<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) December 10, 1996
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 December 10, 1996, the Registrant consummated the acquisition of R & A
Bender, Inc. and certain real estate owned by R & A Bender Property, Ltd.,
pursuant to the terms of an Agreement for the Sale and Purchase of Stock and
Real Estate dated December 2, 1996 and an Escrow Agreement dated December 2,
1996. The parties to the Purchase Agreement and Escrow Agreement were Eastern
Environmental Services, Inc.; Richard G Bender, Sr., Alice L. Fields Bender,
Richard G. Bender, Jr., Karen L. Bender, Teresa A. Bender Miller, Lynetta K.
Bender Mowery, Stephen R. Bender, Jeffrey L. Bender, and Douglas R. Bender
(collectively referred to as the "Stockholders"); and R & A Bender Property,
Ltd., a Pennsylvania limited partnership ("Partnership"). The Stockholders and
Partnership are collectively referred to as the "Sellers." The Sellers are not
affiliated with the Registrant nor with any of the Registrant's subsidiaries.
The description of the acquisition transaction set forth herein is qualified in
its entirety by reference to the Purchase Agreement and Escrow Agreement. The
Purchase Agreement and Escrow Agreement are incorporated as Exhibit 10.1 and
Exhibit 10.2, respectively.
Pursuant to the Purchase Agreement and Escrow Agreement, Registrant
purchased all of the outstanding stock of R & A Bender, Inc. and certain real
estate owned by R & A Bender Property, Ltd, for total consideration of
approximately $17,500,000, including $16,500,000 in cash and 106,667 shares of
the Registrant's common stock valued at $9.375 per share (the closing price of
the Registrant's common stock on December 2, 1996.) Additionally, on the date
of closing the Purchase Agreement, R & A Bender, Inc. had approximately
$1,209,000 of outstanding indebtedness. The Shareholders were also issued five
year stock warrants for 50,000 shares of the common stock of the Registrant
having a per share exercise price equal to the closing price of the Registrant's
stock as of December 2, 1996. The acquisition is being accounted for using the
"purchase" method of accounting. The Registrant has agreed to register the
stock under the Securities Act of 1933 within 120 days of the date of closing.
The acquisition includes substantially all of the outstanding assets and
liabilities relating to the operation of R & A Bender, Inc. The acquired
assets, including collection vehicles, containers and a 280-acre tract of real
estate, will be used by the Registrant in the waste collection and landfill
business. In connection with the acquisition, four of the stockholders were
hired by R&A Bender, Inc. to oversee the waste collection and landfill business.
<PAGE>
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
----------------------------------
(a) Financial Statements of Business Acquired.
R & A Bender, Inc.
Independent Auditor's Report.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Income for the years ended December 31, 1995 and 1994.
Statements of Retained Earnings for the years ended December 31, 1995 and
1994.
Statements of Cash Flows for the years ended December 31, 1995 and 1994.
Notes to Financial Statements.
Independent Accountant's Compilation Report.
Balance Sheet as of June 30, 1996 (Unaudited).
Statement of Income for the year ended June 30, 1996 (Unaudited).
Statement of Retained Earnings for the year ended June 30, 1996
(Unaudited).
Statement of Cash Flows for the year ended June 30, 1996 (Unaudited).
Notes to Financial Statements.
Independent Accountant's Compilation Report.
Balance Sheet as of September 30, 1996 (Unaudited).
Statements of Income for the three months and nine months ended
September 30, 1996 (Unaudited).
Statements of Retained Earnings for the three months and nine months ended
September 30, 1996 (Unaudited).
Statements of Cash Flows for the three months and nine months ended
September 30, 1996 (Unaudited).
Notes to Financial Statements.
R & A Bender Property, Ltd.
Independent Auditor's Report.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Income for the years ended December 31, 1995 and 1994.
Statements of Changes in Partners' Equity for the years ended December 31,
1995 and 1994.
Statements of Cash Flows for the years ended December 31, 1995 and 1994.
Notes to Financial Statements.
Independent Accountants's Compilation Report
Balance Sheet as of June 30, 1996 (Unaudited).
Statement of Income for the year ended June 30, 1996 (Unaudited).
Statement of Changes in Partners' Equity for the year ended June 30, 1996
(Unaudited).
Statement of Cash Flows for the year ended June 30, 1996 (Unaudited).
Notes to Financial Statements.
<PAGE>
Independent Accountant's Compilation Report
Balance Sheet as of September 30, 1996 (Unaudited).
Statements of Income for the three months and nine months ended
September 30, 1996 (Unaudited).
Statements of Changes in Partners' Equity for the three months and nine
months ended September 30, 1996 (Unaudited).
Statements of Cash Flows for the three months and nine months ended
September 30, 1996 (Unaudited).
Notes to Financial Statements.
(b) Pro forma financial information
Eastern Environmental Services, Inc.
Pro forma Consolidated Statement of Operations for the year ended June 30,
1996 (Unaudited).
Pro forma Consolidated Statement of Operations for the three months ended
September 30, 1996 (Unaudited).
Pro forma Consolidated Balance Sheet as of June 30, 1996 (Unaudited).
Pro forma Consolidated Balance Sheet as of September 30, 1996 (Unaudited).
<PAGE>
R & A BENDER, INC.
FINANCIAL REPORT
DECEMBER 31, 1995
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT ON
THE FINANCIAL STATEMENTS 1
- -----------------------------------------------------------------
FINANCIAL STATEMENTS
<S> <C>
Balance Sheets 2 - 3
Statements of Income 4 - 5
Statements of Retained Earnings 6
Statements of Cash Flows 7 - 8
Notes to Financial Statements 9 - 15
</TABLE>
- -----------------------------------------------------------------
<PAGE>
[LETTERHEAD OF BOYER & RITTER CERTIFIED
PUBLIC ACCOUNTANTS APPEARS HERE]
INDEPENDENT AUDITOR'S REPORT
Stockholders
R & A Bender, Inc.
Scotland, Pennsylvania
We have audited the accompanying balance sheets of R & A Bender, Inc., as of
December 31, 1995 and 1994, and the related statements of income, retained
earnings, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
The accompanying financial statements omit disclosures relative to economic
dependency as such disclosures relate to major vendors and customers.
In our opinion, except for the effects on the financial statements of not
providing disclosures relative to economic dependency as described in the
preceding paragraph, the financial statements referred to above present fairly,
in all material respects, the financial position of R & A Bender, Inc., as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ BOYER & RITTER
Chambersburg, Pennsylvania
December 27, 1996
1
<PAGE>
R & A BENDER, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 840,925 $ 199,629
Accounts receivable
Trade 761,107 755,596
Affiliate - 33,425
Other 31,280 25,940
Inventories
Fuel 6,252 5,652
Heating oil 2,345 5,729
Prepaid expenses
Taxes 78,292 64,021
Insurance 204,607 127,122
Maintenance contracts 17,859 16,650
Other - 14,476
--------------------------------
Total current assets 1,942,667 1,248,240
--------------------------------
Property, Plant and Equipment 15,524,791 14,301,564
Less accumulated depreciation and depletion (11,888,496) (10,087,899)
--------------------------------
3,636,295 4,213,665
Construction-in-process and equipment deposits 240,245 157,987
--------------------------------
3,876,540 4,371,652
Other Assets
Cash surrender value of officers' life insurance - net
of policy loans 1995 $50,025; 1994 $49,930 131,026 126,738
Performance bonds 410,692 410,642
Certificates of deposit - landfill collateral bond 3,091,159 2,678,927
Maintenance contracts 18,266 31,040
Permits and licenses 19,042 2,600
Routes purchased 96,726 96,726
--------------------------------
3,766,911 3,346,673
--------------------------------
$ 9,586,118 $ 8,966,565
================================
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Notes payable $ - $ 75,000
Current maturities of long-term debt 1,312,243 589,127
Accounts payable
Trade 194,800 113,552
Other 202,252 48,867
Governmental administrative fees and
surcharges collected 122,113 134,806
Payroll taxes and withholdings 8,202 46,926
Employee uniform deposits and rents withheld 3,060 4,255
Deferred revenue 118,091 114,627
Accrued expenses
Payroll and payroll taxes 56,844 55,883
Pension plan contributions 285,925 350,556
Taxes 74,751 78,045
Other - 1,334
----------------------------------
Total current liabilities 2,378,281 1,612,978
----------------------------------
Long-Term Debt - net of current maturities 183,899 1,145,064
----------------------------------
Deferred Closure Fund Liability 3,403,716 2,613,654
----------------------------------
Stockholders' Equity
Common stock - Class A - Voting; par value - $1 per share;
authorized - 25,000 shares; issued and
outstanding - 5,000 shares 5,000 5,000
Common stock - Class B - Non-Voting; par value -
$1 per share; authorized - 25,000 shares; issued
and outstanding - 16,000 shares 16,000 16,000
Capital in excess of par value 19,000 19,000
Retained earnings 3,580,222 3,554,869
----------------------------------
3,620,222 3,594,869
----------------------------------
$ 9,586,118 $ 8,966,565
==================================
</TABLE>
3
<PAGE>
R & A BENDER, INC.
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Years Ended December 31, 1995 and 1994
1995 1994
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues
Fees and other operating revenues $ 9,087,861 $ 8,658,081
Less customer refunds and discounts (210,065) (193,843)
------------------------------
Operating revenues - net 8,877,796 8,464,238
------------------------------
Operating Expenses
Advertising 17,946 19,608
Bad debt and collection 4,627 19,323
Bank fees and service charges 27,713 24,702
Computer 13,975 12,233
Closure fund 790,062 438,756
Contributions 6,730 6,779
Depreciation 839,321 771,991
Depletion 841,597 615,747
Dues and subscriptions 10,527 16,268
Employee benefit programs 40,216 19,430
Freight 764 866
Gas and oil 292,204 279,787
Insurance
Health, life, and disability 236,675 177,221
Other 408,204 395,119
Landfill testing and monitoring 74,763 51,291
Leachate treatment 237,928 161,543
Miscellaneous 5,407 2,763
Office, postage, and printing 97,913 87,664
Parts and repairs 467,692 536,049
Pension
Administration 19,755 18,273
Contributions 285,925 350,556
Permits and licenses 31,610 31,752
Professional fees 106,567 107,693
Recycling disposal 793 6,494
</TABLE>
(Continued)
4
<PAGE>
R & A BENDER, INC.
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Operating Expenses (Continued)
Rent and royalties 588,778 569,253
Safety and compliance 12,257 3,050
Salaries and wages 2,245,424 2,116,540
Seeds and plants 42,014 51,265
Small tools and supplies 247,477 211,957
Surcharges 141,843 145,684
Taxes
Capital stock 71,059 99,306
Payroll 157,448 153,975
Use 11,214 12,778
Other 45,153 43,718
Temporary drivers and other personnel 4,168 17,838
Tipping fees 48,886 42,695
Tires and tubes 195,010 215,792
Trash relocation 3,148 10,388
Travel and meals 17,418 16,849
Uniforms 19,305 18,914
Utilities and telephone 61,882 60,037
Waste oil disposal fees 4,842 5,779
--------------------------
Total operating expenses 8,776,240 7,947,726
--------------------------
Operating income 101,556 516,512
Interest Income (Expense) - Net 69,571 (56,504)
Other Income (Expense) - Net 60,300 (21,131)
--------------------------
Net income $ 231,427 $ 438,877
==========================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
R & A BENDER, INC.
STATEMENTS OF RETAINED EARNINGS
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------
<S> <C> <C>
Retained Earnings:
Beginning $ 3,554,869 $ 3,615,079
Net Income 231,427 438,877
Distributions to stockholders (206,074) (499,087)
---------------------------
Ending $ 3,580,222 $ 3,554,869
===========================
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
R & A BENDER, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 231,427 $ 438,877
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation 1,001,084 771,991
Depletion 841,597 615,747
Closure fund expense 790,062 438,756
(Gain) loss on disposition of property,
plant and equipment (81,156) 17,290
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 22,574 (147,866)
Inventories 2,784 35
Prepaid expenses (65,715) 12,851
Performance bonds (50) 225,652
Certificates of deposit - landfill
collateral bond (412,232) (412,232)
Permits and licenses (16,442) (2,600)
(Decrease) increase in:
Accounts payable 234,633 (56,165)
Governmental administrative fees
and surcharges collected (12,693) 33,073
Payroll taxes and withholdings (38,724) 39,309
Employee uniform deposits and rents
withheld (1,195) 2,145
Deferred revenue 3,464 (29,936)
Accrued expenses (68,298) (13,249)
----------------------------
Net cash provided by operating
activities 2,431,120 1,933,678
----------------------------
</TABLE>
(Continued)
7
<PAGE>
R & A BENDER, INC.
STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Investing Activities
Proceeds from sale of property, plant
and equipment 146,002 20,454
Purchases of property, plant and equipment (1,330,157) (2,042,629)
(Increase) decrease in construction-in-process
and equipment deposits - net (82,258) 176,090
(Increase) decrease in cash surrender value of
officers' life insurance (4,288) 128,550
-----------------------------
Net cash used in investing activities (1,270,701) (1,717,535)
-----------------------------
Cash Flows From Financing Activities
Net repayments under short-term financing
arrangements (75,000) (490,000)
Proceeds from issuance of long-term debt 627,199 1,407,510
Repayments of long-term debt (865,248) (612,540)
Distributions to stockholders (206,074) (499,087)
-----------------------------
Net cash used in financing activities (519,123) (194,117)
-----------------------------
Net increase in cash and cash equivalents 641,296 22,026
Cash and Cash Equivalents:
Beginning 199,629 177,603
-----------------------------
Ending $ 840,925 $ 199,629
=============================
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business: The Company operates in the landfill and waste management
- ------------------
industry, and consequently, its operations are subject to environmental
legislation and regulations and to certain industrial and governmental bidding
requirements.
Use of Estimates: The preparation of financial statements requires management
- ----------------
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Bad Debts: The Company expenses past-due accounts receivable when, in
- ---------
management's opinion, the Company no longer has any possibility of collection;
recoveries of accounts previously written off are offset with bad debts expense
in the year recovered (direct write-off method). Potential uncollectible
accounts receivable at year-end are considered immaterial to total accounts
receivable; therefore, an allowance for such losses has not been established.
Depreciation and Depletion: Property, plant and equipment are stated at cost.
- --------------------------
Depreciation is provided in accordance with straight-line and accelerated
methods. Depletion of landfill sites is determined by applying the cost per ton
of capacity to the capacity utilized during specific periods of sites'
operations. As capacity utilization is generally determined by periodic
engineering studies, it is reasonably possible that this estimate may change
materially in the near term.
Routes Purchased: Management believes that routes purchased are characterized
- ----------------
by indefinite economic lives; therefore, their costs are not charged to
operations through amortization or depreciation.
Closure Fund Expense: Closure fund expense represents a periodic charge to
- --------------------
operations reflecting utilization of a site's landfill capacity. This
utilization is the product of an estimate of the future cost to close a site and
utilization of a site's capacity measured in total tons of capacity consumed
through the most recent accounting period. As capacity utilization is generally
determined by periodic engineering studies, it is reasonably possible that this
estimate may change materially in the near term.
Income Taxes: The Company has elected Federal and state taxation as a
- ------------
Subchapter "S" Corporation; consequently, the accompanying financial statements
do not reflect Federal and state income taxes because responsibility for payment
of said taxes belongs to the Company's shareholders.
Cash Equivalents: For purposes of the statements of cash flows, the Company
- ----------------
considers all highly-liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Advertising: The cost of advertising is expensed in the year incurred.
- -----------
9
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 2. Cash
All deposits are maintained in two financial institutions and are presented at
carrying amounts in the accompanying balance sheets. Bank balances exceeded
FDIC-insurable limits by $41,250 and $29,802 at December 31, 1995 and 1994,
respectively.
Note 3. Property, Plant and Equipment
Property, plant and equipment consists of the following components:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Land improvements $ 9,810 $ 9,810
Buildings 37,054 37,054
Leasehold improvements 174,119 168,167
Furniture and fixtures 295,983 260,028
Equipment 3,762,995 3,493,330
Vehicles 6,770,216 5,855,861
Breeding stock 34,100 36,800
Landfill expansion 4,440,514 4,440,514
--------------------------------
$ 15,524,791 $ 14,301,564
================================
</TABLE>
Note 4. Loans on Officers' Life Insurance Policies
The loans on the cash surrender value of officers' life insurance have been
applied as a reduction in the cash surrender value. Interest accrues annually at
6.00%; repayment of loan principal is made at the Company's option. See Note 13.
10
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 5. Notes Payable
The following is an analysis of notes payable by lender:
<TABLE>
<CAPTION>
Lender Interest Rate 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Farmers & Merchants Trust Company (A) Prime + 1-1/4% $ -- $ --
Orrstown Bank (B) Prime + 1/2% -- 75,000
--------------------------------
$ -- $ 75,000
================================
</TABLE>
(A) The Company established an unsecured line-of-credit with Farmers &
Merchants Trust Company in the amount of $400,000. Renewal is scheduled for
June 1996.
(B) The Company established an unsecured line-of-credit with Orrstown Bank in
the amount of $500,000. Renewal is scheduled for May 1996.
Note 6. Long-Term Debt
The following is an analysis of long-term debt by lender:
<TABLE>
<CAPTION>
Lender Interest Rate 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Associates Commercial Corporation (A) 9.767% $ 84,184 $ 160,350
The CIT Group/Equipment Financing Inc. (A) 9.750% -- 3,761
The CIT Group/Equipment Financing Inc. (A) 9.500% 112,472 --
The CIT Group/Equipment Financing Inc. (A) 8.150% 285,129 417,178
The CIT Group/Equipment Financing Inc. (A) 7.100% -- 26,054
The CIT Group/Equipment Financing Inc. (A) 8.750% 40,394 105,036
KDC Financial (A) 3.900% 333,759 --
Farmers & Merchants Trust Company (B) 9.750% 7,500 12,500
Farmers & Merchants Trust Company (C) 10.000% 117,704 398,312
Stockholders (D) 8.000% 515,000 611,000
-------------------------------
1,496,142 1,734,191
Less current maturities (1,312,243) (589,127)
-------------------------------
Long-Term Debt - Net of Current Maturities $ 183,899 $ 1,145,064
===============================
</TABLE>
11
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Long-Term Debt (Continued)
(A) Equipment secures these loans which require monthly payments of $67,837,
including interest.
(B) This bond financing agreement requires ten (l0) monthly installments of
$7,500, excluding interest.
(C) This mortgage, secured by real estate, requires monthly payments of
$23,384, excluding interest.
(D) These notes were satisfied in December 1996. Related 1995 and 1994 interest
expense incurred and paid was $46,447 and $48,880, respectively.
The following schedule presents future minimum principal payments required by
year and in the aggregate at December 31, 1995:
<TABLE>
<CAPTION>
Year Amount
- --------------------------------------------------------------------------------
<S> <C>
1996 $ 1,312,243
1997 183,899
-----------------
$ 1,496,142
=================
</TABLE>
Note 7. Leasing Arrangements
Real Estate: The Company leases land, buildings, and storage and office
- -----------
facilities from Richard G. Bender, Sr., President; his wife, Alice F. Bender;
and R & A Bender Property, Limited, a Pennsylvania limited partnership of which
ninety-eight (98) percent is owned by Mr. and Mrs. Bender. See Note 13. 1995 and
1994 rent expense under these year-to-year arrangements was $214,822.
Landfill Operations: The Company pays landfill royalties to R & A Bender
- -------------------
Property, Limited under a year-to-year agreement. See Note 13. 1995 and 1994
royalty expense was $368,568, and $354,279, respectively.
12
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 7. Leasing Arrangements (Continued)
The Company also maintains a sanitary landfill lease with an independent lessor.
Details of the lease follow:
<TABLE>
<CAPTION>
Life of Lease
Acreage Use at Rent Earlier of Renegotiations of Rent
Date Any One Time Per Acre Years Acres Used Per Acre
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/72 5 $ 1,250 35 50 Within first five years
</TABLE>
During 1995 and 1994, no rental expense was incurred or paid with respect to the
foregoing landfill lease.
Note 8. Pension Plans
Money-Purchase: The Company has a contributory pension plan that covers all
- --------------
employees who have completed one year of service and have attained 21 years of
age. The Company contributes annually 5.70% of eligible employees' earnings in
excess of the social security integration level and 5.70% of eligible employees'
total compensation. 1995 and 1994 pension expense under this plan was $102,768
and $95,930, respectively. See Note 13.
Profit-Sharing: The Company has a profit-sharing plan that covers all employees
- --------------
who have completed one year of service and have attained 21 years of age.
Contributions to the plan are based on a formula and are contingent upon the
attainment of certain levels of earnings as defined in the agreement. 1995 and
1994 contributions to the plan were $183,157 and $254,626, respectively. See
Note 13.
Note 9. Interest Expense
Total 1995 and 1994 interest cost incurred, paid, and charged to expense was
$140,576 and $152,614, respectively.
13
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 10. Collateral Bond
The Commonwealth of Pennsylvania, Department of Environmental Resources (D.E.R.)
requires a landfill operation to provide bonding for operation and closure of a
permitted landfill facility within the Commonwealth. For purposes of securing
the bond obligation, the schedule of collateral to be deposited is as follows:
<TABLE>
<CAPTION>
Date Amount
- --------------------------------------------------------------------------------
<S> <C>
Principal to April 6, 1990 $ 30,000
April 6, 1990 1,344,106
April 6, 1991 - 2000 (l0 years) 412,232
</TABLE>
The initial and subsequent deposits of collateral of $3,435,266 were made with
irrevocable standby letters-of-credit issued by Farmers & Merchants Trust
Company and secured by the Company's certificates of deposit of $3,091,159. The
standby letters-of-credit are pledged and assigned to D.E.R.. free and clear of
rights and claims as instructed by the agreement.
Note 11. Statement of Cash Flows Information
Non-cash investing and financing activities: During 1994, the Company purchased
- -------------------------------------------
landfill equipment under a capital lease valued at $430,610. In the accompanying
balance sheet, the equipment is a component of property, plant and equipment,
and the capital lease obligation is a component of current maturities of long-
term debt and long-term debt - net of current maturities. The lease requires
thirty-six (36) installments of $13,432, including interest, through November
22, 1997. Accumulated amortization on this leased property at December 31, 1995
and 1994, approximates $109,000 and $14,000 respectively.
Note 12. Reclassifications
Certain 1994 balances have been reclassified to conform with 1995 presentations.
14
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 13. Subsequent Events
Spin-Off of Non-Core Business
- -----------------------------
On November 27, 1996, certain assets and related liabilities of the Company's
non-core business were transferred to R.G. Bender Enterprises, Inc., a newly-
formed Pennsylvania corporation, in exchange for all of the stock of the newly-
formed corporation. Subsequently, all of the stock of this wholly-owned
subsidiary was distributed by the Company to its President in exchange for 1,352
shares of the Company's Class B non-voting common stock held by that officer.
The fair market value of the assets and liabilities distributed was $918,775.
Other Capital Changes
- ---------------------
On November 27, 1996, certain insurance policies owned by the Company on the
lives of certain of its shareholders were distributed to said shareholders in
exchange for 133 shares of the Company's Class B non-voting common stock. The
value of the policies distributed, net of policy loans, was $90,030. See Note 4.
Termination of Certain Real Estate Leases
- -----------------------------------------
In conjunction with the spin-off of the Company's non-core business, certain
real estate leases between the Company as lessee and the Company's President and
his spouse as lessors were terminated. These leases are more fully described in
Note 7.
In conjunction with the sale of real estate by R & A Bender Property, Limited,
landlord, on December 10, 1996, certain real estate leases involving landfill
site and shop facilities were terminated between the Company as lessee and the
landlord. These leases are more fully described in Note 7. Simultaneously, a new
five-year lease was negotiated between the Partnership, as lessor, and R & A
Bender, Inc., as lessee, involving a certain parcel of real estate and
appurtenant garage, furnace room, and parking facilities. This lease requires
annual rental payments of $80,000, and after the initial term, it is renewable
monthly under like conditions.
Termination of Money-Purchase Pension and Profit-Sharing Plans
- --------------------------------------------------------------
Effective June 22, 1996, benefit accruals were frozen under the Company's money-
purchase pension plan, and corporate contributions thereto ceased. The plan
administrator determined that participants' compensation subsequent to June 22,
1996, would be disregarded for benefit accrual calculations; however, hours of
service for determining participants' levels of vesting and entitlement would be
credited through December 31, 1996. Effective January 1, 1997, this plan was to
be merged with the Company's profit-sharing plan; however, by virtue of a
resolution dated December 7, 1996, both plans were terminated on December 31,
1996.
15
<PAGE>
R & A BENDER, INC.
FINANCIAL REPORT
JUNE 30, 1996
<PAGE>
CONTENTS
-----------------------------------------------------------
INDEPENDENT ACCOUNTANT'S REPORT ON
THE FINANCIAL STATEMENTS 1
-----------------------------------------------------------
FINANCIAL STATEMENTS
Balance Sheet 2 - 3
Statement of Income 4 - 5
Statement of Retained Earnings 6
Statement of Cash Flows 7 - 8
Notes to Financial Statements 9 - 15
-----------------------------------------------------------
<PAGE>
[LETTERHEAD OF BOYER & RITTER
CERTIFIED PUBLIC ACCOUNTANTS
APPEARS HERE]
INDEPENDENT ACCOUNTANT'S REPORT
Stockholders
R & A Bender, Inc.
Scotland, Pennsylvania
We have compiled the accompanying balance sheet of R & A Bender, Inc., as of
June 30, 1996, and the related statements of income, retained earnings, and cash
flows for the year then ended, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting information that is the representation of
management in the form of financial statements. 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. However, we did become aware of
the departure from generally accepted accounting principles that is described in
the following paragraph.
The accompanying financial statements omit disclosures relative to economic
dependency as such disclosures relate to major vendors and customers.
/s/ Boyer & Ritter
Chambersburg, Pennsylvania
January 27, 1997
<PAGE>
R & A BENDER, INC.
BALANCE SHEET
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Current Assets
Cash and cash equivalents $ 3,627,532
Accounts receivable
Trade 827,236
Other 41,786
Inventories
Fuel 7,631
Heating oil 13,908
Cattle 20,846
Prepaid expenses
Taxes 37,942
Insurance 111,720
Maintenance contracts 19,290
------------------
Total current assets 4,707,891
------------------
Property, Plant and Equipment 16,654,323
Less accumulated depreciation and depletion (12,560,668)
------------------
4,093,655
Other Assets
Cash surrender value of officers' life insurance - net of
policy loans of $50,025 131,026
Performance bonds 163,261
Bid bonds 10,000
Certificates of deposit - landfill collateral bond 30,000
Maintenance contracts 13,877
Permits and licenses 25,150
Routes purchased 96,726
------------------
470,040
------------------
$ 9,271,586
==================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------
<S> <C>
Current Liabilities
Current maturities of long-term debt $ 1,067,461
Accounts payable
Trade 247,988
Other 1,144
Governmental administrative fees and surcharges collected 118,789
Payroll taxes and withholdings 4,743
Employee uniform deposits and rents withheld 8,835
Deferred revenue 126,888
Accrued expenses
Payroll and payroll taxes 60,914
Pension plan contributions 179,111
Taxes 36,000
Other 197,064
----------------
Total current liabilities 2,048,937
----------------
Long-Term Debt - net of current maturities 65,814
----------------
Deferred Closure Fund Liability 3,587,001
----------------
Stockholders' Equity
Common stock - Class A - Voting; par value - $1 per share;
authorized - 25,000 shares; issued
and outstanding - 5,000 shares 5,000
Common stock - Class B - Non-Voting; par value - $1 per share;
authorized - 25,000 shares; issued and
outstanding - 16,000 shares 16,000
Capital in excess of par value 19,000
Retained earnings 3,529,834
----------------
3,569,834
----------------
$ 9,271,586
================
</TABLE>
3
<PAGE>
R & A BENDER, INC.
STATEMENT OF INCOME
Year Ended June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Operating Revenues
Fees and other operating revenues $ 8,657,651
Less customer refunds and discounts (203,440)
----------------
Operating revenues - net 8,454,211
----------------
Operating Expenses
Advertising 20,095
Bad debts 4,627
Bank fees and service charges 6,107
Bonding 14,599
Computer 21,211
Closure fund 392,082
Contributions 6,408
Depreciation 948,026
Depletion 488,220
Dues and subscriptions 13,765
Employee benefit programs 39,608
Freight 1,147
Gas and oil 307,311
Insurance
Health, life, and disability 245,570
Other 389,514
Landfill testing and monitoring 59,020
Leachate treatment 104,953
Miscellaneous 6,234
Office, postage, and printing 93,037
Parts and repairs 742,350
Pension
Administration 27,010
Contributions 322,073
Permits and licenses 34,709
Professional fees 188,562
Recycling disposal 4,096
</TABLE>
(Continued)
4
<PAGE>
R & A BENDER, INC.
STATEMENT OF INCOME (Continued)
Year Ended June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Operating Expenses (Continued)
<S> <C>
Rent and royalties 560,744
Safety and compliance 9,274
Salaries and wages 2,294,855
Seeds and plants 55,744
Small tools and supplies 270,299
Surcharges 146,707
Taxes
Capital stock 71,059
Payroll 157,683
Use 23,850
Other 34,848
Temporary drivers and other personnel 1,381
Tipping fees 55,173
Tires and tubes 223,357
Travel and meals 18,795
Uniforms 20,652
Utilities and telephone 86,944
Waste oil disposal fees 4,632
--------------
Total operating expenses 8,516,331
--------------
Loss from operations (62,120)
Interest Income - Net 119,373
Other Income - Net 45,030
--------------
Net income $ 102,283
==============
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
5
<PAGE>
R & A BENDER, INC.
STATEMENT OF RETAINED EARNINGS
Year Ended June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Retained Earnings:
Beginning $ 3,547,455
Net income 102,283
Distributions to stockholders (119,904)
---------------
Ending $ 3,529,834
===============
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
6
<PAGE>
R & A BENDER, INC.
STATEMENT OF CASH FLOWS
Year Ended June 30, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Cash Flows From Operating Activities
<S> <C>
Net income $ 102,283
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 948,026
Depletion 488,220
Closure fund expense 392,082
Loss on disposition of property, plant and equipment 1,296
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (29,215)
Inventories 21,133
Prepaid expenses 15,370
Performance bonds 247,381
Bid bonds (9,188)
Certificates of deposit - landfill collateral bond 3,061,159
Permits and licenses (18,211)
(Decrease) increase in:
Accounts payable 56,089
Governmental administrative fees and surcharges collected (35,258)
Payroll taxes and withholdings (22,555)
Employee uniform deposits and rents withheld 4,105
Deferred revenue 2,633
Accrued expenses (155,193)
---------------
Net cash provided by operating activities 5,070,157
---------------
</TABLE>
(Continued)
7
<PAGE>
R & A BENDER, INC.
STATEMENTS OF CASH FLOWS (Continued)
Year Ended June 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Cash Flows From Investing Activities
Proceeds from sale of property, plant and equipment 2,631
Purchases of property, plant and equipment (1,719,533)
Increase in cash surrender value of officers' life insurance (4,288)
--------------
Net cash used in investing activities (1,721,190)
---------------
Cash Flows From Financing Activities
Proceeds from issuance of long-term debt 443,621
Repayments of long-term debt (908,773)
Distributions to stockholders (119,904)
---------------
Net cash used in financing activities (585,056)
---------------
Net increase in cash and cash equivalents 2,763,911
Cash and Cash Equivalents:
Beginning 863,621
---------------
Ending $ 3,627,532
===============
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
8
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business: The Company operates in the landfill and waste management
- ------------------
industry, and consequently, its operations are subject to environmental
legislation and regulations and to certain industrial and governmental bidding
requirements.
Use of Estimates: The preparation of financial statements requires management
- ----------------
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Bad Debts: The Company expenses past-due accounts receivable when, in
- ---------
management's opinion, the Company no longer has any possibility of collection;
recoveries of accounts previously written off are offset with bad debts expense
in the year recovered (direct write-off method). Potential uncollectible
accounts receivable at year-end are considered immaterial to total accounts
receivable; therefore, an allowance for such losses has not been established.
Depreciation and Depletion: Property, plant and equipment are stated at cost.
- --------------------------
Depreciation is provided in accordance with straight-line and accelerated
methods. Depletion of landfill sites is determined by applying the cost per ton
of capacity to the capacity utilized during specific periods of sites'
operations. As capacity utilization is generally determined by periodic
engineering studies, it is reasonably possible that this estimate may change
materially in the near term.
Routes Purchased: Management believes that routes purchased are characterized
- ----------------
by indefinite economic lives; therefore, their costs are not charged to
operations through amortization or depreciation.
Closure Fund Expense: Closure fund expense represents a periodic charge to
- --------------------
operations reflecting utilization of a site's landfill capacity. This
utilization is the product of an estimate of the future cost to close a site and
utilization of a site's capacity measured in total tons of capacity consumed
through the most recent accounting period. As capacity utilization is generally
determined by periodic engineering studies, it is reasonably possible that this
estimate may change materially in the near term.
Income Taxes: The Company has elected Federal and state taxation as a
- ------------
Subchapter "S" Corporation; consequently, the accompanying financial statements
do not reflect Federal and state income taxes because responsibility for payment
of said taxes belongs to the Company's shareholders.
Cash Equivalents: For purposes of the statement of cash flows, the Company
- ----------------
considers all highly-liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Advertising Costs: The cost of advertising is expensed in the year incurred.
- -----------------
9
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 2. Cash
All deposits are maintained in two financial institutions and are presented at
carrying amounts in the accompanying balance sheet. Bank balances exceeded
FDIC-insurable limits by $3,080,176 at June 30, 1996.
Note 3. Property, Plant and Equipment
Property, plant and equipment consists of the following components:
<TABLE>
<CAPTION>
Amount
- --------------------------------------------------------------------------------
<S> <C>
Land improvements $ 9,810
Buildings 37,054
Leasehold improvements 174,119
Furniture and fixtures 320,868
Equipment 3,868,978
Vehicles 6,803,873
Breeding stock 34,100
Landfill expansion 5,405,521
-------------
$ 16,654,323
=============
</TABLE>
Note 4. Loans on Officers' Life Insurance Policies
The loans on the cash surrender value of officers' life insurance have been
applied as a reduction in the cash surrender value. Interest accrues annually
at 6.00%; repayment of loan principal is made at the Company's option. See Note
11.
10
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 5. Lines-of-Credit
The Company established an unsecured line-of-credit with Farmers & Merchants
Trust Company in the amount of $400,000. Renewal is scheduled for June 1997.
Interest is computed at Prime plus 1-l/4%. There were no borrowings against
this line at June 30, 1996.
The Company established an unsecured line-of-credit with Orrstown Bank in the
amount of $500,000. Renewal is scheduled for May 1997. Interest is computed at
Prime plus l/2%. There were no borrowings against this line at June 30, 1996.
Note 6. Long-Term Debt
The following is an analysis of long-term debt by lender:
<TABLE>
<CAPTION>
Lender Interest Rate Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Associates Commercial Corporation (A) 9.767% $ 43,115
The CIT Group/Equipment Financing Inc. (A) 9.500% 74,486
The CIT Group/Equipment Financing Inc. (A) 8.150% 214,972
The CIT Group/Equipment Financing Inc. (A) 8.750% 5,897
KDC Financial (A) 3.900% 134,805
Stockholders (B) 8.000% 660,000
---------------
1,133,275
Less current maturities (1,067,461)
---------------
Long-Term Debt - Net of Current Maturities $ 65,814
===============
</TABLE>
11
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Long-Term Debt (Continued)
(A) Equipment secures these loans which require monthly payments of $67,837,
including interest.
(B) These notes were satisfied in December 1996. Related interest expense
incurred and paid approximated $48,400 for the year ended June 30, 1996.
The following schedule presents future minimum principal payments required by
year and in the aggregate at June 30, 1996:
<TABLE>
<CAPTION>
Year Amount
- --------------------------------------------------------------------------------
<S> <C>
1997 $ 1,067,461
1998 65,814
-------------
$ 1,133,275
=============
</TABLE>
Note 7. Leasing Arrangements
Operating
Real Estate: The Company leases land, buildings, and storage and office
- -----------
facilities from Richard G. Bender, Sr., President; his wife, Alice F. Bender;
and R & A Bender Property, Limited, a Pennsylvania limited partnership of which
ninety-eight (98) percent is owned by Mr. and Mrs. Bender. See Note 11. Rent
expense under these year-to-year arrangements was $214,822 during the year ended
June 30, 1996.
Landfill Operations: The Company pays landfill royalties to R & A Bender
- -------------------
Property, Limited under a year-to-year agreement. See Note 11. Royalty expense
was $315,620 for the year ended June 30, 1996.
Equipment: The Company leases certain transportation and landfill equipment
- ---------
under a sixty-month operating lease which requires monthly payments of $4,280
through January 9, 2001. Related rent expense for the year ended June 30, 1996,
was $21,400.
12
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 7. Leasing Arrangements (Continued)
Operating (Continued)
The Company also maintains a sanitary landfill lease with an independent lessor.
Details of the lease follow:
<TABLE>
<CAPTION>
Life of Lease
Acreage Use at Rent Earlier of Renegotiations of Rent
Date Any One Time Per Acre Years Acres Used Per Acre
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/72 5 $ 1,250 35 50 Within first five years
</TABLE>
During the year ended June 30, 1996, no rental expense was incurred or paid with
respect to the foregoing landfill lease.
Capital
The Company leases landfill equipment valued at $430,610, under a capital lease
which requires thirty-six monthly installments of $13,432, including interest,
through November 22, 1997. The equipment is a component of property, plant and
equipment in the accompanying balance sheet, and the capital lease obligation is
a component of current maturities of long-term debt and long-term debt-net of
current maturities. Accumulated amortization on this leased property at June
30, 1996, approximates $162,000.
Note 8. Pension Plans
Money-Purchase: The Company maintains a contributory pension plan that covers
- --------------
all employees who have completed one year of service and have attained 21 years
of age. See Note 11. The Company contributes annually 5.70% of eligible
employees' earnings in excess of the social security integration level and 5.70%
of eligible employees' total compensation. Pension expense under this plan for
the year ended June 30, 1996 was $111,950.
Profit-Sharing: The Company maintains a profit-sharing plan that covers all
- --------------
employees who have completed one year of service and have attained 21 years of
age. See Note 11. Contributions to the plan are based on a formula and are
contingent upon the attainment of certain levels of earnings as defined in the
agreement. Contributions to the plan were $210,123 for the year ended June 30,
1996.
13
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 9. Interest Expense
Total interest cost incurred, paid, and charged to expense was $113,115, during
the year ended June 30, 1996.
Note 10. Bonding Arrangements
Applicable Federal, state, and local laws require maintenance of certain
closure, post-closure, performance, surety, and financial assurance bonds.
Consequently, effective May 17, 1996, the Company and two affiliates, R & A
Bender Property, Limited, and R & A Bender Sanitary Landfill, Inc., entered into
a bonding agreement with Evergreen National Indemnity Company. In accordance
with the bonding agreement, the Company will deposit with Farmers & Merchants
Trust Company, escrow agent under an agreement dated September 1996, a minimum
collateral value based upon an estimated closure and post-closure cost of
$5,200,000. Depository requirements mandate an initial deposit of $1,500,000,
and ten annual installments of $45,000. Interest on the initial and annual
installments will be computed at an annual rate of 6.00%, compounded annually.
If the ratio of closure to post-closure cost changes materially, depository
requirements will be adjusted accordingly.
Note 11. Subsequent Events
Spin-Off of Non-Core Business
- -----------------------------
On November 27, 1996, certain assets and related liabilities of the Company's
non-core business were transferred to R.G. Bender Enterprises, Inc., a newly-
formed Pennsylvania corporation, in exchange for all of the stock of the newly-
formed corporation. Subsequently, all of the stock of this wholly-owned
subsidiary was distributed by the Company to its President in exchange for 1,352
shares of the Company's Class B non-voting common stock held by that officer.
The fair market value of the assets and liabilities distributed was $918,775.
Other Capital Changes
- ---------------------
On November 27, 1996, certain insurance policies owned by the Company on the
lives of certain of its shareholders were distributed to said shareholders in
exchange for 133 shares of the Company's Class B non-voting common stock. The
value of the policies distributed, net of policy loans, was $90,030. See Note
4.
14
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 11. Subsequent Events (Continued)
Termination of Certain Real Estate Leases
- -----------------------------------------
In conjunction with the spin-off of the Company's non-core business, certain
real estate leases between the Company as lessee and the Company's President and
his spouse as lessors were terminated. These leases are more fully described in
Note 7.
In conjunction with the sale of real estate by R & A Bender Property Limited,
landlord, on December 10, 1996, certain real estate leases involving landfill
site and shop facilities were terminated between the Company as lessee and the
landlord. These leases are more fully described in Note 7. Simultaneously, a
new five-year lease was negotiated between the Partnership, as lessor, and R & A
Bender, Inc., as lessee, involving a certain parcel of real estate and
appurtenant garage, furnace room, and parking facilities. This lease requires
annual rental payments of $80,000, and after the initial term, it is renewable
monthly under like conditions.
Termination of Money-Purchase Pension and Profit-Sharing Plans
- --------------------------------------------------------------
Effective June 22, 1996, benefit accruals were frozen under the Company's money-
purchase pension plan, and corporate contributions thereto ceased. The plan
administrator determined that participants' compensation subsequent to June 22,
1996, would be disregarded for benefit accrual calculations; however, hours of
service for determining participants' levels of vesting and entitlement would be
credited through December 31, 1996. Effective January 1, 1997, this plan was to
be merged with the Company's profit-sharing plan; however, by virtue of a
resolution dated December 7, 1996, both plans were terminated on December 31,
1996.
15
<PAGE>
R & A BENDER, INC.
FINANCIAL REPORT
SEPTEMBER 30, 1996
<PAGE>
[LETTERHEAD OF BOYER & RITTER
CERTIFIED PUBLIC ACCOUNTANTS
APPEARS HERE]
INDEPENDENT ACCOUNTANT'S REPORT
Stockholders
R & A Bender, Inc.
Scotland, Pennsylvania
We have compiled the accompanying balance sheet of R & A Bender, Inc., as of
September 30, 1996, and the related statements of income, retained earnings, and
cash flows for the three months and nine months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting information that is the representation of
management in the form of financial statements. 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. However, we did become aware of
the departure from generally accepted accounting principles that is described in
the following paragraph.
The accompanying financial statements omit disclosures relative to economic
dependency as such disclosures relate to major vendors and customers.
/s/ Boyer & Ritter
Chambersburg, Pennsylvania
January 29, 1997
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANT'S REPORT ON
THE FINANCIAL STATEMENTS 1
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance Sheet 2-3
Statements of Income 4-5
Statements of Retained Earnings 6
Statements of Cash Flows 7-8
Notes to Financial Statements 9-15
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
R & A BENDER, INC.
BALANCE SHEET
September 30, 1996
ASSETS
- --------------------------------------------------------------------------------
Current Assets
<S> <C>
Cash and cash equivalents $ 3,242,824
Accounts receivable
Trade 740,006
Other 47,271
Inventories
Fuel 8,948
Heating oil 13,908
Prepaid expenses
Taxes 62,997
Insurance 78,576
Maintenance contracts 18,945
----------------
Total current assets 4,213,475
----------------
Property, Plant and Equipment 17,324,014
Less accumulated depreciation and depletion (12,239,667)
----------------
5,084,347
Other Assets
Cash surrender value of officers' life insurance - net of
policy loans of $50,025 131,026
Performance bonds 138,261
Bid bonds 10,000
Certificates of deposit - landfill collateral bond 17,500
Maintenance contracts 9,385
Permits and licenses 25,150
Routes purchased 96,726
----------------
428,048
----------------
$ 9,725,870
================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
<S> <C>
Current Liabilities
Current maturities of long-term debt $ 993,820
Accounts payable
Trade 163,932
Other 31,872
Governmental administrative fees and surcharges collected 139,383
Payroll taxes and withholdings 3,594
Employee uniform deposits and rents withheld 6,820
Accrued expenses
Payroll and payroll taxes 108,123
Pension plan contributions 247,611
Taxes 54,000
Other 262,051
----------------
Total current liabilities 2,011,206
----------------
Long-Term Debt - net of current maturities 97,395
----------------
Deferred Closure Fund Liability 3,686,427
----------------
Stockholders' Equity
Common stock - Class A - Voting; par value - $1 per share;
authorized - 25,000 shares; issued and outstanding -
5,000 shares 5,000
Common stock - Class B - Non-Voting; par value - $1 per share;
authorized - 25,000 shares; issued and outstanding -
16,000 shares 16,000
Capital in excess of par value 19,000
Retained earnings 3,890,842
----------------
3,930,842
----------------
$ 9,725,870
================
</TABLE>
3
<PAGE>
R & A BENDER, INC.
STATEMENTS OF INCOME
Three Months and Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues
Fees and other operating revenues $ 2,220,229 $ 6,438,088
Less customer refunds and discounts (53,759) (159,969)
--------------------------------------
Operating revenues - net 2,166,470 6,278,119
--------------------------------------
Operating Expenses
Advertising 4,268 10,524
Bank fees and service charges 3,431 8,774
Bonding 23,069 37,668
Computer 5,205 18,575
Closure fund 99,426 282,711
Contributions 510 1,083
Depreciation 177,506 558,133
Depletion 105,914 301,158
Dues and subscriptions 1,260 10,541
Employee benefit programs 2,605 8,311
Freight 157 975
Gas and oil 89,695 251,948
Insurance
Health, life, and disability 57,062 180,567
Other 101,429 288,015
Landfill testing and monitoring 36,778 59,292
Leachate treatment 8,385 102,025
Miscellaneous 1,040 7,135
Office, postage, and printing 23,490 63,701
Parts and repairs 185,751 644,979
Pension
Administration 3,060 19,771
Contributions 68,500 247,611
Permits and licenses 2,240 26,729
Professional fees 56,181 198,869
Recycling disposal 309 3,613
</TABLE>
(Continued)
4
<PAGE>
R & A BENDER, INC.
STATEMENTS OF INCOME (CONTINUED)
Three Months and Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating Expenses (Continued)
Rent and royalties 130,065 403,887
Safety and compliance 2,190 5,161
Salaries and wages 553,830 1,614,691
Seeds and plants 16,018 55,308
Small tools and supplies 46,947 160,755
Surcharges 53,000 126,914
Taxes
Capital stock 18,000 54,000
Payroll 31,672 119,550
Use 4,087 17,758
Other 9,766 27,595
Temporary drivers and other personnel 567 1,428
Tipping fees 14,908 40,098
Tires and tubes 42,748 158,701
Travel and meals 3,126 9,236
Uniforms 5,658 16,653
Utilities and telephone 16,386 63,325
Waste oil disposal fees 1,389 4,166
--------------------------------------
Total operating expenses 2,007,628 6,211,934
--------------------------------------
Operating income 158,842 66,185
Interest Income - Net 23,497 88,484
Other Income - Net 201,436 250,054
--------------------------------------
Net income $ 383,775 $ 404,723
======================================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
5
<PAGE>
R & A BENDER, INC.
STATEMENTS OF RETAINED EARNINGS
Three Months and Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Retained Earnings:
Beginning $ 3,529,834 $ 3,580,222
Net income 383,775 404,723
Distributions to stockholders (22,767) (94,103)
--------------------------------------
Ending $ 3,890,842 $ 3,890,842
======================================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
6
<PAGE>
R & A BENDER, INC.
STATEMENTS OF CASH FLOWS
Three Months and Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 383,775 $ 404,723
Adjustments to reconcile net
income to net cash
provided by operating activities
Depreciation 177,506 558,133
Depletion 105,914 301,158
Closure fund expense 99,426 282,711
Gain on disposition of (225,772) (225,772)
property, plant and equipment
Changes in assets and
liabilities:
(Increase) decrease in:
Accounts receivable 81,745 5,110
Inventories 19,529 (14,259)
Prepaid expenses 12,926 149,121
Performance bonds 25,000 272,431
Bid bonds (10,000)
Certificates of deposit - 12,500 3,073,659
landfill collateral bond
Permits and licenses (6,108)
(Decrease) increase in:
Accounts payable (53,328) (201,248)
Governmental administrative 20,594 17,270
fees and surcharges
Payroll taxes and withholdings (1,149) (4,608)
Employee uniform deposits (2,015) 3,760
and rents withheld
Deferred revenue (126,888) (118,091)
Accrued expenses 198,696 254,265
--------------------------------------
Net cash provided by
operating activities 728,459 4,742,255
--------------------------------------
</TABLE>
(Continued)
7
<PAGE>
R & A BENDER, INC.
STATEMENTS OF CASH FLOWS (Continued)
Three Months and Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Investing Activities
Proceeds from sale of property, plant and equipment 290,000 291,000
Purchases of property, plant and equipment (1,338,340) (2,132,326)
------------------------------------------------
Net cash used in investing activities (1,048,340) (1,841,326)
------------------------------------------------
Cash Flows From Financing Activities
Proceeds from issuance of long-term debt 147,687 292,687
Repayments of long-term debt (189,747) (697,614)
Distributions to stockholders (22,767) (94,103)
------------------------------------------------
Net cash used in financing activities (64,827) (499,030)
------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (384,708) 2,401,899
Cash and Cash Equivalents:
Beginning 3,627,532 840,925
------------------------------------------------
Ending $ 3,242,824 $ 3,242,824
================================================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
8
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business: The Company operates in the landfill and waste management
- ------------------
industry, and consequently, its operations are subject to environmental
legislation and regulations and to certain industrial and governmental bidding
requirements.
Use of Estimates: The preparation of financial statements requires management
- ----------------
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Bad Debts: The Company expenses past-due accounts receivable when, in
- ---------
management's opinion, the Company no longer has any possibility of collection;
recoveries of accounts previously written off are offset with bad debts expense
in the year recovered (direct write-off method). Potential uncollectible
accounts receivable at year-end are considered immaterial to total accounts
receivable; therefore, an allowance for such losses has not been established.
Depreciation and Depletion: Property, plant and equipment are stated at cost.
- --------------------------
Depreciation is provided in accordance with straight-line and accelerated
methods. Depletion of landfill sites is determined by applying the cost per ton
of capacity to the capacity utilized during specific periods of sites'
operations. As capacity utilization is generally determined by periodic
engineering studies, it is reasonably possible that this esimate may change
materially in the near term.
Routes Purchased: Management believes that routes purchased are characterized
- ----------------
by indefinite economic lives; therefore, their costs are not charged to
operations through amortization or depreciation.
Closure Fund Expense: Closure fund expense represents a periodic charge to
- --------------------
operations reflecting utilization of a site's landfill capacity. This
utilization is the product of an estimate of the future cost to close a site and
utilization of a site's capacity measured in total tons of capacity consumed
through the most recent accounting period. As capacity utilization is generally
determined by periodic engineering studies, it is reasonably possible that this
estimate may change materially in the near term.
Income Taxes: The Company has elected Federal and state taxation as a
- ------------
Subchapter "S" Corporation; consequently, the accompanying financial statements
do not reflect Federal and state income taxes because responsibility for payment
of said taxes belongs to the Company's shareholders.
Cash Equivalents: For purposes of the statement of cash flows, the Company
- ----------------
considers all highly-liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Advertising Costs: The cost of advertising is expensed in the year incurred.
- -----------------
9
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 2. Cash
All deposits are maintained in two financial institutions and are presented at
carrying amounts in the accompanying balance sheet. Bank balances exceeded FDIC-
insurable limits by $3,047,175 at September 30, 1996.
Note 3. Property, Plant and Equipment
Property, plant and equipment consists of the following components:
<TABLE>
<CAPTION>
Amount
- --------------------------------------------------------------------------------
<S> <C>
Land improvements $ 9,810
Buildings 37,054
Leasehold improvements 174,119
Furniture and fixtures 287,744
Equipment 3,938,482
Vehicles 6,278,352
Breeding stock 34,100
Landfill expansion 6,564,353
----------------
$ 17,324,014
================
</TABLE>
Note 4. Loans on Officers' Life Insurance Policies
The loans on the cash surrender value of officers' life insurance have been
applied as a reduction in the cash surrender value. Interest accrues annually at
6.00%; repayment of loan principal is made at the Company's option. See Note 11.
10
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 5. Lines-of-Credit
The Company established an unsecured line-of-credit with Farmers & Merchants
Trust Company in the amount of $400,000. Renewal is scheduled for June 1997.
Interest is computed at Prime plus 1-1/4%. There were no borrowings against this
line at September 30, 1996.
The Company established an unsecured line-of-credit with Orrstown Bank in the
amount of $500,000. Renewal is scheduled for May 1997. Interest is computed at
Prime plus l/2%. There were no borrowings against this line at September 30,
1996.
Note 6. Long-Term Debt
The following is an analysis of long-term debt by lender:
<TABLE>
<CAPTION>
Lender Interest Rate Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Associates Commercial Corporation (A) 9.767% $ 21,820
The CIT Group/Equipment Financing Inc. (A) 9.500% 54,808
The CIT Group/Equipment Financing Inc. (A) 8.150% 178,811
The CIT Group/Equipment Financing Inc. (A) 8.500% 142,020
KDC Financial (A) 3.900% 33,756
Stockholders (B) 8.000% 660,000
--------------
1,091,215
Less current maturities (993,820)
--------------
Long-Term Debt - Net of Current Maturities $ 97,395
==============
</TABLE>
11
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Long-Term Debt (Continued)
(A) Equipment secures these loans which require monthly payments of $68,610,
including interest.
(B) These notes were satisfied in December 1996. Related interest expense
incurred for the three months and nine months ended September 30, 1996 was
$13,200 and $39,600, respectively.
The following schedule presents future minimum principal payments required by
year and in the aggregate at September 30, 1996:
<TABLE>
<CAPTION>
Year Amount
- --------------------------------------------------------------------------------
<S> <C>
1997 $ 993,820
1998 97,395
---------------
$ 1,091,215
===============
</TABLE>
Note 7. Leasing Arrangements
Operating
Real Estate: The Company leases land, buildings, and storage and office
- -----------
facilities from Richard G. Bender, Sr., President; his wife, Alice F. Bender;
and R & A Bender Property, Limited, a Pennsylvania limited partnership of which
ninety-eight (98) percent is owned by Mr. and Mrs. Bender. See Note 11. Rent
expense under these year-to-year arrangements was $53,321 and $161,116 for the
three months and nine months ended September 30, 1996, respectively.
Landfill Operations: The Company pays landfill royalties to R & A Bender
- -------------------
Property, Limited under a year-to-year agreement. See Note 11. Royalty expense
was $76,744 and $218,217 for the three months and nine months ended September
30, 1996, respectively.
12
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 7. Leasing Arrangements (Continued)
Operating (Continued)
Equipment: The Company leases certain transportation and landfill equipment
- ---------
under various operating leases which require a cumulative monthly payment of
$33,980. Related rent expense for the three months and nine months ended
September 30, 1996, was $103,061 and $124,461, respectively. The following is a
tabular presentation of the Company's future minimum annual rental payments
required under these leases which have noncancelable lease terms in excess of
one year at September 30, 1996.
<TABLE>
<CAPTION>
Year Amount
- --------------------------------------------------------------------------------
<S> <C>
1997 $ 407,760
1998 407,760
1999 317,539
2000 51,360
2001 17,120
---------------
$ 1,201,539
===============
</TABLE>
The Company also maintains a sanitary landfill lease with an independent lessor.
Details of the lease follow:
<TABLE>
<CAPTION>
Life of Lease
Acreage Use at Rent Earlier of Renegotiations of Rent
Date Any One Time Per Acre Years Acres Used Per Acre
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/72 5 $ 1,250 35 50 Within first five years
</TABLE>
During the three months and nine months ended September 30, 1996, no rental
expense was incurred or paid with respect to the foregoing landfill lease.
Capital
The Company leases landfill equipment valued at $430,610, under a capital lease
which requires thirty-six monthly installments of $13,432, including interest,
through November 22, 1997. The equipment is a component of property, plant and
equipment in the accompanying balance sheet, and the capital lease obligation is
a component of current maturities of long-term debt and long-term debt-net of
current maturities. Accumulated amortization on this leased property at
September 30, 1996, approximates $181,000.
13
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 8. Pension Plans
Money-Purchase: The Company maintains a contributory pension plan that covers
- --------------
all employees who have completed one year of service and have attained 21 years
of age. See Note 11. The Company contributes annually 5.70% of eligible
employees' earnings in excess of the social security integration level and 5.70%
of eligible employees' total compensation. Pension expense incurred under this
plan for the three months and nine months ended September 30, 1996, was $-0- and
$45,000, respectively.
Profit-Sharing: The Company has a profit-sharing plan that covers all employees
- --------------
who have completed one year of service and have attained 21 years of age. See
Note 11. Contributions to the plan are based on a formula and are contingent
upon the attainment of certain levels of earnings as defined in the agreement.
Contributions to the plan were $68,500 and $202,611 for the three months and
nine months ended September 30, 1996.
Note 9. Interest Expense
Total interest cost incurred, paid, and charged to expense was $20,311 and
$68,706 for the three months and nine months ended September 30, 1996.
Note 10. Bonding Arrangements
Applicable Federal, state, and local laws require maintenance of certain
closure, post-closure, performance, surety, and financial assurance bonds.
Consequently, effective May 17, 1996, the Company and two affiliates, R & A
Bender Property, Limited, and R & A Bender Sanitary Landfill, Inc., entered into
a bonding agreement with Evergreen National Indemnity Company. In accordance
with the bonding agreement, the Company will deposit with Farmers & Merchants
Trust Company, escrow agent under an agreement dated September 1996, a minimum
collateral value based upon an estimated closure and post-closure cost of
$5,200,000. Depository requirements mandate an initial deposit of $1,500,000,
and ten annual installments of $45,000. Interest on the initial and annual
installments will be computed at an annual rate of 6.00%, compounded annually.
If the ratio of closure to post-closure cost changes materially, depository
requirements will be adjusted accordingly.
14
<PAGE>
R & A BENDER, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 11. Subsequent Events
Spin-Off of Non-Core Business
- -----------------------------
On November 27, 1996, certain assets and related liabilities of the Company's
non-core business were transferred to R.G. Bender Enterprises, Inc., a newly-
formed Pennsylvania corporation, in exchange for all of the stock of the newly-
formed corporation. Subsequently, all of the stock of this wholly-owned
subsidiary was distributed by the Company to its President in exchange for 1,352
shares of the Company's Class B non-voting common stock held by that officer.
The fair market value of the assets and liabilities distributed was $918,775.
Other Capital Changes
- ---------------------
On November 27, 1996, certain insurance policies owned by the Company on the
lives of certain of its shareholders were distributed to said shareholders in
exchange for 133 shares of the Company's Class B non-voting common stock. The
value of the policies distributed, net of policy loans, was $90,030. See Note 4.
Termination of Certain Real Estate Leases
- -----------------------------------------
In conjunction with the spin-off of the Company's non-core business, certain
real estate leases between the Company as lessee and the Company's President and
his spouse as lessors were terminated. These leases are more fully described in
Note 7.
In conjunction with the sale of real estate by R & A Bender Property, Limited,
landlord, on December 10, 1996, certain real estate leases involving landfill
site and shop facilities were terminated between the Company as lessee and the
landlord. These leases are more fully described in Note 7. Simultaneously, a new
five-year lease was negotiated between the Partnership, as lessor, and R & A
Bender, Inc., as lessee, involving a certain parcel of real estate and
appurtenant garage, furnace room, and parking facilities. This lease requires
annual rental payments of $80,000, and after the initial term, it is renewable
monthly under like conditions.
Termination of Money-Purchase Pension and Profit-Sharing Plans
- --------------------------------------------------------------
Effective June 22, 1996, benefit accruals were frozen under the Company's money-
purchase pension plan, and corporate contributions thereto ceased. The plan
administrator determined that participants' compensation subsequent to June 22,
1996, would be disregarded for benefit accrual calculations; however, hours of
service for determining participants' levels of vesting and entitlement would be
credited through December 31, 1996. Effective January 1, 1997, this plan was to
be merged with the Company's profit-sharing plan; however, by virtue of a
resolution dated December 7, 1996, both plans were terminated on December 31,
1996.
15
<PAGE>
R & A BENDER PROPERTY, LTD.
FINANCIAL REPORT
DECEMBER 31, 1995
<PAGE>
CONTENTS
------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT ON
THE FINANCIAL STATEMENTS 1
------------------------------------------------------
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Income 3
Statements of Changes in Partners' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 7
------------------------------------------------------
<PAGE>
[LETTERHEAD OF BOYER & RITTER
CERTIFIED PUBLIC ACCOUNTANTS
APPEARS HERE]
INDEPENDENT AUDITOR'S REPORT
Partners
R & A Bender Property, Ltd.
Chambersburg, Pennsylvania
We have audited the accompanying balance sheets of R & A Bender Property, Ltd.,
as of December 31, 1995 and 1994, and the related statements of income, changes
in partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of R & A Bender Property, Ltd., as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ Boyer & Ritter
Chambersburg, Pennsylvania
December 27, 1996
<PAGE>
R & A BENDER PROPERTY, LTD.
BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 134,112 $ 211,434
Accounts receivable - R & A Bender, Inc.
Royalties -- 1,334
--------------------------
Total current assets 134,112 212,768
--------------------------
Property and Equipment 966,287 897,757
Less accumulated depreciation (133,705) (112,501)
--------------------------
832,582 785,256
--------------------------
$ 966,694 $ 998,024
==========================
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
Accounts payable - R & A Bender, Inc. $ -- $ 33,425
Security deposits 350 350
--------------------------
Total liabilities - all current 350 33,775
--------------------------
Partners' Equity 966,344 964,249
--------------------------
$ 966,694 $ 998,024
==========================
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
R & A BENDER PROPERTY, LTD.
STATEMENTS OF INCOME
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues
Rents
R & A Bender, Inc. $ 167,750 $ 167,750
Other 6,900 7,150
Royalties - R & A Bender, Inc. 368,568 354,279
-------------------------
543,218 529,179
Operating Expenses
Depreciation 21,204 20,369
Real estate taxes 20,585 19,969
Repairs and maintenance 1,207 1,249
Supplies 19 --
-------------------------
43,015 41,587
-------------------------
Operating income 500,203 487,592
Other Income - Net 1,892 --
-------------------------
Net income $ 502,095 $ 487,592
=========================
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
R & A BENDER PROPERTY, LTD.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Partners' Equity
Beginning $ 964,249 $ 990,216
Net income 502,095 487,592
Partners' withdrawals (500,000) (513,559)
----------------------------
Ending $ 966,344 $ 964,249
============================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
R & A BENDER PROPERTY, LTD.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 502,095 $ 487,592
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 21,204 20,369
Changes in assets and liabilities:
Decrease in accounts receivable 1,334 222
(Decrease) increase in accounts payable (33,425) 3,872
-----------------------------
Net cash provided by operating activities 491,208 512,055
-----------------------------
Cash Flows From Investing Activities
Purchases of property and equipment (68,530) (56,808)
-----------------------------
Cash Flows From Financing Activities
Partners' withdrawals (500,000) (513,559)
-----------------------------
Net decrease in cash (77,322) (58,312)
Cash:
Beginning 211,434 269,746
-----------------------------
Ending $ 134,112 $ 211,434
=============================
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
R & A BENDER PROPERTY, LTD.
NOTES TO FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business: R & A Bender Property, Ltd. was formed and duly registered
- ------------------
as a limited partnership on January 1, 1992, under the laws of the Commonwealth
of Pennsylvania.
The Partnership leases land, landfill sites, and related buildings to R & A
Bender, Inc., an affiliated Pennsylvania corporation, two shareholders of which
own ninety-eight percent of the limited partnership. Rents and royalties earned
under these year-to-year arrangements represent nearly one hundred percent of
the limited partnership's operating revenues. See Note 4.
Use of Estimates: The preparation of financial statements requires management
- ----------------
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Bad Debts: The Partnership expenses past-due accounts receivable when, in
- ---------
management's opinion, the Partnership no longer has any possibility of
collection; recoveries of accounts previously written off are offset with bad
debts expense in the year recovered (direct write-off method). Potential
uncollectible accounts receivable at year-end are considered immaterial to total
accounts receivable; therefore, an allowance for such losses has not been
established.
Depreciation: Property and equipment are stated at cost. Depreciation is
- ------------
provided in accordance with the straight-line and accelerated methods.
Income Taxes: The entity is a limited partnership; consequently, the
- ------------
accompanying financial statements do not reflect Federal and state income taxes
because responsibility for payment of said taxes belongs to the partners.
Cash Equivalents: For purposes of the statements of cash flows, the Partnership
- ----------------
considers all highly-liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Note 2. Cash
All deposits are maintained at one financial institution and are presented at
carrying amounts in the accompanying balance sheets. Bank balances exceeded
FDIC-insurable limits by $8,617 and $112,742, at December 31, 1995 and 1994,
respectively.
6
<PAGE>
R & A BENDER PROPERTY, LTD.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3. Property and Equipment
Property and equipment consists of the following components:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 356,917 $ 305,447
Buildings 607,974 590,914
Equipment 1,396 1,396
-------------------------
$ 966,287 $ 897,757
=========================
</TABLE>
Note 4. Subsequent Events
On December 10, 1996, the Partnership sold substantially all of its real estate
for $4,000,000. In conjunction with this sale, real estate leases involving
landfill site and related facilities were terminated with R & A Bender, Inc. See
Note 1.
Simultaneously, a new five-year lease was negotiated between the Partnership, as
lessor, and R & A Bender, Inc., as lessee, involving a certain parcel of real
estate and appurtenant garage, furnace room, and parking facilities. This lease
requires annual rental payments of $80,000, and after the initial term, it is
renewable monthly under like conditions.
7
<PAGE>
R & A BENDER PROPERTY, LTD.
FINANCIAL REPORT
JUNE 30, 1996
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
INDEPENDENT ACOUNTANT'S REPORT ON
THE FINANCIAL STATEMENTS 1
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Income 3
Statement of Changes in Partners' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-7
-------------------------------------------------------------------------------
<PAGE>
[LETTERHEAD OF BOYER & RITTER
CERTIFIED PUBLIC ACCOUNTANTS
APPEARS HERE]
INDEPENDENT ACCOUNTANT'S REPORT
Partners
R & A Bender Property, Ltd.
Chambersburg, Pennsylvania
We have compiled the accompanying balance sheet of R & A Bender Property, Ltd.,
as of June 30, 1996, and the related statements of income, changes in partners'
equity, and cash flows for the year then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting information that is the representation of
management in the form of financial statements. 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.
/s/ Boyer & Ritter
Chambersburg, Pennsylvania
January 24, 1997
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
BALANCE SHEET
June 30, 1996
- --------------------------------------------------------------------------------
ASSETS
<S> <C>
Current Assets
Cash $ 47,295
Accounts receivable - R & A Bender, Inc.
Rents 30,008
Royalties 141,472
------------------
Total current assets 218,775
------------------
Property and Equipment 966,287
Less accumulated depreciation (144,405)
------------------
821,882
------------------
$ 1,040,657
==================
LIABILITIES AND PARTNERS' EQUITY
Liabilities - all current
Security deposits $ 350
Partners' Equity 1,040,307
------------------
$ 1,040,657
==================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
2
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
STATEMENT OF INCOME
Year Ended June 30, 1996
- --------------------------------------------------------------------------------
<S> <C>
Operating Revenues
Rents
R & A Bender, Inc. $ 167,750
Other 6,900
Royalties - R & A Bender, Inc. 315,620
------------
490,270
Operating Expenses
Depreciation 21,302
Real estate taxes 20,652
------------
41,954
Operating income 448,316
------------
Other Income - Net 3,032
Net income $ 451,348
============
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
3
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN PARTNERS' EQUITY
Year Ended June 30, 1996
- --------------------------------------------------------------------------------
Partners' Equity
<S> <C>
Beginning $ 863,159
Net income 451,348
Partners' withdrawals (274,200)
-----------
Ending $ 1,040,307
===========
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
4
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Year Ended June 30, 1996
- --------------------------------------------------------------------------------
Cash Flows From Operating Activities
<S> <C>
Net income $ 451,348
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 21,302
Change in assets and liabilities:
Increase in accounts receivable (133,329)
Decrease in deferred revenue (450)
------------------
Net cash provided by operating 338,871
activities ------------------
Cash Flows From Investing Activities
Purchase of property and equipment (19,075)
------------------
Cash Flows From Financing Activities
Partners' withdrawals (274,200)
------------------
Net increase in cash 45,596
Cash:
Beginning 1,699
------------------
Ending $ 47,295
==================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
5
<PAGE>
R & A BENDER PROPERTY, LTD.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business: R & A Bender Property, Ltd. was formed and duly
- ------------------
registered as a limited partnership on January 1, 1992, under the laws of the
Commonwealth of Pennsylvania.
The Partnership leases land, landfill sites, and related buildings to R & A
Bender, Inc., an affiliated Pennsylvania corporation, two shareholders of which
own ninety-eight percent of the limited partnership. Rents and royalties earned
under these year-to-year arrangements represent nearly one hundred percent of
the limited partnership's operating revenues. See Note 5.
Use of Estimates: The preparation of financial statements requires management
- ----------------
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Bad Debts: The Partnership expenses past-due accounts receivable when, in
- ---------
management's opinion, the Partnership no longer has any possibility of
collection; recoveries of accounts previously written off are offset with bad
debts expense in the year recovered (direct write-off method). Potential
uncollectible accounts receivable at year-end are considered immaterial to total
accounts receivable; therefore, an allowance for such losses has not been
established.
Depreciation: Property and equipment are stated at cost. Depreciation is
- ------------
provided in accordance with the straight-line and accelerated methods.
Income Taxes: The entity is a limited partnership; consequently, the
- ------------
accompanying financial statements do not reflect Federal and state income taxes
because responsibility for payment of said taxes belongs to the partners.
Cash Equivalents: For purposes of the statement of cash flows, the Partnership
- ----------------
considers all highly-liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Note 2. Cash
All deposits are maintained at one financial institution and are presented at
carrying amounts in the accompanying balance sheet. Bank balances were entirely
FDIC-insured at June 30, 1996.
6
<PAGE>
R & A BENDER PROPERTY, LTD.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3. Property and Equipment
Property and equipment consists of the following components:
<TABLE>
<CAPTION>
Amount
- --------------------------------------------------------------------------------
<S> <C>
Land $ 356,917
Buildings 607,974
Equipment 1,396
----------
$ 966,287
==========
</TABLE>
Note 4. Bonding Arrangements
Applicable Federal, state, and local laws require maintenance of certain
closure, post-closure, performance, surety, and financial assurance bonds.
Consequently, effective May 17, 1996, the Partnership and two affiliates, R & A
Bender, Inc., and R & A Bender Sanitary Landfill, Inc., entered into a bonding
agreement with Evergreen National Indemnity Company. In accordance with the
bonding agreement, R & A Bender, Inc. will deposit with Farmers & Merchants
Trust Company, escrow agent under an agreement dated September 1996, a minimum
collateral value based upon an estimated closure and post-closure cost of
$5,200,000. Depository requirements mandate an initial deposit of $1,500,000,
and ten annual installments of $45,000. Interest on the initial and annual
installments will be computed at an annual rate of 6.00%, compounded annually.
If the ratio of closure to post-closure cost changes materially, depository
requirements will be adjusted accordingly.
Note 5. Subsequent Events
On December 10, 1996, the Partnership sold substantially all of its real estate
for $4,000,000. In conjunction with this sale, real estate leases involving
landfill site and related facilities were terminated with R & A Bender, Inc.
See Note 1.
Simultaneously, a new five-year lease was negotiated between the Partnership, as
lessor, and R & A Bender, Inc., as lessee, involving a certain parcel of real
estate and appurtenant garage, furnace room, and parking facilities. This lease
requires annual rental payments of $80,000, and after the initial term, it is
renewable monthly under like conditions.
7
<PAGE>
R & A BENDER PROPERTY, LTD.
FINANCIAL REPORT
SEPTEMBER 30, 1996
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
INDEPENDENT ACOUNTANT'S REPORT ON
THE FINANCIAL STATEMENTS 1
- ----------------------------------------------------------------
<S> <C>
FINANCIAL STATEMENTS
Balance Sheet 2
Statements of Income 3
Statements of Changes in Partners' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 7
- ----------------------------------------------------------------
</TABLE>
<PAGE>
[LETTERHEAD OF BOYER & RITTER
CERTIFIED PUBLIC ACCOUNTANTS]
INDEPENDENT ACCOUNTANT'S REPORT
Partners
R & A Bender Property, Ltd.
Chambersburg, Pennsylvania
We have compiled the accompanying balance sheet of R & A Bender Property, Ltd.,
as of September 30, 1996, and the related statements of income, changes in
partners' equity, and cash flows for the three months and nine months then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting information that is the representation of
management in the form of financial statements. 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.
/S/ BOYER & RITTER
Chambersburg, Pennsylvania
January 24, 1997
1
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
BALANCE SHEET
September 30, 1996
- -------------------------------------------------------------------------
ASSETS
Current Assets
<S> <C>
Cash $ 10,472
Accounts receivable - R & A Bender, Inc.
Rents 30,333
Royalties 194,814
Prepaid real estate taxes 13,247
--------------
Total current assets 248,866
--------------
Property and Equipment 966,287
Less accumulated depreciation (149,754)
--------------
816,533
--------------
$ 1,065,399
==============
LIABILITIES AND PARTNERS' EQUITY
Liabilities - all current
Security deposits $ 350
Partners' Equity 1,065,049
--------------
$ 1,065,399
==============
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
2
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Three Months and Nine Months Ended September 30, 1996
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues
Rents
R & A Bender, Inc. $ 41,938 $ 125,812
Other 1,725 8,710
Royalties - R & A Bender, Inc. 76,744 218,217
-------------------------------
120,407 352,739
Operating Expenses
Depreciation 5,349 16,049
Real estate taxes 4,416 13,248
Repairs and maintenance -- 137
Supplies 900 900
-------------------------------
10,665 30,334
-------------------------------
Operating income 109,742 322,405
Other Income - Net 500
-------------------------------
Net income $ 109,742 $ 322,905
===============================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
3
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
Three Months and Nine Months Ended September 30, 1996
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Partners' Equity
Beginning $ 1,040,307 $ 966,344
Net income 109,742 322,905
Partners' withdrawals (85,000) (224,200)
-----------------------------------
Ending $ 1,065,049 $ 1,065,049
===================================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
4
<PAGE>
R & A BENDER PROPERTY, LTD.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Three Months and Nine Months Ended September 30, 1996
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 109,742 $ 322,905
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,349 16,049
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (53,667) (225,147)
Prepaid real estate taxes (13,247) (13,247)
-----------------------------------
Net cash provided by operating activities 48,177 100,560
-----------------------------------
Cash Flows From Financing Activities
Partners' withdrawals (85,000) (224,200)
-----------------------------------
Net decrease in cash (36,823) (123,640)
Cash:
Beginning 47,295 134,112
-----------------------------------
Ending $ 10,472 $ 10,472
===================================
</TABLE>
See Notes to Financial Statements
and Accountant's Report.
5
<PAGE>
R & A BENDER PROPERTY, LTD.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business: R & A Bender Property, Ltd. was formed and duly
- ------------------
registered as a limited partnership on January 1, 1992, under the laws of the
Commonwealth of Pennsylvania.
The Partnership leases land, landfill sites, and related buildings to R & A
Bender, Inc., an affiliated Pennsylvania corporation, two shareholders of which
own ninety-eight percent of the limited partnership. Rents and royalties earned
under these year-to-year arrangements represent nearly one hundred percent of
the limited partnership's operating revenues. See Note 5.
Use of Estimates: The preparation of financial statements requires management
- ----------------
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Bad Debts: The Partnership expenses past-due accounts receivable when, in
- ---------
management's opinion, the Partnership no longer has any possibility of
collection; recoveries of accounts previously written off are offset with bad
debts expense in the year recovered (direct write-off method). Potential
uncollectible accounts receivable at year-end are considered immaterial to total
accounts receivable; therefore, an allowance for such losses has not been
established.
Depreciation: Property and equipment are stated at cost. Depreciation is
- ------------
provided in accordance with the straight-line and accelerated methods.
Income Taxes: The entity is a limited partnership; consequently, the
- ------------
accompanying financial statements do not reflect Federal and state income taxes
because responsibility for payment of said taxes belongs to the partners.
Cash Equivalents: For purposes of the statements of cash flows, the Partnership
- ----------------
considers all highly-liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Note 2. Cash
All deposits are maintained at one financial institution and are presented at
carrying amounts in the accompanying balance sheet. Bank balances were entirely
FDIC-insured at September 30, 1996.
6
<PAGE>
R & A BENDER PROPERTY, LTD.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3. Property and Equipment
Property and equipment consists of the following components:
<TABLE>
<CAPTION>
Amount
- --------------------------------------------------------------------------------
<S> <C>
Land $ 356,917
Buildings 607,974
Equipment 1,396
------------
$ 966,287
============
</TABLE>
Note 4. Bonding Arrangements
Applicable Federal, state, and local laws require maintenance of certain
closure, post-closure, performance, surety, and financial assurance bonds.
Consequently, effective May 17, 1996, the Partnership and two affiliates, R & A
Bender, Inc., and R & A Bender Sanitary Landfill, Inc., entered into a bonding
agreement with Evergreen National Indemnity Company. In accordance with the
bonding agreement, R & A Bender, Inc. will deposit with Farmers & Merchants
Trust Company, escrow agent under an agreement dated September 1996, a minimum
collateral value based upon an estimated closure and post-closure cost of
$5,200,000. Depository requirements mandate an initial deposit of $1,500,000,
and ten annual installments of $45,000. Interest on the initial and annual
installments will be computed at an annual rate of 6.00%, compounded annually.
If the ratio of closure to post-closure cost changes materially, depository
requirements will be adjusted accordingly.
Note 5. Subsequent Events
On December 10, 1996, the Partnership sold substantially all of its real estate
for $4,000,000. In conjunction with this sale, real estate leases involving
landfill site and related facilities were terminated with R & A Bender, Inc.
See Note 1.
Simultaneously, a new five-year lease was negotiated between the Partnership, as
lessor, and R & A Bender, Inc., as lessee, involving a certain parcel of real
estate and appurtenant garage, furnace room, and parking facilities. This lease
requires annual rental payments of $80,000, and after the initial term, it is
renewable monthly under like conditions.
7
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED SUMMARY OF OPERATIONS FOR THE YEAR ENDED JUNE
30, 1996 AND THREE MONTHS ENDED SEPTEMBER 30, 1996.
The following unaudited pro forma consolidated Statements of Operations
for the year ended June 30, 1996 and the three months ended September 30, 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,
and (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. 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 above
transactions are presented as if they had occurred on July 1, 1995. The Super
Kwik and Maintenance acquisition is accounted for as a "pooling of interests,"
and as a result, no material pro forma adjustments were deemed necessary to
reflect the results of operations on a consolidated basis for this acquisition.
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 R & A Bender, Inc. and R & A Bender Property, Ltd. appearing
elsewhere in this filing.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1996.
<TABLE>
<CAPTION>
Allied Super Kwik, Inc.
Eastern Environmental and Waste R & A Bender, Inc.
Environmental Services, Inc. Maintenance and R & A Pro Forma
Services, Inc. and Affiliates Services, Inc. Bender Property, Ltd. Adjustments
-------------- -------------- ------------- -------------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues 7,632,503 $ 11,097,634 $ 20,521,676 $ 8,461,111 $ ( 183,919 ) (7)
( 734,001 ) (2)
( 390,709 ) (7)
Cost of revenues 6,857,418 8,255,721 15,393,721 5,812,906 (1,124,710 )
------------- --------- ----------- ----------- ------------
Gross Profit 775,085 2,841,913 5,127,955 2,648,205 940,791
( 137,032 ) (1)
172,515 (2)
( 785,723 ) (3)
( 955,898 ) (5)
Selling, general and ( 9,807 ) (7)
administrative expenses 3,853,145 3,040,918 4,992,880 2,262,009 ( 1,715,945 )
------------- --------- ------------ --------- -------------
Operating (loss) income ( 3,078,060 ) ( 199,005 ) 135,075 386,196 2,656,736
Interest expense ( 153,428 ) ( 109,386 ) ( 439,074 ) ( 113,115 ) ( 1,168,191 ) (6)
Other (expense) income ( 268,555 ) ( 2,621,380 ) 9,599 280,550 2,621,380 (4)
------------- ----------- -------------- --------- ------------
(Loss) Income
before income taxes
(benefit) ( 3,500,043 ) ( 2,929,771 ) ( 294,400 ) 553,631 4,109,925
------------- ----------- -------------- --------- ------------
Income taxes (benefit) -- -- ( 12,087 ) -- --
Net Income (loss) $( 3,500,043 ) $( 2,929,771 ) $( 282,313 ) $ 553,631 $ 4,109,925
============== ============ ============= =========== ===========
Weighted average number
of shares outstanding (8)
Loss per share
<CAPTION>
Pro Forma
Consolidated
------------
<S> <C>
Revenues $ 47,529,005
Cost of revenues 35,195,056
-------------
Gross Profit 12,333,949
Selling, general and
administrative expenses 12,433,007
--------------
Operating (loss) income ( 99,058 )
Interest expense ( 1,983,194 )
Other (expense) income 21,594
(Loss) Income
before income taxes
(benefit) ( 2,060,658 )
--------------
Income taxes (benefit) ( 12,087 )
Net Income (loss) $( 2,048,571 )
==============
Weighted average number
of shares outstanding 8,103,463
=========
Loss per share $(.25)
=====
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE YEAR ENDED JUNE 30, 1996
1.) To adjust depreciation and amortization expenses for the change in the
basis of property and equipment, net of historical depreciation and
amortization of Allied Environmental Services, Inc. and Affiliates
("Allied") which would have occurred had the purchase of the assets of
Allied been completed July 1, 1995.
2.) To adjust depreciation, 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 costs 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, 1995.
3.) To eliminate substantially all intercompany administrative expenses and
other intercompany charges from its former parent that, in the opinion
of management, would not have been necessary to operate Allied as a
wholly owned subsidiary of Eastern Environmental Services, Inc.
4.) To eliminate the loss on the write-off of certain intangible assets of
Allied which have been reflected in Eastern Environmental Services'
purchase accounting.
5.) To reflect the decrease in selling, general and administrative expenses
of $955,898 for the reduction made to the former owners' salaries and
for the termination of Bender's pension plans of $606,815 and $349,083,
respectively.
6.) To record additional interest expense of $1,168,191 from 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 Bender of $113,115.
7.) To reflect the elimination of revenues and operating expenses relating
to certain farming operations of Bender not acquired by EESI.
8.) For the purposes of determining pro forma loss per share, the issuance
of 116,667 and 106,667 shares of common stock as consideration for the
purchase of assets of Allied and the stock of R & A Bender, Inc.,
respectively, were considered to have been outstanding from July 1,
1995.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Eastern R & A Bender, Inc.
Environmental and R & A Pro Forma Pro Forma
Services, Inc. Bender Property, Ltd Adjustments Consolidated
-------------- -------------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues $ 10,583,977 $ 2,168,195 $ ( 36,079 ) (4) $ 12,716,093
( 103,457 ) (1)
( 99,331 ) (4)
----------
Cost of revenues 7,993,006 1,358,824 ( 202,788 ) 9,149,042
43,129 (1)
( 179,024 ) (2)
( 3,085 ) (4)
---------
Selling, general and administrative expenses 1,952,001 540,787 ( 138,980 ) 2,353,808
----------- --------- ----------- ---------
Operating income 638,970 268,584 305,689 1,213,243
Interest expense ( 147,859 ) ( 20,311 ) ( 300,015 ) (3) ( 468,185 )
Other income 88,269 245,244 0 333,513
----------- --------- ----------- ---------
Earnings before income taxes 579,380 493,517 5,674 1,078,571
Income tax expense 13,000 0 0 13,000
----------- --------- ----------- ---------
Net income $ 566,380 $ 493,517 $ 5,674 $ 1,065,571
=========== ========== =========== ===========
Net income per share $.10
===========
Weighted average number of shares
outstanding (5) 10,955,698
==========
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 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 costs 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 $179,024 for the reduction made to the former owners' salaries and
for the termination of Bender's pension plans of $107,464 and $71,560,
respectively.
3.) To record additional interest expense of $300,015 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 $20,311.
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 income 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>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND SEPTEMBER 30, 1996
The following unaudited pro forma consolidated balance sheets as of June
30, 1996 and September 30, 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, and (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. 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 R & A Bender, Inc. and R & A Bender Property, Ltd. appearing
elsewhere in this filing.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
Allied Super Kwik, Inc.
Eastern Environmental and Waste R & A Bender, Inc.
Environmental Services, Inc. Maintenance and R & A
Services, Inc. and Affiliates Services, Inc. Bender Property, Ltd
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash
equivalents $ 617,398 $ ( 2,663 ) $ 23,185 $ 3,674,827
Accounts receivable,
net of allowance 1,272,138 2,058,642 1,546,212 827,236
Deferred income taxes 372,445 -- -- --
Tax refund receivable 74,467 -- -- --
Prepaid expenses and
other current assets 634,548 16,552 555,140 253,123
------------ ------------ ------------ ------------
Total current assets 2,970,996 2,072,531 2,124,537 4,755,186
Net property and equipment 10,918,566 5,484 5,384,395 4,915,537
Assets held for resale 859,262 -- -- --
Intangible assets 311,014 -- 723,767 121,876
Other assets 505,173 127,116 432,902 348,164
------------ ------------ ------------ ------------
Total assets $ 15,565,011 $ 2,205,131 $ 8,665,601 $ 10,140,763
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
Pro Forma Pro Forma
Adjustments Combined
--------------------------------------
<S> <C> <C>
Assets
Current Assets:
$ 9,275,752 (1)
2,663 (3)
(17,538,550) (4)
Cash and cash 15,818,595 (5)
--------------
equivalents 7,558,460 $ 11,871,207
(783,610) (3)
Accounts receivable, 211,782 (4)
--------------
net of allowance (571,828) 5,132,400
Deferred income taxes 372,445
Tax refund receivable 74,467
(16,552) (3)
Prepaid expenses and 282,424 (4)
--------------
other current assets 265,872 1,725,235
-------------- --------------
Total current assets 7,252,504 19,175,754
(484) (3)
13,229,325 (4)
--------------
Net property and equipment 13,228,841 34,452,823
Assets held for resale 64,300 (4) 923,562
417,884 (3)
6,805,049 (4)
--------------
Intangible assets 7,222,933 8,379,590
Other assets (348,164) (4) 1,065,191
-------------- --------------
Total assets $ 27,420,414 $ 63,996,920
============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Allied Super Kwik, Inc.
Eastern Environmental and Waste R & A Bender, Inc.
Environmental Services, Inc. Maintenance and R & A
Services, Inc. and Affiliates Services, Inc. Bender Property, Ltd
------------------ -------------- -------------------------- ---------------------
<S> <C> <C> <C> <C>
Liabilities and
stockholders' equity
Current liabilities:
Short-term borrowings $ -- $ -- $ 345,000 $ --
Accounts payable 1,945,343 1,524,541 1,023,151 247,988
Accrued expenses 1,329,579 20,546 369,159 562,358
Income taxes payable 57,739 0 --
Current portion of accrued
environmental costs 870,000 0 --
Current portion of long-
term debt and obligations
under capital leases 325,852 0 1,528,343 1,067,461
------------- ------------- ------------- -------------
Total current liabilities 4,528,513 1,545,087 3,265,653 1,877,807
Deferred income taxes 444,797 0 62,826
Long-term debt and obligations
under capital leases 2,256,816 0 3,410,761 65,814
Landfill closure and
accrued environmental
costs 2,088,457 0 -- 3,587,001
Stockholders' equity:
Common stock 60,777 11,200 2,100 21,000
Additional paid-in
capital 9,020,714 3,071,396 61,484 19,000
Retained earnings
(deficit) ( 2,758,804 ) ( 2,422,552 ) 1,862,777 4,570,141
Less treasury stock at cost -
39,100 common shares ( 76,259 ) 0 0 0
------------- ------------- ------------- -------------
Total stockholders'
equity 6,246,428 660,044 1,926,361 4,610,141
Total liability and
stockholders' equity $ 15,565,011 $ 2,205,131 $ 8,665,601 $ 10,140,763
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Combined
------------ ---------
<S> <C> <C>
Liabilities and
stockholders' equity
Current liabilities:
Short-term borrowings $ 690,080 (4) $ 1,035,080
( 399,509 ) (3)
225,839 (4)
-------------
Accounts payable ( 173,670 ) 4,567,353
1,856,000 (2)
( 20,546 ) (3)
2,943,448 (4)
-------------
Accrued expenses 4,778,902 7,060,544
Income taxes payable 57,739
Current portion of accrued
environmental costs 200,000 (4) 1,070,000
Current portion of long-
term debt and obligations
under capital leases ( 681,099 ) (4) 2,240,557
------------- -------------
Total current liabilities 4,814,213 16,031,273
660,000 (2)
972,000 (4)
Deferred income taxes 1,632,000 2,139,623
15,818,595 (5)
Long-term debt and obligations 53,040 (4)
-------------
under capital leases 15,871,635 21,605,026
Landfill closure and
accrued environmental
costs 1,912,999 (4) 7,588,457
Stockholders' equity:
45,982 (1)
( 10,033 ) (3)
( 19,933 ) (4) 111,093
-------------
Common stock 16,016
9,229,770 (1)
( 2,372,563 ) (3)
Additional paid-in 979,933 (4)
-------------
capital 7,837,140 20,009,734
( 2,516,000 ) (2)
2,422,552 (3)
Retained earnings ( 4,570,141 ) (4)
-------------
(deficit) (4,663,589 ) ( 3,412,027)
Less treasury stock at cost -
39,100 common shares ( 76,259)
------------- -------------
Total stockholders'
equity 3,189,567 16,632,541
Total liability and
stockholders' equity $27,420,414 $ 63,996,920
============= =============
</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 and exchange of Super
Kwik, Inc. and Waste Maintenance Services, Inc. stock 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 purchase price allocation is preliminary. 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
estimated fair value of the assets acquired has been assigned to goodwill.
The purchase price allocation is preliminary. 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.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Eastern R & A Bender, Inc.
Environmental and R & A Pro Forma
Services, Inc. Bender Property, Ltd Adjustments
-------------- -------------------- -----------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,590,920 $ 3,253,296 $ (1,298,424) (1)(2)
Accounts receivable, net of
allowance 5,517,943 740,006 299,012 (2)
Deferred income taxes 372,445
Tax refund receivable 74,467
Prepaid expenses and other current assets 904,098 243,892 291,655 (2)
---------------- ---------------- ----------------
Total current assets 14,459,873 4,237,194 (707,757)
Net property and equipment 19,916,046 5,900,880 12,243,982 (2)
Assets held for resale 859,262 64,300 (2)
Excess cost over fair market value of net assets acquired,
net of accumulated amortization 2,873,290
Other Intangible assets, net of accumulated
amortization 687,836 121,876 6,805,049 (2)
Notes receivable from shareholders/officers 433,577
Other assets, including restricted cash
on deposit for landfill closure and insurance bonding 578,470 306,172 (306,172) (2)
---------------- ---------------- ----------------
Total assets $ 39,808,354 $ 10,566,122 $ 18,099,402
================ ================ ================
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $ 458,000 $ -- $ 690,080 (2)
Current maturities on long-term debt 288,176 993,820 (607,458) (2)
Current maturities on capital lease obligations 1,610,748
Accounts payable 4,366,388 163,932 309,895 (2)
Accrued expenses 3,855,498 628,657 2,877,149 (2)
Income taxes payable 69,080
Current portion of accrued landfill closure
and other environmental costs 870,000 200,000 (2)
---------------- ---------------- ----------------
Total current liabilities 11,517,890 1,786,409 3,469,666
Deferred income taxes 1,176,062 972,000 (2)
Long-term debt and obligations under capital leases 6,605,471 97,395 15,840,054 (1)(2)
Accrued landfill closure and other environmental costs 2,100,526 3,686,427 1,813,573 (2)
Stockholders' equity:
Common Stock 115,675 21,000 (19,933) (2)
Additional paid-in capital 21,213,714 19,000 979,933 (2)
Retained earnings (deficit) (2,844,725) 4,955,891 (4,955,891) (2)
---------------- ---------------- ----------------
18,484,664 4,995,891 (3,995,891)
Less treasury stock at cost -
39,100 common shares (76,259)
---------------- ---------------- ----------------
Total stockholders' equity 18,408,405 4,995,891 (3,995,891)
Total liabilities and stockholders' equity $ 39,808,354 $ 10,566,122 $ 18,099,402
================ ================ ================
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Consolidated
------------
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 9,545,792
Accounts receivable, net of
allowance 6,556,961
Deferred income taxes 372,445
Tax refund receivable 74,467
Prepaid expenses and other current assets 1,439,645
---------------
Total current assets 17,989,310
Net property and equipment 38,060,908
Assets held for resale 923,562
Excess cost over fair market value of net assets acquired,
net of accumulated amortization 2,873,290
Other Intangible assets, net of accumulated
amortization 7,614,761
Notes receivable from shareholders/officers 433,577
Other assets, including restricted cash
on deposit for landfill closure and insurance bonding 578,470
---------------
Total assets $ 68,473,878
===============
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $ 1,148,080
Current maturities on long-term debt 674,538
Current maturities on capital lease obligations 1,610,748
Accounts payable 4,840,215
Accrued expenses 7,361,304
Income taxes payable 69,080
Current portion of accrued landfill closure
and other environmental costs 1,070,000
---------------
Total current liabilities 16,773,965
Deferred income taxes 2,148,062
Long-term debt and obligations under capital leases 22,542,920
Accrued landfill closure and other environmental costs 7,600,526
Stockholders' equity:
Common Stock 116,742
Additional paid-in capital 22,212,647
Retained earnings (deficit) (2,844,725)
---------------
19,484,664
Less treasury stock at cost -
39,100 common shares (76,259)
---------------
Total stockholders' equity 19,408,405
Total liabilities and stockholders' equity $ 68,473,878
===============
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
1.) To record borrowings under EESI's Revolving Credit Facility necessary to
effect the acquisition of R & A Bender, Inc. and certain real estate owned
by R & A Bender Property, Ltd.
2.) 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
estimated fair value of the assets acquired has been assigned to goodwill.
The purchase price allocation is preliminary. The assets not acquired and
the liabilities not assumed have been eliminated.
<PAGE>
(c) Exhibits
*10.1 Agreement for the Sale and Purchase of Stock and Real Estate dated
December 2, 1996 between Richard G Bender, Sr., Alice L. Fields Bender,
Richard G. Bender, Jr., Karen L. Bender, Teresa A. Bender Miller,
Lynetta K. Bender Mowery, Stephen R. Bender, Jeffrey L. Bender, Douglas
R. Bender, (collectively referred to as the "Stockholders"), and R & A
Bender Property, Ltd., a Pennsylvania limited partnership
("Partnership") and Eastern Environmental Services, Inc., a Delaware
corporation.
*10.2 Escrow Agreement dated December 2, 1996, between Richard G. Bender,
Sr., Alice L. Fields Bender, Richard G. Bender, Jr., Karen L. Bender,
Teresa A. Bender Miller, Lynetta K. Bender Mowery, Stephen R. Bender,
Jeffrey L. Bender, Douglas R. Bender (collectively the "Stockholders"),
R&A Bender Property, Ltd. ("Partnership"), Eastern Environmental
Services, Inc. ("Purchaser'), Robert M. Kramer & Associates, P.C.
("RMK") and McNees, Wallace & Nurick ("MWN").
*10.3 Warrant Agreement dated December 2, 1996, between Eastern Environmental
Services, Inc. and Karen L. Bender for 8,970 shares (pursuant to
instruction 2 to Item 601 of Regulation S-K, the Warrant Agreements,
which are substantially identical in all material respects except as to
the parties thereto and amount of shares of common stock issuable upon
exercise of the warrant, between the Registrant and the following
individuals not being filed: Richard G. Bender (3,905 shares), Alice L.
Fields (7,380 shares), Richard G. Bender, Jr. (6,660 shares), Teresa A.
Bender Miller (2,680 shares), Lynetta K. Bender Mowery (4,475 shares),
Stephen R. Bender (6,625 shares), Jeffrey L. Bender (6,625 shares), and
Douglas R. Bender (2,680 shares).
23.1 Consent of Boyer & Ritter, CPAs on R & A Bender, Inc.
23.2 Consent of Boyer & Ritter, CPAs, on R & A Bender Property, Ltd.
- --------------------------------------------------------------------------------
* Incorporated by reference
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: February 11, 1997 By: /s/ Louis D. Paolino, Jr.
--------------------------------
Louis D. Paolino, Jr.
President
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
23.1 Consent of Boyer & Ritter, CPAs on R & A Bender, Inc.
23.2 Consent of Boyer & Ritter, CPAs on R & A Bender Property, LTD.
<PAGE>
[LETTERHEAD OF BOYER & RITTER APPEARS HERE]
EXHIBIT 23.1
Stockholders
R & A Bender, Inc.
Scotland, Pennsylvania
We hereby consent to the use of our audit report dated December 27, 1996,
relating to the 1995 and 1994 financial statements of R & A Bender, Inc., and to
our compilation reports dated January 29, 1997 and January 27, 1997, relating to
the financial statements of R & A Bender, Inc., as of September 30, 1996, and
June 30, 1996, and for the three months and nine months ended September 30,
1996, and for the year ended June 30, 1996, respectively, all of which are
contained in the current report on Form 8-K/A of Eastern Environmental Services,
Inc. dated December 10, 1996.
/s/ BOYER & RITTER
Chambersburg, Pennsylvania
February 5, 1997
<PAGE>
[LETTERHEAD OF BOYER & RITTER APPEARS HERE]
EXHIBIT 23.2
Partners
R&A Bender Property, Ltd.
Chambersburg, Pennsylvania
We hereby consent to the use of our audit report dated December 27, 1996,
relating to the 1995 and 1994 financial statements of R & A Bender Property,
Ltd., and to our compilation reports dated January 24, 1997, relating to the
financial statements of R & A Bender Property, Ltd., as of September 30, 1996,
and June 30, 1996, and for the three months and nine months ended September 30,
1996, and for the year ended June 30, 1996, all of which are contained in the
current report on Form 8-K/A of Eastern Environmental Services, Inc. dated
December 10, 1996.
/s/ BOYER & RITTER
Chambersburg, Pennsylvania
February 5, 1997
