determines)
and agents of the Corporation elected by the board shall be as fixed by the
board of directors.
SECTION 5. TERM, REMOVAL AND VACANCIES. The officers of the Corporation
shall hold office until their successors are chosen and qualify. Any officer or
agent elected or appointed by the board of directors may be removed at any time
by the affirmative vote of a majority of the whole board. Any vacancy occurring
in any office of the Corporation shall be filled by the board of directors.
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SECTION 6. CHAIRMAN OF THE BOARD. The chairman of the board shall be the
chief executive officer of the Corporation, and shall preside at all meetings of
the stockholders and the board of directors. He or she may sign certificates
for shares of the Corporation and any deeds, mortgages, bonds, contracts or
other instruments which the board of directors has authorized to be executed,
whether or not under the seal of the Corporation, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these by-laws to some other officer or agent of the Corporation.
He or she shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
SECTION 7. VICE CHAIRMAN (OR VICE CHAIRMEN) OF THE BOARD. In the absence
of the chairman of the board or in the event of his or her inability or refusal
to act, the vice chairman of the board, if any (or in the event there may be
more than one vice chairman of the board, the vice chairman of the board, in the
order designated, or in the absence of any designation, then in the order of
their election), shall perform the duties of the chairman of the board, and when
so acting, shall have all the powers of and be subject to all the restrictions
upon the chairman of the board. He or she may sign certificates for shares of
the Corporation and any deeds, mortgages, bonds, contracts, or other instruments
which the board of directors has authorized to be executed, whether or not under
the seal of the Corporation, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these by-
laws to some other officer or agent of the Corporation. The vice chairmen of
the board shall perform such other duties and have such other powers as the
board of directors or the chairman of the board may from time to time prescribe.
SECTION 8. PRESIDENT. The president shall be the chief operating officer
of the Corporation. He or she may sign certificates for shares of the
Corporation and any deeds, mortgages, bonds, contracts or other instruments
which the board of directors has authorized to be executed, whether or not under
the seal of the Corporation, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these by-
laws to some other officer or agent of the Corporation. In the absence of the
chairman of the board and the vice chairman (or, if there be more than one, the
vice chairmen) of the board, or in the event of their inability or refusal to
act, the president shall perform the duties of the chairman of the board, and
when so acting, shall have all
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the powers of and be subject to all the restrictions upon the chairman of the
board. The president shall perform such other duties and have such other powers
as the board of directors or the chairman of the board may from time to time
prescribe.
SECTION 9. VICE PRESIDENTS. In the absence of the president or in the
event of his or her inability or refusal to act, the vice president (or in the
event there be more than one vice president, the vice presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. A vice president who is appointed as such with respect to a
particular area of responsibility or function of the Corporation shall, subject
to the authority of the chairman and the president, perform all duties and have
all authority pertaining to the general and active management of such area or
function and shall see that all orders and resolutions of the board of directors
pertaining to such area or function are carried into effect. The vice
presidents shall perform such other duties and have such other powers as the
board of directors, the chairman of the board or the president may from time to
time prescribe.
SECTION 10. SECRETARY. The secretary shall: (a) keep the minutes of
stockholders, board of directors and board of directors committee meetings in
one or more books provided for the purpose; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by law;
(c) be custodian of the corporate records and of the seal of the Corporation and
see that the seal of the Corporation is affixed to all documents, the execution
of which on behalf of the Corporation under its seal is necessary or desirable;
(d) keep or cause to be kept a register of the mailing address of each
stockholder which shall be furnished to the secretary or any transfer agent of
the Corporation by such stockholder; (e) have authority to sign with the
chairman of the board, a vice chairman of the board, the president, or a vice
president, certificates for shares of the Corporation, the issue of which shall
have been authorized by resolution of the board of directors; (f) have general
charge of the stock transfer books of the Corporation; (g) attest to the
genuineness of the signature on behalf of the Corporation of any officer or
agent of the Corporation on any deeds, mortgages, bonds, contracts or other
instruments; (h) certify the authenticity of any instrument or record of the
Corporation; and (i) in general perform all duties incident to the office of
secretary and
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such other duties as the board of directors, the chairman of the board or the
president may from time to time prescribe.
SECTION 11. TREASURER. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the board of directors shall
determine. He or she shall: (a) have charge and custody of and be responsible
for all funds and securities of the Corporation, and the deposit of all moneys
in the name of the Corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with resolutions of the board of
directors; (b) have authority to sign with the chairman of the board, a vice
chairman of the board, the president or a vice president, certificates for
shares of the Corporation, the issue of which shall have been authorized by
resolution of the board of directors; and (c) in general perform all the duties
incident to the office of treasurer and such other duties as the board of
directors, the chairman of the board or the president may from time to time
prescribe.
SECTION 12. CONTROLLER. The controller shall be the principal
accounting officer of the Corporation and shall supervise the preparation and
maintenance, on a current basis, of such accounting books, records and reports
as may be necessary for directors, officers and employees of the Corporation to
discharge their duties or as may be required by law. In general he or she shall
perform all duties incident to the office of controller and other duties as the
board of directors, the chairman of the board or the president may from time to
time prescribe.
SECTION 13. GENERAL COUNSEL. The general counsel shall be the chief legal
adviser of the Corporation as to all matters affecting the Corporation or its
business. In general he or she shall perform all the duties incident to the
office of general counsel and such other duties as the board of directors, the
chairman of the board or the president may from time to time prescribe.
Section 14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries as thereunto authorized by the board of directors may sign with the
chairman of the board, a vice chairman of the board, the president, or a vice
president certificates for shares of the Corporation, the issue of which shall
have been authorized by a resolution of the board of directors, may attest to
the genuineness of the signature on behalf of the Corporation of any officer or
agent of the
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Corporation on any deeds, mortgages, bonds, contracts or other instruments and
may certify the authenticity of any instrument or record of the Corporation. The
assistant treasurers may sign with the chairman of the board, a vice chairman of
the board, the president or a vice president, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
board of directors. The assistant treasurers shall respectively, if required by
the board of directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the board of directors shall determine. The
assistant secretaries and assistant treasurers in general shall perform such
duties as from time to time may be prescribed by the secretary or the treasurer,
respectively, or by the board of directors, the chairman of the board or the
president.
ARTICLE VI
CAPITAL STOCK
SECTION 1. CERTIFICATES. Every holder of stock in the Corporation shall
be entitled to have a certificate signed by, or in the name of the Corporation
by, the chairman or a vice chairman of the board, the president or a vice
president, and by the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the Corporation, representing the number of shares
owned by him or her in the Corporation. The board of directors may by
resolution, subject to applicable provisions of the General Corporation Law of
the State of Delaware, determine that some or all of any or all classes or
series of stock shall be uncertificated shares.
SECTION 2. FACSIMILE SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
SECTION 3. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificates to be lost, stolen or destroyed. When authorizing
such issue of a new
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certificate or certificates, the board of directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his or her legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation bond in such sum as it may direct as indemnity or
otherwise indemnify the Corporation against any claim that may be made against
the Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and upon delivery to the Corporation or the transfer agent of the
Corporation of proper evidence of succession, assignment or authority to
transfer any uncertificated shares of the Corporation, it shall be the duty of
the Corporation to issue a new certificate to the person entitled thereto and
cancel the old certificate, if the shares are represented by a certificate, and
record the transaction upon its books.
SECTION 5. RECORD DATES. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
SECTION 6. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, to vote as such owner and to receive notices in
respect of meetings of stockholders and other matters, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the General Corporation Law of
the State of Delaware.
16
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the restated certificate of
incorporation, if any, may be declared by the board of directors at any regular
or special meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
restated certificate of incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 3. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate or as may be
designated pursuant to procedures approved by the board of directors.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation begins on the
first day of January and ends on the last day of December in each calendar year.
SECTION 5. SEAL. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed, affixed or otherwise reproduced.
SECTION 6. INDEMNIFICATION. Each person who at any time is or shall have
been a director, officer or employee of the Corporation, or is or shall have
been serving at the request of the
17
<PAGE>
Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, and his or her heirs,
executors and administrators, shall be indemnified by the Corporation in
accordance with and to the full extent authorized by the General Corporation Law
of the State of Delaware, as may be amended from time to time. The foregoing
right of indemnification shall not be deemed exclusive of other rights to which
any director, officer, employee, agent or other person may be entitled in any
capacity as a matter of law or under any by-law, agreement, vote of stockholders
or directors, or otherwise. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation, as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against or incurred by him or her in any such capacity, or arising out
of his or her status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under the provisions of
this by-law or the General Corporation Law of the State of Delaware.
ARTICLE VIII
AMENDMENTS
SECTION 1. These by-laws may be altered, amended or repealed, or new by-
laws may be adopted, by the stockholders or by the board of directors if such
business is properly brought before any regular meeting of the stockholders or
of the board of directors or at any special meeting of the stockholders or of
the board of directors if, in the case of a special meeting, notice of such
alteration, amendment, repeal or adoption of new by-laws is contained in the
notice of such special meeting.
ARTICLE IX
EMERGENCY BY-LAWS
SECTION 1. EMERGENCY MANAGEMENT COMMITTEE. The board of directors, by
resolution, may provide for an Emergency Management Committee and appoint or
designate the manner in which membership of the Committee shall be determined.
To the extent provided in said resolution, such Committee shall have and may
exercise the powers of the board of directors in the management
18
<PAGE>
of the business and affairs of the Corporation, and shall thereby be deemed to
constitute the board of directors of the Corporation, only during any interval
commencing when the board of directors shall be unable to function by reason of
vacancies occurring due to death, incapacity or catastrophe or other similar
emergency condition and there shall be no member or members of the board
remaining and able to fill such vacancies pursuant to Section 2 of Article III
hereof and terminating when a board of directors has been elected by the
stockholders of the Corporation and shall have been duly qualified.
Notwithstanding the foregoing, such Committee shall, during the time it is
authorized to function as provided herein, have the power to appoint such
temporary officers to fill existing vacancies as the circumstances may require
and to authorize the seal of the Corporation to be affixed to all papers which
may require it.
SECTION 2. MEETINGS, QUORUM AND VACANCIES. The Emergency Management
Committee shall meet as promptly as possible after the occurrence of the event
herein described which would activate the Committee and at such subsequent time
or times as it may designate until a board of directors has been duly elected by
the stockholders and qualified. Such Committee shall make its own rules of
procedure except to the extent otherwise provided by resolution of the board. A
majority of the Committee shall constitute a quorum. Any vacancy occurring in
said Committee caused by resignation, death or other incapacity shall be filled
by a majority of the remaining members of the Committee and any member so chosen
shall serve until a board of directors has been duly elected by the stockholders
and qualified.
SECTION 3. POWERS OF CHAIRMAN. During such times as the Emergency
Management Committee shall be required to function pursuant to the provisions
hereof, the chairman of said Committee shall function as and have the powers of
the chief executive officer of the Corporation and shall preside at all meetings
of the stockholders and the Emergency Management Committee. The chairman of the
Emergency Management Committee shall have and exercise, subject to the direction
of the Emergency Management Committee, general charge and supervision over the
business and affairs of the Corporation.
SECTION 4. OTHER BY-LAW PROVISIONS. To the extent not inconsistent with
the provisions of this Article IX, all other provisions of these by-laws shall
remain in effect during the interval in
19
<PAGE>
which the Emergency Management Committee shall be required to function pursuant
to the provisions hereof.
20
<PAGE>
Exhibit 10.35
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (the "Agreement") dated as of this 9th day of
February, 1995, between WMX Technologies, Inc., a Delaware corporation
(hereinafter referred to as the "Company"), and J. Steven Bergerson (hereinafter
referred to as "Bergerson"):
W I T N E S S E T H:
-------------------
WHEREAS, the Company recognizes that Bergerson has substantially
contributed to the Company's success and growth, and that his experience has
been and is expected to continue to be invaluable to the Company; and
WHEREAS, the Company and Bergerson have agreed that Bergerson shall retire
as an employee and resign as an officer of the Company effective March 31, 1995;
and
WHEREAS, the Company wishes to assure that upon Bergerson's retirement as
an employee of the Company, Bergerson will continue to supply to the Company his
experience, knowledge, expert judgment and counsel on a consulting basis; and
WHEREAS, Bergerson is willing to perform consulting services to the Company
after retirement as an independent contractor upon the terms and conditions
herein set forth; and
WHEREAS, in his capacity as an officer of the Company, Bergerson has, and
in connection with his consulting services under this Agreement will have,
access to the Company's Confidential Information (defined for purposes of this
Agreement as including, but not limited to, drawings, memoranda and other
materials or records of a proprietary nature; engineering or technical data;
records, policy or strategy matters relating to acquisitions, finance, legal
matters, accounting, marketing, personnel, management and operations (including,
insofar as operations are concerned, customer and prospective customer lists,
price lists, customer service requirements, costs of providing service,
suppliers and equipment maintenance costs)).
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the Company hereby agrees to engage Bergerson and
Bergerson hereby agrees to accept such engagement upon the following terms and
conditions:
1. EMPLOYMENT THROUGH March 31, 1995. Bergerson shall continue as an
employee and Senior Vice-President of the Company in his present position until
March 31, 1995 at which time he shall retire as an employee and resign as an
officer of the Company and
<PAGE>
any "Affiliate" (as hereinafter defined). During this period Bergerson will
assist in the orderly transition of duties and responsibilities as reasonably
requested by the Chairman of the Board of Directors of the Company. Until March
31, 1995, Bergerson shall be entitled to all salary and benefits he currently
enjoys. In the event Bergerson should die prior to March 31, 1995, any unpaid
salary earned prior to his death or unpaid bonus earned prior to his death shall
be payable to Bergerson's wife. Bergerson shall be entitled to participate in
the 1994 Corporate Incentive Bonus Plan, but shall not be eligible to receive a
bonus from the Long Term Incentive Plan. After March 31, 1995, Bergerson will
no longer be deemed an employee of the Company but shall be considered an
independent contractor under this Agreement for the Term (as defined in
paragraph 2 below).
The Company agrees that all stock options which have been granted to
Bergerson as of the date hereof shall become fully vested and exercisable by
Bergerson on March 31, 1995. Bergerson shall be able to exercise all such
options pursuant to the terms of the stock option plan and agreements covering
such options until March 31, 2001, after which date all unexercised options
shall expire. In the event Bergerson should die prior to March 31, 2001, the
executor, administrator or personal representative of his estate may exercise
any unexercised options until such date.
2. TERM. The "Term" shall mean the period from April 1, 1995 to the
earlier of (i) March 31, 1998; (ii) Bergerson's disability (which, for purposes
of this Agreement, shall mean his total incapacity (in the reasonable opinion of
the Chairman of the Company) to perform his consulting services under this
Agreement which shall continue for a period of at least six months); or (iii)
Bergerson's death.
3. DUTIES AND RESPONSIBILITIES. During the Term, Bergerson shall have no
duties with respect to the management or day-to-day activities of the Company
and shall be available for consultation with respect to difficult assignments
which require his particular judgment and expertise and shall also be available
for consultation as reasonably directed from time to time by the Chairman of the
Board of Directors with respect to management of the Company, its operations,
acquisitions, legal matters and such other matters within Bergerson's expertise.
Bergerson's consultation services shall be performed at his reasonable
convenience. Bergerson shall also be available to consult with the Company
regarding any litigation or investigations concerning the Company which may
arise during the Term. After the Term, neither the Company nor Bergerson shall
have any further obligations hereunder except, in the case of Bergerson, his
obligations pursuant to paragraph 8 hereof.
4. COMPENSATION DURING THE TERM. During the Term, the
-2-
<PAGE>
Company agrees to pay Bergerson a consulting fee at an annual rate of
$345,000.00. Bergerson's consultation fee shall be payable on a monthly basis.
Any amount due under this Agreement for the calendar year of Bergerson's death
or disability shall be prorated to the end of the month in which Bergerson dies
or becomes disabled.
5. HEALTH, LIFE AND ACCIDENT BENEFITS. As additional consideration for
Bergerson's consulting services, the Company agrees to continue his coverage
under the Company's group medical plan and dental plan on the same basis as
coverage is provided to salaried employees until Bergerson attains age 65 or
until his death, whichever occurs earlier. In addition, Bergerson shall be
provided with continued coverage until age 65, under the Company's group life
and accident insurance plans, subject to the policies' terms and limitations
governing eligibility and insurability.
6. REIMBURSEMENT OF EXPENSES. All expenses reasonably incurred during the
Term by Bergerson in performing consulting services under this Agreement shall
be reimbursed on a monthly basis upon the submission of a monthly expense
account statement to the Company.
7. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Company shall initiate
payments to Bergerson under the terms of the Company Supplemental Executive
Retirement Plan ("SERP") when Bergerson elects to receive such benefits in
accordance with the provisions of the SERP governing the timing of distribution
of benefits. The amount of such benefits shall not be subject to an early
retirement reduction if Bergerson elects to commence benefits prior to age 60.
The SERP shall be payable in such form as Bergerson shall designate in
accordance with the provisions of the SERP. Years of service performed by
Bergerson and the compensation received by him under this Agreement shall be
credited for the purposes of calculating Bergerson's benefit accrual under the
SERP.
8. NON-COMPETITION. Bergerson agrees that:
(a) During the Term of this Agreement, he will not (without the written
consent of the Chairman of the Board of Directors) engage directly or indirectly
in any business within the United States (financially as an investor or lender
or as an employee, director, officer, partner, independent contractor,
consultant or owner or in any other capacity calling for the rendition of
personal services or acts of management, operation or control) which is in any
respect competitive with the business at any time during the Term hereof
conducted by the Company or any of its subsidiaries or Affiliates as defined
below. Notwithstanding the foregoing, Bergerson shall be entitled to own
securities of any corporation conducting a business competitive with the
business of
-3-
<PAGE>
the Company or any of its subsidiaries or Affiliates so long as the securities
of such corporation are listed on the National Securities Exchange and the
securities owned directly or indirectly by Bergerson do not represent more than
two percent (2%) of any class of the outstanding securities of such company.
(b) During the Term of this Agreement, in addition to the obligations
pursuant to subparagraph 10(a), Bergerson agrees that neither he nor any
business in which he engages directly or indirectly will (i) directly or
indirectly induce any customers of the Company or of corporations or businesses
which directly or indirectly control or are controlled by or under common
control with the Company ("Affiliates") to patronize any business similar to
that of the Company, (ii) canvass, solicit or accept any similar business from
any customer of the Company or any Affiliates, (iii) directly or indirectly
request or advise any customer of the Company or Affiliates to withdraw, curtail
or cancel such customer's business with the Company or Affiliates, (iv) directly
or indirectly disclose to any other person, firm or corporation the names or
addresses of any of the customers of the Company or Affiliates, or (v) compete
with the Company or Affiliates in acquiring or merging with any other business
or acquiring the assets of such other business.
(c) Except in connection with the performance of his duties under this
Agreement, he will not, without the prior written consent of the Chairman of the
Board of Directors, divulge any of the Company's Confidential Information to
anyone, directly or indirectly.
(d) In the event that any of the provisions of this paragraph should ever
be deemed to exceed the time, geographic or occupational limitations permitted
by applicable laws, then such provisions shall be and are hereby reformed to the
maximum time, geographic or occupational limitations permitted by law.
Bergerson acknowledges that a part of the compensation to be paid under
this Agreement is in consideration of the fulfillment of the provisions of this
paragraph, and that if at anytime he fails to abide by his agreements in this
paragraph, no further payments shall be due from the Company under this
Agreement. Bergerson further acknowledges and agrees that a breach by him of
his obligations under this paragraph may cause the Company irreparable injury
and damage which cannot be reasonably or adequately compensated by damages at
law and Bergerson agrees that the Company shall be entitled to injunctive and/or
other equitable relief to prevent a breach of Bergerson's obligations under this
paragraph in addition to any other remedies legally available to it.
-4-
<PAGE>
9. RELEASE. In further consideration of the benefits to be paid to
Bergerson under this Agreement, Bergerson hereby releases the Company and its
affiliates, directors, officers and employees from liability for any claim
arising in any way as a result of his employment or his retirement from the
Company, including any contract or tort claims and claims for violation of any
state, federal, or local civil rights law, including the Federal Age
Discrimination in Employment Act and the Illinois Human Rights Act which
prohibit discrimination based on age. He voluntarily states that he will not
file any claim with any government agency or lawsuit with any court which in any
way makes a claim based on his employment, separation or retirement from the
Company. Bergerson further agrees that his signing of this Agreement is
completely voluntary and that he has not been discriminated against during the
term of his employment or termination therefrom because of his race, sex, age,
religion, national origin or any other factor prohibited by law.
Bergerson has twenty-one (21) days from the date of receipt of this
Agreement to consider signing the Agreement. At any time prior to the signing
of this Agreement, he may consult with an attorney if he so chooses. If
Bergerson signs this Agreement, he will have seven (7) days from the date of
signing this Agreement to revoke this agreement by informing, in writing, the
Company's Chairman. The Agreement is not effective until this revocation period
has lapsed. Bergerson understands that any revocation, to be effective, must
be in writing and either (a) postmarked within seven (7) days of execution of
this Agreement and addressed to the Company's Chairman; or (b) hand-delivered
within seven (7) days of execution of this Agreement to the Company's Chairman.
Bergerson understands that if revocation is made by mail, mailing by certified
mail, return receipt requested, is recommended to show proof of mailing.
Bergerson understands that by agreeing to this Agreement he has not waived any
rights or claims that may arise after the date of signing. This paragraph is
intended to comply with the waiver requirements set forth in Section 201 of the
Older Workers Benefit Protection Act and comparable provisions of the Illinois
Human Rights Act and any ambiguity herein shall be resolved in favor of
compliance with said Acts.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
deposited in the U.S. Mail in a registered, postage prepaid envelope addressed,
if to Bergerson at his address set forth below, and if to the Company, c/o
Chairman, 3003 Butterfield Road, Oak Brook, Illinois 60521, or to such other
addresses as either party shall designate by written notice to the other.
-5-
<PAGE>
11. ASSIGNMENT. Bergerson may not assign his rights or obligations
hereunder. The rights and obligations of the Company hereunder shall inure to
the benefit of and shall be binding upon its respective successors and assigns.
12. (a) This Agreement shall be subject to and governed by the laws of
the State of Illinois.
(b) Failure to insist upon strict compliance with any provision(s) hereof
shall not be deemed a waiver of such provision(s) or any other provision hereof.
(c) This Agreement may not be modified except by an agreement in writing
executed by the parties hereto.
(d) The invalidity or unenforceability of any provision hereby shall not
affect the validity or enforceability of any other provisions.
(e) This Agreement shall supersede any prior employment agreements with
Bergerson.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year indicated next to their respective signature lines.
WASTE MANAGEMENT, INC.
2/9 /s/ Dean L. Buntrock
Dated: _______________, 1995 By__________________________________
Chairman of the Board of Directors
February 9 /s/ J. Steven Bergerson
Dated: _______________, 1995 ____________________________________
J. Steven Bergerson
Address:
-6-
<PAGE>
Exhibit 12
WMX TECHNOLOGIES, INC.
Ratio of Earnings to Fixed Charges
(Unaudited)
(millions of dollars, except ratio)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1990/(1)/ 1991/(2)/ 1992/(3)/ 1993/(4)/ 1994/(5)/
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Income Before Income Taxes,
Undistributed Earnings from
Affiliated Companies, Minority
Interest, Extraordinary Item
and Cumulative Effect of
Accounting Changes................ $ 1,253.7 $ 1,139.4 $ 1,555.2 $ 867.2 $ 1,480.8
Interest Expense.................... 192.1 279.9 311.0 401.5 445.3
Capitalized Interest................ (81.4) (111.4) (87.9) (100.6) (104.5)
One-Third of Rents Payable
in the Next Year.................. 23.6 46.7 44.7 48.5 53.9
--------- --------- --------- --------- ---------
Income Before Income Taxes,
Undistributed Earnings from
Affiliated Companies, Minority
Interest, Extraordinary Item,
Cumulative Effect of Accounting
Changes, Interest and One-Third
of Rents.......................... $ 1,388.0 $ 1,354.6 $ 1,823.0 $ 1,216.6 $ 1,875.5
========= ========= ========= ========= =========
Interest Expense.................... 192.1 279.9 311.0 401.5 445.3
One-Third of Rents Payable in the
Next Year......................... 23.6 46.7 44.7 48.5 53.9
--------- --------- --------- --------- ---------
Interest Expense plus One-Third
of Rents.......................... $ 215.7 $ 326.6 $ 355.7 $ 450.0 $ 499.2
========= ========= ========= ========= =========
Ratio of Earnings to Fixed
Charges........................... 6.43 to 1 4.15 to 1 5.13 to 1 2.70 to 1 3.76 to 1
</TABLE>
-------------
/(1)/ The results for 1990 exclude an extraordinary charge ($24.5 million)
reflecting the Company's percentage interest in the writedown by Wheelabrator
Technologies Inc. of Wheelabrator's investment in the stock of The Henley Group,
Inc. and Henley Properties Inc. to market value.
/(2)/ The results for 1991 include a special charge ($296.0 million before tax
and minority interest) primarily to reflect then current estimates of the
environmental remediation liabilities at waste disposal sites previously used or
operated by the Company and its subsidiaries or their predecessors.
/(3)/ The results for 1992 include a non-taxable gain ($240.0 million before
minority interest) resulting from the initial public offering of 75 million
newly issued ordinary shares of Waste Management International plc in April 1992
and special charges ($219.9 million before tax and minority interest). The
results for 1992 exclude the cumulative effect of accounting changes ($71.1
million after tax and minority interest) related to the adoption of Statements
of Financial Accounting Standards Nos. 106 and 109.
/(4)/ The results for 1993 include a non-taxable gain ($15.1 million) relating
to the issuance of shares by Rust International Inc. as well as a special asset
revaluation and restructuring charge ($550.0 million before tax and minority
interest) related primarily to a revaluation of Chemical Waste Management,
Inc.'s thermal treatment business.
/(5)/ The results for 1994 include a charge ($9.2 million before tax and
minority interest) recorded by Rust to write off assets and recognize costs of
exiting certain of Rust's service lines and closing offices in a consolidation
of its engineering and construction groups.
<PAGE>
Exhibit 13.1
WMX Technologies, Inc. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
-------------------------------------------------------------------------------
RESULTS OF OPERATIONS
CONSOLIDATED: Consolidated 1994 revenue of WMX Technologies, Inc. and its
subsidiaries ("WMX" or the "Company") was $10,097,318,000 compared with
$9,135,577,000 in 1993 and $8,661,027,000 in 1992.
Consolidated 1994 net income was $784,381,000 or $1.62 per share, compared
with $452,776,000 or $0.93 per share in 1993 and $850,036,000 or $1.72 per share
in 1992.
Earnings during the three years were impacted by special charges, gains from
stock transactions of subsidiaries, an increase in U.S. tax rates, and required
changes in accounting principles. The following table reconciles reported
earnings per share to earnings excluding such items:
<TABLE>
<CAPTION>
1992 1993 1994
--------------------------------------------------------------
<S> <C> <C> <C>
Reported earnings per share $ 1.72 $ 0.93 $1.62
Gains on stock transactions
of subsidiaries (0.42) (0.02) --
Special charges (see Note 13
to Consolidated Financial
Statements)--
Chemical Waste
Management, Inc.
("CWM") asset revaluation
and restructuring charge -- 0.59 --
Other 0.24 -- 0.01
Adjustment to deferred income taxes
resulting from 1993 tax law change -- 0.03 --
Changes in accounting principles 0.14 -- --
------ ------ -----
Earnings per share excluding
above items $ 1.68 $ 1.53 $1.63
====== ====== =====
</TABLE>
In addition, the higher U.S. tax rates in effect in 1993 negatively impacted
1993 income by approximately $0.04 per share compared with 1992.
During the three-year period, the Company has invested substantial resources
and senior management time in an aggressive expansion into new service lines and
geographic markets. Waste Management International plc ("WM International")
successfully completed an initial public offering ("IPO") and has expanded
rapidly, particularly in the Far East. Wheelabrator Technologies Inc. ("WTI")
has broadened its business lines through targeted acquisitions of water,
wastewater and air pollution control businesses and technologies. The formation
of Rust International Inc. ("Rust") on January 1, 1993, created a leading
environmental and infrastructure engineering, consulting, remediation and
industrial services company. These efforts have positioned WMX as a leader in
the global environmental services market. At the same time, core North American
solid and hazardous waste operations faced difficult business conditions,
including changes which have negatively impacted the hazardous waste industry,
as discussed below, and a lengthy U.S. recession which affected operating
results into 1993. The Company has moved to address these developments with a
major restructuring of CWM during 1993 and a reorganization of its Waste
Management, Inc. ("WMI") North American solid waste management organization.
During the third quarter of 1994, the Company undertook a major strategic review
of its operations, which is continuing. The focus of these efforts is to
streamline all of the Company's business units, enhance its management and
planning process, reduce operating costs and improve profitability, enhance
customer satisfaction, increase returns on capital and grow the business.
The Company currently provides comprehensive environmental, engineering and
construction, industrial and related services through five principal
subsidiaries, each of which operates in a relatively discrete portion of the
environmental services industry or geographic area. WMI provides integrated
solid waste services and CWM provides hazardous waste collection,
transportation, treatment and disposal services in North America. WM
International provides these services, as well as trash-to-energy services,
outside North America. WTI is involved in trash-to-energy and independent power
projects, water and wastewater treatment (including biosolids management) and
air quality control, primarily in North America. Rust serves the engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation and on-site industrial and related services markets in the United
States and a number of foreign countries. During 1995, the strategic review
begun by the Company in 1994 will continue, focusing on, among other things, the
Company's opportunities and resources, on both a line of business and a
geographic basis, to determine the most effective use of resources to add value
to the Company's core competencies. No conclusions have been reached but the
current business alignment could change in the future as a result of the review.
Rust was formed on January 1, 1993, through the contribution by CWM of its
hazardous substance remediation services business, its approximately 56%
ownership in The Brand Companies, Inc. ("Brand"), and its 12% ownership interest
in WM International, together with certain other assets, and the contribution by
WTI of its engineering and construction and environmental and infrastructure
consulting businesses, its London-based international engineering unit, and
certain other assets. Brand was subsequently merged into a subsidiary of Rust.
At December 31, 1994, Rust was owned approximately 56% by CWM and approximately
40% by WTI, with the remaining ownership held by the public. In February 1995,
the Company offered to acquire the approximately 4% of Rust's shares held by the
public; see "Subsequent Events."
Following is an analysis of operating results by principal subsidiary. The
analysis comparing 1993 to 1992 with respect to CWM, WTI and Rust assumes that
the formation of Rust had occurred as of January 1, 1992, and comparative
information for 1992 in that analysis is stated on a pro forma basis reflecting
that assumption.
-------------------------------------------------------------------------------
1993 OPERATIONS COMPARED TO 1992
WMI Revenue for WMI was $4,702,166,000 in 1993 compared with $4,309,614,000 in
1992, an increase of 9.1%. 1993 revenue growth by line of business is analyzed
in the following table:
<TABLE>
<S> <C>
Residential 9.2%
Commercial 7.1
Rolloff and industrial 10.1
Disposal, transfer and other 10.7
</TABLE>
Volume increases accounted for revenue growth of approximately 6.8%, whereas
acquisitions accounted for approximately 2.8%. Pricing pressure experienced by
the solid waste industry in 1992 persisted in 1993. Prior to the fourth quarter
of 1993, prices in general had not increased in twelve to eighteen months and
had deteriorated slightly in the latter portion of the period. WMI began
implementing selective price increases effective October 1, 1993, as the U.S.
economy improved. For the year, price had a negative impact of approximately
0.5% on 1993 revenue growth.
30
<PAGE>
-------------------------------------------------------------------------------
Volume increases in 1993 came from continued growth in special waste and
increased market share as a result of a substantial investment in the sales and
marketing area during the third and fourth quarters of 1992. Disposal volume in
1993 was also helped by a contract to dispose of debris from Hurricane Andrew in
Florida.
Operating margins (after operating, selling and administrative expenses and
goodwill amortization, but before special charges) were 20.4% of revenue in
1993, compared to 21.0% in 1992. Operating expenses as a percentage of revenue
benefited from increased volumes to absorb the fixed portion of such costs as
well as WMI's progress in internalizing disposal volume, but price weakness
largely offset these gains. Selling and administrative expenses at the beginning
of the year reflected the significant 1992 investment in the sales and marketing
areas discussed above, but moved downward steadily as a percentage of revenue
during the first three quarters of 1993, as personnel were trained and became
more productive, and administrative cost reduction programs were implemented.
Both operating and selling and administrative expenses increased in the fourth
quarter, in both dollars and as a percentage of revenue, as a result of
reorganization-related expenses including work force reductions and relocations.
CWM CORE BUSINESS (EXCLUDING RUST) Revenue was $661,860,000 in 1993 compared
with $755,088,000 on a pro forma basis for 1992. The 12.3% net decrease in 1993
revenue was attributable approximately 0.4% to price and 14.2% to volume,
partially offset by a 2.3% increase related to acquisitions. Price decreases in
chemical waste services were partially offset by price increases in low-level
radioactive waste services. Volume declines resulted from a decline in
environmental remediation projects generating hazardous waste for off-site
treatment and disposal at CWM facilities, an uncertain regulatory environment
regarding hazardous waste management, Superfund and other special cleanup
requirements for industry, the effects of the sluggish economy on CWM's
customers, and softness in the commercial hazardous waste incineration market,
leading to reduced pricing. CWM's results were also impacted by reduced activity
resulting from the change in federal government administration and unusual
weather in some western and eastern states in the first quarter of 1993, as well
as continuing efforts by American industry to reduce waste and manage it on-
site. 1992 revenue was helped by disposal volume accelerating ahead of a
regulatory land-ban of certain waste categories which became effective in May of
that year.
Base business revenue declined approximately 7% and event business revenue
(revenue from relatively larger, typically non-recurring projects) declined
approximately 41% in 1993 compared with 1992. Event business accounted for 10.6%
of revenue in 1993 compared with 15.8% in 1992.
In an effort to respond to changing industry conditions, CWM completed a study
of its business in the third quarter of 1993 and announced a strategic
reconfiguration of its operations to meet then-current market demand. Among the
actions taken as part of a program to reduce costs and improve efficiency were
the elimination of approximately 1,600 positions, consolidation of operations,
sale of selected service centers in marginal service lines and geographies, and
centralization of several functions to improve efficiency. The restructuring was
based on the assumption that future base business revenue growth, if any, would
not keep pace with the economic recovery, and that CWM would not make
investments which would be primarily supported by event business volumes.
In connection with the restructuring, CWM recorded a charge of $550 million
before tax, including $381 million to write down assets, primarily incinerators,
and $169 million for cash expenditures to be made as part of the program to
reduce costs, improve efficiency and structure CWM to meet then-current market
demand.
Operating expenses (excluding special charges) as a percentage of revenue were
76.5% in 1993 compared with 56.3% in 1992. The shift in revenue mix toward an
increased percentage of treatment revenue, which has lower margins, compared to
direct disposal services revenue, which has higher margins, increased operating
expenses in dollars and as a percentage of revenue in 1993. Also, a large
component of CWM's operating expenses in its core business is fixed, and the
1993 revenue decline caused such expenses to increase as a percentage of
revenue.
Selling and administrative expenses as a percentage of revenue were 19.3% in
1993 compared with 15.4% in 1992. The increase is due primarily to the lower
revenue volume over which to spread such costs.
WTI 1993 revenue increased 23%, to $1,142,219,000, compared with pro forma
revenue of $928,313,000 for the previous year. Approximately 40% of the revenue
growth came from air and water quality control companies acquired during 1992
and 1993. Businesses acquired during 1993 significantly expanded WTI's
capability to meet the water and wastewater management needs of industrial
customers, and provided entry into certain regional biosolids and air quality
equipment markets, as well as additional wastewater treatment technology and
process know-how. Successful project development efforts were responsible for an
additional 30% of the 1993 revenue increase and included the full year impact of
the North Broward County trash-to-energy facility, the third quarter 1993 start
of commercial operations at WTI's New York Organic Fertilizer Company ("NYOFCO")
biosolids pelletizer facility, and construction revenue for the Lisbon,
Connecticut trash-to-energy facility being built by WTI for the Eastern
Connecticut Resource Recovery Authority ("ECRRA"). Existing business growth
contributed the remaining 30% of the 1993 revenue increase. Major factors in
this internal growth were higher revenues from air quality control system
construction and installation, and greater tonnage at certain trash-to-energy
facilities with related increases in trash disposal and electrical generation
revenue. Energy businesses represented approximately 52% of consolidated 1993
revenue, while the water and air businesses accounted for 32% and 16%,
respectively. For 1992, energy, water and air business lines represented
approximately 59%, 30% and 11%, respectively, of consolidated revenue.
Operating expenses increased to 69.4% of revenue in 1993 from 68.3% in 1992.
This increase reflected primarily the effects, including the amortization of
goodwill associated with acquisitions, of changes in business mix brought about
by the growth of air and water operations. In part because they are less capital
intensive, these businesses typically have lower gross margins than WTI's energy
operations. Selling and administrative expenses increased in absolute terms in
1993 compared with pro forma 1992 levels, but decreased as a percent of revenue
to 9.4% from 10.5%. The percentage decline is attributable to the integration of
acquired companies into existing businesses and to continuing company-wide
administrative cost containment efforts.
WM INTERNATIONAL WM International is a U.K. corporation which prepares its
financial statements in pounds sterling under accounting principles prevailing
in the United Kingdom. Such accounting principles differ in certain respects
from those generally accepted in the United States ("US GAAP"). The discussion
and analysis of WM International is based on US GAAP financial statements with
pounds sterling translated to U.S. dollars at the rates used to translate WM
International financial statements for inclusion in the Company's consolidated
financial statements.
31
<PAGE>
WM International revenue was $1,411,211,000 in 1993 compared with
$1,445,734,000 in 1992. Components of revenue change are as follows:
<TABLE>
<CAPTION>
Percentage
Increase/(Decrease)
-----------------------------------------------------------
<S> <C>
Price increases 3.7%
Volume (including start-ups) (6.2)
Purchased businesses 17.7
Foreign currency translation (17.6)
-----
Total (2.4)%
=====
</TABLE>
WM International was able to achieve revenue growth (excluding currency
translation) despite a depressed economy in Europe, which accounts for roughly
80% of total revenue, and the volume decrease which related primarily to the
transition from the construction phase to the operational phase of a contract to
design, construct and operate a hazardous waste treatment facility in Hong Kong.
Price increases slowed in the second half of 1993 as inflation in Europe
declined. Landfill revenues were constrained by delays in obtaining permits,
particularly in Italy.
A significant portion of WM International's revenue arises in currencies other
than pounds sterling (its reporting currency) or U.S. dollars. As a result,
foreign currency movement has had and will continue to have an impact on
reported revenue, expenses and net income. Stated in pounds sterling, WM
International revenue grew 15.3% in 1993 compared to 1992. Both the Company and
WM International periodically engage in hedging transactions intended to
mitigate currency translation risk. See "Derivatives."
Operating expenses were 71.5% of revenue in both 1993 and 1992. Ongoing
improvements in operating efficiency and the effect of changes in country and
business mix of revenue were offset by increased goodwill amortization. Selling
and administrative expenses were 14.1% of revenue in 1993 compared with 14.6% in
1992. The improvement results from an expanded revenue base to absorb the
investment in country and corporate management and administrative structure, as
well as continuing integration of acquired businesses.
RUST Rust has two broad lines of business: engineering, construction and
environmental and infrastructure consulting services, and environmental
remediation and other on-site industrial services. Rust also operated an
asbestos abatement business for the first four months of 1993. This business was
transferred to NSC Corporation ("NSC") in May 1993, in exchange for a 41% equity
interest in NSC and NSC's ownership interest in two industrial services
businesses.
Excluding the effect of the asbestos abatement business, revenue increased 16%
in 1993 compared with 1992. Revenue by line of business is shown in the
following table ($000's omitted):
<TABLE>
<CAPTION>
1992 1993
---------------------------------------------------------------
<S> <C> <C>
Engineering, construction and
consulting services $ 619,096 $ 798,340
Remediation and
industrial services 677,444 704,360
Asbestos abatement 144,510 31,765
---------- ----------
Total $1,441,050 $1,534,465
========== ==========
</TABLE>
Engineering, construction and consulting services revenue grew by 29% in 1993.
Domestic and international acquisitions completed in 1993 and the latter part of
1992 accounted for revenue growth of 17%. The 1993 domestic acquisitions gave
Rust a strong presence in the petrochemical and refinery engineering markets and
stronger consulting service capabilities in the northeast United States.
Price/volume increases in 1993 (12%) were the result of the start-up of several
large projects, including one large waste-to-energy plant and several
manufacturing/processing facilities.
Remediation and industrial services revenue grew by 4% in 1993. A decline in
remediation service revenue related to project delays and cancellations by
customers and prospective customers was more than offset by an increase in
industrial services revenue resulting from market share gains in existing
businesses and 1992 and 1993 acquisitions.
Revenue from affiliated companies increased $117 million in 1993, to $243
million for the year. Approximately $86 million of this increase related to
engineering design and construction projects, with the balance coming from
consulting services.
Operating expenses as a percentage of revenue were 81.5% in 1993 compared with
85.3% in 1992. The improvement resulted from a shift in revenue mix in favor of
industrial services and environmental and infrastructure consulting services and
projects, which have relatively lower operating costs, improvements in the
profitability of the environmental and infrastructure consulting businesses as a
result of synergies realized by combining offices with higher personnel
utilization, and improved operating margins from international operations.
During 1992, Brand recorded a special charge of approximately $35.2 million
before tax to write down its investment in its asbestos abatement business and
to provide for certain restructuring costs related to the formation of Rust.
Selling and administrative expenses were 10.2% of revenue in 1993 compared
with 10.1% in 1992. The increase is primarily due to acquisitions, particularly
the acquisition of EnClean, Inc. in the third quarter of 1993.
--------------------------------------------------------------------------------
1994 OPERATIONS COMPARED TO 1993
WMI WMI's revenue grew 8.8% to $5,117,871,000 in 1994 compared with
$4,702,166,000 in 1993. Revenue growth occurred in all service lines as shown in
the following table:
<TABLE>
<S> <C>
Residential 4.6%
Commercial 8.1
Rolloff and industrial 11.1
Disposal, transfer and other 11.8
</TABLE>
Price increases accounted for revenue growth of approximately 1.5%. WMI
continues to focus on pricing on a customer-by-customer basis and to seek
increases when and where appropriate. Pricing in the commercial, rolloff and
industrial lines generally continued the positive trend begun in the fourth
quarter of 1993, while residential work remained extremely competitive and
disposal pricing varied by region but generally improved during the year. Higher
recyclable commodity prices, which can vary significantly from year to year,
also helped 1994 results. Volume increases accounted for revenue growth of 7.8%,
despite the negative impact of the 1993 volume from the contract to dispose of
debris from Hurricane Andrew which did not recur in 1994, and the loss of a
disposal contract for the City of Philadelphia as of July 1. The increase in
disposal, transfer and other revenue was aided by special waste volume, which
increased over 20%, and recycling, which grew 29% (including the impact of
higher commodity prices discussed above). Revenue decreases due to businesses
sold exceeded revenue added from acquisitions by approximately 0.5% in 1994,
primarily the result of the sale
32
<PAGE>
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during the first quarter of the year of WMI's Modulaire(R) mobile offices
business and certain other under-performing businesses, and reduced acquisition
activity.
Operating margins strengthened throughout the year following the fourth
quarter 1993 reorganization, and were 20.8% of revenue for the year compared
with 20.4% in 1993. This improvement resulted from productivity increases,
particularly in the selling and administrative areas where expenses remained
relatively constant in dollars and declined as a percentage of revenue, stronger
pricing and increased volume, partially offset by higher costs of operating
disposal facilities to comply with more stringent environmental regulations.
Although the costs of complying with environmental regulations will likely
continue to increase, WMI believes it can maintain or improve margins through
price increases and productivity enhancements if the U.S. economy remains
strong.
CWM CORE BUSINESS (EXCLUDING RUST) CWM core business revenue continued to
decline in 1994, to $649,581,000 from $661,860,000 in 1993. The following table
analyzes core business revenue changes in 1994 compared to 1993:
<TABLE>
<CAPTION>
Percentage
Increase/(Decrease)
---------------------------------------------
<S> <C>
Price 2.9%
Volume (7.2)
Purchased businesses 2.4
-----
Total (1.9)%
=====
</TABLE>
Price and volume increases for low-level radioactive waste services, which
increased core business revenue by 3.1%, were more than offset by a continuation
of the industry conditions which negatively impacted the remainder of the
hazardous waste industry in 1993. The strong results in the low-level
radioactive waste service line resulted from the acceleration of volume received
at CWM's disposal facility in Barnwell, South Carolina, in anticipation of a
state deadline which denied access to that facility to customers outside an
eight-state region in the southeastern United States ("Southeast Compact") after
June 30, 1994. South Carolina has adopted legislation which allows the Barnwell
site to continue operating until December 31, 1995, to serve customers located
within this region. However, the Barnwell disposal operations are not expected
to contribute to CWM's operating results in 1995 to the extent they did in 1994.
The North Carolina Low Level Radioactive Waste Management Authority has voted to
select a site in that state for development by CWM as a replacement regional
disposal facility for the Southeast Compact, but CWM is unable to predict when,
if ever, its efforts to develop a replacement site will be successful.
Event business was 9.0% of core business revenue in 1994 compared to 10.6% in
1993. The decline in event business revenue continues to be primarily the result
of reduced off-site disposal from environmental cleanup projects.
During 1994, CWM completed the strategic reconfiguration of its operations
announced in the third quarter of 1993 and discussed previously. Substantially
all anticipated cash expenditures were made. As a result of this program,
overhead, including depreciation and amortization, was reduced in 1994 by
approximately $60 million on an annualized basis.
Operating expenses declined as a percentage of revenue in 1994 to 70.0%
compared to 76.5% in 1993. Benefits from the restructuring were partially offset
by severe weather in the northeast portion of the United States during the first
quarter, which delayed projects and hampered operations, and a shift in revenue
mix toward lower margin services. Selling and administrative expenses declined
$22.3 million in 1994 on an absolute basis and were reduced from 19.3% of
revenue to 16.3%, primarily as a result of the restructuring.
WTI WTI revenue increased 16% to $1,324,567,000 in 1994. Businesses acquired
in 1993 and 1994 contributed approximately 47% of the revenue increase, while
incremental operating and construction revenue from new energy and water
development projects accounted for the remainder. Overall, revenue from existing
businesses was flat in 1994 compared to 1993.
Revenue from energy businesses increased 16% in 1994 as a result of the third
quarter commencement of commercial operations at the Falls Township trash-to-
energy facility in Pennsylvania and the wood waste, scrap tire, and landfill
gas-fired Ridge Generating Station in Florida. A full year of construction
revenue from the Lisbon trash-to-energy facility, as well as a shift in the mix
of tonnage received at trash-to-energy plants from lower-priced spot tons to
generally higher-priced contract tonnage, also favorably impacted 1994 revenue.
Water business revenue grew 29% in 1994 compared to 1993. Acquisitions
contributed approximately 80% of this growth, and expanded WTI's presence in the
industrial water and wastewater treatment markets, both domestically and
internationally, while increasing the breadth of WTI's technology and product
offerings. The balance of the 1994 revenue increase was attributable to the full
year impact of the NYOFCO biosolids pelletizer facility. Increased 1994 revenue
from sales of water process systems and equipment to industrial customers was
offset by a decline in revenue from water, wastewater, and biosolids contract
service operations and curtailed equipment procurement by municipal customers.
Air-related revenue declined 10% in 1994 compared to 1993, primarily because
of an expected lull in air pollution control retrofit activity by utilities
between Phases I and II of the Clean Air Act Amendments of 1990. In addition,
many industrial customers delayed awards for discretionary equipment purchases
in response to the uncertain economy and to rule-making delays and limited
enforcement activities by the U.S. Environmental Protection Agency. Energy,
water and air business revenue accounted for 52%, 35% and 13%, respectively, of
1994 revenue.
WTI's operating margin increased to 21.9% of revenue in 1994 compared with
21.2% in 1993. Improved operating performance at certain energy facilities and
the addition of the NYOFCO facility were partially offset by competitive pricing
pressures and margin declines in the contract service water business and air and
water product businesses. Selling and administrative expenses declined as a
percentage of revenue from 9.4% to 9.0% as a result of the integration of
acquisitions, ongoing cost containment activities and a larger revenue base over
which to spread the fixed components of such costs.
WM INTERNATIONAL Stated in U.S. dollars, WM International revenue grew $299.7
million or 21.2% to $1,710,862,000 in 1994 compared to $1,411,211,000 in 1993.
Components of revenue change are as follows:
<TABLE>
<CAPTION>
Percentage
Increase
-------------------------------------------
<S> <C>
Price 1.7%
Volume (including start-ups) 8.9
Purchased businesses 9.4
Foreign currency translation 1.2
----
Total 21.2%
====
</TABLE>
Lower inflation and weak economic conditions in many European countries
constrained WM International's ability to increase prices. In Italy, where a
substantial portion of its business
33
<PAGE>
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is municipal contracts, renewals during much of 1994 were consistently at
reduced prices, a condition which is expected to persist in 1995. However, a
price increase was obtained on the municipal contract in Buenos Aires,
Argentina. The volume increase in 1994 related primarily to construction
activity on the solid waste SENT landfill in Hong Kong. Economic and competitive
pressures caused volume declines in Italy, France and Germany, which were more
than offset by volume increases in other countries.
Revenue increases from acquisitions slowed in 1994 compared to 1993. While WM
International continued to make acquisitions in 1994 and expects to do so in
1995, it believes it is now well positioned in many of its markets and will be
selective with respect to such acquisitions, focusing particularly on "tuck-in"
acquisitions (small acquisitions in markets where WM International already has a
support staff).
Operating expenses increased to 72.7% of revenue in 1994 compared with 71.5%
in 1993 due to higher labor costs in Italy, pricing pressure in Italy, Germany
and France, and flow control issues and landfill permitting delays in Italy and
France. Selling and administrative expenses decreased to 13.4% of revenue in
1994 compared to 14.1% in 1993 as a result of the impact of "tuck-in"
acquisitions, a higher revenue base to absorb the costs of corporate and country
management and administrative infrastructure, integration of acquired
businesses, and a continued focus on improved productivity and administrative
cost reduction.
RUST Rust 1994 revenue was $1,682,907,000 compared to $1,534,465,000 in 1993,
an increase of 9.7%. Revenue growth by line of business is shown in the
following table ($000's omitted):
<TABLE>
<CAPTION>
Percentage
1993 1994 Increase
------------------------------------------------------------------
<S> <C> <C> <C>
Engineering, construction
and consulting services $ 798,340 $ 967,671 21.2%
Remediation and
industrial services 704,360 715,236 1.5
Asbestos abatement 31,765 -- N/A
---------- ----------
Total $1,534,465 $1,682,907 9.7%
========== ==========
</TABLE>
Excluding the effect of the asbestos abatement business, revenue increased 12%
in 1994 compared with 1993.
Engineering, construction and consulting services revenue grew by 21.2% in
1994. The full year impact of the 1993 acquisitions and domestic and foreign
1994 acquisitions resulted in revenue growth of 17.7%. The balance came from
increases in existing businesses, primarily the result of work on two pulp and
paper facilities. Backlog in this business line at December 31, 1994, increased
by $437 million from December 31, 1993, to $1.2 billion.
Remediation and industrial services revenue grew by 1.5% in 1994. Growth was
the result of the full-year impact of 1993 acquisitions. Revenue in existing
businesses declined due to severe weather in the first quarter and delays by
scaffolding and industrial customers of scheduled maintenance at their plants.
In addition, the anticipated award of a large federal remediation contract was
delayed. The backlog in this business line at December 31, 1994, decreased by
$26 million from December 31, 1993, to $627 million, including $404 million
related to businesses to be transferred to OHM Corporation ("OHM") in the
transaction discussed in the following paragraph.
In December 1994, Rust signed an agreement with OHM to acquire an
approximately 40% interest in OHM in exchange for Rust's remediation services
business. Subject to approval by OHM shareholders, the transaction is expected
to close in May 1995. For 1994, the business to be transferred had revenue of
$231.1 million and operating income (after operating, selling and administrative
expenses) of $6.0 million. Rust sees this transaction as a strategic alliance
and expects to benefit from being able to concentrate on its core engineering,
construction and industrial services businesses while relying on OHM to provide
remediation services to Rust's customers on a preferred basis.
The backlog in the two business lines includes approximately $449 million (of
which $227 million will be transferred to OHM) for several Department of Defense
contracts awarded to Rust, including two Total Environmental Restoration
Contracts. There can be no assurance that specific projects identified and
performed pursuant to such contracts will result in aggregate revenues of $449
million over their remaining terms.
Revenue from affiliated companies was $224 million in 1994 compared with $243
million in 1993.
Excluding the charge discussed in the following paragraph, operating expenses
were 83.3% of revenue in 1994 compared with 81.5% in 1993, partially the result
of severe weather in the first quarter and delayed projects which resulted in
less efficient personnel utilization. In addition, 1994 saw a shift in revenue
mix in favor of lower margin businesses. Selling and administrative expenses
were 10.4% of 1994 revenue compared with 10.2% of 1993 revenue. The increase in
1994 is attributable to the lower revenue base in existing businesses, and
acquisition activity in 1993 and 1994. The level of selling and administrative
expenses associated with acquired companies was higher than that of existing
businesses, but it is anticipated that these expenses will decline as a
percentage of revenue as the acquired companies are integrated into existing
operations.
In 1994, Rust recorded a pretax charge of $9.2 million for the write-off of
assets and the recognition of one-time costs incurred during the fourth quarter
in connection with the discontinuance of its marine construction and dredging
operations, and the closing of offices in a consolidation of the engineering and
construction groups. After tax and minority interest, the charge reduced the
Company's net income by $0.01 per share.
-------------------------------------------------------------------------------
OTHER ITEMS
GAINS FROM STOCK TRANSACTIONS OF SUBSIDIARIES Gains from stock transactions of
subsidiaries arise when common stock is issued by any of the Company's
subsidiaries for acquisitions, public offerings or the exercise of employee
stock options. In 1992, the Company, CWM and WTI recognized a nontaxable gain of
$240 million (before minority interest) as a result of the WM International IPO
in April of that year.
INTEREST The following table sets forth the components of consolidated
interest expense, net ($000's omitted):
<TABLE>
<CAPTION>
1992 1993 1994
---------------------------------------------------------
<S> <C> <C> <C>
Interest expense $310,949 $ 401,469 $ 445,320
Interest income (57,693) (41,432) (34,613)
Capitalized interest (87,897) (100,591) (104,512)
-------- --------- ---------
Interest expense, net $165,359 $ 259,446 $ 306,195
======== ========= =========
</TABLE>
34
<PAGE>
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Net interest expense has increased during the three-year period, partially the
result of a management decision to increase the leverage of the Company. The
impact of that decision was mitigated in 1992 by lower U.S. interest rates and
by the use of the proceeds of the WM International IPO to repay debt. Debt
levels increased in 1993 to fund stock repurchase programs, acquisitions and
capital expenditures, and approximately $130 million paid to former stockholders
of Brand who elected to receive cash in connection with the merger of Brand into
a wholly-owned subsidiary of Rust. Debt levels remained flat from December 31,
1993, to December 31, 1994, as an increased emphasis on cash flow from
operations and the disposition of under-performing businesses and assets
generated sufficient funds for capital expenditures and dividends, but interest
expense increased as a result of higher U.S. interest rates and the full year
impact of the 1993 borrowings. Capitalized interest varies, depending upon the
level of capital projects such as solid waste landfills and trash-to-energy
plants that are in process at any point in time. The Company expects capitalized
interest to decline in 1995 as a number of significant capital projects were
completed near the end of 1994.
MINORITY INTEREST The decline in minority interest in 1993 reflected the lower
earnings of the Company's subsidiaries in that year and the minority interest
(approximately $78.6 million) in the special charge recorded by CWM.
SUNDRY INCOME, NET Sundry income relates primarily to earnings recorded on the
equity method from the Company's investments in ServiceMaster Consumer Services
Limited Partnership and Wessex Water plc. In addition, CWM recognized a gain in
the first quarter of 1993 on the sale of shares of common stock of WTI it had
held for investment.
INCOME TAXES In August 1993, the U.S. Congress passed and the President signed
the Omnibus Budget Reconciliation Act of 1993, which, among other things,
increased U.S. federal income taxes for the Company and its domestic
subsidiaries, retroactive in certain cases to January 1, 1993. The 1993 income
tax provision is approximately $34 million higher than would have been the case
under the 1992 tax law, as a result of the requirement to adjust deferred income
taxes in accordance with Statement of Financial Accounting Standards ("FAS") No.
109, and to apply the higher tax rate effective January 1, 1993.
-------------------------------------------------------------------------------
ACCOUNTING PRINCIPLES
Effective January 1, 1992, the Company, CWM and WTI adopted FAS No. 106 and FAS
No. 109 issued by the Financial Accounting Standards Board ("FASB"). FAS No. 106
requires that the expected costs of certain future postretirement benefits other
than pensions be charged to expense during the years in which the employees
render service. Previously, the companies recognized these costs on a cash
basis. FAS No. 109 required a change in the method of accounting for income
taxes to an asset and liability approach.
As permitted by the FASB, the Company recorded a charge, after tax and
minority interest, of $71,139,000 or $0.14 per share, for the cumulative effect
of these accounting changes in 1992. Except for the one-time charge, the effect
of these accounting changes on 1992 and subsequent years' earnings was not
significant.
During 1994, the Company was required to adopt FAS No. 112--Employers'
Accounting for Postemployment Benefits--and FAS No. 115--Accounting for Certain
Investments in Debt and Equity Securities. The adoption of FAS 112 did not have
a material impact on the Company's financial statements as its previous
accounting was substantially in compliance with the new standard. Other than for
short-term investments which were previously accounted for in accordance with
FAS No. 115, the Company does not have and does not contemplate acquiring
significant investments of the type covered by that standard.
-------------------------------------------------------------------------------
ENVIRONMENTAL MATTERS
The majority of the businesses in which the Company is engaged are intrinsically
connected with the protection of the environment. As such, a significant portion
of the Company's operating costs and capital expenditures could be characterized
as costs of environmental protection. While the Company is faced, in the normal
course of its business, with the need to expend funds for environmental
protection and remediation, it does not expect such expenditures to have a
material adverse effect on its financial condition or results of operations
because its business is based upon compliance with environmental laws and
regulations and its services are priced accordingly. Such costs may increase in
the future as a result of legislation or regulation; however, the Company
believes that in general it benefits from increased government regulation, which
increases the demand for its services, and that it has the resources and
experience to manage environmental risk.
As part of its ongoing operations, the Company provides for estimated closure
and post-closure monitoring costs over the operating life of disposal sites as
airspace is consumed. Such costs include a final cap and cover on the site,
methane gas and leachate management, and groundwater monitoring. The accrual for
closure and post-closure monitoring costs covers expenditures to be incurred
after a facility ceases to accept waste; to the extent similar costs are
incurred during the active life of a site, they are expensed as normal operating
costs of a disposal site.
The Company has also established procedures to evaluate potential remedial
liabilities at closed sites which it owns or operated or to which it transported
waste, including 104 sites listed on the Superfund National Priority List
("NPL") as of December 31, 1994. In the majority of situations, the Company's
connection with NPL sites relates to allegations that its subsidiaries (or their
predecessors) transported waste to the facilities in question, often prior to
the acquisition of such subsidiaries by the Company. The Company routinely
reviews and evaluates sites requiring remediation, including NPL sites, giving
consideration to the nature (e.g., owner, operator, transporter or generator),
and the extent (e.g., amount and nature of waste hauled to the location, number
of years of site operation by the Company, or other relevant factors) of the
Company's alleged connection with the site, the accuracy and strength of
evidence connecting the Company to the location, the number, connection and
financial ability of other named and unnamed potentially responsible parties
("PRPs"), and the nature and estimated cost of the likely remedy. Where the
Company concludes that it is probable that a liability has been incurred,
provision is made in the financial statements. Cost estimates are based upon
management's judgment and experience in remediating such sites for the Company
as well as for unrelated parties, information available from regulatory agencies
as to cost of remediation, and the number, financial resources and relative
degree of responsibility of other PRPs who are jointly and severally liable for
remediation of the specific site, as well as the typical allocation of costs
among PRPs. These estimates sometimes involve a range of possible outcomes. In
such
35
<PAGE>
-------------------------------------------------------------------------------
cases, the Company provides for the amount within the range which constitutes
its best estimate. If no amount within the range appears to be a better estimate
than any other amount, then the Company provides for the minimum amount within
the range in accordance with FAS No. 5. See Note 6 to the Consolidated Financial
Statements for additional details regarding the Company's environmental
liabilities.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies or other factors could alter this
expectation and necessitate the recording of additional liabilities which could
be material. The impact of such future events cannot be estimated at the current
time.
The Company spent $24,800,000, $34,800,000 and $58,800,000 on remedial
activities at closed sites in 1992, 1993, and 1994, respectively, and
anticipates expenditures of approximately $40,000,000 in 1995.
The Company has filed several lawsuits against numerous insurance carriers
seeking reimbursement for past and future remedial, defense and tort costs at a
number of sites. The carriers have denied coverage and are vigorously defending
these claims. No amounts have been recognized in the financial statements for
any future insurance recoveries.
The Company also becomes involved, in the normal course of business, in
judicial and administrative proceedings related to alleged violations of
licenses, permits, laws or regulations, or differing interpretations of
applicable requirements. From time to time, the Company pays fines and penalties
as a result of such proceedings. Such fines and penalties were not material to
the Consolidated Statements of Income for 1992, 1993 or 1994.
-------------------------------------------------------------------------------
FINANCIAL CONDITION
Liquidity and Capital Resources The Company is primarily in a service industry
and has neither significant inventory nor seasonal variations in receivables.
Accordingly, cash flow from operating activities is used primarily for the
purchase of property and equipment and acquisition of businesses, and, in 1992
and 1993, for stock repurchases. The Company had a working capital deficit of
$90,887,000 at December 31, 1994, compared with working capital of $99,958,000
at December 31, 1993. Current debt increased $136,195,000, primarily because the
Company anticipates having cash flow available for debt reduction in 1995 and
accordingly, at the end of 1994, decided not to seek additional committed long-
term borrowing facilities which would have permitted the reclassification of
additional otherwise short-term debt to long-term. Accounts receivable increased
$195,961,000 while accounts payable and accrued expenses increased $301,760,000,
as a result of business growth, acquisitions and the impact of a weaker U.S.
dollar on the translation of foreign currency denominated balance sheets.
Smaller changes in other current asset and current liability accounts reflect
the effects of normal business activities.
Other than for the impact of foreign currency translation, long-term and
short-term debt declined from December 31, 1993, to December 31, 1994. Capital
expenditures and acquisitions were funded by cash flow from operations, proceeds
from the sales of businesses, and improved working capital management. At
December 31, 1994, short-term and long-term debt (excluding WTI project debt)
were 49.4% of short-term debt and total capital (including minority interest in
subsidiaries and put options), compared to 52.5% at December 31, 1993. The
Company believes that it has adequate liquidity to meet its current capital
needs and finance anticipated growth. Substantial cash is provided by operating
activities, and management intends to continue its emphasis on enhancing
operating cash flow in 1995. In addition, a major portion of capital
expenditures, including acquisitions and development projects, is discretionary
and could be deferred if necessary.
DERIVATIVES From time to time, the Company and certain of its subsidiaries use
derivatives to manage currency, interest rate, and commodity (fuel) risk.
Derivatives used are simple agreements which provide for payments based on the
notional amount, with no multipliers or leverage. Gains or losses on such
instruments to date have not been material. While the Company is exposed to
credit loss in the event of non-performance by counterparties to derivatives, in
all cases such counterparties are highly rated financial institutions and the
Company does not anticipate non-performance. See Note 5 to Consolidated
Financial Statements for further discussion of the use of and accounting for
such instruments.
ACQUISITIONS AND CAPITAL EXPENDITURES Capital expenditures, including
$330,530,000, $443,535,000 and $56,786,000 for property and equipment of
purchased businesses in 1992, 1993 and 1994, respectively, are shown in the
following table ($000's omitted):
<TABLE>
<CAPTION>
1992 1993 1994
-------------------------------------------------------------
<S> <C> <C> <C>
Land (primarily
disposal sites) $ 639,489 $ 660,226 $ 582,287
Buildings and leasehold
improvements 196,680 195,472 141,164
Vehicles 270,712 373,055 226,005
Containers 168,721 231,586 167,936
Other equipment 687,593 702,374 395,022
---------- ---------- ----------
Total $1,963,195 $2,162,713 $1,512,414
========== ========== ==========
</TABLE>
During 1993, the Company and its principal subsidiaries acquired 97 businesses
for $551,901,000 in cash and notes, 1,046,801 shares of the Company's common
stock, and 1,635,471 shares of WTI common stock. During 1994, 46 businesses were
acquired for $172,908,000 in cash and notes, 73,809 shares of the Company's
common stock and 156,124 shares of WTI common stock. The foregoing acquisition
data excludes minor acquisitions where consideration paid was less than $1
million. The Board of Directors has approved a capital expenditure budget of
$1.275 billion for 1995, including a minimal level of acquisitions. The Company
expects to finance this program, as well as any unbudgeted acquisition activity,
through cash flow from operations. The Company scaled back its acquisition
program in 1994, but continues to seek acquisitions that promise above average
returns or meet strategic objectives, and expects acquisition activity to
increase in 1995. The Company believes it has adequate capital resources to
finance any attractive acquisitions that become available.
CAPITAL STRUCTURE Through 1993, the Company financed capital expenditures and
acquisitions primarily through the use of debt, taking advantage of favorable
interest rates. In 1994,
36
<PAGE>
-------------------------------------------------------------------------------
increased emphasis was placed on cash flow and reducing leverage. This emphasis
is expected to continue in 1995. The following table reflects the impact of
these strategies:
<TABLE>
<CAPTION>
December 31
------------------
1992 1993 1994
-----------------------------------------------------
<S> <C> <C> <C>
Long-term debt as a percent
of total capital 38.2% 49.4% 45.6%
Short-term and long-term debt
as a percent of short-term debt
and total capital 41.8% 52.5% 49.4%
</TABLE>
The ratios above include minority interest in subsidiaries and put options as
part of total capital, and exclude project debt of WTI. A significant portion of
WTI's debt is project debt, the interest and principal of which is expected to
be paid by cash generated from operations of specific projects. The Company
believes that its percentage of debt to total capital can be supported by the
net cash provided by operating activities.
While the Company expects 1995 free cash flow from operations, after budgeted
capital expenditures, to be approximately $500 million, the ratios above will be
adversely impacted by the purchase of the public shares of CWM and Rust (see
"Subsequent Events") as these transactions will reduce minority interest and
increase debt.
The Boards of Directors of each of WMX, WTI and Rust have authorized their
respective companies to repurchase shares of their own common stock in the open
market or in privately negotiated transactions. The programs extend into 1996.
During 1993, WMX repurchased approximately 8.4 million of its shares, and during
1994 WTI repurchased approximately 3.3 million shares and Rust repurchased
203,800 shares. Also see "Subsequent Events."
During 1994, WMX sold put options on 17.9 million shares of its common stock
in conjunction with the repurchase program. The put options give the holders the
right at maturity to require the Company to repurchase its shares at specified
prices. Proceeds of $29,965,000 from the sale of put options were credited to
additional paid-in capital. In the event the options are exercised, the Company
may elect to pay the holder in cash the difference between the strike price and
the market price of the Company's shares, in lieu of repurchasing the stock.
Options on 9.0 million shares expired unexercised in 1994, as the price of the
Company's stock was in excess of the strike price at maturity. Options on 4.7
million shares were exercised in February 1995, and the Company elected to
settle them for cash in the amount of $12,019,000. The remaining 4.3 million
options expire in July and August 1995, at strike prices ranging from $25.588 to
$28.833 per share. The Company sold additional put options in February and March
1995 to replace those which matured.
During 1994, the Company formed an Employee Stock Benefit Trust and sold 12.6
million shares of treasury stock to the Trust in return for a 30-year, 7.33%
note with interest payable quarterly and principal due at maturity. The Company
has agreed to contribute to the Trust each quarter funds sufficient, when added
to dividends on the shares held by the Trust, to pay interest on the note as
well as principal outstanding at maturity. At the direction of an administrative
committee comprised of Company officers, the Trustee will use the shares or
proceeds from the sale of shares to pay employee benefits, and to the extent of
such payments by the Trust, the Company will forgive principal and interest on
the note.
SUBSEQUENT EVENTS In January 1995, the holders of a majority of the
outstanding CWM shares (other than those held by WMX) approved a merger
transaction which resulted in WMX acquiring all of the outstanding CWM shares
which it did not previously own, in return for convertible subordinated debt.
In February 1995, the Company offered to acquire the approximately 4% of
Rust's shares held by the public for $14 per share in cash. The transaction is
subject to approval by a special committee of independent directors appointed by
the Rust Board of Directors, but does not require stockholder approval. If
approved, the transaction is expected to be completed during the second quarter
of 1995.
See Note 16 to Consolidated Financial Statements for additional information.
OUTLOOK The Company's business units enter 1995 in significantly different
situations. WMI has strong momentum. Price and volume are trending up in the
commercial and rolloff segments. Disposal prices appear to have bottomed out and
are beginning to increase in certain areas of the country, although there is
still pressure in spots. Residential pricing pressure continues on contract
rebids, but some price increase will result from existing contracts with
inflation adjustments. The loss of the City of Philadelphia disposal contract
will negatively impact the first six months compared to 1994, but recycling
commodity prices remain strong and recycling volume is increasing. Acquisition
activity is expected to accelerate from 1994 levels. Overall, 1995 margins
should benefit from operating productivity enhancements, price increases and
selling and administrative costs rising more slowly than revenue.
CWM continues to be negatively impacted by the changes in the hazardous waste
industry. In addition, the South Carolina legislation which denies access to the
Barnwell disposal facility to customers outside the Southeast Compact, and
currently requires the site to close December 31, 1995, will reduce the revenue
and profit contributions of the low-level radioactive waste service business
line in 1995. The failure to obtain an operating low-level radioactive waste
disposal site beyond 1995 would have a material adverse impact on CWM's net
income. During 1994, CWM restructured its operations to adapt to market
conditions, and substantially reduced its overhead. However, the chemical waste
services line of business has continued to underperform. Management is
continuing to evaluate alternatives to address this situation. On March 14,
1995, the Board of Directors approved a plan to further reduce the scope of the
chemical waste services business by selling or otherwise eliminating
technologies and/or service locations which are not meeting customer service or
performance objectives. Management is finalizing the details of this plan, which
is expected to result in an additional restructuring charge of approximately
$140 million ($91 million after tax) in the first quarter of 1995.
WTI's existing businesses continue to perform well, but because of slow growth
in domestic trash-to-energy and independent power markets, and a resulting shift
in its business mix to the lower margin air and water markets, it expects that
1995 earnings growth will not exceed 10%.
Rust continues to focus its resources on service lines which add the greatest
value, and to restructure the company accordingly. During the fourth quarter of
1994, Rust announced the discontinuance of its marine construction and dredging
operations, the closing of offices in a consolidation of the engineering and
construction groups, and the signing of the definitive agreement with OHM under
which OHM will acquire Rust's hazardous waste and nuclear remediation services
businesses in exchange for 40% of the OHM shares outstanding following the
transaction. Rust's backlog has continued to increase, especially with projects
for the pulp and paper industry, and management believes it is well positioned
for improved results in 1995.
37
<PAGE>
-------------------------------------------------------------------------------
The outlook for WM International reflects the economic conditions and
political and regulatory diversity of its markets. Operations in Italy face a
politically uncertain environment, pricing declines on the renewal of municipal
collection contracts, permitting problems at several landfills and rising labor
costs. Operations in Germany are affected by difficult economic conditions and
the need to integrate existing businesses into a base for internal growth.
France remains a problematic market, economically and competitively. WM
International's focus for 1995 will be on resolving these difficulties and
achieving internal growth, cost control and improved returns on its investments
in capital and human resources. Budgets for 1995 include capital expenditures of
120 million pounds and positive cash flow of 50 million pounds. WM International
believes this strategy should enhance stockholder value in the long term, but
does not anticipate earnings growth of more than 5% in 1995.
The strategic review announced by WMX in the third quarter of 1994 is
continuing, but results to date have reinforced management's commitment to
increasing the Company's return on the assets it has in place and better
leveraging its Company-wide resources. Efforts are now focused on improving
links among the Company's operating and management resources to offer better
service to customers and lower the costs of operations. The completion of the
repurchase of the CWM public shares in January 1995 and the proposed repurchase
of the Rust public shares will enable the Company to simplify its organizational
structure. WMX intends to be a strategic management company, carefully matching
resources to worldwide opportunities. Over time, the Company hopes to achieve a
more balanced combination of revenue growth, return on assets, and increased
cash generation in its core business lines of waste management, clean water,
clean energy and engineering/technology.
38
<PAGE>
Exhibit 13.2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------------------------------------
TO THE STOCKHOLDERS AND THE BOARD OF DIRECTORS OF WMX TECHNOLOGIES, INC.:
We have audited the accompanying consolidated balance sheets of WMX
Technologies, Inc. (formerly Waste Management, Inc.) (a Delaware corporation)
and Subsidiaries as of December 31, 1993 and 1994, and the related consolidated
statements of income, cash flows, and stockholders' equity for each of the three
years in the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of WMX Technologies, Inc. and
Subsidiaries as of December 31, 1993 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
As discussed in Notes 2 and 11 to the consolidated financial statements,
effective January 1, 1992, the Company changed its methods of accounting for
income taxes and postretirement benefits other than pensions.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois,
February 6, 1995 (except with respect to the matter discussed in Note 17, as to
which the date is March 14, 1995)
<PAGE>
WMX Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the years ended December 31, 1992, 1993 and 1994
(000's omitted except per share amounts)
1992 1993 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE $8,661,027 $9,135,577 $10,097,318
---------------------------------------------------------------------------------------------------------
Operating Expenses $5,945,762 $6,346,914 $ 7,034,353
Special Charges 219,900 550,000 --
Goodwill Amortization 77,144 94,391 110,092
Selling and Administrative Expenses 1,048,047 1,128,202 1,184,248
Gains from Stock Transactions of Subsidiaries (263,489) (15,109) --
Interest Expense 223,052 300,878 340,808
Interest Income (57,693) (41,432) (34,613)
Minority Interest 156,824 57,986 149,703
Sundry Income, Net (86,932) (95,424) (66,442)
---------------------------------------------------------------------------------------------------------
Income Before Income Taxes and Cumulative Effect
of Accounting Changes $1,398,412 $ 809,171 $ 1,379,169
Provision For Income Taxes 477,237 356,395 594,788
---------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of Accounting Changes $ 921,175 $ 452,776 $ 784,381
Cumulative Effect of Accounting Changes,
Net of Minority Interest in Portion
Relating to Subsidiaries--
Postretirement Benefits, Net of Tax (36,579) -- --
Income Taxes (34,560) -- --
---------------------------------------------------------------------------------------------------------
NET INCOME $ 850,036 $ 452,776 $ 784,381
=========================================================================================================
AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 493,948 485,374 484,144
=========================================================================================================
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Before Cumulative Effect of Accounting Changes $1.86 $0.93 $1.62
Cumulative Effect of Accounting Changes--
Postretirement Benefits (.07) -- --
Income Taxes (.07) -- --
---------------------------------------------------------------------------------------------------------
NET INCOME $1.72 $0.93 $1.62
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
39
<PAGE>
WMX Technologies, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------
As of December 31, 1993 and 1994
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
1993 1994
------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 92,802 $ 121,918
Short-term investments 33,580 19,704
Accounts receivable, less reserve of
$63,146 in 1993 and $65,536 in 1994 1,762,091 1,958,052
Employee receivables 9,670 10,140
Parts and supplies 148,022 194,645
Costs and estimated earnings in excess of billings
on uncompleted contracts 339,364 403,949
Refundable income taxes 54,001 30,713
Prepaid expenses 337,990 349,723
------------------------------------------------------------------------------
Total Current Assets $ 2,777,520 $ 3,088,844
------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, at cost
Land, primarily disposal sites $ 3,625,412 $ 4,162,418
Buildings 1,223,139 1,372,782
Vehicles and equipment 6,856,044 7,162,217
Leasehold improvements 100,262 91,554
------------------------------------------------------------------------------
$11,804,857 $12,788,971
Less--Accumulated depreciation and amortization (3,035,398) (3,503,219)
------------------------------------------------------------------------------
Total Property and Equipment, Net $ 8,769,459 $ 9,285,752
------------------------------------------------------------------------------
OTHER ASSETS
Intangible assets relating to acquired businesses,
net $ 3,461,331 $ 3,789,801
Funds held by trustees 116,949 90,863
Sundry, including other investments 1,139,217 1,283,654
------------------------------------------------------------------------------
Total Other Assets $ 4,717,497 $ 5,164,318
------------------------------------------------------------------------------
Total Assets $16,264,476 $17,538,914
==============================================================================
CURRENT LIABILITIES
Portion of long-term debt payable within one year $ 754,491 $ 890,686
Accounts payable 818,501 1,017,451
Accrued expenses 863,474 966,284
Unearned revenue 241,096 305,310
------------------------------------------------------------------------------
Total Current Liabilities $ 2,677,562 $ 3,179,731
------------------------------------------------------------------------------
DEFERRED ITEMS
Income taxes $ 448,706 $ 665,677
Environmental liabilities 745,637 704,015
Other 738,976 615,606
------------------------------------------------------------------------------
Total Deferred Items $ 1,933,319 $ 1,985,298
------------------------------------------------------------------------------
LONG-TERM DEBT, less portion payable within one year $ 6,145,584 $ 6,044,411
------------------------------------------------------------------------------
MINORITY INTEREST IN SUBSIDIARIES $ 1,348,559 $ 1,536,165
------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES $ $
------------------------------------------------------------------------------
PUT OPTIONS $ -- $ 252,328
------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value (issuable in series);
50,000,000 shares authorized; none outstanding
during the years $ -- $ --
Common stock, $1 par value; 1,500,000,000 shares
authorized; 496,216,829 shares issued in 1993 and
496,386,758 in 1994 496,217 496,387
Additional paid-in capital 668,470 357,150
Cumulative translation adjustment (245,587) (150,832)
Retained earnings 3,693,108 4,181,606
------------------------------------------------------------------------------
$ 4,612,208 $ 4,884,311
Less--Treasury stock; 12,763,884 shares in 1993, at
cost 425,097 --
1988 Employee Stock Ownership Plan 27,659 19,729
Employee Stock Benefit Trust (12,386,629
shares) -- 323,601
------------------------------------------------------------------------------
Total Stockholders' Equity $ 4,159,452 $ 4,540,981
------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $16,264,476 $17,538,914
==============================================================================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
40
<PAGE>
WMX Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
For the three years ended December 31, 1994
($000's omitted except per share amounts)
1988
Employee Employee
Additional Cumulative Stock Stock
Common Paid-in Translation Retained Treasury Ownership Benefit
Stock Capital Adjustment Earnings Stock Plan Trust
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1992 $493,621 $722,351 $ 40,463 $2,917,204 $ -- $40,539 $ --
-----------------------------------------------------------------------------------------------------------------------------------
Net income for the year $ -- $ -- $ -- $ 850,036 $ -- $ -- $ --
Cash dividends ($.50 per share) -- -- -- (246,050) -- -- --
Stock repurchase (7,588,300 shares) -- -- -- -- 257,950 -- --
Stock issued upon exercise of stock options 809 (19,000) -- -- (62,432) -- --
Treasury stock received in connection
with exercise of stock options -- -- -- -- 15,153 -- --
Contribution to 1988 ESOP (303,226 shares) -- -- -- -- -- (5,551) --
Treasury stock received as settlement for
claims -- -- -- -- 1,717 -- --
Stock issued upon conversion of LYONs 44 (2,200) -- -- (4,546) -- --
Stock issued for acquisitions 1,729 6,462 -- -- (3,352) -- --
Tax benefit of non-qualified stock options
exercised -- 20,303 -- -- -- -- --
Transfer of equity interests
among controlled subsidiaries -- (19,620) -- -- -- -- --
Cumulative translation adjustment
of foreign currency statements -- -- (207,029) -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1992 $496,203 $ 708,296 $(166,566) $3,521,190 $ 204,490 $34,988 $ --
-----------------------------------------------------------------------------------------------------------------------------------
Net income for the year $ -- $ -- $ -- $ 452,776 $ -- $ -- $ --
Cash dividends ($.58 per share) -- -- -- (280,858) -- -- --
Stock repurchase (8,443,400 shares) -- -- -- -- 278,363 -- --
Stock issued upon exercise of stock options 14 (8,749) -- -- (18,285) -- --
Treasury stock received in connection
with exercise of stock options -- -- -- -- 357 -- --
Contribution to 1988 ESOP (362,036 shares) -- -- -- -- -- (7,329) --
Treasury stock received as settlement for
claims -- -- -- -- 3,429 -- --
Stock issued upon conversion of LYONs -- (4,553) -- -- (7,882) -- --
Stock issued for acquisitions -- (4,655) -- -- (35,375) -- --
Tax benefit of non-qualified stock options
exercised -- 2,825 -- -- -- -- --
Transfer of equity interests
among controlled subsidiaries -- (24,694) -- -- -- -- --
Cumulative translation adjustment
of foreign currency statements -- -- (79,021) -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 $496,217 $ 668,470 $(245,587) $3,693,108 $ 425,097 $27,659 $ --
-----------------------------------------------------------------------------------------------------------------------------------
Net income for the year $ -- $ -- $ -- $ 784,381 $ -- $ -- $ --
Cash dividends ($.60 per share) -- -- -- (290,266) -- -- --
Dividends paid to Employee Stock Benefit
Trust -- 5,617 -- (5,617) -- -- --
Stock issued upon exercise of stock options -- (5,948) -- -- (8,250) -- (5,928)
Treasury stock received in connection
with exercise of stock options -- -- -- -- 260 -- --
Contribution to 1988 ESOP (375,312 shares) -- -- -- -- -- (7,930) --
Treasury stock received as settlement for
claims -- -- -- -- 2,741 -- --
Stock issued upon conversion of LYONs 96 1,442 -- -- (56) -- --
Common stock issued for acquisitions 74 1,471 -- -- -- -- --
Tax benefit of non-qualified stock options
exercised -- 1,527 -- -- -- -- --
Temporary equity related to put options -- (252,328) -- -- -- -- --
Proceeds from sale of put options -- 29,965 -- -- -- -- --
Sale of shares to Employee Stock Benefit
Trust (12,601,609 shares) -- (106,327) -- -- (419,792) -- 313,465
Adjustment of Employee Stock Benefit Trust
to market value -- 16,064 -- -- -- -- 16,064
Transfer of equity interests
among controlled subsidiaries -- (2,803) -- -- -- -- --
Cumulative translation adjustment
of foreign currency statements -- -- 94,755 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 $496,387 $ 357,150 $(150,832) $4,181,606 $ -- $19,729 $323,601
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
41
<PAGE>
WMX Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
For the years ended December 31, 1992, 1993 and 1994
Increase (Decrease) in cash ($000's omitted)
1992 1993 1994
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Income before cumulative effect of
accounting changes $ 921,175 $ 452,776 $ 784,381
Adjustments to reconcile income before
cumulative effect of accounting changes to
net cash provided by operating activities:
Depreciation and amortization 714,069 796,691 880,466
Provision for deferred income taxes 221,860 154,782 298,564
Minority interest in subsidiaries 156,824 57,986 149,703
Interest on Liquid Yield Option Notes (LYONs) 36,424 37,162 33,551
Gain on sale of property and equipment, and
of investments by subsidiary (4,659) (14,061) (14,876)
Contribution to 1988 Employee Stock Ownership Plan 5,551 7,329 7,930
Gains from stock transactions of subsidiaries (263,489) (15,109) --
Special charges, net of tax and minority interest 116,375 285,300 --
Changes in assets and liabilities, excluding effects of
acquired companies:
Receivables, net (89,467) (112,489) (133,506)
Other current assets (350,315) 41,038 (110,604)
Sundry other assets 39,862 (29,445) (42,195)
Accounts payable 23,155 33,328 155,254
Accrued expenses and unearned revenue 10,750 (301,039) 41,594
Deferred items (189,599) (24,015) (259,020)
Minority interest in subsidiaries (57,825) (2,021) 14,038
--------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,290,691 $ 1,368,213 $ 1,805,280
--------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Short-term investments $ 72,913 $ 35,911 $ 2,755
Capital expenditures (1,632,665) (1,719,178) (1,455,628)
Proceeds from sale of property and equipment, and
of investments by subsidiary 95,942 134,169 276,822
Cost of acquisitions, net of cash acquired (599,045) (551,901) (172,908)
Other investments 66,414 (185,256) (74,446)
Acquisition of minority interests (26,343) -- (8,200)
Purchase of Brand stock related to Rust merger -- (129,524) --
--------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES $(2,022,784) $(2,415,779) $(1,431,605)
--------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
42
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
1992 1993 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from financing activities:
Cash dividends $ (246,050) $ (280,858) $ (290,266)
Proceeds from issuance of indebtedness 1,274,549 3,407,759 1,710,586
Repayments of indebtedness (807,873) (1,712,794) (1,776,845)
Proceeds from exercise of stock options, net 49,391 12,018 9,497
Proceeds from Waste Management International plc
initial public offering 700,032 -- --
Contributions from minority interests 6,484 28,072 22,169
Stock repurchases by Company and subsidiaries (339,966) (315,302) (49,665)
Preferred stock redemption by subsidiary -- (5,000) --
Proceeds from sale of put options -- -- 29,965
-------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES $ 636,567 $ 1,133,895 $ (344,559)
-------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ (95,526) $ 86,329 $ 29,116
Cash and cash equivalents at beginning of year 101,999 6,473 92,802
-------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 6,473 $ 92,802 $ 121,918
=================================================================================================
The Company considers cash and cash equivalents
to include currency on hand, demand deposits with banks
and short-term investments with maturities of less than
three months when purchased.
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 186,628 $ 263,716 $ 307,257
Income taxes, net of refunds received $ 246,922 $ 331,803 $ 241,657
Supplemental schedule of noncash investing and
financing activities:
LYONs converted into common stock of the Company $ 2,390 $ 3,329 $ 1,594
Exchangeable LYONs exchanged for common stock
of CWM owned by the Company $ 340 $ -- $ --
Liabilities assumed in acquisitions of businesses $ 405,558 $ 673,129 $ 244,560
Fair market value of Company and subsidiary stock
issued for acquired businesses $ 178,885 $ 64,500 $ 4,773
</TABLE>
43
<PAGE>
WMX Technologies, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000's omitted in all tables except per share amounts)
NOTE 1 SUMMARY OF ACCOUNTING POLICIES
REVENUE RECOGNITION The Company recognizes revenue from long-term engineering
and construction contracts on the percentage-of-completion basis with losses
recognized in full when identified. Other revenues are recognized when the
services are performed.
PRINCIPLES OF CONSOLIDATION The Company's financial statements are prepared on
a consolidated basis and include the Company and its majority-owned
subsidiaries. All significant intercompany transactions and balances are
eliminated.
FOREIGN CURRENCY Certain foreign subsidiaries' assets and liabilities are
translated at the rates of exchange at the balance sheet date while income
statement accounts are translated at the average exchange rates in effect during
the period. The resulting translation adjustments are charged or credited
directly to stockholders' equity. Foreign exchange gains (losses) (net of
related income taxes and minority interest) of $5,100,000, ($529,000) and
($3,610,000) are included in the Consolidated Statements of Income for 1992,
1993 and 1994, respectively.
SHORT-TERM INVESTMENTS The Company's short-term investments primarily consist
of securities having an investment grade of not less than A and a term to
maturity generally of less than one year, and because the investments have
always been held to maturity, are carried at cost. Such investments include tax-
exempt securities, certificates of deposit and Eurodollar time deposits.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("FAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The adoption of FAS 115 did not have a significant
effect on earnings for 1994, since the Company's accounting prior to adoption
was substantially in compliance with the new standard.
ENVIRONMENTAL LIABILITIES The Company provides for estimated closure and post-
closure monitoring costs over the operating life of disposal sites as airspace
is consumed. Such costs for U.S. landfills are estimated based on the technical
requirements of the Subtitle C and D Regulations of the U.S. Environmental
Protection Agency or the applicable state requirements, whichever are stricter,
and the proposed air emissions standards under the Clean Air Act, and include
such items as final cap and cover on the site, methane gas and leachate
management, and groundwater monitoring. Substantially the same standards are
applied to estimate costs for foreign sites, even though current regulations in
some foreign jurisdictions are less strict. The accrual for closure and post-
closure costs relates to expenditures to be incurred after a facility ceases to
accept waste; to the extent similar costs are incurred during the active life of
the site, they are expensed as incurred.
The Company has also established procedures to evaluate potential remedial
liabilities at closed sites which it owns or operated, or to which it
transported waste, including 104 sites listed on the Superfund National Priority
List ("NPL"). In the majority of situations, the Company's connection with NPL
sites relates to allegations that its subsidiaries (or their predecessors)
transported waste to the facilities in question, often prior to the acquisition
of such subsidiaries by the Company. The Company routinely reviews and evaluates
sites requiring remediation, including NPL sites, giving consideration to the
nature (e.g., owner, operator, transporter or generator), and the extent (e.g.,
amount and nature of waste hauled to the location, number of years of site
operation by the Company, or other relevant factors) of the Company's alleged
connection with the site, the accuracy and strength of evidence connecting the
Company to the location, the number, connection and financial ability of other
named and unnamed potentially responsible parties ("PRPs"), and the nature and
estimated cost of the likely remedy. Where the Company concludes that it is
probable that a liability has been incurred, provision is made in the financial
statements, based upon management's judgment and prior experience, for the
Company's best estimate of the liability. Such estimates are subsequently
revised as deemed necessary as additional information becomes available.
See Note 6 for additional information.
CONTRACTS IN PROCESS Information with respect to contracts in process at
December 31, 1993 and 1994 is as follows:
<TABLE>
<CAPTION>
1993 1994
----------------------------------------------------------------
<S> <C> <C>
Costs and estimated earnings
on uncompleted contracts $ 3,741,386 $ 3,312,951
Less: Billings on
uncompleted contracts (3,474,386) (3,042,765)
----------- -----------
Total contracts in process $ 267,000 $ 270,186
=========== ===========
Contracts in process are included in the Consolidated Balance
Sheets under the following captions:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 339,364 $ 403,949
Billings in excess of costs and
estimated earnings on
uncompleted contracts
(included in unearned revenue) (72,364) (133,763)
----------- -----------
Total contracts in process $ 267,000 $ 270,186
=========== ===========
</TABLE>
All contracts in process are expected to be billed and collected within five
years.
Accounts receivable includes retainage which has been billed, but which is not
due pursuant to contract provisions until completion. Such retainage at December
31, 1994, is $43,895,000, including $7,037,000 that is expected to be collected
after one year. At December 31, 1993, retainage was $44,828,000.
PROPERTY AND EQUIPMENT Property and equipment (including major repairs and
improvements) are capitalized and stated at cost. Items of an ordinary
maintenance or repair nature are charged directly to operations. Disposal sites
are carried at cost and to the extent this exceeds end use realizable value,
such excess is amortized over the estimated life of the disposal site. Disposal
site improvement costs are capitalized and charged to operations over the
shorter of the estimated usable life of the site or the improvement.
Preparation costs for individual secure land disposal cells are recorded as
prepaid expenses and amortized as the airspace is filled. Significant costs
capitalized for such cells include excavation and grading costs, costs relating
to the design and construction of liner systems and gas collection and leachate
collection systems. Unamortized cell construction cost at December 31, 1993 and
1994 was $146,985,000 and $154,100,000, respectively.
DEPRECIATION AND AMORTIZATION The cost, less estimated salvage value, of
property and equipment is depreciated over the estimated useful lives on the
straight-line method as follows: buildings--10 to 40 years; vehicles and
equipment--3 to 20 years; leasehold improvements--over the life of the
applicable lease.
INTANGIBLE ASSETS Intangible assets relating to acquired businesses consist
primarily of the cost of purchased businesses in excess of market value of net
assets acquired ("goodwill"). Such goodwill is being amortized on a straight-
line basis over a period of not more than forty years. The accumulated
amortization of intangible assets amounted to $364,251,000 and $463,855,000 as
of December 31, 1993 and 1994, respectively.
44
<PAGE>
--------------------------------------------------------------------------------
On an ongoing basis, the Company measures realizability of goodwill by the
ability of the acquired business to generate current and expected future
operating income in excess of annual amortization. If such realizability is in
doubt, an adjustment is made to reduce the carrying value of the goodwill. Such
adjustments have not historically been material to the Company's financial
statements.
CAPITALIZED INTEREST Interest has been capitalized on significant landfills,
trash-to-energy plants and other projects under development in accordance with
FAS No. 34. Amounts capitalized and netted against Interest Expense in the
Consolidated Statements of Income were $87,897,000 in 1992, $100,591,000 in 1993
and $104,512,000 in 1994.
GAIN RECOGNITION ON Sale of Subsidiaries' Stock It is the Company's policy to
record in income, gains from the sale or other issuance of previously unissued
stock by its subsidiaries.
RESTATEMENT Certain amounts in previously issued financial statements have
been restated to conform to 1994 classifications.
--------------------------------------------------------------------------------
NOTE 2 INCOME TAXES
Effective January 1, 1992, the Company and its principal subsidiaries changed
their method of accounting for income taxes as a result of the early adoption of
FAS No. 109, "Accounting for Income Taxes." The 1992 cumulative effect of this
change, after minority interest in the portion relating to Wheelabrator
Technologies Inc. ("WTI"), was a charge of $34,560,000, or $.07 per share. The
cumulative charge resulted primarily from increasing deferred taxes previously
discounted, a method not permitted under FAS 109, valuation allowances against
deferred tax assets and adjustments for rate differences. The proforma effect of
this accounting change on 1992 earnings was not significant, except for the one-
time charge.
The following tables set forth income before income taxes, showing domestic
and international sources, and the income tax provision showing the components
by governmental taxing authority, for the years 1992 through 1994:
<TABLE>
<CAPTION>
INCOME BEFORE INCOME TAXES 1992 1993 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $1,214,342 $637,636 $1,199,519
International 184,070 171,535 179,650
---------- -------- ----------
$1,398,412 $809,171 $1,379,169
========== ======== ==========
INCOME TAX PROVISION (BENEFIT)
-----------------------------------------------------------------------------------------------------
Current tax expense
U.S. Federal $ 159,795 $137,966 $ 217,354
State and local 46,208 30,715 50,476
Foreign 53,376 36,532 30,989
---------- -------- ----------
Total current $ 259,379 $205,213 $ 298,819
---------- -------- ----------
Deferred tax expense
U.S. Federal $ 152,742 $ 92,171 $ 218,953
State and local 38,319 30,284 33,848
Foreign 30,799 32,327 45,763
---------- -------- ----------
Total deferred $ 221,860 $154,782 $ 298,564
---------- -------- ----------
U.S. Federal benefit from amortization
of deferred investment credit $ (4,002) $ (3,600) $ (2,595)
---------- -------- ----------
Total provision $ 477,237 $356,395 $ 594,788
========== ======== ==========
The Federal statutory tax rate in 1992, 1993 and 1994 is reconciled to the effective tax rate
as follows:
-----------------------------------------------------------------------------------------------------
Federal statutory rate 34.0% 35.0% 35.0%
State and local taxes, net of Federal benefit 4.0 4.9 4.0
Amortization of deferred investment credit (0.3) (0.4) (0.2)
Amortization of intangible assets relating to acquired businesses 1.9 4.1 2.2
Federal tax credits (0.6) (1.4) (1.0)
Non-taxable gains on issuance of stock by subsidiaries (6.4) (0.7) --
Minority interest 3.4 2.9 4.2
Adjustment of deferred income taxes due to
Omnibus Budget Reconciliation Act -- 1.7 --
Other, net (1.9) (2.1) (1.1)
---- ---- ----
Effective tax rate 34.1% 44.0% 43.1%
==== ==== ====
</TABLE>
45
<PAGE>
--------------------------------------------------------------------------------
The Company uses the "deferral method" of accounting for investment credit,
whereby the credit is recorded in income over the composite life of the related
equipment.
Deferred income taxes result from the recognition, in different periods, of
revenue and expense for tax and financial statement purposes. The adoption of
FAS 109 required a change in the method of accounting for income taxes to an
asset and liability approach. The primary components that comprise the 1993 and
1994 deferred tax (assets) liabilities are as follows:
<TABLE>
<CAPTION>
1993 1994
----------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Reserves not deductible until paid $ (538,062) $ (494,549)
Deferred revenue (27,714) (25,708)
Net operating losses and tax
credit carryforwards (43,028) (110,073)
Other (104,059) (70,281)
---------- ----------
Subtotal $ (712,863) $ (700,611)
---------- ----------
Deferred tax liabilities
Depreciation and amortization $ 948,024 $1,106,155
Other 183,655 233,178
---------- ----------
Subtotal $1,131,679 $1,339,333
---------- ----------
Valuation allowance $ 29,890 $ 26,955
---------- ----------
Net deferred tax liabilities $ 448,706 $ 665,677
========== ==========
</TABLE>
The Company's subsidiaries have approximately $24 million of alternative
minimum tax credit carryforwards that may be carried forward indefinitely. Also,
various subsidiaries have operating loss carryforwards of approximately $640
million with expiration dates through the year 2009. Valuation allowances have
been established for uncertainties in realizing the tax benefit of net operating
loss carryforwards and of the basis differences in certain assets. In 1994, the
allowance decreased due to the realization of tax benefits on the disposal of
certain assets.
The Company has concluded that development and expansion of its foreign
business requires that the undistributed earnings of its foreign subsidiaries be
reinvested indefinitely outside the United States. If the reinvested earnings
were to be remitted, the U.S. income taxes due under current tax law would not
be material.
The gain of $240,000,000 before minority interest in 1992 resulting from the
initial public offering of 75,000,000 ordinary shares of Waste Management
International plc ("WM International") and the gain of $15,109,000 before
minority interest recognized by Chemical Waste Management, Inc. ("CWM") and WTI
in connection with shares issued by Rust International Inc. ("Rust") as part of
The Brand Companies Inc. ("Brand") merger in 1993 were non-taxable events. The
Company intends to control its investments in CWM and WTI, and the Company, WTI
and CWM intend to control their investments in WM International and Rust to
maintain the non-taxable status of the gains; therefore, deferred income taxes
have not been provided.
--------------------------------------------------------------------------------
NOTE 3 BUSINESS COMBINATIONS
All significant businesses acquired through December 31, 1994, and treated as
poolings of interests have been included retroactively in the financial
statements as if the companies had operated as one entity since inception.
Businesses acquired and accounted for as purchases are included in the financial
statements from the date of acquisition. The acquisition data which follows
excludes minor acquisitions where consideration paid was less than $1,000,000.
During 1992, the Company and its principal subsidiaries acquired 118
businesses for $599,045,000 in cash (net of cash acquired) and notes, 1,826,450
shares of the Company's common stock and 6,886,594 shares of common stock of
WTI. Twenty-seven of the aforementioned 1992 acquisitions, which otherwise met
pooling of interests criteria, were not significant in the aggregate and,
consequently, prior period financial statements were not restated. The remaining
acquisitions were accounted for as purchases.
During 1993, the Company and its principal subsidiaries acquired 97 businesses
for $551,901,000 in cash (net of cash acquired) and notes, 1,046,801 shares of
the Company's common stock and 1,635,471 shares of common stock of WTI. These
acquisitions were accounted for as purchases.
During 1994, the Company and its principal subsidiaries acquired 46 businesses
for $172,908,000 in cash (net of cash acquired) and notes, 73,809 shares of the
Company's common stock and 156,124 shares of common stock of WTI. These
acquisitions were accounted for as purchases.
The following summarizes the pro forma effect of businesses acquired and
accounted for as purchases (including those which otherwise met pooling of
interests criteria but were not significant in the aggregate) in 1992, 1993 and
1994 as if they had been acquired as of January 1 of the preceding year
(unaudited):
<TABLE>
<CAPTION>
1992 1993 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue as reported $8,661,027 $9,135,577 $10,097,318
Revenue of purchased businesses for period prior to
acquisition as stated above 1,000,812 588,496 108,093
---------- ---------- -----------
Pro forma revenue $9,661,839 $9,724,073 $10,205,411
========== ========== ===========
Income before cumulative effect of accounting changes as reported $ 921,175 $ 452,776 $ 784,381
Net income of purchased businesses for period prior to
acquisition as stated above 30,685 11,325 2,129
Adjustment for interest and goodwill amortization (59,229) (19,564) (2,591)
---------- ---------- -----------
Pro forma income before cumulative effect of accounting changes $ 892,631 $ 444,537 $ 783,919
========== ========== ===========
Earnings per share before cumulative effect of
accounting changes as reported $ 1.86 $ 0.93 $ 1.62
Effect of purchased businesses prior to acquisition as stated above (0.05) (0.01) --
---------- ---------- -----------
Pro forma earnings per share before cumulative effect
of accounting changes $ 1.81 $ 0.92 $ 1.62
========== ========== ===========
</TABLE>
46
<PAGE>
-------------------------------------------------------------------------------
In April 1992, WM International sold 75,000,000 newly issued ordinary shares,
representing 20% of the post-offering outstanding shares of that company, to the
public. Following the offering, the Company, CWM and WTI owned 56%, 12% and 12%,
respectively, of the outstanding shares of WM International.
Rust was formed on January 1, 1993, through the contribution by CWM of its
hazardous substance remediation services business, its approximately 56%
ownership in Brand and its 12% ownership interest in WM International, together
with certain other assets, and the contribution by WTI of its engineering and
construction and environmental and infrastructure consulting businesses, its
London-based international engineering unit and certain other assets. On May 7,
1993, Brand was merged into a subsidiary of Rust and Rust thereby acquired the
publicly-held Brand shares. As of December 31, 1994, Rust was owned
approximately 56% by CWM and approximately 40% by WTI, with the remaining shares
held by the public. In February 1995, the Company offered to acquire the
approximately 4% of Rust's shares held by the public; see Note 16 for additional
information.
-------------------------------------------------------------------------------
NOTE 4 DEBT
The details relating to debt (including capitalized leases, which are not
material) as of December 31, 1993 and 1994, are as follows:
<TABLE>
<CAPTION>
1993 1994
<S> <C> <C>
----------------------------------------------------------------------------------------------------------
Commercial Paper, weighted average interest 3.4% in 1993 and 5.8% in 1994 $1,376,197 $ 946,702
Tailored Rate ESOP Notes, interest 4.67% to 5.02% 50,000 50,000
Debentures, interest 8 3/4%, due 2018 249,085 249,085
Notes, interest 4 5/8% to 8 1/4%, due 1995 - 2011 2,500,000 2,684,170
Step-Up Notes, interest 6.22% through April 29, 1997 and 8% thereafter, due 2004 -- 150,000
Solid waste disposal revenue bonds, interest 6% to 7.75%, due 1995 - 2013 280,685 252,385
Installment loans and notes payable, interest 5.34% to 10.61%, due 1995 - 2020 978,691 1,298,436
Project Debt, interest 3.4% to 10.64%, due 1995 - 2010 810,612 764,859
Other long-term borrowings 35,616 34,320
Liquid Yield Option Notes, zero coupon-subordinated, interest 9%, due 2001 11,334 10,721
Liquid Yield Option Notes, zero coupon-subordinated, interest 6%, due 2012 426,005 361,438
Liquid Yield Option Notes, zero coupon-subordinated, interest 6%, due 2010 181,850 132,981
---------- ----------
Total debt $6,900,075 $6,935,097
Less--current portion 754,491 890,686
---------- ----------
Long-term portion $6,145,584 $6,044,411
========== ==========
</TABLE>
The long-term debt as of December 31, 1994, is due as follows:
Second year $ 929,320
Third year 2,423,578
Fourth year 374,885
Fifth year 257,344
Sixth year and thereafter 2,059,284
----------
$6,044,411
==========
Certain of the Company's borrowings are redeemable at the option of the
holders prior to maturity. Such amounts and certain other borrowings which would
otherwise be classified as current liabilities have been classified as long-term
debt because the Company intends to refinance such borrowings on a long-term
basis with the notes (described below) issued in January 1995 and $1,347,000,000
of committed long-term borrowing facilities which it has available. The
committed facilities provide for unsecured long-term loans at interest rates of
prime or LIBOR plus 30 basis points and commitment fees of 6.5 to 10 basis
points per annum. There are no compensating balance requirements or any informal
arrangements in connection with loans which would be made under these
facilities.
In April 1985, the Company issued and sold Convertible Liquid Yield Option
Notes ("Convertible LYONs") in the principal amount at maturity of $840,000,000
due in 2001. The Convertible LYONs, which are zero-coupon notes subordinated to
all existing and future senior debt, were originally priced to yield 9% if held
to maturity, and are convertible into 34.88 shares of the Company's common stock
per Convertible LYON, subject to adjustment. The Convertible LYONs are
redeemable by the Company at a price equal to the issue price plus accrued
original issue discount to the redemption date. The Convertible LYONs will be
purchased for cash by the Company at the option of the holder on June 30, 1995,
and on each June 30 thereafter prior to maturity, at a price determined in the
manner described above. During 1993 and 1994, 6,582 and 2,822 Convertible LYONs
were converted into 229,561 and 97,793 shares of the Company's common stock,
respectively. As of December 31, 1994, there were 18,266 Convertible LYONs
outstanding with a maturity value amounting to $18,266,000.
In November 1988, the Company issued and sold $1,620,000,000 principal amount
at maturity of Exchangeable Liquid Yield Option Notes ("Exchangeable LYONs") due
in April 2012. The Exchangeable LYONs, which are zero-coupon notes subordinated
to all existing and future senior debt, will yield 6% if held to maturity and
are exchangeable at the option of the holder at any time, at the rate per
Exchangeable LYON of 17.218 shares of CWM common stock owned by the Company,
subject to adjustment. The Exchangeable LYONs are redeemable by the Company at a
price equal to the issue price plus accrued original issue discount to the
redemption date. The Exchangeable LYONs will be purchased for cash by the
Company at the option of the holder on June 30, 1995, and on each June 30
thereafter prior to maturity, at a price determined in the manner described
above. As of December 31, 1994, there were 1,003,981 Exchangeable LYONs
outstanding with a maturity value amounting to $1,003,981,000.
In August 1990, CWM issued and sold Convertible Liquid Yield Option Notes
("CWM LYONs") in the principal amount at maturity of $575,000,000 due in August
2010. The CWM LYONs, which are zero-coupon notes subordinated to all existing
and future senior debt of CWM, will yield 6% if held to maturity, and are
convertible at the option of the holder at any time into
47
<PAGE>
11.676 shares of CWM common stock per CWM LYON, subject to adjustment. The CWM
LYONs are redeemable by CWM at a price equal to the issue price plus accrued
original issue discount to the redemption date. The CWM LYONs will be purchased
for cash by CWM at the option of the holder on June 30, 1995, and on each June
30 thereafter prior to maturity, at a price determined in the manner described
above. As of December 31, 1994, there were 334,923 CWM LYONs outstanding with a
maturity value of $334,923,000.
In connection with the acquisition of the CWM minority interest discussed in
Note 16, the exchange and conversion features of the Exchangeable LYONs and the
CWM LYONs were adjusted and the Company assumed CWM's obligation in respect of
the CWM LYONs. See Note 16 for additional information.
During 1993, the Company issued (a) $250,000,000 of 4-7/8% Notes due July 1,
1995, at a price of 99.75%, (b) $200,000,000 of 4-5/8% Notes due April 14, 1996,
at a price of 99.516%, (c) $300,000,000 of 4-7/8% Notes due June 15, 1996, at a
price of 99.628%, and (d) $500,000,000 of 6-3/8% Notes due December 1, 2003 at a
price of 99.875%. These Notes are not redeemable prior to maturity.
In November 1993, the Michigan Strategic Fund issued and sold $35,000,000 of
6% Limited Obligation Revenue Bonds (WMX Technologies, Inc. Project), Series
1993, maturing December 1, 2013, and loaned the proceeds to the Company.
In May 1994, the Company issued, at par, $150,000,000 of ten-year Step-Up
Notes due April 30, 2004. The holders may elect to have the Step-Up Notes or any
portion thereof repaid on April 30, 1997 at 100% of their principal amount
together with accrued interest. The interest rate on the Step-Up Notes is 6.22%
through April 29, 1997, and 8% thereafter. In November 1994, the Company issued
$200,000,000 of 8-1/4% Notes due November 15, 1999, at a price of 99.925%.
Neither of these issues is redeemable at the option of the Company prior to
maturity.
In January 1995, the Company issued $250,000,000 of 8-1/8% Notes due February
1, 1998, at a price of 99.671%. The Notes are not redeemable prior to maturity.
NOTE 5 DERIVATIVE FINANCIAL INSTRUMENTS
From time to time, the Company uses derivatives to manage currency, interest
rate and commodity risk. The portfolio of such instruments (which are held for
purposes other than trading) at December 31, 1994, is set forth in the
paragraphs which follow.
INTEREST RATE AGREEMENTS Certain of the Company's subsidiaries have entered
into interest rate swap agreements to reduce the impact of changes in interest
rates on underlying borrowings. The agreements are contracts to exchange fixed
and floating interest rate payments periodically over the term without the
exchange of the underlying notional amounts. The notional amounts of such
agreements are used to measure interest to be paid or received and do not
represent the amount of exposure to credit loss. The agreements provide only for
the exchange of interest on the notional amounts at the stated rates, with no
multipliers or leverage.
While the subsidiaries are exposed to market risk to the extent that receipts
and payments under interest rate agreements are affected by market interest
rates, such agreements are entered into as a hedge against interest rate
exposure on existing debt. Accordingly, differences paid or received under the
agreements are recognized as part of interest expense over the life of the
agreements. The impact of swap agreements on consolidated interest expense and
on the effective interest rate on consolidated debt was immaterial. As of
December 31, 1994, interest rate agreements in notional amounts and with terms
as set forth in the following table were outstanding:
<TABLE>
<CAPTION>
Notional
Currency Amount Duration of Agreement
------------------ -------- ---------------------
<S> <C> <C>
Sterling 50,000 Feb. 1994 - Feb. 1995
Sterling 20,000 Feb. 1995 - Feb. 1999
Hong Kong dollar 250,000 Feb. 1994 - Feb. 1995
Hong Kong dollar 250,000 Apr. 1994 - Apr. 1997*
Hong Kong dollar 250,000 Feb. 1995 - Feb. 1997
Australian dollars 25,000 Feb. 1994 - Feb. 1995
Australian dollars 20,000 Mar. 1994 - Mar. 1996
U.S. dollars 25,000 Jan. 1988 - Dec. 1995
</TABLE>
*This agreement was terminated subsequent to December 31, 1994.
CURRENCY AGREEMENTS From time to time, the Company and certain of its
subsidiaries use foreign currency derivatives to mitigate the impact of
translation on foreign earnings and income from foreign investees. Typically
these have taken the form of purchased put options or offsetting put and call
options with different strike prices. The Company receives or pays, based on the
notional amount of the option, the difference between the average exchange rate
of the hedged currency against the base currency and the average (strike price)
contained in the option. Complex instruments involving multipliers or leverage
are not used. While the Company may be required to make a payment in connection
with these agreements, it will recognize an offsetting increase in the
translation of foreign earnings or income from foreign investees. Although the
purpose for using such derivatives is to mitigate currency risk, they do not
qualify for hedge accounting under generally accepted accounting principles and
accordingly, must be adjusted to market value at the end of each accounting
period. Gains and losses on currency derivatives to date have not been material.
48
<PAGE>
------------------------------------------------------------------------------
As of December 31, 1994, the Company was party to the following average rate
currency options (all options settle at expiration):
<TABLE>
<CAPTION>
Currency
------------------------------------------
Notional Amount Hedged Against
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Collars, structured as offsetting
puts and calls with different strike prices,
covering the period January 1 to
December 31, 1995 40,000 French Franc Sterling
120,000 Swedish Krona Sterling
Put options purchased,
expiring December 31, 1995 36,000 Deutschemark Sterling
42,000 French Franc Sterling
13,500 Netherlands Guilder Sterling
60,000 Swedish Krona Sterling
</TABLE>
In addition, subsidiaries have sold currencies forward for delivery in 1995 to
hedge foreign exchange exposure on specific transactions. The amounts involved
are not material to the consolidated financial statements, and any gains or
losses on the hedges will be included in the measurement of the identified
transaction. Also in 1995, WMX has purchased and will continue to purchase put
options on the pound sterling to hedge the risk of a decline in value of that
currency on the reported earnings of WM International. Premiums paid will not be
significant.
Significant foreign currency contracts outstanding during 1993 and 1994 were
as follows:
<TABLE>
<CAPTION>
Currency
------------------------------------------
Average Amount Hedged Against
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1993
150,000 Sterling Dollar
9,300 Deutschemark Dollar
6,000 Finland Markka Sterling
1994
85,000 Deutschemark Sterling
132,000 French Franc Sterling
184,000 Swedish Krona Sterling
20,000,000 Lira Sterling
10,000,000 Lira Deutschemark
23,000 Deutschemark Dollar
141,000 Sterling Dollar
</TABLE>
COMMODITY AGREEMENTS The Company utilizes collars, calls and swaps to mitigate
the risk of price fluctuations on the fuel used by its vehicles. Quantities
hedged equate to committed fuel purchases or anticipated usage and accordingly,
gains and losses are deferred and recognized as fuel is purchased. The following
table summarizes the Company's positions in commodity derivatives as of December
31, 1994:
<TABLE>
<CAPTION>
Type Commodity Quantity Expiration
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Swaps Heating oil 128,500 gal. 1995
Collars Gas oil 40 tons 1995
Swaps Crude oil 4,000 bbls. 1996
Collars Crude oil 300 bbls. 1996
Swaps Crude oil 2,000 bbls. 1997
Collars Crude oil 350 bbls. 1997
Collars Crude oil 200 bbls. 1998
Collars Crude oil 100 bbls. 1999
</TABLE>
In addition, the Company has sold swaptions on 2,000,000 barrels of crude oil
with maturities in 1998. Such swaptions give the counterparty the option, at
some future date, to enter into a swap which would require the Company to pay at
the strike price set forth in the agreement in exchange for a floating crude oil
reference price. Until exercised, such contracts do not qualify for hedge
accounting under generally accepted accounting principles and accordingly, must
be marked to market each accounting period. To date, gains and losses on such
contracts have not been material.
The Company is exposed to credit loss in the event of non-performance by
counterparties on interest rate, currency and commodity derivatives, but in all
cases such counterparties are highly rated financial institutions and the
Company does not anticipate non-performance. Maximum credit exposure is
represented by the fair value of contracts with a positive fair value at
December 31, 1994.
49
<PAGE>
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NOTE 6 ENVIRONMENTAL COSTS AND LIABILITIES
The majority of the businesses in which the Company is engaged are intrinsically
connected with the protection of the environment. As such, a significant portion
of the Company's operating costs and capital expenditures could be characterized
as costs of environmental protection. While the Company is faced, in the normal
course of business, with the need to expend funds for environmental protection
and remediation, it does not expect such expenditures to have a material adverse
effect on its financial condition or results of operations because its business
is based upon compliance with environmental laws and regulations and its
services are priced accordingly.
The Company provides for closure and post-closure monitoring costs over the
operating life of disposal sites as airspace is consumed. The accrual for
closure and post-closure costs relates to expenditures to be incurred after a
facility ceases to accept waste. Similar costs incurred during the active life
of a site are charged to expense.
The Company also provides for its estimated share of the cost of necessary
remediation at sites which it owns or operated or to which it transported waste.
Cost estimates are based on management's judgment and experience in remediating
such sites for the Company as well as for unrelated parties, information
available from regulatory agencies as to costs of remediation, and the number,
financial resources and relative degree of responsibility of other PRPs who are
jointly and severably liable for remediation of a specific site, as well as the
typical allocation of costs among PRPs. These estimates are sometimes a range of
possible outcomes. In such cases, the Company provides for the amount within the
range which constitutes its best estimate. If no amount within the range appears
to be a better estimate than any other amount, then the Company provides for the
minimum amount within the range in accordance with FAS No. 5. The Company
believes that it is "reasonably possible," as that term is defined in FAS 5
("more than remote but less than likely"), that its potential liability could be
at the high end of such ranges, which would be approximately $175 million higher
in the aggregate than the estimate that has been recorded in the financial
statements as of December 31, 1994.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult, and the ultimate
outcome may differ from current estimates. However, the Company believes that
its extensive experience in the environmental services business, as well as its
involvement with a large number of sites, provides a reasonable basis for
estimating its aggregate liability. As additional information becomes available,
estimates are adjusted as necessary. While the Company does not anticipate that
any such adjustment would be material to its financial statements, it is
reasonably possible that technological, regulatory or enforcement developments,
the results of environmental studies or other factors could alter this
expectation and necessitate the recording of additional liabilities which could
be material. The impact of such future events cannot be estimated at the current
time.
Where the Company believes that both the amount of a particular environmental
liability and the timing of the payments are reliably determinable, the cost in
current dollars is inflated at 3% until expected time of payment and then
discounted to present value at 7%. Had the Company not discounted any portion of
its liability, the amount recorded would have been increased by approximately
$169 million at December 31, 1994.
The Company's active landfill sites have estimated remaining lives ranging
from one to over 100 years based upon current site plans and anticipated annual
volumes of waste. During this remaining site life, the Company will provide for
an additional $1.15 billion of closure and post-closure costs, including
accretion for the discount recognized to date.
As of December 31, the Company's liabilities for closure, post-closure
monitoring and environmental remediation costs were as follows:
<TABLE>
<CAPTION>
1993 1994
-------------------------------------------------------------
<S> <C> <C>
Current portion, included in
Accrued Expenses $ 130,863 $ 108,750
Non-current portion 745,637 704,015
---------- ----------
Total recorded $ 876,500 $ 812,765
Amount to be provided over
remaining life of active
sites, including discount
of $154 million in 1993 and
$169 million in 1994 987,000 1,149,617
---------- ----------
Expected aggregate undiscounted
environmental liabilities $1,863,500 $1,962,382
========== ==========
Anticipated payments of environmental liabilities at
December 31, 1994, are as follows:
1995 $ 108,750
1996 128,120
1997 93,429
1998 77,233
1999 47,643
Thereafter 1,507,207
----------
$1,962,382
==========
</TABLE>
The increase in the expected aggregate undiscounted amount results primarily
from additional airspace.
The Company has also filed several lawsuits against numerous insurance
carriers seeking reimbursement for past and future remedial, defense and tort
claim costs at a number of sites. The carriers have denied coverage and are
vigorously defending these claims. No amounts have been recognized in the
financial statements for any future insurance recoveries.
--------------------------------------------------------------------------------
NOTE 7 STOCK OPTIONS
The Company has four stock option plans currently in effect: the 1992 Stock
Option Plan (the "1992 Plan"), the 1992 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan"), the Replacement Stock Option Plan (the
"Replacement Plan") and the 1990 ServiceShares Stock Option Plan (the
"ServiceShares Plan").
Options granted under the 1992 Plan and the ServiceShares Plan are generally
exercisable in equal cumulative installments over a three- to five-year period
beginning one year after the date of grant. Options granted under the Directors'
Plan become exercisable in five equal annual installments beginning six months
after the date of grant.
Under the 1992 Plan, non-qualified stock options may be granted at a price
equal to 100% of the market value on the date of grant, for a term of not less
than five years nor more than ten years. Twelve million five hundred thousand
shares of the Company's common stock were initially reserved for issuance under
this plan.
50
<PAGE>
-------------------------------------------------------------------------------
Pursuant to the Directors' Plan, 150,000 shares of the Company's common stock
were initially reserved. Options for 15,000 shares are to be granted, at the
time of election to the Board, to each person who is not an officer or full-time
employee of the Company or any of its subsidiaries.
Under the Replacement Plan, the Compensation and Stock Option Committee of the
Board of Directors ("Committee") may, until August 1, 1997, grant options for a
total of not more than 1,000,000 shares of the Company's common stock to
eligible individuals in connection with acquisitions. The purchase price and
exercise dates of options granted under the Replacement Plan are determined by
the Committee. It is anticipated that the options will be granted by the
Committee on economic terms which will match the acquired companies' options
being replaced.
Under the ServiceShares Plan, 11,000,000 shares of the Company's common stock
have been reserved for issuance upon exercise of non-qualified options. Options
may be granted at a price equal to 100% of the market value on the date of
grant, for a term of not less than five years nor more than ten years.
Generally, full-time employees who are not represented by a bargaining unit,
have three years of service with the Company and are not covered by another
Company option plan are eligible to participate in this plan.
The status of the plans (including predecessor plans under
which options remain outstanding) during the three years ended December 31,
1994, was as follows:
<TABLE>
<CAPTION>
Shares Option Price
--------------------------------------------------------------------------------
<S> <C>
January 1, 1992--
Outstanding 8,643 $ 3.20-$41.63
Available for future grant 6,879 --
------
1992--
Granted 4,003 $33.44-$41.80
Exercised 2,562 $ 3.20-$35.44
Cancelled 301 $ 7.95-$41.80
Shares cancelled upon expiration of
the 1982 Plan 4,154 --
Additional shares reserved for future grant
under 1992 plans 15,799 --
------
December 31, 1992--
Outstanding 9,783 $ 3.46-$41.80
Available for future grant 14,822 --
------
1993--
Granted 2,957 $30.90-$38.45
Exercised 551 $ 3.46-$35.44
Cancelled--
1982 Plan 179 $18.84-$41.80
Current plans 328 $30.69-$41.80
------
December 31, 1993--
Outstanding 11,682 $ 4.33-$41.80
Available for future grant 12,193 --
------
1994--
Granted 3,729 $24.33-$29.03
Exercised 462 $ 4.33-$25.72
Cancelled--
1982 Plan 312 $14.72-$41.80
Current plans 826 $ 8.57-$41.80
Additional shares reserved for future grant 6,000 --
------
December 31, 1994--
Outstanding 13,811 $ 7.20-$41.80
Available for future grant 15,290 --
======
Options were exercisable with respect to
7,209,846 shares at December 31, 1994.
Subsequent to December 31, 1994, in
connection with the acquisition of the CWM
minority interest (see Note 16), outstanding
CWM options were exchanged for options to
acquire 2,867,061 Company shares at prices
of $21.97 to $63.33 per share.
</TABLE>
51
<PAGE>
-------------------------------------------------------------------------------
NOTE 8 CAPITAL STOCK
The Board of Directors has the authority to create and issue up to 50,000,000
shares of $1 par preferred stock at such time or times, in such series, with
such designations, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof as it may
determine. No shares of the preferred stock have been issued.
Pursuant to a plan adopted by the Company in January 1987, each share of the
Company's common stock carries the right (referred to herein as a "Right") to
purchase one four-hundredth (subject to adjustment) of a share of Series A
Preferred Stock, $1.00 par value ("Preferred Stock"), at a price of $68.75
(subject to adjustment). The Rights are tradeable only with the Company's common
stock until they become exercisable. The Rights become exercisable ten days
after the earlier of a public announcement that a person has acquired 20% or
more of the Company's outstanding voting stock or a person's commencement or
announcement of a tender or exchange offer that would result in his owning 30%
or more of the Company's outstanding voting stock. The Rights are subject to
redemption by the Company at a price of $.0125 per Right, subject to certain
limitations, and will expire on February 6, 1997. The Preferred Stock carries
certain preferential dividend and liquidation rights and certain voting and
other rights.
If the Company or its assets are acquired in certain merger or other
transactions after a person acquires Company voting stock or commences or
announces an offer as provided above, each holder of a Right may purchase at the
exercise price of the Right, shares of common stock of the acquiring company
having a market value of two times the exercise price of the Right. If the
Company is the survivor in certain merger transactions or in the event of
certain other "self-dealing" transactions, each holder of a Right may purchase
at the exercise price of the Right, shares of Preferred Stock having a market
value of twice the exercise price of the Right. Rights held by an acquiring
person become void upon the occurrence of such events.
-------------------------------------------------------------------------------
NOTE 9 EARNINGS PER SHARE
Earnings per share are computed on the basis of the weighted average number of
common and common equivalent shares outstanding during each year. Common stock
equivalents relate to the impact of options outstanding under the Company's
stock option plans.
The following table reconciles the number of common shares shown as
outstanding in the Consolidated Balance Sheets with the number of common shares
used in computing earnings per share:
<TABLE>
<CAPTION>
1993 1994
---------------------------------------------------------
<S> <C> <C>
Common shares issued, net of
treasury shares in 1993 and
Employee Stock Benefit Trust
shares in 1994, per Consolidated
Balance Sheets 483,453 484,000
Effect of shares issuable under stock
options after applying the "treasury
stock" method 489 396
Effect of using weighted average
common shares outstanding
during the year 1,432 (252)
------- -------
Common shares used in computing
earnings per share 485,374 484,144
======= =======
</TABLE>
-------------------------------------------------------------------------------
NOTE 10 COMMITMENTS AND CONTINGENCIES
The Company leases several of its operating and office facilities for various
terms. Rents charged to costs and expenses in the Consolidated Statements of
Income amounted to $195,092,000 in 1992, $181,168,000 in 1993 and $203,576,000
in 1994. These amounts include rents under long-term leases, short-term
cancellable leases and rents charged as a percentage of revenue, but are
exclusive of financing leases capitalized for accounting purposes.
The long-term rental obligations as of December 31, 1994, are due as follows:
<TABLE>
<CAPTION>
<S> <C>
First year $ 161,754
Second year 145,728
Third year 134,065
Fourth year 125,022
Fifth year 118,372
Sixth through tenth years 498,942
Eleventh year and thereafter 415,086
----------
$1,598,969
==========
</TABLE>
During 1994, the Company sold put options on 17.9 million shares of its common
stock. The put options give the holders the right at maturity to require the
Company to repurchase shares of its common stock at specified prices. Proceeds
of $29,965,000 from the sale of put options were credited to additional paid-in
capital. The amount the Company would be obligated to pay to repurchase shares
of its common stock if all outstanding put options were exercised has been
reclassified to a temporary equity account. In the event the options are
exercised, the Company may elect to pay the holder in cash the difference
between the strike price and the market price of the Company's shares, in lieu
of repurchasing the stock.
Options on 9.0 million shares expired unexercised in 1994, as the price of the
Company's stock was in excess of the strike price at maturity. Options on 4.7
million shares were exercised in February 1995, and the Company elected to
settle them for cash at a total cost of $12,019,000. The remaining 4.3 million
options expire in July and August 1995, at strike prices ranging from $25.588 to
$28.833 per share. The Company sold additional put options in February and March
1995 to replace those which matured. The new options expire in October and
November 1995 at strike prices of $26.11 to $26.58 per share.
Although the Company's insurance program includes coverage for sudden and
accidental Environmental Impairment Liability ("EIL") risk, insurance coverage
in large amounts for non-sudden and accidental EIL risk continues to be
unavailable at a cost which management believes is reasonable. The coverage
terms and cost of the limited risk transfer EIL insurance of this type which is
available to the Company are such that the insurance has not been purchased. To
satisfy existing government requirements,
52
<PAGE>
-------------------------------------------------------------------------------
the Company has secured non-sudden and accidental EIL insurance coverage in
amounts believed to be in compliance with federal and state law. The Company
must reimburse the carrier for losses incurred under coverage of this policy. In
the event the Company continues not to purchase risk-transfer EIL insurance
coverage, the Company's net income could be adversely affected in the future if
uninsured losses were to be incurred.
The Company has issued or is a party to approximately 3,015 bank letters of
credit, performance bonds and other guarantees. Such financial instruments
(averaging approximately $606,000 each), including those provided for affiliates
and not otherwise recorded, are given in the ordinary course of business.
Because virtually no claims have been made against these financial instruments
in the past, management does not expect these guarantees will have a material
adverse effect on the consolidated financial position or results of operations
of the Company.
In February 1994, a Connecticut Superior Court judge issued a decision on
appeals of the Connecticut Department of Environmental Protection's ("DEP")
issuance of WTI's permit to construct the $92 million Lisbon, Connecticut trash-
to-energy facility. In the ruling, the judge agreed with WTI's position on all
issues raised in the appeals but remanded the permit back to the DEP for further
proceedings on an uncontested permit condition that requires the Lisbon facility
to dispose of only Connecticut waste. WTI continues to construct the facility as
it pursues a favorable resolution of this permit remand through appropriate
judicial and regulatory proceedings. As of December 31, 1994, the facility was
approximately 60 percent complete. Although WTI believes that the probability of
an adverse determination as a result of the judge's remand order is remote, such
a determination could result in the permanent termination of facility
construction. Through a guarantee agreement with the Eastern Connecticut
Resource Recovery Authority, the facility's owner, such a consequence may
require WTI to redeem the debt issued to finance the facility. In the unlikely
event this were to occur, the resulting payments could have a material adverse
impact on WTI's financial condition and results of operations. Although the
impact on the Company would be mitigated by the minority interest in WTI, it
could nonetheless be material to results of operations for a particular quarter
or year.
In the ordinary course of conducting its business, the Company becomes
involved in lawsuits, administrative proceedings and governmental
investigations, including antitrust and environmental matters. Some of these
proceedings may result in fines, penalties or judgments being assessed against
the Company which, from time to time, may have an impact on earnings for a
particular quarter or year. The Company does not believe that these proceedings,
individually or in the aggregate, are material to its business or financial
condition.
The Company was a party to a lawsuit that alleged that it and CWM violated
federal securities laws by engaging in misrepresentations of, or failing to
disclose, material information concerning primarily the overvaluation of certain
of CWM's assets, principally its incineration facilities, and the existence of
certain adverse hazardous waste treatment and disposal industry conditions and
trends, and overstating CWM's and the Company's earnings for 1992 and the first
quarter of 1993 due to failure to write down the value of such assets and other
matters. In February 1995, the lawsuit was certified as a class action and
dismissed as to all defendants.
During the third quarter of 1994, several putative class action lawsuits were
filed by CWM stockholders in the Chancery Court of the State of Delaware in and
for New Castle County which seek unspecified money damages against the Company,
CWM and the individual directors of CWM in connection with the Company's
acquisition of all of the shares of CWM's common stock which it did not own.
These suits have since been consolidated for all purposes into a single action
captioned In re Chemical Waste Management, Inc. Shareholders Litigation.
Discovery is ongoing in the consolidated action. The Company believes that its
actions and those of CWM and its Board of Directors (including a Special
Committee thereof consisting of independent directors) in connection with the
transaction which is the subject of the litigation have been in accordance with
Delaware law. The Company and CWM have agreed with the plaintiffs to settle the
lawsuit as to all parties under terms which will not have a material adverse
impact on the Company. The proposed settlement is subject to certain conditions,
including the negotiation and execution of a definitive settlement agreement and
related documents, and approval by the Court.
-------------------------------------------------------------------------------
NOTE 11 BENEFIT PLANS
The Company has a defined benefit pension plan for all eligible non-union
domestic employees of WMX, CWM and Waste Management, Inc. ("WMI"). The benefits
are based on the employee's years of service and compensation during the highest
five consecutive years out of the last ten years of employment. The Company's
funding policy is to contribute annually the minimum required amount determined
by its actuaries.
Net periodic pension expense for 1992, 1993 and 1994, based on discount rates
of 8.75%, 8.50% and 8.50%, respectively, included the following components:
<TABLE>
<CAPTION>
1992 1993 1994
----------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned
during the year $ 12,922 $ 10,785 $ 11,075
Interest cost on projected
benefit obligation 9,320 9,507 11,532
Expected return on plan assets (12,547) (11,055) (12,335)
Net amortization and deferral (813) (1,451) (1,310)
-------- -------- --------
Net periodic pension expense $ 8,882 $ 7,786 $ 8,962
======== ======== ========
</TABLE>
Assumptions as of December 31, which are used to determine the plan's funded
status at the respective dates, are as follows:
<TABLE>
<CAPTION>
1993 1994
----------------------------------------------------------
<S> <C> <C>
Discount rate 7.25% 8.5%
Rate of increase in compensation levels 4.0% 4.0%
Expected long-term rate of return on assets 9.0% 9.0%
</TABLE>
53
<PAGE>
-------------------------------------------------------------------------------
The following table sets forth the plan's funded status and the amount
recognized in the Company's Consolidated Balance Sheets at December 31, 1993 and
1994 for its pension plan:
<TABLE>
<CAPTION>
1993 1994
------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit obliga-
tions, including vested benefits
of $118,597 and $120,881 at
December 31, 1993 and
1994, respectively $(136,830) $(136,713)
========= =========
Projected benefit obligation $(164,094) $(156,609)
Plan assets at fair value,
primarily common stocks,
bonds and real estate 136,244 136,740
--------- ---------
Plan assets less than
projected benefit obligation $ (27,850) $ (19,869)
Unrecognized net loss 36,530 39,304
Unrecognized overfunding at
date of adoption (January 1, 1985)
of FAS No. 87, net of amortization,
being recognized over 15 years (9,317) (8,727)
-------- ---------
Pension cost included in
prepaid (accrued) expenses $ (637) $ 10,708
========= =========
</TABLE>
The Company participates in various multi-employer pension plans covering
certain employees not covered under the Company's pension plan, pursuant to
agreements between the Company and collective bargaining units who are members
of such plans. These plans are generally defined benefit plans; however, in many
cases, specific benefit levels are not negotiated with, or known by the
employer-contributors. Contributions of $19,913,000, $13,821,000 and $14,648,000
were made and charged to income in 1992, 1993 and 1994, respectively.
The Company and its principal subsidiaries adopted FAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" on the immediate
recognition basis, effective as of January 1, 1992. This Standard requires that
the expected cost of future benefits be charged to expense during the years in
which the employees render service. Previously, the Company recognized these
costs, which relate primarily to health care costs and were not material, on a
cash basis.
The cumulative effect of this accounting change was to decrease income for
1992 by $77,837,000 ($36,579,000, or $.07 per share, after tax and minority
interest), representing the amount of the unfunded obligation measured as of
January 1, 1992. The effect of this accounting change, except for the one-time
charge, on 1992 earnings was not significant.
The following table analyzes the obligation (included in other deferred items
on the Consolidated Balance Sheets) as of December 31, 1993 and 1994:
<TABLE>
<CAPTION>
1993 1994
------------------------------------------------------------------
<S> <C> <C>
Accumulated Postretirement
Benefit Obligations:
Retirees $57,395 $57,216
Other fully eligible participants 24,400 10,960
Other active participants 5,463 9,478
------- -------
$87,258 $77,654
Unrecognized:
Prior service cost 347 627
Gain/(loss) (2,658) 9,501
------- -------
$84,947 $87,782
======= =======
</TABLE>
For measurement purposes, a 9.0% annual rate of increase in the per capita
cost of covered health care claims was assumed for 1995; the rate was assumed to
decrease by 0.5% per year to 6.0% in 2001 and remain at that level thereafter.
Increasing the assumed health care cost trend by one percentage point in each
year would increase the accumulated postretirement benefit obligation as of
December 31, 1994 by approximately $4,114,000, and the aggregate of the service
and interest cost components of net postretirement health care cost for 1994 by
approximately $301,000. The weighted-average discount rate used in determining
the accumulated postretirement benefit obligation for 1993 and 1994 was 7.25%
and 8.5%, respectively.
The expense for postretirement health care benefits was $7,600,000 in 1992,
$7,300,000 in 1993 and $4,668,000 in 1994. The service and interest components
of the expense were $2,900,000 and $4,700,000, respectively, in 1992, $3,000,000
and $4,300,000, respectively, in 1993 and $1,049,000 and $3,619,000,
respectively, in 1994.
The Company has an Employee Stock Ownership Plan ("1988 ESOP") for all
eligible non-union United States and Canadian employees of WMX, CWM and WMI. The
benefits are based on the employee's years of service and compensation. The
Company contributes each year an amount, if any, determined by the Board of
Directors of the Company.
Information concerning the 1988 ESOP is as follows:
<TABLE>
<CAPTION>
1992 1993 1994
---------------------------------------------------------
<S> <C> <C> <C>
Expense recorded (contribution) $5,551 $7,329 $7,930
====== ====== ======
Interest expense on
1988 ESOP debt $1,765 $1,510 $1,965
====== ====== ======
Dividends on unallocated
1988 ESOP shares used
by the 1988 ESOP $ 983 $ 964 $ 780
====== ====== ======
</TABLE>
54
<PAGE>
-------------------------------------------------------------------------------
The Company has a Profit Sharing and Savings Plan ("PSSP") available to
certain employees of WMX, CWM and WMI. The terms of the PSSP call for annual
contributions by the Company as determined by a specific formula as well as a
match of employee contributions up to $500 per employee. Charges to operations
for the PSSP were $24,830,000 in 1992, $11,589,000 in 1993 and $27,334,000 in
1994. Rust, WTI and WM International also sponsor several non-contributory and
contributory defined contribution plans covering both salaried and hourly
employees. Employer contributions are generally based upon fixed amounts of
eligible compensation and amounted to $16,300,000, $25,765,000 and $28,031,000,
during 1992, 1993 and 1994, respectively.
Effective January 1, 1994, the Company and its principal subsidiaries adopted
FAS No. 112, "Employers' Accounting for Postemployment Benefits." This new
statement established accounting standards for employers who provide benefits to
former or inactive employees after employment but before retirement. The
adoption of FAS 112 did not have a significant effect on earnings for 1994,
because the Company's accounting prior to adoption was substantially in
compliance with the new standard.
During 1994, the Company established an Employee Stock Benefit Trust and sold
12.6 million shares of treasury stock to the Trust in return for a 30-year,
7.33% note with interest payable quarterly and principal due at maturity. The
Company has agreed to contribute to the Trust each quarter funds sufficient,
when added to dividends on the shares held by the Trust, to pay interest on the
note as well as principal outstanding at maturity. At the direction of an
administrative committee comprised of Company officers, the trustee will use the
shares or proceeds from the sale of shares to pay employee benefits, and to the
extent of such payments by the Trust, the Company will forgive principal and
interest on the note. The shares of common stock issued to the Trust are not
considered to be outstanding in the computation of earnings per share until the
shares are utilized to fund obligations for which the trust was established.
-------------------------------------------------------------------------------
NOTE 12 COMPANY'S OPERATIONS IN DIFFERENT INDUSTRIES AND GEOGRAPHICAL AREAS
The Company provides comprehensive environmental, engineering and construction,
industrial and related services through five principal subsidiaries, each of
which operates in a relatively discrete industry or geographic area. WMI
provides integrated solid waste services and CWM provides hazardous waste
collection, transportation, treatment and disposal services in North America. WM
International provides these services, as well as trash-to-energy services,
outside North America. WTI is involved in trash-to-energy and independent power
projects, water and wastewater treatment (including biosolids management) and
air quality control, primarily in North America. Rust serves the engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation and on-site industrial and related services markets in the United
States and a number of foreign countries.
Whereas solid waste, hazardous waste and trash-to-energy operations are
performed by three distinct organizations in North America, these services are
provided internationally by a single management organization. Because of this
and the different business environment for international operations, the Company
considers WM International to be a discrete segment. Following is an analysis of
the Company's operations by major segment.
<TABLE>
<CAPTION>
Engineering, Trash-To-Energy, International
Construction, Water Treatment, Waste Corporate
Solid Hazardous Industrial and Air Quality and Management and
Waste Waste Related Services Related Services Services Eliminations(1) Consolidated
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992
Revenue $4,309,614 $ 755,088 $1,441,050 $ 928,313 $1,445,734 $(218,772) $ 8,661,027
Operating expenses
including goodwill
amortization 2,911,971 425,359 1,228,749 633,614 1,033,263 (210,050) 6,022,906
Special charges 96,000 76,000 35,200 -- -- 12,700 219,900
Selling and
administrative
expenses 494,300 115,913 145,405 97,920 210,891 (16,382) 1,048,047
----------------------------------------------------------------------------------------------------------
Income from
operations $ 807,343 $ 137,816 $ 31,696 $ 196,779 $ 201,580 $ (5,040) $ 1,370,174
==========================================================================================================
Identifiable assets $5,771,464 $1,651,206 $1,167,495 $2,619,635 $2,792,803 $ 111,577 $14,114,180
==========================================================================================================
Depreciation and
amortization
expense $ 422,793 $ 65,918 $ 36,425 $ 58,410 $ 113,670 $ 16,853 $ 714,069
==========================================================================================================
Capital expenditures(2) $1,066,863 $ 197,567 $ 132,228 $ 263,187 $ 264,761 $ 38,589 $ 1,963,195
==========================================================================================================
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trash-To-
Engineering, Energy, Water
Construction, Treatment, International
Industrial Air Quality Waste Corporate
Solid Hazardous and Related and Related Management and
Waste Waste Services Services Services Eliminations(1) Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1993
Revenue $4,702,166 $ 661,860 $1,534,465 $1,142,219 $1,411,211 $(316,344) $ 9,135,577
Operating expenses
including goodwill
amortization 3,193,183 506,264 1,249,908 792,719 1,009,145 (309,914) 6,441,305
Special charge -- 550,000 -- -- -- -- 550,000
Selling and
administrative expenses 547,413 128,058 155,753 107,276 198,969 (9,267) 1,128,202
--------------------------------------------------------------------------------------------------------
Income from operations $ 961,570 $ (522,462) $ 128,804 $ 242,224 $ 203,097 $ 2,837 $ 1,016,070
========================================================================================================
Identifiable assets $6,912,271 $1,498,631 $1,625,413 $3,090,278 $3,315,621 $(177,738) $16,264,476
========================================================================================================
Depreciation and
amortization expense $ 461,963 $ 63,971 $ 52,300 $ 75,323 $ 121,050 $ 22,084 $ 796,691
========================================================================================================
Capital expenditures(2) $1,139,004 $ 157,786 $ 132,683 $ 310,839 $ 403,326 $ 19,075 $ 2,162,713
========================================================================================================
1994
Revenue $5,117,871 $ 649,581 $1,682,907 $1,324,567 $1,710,862 $(388,470) $10,097,318
Operating expenses
including goodwill
amortization 3,502,445 454,765 1,407,794 915,237 1,244,597 (380,393) 7,144,445
Selling and
administrative expenses 549,608 105,736 177,978 119,380 230,014 1,532 1,184,248
--------------------------------------------------------------------------------------------------------
Income from operations $1,065,818 $ 89,080 $ 97,135 $ 289,950 $ 236,251 $ (9,609) $ 1,768,625
========================================================================================================
Identifiable assets $7,388,766 $1,375,341 $1,771,655 $3,282,471 $4,037,922 $(317,241) $17,538,914
========================================================================================================
Depreciation and
amortization expense $ 479,333 $ 59,381 $ 67,409 $ 95,254 $ 154,575 $ 24,514 $ 880,466
========================================================================================================
Capital expenditures(2) $ 950,383 $ 57,983 $ 63,570 $ 115,082 $ 304,999 $ 20,397 $ 1,512,414
========================================================================================================
</TABLE>
(1) Includes corporate office expenses, corporate charges and elimination of
intercompany transactions.
(2) Includes property and equipment of purchased businesses.
56
<PAGE>
--------------------------------------------------------------------------------
In addition to the markets served by WM International, the Company has foreign
operations in Canada and Mexico and CWM, WTI and Rust derive revenue from
outside the United States. The information relating to the Company's foreign
operations is set forth in the following table:
<TABLE>
<CAPTION>
United Other
States Europe Foreign Consolidated
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1992
Revenue $ 6,973,822 $1,143,496 $543,709 $ 8,661,027
===============================================
Income from operations $ 1,161,365 $ 150,910 $ 57,899 $ 1,370,174
===============================================
Identifiable assets $11,124,070 $2,326,877 $663,233 $14,114,180
===============================================
1993
Revenue $ 7,483,316 $1,241,811 $410,450 $ 9,135,577
===============================================
Income from operations $ 788,524 $ 184,412 $ 43,134 $ 1,016,070
===============================================
Identifiable assets $12,676,240 $2,955,078 $633,158 $16,264,476
===============================================
1994
Revenue $ 7,946,920 $1,504,154 $646,244 $10,097,318
===============================================
Income from operations $ 1,496,039 $ 198,251 $ 74,335 $ 1,768,625
===============================================
Identifiable assets $12,884,724 $3,731,393 $922,797 $17,538,914
===============================================
</TABLE>
No single customer accounted for as much as 3% of consolidated revenue in
1992, 4% in 1993 and 3% in 1994.
--------------------------------------------------------------------------------
Note 13 SPECIAL GAINS AND CHARGES
The Company's results for 1992 include a non-taxable gain of $240,000,000
(before minority interest) resulting from the initial public offering by WM
International in April 1992, of 75,000,000 newly issued ordinary shares,
representing 20 percent of the post-offering outstanding shares.
During the second quarter of 1992, the Company recorded special charges of
$159,700,000 before tax and minority interest, primarily related to a writedown
of the Company's medical waste business and CWM incinerators in Chicago,
Illinois, and Tijuana, Mexico.
The writedown of the medical waste business resulted from a study by an
independent consultant commissioned by WTI in connection with WTI's ultimate
decision not to exercise its option to purchase this business. The WTI purchase
option was subsequently extended five years.
The CWM charges related in part to an agreement with the Illinois
Environmental Protection Agency concerning the Chicago incinerator. CWM also
revised its plans for a mobile hazardous waste incinerator in Tijuana following
a decision by the Mexican government requiring the unit's relocation. Although
the facility was never operated, funds had been expended to develop site
infrastructure and prepare for trial burns.
During the fourth quarter of 1992, the Company recorded a special charge of
$60,200,000 before tax and minority interest as a result of charges by Brand and
CWM to reflect a writedown of Brand's investment in its asbestos abatement
business and certain restructuring costs incurred by Brand and CWM related to
the formation of Rust.
During the third quarter of 1993, the Company recorded a special charge of
$550,000,000 before tax and minority interest as a result of CWM recording a
special asset revaluation and restructuring charge. The charge consisted of
$381,000,000 to write down assets, primarily incinerators, and $169,000,000 for
cash expenditures. Substantially all of the cash expenditures were made as of
December 31, 1994. As a result of this program, overhead, including depreciation
and amortization, was reduced in 1994 by approximately $60 million on an
annualized basis.
Results for 1993 include a non-taxable gain of $15,109,000 (before minority
interest) relating to the second quarter issuance of shares by Rust in the Brand
merger.
In 1994, Rust recorded a charge of $9.2 million (before tax and minority
interest) for the writeoff of assets and the recognition of one-time costs
incurred during the fourth quarter in connection with the discontinuance of its
marine construction and dredging operations, and the closing of offices in a
consolidation of the engineering and construction groups. This charge is
included in Operating Expenses ($6.6 million) and Selling and Administrative
Expenses ($2.6 million) in the Consolidated Statement of Income.
57
<PAGE>
-----------------------------------------------------------------------------
NOTE 14 FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of FAS No. 107, "Disclosures about Fair
Value of Financial Instruments." The estimated fair value amounts have been
determined by the Company, using available market information and commonly
accepted valuation methodologies. However, considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company or holders of the instruments could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts. The fair value estimates presented herein are based on information
available to management as of December 31, 1993, and December 31, 1994. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been revalued since those
dates, and current estimates of fair value may differ significantly from the
amounts presented herein.
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1994
------------------------------------------------------------------------------------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonderivatives--
Assets--
Cash and cash equivalents $ 92,802 $ 92,802 $ 121,918 $ 121,918
Receivables 1,771,761 1,771,761 1,968,192 1,968,192
Investments 33,580 33,580 19,704 19,704
Liabilities--
Commercial paper 1,376,197 1,376,106 946,702 944,837
Project debt 810,612 977,800 764,859 828,320
Liquid Yield Option Notes 619,189 611,121 505,140 500,410
Other borrowings 4,094,077 4,247,543 4,718,396 4,586,522
Derivatives relating to debt -- (1,900) -- 1,653
Other derivatives carried as--
Assets (in Other Assets) -- -- 307 307
Liabilities (in Accrued Expenses) -- -- (1,105) (16,245)
Letters of credit, performance bonds
and guarantees -- -- -- --
</TABLE>
CASH, RECEIVABLES AND INVESTMENTS The carrying amounts of these items are a
reasonable estimate of their fair value.
LIABILITIES For debt issues that are publicly traded, fair values are based on
quoted market prices or dealer quotes. Due to the short-term nature of the ESOP
notes, their carrying value approximates fair value. Interest rates that are
currently available to the Company for issuance of debt with similar terms and
remaining maturities are used to estimate fair value for debt issues that are
not quoted on an exchange.
DERIVATIVES The fair value of derivatives generally reflects the estimated
amounts that the Company would receive or pay to terminate the contracts at
December 31, thereby taking into account unrealized gains and losses. Dealer
quotes are available for most of the Company's derivatives. Deferred gains and
losses are shown as assets and liabilities, as offsetting such amounts against
the related nonderivative instrument is permitted only pursuant to a right of
setoff or master netting agreement.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS In the normal course of business, the
Company is a party to financial instruments with off-balance-sheet risk, such as
bank letters of credit, performance bonds and other guarantees, which are not
reflected in the accompanying balance sheets. Such financial instruments are to
be valued based on the amount of exposure under the instrument and the
likelihood of performance being required. In the Company's experience, virtually
no claims have been made against these financial instruments. Management does
not expect any material losses to result from these off-balance-sheet
instruments and, therefore, is of the opinion that the fair value of these
instruments is zero.
58
<PAGE>
--------------------------------------------------------------------------------
NOTE 15 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is an analysis of certain items in the Consolidated Statements
of Income by quarter for 1993 and 1994.
<TABLE>
<CAPTION>
Net Earnings
Gross Income/ (Loss) Per
1993 Revenue Profit (Loss) Share (1)
------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $ 2,135,341 $ 635,484 $ 199,285 $ .41
Second Quarter 2,290,582 687,447 217,724 .45
Third Quarter 2,322,745 139,081 (127,156) (.26)
Fourth Quarter 2,386,909 682,260 162,923 .34
----------- ---------- --------- -----
$ 9,135,577 $2,144,272 $ 452,776 $ .93
=========== ========== ========= =====
1994
First Quarter $ 2,284,067 $ 659,945 $ 162,612 $ .34
Second Quarter 2,551,722 757,112 203,117 .42
Third Quarter 2,603,110 765,849 212,885 .44
Fourth Quarter 2,658,419 769,967 205,767 .42
----------- ---------- --------- -----
$10,097,318 $2,952,873 $ 784,381 $1.62
=========== ========== ========= =====
</TABLE>
(1) The sum of the quarterly per share amounts does not equal the annual amount
in 1993 due to rounding.
See Note 13 to Consolidated Financial Statements for a discussion of the
special gains and charges affecting the 1993 second and third quarter and full
year results and the 1994 fourth quarter and full year results.
--------------------------------------------------------------------------------
NOTE 16 ACQUISITION OF SUBSIDIARIES' STOCK
CWM TRANSACTION On January 24, 1995, the Company acquired all of the
outstanding shares of CWM which it did not already own. WMX previously owned
approximately 78.6% of the outstanding CWM shares. The transaction provided for
the CWM public shareholders to receive a convertible subordinated WMX note due
2005, with a principal amount at maturity of $1,000, for every 81.1 CWM shares
held with cash paid for fractional notes. The notes are subordinated to all
existing and future indebtedness of WMX. Each note bears cash interest from the
date the merger was consummated at the rate of two percent per annum of the
$1,000 principal amount at maturity, payable semi-annually. The difference
between the principal amount at maturity of $1,000 and the $717.80 stated issue
price of each note represents the stated discount which, together with the cash
interest payable on the notes, will accrue at a rate of 5.75 percent per annum
(determined on a semi-annual bond equivalent basis) for purposes of determining
the prices at which WMX may purchase or redeem notes, as described below. At the
option of the holder, each note will be purchased for cash by WMX on March 15,
1998, and March 15, 2000, at prices of $789.95 and $843.03, respectively, which
represent the stated issue price plus accrued stated discount to those dates.
Accrued unpaid interest to those dates will also be paid. The notes will be
redeemable by WMX after March 15, 2000 (but not before) for cash, at the stated
issue price plus accrued stated discount and accrued but unpaid interest through
the date of redemption. In addition, each note is convertible at any time prior
to maturity, unless previously purchased or redeemed by WMX, into 26.078 shares
of WMX common stock, subject to adjustment upon the occurrence of certain
events. Upon any such conversion, WMX will have the option of paying cash equal
to the market value of the WMX shares which would otherwise be issuable.
As of December 31, 1994, the CWM LYONs and the Exchangeable LYONs (together
with the CWM LYONs, the "LYONs") were convertible into (in the case of the CWM
LYONs) or exchangeable for (in the case of the Exchangeable LYONs) CWM shares.
Upon consummation of the merger, the LYONs became convertible into the number of
notes discussed in the preceding paragraph to which the holders would have been
entitled had they converted or exchanged the LYONs immediately prior to the
merger approval. Outstanding CWM options were exchanged for options to acquire
2,867,061 Company shares at prices of $21.97 to $63.33 per share.
RUST TRANSACTION In February 1995, the Company offered to acquire the
approximately 4% of Rust's shares held by the public for $14 per share in cash.
The transaction is subject to approval by a special committee of independent
directors appointed by the Rust Board of Directors, but does not require
shareholder approval. If approved, the transaction is expected to be completed
during the second quarter of 1995.
--------------------------------------------------------------------------------
NOTE 17 SUBSEQUENT EVENT
Although CWM restructured its operations in 1994 to adapt to market conditions,
and substantially reduced its overhead, its chemical waste services line of
business has continued to underperform, and management is continuing to evaluate
alternatives to address this situation. On March 14, 1995, the Board of
Directors approved a plan to further reduce the scope of the chemical waste
services business by selling or otherwise eliminating technologies and/or
service locations which are not meeting customer service or performance
objectives. Management is finalizing the details of this plan, which is expected
to result in an additional restructuring charge of approximately $140 million
pretax in the first quarter of 1995.
59
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF WMX TECHNOLOGIES, INC.
--------------------------------------
The following is a list of all direct and indirect subsidiaries of the
registrant as of March 1, 1995. The state or other jurisdiction of
incorporation or organization is indicated in parentheses following each
subsidiary's name. The names of the divisions or other business units of each
subsidiary are indented and listed below the relevant subsidiary's name.
A & B Builders, Inc. (Texas)
ABC Holdings GmbH (Germany)
Able Industrial Maintenance & Cleaning, Inc. (Illinois)
AeroMap U.S., Inc. (Alaska)
AeroMap U.S., Inc. (Florida)
Aero-Metric Engineering, Inc. (Wisconsin)
AEV Franz Wagner Abfall-Entsorgungs und Verwertungsgesellschaft GmbH (Germany)
Afvalstoffen Terminal Moerdijk B.V. (Netherlands)
A. Grenet (France)
Air Survey Corporation of Virginia (Delaware)
Alderfer & Frank, Inc. (Pennsylvania)
Alfred Crew Consulting Engineers, Inc. (New Jersey)
Allegheny Industrial Electrical Company, Inc. (Delaware)
ALPLAST (Germany)
Am.Eco S.r.l. (Italy)
Applied Environmental Consulting, Inc. (California)
Applied Environmental, Inc. (California)
Applied Geology (Central) (United Kingdom)
Applied Geology Limited (United Kingdom)
Applied Geology (South Wales) (United Kingdom)
Arabian Cleaning Enterprise, Ltd. (Saudi Arabia)
Arkansas Valley Waste Limited Partnership (Illinois)
Ark BV (Netherlands)
ARS - Waste Management, Ltd. (Illinois)
Aseo S.A. (Argentina)
Aspica s.r.l. (Italy)
Aurec (Germany)
Automated Disposal Systems, Inc. (Delaware)
Automotive Industrial Recyclers Holding Company (Florida)
Automative Industrial Recovery Systems, Inc. (Florida)
Auxiwaste SA (France)
Avica S.r.l. (Italy)
Avonmouth Recycling For Energy Limited (United Kingdom)
Bellenger Industrial & Commercial Services, Inc. (Missouri)
Beam Miljoservice Service A/S (Denmark)
<PAGE>
Belpar Chemical Services, Inc. (West Virginia)
Belpar Environmental, Inc. (Illinois)
Belpar Environmental of Virginia, Inc. (Virginia)
Benfur Engineering Company (Delaware)
Bensalem Power Company (Pennsylvania)
BICS of Tennessee, Inc. (Tennessee)
Bio-Energy Partners (Illinois)
Bio Gro Acquisition Sub, Inc. (Delaware)
Bio Gro Florida, Inc. (Florida)
Blackline Oy (Finland)
Blastrac Europe Ltd. (United Kingdom)
Brand Air, Inc. (Delaware)
Brand Construction Services, Inc. (Delaware)
Brand Demolition Services, Inc. (Delaware)
Brand H & O, Inc. (New York)
Brand Industrial Services of Ontario, Inc. (Ontario)
Brand Insulations, Inc. (Illinois)
Brand Marine Services, Inc. (Delaware)
Brand MPC, Inc. (Delaware)
Brand Remediation Services, Inc. (Delaware)
Brand Services, Inc. (Delaware)
BRINI of North America, Inc. (Connecticut)
Brundidge Waste Disposal Center, Inc. (Alabama)
Burton, Adams, Kemp & King, Inc. (North Carolina)
Bury House Limited (United Kingdom)
California Acquisition Sub, Inc. (Delaware)
C. A. van Vliet Containertransport (Netherlands)
C. A. van Vliet Techneik B.V. (Netherlands)
Cedar Hammock Refuse Disposal Corporation (Florida)
Waste Management of Manatee County
Waste Management of Sarasota County
Cemtech L.P. (Delaware)
Cemtech Management, Inc. (Delaware)
Central Service Corporation (Florida)
Ceriani Cave (Italy)
Chamberlain Resources, Inc. (Arizona)
Charlotte Landscaping and Sanitation Services, Inc. (Florida)
Chemical Waste Management, Inc. (Delaware)
Controlled Waste
CWM Remedial Services
CWM Transportation
Technical Services
Trade Waste Incineration
2
<PAGE>
Waste Reduction Services
Waste Separation Technologies
Chemical Waste Management Clemson Technical Center, Inc. (South Carolina)
Chemical Waste Management de Mexico, S.A. de C.V. (Mexico)
Chemical Waste Management of Baja California, Inc. (Delaware)
Chemical Waste Management of Indiana, Inc. (Indiana)
Chemical Waste Management of Kansas, Inc. (Kansas)
Chemical Waste Management of New Jersey, Inc. (New Jersey)
Chemical Waste Management of Pennsylvania, Inc. (Delaware)
Chemical Waste Management of the Northwest, Inc. (Washington)
Chem-Nuclear Systems, Inc. (Delaware)
CID MRRF, Inc. (Delaware)
CNSI Sub, Inc. (Delaware)
Community Refuse, Limited (Pennsylvania)
Compania Schreiber de Servicios (Spain)
Container Recycling Alliance, L.P. (Delaware)
Controlled Waste Materials, Inc. (Illinois)
Cord Industrienster Amsterdam (The Netherlands) B.V. (Netherlands)
Cord Industrienster Spykerisse BV (Netherlands)
Cote D'Azur Assainissement (France)
Cote D'Azur Entretien (France)
County Wide Sanitation Partners, L.P. (Illinois)
C.van der Helm en ZN. B.V. & R.J.M. van der Helm (Netherlands)
CWM Cement, Inc. (Delaware)
CWM Chemical Services, Inc. (Delaware)
Chicago Incinerator Facility
Model City Facility
Memphis Service Facility
CWM Chemical Waste Management of Canada, Inc. (Canada)
CWM Consolidation Sub, Inc. (Delaware)
CWM Holdings, Inc. (Delaware)
CWM Resource Management, Inc. (Georgia)
CWM Resource Recovery, Inc. (Ohio)
Dalamiliho AB (Sweden)
Dan-Clean DK A/S (Denmark)
Dankompost APS (Denmark)
Davies Bros (Waste) Ltd & Greenwood (DB) Containers Ltd. (England)
Dearborn Management Group, Inc. (Illinois)
Decker Disposal, Inc. (Florida)
Waste Management of Sarasota County
DeKlok Containers B.V. (Netherlands)
Delta Building and Investment Co., Inc. (Texas)
Demart (France)
3
<PAGE>
Deponie Bentheim Entsorgung GMBH & Co KG (Germany)
Deponie Bentheim Entsorgung Verwaltungsgeskellschaft Mbh (Germany)
Derat France (France)
Derichebourg Services (France)
Diversified Scientific Services, Inc. (Tennessee)
Donohue JRP Ltd. (Hong Kong)
Downfield Services Ltd. (United Kingdom)
Drakeshore Development Ltd. (United Kingdom)
Dr. Born & Dr. Ermel GmbH (Germany)
Dr. Born - Dr. Ermel GmbH, Freital (Germany)
Dr. Ermel-Lentz & Partner GmbH (Germany)
Dunn Corporation (New York)
Dynastar, Inc. (Ohio)
Ecocentro (Italy)
Eco-Consult s.r.l. (Italy)
Ecol Italiana S.p.A. (Italy)
Ecol S.A. (Argentina)
Eco Panama S.A. (Panama)
Ecoservizi S.p.A. (Italy)
Eksjo Renhallning AB (Eksjo)
Eksso Renhallning AB (Sweden)
Elp GmbH (Germany)
EMICA S.r.l. (Italy)
EnClean Environmental Services Group, Inc. (Delaware)
Enviro-Gro Technologies, Inc. (New York)
Enviro-Gro Technologies II, Inc. (New York)
Enviroland, Incorporated (Michigan)
Environmental Waste Concepts, Ltd. (Illinois)
Environment Service S.A. (France)
Enviropace Limited (Hong Kong)
Envirotech Operating Services, Inc. (Delaware)
Envirotech Operating Services (Petaluma), Inc. (Delaware)
Equipamentos Industriais Ltda. (Brazil)
Erco Tennessee, a general partnership (Tennessee)
Erland Bylunds Akeri AB (Sweden)
EST Environment Service (France)
Fempack Limited (United Kingdom)
Filtres Crepines Johnson (France) S.A. (France)
Fineco Italiana S.r.l. (Italy)
Fraktjanst AB (Sweden)
Franchi E Caserio S.r.l. (Italy)
Franks Industrirenovation (Denmark)
Franz Schreiber GmbH (Germany)
Fratelli Visconti S.r.l. (Italy)
Fritz Ohlig GmbH & Co. Kommanditgesellschaft (Germany)
Fuchs Recycling GmbH (Germany)
Fuchs Rohstoffhandelsgesellschaft mbH (Germany)
Gateway Waste Partners, L.P. (Illinois)
GCP Engineering Limited (Hong Kong)
Gebr. Van Vliet B.V. (Netherlands)
General Nuclear Systems, Inc. (Delaware)
General Sanitation Corporation (Florida)
Geological Reclamation Operations and Waste Systems, Inc. (Pennsylvania)
Burlington County Resource Recovery Facilities Complex
G.R.O.W.S. Landfill
Meadowlands Baler Facility
Meadowland Recycling and Disposal Facility
Georgia Waste Systems, Inc. (Georgia)
B. J. Recycling and Disposal Facility
Georgia Waste Systems North
Rolling Hills Recycling and Disposal Facility
Waste Management of Augusta - Aiken
Waste Management of Atlanta
Waste Management of Cobb County
Waste Management of Macon
Gesam Gestione Servizi Ambientali S.p.A. (Italy)
GES GmbH (Germany)
Gestion Des Rebuts D.M.P. Inc. (Quebec)
WMI Mauricie Bois - Franc
WMI Parc Hirondelles
Gestione Servizi Ambientali S.p.A. (Italy)
GMI Holdings Ltd. (United Kingdom)
Gnosjo Renhallning AB (Sweden)
Grand Disposal Partners, L.P. (Illinois)
Green Valley Landfill Limited (Hong Kong)
Gruning GmbH Wertstoffaufbereitung und Containerdienst (Germany)
Gulf Disposal, Inc. (Florida)
Gulf Coast Recycling and Disposal Facility
Haagse Recycling Maatschappij (HRM) B.V. (Netherlands)
Hall-ing Refuse Partners, L.P. (Illinois)
Harmony Sanitary Landfill Co. (Pennsylvania)
Harris Disposal Service, Inc. (Florida)
Harris Sanitation, Inc. (Florida)
Hedco Landfill Limited (United Kingdom)
Helsingin Puhdistuskone OY (Finland)
Hemmings Hygiene Limited (United Kingdom)
Henley Properties Inc. (Delaware)
Holiday Moss (Landfill) Limited (United Kingdom)
4
<PAGE>
Holje Miljotransporter AB (Sweden)
Holland Industriediensten Amsterdam BV (Netherlands)
Hyvinkaan Jatehuolto Oy (Finland)
Ibjorgensen Handelaktiesglsk A/B (Denmark)
Ibka Industriservice A/S (Denmark)
Ichochema B.V. (Netherlands)
Icopower B.V. (Netherlands)
Icosloop BV (Netherlands)
Icotech (Netherlands)
Icova B.V. (Netherlands)
Icova/Maltha Glascollecting B.V. (Netherlands)
ICRC Company (Delaware)
IGA Tabasaran GmbH (Germany)
IGM International S.p.A. (Italy)
IGM S.p.A. (Italy)
Industrial Waste Incorporated (Florida)
Infectious Waste Management Limited Partnership (Illinois)
Ingenieria Urbana S.A. (Spain)
Ingenieuroboro Fur Verfahrentechnik Dr. Born & Dr. Ermel GmbH (Germany)
International Coal Refinery Company (Delaware)
International Process Systems Canada Inc. (Ontario)
Intersearch Aktiengersellschaft (Germany)
IPS Quinte Inc. (Ontario)
IPU GmbH (Germany)
IRA S.r.l. (Italy)
Italrifiuti S.p.A. (Italy)
Jaartsveld Exploitatie B.V. (Netherlands)
Jaartiveld Groen & Milieu B.V. (Netherlands)
Jatekiito OY (Finland)
Jatekuuto OY (Finland)
Jatekyyti Oy (Finland)
JFS (Japan) Ltd. (Japan)
Jinyuan Power Limited Partnership (Delaware)
JLG Scaffolding Ltd. (British Columbia)
Johnson Filtration Systems Inc. (Delaware)
Johnson Filtration Systems Limited (Ireland)
Johnson Filtration Systems Limited (United Kingdom)
Johnson Screens (Australia) Pty. Ltd. (Australia)
J. Roger Preston & Partners (PNG) Pty Ltd. (Papva New Guinea)
JRP Consultants (Malaysia) SDN BHD (Malaysia)
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Just-Altpapier-Verwertung GmbH (Germany)
Just GmbH Rohstoffe fur die Papierindustrie (Germany)
KAB/WMI SDN. BHD. (Malaysia)
Kahle Landfill, Inc. (Missouri)
Karlstad Bilfrakt AB (Sweden)
Karlstad Renhallnings AB (Sweden)
KDK Limited (United Kingdom)
K. D. Skott Limited (United Kingdom)
Keene Road Landfill, Inc. (Florida)
Kennedy & Donkin Africa (Botswana) Partnership (Botswana)
Kennedy & Donkin Africa (Malawi) Partnership (Malawi)
Kennedy & Donkin Building Services Limited (United Kingdom)
Kennedy & Donkin Generation & Industrial Limited (United Kingdom)
Kennedy & Donkin Information Systems Ltd. (United Kingdom)
Kennedy & Donkin International Ltd. (Hong Kong)
Kennedy & Donkin Ltd. (United Kingdom)
Kennedy & Donkin Malaysia Ltd. (Delaware)
Kennedy & Donkin (Middle East) Limited (Cyprus)
Kennedy & Donkin Overseas Ltd. (United Kingdom)
Kennedy & Donkin Power Ltd. (United Kingdom)
Kennedy & Donkin Quality Engineering Limited (United Kingdom)
Kennedy & Donkin Quality Inc. (Delaware)
Kennedy & Donkin Systems Control Ltd. (United Kingdom)
Kennedy & Donkin Transportation Ltd. (United Kingdom)
Kennedy Scott Furphy (PTY) Limited (New South Wales Australia)
Keravan Hyotykaytto Oy (Finland)
KH Associates Limited (United Kingdom)
Kiinteistojen Jatepoisto M. Saarinen Oy (KJP) (Finland)
KNAB GmbH (Germany)
Knoss & Anthes GmbH (Germany)
K.R. & C. Edwards Pty. Ltd. (New South Wales)
Krantz Miljo AB (Sweden)
Kuljetusliike Ralento OV (Finland)
Kulljestuslike Reipas OY (Finland)
Kvicksilver Atervinning I Karlskrona AB (Karlskrona)
Lake Disposal Partners, Ltd. (Illinois)
La Loggese S.r.l. (Italy)
Landskrona-Svalovs Renhallnings AB (Sweden)
Lichliter/Jameson & Associates (Texas)
Ljusne Renhallnings AB (Sweden)
Loristan Services Limited (United Kingdom)
LSR (Sweden)
LSS & Associates, Inc. (Arizona)
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Malardalens Tankservice AB (Sweden)
Manchester Tankers Limited (United Kingdom)
Manliba, S.A. (Argentina)
Mantank Cleaning Services Limited (United Kingdom)
M & O Waste Management Limited Partnership (Illinois)
Mashor & Reym Charter Ltd. (Brunei)
Mashor & Reym Malaysia (Malaysia)
Massachusetts Refusetech, Inc. (Delaware)
Matrix Construction, Incorporated (Texas)
Matrix Engineering, Inc. (Texas)
Mellanaktoren AB (Sweden)
Mesne Lea Estates Limited (United Kingdom)
Meurthe Et Moselle Service Sarl (France)
Miami Valley Pressure Cleaning, Inc. (Ohio)
Midi Pyrenees Environement Service (France)
Miljotjanst: Malardalan AB (Sweden)
Miljotjanst: Nykoping AB (Sweden)
Miljotjanst: Sodermanland AB (Sweden)
Miljotjanst: Vastmanland AB (Sweden)
Miller Waste Partners, L.P. (Illinois)
Missouri Disposal Partners, L.P. (Illinois)
Modern Trash Removal of York, Inc. (Pennsylvania)
Modern Landfill
Montolivet Finanz S.A. (Luxembourg)
Mountain Indemnity Insurance Company (Vermont)
MPF Engineered Filtered Products Inc. (Ontario)
MRI Holding Company (Delaware)
MRM Health Ltd. (United Kingdom)
MRM Holdings Ltd. (United Kingdom)
MRM Leisure International Ltd. (United Kingdom)
MRM Leisure Ltd. (United Kingdom)
MRM Partnership (United Kingdom)
MRM Projecta GmbH & Co. (Germany)
MRM Sandow Ltd. (United Kingdom)
M.S.T.S., Inc. (Delaware)
M.S.T.S. Limited Partnership (Illinois)
Muerthe et Moselle Service S.A.R.L. (MMS) (France)
Mullentsorgung West GmbH & Co. KG (Germany)
Nassjo Renhallning AB (Sweden)
National Industrial Constructors Inc. (Delaware)
National Seal Company (Illinois)
Naylor Industrial Services, Inc. (Texas)
Nelanco, Ltd. (Missouri)
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Neptune Microfloc, Incorporated (Oregon)
Neptune Nichols Limited (United Kingdom)
Neuhaus Entsorgung GmbH & Co. KG (West Germany)
NH/VT Energy Recovery Corporation (New Hampshire)
Nichols Sanitation, Inc. (Florida)
Lake Placid Sanitation
Waste Management of Palm Beach
Nice Mettoyage (France)
Nollmann Entsorgung GmbH & Co KG (West Germany)
Norab Renhallnings AB (Sweden)
Nord Environement Service (France)
Nordisk Avfallskonsult AB (Sweden)
Norrlands Miljosanering I Umea AB (Sweden)
North Broward County Resource Recovery Project, Inc. (Florida)
North Broward Holdings Inc. (Delaware)
Northedge Limited (United Kingdom)
Northwest Sanitary Landfill, Inc. (Pennsylvania)
Norwaste Limited (United Kingdom)
Nova Spurghi (Italy)
NSC Sales Corp. (Virgin Islands)
Ocean Combustion Service, B.V. (Netherlands)
Ocean Combustion Service GmbH (West Germany)
Ocean Combustion Service, N.V. (Belgium)
Ocean Combustion Service -O.C.S.- Espana S.A. (Spain)
Ocmulgee Disposal, Inc. (Georgia)
Oil & Solvent Process Company (California)
Olshan Asbestos Removal Corportion (Texas)
Olshan Demolishing Company, Inc. (Texas)
Ostjydsk Industrirenovation A/S (Denmark)
Pacific Waste Management Holdings Pty. Limited. (New South Wales)
Pacific Waste Management, Ltd. (New Zealand)
Pacific Waste Management Limited (Hong Kong)
Pacific Waste Management PTE Limited (Singapore)
Pacific Waste Management Pty. Limited (New South Wales)
Paris Suo Hydraulique (France)
Park Services, Inc. (Delaware)
Pecol S.r.l. (Italy)
Penn-Warner Club, Inc. (Delaware)
Peterson-KNAB GmbH (Germany)
Phoenix Systems, Inc. (Maryland)
Piacentii Srl (Italy)
Pierdan (France)
Pilmuir Waste Disposal Limited (United Kingdom)
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Pingliang Power Limited Partnership (Delaware)
P.I.T.E.F. S.r.l. (Italy)
Plant Control Services, Inc. (Texas)
PPK Consultants Pty. Ltd. (Australia)
Progesam Ecosistenmi S.r.l. (Italy)
PT J Roger Preston & Partners (Indonesia)
Pullman-Hoffman, Inc. (Ohio)
Pullman Plumbing, Pipefitting & Mechanical, Inc. (West Virginia)
Pullman Power Products Corporation (Delaware)
Pullman Power Products International Corporation (Delaware)
Pullman Power Products of Canada Limited (Canada)
Pullman Torkelson Utility Fuels Company (Delaware)
PWF Projeklplanungs - und Wirtschaftsberatungsgesellschaft mbH (Germany)
Quest Environement Service (France)
Questquill Limited (United Kingdom)
R A Johnson (Haulage) Ltd. (England)
Rancho Estates Properties, Inc. (Delaware)
R.B.S. Pension Trustees Limited (United Kingdom)
RCCD Inc. (Delaware)
RCC Fiber Company, Inc. (Delaware)
Recovery I, Inc. (Louisiana)
Recovery Project, Inc. (Florida)
Recycle First North Andover Inc. (Delaware)
Recycling For Energy Limited (United Kingdom)
Refuse Services, Inc. (Florida)
Clay County Recycling and Disposal Facility
Jacksonville Waste Control
Lake City Waste Control
Sunbeam Recycling and Disposal Facility
Trinity Recycling and Disposal Facility
Waste Management of Clay County
Waste Management of Jacksonville
Waste Management of Putnam County
Regin B.V. (Netherlands)
Rehu Handelsonderneming BV (Netherlands)
Renovadan Miljoservice A/S (Denmark)
Resco Holdings Inc. (Delaware)
Residuos Industriales Multiquim, S.A. de C.V. (Mexico)
Reym & Mashnor Charters Senirian Berhad (Srm. Bhd) (Brunei)
Reym B.V. (Netherlands)
Richmond Waste Partners, Ltd. (Illinois)
RIH Inc. (Delaware)
Riimaki OY (Finland)
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Riley Energy Systems of Lisbon Corporation (Delaware)
Riley Energy Systems of Lisbon Connecticut Corp. (Connecticut)
Rohstoffruckgewinnung Fixheide GmbH & Co. Kg (Germany)
Rupke & Associates Ltd. (Ontario)
Rusk County Landfill, Inc. (Wisconsin)
Rust Architecture of North Carolina, P.C. (North Carolina)
Rust Associates Ltd. (Canada)
Rust Capital Corporation (Delaware)
Rust CHDA Company (Delaware)
Rust China Ltd. (Delaware)
Rust Controladora, S.A. de C.V. (Mexico)
Rust Construcciones, S.A. de C.V. (Mexico)
Rust Deutschland GmbH (Germany)
Rust Engineering do Brasil Construcoes Ltda. (Brasil)
Rust Environment & Infrastructure Inc. (Wisconsin)
Rust Environment & Infrastructure of Canada Inc. (Alberta)
Rust Environment & Infrastructure of Michigan Inc. (Michigan)
Rust Environment & Infrastructure of North Carolina Inc. (North Carolina)
Rust Environment & Infrastructure of Ohio Inc. (Ohio)
Rust Environment & Infrastructure, P.E., ARCH. L.S., P.C. (New York)
Rust Environmental Pty Ltd (New South Wales, Australia)
Rust Environmental Inc. (Delaware)
Rust Federal Environmental Services Inc. (Delaware)
Rust Federal Services Inc. (Delaware)
Rust Federal Services of Colorado Inc. (Delaware)
Rust Federal Services of Idaho Inc. (Delaware)
Rust Field Services, Inc. (Delaware)
Rust Geotech Inc. (Delaware)
Rust Germany GmbH (Germany)
Rust Industrial Cleaning Inc. (Delaware)
Rust Industrial Cleaning Services Inc. (Delaware)
Rust Industrial Services Inc. (Delaware)
Rust International Corporation (Delaware)
Rust International Holdings Inc. (Delaware)
Rust International Inc. (Delaware)
Rust International of North Carolina, P.C. (North Carolina)
Rust JRP Pty Ltd (Australia)
Rust JRP Ltd (Hong Kong)
Rust JRP Pte Ltd (Singapore)
Rust Leasing Corp. (Delaware)
Rust Limited (United Kingdom)
Rust MRM Limited (United Kingdom)
Rust North America Holdings Inc. (Delaware)
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Rust Overseas B.V. (Netherlands)
Rust Overseas Inc. (Delaware)
Rust Plant Services Inc. (South Carolina)
Rust PPK Pty Ltd. (New South Wales, Australia)
Rust Precision Blasting Inc. (Delaware)
Rust Remedial Services Inc. (Delaware)
Rust Scaffold Builders Inc. (Delaware)
Rust Scaffold Rental & Erection Inc. (Delaware)
Rust Scaffold Services Inc. (Delaware)
Rust Scaffold Services of Canada Ltd. (Ontario)
Rust Servicios Ambientales e Infraestructura, S.A. de C.V. (Mexico)
Rust Specialty Chemicals Inc. (Delaware)
Rust Sweden Holdings A B (Sweden)
Rust Utility Services Inc. (Delaware)
Rust VA Projekt AB (Sweden)
Rust Waste Treatment Services Inc. (Delaware)
Sacagica s.r.l. (Italy)
Saframa S.A. (Argentina)
Sakab Batteri B (Sweden)
Sakab MFA-Forvaltning AB (Sweden)
Salem Waste Disposal Center, Inc. (Alabama)
Salutec, S.A. (Argentina)
Saneanientos Sellberg S.A. (Spain)
S.A.P. s.p.a. (Italy)
S.A.R.I. S.p.A. (Italy)
S.A.S.P.I S.p.A. (Italy)
SC Holdings, Inc. (Pennsylvania)
L & D Landfill
Parklands Landfill
Sanitary Landfill
SCA Services, Inc. (Delaware)
Mohawk Valley Sanitary Landfill
SCA Services of South Carolina, Inc. (South Carolina)
Charleston Landfill
Sandy Pines Landfill
S.C.E.A. Du Bosnier (France)
Schreiber Stadtereinigung GmbH & Co. KG (West Germany)
Schroeder GmbH & Co. KG (Germany)
SCS Contractors Limited (United Kingdom)
Sellbergs Danmark A/S (Denmark)
Sengelose Kompost A/S (Denmark)
S.E.P. s.r.l. (Italy)
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Serater S.A. (France)
SERPOL (France)
Service de Rehabilitation des Dechets (S.R.D.) (France)
Servicios Especiales de Recoleccion de Basura, S.A. de C.V. (Mexico)
Servicios Integrales de Protection Ambiental, S.A. de C.V. (Mexico)
Servicios Limpiezas Urbanas S.A. (SELIMURSA) (Spain)
Servi Jatchuolto OY (Finland)
Servizi Piemonte S.r.l. (Italy)
SES Bridgeport Inc. (Delaware)
SES Brooklyn Inc. (Delaware)
SES Brooklyn Navy Yard Inc. (Delaware)
SES Connecticut Inc. (Delaware)
SES Gloucester Inc. (Delaware)
SES New Jersey Inc. (Delaware)
SES North Andover Inc. (Delaware)
SES Seattle Inc. (Delaware)
Sidel (France)
Sigma Associates, Inc. (Texas)
Signal Capital Sherman Station Inc. (Delaware)
Signal Cleanfuels Inc. (Delaware)
Signal Clean Water Corporation (Delaware)
Signal Own-And-Operate Inc. (Delaware)
Signal Overseas Capital Corporation N.V. (Netherlands)
Signal RESCO, Inc. (Delaware)
Sir-Mas (Italy)
Sirtis Service s.r.l. (Italy)
Sistemas Para Control de Desechos Solidos, S.A. de C.V. (Mexico)
SMC Shaltimenti Controllati S.p.a. (Italy)
SNC Rust Canada Limited (Canada)
Soaring Vista Properties, Inc. (Maryland)
Societa' Appalti Pubblici S.A.P. S.p.A. (Italy)
Societe D'Amenagement Et D'Exploitation De Terrains Agricoles (France)
Societe D'Assainissement Provencal (France)
Societe D'Enlevement Et De Transport Annexe (France)
Societe D'Etude Et De Maintenance D'Assainissement (France)
Societe D'Etudes et de realisation D'Amenagements De Terrains (France)
Societe De Mecanique Et D'Entretretien Du Val De Marne (France)
Societe De Mecanique Hydraulique Et D'Electroite (France)
Societe Europeenne de Ferrailles et de Machefers (France)
Societe Parisienne D'Amenagement De Terrains (SPAT) (France)
Sogea S.r.l. (Italy)
Solid Waste Equipment Leasing Limited (Bermuda)
Solna Transport AB (Sweden)
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Solna Transport & Renhallning AB (Sweden)
South Broward County Resource Recovery Project, Inc. (Florida)
South Broward Holdings Inc. (Delaware)
Special Resource Management, Inc. (Montana)
S.P.E.M. S.p.A. (Italy)
St. George's Engineering Ltd. (United Kingdom)
Sud Quest Environnement Service (France)
Sunny Farms, Ltd. (Pennsylvania)
Svensk Avfallskonvertering AB (Sweden)
S. V. Farming Corp. (New Jersey)
Swenson S.A. (France)
Swindell-Dressler Energy Supply Company (Delaware)
Swindell-Dressler Leasing Company (Delaware)
Swindell Rust Associates Inc. (Delaware)
Swindell Rust Iran Inc. (Delaware)
Sylvan & Qvibelius AB (Sweden)
TC, Inc. (Indiana)
Techim S.r.l. (Italy)
Terra Quest - Mohave, Inc. (Arizona)
Texas Sanitation Service, Inc. (Texas)
The Rust Engineering Company Limited (Canada)
The Rust Engineering Company of Michigan (Michigan)
The Rust Engineering Company of New York Inc. (New York)
The Standard Bridge Corporation (New York)
The Standard Engineering Corporation (New York)
The Swindell-Dressler Corporation of Canada Limited (Canada)
The Wheelabrator Corporation (Delaware)
The Woodlands of Van Buren, Inc. (Delaware)
Tijuana Equilibrio Ecologico, S.A. de C.V. (Mexico)
Tilghman (Broadheath) Limited (United Kingdom)
Tilghman (Engineers) Limited (United Kingdom)
Tilghman (1988) Limited (United Kingdom)
Tilghman Wheelabrator Limited (United Kingdom)
Tilghman Wheelabrator Special Products Ltd. (United Kingdom)
Tomoka Refuse, Inc. (Florida)
Town and Country Refuse, Inc. (Florida)
Port-O-Let
Trail Ridge Landfill, Inc. (Delaware)
Tra.S.E. S.p.A. (Italy)
Transmetro (Argentina)
Transportbedrijf Van Bliet B.V. (Nederlands)
Transwaste (N.W.) Limited (United Kingdom)
TRECO Construction Services Inc. (Delaware)
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UK Waste Management Holdings Limited (United Kingdom)
U.K. Waste Management Limited (United Kingdom)
United Waste Partners, L.P. (Illinois)
Vaggeryds Renhallnings AB (Sweden)
Valdenza S.r.l. (Italy)
Vallentuna Renhallning AB (Sweden)
Vanerborgs Stadbudsbyra AB (Sweden)
Vanersborgs Renhallning AB (Sweden)
Van Vliet Recycling B.V. (Netherlands)
Van Vliet Speciaal Afval B.V. (Netherlands)
Var Assainissement (France)
VE-Part S.r.l. (Italy)
Verwaltungsgesellschaft Neuhaus Entsorgung GmbH (Germany)
Verwaltungsgesellschaft Nollmann Entsorgung GmbH (Germany)
Vliko B.V. (Netherlands)
Vulcanus Shipping Company Pte. Ltd. (Singapore)
Walker & Associates, Inc. (Washington)
Walker - Alaska Aerial Survey, Inc. (Alaska)
Warner Company (Delaware)
Warner East
Warner West
Washington Waste Hauling & Recycling, Inc. (Delaware)
Port-O-Let
Recycle America
Valley Topsoil
Waste Management - Northwest
Waste Management of Ellensburg
Waste Management of Greater Wenatchee
Waste Management of Kennewick
Waste Management of Seattle
Waste Management of Spokane
Waste Management of Yakima
Waste Management - SnoKing
Waste Management - Rainier
West Group - Northwest Region Office
WMI Services
Washington Waste Systems, Inc. (Washington)
Waste Away Group, Inc. (Alabama)
Waste Management of Alabama - East
Waste Clearance (Holdings) Limited (United Kingdom)
Waste Clearance Limited (United Kingdom)
Waste Disposal, Inc. (New Jersey)
Howell Landfill
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Waste Handling Company (W.H.C.) B.V. (Holland)
Waste Management Czechoslovakia s.r.o. (Czechoslovakia)
Waste Management Collection and Recycling, Inc. (California)
American Waste Systems
C & H Disposal
Empire Waste Management
Great Western Reclamation
Griffith Disposal
Horizon Rubbish Service
Recycle America
SAWDCO Collection
Valley Waste Management
Waste Management of Inland Valley
Waste Management of Sacramento
Waste Management of San Gabriel/Pomona Valley
Waste Management of Santa Cruz County
Waste Management of Stockton
Waste Management of the Central Valley
Waste Management of Woodland
Waste Management de Mexico, S.A. de C.V. (Mexico)
Waste Management Deutschland GmbH (Germany)
Waste Management Disposal Services of Arizona, Inc. (Delaware)
Waste Management Disposal Services of California, Inc. (California)
Bradley Landfill and Recycling Center
Ecolo-Haul
Recycle America
Waste Management Disposal Services of Colorado, Inc. (Colorado)
Central Weld Sanitary Landfill
North Weld Sanitary Landfill
Waste Management Disposal Services of Maine, Inc. (Maine)
Waste Management Disposal Services of Maine - Crossroads
Waste Management Disposal Services of Maryland, Inc. (Maryland)
Sandy Hill
Waste Management Disposal Services of Massachusetts, Inc. (Massachusetts)
Waste Management Disposal Services of New York, Inc. (Delaware)
Waste Management Disposal Services of Oregon, Inc. (Delaware)
Columbia Ridge Landfill and Recycling Center
Oregon Waste Systems
Waste Management Disposal Services of Pennsylvania, Inc. (Pennsylvania)
Pottstown Landfill and Recycling Center
Waste Management Disposal Services of Virginia, Inc. (Delaware)
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Middle Peninsula Landfill and Recycling Facility
Waste Management Disposal Services of Washington, Inc. (Delaware)
Greater Wenatchee Regional Landfill and Recycling Center
Waste Management Do Brasil, Ltda Empreendimentos Ambientals (Brazil)
Waste Management Espana S.A. (Spain)
Waste Management Finland OY (Finland)
Waste Management France (France)
Waste Management France S.A.R.L. (France)
Waste Management GmbH & Co (Germany)
Waste Management GmbH & DO MVA Hamm OHG (Germany)
Waste Management Greece Anonymous Commercial Company (Greece)
Waste Management Inc. of Florida (Florida)
Broward Disposal
Central Disposal
Environmental Waste Systems
Florida Environmental Waste
Florida Disposal
Gulf Coast Recycling and Disposal Facility
Hillsborough Heights Recycling and Disposal Facility
Medley Landfill & Recycling Center
Rubbish Gobbler
Southeast Recycling and Disposal Facility
Southern Sanitation Service
South Florida Service Center
United Sanitation Recycling and Disposal Facility
Waste Management of Bay County
Waste Management of Collier County
Waste Management of Dade County
Waste Management of Monroe County
Waste Management of Pasco County
Waste Management of Tampa
Waste Management, Inc. of Tennessee (Tennessee)
Chestnut Ridge Landfill and Recycling Center
Waste Management of Tennessee - Clarksville
Waste Management of Tennessee - Jackson
Waste Management of Tennessee - Knoxville
Waste Management of Tennessee- Memphis
Waste Management of Tennessee - Nashville
Waste Management International B.V. (Netherland)
Waste Management International, Inc. (Delaware)
Waste Management International, Ltd. (Bermuda)
Waste Management International, Ltd. Argentine Branch (Argentina)
Waste Management International plc (United Kingdom)
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Waste Management International Y CIA (Chile)
Waste Management International Services Limited (United Kingdom)
Waste Management International Services Pension Scheme (Trustees) Limited (UK)
Waste Management Italia S.r.l. (Italy)
Waste Management (Land) Limited (United Kingdom)
Waste Management Limited (England)
Waste Management Nederland B.V. (Netherlands)
Waste Management N.Z. Ltd. (New Zealand)
Waste Management of Alabama, Inc. (Alabama)
Dixie Waste
Valley View Sanitary Landfill
Waste Management of Alabama - Lynn
Waste Management of Alabama - Mobile
Waste Management of Alabama - The Shoals
Waste Management of Birmingham - Recycle America
Waste Management of Mississippi - Gulf Coast
Waste Management of North Mississippi - Tupelo
Waste Management of West Alabama
WMI Services of Birmingham
Waste Management of Alameda County, Inc. (California)
Altamont Landfill and Resource Recovery Facility
Central Division
Davis Street Station for Material Recovery and Transfer
East Bay Disposal Co.
Livermore Dublin Disposal
Northern Division
Recycle America of Northern California
Southern Division
Sunnyvale Recycling and Disposal Facility
Tri-Cities Recycling and Disposal Facility
Waste Management of Arizona, Inc. (California)
Butterfield Station Recycling and Disposal Facility
Modulaire of Arizona
Sky Harbor Regional Transfer & Recycling Center
27th Avenue Recycling and Disposal Facility
Waste Management of Northern Arizona
Waste Management of Phoenix - North
Waste Management of Phoenix - Recycle America
Waste Management of Phoenix - South
Waste Management of Tucson
Waste Management of Tucson - Recycle America
Waste Management of Verde Valley
WMI Services - Phoenix
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Waste Management of Arkansas, Inc. (Delaware)
Brushy Island Recycling and Disposal Facility
Jefferson County Landfill and Recycling Center
Shannon Road Recycling and Disposal Facility
Union County Recycling and Disposal Facility
Waste Management of Arkansas North
Waste Management of Arkansas South
Waste Management of California, Inc. (California)
Kirby Canyon Recycling and Disposal Facility
Lancaster Recycling and Disposal Facility
Modulaire of California
Simi Valley Recycling and Disposal Facility
Universal Refuse Removal of El Cajon
Waste Management of Fresno County
Waste Management of Lancaster
Waste Management of Los Angeles
Waste Management of Los Angeles - South
Waste Management of North County
Waste Management of San Diego
Waste Management of San Fernando Valley
Waste Management of Santa Clara County
Waste Management of the Desert
Waste Management of Cambridge, Inc. (Delaware)
Adho Disposal
Hunting Ridge Landfill
Waste Management of Carolinas, Inc. (North Carolina)
Piedmont Landfill and Recycling Center
Waste Management of Asheville
Waste Management of Carolinas
Waste Management of Central Carolina
Waste Management of Eastern Carolina
Waste Management of the Piedmont
Waste Management of Raleigh/Durham
Waste Management of Wilmington
Waste Management of the Triad
Waste Management of Central Florida, Inc. (Florida)
Alachua Waste Management
Waste Management of Central Jersey, Inc. (New Jersey)
Parklands Recycling and Disposal Facility
Waste Management of Colorado, Inc. (Colorado)
Colorado Springs Recycling and Disposal Facility
Colorado Springs Transfer Station
County Line Recycling and Disposal Facility
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Denver/Arapahoe Disposal Site
Englewood Transfer Station
Modulaire of Colorado
Port-O-Let
Waste Management of Aurora
Waste Management of Colorado - Aurora Facility
Waste Management of Colorado - Landfill Division
Waste Management of Colorado - North Facility
Waste Management of Colorado - Recycle Facility
Waste Management of Colorado - South Facility
Waste Management of Colorado Springs
Waste Management of Colorado Springs - Recycle America Processing Facility
Waste Management of Denver
Waste Management of Denver - Recycle America Processing Facility
Waste Management of Northern Colorado
Waste Management of Pueblo
Waste Management of the Rockies
Waste Management of Columbus, Inc. (Ohio)
Waste Management of Connecticut, Inc. (Connecticut)
New Milford Recycling and Disposal Facility
Waste Management of Connecticut - Cheshire
Waste Management of Connecticut - Norwalk
Waste Management of Connecticut - Wallingford
Waste Management of Delaware, Inc. (Delaware)
Waste Management of Delaware - Wilmington
Waste Management of Delmarva
Waste Management of Five Oaks Recycling and Disposal Facility, Inc. (Delaware)
Waste Management of Florida Holding Company, Inc. (Delaware)
Waste Management of Florida, Inc. (Delaware)
Waste Management of Georgia, Inc. (Georgia)
Live Oak Landfill
Waste Management of Chattanooga
Waste Management of Northeast Alabama
Waste Management of Savannah
Waste Management of the Tennessee Valley
Waste Management of Grass Valley, Inc. (Delaware)
Waste Management of Hawaii, Inc. (Hawaii)
Oahu Refuse Systems Company
Waimanalo Gulch Recycling and Disposal Facility
Waste Management of Idaho, Inc. (Idaho)
Waste Management of Illinois, Inc. (Delaware)
Banner/Western Disposal Service
Chain of Rocks Recycling and Disposal Facility
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CID
Durbin Paper Stock Company
Five Oaks Recycling and Disposal Facility
Greene Valley Recycling and Disposal Facility
Kankakee Recycling and Disposal Facility
Laraway Recycling and Disposal Facility
McLean County Disposal and Recycling Services
Milam Recycling and Disposal Facility
Settler's Hill Recycling and Disposal Facility
Tazewell Recycling and Disposal Facility
TCD Services
United Waste Systems
Waste Management - Northwest
Waste Management - West
Waste Management of Metro East
Waste Management of Peoria
Waste Management of the South Suburbs
Wheatland Prairie Recycling and Disposal Facility
Woodland Recycling and Disposal Facility
Waste Management of Indiana, Inc. (Indiana)
Deercroft Recycling and Disposal Facility
Glenwood Ridge Recycling and Disposal Facility
Oak Ridge Recycling and Disposal Facility
Prairie View Recycling and Disposal Facility
Superior Waste Systems
Twin Bridges Recycling and Disposal Facility
Waste Management of Central Indiana
Waste Management of Evansville
Waste Management of Fort Wayne
Waste Management of Indianapolis
Waste Management of Indianapolis - Hamilton County Transfer
Waste Management of Lafayette
Waste Management of Muncie
Waste Management of Northwest Indiana
Waste Management of Warsaw
Wheeler Recycling and Disposal Facility
Waste Management of Iowa, Inc. (Iowa)
Solid Waste Systems
Waste Management of Kansas, Inc. (Kansas)
Forest View Recycling and Disposal Facility
Rolling Meadows Recycling & Disposal Facility
Solid Waste Systems
Topeka Waste Systems
20
<PAGE>
Waste Management of Wichita
Waste Management - Refuse Control
Waste Management of Kentucky, Inc. (Kentucky)
Blue Ridge Recycling and Disposal Facility
Kramer Lane Recycling and Disposal Facility
Lexington Recycling and Disposal Facility
Outer Loop Recycling and Disposal Facility
Waste Management of Kentucky - Gray Disposal
Waste Management of Kentucky - Lexington
Waste Management of Kentucky - Louisville
Waste Management of Kentucky - Madison Disposal
Waste Management of Kentucky - Stevens Dispos-All Service
Waste Management of Leon County, Inc. (Florida)
Springhill Regional Sanitary Landfill
Waste Management of Louisiana, Inc. (Louisiana)
Acadiana Recycling and Disposal Facility
Acadia Parish Sanitary Landfill
Alexandria Recycling and Disposal Facility
American Waste and Pollution Control-Algiers Residential
American Waste and Pollution Control-Eastern New Orleans Residential
American Waste and Pollution Control-Kelvin Recycling and Disposal Facility
American Waste and Pollution Control-St. Bernard Parish Residential
American Waste and Pollution Control-Slidell Residential
American Waste and Pollution Control-West Jefferson Residential
Jefferson Davis Recycling and Disposal Facility
Kelvin Recycling and Disposal Facility
Magnolia Recycling and Disposal Facility
Pelican Recycling and Disposal Facility
Pelican State Environmental Services
Waste Management of Acadiana
Waste Management of Baton Rouge
Waste Management of the Bayous
Waste Management of Central Louisiana
Waste Management of Lake Charles
Waste Management of New Orleans
Waste Management of Northeast Louisiana
Waste Management of Northwest Louisiana
Waste Management of the Pines
Waste Management of St. Landry
Waste Management of St. Tammany
Waste Management of South Louisiana
Waste Management Services of Louisiana
Woodside Recycling and Disposal Facility
21
<PAGE>
Waste Management of Maine, Inc. (Maine)
Waste Management of Maine - Portland
Waste Management of Malaysia Sdn BHd (Malaysia)
Waste Management of Maryland, Inc. (Maryland)
Mobile Offices of Maryland
Waste Management of Greater Washington
Waste Management of Maryland - Baltimore
Waste Management of Southern Maryland
WMI Medical Services
WMI Services of Maryland
Waste Management of Massachusetts, Inc. (Massachusetts)
Waste Management of Boston - North
Waste Management of Central Massachusetts
Waste Management of Massachusetts - Gloucester
Waste Management of Massachusetts - South Shore
Waste Systems
Waste Management of Michigan, Inc. (Michigan)
Autumn Hills Recycling and Disposal Facility
Cedar Ridge Recycling and Disposal Facility
Eagle Valley Recycling and Disposal Facility
Efficient Sanitation
Northern Oaks Recycling and Disposal Facility
Recycle America - Metro Detroit
Tri-City Recycling and Disposal Facility
22
<PAGE>
Valley Rubbish
Venice Park Recycling and Disposal Facility
Waste Management of Michigan - Alma Transfer and Recycling Facility
Waste Management of Michigan - Area Disposal
Waste Management of Michigan - Burr Oak
Waste Management of Michigan - Central
Waste Management of Michigan - Detroit North
Waste Management of Michigan - Detroit Transfer and Recycling Facility
Waste Management of Michigan - Detroit West
Waste Management of Michigan - Dowagiac Transfer and Recycling Facility
Waste Management of Michigan - Holland
Waste Management of Michigan - Holland Transfer and Recycling Facility
Waste Management of Michigan - Mideast
Waste Management of Michigan - Mideast/Port Huron
Waste Management of Michigan - Midwest
Waste Management of Michigan - Northern
Waste Management of Michigan - Recycle America/Grand Rapids
Waste Management of Michigan - Southwest
Waste Management of Michigan - Western
23
<PAGE>
Westside Recycling and Disposal Facility
WMI Services - Eastern Michigan/Northwest Ohio
Woodland Meadows Recycling and Disposal Facility
Waste Management of Minnesota, Inc. (Minnesota)
Anoka Recycling and Disposal Facility
Dietman Sanitation & Recycling
Sun Prairie Recycling and Disposal Facility
Waste Management - Blaine
Waste Management - Rochester
Waste Management - Savage
Waste Management of Hastings
Waste Management of LeSueur/St. Peter
Waste Management of St. Cloud
WMI Services of Minnesota
Waste Management of Mississippi, Inc. (Mississippi)
Pecan Grove Sanitary Landfill
Pine Ridge Sanitary Landfill
Plantation Oaks Sanitary Landfill
Prairie Bluff Sanitary Landfill and Recycling Center
Waste Management of Meridian
Waste Management of Mississippi - Gulf Coast
Waste Management of Mississippi - Jackson
Waste Management of Mississippi - Laurel/Hattisburg
Waste Management of Mississippi - Pike County
Waste Management of Mississippi - Natchez
Waste Management of Mississippi - Vicksburg
Waste Management of North Mississippi - Columbus
Waste Management of North Mississippi - Tupelo
Waste Management of Northwest Mississippi - Grenada
Waste Management of Southwest Mississippi
Waste Management of Missouri, Inc. (Delaware)
Black Oak Recycling and Disposal Facility
Environmental Industries
Kahle Recycling and Disposal Facility
Meramec Hauling
Pezold Hauling
Rumble Recycling and Disposal Facility
Waste Management of Kansas City
Waste Management of Springfield
Waste Management of St. Louis
Waste Management of the Ozarks
Waste Management of Montana, Inc. (Delaware)
High Plains Sanitary Landfill and Recycling Center
24
<PAGE>
Waste Management of Great Falls
Waste Management of Nebraska, Inc. (Delaware)
Douglas County Recycling and Disposal Facility
Waste Management of New Hampshire, Inc. (Connecticut)
Turnkey Recycling and Environmental Enterprises
Waste Management of New Hampshire - Laconia
Waste Management of New Hampshire - Londonderry
Waste Management of New Hampshire - Rochester
Waste Management of New Hampshire - Peterborough
Waste Management of New Jersey, Inc. (New Jersey)
Avenue A Transfer & Recycling Center
Recycle America
Waste Management of New Mexico, Inc. (New Mexico)
Hobbs Recycling and Disposal Facility
Modulaire of New Mexico
Otero County Recycling and Disposal Facility
Recycle America Processing Facility
Rio Rancho Recycling and Disposal Facility
San Juan County Recycling and Disposal Facility
Sunshine Recycling and Disposal Facility
Waste Management of Albuquerque - Recycle America Processing Facility
Waste Management of Four Corners
Waste Management of Southeast New Mexico
Waste Management of the Southwest
Waste Management of New York, Inc. (New York)
High Acres Landfill and Recycling Facility
Waste Management of Eastern New York
Waste Management of New York - Buffalo
Waste Management of New York - Rochester
Waste Management of New York - Syracuse
Waste Management of New York - Utica
Waste Management of Southwestern New York
Waymor Recycling and Disposal Facility
WMI Services of New York
Waste Management of New York City, Inc. (Delaware)
Waste Management of New York City, L.P. (Delaware)
Waste Management, Inc. (Illinois)
Waste Management of North Dakota, Inc. (Delaware)
Waste Management of North Jersey, Inc. (Delaware)
Waste Management of NYC, Inc. (Delaware)
Waste Management of Ohio, Inc. (Delaware)
Countywide Recycling and Disposal Facility
ELDA Recycling and Disposal Facility
25
<PAGE>
Evergreen Recycling and Disposal Facility
Herrick Valley Recycling and Disposal Facility
Lake County Recycling and Disposal Facility
Pinnacle Road Recycling and Disposal Facility
Seneca East Recycling and Disposal Facility
Stony Hollow Recycling and Disposal Facility
Suburban Recycling and Disposal Facility
Waste Management of Ohio - Akron
Waste Management of Ohio - Blaylock
Waste Management of Ohio - Cleveland Transfer and Recycling Facility
Waste Management of Ohio - Cleveland West
Waste Management of Ohio - Columbus
Waste Management of Ohio - Columbus Transfer and Recycling Facility
Waste Management of Ohio - Findlay
Waste Management of Ohio - IWD
Waste Management of Ohio - Koogler
Waste Management of Ohio - Lima
Waste Management of Ohio - Lima Transfer and Recycling Facility
Waste Management of Ohio - M & M Sanitation
Waste Management of Ohio - Newark
Waste Management of Ohio - Northwest
Waste Management of Ohio - Recycle America/Toledo
Waste Management of Ohio - S.E.M.
Waste Management of Ohio - Shelby County Transfer
Waste Management of Ohio - Suburban Sanitation Service
Waste Management of Ohio - Youngstown
WMI Services - Ohio
Waste Management of Oklahoma, Inc. (Oklahoma)
East Oak Recycling and Disposal Facility
Waste Management of Oklahoma City
Waste Management of Tulsa
Waste Management of Orange County, Inc. (California)
Waste Management of Oregon, Inc. (Oregon)
Waste Management of Vancouver U.S.A.
Waste Management of Orlando, Inc. (Florida)
Waste Management of Pennsylvania, Inc. (Pennsylvania)
Lake View Landfill (Northern)
Mid-Atlantic Recycling and Distribution Center
Milton Grove Demolition and Tire Recycling
Philadelphia Transfer and Recycling Station
Pottsville Transfer Station
Recycle America
River Road Landfill
26
<PAGE>
Steel Valley Transfer Station
The Forge Recycling and Resource Recovery Center
Tully Town Resource Recovery Facility
Waste Automation
Waste Management - Allentown
Waste Management of Camp Hill
Waste Management of Delaware Valley - North
Waste Management of Delaware Valley - South
Waste Management of Erie
Waste Management of Greater Lancaster
Waste Management of Greencastle
Waste Management of Greenville
Waste Management of Indian Valley
Waste Management of Laurel Valley
Waste Management of Northeast Pennsylvania
Waste Management of Pennsylvania - Hauling
Waste Management of Pittsburgh
Waste Management of Pottstown
Waste Management of Pinellas County, Inc. (Florida)
Suncoast Recycle America Center
Waste Management of Rhode Island, Inc. (Delaware)
Waste Management of Rhode Island - Newport
Waste Management of South Carolina, Inc. (South Carolina)
Hickory Hill Sanitary Landfill
Palmetto Landfill
Waste Management of Coastal Disposal Service
Waste Management of the Low Country
Waste Management of South Dakota, Inc. (South Dakota)
Waste Management of Sioux Falls
Waste Management of the Black Hills
Waste Management of South Jersey, Inc. (New Jersey)
Middle Martee Landfill
Waste Management of Camden
Waste Management of Texas, Inc. (Texas)
All Waste Paper Recycling
Austin Community Disposal co.
Bluebonnet Recycling and Disposal Facility
Centex Waste Management
Coastal Plains Recycling and Disposal Facility
Comal County Recycling and Disposal Facility
Covell Gardens Landfill
DFW Recycling and Disposal Facility
Eastside Recycling and Disposal Facility
27
<PAGE>
Fabit Waste Management
Garbage Gobbler
Hillside Recycling and Disposal Facility
Lacy Lakeview Recycling and Disposal Facility
Longhorn Disposal
Northwest Transfer Station
Oak Hill Recycling and Disposal Facility
Pecan Prairie Recycling and Disposal Facility
Permian Basin Waste Management
Recycle America - Dallas Bulk Grade Division
Recycle America - Dallas High Grade Division
S & B Trucking & Sanitation
Texas Waste Management
Waste Management of Fort Worth Recycling and Disposal Facility
Waste Management - Golden Triangle
Waste Management of Dallas - East
Waste Management of Dallas Recycle America Processing Facility
Waste Management of Dallas - West
Waste Management of East Texas
Waste Management of Houston
Waste Management of Northeast Texas
Waste Management of Southeast Texas - Angleton
Waste Management of Southeast Texas - Dickinson
Waste Management of South Texas
Westside Recycling and Disposal Facility
Williamson County Recycling and Disposal Facility
WMI Services of Dallas
WMI Services of North Texas
WMI Services of Texas
Waste Management of Tri-Cities, Inc. (Delaware)
Waste Management of Utah, Inc. (Utah)
Modulaire of Utah
Reliable Waste Systems
Waste Management of Salt Lake
Waste Management of Virginia, Inc. (Virginia)
Waste Management of Hampton Roads
Waste Management of Northern Virginia
Waste Management of Northern Virginia - Crown Disposal
Waste Management of the Outer Banks
Waste Management of Richmond
Waste Management of Richmond Port-O-let
Waste Management of Richmond Recycle America
Waste Management of Virginia - Blue Ridge
28
<PAGE>
WMI Services of Hampton Roads
WMI Services of Virginia
Waste Management of West Virginia, Inc. (Delaware)
Waste Management of Shenandoah Valley
Waste Management of Wilmington, Inc. (Delaware)
Waste Management of Wisconsin, Inc. (Wisconsin)
Best Disposal
Metro/Stone Ridge Recycling and Disposal Facility
Orchard Ridge Recycling and Disposal Facility
Parkview Recycling and Disposal Facility
Pheasant Run Recycling and Disposal Facility
Ridgeview Recycling and Disposal Facility
Timberline Trail Recycling and Disposal Facility
Turtle Creek Recycling and Disposal Facility
United Waste/WMI Services
UWS Transportation
Valley Trail Recycling and Disposal Facility
Waste Management - Northeast Wisconsin
Waste Management of Fox Valley
Waste Management of La Crosse
Waste Management of Madison
Waste Management of Milwaukee
Waste Management of Muskego
Waste Management of Rockford
Waste Management Southwest
Waste Management - Tri County
WMI Services of Wisconsin
Waste Management of Wyoming, Inc. (Delaware)
Waste Management Paper Stock Company, Inc. (Delaware)
Southern Sanitation Southeast - Recycle America
Waste Management of Florida - Recycle America
Waste Management of Sarasota - Recycle America
Waste Management of Tampa - Recycle America
Waste Management Partners, Inc. (Delaware)
Waste Management Partners of Bozeman, Ltd. (Illinois)
Waste Management Partners of Midland/Odessa (Illinois)
Waste Management Partners of Paris, Ltd. (Illinois)
Waste Management Partners of Southeast North Dakota, L.P. (Illinois)
Waste Management Plastic Products, Inc. (Delaware)
Waste Management Queensland Pty. Ltd. (Queensland)
Waste Management Recycling and Disposal Services of Illinois, Inc. (Illinois)
Waste Management Recycling and Disposal Services of Michigan, Inc. (Delaware)
Waste Management Remediation Services B.V. (Netherlands)
29
<PAGE>
Waste Management (Rock Common) Limited (United Kingdom)
Waste Management (Roxby) Limited (United Kingdom)
Waste Management Services, C.A. (Venezuela)
Waste Management Services S A (Switzerland)
Waste Management Superior Acquisition, Inc. (Georgia)
Waste Relief Partners, L.P. (Illinois)
Waste Resources Ltd (New Zealand)
Waste Resources of Tampa Bay, Inc. (Florida)
Waste Resources of Tennessee, Inc. (Tennessee)
Waste Services Company Partnership (Colorado)
Waterblast Ltd. (United Kingdom)
WB Industrienlagen Consulting GmbH (West Germany)
WESA Wertstoffsortieranlagen Gesellschaft GmbH (Germany)
Wessex Waste Management Limited (United Kingdom)
WESI Baltimore Inc. (Delaware)
WESI Capital Inc. (Delaware)
WESI Peabody Inc. (Delaware)
WESI Peekskill Inc. (Delaware)
WESI Westchester Inc. (Delaware)
WESI Saugus Inc. (Delaware)
WES Medical Services of Florida Inc. (Delaware)
WES Medical Services of North Carolina Inc. (Delaware)
WES Medical Services of Ohio Inc. (Delaware)
WES Medical Services of Texas Inc. (Delaware)
WES Medical Services of Wisconsin Inc. (Delaware)
Westates Carbon-Arizona, Inc. (Arizona)
Western Compliance Services, Inc. (Oregon)
Western Waste Partners, L.P. (Illinois)
Wheelabrator Air Pollution Control Inc. (Delaware)
Wheelabrator Albion Inc. (Delaware)
Wheelabrator Albion Power Inc. (Delaware)
Wheelabrator Baltimore Inc. (Delaware)
Wheelabrator Bridgeport Inc. (Delaware)
Wheelabrator Broward Inc. (Delaware)
Wheelabrator-Berger (Maschinenfabriken) GmbH (West Germany)
Wheelabrator-Berger Stiftung GmbH (West Germany)
Wheelabrator Canada Inc. (Ontario)
Wheelabrator Cedar Creek Inc. (Delaware)
Wheelabrator Clean Air Holdings Inc. (Delaware)
Wheelabrator Clean Air Systems Inc. (Illinois)
Wheelabrator Cleanfuel Corporation (Delaware)
Wheelabrator Clean Water Holdings Inc. (Delaware)
Wheelabrator Clean Water Systems Inc. (Maryland)
30
<PAGE>
Wheelabrator Coal Refinery Inc. (Delaware)
Wheelabrator Coal Services Company (Delaware)
Wheelabrator Cobb Inc. (Delaware)
Wheelabrator Concord Inc. (Delaware)
Wheelabrator Concord Operating Inc. (Delaware)
Wheelabrator Connecticut Inc. (Delaware)
Wheelabrator Culm Services Inc. (Delaware)
Wheelabrator do Brasil Limitada (Brazil)
Wheelabrator Energy Company Inc. (Delaware)
Wheelabrator Energy Leasing Company (Delaware)
Wheelabrator Energy Systems Inc. (Delaware)
Wheelabrator Engineered Systems Inc. (Delaware)
Wheelabrator Environmental Systems Inc. (Delaware)
Wheelabrator Environmental Systems of New York, Inc. (Delaware)
Wheelabrator EOS Canada Inc. (Ontario)
Wheelabrator EOS Inc. (Delaware)
Wheelabrator EOS Puerto Rico Inc. (Delaware)
Wheelabrator Epping Inc. (Delaware)
Wheelabrator Falls Inc. (Delaware)
Wheelabrator Frackville Energy Company Inc. (Delaware)
Wheelabrator Frackville Properties Inc. (Delaware)
Wheelabrator Fuel Services Inc. (Delaware)
Wheelabrator Fuels Service Corporation (Delaware)
Wheelabrator Genesee Inc. (Delaware)
Wheelabrator Gloucester Inc. (Delaware)
Wheelabrator Hagerstown Inc. (Delaware)
Wheelabrator HPD Inc. (Illinois)
Wheelabrator Hudson Energy Company Inc. (Delaware)
Wheelabrator Incineration, Inc. (Delaware)
Wheelabrator Land Resources Inc. (Delaware)
Wheelabrator Lee County Inc. (Delaware)
Wheelabrator McKay Bay Inc. (Florida)
Wheelabrator Mecklenburg Inc. (Delaware)
Wheelabrator Mercer Inc. (Delaware)
Wheelabrator Millbury Inc. (Delaware)
Wheelabrator MSW Plant 12 Inc. (Delaware)
Wheelabrator New Hampshire Inc. (Delaware)
Wheelabrator New Jersey Inc. (Delaware)
Wheelabrator NHC Inc. (Delaware)
Wheelabrator Northampton Energy Company Inc. (Delaware)
Wheelabrator Northampton Inc. (Delaware)
Wheelabrator Northampton Linerboard Company Inc. (Delaware)
Wheelabrator North Broward Inc. (Delaware)
31
<PAGE>
Wheelabrator North Shore Inc. (Delaware)
Wheelabrator Norwalk Energy Company Inc. (Delaware)
Wheelabrator Peekskill Inc. (Delaware)
Wheelabrator Penacook Inc. (Delaware)
Wheelabrator Pierce Inc. (Delaware)
Wheelabrator Pinellas Inc. (Delaware)
Wheelabrator Plant Services Inc. (Delaware)
Wheelabrator Polk Inc. (Delaware)
Wheelabrator Pottstown Inc. (Delaware)
Wheelabrator Putnam Inc. (Delaware)
Wheelabrator Ridge Energy Inc. (Delaware)
Wheelabrator-Rust Maintenance Services, Inc. (Delaware)
Wheelabrator San Diego Inc. (Delaware)
Wheelabrator Saugus Inc. (Delaware)
Wheelabrator Shasta Energy Company Inc. (Delaware)
Wheelabrator Sherman Station One Inc. (Delaware)
Wheelabrator Sherman Station Two Inc. (Delaware
Wheelabrator Shrewsbury Inc. (Delaware)
Wheelabrator South Broward Inc. (Delaware)
Wheelabrator Spokane Inc. (Delaware)
Wheelabrator Technologies Environmental Services, Inc. (Delaware)
Wheelabrator Technologies Germany Holding GmbH (Germany)
Wheelabrator Technologies Inc. (Delaware)
Wheelabrator Technologies International Holdings Inc. (Delaware)
Wheelabrator Technologies International Limited (United Kingdom)
Wheelabrator Technologies (UK) Limited (United Kingdom)
Wheelabrator Tidewater Inc. (Delaware)
Wheelabrator Trucking Corporation (Delaware)
Wheelabrator Utility Services Inc. (Delaware)
Williams Disposal Service, Inc. (Florida)
Winnipeg Waste Disposal Limited Partnership (Manitoba)
WMD Miljoservice A/S (Denmark)
WMI Medical Services, Inc. (Delaware)
WMI Medical Services of Arizona, Inc. (Delaware)
WMI Medical Services of California, Inc. (Delaware)
WMI Medical Services of Florida, Inc. (Delaware)
WMI Medical Services of Indiana, Inc. (Indiana)
WMI Medical Services of the Midwest, Inc. (Delaware)
WMI Medical Services of Wisconsin
WMI Medical Waste Services of Illinois
WMI Medical Services of New England, Inc. (Delaware)
WMI Medical Services of the Northeast, Inc. (Delaware)
WMI Medical Services of New Jersey
32
<PAGE>
WMI Medical Services of New York
WMI Medical Services of Pennsylvania
WMI Medical Services of West Virginia
WMI Medical Services of Ohio, Inc. (Ohio)
WMI Medical Services - Dayton
WMI Medical Services - Toledo
WMI Medical Services - Youngstown
WMI Medical Services of the South, Inc. (Delaware)
WMI Medical Services of Texas, Inc. (Delaware)
WMI Medical Waste Services of North Carolina, Inc. (North Carolina)
WMI Properties, Inc. (Pennsylvania)
Warner Company Slag Operation
WMI Quebec Inc. (Quebec)
WMI Sellbergs AB (Sweden)
WMI Services of Nevada, Inc. (Nevada)
WMI Urban Services, Inc. (Delaware)
WMI Waste Management International Ltd. (United Kingdom)
WMI Waste Management of Canada Inc. (Ontario)
Waste Management Big Bear Services
Waste Management Essex/Kent
Waste Management Fraser Valley
Waste Management Halton/Hamilton
Waste Management Materials Processing - Recycle Canada
Waste Management Materials Processing - Toronto Transfer
Waste Management McLellan Disposal
Waste Management of Oxford/Perth
Waste Management of Calgary
Waste Management of Edmonton
Waste Management of Greater Toronto
Waste Management of Greater Vancouver
Waste Management of Southwestern Ontario
Waste Management of the Okanagan
Waste Management York/Simcoe
West Edmonton Recycling and Disposal Facility
WMI du Quebec
WMI - Hull/Ottawa
WMI Recyclage - Quebec
WMI Services - Ontario
WMI Services - Quebec
WM Jatchuolto OY (Finland)
WMNA Container Recycling, Inc. (Delaware)
WMNA Rail-Cycle Sub, Inc. (Delaware)
WM Paper Recycling, Inc. (Delaware)
33
<PAGE>
WM Partnership Holdings, Inc. (Delaware)
WM Portugal (Gestao De Residuos) LDA (Portugal)
WM Umwelttechnik Gmbh (Germany)
WMX Environmental Monitoring Laboratories, Inc. (Delaware)
WMX Mexico Holdings, Inc. (Delaware)
WMX of Alabama, Inc. (Delaware)
WTI International Holdings Inc. (Delaware)
WTI Jinyuan Limited Inc. (Delaware)
WTI Jinyuan Power Inc. (Delaware)
WTI Pingliang Limited Inc. (Delaware)
WTI Pingliang Power Inc. (Delaware)
WTI Rust Holdings Inc. (Delaware)
W-T Universal Engineering, Inc. (California)
Wuper Recycling Container-Dienst GmbH (Germany)
Y & S Maintenance, Inc. (Pennsylvania)
Zimmark (Shenzhen) Oil Reclamation Limited (China)
Zimmerman Environmental Consultants, Inc. (Louisiana)
34
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included or incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statements on Form S-8 (registration
nos. 33-7201, 33-17447, 33-26733, 33-35936, 33-63702 and 33-64266), and
previously filed Registration Statement on Form S-3 (registration no. 33-53005).
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 29, 1994
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the December
31, 1994 consolidated balance sheet and the consolidated statement of income for
the twelve-month period ended December 31, 1994 and is qualified in its entirety
by reference to such financial statements and the footnotes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 121,918
<SECURITIES> 19,704
<RECEIVABLES> 2,023,588
<ALLOWANCES> 65,536
<INVENTORY> 403,949
<CURRENT-ASSETS> 3,088,844
<PP&E> 12,788,971
<DEPRECIATION> 3,503,219
<TOTAL-ASSETS> 17,538,914
<CURRENT-LIABILITIES> 3,179,731
<BONDS> 6,044,411
<COMMON> 496,387
0
0
<OTHER-SE> 4,044,594
<TOTAL-LIABILITY-AND-EQUITY> 17,538,914
<SALES> 0
<TOTAL-REVENUES> 10,097,318
<CGS> 0
<TOTAL-COSTS> 7,144,445
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 34,368
<INTEREST-EXPENSE> 340,808
<INCOME-PRETAX> 1,379,169
<INCOME-TAX> 594,788
<INCOME-CONTINUING> 784,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 784,381
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 0.00
</TABLE>
