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, 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 May 4, 1998 was 40,713,765.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
1998 1997
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,259 $ 9,942
Accounts receivable, less allowance for
doubtful accounts of $721 in 1998 and
$701 in 1997 36,666 33,260
Net deferred income taxes 2,755 2,755
Other current assets 3,804 3,966
--------- ---------
Total current assets 50,484 49,923
Property, plant and equipment, at cost 296,136 288,360
Less allowance for depreciation (151,904) (144,978)
--------- ---------
144,232 143,382
Goodwill, less amortization 131,558 132,766
Closure trust funds and deferred charges,
less amortization 33,539 33,810
Landfill permits, less amortization 23,633 23,849
Net deferred income taxes 13,953 12,582
Debt issuance costs, less amortization 9,756 10,130
Other assets 6,802 6,860
--------- ---------
$ 413,957 $ 413,302
========= =========
See notes to consolidated financial statements.
<PAGE>
EnviroSource Inc.
CONSOLIDATED BALANCE SHEETS - (continued)
(Dollars in thousands)
March 31, December 31,
1998 1997
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,471 $ 12,194
Salaries, wages and related benefits 8,098 7,173
Insurance obligations 6,120 5,789
Estimated reorganization and
restructuring costs 686 963
Interest 8,198 1,417
Other current liabilities 10,275 9,380
Current portion of debt 7,194 13,786
--------- ---------
Total current liabilities 54,042 50,702
Long term debt:
9 3/4% Senior Notes due 2003 270,000 270,000
Other long term debt 11,203 11,614
Other liabilities 40,005 40,775
Stockholders' equity:
Common stock, par value $.05 per share,
shares authorized -- 60,000,000, shares
issued and outstanding -
40,713,765 in 1998 and 1997 2,036 2,036
Capital in excess of par value 174,201 174,194
Accumulated deficit (135,704) (134,132)
Stock purchase loans receivable from
officers (663) (663)
Accumulated other comprehensive income (1,163) (1,224)
--------- ---------
Total stockholders' equity 38,707 40,211
--------- ---------
$ 413,957 $ 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 March 31,
1998 1997
------------ ------------
Revenues $ 59,579 $ 54,597
Cost of revenues 48,218 43,778
Selling, general and
administrative expenses 6,672 6,751
-------- --------
Operating income 4,689 4,068
Interest income 237 262
Interest expense (7,586) (7,320)
-------- --------
Loss before income taxes (2,660) (2,990)
Income tax benefit (expense):
Current (283) (338)
Deferred 1,371 1,990
-------- --------
Loss from continuing operations (1,572) (1,338)
Gain from sale of discontinued
IMSAMET operations, after taxes 8,300
-------- --------
Net income (loss) $ (1,572) $ 6,962
======== ========
Income (loss) per share:
Continuing operations $ (.04) $ (.03)
Discontinued operations .20
-------- --------
Net income (loss) $ (.04) $ .17
======== ========
Weighted average shares 40,714 40,351
See notes to condensed consolidated financial statements.
<PAGE>
EnviroSource, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31,
1998 1997
------------- -------------
OPERATING ACTIVITIES
Net income (loss) $ (1,572) $ 6,962
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Deferred income taxes (1,371) 9,310
Gain from sale of IMSAMET (19,600)
Depreciation 6,983 6,503
Amortization 3,063 2,666
Payment of unusual items (591) (853)
Changes in working capital 7,122 3,144
Other 90 420
-------- --------
Cash provided by operating activities 13,724 8,552
INVESTING ACTIVITIES
Property, plant and equipment:
Additions (7,818) (8,684)
Proceeds from dispositions 182 50
Net proceeds from sale of IMSAMET 54,464
Landfill permit additions and closure
expenditures (664) (908)
Closure trust fund payments (190) (184)
Ongoing cash flows related to
IU International acquisition (662) (486)
Other (148) (540)
-------- --------
Cash used by investing activities (9,300) 43,712
FINANCING ACTIVITIES
Debt issuance 2,000 6,000
Debt repayment (9,003) (62,787)
Debt issuance costs (104)
-------- --------
Cash used by financing activities (7,107) (56,787)
-------- --------
CASH AND CASH EQUIVALENTS
Decrease during the period (2,683) (4,523)
Beginning of year 9,942 9,678
-------- -------
End of period $ 7,259 $ 5,155
======== ========
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
only of normal recurring accruals) necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 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: Earnings per share amounts for all periods are presented in
- ------------------
conformity with the requirements of Financial Accounting Standards Board (FASB)
Statement No. 128, 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.
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 months ended March 31, 1998
and 1997 are as follows:
1998 1997
------- -------
Net income (loss) $(1,572) $ 6,962
Canadian translation adjustment 61 (64)
------- -------
Comprehensive income (loss) $(1,511) $ 6,898
======= =======
Accumulated other comprehensive income consists of Canadian translation
adjustments at March 31, 1998 and December 31, 1997.
<PAGE>
EnviroSource, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE B -- SALE OF IMSAMET
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 $.20 per share for the 1997 first quarter. The
proceeds from the sale were used to repay revolving credit borrowings and
expenses related to the transaction.
NOTE C -- OTHER INFORMATION
As of March 31, 1998, $6.6 million of standby letters of credit and $2 million
of revolving credit borrowings were outstanding under the Company's $50 million
bank credit facility.
During the three months ended March 31, 1998 and 1997, the Company paid interest
of $.3 million and $2.3 million.
Current income tax expense consists of state and foreign income taxes. In each
of the three months ended March 31, 1998 and 1997, the Company made cash income
tax payments, net of refunds, of $.3 million.
NOTE D -- COMMITMENTS AND CONTINGENCIES
As of March 31, 1998, the Company is committed to spend $12.7 million for
equipment additions and improvements to waste treatment facilities.
At March 31, 1998, the Company was contingently liable for $6.6 million of
letters of credit outstanding under its bank credit agreement, including $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 are expected to
amount to approximately $2 million in 1998, including the reinvestment of Idaho
trust fund earnings that the Company includes in interest income. Thereafter,
such payments are not expected to exceed the reinvestment of trust fund
earnings, based on current requirements.
<PAGE>
EnviroSource, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE D -- COMMITMENTS AND CONTINGENCIES - continued
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
1998
Three months ended better/(worse)
March 31, than 1997
------------------------ ------------------------
1998 1997 Amount %
----------- ----------- ----------- -----------
(Dollars in millions)
REVENUES
IMS $ 49,425 $ 43,978 $ 5,447 12.4 %
Technologies 10,154 10,619 (465) (4.4)%
-------- -------- --------
$ 59,579 $ 54,597 $ 4,982 9.1 %
======== ======== ========
GROSS PROFIT
IMS $ 10,373 $ 9,519 $ 854 9.0 %
Technologies 988 1,300 (312) (24.0)%
-------- -------- --------
$ 11,361 $ 10,819 $ 542 5.0 %
======== ======== ========
OPERATING INCOME (LOSS)
IMS $ 6,228 $ 5,636 $ 592 10.5 %
Technologies (77) (59) (18) (30.5)%
Corporate headquarters (1,462) (1,509) 47 3.1 %
-------- -------- --------
$ 4,689 $ 4,068 $ 621 15.3 %
======== ======== ========
IMS revenues increased as compared to the 1997 first quarter. Revenue
improvements were due to strong production at most of the segment's steel
industry customer mills. Prior year first quarter revenues were adversely
affected by a revenue reduction resulting from a strike (settled in mid-August
1997) by a major steel industry customer's employees. Technologies revenues
decreased slightly in the 1998 first quarter as compared to the 1997 quarter.
While revenues attributable to the processing of electric arc furnace dust (a
hazardous waste produced by steel mini-mills) stabilized at the Company's Ohio
and Idaho treatment facilities increased $1.2 million, the increase was more
than offset by a decline in revenues attributable to other waste streams.
IMS gross profit increased primarily due to settlement of the strike.
Technologies' gross profit decreased due to the decline in revenues and to
somewhat higher costs.
Selling, general and administrative expenses were comparable to the
1997 first quarter. In the 1998 first quarter severance and other costs related
to a Company-wide profit improvement program more than offset 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 concluded in the 1998 quarter.
<PAGE>
Interest expense for the period increased as debt levels were slightly
higher in 1998. While the Company paid down $56 million of 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. The net proceeds from the sale of the Notes were used to repay
the remaining balance on the Company's bank credit facility.
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 $.20 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 $1 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 1998 first quarter 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 $16.7 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 $48 million. When the
consolidated results of continuing operations for the four most recent fiscal
years and current three 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 over $30 million and
average $7.1 million annually. On this basis, the Company would realize $16.7
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 $16.7 million of deferred tax assets if, counting
only profitable years, it earns $48 million of taxable income during the period
ending in 2012, so long as the cumulative amount of such earnings reaches at
least $14 million by 2005, $25 million by 2006, $34 million by 2008, $43 million
by 2009 and $46 million by 2010.
In making its determination that it is more likely than not that it
will earn enough taxable income to realize $16.7 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 three months of
1997, (2) the reduction in interest expense obtained by applying the IMSAMET net
proceeds to reduce debt, (3) ongoing cost savings achieved with its 1996
reorganization, (4) additional cost savings anticipated from a Company-wide
profit improvement program commenced in 1998, and (5) 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 $25 to $30 million,
primarily for equipment replacements, new services, development of additional
landfill capacity and improvements to waste treatment facilities. Through March
31, 1998, the Company spent $7.8 million for capital additions and is committed
for an additional $12.7 million.
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
are expected to be approximately $2 million in 1998, including the reinvestment
of Idaho trust fund earnings that the Company includes in interest income.
Thereafter, such payments are not expected to exceed the reinvestment of trust
fund earnings, based on current requirements.
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.
<PAGE>
PART II - OTHER INFORMATION
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 - 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)).
3.4 - 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)).
3.5 - 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.
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.
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 March 31, 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: May 12, 1998
ENVIROSOURCE, INC.
By:/s/James C. Hull
----------------------------------
Vice President and Chief Financial
Officer
<PAGE>
EXHIBIT INDEX
Number Exhibit Page
10.2 Promissory Note of Louis A. Guzzetti, Jr., EXHIBIT 1
dated March 31, 1998, payable to the
Company, amending and replacing the
Promissory Note dated March 31, 1993.
10.3 Promissory Notes of Aarne Anderson, George EXHIBIT 2
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.
PROMISSORY NOTE
---------------
March 31, 1998
FOR VALUE RECEIVED, the undersigned ("Borrower") hereby promises to pay
to the order of ENVIROSOURCE, INC., a Delaware corporation ("Lender"), at its
office at 1155 Business Center Drive, Horsham, PA 19044, or such other place as
may be designated to Borrower by Lender in writing, in lawful money of the
United States of America, the principal amount of $501,603.00 on the earlier to
occur of (i) March 31, 1999 and (ii) thirty (30) days after termination of
Borrower's employment with Lender (the "Maturity Date"). The principal amount of
this Note from time to time outstanding shall bear interest at the rate of six
percent (6%) per annum. Interest shall begin to accrue from and including the
date first above written. All accrued and unpaid interest shall be due and
payable on the Maturity Date in like money at the above-described office. The
principal amount hereof may be prepaid in whole or in part from time to time
without premium or penalty; provide that accrued and unpaid interest on the
principal amount being prepaid shall be paid at the time of such pre-payment.
If Borrower dies while in the employ of Lender, then this Note shall
automatically be deemed to be prepaid in full and all the indebtedness
represented hereby shall be forgiven.
If any payment on this Note becomes due and payable on a Saturday or
other day on which commercial banks in New York City are authorized or required
by law to close, the maturity thereof shall be extended to the next succeeding
business day and, with respect to payment of principal, interest thereon shall
be payable at the rate provided above during such extension.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania.
/s/Louis A. Guzzetti, Jr.
-------------------------
PROMISSORY NOTE
---------------
March 31, 1998
FOR VALUE RECEIVED, the undersigned ("Borrower") hereby promises to pay
to the order of ENVIROSOURCE, INC., a Delaware corporation ("Lender"), at its
office at 1155 Business Center Drive, Horsham, PA 19044, or such other place as
may be designated to Borrower by Lender in writing, in lawful money of the
United States of America, the principal amount of $131,432.00 on the earlier to
occur of (i) March 31, 1999 and (ii) thirty (30) days after termination of
Borrower's employment with Lender (the "Maturity Date"). The principal amount of
this Note from time to time outstanding shall bear interest at the rate of six
percent (6%) per annum. Interest shall begin to accrue from and including the
date first above written. All accrued and unpaid interest shall be due and
payable on the Maturity Date in like money at the above-described office. The
principal amount hereof may be prepaid in whole or in part from time to time
without premium or penalty; provide that accrued and unpaid interest on the
principal amount being prepaid shall be paid at the time of such pre-payment.
If Borrower dies while in the employ of Lender, then this Note shall
automatically be deemed to be prepaid in full and all the indebtedness
represented hereby shall be forgiven.
If any payment on this Note becomes due and payable on a Saturday or
other day on which commercial banks in New York City are authorized or required
by law to close, the maturity thereof shall be extended to the next succeeding
business day and, with respect to payment of principal, interest thereon shall
be payable at the rate provided above during such extension.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania.
/s/Aarne Anderson
-----------------
<PAGE>
PROMISSORY NOTE
---------------
March 31, 1998
FOR VALUE RECEIVED, the undersigned ("Borrower") hereby promises to pay
to the order of ENVIROSOURCE, INC., a Delaware corporation ("Lender"), at its
office at 1155 Business Center Drive, Horsham, PA 19044, or such other place as
may be designated to Borrower by Lender in writing, in lawful money of the
United States of America, the principal amount of $200,754.00 on the earlier to
occur of (i) March 31, 1999 and (ii) thirty (30) days after termination of
Borrower's employment with Lender (the "Maturity Date"). The principal amount of
this Note from time to time outstanding shall bear interest at the rate of six
percent (6%) per annum. Interest shall begin to accrue from and including the
date first above written. All accrued and unpaid interest shall be due and
payable on the Maturity Date in like money at the above-described office. The
principal amount hereof may be prepaid in whole or in part from time to time
without premium or penalty; provide that accrued and unpaid interest on the
principal amount being prepaid shall be paid at the time of such pre-payment.
If Borrower dies while in the employ of Lender, then this Note shall
automatically be deemed to be prepaid in full and all the indebtedness
represented hereby shall be forgiven.
If any payment on this Note becomes due and payable on a Saturday or
other day on which commercial banks in New York City are authorized or required
by law to close, the maturity thereof shall be extended to the next succeeding
business day and, with respect to payment of principal, interest thereon shall
be payable at the rate provided above during such extension.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania.
/s/George E. Fuehrer
--------------------
<PAGE>
PROMISSORY NOTE
March 31, 1998
FOR VALUE RECEIVED, the undersigned ("Borrower") hereby promises to pay
to the order of ENVIROSOURCE, INC., a Delaware corporation ("Lender"), at its
office at 1155 Business Center Drive, Horsham, PA 19044, or such other place as
may be designated to Borrower by Lender in writing, in lawful money of the
United States of America, the principal amount of $511,123.00 on the earlier to
occur of (i) March 31, 1999 and (ii) thirty (30) days after termination of
Borrower's employment with Lender (the "Maturity Date"). The principal amount of
this Note from time to time outstanding shall bear interest at the rate of six
percent (6%) per annum. Interest shall begin to accrue from and including the
date first above written. All accrued and unpaid interest shall be due and
payable on the Maturity Date in like money at the above-described office. The
principal amount hereof may be prepaid in whole or in part from time to time
without premium or penalty; provide that accrued and unpaid interest on the
principal amount being prepaid shall be paid at the time of such pre-payment.
If Borrower dies while in the employ of Lender, then this Note shall
automatically be deemed to be prepaid in full and all the indebtedness
represented hereby shall be forgiven.
If any payment on this Note becomes due and payable on a Saturday or
other day on which commercial banks in New York City are authorized or required
by law to close, the maturity thereof shall be extended to the next succeeding
business day and, with respect to payment of principal, interest thereon shall
be payable at the rate provided above during such extension.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Pennsylvania.
/s/Louis A. Guzzetti, Jr.
-------------------------
<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 March 31, 1998 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,259
<SECURITIES> 0
<RECEIVABLES> 37,387
<ALLOWANCES> 721
<INVENTORY> 0
<CURRENT-ASSETS> 50,484
<PP&E> 296,136
<DEPRECIATION> 151,904
<TOTAL-ASSETS> 413,957
<CURRENT-LIABILITIES> 54,042
<BONDS> 281,203
0
0
<COMMON> 2,036
<OTHER-SE> 36,671
<TOTAL-LIABILITY-AND-EQUITY> 413,957
<SALES> 0
<TOTAL-REVENUES> 59,579
<CGS> 0
<TOTAL-COSTS> 48,218
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,586
<INCOME-PRETAX> (2,660)
<INCOME-TAX> (1,088)
<INCOME-CONTINUING> (1,572)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,572)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
