<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[MARK ONE]
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
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 No. 1-10489
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KIMMINS CORP.
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(Exact name of registrant as specified in its charter)
Delaware 59-2763096
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(State of Incorporation) (I.R.S. Employer
Identification No.)
1501 Second Avenue, East, Tampa, Florida 33605
(Address of registrant's principal executive offices,
including zip code)
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(Registrant's telephone number, including area code):
(813) 248-3878
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Each Class on Which Registered
------------------------------- -------------------------------
Common Stock, $.001 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by a 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 [ ] No [X]<PAGE>
Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
As of March 31, 1998, there were outstanding 4,447,397 shares of
Common Stock and 2,291,569 shares of Class B common stock. The aggregate
market value of the voting stock held by non-affiliates of the registrant
as of March 31, 1998, was $10,851,000.
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DOCUMENTS INCORPORATED BY REFERENCE:
NONE<PAGE>
KIMMINS CORP.
Form 10-K
TABLE OF CONTENTS
Page
No.
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PART I
Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 8
Item 4 Submission of Matters to a vote of Security Holders . . . . . 9
PART II
Item 5 Market for the Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . . . . 8
PART III
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures . . . . . . . . . . . 34
Item 10 Directors and Executive Officers of the Registrant . . . . 34
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . 51
Item 12 Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . 55
PART IV<PAGE>
Note: The discussions in this Form 10-K contain forward looking
statements that involve risks and uncertainties. Statements contained in
this Form 10-K that are not historical facts are forward looking
statements that are subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. A number of important factors
could cause future results of Kimmins Corp. and its subsidiaries to
differ materially and significantly from those expressed or implied in
past results and in any forward looking statements made by, or on behalf
of, the Company. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
"Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," as well as those discussed
elsewhere in this Form 10-K. These factors include, without limitation,
those listed in "Risk Factors" in the Company's Registration Statement on
Form S-1 (File No. 33-12677).
PART I
Item 1. Business
THE COMPANY
Kimmins Corp. and its subsidiaries (collectively, the "Company")
operates two business segments: solid waste management services and
specialty contracting services. The Company provides solid waste
management services through its TransCor Waste Services, Inc., subsidiary
to commercial, industrial, residential, and municipal customers in the
state of Florida. The Company provides specialty contracting services in
the south, including infrastructure development; underground
construction; road work; site remediation services such as excavation,
removal and disposal of contaminated soil; facilities demolition and
dismantling; and asbestos abatement.
The Company's services are as follows:
* Solid waste management services - Transfer, collection, resource
recovery, transportation, disposal of non-hazardous waste, and
demolition of residential and commercial facilities.
* Specialty contracting services
- Environmental and utility contracting - Environmental and
utility contracting, including infrastructure services such as
sewer lines, water lines, and roads.
- Industrial demolition, dismantling, and abatement - Dismantling
of facilities or structures including offshore oil platforms;
draining liquid wastes from pipes and tanks; asbestos removal,
cleanup, disposal, and reinsulation; removal of above- and
below-ground tanks; removal and disposal or sale of other
equipment; and sale of scrap materials.
- Hazardous waste services - On-site treatment, containment, and
excavation and removal.<PAGE>
The Company's services may be used individually or in combination as
required to meet the specific needs of customers. The Company's business
strategy is to draw upon its solid waste management and contracting
experience to perform complex projects requiring a broad range of
services. Although each of the Company's business lines can operate
independently from the other related services, the Company believes that
integration of these services gives it a competitive advantage by
relieving the customer of the burden of coordinating activities of
multiple contractors.
During its initial years of operation, the Company emphasized, among
other services offered, a broad range of contracting services. As the
need for waste-related and specialty contracting services has grown in
response to heightened public concern and government regulation, the
Company has used its capabilities in facilities demolition and
dismantling and in the management of complex construction projects to
become increasingly involved in solid waste management and
project-oriented activities.
The Company's strategy is to continue to focus on solid waste
management services, through its TransCor Waste Services, Inc.
subsidiary, and specialty contracting projects for private and
governmental customers. To date, the Company's activities in solid waste
management have consisted of opening and operating resource recovery and
transfer facilities in various cities in Florida and bidding on and
obtaining industrial, commercial, and municipal solid waste management
contracts. The Company does not consider its business to be highly
seasonable.
SERVICES
Solid Waste Management Services:
The Company, through its majority-owned subsidiary, TransCor Waste
Services, Inc. ("TransCor"), provides solid waste management services to
commercial, industrial, residential, and municipal customers. In
connection with such services, the Company currently owns and operates
fully-permitted construction and demolition ("C&D") transfer and
recycling ("T&R") facilities in four of the largest metropolitan regions
in the state of Florida. The Company has also, pursuant to several
municipal contracts, commenced the residential curbside collection of a
variety of already segregated recyclable forms of solid waste, including
such materials as newspapers, cardboard, plastic, metals, and glass. In
addition to its T&R operations, the Company collects and disposes of all
types of non-hazardous solid waste for industrial and commercial
customers in its T&R regions. The Company also provides residential
garbage collection services for several municipalities located in Lee
County and Hillsborough County, Florida. In addition, the Company
provides demolition and other related services with, and as an economic
complement to, its solid waste management services.<PAGE>
The Company's permits allow it to segregate and recycle part of the
C&D debris and yard waste accepted at its T&R facilities (thereby
decreasing the Company's landfill disposal costs). The Company has the
capability to haul the non-recyclable waste economically to outlying
rural landfills (where disposal fees generally are much lower than those
charged by urban landfills). Consequently, the Company can charge lower
rates at its T&R facilities than those charged by landfill operators in
the same vicinities. In addition, disposal of debris at the Company's T&R
facilities generally requires less time and results in less damage to
waste collection vehicles than landfill disposal. As a result, third-
party waste hauling organizations, including those in competition with
the Company's own collection services, are provided strong economic and
other incentives for disposing of their C&D debris and yard waste at the
Company's T&R facilities.
The Company provides demolition services for commercial and
residential customers. These services include the razing and dismantling
of facilities and structures, the recovery of demolished material for
reuse and recycling, and the disposal of non-recycled demolition debris.
The typical demolition projects of the Company are single and multistory
urban buildings and small warehouses, manufacturing plants, and other
facilities. Typically, the Company enters into separate demolition
contracts for each project, which are usually for a term of less than six
months.
Specialty Contracting:
Infrastructure and Utility Contracting Services
Since 1988, the Company has directed its focus toward environmental
and utility contracting, including infrastructure and reconstructive
service work. The Company, through its subsidiary, Kimmins Contracting
Corp., continues to provide comprehensive non-hazardous contracting
services, including infrastructure services such as water and sewer line
installation, replacement and repair to private and governmental
customers primarily in the State of Florida. Related infrastructure
development includes road installation, repair and widening, and
installation, repair and enhancement of drainage and wastewater services.
Industrial Demolition, Dismantling, and Abatement Services
The Company, through its subsidiaries, Kimmins Industrial Service
Corp., Kimmins Abatement Corp., and Kimmins International, offers
demolition and dismantling of facilities or structures; asbestos removal;
cleanup, disposal, and reinsulation; removal of above- and below-ground
storage tanks; removal and disposal or sale of industrial equipment; and
the sale of equipment and scrap materials.
Demolition and dismantling projects result from the closing or
retooling of facilities due to such factors as technological obsolescence
of facilities, corporate mergers and consolidations of operations, and
the relocation of manufacturing operations to low-cost labor areas or
areas subject to less stringent regulation, primarily in foreign
countries. In addition, site remediation, particularly in the case of
environmental contamination of a site, frequently requires the demolition
or dismantling of a contaminated facility.<PAGE>
Dismantling is the precise disassembly of a manufacturing or
production facility on a piece-by-piece basis to recover equipment as
complete operating units that can be reinstalled at another location.
Dismantling enhances the value of the facility above scrap market values.
The Company is paid a fee for dismantling services and, usually, a
commission on the sale of non-relocated equipment.
Demolition usually requires wrecking services for which the Company
is paid a fee by the customer. In certain projects, the Company may also
receive additional revenue from selling the scrap material. The Company's
services in these areas include dismantling large structures (including
refineries, and utility plants); draining liquid wastes from pipes and
tanks; removing above- and below-ground tanks; cleaning and disposing of
contaminated equipment; and controlled demolition.
Certain demolition projects also involve asbestos removal, cleanup
and disposal. The Company is continuing to de-emphasize its asbestos
abatement services and generally will only perform these services in
conjunction with other environmental demolition activities.
Hazardous Waste Services
The Company offers a range of services for the removal, treatment,
and disposal of hazardous materials. The services offered include on-site
treatment methods, construction of containment systems, and the
excavation and removal of contaminated material. The Company has de-
emphasized its hazardous waste services and will only perform these
services in conjunction with other environmental demolition activities.
On-site treatment. On-site remediation involves treating hazardous
materials at a customer's site to reduce or eliminate the need for off-
site transportation and disposal of hazardous materials, thus decreasing
the cost to and potential liability of the customer. On-site treatment,
which includes a variety of techniques, eliminates the substance
permanently, reduces its toxicity or volume, or stabilizes its
constituents for disposal on-site or off-site at a permitted disposal
facility. Treatment and disposal methods used by the Company include
incineration, stabilization and fixation, dechlorination, filtration,
dewatering, air stripping and carbon adsorption, precipitation, and
bioremediation.
Containment. Containment systems are constructed to prevent the
migration of hazardous materials from a site to the surrounding
groundwater, surface water, soil or air. While containment can be a
permanent remedial solution, it is also used as an interim step followed
by excavation and removal or on-site treatment. The Company installs
containment systems that include containment cells, surface caps, and
slurry walls.<PAGE>
Excavation and removal. Excavation and removal involve the excavation
of contaminated materials for containment, on-site treatment or off-site
disposal. When off-site disposal is required, the Company subcontracts
with licensed third parties for the transportation of the material for
off-site disposal. As part of its quality control program, the Company
regularly samples and analyzes excavated materials to verify that the
contaminants are consistent with those identified in the remediation
plan.
SEGMENT INFORMATION
Note 20 of the Notes to Consolidated Financial Statements of the
Company for the years ended December 31, 1995, 1996, and 1997, to be
filed by amendment, will set forth the Company's financial segment
information.
PERFORMANCE BONDS
The Company is required to post performance bonds in connection with
certain asbestos abatement, waste remediation, demolition, and
construction contracts. For the year ended December 31, 1997, most of the
Company's revenue was derived from contracts or projects that required
the Company to post performance bonds. The Company's current bonding
capacity for qualification purposes is $60 million for individual
projects and $120 million in the aggregate. This capacity is not intended
to be a limitation nor a commitment as to the Company's bond capacity,
but rather guidelines for qualification purposes. It is customary for
surety bond companies to underwrite each surety obligation individually;
therefore, the potential for more or less capacity exists based on the
merits of the obligation. Historically, the Company has obtained surety
bond support for individual projects in the $53 million range while the
aggregate approached $100 million. The Company has obtained bonding
coverage in amounts up to $8.5 million for environmental projects.
However, some environmental projects either do not require a bond or
require a bond for less than the complete contract price of the project
value. The Company has obtained bonding coverage for environmental
projects more than $8.5 million as a result of personal surety bonds or
collateral furnished by Francis M. Williams, President of the Company.
Mr. Williams has no obligation to provide surety bonds, collateral or
otherwise to assist the Company in connection with bonding coverage.
Management believes that bonding coverages are adequate for the size and
scope of projects being performed.
In addition to performance bond requirements, some jurisdictions in
the future may require the posting of substantial bonds or require
companies engaged in solid waste management and related activities to
provide other financial assurances covering the closure, post-closure
monitoring and corrective activities for certain solid waste management
facilities.<PAGE>
MARKETING
The Company, through its majority-owned subsidiary, TransCor Waste
Services, Inc., generally obtains solid waste collection contracts for
its services or for the operation of certain solid waste management
facilities through the process of competitive bidding, purchase orders,
or negotiations. The Company's marketing efforts include door-to-door
sales, monitoring trade journals and other industry sources for bid
solicitations by various entities, including government authorities and
related instrumentalities, and responding to such bid solicitations,
which may include requests for proposals ("RFPs") and requests for
qualifications ("RFQs"). The Company also attempts to be included on
lists of qualified bidders frequently contained in RFPs and RFQs. In
response to an RFP or RFQ, the soliciting entity requires a written
response within a specified period. Generally, in the case of an RFP, a
bidder submits a proposal detailing its qualifications, the services to
be provided, and the cost of the services to the soliciting entity; then,
such entity, based on its evaluation of the proposals submitted, awards
the contract to the successful bidder. In the case of an RFQ, a bidder
submits a response describing its experience and qualifications, the
soliciting entity then selects the bidder believed to be the most
qualified, and then negotiates all of the terms of the contract,
including the cost of the services. The Company's single largest solid
waste collection contract was derived through competitive bidding, and
the Company expects that future significant contracts will be obtained
through competitive bidding. The Company has also obtained customers
through recommendations and referrals from existing customers.
The Company's specialty contracting business results primarily from
customers for whom the Company has previously provided services, prior
customer references, and from direct marketing efforts. In particular,
the Company believes its national reputation as a leading demolition and
dismantling contractor has contributed significantly to its ability to
attract specialty service business.
The Company's specialty contracting subsidiaries direct their
marketing activities through the home office in Tampa, Florida. This
office is located in an area with a high concentration of industrial
facilities. The Company believes that accurate bidding is crucial in
securing new contracting projects and completing them profitably. The
Company uses computerized bidding systems in conjunction with site visits
to develop bids for contracting projects. While bid price is an important
factor in obtaining contracts, potential clients also consider the
reputation, experience, safety record and financial strength of the
bidders in awarding contracts.<PAGE>
CUSTOMERS
Customers for the Company's solid waste management services include
local and regional contractors, municipalities, institutions, other
third-party waste hauling organizations, and local businesses. The
primary private customers for the Company's specialty contracting
services are Fortune 500 corporations engaged in heavy manufacturing,
such as chemical, petroleum, petrochemical, paper, and steel companies as
well as public utilities and federal, state and local government
agencies. For the years ended December 31, 1995, 1996 and 1997, the
Company's specialty contracting services segment earned gross revenue of
approximately $3,953,000, $14,884,000, and $12,032,000, respectively, on
contracts with the Florida Department of Transportation. For the years
ended December 31, 1995, 1996 and 1997, the Company's specialty
contracting services segment earned gross revenue of approximately
$3,999,000, $2,562,000 and $30,093,000, respectively, on contracts with
IMC-Agrico Company, a phosphate mining company with operations on
Florida's west coast. These were the only customers whose purchases
aggregated more than 10 percent of the Company's revenues.
For the year ended December 31, 1997, 57 percent and 43 percent,
respectively, of the Company's gross revenue were derived from private
and governmental customers, respectively. Government contracts, which
represent a significant portion of the Company's gross revenue, are
subject to legislation mandating a balanced budget; delays in funding;
lengthy review processes for awarding contracts; delay or termination of
contracts at the convenience of the government; termination, reduction or
modification of contracts in the event of changes in the government's
policies or because of budgetary constraints. Furthermore, increased or
unexpected costs could result in losses or reduced profits under
fixed-price government as well as commercial contracts.
BACKLOG
As of December 31, 1997, the Company had a backlog of uncompleted
projects under contract aggregating approximately $109,203,000 (compared
to approximately $137,372,000 as of December 31, 1996), of which
approximately $39,385,000 is attributable to environmental and utility
contracting services, approximately $2,709,000 is attributable to
demolition and dismantling services, approximately $1,100,000 is
attributable to asbestos abatement services, approximately $0 is
attributable to site remediation services, and approximately $66,010,000
is attributable to solid waste management services. The Company
anticipates that it will recognize approximately $57,000,000 of revenues
from these projects by the end of 1998 with the remaining revenue to be
recognized through the year 2004.<PAGE>
COMPETITION
Although developments in the solid waste management industry have
resulted in the emergence of large private and public solid waste
management companies and in consolidating trends in the industry, the
solid waste management business is characterized by intense competition.
The Company believes that no single company has a dominant market share
of the solid waste management business in the United States, including
Florida. Although competition varies by locality and type of services,
the Company's principal sources of competition are local and regional
solid waste management companies of varying size that primarily provide
collection or disposal services to customers in a limited geographic
area, large regional and national solid waste management companies that
operate over more extensive geographic areas and provide completely
integrated solid waste management services, own or operate disposal sites
and engage in various transfer and resource recovery activities, and
counties and municipalities that maintain their own solid waste
collection and disposal services for residents and businesses in the
locality. National companies that compete against the Company include,
among others, U.S.A. Waste, Waste Management, Inc., and Browning-Ferris
Industries, Inc.
The Company believes that the principal competitive factors in the
solid waste management industry are price, reputation, services,
managerial experience, financial assurance capability (particularly as it
relates to municipal contracts), and range of services offered.
The Company believes that its ability to offer a broad range of
specialty contracting services provides it with significant competitive
advantage. Nevertheless, the Company faces substantial competition from
national, regional and local competitors, many of which are well
established and have much greater marketing, financial, technological and
other resources than the Company.
The Company believes the principal competitive factors in the
specialty contracting services industry are safety, reputation, technical
proficiency, surety bonding capability, managerial experience, price, and
breadth of services offered.
INSURANCE COVERAGE
The Company currently maintains comprehensive general liability
insurance, with total coverage of $51 million for any single occurrence
and $53 million for aggregate claims relating to damage to persons or
property. These policies cover all activities of the Company and its
subsidiaries except for its asbestos-related activities and certain
non-asbestos related liabilities such as pollution liability damage
(sudden or gradual) caused by the discharge or release of any irritant or
contaminant. In addition, the Company has comprehensive general liability
coverage that covers, among other things, specific asbestos-related risks
up to $1 million. In addition, the Company has obtained a $2 million per
occurrence/$2 million aggregate blanket policy for contractors pollution
liabilities and can obtain additional coverage of up to a total of $6
million as required on a project-by-project basis.<PAGE>
GOVERNMENT REGULATION
The Company is subject to an extensive and frequently changing
statutory and regulatory framework of federal, state, and local
environmental, health, safety, and transportation authorities, which
framework imposes significant compliance burdens and risks upon the
Company. The Company believes it is in substantial compliance with all
material federal, state, and local laws governing its material business
operations. Nevertheless, amendments to existing statutes and
regulations, adoption of new statutes and regulations and the Company's
expansion into other jurisdictions and types of operations could result
not only in the additional risk of noncompliance, but also in the
increase in regulatory burden that could cause related increases in costs
and expenses.
Two of the statutes very important to the Company are the Resource
Conservation and Recovery Act of 1976, as amended, and the EPA's
implementing regulations of that statute (collectively, "RCRA"), and the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"). RCRA establishes a comprehensive framework
for state and federal regulation of hazardous waste management. It seeks
to prevent the release into the environment of hazardous wastes through
the development of solid waste management plans and the regulation of the
generation, transportation, treatment, storage and disposal of hazardous
wastes. On October 9, 1991, the EPA promulgated substantial revisions to
its existing RCRA Subtitle D implementing regulations. The revisions set
forth minimum national "open dump" criteria for publicly and privately
owned municipal solid waste landfills. They include location
restrictions, design and operating criteria, groundwater monitoring and
corrective action standards, closure and post closure care requirements,
and financial assistance criteria. Most revisions became effective
October 9, 1993, and states have revised their own laws and regulations
to be consistent with the RCRA criteria. Some revisions (i.e.,
groundwater monitoring requirements) have been phased in over a five-year
period that began on October 9, 1991, and others relating to financial
responsibility became effective April 9, 1994.
While RCRA was implemented to prevent the release of hazardous wastes
into the environment, CERCLA was designed to establish a national
strategy to remedy existing hazardous environmental conditions. CERCLA
establishes liability for clean up costs and environmental damages for
owners and operators of disposal sites, as well as for persons who
generate, transport or arrange for transportation of wastes to a
particular site. While CERCLA generally exempts responsible contractors
from liability arising from the release or threatened release to which
the contractor is responding, it can impose liability on a responsible
contractor for that contractor's negligent and grossly negligent acts.
Many states have enacted statutes similar to RCRA and CERCLA
regulating the handling of hazardous substances and wastes. The Company
could be subject to substantial liability under these statutes to private
parties and government entities for fines or penalties, in some instances
without any fault on the part of the Company, because of the mishandling
or release of any hazardous substances.<PAGE>
PERMITS AND LICENSES
Many states license such areas of the Company's operations as
asbestos abatement and general contracting. Licensing requires that
workers and supervisors receive training from EPA approved and state
certified organizations and pass required tests. The Company is currently
licensed to perform its services in 33 states. The Company also operates
in certain states that do not have a special asbestos abatement or
general contracting license requirement; however, these states have
adopted regulations regarding worker safety with which the Company must
comply.
The Company may need additional licenses to expand its operations.
Although there can be no assurance, based upon the level of training of
its employees and its experience, the Company currently believes that it
can obtain all such required licenses.
EMPLOYEES
The Company has approximately 980 employees, of which 9 are employed
in executive capacities, 28 in professional capacities, 76 in
administrative capacities, 166 as field supervisors and 701 in field
operations. A total of 11 of the Company's employees are union members,
covered by various collective bargaining agreements. The Company has not
experienced any strikes or work stoppages and considers its relationship
with its employees to be satisfactory.
The Company, through its subsidiaries, has implemented employee
safety programs that require each employee to complete a general training
and safety program. Training topics include approved work procedures and
instruction on personal safety and the use of protective equipment. In
addition, all employees engaged in asbestos abatement activities are
required to attend a minimum three-day to four-day course approved by the
EPA and Occupational Safety and Health Administration, and all
supervisors of abatement projects are required to attend a 40-hour safety
course annually. Moreover, employees are issued detailed training
materials and are required to attend ongoing safety seminars. The
Company's subsidiaries also conduct job safety analysis in the job
bidding stage. Besides the precautions taken with respect to projects,
the Company takes additional measures to protect its asbestos and site
remediation workers, including providing them with additional protective
equipment and sponsoring periodic medical examinations.
Item 2. Properties
The Company owns its principal executive offices that are located in
approximately 20,600 square feet of office space at 1501 and 1502 Second
Avenue, East, Tampa, Florida 33605. The offices are subject to a
mortgage, securing indebtedness evidenced by a promissory note with an
outstanding principal amount at December 31, 1997, of $1,675,000. This
variable rate note matures on August 1, 1999, and currently bears
interest at 1.25 percent above the lender's prime rate.<PAGE>
Item 3. Legal Proceedings
The Company is involved in various legal actions and claims arising
in the ordinary course of its business, none of which is expected to have
a material effect on the Company's financial position or results of
operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
The Company's common stock has been traded on the New York Stock
Exchange (symbol "KVN") since March 30, 1990. The following table sets
forth for the periods indicated high and low sales prices of the
Company's common stock as reported by the New York Stock Exchange.
1997 High Low
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First Quarter . . . . . . . . . . . . $ 4.125 $ 3.000
Second Quarter . . . . . . . . . . . $ 4.000 $ 2.500
Third Quarter . . . . . . . . . . . . $ 6.000 $ 3.813
Fourth Quarter . . . . . . . . . . . $ 7.000 $ 4.500
1996 High Low
------------------------------------- --------- ---------
First Quarter . . . . . . . . . . . . $ 7.875 $ 5.250
Second Quarter . . . . . . . . . . . $ 5.750 $ 4.875
Third Quarter . . . . . . . . . . . . $ 5.000 $ 3.500
Fourth Quarter . . . . . . . . . . . $ 4.125 $ 3.250
The closing stock price for the Company's stock on March 31, 1998,
was $4.1875. On March 31, 1998, there were approximately 870 holders of
record of the common stock. Certain record holders are brokers and other
institutions holding shares in "street name" for more than one beneficial
owner.
Dividends
The payment by the Company of dividends, if any, in the future is
within the discretion of its Board of Directors and will depend upon the
Company's earnings, capital requirements (including working capital
needs), and financial condition, as well as other relevant factors.
Certain agreements between the Company and its lending institutions
prohibit the Company from paying cash dividends without the lenders'
consent. Other than a three and one-third cent per share of a common
stock cash dividend paid in July 1989, the Company has not paid any cash
dividends since its inception, and the Board of Directors does not plan
to declare or pay any cash dividends in the future.<PAGE>
PART III
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company are as follows:
Name Age Position
--------------------------------------- ----------------------------
Francis M. Williams . . . . . . . . 56 President, Chief Executive
Officer, and Director
Norman S. Dominiak . . . . . . . . 53 Vice President
Joseph M. Williams . . . . . . . . 42 Secretary and Treasurer
Michael Gold . . . . . . . . . . . 49 Director
George Chandler . . . . . . . . . . 68 Director
All directors of the Company hold office until the next annual
meeting of stockholders and the election and qualification of their
successors. Officers of the Company are elected annually by the Board of
Directors and hold office at the discretion of the Board of Directors.
Francis M. Williams has been President and Chairman of the Board of
the Company since its inception and Chairman of the Board of Directors of
TransCor since November 1992. For more than five years prior to November
1988, Mr. Williams was the Chairman of the Board and Chief Executive
Officer of Kimmins Corp. and its predecessors and sole owner of K
Management Corp. From June 1981 until January 1988, Mr. Williams was also
the President and a Director of College Venture Equity Corp., a small
business investment company. Mr. Williams has also been a Director of the
National Association of Demolition Contractors and a member of the
Executive Committee of the Tampa Bay International Trade Council.
Norman S. Dominiak has been Vice President of the Company since March
1995 and has been employed by the Company as its Chief Financial Officer
since January 1994. Mr. Dominiak has also been Chief Financial Officer of
TransCor since January 1994. Mr. Dominiak served as Controller of
ThermoCor Kimmins, Inc., a subsidiary of the Company, from October 1991
until January 1994. From May 1988 until September 1991, Mr. Dominiak
served as Senior Vice President of Creative Edge, a company engaged in
the manufacturing and distribution of educational products. From October
1982 until April 1988, Mr. Dominiak served as Senior Vice President of
Cecos Environmental Services, Inc., a company engaged in treatment,
transportation, and disposal of hazardous waste. From 1965 until 1982,
Mr. Dominiak was employed in various financial capacities for the
Carborundum Company.<PAGE>
Joseph M. Williams has been the Secretary and Treasurer of the
Company since October 1988. Since September 1997, Mr. Williams has been
President and Chief Executive Officer of TransCor. Since November 1991,
Mr. Williams has served as President and has been a Director of
Cumberland Technologies, Inc., a holding company whose wholly-owned
subsidiaries provide reinsurance and specialty sureties and performance
and payment bonds. Since June 1986, Mr. Williams has served as President
and Vice President and has been a Director of Cumberland Real Estate
Holdings, Inc., the corporate general partner of Sunshadow Apartments,
Ltd. ("Sunshadow") and Summerbreeze Apartments, Ltd. ("Summerbreeze"),
both of which are limited partnerships. Mr. Williams has been employed by
the Company and its subsidiaries in various capacities since January
1984. From January 1982 to December 1983, he was the managing partner of
Williams and Grana, a firm engaged in public accounting. From January
1978 to December 1981, Mr. Williams was employed as a senior tax
accountant with Price Waterhouse & Co. Joseph M. Williams is the nephew
of Francis M. Williams.
Michael Gold has been a Director of the Company since November 1987.
For more than the past five years, Mr. Gold has been a partner in the
Niagara Falls, New York law firm of Gold and Gold.
George Chandler has been a Director of the Company since January
1990. Since November 1989, Mr. Chandler has been a business consultant.
Mr. Chandler was Chairman of the Board from July 1986 to November 1989,
and President and Chief Executive Officer from October 1985 to November
1989 of Aqua-Chem, Inc., a manufacturer of packaged boilers and water
treatment equipment. From May 1983 to October 1985, he was President,
Chief Executive Officer and a Director of American Ship Building Co.,
which is engaged in the construction, conversion and repair of cargo
vessels. Mr. Chandler is also a Director of The Allen Group Inc., and
DeVlieg Bullard, Inc.
Set forth below is information regarding certain key employees of the
Company:
Michael D. O'Brien, 47, has been employed by TransCor Waste Services,
Inc. (including its predecessor) as Vice President since October 1992.
From June 1987 to October 1992, Mr. O'Brien served as Vice President of
Kimmins Industrial Service Corp., a subsidiary of the Company. From July
1983 to June 1987, Mr. O'Brien served as Vice President of Jordan Foster
Scrap Corporation in Buffalo, New York, a company specializing in
demolition and preparation of scrap for sale. From November 1972 to July
1983, Mr. O'Brien was employed by a national demolition contractor.
John V. Simon Jr., 42, has been President and General Manager of
Kimmins Contracting Corp., responsible for supervising utility
construction, since May 1981, and served as a Vice President of the
Company from 1981 until October 1988. From January 1978 to May 1981, Mr.
Simon owned Simon Construction Company, a company that performed site
work and utilities and demolition projects.<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance. Pursuant to
Section 16(a) of the Securities Exchange Act of 1934 and the rules issued
thereunder, the Company's executive officers and directors and any
persons holding more than 10 percent of the Company's common stock are
required to file with the Securities and Exchange Commission and the New
York Stock Exchange reports of their initial ownership of the Company's
common stock and any changes in ownership of such common stock. Specific
due dates have been established, and the Company is required to disclose
in its Annual Report on Form 10-K and Proxy Statement any failure to file
such reports by these dates. Copies of such reports are required to be
furnished to the Company. Based solely on its review of the copies of
such reports furnished to the Company, or written representations that no
reports were required, the Company believes that, during 1996, all of its
executive officers (including the Named Executive Officers), directors
and persons owning more than 10 percent of its common stock complied with
the Section 16(a) requirements.
Item 11. Executive Compensation
Summary Compensation Table. The following table provides certain
summary information concerning compensation paid or accrued by the
Company and its subsidiaries to the Chief Executive Officer and all other
executive officers whose salary and bonus exceeded $100,000 for the year
ended December 31, 1997 (the "Named Executives"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
-------------------------------
Other
Annual
Compen-
Name and Salary Bonus sation
Principal Position Year ($) ($) ($)
----------------------------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Francis M. Williams 1997 $ 172,120 $0 $0
Chairman of the Board, 1996 $ 184,810 $0 $0
President and Chief 1995 $ 271,137 $0 $0
Executive Officer
John V. Simon, Jr. 1997 $ 100,019 $ 108,032 $0
President of Kimmins 1996 $ 95,000 $ 25,000 $0
Contracting Corp. 1995 $ 95,000 $ 81,489 $0
Michael D. O'Brien 1997 $ 105,427 $ 0 $0
Vice President 1996 $ 95,000 $ 0 $0
of TransCor 1995 $ 91,261 $ 13,740 $0
(*) Represents the Company's contribution to the employee's account of
the Company's 401(k) Plan and premiums paid by the Company for term
life insurance and long-term disability. These plans, subject to the
terms and conditions of each plan, are available to all employees.
/TABLE
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE (continued)
<CAPTION>
Long-Term Compensation
-------------------------------
Awards Payouts
-------------------- ----------
All
Restricted Securities Other
Stock Underlying Compen-
Name and Award(s) Options/ LTIP sation
Principal Position Year ($) SARs (#) Payouts(s) ($)
----------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Francis M. Williams 1997 $0 0 $0 $ 996 (*)
Chairman of the Board, 1996 $0 0 $0 $ 995 (*)
President and Chief 1995 $0 0 $0 $ 989 (*)
Executive Officer
John V. Simon, Jr. 1997 $0 71,666 $0 $1,698 (*)
President of Kimmins 1996 $0 0 $0 $1,655 (*)
Contracting Corp. 1995 $0 3,333 $0 $1,647 (*)
Michael D. O'Brien 1997 $0 2,000 $0 $ 695 (*)
Vice President 1996 $0 0 $0 $ 695 (*)
of TransCor 1995 $0 5,000 $0 $ 695 (*)
(*) Represents the Company's contribution to the employee's account of
the Company's 401(k) Plan and premiums paid by the Company for term
life insurance and long-term disability. These plans, subject to the
terms and conditions of each plan, are available to all employees.
/TABLE
<PAGE>
Stock Option/SAR Grants in the Last Fiscal Year. Stock options or
stock appreciation rights granted to Named Executives during the year
ended December 31, 1997, are summarized in the table below:
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
----------------------------------------------
Potential
Realizable
Value at
Number of Percent of Assumed Annual
Securities Total Rates of Stock
Underlying Options/SARs Price
Options/ Granted to Exercise Appreciation for
SARs Employees or Base Option Term (2)
Granted in Fiscal Price Expiration ------------------
Name (#)(1) Year ($/Sh)(1) Date 5% ($) 10% ($)
-------------------- ---------------------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Williams 50,000 18.5% $ 2.62 04/30/07 $82,385 $208,780
13,333 4.9% $ 2.62 04/30/07 $21,969 $ 55,673
John V. Simon, Jr. 50,000 18.5% $ 2.62 04/30/07 $82,385 $208,780
21,666 8.0% $ 2.62 04/30/07 $35,699 $ 90,469
George A. Chandler 10,000 3.7% $ 3.94 11/12/07 $24,778 $ 62,793
8,000 3.0% $ 2.62 04/30/07 $13,182 $ 33,405
Michael A. Gold . . 10,000 3.7% $ 3.94 11/12/07 $24,778 $ 62,793
8,500 3.1% $ 2.62 04/30/07 $14,005 $ 35,493
(1) All options vest and are exercisable in 20 percent increments annually for five
years after the date of grant. The exercise price of all options is the fair
market value of the Company's stock at the time of the grant.
(2) These amounts represent assumed rates of appreciation for the market value of the
Company's stock from the date of the grant until the end of the option period at
rates arbitrarily set by the Securities and Exchange Commission. They are not
intended to forecast possible future appreciation in the Company's stock and any
actual gains on exercise of options are dependent on the future performance of the
Company's stock.
/TABLE
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-
End Option/SAR Values. The following table summarizes the net value
realized on the exercise of options in 1996 and the value of outstanding
options as of December 31, 1997, for the Named Executives.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number
of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Year-End (#) Year-End ($) (1)
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
------------------------ -------------- ------------ --------------- -----------------
<S> <C> <C> <C> <C>
John V. Simon, Jr. 0 $0 14,333/57,333 $38,592/$154,369
(1) Value is calculated using the Company's closing stock price on December 31, 1997,
of $5.3125 per share less the exercise price for such shares.
</TABLE>
No stock options or stock appreciation rights were exercised by
Francis M. Williams during the year ended December 31, 1997, and Mr.
Williams does not have any outstanding stock options or SARs at December
31, 1997.
<TABLE>
TEN-YEAR OPTION/SAR REPRICINGS
<CAPTION>
Length of
Number of Market Original
Securities Price of Exercise Option
Underlining Stock at Price at Term
Options/ Time of Time of Remaining
SARs Repricing Repricing New at Date of
Repriced or or or Exercise Repricing
Amended Amendment Amendment Price or
Name Date (#) ($) ($) ($) Amendment
----------------------- -------- ----------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Norman S. Dominiak 04/30/97 7,500 $2.62 $4.50 $2.62 8 years
Vice President
Joseph M. Williams 04/30/97 13,333 $2.62 $4.50 $2.62 8 years
Secretary/Treasurer
Michael D. O'Brien 04/30/97 15,976 $2.62 $4.50 $2.62 8 years
Vice President of
TransCor
John V. Simon, Jr. 04/30/97 21,666 $2.62 $4.50 $2.62 8 years
President of Kimmins
Contracting Corp.
/TABLE
<PAGE>
Compensation Committee Interlocks and Insider Participation. During
the year ended December 31, 1997, Francis M. Williams, the Company's
President and Chairman of the Board of Directors, served as President and
Chairman of the Board of Directors of TransCor, and Norman S. Dominiak
served as Chief Financial Officer of the Company and TransCor.
Compensation of Directors. During the year ended December 31, 1997,
the Company paid non-officer Directors an annual fee of $5,000 and $1,000
per board meeting attended. Directors are reimbursed for all
out-of-pocket expenses incurred in attending Board of Directors and
committee meetings.
Stock Option and Other Plans
1987 Stock Option Plan
The Company adopted a stock option plan (the "Plan") pursuant to
which 975,000 shares of common stock were originally reserved for
issuance to persons upon exercise of options designated as "incentive
stock options," within the meaning of Section 422A of the Internal
Revenue code of 1986 (the "Code"), and non-qualified stock options. The
purpose of the Plan is to attract, retain, and motivate officers and
other full-time employees of the Company, and certain other persons
instrumental to the success of the Company, and to provide them with a
means to acquire a proprietary interest in the Company. The Plan is
administered by a committee consisting of three members of the Board of
Directors. The exercise price of an incentive stock option granted under
the Plan may not be less than the fair market value of the common stock
at the time the option is granted (110 percent of fair market value in
the case of an incentive stock option granted to an employee owning more
than 10 percent of the voting stock of the Company). The exercise price
of a non-qualified stock option granted under the Plan may be any amount
determined by the Board of Directors but not less than the par value of
the common stock on the date of the grant. Options granted under the Plan
must, in general, expire no later than ten years from the date of the
grant (five years from the date of grant in the case of an incentive
stock option granted to an employee owning more than 10 percent of the
voting stock of the Company). All options granted to date provide that
the grantees' rights vest over five years from the date of grant. At
December 31, 1997, Joseph M. Williams held 63,333 options to purchase the
Company's stock at $2.62 per share of which 12,667 shares are
exercisable. At December 31, 1997, John V. Simon, Jr., held 71,666
options to purchase the Company's stock at $2.62 per share, of which
14,333 shares are exercisable.
Savings and Profit-Sharing Plan
The Company offers a savings and profit-sharing plan (the "401(k)
Plan"), which qualifies under Sections 401(a) and (k) of the Code.
Employees of the Company and certain affiliates who have been employed
for a specified period of time are eligible to participate in the 401(k)
Plan. All contributions made by the employees vest immediately. Amounts
contributed by the Company vest 20 percent after three years of service
and 20 percent each year thereafter.<PAGE>
Profit and Equity Participation Plan
The Company's Profit and Equity Participation Plan (the "Profit
Participation Plan"), a defined contribution plan, covers employees of
the Company and certain affiliates who have been employed for a specified
period of time. Contributions to the Profit Participation Plan are made
at the discretion of the Board of Directors. Employees' rights in the
Profit Participation Plan vest 20 percent after three years of service
and 20 percent each year thereafter. The Profit Participation Plan was
merged into The Kimmins Environmental Service Corp. Employee Stock
Ownership Plan Trust ("ESOP") on January 1, 1989.
Employee Stock Ownership Plan
Effective January 1, 1989, the Company formed the ESOP for the
benefit of the employees of the Company and its subsidiaries to purchase
shares of the Company's common stock from time to time on the open market
or in negotiated transactions at prices deemed to be attractive and,
simultaneously, the Profit Participation Plan was merged into the ESOP.
Contributions to the ESOP are made at the discretion of the Board of
Directors and, for the year ended December 31, 1989, was $200,000. During
1989, the ESOP acquired from the Company's President approximately
772,000 shares of common stock at a cost of $5,100,000. The shares were
acquired in exchange for a note payable to the President. Simultaneously
with such purchase, the President purchased certain receivables and
interests in certain investments from the Company for a purchase price of
$5,100,000, which was paid by the assignment to the Company of the note
received from the ESOP. The note was funded, during March 1990, through a
long-term bank financing agreement guaranteed by the Company. Expenses
with respect to the ESOP include the recognition of interest expense
relating to the ESOP debt and to earned compensation. For the year ended
December 31, 1997, interest expense and compensation expense relating to
the ESOP were $133,000 and $480,000, respectively. As of December 31,
1997, the unpaid ESOP debt is also reflected as a reduction in
stockholders' equity.<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's
common stock beneficially owned as of March 31, 1998, by (i) persons
known by the Company to own more than 5 percent of the Company's
outstanding common stock, (ii) by each Named Executive and director of
the Company, and (iii) all executive officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
Percent
of
Name and Address of Percent Total
Beneficial Owner of Voting
(1) Title of Class Number of Shares Class Power
--------------------------- -------------------- ------------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Francis M. Williams Common Stock 1,857,065 (2) 41.8% 61.6%
Class B Common Stock 2,291,569 100.0%
Joseph M. Williams Common Stock 366,244 (3) 8.2% 5.4%
John V. Simon, Jr. Common Stock 20,759 (4) * *
Michael Gold Common Stock 14,923 (5) * *
George Chandler Common Stock 7,914 (6) * *
All executive officers Common Stock 2,263,436 (2)(3) 50.9%
and directors as a group (5)(7) 67.3%
(five persons) Class B Common Stock 2,291,569 100.0%
</TABLE>
(1) The addresses of all officers and directors of the Company above are
in care of the Company at 1501 Second Avenue, East, Tampa, Florida
33605.
(2) Includes 1,479,136 shares owned directly by Mr. Francis M. Williams;
133,333 shares owned by Summerbreeze and 121,750 shares owned by
Sunshadow, both of which Mr. Williams is the sole shareholder of the
corporate general partner and a 50 percent limited partner (see Item
13, "Certain Relationships and Related Transactions"); 48,908 shares
owned by Mr. Williams' wife; 30,493 shares held by Mr. Williams as
Trustee for his wife and children; 37,913 shares held by Mr. Williams
as Custodian under the New York Uniform Gifts to Minors Act for his
children; 4,464 shares held by the Company's 401(k) and ESOP Plans of
which Mr. Williams is fully vested; and 1,067 shares held by Kimmins
Realty Investment, Inc., which is owned 100 percent by Mr. Williams.
(3) Includes 10,000 shares owned by Mr. Joseph M. Williams; 12,667 shares
issuable upon exercise of currently exercisable stock options; 2,355
shares held by the Company's 401(k) and ESOP Plans of which Mr.
Williams is fully vested; and 341,220 shares held by the Company's
401(k) Plan and ESOP of which Mr. Williams is a trustee with shared
voting and investment power.<PAGE>
(4) Includes 1,500 shares owned by Mr. Simon; 14,333 shares issuable upon
exercise of currently exercisable stock options; and 5,726 shares
held by the Company's 401(k) and ESOP plans of which Mr. Simon is
fully vested.
(5) Includes 1,150 shares owned by Mr. Gold; 5,775 shares currently owned
by Mr. Gold's wife; 2,898 held by Mr. Gold as trustee for Mr. Gold's
minor children; and 3,700 shares issuable upon exercise of currently
exercisable stock options.
(6) Includes 3,114 shares owned by Mr. Chandler; and 3,600 shares
issuable upon exercise of currently exercisable stock options.
(7) Includes 19,100 shares issuable upon exercise of currently
exercisable stock options; 6,250 shares held by the Company's 401(k)
and ESOP Plans of which certain officers of the Company are fully
vested; and 341,471 shares held by the Company's 401(k) and ESOP
Plans of which the Secretary of the Company is a trustee.
* Less than one percent.<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunder duly authorized.
KIMMINS CORP.
Date: April 17, 1998 By: /s/ Francis M. Williams
--------------------- ----------------------------------------
Francis M. Williams
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Date: April 17, 1998 /s/ Francis M. Williams
--------------------- ----------------------------------------
Francis M. Williams
President and Director
(Chief Executive Officer)
Date: April 17, 1998 /s/ Joseph M. Williams
--------------------- ----------------------------------------
Joseph M. Williams
Secretary/Treasurer
Date: April 17, 1998 /s/ Norman S. Dominiak
--------------------- ----------------------------------------
Norman S. Dominiak
Vice President, Treasurer and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
Date: April 17, 1998 /s/ Michael A. Gold
--------------------- ----------------------------------------
Michael A. Gold, Director
Date: April 17, 1998 /s/ George A. Chandler
--------------------- ----------------------------------------
George A. Chandler, Director
<PAGE>
