<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
___ ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________
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 (I.R.S. Employer
incorporation or organization) Identification No.)
3003 BUTTERFIELD ROAD,
OAK BROOK, ILLINOIS 60521
(Address of principal executive office) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (708) 572-8800
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 REGISTRANT WAS REQUIRED
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS.
YES X NO
___ ___
SHARES OF REGISTRANT'S COMMON STOCK, $1 PAR VALUE, ISSUED AND
OUTSTANDING, AT APRIL 30, 1996 -- 496,135,356
- --------------------------------------------------------------------------------
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<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
-----
PAGE
----
PART I. Financial Information:
Consolidated balance sheets as of December 31, 1995, and
March 31, 1996................................................... 3
Consolidated statements of income for the three months
ended March 31, 1995 and 1996.................................... 5
Consolidated statements of stockholders' equity for the three months
ended March 31, 1995 and 1996.................................... 6
Consolidated statements of cash flows for the three months
ended March 31, 1995 and 1996.................................... 8
Notes to consolidated financial statements............................ 9
Management's discussion and analysis of results of operations
and financial condition.......................................... 14
PART II. Other Information........................................... 20
******
2
<PAGE>
PART I. FINANCIAL INFORMATION
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's omitted)
ASSETS
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1996
----------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 189,031 $ 106,732
Short-term investments 36,243 24,636
Accounts receivable, less reserve of $66,840 in 1995
and $67,706 in 1996 1,880,934 1,866,852
Employee receivables 8,787 9,720
Parts and supplies 210,864 205,164
Costs and estimated earnings in excess of billings
on uncompleted contracts 334,786 341,245
Prepaid expenses 360,404 393,482
----------- -----------
Total Current Assets $ 3,021,049 $ 2,947,831
----------- -----------
PROPERTY AND EQUIPMENT, at cost:
Land, primarily disposal sites $ 4,575,117 $ 4,738,622
Buildings 1,572,821 1,516,524
Vehicles and equipment 7,498,718 7,650,049
Leasehold improvements 87,986 89,958
----------- -----------
$13,734,642 $13,995,153
Less - Accumulated depreciation and amortization (3,968,943) (4,137,686)
----------- -----------
Total Property and Equipment, Net $ 9,765,699 $ 9,857,467
----------- -----------
OTHER ASSETS:
Intangible assets relating to acquired businesses, net $ 4,205,031 $ 4,430,274
Sundry, including other investments 1,572,977 1,590,510
Net assets of discontinued operations 130,552 119,305
----------- -----------
Total Other Assets $ 5,908,560 $ 6,140,089
----------- -----------
Total Assets $18,695,308 $18,945,387
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($000's omitted except per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1995 March 31,1996
------------------ --------------
<S> <C> <C>
CURRENT LIABILITIES:
Portion of long-term debt payable within one year $ 1,094,165 $ 1,315,189
Accounts payable 1,072,372 846,712
Accrued expenses 991,539 1,001,742
Unearned revenue 263,029 258,151
----------- -----------
Total Current Liabilities $ 3,421,105 $ 3,421,794
----------- -----------
DEFERRED ITEMS:
Income taxes $ 956,525 $ 1,005,765
Environmental liabilities 622,952 583,072
Other 684,452 677,801
----------- -----------
Total Deferred Items $ 2,263,929 $ 2,266,638
----------- -----------
LONG-TERM DEBT, less portion payable within one year $ 6,420,610 $ 6,385,833
----------- -----------
MINORITY INTEREST IN SUBSIDIARIES $ 1,385,366 $ 1,346,160
----------- -----------
COMMITMENTS AND CONTINGENCIES $ $
----------- -----------
PUT OPTIONS $ 261,959 $ 261,959
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $l par value (issuable in series);
50,000,000 shares authorized; none outstanding
during the periods $ - $ -
Common stock, $l par value; 1,500,000,000 shares
authorized; 498,817,093 shares issued in 1995
and 506,057,872 in 1996 498,817 506,058
Additional paid-in capital 422,801 646,866
Cumulative translation adjustment (102,943) (112,482)
Retained earnings 4,486,877 4,596,164
----------- -----------
$ 5,305,552 $ 5,636,606
Less: 1988 Employee Stock Ownership Plan 13,062 11,395
Employee Stock Benefit Trust (11,769,788
shares in 1995 and 11,408,128 shares
in 1996, at market) 350,151 362,208
----------- -----------
Total Stockholders' Equity $ 4,942,339 $ 5,263,003
----------- -----------
Total Liabilities and Stockholders'
Equity $18,695,308 $18,945,387
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
4
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(Unaudited)
(000's omitted except per share amounts)
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
REVENUE $2,445,185 $2,417,191
---------- ----------
Operating expenses $1,683,950 $1,679,923
Special charges 140,600 -
Goodwill amortization 29,510 31,564
Selling and administrative expenses 287,530 286,886
Interest expense 106,523 99,315
Interest income (8,886) (6,842)
Minority interest 29,314 28,075
Sundry income, net (16,921) (17,359)
---------- ----------
Income from continuing operations
before income taxes $ 193,565 $ 315,629
Provision for income taxes 92,273 130,451
---------- ----------
Income from continuing operations $ 101,292 $ 185,178
Loss from operations of discontinued
businesses, less applicable income
taxes and minority interest of
$91 in 1995 (47) -
---------- ----------
NET INCOME $ 101,245 $ 185,178
========== ==========
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 484,814 489,913
========== ==========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Continuing operations $ 0.21 $ 0.38
Discontinued operations - -
---------- ----------
NET INCOME $ 0.21 $ 0.38
========== ==========
DIVIDENDS DECLARED PER SHARE $ 0.15 $ 0.15
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(Unaudited)
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
1988
Employee
Additional Cumulative Stock Employee
Common Paid-In Translation Retained Treasury Ownership Stock
Stock Capital Adjustment Earnings Stock Plan Benefit Trust
-------- ----------- ------------ ----------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 $496,387 $357,150 $(150,832) $4,181,606 $ - $19,729 $323,601
Net income for the period - - - 101,245 - - -
Cash dividends ($.15 per
share) - - - (72,658) - - -
Dividends paid to Employee
Stock Benefit Trust - 1,828 - (1,828) - - -
Stock issued upon exercise
of stock options 6 (1,415) - - (323) - (5,674)
Treasury stock received in
connection with exercise
of stock options - - - - 323 - -
Tax benefit of
non-qualified
stock options exercised - 619 - - - - -
Contribution to 1988
Employee Stock Ownership
Plan - - - - - (1,667) -
Common stock issued upon
conversion of Liquid
Yield Option Notes 2 27 - - - - -
Common stock issued for
acquisitions 184 4,966 - - - - -
Temporary equity related to
put options - 11,133 - - - - -
Proceeds from sale of put
options - 6,766 - - - - -
Settlement of expired put
options - (12,019) - - - - -
Adjustment of Employee
Stock Benefit Trust to
market value - 16,787 - - - - 16,787
Transfer of equity
interests among controlled
subsidiaries - 587 - - - - -
Cumulative translation
adjustment of foreign
currency statements - - 48,568 - - - -
-------- -------- --------- ---------- ----- ------- --------
Balance, March 31, 1995 $496,579 $386,429 $(102,264) $4,208,365 $ - $18,062 $334,714
======== ======== ========= ========== ===== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
($000's omitted except per share amounts)
<TABLE>
<CAPTION>
1988
Employee
Additional Cumulative Stock Employee
Common Paid-In Translation Retained Treasury Ownership Stock
Stock Capital Adjustment Earnings Stock Plan Benefit Trust
-------- ----------- ------------ ----------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $498,817 $422,801 $(102,943) $4,486,877 $ - $13,062 $350,151
Net income for the period - - - 185,178 - - -
Cash dividends ($.15 per share) - - - (74,173) - - -
Dividends paid to Employee
Stock Benefit Trust - 1,718 - (1,718) - - -
Stock issued upon exercise
of stock options 48 (2,354) - - (1,814) - (10,969)
Treasury stock received in
connection with exercise of
stock options - - - - 714 - -
Tax benefit of non-qualified
stock options exercised - 1,289 - - - - -
Contribution to 1988 Employee
Stock Ownership Plan - - - - - (1,667) -
Treasury stock received as
settlement for claims - - - - 1,100 - -
Common stock issued upon
conversion of Liquid Yield
Option Notes 100 1,768 - - - - -
Common stock issued for
acquisitions 7,093 198,618 - - - - -
Adjustment of Employee Stock
Benefit Trust to market value - 23,026 - - - - 23,026
Cumulative translation adjust-
ment of foreign currency
statements - - (9,539) - - - -
-------- -------- --------- ---------- -------- ------- --------
Balance, March 31, 1996 $506,058 $646,866 $(112,482) $4,596,164 $ - $11,395 $362,208
======== ======== ========= ========== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
Increase (Decrease) in Cash
(Unaudited)
($000's omitted)
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income for the period $ 101,245 $ 185,178
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 213,245 222,926
Provision for deferred income taxes 32,809 65,252
Minority interest in subsidiaries 29,302 28,075
Interest on Liquid Yield Option Notes (LYONs)
and WMX Subordinated Notes 9,067 2,864
Gain on sale of property and equipment (1,899) (2,431)
Contribution to 1988 Employee Stock
Ownership Plan 1,667 1,667
Special charge, net of tax 91,400 --
Changes in assets and liabilities, excluding effects
of acquired companies:
Receivables, net 79,778 31,434
Other current assets (79,887) (31,351)
Sundry other assets (2,782) 17,976
Accounts payable (161,140) (234,807)
Accrued expenses and unearned revenue 50,681 8,745
Deferred items (24,041) (59,301)
Minority interest in subsidiaries 2,665 2,057
--------- ---------
Net cash provided by operating activities $ 342,110 $ 238,284
--------- ---------
Cash flows from investing activities:
Short-term investments $ 6,480 $ 11,607
Capital expenditures (261,680) (280,551)
Proceeds from sale of property and equipment 66,562 25,546
Cost of acquisitions, net of cash acquired (42,070) (35,695)
Other investments (16,090) (26,496)
Acquisition of minority interests (2,251) --
--------- ---------
Net cash used for investing activities $(249,049) $(305,589)
--------- ---------
Cash flows from financing activities:
Cash dividends $ (72,658) $ (74,173)
Proceeds from issuance of indebtedness 718,956 342,979
Repayments of indebtedness (554,722) (213,895)
Proceeds from exercise of stock options, net 4,265 9,763
Contributions from minority interests 10,761 2,143
Stock repurchases by subsidiaries (23,266) (81,811)
Proceeds from sale of put options 6,766 --
Settlement of put options (12,019) --
--------- ---------
Net cash provided by (used for) financing activities $ 78,083 $ (14,994)
--------- ---------
Net increase (decrease) in cash and cash equivalents $ 171,144 $ (82,299)
Cash and cash equivalents at beginning of period 123,348 189,031
--------- ---------
Cash and cash equivalents at end of period $ 294,492 $ 106,732
========= =========
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 disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 98,093 $ 96,451
Income taxes, net of refunds received $ 36,087 $ 31,538
Supplemental schedule of noncash investing and
financing activities:
LYONs converted into common stock of the Company $ 29 $ 1,868
Liabilities assumed in acquisitions of businesses $ 61,451 $ 89,820
Fair market value of Company stock issued for
acquired businesses $ 5,150 $ 205,711
WMX Subordinated Notes issued for acquisition of
CWM minority interest $ 436,830 $ --
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE>
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
($000's omitted in all tables)
The financial statements included herein have been prepared by WMX Technologies,
Inc. ("WMX" or the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The financial information
included herein reflects, in the opinion of the Company, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position and results of operations for the periods presented. The
results for interim periods are not necessarily indicative of results for the
entire year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets, liabilities, income and expenses and
disclosures of contingencies. Future events could alter such estimates in the
near term.
Certain amounts in previously issued financial statements have been restated to
conform to 1996 classifications.
Income Taxes -
The following table sets forth the provision for income taxes for continuing
operations for the three months ended March 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Currently payable $60,021 $65,393
Deferred 32,523 65,252
Amortization of deferred
investment credit (271) (194)
------- -------
$92,273 $130,451
======= ========
</TABLE>
Business Combinations -
During 1995, the Company and its principal subsidiaries acquired 136 businesses
for $224,304,000 in cash (net of cash acquired) and notes, $77,689,000 of debt
assumed, and 2,236,354 shares of the Company's common stock. Three of the
aforementioned 1995 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.
In January 1995, the Company acquired all of the approximately 21.4% of the
outstanding shares of Chemical Waste Management, Inc. ("CWM") that it did not
already own, for $436.8 million of convertible subordinated notes. In July
1995, the Company acquired all of the approximately 3.1 million shares of Rust
International Inc. ("Rust") held by the public, for $16.35 per share in cash.
9
<PAGE>
During the three months ended March 31, 1996, the Company and its principal
subsidiaries acquired 45 businesses for $35,695,000 in cash (net of cash
acquired) and notes, $31,379,000 of debt assumed, and 7,093,075 shares of the
Company's common stock. These acquisitions were accounted for as purchases.
The pro forma effect of the acquisitions made during 1995 and 1996 is not
material.
Discontinued Operations -
In December 1995, the Rust Board of Directors approved a plan to sell or
otherwise discontinue Rust's process engineering, construction, specialty
contracting and similar lines of business and have Rust focus on its
environmental and infrastructure engineering and consulting businesses. Rust
engaged investment bankers to assist it in valuing and identifying and
negotiating with potential buyers for the major business units to be sold.
Negotiations are proceeding with a number of interested parties and Rust expects
to complete the process in 1996.
The discontinued businesses have been segregated from continuing operations in
the accompanying balance sheets and statements of income. Results of operations
for the three months ended March 31, 1996, were not material and were included
in the reserve for loss on disposition provided previously. Revenue from these
businesses was $142.8 million for the three months ended March 31, 1996, and
$159.7 million for the comparable period in 1995.
Accounting Principles -
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("FAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." The change did not have a material
impact on the Company's financial statements.
In October 1995, the Financial Accounting Standards Board issued FAS No. 123,
"Accounting for Stock-Based Compensation," which the Company also must adopt in
1996. FAS 123 provides an optional new method of accounting for employee stock
options and expands required disclosure about stock options. If the new method
of accounting is not adopted, the Company will be required to disclose pro forma
net income and earnings per share as if it were. The Company is studying FAS
123 and is gathering data necessary to calculate compensation in accordance with
its provisions, but has not decided whether to adopt the new method or
quantified its impact on the Company's financial statements.
Derivative Financial Instruments-
From time to time, the Company uses derivatives to manage interest rate,
currency and commodity risk. Neither the amount of such instruments outstanding
at any point in time nor gains or losses from their use has been material to the
Company's financial statements.
INTEREST RATE AGREEMENTS Certain of the Company's subsidiaries have entered
into interest rate swap agreements to balance fixed and floating rate debt in
accordance with management's criteria. 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 agreements provide only for
the exchange of interest on the notional amounts at the stated rates, with no
multipliers or leverage. Differences paid or received are recognized as a part
of interest expense on the underlying debt over the life of the agreements.
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
10
<PAGE>
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. 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.
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 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 March
31, 1996, which is not material.
Environmental 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. 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. The Company has also established procedures to evaluate
its potential remedial liabilities at closed sites which it owns or operated, or
to which it transported waste, including 106 sites listed on the Superfund
National Priority List ("NPL"). The majority of the situations involving NPL
sites relate to allegations that subsidiaries of the Company (or their
predecessors) transported waste to the facilities in question, often prior to
the acquisition of such subsidiaries by the Company. Where the Company
concludes that it is probable that a liability has been incurred, provision is
made in the financial statements.
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 necessitate the recording of additional liabilities which could be
material. The impact of such future events cannot be estimated at the current
time.
11
<PAGE>
The Company and certain of its subsidiaries are named as defendants in personal
injury and property damage lawsuits, including purported class actions, on the
basis of a Company subsidiary's having owned, operated or transported waste to a
disposal facility which is alleged to have contaminated the environment. While
the Company believes it has meritorious defenses to these lawsuits, their
ultimate resolution is often substantially uncertain due to a number of factors,
and it is possible such matters could have a material adverse impact on the
Company's earnings for one or more quarters or years.
Stockholders' Equity -
The Boards of Directors of WMX and WTI have authorized their respective
companies to repurchase shares of their own common stock (up to 25 million
shares in the case of WMX and 20 million shares in the case of WTI) in the open
market or in privately negotiated transactions. These programs extend into
1997. WTI has repurchased 3.8 million shares, including 3 million shares during
the first quarter of 1996. Through the first quarter of 1996, WMX had not
repurchased any shares under this program.
In conjunction with its authorized repurchase program, WMX periodically sells
put options on its common stock. The put options give the holders the right at
maturity to require the Company to repurchase its shares at specified prices.
Proceeds from the sale of the options are 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. At March 31, 1996,
put options were outstanding for 9.0 million shares at strike prices ranging
from $27.34 to $31.45 per share. 4.3 million of these options subsequently
expired unexercised as the price of the Company's stock was in excess of the
strike price at maturity. The Company has sold and expects to continue to sell
additional put options during 1996.
Commitments and Contingencies -
Waste Management International plc ("WM International") has received an
assessment of approximately 417 million Krona (approximately $62 million) from
the Swedish Tax Authority, relating to a transaction completed in 1990. WM
International believes that all appropriate tax returns and disclosures were
filed at the time of the transaction and intends to vigorously contest the
assessment.
A subsidiary of WMI has been involved in litigation challenging a municipal
zoning ordinance which restricted the height of its New Milford, Connecticut
landfill to a level below that allowed by the permit previously issued by the
Connecticut Department of Environmental Protection ("DEP"). WMI is presently
under an order of the Superior Court to apply to the DEP for permission to
remove all waste above the height allowed by the zoning ordinance. The Company
believes that the removal of such waste is an inappropriate remedy and has
appealed the Superior Court order to the state Supreme Court. The Company is
unable to predict the outcome of this appeal or the nature and extent of the
removal action that may ultimately be required. However, if the Superior Court
order is not modified, the subsidiary could incur substantial costs, which could
vary significantly depending upon the nature of any plan eventually approved by
the applicable regulatory authorities, the actual volume of waste to be moved,
and other factors, and which could have a material adverse effect on the
Company's financial condition and results of operations in one or more future
periods.
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.
12
<PAGE>
Debt -
In April 1996, the Company issued $150,000,000 of 6.25% Notes due April 1, 1999,
at a price of 99.972%. The Notes are not redeemable prior to maturity.
Also in April 1996, the Illinois Development Finance Authority issued and sold
$69,795,000 of 4.625% Environmental Refunding Bonds (WMX Technologies, Inc.)
Series 1996, maturing February 1, 1998, at a price of 100.291% plus accrued
interest and loaned the proceeds to the Company. These Bonds were issued for
the purpose of refunding all of the outstanding Illinois Development Finance
Authority 7.75% Solid Waste Disposal Revenue Bonds (Waste Management, Inc.
Project) Series 1988.
Legal Matters -
See Part II of this Form 10-Q for a discussion of legal matters.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS:
Consolidated -
- ------------
For the three months ended March 31, 1996, WMX Technologies, Inc. and its
subsidiaries ("WMX" or the "Company") had net income from continuing operations
of $185.2 million or $.38 per share, compared with $101.3 million or $.21 per
share in the same period in 1995. Revenue for the quarter was $2.42 billion
versus $2.45 billion (restated to eliminate discontinued operations) in the
year-earlier quarter.
First quarter 1995 results included a pretax charge of $140.6 million
recorded by the Company's Chemical Waste Management, Inc. ("CWM") subsidiary,
primarily to revalue investments in certain hazardous waste treatment and
processing technologies and facilities, which reduced earnings by $.19 per
share.
The Company has five primary operating subsidiaries: Waste Management, Inc.
("WMI"), CWM, Wheelabrator Technologies Inc. ("WTI"), Waste Management
International plc ("WM International"), and Rust International Inc. ("Rust").
However, operations are managed on the basis of four principal global lines of
business - waste services, clean energy, clean water, and environmental and
infrastructure engineering and consulting. Revenue, operating expenses
(excluding special charges), selling and administrative expense, and operating
margin for each of the continuing business lines are set forth in the tables
below (in millions):
<TABLE>
<CAPTION>
Environmental &
Infrastructure
Engineering
Waste Clean Clean and
Services Energy Water Consulting Eliminations Consolidated
-------- ------ ----- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter 1996 -
Revenue $2,037.5 $203.3 $150.3 $110.1 $(84.0) $2,417.2
Operating
expenses 1,454.0 132.6 118.9 90.0 (84.0) 1,711.5
Selling &
admin. expenses 237.6 10.7 22.6 16.0 - 286.9
-------- ------ ------ ------ ------ --------
Margin $ 345.9 $ 60.0 $ 8.8 $ 4.1 $ - $ 418.8
======== ====== ====== ====== ====== ========
First Quarter 1995 -
Revenue $2,032.6 $251.2 $137.1 $108.4 $(84.1) $2,445.2
Operating
expenses 1,433.2 169.9 110.0 84.5 (84.1) 1,713.5
Selling &
admin. expenses 237.3 11.0 21.6 17.6 - 287.5
-------- ------ ------ ------ ------ --------
Margin $ 362.1 $ 70.3 $ 5.5 $ 6.3 $ - $ 444.2
======== ====== ====== ====== ====== ========
</TABLE>
14
<PAGE>
Waste Services -
- ----------------
Waste services revenue by source for the first quarter of 1996 compared to
the same quarter in 1995 is shown in the following table (in millions):
<TABLE>
<CAPTION>
Percentage
1996 1995 Increase/(Decrease)
-------- -------- -------------------
<S> <C> <C> <C>
North America
Residential $ 312.4 $ 293.1 6.6%
Commercial 405.0 394.3 2.7
Rolloff and industrial 315.9 305.1 3.5
Disposal, transfer
and other* 456.7 439.8 3.8
Rust Industrial
Services 107.7 171.1 (37.1)
International 439.8 429.2 2.5
-------- --------
Total $2,037.5 $2,032.6 0.2%
======== ======== =====
</TABLE>
*Includes hazardous waste revenue of $125.2 million in 1996 and $130.5 million
in 1995.
North American solid waste revenue grew 4.8% for the first quarter of 1996
compared to the same period in 1995. Price increases accounted for 0.5 to 1.0%
of revenue growth; a decline in recyclable commodity prices caused a 1.0% loss
in revenue that partially offset price increases of 1.5 to 2.0% in other solid
waste business. Volume increases accounted for 2.0 to 2.5% revenue growth while
acquisitions accounted for 1.5 to 2.0%. Industrial services revenue in 1995
included Rust's environmental remediation business, which was exchanged in May
1995 for an approximately 37% equity interest in OHM Corporation. International
waste services revenue increased 2.5% for the first quarter of 1996 compared to
the first quarter of 1995, a result of price (1.5%), volume (-2.8%),
acquisitions (1.9%) and currency translation (1.9%).
Revenue from all segments of the waste services business was negatively
impacted by severe winter weather in many areas of the United States and most of
northern Europe during the first quarter of 1996. In addition, as noted above,
prices for recyclable commodities, which can vary significantly from year to
year, were approximately 50% lower during the first quarter of 1996 than during
the first quarter of 1995. Volumes at WM International's Hong Kong hazardous
waste incinerator have declined since the Hong Kong government introduced a
pricing mechanism in March 1995, that requires generators to absorb a portion of
the disposal cost for their waste. Pricing in Europe continued to be negatively
impacted by highly competitive conditions in France, softness in segments of the
hazardous waste market, and lower prices on rebids of municipal contracts in
Italy.
Operating expenses were 71.4% of first quarter 1996 revenue compared to
70.5% in the first quarter of 1995. The increase was a function of the severe
weather, which hampered operations, and the decline in the price of recyclable
commodities. Selling and administrative expenses remained constant between
years, both in dollars and as a percentage of revenue.
Clean Energy -
- ---------------
Revenue declined to $203.3 million in the first quarter of 1996 compared to
$251.2 million in the first quarter of 1995. The majority of the decrease
relates to construction revenue from the Lisbon, Connecticut trash-to-energy
plant included in the 1995 quarter; the plant has subsequently been completed
and began commercial operations in January 1996. Revenue from existing energy
facilities also decreased, a result of a number of factors including lower spot
pricing for trash disposal in areas of Florida and the timing of scheduled
maintenance at certain domestic facilities.
15
<PAGE>
Operating expenses declined slightly as a percentage of revenue in the
first quarter of 1996 compared to the same 1995 quarter, primarily as a result
of the 1995 Lisbon construction revenue carrying no profit margin. Selling and
administrative expenses remained essentially flat in dollar terms, but increased
as a percentage of revenue because of the lower 1996 revenue base. The 1996
operating margin was below the 1995 comparable quarter in dollar terms, but
improved as a percentage of revenue to 29.5% from 28.0% a year earlier.
Clean Water -
- --------------
Revenue for the first quarter grew $13.2 million to $150.3 million in 1996,
a 10% increase compared to the prior year. Companies acquired in the previous
twelve months provided $4.8 million or 36% of this increase. The balance was
attributable to growth in existing operations, with biosolids and screen
activity being particularly strong. The domestic industrial water process
business experienced strong orders during the 1996 quarter, reversing the delays
experienced late in 1995.
Operating income grew $3.3 million, or 60%, to $8.8 million in the 1996
quarter compared to 1995. As a percentage of revenue, operating income
increased from 4.0% in 1995 to 5.8% in 1996, due primarily to business mix and
the benefits of consolidating office and manufacturing locations. Operating
expenses declined slightly as a percentage of revenue due to a larger proportion
of higher margin equipment and product sales, which offset weather-related
declines in biosolids' margins. Selling and administrative expenses increased
$1.0 million in 1996 compared to the first quarter of 1995, but decreased as a
percentage of revenue from 15.7% to 15.0%.
Environmental and Infrastructure Engineering and Consulting -
- --------------------------------------------------------------
Total revenue improved slightly to $110.1 million in the first quarter of
1996 compared to $108.4 million in the first quarter of 1995. However, domestic
engineering and consulting fees (labor-based revenues) were $6.3 million less in
1996 than in 1995, with the shortfall offset by an increase in subcontract and
other pass-through revenues that have little or no markup. As a result,
operating expenses increased from 77.9% of revenue in 1995 to 81.7% in 1996.
The severe winter weather delayed client projects and reduced productivity.
Selling and administrative expenses declined in 1996 compared to 1995 in both
dollar terms and as a percentage of revenue as the Company realized benefits
from cost-control programs and the consolidation of certain operating units.
Discontinued Operations -
- -------------------------
In the fourth quarter of 1995, the Rust Board of Directors approved a plan
to sell or otherwise discontinue Rust's process engineering, construction,
specialty contracting and similar lines of business and have Rust focus on its
environmental and infrastructure engineering and consulting businesses. Rust
engaged investment bankers to assist it in valuing and identifying and
negotiating with potential buyers for the major business units. Negotiations
are proceeding with a number of interested parties and Rust expects to complete
the process in 1996.
The discontinued businesses have been segregated from continuing operations
in the accompanying balance sheets and statements of income. Results of
operations for the three months ended March 31, 1996, were not material and were
included in the reserve for loss on disposition provided previously. Revenue
from these businesses was $142.8 million for the three months ended March 31,
1996, and $159.7 million for the comparable period in 1995.
16
<PAGE>
Interest -
- ----------
The following table sets forth the components of consolidated interest,
net, for the three months ended March 31, 1996 and 1995 (in millions):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Interest expense $116.5 $126.2
Interest income (6.8) (8.9)
Capitalized interest (17.2) (19.7)
------ ------
Interest expense, net $ 92.5 $ 97.6
====== ======
</TABLE>
The lower net interest expense in 1996 was a function of lower rates,
including the benefit of refinancing certain debt, offsetting a reduction in
capitalized interest and the impact of debt incurred to buy back the public
ownership of CWM and Rust during 1995. Capitalized interest declined as a
result of continuing management effort to reduce capital expenditures.
Minority Interest -
- -------------------
Minority interest declined in the first quarter of 1996 compared to the
same period in 1995 as a result of the purchase of the public shares of CWM and
Rust, and stock repurchases by WTI under the repurchase program discussed below
under "Financial Condition - Capital Structure".
Accounting Principles -
- -----------------------
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("FAS") No. 121 - Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of. The adoption of this
standard did not have a material impact on the financial statements. The
Financial Accounting Standards Board has also issued FAS No. 123 - Accounting
for Stock-Based Compensation - which the Company must adopt in 1996. This
statement provides an optional new method of accounting for employee stock
options and expands required disclosure about stock options. If the new method
of accounting is not adopted, the Company will be required to disclose pro forma
net income and earnings per share as if it were. The Company is studying FAS
No. 123 and is gathering data necessary to calculate compensation in accordance
with its provisions, but has not decided whether to adopt the new method or
quantified its impact on the financial statements.
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. The Company's use of
derivatives has not been and is not expected to be material with respect to
financial condition or results of operations.
Environmental 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. 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. The Company has also established procedures to evaluate its potential
remedial liability at closed sites which it owns or operated, or to which it
transported waste. While the Company believes it has adequately provided for
its environmental liabilities, it is reasonably possible that technological,
regulatory or enforcement developments, the results of environmental studies or
other factors could necessitate the recording of additional liabilities which
could be material.
17
<PAGE>
From time to time, the Company and certain of its subsidiaries are named as
defendants in personal injury and property damage lawsuits, including purported
class actions, on the basis of a Company subsidiary's having owned, operated or
transported waste to a disposal facility which is alleged to have contaminated
the environment or, in certain cases, conducted environmental remediation
activities at such sites. Some of such lawsuits may seek to have the Company or
its subsidiaries pay the cost of groundwater monitoring and health care
examinations of allegedly affected persons for a substantial period of time,
even where no actual damage is proven. While the Company believes that it has
meritorious defenses to these lawsuits, their ultimate resolution is often
substantially uncertain due to the difficulty of determining the cause, extent
and impact of alleged contamination (which may have occurred over a long period
of time), the potential for successive groups of complainants to emerge, the
diversity of the individual plaintiffs' circumstances, and the potential
contribution or indemnification obligations of co-defendants or other third
parties, among other things. Accordingly, it is reasonably possible that such
matters could have a material adverse impact on the Company's earnings for one
or more fiscal quarters or years.
FINANCIAL CONDITION:
Liquidity and Capital Resources -
- ---------------------------------
The Company had a working capital deficit of $474.0 million at March 31,
1996, compared to a deficit of $400.1 million at December 31, 1995. The Company
operates in a service industry with neither significant inventory nor seasonal
variations in receivables, and accordingly, minimizing working capital typically
does not adversely affect operations.
The Company has adopted a strategy of raising the level of "owner's cash
flow", which it defines as cash flow from operating activities less net capital
expenditures (other than acquisitions) and dividends. Such amounts are available
to make acquisitions, reduce debt, or repurchase common stock. For 1996, owners'
cash flow was originally expected to exceed $600 million. Although the first
quarter amount was negative, results were consistent with budgeted levels, and
as a result of a subsequent downward revision in expected capital expenditures,
the Company now anticipates that 1996 owners' cash flow will exceed $700
million. In addition, management has established a goal of converting
approximately $1 billion of non-core or underperforming assets into cash over
the next 18 to 24 months.
Acquisitions and Capital Expenditures -
- ---------------------------------------
Capital expenditures, excluding property and equipment of purchased
businesses, were $280.6 million for the three months ended March 31, 1996, and
$261.7 million for the comparable quarter in 1995. In addition, the Company and
its principal subsidiaries acquired 45 businesses for $67.1 million in cash and
debt (including debt assumed) and 7.1 million shares of WMX common stock during
the first quarter of 1996. For the first quarter of 1995, 34 businesses were
acquired for $47.9 million in cash and debt (including debt assumed) and .2
million shares of WMX common stock.
Capital Structure -
- -------------------
The Boards of Directors of WMX and WTI have authorized their respective
companies to repurchase shares of their own common stock (up to 25 million
shares in the case of WMX and 20 million shares in the case of WTI) in the open
market or in privately negotiated transactions. These programs extend into
1997. WTI has repurchased 3.8 million shares under its program, including 3.0
million shares during the first quarter of 1996. WMX had not repurchased any
shares under its program as of March 31, 1996.
18
<PAGE>
In conjunction with its authorized repurchase program, WMX periodically
sells put options on its common stock. The put options give the holders the
right at maturity to require the Company to repurchase its shares at specified
prices. Proceeds from the sale of the options are 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. At March 31,
1996, put options were outstanding for 9.0 million shares at strike prices
ranging from $27.34 to $31.45 per share. Of these options, 4.3 million
subsequently expired unexercised as the price of the Company's stock was in
excess of the strike price at maturity. Subsequent to March 31, 1996, the
Company sold additional put options and expects to continue to do so.
Contingencies -
- ---------------
WM International has received an assessment of approximately 417 million
Krona (approximately $62 million) from the Swedish Tax Authority, relating to a
transaction completed in 1990. WM International believes that all appropriate
tax returns and disclosures were filed at the time of the transaction and
intends to vigorously contest the assessment.
A subsidiary of WMI has been involved in litigation challenging a municipal
zoning ordinance which restricted the height of its New Milford, Connecticut
landfill to a level below that allowed by the permit previously issued by the
Connecticut Department of Environmental Protection ("DEP"). WMI is presently
under an order of the Superior Court to apply to the DEP for permission to
remove all waste above the height allowed by the zoning ordinance. The Company
believes that the removal of such waste is an inappropriate remedy and has
appealed the Superior Court order to the state Supreme Court. The Company is
unable to predict the outcome of this appeal or the nature and extent of the
removal action that may ultimately be required. However, if the Superior Court
order is not modified, the subsidiary could incur substantial costs, which could
vary significantly depending upon the nature of any plan eventually approved by
the applicable regulatory authorities, the actual volume of waste to be moved,
and other factors, and which could have a material adverse effect on the
Company's financial condition and results of operations in one or more future
periods.
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.
19
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
-----------------
The majority 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 or trash-to-energy facilities. As of March 31, 1996, a Company
subsidiary engaged in providing hazardous waste management services, was
involved in one such proceeding where it is believed that sanctions involved may
exceed $100,000. The Company believes that these matters will not have a
material adverse effect on its results of operation or financial condition.
However, the outcome of any particular proceeding cannot be predicted with
certainty, 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.
In March 1996, WTI entered into a consent order in an administrative
proceeding brought by the United States Environmental Protection Agency in
connection with certain alleged sulphur dioxide exceedences at a trash-to-energy
facility operated by WTI in Westchester County, New York. The consent order
provided for the payment by WTI of a civil penalty of $172,917. In settling
these matters, WTI did not admit any violation of law.
ITEM 5. Other Information.
-----------------
On May 10, 1996, the registrant announced that its Board of Directors has
selected Phillip B. Rooney, currently the registrant's President and Chief
Operating Officer, to become the registrant's Chief Executive Officer, effective
June 7, 1996. Mr. Rooney will succeed Dean L. Buntrock, currently the Chairman
of the Board and Chief Executive Officer of the registrant, who will retain his
position as Chairman of the Board and will remain an active member of the
registrant's senior management team.
ITEM 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
The exhibits to this report are listed in the Exhibit Index elsewhere
herein.
(b) Reports on Form 8-K.
The registrant filed a report on Form 8-K dated February 5, 1996 reporting
the issuance of a news release concerning the registrant's results of operations
for the three months and year ended December 31, 1995 and the registrant's
anticipated 1996 earnings growth rate.
20
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WMX TECHNOLOGIES, INC.
/s/ JAMES E. KOENIG
---------------------------------------
James E. Koenig - Senior Vice President
and Chief Financial Officer
May 14, 1996
21
<PAGE>
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
Number and Description of Exhibit*
---------------------------------
2 None
3 By-laws of registrant, as amended and restated as of
May 10, 1996
4 None
10 None
11 None
12 Computation of Ratios of Earnings to Fixed Charges
15 None
18 None
19 None
22 None
23 None
24 None
27 Financial Data Schedule
99 None
- ------------------
* Exhibits not listed are inapplicable.
22
<PAGE>
WMX TECHNOLOGIES, INC.
______________________________
BY-LAWS
______________________________
AMENDED AND RESTATED AS OF: May 10, 1996
<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
1
<PAGE>
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 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
2
<PAGE>
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 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
3
<PAGE>
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.
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
4
<PAGE>
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 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
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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 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
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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.
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
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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 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
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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.
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.
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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.
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
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a majority of the whole board. Any vacancy occurring in any office of the
Corporation shall be filled by the board of directors.
SECTION 6. CHAIRMAN OF THE BOARD. The chairman of the board 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. The chairman of the board shall perform such other duties and have
such other powers as the board of directors may from time to time prescribe.
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 executive officer
of the Corporation. He or she shall have responsibility for the 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. He or
she may sign certificates for shares of the
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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 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 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
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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 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
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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 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
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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 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
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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.
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.
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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 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
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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 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
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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 which the Emergency Management Committee
shall be required to function pursuant to the provisions hereof.
20
<PAGE>
EXHIBIT 12
WMX TECHNOLOGIES, INC.
Ratio of Earnings to Fixed Charges
(Unaudited)
(millions of dollars, except ratio)
<TABLE>
<CAPTION>
Three Months
Ended March 31
--------------------
1995 (1) 1996
---------- --------
<S> <C> <C>
Income From Continuing Operations Before Income
Taxes, Undistributed Earnings from Affiliated
Companies and Minority Interest................ $210.2 $334.7
Interest Expense................................. 126.2 116.5
Capitalized Interest............................. (19.7) (17.2)
One-Third of Rents Payable in the Next Year...... 13.1 13.8
------ ------
Income From Continuing Operations Before Income
Taxes, Undistributed Earnings from Affiliated
Companies, Minority Interest, Interest and
One-Third of Rents............................. $329.8 $447.8
====== ======
Interest Expense................................. $126.2 $116.5
One-Third of Rents Payable in the Next Year...... 13.1 13.8
------ ------
Interest Expense plus One-Third of Rents......... $139.3 $130.3
====== ======
Ratio of Earnings to Fixed Charges............... 2.37 to 1 3.44 to 1
</TABLE>
(1) The results for 1995 include a special charge ($140.6 million before income
taxes), recorded by the Company's Chemical Waste Management, Inc. subsidiary,
primarily related to a writeoff of certain investments in hazardous waste
treatment and processing technologies and facilities. Excluding the effect of
this charge, the ratio of earnings to fixed charges would be 3.38 to 1.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the March 31, 1996 consolidated balance sheet and the consolidated statement of
income for the three-month period ended March 31, 1996 and is qualified in its
entirety by reference to such financial statements and the footnotes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 106,732
<SECURITIES> 24,636
<RECEIVABLES> 1,934,558
<ALLOWANCES> 67,706
<INVENTORY> 0
<CURRENT-ASSETS> 2,947,831
<PP&E> 13,995,153
<DEPRECIATION> 4,137,686
<TOTAL-ASSETS> 18,945,387
<CURRENT-LIABILITIES> 3,421,794
<BONDS> 6,385,833
<COMMON> 506,058
0
0
<OTHER-SE> 4,756,945
<TOTAL-LIABILITY-AND-EQUITY> 18,945,387
<SALES> 0
<TOTAL-REVENUES> 2,417,191
<CGS> 0
<TOTAL-COSTS> 1,711,487
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,147
<INTEREST-EXPENSE> 99,315
<INCOME-PRETAX> 315,629
<INCOME-TAX> 130,451
<INCOME-CONTINUING> 185,178
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185,178
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.00
</TABLE>
