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 June 30, 1998
OR
[ ] 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 1-1363
Envirosource, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 34-0617390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1155 Business Center Drive, Horsham, Pennsylvania 19044-3454
(Address of principal executive offices) (Zip Code)
(215) 956-5500
(Registrant's telephone number, including area code)
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 the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The number of shares outstanding of the Registrant's Common Stock as of the
close of business on August 7, 1998 was 5,813,394.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
Envirosource, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
1998 1997
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 5,864 $ 9,942
Accounts receivable, less allowance for
doubtful accounts of $669 in 1998 and
$701 in 1997 44,162 33,260
Net deferred income taxes 2,755 2,755
Other current assets 3,571 3,966
------------ ------------
Total current assets 56,352 49,923
Property, plant and equipment, at cost 298,933 288,360
Less allowance for depreciation (153,233) (144,978)
------------ ------------
145,700 143,382
Goodwill, less amortization 130,349 132,766
Closure trust funds and deferred charges,
less amortization 33,293 33,810
Landfill permits, less amortization 23,559 23,849
Net deferred income taxes 15,550 12,582
Debt issuance costs, less amortization 8,890 10,130
Other assets 7,072 6,860
------------ ------------
$ 420,765 $ 413,302
============ ============
See notes to condensed consolidated financial statements.
<PAGE>
Envirosource Inc.
CONSOLIDATED BALANCE SHEETS - (continued)
(Dollars in thousands)
June 30, December 31,
1998 1997
------------ ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,435 $ 12,194
Salaries, wages and related benefits 7,658 7,173
Insurance obligations 6,198 5,789
Estimated reorganization and
restructuring costs 620 963
Interest 1,447 1,417
Other current liabilities 9,954 9,380
Current portion of debt 8,216 13,786
------------ ------------
Total current liabilities 48,528 50,702
Long term debt:
9 3/4% Senior Notes due 2003 270,000 270,000
Other long term debt 25,340 11,614
Other liabilities 39,187 40,775
Stockholders' equity:
Common stock, par value $.05 per share,
shares authorized - 20,000,000, shares
issued and outstanding -
5,813,394 in 1998 and 5,816,252 in 1997 291 2,036
Capital in excess of par value 175,954 174,194
Accumulated deficit (136,591) (134,132)
Stock purchase loans receivable from
officers (633) (663)
Accumulated other comprehensive income (1,311) (1,224)
------------ ------------
Total stockholders' equity 37,710 40,211
------------ ------------
$ 420,765 $ 413,302
============ ============
See notes to condensed consolidated financial statements.
<PAGE>
Envirosource, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except for per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Revenues $ 62,963 $ 57,231 $ 122,542 $ 111,828
Cost of revenues 48,532 44,009 96,750 87,787
Selling, general and
administrative expenses 5,867 6,385 12,128 13,136
Unusual charges 3,489 3,900
----------- ----------- ----------- -----------
Operating income 5,075 6,837 9,764 10,905
Interest income 282 238 519 500
Interest expense (7,521) (7,097) (15,107) (14,417)
----------- ----------- ----------- -----------
Loss before income taxes (2,164) (22) (4,824) (3,012)
Income tax benefit (expense):
Current (320) (374) (603) (712)
Deferred 1,597 403 2,968 2,393
----------- ----------- ----------- -----------
Income (loss) from continuing (887) 7 (2,459) (1,331)
operations
Gain from sale of discontinued
IMSAMET operations, after
taxes 8,300
----------- ----------- ----------- -----------
Net income (loss) $ (887) $ 7 $ (2,459) $ 6,969
=========== =========== =========== ===========
Income (loss) per share:
Continuing operations $ (.15) $ - $ (.42) $ (.23)
Discontinued operations - - - 1.44
----------- ----------- ----------- -----------
Net income (loss) $ (.15) $ - $ (.42) $ 1.21
=========== =========== =========== ===========
Weighted average shares 5,816 5,764 5,816 5,764
See notes to condensed consolidated financial statements.
<PAGE>
Envirosource, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Six Months Ended June 30,
1998 1997
------------ ------------
OPERATING ACTIVITIES
Net (loss) income $ (2,459) $ 6,969
Adjustments to reconcile net (loss) income
to cash provided by operating activities:
Deferred income taxes (2,968) 8,907
Gain from sale of IMSAMET (19,600)
Depreciation 14,111 12,974
Amortization 6,179 5,469
Unusual charges, net of payments 2,307 (1,222)
Changes in working capital (7,576) (826)
Other 1,046 913
------------ ------------
Cash provided by operating activities 10,640 13,584
INVESTING ACTIVITIES
Property, plant and equipment:
Additions (19,685) (14,742)
Proceeds from dispositions 857 149
Net proceeds from sale of IMSAMET 54,464
Landfill permit additions and closure
expenditures (1,564) (1,631)
Closure trust fund payments (413) (332)
Ongoing cash flows related to
IU International acquisition (1,515) (2,402)
Other (554) (832)
------------ ------------
Cash (used) provided by investing activities (22,874) 34,674
FINANCING ACTIVITIES
Debt issuance 28,000 17,000
Debt repayment (19,844) (66,337)
Other (8)
------------ ------------
Cash provided (used) by financing activities 8,156 (49,345)
------------ ------------
CASH AND CASH EQUIVALENTS
Decrease during the period (4,078) (1,087)
Beginning of year 9,942 9,678
------------ ------------
End of period $ 5,864 $ 8,591
============ ============
See notes to condensed consolidated financial statements.
<PAGE>
Envirosource, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments (consisting
of normal recurring accruals and the unusual charges discussed in Note B)
necessary for a fair presentation have been included. Operating results for the
six month period ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. The
condensed consolidated balance sheet at December 31, 1997 has been derived from
audited financial statements at that date. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
Earnings Per Share: Basic and diluted earnings per share amounts are the same
- ------------------
in 1998 and 1997 because there is no dilution when there is a loss from
continuing operations.
In June 1998 the Company completed a 1-for-7 reverse stock split. Numbers of
shares and per share amounts have been restated for all periods presented.
Comprehensive Income: As of January 1, 1998, the Company adopted Statement
- ---------------------
130, Reporting Comprehensive Income. Statement 130 establishes new rules
for the reporting and display of comprehensive income and its components. The
adoption of this Statement had no impact on the Company's net income or
stockholders' equity.
The components of comprehensive income for the three and six month periods ended
June 30, 1998 and 1997 are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1998 1997 1998 1997
----------- ----------- ----------- ----------
Net income (loss) $ (887) $ 7 $ (2,459) $ 6,969
Canadian translation adjustment (148) 18 (87) (46)
----------- ----------- ----------- ----------
Comprehensive income (loss) $ (1,035) $ 25 $ (2,546) $ 6,923
=========== =========== =========== ==========
Accumulated other comprehensive income consists of Canadian translation
adjustments at June 30, 1998 and December 31, 1997.
<PAGE>
NOTE B - UNUSUAL CHARGES
The Company initiated a profit improvement program in the first quarter of 1998.
Program costs incurred during the three month period ended June 30, 1998 totaled
$3.5 million and consist of $2.4 to write down excess equipment to its net
realizable value, $.9 million of program consulting fees and expenses and $.2
million of severance costs. Costs incurred during the six month period ended
June 30, 1998 totaled $3.9 million and consist of $2.3 million related to excess
equipment, $1.1 million of program consulting and $.5 million of severance.
NOTE C - DISCONTINUED OPERATIONS
In January 1997 the Company sold the capital stock of IMSAMET, Inc., a
wholly-owned subsidiary that performed recycling and waste management services
for the aluminum industry, for $58 million, realizing a pre-tax gain of $19.6
million. (In the 1997 third quarter, a purchase price adjustment increased the
pre-tax gain by $2 million.) After deferred income tax charges, the gain
amounted to $8.3 million or $1.44 per share for the first six months of 1997.
The proceeds from the sale were used to repay revolving credit borrowings and
expenses related to the transaction.
NOTE D -- OTHER INFORMATION
As of June 30, 1998, $5.7 million of standby letters of credit and $21 million
of revolving credit borrowings were outstanding under the Company's $50 million
bank credit facility.
During the six months ended June 30, 1998 and 1997, the Company paid interest of
$14.2 million and $14.6 million.
Current income tax expense consists of state and foreign income taxes. During
the six months ended June 30, 1998 and 1997, the Company made cash income tax
payments, net of refunds, of $.8 million and $.7 million.
NOTE E -- COMMITMENTS AND CONTINGENCIES
As of June 30, 1998, the Company is committed to spend $15 million for new
operating sites, equipment additions and improvements to waste treatment
facilities. Not all of that amount will be spent this year.
<PAGE>
NOTE E -- COMMITMENTS AND CONTINGENCIES (continued)
At June 30, 1998, the Company was contingently liable for $5.7 million of
letters of credit outstanding under its bank credit agreement, including $4.5
million that secure liabilities already reflected in the condensed consolidated
balance sheet.
To secure its obligations to close its landfills and perform post-closure
monitoring and maintenance procedures, the Company must make payments into
closure trust funds. Based on current regulations, planned improvements to waste
treatment facilities and permitted capacity, such payments currently are not
expected to exceed the reinvestment of Idaho trust fund earnings that the
Company includes in interest income.
The Company's Ohio and Idaho facilities hold operating permits issued by state
and federal environmental agencies under the Resource Conservation and Recovery
Act, as amended, that require renewal and modification from time to time. The
Company expects that it will obtain the renewals and modifications to its
permits that it requires to continue to provide landfill capacity in its
approved disposal cells well into the next decade.
The Company and its competitors and customers are subject to a complex, evolving
array of federal, state and local environmental laws and regulations. In
particular, such requirements not only can affect the demand for treatment and
disposal services, but could also require the Company to incur significant costs
for such matters as facility upgrading, remediation or other corrective action,
facility closure and post-closure maintenance and monitoring. It is possible
that the future imposition of additional environmental compliance requirements
could have a material adverse effect on the Company's results of operations or
financial condition, but the Company is unable to predict any such future
requirements. The Company believes that the consolidated financial statements
appropriately reflect all presently-known compliance costs in accordance with
generally accepted accounting principles.
The Company is a party to litigation and proceedings arising in the normal
course of its present or former businesses. In the opinion of management, the
outcome of such matters will not have a material adverse effect on the Company's
financial condition or results of operations.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
--------------
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30
1998
Three months ended better/(worse)
June 30, than 1997
------------------------ ------------------------
1998 1997 Amount %
----------- ----------- ----------- -----------
(Dollars in millions)
Revenues
IMS $ 49,498 $ 46,574 $ 2,924 6.3%
Technologies 13,465 10,657 2,808 26.3%
----------- ----------- -----------
$ 62,963 $ 57,231 $ 5,732 10.0%
=========== =========== ===========
Gross profit
IMS $ 11,360 $ 11,775 $ (415) (3.5%)
Technologies 3,071 1,447 1,624 112.2%
----------- ----------- -----------
$ 14,431 $ 13,222 $ 1,209 9.1%
=========== =========== ===========
Operating income (loss)
IMS $ 7,320 $ 7,790 $ (470) (6.0%)
Technologies 1,878 91 1,787 -
Corporate headquarters (634) (1,044) 410 39.3%
Unusual charges (3,489) (3,489) -
----------- ----------- -----------
$ 5,075 $ 6,837 $ (1,762) (25.8%)
=========== =========== ===========
IMS quarterly revenues increased primarily because 1997 second quarter
revenues were reduced by the effects of a strike (settled in mid-August 1997) by
a major steel industry customer's employees. The revenue increase was partially
offset by a revenue decrease attributable to second quarter blast furnace
outages at the segment's largest customer. Technologies revenues increased in
the 1998 quarter as compared to the 1997. The increase is attributable to
processing larger volumes of electric arc furnace dust (a hazardous waste
produced by steel mini-mills) and an unusually large cleanup project.
IMS gross profit decreased due to the blast furnace outages noted above
as well as the negative effects of changes in manufacturing practices at several
of the segment's most important customers. In addition, significant costs were
incurred to repair equipment at a major customer. Technologies' gross profit
increased due to processing larger volumes of electric arc furnace dust and the
cleanup project noted above.
Selling, general and administrative expenses decreased as compared to
the 1997 second quarter. The decrease was primarily due to a reduction in legal
fees and expenses attributable to the litigation between the Company and its
largest competitor in the electric arc furnace dust processing market, which was
finally concluded in the 1998 first quarter.
The Company initiated a profit improvement program in the first quarter
of 1998. Unusual charges for the 1998 quarter consist of $3.5 million of costs
associated with this program, including $2.4 million to write down excess
equipment to its net realizable value, $.9 million of program consulting fees
and expenses and $.2 million of severance costs.
Interest expense for the period increased as the overall debt level was
higher in 1998. While the Company paid down debt with proceeds from the sale of
its IMSAMET subsidiary early in the 1997 first quarter, in September 1997 the
Company also issued $50 million of additional 9 3/4% Senior Notes due 2003.
Current income tax expense includes state and Canadian income taxes.
Due to the factors described above, the 1998 net loss was $887,000
as compared with 1997 net income of $7,000.
<PAGE>
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30
1998
Six months ended better/(worse)
June 30, than 1997
------------------------ ------------------------
1998 1997 Amount %
----------- ----------- ----------- -----------
(Dollars in millions)
Revenues
IMS $ 98,923 $ 90,552 $ 8,371 9.2%
Technologies 23,619 21,276 2,343 11.0%
----------- ----------- -----------
$ 122,542 $ 111,828 $ 10,714 9.6%
=========== =========== ===========
Gross profit
IMS $ 21,733 $ 21,294 $ 439 2.1%
Technologies 4,059 2,747 1,312 47.8%
----------- ----------- -----------
$ 25,792 $ 24,041 $ 1,751 7.3%
=========== =========== ===========
Operating income (loss)
IMS $ 13,397 $ 13,426 $ (29) (.2%)
Technologies 1,801 32 1,769 -
Corporate headquarters (1,534) (2,553) 1,019 39.9%
Unusual charges (3,900) (3,900) -
----------- ----------- -----------
$ 9,764 $ 10,905 $ (1,141) (10.5%)
=========== =========== ===========
IMS revenues increased as compared to the same period of 1997. Although a
majority of the increase was due to the absence of the 1997 strike (settled in
mid-August 1997) by a major steel industry customer's employees, revenues also
improved due to generally strong production at most of the segment's steel
industry customer mills. Technologies revenues increased in the first six months
as compared to the same period of 1997. The increase is attributable to
processing larger volumes of electric arc furnace dust (a hazardous waste
produced by steel mini-mills) and an unusually large cleanup project.
IMS gross profit increased slightly as compared to the same period of
1997. The gross profit improvement due to the absence of the customer's strike
noted above was largely offset by the negative effects of blast furnace outages
at the segment's largest customer, changes in manufacturing practices at several
important customers and significant costs to repair equipment at a major
customer. Technologies' gross profit increased due to processing larger volumes
of electric arc furnace dust and the cleanup project noted above.
Selling, general and administrative expenses for the first six months
of 1998 decreased as compared to the same period of 1997. The decrease was
primarily due to a reduction in legal fees and expenses attributable to the
litigation between the Company and its largest competitor in the electric arc
furnace dust processing market, which was finally concluded in the 1998 first
quarter.
The Company initiated a profit improvement program in the first quarter
of 1998. Unusual charges for the first six months of 1998 consist of $3.9
million of costs associated with this program, including $2.3 million to write
down excess equipment to its net realizable value, $1.1 million of program
consulting fees and expenses and $.5 million of severance costs.
Interest expense for the first six months of 1998 increased as the
overall debt level was higher in 1998. While the Company paid down debt with
proceeds from the sale of its IMSAMET subsidiary early in the 1997 first
quarter, in September 1997 the Company also issued $50 million of additional 9
3/4% Senior Notes due 2003.
Current income tax expense includes state and Canadian income taxes.
The Company sold its IMSAMET subsidiary in January 1997 for an after-tax
gain of $8.3 million or $1.44 per share. (In the 1997 third quarter, a purchase
price adjustment increased the pre-tax gain by $2 million.) The gain from the
sale in 1997 has been classified as discontinued operations.
Due to the factors described above, the 1998 net loss was $2.5
million as compared with 1997 net income of $7 million.
DEFERRED INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The deferred
income tax benefit recognized in the first six months of 1998 was determined
using the effective federal income tax rate expected for the year. The benefit
recorded for the period varies from the amount computed by applying the 35%
federal statutory rate primarily due to the amortization of goodwill and the
effect of state and Canadian income taxes.
The Company has determined that it is more likely than not that it will
earn enough taxable income to realize the $18 million of deferred tax assets in
its balance sheet over the next several years. Realization of this amount will
require cumulative taxable earnings of approximately $52 million. When the
consolidated results of continuing operations for the four most recent fiscal
years and current six month period are adjusted by (1) excluding unusual items,
and (2) adding back goodwill amortization (which is not deductible for tax
purposes), the pre-tax earnings, as adjusted, total approximately $33 million
and average $7.3 million annually. On this basis, the Company would realize
$18.3 million of deferred tax assets within approximately seven years. On the
other hand, because its net operating loss carryforwards expire well into the
future, the Company would also realize $18.3 million of deferred tax assets if,
counting only profitable years, it earns $52 million of taxable income during
the period ending in 2012, so long as the cumulative amount of such earnings
reaches at least $20 million by 2005, $31 million by 2006, $40 million by 2008,
$49 million by 2009 and $52 million by 2010.
In making its determination that it is more likely than not that it
will earn enough taxable income to realize $18.3 million of net deferred tax
assets, the Company considered (1) its cumulative consolidated results of
operations for the four most recent fiscal years and the first six months of
1998, (2) ongoing cost savings achieved with its 1996 reorganization, (3)
additional cost savings anticipated from a Company-wide profit improvement
program commenced in 1998, and (4) profit improvements from treating increased
volumes of electric arc furnace dust with its proprietary Super Detox(R)
technology. Factors which could negatively affect this determination would
include (1) loss of a major customer or customers, (2) prolonged work stoppages
at major customers, (3) a major decline in United States steel industry
production, and (4) a material decrease in the level of electric arc furnace
dust currently treated with the Company's proprietary Super Detox(R) technology.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise primarily from the funding
of capital expenditures, the Technologies segment's trust fund payments, working
capital needs and debt service obligations. Historically, the Company has met
such requirements with cash flows generated by operations and with additional
debt financing.
The Company expects 1998 capital expenditures of approximately $30
million, primarily for new IMS operating sites, equipment replacements, new
services, development of additional landfill capacity and improvements to waste
treatment facilities. Through June 30, 1998, the Company spent $19.7 million for
capital additions and is committed for an additional $15 million, not all of
which will be spent this year.
Technologies' landfill permits require the Company to fund closure and
post-closure monitoring and maintenance obligations by making essentially
non-refundable trust fund payments. Based on current regulations, planned
improvements to waste treatment facilities and permitted capacity, such payments
currently are not expected to exceed the reinvestment of Idaho trust fund
earnings that the Company includes in interest income.
Cash on hand, funds from operations and borrowing capacity under the
bank credit facility are expected to satisfy the Company's normal operating and
debt service requirements.
Because its businesses are environmentally-oriented, and therefore
highly regulated, the Company is subject to violations alleged by environmental
regulators and, occasionally, fines. Such violations and fines have not had, and
are not expected to have, a material adverse impact on the Company's business.
It is possible that the future imposition of additional environmental compliance
requirements could have a material adverse effect on the Company's results of
operations or financial condition, but the Company is unable to predict any such
future requirements.
YEAR 2000
Within the last two and one-half years, the Company has purchased new
software packages for most of its computer systems and is currently purchasing
and implementing new software for the rest. By early 1999, all the Company's
software will either be designed to accommodate the "year 2000" transition or
upgraded through routine software releases from reliable software suppliers.
Related costs are not expected to be significant.
SAFE HARBOR STATEMENT
Some of the statements in Management's Discussion and Analysis of
Financial Condition and Results of Operations are forward-looking statements.
These statements are based on current expectations that involve a number of
risks and uncertainties which could cause actual results to differ materially
from those projected. These forward-looking statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 and the financial statements contained therein which include
information describing factors that could cause actual results to differ
materially from those projected in such forward-looking statements.
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. Matters Submitted To A Vote Of Security Holders.
------------------------------------------------
The Company's Annual Meeting of Stockholders was held at 10:00
a.m. on June 18, 1998. At such meeting, the following proposals were adopted by
the margins indicated (all numbers of shares are stated without adjustment for
the one-for-seven reverse stock split of the outstanding shares of the Company's
Common Stock that became effective at the close of business on June 22, 1998):
a. To elect three members of Class C of the Board of Directors. The
tabulation of the votes cast with respect to each such director is as follows:
Raymond P. Robert N. Ronald P.
Caldiero Gurnitz Spogli
----------- ----------- -----------
For 33,404,033 33,430,434 33,430,601
Against 0 0 0
Withheld 1,444,463 1,418,062 1,417,895
Abstain 0 0 0
Broker
Non-Vote 0 0 0
b. To authorize and approve amendments to the Company's certificate of
incorporation in order to: (i) effect a one-for-seven reverse stock split with
respect to the outstanding shares of the Company's Common Stock; (ii) change the
number of authorized shares of the Company's Common Stock; and (iii) change the
Company's name to make the "S" lower case. The votes cast with respect to this
item were as follows: 33,362,719 for; 1,470,023 against; 15,754 abstain; 0
broker non-votes.
c. To ratify and approve the selection of Ernst & Young LLP as the
Company's independent public accountant for the fiscal year ending December 31,
1998. The votes cast with respect to this item were as follows: 34,752,226 for;
63,264 against; 33,006 abstain; 0 broker non-votes.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 - Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Appendix A (pages A-1 to
A-3) to the Company's Proxy Statement filed April 29, 1996, in
respect of its 1996 Annual Meeting of Stockholders
(File No. 1-1363)).
3.2 - Amendment of Amended and Restated Certificate of Incorporation
(incorporated herein by reference to Page 2 to the Company's
Proxy Statement filed April 30, 1997, in respect of its 1997
Annual Meeting of Stockholders (File No. 1-1363)).
3.3 - Amendment of Amended and Restated Certificate of Incorporation
(incorporated herein by reference to Pages 13 and 14 of the
Company's Proxy Statement filed April 30, 1998, in respect of its
1998 Annual Meeting of Stockholders (File No. 1-1363)).
3.4 - By-Laws of the Company (incorporated herein by reference to
Exhibit C (pages C-1 to C-9) to the Company's Proxy Statement
filed April 24, 1987, in respect of its 1987 Annual Meeting of
Stockholders (File No. 1-1363)).
3.5 - Amendment to the By-Laws of the Company (incorporated herein by
reference to Exhibit 3.4 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987 (File No.
1-1363)).
3.6 - By-Laws Amendment Adopted March 26, 1997 By Unanimous Written
Consent of the Board of Directors, Effective June 19, 1997
(incorporated by reference to Exhibit 3.5 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1997 (File No. 1- 1363)).
4.1 - Loan and Security Agreement, dated as of April 6, 1993, between
IMS Funding Corporation and Greyhound Financial Corporation.
(The Company agrees to furnish a copy of such agreement to the
Commission upon request).
4.2 - Agreement Amending Loan and Security Agreement and Corporate
Guarantee Agreement, dated as of December 8, 1995, between FINOVA
Capital Corporation (formerly known as Greyhound Financial
Corporation), IMS Funding Corporation, and International Mill
Service, Inc. (The Company agrees to furnish a copy of such
agreement to the Commission upon request).
4.3 - Indenture, dated as of July 1, 1993, between the Company and
United States Trust Company of New York, as Trustee, relating to
the Company's 9-3/4% Senior Notes due 2003, including the form of
such Notes attached as Exhibit A thereto (incorporated herein by
reference to Exhibit 4.10 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1993 (File No.
1-1363)).
<PAGE>
4.4 - First Supplemental Indenture, dated as of November 2, 1995,
between the Company and United States Trust Company of New York,
as Trustee, relating to the Company's 9-3/4% Senior Notes due
2003(incorporated herein by reference to Exhibit 4.15 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995 (File No. 1-1363)).
4.5 - Second Supplemental Indenture, dated as of September 24, 1997,
between the Company and United States Trust Company of New York,
as Trustee, relating to the company's 9-3/4% Senior Notes due
2003 (incorporated herein by reference to Exhibit 4.5 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1997 (File No. 1-1363).
4.6 - Indenture, dated as of September 30, 1997, between the Company
and United States Trust Company of New York, as Trustee, relating
to the Company's 9-3/4% Senior Notes due 2003, Series B,
including the form of such Notes attached as Exhibit A thereto
(incorporated herein by reference to Exhibit 4.6 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1997 (File No. 1-1363).
4.7 - Registration Rights Agreement, dated as of September 30, 1997,
among the Company and Morgan Stanley Dean Witter, Jeffries &
Company, Inc. and NationsBanc Capital Markets, Inc. (incorporated
herein by reference to Exhibit 4.7 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30,
1997 (File No. 1-1363)
4.8 - Registration Rights Agreement, dated as of May 13, 1993, among
the Company, FS Equity Partners II, L.P., The IBM Retirement Plan
Trust Fund and Enso Partners, L.P. (incorporated herein by
reference to Exhibit 4.29 to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed June 14, 1993 (File No.
33-62050)).
4.9 - Loan Agreement, dated as of June 1, 1994, between the Industrial
Development Corporation of Owyhee County, Idaho and Envirosafe
Services of Idaho, Inc. relating to $8,500,000 Industrial
Revenue Bonds, Series 1994. (The Company agrees to furnish a copy
of such agreement to the Commission upon request).
4.10 - Credit Agreement, dated as of December 19, 1995, among the
Company, International Mill Service, Inc., the lenders parties
thereto, NationsBank, N.A., as Administrative Agent, and Credit
Lyonnais as Syndication Agent (incorporated herein by reference
to Exhibit 4.14 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 (File No. 1-1363)).
4.11 - First Amendment, dated as of May 15, 1996, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais
as Syndication Agent (incorporated herein by reference to Exhibit
4.15 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1996 (File No. 1-1363)).
4.12 - Second Amendment, dated as of December 23, 1996, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais
as Syndication Agent (incorporated herein by reference to Exhibit
4.13 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (File No. 1-1363)).
4.13 - Third Amendment, dated effective as of June 30, 1997, to the
Credit Agreement, dated as of December 19, 1995, among the
Company, International Mill Service, Inc., the lenders parties
hereto, NationsBank, N.A., as Administrative Agent, and Credit
Lyonnais as Syndication Agent (incorporated herein by reference
to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1997 (File No. 1-1363)).
4.14 - Fourth Amendment, dated as of September 23, 1997, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais
as Syndication Agent (incorporated herein by reference to Exhibit
4.18 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997 (File No. 1-1363)).
4.15 - Fifth Amendment, dated as of March 5, 1998, to the Credit
Agreement, dated as of December 19, 1995, among the Company,
International Mill Service, Inc., the lenders parties thereto,
NationsBank, N.A., as Administrative Agent, and Credit Lyonnais
as Syndication Agent (incorporated herein by reference to Exhibit
4.15 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31,1997 (File No. 1-1363)).
10.1 - Restated Incentive Stock Option Plan of the Company, as amended
(incorporated herein by reference to Exhibit A to the Company's
Registration Statement on Form S-8, filed January 17, 1989 (File
No. 33-26633)).
10.2 - Promissory Note of Louis A. Guzzetti, Jr., dated March 31, 1998,
payable to the Company, amending and replacing the Promissory
Note dated March 31, 1993 (incorporated herein by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1998 (File No. 1-1363)).
10.3 - Promissory Notes of Aarne Anderson, George E. Fuehrer and Mr.
Guzzetti, dated as of March 31, 1998, payable to the Company,
amending and replacing the Promissory Notes dated April 1, 1993
(incorporated herein by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1998 (File No. 1-1363)).
10.4 - Stock Option Agreement, dated March 18, 1992, between the Company
and Raymond P. Caldiero (incorporated herein by reference to
Exhibit 10.20 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992 (File No. 1-1363)).
10.5 - Stock Option Agreement, dated March 18, 1992, between the Company
and Jeffrey G. Miller (incorporated herein by reference to
Exhibit 10.21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992 (File No. 1-1363)).
10.6 - Amendment, dated August 5, 1993, to the Stock Option Agreement,
dated March 18, 1992, between the Company and Jeffrey G. Miller
(incorporated herein by reference to Exhibit 10.22 to Post-
Effective Amendment No. 1 to the Company's Registration Statement
on Form S-1, filed September 16, 1993(File No. 33-46930)).
10.7 - Stock Option Agreement, dated August 5, 1993, between the Company
and Wallace B. Askins (incorporated herein by reference to
Exhibit 10.23 to Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed September 16, 1993
(File No. 33-46930)).
10.8 - 1993 Stock Option Plan of the Company (incorporated herein by
reference to Exhibit 10.21 to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed June 14, 1993 (File
No. 33-62050)).
10.9 - EnviroSource, Inc. Stock Option Plan for Non-Affiliated
Directors, dated as of January 1, 1995 (incorporated herein by
reference to Exhibit 10.14 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994
(File No. 1-1363)).
10.10 - Supplemental Executive Retirement Plan of the Company, effective
January 1, 1995 (incorporated herein by reference to Exhibit
10.19 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (File No. 1-1363)).
10.11 - Employment Agreement, dated November 5, 1996, between the Company
and Aarne Anderson (incorporated herein by reference to Exhibit
10.12 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1996 (File No. 1-1363)).
10.12 - Employment Agreement, dated November 5, 1996, between the Company
and William B. Davis (incorporated herein by reference to Exhibit
10.13 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1996 (File No. 1-1363)).
10.13 - Employment Agreement, dated November 5, 1996, between the Company
and James C. Hull (incorporated herein by reference to Exhibit
10.14 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1996 (File No. 1-1363))
10.14 - Stock Purchase Agreement, dated November 26, 1996, by and
among IMCO Recycling Inc., IMSAMET, Inc. and EnviroSource, Inc.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Form 8-K filed January 21, 1997(File No. 1-1363)).
10.15 - Amendment No. 1, dated as of January 21, 1997, to Stock
Purchase Agreement, dated November 26, 1996, by and among IMCO
Recycling Inc., IMSAMET, Inc. and EnviroSource, Inc.
(incorporated herein by reference to Exhibit 10.2 to the
Company's Form 8-K filed January 21, 1997(File No. 1-1363))
* Filed Herewith
b) Reports on Form 8-K.
--------------------
During the quarter ended June 30, 1998, the Company filed no
current reports on Form 8-K.
<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.
Dated: August 14, 1998
ENVIROSOURCE, INC.
By: /s/James C. Hull
--------------------
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the financial statements included in Envirosource's Form 10-Q for the
quarterly period ended June 30, 1998 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,864
<SECURITIES> 0
<RECEIVABLES> 44,831
<ALLOWANCES> 669
<INVENTORY> 0
<CURRENT-ASSETS> 56,352
<PP&E> 298,933
<DEPRECIATION> 153,233
<TOTAL-ASSETS> 420,765
<CURRENT-LIABILITIES> 48,528
<BONDS> 295,340
0
0
<COMMON> 291
<OTHER-SE> 37,419
<TOTAL-LIABILITY-AND-EQUITY> 420,765
<SALES> 0
<TOTAL-REVENUES> 122,542
<CGS> 0
<TOTAL-COSTS> 96,750
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,107
<INCOME-PRETAX> (4,824)
<INCOME-TAX> (2,365)
<INCOME-CONTINUING> (2,459)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,459)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
