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, 1998.
[ ] 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
<PAGE>
Financial Statements
and Supplemental Schedules
Envirosource, Inc.
Savings Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Envirosource, Inc. Savings Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors.................................................1
Audited Financial Statements
Statement of Assets Available for Benefits,
as of December 31, 1998....................................................2
Statement of Assets Available for Benefits,
as of December 31, 1997....................................................4
Statement of Changes in Assets Available for Benefits,
Year ended December 31, 1998...............................................5
Statement of Changes in Assets Available for Benefits,
Year ended December 31, 1997...............................................6
Notes to Financial Statements..................................................7
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes....................10
Line 27d - 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, 1998 and 1997, 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, 1998 and 1997, 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, 1998, and reportable
transactions for the year then ended, are presented for the purpose of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. 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
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
Philadelphia, Pennsylvania
May 19, 1999
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Statement of Assets Available for Benefits, With Fund Information
December 31, 1998
Vanguard Vanguard
Vanguard Total Bond Vanguard Vanguard Total Stock Vanguard
Prime Money Market Index Wellesley Windsor Market Index Wellington
Market Fund Fund Income Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value $ 2,694,442 $ 662,915 $ 2,583,812 $ 8,777,409 $ 362,032 $ 160,346
Cash and cash equivalents 12,794 258 9,672 728 91,422 -
-----------------------------------------------------------------------------------------------------
Total investments 2,707,236 663,173 2,593,484 8,778,137 453,454 160,346
Accrued income receivable 32 5,784 41 3 - -
-----------------------------------------------------------------------------------------------------
Assets available for benefits $ 2,707,268 $ 668,957 $ 2,593,525 $ 8,778,140 $ 453,454 $ 160,346
=====================================================================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Statement of Assets Available for Benefits, With Fund Information (continued)
December 31, 1998
Envirosource,
Vanguard Vanguard Vanguard Inc.
PRIMECAP Explorer International Common Stock Participant
Fund Fund Growth Fund Fund Loans Total
-----------------------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value $ 90,312 $ 46,920 $ 13,076 $ 677,161 $ 710,332 $ 16,778,757
Cash and cash equivalents - - - - - 114,874
-----------------------------------------------------------------------------------------------------
Total investments 90,312 46,920 13,076 677,161 710,332 16,893,631
Accrued income receivable - - - - - 5,860
-----------------------------------------------------------------------------------------------------
Assets available for benefits $ 90,312 $ 46,920 $ 13,076 $ 677,161 $ 710,332 $ 16,899,491
=====================================================================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Statement of Assets Available for Benefits, With Fund Information
December 31, 1997
Vanguard Vanguard Envirosource,
Vanguard Total Bond Wellesley Vanguard Inc.
Prime Money Market Index Income Windsor Common Stock Participant
Market Fund Fund 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 Changes in Assets Available for Benefits, With Fund Information
Year ended December 31, 1998
Vanguard Vanguard
Vanguard Total Bond Vanguard Vanguard Total Stock Vanguard
Prime Money Market Index Wellesley Windsor Market Index Wellington
Market Fund Fund Income Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------------
Additions:
Contributions:
<S> <C> <C> <C> <C> <C> <C>
Participants $ 142,769 $ 36,773 $ 190,691 $ 481,035 $ 21,460 $ 3,389
Employer 51,864 13,359 69,273 174,747 7,797 1,231
-----------------------------------------------------------------------------------------------------
Total contributions 194,633 50,132 259,964 655,782 29,257 4,620
Investment income:
Interest - - - - - -
Dividends 155,948 42,287 261,677 789,380 4,123 13,940
Net appreciation
(depreciation)
in fair value
of investments - 12,399 36,886 (604,894) 16,453 (12,691)
-----------------------------------------------------------------------------------------------------
Total investment income 155,948 54,686 298,563 184,486 20,576 1,249
Transfer of participants'
assets from other plans 12,507 3,222 16,706 42,141 1,880 297
-----------------------------------------------------------------------------------------------------
Total additions 363,088 108,040 575,233 882,409 51,713 6,166
Participant withdrawals (989,889) (165,596) (435,699) (3,338,831) (77) (74)
-----------------------------------------------------------------------------------------------------
Net (decrease) increase
prior to interfund
transfers (626,801) (57,556) 139,534 (2,456,422) 51,636 6,092
Interfund transfers 45,126 39,022 (206,499) (716,256) 401,818 154,254
-----------------------------------------------------------------------------------------------------
Net (decrease) increase
in assets available
for benefits (581,675) (18,534) (66,965) (3,172,678) 453,454 160,346
Assets available for
benefits at beginning
of year 3,288,943 687,491 2,660,490 11,950,818 - -
-----------------------------------------------------------------------------------------------------
Assets available for
benefits at end
of year $ 2,707,268 $ 668,957 $ 2,593,525 $ 8,778,140 $ 453,454 $ 160,346
=====================================================================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Statement of Changes in Assets Available for Benefits, With Fund Information (Continued)
Year ended December 31, 1998
Envirosource,
Vanguard Vanguard Vanguard Inc.
PRIMECAP Explorer International Common Stock Participant
Fund Fund Growth Fund Fund Loans Total
-----------------------------------------------------------------------------------------------------
Additions:
Contributions:
<S> <C> <C> <C> <C> <C> <C>
Participants $ 9,048 $ 2,500 $ 1,057 $ 178,785 $ - $ 1,067,507
Employer 3,287 908 384 145,906 - 468,756
-----------------------------------------------------------------------------------------------------
Total contributions 12,335 3,408 1,441 324,691 - 1,536,263
Investment income:
Interest - - - - 68,911 68,911
Dividends 2,861 407 256 - - 1,270,879
Net appreciation
(depreciation)
in fair value
of investments 5,299 (635) 60 (1,630,761) - (2,177,884)
-----------------------------------------------------------------------------------------------------
Total investment income 8,160 (228) 316 (1,630,761) 68,911 (838,094)
Transfer of participants'
assets from other plans 793 219 93 - - 77,858
-----------------------------------------------------------------------------------------------------
Total additions 21,288 3,399 1,850 (1,306,070) 68,911 776,027
Participant withdrawals (77) (62) - (229,313) (101,472) (5,261,090)
-----------------------------------------------------------------------------------------------------
Net (decrease) increase
prior to interfund
transfers 21,211 3,337 1,850 (1,535,383) (32,561) (4,485,063)
Interfund transfers 69,101 43,583 11,226 201,668 (43,043) -
-----------------------------------------------------------------------------------------------------
Net (decrease) increase
in assets available
for benefits 90,312 46,920 13,076 (1,333,715) (75,604) (4,485,063)
Assets available for
benefits at beginning
of year - - - 2,010,876 785,936 21,384,554
-----------------------------------------------------------------------------------------------------
Assets available for
benefits at end
of year $ 90,312 $ 46,920 $ 13,076 $ 677,161 $ 710,332 $ 16,899,491
=====================================================================================================
</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 Vanguard Envirosource,
Vanguard Total Bond Wellesley Vanguard Inc.
Prime Money Market Index Income Windsor Common Stock Participant
Market Fund Fund Fund Fund Fund Loans Total
----------------------------------------------------------------------------------------------------
Additions:
Contribtions:
<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
(depreciation)
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 (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>
Envirosource, Inc. Savings Plan
Notes to Financial Statements
December 31, 1998
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 $5,000 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 nine
Vanguard mutual funds or into the Envirosource, Inc. Common Stock Fund.
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.
ADMINISTRATIVE EXPENSES
Administrative expenses incurred by the Plan are paid by the Company.
<PAGE>
Envirosource, Inc. Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in mutual funds are stated at the quoted net asset values of the
respective funds on the last business day of the Plan year. Investments in
Envirosource, Inc. common stock are stated at the quoted market price of the
stock. The participant loans are valued at the then outstanding balances which
approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
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. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated April 11, 1995 stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with the
IRC to maintain its qualification. The Plan was amended and restated effective
January 1, 1996. The Plan will apply for a new determination letter, however,
the Plan's Administrative Committee believes the Plan is being operated in
compliance with the applicable requirements of the IRC and, therefore, believes
that the Plan is qualified and the related trust is tax-exempt.
<PAGE>
Supplemental Schedules
<PAGE>
Envirosource, Inc. Savings Plan
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
Description of
Investment,
including
Maturity Date,
Rate of Interest,
Identity of Issue, Borrower, Collateral, Par or Current
Lessor, or Similar Party Maturity Value Cost Value
- --------------------------------------------------------------------------------
Mutual Funds:
*Vanguard:
Prime Money Market Fund 2,694,442 shares $ 2,694,442 $ 2,694,442
Total Bond Market
Index Fund 64,549 shares 644,029 662,915
Wellesley Income Fund 116,809 shares 2,369,482 2,583,812
Windsor Fund 563,739 shares 8,675,330 8,777,409
Total Stock Market
Index Fund 13,203 shares 340,032 362,032
Wellington Fund 5,463 shares 172,214 160,346
PRIMECAP Fund 1,895 shares 83,841 90,312
Explorer Fund 827 shares 47,566 46,920
International Growth
Fund 697 shares 13,027 13,076
*Wilmington Trust Company
Short Term Money
Market Fund 114,874 shares 114,874 114,874
*Envirosource, Inc.
Common Stock Fund 132,129 shares 2,025,529 677,161
*Participant loans Interest rates
ranging from
8% to 12% - 710,332
===========================
$ 17,180,366 $ 16,893,631
===========================
*Indicates party-in-interest to the Plan.
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1998
Identity of
Party Purchase Selling Cost of Net Gain
Involved Description of Assets Price Price Asset (Loss)
- ---------------------------------------------------------------------------------------------------------------
Category (i)--Single transaction in excess of 5% of plan assets
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Vanguard Windsor Fund $ - $ 1,150,702 $ 1,054,190 $ 96,512
Wilmington Trust
Company Short Term Money Market Fund 1,348,300 - 1,348,300 -
Wilmington Trust
Company Short Term Money Market Fund - 1,330,895 1,330,895 -
Category (iii)--Series of transactions in excess of 5% of plan assets
- ---------------------------------------------------------------------
Vanguard Prime Money Market Fund 955,108 - 955,108 -
- 1,541,022 1,541,022 -
Vanguard Wellesley Income Fund 932,220 - 932,220 -
- 856,369 761,998 94,371
Vanguard Windsor Fund 2,021,214 - 2,021,214 -
- 4,585,369 4,064,506 520,863
Wilmington Trust
Company Short Term Money Market Fund 3,723,806 - 3,723,806 -
- 3,716,837 3,716,837 -
</TABLE>
"Current Value of Asset on Transaction Date" is equal to current (fair value) of
purchase and selling prices on trade dates.
"Lease Rental" and "Expense incurred with Transactions" are not applicable.
There were no Category (ii) or (iv) reportable transactions during the year
ended December 31, 1998.
<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, 1999
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 19, 1999, with respect to the financial statements and schedules of
the Envirosource, Inc. Savings Plan included in this Annual Report (Form 11-K)
for the year ended December 31, 1998.
/s/Ernst & Young LLP
Philadelphia, Pennsylvania
June 23, 1999
