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 FEBRUARY 28,
1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period from
_________ to _________
Commission File Number 1-11016
ALLWASTE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 74-2427167
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5151 SAN FELIPE, SUITE 1600, HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 623-8777
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
The number of shares of Common Stock of the Registrant, par value $.01 per
share, outstanding at April 10, 1995 was 38,264,057.
<PAGE>
ALLWASTE, INC. AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED FEBRUARY 28, 1995
INDEX
PAGE
Part I - Financial Information ----
Item 1 - Financial Statements
General Information .................................................... 3
Condensed Consolidated Balance Sheets as of February 28, 1995
(unaudited) and August 31, 1994 ...................................... 4
Condensed Consolidated Statements of Operations for the Six and
Three Month Periods Ended February 28, 1995 and 1994 (unaudited) ..... 5
Condensed Consolidated Statements of Cash Flows for the Six Month
Periods Ended February 28, 1995 and 1994 (unaudited) ................. 6
Notes to Condensed Consolidated Financial Statements (unaudited) ....... 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................ 9
Part II - Other Information
Item 4 - Submission of Matters to a Vote of Security Holders ............. 15
Item 6 - Exhibits and Reports on Form 8-K ................................ 17
Signature .................................................................. 19
ALLWASTE, INC. AND SUBSIDIARIES
PART I, ITEM 1 - FINANCIAL INFORMATION
GENERAL INFORMATION
The condensed consolidated financial statements herein have been prepared
by the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). As applicable under such
regulations, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes that the
presentation and disclosures herein are adequate to make the information not
misleading, and the financial statements reflect all elimination entries and
normal adjustments which are necessary for a fair statement of the results for
the interim periods ended February 28, 1995 and 1994.
Operating results for interim periods are not necessarily indicative of the
results for full years. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements for the year ended August 31, 1994 and the related notes thereto
included in the Company's Annual Report on Form 10-K filed with the SEC.
3
<PAGE>
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
FEBRUARY 28, AUGUST 31,
1995 1994
----------- ---------
(Unaudited) (Audited)
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents ......................... $ 3,169 $ 3,215
Receivables, net .................................. 76,222 77,219
Inventories ....................................... 4,949 4,302
Prepaid expenses .................................. 5,659 7,206
Other current assets .............................. 2,249 2,864
--------- ---------
Total current assets ......................... 92,248 94,806
--------- ---------
PROPERTY AND EQUIPMENT ............................... 246,838 221,019
Less - Accumulated depreciation ................... (107,389) (94,145)
--------- ---------
139,449 126,874
--------- ---------
GOODWILL, net ........................................ 84,774 84,176
NOTES RECEIVABLE AND OTHER ASSETS .................... 12,607 13,560
--------- ---------
Total assets ................................. $ 329,078 $ 319,416
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accruals ..................... $ 51,908 $ 54,303
Current maturities of long-term debt and
convertible subordinated debt ................... 8,343 7,870
--------- ---------
Total current liabilities .................... 60,251 62,173
--------- ---------
LONG-TERM DEBT, net .................................. 90,202 85,356
CONVERTIBLE SUBORDINATED DEBT, net ................... 36,987 37,672
DEFERRED INCOME TAXES AND OTHER LIABILITIES .......... 12,714 12,997
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock ...................................... 385 376
Additional paid-in capital ........................ 48,721 47,482
Retained earnings ................................. 80,880 74,422
Treasury stock .................................... (1,062) (1,062)
--------- ---------
Total shareholders' equity ................... 128,924 121,218
--------- ---------
Total liabilities and shareholders' equity ... $ 329,078 $ 319,416
========= =========
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE THREE
MONTHS ENDED MONTHS ENDED
------------------------------- --------------------------------
2/28/95 2/28/94 2/28/95 2/28/94
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES ....................................... $ 193,352 $ 163,942 $ 93,696 $ 80,511
COST OF OPERATIONS ............................. 143,686 122,625 69,906 59,565
----------- ----------- ----------- -----------
Gross profit ................................. 49,666 41,317 23,790 20,946
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ...................... 34,977 30,189 17,456 15,703
INTEREST EXPENSE ............................... (4,360) (3,068) (2,275) (1,612)
INTEREST INCOME ................................ 197 195 81 69
OTHER INCOME (EXPENSE), net .................... 54 (805) (35) (672)
----------- ----------- ----------- -----------
Income before income taxes ................... 10,580 7,450 4,105 3,028
INCOME TAX PROVISION ........................... (4,645) (2,809) (1,803) (1,142)
MINORITY INTEREST, net of tax .................. 117 185 30 73
----------- ----------- ----------- -----------
Net income ............................... $ 6,052 $ 4,826 $ 2,332 $ 1,959
=========== =========== =========== ===========
Net income per common share .................. $ .16 $ .13 $ .06 $ .05
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING .................... 38,558 36,667 38,479 36,627
=========== =========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
------------------------
2/28/95 2/28/94
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................................ $ 6,052 $ 4,826
Reconciliation of net income to cash provided by operating activities:
Depreciation and amortization .......................................................... 15,134 12,568
Loss (gain) on sale of property and equipment .......................................... (105) 4
Allowance recorded on notes receivable ................................................. -- 1,740
Equity in losses of unconsolidated partnership ......................................... -- 1,987
Gain on sale of marketable security .................................................... -- (2,688)
Common Stock received in lawsuit settlement ............................................ -- (1,062)
Change in assets and liabilities, net of effects of acquisitions accounted
for as purchases:
Receivables .......................................................................... 1,708 (3,865)
Inventories .......................................................................... (632) (529)
Prepaid expenses and other current assets ............................................ 2,382 (823)
Notes receivable and other assets .................................................... 573 (204)
Accounts payable and accruals ........................................................ (3,058) (6,255)
Deferred income taxes and other liabilities .......................................... (306) 119
-------- --------
Cash provided by operating activities .................................................. 21,748 5,818
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of Common Stock ................................................ 1,051 --
Proceeds from borrowings ............................................................... 5,135 16,687
Principal payments on borrowings ....................................................... (656) (5,264)
-------- --------
Cash provided by financing activities .................................................. 5,530 11,423
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .................................................... (26,278) (18,782)
Proceeds from sale of property and equipment ........................................... 1,051 914
Payments for acquisitions accounted for
as purchases, net of cash acquired ................................................... (1,696) (1,075)
Proceeds from sale of marketable security .............................................. -- 2,982
-------- --------
Cash used in investing activities ...................................................... (26,923) (15,961)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ........................................................... (401) (70)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......................................... (46) 1,210
CASH AND CASH EQUIVALENTS, beginning of period ............................................ 3,215 2,966
-------- --------
CASH AND CASH EQUIVALENTS, end of period .................................................. $ 3,169 $ 4,176
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
ALLWASTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1995
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES --
The consolidated financial statements include the accounts of Allwaste,
Inc. and its subsidiaries (the "Company"). There have been no significant
changes in the accounting policies of the Company during the periods presented.
For a description of these policies, see Note 1 of Notes to Consolidated
Financial Statements in the Company's Form 10-K for the year ended August 31,
1994.
(2) ACQUISITIONS --
During the first six months of fiscal year 1995, the Company completed the
acquisition of three businesses for aggregate consideration of $5.1 million
consisting of $1.7 million in cash and 557,430 shares of the Company's Common
Stock. As an integral part of these acquisitions, all former shareholders signed
non-compete agreements and key management entered into agreements with the
Company to continue managing the businesses.
Subsequent to February 28, 1995, the Company has completed one additional
acquisition accounted for as a purchase. Aggregate consideration for this
business was $1.5 million of cash.
(3) INCOME TAXES --
Income tax provisions for interim periods are estimated based upon
projections of the annual effective tax rates. Certain assumptions have been
made in this regard in projecting the effective tax rate for fiscal 1995, which
may not be resolved until the end of the year. The effective tax rate of 44% for
the six month period ended February 28, 1995 reflects the estimated U.S. federal
and state income taxes and foreign taxes on the earnings of the Company's
foreign subsidiaries.
Deferred tax assets and liabilities are determined based on the estimated
future tax effects of differences between the financial statement and tax bases
of assets and liabilities. On the accompanying consolidated balance sheet,
deferred tax assets and liabilities are netted within each tax jurisdiction. The
following table sets forth the gross deferred tax assets (liabilities) recorded
(in thousands):
1995 1994
FEBRUARY 28, AUGUST 31,
------------ ----------
Current deferred tax assets .................... $ 2,248 $ 2,895
Non-current deferred tax assets ................ 2,133 1,496
-------- --------
Total deferred tax assets .................... 4,381 4,391
-------- --------
Current deferred tax liabilities ............... 0 (147)
Non-current deferred tax liabilities ........... (14,175) (13,827)
-------- --------
Total deferred tax liabilities ............... (14,175) (13,974)
-------- --------
Net deferred tax liabilities ................... $ (9,794) $ (9,583)
======== ========
7
The components of the net deferred tax assets (liabilities) are as follows
(in thousands):
1995 1994
FEBRUARY 28, AUGUST 31,
------------ ----------
Depreciation and amortization ................ $(12,874) $(11,994)
Financial reserves and accruals
not yet deductible ....................... 3,080 2,411
-------- --------
Total .................................... $ (9,794) $ (9,583)
======== ========
(4) LONG TERM DEBT --
In October 1994, the Company amended its revolving credit agreement to
provide an unsecured $160 million revolving credit line to the Company. As of
April 10, 1995, the Company had unutilized borrowing capacity under the new
agreement of $29.5 million after utilizing $21.0 million of the facility for
letters of credit to secure certain insurance obligations and performance bonds.
In addition, the agreement provides for the extension of the revolving portion
of the credit agreement until January 1998, at which time any outstanding
borrowings convert to a term loan due in equal quarterly installments through
January 31, 2002. Borrowing availability is subject to the maintenance of
certain financial and cash flow ratios.
In October 1994, the Company entered into an interest rate swap agreement
through June 1997 to potentially lower the overall cost of borrowings. The
agreement is with a member of the Company's bank group and modifies $30 million
of 7.25% fixed rate debt to LIBOR-based floating rate plus .24% debt, which is
reset quarterly. The applicable swap rate at April 10, 1995 was 6.49%. The swap
agreement only subjects the Company to the risk of interest rate fluctuations.
At February 28, 1995, the market value of the interest rate swap was $.6
million, resulting in an unrealized gain to the Company of $.6 million. The fair
value of the interest rate swap is the estimated amount that a member of the
Company's bank group would pay to enter into the swap agreement at February 28,
1995, taking into account current interest rates and the current
creditworthiness of the swap counter-parties.
(5) SUBSEQUENT EVENT --
In March 1995, the Company announced that it is evaluating the disposition
of all or part of its glass recycling operations.
8
<PAGE>
ALLWASTE, INC. AND SUBSIDIARIES
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For supplemental information, it is suggested that "Management's Discussion
and Analysis of Financial Condition and Results of Operations" be read in
conjunction with the corresponding section included in the Company's Annual
Report on Form 10-K filed for the year ended August 31, 1994 with the SEC.
SIX MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 1995 AND 1994
The following is a summary of revenues and gross profit by operating
segment ($ in thousands):
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
---------------------------------------- --------------------------------------
1995 1994 1995 1994
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Environmental Services ............. $136,131 70% $114,558 70% $65,973 70% $55,570 69%
Recycling .......................... 32,328 17% 28,202 17% 15,263 17% 14,125 18%
Container Services ................. 24,893 13% 21,182 13% 12,460 13% 10,816 13%
-------- --- -------- --- ------- --- ------- ---
Total Revenues ................... $193,352 100% $163,942 100% $93,696 100% $80,511 100%
======== === ======== === ======= === ======= ===
Gross Profit:
Environmental Services ............. $ 36,690 27% $ 30,777 27% $17,550 27% $15,421 28%
Recycling .......................... 6,006 19% 4,454 16% 2,887 19% 2,317 16%
Container Services ................. 6,970 28% 6,086 29% 3,353 27% 3,208 30%
-------- -------- ------- -------
Total Gross Profit ............... $ 49,666 26% $ 41,317 25% $23,790 25% $20,946 26%
======== === ======== === ======= === ======= ===
</TABLE>
REVENUES - Compared to the corresponding periods in the prior year, the
Company's consolidated revenues increased by 18% and 16% for the six and three
month periods ended February 28, 1995, respectively.
ENVIRONMENTAL SERVICES revenues increased 19% during the six and three
month periods ended February 28, 1995, as compared to the corresponding periods
in fiscal 1994. Purchase acquisitions completed after fiscal 1993 contributed
$8.8 million or 41% and $4.2 million or 40% of the growth in revenues for the
six and three month periods ended February 28, 1995, respectively.
Approximately $12.8 million or 59% and $6.2 million or 60% of the revenue
growth in the six and three month periods ended February 28, 1995, respectively,
was internally generated. Internal
9
revenue growth for the respective six and three month periods included $10.0
million and $4.6 million in the Central region due to a continued increase in
processing, scaffolding and aboveground tank cleaning projects, and several
large turnaround jobs along the Gulf Coast. The Southeast region experienced an
increase in internal revenue growth of $9.1 million and $5.1 million during the
six and three month periods ended February 28, 1995, respectively, due to a
continued increase in site remediation and excavating work in the pulp and paper
industry, continuing work under a $7.0 million municipal works project and high
offshore activity. There was a continued increase in demand for aboveground tank
cleaning jobs and higher than expected demand for airmoving and hydroblasting
services. The increases in revenue growth for the respective six and three month
periods were offset by a $5.7 million and $2.9 million decline in internal
revenue growth in the Pacific region which resulted from continued lower levels
of day-to-day service and turnaround work with California refining customers in
certain plants. Revenue growth was also down in the second quarter of fiscal
1995, as compared to the same period of the prior year, due to the nonrecurrence
of emergency spill response work which resulted from pipeline ruptures in the
severe earthquake in Southern California in mid-January 1994. The Northeast
region experienced a $.6 million and $.4 million decline in internally generated
revenues due to a decrease in the need for maintenance in the power plant
industry caused by the mild winter months. The Mexican operations had a $.2
million and $.1 million decline in internal revenue growth and the North region
experienced a $.2 million increase and a $.1 million decrease in internally
generated revenue for the six and three month periods ended February 28, 1995,
respectively.
RECYCLING revenues increased 15% and 8% during the six and three month
periods ended February 28,1995, respectively, from the corresponding periods of
the prior year. The revenue growth for the six and three month periods ended
February 28, 1995 includes $4.1 million (100%) from two businesses acquired
after the first quarter of fiscal 1994 and $1.2 million (110%) from one business
acquired after the second quarter of fiscal 1994, respectively. Excluding the
contributions of the two acquired businesses, the Company experienced a 2%
increase in glass volumes with a 3% decrease in glass prices and a 2% decrease
in glass volumes with a 1% decrease in glass prices in the six and three month
periods of fiscal 1995, respectively, as compared to the corresponding periods
of the prior year. For the six month period ended February 28, 1995, volume
increased in container glass by 2% with a 7% price decrease, and volume remained
flat in the second quarter of fiscal 1995 compared to the same period of the
prior year, with a 5% decrease in price. These price variances resulted from the
Company's ability to lower supply costs and pass a portion of the savings
through to the customer. Glass volumes increased in the fiberglass industry by
1% with a 2% price increase and decreased by 6% with a 6% price increase for the
six and three month periods ended February 28, 1995, respectively, compared to
the same periods in the prior year. Volume decreased in the second quarter due
to scheduled customer shutdowns and a slow down in demand for fiberglass
insulation in the residential construction market. Highway bead volumes remained
flat with the corresponding prior year six month period and increased 2% in the
second quarter of fiscal 1995, with a 15% and 18% increase in prices,
respectively. Due to the continued economic recovery in this industry in fiscal
1995, the Company was able to recover previous price concessions.
CONTAINER SERVICES revenues increased 18% and 15% during the six and three
month periods ended February 28, 1995, respectively, from the corresponding
periods of the prior year. The increase in revenue was all internally generated.
Wastewater pretreatment revenues increased by $1.7 million and $.9 million for
the six and three month periods ended February 28, 1995, respectively. Of these
10
increases in wastewater pretreatment revenues, $1.1 million and $.6 million was
due to the Company's wastewater pretreatment facility in Atlanta, Georgia which
was recorded under the equity method of accounting in the same periods of the
prior fiscal year. Intermediate bulk container ("IBCs") cleaning revenues
increased $1.0 million and $.4 million during the six and three month periods of
the current year, as compared to the same corresponding periods of the prior
year, due to volume gains resulting from the addition or expansion of IBC
cleaning capabilities in existing facilities. The remaining increase in revenue
included a $.9 million and $.4 million increase in tank trailer cleaning
revenues for the six and three month periods resulting from a 5% and 4% volume
increase, respectively, and a 2% price increase. Compared to prior year
corresponding periods, railcar revenues increased $.1 million as a result of a
31% increase in volume with a 21% decrease in price during the six month period
ended February 28, 1995 and decreased $.1 million in the second quarter of the
current fiscal year with a 24% increase in volume and a 25% decrease in price.
These fluctuations in volume and price are primarily the result of a certain
contract to clean a high volume of easy-to-clean (and thus lower priced)
railcars during the quarter. Additionally, there has been an overall decline in
higher priced pressure car cleaning revenue which was replaced by an increase in
lower priced general purpose car cleaning revenue.
GROSS PROFIT MARGINS - Consolidated gross profit, as a percentage of
revenues ("gross margin") increased 1% to 26% for the six months ended February
28, 1995 and decreased 1% to 25% for the three months then ended, compared to
the corresponding periods in the prior year.
ENVIRONMENTAL SERVICES gross margins remained unchanged at 27% for the six
month period ended February 28, 1995 and decreased 1% to 27% for the three month
period then ended, as compared to the corresponding periods of the prior year.
Gross margins decreased in the second quarter of fiscal 1995 due to the
nonrecurrence of high margin spill response work caused by the severe earthquake
in Southern California in January 1994, an increase in low margin subcontract
revenue and a slowdown in the need for maintenance in the power plant industry
in the Northeast region caused by a mild winter. Gross margins were favorably
impacted by an increase in revenues for the remainder of the division which
resulted in higher equipment and labor utilization in some regions and a
decrease in costs resulting from a continued focus on safety and training.
RECYCLING gross margins increased 3% to 19% for the six and three month
periods ended February 28, 1995 as compared to the corresponding periods of the
prior year. Gross margins have improved in the current year, as compared to the
prior year, due to declines in overall supply costs, increased pricing in the
container, fiberglass and bead industries and improved operational efficiencies.
Approximately 50% of the gross margin improvement resulted from the businesses
acquired in fiscal 1994.
CONTAINER SERVICES gross margins decreased 1% to 28% for the six month
period ended February 28, 1995 and decreased 3% to 27% for the three month
period then ended, as compared to the respective corresponding periods in fiscal
1994. The decrease in gross margin for the second quarter of fiscal 1995 was
primarily due to the results of the Company's Atlanta wastewater pretreatment
facility which were accounted for under the equity method in the same period of
the prior year. Without this facility's results, gross margins increased 1% to
30% and decreased 1% to 29% for the six and three month periods ended February
28, 1995, respectively. In fiscal 1995, the decrease in second quarter margins
11
was offset by the nonrecurrence of costs experienced in the first quarter of
fiscal 1994 at certain operating locations associated with temporary waste
disposal, transitional relocation inefficiencies and increased labor costs
related to the introduction of capabilities to handle multiple container types.
The remaining decrease in gross margins for the second quarter was due to lower
margins at railcar operations caused primarily by a change in revenue mix.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES - SG&A expenses
increased $4.8 million or 16% to $35.0 million and $1.8 million or 11% to $17.5
million for the six and three month periods ended February 28,1995,
respectively, compared to the same periods in fiscal 1994. Direct SG&A from
purchase acquisitions completed subsequent to fiscal 1993 contributed
approximately 32% of the six months' increase and 46% of the three months'
increase. The remainder of the increases is due to higher overall levels of
activity. SG&A expense as a percentage of total revenues has remained consistent
at 18% and decreased by 1% to 19% for the six and three month periods ended
February 28, 1995, respectively, as compared to the same periods of the prior
year. The environmental services segment has increased its sales efforts as part
of its internal growth focus. The Company has also increased its staffing to
support its safety, quality and compliance programs. The increase in these costs
was offset by a decrease in costs related to the Company's safety and management
incentive plans compared to the same period in the prior year.
INTEREST AND OTHER - Interest expense increased by $1.3 million and $.7
million during the six and three month periods ended February 28, 1995,
respectively, as compared to the same periods in fiscal 1994, due to a higher
average level of debt and higher average interest rates than in the
corresponding prior year periods.
For substantially all of the second quarter of fiscal 1994, the wastewater
pretreatment plant in Atlanta, Georgia was idle as a result of permitting and
operational problems. As such, the Company, as a minority partner, recognized a
$.8 million loss for the three month period ended February 28, 1994, on a
pre-tax basis which was recorded in "other income (expense), net" under the
equity method of accounting. Subsequent to February 1994, the Company increased
its ownership in the facility to 100%.
INCOME TAXES - The effective income tax rate for the six and three months
ended February 28, 1995 was 44%, compared to 38% in the same periods in fiscal
1994. The effective tax rate was higher than the statutory federal rate of 35%
primarily due to the effect of the nondeductibility of a portion of meal and
entertainment expenses, the nondeductible amortization of a portion of the
Company's goodwill, state income taxes and Canadian earnings which are taxed at
a higher statutory rate. The effective tax rate was lower in the same periods of
the prior year primarily due to the nontaxable nature of $1.4 million of income
received during the first quarter of fiscal 1994.
FINANCIAL CONDITION
Shareholders' equity increased $7.7 million to $128.9 million. Working
capital decreased $.6 million to $32.0 million reflecting payment of certain
non-trade receivables and a reduction in prepaid federal income taxes, offset by
payments relating to the Company's fiscal 1994 safety and management incentive
plans. Long-term obligations, excluding minority interest, increased $3.9
million, primarily due to $4.8 million in additional borrowings under the
Company's revolving credit agreement used primarily to fund capital
expenditures, insurance payments and acquisitions during the six month period
ended
12
February 28, 1995. These additional borrowings were offset primarily by
$.7 million in long-term obligations which became current during the first half
of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
In March 1995, the Company announced that it is evaluating the disposition
of all or part of its glass recycling operations. The evaluation of potential
disposition is intended to focus management's efforts on expanding services to
core industrial customers in the environmental and industrial services
operations and to maximize shareholder value. Any cash proceeds from the
potential disposition of the glass recycling operations would likely be used to
reduce long term debt; thus, further enabling the Company to fund growth,
including potential acquisition.
Capital expenditures during the first half of fiscal 1995 were $26.3
million. Of the total capital expenditures during this period, $17.4 million
applied to environmental services operations, $6.1 million to container services
operations, $2.2 million to the recycling division, and the balance to corporate
operations. The Company has projected capital requirements of approximately
$16.6 million for the next two quarters, of which $7.4 million relates to
environmental services operations, $5.5 million to container services operations
and $3.7 million to recycling operations. The remainder of fiscal 1995 capital
expenditures will be funded from a combination of cash flows from operating
activities and utilization of the Company's revolving credit facility. The
previously anticipated equipment leasing facility has been delayed by the
Company until a decision is reached on the potential disposition of the glass
recycling operations.
In October 1994, the Company amended its revolving credit agreement which
provides an unsecured $160 million revolving credit line to the Company. As of
April 10, 1995, unutilized borrowing capacity under the new agreement was $29.5
million after utilizing $21.0 million of the facility for letters of credit to
secure certain insurance obligations and performance bonds. In addition, the
agreement provides for the extension of the revolving portion of the credit
agreement until January 1998, at which time any outstanding borrowings convert
to a term loan due in equal quarterly installments through January 31, 2002.
Borrowing availability is subject to the maintenance of certain financial and
cash flow ratios.
In October 1994, the Company entered into an interest rate swap agreement
through June 1997 to potentially lower the overall cost of borrowings. The
agreement is with a member of the Company's bank group and modifies $30 million
of 7.25% fixed rate debt to LIBOR-based floating rate plus .24% debt, which is
reset quarterly. The applicable swap rate at April 10, 1995 was 6.49%. The swap
agreement only subjects the Company to the risk of interest rate fluctuations.
At February 28, 1995, the market value of the interest rate swap was $.6
million, resulting in an unrealized gain to the Company of $.6 million.
Substantially all of the Company's debt financing is subject to variable
interest rates. The prime lending rate has increased by 1.25% since August 31,
1994 and rates could continue their upward trend.
OUTLOOK
The Company experienced an 18% growth in revenues in the first half of
fiscal 1995 and gross margin increased 1% as a percentage of revenues. The
growth in revenues is due to a 10% increase
13
in internally generated revenues and an 8% increase in revenues from
acquisitions. Internal growth has resulted largely from the expansion of service
lines in existing operations. Management expects to continue to achieve strong
revenue growth in the remainder of fiscal 1995 through a combination of internal
growth programs and acquisitions.
The Company's Mexican joint venture has experienced pre-tax losses of $.4
million and $.1 million, before absorption of the minority partner's interest in
such losses, in the six and three month periods ended February 28, 1995. While
maintaining a presence in Mexico, management initiated actions which reduced
losses by $.3 million for the first half of fiscal 1995, as compared to the same
period of the prior year, by decreasing overhead expenses. In December 1994, the
Mexican peso began a period of devaluation which will have an effect on the
Company due to the inflationary impact. However, due to the immateriality of the
Mexican operations to the Company as a whole, the devaluation is not expected to
have a significant impact upon the Company's results of operations.
The Company expects to continue to achieve strong growth in its IBC
cleaning services and wastewater pretreatment services as a result of the
Company's existing IBC national service agreement with Hoover and expansion of
both IBC and wastewater pretreatment capabilities.
The impact of inflation upon the Company has been minimal.
14
ALLWASTE, INC. AND SUBSIDIARIES
PART II, ITEM 4 - SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
On January 20, 1995, the Company held its eighth annual meeting of
stockholders since becoming a public company on December 5, 1986. At the
meeting, the stockholders voted upon the following matters:
1. To amend the Company's Amended and Restated Certificate of
Incorporation to permit the size of the Board of Directors to be not
less than nine nor more than fifteen.
2. To elect three Class II directors of the Company to hold office until
the third succeeding annual meeting of stockholders after their
election (the 1998 Annual Meeting), and to elect three new directors,
each to a particular class, resulting in four directors in each class,
all until their successors have been duly elected and qualified.
3. To approve and to adopt the Amended and Restated 1989 Replacement
Non-Qualified Stock Option Plan (the "Amended and Restated Plan"),
which included (a) increasing the number of shares subject to issued
and outstanding options plus the number of shares available for option
grants from 3.0 to 4.5 million, (b) eliminating the 2.0 million share
limit for options granted to and exercised by persons then subject to
Section 16 of the Securities Exchange Act of 1934, as amended, and (c)
certain technical changes to ensure that the Amended and Restated Plan
would meet the requirements of the performance-based compensation
exception set forth in Section 162(m) of the Internal Revenue Code of
1986, as amended.
4. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants to audit the Company's consolidated
financial statements for the fiscal year ending August 31, 1995.
All proposals received the affirmative vote required for approval. The
number of votes cast for, against and withheld, as well as the number of
abstentions and broker non-votes, as to each such matter were as follows:
<TABLE>
<CAPTION>
AFFIRMATIVE NEGATIVE VOTES BROKER
PROPOSAL VOTES VOTES ABSTENTIONS WITHHELD NON-VOTES
- - -------- ----------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
1. .................................................. 28,695,227 2,758,982 222,918 N/A None
2. Robert L. Knauss ................................ 30,885,752 N/A N/A 791,375 None
Ronald L. Stanfa ................................. 30,901,164 N/A N/A 775,963 None
T. Michael Young ................................. 30,898,764 N/A N/A 778,363 None
Robert M. Chiste ................................. 30,902,902 N/A N/A 774,225 None
Fred M. Ferreira ................................. 30,906,564 N/A N/A 770,563 None
Fletcher Thorne-Thomsen, Jr ...................... 30,902,764 N/A N/A 774,363 None
3. .................................................. 25,598,700 5,579,495 408,932 N/A 90,000
4. .................................................. 31,081,525 416,983 178,619 N/A None
</TABLE>
15
In addition to the six directors listed in Proposal 2 who were elected at
the 1995 Annual Meeting, the following directors' terms of office continued
after the meeting and will continue through the annual meeting of stockholders
indicated:
TERM THROUGH
NAME ANNUAL MEETING OF
---- -----------------
Ricardo J. Besquin 1996
I. T. Corley 1996
Thomas J. Tierney 1996
Michael A. Baker 1997
David H. Batchelder 1997
R. L. Nelson, Jr. 1997
16
ALLWASTE, INC. AND SUBSIDIARIES
PART II, ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
EXHIBIT
NO. DESCRIPTION
------- -----------
4.1 -- Specimen Common Stock certificate (Exhibit 4.1 of the
Allwaste, Inc. Report on Form 10-K (File No. 1-11008) for
the fiscal year ended August 31, 1992, filed November 27,
1992, is hereby incorporated by reference.)
4.2 -- Specimen debenture certificate (Exhibit 4.2 of the Allwaste,
Inc. Report on Form 10-K (File No. 1-11008) for the fiscal
year ended August 31, 1992, filed November 27, 1992, is
hereby incorporated by reference.)
4.3 -- Form of Indenture between the Company and the Trustee
relating to the Debentures. (Exhibit 4.1 of the Allwaste,
Inc. Quarterly Report on Form 10-Q (File No. 0-15217) for
the quarter ended May 31, 1989, is hereby incorporated by
reference.)
10.1 -- Employment Agreement dated October 23, 1986, between R.L.
Nelson, Jr. and Allwaste, Inc. (Exhibit 10.1 of the
Allwaste, Inc. Report on Form 10-K (File No. 1-11016) for
the fiscal year ended August 31, 1994, filed November 29,
1994, is hereby incorporated by reference.)
10.2 -- Employment Agreement dated March 26, 1990, between I.T.
Corley and Allwaste, Inc. (Exhibit 10.2 of the Allwaste,
Inc. Report on Form 10-K (File No. 1-11016) for the fiscal
year ended August 31, 1994, filed November 29, 1994, is
hereby incorporated by reference.)
10.3 -- Employment Agreement dated June 21, 1991, between Fred
Ferreira and Allwaste Services, Inc. (Exhibit 10.3 of the
Allwaste, Inc. Report on Form 10- K (File No. 1-11016) for
the fiscal year ended August 31, 1994, filed November 29,
1994, is hereby incorporated by reference.)
10.4 -- Employment Agreement dated July 6, 1993, as amended, between
Steven B. Bowles and Allwaste Recycling, Inc. (Exhibit 10.4
of the Allwaste, Inc. Report on Form 10-K (File No. 1-11016)
for the fiscal year ended August 31, 1994, filed November
29, 1994, is hereby incorporated by reference.)
10.5 -- Employment Agreement dated October 30, 1987, between Berry
Rankin and Independent Tank Cleaning Services, Inc.
(Exhibit 10.5 of the Allwaste, Inc. Report on Form 10-K
(File No. 1-11016) for the fiscal year ended August 31,
1994, filed November 29, 1994, is hereby incorporated by
reference.)
17
10.6 -- Employment Agreement dated October 17, 1994, between Robert
M. Chiste and Allwaste, Inc. (Exhibit 10.6 of the Allwaste,
Inc. Report on Form 10-K (File No. 1-11016) for the fiscal
year ended August 31, 1994, filed November 29, 1994, is
hereby incorporated by reference.)
10.7 -- Allwaste, Inc. Amended and Restated 1989 Replacement
Non-Qualified Stock Option Plan. (Filed herewith.)
10.8 -- Allwaste Retirement Savings Plan. (Exhibit 4.1 of the
Allwaste, Inc. Registration Statement on Form S-8 (File No.
33-37684), effective November 8, 1990, is hereby
incorporated by reference.)
10.9 -- Allwaste Retirement Savings Trust. (Exhibit 4.2 of the
Allwaste, Inc. Registration Statement on Form S-8 (File No.
33-37684), effective November 8, 1990, is hereby
incorporated by reference.)
10.10 -- Credit Agreement dated as of November 30, 1993, as amended,
by and among Allwaste, Inc., a Delaware corporation, the
Financial Institutions Signatory Thereto, and Texas Commerce
Bank National Association, a national banking association,
as Agent. (Exhibit 10.10 of the Allwaste, Inc. Report on
Form 10-K (File No. 1-11016) for the fiscal year ended
August 31, 1994, filed November 29, 1994, is hereby
incorporated by reference.)
11.1 -- Calculation of Net Income Per Common Share. (Filed
herewith.)
27.1 -- Financial Data Schedule. (Filed herewith.)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended February 28,
1995.
18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Allwaste, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALLWASTE, INC.
Dated: April 10, 1995 By: I. T. CORLEY
I. T. Corley
19
EXHIBIT 10.7
ALLWASTE, INC.
AMENDED AND RESTATED
1989 REPLACEMENT NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE. This Amended and Restated 1989 Replacement Non-Qualified
Stock Option Plan (the "Plan") of Allwaste, Inc. (the "Company") for directors
and employees is intended to advance the best interest of the Company by
providing such persons with additional incentive and by increasing their
proprietary interest in the success of the Company.
2. ADMINISTRATION. The Plan shall be administered by a committee to be
appointed by the Board of Directors of the Company (the "Committee"). All
questions of interpretation and application of the Plan shall be subject to the
determination, which shall be final and binding, of a majority of the whole
Committee, except for the granting of options (the "Options") which shall be
granted by unanimous vote or consent of the Committee. The Committee shall
consist of not less than three (3) members of the Board of Directors, all of
whom shall be "Non-Employee Directors" (as defined below) of the Company.
3. OPTION SHARES. The stock subject to the Options and other provisions of
the Plan shall be shares of the Company's Common Stock, $0.01 par value (the
"Common Stock"). All Options granted under the Plan shall be non-qualified stock
options and not incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended. Except as otherwise provided herein,
the total amount of the Common Stock with respect to which Options may be
granted shall not exceed in the aggregate 4,500,000 shares; provided, however,
that such aggregate number of shares shall be subject to adjustment in
accordance with the provisions of Paragraph 14 hereof. Such shares may be
treasury shares or authorized but unissued shares. Effective February 23, 1990
and continuing through August 31, 1999, upon exercise of any outstanding Option,
whether partial or in full, the shares of Common Stock allocable to the
exercised portion of such Option may again be available for option grants under
the Plan and the sum of the number of shares subject to issued and outstanding
Options plus the number of shares available for Option grants shall remain
constant at 4,500,000. In the event that any outstanding Option shall for any
reason expire, the shares of Common Stock allocable to the unexercised portion
of such Option may again be subject to an Option under the Plan.
4. ELIGIBILITY. The individuals who shall be eligible to participate in the
Plan shall be such directors and employees of the Company, or of any corporation
in which the Company owns, directly or indirectly, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
as the Committee shall determine from time to time.
(a) GRANTS TO EMPLOYEES. All employees of the Company shall be eligible
to participate in the Plan and shall be granted Options as determined by
unanimous vote or consent of the Committee. No employee may be granted Options
resulting in such employee holding in excess of 1,500,000 Options.
(b) GRANTS TO NON-EMPLOYEE DIRECTORS. Each Non-Employee Director
(meaning directors of the Company who are not officers or full-time employees of
the Company or any of its subsidiaries) shall, on the August 1 coinciding with
or immediately following the date on which he or she is an elected or appointed
director of the Company, be granted an option to purchase 10,000 shares of
Common Stock of the Company exercisable for a period of ten (10) years from the
date of such Option grant, subject to the six (6) month vesting period referred
to below and Paragraphs 10 and 14 hereof.
Thereafter, on August 1 of each subsequent year in which the Non-Employee
Director is still serving as a director (whether or not the Non-Employee
Director has continually remained a director since the initial granting of the
option to purchase 10,000 shares), he or she shall automatically be granted an
option to purchase an additional 7,500 shares of Common Stock of the Company
exercisable for a period of ten (10) years from the date of such Option grant,
subject to the six (6) month vesting period referred to below and Paragraphs 10
and 14 hereof. The total amount of Stock with respect to which Options may be
granted under the Plan to Non-Employee Directors of the Company as a group shall
not exceed 400,000 shares in the aggregate during any fiscal year; provided,
that the class and the aforesaid maximum number of shares shall be subject to
adjustments in accordance with the provisions of Paragraph 14 hereof.
Notwithstanding the foregoing, the option to purchase 7,500 shares of Common
stock to be granted automatically on August 1 of each year to each Non-Employee
Director shall not be adjusted in the event of a change in capital structure of
the Company as described in Paragraph 14 hereof. All Options granted to
Non-Employee Directors shall not be exercisable until six (6) months after the
date of grant.
5. OPTION PRICE. The price at which shares may be purchased pursuant to
Options originally granted under the Plan shall be no less than the lesser of
the quoted market price at (a) the date of grant or (b) the date which marks the
occurrence of the event pursuant to which the Option is granted, and Options
granted in exchange or to replace options originally granted under an existing
option plan of the Company shall be at the originally granted price.
6. DURATION OF OPTIONS. The Plan shall terminate on January 13, 2004. The
Committee, in its discretion, shall determine the period over which Options
shall be exercisable (subject to Paragraph 4(b) hereof) and may provide that an
Option shall be exercisable in various installments ("Vested Option Shares");
provided, however, that the period during which Options may be exercisable shall
expire not later than ten (10) years after the date of grant.
7. AMOUNT EXERCISABLE. The Vested Option Shares may be exercised, so long
as the Option is valid and outstanding, from time to time in part or as a whole,
and subject to such other conditions as the Committee in its discretion may
provide. However, no Option granted hereunder shall be exercisable prior to full
ratification of the Plan as required under Paragraph 17 hereof.
8. (a) EXERCISE OF OPTIONS. Vested Option Shares shall be exercised by the
delivery of written notice to the Company setting forth the number of shares
with respect to which the Option is to be exercised, together with cash,
certified check, bank draft or postal or express money order payable to the
order of the Company for an amount equal to the option price of such shares and
any income taxes required to be withheld, and specifying the address to which
the certificates for such shares are to be mailed.
As promptly as practicable after receipt of such written notification
and payment, the Company shall deliver to the option holder ("Optionee")
certificates for the number of shares with respect to which such Option has been
so exercised, issued in the Optionee's name; provided, that such delivery shall
be deemed effected for all purposes when a stock transfer agent of the Company
shall have deposited such certificates in the United States mail, addressed to
the Optionee, at the address specified pursuant to this Paragraph 8.
(b) TAX ELECTION AVAILABLE TO OPTIONEES WHO ARE PERSONS DESCRIBED IN
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934. Optionees who are persons
described in Section 16(a) of the Exchange Act ("Section 16(a) Optionees") at
the time of exercise of an Option shall have the option, rather than paying to
the Company an amount required to be withheld under applicable income tax
laws in connection with the exercise of an Option, to satisfy this obligation in
whole or in part by making an election (the "Election") to have the Company
withhold shares of Common Stock having a fair market value equal to the amount
required to be withheld. Such Election may not be made within six months of the
date the Option is granted (except in the event of the Section 16(a) Optionee's
death or disability) and must be made concurrently with the Option exercise. The
Election shall be made by providing the Company with written notice of such
Election (attached to the written notice of the Option exercise provided under
Paragraph 8(a) above). The written notice shall specify the date the amount of
tax to be withheld is to be determined (the "Tax Date") which shall be either
(1) the same date that the Option is exercised or (2) a date six months after
the Option is exercised. In order for the Tax Date to be the same date that the
Option is exercised, such exercise must be made during the ten-day "window
period" beginning on the third day following the press release of the Company's
quarterly or annual summary statement of revenues and earnings and such written
notice shall also indicate the amount of the tax obligation, number of shares to
be withheld together with cash delivered (if any) to pay the withholding
obligation. For purposes of calculating the withhold obligation when the Tax
Date is the same as the date of exercise, the fair market value of the shares to
be utilized to calculate the withholding obligation and to determine the number
of shares to be withheld to satisfy this obligation shall be based on the
closing price of the Common Stock as reported in the WALL STREET JOURNAL on the
last trading day preceding the date that the Option is exercised. If the Tax
Date chosen is six months after the date the Option is exercised, the full
number of shares will be issued on exercise but the Section 16(a) Optionee will
be unconditionally obligated to tender back to the Company the proper number of
shares and the Company retains the right to place legends on the certificates
representing such shares or use other similar means to assure itself that the
unconditional obligation will be met, and the fair market value of the shares to
be utilized to calculate the withholding obligation shall be based on the
closing price of the Common Stock as reported in the WALL STREET JOURNAL on the
date of, or, in the event such day is not a trading day, the next trading day
following such Tax Date. The Election shall be available to all Section 16(a)
Optionees regardless of whether or not he or she is subject to the withholding
obligation.
9. NON-TRANSFERABILITY OF OPTIONS. Options shall not be transferable and
may not be sold, pledged or assigned in any manner otherwise than by will or by
the laws of descent and distribution.
10. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE. Except as may be
otherwise expressly provided herein, Options shall terminate on such date as
shall be selected by the Committee in its discretion and specified in the option
agreement; however, with respect to an employee, Vested Option Shares will in
all cases expire in three (3) months following the severance of the employment
relationship between the Company and the Optionee for any reason, for or without
cause (other than death), or in the case of employees' retirement in good
standing from the employ of the Company for reasons of age or disability under
the then established rules of the Company. If an Optionee is a director of the
Company at the time an Option is granted to such Optionee, and he or she ceases
to be a director, the Option shall terminate three (3) months following the date
he or she ceases to be a director; provided that the Committee may extend such
date if such person becomes an employee of the Company. Whether authorized leave
of absence, or absence on military or government service, shall constitute
severance of the employment relationship between the Company and the Optionee,
in the case of options granted to employees, shall be determined by the
Committee at the time thereof. In the event of the death of the holder of an
Option while serving as a director or while in the employ of the Company as the
case may be and before the date of expiration of such Option, such Option shall
terminate one (1) year following the date of such death regardless of the date
of expiration of such Option. After the death of the Optionee, his or her
executors, administrators or any person or persons to whom his or her Option may
be transferred by will or by the laws of descent and distribution, shall have
the right, at any time prior to one (1) year following the date of such death,
to exercise the
Option, in whole (without regard to any limitations set forth in or imposed
pursuant to Paragraph 6 hereof) or in part. For the purpose of determining the
employment relationship between the Company and the Optionee, employment by any
corporation of which the Company owns, directly or indirectly, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock shall be considered employment by the Company.
11. REQUIREMENTS OF LAW. The Company shall not be required to sell or issue
any shares under any Option if the issuance of such shares shall constitute a
violation by the Optionee or the Company of any provisions of any law or
regulation of any governmental authority. In addition, in connection with the
Securities Act of 1933 (as now in effect or hereafter amended), upon exercise of
any Option, the Company shall not be required to issue such shares unless the
Committee has received evidence satisfactory to it to the effect that the holder
of such Option will not transfer such shares except pursuant to a registration
statement in effect under such Act or unless an opinion of counsel to the
Company has been received by the Company to the effect that such registration is
not required. Any determination in this connection by the Committee shall be
final, binding and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act of 1933 (as now in effect or as hereafter amended). The Company shall not be
obligated to take any other affirmative action in order to cause the exercise of
any Option or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority.
12. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a
stockholder with respect to shares covered by his or her Option until the date
of issuance of a stock certificate for such shares; no adjustment for dividends,
or otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
13. EMPLOYMENT OBLIGATIONS. The granting of any Option shall not impose
upon the Company any obligation to employ or continue to employ any Optionee;
and the right of the Company to terminate the employment of any employee shall
not be diminished or affected by reason of the fact that an Option has been
granted to him or her.
14. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If at any time the Company shall effect a subdivision or consolidation of
shares or other increase or reduction of the number of shares of the Common
Stock outstanding, without receiving compensation therefor in money, services or
property, then the number of shares of Common Stock then subject to Options
hereunder, the number of shares then available for Options hereunder, the number
of options granted to a Non-Employee Director on the August 1 coinciding with or
immediately following the date on which such person is first elected or
appointed a director, and the aggregate limit on the number of options that may
be granted during any fiscal year to Non-Employee Directors as a group shall
each be proportionately adjusted.
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each holder of an outstanding Option shall,
at no additional cost, be entitled upon exercise of such Option
to receive (subject to any required action by stockholders) in lieu of the
number of shares as to which such Option shall then be so exercisable, the
number and class of shares of stock or other securities to which such holder
would have been entitled pursuant to the terms of the agreement of merger or
consolidation, if, immediately prior to such merger of consolidation, such
holder had been the holder of record of a number of shares of Common Stock equal
to the number of shares as to which such Option shall be so exercised.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company sells or otherwise disposes of substantially all its assets to
another corporation while unexercised Options remain outstanding under the Plan,
(i) subject to the provisions of clause (iii) below, and so long as the
successor entity is willing to assume the obligation to deliver shares of such
stock or other securities, after the effective date of such merger,
consolidation or sale, as the case may be, each holder of an outstanding Option
shall be entitled, upon exercise of such Option, to receive, in lieu of shares
of Common Stock, shares of such stock or other securities as the holder of
shares of Common Stock received pursuant to the terms of the merger,
consolidation or sale, and if any Optionee is subsequently terminated without
cause subsequent to the merger, consolidation or sale, then he or she shall have
the right, at any time prior to three (3) months following the date of
termination without cause to exercise the Option, in whole (without regard to
any limitations set forth in or imposed pursuant to Paragraph 6 hereof) or in
part; (ii) the Board of Directors may waive any limitations set forth in or
imposed pursuant to Paragraph 6 hereof so that all Options, from and after a
date prior to the effective date of such merger, consolidation or sale, as the
case may be, specified by the Board, shall be exercisable in full; or (iii) all
outstanding Options may be canceled by the Board of Directors as of the
effective date of any such merger, consolidation or sale provided that (x)
notice of any such cancellation shall be given to each holder of an Option and
(y) each holder of an Option shall have the right to exercise such Option in
full (without regard to any limitations set forth in or imposed pursuant to
Paragraph 6 hereof) during a thirty (30) day period preceding the effective date
of such merger, consolidation or sale.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to outstanding Options.
15. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may
modify, revise or terminate the Plan at any time and from time to time;
provided, however, that no such modification, revision or termination shall
change or impair any Option previously granted without the consent of the
Optionee and provided further that the Board of Directors of the Company may
only make amendments in accordance with procedures required under Rule 16b-3 and
any such amendment must keep the Plan in compliance with Rule 16b-3 or any
successor thereto under the Securities Exchange Act of 1934 (as now in effect or
hereafter amended).
16. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied in a
written option agreement which shall be subject to the terms and conditions
prescribed above, and shall be signed by the Optionee and by an Executive
Officer, the President, or any Vice President of the Company for and in the name
and on behalf of the Company. Such an option agreement shall contain such other
provisions as the Committee in its discretion shall deem advisable.
17. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective and shall
be deemed to have been adopted upon approval by the full Board of Directors,
subject to ratification by the stockholders of the Company.
<PAGE>
EXHIBIT 11.1
ALLWASTE, INC. AND SUBSIDIARIES
CALCULATION OF NET INCOME PER COMMON SHARE
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 28,
-------------------------- --------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income ..................................................... $ 6,052 $ 4,826 $ 2,332 $ 1,959
========= ========= ========= =========
Common shares outstanding, beginning of fiscal period .......... 37,741 36,740 37,741 36,740
Weighted average number of common shares outstanding:
Stock options, treasury stock method ....................... 342 100 215 137
Purchased companies ........................................ 558 -- 559 --
Exercise of stock options .................................. 167 -- 214 --
Receipt of Common Stock .................................... (250) (173) (250) (250)
--------- --------- --------- ---------
Total weighted average common shares outstanding ............... 38,558 36,667 38,479 36,627
========= ========= ========= =========
Net income per common share .................................... $ .16 $ .13 $ .06 $ .05
========= ========= ========= =========
</TABLE>
Fully diluted net income per common share is not presented for any period as it
is not materially different from the above primary calculations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the Company's
Quarterly Form 10-Q consolidated financial statements for the 6 months ended
February 28, 1995 and is qualified in its entirety by referrence to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> FEB-28-1995
<CASH> 3,169
<SECURITIES> 0
<RECEIVABLES> 79,170
<ALLOWANCES> 2,948
<INVENTORY> 4,949
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0
0
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<EPS-PRIMARY> .16
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</TABLE>
