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, 1999
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 10, 1999 was 5,813,394.
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
---------------------
<TABLE>
<CAPTION>
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, December 31,
1999 1998
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,829 $ 5,134
Accounts receivable, less allowance
for doubtful accounts 33,792 32,305
Other current assets 3,720 3,520
------------ ------------
Total current assets 43,341 40,959
Property, plant and equipment, at cost 284,689 304,324
Less accumulated depreciation (143,561) (157,387)
------------ ------------
141,128 146,937
Goodwill, less accumulated amortization 125,514 127,931
Closure trust funds and deferred charges,
less accumulated amortization 32,081 33,205
Landfill permits, less accumulated
amortization 22,082 22,974
Other assets 14,339 15,450
------------ ------------
$ 378,485 $ 387,456
============ ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 13,746 $ 10,949
Accruals and other current liabilities 27,522 24,905
Current portion of debt 7,560 5,549
------------ ------------
Total current liabilities 48,828 41,403
Long-term debt:
9 3/4% Senior Notes due 2003 270,000 270,000
Other long-term debt 21,727 28,023
------------ ------------
Total long-term debt 291,727 298,023
Other long-term liabilities 40,013 38,187
Stockholders' (deficit) equity:
Common stock 291 291
Capital in excess of par value 175,969 175,969
Accumulated deficit (176,923) (164,771)
Accumulated other comprehensive losses (1,330) (1,556)
Stock purchase loan receivable from officer (90) (90)
------------ ------------
Total stockholders' (deficit) equity (2,083) 9,843
------------ ------------
$ 378,485 $ 387,456
============ ============
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
ENVIROSOURCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 53,837 $ 62,963 $ 102,120 $ 122,542
Expenses:
Cost of revenues 35,955 40,265 69,134 80,479
Selling, general and
administrative 4,088 4,284 8,729 8,981
Depreciation and amortization
(less interest amortization) 9,061 9,850 17,731 19,418
Unusual charges -- 3,489 2,964 3,900
------------ ------------ ------------ ------------
Total expenses 49,104 57,888 98,558 112,778
------------ ------------ ------------ ------------
Operating income 4,733 5,075 3,562 9,764
Interest income 166 282 349 519
Interest expense (7,718) (7,521) (15,525) (15,107)
------------ ------------ ------------ ------------
Loss before income taxes (2,819) (2,164) (11,614) (4,824)
Income tax (expense) benefit:
Current (269) (320) (538) (603)
Deferred -- 1,597 -- 2,968
------------ ------------ ------------ ------------
Total income tax (expense)
benefit (269) 1,277 (538) 2,365
------------ ------------ ------------ ------------
Net loss $ (3,088) $ (887) $ (12,152) $ (2,459)
============ ============ ============ ============
Net loss per share $ (0.53) $ (0.15) $ (2.09) $ (0.42)
============ ============ ============ ============
Weighted average shares 5,813 5,816 5,813 5,816
============ ============ ============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
ENVIROSOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Six Months Ended June 30,
---------------------------
1999 1998
------------ ------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (12,152) $ (2,459)
Adjustments to reconcile net loss
to cash provided by operating activities:
Deferred income taxes -- (2,968)
Depreciation 13,067 14,111
Amortization 5,650 6,179
Unusual charges, net of payments 401 2,307
Changes in working capital 1,759 (7,576)
Other 321 1,046
------------ ------------
Cash provided by operating activities 9,046 10,640
INVESTING ACTIVITIES:
Property, plant and equipment:
Additions (8,693) (19,685)
Proceeds from dispositions 1,163 857
Landfill permit additions and closure
expenditures (193) (1,564)
Closure trust fund recovery (payments), net 496 (413)
Ongoing net cash flows related to
IU International acquisition 3,353 (1,515)
Other (192) (554)
------------ ------------
Cash used for investing activities (4,066) (22,874)
FINANCING ACTIVITIES:
Revolving credit facility:
Borrowings 43,000 28,000
Repayments (46,000) (15,000)
------------ ------------
(3,000) 13,000
Other debt repayment (1,285) (4,844)
------------ ------------
Cash (used for) provided by financing
activites (4,285) 8,156
------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) during the period 695 (4,078)
Beginning of year 5,134 9,942
------------ ------------
End of period $ 5,829 $ 5,864
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
ENVIROSOURCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are unaudited, and
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 six-month period ended June 30,
1999 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. The condensed consolidated balance sheet at
December 31, 1998 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, 1998.
NOTE B -- COMPREHENSIVE LOSS
The following table presents total comprehensive losses for the three-and
six-month periods ended June 30, 1999 and 1998 (dollars in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Net loss $ (3,088) $ (887) $ (12,152) $ (2,459)
Canadian currency
translation
adjustment 131 (148) 226 (87)
------------ ------------ ------------ ------------
Comprehensive loss $ (2,957) $ (1,035) $ (11,926) $ (2,546)
============ ============ =========== ============
NOTE C -- UNUSUAL CHARGES
The Company initiated in the first quarter of 1998 a profit improvement program.
Costs for the six months ended June 30, 1999 (incurred entirely during the 1999
first quarter) totaled $3 million and consisted of $2.3 million of employee
severance and $.7 million of program consulting fees and expenses. Costs
incurred during the six months ended June 30, 1998, most of which were incurred
during the 1998 second quarter, totaled $3.9 million and consisted of $2.3
million related to excess equipment, $1.1 million of program consulting and $.5
million of severance.
NOTE D -- SEGMENT DISCLOSURE
Operating information for the Company's reportable segments for the three-and
six-month periods ended June 30, 1999 and 1998 can be found in the tables on
pages 7 and 8 of this Report. At June 30, 1999, there were no significant
changes in identifiable assets of the Company's reportable segments from the
amounts disclosed at December 31, 1998, nor were there any changes in the basis
of segmentation or in the measurement of segment operating results.
5
<PAGE>
ENVIROSOURCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE E -- OTHER INFORMATION
The Company currently has a $43.8 million bank credit facility that declines to
$38.3 million by January, 2000, and declines further in subsequent periods until
its termination in January, 2001. At June 30, 1999, $19 million of borrowings
were outstanding, an additional $5.7 million is dedicated to cover standby
letters of credit, and the remaining $19.1 million of the revolving credit
facility is unused and available.
Included in the results of operations for the first six months and second
quarter of 1998 are deferred tax benefits. These benefits totaled $3 million and
$1.6 million, respectively, and were subsequently reversed in the third quarter
of 1998, when the determination was made that the Company might not earn
sufficient taxable income to realize the deferred tax benefits.
NOTE F -- COMMITMENTS AND CONTINGENCIES
The Company is required to maintain trust funds to secure its obligations to
close its landfills and perform post-closure monitoring and maintenance
procedures. Based on current regulations, planned improvements to waste
treatment facilities and permitted capacity, such trust funds are adequately
funded and currently require only the reinvestment of Idaho trust fund earnings
that the Company includes in interest income. In the six months ended June 30,
1999, the Company recovered from the Idaho trust fund $790,000 that was in
excess of current requirements.
The Company's Ohio and Idaho facilities hold operating permits issued by state
and federal environmental agencies under the Resource Conservation and Recovery
Act 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. 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 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.
At June 30, 1999, the Company is committed to spend $4.8 million for capital
equipment.
6
<PAGE>
ENVIROSOURCE, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
-----------------------------------------------------------------------
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30
<TABLE>
<CAPTION>
Three Months Ended 1999
June 30, Increase (decrease)
--------------------------- ---------------------------
1999 1998 Amount %
------------ ------------ ------------ ------------
(Dollars in thousands)
REVENUES
<S> <C> <C> <C> <C>
IMS $ 46,460 $ 49,498 $ (3,038) (6.1)%
Technologies 7,377 13,465 (6,088) (45.2)%
------------ ------------ ------------
$ 53,837 $ 62,963 $ (9,126) (14.5)%
============ ============ ============
GROSS PROFIT (LOSS)
IMS $ 10,959 $ 11,360 $ (401) (3.5)%
Technologies (525) 3,071 (3,596) (117.1)%
------------ ------------ ------------
$ 10,434 $ 14,431 $ (3,997) (27.7)%
============ ============ ============
OPERATING INCOME (LOSS)
IMS $ 7,066 $ 7,320 $ (254)
Technologies (1,902) 1,878 (3,780)
Corporate headquarters (431) (634) 203
------------ ------------ ------------
4,733 8,564 (3,831) (44.7)%
Unusual charges:
IMS ----- (2,305) 2,305
Technologies ----- (135) 135
Corporate headquarters ----- (1,049) 1,049
------------ ------------ ------------
----- (3,489) 3,489
------------ ------------ ------------
CONSOLIDATED OPERATING
INCOME $ 4,733 $ 5,075 $ (342) (6.7)%
============ ============ ============
</TABLE>
Consolidated revenue in the second quarter of 1999 decreased compared
with the same quarter of 1998 as a result of lower processing volumes in both of
the Company's operating segments. The IMS segment revenue decrease was primarily
due to lower production levels at the Company's steel mill customers, resulting
from an industry-wide decrease in production by U.S. steel manufacturers. The
loss of a steel industry customer in late 1998 that contributed $2.4 million of
revenue to the 1998 second quarter also contributed to the IMS revenue decrease.
Technologies segment revenues decreased significantly during the 1999 second
quarter, due in part to an overall reduction in the volume of waste processed.
Competitive market conditions also contributed to the Technologies revenue
decrease, as did a change in the mix of services provided, as a higher
proportion of lower-priced cleanup projects were processed during the 1999
second quarter.
Consolidated gross profit for the second quarter of 1999 decreased
compared with the same quarter of 1998, primarily due to the reasons noted
above.
Selling, general and administrative expenses for the 1999 second
quarter did not change significantly from the same quarter of 1998.
The Company initiated in the first quarter of 1998 a profit improvement
program. Included in the 1998 second quarter results were unusual charges
totaling $3.5 million, which consisted of $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.
7
<PAGE>
ENVIROSOURCE, INC.
RESULTS OF OPERATIONS (CONTINUED)
Interest expense for the second quarter of 1999 did not change
significantly from the same quarter of 1998.
In the 1998 second quarter the Company recorded a $1.6 million deferred
tax benefit. This tax benefit was subsequently reversed in the third quarter of
1998, when the determination was made that the Company might not earn sufficient
taxable income to realize the deferred tax benefits.
As a result of all the items discussed above, the Company recorded a
net loss for the second quarter of 1999 totaling $3.1 million, compared with a
1998 second quarter net loss of $.9 million.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30
<TABLE>
<CAPTION>
Six Months Ended 1999
June 30, Increase (decrease)
--------------------------- ---------------------------
1999 1998 Amount %
------------ ------------ ------------ ------------
(Dollars in thousands)
REVENUES
<S> <C> <C> <C> <C>
IMS $ 88,561 $ 98,923 $ (10,362) (10.5)%
Technologies 13,559 23,619 (10,060) (42.6)%
------------ ------------ ------------
$ 102,120 $ 122,542 $ (20,422) (16.7)%
============ ============ ============
GROSS PROFIT (LOSS)
IMS $ 19,103 $ 21,733 $ (2,630) (12.1)%
Technologies (622) 4,059 (4,681) (115.3)%
------------ ------------ ------------
$ 18,481 $ 25,792 $ (7,311) (28.3)%
============ ============ ============
OPERATING INCOME (LOSS)
IMS $ 10,921 $ 13,397 $ (2,476)
Technologies (3,497) 1,801 (5,298)
Corporate headquarters (898) (1,534) 636
------------ ------------ ------------
6,526 13,664 (7,138) (52.2)%
Unusual charges:
IMS (45) (2,154) 2,109
Technologies (530) (135) (395)
Corporate headquarters (2,389) (1,611) (778)
------------ ------------ ------------
(2,964) (3,900) 936
------------ ------------ ------------
CONSOLIDATED OPERATING
INCOME $ 3,562 $ 9,764 $ (6,202) (63.5)%
============ ============ ============
</TABLE>
Consolidated revenue for the first half of 1999 decreased compared with
the first half of 1998 as a result of lower processing volumes in both operating
segments. The IMS segment revenue decrease resulted in part from a 9% decrease
in tons produced by the Company's steel mill customers in the first half of 1999
during an overall slowdown in the U.S. steel industry. In addition, the loss of
a steel industry customer in late 1998 that had contributed $4.9 million of
revenue to the first half of 1998 also contributed to the IMS revenue reduction,
as did lower sales of steel by-products. Technologies segment revenues for the
first half of 1999 decreased significantly, due in part to an overall reduction
in the volume of waste processed. The first six months of 1999 were also
negatively affected by a change in the mix of services provided, as a higher
proportion of lower-priced cleanup projects were processed relative to the first
six months of 1998, as well as overall competition in the waste processing
markets.
8
<PAGE>
ENVIROSOURCE, INC.
RESULTS OF OPERATIONS (CONTINUED)
Consolidated gross profit during the first half of 1999 decreased from
the same period a year ago, primarily due to the reasons discussed in the
preceding paragraph.
Selling, general and administrative expenses for the first six months
of 1999 did not significantly change from the same period of 1998.
The Company initiated a profit improvement program in the first quarter
of 1998. Unusual charges of the program for the first six months of 1999 totaled
$3.0 million, incurred entirely during the first quarter of the year, and
consisted of $2.3 million for employee severance and $.7 million of program
consulting fees and expenses. For the first six months of 1998, such charges
totaled $3.9 million, and consisted of $2.3 million of excess equipment
write-downs, $1.1 million of consulting fees and expenses, and $.5 million of
severance costs.
Interest expense for the first six months of 1999 did not significantly
change from the first half of 1998.
During the first half of 1998, the Company recorded a $3.0 million
deferred income tax benefit. This tax benefit was subsequently reversed in the
third quarter of 1998, when the determination was made that the Company might
not earn sufficient taxable income to realize the deferred tax benefits.
Due to all the factors described above, the net loss for the first half
of 1999 was $12.2 million, compared with a net loss of $2.5 million for the same
period of 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise primarily from the funding
of capital expenditures, working capital needs and debt service obligations. At
June 30, 1999, the Company had negative working capital of $5.5 million,
compared with negative working capital of $.4 million at December 31, 1998. The
reduction was primarily due to an increase in payables and other accruals at
June 30.
The Company's capital additions are primarily for equipment
replacements and providing new services, and are not expected to exceed $20
million for all of 1999. Through June 30, 1999, the Company spent $8.7 million
for capital additions and has commitments to spend an additional $4.8 million.
Technologies' landfill permits require the Company to fund closure and
post-closure monitoring and maintenance obligations by maintaining trust funds.
Based on current regulations, planned improvements to waste treatment facilities
and permitted capacity, such trust funds are adequately funded.
9
<PAGE>
ENVIROSOURCE, INC.
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
At June 30, 1999, the Company had $19.1 million available under its
current $43.8 million bank credit facility. During the first half of 1999, the
Company made net repayments totaling $3 million on the facility, compared with
net borrowings of $13 million during the same period of 1998. Management intends
to continue using cash flow from operations to further reduce its outstanding
borrowings. At June 30, 1999, the Company was in compliance with all of the
covenants of its bank credit facility. Management is currently in negotiations
to obtain a new bank credit facility to replace the current one. It is intended
that the new agreement would supply the Company with funding into the year 2003.
Cash on hand, funds from operations and borrowing capacity under the current
bank credit facility, or any subsequent 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 impact on the Company's business. It is
possible that the future imposition of additional environmental compliance
requirements could have a material effect on the Company's results of operations
or financial condition, but the Company is unable to predict any such future
requirements.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define applicable years. Computer programs
that have date-sensitive software may recognize a date coded "00" as the year
1900 rather than the year 2000. This could result in system failures or
miscalculations that could cause disruptions of operations, including temporary
inability to process transactions.
The Company has completed an assessment of its computer information
systems. In the normal course of business, the Company has purchased new
software packages for most of its computer systems and is currently purchasing
and implementing new software for the rest. The Company has implemented Year
2000-compliant upgrades to its core financial and operational software. In
addition, most of the Company's other software has been upgraded, through
routine software releases from reliable software suppliers, to accommodate the
Year 2000 transition. The remaining software that require upgrades to
accommodate the Year 2000 transition will receive such upgrades in the normal
course of business by the end of 1999. The Company has not incurred and does not
anticipate incurring material incremental costs for Year 2000 issues relating to
its computer information systems since all updates or replacements of such
systems shall have occurred in the ordinary course of business.
The Company has substantially completed an assessment of its
non-information technology systems, including telecommunications and embedded
systems. The Company has identified certain non-core systems that, in current
operating form, may not accommodate the Year 2000 transition. These systems will
be upgraded in the ordinary course of business, prior to December 31, 1999, and
such upgrades are expected to accommodate the Year 2000 transition. Any
additional non-information technology systems identified as possibly not being
Year 2000 compliant will be upgraded or replaced as necessary to accommodate the
Year 2000 transition by December 31, 1999. The costs of compliance for
non-information technology systems that would not otherwise be replaced or
upgraded in the ordinary course of business are not expected to be material.
10
<PAGE>
ENVIROSOURCE, INC.
YEAR 2000 READINESS DISCLOSURE (CONTINUED)
The Company is also addressing the Year 2000 activities of its
suppliers and customers. The Company has contacted its significant suppliers and
customers, either through direct contact or reviews of their Year 2000 Readiness
Disclosures, to determine if they are Year 2000 compliant, and if they are not,
to inquire when such compliance is expected to occur. This information is used
to assess the extent of interruption that could occur in the Company's
operations if a supplier or customer were non-compliant. The Company has not
received information from any of its significant suppliers or customers
regarding Year 2000 readiness that would indicate the possibility of a material
interruption of the Company's operations. There can be no guarantee that failure
to address Year 2000 issues by a third party would not have a material adverse
effect on the Company. However, the Company believes that its continuing
communications with its suppliers and customers will minimize these risks.
The Company's Year 2000 program is based on management's best estimates
of the Company's requirements. However, there can be no guarantee of the success
of the Company's Year 2000 program and actual results could differ materially
from the Company's plans. Factors that could impact implementation of this
program include, but are not limited to, the availability of trained personnel,
the ability to identify and correct all affected applications, and the failure
of third parties on which the Company relies to resolve their Year 2000 issues.
To date, the Company has not made any contingency plans to address Year
2000 risks. Contingency plans will be developed if it appears that the Company
or its significant suppliers or customers will not be Year 2000 compliant and
such noncompliance can be expected to have a material adverse impact on the
Company's operations.
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 financial statements contained herein which include
information describing factors that could cause actual results to differ
materially from those projected in such forward-looking statements.
11
<PAGE>
ENVIROSOURCE, INC.
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 10, 1999. At such meeting, the following proposals were adopted by
the margins indicated:
a. To elect three members of Class A of the Board of Directors. The
tabulation of the votes cast with respect to each such director is as follows:
John T. Jeffrey G. Jon D.
DiLacqua Miller Ralph
---------- ---------- ----------
For 5,111,617 5,111,626 5,111,604
Against 0 0 0
Withheld 27,838 27,829 27,851
Abstain 0 0 0
Broker Non-Vote 0 0 0
b. To ratify and approve the adoption of the Envirosource, Inc. 1999
Stock Option Plan. The votes cast with respect to this item were as follows:
4,158,522 for; 288,799 against; 2,770 abstain; 0 broker non-votes.
12
<PAGE>
ENVIROSOURCE, INC.
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 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)).
4.2 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)).
4.3 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
13
<PAGE>
ENVIROSOURCE, INC.
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).
4.4 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)).
4.5 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).
4.6 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)).
4.7 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).
4.8 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)).
4.9 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)).
4.10 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)).
14
<PAGE>
ENVIROSOURCE, INC.
4.11 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
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 Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1997 (File No. 1-1363)).
4.12 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)).
4.13 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)).
4.14 Sixth Amendment, dated as of March 26, 1999, 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 4.14 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 (File No. 1-1363)).
4.15 Seventh Amendment, dated as of April 9, 1999, 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 March 31, 1999 (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)).
15
<PAGE>
ENVIROSOURCE, INC.
10.3 Promissory Notes of Aarne Anderson, George E. Fuehrer and Louis
A. Guzzetti, Jr., 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 Amendment To Note Related To Stock Purchase, dated as of
January 15, 1999, between the Company and Louis A. Guzzetti,
Jr. (incorporated herein by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999 (File No. 1-1363)).
10.5 Amendment To Note Related To Stock Purchase, dated as of
February 12, 1999, between the Company and George E. Fuehrer
(incorporated herein by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999 (File No. 1-1363)).
10.6 Promissory Note of Aarne Anderson, dated March 31, 1999,
payable to the Company, amending and replacing the Promissory
Note dated March 31, 1998 (incorporated herein by reference to
Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1999 (File No. 1-1363)).
10.7 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)).
10.8 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)).
10.9 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)).
10.10 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)).
10.11 Envirosource, Inc. 1993 Stock Option Plan (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)).
16
<PAGE>
ENVIROSOURCE, INC.
10.12 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)).
10.13 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)).
10.14 Envirosource, Inc. 1999 Stock Option Plan (incorporated herein
by reference to Appendix A to the Company's Proxy Statement
filed April 30, 1999, in respect of its 1999 Annual Meeting of
Stockholders (File No. 1-1363)).
10.15 Confidential Severance Agreement, dated as of January 15, 1999,
between the Company and Louis A. Guzzetti, Jr. (incorporated
herein by reference to Exhibit 10.18 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1999
(File No. 1-1363)).
10.16 Employment Agreement, dated as of January 20, 1999, between the
Company and John T. DiLacqua (incorporated herein by reference
to Exhibit 10.19 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1999 (File No. 1-1363)).
10.17 Confidential Severance Agreement, dated as of February 12,
1999, between the Company and George E. Fuehrer (incorporated
herein by reference to Exhibit 10.20 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1999
(File No. 1-1363)).
10.18 Letter Agreement, dated February 15, 1999, between the Company
and John C. Heenan (incorporated herein by reference to Exhibit
10.21 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1999 (File No. 1-1363)).
10.19 Letter Agreement, dated March 23, 1999, between the Company and
James C. Hull (incorporated herein by reference to Exhibit
10.22 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1999 (File No. 1-1363)).
(b) Reports on Form 8-K.
--------------------
During the quarter ended June 30, 1999, the Company filed no current
reports on Form 8-K.
17
<PAGE>
ENVIROSOURCE, INC.
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 13, 1999
ENVIROSOURCE, INC.
By: /s/ John C. Heenan
------------------
John C. Heenan
Senior Vice President and
Chief Financial Officer
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the condensed consolidated balance sheet of Envirosource,
Inc. at June 30, 1999, and from the consolidated statement of
operations of Envirosource, Inc. for the six months ended June
30, 1999, 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,829
<SECURITIES> 0
<RECEIVABLES> 35,014
<ALLOWANCES> 1,222
<INVENTORY> 0
<CURRENT-ASSETS> 43,341
<PP&E> 284,689
<DEPRECIATION> 143,561
<TOTAL-ASSETS> 378,485
<CURRENT-LIABILITIES> 48,828
<BONDS> 291,727
0
0
<COMMON> 291
<OTHER-SE> (2,374)
<TOTAL-LIABILITY-AND-EQUITY> 378,485
<SALES> 0
<TOTAL-REVENUES> 102,120
<CGS> 0
<TOTAL-COSTS> 69,134
<OTHER-EXPENSES> 20,695
<LOSS-PROVISION> 176
<INTEREST-EXPENSE> 15,525
<INCOME-PRETAX> (11,614)
<INCOME-TAX> 538
<INCOME-CONTINUING> (12,152)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,152)
<EPS-BASIC> (2.09)
<EPS-DILUTED> (2.09)
</TABLE>
