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Previous: PRINCIPAL HIGH YIELD FUND INC, 485BPOS, 1997-04-15 |
Next: INTERCARGO CORP, DEF 14A, 1997-04-15 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K/A
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31, 1997
EASTERN ENVIRONMENTAL SERVICES, INC.
------------------------------------
(Exact name of issuer as specified in charter)
Delaware 0-16102 59-2840783
(State or Other Jurisdiction Commission (I.R.S. Employer
or Incorporation or file number Identification
Organization) Number)
1000 CRAWFORD PLACE, MT. LAUREL, NEW JERSEY 08054
(Address of principal executive offices)
(609) 235-6009
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
- ----------------------------------------------
On January 31, 1997, the Registrant consummated the acquisition of the
Donno Company, Inc., Suffolk Waste Systems, Inc., and Residential Services, Inc.
and NRT Realty Corp. (Collectively referred to as "Companies") pursuant to the
terms of a Reorganization Plan and Agreement dated December 31, 1996, by and
among Norman Taylor, Thomas King, Robert Donno ("Shareholders"), Eastern
Environmental Services, Inc. ("Registrant"), and Eastern Waste of Long Island,
Inc. ("EWLI"). EWLI is a wholly owned subsidiary of the Registrant. The
description of the acquisition transaction set forth herein is qualified in its
entirety by the Reorganization Plan and Agreement. The Reorganization Plan and
Agreement is incorporated as Exhibit 10.1
Pursuant to the Reorganization Plan and Agreement, the Companies were
acquired by Eastern Waste of Long Island, Inc., resulting in the Shareholders
receiving 1,137,951 shares of the Registrant's common stock, $.01 par value, in
exchange for all issued and outstanding shares of the Companies. The shares of
the Registrant's common stock were valued at $9.00 per share (which exceeded the
closing price of the Registrant's common stock at the date of the Reorganization
Plan and Agreement) representing aggregate consideration of $10,241,559. No cash
was paid to the Shareholders for the acquisition of the shares of the Companies.
The business combination is to be accounted for using the pooling of interest
method. The Registrant has agreed to register the stock for resale under the
Securities Act of 1933 within 120 days of the date of closing pursuant to the
terms of the Registration Rights included within the Reorganization Plan and
Agreement as Section 6.2.
At the date of closing of the Reorganization Plan and Agreement, the
Registrant assumed approximately $708,000 of outstanding indebtedness of the
Companies.
The merger includes all of the assets and liabilities relating to the
operation of the Companies. The acquired assets were used by the Shareholders in
the waste collection, transfer and disposal business. The Registrant intends to
continue to use the acquired assets for this purpose. The Shareholders were
hired by the Registrant to oversee the Companies operations.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
----------------------------------
(A) COMBINED FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND RESIDENTIAL SERVICES
AND N.R.T. REALTY CORP.
Independent Auditors' Report
Combined Balance Sheets as of June 30, 1996, 1995 and 1994.
Combined Statements of Income and Retained Earnings for the years ended
June 30, 1996, 1995 and 1994.
Combined Statements of Cash Flows for the years ended June 30, 1996, 1995
and 1994.
Notes to Combined Financial Statements
Independent Accountant's Compilation Report.
Combined Balance Sheet as of December 31, 1996 (Unaudited.)
Combined Statement of Income and Retained Earnings for the six months
ended December 31, 1996 (Unaudited.)
Combined Statement of Cash Flows for the six months ended December 31,
1996 (Unaudited.)
Notes to Combined Financial Statements.
(B) EASTERN ENVIRONMENTAL SERVICES, INC.
Pro forma Consolidated Statement of Operations for the years ended June
30, 1996, 1995 and 1994 (Unaudited.)
Pro forma Consolidated Statement of Operations for the six months ended
December 31, 1996 (Unaudited.)
Pro forma Consolidated Balance Sheet as of June 30, 1996 (Unaudited.)
Pro forma Consolidated Balance Sheet as of December 31, 1996 (Unaudited.)
(C) EXHIBITS
* 10.1 Reorganization Plan and Agreement dated December 31,1996, between Norman
Taylor, Thomas King, Robert Donno, Eastern Environmental Services, Inc.,
and Eastern Waste of Long Island, Inc. and amendment thereto.
23.1 Consent of Paternostro, Callahan and DeFreitas, LLP
________________________________________________________________________________
* Incorporated by reference.
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Combined Financial Statements
June 30, 1996, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
"Independent Auditors' Report"
To the Board of Directors and Shareholders
Donno Company, Inc., Suffolk Waste Systems, Inc. and
Residential Services and N.R.T. Realty Corp.
Gentlemen:
We have audited the accompanying combined balance sheets of Donno Company, Inc.
and affiliates as of June 30, 1996, 1995 and 1994, and the related statements
of income and retained earnings and cash flows for the years ended June 30,
1996, 1995 and 1994. The combined financial statements include the financial
statements of Donno Company, Inc. (an "S" corporation), Suffolk Waste Systems,
Inc. (an "S" corporation) combined for 1996 with Residential Services (a joint
venture) and N.R.T. Realty Corp. (an "S" corporation). These companies are
related through common ownership and management. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provided a reasonable basis for our opinion.
In our opinion, the combined financial statements referenced to above present
fairly, in all material respects, the financial position of Donno Company, Inc.,
and affiliates at June 30, 1996, 1995 and 1994 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ PATERNOSTRO, CALLAHAN & DE FREITAS, LLP
March 3, 1997
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND
RESIDENTIAL SERVICES AND N.R.T. REALTY, INC.
Combined Balance Sheets
<TABLE>
<CAPTION>
ASSETS
June 30,
-------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note Aa, B) $ 1,135,529 2,021,674 1,094,655
Marketable securities, at lower of cost or market (Note Ad) 340,375 - 155,985
Accounts receivable (less allowance for doubtful
accounts of $69,060, $66,187 and $79,004 in 1996, 1995 and 1994) 530,809 457,698 1,046,326
Prepaid expenses and other current assets (Note C) 168,690 224,175 142,795
Shareholders advances - - 25,000
------------- --------- ---------
TOTAL CURRENT ASSETS 2,175,403 2,703,547 2,464,761
------------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT, AT COST: (NOTE AB)
Land 182,500 182,500 182,500
Building 710,970 710,970 710,970
Equipment 5,087,976 4,239,035 4,033,150
Furniture, fixtures and improvements 354,506 346,257 334,181
------------- --------- ---------
TOTAL PROPERTY, PLANT AND EQUIPMENT 6,335,952 5,478,762 5,260,801
LESS: ACCUMULATED DEPRECIATION 4,295,544 4,251,634 4,136,747
------------- --------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 2,040,408 1,227,128 1,124,054
------------- --------- ---------
OTHER ASSETS:
Deposits and advances 2,525 1,500 25
Cash surrender value of life insurance policies 66,300 62,544 59,175
Prepaid pension cost (Note J) 190,295 194,581 158,806
Investment Residential Services of Suffolk (Note Hb) 80,544 - -
------------- --------- ---------
TOTAL OTHER ASSETS 339,664 258,625 218,006
------------- --------- ---------
TOTAL ASSETS 4,555,475 4,189,300 3,806,821
============= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank (Note D) 250,000 300,000 -
Current installments of long-term debt (Note F) 159,865 21,945 61,811
Accounts payable 590,637 454,750 638,554
Accrued expenses and other current liabilities (Note E) 329,621 134,389 103,987
------------- --------- ---------
TOTAL CURRENT LIABILITIES 1,330,123 911,084 804,352
Long-term debt, net of current installments (Note F) 641,263 131,510 153,456
OTHER LIABILITIES:
Environmental remediation (Note G) 335,680
------------- --------- ---------
TOTAL LIABILITIES 2,307,066 1,042,594 957,808
------------- --------- ---------
STOCKHOLDERS' EQUITY
Common stock; voting 568,060 568,060 568,060
Common stock; non-voting 710,841 710,841 710,841
Additional paid-in-capital 332,689 332,689 332,689
Retained earnings 636,819 1,535,116 1,237,423
------------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,248,409 3,146,706 2,849,013
------------- --------- ---------
CONTINGENCIES (NOTE G)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 4,555,475 4,189,300 3,806,821
============= ========= =========
"The Accompanying Notes are an Integral Part of this Combined Statement"
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND
RESIDENTIAL SERVICES AND N.R.T. REALTY, INC.
COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30,
---------------------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
REVENUES $ 11,364,994 13,285,570 12,833,093
------------ ---------- ----------
OPERATING EXPENSES
Salaries, excluding officers' 3,087,966 3,609,739 3,344,424
Incineration and disposal 4,468,597 4,944,874 5,446,647
Truck operations 979,008 979,648 872,740
Depreciation and amortization (Note Ab) 227,867 191,281 245,750
Taxes 386,126 435,966 408,820
Insurance 789,951 769,333 793,433
Group insurance and hospitalization 428,159 459,560 412,980
Interest 36,507 23,498 20,205
Pensions 118,446 114,951 177,335
Advertising and promotion 60,099 68,154 52,974
Maintenance 38,029 38,790 26,172
Office 104,901 87,755 90,379
Uniforms 18,488 21,133 18,895
Legal and accounting 106,091 58,368 27,537
Heating and electricity 43,849 36,087 38,268
Other 31,821 32,000 35,141
Unusual charges:
Union severence settlement (Note K) 330,762 - -
Environmental remediation (Note G) 335,680 - -
------------ ---------- ----------
TOTAL OPERATING EXPENSES 11,592,347 11,871,137 12,011,700
------------ ---------- ----------
OPERATING PROFIT BEFORE OFFICERS' SALARIES (227,353) 1,414,433 821,393
OFFICERS' SALARIES 538,860 522,600 455,160
------------ ---------- ----------
OPERATING PROFIT (766,213) 891,833 366,233
------------ ---------- ----------
OTHER INCOME:
Interest and dividend income 55,125 55,798 41,904
Other, net 73,191 36,471 20,381
------------ ---------- ----------
Total other income 128,316 92,269 62,285
------------ ---------- ----------
NET INCOME BEFORE INCOME TAXES (637,897) 984,102 428,518
Less: income taxes (Note Ac) 2,400 32,409 17,486
------------ ---------- ----------
NET INCOME (LOSS) (640,297) 951,693 411,032
Retained earnings at beginning of year 1,535,116 1,237,423 1,136,591
Dividends declared and paid (258,000) (654,000) (369,000)
Prior period adjustment - - 58,800
------------ ---------- ----------
RETAINED EARNINGS AT END OF YEAR 636,819 1,535,116 1,237,423
============ ========== ==========
</TABLE>
"The Accompanying Notes are an Integral Part of this Combined Statement"
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND
RESIDENTIAL SERVICES AND N.R.T. REALTY, INC.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Twelve Months Ended June 30,
------------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (640,297) 951,693 411,032
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 227,867 191,281 245,750
Loss (gain) on sale of property 10,812 (14,200) (17,359)
Unrecognized loss (gain) on marketable securities (7,164)
(Increase) decrease in prepaid pension cost 4,286 (35,775) 35,270
Changes in current assets and liabilities:
Accounts receivable (73,111) 588,628 (593,322)
Prepaid expenses and other current assets 55,485 (56,379) 49,079
Accounts payable and accrued expenses 326,119 (153,402) 108,834
Other liabilities 335,680
------------ --------- ---------
Net cash provided by operating activities 239,677 1,471,846 239,284
------------ --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,076,392) (294,356) (119,471)
Proceeds from sale of equipment 24,433 14,200 33,768
Investments made, marketable securities (479,919) (327,057)
Investments sold, marketable securities 66,164 155,985 447,366
(Increase) decrease in other assets 219 (4,844) 1,600
------------ --------- ---------
Net cash (used in) investing activities (1,465,495) (129,015) 36,206
------------ --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes and loans 1,100,510 430,000 -
Repayments of notes and loans (502,837) (191,812) (120,190)
Cash dividends to stockholders (258,000) (654,000) (369,000)
------------ --------- ---------
Net cash (used in) financing activities 339,673 (415,812) (489,190)
------------ --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (886,145) 927,019 (213,700)
Cash and cash equivalents at beginning of year 2,021,674 1,094,655 1,308,355
------------ --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,135,529 2,021,674 1,094,655
============ ========= =========
</TABLE>
Supplemental disclosures (Note I)
"The Accompanying Notes are an Integral Part of this Combined Statement"
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
FORMATION AND BUSINESS ACTIVITY
The combined financial statements include the accounts of Donno Company,
Inc., Suffolk Waste Systems, Inc. and for 1996 Residential Services and
N.R.T. Realty Corp. (the Companies). The companies, with the exception of
N.R.T. Realty Corp., are engaged in the waste collection and disposal
business. A major portion of the Companies revenues are derived from
contracts with municipalities, which are renewable over periods of one to
five years. N.R.T Realty Corp. holds title to commercial real estate which
it rents exclusively to the Companies. All significant inter-company
balances and transactions have been eliminated in the combination.(Note M)
CAPITALIZATION:
DONNO COMPANY, INC.
Common stock, voting, $11,283.185 par value. Authorized 100
shares; issued and outstanding 50 shares.
Common stock, non-voting, $11,283.185 par value. Authorized 100
shares; issued and outstanding 50 shares.
SUFFOLK WASTE SYSTEMS, INC.
Common stock, voting, no par value. Authorized 200 shares; issued
and outstanding 30 shares
N.R.T. REALTY CORP.
Common stock, voting, no par value. Authorized 200 shares;
issued and outstanding 30 shares
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements of Donno Company, Inc. have been prepared on the
accrual basis of accounting. The significant policies are described below
to enhance the usefulness of the financial statements to the reader.
a. Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Companies considers
all certificates of deposit and short-term, highly liquid investments
that are readily convertible to known amounts of cash and so near
maturity that they present insignificant risk of changes in value
because of changes in interest rates to be cash equivalents. (Note B)
b. Depreciation and Amortization
-----------------------------
The Companies follows the practice of capitalizing major expenditures
for property, plant and equipment. These assets are stated at cost.
Depreciation is provided on the straight-line method over the
estimated useful lives of the assets. Depreciation and amortization
relating to property, plant and equipment amounted to $227,867 in
1996, $191,281 in 1995 and $245,750 in 1994.
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: - CONTINUED
c. Income Taxes
------------
The Companies, excluding Residential Services (a joint venture), with
the consent of their shareholders, have elected under the Internal
Revenue Code to be "S" corporations. In lieu of corporation income
taxes, the shareholders of an "S" corporation are taxed on their
proportionate share of the corporation's taxable income. Therefore, no
provision or liability for federal income taxes has been included in
the financial statements. The Company is subject to a New York State
tax law which provides for a corporate income tax based on the
difference between the projected tax liability computed on a "C"
corporation basis versus the projected tax liability computed on an
individual basis. No provisions have been made to the accompanying
combined financial statements based on timing differences between book
and taxable income, the results deemed insignificant to the financial
statement presentation.
d. Investments
-----------
Marketable securities are stated at the aggregate of lower of cost or
market. The aggregate cost was $360,422. at June 30, 1996 and $155,955
at June 30, 1994.
e. Environmental Liabilities and Expenditures
------------------------------------------
Accruals for environmental matters are recorded in operating expenses
when it is probable that a liability has been incurred and the amount
of the liability can be reasonably estimated. Accrued liabilities are
exclusive of claims against third parties and are not discounted. In
general, cost related to environmental remediation are charged to
expense unless the cost increases the value of the property in which
case they would be capitalized.
NOTE B - CASH AND CASH EQUIVALENTS:
Included in cash and cash equivalents are the following certificates of
deposit at June 30,:
<TABLE>
<CAPTION>
Donno Company, Inc.
------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Purchase date 05/10/96 03/09/95 06/09/94
Maturity date 11/08/96 09/07/95 12/08/94
Interest rate 4.20% 5.25% 3.40%
Amount $ 500,000 $ 800,000 $ 600,000
Suffolk Waste Systems, Inc.
---------------------------
Purchase date 04/10/95
Maturity date 07/10/95
Interest rate 4.50%
Amount $ 300,000
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE C - PREPAID EXPENSES AND OTHER CURRENT ASSETS:
<TABLE>
<CAPTION>
Donno Company, Inc.
-------------------
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Performance bonds $ 5,072 43,458 41,080
Workers compensation 48,595 94,793 41,823
Liability insurance 10,419 21,103 13,215
Real estate taxes 29,983 29,009 27,954
Advances 1,115 1,540 -
Corporate income taxes - - 2,277
Suffolk Waste Systems, Inc.
---------------------------
Performance bonds 50,410 750 5,235
Workers compensation 11,348 29,896 6,449
Liability insurance 8,317 1,972 2,603
Corporate income taxes 3,035 672 -
Advances 200 - -
N.R.T. Corp.
------------
Deferred expenses 196 982 2,159
------------ ------------ ------------
Totals 168,690 224,175 142,795
============ ============ ============
</TABLE>
NOTE D - SHORT-TERM DEBT:
On June 25, 1996, Donno Company executed a $250,000 note with the Bank of
New York. The note matures in 136 days and interest accrues at the rate of
5.20%.
On June 14, 1995, Suffolk Waste Systems, Inc. executed a $300,000 note with
the Bank of New York. note matures in 26 days and interest accrues at the
rate of 5.50%.
NOTE E - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
<TABLE>
<CAPTION>
Donno Company, Inc.
-------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Garnishes $ 230 - -
Union dues 336 34 -
Security deposits 7,200 7,200 7,200
Sales taxes 13,632 9,745 15,141
Accrued compensation 18,605 36,377 28,039
Accrued vacation 37,120 47,080 47,075
Accrued union severance 203,748 - -
Accrued legal fees 25,000 - -
Income taxes 1,193 - -
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE E - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES: - CONTINUED
<TABLE>
<CAPTION>
Suffolk Waste Systems, Inc.
---------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Union dues 1,376 - 400
Income taxes 163 23,332 549
Accrued compensation 10,989 2,588 1,295
Accrued vacation 10,029 8,033 4,288
N.R.T. Corp.
------------
Security deposits 5,000 10,000 10,000
------------ ------------ ------------
Totals 304,621 134,389 103,987
============ ============ ============
</TABLE>
NOTE F - LONG-TERM DEBT:
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Donno Company, Inc.
-------------------
Promissory notes:
The Bank of New York, equipment loan
Requires constant monthly payments of
$9,112 plus interest at 1.0% over prime.
Final installment due on or about Jan. 2001 $ 501,138 - -
Navistar Financial Services, equipment loan
Requires constant monthly payments of $2,421
including interest at 9.25%. Final installment
due on or about Jun. 2000. 114,444 - -
Navistar Financial Services, equipment loan
Requires constant monthly payments of $3,926
including interest at 9.25%. Final installment
due on or about Jun. 2000. 185,546 - -
Settlement (Note X)
The State of New York
Requires three annual installments of $28,333
including interest. Final installment due on or
about Nov. 1994 - - 28,333
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE F - LONG-TERM DEBT: - CONTINUED
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
N.R.T. Realty Corp.
-------------------
Promissory notes:
Bennu Waste Management, Inc., real estate loan
Requires constant monthly payments of
$2,660 including interest at 9.0%
Loan refinanced by Donno Company, Inc. Jun. 96. - 150,651 168,150
Shareholder loans, unsecured
Requires constant monthly payments of
$1,418 including interest at 9.0%
Final installment due on or about Aug. 1995 - 2,804 18,784
--------- --------- ---------
Total long-term debt 801,128 153,455 215,267
Less: current installments 159,865 21,945 61,811
--------- --------- ---------
Net long-term debt 641,263 131,510 153,456
========= ========= =========
</TABLE>
Combined scheduled principal payments on long-term debt as of June 30, 1996
are as follows:
<TABLE>
Year ended June 30,
<S> <C>
1997 $ 159,865
1998 164,747
1999 170,094
2000 175,959
2001 130,463
-----------------
Total 801,128
=================
</TABLE>
NOTE G - OTHER LIABILITIES:
The companies are subject to various contingencies pursuant to
environmental laws and regulations that in the future may require the
companies to take action to correct the effects on the environment of prior
disposal practices or releases of chemicals or petroleum substances by the
companies or other parties. The companies have accrued for certain
environmental remediation activities consistent with the policy set forth
in Note Ae. At June 30, 1996, such accrual amounted to $335,680 and in
management's opinion, was appropriate based on existing facts and
circumstances. Under the most adverse circumstances, however, this
potential liability could reach $860,000 as provided in independent
engineering studies and evaluation. In the event that future remediation
expenditures are in excess of amounts accrued, management does not
anticipate that they will have a material adverse effect on the combined
financial position of the companies.
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE H - RELATED PARTY TRANSACTIONS:
a. Donno Company, Inc. received from North Hempstead Transfer, Inc. (a
related corporation) $54,000. in 1995 for management services provided
in managing its corporate affairs.
b. During 1995, Donno Company, Inc. entered into a joint venture with
Resource N.E. of Long Island, Inc. to bid on and service municipal
contracts. The resulting entity operates under the name Residential
Services of Suffolk. Donno Company, Inc. holds a one-third interest in
this joint venture. Several five year contracts have been awarded to
Residential Services of Suffolk beginning January 1, 1996. Gross
annual billing for these contracts will approximate $1,601,000.
c. Donno Company, Inc. entered into an agreement with Bennu Waste
Management, Inc. (a related corporation) to provide management
services. Donno Company, Inc. received $74,506 in 1994 under this
contract.
d. Bennu Waste Management, Inc. (a related corporation) at June 30, 1995
and 1994 held an unsecured note against N.R.T. Realty Corp. (see Note
F)
e. Shareholders of N.R.T. Realty Corp. (a related corporation) at June
30, 1995 and 1994 held unsecured notes against N.R.T. Realty Corp.
(see Note F)
NOTE I - SUPPLEMENTAL CASH FLOW INFORMATION:
a. Supplemental disclosure of cash flow information:
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Cash paid for interest:
Donno Company, Inc. $ 19,841 $ 941 $ 1,311
Suffolk Waste Systems, Inc. 1,192 7,092 558
N.R.T. Realty Corp. 15,474 15,465 18,336
---------- -------- ---------
Total $ 36,507 $ 23,498 $ 20,205
========== ======== =========
</TABLE>
NOTE J - PENSION PLAN:
The Company maintains a non-contributory defined benefit pension plan for
all non-union employees who have attained minimum service and age
requirements. The benefits are based upon earnings of covered employees
during the period of credited service.
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE J - PENSION PLAN: - CONTINUED
The following table sets forth the plan's funded status and the components of
net pension income:
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Actuarial present value of accumulated obligations:
Vested benefits $2,734,571 $2,841,238 $2,749,250
Non-vested benefits 1,291 - 1,184
---------- ---------- ----------
Projected benefit obligation for service rendered to date $3,063,202 $3,041,411 $3,012,249
Plan assets at fair value, primarily marketable securities 3,427,476 2,825,807 3,027,456
---------- ---------- ----------
Plan assets in excess of projected benefit obligation $ 364,274 $ (215,604) $ 15,207
Unrecognized net (assets) value being amortized over 17 years (252,511) (281,839) (311,167)
Unrecognized prior service cost (340,462) (366,927) (393,392)
Unrecognized net loss due to past experience different from
assumptions made 418,994 1,058,951 848,158
---------- ---------- ----------
Prepaid pension cost $ 190,295 $ 194,581 $ 158,806
========== ========== ==========
Assumptions used:
Weighted average discount rate 7.0% 7.0% 7.0%
Rate of increase in compensation levels 5.0% 5.0% 5.0%
Expected long-term rate of return on assets 9.0% 9.0% 9.0%
Net pension income consisted of the following components:
Service cost benefits earned during the year $ 50,584 $ 44,798 $ 79,002
Interest cost on projected benefit obligations 202,977 201,347 229,032
Net amortization and deferral 532,451 (306,596) (121,231)
Actual return on plan assets (781,726) 24,676 (151,533)
---------- ---------- ----------
Net pension (income) expense $ 4,286 $ (35,775) $ 35,270
========== ========== ==========
</TABLE>
All full-time union employees are covered under a separate union defined
contribution pension plan. Contributions to the plan were $114,160, 150,726 and
$141,065 in 1996, 1995 and 1994, respectively.
NOTE K - UNUSUAL CHARGES:
During 1996, Donno Company, Inc. reached a severance agreement with
Teamster local 813. The computed cost of those employees accepting the
severance arrangements amounted to $150,762. The Company anticipates an
additional 30 employees to accept the severance arrangements with a
projected cost of $ 180,000. Total charges to operating expenses amounted
to $330,762 for the year ended June 30, 1996.
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE L - QUARTERLY RESULTS (UNAUDITED):
<TABLE>
<CAPTION>
First Second Third Forth
<S> <C> <C> <C> <C>
1996
Revenues $ 2,473,543 $ 2,352,078 $3,123,440 $3,415,933
Net Income 74,526 (509,235) 262,765 (468,353)
1995
Revenues 3,405,691 3,537,164 2,884,505 3,458,210
Net Income 29,545 65,825 176,449 679,874
1994
Revenues 3,133,546 3,197,928 3,127,977 3,373,642
Net Income 120,641 11,628 415,409 (136,646)
</TABLE>
NOTE M - SUBSEQUENT EVENTS
On January 31, 1997, the Companies merged with Eastern Environmental
Services, Inc.(EESI). All of the issued common stock of the companies were
exchanged solely for voting stock of EESI, the parent and sole shareholder.
The parties intend that the transaction contemplated hereby qualify as a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------------------------------------------------------
SUFFOLK WASTE
DONNO CO., INC. RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 971,687 88,829 75,013 1,135,529
Marketable securities, at lower of cost or market 340,375 340,375
Accounts receivable (less allowance for doubtful
accounts of $69,060) 408,406 122,403 530,809
Prepaid expenses and other current assets 95,184 73,310 196 168,690
Loan receivable 18,818 (18,818) 0
---------- ---------- ----------- ---------- ----------
TOTAL CURRENT ASSETS 1,834,470 284,542 75,209 (18,818) 2,175,403
---------- ---------- ----------- ---------- ----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 127,500 55,000 182,500
Building 490,970 220,000 710,970
Equipment 4,818,046 269,930 5,087,976
Furniture, fixtures and improvements 351,145 3,361 354,506
---------- ---------- ----------- ---------- ----------
TOTAL PROPERTY, PLANT AND EQUIPMENT 5,787,661 273,291 275,000 0 6,335,952
LESS: ACCUMULATED DEPRECIATION 4,166,327 95,169 34,048 4,295,544
---------- ---------- ----------- ---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 1,621,334 178,122 240,952 0 2,040,408
---------- ---------- ----------- ---------- ----------
OTHER ASSETS:
Deposits and advances 7,525 (5,000) 2,525
Cash surrender value of life insurance policies 66,300 66,300
Prepaid pension cost 190,295 190,295
Investment Residential Services of Suffolk 80,544 80,544
Loan receivable 231,182 (231,182) 0
---------- ---------- ----------- ---------- ----------
TOTAL OTHER ASSETS 575,846 0 0 (236,182) 339,664
---------- ---------- ----------- ---------- ----------
TOTAL ASSETS 4,031,650 462,664 316,161 (255,000) 4,555,475
========== ========== =========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank 250,000 250,000
Current installments of long-term debt 159,865 18,818 18,818 159,865
Accounts payable 383,197 207,440 590,637
Accrued expenses and other liabilities 307,064 22,557 5,000 5,000 329,621
---------- ---------- ----------- ---------- ----------
TOTAL CURRENT LIABILITIES 1,100,126 229,997 23,818 23,818 1,330,123
LONG-TERM DEBT, NET OF CURRENT INSTALLMENTS 641,263 231,182 231,182 641,263
OTHER LIABILITIES:
Environmental remediation 335,680 335,680
----------- ---------- ----------- ---------- ----------
TOTAL LIABILITIES 2,077,069 229,997 255,000 255,000 2,307,066
----------- ---------- ----------- ---------- ----------
STOCKHOLDERS' EQUITY
Common stock; voting 564,160 900 3,000 568,060
Common stock; non-voting 710,841 710,841
Additional paid-in-capital 332,689 332,689
Retained earnings 346,891 231,767 58,161 636,819
---------- ---------- ----------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,954,581 232,667 61,161 0 2,248,409
---------- ---------- ----------- ---------- ----------
CONTINGENCIES
---------- ---------- ----------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 4,031,650 462,664 316,161 255,000 4,555,475
========== ========== =========== ========== ==========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. and RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1996
--------------------------------------------------------------------------------
SUFFOLK WASTE
DONNO CO., INC. RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
REVENUES 9,022,425 2,839,133 47,000 543,564 11,364,994
--------------- -------------- -------- ---------- ------------
OPERATING EXPENSES
Salaries, excluding officers' 2,418,769 669,197 3,087,966
Incineration and disposal 3,275,034 1,193,563 4,468,597
Truck operations 932,183 46,825 979,008
Depreciation and amortization 187,207 33,676 6,984 227,867
Taxes 303,486 75,547 7,093 386,126
Insurance 621,767 168,184 789,951
Group insurance and hospitalization 279,948 148,211 428,159
Interest 19,841 1,192 15,474 36,507
Pensions 118,446 118,446
Advertising and promotion 59,849 250 60,099
Maintenance 38,029 38,029
Office 91,623 13,278 104,901
Uniforms 18,488 18,488
Legal and accounting 94,301 10,950 840 106,091
Heating and electricity 43,561 288 43,849
Other 62,450 512,149 786 (543,564) 31,821
Unusual charges:
Union severence settlement 330,762 330,762
Environmental remediation 335,680 335,680
--------------- -------------- -------- ------------ ------------
TOTAL OPERATING EXPENSES 9,231,424 2,873,310 31,177 (543,564) 11,592,347
--------------- -------------- -------- ------------ ------------
OPERATING PROFIT BEFORE OFFICERS'
SALARIES (208,999) (34,177) 15,823 0 (227,353)
OFFICERS' SALARIES 538,860 538,860
--------------- -------------- -------- ------------ ------------
OPERATING PROFIT (747,859) (34,177) 15,823 0 (766,213)
--------------- -------------- -------- ------------ ------------
OTHER INCOME:
Interest and dividend income 52,728 2,397 55,125
Other, net 59,833 13,358 73,191
--------------- -------------- -------- ------------ ------------
Total other income 112,561 15,755 0 0 128,316
--------------- -------------- -------- ------------ ------------
NET INCOME BEFORE INCOME TAXES (635,298) (18,422) 15,823 0 (637,897)
Less: income taxes 1,750 325 325 2,400
--------------- -------------- -------- ------------ ------------
NET INCOME (637,048) (18,747) 15,498 0 (640,297)
Retained earnings at beginning of year 1,109,939 334,514 90,663 1,535,116
Dividends declared and paid (126,000) (84,000) (48,000) (258,000)
--------------- -------------- -------- ------------ ------------
RETAINED EARNINGS AT END OF YEAR 346,891 231,767 58,161 0 636,819
=============== ============== ======== ============ ============
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. and RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1996
----------------------------------------------------------------------
DONNO CO., INC. SUFFOLK WASTE N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (637,048) (18,747) 15,498 (640,297)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 187,207 33,676 6,984 227,867
Loss (gain) on sale of property 17,268 (6,456) 10,812
Unrecognized loss (gain) on marketable securities (7,164) (7,164)
(Increase) decrease in prepaid pension cost 4,286 4,286
Changes in current assets and liabilities:
Accounts receivable 25,965 (99,076) (73,111)
Prepaid expenses and other current assets 94,719 (40,020) 786 55,485
Accounts payable and accrued expenses 145,110 186,009 (5,000) 326,119
Other liabilities 335,680 335,680
-------------- ------------ ------------ ------------ ----------
Net cash provided by operating activities 166,023 55,386 18,268 0 239,677
-------------- ------------ ------------ ------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,076,392) (1,076,392)
Proceeds from sale of equipment (567) 25,000 24,433
Loans receivable (250,000) 250,000 0
Investments made, marketable securities (479,919) (479,919)
Investments sold, marketable securities 66,164 66,164
(Increase) decrease in other assets (4,781) 5,000 219
-------------- ------------ ------------ ------------ ----------
Net cash (used in) investing activities (1,745,495) 30,000 0 250,000 (1,465,495)
-------------- ------------ ------------ ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes and loans 1,100,510 250,000 (250,000) 1,100,510
Repayments of notes and loans (49,382) (300,000) (153,455) (502,837)
Cash dividends to stockholders (126,000) (84,000) (48,000) (258,000)
-------------- ------------ ------------ ------------ ----------
Net cash (used in) financing activities 925,128 (384,000) 48,545 (250,000) 339,673
-------------- ------------ ------------ ------------ ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (654,344) (298,614) 66,813 0 (886,145)
Cash and cash equivalents at beginning of year 1,626,031 387,443 8,200 2,021,674
-------------- ------------ ------------ ------------ ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR 971,687 88,829 75,013 0 1,135,529
============== ============ ============ ============ ==========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - Business Combination
<TABLE>
<CAPTION>
COMBINING BALANCE SHEET
ASSETS
JUNE 30, 1995
-----------------------------------------------------------------------
SUFFOLK WASTE
DONNO CO., INC. RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 1,626,031 387,443 8,200 2,021,674
Accounts receivable (less allowance for doubtful
accounts of $66,187) 434,371 23,327 457,698
Prepaid expenses and other current assets 189,903 33,290 982 224,175
--------------- -------------- ------------- ------------ ---------
TOTAL CURRENT ASSETS 2,250,305 444,060 9,182 0 2,703,547
--------------- -------------- ------------- ------------ ---------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 127,500 55,000 182,500
Building 490,970 220,000 710,970
Equipment 3,863,315 375,720 4,239,035
Furniture, fixtures and improvements 342,896 3,361 346,257
--------------- -------------- ------------- ------------ ---------
TOTAL PROPERTY, PLANT AND EQUIPMENT 4,824,681 379,081 275,000 0 5,478,762
LESS: ACCUMLATED DEPRECIATION 4,075,831 148,739 27,064 4,251,634
--------------- -------------- ------------- ------------ ---------
NET PROPERTY, PLANT AND EQUIPMENT 748,850 230,342 247,936 0 1,227,128
--------------- -------------- ------------- ------------ ---------
OTHER ASSETS:
Deposits and advances 6,500 5,000 (10,000) 1,500
Cash surrender value of life insurance policies 62,544 62,544
Prepaid pension cost 194,581 194,581
--------------- -------------- ------------- ------------ ---------
TOTAL OTHER ASSETS 263,625 5,000 0 (10,000) 258,625
--------------- -------------- ------------- ------------ ---------
TOTAL ASSETS 3,262,780 679,402 257,118 (10,000) 4,189,300
=============== ============== ============= ============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank 300,000 300,000
Current installments of long-term debt 21,945 21,945
Accounts payable 444,715 10,035 454,750
Accrued expenses and other liabilities 100,436 33,953 10,000 10,000 134,389
--------------- -------------- ------------- ------------ ---------
TOTAL CURRENT LIABILITIES 545,151 343,988 31,945 10,000 911,084
LONG-TERM DEBT, NET OF CURRENT INSTALLMENTS 131,510 131,510
--------------- -------------- ------------- ------------ ---------
TOTAL LIABILITIES 545,151 343,988 163,455 10,000 1,042,594
--------------- -------------- ------------- ------------ ---------
STOCKHOLDERS' EQUITY
Common stock; voting 564,160 900 3,000 568,060
Common stock; non-voting 710,841 710,841
Additional paid-in-capital 332,689 332,689
Retained earnings 1,109,939 334,514 90,663 1,535,116
--------------- -------------- ------------- ------------ ---------
TOTAL STOCKHOLDERS' EQUITY 2,717,629 335,414 93,663 0 3,146,706
--------------- -------------- ------------- ------------ ---------
CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 3,262,780 679,402 257,118 10,000 4,189,300
=============== ============== ============= ============ =========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. and RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1995
--------------------------------------------------------------------------
SUFFOLK WASTE
DONNO CO., INC. RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
REVENUES 11,193,940 2,151,630 60,000 120,000 13,285,570
--------------- -------------- ------------- ---------- ----------
OPERATING EXPENSES
Salaries, excluding officers' 3,080,403 529,336 3,609,739
Incineration and disposal 4,616,259 328,615 4,944,874
Truck operations 717,187 262,461 979,648
Depreciation 138,181 46,116 6,984 191,281
Taxes 384,027 46,438 5,501 435,966
Insurance 680,268 89,065 769,333
Group insurance and hospitalization 406,921 52,639 459,560
Interest 941 7,092 15,465 23,498
Pensions 96,324 18,627 114,951
Advertising and promotion 67,504 650 68,154
Maintenance 38,151 639 38,790
Office 77,892 9,863 87,755
Uniforms 21,133 21,133
Legal and accounting 49,683 7,850 835 58,368
Heating and electricity 35,515 572 36,087
Other 27,305 123,517 1,178 (120,000) 32,000
--------------- -------------- ------------- ---------- ----------
TOTAL OPERATING EXPENSES 10,437,694 1,523,480 29,963 (120,000) 11,871,137
--------------- -------------- ------------- ---------- ----------
OPERATING PROFIT BEFORE OFFICERS' SALARIES 756,246 628,150 30,037 0 1,414,433
OFFICERS' SALARIES 522,600 522,600
--------------- -------------- ------------- ---------- ----------
OPERATING PROFIT 233,646 628,150 30,037 0 891,833
--------------- -------------- ------------- ---------- ----------
OTHER INCOME:
Interest and dividend income 51,097 4,701 55,798
Other, net 26,469 10,000 2 36,471
--------------- -------------- ------------- ---------- ----------
Total other income 77,566 14,701 2 0 92,269
--------------- -------------- ------------- ---------- ----------
NET INCOME BEFORE INCOME TAXES 311,212 642,851 30,039 0 984,102
Less: income taxes 6,630 25,454 325 32,409
--------------- -------------- ------------- ---------- ----------
NET INCOME 304,582 617,397 29,714 0 951,693
Retained earnings at beginning of period 961,357 215,117 60,949 1,237,423
Dividends declared and paid (156,000) (498,000) (654,000)
--------------- -------------- ------------- ---------- ----------
RETAINED EARNING AT END OF YEAR 1,109,939 334,514 90,663 0 1,535,116
=============== ============== ============= ========== ==========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. and RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1995
-----------------------------------------------------------------------------
DONNO CO., INC. SUFFOLK WASTE N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 304,582 617,397 29,714 951,693
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 138,181 46,116 6,984 191,281
Loss (gain) on sale of property (14,200) (14,200)
(Increase) decrease in prepaid pension cost (35,775) (35,775)
Changes in current assets and liabilities:
Accounts receivable 506,265 82,363 588,628
Prepaid expenses and other current assets (38,554) (19,003) 1,178 (56,379)
Accounts payable and accrued expenses (121,823) (31,579) (153,402)
---------- -------- --------- ---------- ---------
Net cash provided by operating activities 738,676 695,294 37,876 0 1,471,846
---------- -------- --------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (130,649) (163,707) (294,356)
Proceeds from sale of equipment 14,200 14,200
Investments sold, marketable securities 155,985 155,985
(Increase) decrease in other assets (4,844) (4,844)
---------- -------- --------- ---------- ---------
Net cash (used in) investing activities 34,692 (163,707) 0 0 (129,015)
---------- -------- --------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes and loans 430,000 430,000
Repayments of notes and loans (28,333) (130,000) (33,479) (191,812)
Cash dividends to stockholders (156,000) (498,000) (654,000)
---------- -------- --------- ---------- ---------
Net cash (used in) financing activities (184,333) (198,000) (33,479) 0 (415,812)
---------- -------- --------- ---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 589,035 333,587 4,397 0 927,019
Cash and cash equivalents at beginning of year 1,036,996 53,856 3,803 1,094,655
---------- -------- --------- ---------- ---------
Cash and cash equivalents at end of year 1,626,031 387,443 8,200 0 2,021,674
========== ======== ========= ========== =========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. and RESIDENTIAL SERVICES and
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1994
---------------------------------------------------------------------------
SUFFOLK WASTE
DONNO CO., INC. RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 1,036,996 53,856 3,803 1,094,655
Marketable securities, at lower of cost or market 155,985 155,985
Accounts receivable (less allowance for doubtful
accounts of $79,004) 940,636 105,690 1,046,326
Prepaid expenses and other current assets 126,349 14,287 2,159 142,795
Loan receivable 25,000 25,000
---------- ------- --------- --------- ---------
TOTAL CURRENT ASSETS 2,284,966 173,833 5,962 0 2,464,761
---------- ------- --------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 127,500 55,000 182,500
Building 490,970 220,000 710,970
Equipment 3,821,137 212,013 4,033,150
Furniture, fixtures and improvements 330,820 3,361 334,181
---------- ------- --------- --------- ---------
TOTAL PROPERTY, PLANT AND EQUIPMENT 4,770,427 215,374 275,000 0 5,260,801
LESS: ACCUMULATED DEPRECIATION 4,014,045 102,623 20,079 4,136,747
---------- ------- --------- --------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 756,382 112,751 254,921 0 1,124,054
---------- ------- --------- --------- ---------
OTHER ASSETS:
Deposits and advances 5,025 5,000 (10,000) 25
Cash surrender value of life insurance policies 59,175 59,175
Prepaid pension cost 158,806 158,806
---------- ------- --------- --------- ----------
TOTAL OTHER ASSETS 223,006 5,000 0 (10,000) 218,006
---------- ------- --------- --------- ----------
TOTAL ASSETS 3,264,354 291,584 260,883 (10,000) 3,806,821
========== ======= ========= ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt 28,333 33,478 61,811
Accounts payable 569,519 69,035 638,554
Accrued expenses and other liabilities 97,455 6,532 10,000 10,000 103,987
---------- ---------- ---------- --------- ---------
TOTAL CURRENT LIABILITIES 695,307 75,567 43,478 10,000 804,352
LONG-TERM DEBT, NET OF CURRENT INSTALLMENTS 153,456 153,456
---------- ---------- ---------- --------- ---------
TOTAL LIABILITIES 695,307 75,567 196,934 10,000 957,808
---------- ---------- ---------- --------- ---------
STOCKHOLDERS' EQUITY
Common stock; voting 564,160 900 3,000 568,060
Common stock; non-voting 710,841 710,841
Additional paid-in-capital 332,689 332,689
Retained earnings 961,357 215,117 60,949 1,237,423
---------- ---------- ---------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,569,047 216,017 63,949 0 2,849,013
---------- ---------- ---------- --------- ---------
CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 3,264,354 291,584 260,883 10,000 3,806,821
========== ========== ========== ========= =========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. and RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - Business Combination
COMBINING STATEMENT OF INCOME AND RETAINED EARCNINGS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1994
-------------------------------------------------------------------------------
SUFFOLK WASTE
DONNO CO., INC. RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
REVENUES 11,607,785 1,225,308 60,000 60,000 12,833,093
--------------- ---------- ----------- --------- ----------
OPERATING EXPENSES
Salaries, excluding officers' 3,061,231 283,193 3,344,424
Incineration and disposal 5,107,685 338,962 5,446,647
Truck operations 734,322 138,418 872,740
Depreciation 206,006 34,069 5,675 245,750
Taxes 385,017 18,276 5,527 408,820
Insurance 730,798 62,635 793,433
Group insurance and hospitalization 390,211 22,769 412,980
Interest 1,311 558 18,336 20,205
Pensions 168,194 9,141 177,335
Advertising and promotion 51,874 1,100 52,974
Maintenance 25,939 233 26,172
Office 87,346 3,033 90,379
Uniforms 18,895 18,895
Legal and accounting 19,702 6,950 885 27,537
Heating and electricity 37,815 453 38,268
Other 60,504 33,852 785 (60,000) 35,141
--------------- ---------- ----------- --------- ----------
TOTAL OPERATING EXPENSES 11,086,850 953,642 31,208 (60,000) 12,011,700
--------------- ---------- ----------- --------- ----------
OPERATING PROFIT BEFORE OFFICERS' SALARIES 520,935 271,666 28,792 0 821,393
OFFICERS' SALARIES 455,160 455,160
--------------- ---------- ----------- --------- ----------
OPERATING PROFIT 65,775 271,666 28,792 0 366,233
--------------- ---------- ----------- --------- ----------
OTHER INCOME:
Interest and dividend income 41,252 652 41,904
Other, net 20,381 20,381
--------------- ---------- ----------- --------- ----------
Total other income 61,633 652 0 0 62,285
--------------- ---------- ----------- --------- ----------
NET INCOME BEFORE INCOME TAXES 127,408 272,318 28,792 0 428,518
Less: income taxes 15,675 1,486 325 17,486
--------------- ---------- ----------- --------- ----------
NET INCOME 111,733 270,832 28,467 0 411,032
Retained earnings at beginning of year 949,824 142,285 44,482 1,136,591
Dividends declared and paid (159,000) (198,000) (12,000) (369,000)
Prior period adjustment CSV life insurance 58,800 58,800
--------------- ---------- ----------- --------- ----------
RETAINED EARNINGS AT END OF YEAR 961,357 215,117 60,949 0 1,237,423
=============== ========== =========== ========= ==========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Notes to Combined Financial Statements
Years ended June 30, 1996, 1995 and 1994
NOTE M - BUSINESS COMBINATION
COMBINING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1994
---------------------------------------------------------------------------
DONNO CO., INC. SUFFOLK WASTE N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 111,733 270,832 28,467 411,032
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 206,006 34,069 5,675 245,750
Loss (gain) on sale of property (17,359) (17,359)
(Increase) decrease in prepaid pension cost 35,270 35,270
Changes in current assets and liabilities:
Accounts receivable (566,213) (27,109) (593,322)
Prepaid expenses and other current assets 51,404 (3,110) 785 49,079
Accounts payable and accrued expenses 75,361 33,473 108,834
------------ ------------ ------------ ------------ ---------
Net cash provided by operating activities (103,798) 308,155 34,927 0 239,284
------------ ------------ ------------ ------------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (51,948) (67,523) (119,471)
Proceeds from sale of equipment 33,768 33,768
Investments made, marketable securities (327,057) (327,057)
Investments sold, marketable securities 447,366 447,366
(Increase) decrease in other assets 600 1,000 1,600
------------ ------------ ------------ ------------ ---------
Net cash (used in) investing activities 102,729 (66,523) 0 0 36,206
------------ ------------ ------------ ------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes and loans (70,833) (18,750) (30,607) (120,190)
Cash dividends to stockholders (159,000) (198,000) (12,000) (369,000)
------------ ------------ ------------ ------------ ---------
Net cash (used in) financing activities (229,833) (216,750) (42,607) 0 (489,190)
------------ ------------ ------------ ------------ ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (230,902) 24,882 (7,680) 0 (213,700)
Cash and cash equivalents at beginning of year 1,267,898 26,974 11,483 1,308,355
------------ ------------ ------------ ------------ ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,036,996 53,856 3,803 0 1,094,655
============ ============ ============ ============ =========
</TABLE>
<PAGE>
COMBINED FINANCIAL STATEMENTS REVISED PER EASTERN ENVIRONMENTAL
<TABLE>
<CAPTION>
JUNE 30, 1993
----------------------------------------------
ASSETS
- ------
DONNO CO., INC. SUFFOLK WASTE N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 1,267,898 28,974 11,463 1,308,355
Marketable securities, at lower of cost or market 276,294 276,294
Accounts receivable (less allowance for doubtful
accounts of $65,509) 374,423 78,581 453,004
Prepaid expenses and other current assets 202,753 11,177 2,945 216,875
------------- ---------- ----------- ----------- ---------
TOTAL CURRENT ASSETS 2,121,368 118,732 14,428 0 2,254,528
------------- ---------- ----------- ----------- ---------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 127,500 55,000 182,500
Building 490,970 220,000 710,970
Equipment 4,044,524 144,490 4,189,014
Furniture, fixtures and improvements 313,374 3,361 316,735
------------- ---------- ----------- ----------- ---------
TOTAL PROPERTY, PLANT AND EQUIPMENT 4,976,368 147,851 275,000 0 5,399,219
LESS: ACCUMULATED DEPRECIATION 4,049,519 68,554 14,405 4,132,478
------------- ---------- ----------- ----------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 926,849 79,297 260,595 0 1,266,741
------------- ---------- ----------- ----------- ---------
OTHER ASSETS:
Purchased routes 0
Deposits and advances 6,000 6,000 (10,000) 2,000
Prepaid pension cost 194,076 194,076
------------- ---------- ----------- ----------- ---------
TOTAL OTHER ASSETS 200,076 6,000 0 (10,000) 196,076
------------- ---------- ----------- ----------- ---------
TOTAL ASSETS 3,248,293 204,029 275,023 (10,000) 3,717,345
============= ========== =========== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES;
Current installments of long-term debt 70,833 18,750 30,607 120,190
Accounts payable 501,955 40,269 542,224
Accrued expenses and other liabilities 89,658 1,825 10,000 10,000 91,483
------------ ---------- ----------- ----------- ---------
TOTAL CURRENT LIABILITIES 662,446 60,844 40,607 10,000 753,897
LONG-TERM DEBT, NET OF CURRENT INSTALLMENTS 28,333 186,934 215,267
------------ ---------- ----------- ----------- ---------
TOTAL LIABILITIES 690,779 60,844 227,541 10,000 969,164
------------ ---------- ----------- ----------- ---------
STOCKHOLDERS' EQUITY
Common stock; voting 564,160 900 3,000 568,060
Common stock; non-voting 710,841 710,841
Additional paid-in-capital 332,689 332,689
Retained earnings 949,824 142,285 44,482 1,136,591
------------ ---------- ----------- ----------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,557,514 143,185 47,482 0 2,748,181
------------ ---------- ----------- ----------- ---------
CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 3,248,293 204,029 275,023 10,000 3,717,345
============ ========== =========== =========== =========
</TABLE>
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE
SYSTEMS, INC. AND RESIDENTIAL SERVICES AND
N.R.T. REALTY CORP.
Interim Combined Financial Statements
(Unaudited)
December 31, 1996
<PAGE>
To the Board of Directors and Shareholders
Donno Company, Inc., Suffolk Waste Systems, Inc. and
Residential Services and N.R.T. Realty Corp.
Gentlemen:
We have compiled the accompanying combined balance sheets of Donno Company, Inc.
and affiliates as of December 31, 1996, and the related statements of income,
retained earnings and cash flows for the six months ended December 31,1996, in
accordance with the Statements on Standards of Accounting and Review Services
issued by the American Institute of Certified Public Accountants. The combined
financial statements include the financial statements of Donno Company, Inc. (an
"S" corporation), Suffolk Waste Systems, Inc. (an "S" corporation) combined with
Residential Services (a joint venture) and N.R.T. Realty Corp. (an "S"
corporation). These companies are related through common ownership and
management.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the users'
conclusions about the Companies' financial position and results of operations.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
The Companies, excluding Residential Services, with the consent of their
shareholders, have elected under the Internal Revenue Code to be S
corporations. In lieu of corporation income taxes, the shareholders of an S
corporation are taxed on their proportionate share of the Company's taxable
income. Therefore, no provision or liability for federal income taxes has been
included in these financial statements.
/s/ PATERNOSTRO, CALLAHAN & DE FREITAS, LLP
March 3, 1997
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND
RESIDENTIAL SERVICES AND N.R.T. REALTY, INC.
COMBINED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
December 31, 1996
-----------------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,102,376
Marketable securities, at lower of cost or market 188,875
Accounts receivable (less allowance for doubtful
accounts of $55,137) 436,546
Prepaid expenses and other current assets 69,844
-------------
TOTAL CURRENT ASSETS 1,797,641
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 182,500
Building 710,970
Equipment 5,071,294
Furniture, fixtures and improvements 368,232
-------------
TOTAL PROPERTY, PLANT AND EQUIPMENT 6,332,996
LESS: ACCUMULATED DEPRECIATION 4,387,655
-------------
NET PROPERTY, PLANT AND EQUIPMENT 1,945,341
OTHER ASSETS:
Deposits and advances 1,500
Cash surrender value of life insurance policies 69,000
Prepaid pension cost 275,820
Investment Residential Services of Suffolk 64,523
-------------
TOTAL OTHER ASSETS 410,843
-------------
TOTAL ASSETS 4,153,825
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank
Current installments of long-term debt 162,247
Accounts payable 518,807
Accrued expenses and other liabilities 354,479
-------------
TOTAL CURRENT LIABILITIES 1,035,533
LONG-TERM DEBT, NET OF CURRENT INSTALLMENTS 559,530
OTHER LIABILITIES:
Environmental remediation 335,680
-------------
TOTAL LIABILITIES 1,930,743
STOCKHOLDERS' EQUITY
Common stock; voting 568,060
Common stock; non-voting 710,841
Additional paid-in-capital 332,689
Retained earnings 611,492
-------------
TOTAL STOCKHOLDERS' EQUITY 2,223,082
-------------
CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 4,153,825
=============
</TABLE>
"See accountants' compilation report"
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND
RESIDENTIAL SERVICES AND N.R.T. REALTY, INC.
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, 1996
-------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 145,673
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 125,610
Loss (gain) on sale of property (5,500)
Unrecognized loss (gain) on marketable securities 17,412
(Increase) decrease in prepaid pension cost (85,525)
CHANGES IN CURRENT ASSETS AND LIABILITIES:
Accounts receivable 94,263
Prepaid expenses and other current assets 98,846
Accounts payable and accrued expenses (46,972)
----------
Net cash provided by operating activities 343,807
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (30,543)
Proceeds from sale of equipment 5,500
Investments made, marketable securities (291,163)
Investments sold, marketable securities 441,272
(Increase) decrease in other assets (1,675)
----------
Net cash (used in) investing activities 123,391
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes and loans (329,351)
Cash dividends to stockholders (171,000)
---------
Net cash (used in) financing activities (500,351)
---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (33,153)
Cash and cash equivalents at beginning of year 1,135,529
----------
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,102,376
==========
Supplemental disclosures
</TABLE>
"See accountants' compilation report"
<PAGE>
DONNO COMPANY, INC., SUFFOLK WASTE SYSTEMS, INC. AND
RESIDENTIAL SERVICES AND N.R.T. REALTY, INC.
COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1996
-----------------
<S> <C>
REVENUES $ 6,537,376
OPERATING EXPENSES
Salaries, excluding officers' 1,686,003
Incineration and disposal 2,835,312
Truck operations 496,009
Depreciation and amortization 125,610
Taxes 216,241
Insurance 363,041
Group insurance and hospitalization 349,631
Interest 44,607
Advertising and promotion 18,113
Maintenance 15,910
Office 45,857
Uniforms 11,786
Legal and accounting 41,274
Heating and electricity 19,194
Other 16,776
-----------
TOTAL OPERATING EXPENSES 6,285,364
-----------
OPERATING PROFIT BEFORE OFFICERS' SALARIES 252,012
OFFICERS' SALARIES 166,473
-----------
OPERATING PROFIT 85,539
OTHER INCOME:
Interest and dividend income 21,480
Other, net 40,108
-----------
Total other income 61,588
-----------
NET INCOME BEFORE INCOME TAXES 147,127
Less: income taxes 1,454
-----------
NET INCOME (LOSS) 145,673
Retained earnings at beginning of year 636,819
Dividends declared and paid (171,000)
-----------
RETAINED EARNINGS AT END OF PERIOD 611,492
===========
</TABLE>
"See accountants' compilation report"
<PAGE>
COMBINED FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
- -----------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1996
-------------------------------------------------
SUFFOLK WASTE
DONNO C0., INC RESIDENT. SERV. N.R.T. REALTY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C> <C>
REVENUES 3,993,949 3,166,896 21,375 644,844 6,537,376
------------ ----------- ----------- --------- ---------
OPERATING EXPENSES
Salaries, excluding officers' 856,342 829,661 1,686,003
Incineration and disposal 1,506,040 1,329,272 2,835,312
Truck operations 450,008 46,001 496,009
Depreciation and amortization 108,276 13,842 3,492 125,610
Taxes 138,008 74,729 3,504 216,241
Insurance 226,110 136,931 363,041
Group insurance and hospitalization 149,725 199,906 349,631
Interest 38,433 6,174 44,607
Pensions 0 0
Advertising and promotion 18,113 18,113
Maintenance 15,910 15,910
Office 36,693 6,164 45,857
Uniforms 3,792 7,994 11,786
Legal and accounting 37,170 4,104 41,274
Heating and electricity 19,194 19,194
Other 37,331 624,093 196 (644,844) 16,776
------------ ----------- ----------- --------- ---------
TOTAL OPERATING EXPENSES 3,644,145 3,272,697 13,366 (644,844) 6,285,364
------------ ----------- ----------- --------- ---------
OPERATING PROFIT BEFORE OFFICERS' SALARIES 349,804 (105,801) 8,009 0 252,012
OFFICERS' SALARIES 166,473 166,473
------------ ----------- ----------- --------- ---------
OPERATING PROFIT 183,331 (105,801) 8,009 0 85,539
------------ ----------- ----------- --------- ---------
OTHER INCOME:
Interest and dividend income 21,068 412 21,480
Other, net 38,750 1,358 40,108
------------ ----------- ----------- --------- ---------
Total other income 59,818 1,770 0 0 61,588
------------ ----------- ----------- --------- ---------
NET INCOME BEFORE TAXES AND EXTRAORDINARY ITEM 243,149 (104,031) 8,009 0 147,127
Extraordinary expense
------------ ----------- ----------- --------- ---------
NET INCOME BEFORE INCOME TAXES 243,149 (104,031) 8,009 0 147,127
Less: income taxes 1,292 162 1,454
------------ ----------- ----------- --------- ---------
NET INCOME 241,857 (104,193) 8,009 0 145,673
Retained earnings beginning of year 346,891 231,767 58,161 636,819
Dividends declared and paid (93,000) (78,000) (171,000)
------------ ----------- ----------- --------- ---------
RETAINED EARNINGS END OF YEAR 495,748 127,574 (11,830) 0 611,492
============ =========== =========== ========= =========
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED SUMMARY OF OPERATIONS FOR THE YEAR ENDED JUNE
30, 1996 AND SIX MONTHS ENDED DECEMBER 31, 1996.
The following unaudited pro forma consolidated Statements of Operations for
the year ended June 30, 1996 and the six months ended December 31, 1996 give
effect to (i) the acquisition of Allied Environmental Services, Inc. and
Affiliates ("Allied") for consideration of $700,000 in Eastern Environmental
Services, Inc. common stock at an assumed fair market value of $6.00 per share,
(ii) the acquisition of Super Kwik, Inc. ("Super Kwik") and Waste Maintenance
Services, Inc. ("Maintenance") pursuant to the terms of an Agreement of Merger,
(iii) the acquisition of R & A Bender, Inc. and certain real estate owned by R &
A Bender Property, Ltd ("Bender") for consideration of $16,483,510 in cash and
$1,000,000 in Eastern Environmental Services, Inc. common stock at a fair market
value of $9.375 per share, and (iv) the acquisition of Donno Company, Inc.,
Suffolk Waste Systems, Inc., and Residential Services and N.R.T. Realty Corp.
(Collectively referred to as "Donno Companies") pursuant to the terms of a
Reorganization Plan and Agreement dated December 31, 1996. The Shareholders of
Super Kwik and Maintenance received 2,308,176 shares of the Registrant's common
stock in exchange for all issued and outstanding shares of Super Kwik and
Maintenance. The Shareholders of the Donno Companies received 1,137,951 shares
of the Registrant's common stock in exchange for all issued and outstanding
shares of the Donno Companies. The above transactions are presented as if they
had occurred on July 1, 1995. The Super Kwik and Maintenance and the Donno
Companies business combinations were accounted for using the pooling of
interests method, and as a result, no material pro forma adjustments were deemed
necessary to reflect the results of operations on a consolidated basis for these
business combinations.
The following unaudited pro forma financial data may not be indicative of
what the results of operations of Eastern Environmental Services, Inc. would
have been, had the transactions to which such data gives effect had been
completed on the date assumed, nor are such data necessarily indicative of the
results of operations of Eastern Environmental Services, Inc. that may exist in
the future. The following unaudited pro forma information should be read in
conjunction with the notes thereto, the other pro forma financial statements and
notes thereto, and the historical financial statements and notes of Eastern
Environmental Services, Inc. as filed in the Company's annual report filed on
Form 10-K for the three years ended June 30, 1996 and the historical financial
statements of the Donno Company, Inc., Suffolk Waste System, Inc., Residential
Services and N.R.T. Realty Corporation appearing elsewhere in this filing.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Donno Co., Inc.,
Suffolk Waste
Allied Super Kwik, Inc. R & A Bender, Systems, Inc. and
Eastern Environmental and Waste Inc. and R & A Residential
Environmental Services, Inc. Maintenance Bender Property, Services and
Services, Inc. and Affiliates Services, Inc. Ltd. N.R.T. Corp.
---------------- --------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenues $ 7,632,503 $ 11,097,634 $20,521,676 $8,461,111 $11,364,994
Cost of revenues 6,857,418 8,255,721 15,393,721 5,812,906 9,237,902
---------------- --------------- ------------------ ----------------- ----------------
Gross profit 775,085 2,841,913 5,127,955 2,648,205 2,127,092
Selling, general and
administrative
expenses 3,853,145 3,040,918 4,992,880 2,262,009 2,856,798
---------------- --------------- ------------------ ----------------- ----------------
Operating (loss) income (3,078,060) (199,005) 135,075 386,196 (729,706)
Interest expense (153,428) (109,386) (439,074) (113,115) (36,507)
Other (expense) income (268,555) (2,621,380) 9,599 280,550 128,316
----------------- ---------------- ------------------ ------------------ ----------------
(Loss) income before
income taxes (benefit) (3,500,043) (2,929,771) (294,400) 553,631 (637,897)
Income tax (benefit)
expense - - (12,087) - 2,400
---------------- ---------------- ------------------ ------------------ ----------------
Net (loss) income $(3,500,043) $ (2,929,771) $ (282,313) $ 553,631 $ (640,297)
================ ================ ================== ================== ================
<CAPTION>
Pro Forma Pro Forma
Adjustments Consolidated
----------- ------------
<S> <C> <C>
Revenues $ (183,919) (8) $58,893,999
Cost of revenues (734,001) (2)
(390,709) (8)
-----------
(1,124,710) 44,432,958
----------- ----------
Gross profit 940,791 14,461,041
(137,032) (1)
172,515 (2)
(785,723) (3)
(955,898) (6)
(9,807) (8)
----------
Selling, general and
administrative
expenses (1,715,945) 15,289,805
----------- ------------
Operating (loss) income 2,656,736 (828,764)
Interest expense (1,168,191) (7) (2,019,701)
Other (expense) income 2,621,380 (4) 149,910
----------- ------------
(Loss) income before
income taxes (benefit) 4,109,925 (2,698,555)
Income tax (benefit)
expense - (9,687)
------------ ------------
Net (loss) income $ 4,109,925 $ (2,688,868)
============ ============
Net (loss) income per share $ (0.29)
=============
Weighted avg # of shares
outstanding (5) 9,241,414
==============
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Donno Co., Inc.,
Suffolk Waste
Eastern Super Kwik, Inc. and Systems, Inc. and
Environmental Waste Maintenance Residential Services Pro Forma
Services, Inc. Services, Inc. and N.R.T. Corp. Consolidated
-------------------- ---------------------- ------------------------- ------------
<S> <C> <C> <C> <C>
Revenues $ 8,650,945 $18,865,547 $13,285,570 $40,802,062
Cost of revenues 7,430,228 14,736,898 10,253,431 32,420,557
-------------------- ---------------------- ------------------------- -------------
Gross profit 1,220,717 4,128,649 3,032,139 8,381,505
Selling, general and
administrative expenses 3,149,863 3,224,249 2,116,808 8,490,920
-------------------- ---------------------- ------------------------- -------------
Operating (loss) income (1,929,146) 904,400 915,331 (109,415)
Interest expense (226,463) (330,671) (23,498) (580,632)
Other (expense) income 365,888 30,227 92,269 488,384
-------------------- ---------------------- ------------------------- -------------
(Loss) income before
income taxes (benefit) (1,789,721) 603,956 984,102 (201,663)
Income tax (benefit) expense (242,171) 62,669 32,409 (147,093)
-------------------- ---------------------- ------------------------- -------------
Net (loss) income $(1,547,550) $ 541,287 $ 951,693 $ (54,570)
==================== ====================== ========================= ===============
Net (loss) income per share $ (0.01)
===============
Weighted avg # of shares
outstanding 7,844,359
================
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
Donno Co., Inc.,
Suffolk Waste
Super Kwik, Inc. Systems, Inc. and
Eastern and Waste Residential
Environmental Maintenance Services and Pro Forma
Services, Inc. Services, Inc. N.R.T. Corp. Consolidated
------------------ ----------------- ------------------ --------------
<S> <C> <C> <C> <C>
Revenues $ 8,480,955 $16,000,394 $12,833,093 $37,314,442
Cost of revenues 6,138,295 12,598,739 10,398,589 29,135,623
------------------ ----------------- ------------------ --------------
Gross profit 2,342,660 3,401,655 2,434,504 8,178,819
Selling, general and
administrative expenses 3,442,193 2,864,279 2,048,066 8,354,538
------------------ ----------------- ------------------ --------------
Operating (loss) income (1,099,533) 537,376 386,438 (175,719)
Interest expense (75,132) (276,581) (20,205) (371,918)
Other (expense) income 155,933 8,071 62,285 226,289
------------------- ----------------- ------------------ --------------
(Loss) income before
income taxes (benefit) (1,018,732) 268,866 428,518 (321,348)
Income tax (benefit) expense (295,759) 49,573 17,486 (228,700)
------------------- ----------------- ------------------ --------------
Net (loss) income $ (722,973) $ 219,293 $ 411,032 $ (92,648)
=================== ================= ================== ==============
Net (loss) income per share $ (0.01)
==============
Weighted avg # of shares
outstanding 7,836,332
==============
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE SIX MONTHS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Donno Co., Inc.,
R & A Bender Suffolk Waste
Eastern Inc., and R & A Systems, Inc. and
Environmental Bender Residential Services Pro Forma Pro Forma
Services, Inc. Property Ltd. and N.R.T. Corp. Adjustments Consolidated
----------------- ----------------- --------------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 21,983,649 $ 4,298,280 $ 6,537,376 $ (41,019) (4) $ 32,778,286
(196,402) (1)
(206,352) (4)
-------------
Cost of revenues 16,441,679 2,694,590 5,403,647 (402,754) 24,137,162
-------------- ------------- ------------- ------------- -------------
Gross profit 5,541,970 1,603,690 1,133,729 361,735 8,641,124
76,769 (1)
(1,035,367) (2)
(6,085) (4)
-------------
Selling, general and
administrative expenses 3,657,400 1,756,647 1,003,583 (964,683) 5,452,947
-------------- ------------- ------------- ------------- -------------
Operating income (loss) 1,884,570 (152,957) 130,146 1,326,418 3,188,177
Interest expense (385,246) (7,243) (44,607) (529,754) (3) (966,850)
Other income 206,678 245,746 61,588 514,012
-------------- ------------- ------------- ------------- -------------
Income before
income taxes 1,706,002 85,546 147,127 796,664 2,735,339
Income tax expense 34,561 0 1,454 0 36,015
-------------- ------------- ------------- ------------- -------------
Net income $ 1,671,441 $ 85,546 $ 145,673 $ 796,664 $ 2,699,324
============== ============= ============= ============= =============
Net income per share $ 0.21
=============
Weighted avg # of shares
outstanding 12,889,644
=============
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996 AND DECEMBER 31, 1996
The following unaudited pro forma consolidated balance sheets as of June
30, 1996 and December 31, 1996 give effect to (i) the acquisition of Allied
Environmental Services, Inc. and Affiliates ("Allied") for consideration of
approximately $700,000 in Eastern Environmental Services, Inc. common stock at
an assumed fair market value of $6.00 per share; (ii) the acquisition of Super
Kwik, Inc. and Waste Maintenance Services, Inc. pursuant to the terms of an
Agreement of Merger, (iii) the completion on August 9, 1996 of the private
placement of Eastern Environmental Services, Inc. ("EESI") stock, providing net
proceeds of $9,275,752 after issuance expense of $724,248, (iv) the acquisition
of R & A Bender, Inc. and certain real estate owned by R & A Bender Property,
Ltd. ("Bender") for consideration of $16,483,510 in cash and $1,000,000 in
Eastern Environmental Services, Inc. common stock at a fair market value of
$9.375 per share, and (v) the acquisition of the Donno Company, Inc., Suffolk
Waste Systems, Inc, and Residential Services and N.R.T. Realty Corp. ("Donno
Companies) pursuant to terms of a Reorganization Plan and Agreement dated
December 31, 1996, by and among Norman Taylor, Thomas King, Robert Donno
("Shareholders"), Eastern Environmental Services, Inc.("Registrant") and Eastern
Waste of Long Island, Inc. ("EWLI"), a wholly owned subsidiary of the
Registrant. The above transactions are presented as if they had occurred on June
30, 1996.
The following unaudited pro forma financial data may not be indicative of
what the financial condition of EESI would have been, had the transactions to
which such data gives effect been completed on the date assumed, nor are such
data necessarily indicative of the financial condition of EESI that may exist in
the future. The following unaudited pro forma information should be read in
conjunction with the notes thereto, the other pro forma financial statements and
notes thereto, and the historical financial statements and notes of Eastern
Environmental Services, Inc. as filed in the Company's annual report filed on
Form 10-K for the three years ended June 30, 1996 and the historical financial
statements of Donno Company, Inc., Suffolk Waste Systems, Inc. and Residential
Services and N.R.T. Realty Corporation appearing elsewhere in this filing.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
DONNO CO., INC.,
SUFFOLK WASTE
SUPER KWIK, R & A SYSTEMS,
ALLIED INC. AND BENDER, INC. INC. AND
EASTERN ENVIRONMENTAL WASTE AND R & A RESIDENTIAL
ENVIRONMENTAL SERVICES, MAINTENANCE BENDER SERVICES
SERVICES, INC. AND SERVICES, PROPERTY, AND N.R.T. PRO FORMA PRO FORMA
INC. AFFILIATES INC. LTD. CORP. ADJUSTMENTS CONSOLIDATED
------------- ------------- ------------ ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
$ 9,275,752 (1)
2,663 (3)
(17,538,550)(4)
15,818,595 (5)
-------------
Cash and cash equivalents $ 617,398 $ (2,663) $ 23,185 $ 3,674,827 $1,135,529 $ 7,558,460 $13,006,736
(783,610)(3)
Accounts receivable, 211,782 (4)
-------------
net of allowance 1,272,138 2,058,642 1,546,212 827,236 530,809 (571,828) 5,663,209
Deferred income taxes 372,445 - - - - 372,445
Tax refund receivable 74,467 - - - 74,467
(16,552)(3)
Prepaid expenses and 282,424 (4)
-------------
other current assets 634,548 16,552 555,140 253,123 509,065 265,872 2,234,300
----------- ---------- ---------- ----------- ---------- ------------- -----------
TOTAL CURRENT ASSETS 2,970,996 2,072,531 2,124,537 4,755,186 2,175,403 7,252,504 21,351,157
(484)(3)
13,229,325 (4)
-------------
Net property and equipment 10,918,566 5,484 5,384,395 4,915,537 2,040,408 13,228,841 36,493,231
Assets held for resale 859,262 - - - 64,300 (4) 923,562
417,884 (3)
6,805,049 (4)
-------------
Intangible assets 311,014 - 723,767 121,876 7,222,933 8,379,590
Other assets 505,173 127,116 432,902 348,164 339,664 (348,164)(4) 1,404,855
----------- ---------- ---------- ----------- ---------- ------------- -----------
TOTAL ASSETS $15,565,011 $2,205,131 $8,665,601 $10,140,763 $4,555,475 $27,420,414 $68,552,395
=========== ========== ========== =========== ========== ============= ===========
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
Donno Co., Inc.,
Suffolk Waste
Super Kwik, R & A Systems,
Allied Inc. and Bender, Inc. Inc. and
Eastern Environmental Waste and R & A Residential
Environmental Services, Maintenance Bender Services
Services, Inc. and Services, Property, and N.R.T. Pro Forma Pro Forma
Inc. Affiliates Inc. Ltd. Corp. Adjustments Consolidated
------------- ------------- ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ - $ - $ 345,000 $ - $ 250,000 $ 690,080 (4) $ 1,285,080
(399,509)(3)
225,839 (4)
-------------
Accounts payable 1,945,343 1,524,541 1,023,151 247,988 590,637 (173,670) 5,157,990
1,856,000 (2)
(20,546)(3)
2,943,448 (4)
800,000 (6)
-------------
Accrued expenses 1,329,579 20,546 369,159 562,358 329,621 5,578,902 8,190,165
Income taxes payable 57,739 - - 57,739
Current portion of accrued
environmental costs 870,000 - - - 200,000 (4) 1,070,000
Current position of long-
term debt and
obligations
under capital leases 325,852 - 1,528,343 1,067,461 159,865 (681,099)(4) 2,400,422
------------- ----------- ----------- ----------- ----------- -------------- ------------
TOTAL CURRENT LIABILITIES 4,528,513 1,545,087 3,265,653 1,877,807 1,330,123 5,614,213 18,161,396
660,000 (2)
972,000 (4)
7,500 (6)
-------------
Deferred income taxes 444,797 - 62,826 - 1,639,500 2,147,123
Long-term debt and
obligations
under capital leases 2,256,816 - 3,410,761 65,814 641,263 15,871,635 (4) 22,246,289
Landfill closure and
accrued environmental
costs 2,088,457 - - 3,587,001 335,680 1,912,999 (4) 7,924,137
STOCKHOLDERS' EQUITY:
(1,221,539)(1)
(10,033)(3)
(19,933)(4)
-------------
Common stock 60,777 11,200 2,100 21,000 1,278,901 (1,251,505) 122,473
10,497,291 (1)
(2,372,563)(3)
Additional paid-in 979,933 (4)
-------------
capital 9,020,714 3,071,396 61,484 19,000 332,689 9,104,661 21,609,944
(2,516,000)(2)
2,422,552 (3)
(4,570,141)(4)
Retained earnings (807,500)(6)
-------------
(deficit) (2,758,804) (2,422,552) 1,862,777 4,570,141 636,819 (5,471,089) (3,582,708)
Less treasury stock at
cost -
39,100 common shares (76,259) - - - - - (76,259)
------------- ----------- ----------- ----------- ----------- -------------- ------------
Total stockholders' equity 6,246,428 660,044 1,926,361 4,610,141 2,248,409 2,382,067 18,073,450
------------- ----------- ----------- ----------- ----------- -------------- ------------
TOTAL LIABILITY AND
STOCKHOLDERS' EQUITY $ 15,565,011 $ 2,205,131 $8,665,601 $10,140,763 $4,555,475 $ 27,420,414 $68,552,395
============= =========== =========== =========== =========== ============== ============
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
1.) To record the receipt of the net proceeds from the offering of common stock
of $10,000,000, net of issuance expenses of $724,248, exchange of Super
Kwik, Inc. and Waste Maintenance Services, Inc. stock and the stock of the
Donno Company, Inc., Suffolk Waste Systems, Inc. and Residential Services,
Inc. and N.R.T. Realty Corporation for Eastern Environmental Services, Inc.
common stock.
2.) To record the effect of merger costs relating to the acquisition of Super
Kwik and Maintenance of $1,856,000 and a tax provision of $660,000 relating
to the recording of a deferred tax liability with the termination of Super
Kwik's and Maintenance's previous S Corporation status at the date of the
merger.
3.) To record the purchase of Allied Environmental Services, Inc. and
Affiliates for consideration of $700,000 in EESI stock at an assumed fair
market value of $6.00 per share. The excess of the cumulative purchase
price over the cumulative net book value of the assets acquired has been
assigned to goodwill. The assets not acquired and the liabilities not
assumed have been eliminated.
4.) To record the purchase of the stock of R & A Bender, Inc. and certain real
estate owned by R & A Bender Property, Ltd for consideration of $1,000,000
in EESI stock at an assumed fair market value of $9.375 per share and
$16,483,510 in cash. The excess of the cumulative purchase price over the
cumulative net book value of the assets acquired has been assigned to
goodwill. The assets not acquired and the liabilities not assumed have been
eliminated.
5.) To record borrowings under EESI's Revolving Credit Facility of $15,818,595
necessary to effect the acquisition of R & A Bender, Inc. and certain real
estate owned by R & A Bender Property, Ltd.
6.) To record the effect of merger costs relating to the acquisition of Donno
Company, Inc., Suffolk Waste Systems, Inc. and Residential Services and
N.R.T. Realty Corp. of $800,000 and a tax provision of $7,500 relating to
the recording of a net deferred tax liability with the termination of the
Donno Companies' previous "S" Corporation status at the date of the merger.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Donno Co., Inc.,
Suffolk Waste Systems,
Inc. and Residential
Eastern Environmental Services and N.R.T. Pro Forma Pro Forma
Services, Inc. Corp. Adjustments Consolidated
---------------------- -------------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,107,323 $ 1,102,376 $ 6,209,699
Accounts receivable, net of
allowance 6,879,776 436,546 7,316,322
Deferred income taxes 442,035 442,035
Tax refund receivable 45,296 45,296
Prepaid expenses and other
current assets 2,341,444 258,719 2,600,163
---------------- ---------------- ----------------
TOTAL CURRENT ASSETS 14,815,874 1,797,641 16,613,515
PROPERTY, PLANT AND EQUIPMENT
Land 1,869,224 182,500 2,051,724
Landfill sites 29,388,892 29,388,892
Buildings and leasehold
improvements 2,756,136 710,970 3,467,106
Vehicles 9,556,470 9,556,470
Machinery and equipment 8,666,192 5,071,294 13,737,486
Furniture and fixtures 900,743 368,232 1,268,975
---------------- ---------------- ----------------
TOTAL PROPERTY, PLANT AND
EQUIPMENT 53,137,657 6,332,996 59,470,653
Accumulated depreciation (13,781,147) (4,387,655) (18,168,802)
---------------- ---------------- ----------------
Net property and equipment 39,356,510 1,945,341 41,301,851
Assets held for resale 521,512 521,512
Excess cost over fair market value of
net assets acquired, net of
accumulated amortization 9,506,766 9,506,766
Intangible assets, net of accumulated
amortization 1,059,814 1,059,814
Notes receivable from shareholders /
officers 432,902 432,902
Other assets 863,181 410,843 1,274,024
---------------- ---------------- ----------------
TOTAL ASSETS $ 66,556,559 $ 4,153,825 $ 70,710,384
================ ================ ================
LIABILITIES AND AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ - $ - $ -
Current maturities on long-term
debt 735,543 735,543
Current position of long-term
debt and obligations under
capital leases 1,391,283 162,247 1,553,530
Accounts payable 4,385,943 518,807 4,904,750
Accrued expenses 6,680,539 354,479 7,035,018
Income taxes payable 98,980 98,980
Current portion of accrued
environmental costs 870,000 870,000
---------------- ---------------- ----------------
TOTAL CURRENT LIABILITIES 14,162,288 1,035,533 15,197,821
Deferred income taxes 2,209,007 2,209,007
Long-term debt 18,444,535 559,530 19,004,065
Capital lease obligations - long-term 2,649,362 2,649,362
Accrued landfill closure and other
environmental costs 7,762,679 335,680 8,098,359
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value: 120,911 1,278,901 (1,267,521) (1) 132,291
Additional paid-in capital 23,023,700 332,689 1,267,521 (1) 24,623,910
Retained earnings (deficit) (1,739,664) 611,492 (1,128,172)
Less treasury stock at cost -
39,100 common shares (76,259) - - (76,259)
---------------- ---------------- ---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 21,328,688 2,223,082 - 23,551,770
---------------- ---------------- ---------------- ----------------
TOTAL LIABILITY AND STOCKHOLDERS'
EQUITY $ 66,556,559 $ 4,153,825 $ - $ 70,710,384
================ ================ ================ ================
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
1.) To record the exchange of the stock of the Donno Company, Inc., Suffolk
Waste Systems, Inc. and Residential Services, Inc. and N.R.T. Realty
Corporation for Eastern Environmental Services, Inc. common stock.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE SIX MONTHS ENDED DECEMBER 31, 1996
1.) To adjust depreciation and amortization expense and the provision for
closure and post closure costs for the change in the basis of property,
equipment, landfill site costs and intangible assets, net of historical
depreciation, amortization, closure and post closure cost of R & A Bender,
Inc. and R & A Bender Property, Ltd. ("Bender") which would have occurred
had the purchase of Bender been completed July 1, 1996.
2.) To reflect the decrease in selling, general and administrative expenses of
$1,035,367 for the reduction made to the former owners' salaries and for the
termination of Bender's pension plans of $706,807 and $328,560,
respectively.
3.) To record the additional interest expense of $529,754 resulting to amounts
outstanding under the Company's Revolving Credit Facility of $15,818,595
incurred to consummate the acquisition of Bender, net of historical interest
expense of $38,291.
4.) To reflect the elimination of revenues and operating expenses relating to
certain farming operations of Bender not acquired by EESI.
5.) For the purposes of determining pro forma loss per share, the issuance of
106,667 shares of common stock as partial consideration for the purchase of
the stock of R & A Bender, Inc., was considered to have been outstanding
from July 1, 1996.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTERN ENVIRONMENTAL SERVICES, INC.
Date: April 15, 1997 By: /s/ Louis D. Paolino, Jr.
------------------------------
Louis D. Paolino, Jr.
President
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
23.1 Consent of Paternostro, Callahan and DeFreitas, LLP
<PAGE>
PATERNOSTRO, CALLAHAN & DEFREITAS, LLP
--------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
PETER N. PATERNOSTRO, CPA
KENNETH J. CALLAHAN, CPA
EMANUEL J. DE FREITAS, CPA
WALTER J. SMITH, MBA
To the Board of Directors and Shareholders
Donno Company, Inc., Suffolk Waste Systems, Inc. and
Residential Services and N.R.T. Realty Corp.
We hereby consent to the use of our audit report dated March 3, 1997, relating
to the combined financial statements of the Donno Company, Inc., Suffolk Waste
Systems, Inc. and Residential Services and N.R.T. Realty Corporation, as of and
for the three years ended June 30, 1996, and to our compilation reports dated
March 3, 1997, relating to the combined financial statements of the Donno
Company, Inc., Suffolk Waste Systems, Inc. and Residential Services and N.R.T.
Realty Corporation, as of December 31, 1996, and for the six months then ended,
all of which are contained in the current report on Form 8-K/A of Eastern
Environmental Services, Inc., dated January 31, 1997. Additionally, we also
consent to the incorporation by reference of the above mentioned reports in the
Registration Statement on Form S-8 (Registration No. 33-25155, filed on October
24, 1988), the Registration Statement on Form S-8 (Post-Effective Amendment No.
2 to Registration No. 33-21251, filed on May 4, 1990), the Registration
Statement on Form S-8 (Registration No. 33-37374, filed on October 18, 1990),
the Registration Statement on Form S-8 (Registration No. 33-45250, filed on
January 27, 1992), and the Registration Statement on Form S-3 (Registration No.
333-00283, filed on February 14, 1996) of Eastern Environmental Services, Inc.
/s/ Paternostro, Callahan & DeFreitas
PATERNOSTRO, CALLAHAN & DeFREITAS, LLP
Mineola, New York
April 7, 1997
238 Mineola Boulevard Mineola, New York 11501
Tel: 516-746-6322 Fax: 516-742-6722
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