SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.For the transition period from _____________ to _______________.
Commission file number 1-1363
------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
ENVIROSOURCE, INC. SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
EnviroSource, Inc.
1155 Business Center Drive
Horsham, Pennsylvania 19044-3454
Financial Statements
and Supplemental Schedules
EnviroSource, Inc.
Savings Plan
Years ended December 31, 1997 and 1996
with Report of Independent Auditors
<PAGE>
EnviroSource, Inc. Savings Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1997 and 1996
CONTENTS
Report of Independent Auditors.................................................1
Audited Financial Statements
Statement of Assets Available for Benefits,
With Fund Information as of December 31, 1997..............................2
Statement of Assets Available for Benefits,
With Fund Information as of December 31, 1996..............................3
Statement of Changes in Assets Available for Benefits,
With Fund Information - Year ended December 31, 1997.......................4
Statement of Changes in Assets Available for Benefits,
With Fund Information - Year ended December 31, 1996.......................5
Notes to Financial Statements..................................................6
Supplemental Schedules
Schedule of Assets Held for Investment Purposes...............................10
Schedule of Reportable Transactions...........................................11
<PAGE>
Report of Independent Auditors
The Savings Plan Administrative Committee
EnviroSource, Inc.
We have audited the accompanying statements of assets available for benefits of
the EnviroSource, Inc. Savings Plan as of December 31, 1997 and 1996, and the
related statements of changes in assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Plan at December
31, 1997 and 1996, and the changes in its assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund Information in the
statements of assets available for benefits and the statements of changes in
assets available for benefits is presented for purposes of additional analysis
rather than to present the assets available for benefits and changes in assets
available for benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in our audits
of the financial statements and, in our opinion, are fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/Ernst & Young LLP
May 29, 1998
<PAGE>
<TABLE>
<CAPTION>
EnviroSource, Inc. Savings Plan
Statement of Assets Available for Benefits, With Fund Information
December 31, 1997
VANGUARD ENVIROSOURCE,
VANGUARD BOND INDEX VANGUARD VANGUARD INC.
MONEY MARKET TOTAL BOND WELLESLEY WINDSOR COMMON STOCK PARTICIPANT
PRIME FUND MARKET FUND INCOME FUND FUND FUND LOANS TOTAL
-----------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value $ 3,280,356 $ 684,101 $ 2,471,076 $ 11,946,457 $ 2,010,876 $ 785,936 $ 21,178,802
Cash and cash equivalents 8,587 - 4,930 4,361 - - 17,878
-----------------------------------------------------------------------------------------------------
Total investments 3,288,943 684,101 2,476,006 11,950,818 2,010,876 785,936 21,196,680
Accrued income receivable - 3,390 184,484 - - - 187,874
-----------------------------------------------------------------------------------------------------
Assets available for benefits $ 3,288,943 $ 687,491 $ 2,660,490 $ 11,950,818 $ 2,010,876 $ 785,936 $ 21,384,554
=====================================================================================================
</TABLE>
See accompanying notes.
- -----------------------
<PAGE>
<TABLE>
<CAPTION>
EnviroSource, Inc. Savings Plan
Statement of Assets Available for Benefits, With Fund Information
December 31, 1996
VANGUARD ENVIROSOURCE,
VANGUARD BOND INDEX VANGUARD VANGUARD INC.
MONEY MARKET TOTAL BOND WELLESLEY WINDSOR COMMON STOCK PARTICIPANT
PRIME FUND MARKET FUND INCOME FUND FUND FUND LOANS TOTAL
-----------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value $ 3,936,479 $ 517,028 $ 2,521,673 $ 9,624,238 $ 1,616,835 $ 753,849 $ 18,970,102
Cash and cash equivalents 30,097 2,480 12,818 24,174 36,830 - 106,399
Receivables:
Participants' contributions 1,395 647 2,692 6,868 3,938 - 15,540
Employer contributions 597 244 1,038 2,672 3,230 - 7,781
Accrued income - - 101,635 - - - 101,635
-----------------------------------------------------------------------------------------------------
Total receivables 1,992 891 105,365 9,540 7,168 - 124,956
-----------------------------------------------------------------------------------------------------
Assets available for benefits $ 3,968,568 $ 520,399 $ 2,639,856 $ 9,657,952 $ 1,660,833 $ 753,849 $ 19,201,457
=====================================================================================================
</TABLE>
See accompanying notes.
- -----------------------
<PAGE>
<TABLE>
<CAPTION>
EnviroSource, Inc. Savings Plan
Statement of Changes in Assets Available for Benefits, With Fund Information
Year ended December 31, 1997
VANGUARD ENVIROSOURCE,
VANGUARD BOND INDEX VANGUARD VANGUARD INC.
MONEY MARKET TOTAL BOND WELLESLEY WINDSOR COMMON STOCK PARTICIPANT
PRIME FUND MARKET FUND INCOME FUND FUND FUND LOANS TOTAL
-----------------------------------------------------------------------------------------------------
Additions:
Contributions:
<S> <C> <C> <C> <C> <C> <C> <C>
Participants $ 212,058 $ 44,436 $ 196,000 $ 513,254 $ 208,147 $ - $ 1,173,895
Employer 78,435 16,436 72,495 189,840 173,618 - 530,824
-----------------------------------------------------------------------------------------------------
Total contributions 290,493 60,872 268,495 703,094 381,765 - 1,704,719
Investment income:
Interest - - - - - 77,625 77,625
Dividends 188,863 38,622 301,679 1,887,539 - - 2,416,703
Net appreciation in fair
value of investments - 13,803 144,342 190,306 322,057 - 670,508
-----------------------------------------------------------------------------------------------------
Total investment income 188,863 52,425 446,021 2,077,845 322,057 77,625 3,164,836
Transfer of participants'
assets from other plans 1,189 249 1,099 2,878 155 - 5,570
-----------------------------------------------------------------------------------------------------
Total additions 480,545 113,546 715,615 2,783,817 703,977 77,625 4,875,125
Participant withdrawals (699,001) (66,900) (414,062) (1,084,530) (288,633) (138,902) (2,692,028)
-----------------------------------------------------------------------------------------------------
Net (decrease) increase prior
to interfund transfers (218,456) 46,646 301,553 1,699,287 415,344 (61,277) 2,183,097
Interfund transfers, net (461,169) 120,446 (280,919) 593,579 (65,301) 93,364 -
-----------------------------------------------------------------------------------------------------
Net (decrease) increase in assets
available for benefits (679,625) 167,092 20,634 2,292,866 350,043 32,087 2,183,097
Assets available for benefits
at beginning of year 3,968,568 520,399 2,639,856 9,657,952 1,660,833 753,849 19,201,457
-----------------------------------------------------------------------------------------------------
Assets available for
benefits at end of year $ 3,288,943 $ 687,491 $ 2,660,490 $11,950,818 $ 2,010,876 $ 785,936 $21,384,554
=====================================================================================================
</TABLE>
See accompanying notes.
- -----------------------
<PAGE>
<TABLE>
<CAPTION>
EnviroSource, Inc. Savings Plan
Statement of Changes in Assets Available for Benefits, With Fund Information
Year ended December 31, 1996
VANGUARD ENVIROSOURCE,
VANGUARD BOND INDEX VANGUARD VANGUARD INC.
MONEY MARKET TOTAL BOND WELLESLEY WINDSOR COMMON STOCK PARTICIPANT
PRIME FUND MARKET FUND INCOME FUND FUND FUND LOANS TOTAL
-----------------------------------------------------------------------------------------------------
Additions:
Contributions:
<S> <C> <C> <C> <C> <C> <C> <C>
Participants $ 254,999 $ 57,903 $ 236,915 $ 544,855 $ 300,448 $ - $ 1,395,120
Employer 105,952 22,316 89,060 202,991 250,129 - 670,448
-----------------------------------------------------------------------------------------------------
Total contributions 360,951 80,219 325,975 747,846 550,577 - 2,065,568
Investment income (loss):
Interest - - - - - 60,177 60,177
Dividends 202,202 29,945 150,111 920,967 - - 1,303,225
Net (depreciation)
appreciation in fair
value of investments - (16,167) 75,567 1,066,248 (191,312) - 934,336
-----------------------------------------------------------------------------------------------------
Total investment
income (loss) 202,202 13,778 225,678 1,987,215 (191,312) 60,177 2,297,738
Transfer of participants'
assets from other plans - 19,995 933 61,672 2,709 - 85,309
-----------------------------------------------------------------------------------------------------
Total additions 563,153 113,992 552,586 2,796,733 361,974 60,177 4,448,615
Participant withdrawals (464,735) (157,912) (421,655) (572,027) (213,354) (35,744) (1,865,427)
-----------------------------------------------------------------------------------------------------
Net increase (decrease) prior
to interfund transfers 98,418 (43,920) 130,931 2,224,706 148,620 24,433 2,583,188
Interfund transfers, net 97,550 21,269 146,526 8,905 (289,444) 15,194 -
-----------------------------------------------------------------------------------------------------
Net increase (decrease) in assets
available for benefits 195,968 (22,651) 277,457 2,233,611 (140,824) 39,627 2,583,188
Assets available for benefits
at beginning of year 3,772,600 543,050 2,362,399 7,424,341 1,801,657 714,222 16,618,269
-----------------------------------------------------------------------------------------------------
Assets available for
benefits at end of year $ 3,968,568 $ 520,399 $ 2,639,856 $ 9,657,952 $ 1,660,833 $ 753,849 $19,201,457
=====================================================================================================
</TABLE>
See accompanying notes.
- -----------------------
<PAGE>
EnviroSource, Inc. Savings Plan
Notes to Financial Statements
December 31, 1997
1. DESCRIPTION OF THE PLAN
The following is a general description of the EnviroSource, Inc. Savings Plan
(the Plan). Participants should refer to the Plan document for a more complete
description of its provisions.
GENERAL
The Plan is a defined contribution plan available to all salaried and certain
nonunion hourly employees of EnviroSource, Inc. (the Company) who have completed
one year of service, as defined by the Plan document. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Participants may make tax-deferred contributions ranging from 2% to 6% of their
base salaries, with the employer contributing a matching amount equal to 50%
(100% if the contributions are invested in the EnviroSource, Inc. Common Stock
Fund) of such contributions subject to certain limitations. Participants may
make additional tax-deferred contributions ranging from 1% to 6% of their base
salaries without further contributions by the employer up to the annual limit
prescribed by the Internal Revenue Code. Participants may also make additional
contributions to the Plan, subject to certain limitations, which are not tax
deferred.
VESTING
Participants have a nonforfeitable interest in 100% of their contributions.
Generally, participants become 20% vested in the matching contributions made by
the employer for each year of qualifying service. In addition, participants
become 100% vested upon reaching age 65, death or disability, termination of the
Plan, or discontinuance of matching contributions by the employer. Forfeitures
of matching account balances, by participants not fully vested at their
termination, are used to fund benefits required to be restored for formerly
terminated participants and the excess, if any, is used to reduce the employer's
obligation to make matching contributions.
<PAGE>
EnviroSource, Inc. Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENT OF BENEFITS
Upon termination of employment, participants receive lump-sum distributions
unless they elect to receive annual benefits over a ten-year period.
Participants with account balances less than $3,500 receive lump-sum
distributions only.
PARTICIPANT LOANS
A qualified participant may request a loan once in any 12-month period, subject
to the approval of the Plan's Administrative Committee. The total amount of
loans outstanding at any time for a participant may not exceed the lesser of 50%
of the vested balance in the participant's account or $50,000. The loans are
payable over a period of up to five years and bear interest at market rates
prevailing when the loans are made.
INVESTMENT OPTIONS
Participants may direct employer and employee contributions into any of four
Vanguard mutual funds or into the EnviroSource, Inc. Common Stock Fund.
ADMINISTRATIVE EXPENSES
Administrative expenses incurred by the Plan are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments in mutual funds are stated at the quoted net asset values of the
respective funds. Investments in EnviroSource, Inc. common stock are stated at
the quoted market price of the stock.
<PAGE>
EnviroSource, Inc. Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
3. INVESTMENTS
Plan investments are held by a bank administered trust fund. The following
reflects the fair value of investments at December 31, 1997 and 1996.
1997 1996
--------------------- ---------------------
Shares Fair Value Shares Fair Value
--------------------- ---------------------
Investments
Vanguard Money Market Prime Fund* 3,280,356 $3,280,356 3,936,479 $3,936,479
Vanguard Bond Index Total Bond
Market Fund 67,800 684,101 52,544 517,028
Vanguard Wellesley Income Fund* 113,041 2,471,076 122,949 2,521,673
Vanguard Windsor Fund* 703,560 11,946,457 580,123 9,624,238
----------- -----------
Total mutual funds 18,381,990 16,599,418
EnviroSource Inc., Common Stock
Fund* 670,292 2,010,876 601,501 1,616,835
Participant loans 785,936 753,849
Short Term Money Market Fund 17,878 17,878 - -
----------- -----------
Total investments $21,196,680 $18,970,102
=========== ===========
*Represents 5% or more of plan assets available for benefits.
<PAGE>
EnviroSource, Inc. Savings Plan
Notes to Financial Statements (continued)
4. PLAN TERMINATION
Although the Company has not expressed any intent to terminate the Plan, it may
do so at any time. In the event the Plan is terminated, participants become
fully vested in their accounts and such amounts will be distributed to them as
described in the Plan.
5. INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan qualifies under Section
401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is
not subject to tax under present income tax law. Accordingly, the Plan is
required to operate in conformity with the IRC to maintain its qualification.
The Plan's Administrative Committee is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan's
qualified status.
6. SUBSEQUENT EVENT
Effective May 11, 1998, participants may direct employee and employer
contributions into any of nine Vanguard mutual funds (the four Vanguard mutual
funds available prior to that date and five additional Vanguard mutual funds) or
into the EnviroSource, Inc. Common Stock Fund.
<PAGE>
Supplemental Schedules
<PAGE>
EnviroSource, Inc. Savings Plan
Schedule of Assets Held for Investment Purposes
December 31, 1997
Description of
Identity of Issue Investment Cost Fair Value
- --------------------------------------------------------------------------------
Vanguard Money Market
Prime Fund 3,280,356 shares $ 3,280,356 $ 3,280,356
Vanguard Bond Index Total
Bond Market Fund 67,800 shares 666,349 684,101
Vanguard Wellesley Income
Fund 113,041 shares 2,199,260 2,471,076
Vanguard Windsor Fund 703,560 shares 10,718,622 11,946,457
EnviroSource, Inc.*
Common Stock Fund 670,292 shares 1,942,231 2,010,876
Participant loans Interest rates
ranging from
8 % to 12 % - 785,936
Short Term Money
Market Fund 17,878 shares 17,878 17,878
-------------------------------
$ 18,824,696 $ 21,196,680
===============================
*Indicates party-in-interest to the Plan.
<PAGE>
EnviroSource, Inc. Savings Plan
Schedule of Reportable Transactions
Year ended December 31, 1997
Purchase Selling Net Gain
Description of Assets Price (A) Price (A) Cost (Loss)
- --------------------------------------------------------------------------------
Category (i)--Single transaction in excess of 5% of plan assets
- ---------------------------------------------------------------
Vanguard Windsor Fund $ 1,193,258 $ - $ 1,193,258 $ -
Category (iii)--Series of transactions in excess of 5% of plan assets
- ---------------------------------------------------------------------
Vanguard Money Market
Prime Fund
63 Purchases 731,933 - 731,933 -
71 Sales - 1,388,056 1,388,056 -
Vanguard Wellesley
Income Fund
53 Purchases 716,048 - 716,048 -
80 Sales - 910,987 826,213 84,774
Vanguard Windsor Fund
73 Purchases 3,839,508 - 3,839,508 -
79 Sales - 1,707,595 1,325,219 382,376
EnviroSource, Inc.*
Common Stock Fund
70 Purchases 919,721 - 919,721 -
73 Sales - 851,601 1,089,049 (237,448)
Short Term Money
Market Fund
254 Purchases 5,465,941 - 5,465,941 -
191 Sales - 5,453,523 5,453,523 -
*Party-in-interest (not a "prohibited transaction").
(A) Purchase and selling prices are equal to current (fair value) on trade
dates.
There were no Category (ii) or (iv) reportable transactions during the year
ended December 31, 1997.
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 24, 1998
ENVIROSOURCE, INC. SAVINGS PLAN
By: /s/James C. Hull
----------------
James C. Hull
Member of the EnviroSource, Inc.
Savings Plan Administrative
Committee
<PAGE>
EXHIBIT INDEX
Number Exhibit Page
- ------ ------- ----
23.1 Consent of Independent Auditors EX-23.1
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to the Registration Statement (Form S-8 No. 33-34566) pertaining to the
EnviroSource, Inc. Savings Plan and in the related Prospectus of our report
dated May 29, 1998, with respect to the financial statements and scheduled of
the EnviroSource, Inc. Savings Plan included in this Annual Report (Form 11-K)
for the year ended December 31, 1997.
/s/Ernst & Young LLP
Philadelphia, Pennsylvania
June 24, 1998
