SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-22602
CONTINENTAL WASTE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2909512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
67 Walnut Avenue, Suite 103
Clark, New Jersey 07066
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 396-0018
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
14,879,248 shares of Common Stock, $0.0006 par value, were outstanding as of
August 7, 1996.
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995.........................3
Condensed Consolidated Statements of Income for
Three Months Ended June 30, 1996 and 1995...................4
Condensed Consolidated Statements of Income for
Six Months Ended June 30, 1996 and 1995.....................5
Condensed Consolidated Statements of Cash Flows for
Six Months Ended June 30, 1996 and 1995.....................6
Notes to Condensed Consolidated Financial Statements..........7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................15
SIGNATURE........................................................17
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
1996 1995
---------- ------------
ASSETS
Current assets
Cash and cash equivalents........................ $ 1,106,157 $ 3,483,154
Accounts and notes receivable - net.............. 10,668,314 8,169,121
Other current assets............................. 8,568,412 7,256,175
----------- -----------
Total current assets............................... 20,342,883 18,908,450
Landfill, property and equipment - net............. 90,974,714 78,660,737
Excess cost over the fair value of net
assets acquired - net.......................... 16,589,965 16,681,935
Other assets....................................... 13,278,100 12,037,669
----------- -----------
Total assets....................................... $141,185,662 $126,288,791
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable and current maturities
of long-term debt.............................. $ 2,191,834 $ 4,646,241
Accounts payable................................. 2,315,681 2,543,768
Other accrued liabilities........................ 9,560,909 9,581,078
----------- -----------
Total current liabilities.......................... 14,068,424 16,771,087
Long-term debt, less current maturities............ 31,725,789 20,774,991
Accrued landfill closure costs, less
current portion................................ 6,846,035 6,748,474
Other long-term liabilities........................ 11,486,423 9,949,265
Stockholders' equity:
Common stock, $.0006, authorized 40,000,000
shares 14,323,123 and 14,089,742 shares issued
in 1996 and 1995, respectively................. 8,594 8,454
Additional paid-in capital....................... 65,167,272 63,063,241
Retained earnings................................ 12,355,224 9,445,378
Treasury stock (79,375 common shares at cost).... (472,099) (472,099)
----------- -----------
Total stockholders' equity......................... 77,058,991 72,044,974
----------- -----------
Total liabilities and stockholders' equity......... $141,185,662 $126,288,791
------------ -------------
------------ -------------
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
June 30,
-------------------------
1996 1995
----------- -----------
Revenue............................................ $16,254,478 $10,769,885
Costs and expenses:
Operating expenses............................... 8,819,937 4,704,522
General and administrative expenses.............. 2,209,271 1,712,004
Depreciation and amortization.................... 2,467,447 1,398,791
----------- ----------
Income from operations............................. 2,757,823 2,954,568
----------- ----------
Other income (expenses):
Interest expense, net............................ (492,713) (598,419)
Other, net....................................... 522,801 (66,608)
----------- ----------
Other income (expenses), net................... 30,088 (665,027)
----------- ----------
Income before income taxes and minority interest
in subsidiaries................................. 2,787,911 2,289,541
Provision for income taxes......................... (1,143,044) (950,160)
----------- ----------
Income before minority interest in subsidiaries.... 1,644,867 1,339,381
Minority interest in subsidiaries.................. (52,386) (24,733)
----------- ----------
Net income......................................... $ 1,592,481 $ 1,314,648
----------- ----------
----------- ----------
Earnings per share................................. $0.11 $0.11
----------- ----------
----------- ----------
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Six Months Ended
June 30,
-----------------------
1996 1995
----------- ----------
Revenue........................................... $30,188,957 $20,478,298
Costs and expenses:
Operating expenses.............................. 16,258,761 9,376,272
General and administrative expenses............. 3,706,738 2,983,937
Depreciation and amortization................... 4,755,739 2,758,981
----------- ----------
Income from operations............................ 5,467,719 5,359,108
----------- ----------
Other income (expenses):
Interest expense, net........................... (926,118) (1,127,169)
Other, net...................................... 512,332 (102,375)
----------- ----------
Other income (expenses), net.................. (413,786) (1,229,544)
----------- ----------
Income before income taxes and minority interest
in subsidiaries............................... 5,053,933 4,129,564
Provision for income taxes........................ (2,072,113) (1,722,970)
----------- ----------
Income before minority interest in subsidiaries... 2,981,820 2,406,594
Minority interest in subsidiaries................. (71,974) (68,696)
----------- ----------
Net income........................................ $ 2,909,846 $ 2,337,898
----------- ----------
----------- ----------
Earnings per share................................ $0.20 $0.20
----------- ----------
----------- ----------
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
-------------------------
1996 1995
---------- ------------
Cash flows from operating activities:
Net income....................................... $2,909,846 $2,337,898
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 4,755,739 2,758,981
Changes in operating assets and liabilities, net
of effect of acquired businesses:
Accounts and notes receivables, net............ (2,439,776) (1,284,921)
Other current assets........................... (1,602,652) (537,661)
Accounts payable............................... (283,109) (543,353)
Other current liabilities...................... (774,082) (204,615)
Other long-term liabilities.................... 1,655,929 860,826
Other long-term assets......................... (2,259,107) (470,584)
---------- ------------
Net cash provided by operating activities........ 1,962,788 2,916,571
---------- ------------
Cash flows from investing activities:
Proceeds from sale of Mexico operations........ 2,574,089 -
Capital expenditures........................... (10,380,871) (10,104,903)
Cash paid for businesses, net of cash acquired. (3,400,240) (1,065,755)
Cash paid for common and preferred stock of
minority interest........................... - (669,824)
Cash held in escrow............................ (548,800) (937,571)
---------- ------------
Net cash used in investing activities............ (11,755,822) (12,778,053)
---------- ------------
Cash flows from financing activities:
Net borrowings under revolving line of credit.. 10,600,000 32,450,000
Issuance of long-term debt..................... 2,063,357 263,054
Payments on long-term debt..................... (5,245,157) (23,176,035)
Deferred financing costs paid.................. - (716,871)
Issuance of common stock....................... 69,598 305,479
Purchase of treasury stock..................... - (365,550)
Exercise of warrants for common stock.......... - 218,715
Other.......................................... (71,761) -
---------- ------------
Net cash provided by financing activities........ 7,416,037 8,978,792
---------- ------------
Net decrease in cash and cash equivalents.......... (2,376,997) (882,690)
Cash and cash equivalents, beginning of year....... 3,483,154 4,677,237
---------- ------------
Cash and cash equivalents, end of period........... $1,106,157 $3,794,547
---------- ------------
---------- ------------
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation (consisting of normal recurring accruals) have
been included. Operating results for the three and six months ended June 30,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in Continental Waste Industries, Inc.
("the Company's") Form 10-KSB for the year ended December 31, 1995.
On December 28, 1995, the Company effected a 5 for 3 stock split of its common
stock. All common share information has been restated for all periods to reflect
the 5 for 3 stock split. The Company's $0.0006 par value common stock is
hereinafter referred to as Shares. On June 27, 1996, the Company signed a
definitive agreement to be acquired by Republic Industries, Inc. ("Republic").
Under the terms of the agreement, each share of the Company's common stock would
be converted into 4/5ths of a share of Republic's common stock.
The proposed transaction would be accounted for on a pooling of interests basis
and is subject to final approval by the stockholders of the Company, the filing
and clearance of the Republic registration statement and the Company's related
proxy statement by the Securities and Exchange Commission. The Company
anticipates that the merger with Republic will be consummated in the fourth
quarter of 1996.
Certain amounts in previously issued financial statements have been reclassified
to conform to 1996 classifications.
Note 2 - Business Combinations and Disposition
From January 1, 1995 to August 15,1995, the Company expanded its operations
through the acquisition of six businesses engaged in waste management
operations. The aggregate of these business acquisitions was significant to the
Company. These entities included ASCO Sanitation, Inc., Larry's Disposal, Inc.,
Terre Haute Recycling, Inc., Gilliam Sanitation, Inc./Gilliam Transfer, Inc.,
Anderson Refuse Company, Inc./M.V. Dulworth, and a 72% interest in Procesa
Continental S.A., de C.V. The aggregate purchase price of these businesses was
$8.9 million, plus the assumption or refinancing of $2.1 million of debt and
$0.6 million of future contingent payments. The purchase prices were paid by
issuing 164,846 Shares with a market value of $1.1 million at the time of
issuance, paying $5.8 million of cash obtained from the Company's credit
facility (the "Credit Facility") with LaSalle National Bank ("LNB") and issuing
$2.0 million of notes payable to the sellers.
In October 1995, the Company purchased, through one of its subsidiaries, a
sanitary landfill in Richland County, South Carolina ("Richland"). The acquiring
subsidiary, which is 85% owned by the Company, was organized recently to make
acquisitions of landfills and related solid waste management operations and to
pursue privatization and public- private partnership opportunities in the
Southeastern United States. The Company has an option to acquire the remaining
15% of the subsidiary for approximately $2.4 million of common stock of the
Company. The Company, on behalf of its subsidiary, paid $2.4 million in cash and
notes, and assumed $1.1 million of debt for Richland. As a condition of the
landfill purchase, a South Carolina collection company has entered into, among
other things, a 10- year put-or-pay disposal contract with the
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2 - Business Combinations and Disposition (Continued)
Company to provide a minimum of 300 tons of waste per day, and a 120-day
disposal contract for 500 tons of waste per day, with a right of first refusal
to the Company for a long-term extension.
In March 1996, the Company purchased two construction and demolition landfills
in central Florida for approximately $2.1 million in Shares (195,864 Shares) and
$2.3 million in cash.
In March 1996, the Company sold its 72% interest in Procesa Continental S.A., de
C.V., which encompassed all of the Company's Mexico City operations, for
approximately $2.6 million in cash resulting in a pre-tax gain of approximately
$500,000 which was recorded in the first quarter of 1996.
In March 1996, the Company decided to suspend operations at its Prichard, West
Virginia landfill. The Company is evaluating whether to re-open or to dispose of
the facility. The Company recorded a pre-tax charge of approximately $500,000
for this suspension of operations. This charge consisted primarily of $350,000
of costs related to closure and post-closure of the facility and other related
closing costs and $150,000 of identified severance and miscellaneous costs.
In May 1996, the Company purchased a residential and commercial collection
business for $1.2 million in cash, which will be combined into the Company's
Jamax division in Terre Haute, Indiana.
Note 3 - Earnings Per Share
Earnings per share for the three and six months ended June 30, 1996 and 1995 was
based on the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ----------------------
6/30/96 6/30/95 6/30/96 6/30/95
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Weighted average common and common
equivalent shares:
Shares outstanding..................... 14,229,000 10,433,000 14,123,000 10,387,000
Dilutive stock options and warrants.... 633,000 781,000 596,000 781,000
Contingent shares and options related
to the Victory acquisition........... - 245,000 - 245,000
---------- ---------- --------- ----------
14,862,000 11,459,000 14,719,000 11,413,000
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Income available to common stockholders:
Net income............................... $1,592,481 $1,314,648 $2,909,846 $2,337,898
Amortization of incremental goodwill
upon issuance of additional
contingent shares..................... - (9,321) - (19,133)
---------- ---------- ---------- ----------
$1,592,481 $1,305,327 $2,909,846 $2,318,765
---------- ---------- --------- ----------
---------- ---------- --------- ----------
</TABLE>
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<PAGE>
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4 - Supplemental Cash Flows Disclosure
Six Months Ended
June 30,
---------------------------
1996 1995
---------- ----------
Cash paid during the period for:
Interest, net of interest capitalized........ $1,059,352 $1,416,311
---------- ----------
---------- -----------
Income taxes................................ $1,071,521 $1,233,011
---------- -----------
---------- -----------
Business acquisitions:
Shares issued................................ $2,091,039 $ 96,688
Notes issued to sellers...................... - 244,284
Cash paid.................................... 3,400,240 1,065,755
---------- -----------
Total consideration paid................... 5,491,279 1,406,727
Assets received............................ 7,102,252 2,276,513
---------- ----------
Liabilities assumed........................ $1,610,973 $ 869,786
---------- ----------
---------- ----------
Note 5 - Other Information
Selected balance sheet account disclosures follow:
June 30, December 31,
1996 1995
----------- ------------
Allowance for doubtful accounts................. $ 580,339 $ 396,000
----------- ------------
----------- ------------
Accumulated depreciation and amortization of
property and equipment........................$18,102,889 $14,215,696
----------- -----------
----------- -----------
Accumulated amortization of excess cost over
the fair value of net assets acquired.........$ 1,671,678 $ 1,395,054
----------- -----------
----------- -----------
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CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6 - Debt
In the first quarter of 1996, the Company and its lenders amended the Credit
Facility effective as of January 1, 1996 with covenants effective as of December
31, 1995. As amended, each borrowing under the Credit Facility bears interest
based on the Company's leverage ratio, as defined, of funded debt to earnings
before interest, taxes, depreciation and amortization. If the leverage ratio is
2.0 to 1 or less, then the interest rate is, at the Company's option, prime or
LIBOR plus 1.5% and the fee on outstanding letters of credit is .75%. If the
leverage ratio falls between 2.01 to 2.5 compared to 1, then the interest rate
is prime plus 0.5% or LIBOR plus 1.75% and the fee on outstanding letters of
credit is 1.0%. If the leverage ratio falls between 2.51 and 3.0 compared to 1,
then the interest rate is prime plus 1.0% or LIBOR plus 2.0% and the fee on
outstanding letters of credit is 1.5%. If the leverage ratio is greater than 3.0
to 1, then the interest rate is prime plus 1% or LIBOR plus 2.5% and the fee on
outstanding letters of credit is 2.0%. The Company and its lenders amended the
Credit Facility again during the second quarter of 1996 to increase the line of
credit from $45 million to $70 million. The Credit Facility now expires in June
1999 and is secured by all corporate assets and a pledge of the stock of all
subsidiaries.The Credit Facility includes provisions for letters of credit up to
$15.0 million. The Company will also pay a 0.5% fee on the average unused
portion of the Credit Facility. As of June 30, 1996, $37.9 million of unused
credit under this facility remained available. Borrowings under the Credit
Facility bore a weighted average interest rate of 6.97% on outstanding loans as
of June 30, 1996.
In April 1996, the Company entered into a $10.0 million facility with Bank of
America which has provided funds for capital expenditures. The capital equipment
financed must be delivered to and accepted by the Company no later than December
31, 1997. As of June 30, 1996, $8.3 million of unused credit under this facility
remained available. Each lease the Company enters into has a term of six years.
Such borrowings will bear interest at the prevalent market rates. As of June 30,
1996, the outstanding borrowings bore a weighted average interest rate of 8.48%.
Note 7 - Excess Cost Over the Fair Value of Net Assets Acquired
Prior to 1996, the excess cost over the fair value of assets acquired
("goodwill") was amortized on a straight-line basis over twenty-five to thirty
years. In the first quarter of 1996, the Company changed the amortization period
for goodwill generated from all non-landfill acquisitions to 40 years consistent
with industry trend and due to the life of operating conditions at such
businesses not being dependent on the capacity of available landfill airspace.
The effect of the change in the second quarter and first half of 1996 was to
decrease amortization expense by approximately $50,000 and $84,000,
respectively.
Note 8 - Subsequent Events
On July 1, 1996, the Company completed its acquisition of Statewide
Environmental Contractors, Inc. and its affiliated companies, Recycling
Industries, Inc. and Lomac Realty (the "Acquisition"). These three companies
have combined revenues of approximately $12 million and all are engaged in the
waste management business in central New Jersey.
The Company paid $6.7 million in cash, issued 555,512 Shares and issued $3.0
million in Notes payable to the Sellers for the Acquisition. The Company will
record this transaction as a purchase. The cash portion of the purchase price
was paid using proceeds of an advance under the Company's Credit Facility.
Owing to the length of time required to obtain regulatory approval, the Company
does not anticipate closing on any acquisitions until after the consummation of
the Republic merger.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Background:
Continental Waste Industries, Inc. (the "Company") provides integrated solid
waste management services to residential, commercial and industrial customers
concentrated primarily in the eastern half of the United States. The Company
conducts its operations through 10 landfills, 9 waste collection operations, 14
transfer stations and 4 recycling facilities located in 10 states and in Costa
Rica. Since its founding in 1988, the Company has experienced significant growth
in revenues and operating income due primarily to the acquisition of 31 solid
waste service businesses.
The Company's strategy is focused on an integrated operational model over a
geographically diverse base of operations. In general, the Company seeks to own
or control both waste collection and disposal operations in each of the local
markets in which it competes. This integration strategy is intended to improve
cost competitiveness and mitigate operating risk by reducing the dependence of
the Company's landfills on waste streams from unaffiliated haulers, and by
reducing the exposure of the Company's collection operations to disposal cost
fluctuations at facilities owned by third parties.
On June 27, 1996, the Company signed a definitive agreement to be acquired by
Republic Industries, Inc. ("Republic"). Under the terms of the agreement, each
share of the Company's common stock would be converted into 4/5ths of a share of
Republic's common stock.
The proposed transaction would be accounted for on a pooling of interests basis
and is subject to final approval by the stockholders of the Company, the filing
and clearance of the Republic registration statement and the Company's related
proxy statement by the Securities and Exchange Commission. The Company
anticipates that the merger with Republic will be consummated in the fourth
quarter of 1996.
Results of Operations
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995
Revenue:
Revenue increased by $5.5 million, or 50.9%, from $10.8 million to $16.3
million. The increase in revenue was primarily due to several 1995 and 1996
acquisitions: two hauling and collection companies in the second quarter and two
hauling companies and a recycling facility in the third quarter of 1995, a
landfill in the fourth quarter of 1995, two construction and demolition
landfills and a recycling center in the first quarter of 1996, as well as same
store growth in waste collection.
Operating Expenses:
Operating expenses increased by $4.1 million from $4.7 million to $8.8 million
and increased as a percentage of revenue from 43.7% to 54.3%, respectively. The
percentage increase was primarily due to acquired hauling and collection
companies and a recycling facility which have significantly higher operating
costs compared with landfill operations. The same store waste collection
operations also experienced increased operating expenses as a percentage of
revenue due primarily to higher than anticipated costs principally related to
operating labor and collection route conversions and rerouting. The dollar
increase was primarily due to the above mentioned acquisitions.
General and Administrative Expenses:
General and administrative expenses increased by $497,000 from $1.7 million to
$2.2 million and decreased as a percentage of revenues from 15.9% to 13.6%. The
percentage decrease was primarily attributable to synergies obtained with the
1995 acquired companies. The dollar increase was primarily due to the above
mentioned acquisitions.
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<PAGE>
Results of Operations (Continued)
Depreciation and Amortization Expenses:
Depreciation and amortization expenses increased by $1.1 million, from $1.4
million to $2.5 million. The increase was due to the above mentioned
acquisitions, increased capital expenditures and increased landfill cell
amortization costs due to compliance with Subtitle D Regulations.
Interest Expense, Net:
Interest expense, net of interest income was $493,000 for the second quarter of
1996 compared to $598,000 for the same period in 1995. The decrease in interest
expense is primarily due to the paydown of the Company's Credit Facility during
the fourth quarter of 1995 with the $30.1 million of net proceeds received from
a public offering of Shares completed in October 1995. The Company also amended
the Credit Facility in 1996, lowering the interest rate.
Other Income:
The increase in other income in 1996 was primarily due to the partial sale of
the Company's common stock investment in Eastern Environmental Services, Inc.
during the second quarter of 1996.
Provision for Income Taxes:
The provision for income taxes increased by $193,000 from $950,000 to $1.1
million as a result of a higher income level partially offset by a lower
effective tax rate in 1996.
Net Income:
For the reasons discussed above, the Company's net income increased by $278,000
from $1.3 million to $1.6 million.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Revenue:
Revenue increased by $9.7 million, or 47.4%, from $20.5 million to $30.2
million. The increase in revenue was primarily due to several 1995 and 1996
acquisitions: two hauling and collection companies in the second quarter and two
hauling companies and a recycling facility in the third quarter of 1995, a
landfill in the fourth quarter of 1995, two construction and demolition
landfills and a recycling center in the first quarter of 1996, as well as same
store growth in waste collection.
Operating Expenses:
Operating expenses increased by $6.9 million from $9.4 million to $16.3 million
and increased as a percentage of revenue from 45.8% to 53.9%, respectively. The
percentage increase was primarily due to acquired hauling and collection
companies and a recycling facility which have significantly higher operating
costs compared with landfill operations. The same store waste collection
operations also experienced increased operating expenses as a percentage of
revenue due primarily to higher than anticipated costs principally related to
operating labor and collection route conversions and rerouting. The dollar
increase was primarily due to the above mentioned acquisitions.
General and Administrative Expenses:
General and administrative expenses increased by $723,000 from $3.0 million to
$3.7 million and decreased as a percentage of revenues from 14.6% to 12.3%. The
percentage decrease was primarily attributable to synergies obtained with the
1995 acquired companies. The dollar increase was primarily due to the above
mentioned acquisitions.
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<PAGE>
Results of Operations (Continued)
Depreciation and Amortization Expenses:
Depreciation and amortization expenses increased by $2.0 million, from $2.8
million to $4.8 million. The increase was do to the above mentioned
acquisitions, increased capital expenditures and increased landfill cell
amortization due to compliance with Subtitle D. Regulations.
Interest Expense, Net:
Interest expense, net of interest income was $1.1 million for the half of 1995
compared to $926,000 for the same period in 1996. The decrease in interest
expense is primarily due to the paydown of the Company's Credit Facility during
the fourth quarter of 1995 with the $30.1 million of net proceeds received from
a public offering of Shares completed in October 1995. The Company experienced
lower interest rates in the first half of 1996 versus 1995 primarily due to
replacing higher interest debt with the Credit Facility and the January 1, 1996
amendment which also lowered interest rates.
Other Income:
The increase in other income in 1996 was primarily due to the partial sale of
the Company's common stock investment in Eastern Environmental Services, Inc.
during the second quarter of 1996.
Provision for Income Taxes:
The provision for income taxes increased by $349,000 from $1.7 million to $2.1
million as a result of a higher income level partially offset by a lower
effective tax rate in 1996.
Net Income:
For the reasons discussed above, the Company's net income increased by $572,000
from $2.3 million to $2.9 million.
Liquidity and Capital Resources
The Company's cash applications consist principally of working capital, payments
of principal and interest on its outstanding indebtedness, capital expenditures
and acquisitions. At June 30, 1996, the Company had working capital of $6.3
million, an increase of $4.1 million since December 31, 1995, and its cash and
cash equivalents balance was $1.1 million. The growth in working capital is
primarily attributable to the refinancing of short-term debt with the Credit
Facility and increased accounts receivables due primarily to increased sales.
Cash Flow from Operating Activities:
During the six months ended June 30, 1996 and 1995, net cash provided by
operating activities was $2.0 million and $2.9 million, respectively. This
decrease is primarily due to long-term assets and accounts receivable increasing
more in the first half of 1996 versus 1995. Long-term assets increased primarily
due to a $1.4 million loan to a Costa Rican company, with an option to purchase
the same company, owning a quarry. Additionally, the Company spent $674,000 in
the first half of 1996 on its landfill development project in Gila Bend,
Arizona. The Company filed a permit application in July 1996 with the Arizona
Department of Environmental Quality and management believes a permit will be
issued by December 31, 1996. Partially offsetting these effects were higher
earnings (excluding the effect of noncash charges) in the first half of 1996
versus the same period in 1995.
Cash Flow from Investing Activities:
During the six months ended June 30, 1996 and 1995, the Company made capital
expenditures of approximately $10.4 million and $10.1 million, respectively, for
landfill expansions and equipment additions. The Company expects total
expenditures for 1996 will be approximately $18.0 million to $20.0 million. In
March 1996, the Company sold its 72% interest in Procesa Continental S.A., de
C.V., which encompassed all of the Company's Mexico City operations, for
approximately $2.6 million in cash.
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<PAGE>
Liquidity and Capital Resources (Continued)
In March 1996, the Company purchased two construction and demolition landfills
in central Florida for approximately $2.1 million in Shares (195,864) and $2.1
million in cash.
In May 1996, the Company purchased a residential and commercial collection
business for $1.2 million in cash, which will be combined into the Company's
Jamax division in Terre Haute, Indiana.
Cash Flow from Financing Activities:
Cash flows from financing activities were approximately $7.4 million and $9.0
million for the first half of 1996 and 1995, respectively. The decrease in cash
provided by financing activities was primarily due to decreased borrowing in the
first half of 1996 versus 1995.
In the first quarter of 1996, the Company and its lenders amended the Credit
Facility effective as of January 1, 1996 with covenants effective as of December
31, 1995. The Company and its lenders amended the Credit Facility again during
the second quarter of 1996 to increase the line of credit from $45 million to
$70 million. The Credit Facility now expires in June 1999 and is secured by all
corporate assets and a pledge of the stock of all subsidiaries. As amended, each
borrowing under the Credit Facility bears interest based on the Company's
leverage ratio, as defined, of funded debt to earnings before interest, taxes,
depreciation and amortization. If the leverage ratio is 2.0 to 1 or less, then
the interest rate is, at the Company's option, prime or LIBOR plus 1.5% and the
fee on outstanding letters of credit is .75%. If the leverage ratio falls
between 2.01 to 2.5 compared to 1, then the interest rate is prime plus 0.5% or
LIBOR plus 1.75% and the fee on outstanding letters of credit is 1.0%. If the
leverage ratio falls between 2.51 and 3.0 compared to 1, then the interest rate
is prime plus 1.0% or LIBOR plus 2.0% and the fee on outstanding letters of
credit is 1.5%. If the leverage ratio is greater than 3.0 to 1, then the
interest rate is prime plus 1% or LIBOR plus 2.5% and the fee on outstanding
letters of credit is 2.0%. The Credit Facility includes provisions for letters
of credit up to $15.0 million. The Company will also pay a 0.5% fee on the
average unused portion of the Credit Facility. As of June 30, 1996, $37.9
million of unused credit under this facility remained available. Borrowings
under the Credit Facility bore a weighted average interest rate of 6.97% on
outstanding loans as of June 30, 1996.
In April 1996, the Company entered into a $10.0 million facility with
BankAmerica which will provide funds for capital expenditures. The capital
equipment financed must be delivered to and accepted by the Company no later
than December 31, 1997. As of June 30, 1996, $8.3 million of unused credit under
this facility remained available. Each lease the Company enters into has a term
of six years. Such borrowings will bear interest at the prevalent market rates.
As of June 30, 1996, the outstanding borrowings bore a weighted average interest
rate of 8.48%.
As of June 30, 1996, the Company was in compliance with all of its restrictive
covenants under both the Credit Facility and the BankAmerica facility.
Owing to the length of time required to obtain regulatory approval, the Company
does not anticipate closing on any acquisitions until after the consummation of
the Republic merger.
Assuming the merger with Republic is not approved, the Company believes that
cash from operating activities, cash on hand, additional borrowings under the
Credit Facility and issuance of additional debt will be sufficient to: (i)
finance its planned 1996 and 1997 development projects and capital expenditures;
(ii) meet its 1996 and 1997 operating cash requirements; and (iii) meet expected
debt service obligations during the next two years.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) None.
Exhibit Sequential
Number Document Description Page
Number
2.1 Agreement and Plan of Merger by and among Republic Industries, Inc., RI/CW
Merger Corp. Continental Waste Industries, Inc. and Thomas A. Volini and
Carlos E. Aguero, dated June 27, 1996 (incorporated by reference to Exhibit
2.1 to Form 8-K of Continental Waste Industries, Inc. filed on July 15,
1996, Commission File No. 0-22602).
2.2 Acquisition Agreement by and among Continental Waste Industries, Inc.,
Statewide Environmental Contractors, Inc. and the Stockholders of Statewide
Environmental Contractors, Inc., dated April 11, 1996 (incorporated by
reference to Exhibit 2.2 to Form 8-K of Continental Waste Industries, Inc.
filed on July 15, 1996, Commission File No. 0- 22602).
2.3 Acquisition Agreement by and among Continental Waste Industries, Inc.,
Recycling Industries, Inc. and the Stockholders of Recycling Industries,
Inc., dated April 11, 1996 (incorporated by reference to Exhibit 2.3 to
Form 8-K of Continental Waste Industries, Inc. filed on July 15, 1996,
Commission File No. 0-22602).
2.4 Agreement of Sale between Lomac Realty and Karat Corp., dated April 11,
1996 (incorporated by reference to Exhibit 2.4 to Form 8-K of Continental
Waste Industries, Inc. filed on July 15, 1996, Commission File No.
0-22602).
2.5 Override Agreement Respecting Closing Consideration among Continental Waste
Industries, Inc., CWI of NJ, Inc., Statewide Environmental Contractors,
Inc., Recycling Industries, Inc., Lomac Realty, Mary Lemmo, Nicholas Lemmo,
Maurice Kirchofer, Don J. Lotano, Frank J. Lotano, Arline M. Lotano and
Joseph Lemmo, dated June 28, 1996 (incorporated by reference to Exhibit 2.5
to Form 8-K of Continental Waste Industries, Inc. filed on July 15, 1996,
Commission File No. 0-22602).
2.6 Non-Compete Agreement (Schedule 2.2(k) among Recycling Industries, Inc.,
Continental Waste Industries, Inc., Don J. Lotano, Frank J. Lotano, Arline
Lotano (the "Stockholders") and among CWI, Stockholders, Maurice Kirchofer
and Joseph Lemmo, dated April 11, 1996, (incorporated by reference to
Exhibit 2.6 to Form 8-K of Continental Waste Industries, Inc. filed on July
15, 1996, Commission File No. 0-22602).
3.1 Certificate of Incorporation of Continental Waste Industries, Inc.
(incorporated by reference to Exhibit 3.1 to the Annual Report on Form
10-KSB of Continental Waste Industries, Inc. filed on March 31, 1994,
Commission File No. 0-22602).
3.2 By-Laws of Continental Waste Industries, Inc. (incorporated by reference to
Exhibit 3.3 to the Registration Statement on Form SB-2 of Continental Waste
Industries, Inc. filed on November 4, 1994, Commission File No. 33-84130).
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<PAGE>
3.3 Amendment to Certificate of Incorporation of Continental Waste Industries,
Inc. (incorporated by reference to Exhibit 3.3 to the Registration
Statement on Form SB-2 of Continental Waste Industries, Inc. filed on
November 4, 1994, Commission File No. 33- 84130).
3.4 Amendment 2 to Certificate of Incorporation of Continental Waste
Industries, Inc. (incorporated by reference to Exhibit 3.4 to the Annual
Report on Form 10-KSB of Continental Waste Industries, Inc. filed on March
29, 1996, Commission File No. 0- 22602).
10.1 Employment Agreement between Continental Waste Industries, Inc. and Thomas
A. Volini (incorporated by reference to Exhibit 10.1 to the Registration
Statement on Form SB-2 of Continental Waste Industries, Inc. filed on
September 12, 1995, Commission File No. 33- 62589).
10.2 Employment Agreement between Continental Waste Industries, Inc. and Carlos
E. Aguero (incorporated by reference to Exhibit 10.2 to the Registration
Statement on Form SB-2 of Continental Waste Industries, Inc. filed on
September 12, 1995, Commission File No. 33- 62589).
10.3 Employment Agreement between Continental Waste Industries, Inc. and Michael
J. Drury (incorporated by reference to Exhibit 10.3 to the Registration
Statement on Form SB-2 of Continental Waste Industries, Inc. filed on
September 12, 1995, Commission File No. 33- 62589).
10.4 Credit Agreement by and among LaSalle National Bank as agent, the Lenders
Signatory or Parties Thereto and Continental Waste Industries, Inc. and its
Subsidiaries (incorporated by reference to Exhibit 10.8 to the Registration
Statement on Form SB-2 of Continental Waste Industries, Inc. filed on
September 12, 1995, Commission File No. 33-62589).
10.5 First Amendment to Credit Agreement by and among LaSalle National Bank as
agent, the Lenders Signatory or Parties Thereto and Continental Waste
Industries, Inc. and its Subsidiaries (incorporated by reference to Exhibit
10.8 to the Registration Statement on Form SB-2 of Continental Waste
Industries, Inc. filed on September 12, 1995, Commission File No.
33-62589).
10.6 Second Amendment to Credit Agreement by and among LaSalle National Bank as
agent, the Lenders Signatory or Parties Thereto and Continental Waste
Industries, Inc. and its Subsidiaries (incorporated by reference to the
Current Report on Form 8-K to Continental Waste Industries, Inc. filed on
October 27, 1995, Commission File No. 0-22602).
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<PAGE>
10.7 Third Amendment to Credit Agreement by and among LaSalle National Bank as
agent, the Lenders Signatory or Parties Thereto and Continental Waste
Industries, Inc. and its Subsidiaries (incorporated by reference to Exhibit
10.7 to the Annual Report on Form 10- KSB of Continental Waste Industries,
Inc. filed on March 29, 1996, Commission File No. 0-22602).
10.8 Fourth Amendment to Credit Agreement by and among LaSalle National Bank as
agent, the Lenders Signatory or Parties Thereto and Continental Waste
Industries, Inc. and its Subsidiaries.
b) Reports on Form 8-K:
On April 24, 1996, the Company filed a report on Form 8-K under "Item
5. Other Events". No financial statements were filed.
On May 22, 1996, the Company filed a report on Form 8-K under "Item 5.
Other Events". No financial statements were filed.
On July 12, 1996, the Company filed a report on Form 8-K under "Item
2. Acquisition or Disposition of Assets", "Item 5. Other Events", and
"Item 7. Financial Statements and Exhibits". The historical and
proforma financial information required under "Item 7. Financial
Statements and Exhibits" were filed on Form 8-K Amendment No. 1 on
August 9, 1996.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 to Form 10-Q to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: October 7, 1996
By: /s/ Michael J. Drury
MICHAEL J. DRURY
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER and
PRINCIPAL FINANCIAL OFFICER
-18-
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of June 14, 1996, by and among LaSalle National Bank, a national banking
association with its principal offices located in Chicago, Illinois, as agent
for the Lenders hereunder (the "Agent"), various financial institutions which
are, or may become, signatories or parties hereto (individually, a "Lender" and
collectively, the "Lenders"), and Continental Waste Industries, Inc., a Delaware
corporation ("CWI"), together with its Subsidiaries, which currently consist of
Barker Brothers, Inc., a Tennessee corporation, Barker Brothers Waste, Inc., a
Tennessee corporation, Berrien County Landfill, Inc., a Michigan corporation,
Bluegrass Recycling & Transfer Company, a Kentucky corporation, Commercial Waste
Disposal, Inc., a Kentucky corporation, Covington Waste, Inc., a Tennessee
corporation, CWI of Illinois, Inc., an Illinois corporation, CWI of Missouri,
Inc., a Missouri corporation, CWI Venture, Inc., a New Jersey corporation, FLL,
Inc., a Michigan corporation, G.E.M. Environmental Management Inc., a Delaware
corporation, Gila Bend Regional Landfill, Inc., an Arizona corporation,
Greenfield Environmental Development Corp., a Delaware corporation, Jamax
Corporation, an Indiana corporation, Karat Corp., a New Jersey corporation,
Midwest Material Management, Inc. an Indiana corporation, Northwest Tennessee
Disposal Corporation, a Tennessee corporation, Prichard Landfill Corporation, a
West Virginia corporation, Sandy Hollow Landfill Corp., a West Virginia
corporation, Sanifill, Inc., a Tennessee corporation, Southern Illinois Regional
Landfill, Inc., an Illinois corporation, South Trans, Inc., a New Jersey
corporation, Springfield Environmental, Inc., a Delaware corporation,
Springfield Environmental, Inc., an Indiana corporation, Triple G Landfills,
Inc., an Indiana corporation, United Refuse Co., Inc., an Indiana corporation,
Victory Environmental Services, Inc., a Delaware corporation, Victory Waste
Incorporated, a California corporation, WPP Continental de Costa Rica S.A., a
Costa Rican corporation, WPP Services, Inc., an Ohio corporation, ASCO
Sanitation, Inc., a Mississippi corporation, Gilliam Transfer, Inc., a Missouri
corporation, Anderson Refuse Co Inc, an Indiana corporation, Terre Haute
Recycling, Inc., an Indiana corporation, NationsWaste, Inc., a Delaware
corporation, Northeast Sanitary Landfill, Inc., a South Carolina corporation,
Schofield Corporation of Orlando, a Florida corporation, and Holland Excavating,
Inc., a Florida corporation, individually, CWI and any of said other
corporations may be referred to herein as a "Borrower," and collectively are
sometimes referred to as the "Borrowers").
WITNESSETH:
WHEREAS, the Borrowers and the Lenders have previously entered into
that certain Credit Agreement dated as of March 28, 1995, as amended by a First
Amendment to Credit Agreement dated June 6, 1995, a Second Amendment to Credit
Agreement dated October 5, 1995, and a Third Amendment to Credit Agreement dated
January 31, 1996 (as so amended, the "Credit Agreement," with terms used but not
otherwise defined herein being used with the same meanings as therein defined),
whereunder Lenders have made certain Loans to Borrowers;
WHEREAS, the Borrowers have requested that the Lenders increase the
amount of the Commitment from $45,000,000 to $70,000,000 and make certain other
modifications to the Credit Agreement;
WHEREAS, the Lenders are willing to increase such Commitment and make
such modifications upon the terms and conditions set forth herein;
NOW, THEREFORE, for and in consideration of the foregoing premises and
of the mutual agreements, promises and covenants contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Loan Documents. The Credit Agreement and all of the Loan Documents
are hereby amended such that all references therein to the Credit Agreement or
any other Loan Documents are hereby deemed to include this Amendment and the
amendments to the Credit Agreement and the Loan Documents contained herein.
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<PAGE>
2. Section 2.A.1. Revolving Loans. Sections 2.A.1. and 2.A.2 of the
Credit Agreement are hereby deleted in their entirety and replaced with the
following:
"2.A.1. Revolving Loans. Subject to the terms and conditions of this
Agreement, the Lenders agree to lend to the Borrowers from time to time until
the earlier of the Termination Date or the occurrence of either a Default or an
Event of Default hereunder (the earlier of such date being hereinafter referred
to as the "Expiration Date"), such sums, in a minimum amount(s) as set forth in
Section 3.B hereof, as Borrowers may request from time to time by a Borrowing
Notice pursuant to Section 3.C hereof; provided, however, that the aggregate
principal amount of all loans outstanding under this Section 2.A.1
(individually, a "Revolving Loan" or "Loan" or, collectively, the "Revolving
Loans" or "Loans") plus the Stated Amount of all letters of credit issued
pursuant to Section 2.B hereof (the "Letters of Credit") at any one time shall
not exceed Seventy Million Dollars ($70,000,000) (such amount hereinafter
referred to as the "Commitment" and/or cumulatively for all Lenders as the or
their "Commitments"). Each Borrowing of Loans shall be made ratably from the
Lenders in proportion to their respective Commitments. Subject to the terms and
conditions hereof, the Borrowers may borrow or repay and reborrow hereunder,
from the date hereof until the Expiration Date, either the full amount of the
Commitments or any lesser sum in the minimum amounts referred to herein. If, at
any time, the Loans plus the Stated Amount of outstanding Letters of Credit
exceed the Commitment, the Borrowers shall immediately notify the Agent of the
existence of and pay to the Agent the amount of such excess. The maximum amount
of the Commitment of each Lender, which is also the maximum amount of Loans
which each Lender agrees to extend to the Borrowers, shall be as set forth
opposite its name on the applicable signature page hereof (subject to any
reductions thereof pursuant to the terms hereof). For all purposes of this
Agreement, where a determination of the unused or available amount of the
Commitment is necessary, the Loans and the Letter of Credit Utilization shall be
deemed to utilize the Commitments. The obligations of the Lenders hereunder are
several and not joint and no Lender shall under any circumstances be obligated
to extend credit hereunder in excess of its Commitment.
"2.A.2. Revolving Notes. In order to evidence the Loans, concurrently
herewith, the Borrowers will execute and deliver promissory notes payable to the
order of each Lender in the principal amount of its Commitment, substantially in
the form of Exhibit A-1 hereto, with appropriate insertions (together with any
and all amendments, modifications, supplements, substitutions, renewals,
extensions and restatements, thereof and therefor, whether individually or
collectively, the "Revolving Note" or "Note" or the "Revolving Notes" or
"Notes"). The Loans and the Notes shall mature on the Termination Date and shall
bear and pay interest as set forth in Section 3 hereof."
3. Section 2.B(a) Letters of Credit. Section 2.B(a) of the Credit
Agreement is hereby deleted in its entirety and replaced by the following:
"(a) General Terms. Subject to all of the terms and conditions hereof,
the Commitment may be availed of in the form of Letters of Credit, provided that
the aggregate outstanding amount of Letter of Credit Utilization by the
Borrowers hereunder shall in no event exceed the lesser of (aa) the unused
amount of the Commitments or (bb) $15,000,000. The Letters of Credit shall be
issued by the Agent, but each Lender shall be obligated to reimburse the Agent
for a pro rata share of the amount of each draft drawn thereunder and,
accordingly, each Letter of Credit shall be deemed to utilize the Commitments of
all Lenders pro rata in accordance with the respective amounts thereof. For all
purposes of this Agreement, each Existing Letter of Credit shall be deemed to be
a Letter of Credit issued hereunder."
4. Section 8.A.1 Financial Covenants.
The following Section 8.A.1(f) is hereby added to the Credit
Agreement:
"(f) The Borrowers' Consolidated ratio of (a) interest-bearing debt to
(b) Stockholders' Equity plus interest-bearing debt, as determined as of the end
of each quarter of CWI's Fiscal Year, shall not be greater than 0.50:1."
- 2 -
<PAGE>
5. Conditions.
5.A. Delivery of Documents as Conditions Precedent. The delivery by or
on behalf of the Borrowers of each of the following documents to the Agent, each
of which shall be satisfactory to the Agent in substance and form, shall
constitute separate and distinct conditions precedent to the effectiveness of
this Amendment:
5.A.1. A copy of this Amendment duly executed by Borrowers.
5.A.2. The Revolving Notes duly executed by the Borrowers.
5.A.3. A Reaffirmation of Environmental Indemnity Agreement in the form
attached hereto as Exhibit A-2 duly executed by the Borrowers.
5.A.4. A Reaffirmation of Security Agreement in the form attached
hereto as Exhibit A-3 duly executed by the Borrowers.
5.A.5. A Reaffirmation of Stock Pledge Agreement in the form of
Exhibit A-4 hereto duly executed by the Pledgors.
5.A.6. Certificate of Secretary of the Borrowers as to (I) resolutions
authorizing entry into, execution, delivery and performance of its obligations
under this Amendment and the Loan Agreement and related Loan Documents to which
it is a party, (ii) the incumbency and signatures of the officers authorized to
execute on its behalf the Loan Documents to which it is a party, and (iii) no
change in the Certificates of Incorporation and bylaws of the Borrowers provided
to Bank.
5.A.7. In form and substance satisfactory to the Agent, any other
documents which the Agent may reasonably request from or to be delivered by the
Borrowers from time to time to effect the intent of this Amendment and the Loan
Documents, which shall include but not be limited to modifications to the
Mortgages and date-down endorsements on existing title policies.
5.B. Facility Fee. The Borrowers shall pay to the Agent for the ratable
account of the Lenders a facility fee equal to $62,500 upon execution of this
Amendment, and an additional fee of $62,500 (the "Additional Fee") within 120
days of the date of this Amendment; provided, however, that Borrowers shall not
be required to pay the Additional Fee if, within 120 days of the date hereof,
Borrowers direct the Agent to permanently reduce the amount of the Commitment
from $70,000,000 to $45,000,000 (which Commitment shall be reduced ratably among
the Lenders), and Borrowers repay to the Lenders the aggregate principal amount
of the Loans and Letter of Credit Utilization then outstanding in excess of
$45,000,000, plus interest accrued thereon.
6. Representations; Warranties; Covenants.
6.A. To induce the Agent and the Lenders to execute this Amendment,
the Borrowers jointly and severally represent and warrant that, as of the date
hereof:
(i) the representations and warranties set forth in
the Credit Agreement, including, without
limitation, those set forth in Section 7 thereof,
and in the Loan Documents to which any Borrower is
a party, are true and correct;
(ii) the covenants and agreements set forth in the
Credit Agreement, including, without limitation,
those set forth in Section 8 thereof as amended
hereby, and in the other Loan Documents to which
any Borrower is a party, are not currently being
breached and are inviolate;
(iii) no Default or Event of Default currently exists
under the Credit Agreement or any Loan Documents
and is continuing; and
(iv) the Borrowers have taken all corporate action
necessary to enter into and authorize the
execution and delivery of this Amendment and the
other Loan Documents to be executed and delivered
hereunder.
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<PAGE>
6.B. Within 90 days of the date hereof, Borrowers shall deliver to
Lenders an opinion of outside legal counsel in form and substance acceptable to
Lenders and covering such items as Lenders shall request.
7. Reimbursement for Costs. As further inducement for the Agent and the
Lenders to execute this Amendment, the Borrowers agree to reimburse the Agent
for any costs or expenses any such party may incur in connection with the
negotiation and drafting of this Amendment, including all attorneys' fees.
8. Governing Law; Successors and Assigns. This Amendment has been
executed, delivered and accepted in and shall be deemed to have been made under
and shall be governed by and construed in accordance with the internal laws of
the State of Illinois without regard to its conflict of law rules. This
Amendment shall be binding upon Borrowers and their respective successors and
assigns and shall inure to the benefit of Agent, the Lenders and their
respective successors and assigns; provided, however, that Borrowers shall not
have the right to assign their rights or interests hereunder or under the Credit
Agreement without the prior written consent of Agent.
9. Release. Borrowers, for and on behalf of their successors and
assigns, hereby release, forever discharge and agree to hold harmless Agent and
each Lender, and their respective successors and assigns, from any and all
claims, actions or causes of action heretofore arising in any manner under,
pursuant to or with respect to the Credit Agreement or the Loan Documents or
Agent's or any Lender's administration or actions under, pursuant to or with
respect to the Credit Agreement or the Loan Documents and from any suit or
proceeding relating to the foregoing at any time against Agent or any Lender.
10. Amendment; Ratification; No Waiver. The Credit Agreement and the
other Loan Documents to which any Borrower is a party are hereby amended in all
other respects to give effect to the foregoing amendments and agreements and, as
so amended, shall remain in full force and effect and shall continue to
constitute the valid and binding obligations of the Borrowers enforceable in
accordance with their respective terms. This Amendment shall not be deemed to
constitute or shall not be construed as a waiver of any rights, remedies,
collateral or other security of or granted to the Bank under the foregoing or of
any Event of Default or other default or breach which has occurred and is
continuing thereunder as of the date hereof.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original hereof and all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the Borrowers, the Agent and the Lenders have
caused their respective officers, thereunto duly authorized, to execute this
Amendment as of the date first above written.
BORROWERS:
CONTINENTAL WASTE INDUSTRIES, INC.
By:______________________________
Name: Jeffrey E. Levine
Title: Senior Vice President
BARKER BROTHERS, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
BARKER BROTHERS WASTE, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
BERRIEN COUNTY LANDFILL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
BLUEGRASS RECYCLING & TRANSFER COMPANY
By:
Name: Jeffrey E. Levine
Title: Vice President
- 4 -
<PAGE>
COMMERCIAL WASTE DISPOSAL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
COVINGTON WASTE, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
CWI OF ILLINOIS, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
CWI OF MISSOURI, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
CWI VENTURE, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
FLL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
G.E.M. ENVIRONMENTAL MANAGEMENT INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
GILA BEND REGIONAL LANDFILL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
GREENFIELD ENVIRONMENTAL DEVELOPMENT CORP.
By:
Name: Jeffrey E. Levine
Title: Vice President
JAMAX CORPORATION
By:
Name: Jeffrey E. Levine
Title: Vice President
KARAT CORP.
By:
Name: Jeffrey E. Levine
Title: Vice President
MIDWEST MATERIAL MANAGEMENT, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
NORTHWEST TENNESSEE DISPOSAL CORPORATION
By:
Name: Jeffrey E. Levine
Title: Vice President
PRICHARD LANDFILL CORPORATION
By:
Name: Jeffrey E. Levine
Title: Vice President
- 5 -
<PAGE>
SANDY HOLLOW LANDFILL CORP.
By:
Name: Jeffrey E. Levine
Title: Vice President
SANIFILL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
SOUTHERN ILLINOIS REGIONAL LANDFILL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
SOUTH TRANS, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
SPRINGFIELD ENVIRONMENTAL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
SPRINGFIELD ENVIRONMENTAL, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
TRIPLE G LANDFILLS, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
UNITED REFUSE CO., INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
VICTORY ENVIRONMENTAL SERVICES, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
VICTORY WASTE INCORPORATED
By:
Name: Jeffrey E. Levine
Title: Vice President
WPP CONTINENTAL DE COSTA RICA S.A.
By:
Name: Jeffrey E. Levine
Title: Vice President
WPP SERVICES, INC.
By:
Name: Jeffrey E. Levine
Title: Vice President
- 6 -
<PAGE>
ASCO SANITATION, INC.
By:______________________________
Name: Jeffrey E. Levine
Title: Vice President
GILLIAM TRANSFER, INC.
By:_______________________________
Name: Jeffrey Levine
Title: Vice President
ANDERSON REFUSE CO INC
By:________________________________
Name: Jeffrey Levine
Title: Vice President
TERRE HAUTE RECYCLING, INC.
By:_________________________________
Name: Jeffrey Levine
Title: Vice President
NATIONSWASTE, INC.
By:_________________________________
Name: Jeffrey Levine
Title: Vice President
NORTHEAST SANITARY LANDFILL, INC.
By:_________________________________
Name: Jeffrey Levine
Title: Vice President
SCHOFIELD CORPORATION OF ORLANDO
By:_________________________________
Name: Jeffrey Levine
Title: Vice President
HOLLAND EXCAVATING, INC.
By:_________________________________
Name: Jeffrey Levine
Title: Vice President
- 7 -
<PAGE>
AGENT:
LASALLE NATIONAL BANK, as Agent
By:
Name: Mike Foster
Title: Senior Vice President
Address: 120 South LaSalle Street
Chicago, Illinois 60603
Telephone: 312-904-2791
Telecopy: 312-904-8544
LENDERS:
LASALLE NATIONAL BANK
120 South LaSalle Street By:
Chicago, Illinois 60603 Name: Mike Foster
Title: Senior Vice President
Telephone: 312-904-2791
Telecopy: 312-904-8544
Amount of Commitment: $23,333,333.34
THE FIRST NATIONAL BANK OF BOSTON
100 Federal Street By:
Boston, MA 02106 Name:
Title:
Telephone: 617-434-4295
Telecopy: 617-434-2160
Amount of Commitment: $23,333,333.33
BANK OF AMERICA ILLINOIS
231 South LaSalle Street By:
Chicago, Illinois 60603 Name:
Title:
Telephone: 312-828-8363
Telecopy: 312-828-1974
Amount of Commitment: $23,333,333.33
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at June 30, 1996 and Consolidated
Statement of Operations for the six (6) months ended June 30, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 1,106,157
<SECURITIES> 0
<RECEIVABLES> 11,248,653
<ALLOWANCES> 580,339
<INVENTORY> 0
<CURRENT-ASSETS> 20,342,883
<PP&E> 109,077,603
<DEPRECIATION> 18,102,889
<TOTAL-ASSETS> 141,185,662
<CURRENT-LIABILITIES> 14,068,424
<BONDS> 0
0
0
<COMMON> 8,594
<OTHER-SE> 77,050,397
<TOTAL-LIABILITY-AND-EQUITY> 141,185,662
<SALES> 0
<TOTAL-REVENUES> 30,188,957
<CGS> 0
<TOTAL-COSTS> 21,014,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,083,276
<INCOME-PRETAX> 4,981,959
<INCOME-TAX> 2,072,113
<INCOME-CONTINUING> 2,909,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,909,846
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
