UNITED STATES
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, 1999.
[ ] 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>
Envirosource, Inc. Savings Plan
Financial Statements and Supplemental Schedules
Years ended December 31, 1999 and 1998
TABLE OF CONTENTS
Reports of Independent Auditors................................................3
Audited Financial Statements
Statements of Net Assets Available for Benefits,
as of December 31, 1999 and 1998...........................................5
Statements of Changes in Net Assets Available for Benefits,
Years Ended December 31, 1999 and 1998.....................................6
Notes to Financial Statements..................................................7
Supplemental Schedules
Schedule of Assets Held for Investment Purposes...............................11
Schedule of Reportable Transactions...........................................12
2
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INDEPENDENT AUDITORS' REPORT
The Envirosource, Inc. Savings Plan
Administrative Committee:
We have audited the accompanying statement of net assets available for benefits
of the Envirosource, Inc. Savings Plan (the Plan) as of December 31, 1999, and
the related statement of changes in net assets available for benefits for the
year 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999, and the changes in its net assets available for benefits for
the year then ended, in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplemental information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
May 31, 2000 /s/ Hege Kramer Connell Murphy & Goldkamp, P.C.
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Savings Plan Administrative Committee
Envirosource, Inc.
We have audited the accompanying statement of net assets available for benefits
of the Envirosource, Inc. Savings Plan as of December 31, 1998 and the related
statement of changes in net assets available for benefits for the year 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and the changes in its net assets available for benefits for
the year then ended, in conformity with generally accepted accounting
principles.
Philadelphia, Pennsylvania /s/ Ernst & Young LLP
May 19, 1999
4
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
December 31,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Investments, at fair value $ 15,747,320 $ 16,778,757
Short-term investment fund 1,650 114,874
------------- -------------
Total investments 15,748,970 16,893,631
Investment income receivable 2,543 5,860
------------- -------------
Net assets available for benefits $ 15,751,513 $ 16,899,491
============= =============
</TABLE>
See accompanying notes.
5
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 1999 and 1998
Years Ended December 31,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Additions:
Contributions
Participants $ 942,075 $ 1,067,507
Employer 323,176 468,756
------------- -------------
Total contributions 1,265,251 1,536,263
------------- -------------
Investment income (loss):
Interest 265,964 68,911
Dividends 1,215,405 1,270,879
Net depreciation in fair value
of investments (514,756) (2,177,884)
------------- -------------
Total investment income (loss) 966,613 (838,094)
------------- -------------
Transfer of participants' assets
from other plans 6,300 77,858
Merger of Alexander Mill Services,
Inc. plan 203,727 -
------------- -------------
Total additions 2,441,891 776,027
Participant withdrawals (3,589,869) (5,261,090)
------------- -------------
Decrease in net assets available
for benefits (1,147,978) (4,485,063)
Net assets available for benefits at
beginning of year 16,899,491 21,384,554
------------- -------------
Net assets available for benefits at
end of year $ 15,751,513 $ 16,899,491
============= =============
</TABLE>
See accompanying notes.
6
<PAGE>
Envirosource, Inc. Savings Plan
Notes to Financial Statements
December 31, 1999 and 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% of
such contributions, subject to certain limitations. Participant contributions
invested in the Envirosource, Inc. Common Stock Fund were matched 100% through
December 31, 1999. Beginning January 1, 2000, such contributions are matched
50%. 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 (IRC). Participants may
also make additional contributions to the Plan, subject to certain limitations,
which are not tax-deferred.
PARTICIPANT ACCOUNTS
Each participant's account is credited with their contributions and allocations
of the employer's contributions and Plan earnings. Allocations of employer
contributions are based on participant-directed investment elections.
Allocations of Plan earnings are based on each participant's account balance.
VESTING
Participants are immediately and fully vested in their Plan contributions, and
any investment income thereon. Generally, participants become 20% vested in the
matching contributions made by the employer (and investment income thereon) for
each year of qualifying service. In addition, regardless of the years of
service, participants become fully 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 upon termination are used to fund benefits required to be restored
for formerly terminated participants. The excess, if any, is used to reduce the
employer's funding of future matching contributions.
7
<PAGE>
Envirosource, Inc. Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
1. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENTS 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 twelve-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.
PLAN TERMINATION
Although the Company has not expressed any intent to terminate the Plan, it may
do so at any time, subject to the provisions of ERISA. 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 document.
ADMINISTRATIVE EXPENSES
Administrative expenses incurred by the Plan are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
In September 1999 the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 99-3, "Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure Matters."
This SOP simplified required disclosures for investments held in defined
contribution plans, eliminating the former requirement to report
participant-directed investment programs individually within the financial
statements of such plans. As required by the SOP, the Plan adopted the new
presentation requirements for the year ended December 31, 1999 and reclassified
comparative amounts for earlier periods presented in the accompanying financial
statements.
8
<PAGE>
Envirosource, Inc. Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. Loans to participants are valued at their outstanding balances, which
approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is accrued as earned. 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. INVESTMENTS
Participants may direct employer and employee contributions into the
Envirosource, Inc. Common Stock Fund, or into any of nine mutual funds of the
Vanguard Group of Mutual Funds. Vanguard funds that participants may invest in
are: the Prime Money Market Fund, the Total Bond Market Index Fund, the
Wellesley Income Fund, the Windsor Fund, the Total Stock Market Index Fund, the
Wellington Fund, the PRIMECAP Fund, the Explorer Fund, and the International
Growth Fund. Participants, upon their entry into the Plan, receive summaries of
each fund's investment objectives. A more detailed prospectus for any of the
investment options will be made available to participants upon request, at no
cost.
The following table presents shares held and the fair value of investments
representing 5% or more of net assets available for benefits at December 31,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Vanguard Prime Money Market Fund, 2,588,032 and
2,694,442 shares, respectively $ 2,588,032 $ 2,694,442
Vanguard Wellesley Income Fund, 85,472 and
116,809 shares, respectively 1,611,152 2,583,812
Vanguard Windsor Fund, 474,142 and 563,739
shares, respectively 7,192,740 8,777,409
Vanguard Total Stock Market Index Fund, 35,480 shares 1,178,647 N/A
Vanguard PRIMECAP Fund, 24,520 shares 1,521,968 N/A
</TABLE>
N/A - not applicable, as fair value of investment was less than 5% of total net
assets available for benefits for that plan year.
9
<PAGE>
Envirosource, Inc. Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
4. RELATED PARTY TRANSACTIONS
At December 31, 1999, the Plan held 219,738 shares of the Envirosource, Inc.
Common Stock Fund, with a fair value of $170,163. At December 31, 1998, there
were 132,129 shares held with a fair value of $677,161. The decrease in net
assets available for benefits during 1999 was $510,589, primarily consisting of
net depreciation in fair value of the stock of $583,084, offset by
contributions, net of withdrawals, of $73,711. For 1998, the decrease in net
assets was $1,333,715, consisting of net depreciation of $1,630,761, offset by
net contributions of $95,378, and interfund transfers of $201,668.
5. 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 prior to the
end of the 2000 plan year, or as otherwise required. 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 remains tax-exempt.
6. PLAN MERGER
During 1999, net assets representing balances of certain salaried employees of
the Alexander Mill Services, Inc. 401(k) plan were transferred into the Plan.
Such assets totaled $203,727 at the time of the transfer.
10
<PAGE>
Envirosource, Inc. Savings Plan
Schedule of Assets Held for Investment Purposes
December 31, 1999
DESCRIPTION OF
INVESTMENT,
INCLUDING
INTEREST RATE,
IDENTITY OF ISSUE, BORROWER, PAR VALUE, AND CURRENT
LESSOR, OR SIMILAR PARTY MATURITY DATE, IF ANY COST VALUE
------------------------------- --------------------- ----------- -----------
Mutual Funds: Shares
---------
Vanguard Group of funds:
Prime Money Market Fund 2,588,032 $ 2,588,032 $ 2,588,032
Total Bond Market
Index Fund 46,847 467,543 447,853
Wellesley Income Fund 85,472 1,875,373 1,611,152
Windsor Fund 474,142 7,327,995 7,192,740
Total Stock Market
Index Fund 35,480 995,958 1,178,647
Wellington Fund 5,479 162,464 153,182
PRIMECAP Fund 24,520 1,311,413 1,521,968
Explorer Fund 1,028 65,244 70,530
International Growth Fund 8,248 161,591 185,486
----------- -----------
Total Vanguard Group of funds 14,955,613 14,949,590
Envirosource, Inc.
Common Stock Fund* 219,738 1,220,630 170,163
Participant Loans* Interest rates
ranging from
8% to 12% - 627,567
----------- -----------
Total Investment Funds 16,176,243 15,747,320
----------- -----------
Wilmington Trust Company*
Short-term Money Market Fund 1,650 1,650 1,650
----------- -----------
Total assets held for investment purposes $16,177,893 $15,748,970
=========== ===========
*Indicates party-in-interest to the Plan.
11
<PAGE>
<TABLE>
<CAPTION>
Envirosource, Inc. Savings Plan
Schedule of Reportable Transactions
Year Ended December 31, 1999
IDENTITY OF
PARTY PURCHASE SELLING COST OF NET GAIN
INVOLVED DESCRIPTION OF ASSETS PRICE PRICE ASSET (LOSS)
----------------- ----------------------------- -------------- -------------- -------------- -------------
(i) Single transaction in excess of 5% of Plan assets
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Vanguard Group
of Mutual Funds Windsor Fund $ 843,579 $ - $ 843,579 $ -
(iii) Series of transactions in excess of 5% of Plan assets
-----------------------------------------------------------
Wilmington Trust
Company Short-term investment fund $ 6,942,634 $ - $ 6,942,634 $ -
- 6,953,032 6,953,032 -
Vanguard Group
of Mutual Funds Prime Money Market Fund 899,849 - 899,849 -
- 1,006,254 1,006,254 -
PRIMECAP Fund 1,413,459 - 1,413,459 -
- 210,433 185,892 24,541
Wellesley Income Fund 500,562 - 500,562 -
- 1,163,133 969,056 194,077
Windsor Fund 2,087,837 - 2,087,837 -
- 3,651,787 3,435,172 216,615
Total Stock Market Index Fund 741,147 - 741,147 -
- 189,995 176,641 13,354
</TABLE>
12
<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 21, 2000
ENVIROSOURCE, INC. SAVINGS PLAN
By: /s/John C. Heenan
-----------------
John C. Heenan
Member of the Envirosource, Inc.
Savings Plan Administrative Committee
13
<PAGE>
EXHIBIT INDEX
Number Exhibit Page
23.1 Consent of Independent Auditors EX-23.1
23.2 Consent of Independent Auditors EX-23.2
14
