<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 1996
[ ] 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: 0-14246
WHEELABRATOR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 22-2678047
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4 LIBERTY LANE WEST
HAMPTON, NEW HAMPSHIRE 03842
(Address of principal executive offices) (Zip Code)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 929-3000
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
--------- _________
SHARES OF REGISTRANT'S COMMON STOCK, $0.01 PAR VALUE, ISSUED AND OUTSTANDING AT
JULY 31, 1996: 161,747,977
- --------------------------------------------------------------------------------
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<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
-----------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1 - Financial Statements
Consolidated Balance Sheets as of December 31, 1995, and
June 30, 1996.................................................. 1
Consolidated Statements of Income for the Three and Six
Months Ended June 30, 1995 and 1996............................ 2
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1996......................................... 3
Consolidated Statements of Changes in Stockholders' Equity for
the Six Months Ended June 30, 1995 and 1996.................... 4
Notes to Consolidated Financial Statements........................ 5
Item 2 - Management's Discussion and Analysis of Results of
Operations and Financial Condition................................ 9
PART II. OTHER INFORMATION:
Item 1 - Legal Proceedings............................................ 19
Item 4 - Submission of Matters to a Vote of Security Holders.......... 19
Item 6 - Exhibits and Reports on Form 8-K............................. 20
SIGNATURE.............................................................. 21
Exhibit Index.......................................................... 22
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(000s omitted, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
- -----------------------------------------------------------------------------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 78,732 $ 33,921
Receivables, net of allowance of $12,187 in 1995
and $9,147 in 1996...................................... 215,080 230,392
Inventories.............................................. 62,638 50,210
Costs and earnings in excess of billings................. 50,497 44,500
Other current assets..................................... 51,312 56,741
---------- ----------
Total current assets................................... 458,259 415,764
Property, plant and equipment, net........................ 1,624,159 1,615,597
Cost in excess of net assets of acquired businesses, net.. 233,533 231,525
Investments in affiliates................................. 604,656 633,610
Other assets.............................................. 299,586 301,750
---------- ----------
Total assets.......................................... $3,220,193 $3,198,246
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt..................... $ 35,808 $ 39,355
Due to WMX Technologies, Inc............................. - 128,645
Accounts payable......................................... 93,327 107,156
Accrued liabilities...................................... 185,273 178,237
Advance payments on contracts............................ 45,686 40,320
---------- ----------
Total current liabilities.............................. 360,094 493,713
Long-term debt............................................ 704,414 755,812
Deferred income taxes..................................... 395,645 422,085
Deferred income........................................... 77,513 72,168
Other long-term liabilities............................... 232,262 221,546
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 1995 and 1996................................. 1,895 1,895
Capital in excess of par value........................... 876,595 875,593
Cumulative translation adjustments....................... (9,986) (10,810)
Treasury stock at cost; 10,112,610 shares in 1995
and 27,797,430 shares in 1996........................... (146,494) (431,693)
Retained earnings........................................ 728,255 797,937
---------- ----------
Total stockholders' equity............................. 1,450,265 1,232,922
---------- ----------
Total liabilities and stockholders' equity............ $3,220,193 $3,198,246
========== ==========
</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 AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(000s omitted, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
- ------------------------------------------------------------------------------------------------------------
1995 1996 1995 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue..................................... $369,994 $365,952 $743,293 $705,549
Operating expenses.......................... 260,590 253,846 528,483 490,999
Selling and administrative expenses......... 32,869 31,006 64,627 62,047
Interest expense............................ 15,206 13,788 31,033 27,327
Interest income............................. (2,934) (1,713) (5,414) (3,765)
Equity in earnings of affiliates............ (7,678) (7,938) (15,981) (13,002)
Other (income) or expense, net.............. (3,415) (489) (3,283) 321
-------- -------- -------- --------
Income before income taxes................ 75,356 77,452 143,828 141,622
Income tax provision........................ 25,662 27,651 50,434 51,251
-------- -------- -------- --------
Income from continuing operations......... 49,694 49,801 93,394 90,371
Equity income from discontinued operations.. 3,274 - 3,250 -
-------- -------- -------- --------
Net income.............................. $ 52,968 $ 49,801 $ 96,644 $ 90,371
======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding.............. 185,300 172,400 185,900 176,300
======== ======== ======== ========
Earnings per common and common
equivalent share:
Continuing operations...................... $ 0.27 $ 0.29 $ 0.50 $ 0.51
Discontinued operations.................... 0.02 - 0.02 -
-------- -------- -------- --------
Net Income.............................. $ 0.29 $ 0.29 $ 0.52 $ 0.51
======== ======== ======== ========
</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 SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(000s omitted)
(unaudited)
1995 1996
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES:
Net income......................................... $ 96,644 $ 90,371
Adjustments to reconcile net income to cash flows
from operating activities:
Depreciation and amortization.................... 53,575 54,108
Deferred income taxes............................ 29,322 19,734
Undistributed earnings of affiliates............. (15,981) (13,002)
Equity in discontinued operations................ (3,250) -
Changes in assets and liabilities, net of
effects of acquired businesses:
Receivables, net............................... (25,398) (15,312)
Inventories.................................... 2,024 1,756
Costs and earnings in excess of billings....... (16,835) 6,601
Other current assets........................... 8,232 (2,780)
Accounts payable and accrued liabilities....... (23,291) (13,806)
Advance payments on contracts.................. (5,396) 5,286
Other long-term liabilities.................... (13,635) (16,844)
Other, net....................................... (4,621) 4,063
-------- ---------
Net cash provided by operating activities........ 81,390 120,175
-------- ---------
INVESTING ACTIVITIES:
Capital expenditures............................... (12,227) (37,127)
Proceeds from sale of investments.................. 12,658 -
Investments held by trustees....................... (895) (1,131)
Cash paid for acquisitions, net of acquired cash... - (4,483)
Cash paid for equity investment.................... - (15,415)
Other, net......................................... (3,819) (1,299)
-------- ---------
Net cash used for investing activities........... (4,283) (59,455)
-------- ---------
FINANCING ACTIVITIES:
Additions to long-term debt........................ 1,290 58,550
Repayments of long-term debt....................... (5,987) (6,081)
Net borrowings from WMX Technologies, Inc.......... (53,163) 128,645
Proceeds from exercise of stock options............ 798 8,693
Stock repurchase program........................... (24,420) (296,070)
Other, net......................................... 1,847 732
-------- ---------
Net cash used for financing activities........... (79,635) (105,531)
-------- ---------
Net decrease in cash and cash equivalents.......... (2,528) (44,811)
Cash and cash equivalents at beginning of period... 36,133 78,732
-------- ---------
Cash and cash equivalents at end of period......... $ 33,605 $ 33,921
======== =========
Supplemental disclosure:
Interest paid, net of amounts capitalized........ $ 30,098 $ 27,175
======== =========
Income taxes paid................................ $ 29,075 $ 23,117
======== =========
Significant noncash investing activities:
Common stock issued for acquisitions............. $ - $ -
======== =========
Liabilities assumed in acquisitions.............. $ - $ 2,675
======== =========
</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 SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(000s 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, 1994 $1,895 $877,428 $(17,650) $ (47,489) $610,698 $1,424,882
Net income - - - - 96,644 96,644
Dividends declared
($0.11 per share) - - - - (20,301) (20,301)
Foreign currency
translation - - 9,081 - - 9,081
Exercise of
stock options - (508) - 1,306 - 798
Tax benefit from
stock options - 132 - - - 132
Stock repurchases
(1,797,200 shares) - - - (24,420) - (24,420)
------ -------- -------- --------- -------- ----------
Balance,
June 30, 1995 $1,895 $877,052 $ (8,569) $ (70,603) $687,041 $1,486,816
====== ======== ======== ========= ======== ==========
Balance,
December 31, 1995 $1,895 $876,595 $ (9,986) $(146,494) $728,255 $1,450,265
Net income - - - - 90,371 90,371
Dividends declared
($0.12 per share) - - - - (20,689) (20,689)
Foreign currency
translation - - (824) - - (824)
Exercise of
stock options - (2,358) - 11,051 - 8,693
Tax benefit from
stock options - 1,356 - - - 1,356
Stock repurchases
(18,444,700 shares) - - - (296,250) - (296,250)
------ -------- -------- --------- -------- ----------
Balance,
June 30, 1996 $1,895 $875,593 $(10,810) $(431,693) $797,937 $1,232,922
====== ======== ======== ========= ======== ==========
</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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets, liabilities, income and expenses and
disclosures of contingencies. Future events could alter such estimates.
Wheelabrator is a majority-owned subsidiary of WMX Technologies, Inc. ("WMX").
Wheelabrator and WMX are parties to a Master Intercorporate 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 $100.0 million in excess of amounts loaned by Wheelabrator to WMX. As of
June 30, 1996, the Company had $53.6 million of net borrowings from WMX under
the terms of this agreement. In addition, the Company also had a $75.0 million
short-term note from WMX outstanding at June 30, 1996, that matures on March 31,
1997, with essentially the same terms as borrowings under the Master
Intercorporate Agreement. The proceeds from this note were used to finance
second quarter share repurchases.
In the fourth quarter of 1995, Rust International Inc. ("Rust") announced that
it would sell or discontinue its process engineering, construction, specialty
5
<PAGE>
WHEELABRATOR TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
contracting, and similar lines of business and focus on its environmental and
infrastructure consulting businesses. During the second quarter of 1996, the
sale of the industrial process engineering and construction business, based in
Birmingham, Alabama, was completed. The transaction did not have a material
impact on Rust's income. Rust is currently negotiating the sales of certain
other businesses. The businesses being sold have been accounted for as
discontinued operations, and accordingly, Wheelabrator has reported its 40
percent equity interest in the historical operating results of these businesses
separately from continuing operations in the accompanying consolidated
statements of income.
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.
NOTE 2 - ACQUISITIONS AND EQUITY INVESTMENT
During the first six months of 1996, the Company acquired wastewater treatment
operating contracts and an industrial cogeneration facility in Martell,
California, for $7.0 million in cash and assumed debt. Also during the first
six months of 1996, the Company acquired a 20 percent interest in an ultrapure
water company for $15.4 million. No acquisitions or equity investments were
made during the first six months of 1995. The proforma effect of the 1996
acquisitions and equity investment is not material.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
In May 1994, the U.S. Supreme Court ruled that state and local governments may
not constitutionally restrict the free movement of trash in interstate commerce
through the use of flow control laws. Such laws typically involve a
municipality specifying the disposal site for all solid waste generated within
its borders. Since the ruling, several decisions of state or federal courts
have invalidated regulatory flow control schemes in a number of jurisdictions.
Other judicial decisions have upheld nonregulatory means by which municipalities
may effectively control the flow of municipal solid waste. The Company's
Gloucester County, New Jersey, facility relies on a disposal franchise for
substantially all of its supply of municipal solid waste. In July 1996, a
Federal District Court permanently enjoined the State of New Jersey from
enforcing its solid waste
6
<PAGE>
WHEELABRATOR TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
regulatory flow control system, which was held to be unconstitutional, but
stayed the injunction for as long as its ruling is on appeal plus an additional
period of two years to enable the State to devise an alternative
nondiscriminatory approach. The Company believes that the State is currently
deciding whether or not it will appeal the Federal District Court's ruling.
The Supreme Court's 1994 ruling and subsequent court decisions have not to date
had a material adverse affect on any of the Company's trash-to-energy
operations. Federal legislation has been proposed, but not yet enacted, to
effectively grandfather existing flow control mandates. In the event that such
legislation is not adopted, the Company believes that affected municipalities
will endeavor to implement alternative lawful means to continue controlling the
flow of waste. In view of the uncertain state of the law at this time, however,
the Company is unable to predict whether such efforts would be successful or
what impact, if any, this matter might have on its trash-to-energy facilities.
Wheelabrator has been notified by certain private parties that it may be
responsible for a portion of the remediation costs related to a certain state-
listed remediation site currently subject to an enforcement order that includes
a site assessment study. Although the Company is considering joining 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 beyond its possible
voluntary sharing of enforcement order costs, which have been previously
accrued.
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, their ultimate resolution will not
have a material adverse effect on the financial condition or results of
operations of the Company.
7
<PAGE>
WHEELABRATOR TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4 - ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1996, the Company adopted 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"). The adoption of FAS 121 did
not have a material impact on its financial statements since Wheelabrator's
accounting was substantially in compliance with the new standard.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), which the Company also must adopt in 1996. FAS 123
provides an optional new method of accounting for employee stock options and
expands required disclosure about stock options. If the new method of
accounting is not adopted, the Company will be required to disclose pro forma
net income and earnings per share as if it were. The Company is studying FAS
123 and is gathering data necessary to calculate compensation in accordance
with its provisions, but has not decided whether to adopt the new method or
quantified its impact on the financial statements.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
(000s omitted in all tables)
Wheelabrator Technologies Inc. ("Wheelabrator" or the "Company") is a
diversified environmental products and services company focused primarily on
meeting customer requirements for clean energy and clean water. The Company has
been a pioneer in the privatization of municipal infrastructure while providing
water, wastewater, biosolids, air quality control, trash-to-energy, and
independent power solutions to environmental problems of communities and
industries worldwide. Wheelabrator is majority-owned by WMX Technologies, Inc.
("WMX") and holds minority interests in two other WMX-controlled subsidiaries,
Waste Management International plc ("WM International") and Rust International
Inc. ("Rust").
RESULTS OF OPERATIONS
- ---------------------
Consolidated revenue for the quarter ended June 30 was $366.0 million in 1996
compared with $370.0 million in 1995. Second quarter 1995 revenue included $8.6
million of construction revenue related to the Lisbon, Connecticut, trash-to-
energy facility, which was completed in that quarter. Income from continuing
operations for the quarter of $49.8 million was essentially flat when compared
with the prior year, while net income decreased $3.2 million to $49.8 million
due to the absence of equity income from discontinued operations. Earnings per
share from continuing operations increased $0.02 to $0.29, reflecting fewer
outstanding shares. Net income per share was flat at $0.29.
For the six months ended June 30, 1996, revenue totaled $705.5 million, while
income from continuing operations and net income were each $90.4 million, or
$0.51 per share. First half 1995 revenue was $743.3 million, with income from
continuing operations of $93.4 million, or $0.50 per share, and net income of
$96.6 million, or $0.52 per share. Construction revenue related to the Lisbon
project was $37.5 million in the first six months of 1995. The first six months
of 1995 also included a gain associated with the Company's liquidation of its
investment in Abex, Inc.
Wheelabrator's operations are managed along the two principal industry segments
that the Company serves--Clean Water and Clean Energy. Clean Water's principal
products and services include equipment and process systems designed for a broad
range of water and wastewater management applications, biosolids management, and
outsourcing the operation, or ownership and operation, of water and wastewater
treatment facilities. Its customer base is global in nature and includes both
municipalities and industry. The Company's materials cleaning business is
included in the Clean Water segment since its manufacturing and aftermarket
9
<PAGE>
INSERT 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
capabilities are utilized by certain Company water businesses. The Clean Energy
segment develops, owns, and operates trash-to-energy and independent power
facilities that generate electricity and other forms of energy while providing
trash disposal for municipal and industrial customers. Wheelabrator's air
quality control business is included in Clean Energy segment results. The
analysis of operating results that follows reflects these two segments. Results
from the prior year, during which the Company was managed and reported as one
industry segment, have been restated to conform with the current presentation.
Clean Water:
- -----------
Operating results for the three and six months ended June 30 were as follows:
<TABLE>
<CAPTION>
Three Months Six Months
------------ ----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $162,960 $164,213 $313,220 $301,248
Operating expenses 128,980 129,167 247,878 239,140
Selling and admin.
expenses 22,605 22,811 45,193 44,393
-------- -------- -------- --------
Margin $ 11,375 $ 12,235 $ 20,149 $ 17,715
======== ======== ======== ========
</TABLE>
Revenue for the second quarter of $163.0 million was down slightly ($1.3
million) from the prior year as lower revenue in the segment's existing North
American and European water process businesses was only partially offset by
growth of $4.3 million from acquisitions made during the past twelve months.
These acquisitions include Sun Chi Environmental Industries in Taiwan, the
privatization of the Miami Conservancy District wastewater treatment plant in
Franklin, Ohio, and the purchase of certain water operating contracts from Rust.
Water process revenue declined due to a large project being completed in 1995
and the timing of contract execution on orders booked late in 1995 and early in
1996. In addition, European revenue was negatively impacted by the weak German
economy and the stronger dollar. First half segment revenue grew $12.0 million,
or four percent, to $313.2 million. Businesses acquired during the past twelve
months accounted for $9.0 million, or approximately 75 percent, of this growth.
The balance of the growth was attributable to strong biosolids and contract
operations and the Asian market, partially offset by lower water process revenue
in Europe and North America.
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
Operating income decreased $0.9 million from the second quarter of 1995 to $11.4
million in 1996 as a result of the revenue decrease. Gross margin for the
quarter in both 1996 and 1995 was 21 percent. Selling and administrative costs
remained flat at 14 percent of revenue. For the first six months of 1996,
operating income increased $2.4 million, or 14 percent, to $20.1 million due to
improved revenue and lower selling and administrative expenses. Gross margin as
a percent of revenue was 21 percent for the first six months of both years.
Selling and administration costs for the first six months increased $0.8 million
over the same period a year ago due largely to the growth in Asian operations,
but decreased slightly as a percent of revenue to 14 percent because revenue
grew at a faster rate than associated selling and overhead costs.
Clean Energy:
- ------------
Operating results for the three and six months ended June 30 were as follows:
<TABLE>
<CAPTION>
Three Months Six Months
------------ ----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $205,069 $207,710 $396,712 $445,893
Operating expenses 126,943 133,942 247,504 294,293
Selling and admin.
expenses 8,401 10,074 16,854 20,251
-------- -------- -------- --------
Margin $ 69,725 $ 63,694 $132,354 $131,349
======== ======== ======== ========
</TABLE>
Revenue for this segment totaled $205.1 million during the second quarter of
1996, which represents a $2.6 million decrease from the comparable 1995 period.
The benefits of operating revenue from the Lisbon facility, which began
commercial operation in January 1996, the acquisition of an industrial
cogeneration facility in Martell, California, and less curtailment of electrical
purchases by the utility customer of the Company's California independent power
facilities were more than offset by the absence of Lisbon construction revenue
and a continuing decline in air business revenue. Air business revenue fell
from nine percent of segment revenue in the second quarter and first six months
of 1995 to seven percent in the comparable periods of 1996, reflecting
continuing industry-wide weakness in the face of regulatory uncertainty. The
segment's six month revenue declined $49.2 million to $396.7 million due to the
above factors as well as lower spot market pricing in the first quarter for
trash disposal in the Broward and Dade County, Florida, area.
11
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
Clean Energy operating income was $69.7 million during the second quarter of
1996 versus $63.7 million in the comparable year earlier period. As a percent
of revenue, segment operating income increased over three percentage points to
34 percent. Gross margin improved over two percentage points to 38 percent of
revenue, while selling and administrative costs declined almost a point to four
percent of revenue. The gross margin percentage increase resulted primarily
from the absence of Lisbon facility construction revenue, which had no
associated margin. Improved air results along with lower energy development
expense were responsible for the selling and administrative percentage
improvement. The air business operated near break-even, but had an operating
income increase of approximately $2 million over the same quarter of 1995.
Six month operating income for the segment increased $1.0 million to $132.4
million and as a percent of revenue increased almost four percentage points to
33 percent. Gross margin for the six-month period decreased in absolute dollars
from $151.6 million in 1995 to $149.2 million in 1996, but increased as a
percent of revenue almost four percentage points. Lower operating revenue was
responsible for the absolute dollar gross margin decline, while the absence of
no-margin Lisbon construction revenue improved the six-month gross margin
percentage. During the first six months, selling and administrative costs
declined $3.4 million versus the comparable 1995 period and decreased slightly
as a percent of revenue to four percent.
OTHER ITEMS
- -----------
Interest: Interest expense for the second quarter and first six months of 1996
decreased $1.4 million and $3.7 million, respectively, compared with 1995
principally as a result of lower average outstanding debt balances. During the
second quarter of 1996, WTI repurchased 15.4 million shares of its common stock
(see "Financial Condition" below). The debt incurred to fund these purchases
will increase interest expense during the last half of 1996. Interest income
decreased $1.2 million and $1.6 million, respectively, from the second quarter
and first half of 1995 because of higher interest rates on long-term investments
with WMX that matured during 1995.
Equity in Earnings of Affiliates: Equity income from the continuing operations
of Wheelabrator's affiliates for the second quarter and six months ended June 30
totaled $7.7 million and $16.0 million, respectively, in 1995 and $7.9 million
and $13.0 million, respectively, in 1996. The increase for the quarter was
largely driven by the Company's equity in the earnings of Glegg Industries,
Inc., an ultrapure water company in which Wheelabrator acquired a 20 percent
interest
12
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
during the quarter. During the first six months, the Company's equity in WM
International's earnings decreased $0.3 million due to a stronger dollar versus
pound exchange rate. The remaining six-month decrease was largely caused by the
impact of adverse weather on Rust's first quarter earnings.
Income Taxes: The Company's effective tax rate excluding equity income, which is
reported net of tax, for both the three and six months ended June 30, 1996, was
39.8 percent. For the three and six months ended June 30, 1995, the rates were
37.9 percent and 39.4 percent, respectively. The lower rates in 1995 were
attributable to certain tax benefits associated with the Company's liquidation
of its investment in Abex, Inc.
Discontinued Operations: In the fourth quarter of 1995, Rust announced that it
would sell or discontinue its process engineering, construction, specialty
contracting, and similar lines of business and focus on its environmental and
infrastructure consulting businesses. During the second quarter of 1996, the
sale of the industrial process engineering and construction business, based in
Birmingham, Alabama, was completed. The transaction did not have a material
impact on Rust's income. Rust is currently negotiating the sales of certain
other businesses. The businesses being sold have been accounted for as
discontinued operations, and accordingly, Wheelabrator has reported its 40
percent equity interest in the historical operating results of these businesses
separately from continuing operations in the accompanying consolidated
statements of income.
Environmental Matters: The majority of Wheelabrator's businesses are involved
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 business, with the need to expend funds for environmental
protection, 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
products and services are priced accordingly. Although unlikely in the
near-term, such ongoing compliance costs may increase in the future as a result
of legislation or regulation. However, the Company believes that in general it
benefits from increased governmental regulation, which increases the demand for
its products and services, and that it has the resources and experience to
manage environmental risk.
13
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
Wheelabrator has instituted procedures to periodically evaluate potential
environmental exposures. When the Company concludes it is probable that a
liability has been incurred, provision is made in the financial statements,
based upon management's judgment and prior experience, for the Company's best
estimate of the liability. Such estimates are subsequently revised as deemed
necessary when additional information becomes available. While the Company does
not anticipate that any such adjustment would be material to its financial
statements, it is reasonably possible that future technological, regulatory or
enforcement developments, results of environmental studies, or other factors
could alter this expectation and necessitate the recording of additional
liabilities, which could be material.
Wheelabrator has been notified by certain private parties that it may be
responsible for a portion of the remediation costs related to a certain state-
listed remediation site currently subject to an enforcement order that includes
a site assessment study. Although the Company is considering joining 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 beyond its possible
voluntary sharing of enforcement order costs, which have been previously
accrued.
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 operation.
Accounting Pronouncements: Effective January 1, 1996, the Company adopted
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"). The adoption of FAS 121 did not have a material impact on its
financial statements since Wheelabrator's accounting was substantially in
compliance with the new standard.
14
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), which the Company also must adopt in 1996. FAS 123
provides an optional new method of accounting for employee stock options and
expands required disclosure about stock options. If the new method of
accounting is not adopted, the Company will be required to disclose pro forma
net income and earnings per share as if it were. The Company is studying FAS
123 and is gathering data necessary to calculate compensation in accordance with
its provisions, but has not decided whether to adopt the new method or
quantified its impact on the financial statements.
FINANCIAL CONDITION
- -------------------
Liquidity and Capital Resources: Operating activities continue to be
Wheelabrator's principal source of liquidity and provided $120.2 million of cash
for the first six months of 1996 compared to $81.4 million during the same
period of 1995. The majority of the increase was attributable to lower cash
funding of working capital needs in 1996 offset, in part, by lower deferred
taxes. The working capital improvement relates primarily to timing of long-term
contract payments, while the change in deferred taxes is attributable to the
reversal of depreciation timing differences at certain energy facilities.
Investing activities utilized $4.3 million and $59.5 million of cash during the
first six months of 1995 and 1996, respectively. Wheelabrator spent $1.3
million on project construction during the first six months of 1995 compared
with $22.4 million in 1996. During the first half of 1996, construction
continued on a second Company-owned pelletizer facility in Baltimore, Maryland.
Other project spending during the first six months of 1996 included expansion of
the Parker, Arizona, carbon regeneration facility and construction of an
industrial process water recycling facility in North Carolina. Nonproject
capital expenditures were $10.9 million and $14.7 million in the first six
months of 1995 and 1996, respectively. During the first six months of 1996,
Wheelabrator acquired wastewater treatment operating contracts and an industrial
cogeneration facility in Martell, California, for approximately $4.5 million in
cash and the assumption of $2.5 million in debt. Also during the first half of
1996, the Company acquired a 20 percent interest in Glegg Industries, Inc., a
leading ultrapure water company, for $15.4 million. There were no acquisitions
or equity investments made during the first half of 1995. The proforma effect
of the acquisitions and equity investment on the Company's results of operations
is not material.
15
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
Financing activities required $79.6 million and $105.5 million of cash during
the first six months of 1995 and 1996, respectively. Wheelabrator repurchased
18.4 million shares of its common stock at an aggregate cost of $296.3 million
($0.2 million of which was in accounts payable at June 30, 1996) during the
first six months of 1996 compared with repurchases of 1.8 million shares at an
aggregate cost of $24.4 million during the first six months of 1995. The
Company is authorized to repurchase approximately an additional 775,000 shares
of its common stock through mid-December 1997 on the open market or in privately
negotiated transactions. Short-term borrowings from WMX provided a portion of
the cash needed for these share repurchases and totaled $128.6 million as of
June 30, 1996. In the comparable prior year period, the Company repaid $53.2
million of short-term borrowings from WMX. In addition, during the second
quarter of 1996, the Company externally financed the two Company-owned
pelletizer facilities in Baltimore, Maryland, with $58.6 million of project
debt.
Within the next five years, 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 adopted
by the EPA in October 1995. The compliance dates will vary by facility, but all
affected facilities will be required to be in compliance with the new rules by
the end of the year 2000. 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 $250 - $300 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.
Wheelabrator had a working capital deficit of $77.9 million as of June 30, 1996,
compared to net working capital of $98.2 million at December 31, 1995. The
decline was driven primarily by share repurchase activity that caused cash and
cash equivalents to decline from $78.7 million at year-end 1995 to $33.9 million
at June 30, 1996, and also led to an increase in short-term borrowings from WMX
of $128.6 million during that same time period. Pursuant to the Master
Intercorporate Agreement, which governs borrowing and lending between the
Company and WMX, Wheelabrator may borrow up to $100.0 million in excess of any
amounts loaned to WMX. As of June 30, 1996, the Company had $53.6 million of
net borrowings from WMX under the terms of this agreement. The balance of the
borrowings from WMX consisted of a $75.0 million short-term note maturing on
March 31, 1997, with essentially the same terms as borrowings under the Master
16
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
Intercorporate Agreement. Cash and cash equivalents at June 30, 1996, plus net
cash generated by operating activities and short-term borrowings from WMX are
expected to be sufficient to meet the Company's anticipated short-term capital
expenditure, dividend payment, debt retirement, and operating liquidity needs.
Wheelabrator's ratio of total debt to total capital was approximately 39% at
June 30, 1996, which the Company believes to be indicative of substantial unused
borrowing capacity given its historically strong ability to generate cash from
operations.
Derivatives: 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's use of derivatives has not been and is not expected to
be material to the Company's financial statements.
Contingencies: In May 1994, the U.S. Supreme Court ruled that state and local
governments may not constitutionally restrict the free movement of trash in
interstate commerce through the use of flow control laws. Such laws typically
involve a municipality specifying the disposal site for all solid waste
generated within its borders. Since the ruling, several decisions of state or
federal courts have invalidated regulatory flow control schemes in a number of
jurisdictions. Other judicial decisions have upheld nonregulatory means by
which municipalities may effectively control the flow of municipal solid waste.
The Company's Gloucester County, New Jersey, facility relies on a disposal
franchise for substantially all of its supply of municipal solid waste. In July
1996, a Federal District Court permanently enjoined the State of New Jersey from
enforcing its solid waste regulatory flow control system, which was held to be
unconstitutional, but stayed the injunction for as long as its ruling is on
appeal plus an additional period of two years to enable the State to devise an
alternative nondiscriminatory approach. The Company believes that the State is
currently deciding whether or not it will appeal the Federal District Court's
ruling.
The Supreme Court's 1994 ruling and subsequent court decisions have not to date
had a material adverse affect on any of the Company's trash-to-energy
operations. Federal legislation has been proposed, but not yet enacted, to
effectively grandfather existing flow control mandates. In the event that such
legislation is not adopted, the Company believes that affected municipalities
will endeavor
17
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND
FINANCIAL CONDITION (continued)
to implement alternative lawful means to continue controlling the flow of waste.
In view of the uncertain state of the law at this time, however, the Company is
unable to predict whether such efforts would be successful or what impact, if
any, this matter might have on its trash-to-energy facilities.
18
<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 June 30,
1996, the Company was not involved in any 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, 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.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's annual meeting of stockholders on May 1, 1996, two proposals
were submitted to the Company's stockholders. The first proposal was to elect
Donald F. Flynn, Kay Hahn Harrell, John M. Kehoe, Jr. and Manuel Sanchez as
directors of the Company for terms expiring at the annual meeting of the
Company's stockholders in 1998. The nominees were elected by the stockholders
with votes cast as follows:
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
------- --------- --------------
<S> <C> <C>
Donald F. Flynn 154,184,859 1,788,516
Kay Hahn Harrell 154,248,596 1,729,779
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
John M. Kehoe, Jr. 154,231,033 1,742,342
Manuel Sanchez 154,254,343 1,719,032
</TABLE>
The second proposal was a stockholder proposal to declassify the Company's Board
of Directors. The proposal was rejected by the stockholders with 25,471,658
votes being cast in favor of the proposal, 118,069,566 votes being cast against
the proposal and 346,067 abstentions. There were 12,086,084 broker non-votes as
to this proposal.
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 June 30, 1996.
20
<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.
August 12, 1996 /s/ John D. Sanford
-----------------------------------
John D. Sanford
Executive Vice President and
Chief Financial Officer
21
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
Number and Description of Exhibit/*/
---------------------------------
2 None
3 Bylaws of registrant, amended as of
May 13, 1996
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
22
<PAGE>
EXHIBIT 3
WHEELABRATOR TECHNOLOGIES INC.
BY-LAWS
AS AMENDED THROUGH
MAY 13, 1996
1
<PAGE>
BY-LAWS
OF
WHEELABRATOR TECHNOLOGIES INC.
ARTICLE I
OFFICES
Section 1. Delaware Office. The office of Wheelabrator Technologies Inc.
(the "Corporation") within the State of Delaware shall be in the City of Dover,
County of Kent.
Section 2. Other Offices. The Corporation may also have an office or
offices and keep the books and records of the Corporation, except as otherwise
may be required by law, in such other place or places, either within or without
the State of Delaware, as the Board of Directors of the Corporation may from
time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of holders of shares of capital
stock of the Corporation shall be held at the office of the Corporation in the
State of Delaware or at such other place, within or without the State of
Delaware, as may from time to time be fixed by the Board or specified or fixed
in the respective notices or waivers of notice thereof.
Section 2. Annual Meetings. An annual meeting of stockholders of the
corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting (an "Annual Meeting") shall be
held at 9:00 a.m. on the first Wednesday of May of each year (the first Annual
Meeting to be held in May 1987), or on such other date and at such other time as
may be fixed by the Board. If the Annual Meeting shall not be held on the day
designated, the Board shall call a special meeting of stockholders as soon as
practicable for the election of directors.
Section 3. Special Meetings. Special meetings of stockholders, unless
otherwise provided by law, may be called at any time by the Board pursuant to a
resolution adopted by a majority of the then authorized number of directors (as
determined in accordance with Section 2 of Article III of these By-laws), or by
the Chief Executive Officer. Any such call must specify the matter or matters to
be acted upon at such meeting and only such matter or matters shall be acted
upon thereat.
Section 4. Notice of Meetings. Except as otherwise may be required by law,
notice of each meeting of stockholders, whether an Annual Meeting or a special
meeting, shall be in writing, shall state the purpose or purposes of the
meeting, the place, date and hour of the meeting and, unless it is an Annual
Meeting, shall indicate that the notice is being issued by or at the direction
of the person or persons calling the meeting, and a copy thereof shall be
delivered or sent by mail, not less than 10 or more than 60 days before the date
of said meeting, to each stockholder entitled to vote at such meeting. If
mailed, such notice shall be directed to such stockholder at his address as it
appears on the stock records of the Corporation, unless he shall have filed with
the Secretary a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address. Notice
of an adjourned meeting need not be given if the time and place to which the
meeting is to be adjourned was announced at the meeting at which the adjournment
was taken, unless
1
<PAGE>
(i) the adjournment is for more than 30 days or (ii) the Board shall fix a new
record date for such adjourned meeting after the adjournment.
Section 5. Quorum. At each meeting of stockholders of the Corporation, the
holders of shares having a majority of the voting power of the capital stock of
the Corporation issued and outstanding and entitled to vote thereat shall be
present or represented by proxy to constitute a quorum for the transaction of
business, except as otherwise provided by law.
Section 6. Adjournments. In the absence of a quorum at any meeting of
stockholders or any adjournment or adjournments thereof, holders of shares
having a majority of the voting power of the capital stock present or
represented by proxy at the meeting may adjourn the meeting from time to time
until a quorum shall be present or represented by proxy. At any such adjourned
meeting at which a quorum shall be present or represented by proxy, any business
may be transacted which might have been transacted at the meeting as originally
called if a quorum had been present or represented by proxy thereat.
Section 7. Order of Business. (a) At any Annual Meeting, only such business
shall be conducted as shall have been brought before the Annual Meeting (i) by
or at the direction of the Board of Directors or (ii) by any stockholder who
complies with the procedures set forth in this Section 7.
(b) For business properly to be brought before an Annual Meeting by a
stockholder, the stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 30 days nor more than 60 days prior to
the Annual Meeting; provided, however, that in the event that less than 40 days'
notice or prior public disclosure of the date of the Annual Meeting is given or
made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the tenth day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made. To be in proper written form, a stockholder's notice to
the Secretary shall set forth in writing as to each matter the stockholder
proposes to bring before the Annual Meeting: (i) a brief description of the
business desired to be brought before the Annual Meeting and the reasons for
conducting such business at the Annual Meeting; (ii) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business; (iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder; and (iv) any material interest of the
stockholder in such business. Notwithstanding anything in the By-laws to the
contrary, no business shall be conducted at an Annual Meeting except in
accordance with the procedures set forth in this Section 7. The chairman of an
Annual Meeting shall, if the facts warrant, determine and declare to the Annual
Meeting that business was not properly brought before the Annual Meeting in
accordance with the provisions of this Section 7 and, if he should so determine,
he shall so declare to the Annual Meeting and any such business not properly
brought before the Annual Meeting shall not be transacted.
Section 8. Voting. Except as otherwise provided in the Certificate of
Incorporation or in a resolution of the Board of Directors adopted pursuant to
the Certificate of Incorporation establishing a series of Preferred Stock of the
Corporation ("Preferred Stock"), at each meeting of stockholders, every
stockholder of the Corporation shall be entitled to one vote for every share of
capital stock standing in his name on the stock records of the Corporation (i)
at the time fixed pursuant to Section 6 of Article VII of these By-laws as the
record date for the determination of stockholders entitled to vote at such
meeting, or (ii) if no such record date shall have been fixed, then at the close
of business on the day next preceding the day on which notice thereof shall be
given. At each meeting of stockholders, all matters (except as otherwise
provided in Section 3 of Article III of these By-laws and except in cases where
2
<PAGE>
a larger vote is required by law or by the Certificate of Incorporation of the
Corporation or these By-laws) shall be decided by a majority of the votes cast
at such meeting by the holders of shares of capital stock present or represented
by proxy and entitled to vote thereon, a quorum being present.
Section 9. Inspectors. For each election of directors by the stockholders
and in any other case in which it shall be advisable, in the opinion of the
Board, that the voting upon any matter shall be conducted by inspectors of
election, the Board shall appoint two inspectors of election. If, for any such
election of directors or the voting upon any such other matter, any inspector
appointed by the Board shall be unwilling or unable to serve, or if the Board
shall fail to appoint inspectors, the chairman of the meeting shall appoint the
necessary inspector or inspectors. The inspectors so appointed, before entering
upon the discharge of their duties, shall be sworn faithfully to execute the
duties of inspectors with strict impartiality, and according to the best of
their ability, and the oath so taken shall be subscribed by them. Such
inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each of the shares represented
at the meeting, the existence of a quorum, and the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the chairman of the meeting or any stockholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as an inspector of election of directors. Inspectors need not be
stockholders.
ARTICLE III
Directors
Section 1. Powers. The business of the Corporation shall be managed under
the direction of the Board. The Board may exercise all such authority and powers
of the Corporation and do all such lawful acts and things as are not by law or
otherwise directed or required to be exercised or done by the stockholders.
Section 2. Number, Election and Terms. The authorized number of directors
may be determined from time to time by a vote of a majority of the then
authorized number of directors or by the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class; provided, however, that such number initially shall
be five; and provided, further, that such number shall not be less than a
minimum of five nor more than a maximum of 15; and provided, further, that such
number and such minimum and maximum may be increased pursuant to resolution of
the Board, adopted pursuant to the Certificate of Incorporation, establishing
any series of Preferred Stock. The directors, other than those who may be
elected by the holders of any series of the Preferred Stock pursuant to a
resolution of the Board adopted pursuant to the Certificate of Incorporation
establishing such series, shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, as determined by the Board, one class initially to be elected for a
term expiring at the Annual Meeting to be held in 1987, another class initially
to be elected for a term expiring at the Annual Meeting to be held in 1988, and
another class initially to be elected for a term expiring at the Annual Meeting
to be held in 1989, with the members of each class to hold office until their
successors have been elected and qualified. At each Annual Meeting, the
successors of the class of directors whose term expires at that Annual Meeting
shall be elected to hold office for a term expiring at the Annual Meeting held
in the third year following
3
<PAGE>
the year of their election. Except as otherwise provided in the Certificate of
Incorporation, newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
if less than a quorum of the Board, or by a sole remaining director. Any
director elected in accordance with the preceding sentence shall hold office
until the Annual Meeting at which the term of office of the class to which such
director has been elected expires and until such director's successor shall have
been duly elected and qualified. No decrease in the number of directors
constituting the Board shall shorten the term of any incumbent director.
Section 3. Nominations of Directors; Election. Nominations for the election
of directors may be made by the Board or a committee appointed by the Board, or
by any stockholder entitled to vote generally in the election of directors who
complies with the procedures set forth in this Section 3. Directors shall be at
least 21 years of age. Directors need not be stockholders. At each meeting of
stockholders for the election of directors at which a quorum is present, the
persons receiving a plurality of the votes cast shall be elected directors. All
nominations by stockholders shall be made pursuant to timely notice in proper
written form to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 30 days nor more than 60 days prior to
the meeting; provided, however, that in the event that less than 40 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. To be in proper written form, such stockholder's notice shall set forth in
writing (i) as to each person whom the stockholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, including, without
limitation, such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected; and (ii) as to the
stockholder giving the notice (x) the name and address, as they appear on the
Corporation's books, of such stockholder and (y) the class and number of shares
of the Corporation which are beneficially owned by such stockholder. At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation the information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee. In the event that a stockholder
seeks to nominate one or more directors, the Secretary shall appoint two
inspectors, who shall not be affiliated with the Corporation, to determine
whether a stockholder has complied with this Section 3. If the inspectors shall
determine that a stockholder has not complied with this Section 3, the
inspectors shall direct the chairman of the meeting to declare to the meeting
that a nomination was not made in accordance with the procedures prescribed by
the By-laws of the Corporation, and the chairman shall so declare to the meeting
and the defective nomination shall be disregarded.
Section 4. Place of Meetings. Meetings of the Board shall be held at the
Corporation's office in the State of Delaware or at such other place, within or
without such State, as the Board may from time to time determine or as shall be
specified or fixed in the notice or waiver of notice or any such meeting.
Section 5. Regular Meetings. Regular meetings of the Board shall be held in
accordance with a yearly meeting schedule as determined by the Board; or such
meetings may be held on such other days and at such other times as the Board may
from time to time determine. Notice of regular meetings of the Board need not be
given except as otherwise required by these By-laws.
4
<PAGE>
Section 6. Special Meetings. Special meetings of the Board may be called by
the Chief Executive Officer and shall be called by the Secretary at the request
of any two of the other directors.
Section 7. Notice of Meetings. Notice of each special meeting of the Board
(and of each regular meeting for which notice shall be required), stating the
time, place and purposes thereof, shall be mailed to each director, addressed to
him at his residence or usual place of business, or shall be sent to him by
telex, cable or telegram so addressed, or shall be given personally or by
telephone, on 24 hours' notice.
Section 8. Quorum and Manner of Acting. The presence of at least a majority
of the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business at any meeting of the Board.
If a quorum shall not be present at any meeting of the Board, a majority of the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Except where a different vote is required or permitted by law or these By-laws
or otherwise, the act of a majority of the directors present at any meeting at
which a quorum shall be present shall be the act of the Board. Any action
required or permitted to be taken by the Board may be taken without a meeting if
all the directors consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consents thereto by the directors
shall be filed with the minutes of the proceedings of the Board. Any one or more
directors may participate in any meeting of the Board by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall be deemed to constitute presence in person at a meeting of the Board.
Section 9. Resignation. Any director may resign at any time by giving
written notice to the Corporation; provided, however, that written notice to the
Board, the Chairman of the Board, the Chief Executive Officer or the Secretary
shall be deemed to constitute notice to the Corporation. Such resignation shall
take effect upon receipt of such notice or at any later time specified therein
and, unless otherwise specified therein, acceptance of such resignation shall
not be necessary to make it effective.
Section 10. Removal of Directors. Subject to the rights of the holders of
any series of Preferred Stock, any director may be removed from office only for
cause by the affirmative vote of the holders of at least 80% of the voting power
of all shares of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
Section 11. Compensation of Directors. The Board may provide for the
payment to any of the directors, other than officers or employees of the
Corporation, of a specified amount for services as director or member of a
committee of the Board, or of a specified amount for attendance at each regular
or special Board meeting or committee meeting, or of both, and all directors
shall be reimbursed for expenses of attendance at any such meeting; provided,
however, that nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
ARTICLE IV
COMMITTEES OF THE BOARD
Section 1. Appointment and Powers of Executive Committee. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate an Executive Committee of the Board which shall
5
<PAGE>
consist of such number of members as the Board shall determine. Except as
provided by Delaware law, during the interval between the meetings of the Board,
the Executive Committee shall possess and may exercise all the powers of the
Board in the management and direction of all the business and affairs of the
Corporation (except the matters hereinafter assigned to any other Committee of
the Board), in such manner as the Executive Committee shall deem in the best
interests of the Corporation in all cases in which specific directions shall not
have been given by the Board. A majority of the members of the Executive
Committee shall constitute a quorum for the transaction of business by the
committee and the act of a majority of the members of the committee present at a
meeting at which a quorum shall be present shall be the act of the committee.
Either the Chief Executive Officer or the Chairman of the Executive Committee
may call meetings of the Executive Committee.
Section 2. Appointment and Powers of Audit Committee. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate an Audit Committee of the Board, which shall
consist of such number of members as the Board shall determine. The Audit
Committee shall (i) make recommendations to the Board as to the independent
accountants to be appointed by the Board; (ii) review with the independent
accountants the scope of their examination; (iii) receive the reports of the
independent accountants and meet with representatives of such accountants for
the purpose of reviewing and considering questions relating to their examination
and such reports; (iv) review, either directly or through the independent
accountants, the internal accounting and auditing procedures of the Corporation;
and (v) perform such other functions as may be assigned to it from time to time
by the Board. The Audit Committee may determine its manner of acting and fix the
time and place of its meetings, unless the Board shall otherwise provide. A
majority of the members of the Audit Committee shall constitute a quorum for the
transaction of business by the committee and the act of a majority of the
members of the committee present at a meeting at which a quorum shall be present
shall be the act of the committee.
Section 3. Compensation Committee; Other Committees. The Board may, by
resolution adopted by the affirmative vote of a majority of the authorized
number of directors, designate members of the Board to constitute a Compensation
Committee and such other committees of the Board as the Board may determine.
Such committees shall in each case consist of such number of directors as the
Board may determine, and shall have and may exercise, to the extent permitted by
law, such powers as the Board may delegate to them, in the respective
resolutions appointing them. Each such committee may determine its manner of
acting and fix the time and place of its meetings, unless the Board shall
otherwise provide. A majority of the members of any such committee shall
constitute a quorum for the transaction of business by the committee and the act
of a majority of the members of such committee present at a meeting at which a
quorum shall be present shall be the act of the committee.
Section 4. Action by Consent; Participation by Telephone or Similar
Equipment. Unless the Board shall otherwise provide, any action required or
permitted to be taken by any committee may be taken without a meeting if all
members of the committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents thereto by the
members of the committee shall be filed with the minutes of the proceedings of
the committee. Unless the Board shall otherwise provide, any one or more members
of any such committee may participate in any meeting of the committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation by
such means shall constitute presence in person at a meeting of the committee.
Section 5. Changes in Committees; Resignations; Removals. The Board shall
have power, by the affirmative vote of a majority of the authorized number of
directors, at any time to change the members of, to fill vacancies in, and to
6
<PAGE>
discharge any committee of the Board. Any member of any such committee may
resign at any time by giving notice to the Corporation; provided, however, that
notice to the Board, the Chairman of the Board, the Chief Executive Officer, the
chairman of such committee or the Secretary shall be deemed to constitute notice
to the Corporation. Such resignation shall take effect upon receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, acceptance of such resignation shall not be necessary to make it
effective. Any member of any such committee may be removed at any time, either
with or without cause, by the affirmative vote of a majority of the authorized
number of directors at any meeting of the Board called for that purpose.
ARTICLE V
OFFICERS
Section 1. The Officers of the Corporation shall be chosen by the board of
directors and shall be a chairman of the board, one or more vice chairmen of the
board (the number thereof to be determined by the board of directors), a
president, one or more vice presidents (the number and designation thereof to be
determined by the board of directors), a secretary, a treasurer, a chief
financial officer, a general counsel, a controller and such assistant
secretaries, assistant treasurers or other officers as may be elected or
appointed by the board of directors. Any number of offices may be held by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a chairman of the board, a president, one
or more vice presidents, a secretary, a treasurer, a chief financial officer, a
general counsel, a controller and may choose one or more vice chairmen of the
board, assistant officers or other officers as it may deem advisable.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries and other compensation of all officers (other than
assistant officers, unless the board otherwise determines) and agents of the
Corporation appointed by the board shall be as fixed by the board of directors.
Section 5. The officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the Corporation
shall be filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 6. The chairman of the board shall be the chief executive officer
of the Corporation, and shall preside at all meetings of the stockholders and
board of directors. He may sign certificates for shares of the Corporation and
any deeds, mortgages, bonds, contracts or other instruments which the board of
directors has authorized to be executed, whether or not under the seal of the
Corporation, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some other
officer or agent of the Corporation. He shall have general and active management
of the business of the Corporation and shall see that all orders and resolutions
of the board of directors are carried into effect.
7
<PAGE>
VICE CHAIRMAN (OR VICE CHAIRMEN) OF THE BOARD
Section 7. In the absence of the chairman of the board or in the event of
his inability or refusal to act, the vice chairman of the board (or in the event
there may be more than one vice chairman of the board, the vice chairman of the
board, in the order designated, or in the absence of any designation, then in
the order of their election) shall perform the duties of the chairman of the
board, and when so acting, shall have all the powers of and be subject to all
restrictions upon the chairman of the board. He may sign certificates for shares
of the Corporation and any deeds, mortgages, bonds, contracts, or other
instruments which the board of directors has authorized to be executed, whether
or not under the seal of the Corporation, except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these by-laws to some other officer or agent of the Corporation. The vice
chairmen of the board shall perform such other duties and have such other powers
as the board of directors or the chairman of the board may from time to time
prescribe.
PRESIDENT
Section 8. The president may sign certificates for shares of the
Corporation and any deeds, mortgages, bonds, contracts or other instruments
which the board of directors has authorized to be executed, whether or not under
the seal of the Corporation, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these by-
laws to some other officer or agent of the Corporation. In the absence of the
chairman of the board and the vice chairman (or, if there be more than one, the
vice chairmen) of the board, or in the event of their inability or refusal to
act, the president shall perform the duties of the chairman of the board, and
when so acting, shall have the powers of and be subject to all the restrictions
upon the chairman of the board. The president shall perform such other duties
and have such other powers as the board of directors or the chairman of the
board may from time to time prescribe.
VICE PRESIDENT(S)
Section 9. In the absence of the president or in the event of his inability
or refusal to act, the vice president (or in the event there be more than one
vice president, the vice presidents in the order designated, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the president, and when so acting, shall have all the powers of and be
subject to the restrictions upon the president. The vice presidents shall
perform such other duties and have such other powers as the board of directors,
the chairman of the board or the president may from time to time prescribe.
SECRETARY
Section 10. The secretary shall: (a) keep the minutes of stockholders,
board of directors and board of directors committee meetings in one or more
books provided for the purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all certificates for shares prior
to the issue thereof and to all documents, the execution of which on behalf of
the Corporation under its seal is necessary or desirable; (d) keep or cause to
be kept a register of the mailing address of each stockholder which shall be
furnished to the secretary or the transfer agent of the Corporation by such
stockholder; (e) sign with the chairman of the board, a vice chairman of the
board, the president, or a vice president, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
board of directors; (f) have general charge of stock transfer books of the
Corporation (g) attest to the
8
<PAGE>
genuineness of the signature on behalf of the Corporation of any officer or
agent of the Corporation on any deeds, mortgages, bonds, contracts or other
instruments; (h) certify the authenticity of any instrument or record of the
Corporation; and (i) in general perform all duties incident to the office of
secretary and such other duties as the board of directors or the chairman of the
board or the president may from time to time prescribe.
TREASURER
Section 11. If required by the board of directors, the treasurer shall give
a bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the board of directors shall determine. He shall: (a) have charge
and custody of and be responsible for all funds and securities of the
Corporation, and the deposit of all moneys in the name of the Corporation in
such banks, trust companies or other depositaries as shall be selected in
accordance with resolutions of the board of directors; and (b) in general
perform all the duties incident to the office of treasurer and such other duties
as the board of directors or the chairman of the board or the president may from
time to time prescribe.
CHIEF FINANCIAL OFFICER
Section 12. The chief financial officer shall have the general powers and
duties of supervision and management with respect to the financial affairs of
the Corporation usually vested in the chief financial officer of a corporation,
and such other duties as the board of directors or the chairman of the board or
the president may from time to time prescribe.
GENERAL COUNSEL
Section 13. The general counsel shall be the chief legal adviser of the
Corporation as to all matters affecting the Corporation or its business. In
general he shall perform all the duties incident to the office of general
counsel and such other duties as the board of directors, the chairman of the
board or the president may from time to time prescribe.
CONTROLLER
Section 14. The controller shall be the principal accounting officer of
the Corporation and shall supervise the preparation and maintenance, on a
current basis, of such accounting books, records and reports as may be necessary
for directors, officers and executives of the Corporation to discharge their
duties or as may be required by law. In general, he shall perform all duties
incident to the office of controller and such other duties as the board of
directors or the chairman of the board or the president may from time to time
prescribe.
ASSISTANT TREASURERS AND ASSISTANT SECRETARIES
Section 15. The assistant secretaries as thereunto authorized by the board
of directors may sign with the chairman of the board, a vice chairman of the
board, the president, or a vice president certificates for shares of the
Corporation, the issue of which shall have been authorized by a resolution of
the board of directors, may attest to the genuineness of the signature on behalf
of the Corporation of any officer or agent of the Corporation on any deeds,
mortgages, bonds, contracts or other instruments and may certify the
authenticity of any instrument or record of the Corporation. The assistant
treasurers may sign with the chairman of the board, a vice chairman of the
board, the president or a vice president, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
board of directors. The assistant treasurers shall, respectively, if required by
the board of directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the board of directors shall determine. The
assistant secretaries
9
<PAGE>
and assistant treasurers in general shall perform such duties as the secretary
or the treasurer, respectively, or the board of directors or the chairman of the
board or the president may from time to time prescribe.
ARTICLE VI
CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.
Section 1. Contracts. The Board may authorize any officer or officers,
agent or agents, in the name and on behalf of the Corporation, to enter into any
contract or to execute and deliver any instrument, which authorization may be
general or confined to specific instances; and, unless so authorized by the
Board, no officer, agent or employee shall have any power or authority to bind
the Corporation by any contract or engagement or to pledge its credit or to
render it liable pecuniarily for any purpose or for any amount.
Section 2. Checks, etc. All checks, drafts, bills of exchange or other
orders for the payment of money out of the funds of the Corporation, and all
notes or other evidences of indebtedness of the Corporation, shall be signed in
the name and on behalf of the Corporation in such manner as shall from time to
time be authorized by the Board, which authorization may be general or confined
to specific instances.
Section 3. Loans. No loan shall be contracted on behalf of the
Corporation, and no negotiable paper shall be issued in its name, unless
authorized by the Board, which authorization may be general or confined to
specific instances. All bonds, debentures, notes and other obligations or
evidences of indebtedness of the Corporation issued for such loans shall be
made, executed and delivered as the Board shall authorize.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as may be selected by or in the
manner designated by the Board. The Board or its designees may make such special
rules and regulations with respect as such bank accounts, not inconsistent with
the provisions of the Certificate of Incorporation or these By-laws, as they may
deem advisable.
ARTICLE VII
CAPITAL STOCK
Section 1. Stock Certificates. Each stockholder shall be entitled to
have, in such form as shall be approved by the Board, a certificate or
certificates signed by the Chairman of the Board or the Chief Executive Officer,
and by either the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary (except that, when any such certificate is countersigned by
a transfer agent or registered by a registrar other than the Corporation or an
employee of the Corporation, the signatures of any such officers may be
facsimiles, engraved or printed), which may be sealed with the seal of the
Corporation (which seal may be a facsimile, engraved or printed), certifying the
number of shares of capital stock of the Corporation owned by such stockholder.
In the event any officer who has signed or whose facsimile signature has been
placed upon any such certificate shall have ceased to be such officer before
such certificate is issued, such certificate may be issued by the Corporation
with the same effect as if he were such officer at the date of its issue.
Section 2. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make or cause to be prepared or made, at least 10 days before every meeting
10
<PAGE>
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares of capital stock registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting for the duration thereof, and may be inspected by any stockholder of
the Corporation who is present.
Section 3. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 2 of this Article VII or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 4. Transfers of Capital Stock. Transfers of shares of capital
stock of the Corporation shall be made only on the stock ledger of the
Corporation by the holder of record thereof, by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, or by the transfer agent of the Corporation, and only on
surrender of the certificate or certificates representing such shares, properly
endorsed or accompanied by a duly executed stock transfer power. The Board may
make such additional rules and regulations as it may deem advisable concerning
the issue and transfer of certificates representing shares of the capital stock
of the Corporation.
Section 5. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or his legal representative, to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 6. Fixing of Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividends or other distributions or allotments of any rights, or entitled to
exercise any rights in respect to any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than 60 days nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 7. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not the
Corporation shall have express or other notice thereof, except as otherwise
provided by law.
11
<PAGE>
ARTICLE VIII
FISCAL YEAR
The Corporation's fiscal year shall coincide with the calendar year.
ARTICLE IX
SEAL
The Corporation's seal shall be circular in form and shall include the
words "WHEELABRATOR TECHNOLOGIES INC., Delaware, 1985, Seal."
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required by law, the Certificate of Incorporation or
these By-laws to be given to any director, member of a committee or stockholder,
a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether signed before or after the time stated in such written waiver,
shall be deemed equivalent to such notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting, except when such person
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the grounds that the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE XI
AMENDMENTS
These By-laws or any of them may be amended or supplemented in any respect
at any time, either (i) at any meeting of stockholders, provided that any
amendment or supplement proposed to be acted upon at any such meeting shall have
been described or referred to in the notice of such meeting; or (ii) at any
meeting of the Board, provided that any amendment or supplement proposed to be
acted upon at any such meeting shall have been described or referred to in the
notice of such meeting or an announcement with respect thereto shall have been
made at the last previous Board meeting, and provided further that no amendment
or supplement adopted by the Board shall vary or conflict with any amendment or
supplement adopted by the stockholders. Notwithstanding the preceding sentence,
the affirmative vote of the holders of at least 80% of the voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to amend or repeal, or adopt any provisions inconsistent with,
Section 3 of Article II of these By-laws, Section 2 or Section 10 of Article III
of these By-laws, or this sentence.
ARTICLE XII
INAPPLICABILITY OF SECTION 203
The Corporation expressly elects not to be governed by Section 203 of the
Delaware General Corporation Law.
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1996, Consolidated Balance Sheet and the Consolidated Statement of income for
the six-month period ended June 30, 1996, 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 33,921
<SECURITIES> 0
<RECEIVABLES> 239,539
<ALLOWANCES> 9,147
<INVENTORY> 50,210
<CURRENT-ASSETS> 415,764
<PP&E> 2,051,996
<DEPRECIATION> 436,399
<TOTAL-ASSETS> 3,198,246
<CURRENT-LIABILITIES> 493,713
<BONDS> 755,812
<COMMON> 1,895
0
0
<OTHER-SE> 1,231,027
<TOTAL-LIABILITY-AND-EQUITY> 3,198,246
<SALES> 0
<TOTAL-REVENUES> 705,549
<CGS> 0
<TOTAL-COSTS> 490,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,183
<INTEREST-EXPENSE> 27,327
<INCOME-PRETAX> 141,622
<INCOME-TAX> 51,251
<INCOME-CONTINUING> 90,371
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,371
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0
</TABLE>
