<PAGE>
____________________________
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For The Quarterly Period Ended March 31, 1995
--------------
Commission file number 0-14246
-------
Wheelabrator Technologies Inc.
---------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2678047
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Liberty Lane, Hampton, New Hampshire 03842
- ------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(603) 929-3000
-----------------------------
(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 that 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
--------- ---------
Number of shares of common stock outstanding at April 30, 1995 - 184,535,594
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Part I - Financial Information: Page No.
- ------------------------------- --------
<S> <C>
Item 1 - Financial Statements
Consolidated Balance Sheets as of December 31, 1994, and March 31, 1995.. 1
Consolidated Statements of Income for the Three Months Ended
March 31, 1994 and 1995........................................... 2
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1994 and 1995........................................... 3
Consolidated Statements of Changes in Stockholders' Equity for
the Three Months Ended March 31, 1994 and 1995.................... 4
Notes to Consolidated Financial Statements............................... 5
Item 2 - Management's Discussion and Analysis of Results
of Operations and Financial Condition.......................... 7
Part II - Other Information:
- ----------------------------
Item 1 - Legal Proceedings................................................. 12
Item 6 - Exhibits and Reports on Form 8-K.................................. 13
SIGNATURE.................................................................. 14
Exhibit Index.............................................................. 15
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(000's omitted, except share amounts)
(unaudited)
ASSETS
------
<TABLE>
<CAPTION>
December 31, March 31,
1994 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $ 36,133 $ 29,039
Receivables, net of allowance of $9,462 in 1994 and $10,499 in 1995.. 230,433 235,053
Inventories.......................................................... 69,220 69,218
Costs and earnings in excess of billings............................. 28,767 35,791
Other current assets................................................. 64,220 58,060
---------- ----------
Total current assets.............................................. 428,773 427,161
---------- ----------
Property, plant and equipment, net..................................... 1,680,002 1,661,881
Cost in excess of net assets of acquired businesses, net............... 230,711 228,759
Investments in affiliates.............................................. 618,971 633,538
Other assets........................................................... 324,014 321,415
---------- ----------
Total assets................................................... $3,282,471 $3,272,754
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term project debt......................... $ 29,213 $ 29,528
Due to WMX Technologies, Inc......................................... 53,163 32,316
Accounts payable..................................................... 100,911 97,285
Accrued liabilities.................................................. 189,687 173,881
Advance payments on contracts........................................ 65,966 66,809
---------- ----------
Total current liabilities.......................................... 438,940 399,819
---------- ----------
Long-term project debt................................................. 735,646 731,643
Deferred income taxes.................................................. 332,617 345,335
Deferred income........................................................ 89,083 86,897
Other long-term liabilities............................................ 261,303 255,213
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $1.00 per share, 50,000,000 shares
authorized, none issued or outstanding.............................. - -
Common stock, par value $0.01 per share, 500,000,000 shares
authorized, 189,545,407 shares issued in 1994 and 1995............. 1,895 1,895
Capital in excess of par value....................................... 877,428 877,313
Cumulative translation adjustments................................... (17,650) (9,409)
Treasury stock at cost; 3,270,054 shares in 1994 and 4,959,323
shares in 1995..................................................... (47,489) (70,326)
Retained earnings.................................................... 610,698 654,374
---------- ----------
Total stockholders' equity......................................... 1,424,882 1,453,847
---------- ----------
Total liabilities and stockholders' equity....................... $3,282,471 $3,272,754
=========== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
1
<PAGE>
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
(000's omitted, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Revenue.......................................... $281,332 $373,299
Operating expenses............................... 195,584 267,893
Selling and administrative expenses.............. 25,652 31,758
Interest expense................................. 12,640 15,827
Interest income.................................. (3,404) (2,480)
Equity in earnings of affiliates................. (8,491) (8,279)
Other (income) or expense, net................... (1,697) 132
-------- --------
Income before income taxes..................... 61,048 68,448
Income tax provision............................. 20,908 24,772
-------- --------
Net income..................................... $ 40,140 $ 43,676
======== ========
Weighted average common and common equivalent
shares outstanding............................. 190,200 186,400
======== ========
Earnings per common and common equivalent share.. $ 0.21 $ 0.23
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
(000's omitted)
(unaudited)
<TABLE>
<CAPTION>
1994 1995
---------- ---------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income.................................................................... $ 40,140 $ 43,676
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization............................................... 21,231 26,622
Deferred income taxes....................................................... 9,101 11,402
Undistributed earnings of affiliates........................................ (8,491) (8,279)
Changes in assets and liabilities, net of effects of acquired businesses:
Receivables, net......................................................... (31,629) (4,620)
Inventories.............................................................. (6,306) 2
Costs and earnings in excess of billings................................. (3,023) (7,024)
Other current assets..................................................... 7,205 9,175
Accounts payable and accrued liabilities................................. (20,027) (19,391)
Advance payments on contracts............................................ 220 843
Other long-term liabilities.............................................. (11,840) (8,276)
Other, net.................................................................. 471 4,197
--------- --------
Net cash provided by (used for) operating activities........................ (2,948) 48,327
--------- --------
INVESTING ACTIVITIES:
Capital expenditures.......................................................... (40,387) (4,752)
Investments held by trustees.................................................. 6,274 (523)
Cash paid for acquisitions, net of acquired cash.............................. (4,509) -
Other, net ................................................................... 3,063 (3,792)
--------- --------
Net cash used for investing activities...................................... (35,559) (9,067)
--------- --------
FINANCING ACTIVITIES:
Additions to long-term project debt........................................... 112,985 -
Repayments of long-term project debt.......................................... (122,854) (3,775)
Net borrowings from WMX Technologies, Inc..................................... 23,930 (20,847)
Proceeds from exercise of stock options, net.................................. 4,261 198
Stock repurchase program...................................................... - (23,150)
Other, net.................................................................... (3,736) 1,220
--------- --------
Net cash provided by (used for) financing activities........................ 14,586 (46,354)
--------- --------
Decrease in cash and cash equivalents......................................... (23,921) (7,094)
Cash and cash equivalents at beginning of period.............................. 36,719 36,133
--------- --------
Cash and cash equivalents at end of period.................................... $ 12,798 $ 29,039
========= ========
Supplemental disclosure:
Interest paid, net of amounts capitalized................................... $ 9,195 $ 9,586
========= ========
Income taxes paid........................................................... $ 8,179 $ 5,684
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
(000's omitted, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
Capital in Cumulative
Common Excess of Translation Treasury Retained
Stock Par Value Adjustment Stock Earnings Total
-------- ---------- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $1,888 $874,580 $(33,670) $ (717) $444,757 $1,286,838
Net income - - - - 40,140 40,140
Foreign currency translation - - 6,935 - - 6,935
Exercise of stock options 3 2,581 - 577 - 3,161
Tax benefit from stock
options - 1,100 - - - 1,100
------ -------- -------- -------- -------- ----------
Balance, March 31, 1994 $1,891 $878,261 $(26,735) $ (140) $484,897 $1,338,174
====== ======== ======== ======== ======== ==========
Balance, December 31, 1994 $1,895 $877,428 $(17,650) $(47,489) $610,698 $1,424,882
Net income - - - - 43,676 43,676
Foreign currency translation - - 8,241 - - 8,241
Exercise of stock options - (128) - 313 - 185
Tax benefit from stock
options - 13 - - - 13
Stock repurchases (1,708,600 shares) - - - (23,150) - (23,150)
------ -------- -------- -------- -------- ----------
Balance, March 31, 1995 $1,895 $877,313 $ (9,409) $(70,326) $654,374 $1,453,847
====== ======== ======== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The accompanying financial statements have been prepared by Wheelabrator
Technologies Inc. ("Wheelabrator" or the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
The financial information presented herein reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented. Certain prior period amounts have been reclassified to
conform with the current presentation. The results for interim periods are not
necessarily indicative of the results to be expected for the full year.
Wheelabrator is a majority-owned subsidiary of WMX Technologies, Inc.
("WMX"). Wheelabrator and WMX are parties to an agreement which provides, among
other things, for Wheelabrator to lend excess cash to WMX at interest rates at
least as favorable as those Wheelabrator could otherwise obtain. Under the
terms of this agreement, in the event the Company requires short-term cash for
the conduct of its business and operations, WMX will make available to
Wheelabrator such amounts as Wheelabrator requires, up to a total of $100
million in excess of amounts loaned by Wheelabrator to WMX. As of March 31,
1995, the Company had $32.3 million of net borrowings from WMX under the terms
of this agreement.
Earnings per common and common equivalent share are calculated using
the weighted average number of shares outstanding for each period, including the
effect of common stock equivalents using the treasury stock method. Common
stock equivalents consist of unexercised stock options.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
------------------------------------------------------
NOTE 2 - COMMITMENTS AND CONTINGENCIES
In 1994, a Connecticut Superior Court judge issued a decision on appeals of
the Connecticut Department of Environmental Protection's ("DEP") issuance of
Wheelabrator's permit to construct the $92 million Lisbon, Connecticut, trash-
to-energy facility. In the ruling, the judge remanded the permit back to the
DEP for further proceedings on an uncontested permit condition that requires the
Lisbon facility to dispose of only Connecticut waste. The Company continues to
construct the facility as it pursues a favorable resolution of this permit
remand through appropriate judicial and regulatory proceedings. As of March 31,
1995, the facility was approximately 90 percent complete. Although Wheelabrator
believes that the probability of an adverse determination as a result of the
judge's remand order is remote, such a determination could result in the
permanent termination of facility construction. Through a guarantee agreement
with the Eastern Connecticut Resource Recovery Authority ("ECRRA"), the
facility's owner, such a consequence may require the Company to redeem the debt
issued to finance the facility. In the unlikely event this were to occur, the
resulting payments could have a material adverse impact on the Company's
financial condition and results of operations.
Wheelabrator has been notified by certain private parties that it may be
potentially responsible for a portion of the remediation costs related to a
certain state-listed remediation site currently undergoing a site assessment
study. Although the Company has been requested by these private parties to
share in these costs, no litigation has been filed, nor has the Company been
named as a potentially responsible party. At the present time, there is
insufficient information available to estimate the remediation costs or the
extent of Wheelabrator's responsibility, if any.
There are various lawsuits and claims pending against Wheelabrator that
have arisen in the normal course of Wheelabrator's business and relate mainly to
matters of product liability, personal injury and property damage. The outcome
of these matters is not presently determinable, but in the opinion of
management, based on the advice of counsel, the ultimate resolution of these
matters will not have a material adverse effect on the financial condition or
results of operations of the Company.
NOTE 3 - ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of ("FAS 121"), which is effective for
fiscal years beginning after December 15, 1995. The Company is studying FAS 121
but currently does not believe its application will have a material impact on
the Company's financial statements.
6
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition
----------------------------------
RESULTS OF OPERATIONS
Consolidated revenue for the three month period ended March 31, 1995, grew
$92.0 million to $373.3 million, which represents a 33 percent increase over the
prior year. Just under 30 percent of the revenue growth reflects incremental
construction revenue from the Lisbon, Connecticut, trash-to-energy facility
being built by Wheelabrator. Another 30 percent of the revenue increase
reflects the impact of water quality control businesses acquired during the last
twelve months. The remaining 40 percent was split almost equally between
revenue from new plants and the growth of existing businesses.
Revenue from energy businesses grew $54.2 million or 37 percent during the
quarter and contributed 54 percent of Wheelabrator's total revenue versus 53
percent in the first quarter of 1994. The Company's Falls Township trash-to-
energy facility located outside of Philadelphia, Pennsylvania, and the Polk
County, Florida, urban wood waste-to-energy facility, both of which began
commercial operation in the third quarter of last year, provided almost 30
percent of energy's growth. Incremental construction revenue recognized on
Lisbon provided another 48 percent of the increase. The balance of energy's
growth was attributable to a modest improvement in contract deliveries from
municipal customers as the economy improves, contractual price escalation and
plant operating performances.
Wheelabrator's water business revenue grew $38.0 million or 40 percent
during the quarter and provided 36 percent of total revenue versus 33 percent in
the same quarter of last year. Acquisitions accounted for 73 percent of this
growth. The companies purchased during the past twelve months include Memtek in
the United States, Procesos y Sistemas de Separacion, S.A. in Spain, Darchet
Engineering and Water Treatment in Singapore, Rossmark in The Netherlands, and a
number of smaller companies. These acquisitions strengthened the Company's
global ability to design and supply high-technology industrial water and
wastewater treatment systems. The Baltimore I biosolids pelletizer facility,
which began commercial operations in January 1995, contributed 4 percent of the
growth, with the balance of water's increase coming from existing businesses.
Compared to the first quarter of 1994, existing water business growth came
principally from increased land application volumes and new contracts,
contractual price escalation at the Company's New York Organic Fertilizer
Company ("NYOFCO") biosolids pelletizer facility and improved screen product
sales, primarily in North America and Australia.
Air business revenue was generally flat compared to the first quarter of
1994, providing 10 percent of total revenue versus 14 percent a year ago. The
businesses involved in volatile organic compound, odor control and continuous
emissions monitoring equipment and technology grew modestly over the same
quarter last year; however, this growth was offset by the lull in air pollution
control retrofit activity by utilities between Phases I and II of the Clean Air
Act Amendments of 1990 (the "CAAA"). As it has done in the past, management
intends to continue to size this business according to market demand.
7
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition (continued)
----------------------------------------------
Gross margin was 28.2 percent in the first quarter of 1995, down from 30.5
percent in the first quarter of 1994. The primary reason for this decline is
that Lisbon construction revenue is being offset by a corresponding amount of
construction expense. As a result, there was $26.3 million of incremental first
quarter 1995 revenue related to Lisbon construction that did not contribute any
margin. Excluding this construction revenue, first quarter 1995 gross margin
was 30.4 percent, relatively consistent with a year ago. Overall margins are
anticipated to decline slightly as the Company continues to expand its water
businesses. However, the extent of the decline is highly dependent on the water
business mix, as own-and-operate projects, such as NYOFCO, typically have higher
associated margins than process equipment and contract operating businesses that
involve lower risk and less capital commitment.
Selling and administrative expenses as a percent of revenue were consistent
with last year after excluding the incremental Lisbon construction revenue,
which has no associated selling and administrative expenses. On an absolute
basis, selling and administrative expenses increased $6.1 million over the same
quarter a year ago primarily due to the impact of 1994 acquisitions.
First quarter 1995 interest expense increased $3.2 million in 1995 compared
to 1994. A reduction in capitalized interest in 1995, since no Wheelabrator-
owned facilities were under construction during the quarter, and higher rates
and borrowings from WMX more than offset the benefit of lower outstanding
project debt balances. Interest income declined 27 percent compared to 1994 due
to lower invested balances with WMX. Wheelabrator's equity in the earnings of
Waste Management International plc ("WM International") and Rust International
Inc. were down slightly when compared to the first quarter of 1994, but were in
line with expectations. The Company's effective tax rate excluding equity
income, which is presented net of tax, was 41.2 percent, up from 39.8 percent a
year ago, reflecting primarily a shift in mix of income sources to higher tax
rate states.
Net income in the first quarter increased nine percent to $43.7 million, or
$0.23 per share, compared to net income of $40.1 million, or $0.21 per share, in
the year earlier period. The difference between revenue and net income growth
rates is primarily attributable to flat equity earnings, the absence of interest
capitalization, decreased interest income and a higher effective tax rate.
Operating income showed a strong 23 percent increase in the first quarter versus
a year ago.
The majority of Wheelabrator's businesses are intrinsically connected with
the protection of the environment. As such, a significant portion of the
Company's operating costs and capital expenditures could be characterized as
costs of environmental protection. While the Company is faced, in the normal
course of its activities, with the need to expend funds for environmental
8
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition (continued)
----------------------------------------------
protection and remediation, it does not expect such expenditures to have a
material adverse effect on its financial condition or results of operations
because its business is based upon compliance with environmental laws and
regulations and its goods and services are priced accordingly. Such costs may
increase in the future as a result of legislation or regulation. However, the
Company believes that in general it benefits from increased government
regulation, which increases the demand for its products and services, and that
it has the resources and experience to manage environmental risk.
Wheelabrator has been notified by certain private parties that it may be
potentially responsible for a portion of the remediation costs related to a
certain state-listed remediation site currently undergoing a site assessment
study. Although the Company has been requested by the private parties to share
in these costs, no litigation has been filed and the Company has not been named
a potentially responsible party. At the present time, there is insufficient
information available to estimate the remediation costs or the extent of
Wheelabrator's responsibility, if any.
Wheelabrator also becomes involved, in the normal course of business, in
judicial and administrative proceedings related to alleged violations of
licenses, permits, laws or regulations, or differing interpretations of
applicable requirements. From time to time, the Company pays fines and
penalties as a result of such proceedings. To date, such fines and penalties
have not been material and, in the opinion of management, the ultimate
liability, if any, with respect to these matters will not have a material
adverse effect on the business and properties of the Company, taken as a whole,
or its financial position or results of operations.
From time to time, the Company uses foreign currency derivatives to
mitigate the impact of currency fluctuations on its equity income from WM
International and on certain specifically identified transactions. Derivatives
used are confined to simple instruments that do not involve multipliers or
leverage. The Company had no material amount of foreign currency derivatives
outstanding during the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The principal uses of capital during the first three months of 1995 were
stock repurchases, paydowns of short-term borrowings from WMX, and long-term
project debt and lease payments. Capital expenditures throughout the remainder
of the year are anticipated to be significantly higher than the first quarter's
$4.8 million due, in part, to the commencement of construction of a second
pelletizer installation in Baltimore along with the privatization of the Miami
Conservancy District wastewater treatment plant located in Franklin, Ohio,
following receipt of federal regulatory approvals. Wheelabrator currently has
several other projects in various stages of development. Total 1995 capital
expenditures are anticipated to be approximately $100 million. The Company also
intends to continue its diversification through
9
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition (continued)
----------------------------------------------
selected acquisitions of air and water quality control technologies and
companies, both domestically and internationally.
Wheelabrator believes it has access to sufficient capital resources to
finance its development and construction projects along with future acquisitions
and authorized stock repurchases. Operating cash flows or borrowings from WMX
pursuant to the Master Intercorporate Agreement between the Company and WMX may
be utilized to meet short-term funding requirements. The Company may borrow up
to $100 million in excess of any amount loaned to WMX until September 1995
pursuant to this agreement. The Company and WMX have entered into discussions
regarding an extension of the terms of this credit facility. Future needs for
long-term external capital are anticipated to be met by permanently financing
certain projects.
Before the turn of the century, the air pollution control systems at
certain trash-to-energy facilities owned or leased by Wheelabrator will be
required to be modified to comply with more stringent air pollution control
standards such as those in the CAAA. Required compliance dates for affected
facilities are not yet known because the U.S. Environmental Protection Agency
has not issued the final emission regulations and timetables required by the
CAAA. Based on the draft emission standards issued to date as part of the CAAA
rule-making process, currently available technologies will be adequate to meet
the new standards. Although the total expenditures required for such
modifications are estimated to be in the $225-$275 million range, they are not
expected to have a material adverse effect on the Company's liquidity or results
of operations because provisions in the impacted facilities' long-term waste
supply agreements allow the Company to recover from customers the majority of
incremental capital and operating costs.
In 1994, a Connecticut Superior Court judge issued a decision on appeals of
the DEP issuance of Wheelabrator's permit to construct the $92 million Lisbon,
Connecticut, trash-to-energy facility. In the ruling, the judge remanded the
permit back to the DEP for further proceedings on an uncontested permit
condition that requires the Lisbon facility to dispose of only Connecticut
waste. The Company continues to construct the facility as it pursues a
favorable resolution of this permit remand through appropriate judicial and
regulatory proceedings. As of March 31, 1995, the facility was approximately 90
percent complete. Although Wheelabrator believes that the probability of an
adverse determination as a result of the judge's remand order is remote, such a
determination could result in the permanent termination of facility
construction. Through a guarantee agreement with the ECRRA, the facility's
owner, such a consequence may require the Company to redeem the debt issued to
finance the facility. In the unlikely event this were to occur, the resulting
payments could have a material adverse impact on the Company's financial
condition and results of operations.
10
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition (continued)
----------------------------------------------
During the quarter, Wheelabrator repurchased approximately 1.7 million
shares of its common stock. The Company is authorized to repurchase an
additional 8.8 million shares through March 1996.
FINANCIAL CONDITION
The Company's financial condition at March 31, 1995, compared to
December 31, 1994, generally reflects the results of normal operating activities
as well as the use of funds for stock repurchases and paydowns on short-term
borrowings from WMX. During the first quarter of 1995, net property, plant and
equipment decreased by $18.1 million as a result of depreciation offset in part
by capital expenditures. Net working capital as of March 31, 1995, increased
$37.5 million from year-end 1994 levels to $27.3 million due largely to cash
flows from operations being used to make first quarter lease and tax payments
and to reduce short-term borrowings from WMX. An additional $67.7 million of
borrowings are available to meet short-term funding requirements under the terms
of the Company's Master Intercorporate Agreement with WMX.
ACCOUNTING PRONOUNCEMENT
The Company is required to adopt Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of ("FAS 121") beginning in 1996. The Company
is studying FAS 121, but currently does not believe the pronouncement's
application will have a material impact on its financial statements.
11
<PAGE>
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
---------------------------
ITEM 1 - Legal Proceedings
-----------------
Regulatory - The business in which the Company is engaged is intrinsically
connected with the protection of the environment and the potential exists for
the discharge of materials into the environment. In the ordinary course of
conducting its business activities, the Company becomes involved in judicial and
administrative proceedings involving governmental authorities at the federal,
state and local level including, in certain instances, proceedings instituted by
citizens or local governmental authorities seeking to overturn governmental
action in which governmental officials or agencies are named as defendants
together with the Company or one or more of its subsidiaries, or both. In the
majority of the situations where proceedings are commenced by governmental
authorities, the matters involved relate to alleged technical violations of
licenses or permits pursuant to which the Company operates or is seeking to
operate or laws or regulations to which its operations are subject or are the
result of different interpretations of the applicable requirements. At
March 31, 1995, the Company was involved in one such proceeding where the
Company believes sanctions involved may exceed $100,000.
Other - In addition, there are other routine lawsuits and claims, including
certain environmental matters, pending against Wheelabrator and its subsidiaries
which are incidental to its businesses. In the opinion of the Company's
management, the ultimate liability, if any, with respect to the above
proceedings and such other lawsuits and claims will not have a material adverse
effect on the business and properties of the Company, taken as a whole, or its
financial position and results of operations.
12
<PAGE>
ITEM 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
The exhibits to this report are listed on the Exhibit Index elsewhere
herein.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter ended
March 31, 1995.
13
<PAGE>
SIGNATURE
---------
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.
WHEELABRATOR TECHNOLOGIES INC.
May 11, 1995 /s/ John D. Sanford
-----------------------------
John D. Sanford
Vice President and
Chief Financial Officer
14
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
Number and Description of Exhibit/*/
---------------------------------
2 None
4 None
10 None
11 None
15 None
18 None
19 None
22 None
23 None
24 None
27 Financial Data Schedule
99 None
- --------------------------
* Exhibits not listed are inapplicable
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE MARCH 31, 1995, CONSOLIDATED BALANCE
SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE
THREE-MONTH PERIOD ENDED MARCH 31, 1995, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS AND THE FOOTNOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 29,039
<SECURITIES> 0
<RECEIVABLES> 245,552
<ALLOWANCES> 10,499
<INVENTORY> 69,218
<CURRENT-ASSETS> 427,161
<PP&E> 1,996,494
<DEPRECIATION> 334,613
<TOTAL-ASSETS> 3,272,754
<CURRENT-LIABILITIES> 399,819
<BONDS> 731,643
<COMMON> 1,895
0
0
<OTHER-SE> 1,451,952
<TOTAL-LIABILITY-AND-EQUITY> 3,272,754
<SALES> 0
<TOTAL-REVENUES> 373,299
<CGS> 0
<TOTAL-COSTS> 267,893
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,291
<INTEREST-EXPENSE> 15,827
<INCOME-PRETAX> 68,448
<INCOME-TAX> 24,772
<INCOME-CONTINUING> 43,676
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,676
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0
</TABLE>
