SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A #2
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
[ ] 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 0-20868
UNITED WASTE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3532338
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Four Greenwich Office Park, Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (203) 622 3131
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of class
Common Stock, $.001 par value
8% Cumulative Convertible Preferred
Stock, $.001 par value
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.
[X]Yes No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10K. [X]
As of March 12, 1997, there were 42,641,771 shares of the
registrant's common stock outstanding. The aggregate market
value of the common stock held by non-affiliates of the
registrant at March 12, 1997 was approximately $1,722,376,000.
The aggregate market value was calculated by using the closing
price of the stock as of that date on the Nasdaq Stock Market.
Documents incorporated by reference: None
FORM 10-K/A#2 REPORT INDEX
Page
PART II
Item 8 Financial Statements and Supplementary Data. . . . . .1
PART IV
Item 14 Exhibits, Financial Statements and Schedule, and
Reports on Form 8-K. . . . . . . . . . . . . . . . 41
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
(1) Consolidated Financial Statements:
Report of Independent Auditors . . . . . . . . . . . . . . . . .2
Consolidated Balance Sheets as of December 31, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . .6
Consolidated Statements of Stockholders' Equity for
the years ended December 31, 1996, 1995 and 1994 . . . . . . . .8
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . 11
Notes to Consolidated Financial Statements . . . . . . . . . . 14
(2) Financial Statement Schedule:
Schedule II Valuation and Qualifying Accounts. . . . . . . . . 39
Schedules other than those listed are omitted as they are not
applicable or the required or equivalent information has been
included in the financial statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
United Waste Systems, Inc.
We have audited the accompanying consolidated balance sheets of
United Waste Systems, Inc. as of December 31, 1996 and 1995 and
the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period
ended December 31, 1996. Our audits also included the financial
statement schedule listed in the index at Item 14(a). These
financial statements and schedule are the responsibility of the
management of United Waste Systems, Inc. Our responsibility is
to express an opinion on these financial statements and schedule
based on our audits. We did not audit the 1994 financial
statements of the Carmel Marina Companies, wholly-owned
subsidiaries, which statements reflect total revenues
constituting 15% in 1994 of the related consolidated totals.
Those statements were audited by other auditors, whose report has
been furnished to us and our opinion, insofar as it relates to
data included for the Carmel Marina Companies, is based solely on
the report of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and, for 1994, the report of
other auditors, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of United Waste Systems, Inc. at December 31,
1996 and 1995, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted
accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
ERNST & YOUNG LLP
MetroPark, New Jersey
February 21, 1997,
except for Note 13, as
to which the date is
March 25, 1997
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
December 31
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 2,567,854 $ 6,721,849
Accounts receivable, net of
allowance for doubtful accounts
of $3,076,000 in 1996 and
$2,249,000 in 1995 54,963,664 38,522,126
Prepaid expenses and
other current assets 29,989,310 14,198,544
Total current assets 87,520,828 59,442,519
Property and equipment, net
of accumulated depreciation of
$94,407,414 in 1996 and
$58,866,599 in 1995 387,980,224 289,378,346
Intangible assets, net 286,851,677 171,739,197
Other assets 38,688,965 20,008,399
$801,041,694 $540,568,461
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
and nonrecourse bonds $ 5,064,413 $ 5,644,096
Accounts payable 23,923,298 18,031,701
Deferred revenue 12,189,998 8,291,415
Due to seller 4,258,016 6,465,720
Short-term accrued landfill costs 4,648,923 6,524,024
Current portion of capital lease
obligations 846,528 1,383,576
Accrued expenses 15,572,292 11,143,769
Other current liabilities 9,196,178 5,933,633
Total current liabilities 75,699,646 63,417,934
Long-term debt, less current portion 302,704,119 156,193,971
Obligations under capital leases, less
current portion 373,296 4,687,554
Nonrecourse sewage facility revenue
bonds, less current portion 8,900,000 9,400,000
Accrued landfill costs, less
current portion 44,878,800 27,663,907
Other long-term liabilities 13,137,811 3,056,578
Deferred income taxes 36,634,609 33,885,306
Commitments and contingencies
The accompanying notes are an integral part of these consolidated
financial statements.
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
December 31
1996 1995
Stockholders' equity:
Preferred stock, $.001
par value, 5,000,000 shares
authorized; none outstanding
Common stock, $.001 par value,
75,000,000 shares authorized;
39,089,553 in 1996 and
17,578,550 in 1995 shares
issued and outstanding 39,090 17,579
Additional paid-in capital 248,973,700 200,267,630
Retained earnings 69,700,623 41,978,002
Total stockholders' equity 318,713,413 242,263,211
$801,041,694 $ 540,568,461
The accompanying notes are an integral part of these consolidated
financial statements.
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31
1996 1995 1994
Revenues $335,743,175 $228,376,762 $146,042,523
Cost of operations 206,786,205 140,813,834 88,611,515
Selling, general and
administrative expense 53,106,485 34,841,125 22,526,867
Income from operations 75,850,485 52,721,803 34,904,141
Interest expense 14,949,746 10,061,290 6,424,630
Other expense
(income), net 251,661 (948,830) (474,211)
Income before provision
for income taxes 60,649,078 43,609,343 28,953,722
Provision for
income taxes 25,256,286 15,320,898 7,944,023
Net income 35,392,792 28,288,445 21,009,699
Net deductions from
income available
to common stockholders -- 372,501 1,275,180
Income available to
common stockholders $ 35,392,792 $ 27,915,944 $ 19,734,519
Primary earnings
per common share and
common equivalent
share $ .89 $ .82 $ .76
Fully diluted
earnings per common
share and common
equivalent share $ .88 $ .81 $ .72
Pro forma tax
adjustments 363,280 1,458,361 2,064,773
Pro forma net income 35,029,512 26,830,084 18,944,926
Net deductions from
pro forma income
available to common
shareholders -- 372,501 1,275,180
Pro forma net income
available to common
shareholders $ 35,029,512 $ 26,457,583 $ 17,669,746
The accompanying notes are an integral part of these consolidated
financial statements.
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - Con't
Year ended December 31
1996 1995 1994
Pro forma primary
earnings per common
share and common
equivalent share $ .88 $ .77 $ .68
Pro forma fully diluted
earnings per common
share and common
equivalent share $ .87 $ .77 $ .65
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Preferred Stock Common Stock
Number Number Additional
of of Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
Balance, December
31, 1993 1,797,581 $ 1,798 11,514,060 $ 11,514 $ 83,935,580 $ 4,535,071
Issuance of
common stock 763,578 764 15,279,707
Exercise of
common stock
warrants and
options 568,394 569 7,311,162
Conversion of 8%
convertible
preferred
stock (854,152) (854) 780,563 780 44
Preferred stock
dividends (1,275,180)
Contributed capital 590,667
Subchapter S
distributions
of pooled
entities (3,413,997)
Net income 21,009,699
Balance, December
31, 1994 943,429 944 13,626,595 13,627 107,117,160 20,855,593
Issuance of
common stock 2,469,299 2,469 79,684,075
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Continued
<CAPTION>
Preferred Stock Common Stock
Number Number Additional
of of Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
Exercise of
common stock
warrants and
options 529,582 530 8,145,726
Conversion of 8%
convertible
preferred stock (943,429) (944) 862,105 862 82
Conversion of
convertible debt 90,969 91 2,660,752
Preferred stock
dividends (372,501)
Subchapter S
distributions
of pooled
entities (4,133,700)
Net income 28,288,445
Reclassification of
subchapter S
accumulated
earnings to
paid-in capital 2,659,835 (2,659,835)
Balance, December 31,
1995 17,578,550 17,579 200,267,630 41,978,002
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Continued
Preferred Stock Common Stock
Number Number Additional
of of Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C>
Two-for-one stock
split 18,238,718 18,238 (18,238)
Poolings-of-
interests 758,558 759 422,967 (4,781,320)
Adjustment to
conform fiscal
year of pooled
entities (506,803)
Exercise of
common stock
warrants and
options 2,468,630 2,469 43,335,486
Issuance of common
stock 45,097 45 3,823,807
Subchapter S
distributions of
pooled entities (1,240,000)
Net income 35,392,792
Reclassification
of Subchapter S
accumulated
earnings to paid-in
capital 1,142,048 (1,142,048)
Balance, December 31,
1996 -- -- 39,089,553 $39,090 $248,973,700 $69,700,623
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31
1996 1995 1994
Cash flows from operating
activities:
Net income $ 35,392,792 $ 28,288,445 $ 21,009,699
Adjustments to reconcile
net income to
net cash provided
by operating activities:
Depreciation and
amortization 37,875,896 24,308,227 14,247,906
Deferred income
taxes 10,057,369 3,859,374 1,871,425
Gain on sale of
assets (929,661) (174,767) (25,618)
Changes in operating assets
and liabilities:
Accounts
receivable (5,332,538) (2,446,181) (6,076,126)
Other assets 1,614,204 (3,874,321) (163,365)
Accounts payable 1,994,813 (882,447) 4,870,279
Accrued landfill
costs (5,525,390) 34,893 (1,849,037)
Other
liabilities 3,045,562 7,277,122 3,536,541
Net cash provided by
operating
activities 78,193,047 56,390,345 37,421,704
Cash flows from investing
activities:
Purchases of property
and equipment (55,317,981) (39,189,791) (22,562,624)
Proceeds from sale
of assets 3,071,440 280,290 285,243
Restricted investments, net
(held to maturity) (8,151,482) (7,954,428) (186,741)
Payments of capitalized
project costs (1,244,535) (1,279,671) (2,305,851)
Payments of contingent
purchase price (3,752,072) (2,337,751) (6,262,879)
The accompanying notes are an integral part of these consolidated financial
statements.
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
Year ended December 31
1996 1995 1994
Purchases of other companies,
net of cash acquired (157,092,207) (159,062,810) (27,331,361)
Net cash used in
investing activities (222,486,837) (209,544,161) (58,364,213)
Cash flows from financing
activities:
Dividends on preferred
stock (372,501) (1,275,180)
Proceeds from debt 225,130,225 278,281,793 40,839,022
Repayments of debt (94,638,687) (185,233,930) (32,977,036)
Repayments of capital lease
obligations (3,456,053) (614,686) (1,570,971)
Net proceeds from issuance
of common stock 66,072,051 15,280,471
Proceeds from exercise
of common stock warrants
and options 26,652,798 8,146,256 6,296,716
Payment of financing costs (5,437,000) (2,684,074) (582,483)
Due to sellers (6,871,488) (2,185,751) (317,498)
Notes receivable (1,104,505)
Contributed capital of
pooled entities 590,667
Subchapter S distributions
of pooled entities (1,240,000) (4,133,700) (3,413,997)
Net cash provided by
financing activities 140,139,795 157,275,458 21,765,206
(Decrease) increase in cash
and cash equivalents (4,153,995) 4,121,642 822,697
Cash and cash equivalents
at beginning of year 6,721,849 2,600,207 1,777,510
Cash and cash equivalents
at end of year $ 2,567,854 $ 6,721,849 $2,600,207
Supplemental disclosure of
cash flow information:
Cash paid during the year
for interest, net of
amounts capitalized $ 13,328,310 $ 8,337,161 $5,970,394
Cash paid during the year
for income taxes $ 5,644,573 $ 10,362,953 $3,426,391
The accompanying notes are an integral part of these consolidated financial
statements.
UNITED WASTE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
Year ended December 31
1996 1995 1994
Supplemental schedule of
noncash investing and
financing activities:
The Company acquired the
net assets and assumed
certain liabilities of
other companies as follows:
Fair value of net assets
acquired:
Property and equipment $ 51,505,429 $ 121,210,509 $ 14,795,348
Other assets, net of cash
acquired 138,909,867 129,422,285 22,425,750
Less liabilities assumed (24,603,268) (67,813,389) (9,227,426)
Less amounts due to
seller (4,671,023) (7,965,999) (594,483)
Less amounts paid in common
stock (3,823,852) (13,333,150)
Less deposits and
capitalized project costs
paid in
prior periods (224,946) (2,457,446) (67,828)
Net cash paid $ 157,092,207 $ 159,062,810 $27,331,361
Equipment financed by capital
lease obligations $ 777,867 $ 167,370
Conversion of convertible
preferred stock 10,377,719 9,395,672
Conversion of convertible
debt 2,660,843
The accompanying notes are an integral part of these consolidated financial
statements.
UNITED WASTE SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
Note 1 - Organization and basis of presentation
United Waste Systems, Inc. and its subsidiaries ("United" or
"the Company") own, operate, acquire and develop nonhazardous
solid waste landfills, collection operations and other related
environmental services in selected markets in the United States.
The accompanying Consolidated Financial Statements include
the accounts of the Company and its wholly-owned subsidiaries.
All significant intercompany accounts and transactions have been
eliminated. The accompanying Consolidated Financial Statements
have been restated to include accounts of certain acquisitions
accounted for as poolings-of-interests (see Note 3).
All per share data of the Company for all periods included
in the Consolidated Financial Statements and related Notes to
Consolidated Financial Statements and all share data in the Notes
to Consolidated Financial Statements have been adjusted to
reflect a two-for-one stock split in the form of a 100% stock
dividend that became effective in June 1996 (see Note 9).
Note 2 - Summary of significant accounting policies
Cash Equivalents: The Company considers all highly liquid
instruments with a maturity of three months or less when
purchased to be cash equivalents.
Property and Equipment: Property and equipment are recorded
at cost and depreciated over their estimated useful lives using
the straight-line method. The estimated useful life ranges for
property and equipment are as follows:
Range of
Estimated
Useful Lives
Buildings and improvements 25 - 30 years
Vehicles and equipment 7 - 10 years
Furniture, fixtures and
office equipment 5 - 10 years
Amortization of assets recorded under capital leases is
included in depreciation expense. The Company's sludge
composting facility is being depreciated over the original
contract period of 20 years. Landfill and landfill improvement
costs are amortized based upon total units of airspace filled
during the year in relation to estimated permitted airspace
capacity. Land held for future development is excluded from
amortization.
Engineering and legal fees paid to third parties incurred to
obtain a disposal facility permit are capitalized as landfill
costs and amortized over the estimated related airspace capacity.
These costs are not amortized until the permit is obtained and
the disposal facility is ready for its intended use. If the
permit is denied, these costs are charged to expense.
Other Assets: Other assets consist primarily of deposits
for, or advances to, pending or prospective acquisitions and
restricted cash and cash equivalents which are collateral for
letters of credit and bonds and restricted debt service and
construction funds. Restricted cash and cash equivalents are
$11,480,003 at December 31, 1996 and $8,366,000 at December 31,
1995.
In connection with the Company's Tax Exempt Bonds (see Note
6), restricted cash and cash equivalents in escrow total
$5,590,000 at December 31, 1995. At December 31, 1996, all funds
have been expended.
Concentrations of Credit Risk: Financial instruments that
potentially subject the Company to concentrations of credit risk
consist primarily of cash investments and accounts receivable.
The Company places its cash investments with high quality
financial institutions. Concentrations of credit risk with
respect to accounts receivable are limited because a large number
of geographically diverse customers make up the Company's
customer base. No single group or customer represents greater
than 10% of total accounts receivable. The Company controls
credit risk through credit approvals, credit limits, and
monitoring procedures.
Accrued Landfill Costs: Landfill site closure and post-closure cost
liabilities are accrued for the Company's owned
landfills based on engineering estimates of total units of
airspace filled during the year and the total closure and post-closure costs
to be incurred by the Company. Such liabilities
are not discounted or reduced by possible recoveries from third
parties.
Accrued Expenses and Other Current Liabilities: Accrued
expenses consist primarily of accrued liabilities related to
interest, payroll and payroll taxes, insurance claims, royalties,
and waste taxes. Other current liabilities consist primarily of
contractual obligations, deferred payments and acquisition costs
payable.
Revenue Recognition: Landfill revenues are recorded at the
date of actual waste disposal. Revenues received prior to
services being performed are deferred and are recognized over the
service period.
Income Taxes: The Company uses the liability method in
accounting for income taxes. Under this method, deferred tax
assets and liabilities are determined based on the differences
between financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws
that are expected to be in effect when the differences are
expected to reverse.
Impact of Recently Issued Accounting Standards: In March
1995, the Financial Accounting Standards Board issued Statement
No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed of ("SFAS No. 121"), which
requires impairment losses to be recorded on long-lived assets
used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. SFAS No. 121
also addresses the accounting for long-lived assets that are
expected to be disposed of. SFAS No. 121 is effective for the
Company's fiscal year ended December 31, 1996. The adoption of
this Statement did not have a material effect on the Company's
financial position or results of operations.
In October 1996, the Accounting Standards Executive
Committee of the American Institute of Certified Public
Accountants issued Statement of Position No. 96-1 ("SOP 96-1"),
Environmental Remediation Liabilities. SOP 96-1 provides
authoritative guidance on the recognition, measurement, display
and disclosure of environmental remediation liabilities.
SOP 96-1 also contains a discussion of major federal legislation
relating to environmental remediation and pollution prevention
and control. SOP 96-1 is effective for fiscal years beginning
after December 15, 1996. Although such costs are not presently
determinable, adoption of SOP 96-1 is not expected to have a
material effect on the Company's financial position and results
of operations (See Note 12).
Use of Estimates: The preparation of the Consolidated
Financial Statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the Consolidated
Financial Statements and accompanying notes. These estimates and
assumptions principally affect the Company's accruals for
landfill costs and accounts receivable reserve, the amortization
periods for intangible assets and landfill and landfill
improvement costs. Actual results could differ from those
estimates.
Stock-Based Compensation: The Company accounts for its stock
compensation arrangements under the provisions of APB Opinion No.
25, "Accounting for Stock Issued to Employees." Since the stock
options are granted by the Company at the fair value of the
shares at the date of grant, no compensation expense is
recognized in the Consolidated Financial Statements (see Note 9).
Note 3 - Acquisitions
On June 28, 1996, the Company issued 730,765 shares of its
Common Stock for all of the outstanding shares of common stock of
Salinas Disposal Service, Inc., Rural Dispos-All Service, Inc.
and Madison Lane Properties, Inc. (the "Salinas Companies"), a
group of affiliated companies that comprise an integrated solid
waste management company. This transaction has been accounted
for as a pooling-of-interests and, accordingly, the Consolidated
Financial Statements have been restated for all periods presented
to include the accounts of the Salinas Companies.
On September 29, 1995, the Company issued 2,252,946 shares
of its Common Stock for all of the outstanding shares of common
stock of Carmel Marina Corporation, Neal Road Landfill
Corporation, Jolon Road Landfill Corporation, Cal Sanitation
Services, Inc., Portable Site Services, Inc. and certain real
estate assets (the "Carmel Marina Companies"), a group of
affiliated companies that comprise an integrated solid waste
management company. This transaction has been accounted for as a
pooling-of-interests and, accordingly, the Consolidated Financial
Statements have been restated for all periods presented to
include the accounts of the Carmel Marina Companies.
Separate revenue and pro forma net income of United the
Carmel Marina Companies and the Salinas Companies prior to the
respective combinations are as follows:
Carmel
Marina Salinas
United(1) Companies Companies Combined
Year ended
December 31,
1995
Revenues $211,790,224 $16,586,538 $228,376,762
Pro forma net
income 25,987,769 842,315 26,830,084
Year ended
December 31,
1994
Revenues 106,551,057 $21,977,708 17,513,758 146,042,523
Pro forma net
income 15,557,488 1,509,387 1,878,051 18,944,926
_______________
(1) The data with respect to United for the year ended December
31, 1994, is prior to restatement for the acquisitions of
the Carmel Marina Companies and the Salinas Companies. The
data with respect to United for the year ended December 31,
1995, is after restatement for the acquisition of the Carmel
Marina Companies, but prior to restatement for the
acquisition of the Salinas Companies.
During September 1996, the Company issued 579,857 shares of
its Common Stock for the acquisition of three solid waste
management companies. During December 1996, the Company issued
178,701 shares of its Common Stock for the acquisition of two
solid waste management companies. These transactions were
accounted for as poolings-of-interests; however, these
acquisitions were not material to the Company's consolidated
operations and financial position and, therefore, the
accompanying 1995 and 1994 Consolidated Financial Statements have
not been restated.
The acquisitions discussed below have been accounted for as
purchases and, accordingly, the results of their operations have
been included in the Company's results of operations from their
respective acquisition dates. The purchase prices have been
allocated to the assets acquired and liabilities assumed based on
their respective fair values at their respective acquisition
dates. Contingent purchase price is capitalized when earned and
amortized over the remaining life of the related asset.
During December 1996, the Company purchased outstanding
stock and certain assets of the I-5 Companies, which are
comprised of two landfill operating contracts, one collection
company and two transfer stations. The consideration was
comprised of $21,000,000 in cash and certain additional assumed
liabilities.
During January 1996, the Company purchased all of the
outstanding stock of Commercial Disposal Co., Inc. which is
comprised of a collection company and two transfer stations. The
aggregate consideration was $16,126,500 in cash.
The total initial consideration for other acquisitions that
the Company made in 1996 was approximately $119,466,000 in cash,
approximately $1,390,000 in seller notes, 109,673 shares of the
Company's Common Stock, warrants to purchase 65,000 shares of the
Company's Common Stock and contingent consideration not to exceed
$15,950,000.
During September 1995, the Company purchased the outstanding
stock and certain assets of the Partyka Resource Companies, which
comprise two solid waste landfills and collection operations.
The aggregate initial consideration was $36,424,609 in cash, $6
million in seller notes and 184,200 shares of the Company's
Common Stock. Contingent royalty payments of $5.95 per ton are
due for each ton received at the landfills commencing October
1995 (subject to a cap of $10,577,773).
During September 1995, the Company purchased all of the
outstanding stock of the Zenith Kremer Companies, which are
comprised of a collection company and two transfer station
permits. The aggregate consideration was $19,158,320 in cash.
During February 1995, the Company purchased all of the
outstanding stock of Waste Systems Corporation and certain assets
of WasteCo, Inc., which together are comprised of a solid waste
landfill and collection operations. The aggregate initial
consideration was $12,326,396 in cash and 280,000 shares of the
Company's Common Stock. Contingent royalty payments of $1.15 per
ton are due for each ton received at the landfill (not to exceed
$8 million in aggregate). An additional contingent purchase
payment of $750,000 was paid in 1996 upon receipt of a permit
modification increasing daily and annual tonnage limits that may
be accepted by the landfill, and an additional contingent
purchase payment of $1,000,000 was paid in 1996 upon the receipt
of another permit modification from required regulatory agencies
authorizing additional landfill capacity.
The total initial consideration for other acquisitions that
the Company made in 1995 was approximately $91,200,000 in cash,
approximately $5,900,000 in seller notes, 464,398 shares of the
Company's Common Stock and contingent consideration not to exceed
$19,200,000.
During August 1994, the Company purchased all of the
outstanding stock of Pete's Disposal Service, Inc., a collection
company that provides solid waste collection services. The
aggregate initial consideration was $4,800,000 in cash.
Contingent consideration of $347,896 in cash was paid in January
1995 related to certain contractual obligations for billing
retentions.
During June 1994, the Company purchased all of the
outstanding stock of PRTR, Inc., a company that operates a
transfer station. The aggregate initial consideration was
$4,225,846 in cash. Contingent royalty payments of $1 per ton
(subject to $.75 increases on the fifth and tenth anniversary
dates of the transaction) for each ton received in excess of 100
tons per day are payable quarterly (subject to a cap of $125,000
per year and $1,300,000 in aggregate).
During April 1994, the Company purchased substantially all
of the assets of Orlando Trucking, Inc., a collection company.
The aggregate initial consideration was $3,970,000 in cash.
During March 1994, the Company purchased all of the
outstanding stock of Kent Industrial Services, Inc., a collection
company. The aggregate initial consideration was $5,000,000 in
cash.
During January 1994, the Company purchased all of the
outstanding stock of Harland's Sanitary Landfill, Inc. and
purchased substantially all of the assets of Harland's Disposal
Service, Inc. These companies are comprised of solid waste
landfill and collection operations. The initial aggregate
purchase price was $4,170,000 in cash. Contingent royalty
payments of $1.50 per ton commence on the ninth anniversary of
the transaction.
The total consideration for other acquisitions that the
Company made in 1994 was $2,652,291 in cash and $1,363,000 in
seller notes.
The Company has not completed its valuation of certain of
its 1996 purchases and the purchase price allocations are subject
to change when additional information concerning asset and
liability valuations are completed.
The following table summarizes, on an unaudited pro forma
basis, the combined results of operations of the Company for the
years ended December 31, 1996 and 1995 as though each acquisition
described above (excluding certain of such acquisitions that were
not material individually or in the aggregate) was made on
January 1, 1995.
1996 1995
Revenues $ 360,469,429 $ 322,428,781
Pro forma net income 34,960,904 28,169,023
Pro forma primary earnings
per common and common
equivalent share $.88 $.81
Pro forma fully diluted earnings
per common and common
equivalent share $.87 $.80
The unaudited pro forma results are based upon certain
assumptions and estimates which are subject to change. These
results are not necessarily indicative of the actual results of
operations that might have occurred, nor are they necessarily
indicative of expected results in the future.
<PAGE>
Note 4 - Property and equipment
A summary of property and equipment is as follows:
December 31
1996 1995
Landfills $ 224,413,867 $ 181,685,044
Land and improvements 22,350,398 14,529,438
Buildings and improvements 34,713,450 22,626,762
Sludge composting facility 11,675,853 11,675,853
Vehicles and equipment 160,422,300 102,582,170
Furniture, fixtures and
office equipment 5,381,978 3,243,833
Construction in progress 23,429,792 11,901,845
482,387,638 348,244,945
Less accumulated depreciation and
amortization (94,407,414) (58,866,599)
Net property and equipment $ 387,980,224 $ 289,378,346
Landfill amortization totaled $11,176,704, $6,986,922 and
$3,573,196 for the years ended December 31, 1996, 1995 and 1994,
respectively. Depreciation expense totaled $18,009,022,
$9,971,936 and $5,447,329 for the years ended December 31, 1996,
1995 and 1994, respectively.
The Company capitalizes interest as a component of the cost
of property and equipment for construction projects that take
considerable time and expenditures. Interest capitalized,
primarily related to landfill cell construction, in 1996, 1995
and 1994 amounted to $1,682,000, $1,349,000 and $722,000,
respectively.
Note 5 - Intangible assets
Intangible assets consist of the excess of cost over the
value of identifiable net assets of businesses acquired and other
intangible assets. Excess of cost over value of identifiable net
assets of businesses acquired are being amortized on a straight
line basis over forty years while other intangible assets are
being amortized on a straight line basis for periods ranging from
three to ten years.
December 31
1996 1995
Excess of cost over value of
identifiable net assets of
businesses acquired $ 293,462,083 $ 171,957,922
Other intangible assets 8,621,997 8,520,001
302,084,080 180,477,923
Less accumulated amortization (15,232,403) (8,738,726)
Intangible assets, net $ 286,851,677 $ 171,739,197
The Company continually evaluates the value and future
benefits of its intangibles. The Company assesses recoverability
from future operations using income from operations of the
related acquired business as a measure. Under this approach, the
carrying value would be reduced if it becomes probable that the
Company's best estimate for expected future cash flows of the
related business would be less than the carrying amount of the
intangible over the remaining amortization period. For the three
year period ended December 31, 1996, there were no adjustments to
the carrying amounts of intangibles resulting from these
evaluations.
Note 6 - Long-term debt
Long-term debt consists of the following:
December 31
1996 1995
Credit Facility $ 31,450,000 $ 41,800,000
Convertible Subordinated Notes
at 4 1/2% per annum, due
June 1, 2001, convertible
to Common Stock at $32.50
per share 150,000,000
Senior secured notes, interest
payment semi-annually, at 7.67%
per annum, annual principal
payments beginning September 1999,
due September 2005 75,000,000 75,000,000
Tax exempt bonds, monthly interest
payments at variable rates
(4.25% and 5.15% at December 31,
1996 and 1995, respectively),
due April 2010 22,500,000 22,500,000
Promissory note, quarterly interest
payments, at 8% per annum, due
September 2001 6,000,000 6,000,000
December 31
1996 1995
Subordinated promissory notes,
monthly interest payments at 8 1/2%
per annum due April 2000 3,000,000 3,000,000
Other (interest rates ranging from
3.07% to 14.7%) 19,418,532 13,238,067
307,368,532 161,538,067
Less current portion (4,664,413) (5,344,096)
$302,704,119 $ 156,193,971
The Company's credit facility was amended in December 1996
to, among other things, eliminate certain covenants and lower
borrowing costs. The credit facility as so amended (the "Credit
Facility") provides for a $190 million, three year, secured
revolving credit facility due December 1999. Outstanding loans
under the Credit Facility bear interest at a rate per annum equal
to the Eurodollar Rate (Reserve Adjusted) (as defined in the loan
agreement providing for the Credit Facility) applicable to each
interest period plus 0.625% to 1.25% per annum or the Alternate
Reference Rate (as defined) from time to time in effect. At
December 31, 1996 and 1995, the weighted average interest rate
was 6.98% and 7.15%, respectively. The Credit Facility also
allows the Company to obtain up to $90 million in letters of
credit. The aggregate amount that the Company is permitted to
borrow under the Credit Facility is reduced by the aggregate face
amount of all outstanding letters of credit issued thereunder.
The Credit Facility is secured by the stock of the Company's
subsidiaries, restricts the Company from granting other liens on
its assets (subject to certain limited exceptions), and requires
the Company to comply with certain covenants including, but not
limited to, maintenance of certain financial ratios, limitations
on additional indebtedness, limitations on capital expenditures
and a prohibition on the Company's payment of cash dividends on
its Common Stock. The Credit Facility also currently requires
that the consent of the lenders be obtained in order for the
Company to make an acquisition that provides for an aggregate
cash purchase price of $50 million or more. In addition, the
Credit Facility prohibits the Company from using more than $15
million of its cash to secure closure and post-closure
obligations that the Company may have relating to its landfills
(see Note 13).
In June 1996, the Company issued $150 million principal
amount of 4-1/2% Convertible Subordinated Notes due June 1, 2001
(the "Convertible Notes"). The Convertible Notes bear interest
at a fixed rate of 4-1/2% per annum, payable semi-annually. The
Convertible Notes are convertible into Common Stock of the
Company at a conversion price of $32.50 per share. The
Convertible Notes are unsecured obligations of United Waste
Systems, Inc. and are subordinated to all existing and future
Senior Indebtedness (as defined in the indenture relating to the
Convertible Notes) of United Waste Systems, Inc. and are
effectively subordinated to all indebtedness and other
liabilities of the subsidiaries of the Company.
In April 1995, $22.5 million in principal amount of Variable
Rate Demand Limited Obligation Revenue Bonds (the "Tax Exempt
Bonds") were issued for the benefit of the Company by a corporate
body organized under the laws of the State of Michigan. The Tax
Exempt Bonds mature on April 1, 2010 and bear interest at a
variable rate unless the Company elects a fixed rate in
accordance with the terms of the Tax Exempt Bonds. If a variable
rate is in effect, this rate is set periodically at a level (not
to exceed 12% per annum) that would enable the Tax Exempt Bonds
to be resold at a price equal to their principal amount plus all
accrued interest thereon.
In September 1995, the Company issued $75 million in Senior
Secured Notes due September 1, 2005 (the "Notes"). The Notes
bear interest at a fixed rate of 7.67% per annum; interest is
payable semi-annually and annual principal payments in the amount
of $10.7 million are due beginning September 1999. The Notes are
secured pari passu with the Credit Facility and any event of
default under the Credit Facility also constitutes an event of
default under the Notes. The Notes require the Company to comply
with certain covenants including, but not limited to, maintenance
of certain financial ratios, limitation on additional
indebtedness and prohibition on the Company's payment of cash
dividends on any of its capital stock.
Maturities of the Company's long-term debt for each of the
next five years at December 31, 1996 are as follows:
1997 $4,664,413
1998 5,564,456
1999 52,167,791
2000 11,406,981
2001 17,200,242
Thereafter 216,364,649
Note 7 - Nonrecourse Sewage Facility Revenue Bonds
The Company's nonrecourse sewage facility revenue bonds (the
"Revenue Bonds") are obligations of a wholly-owned subsidiary of
the Company and are collateralized solely by the subsidiary's
interest in a sludge composting facility, revenue derived from
such facility and by certain bond funds held in trust. The
Revenue Bonds are nonrecourse and, therefore, the subsidiary and
its affiliates, including, but not limited to, United Waste
Systems, Inc. and subsidiaries, are not liable for any payment
due on the Revenue Bonds, nor any claim based on, or in respect
to, the Revenue Bond's indenture. Annual principal payments on
the Revenue Bonds range from $400,000 to $1,100,000 through 2010
at final maturity and interest is payable semi-annually at a
fixed rate of 9.25% per annum.
Note 8 - Income Taxes
Certain of the companies acquired by United in transactions
accounted for as poolings-of-interests (see Note 3) had elected
to be treated as Subchapter S Corporations or partnerships prior
to being acquired. In general, the income or loss of a
Subchapter S Corporation or partnership is passed through to its
owners rather than being subjected to taxes at the entity level.
Pro forma net income or loss reflects a provision for income
taxes on a pro forma basis for all periods presented as if all
such companies were liable for federal and state income taxes as
taxable corporate entities for all periods presented.
The provision for historical and pro forma federal and state
income taxes is as follows:
December 31
1996 1995 1994
Historical income taxes:
Current State $ 3,135,854 $ 1,546,649 $ 546,230
Current Federal 12,063,062 10,228,961 5,575,607
Deferred State 1,607,625 660,890 181,636
Deferred Federal 8,449,744 3,198,484 1,640,550
December 31
1996 1995 1994
(Benefit) for deferred
taxes of Subchapter S
Corporation at time
of pooling (314,086)
$ 25,256,286 $ 15,320,898 $ 7,944,023
Pro forma tax adjustment:
State 78,743 310,142 450,095
Federal 284,537 1,148,219 1,614,678
$ 363,280 $ 1,458,361 $ 2,064,773
A reconciliation of the provision for income taxes and the
amount computed by applying the statutory federal income tax
rates of 35% for 1996, 1995 and 1994 to income before taxes is as
follows:
December 31
1996 1995 1994
Computed tax at statutory
tax rate $ 21,227,177 $ 15,263,270 $ 10,133,803
Increase (decrease)
in taxes:
Change in valuation
allowance (270,480) (35,978) (472,306)
Nondeductible expense
(primarily
intangibles) 1,613,019 992,663 230,994
State income taxes, net
of federal tax
benefit 3,134,444 1,636,493 658,546
Income of Subchapter S
corporations (363,280) (1,458,361) (2,064,773)
(Benefit) for deferred
taxes of Subchapter S
Corporation at
time of pooling (314,086)
Other (84,594) (763,103) (542,241)
$ 25,256,286 $ 15,320,898 $ 7,944,023
The components of deferred income tax liabilities and assets
are as follows:
December 31
1996 1995
Deferred income tax
liabilities:
Property, equipment
and intangibles $ 47,972,712 $ 42,593,903
Deferred income
tax assets:
Accounts receivable
allowance 770,304 921,905
Accrued liabilities 6,961,902 1,861,550
Closure reserves 10,405,684 8,090,566
Net operating loss
carryforwards 2,047,551 1,131,158
Other 64,004
Total deferred income
tax assets 20,185,441 12,069,183
Valuation allowance (270,480)
$ 20,185,441 $ 11,798,703
The Company recognized certain tax benefits related to its
stock option plan in the amount of $16,682,688 and $1,754,177 in
1996 and 1995, respectively. At December 31, 1996, these
benefits were recorded as income taxes receivable, which is
reflected in the balance sheet as an increase in prepaid expenses
and other current assets, and an increase in additional paid-in
capital. At December 31, 1995, these benefits were recorded as a
reduction of income taxes payable, and reflected in the balance
sheet as a reduction in accrued expenses and other current
liabilities, and an increase in additional paid-in capital.
The Company has net short-term deferred tax assets in the
amount of $8,847,338 and $2,842,000, at December 31, 1996 and
1995, respectively, which are reported in the balance sheet in
prepaid expenses and other current assets.
At December 31, 1996, the Company has net operating loss
carryforwards ("NOLs") of $14,111,425 for federal and $17,504,221
for state income tax purposes that expire in years 1997 through
2011. A portion of the NOLs resulted from the Company's
acquisitions discussed in Note 3 and such NOLs are limited to the
future taxable earnings of their related acquired businesses. At
December 31, 1996, the Company has refundable income taxes in the
amount of $9,591,911. This consists of $4,739,903 representing a
carryback of losses and $4,852,008 representing federal and state
payments for future liabilities.
Note 9 - Capital Stock
Common Stock: On May 30, 1996, the stockholders of the
Company approved an amendment to the Company's Certificate of
Incorporation that increased the authorized shares of Common
Stock of the Company to 75,000,000 shares. On March 12, 1996,
the Board of Directors approved a two-for-one stock split of the
Company's Common Stock to be effected in the form of a 100% stock
dividend. Such stock split was effected by the distribution on
June 18, 1996, of a dividend of one share of the Company's Common
Stock in respect of each share of Common Stock that was
outstanding on June 7, 1996, the record date established for such
distribution. All agreements concerning stock options,
convertible securities and other commitments payable in shares of
the Company's Common Stock were amended pursuant to their own
terms to provide for the issuance of two shares of Common Stock
for every one share that was issuable prior to the stock split.
At December 31, 1996, approximately 9,176,552 shares of
Common Stock are reserved for the exercise of warrants, options
and the conversion of certain debt.
Preferred Stock: The Company's board of directors has the
authority to designate 5,000,000 shares of $.001 par value
preferred stock in series, to establish as to each series the
designation and number of shares to be issued and the rights,
preferences, privileges and restrictions of the shares of each
series, and to determine the voting powers, if any, of such
shares. At December 31, 1996, the Company's Board of Directors
had designated 3,440,990 shares, of which 336,621 shares are
available for future issuance.
Common Stock Options and Warrants: During July 1992, the
Company adopted the 1992 Stock Option Plan for the grant of
incentive stock options and non-statutory stock options. The
aggregate number of shares of Common Stock which may be subject
to options granted under the plan may not exceed 5,900,000,
subject to adjustment under certain circumstances. The exercise
price, subject to certain minimums, vesting periods and other
conditions applicable to each option granted, are generally
determined by two disinterested directors on the Compensation
Committee of the Board of Directors.
Also during July 1992, the Company adopted a 1992
Disinterested Director Stock Option Plan for the grant of
non-statutory options for certain directors of the Company. The
plan provides for a fixed number of options to be issued annually
for each participant with exercise prices at current market value
and these options vest immediately.
The Company has various other stock option plans for
employees other than officers or directors. These plans have
terms similar to those of the Company's 1992 Stock Option Plan.
During 1996, the Company granted 1,983,368 stock options
with a weighted-average exercise price of $26.92 per share.
During 1996, 2,562,698 options (with a weighted-average exercise
price per share of $10.06) were exercised and 17,829 options
(with a weighted-average exercise price per share of $13.97) were
forfeited. The weighted-average grant date fair value of
options granted during 1996 was $6.52 per share.
At December 31, 1996, 3,588,091 options to purchase shares
of the Company's Common Stock were outstanding. The weighted
average exercise price per share of such options was $19.91.
Such options had exercise prices ranging from $5.06 to $36.25 per
share. Of such options, 816,018 provided for an exercise price
per share in the range of $5.06 to $10.00 (the weighted average
exercise price and weighted average remaining life of the options
in this range being $8.08 and 6.9 years, respectively); 1,107,158
provided for an exercise price per share in the range of $10.01
to $20.00 (the weighted average exercise price and weighted
average remaining life of the options in this range being $16.48
and 8.6 years, respectively); and 1,664,915 provided for an
exercise price per share in the range of $20.01 to $36.25 (the
weighted average exercise price and weighted average remaining
life of the options in this range being $27.98 and 9.7 years,
respectively).
At December 31, 1996, 1,424,954 of the Company's outstanding
options were exercisable. The weighted average exercise price
per share of such exercisable options was $17.89. Of such
options, 479,682 provided for an exercise price per share in the
range of $5.06 to $10.00 (the weighted average exercise price of
the options in this range being $7.78); 360,995 provided for an
exercise price per share in the range of $10.01 to $20.00 (the
weighted average exercise price per share of the options in this
range being $15.65); and 584,277 provided for an exercise price
per share in the range of $20.01 to $36.25 (the weighted average
exercise price of the options in this range being $27.58).
At December 31, 1996, the Company had 973,076 stock purchase
warrants outstanding with an exercise price per share ranging
from $2.61 to $34.75, all of which were currently exercisable.
Such warrants expire through the year 2006.
At December 31, 1995, the Company had 4,185,250 stock
options outstanding with exercise prices per share ranging from
$5.06 to $19.00, with a weighted-average exercise price of $10.69
of which 3,063,584 options were exercisable. During 1995,
447,140 stock options were exercised with exercise prices per
share ranging from $5.25 to $17.19. Also at December 31, 1995,
the Company had 1,247,328 stock purchase warrants outstanding
with exercise prices per share ranging from $2.61 to $12.50, all
of which were currently exercisable, and expire through the year
2002.
At December 31, 1994, the Company had 3,235,242 stock
options outstanding with exercise prices per share ranging from
$5.06 to $12.00. During 1994, 672,844 stock options were
exercised with exercise prices per share ranging from $4.05 to
$9.00. Also at December 31, 1994, the Company had 1,631,214
stock purchase warrants outstanding with exercise prices per
share ranging from $.03 to $7.71, all of which were currently
exercisable, and such warrants expire through the year 2002.
The Company applies Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" in accounting for
stock-based employee compensation arrangements whereby no
compensation cost related to stock options is deducted in
determining net income. Had compensation cost for the Company's
stock option plans been determined pursuant to Financial
Accounting Standards Board Statement No. 123 ("SFAS No. 123"),
"Accounting for Stock-Based Compensation," the Company's pro
forma net income and earnings per share would have differed. The
Black-Scholes option pricing model estimates fair value of
options using subjective assumptions which can materially effect
fair value estimates and, therefore, do not necessarily provide a
single measure of fair value of options. Using the Black-Scholes
option pricing model for all options granted after December 31,
1994 and a risk-free interest rate of 5.75%, a volatility factor
for the market price of the Company's Common Stock of .315 and a
weighted-average expected life of options of approximately three
years, the Company's pro forma net income, primary pro forma
earnings per share and fully-diluted pro forma earnings per share
would have been $32,338,165, $.81 and $.81, respectively, for
1996 and,$26,008,749, $.75 and $.75 respectively, for 1995. For
purposes of these pro forma disclosures, the estimated fair value
of options is amortized over the options' vesting period. Since
the number of options granted and their fair value may vary
significantly from year to year, the pro forma compensation
expense in future years may be materially different.
Note 10 - Earnings Per Share
Primary and fully diluted earnings per common share for the
year ended December 31, 1996 have been computed based upon
weighted average equivalent shares outstanding of 39,943,715 and
42,913,825, respectively.
Primary and fully diluted earnings per common share for the
year ended December 31, 1995 have been computed based upon
weighted average equivalent shares outstanding of 34,693,501 and
34,898,801, respectively.
Primary and fully diluted earnings per common share for the
year ended December 31, 1994 have been computed based upon
weighted average equivalent shares outstanding of 26,076,421 and
29,153,689, respectively. Primary earnings per share was
calculated after giving effect to net deductions from income
available to common stockholders of $1,275,180 related to
dividends on preferred stock.
Note 11 - Fair Value of Financial Instruments
The following methods and assumptions were used by the
Company in estimating the fair value disclosures for financial
instruments:
Cash and cash equivalents: The carrying amount reported in
the balance sheet for cash and cash equivalents approximates fair
value.
Restricted cash: The $11,480,003 carrying amount reported in
the balance sheet included in other assets for restricted cash
and cash equivalents approximates fair value.
Long and short-term debt: The carrying amount of the
Company's borrowings under its revolving credit agreement
approximates fair value. The Convertible Notes traded at 115% of
face value at December 31, 1996 and therefore the $150 million
face amount of the Convertible Notes have a fair value of $173
million. The fair values of the other long and short-term debt
are estimated based on the Company's incremental borrowing rates
for similar types of borrowing arrangements. These carrying
amounts approximate fair value.
Note 12 - Commitments and Contingencies
The Company leases various office space and equipment under
noncancellable operating leases expiring on various dates through
2004. The Company leases equipment with a cost of $2,422,984 and
$5,981,710 and cumulative amortization of approximately $504,060
and $1,547,133 under various capital leases at December 31, 1996
and December 31, 1995, respectively.
The following is a schedule of future minimum lease payments
under capital leases and noncancellable operating leases with
initial terms in excess of one year as of December 31, 1996:
Noncancellable
Capital Operating
December 31 Leases Leases
1997 $ 905,876 $ 1,257,322
1998 260,955 982,840
1999 113,589 375,242
2000 35,160 295,699
2001 - 275,000
Thereafter - 709,202
Total minimum
lease payments 1,315,580 $ 3,895,305
Noncancellable
Capital Operating
December 31 Leases Leases
Less amount
representing
interest (95,756)
Present value of net
minimum lease payments 1,219,824
Less current
portion (846,528)
Long-term portion $ 373,296
Rent expense under noncancellable operating leases for the
years ended December 31, 1996, 1995 and 1994 was $1,044,995,
$435,008 and $428,233, respectively.
During 1995, the Company acquired a company which had a
contingent lease agreement with respect to a portion of the land
related to one of its solid waste landfills. Payments under this
lease agreement are based upon 50% of the net cash receipts (as
defined in the lease agreement) of the landfill and are payable
monthly. For the year ended December 31, 1996 and 1995 the
related lease expense totaled $751,000 and $243,000,
respectively.
The Company owns and operates a waste water sludge
composting plant located in Springfield, Massachusetts. During
1992, the Company entered into a 20-year service agreement with
the City of Springfield under which the Company treats sewage
sludge generated at the Springfield Regional Wastewater Treatment
Facility.
While the Company carries a wide range of insurance coverage
for the protection of the Company's assets and operations, the
Company does not carry insurance coverage for environmental
liability, except as described in the following sentence. The
Company's insurance coverage for environmental liability is
limited to (i) over-the-road environmental liability protection
for the transportation of asbestos-containing material, (ii)
contractor pollution liability insurance that relates to certain
environmental services provided by the Company and (iii) certain
other pollution liability insurance which is the equivalent to
self-insurance because under the terms thereof the Company is
required to fully reimburse the insurance company for any paid
claims. The Company accrues for such claims when they are
incurred. In the event uninsured losses occur, the Company's net
income and financial position could be materially adversely
affected.
On January 9, 1996, the Junker Landfill Trust sued the
Company, Junker Sanitation Services, Inc., and United Waste
Transfer, Inc., both of which are subsidiaries of the Company,
and approximately 800 other parties in the United States District
Court for the Western District of Wisconsin, Case No. 96C-19S,
for the contribution under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), as well as
state common law, with respect to the Junker Landfill site in
Hudson, Wisconsin. By order entered July 19, 1996, the court
approved a consent decree which was signed by the Company and
others with respect to this site. The Company's obligations
under the consent decree are secured by, and limited to,
$3,000,000 in promissory notes issued by the Company for the
purchase of Junker Sanitation Services, Inc. A Settlement
Agreement has been reached with the Plaintiff which involves no
payment obligation on the part of Junker Sanitation Services,
Inc., United Waste Systems, Inc., or United Waste Transfer, Inc.
That settlement will become complete when the Court approves a
second consent decree, which approval is expected at a hearing
scheduled for April 29, 1997.
On May 26, 1995, the Company sued Robert Foley and Matthew
Parzych in the United States District Court for the District of
Connecticut, Case No. 3:95-CV-985. The defendants sold stock in
certain Massachusetts corporations to the Company under an
agreement dated April 1, 1992 (the "1992 agreement"). In the
suit the Company seeks approximately $1,115,000 in cash and
securities from an escrow account and additional amounts from
defendants by reason of indemnity provisions contained in the
1992 agreement and confirmed in an agreement dated January 28,
1994 (the "1994 agreement"). The defendants have counterclaimed
against the Company and its chief executive officer, seeking to
invalidate the 1994 agreement primarily for alleged lack of
consideration and economic duress, and to receive alleged damages
and costs. The counterclaims for damages are primarily for
alleged misrepresentations by the Company in connection with the
1992 agreement, and were asserted by defendants notwithstanding
provisions in the 1994 agreement which generally released the
Company from all claims. The Company intends vigorously to
pursue its claims in this action and to seek dismissal of the
counterclaims. In the opinion of management, this claim should
not materially affect the financial position or operating results
of the Company.
In June 1996, Dale Lynch, Dennis Lynch and D.L. Lynch sued
the Company, its chief executive officer and a subsidiary of the
Company in the Circuit Court of Whitley County, Kentucky (Index
No. 96 CI 00355). The subsidiary purchased the Tri-County
landfill from the plaintiffs in 1991. The suit primarily seeks
compensatory and punitive damages for alleged breach of contract
and for allegedly fraudulent representations in connection with
this purchase. The Company has filed a Counterclaim for breach
of warranties and fraud. The Company has also sought
indemnification for breach of warranties. In January 1997, the
plaintiffs filed an Amended Complaint, which seeks relief similar
to that of their original Complaint. The Company intends to file
a Motion to Dismiss seven of the eight counts in the Complaint,
including the fraud count. The Company has served discovery
requests and deposition notices on plaintiffs and intends to
vigorously defend against plaintiffs' claims and prosecute its
Counterclaim. In the opinion of management, this suit should not
materially affect the financial position or operating results of
the Company.
In July 1996 the Company filed suit against H.A.M. Sanitary
Landfill, Inc. and its shareholders. The suit is now pending in
the Circuit Court for Monroe County, West Virginia, Civil Action
No. 96-C-51. The Company, among other things, seeks to recover
$1.8 million in advances which the Company made in connection
with an agreement, since terminated, to purchase the H.A.M.
Sanitary Landfill in West Virginia from the defendants, and to
recover certain machinery and equipment with an aggregate
replacement value of approximately $150,000. The Company has
assessed the collectibility of the advances and recoverability of
the machinery and equipment to H.A.M. and has provided reserves
accordingly. The defendants in September 1996 filed a
counterclaim against the Company and a subsidiary which seeks
compensatory and punitive damages for claims of alleged breach of
contract, breach of fiduciary duty under an alleged joint
venture, unjust enrichment and fraud. The Company will
vigorously prosecute its claim and defend against the
counterclaim. In the opinion of management, the counterclaim
should not materially affect the financial position or operating
results of the Company.
The Company accrues the costs for closure and postclosure
monitoring over the life of its owned landfills and will pay out
these costs over the next fifty years. Major components of these
costs include closure cap construction, leachate treatment and
groundwater monitoring. The Company accrues these costs
utilizing engineering estimates based on current governmental
regulations regarding closure requirements. The Company
estimates that the aggregate liability for the closure,
postclosure and remediation costs of its landfills owned at
December 31, 1996 will be approximately $66.6 million. At
December 31, 1996, the Company has approximately $49.5 million of
these costs accrued and, therefore, has accrued approximately
74.3% of its estimated total costs to date.
The Company monitors the availability of airspace at each of
its landfills and the need to obtain permit modifications for
approvals for expansion in order to continue operating these
landfills. In order to develop and operate a landfill, a
composting facility or transfer station, or other solid waste
management facility, the Company typically must go through
several governmental review processes and obtain one or more
permits and often zoning or other land use approvals. Once
obtained, operating permits generally must be periodically
renewed and are subject to modification and revocation by the
issuing agency. There can be no assurance that the Company will
succeed in obtaining these permits, permit modifications or
approvals.
The Company has outstanding letters of credit with banks
of approximately $61,311,000 at December 31, 1996. The letters
of credit were obtained as collateral for the Company's Tax
Exempt Bonds, self-fund insurance programs and as direct
collateral to assure compliance with governmental sanitary
landfill closure and post-closure obligations for landfills.
Note 13 - Subsequent Events
Subsequent to December 31, 1996, the Company completed the
acquisition of 13 solid waste businesses - these businesses
include one landfill, 12 collection operations and one transfer
operation. These acquisitions were accounted for as purchases.
Also, subsequent to December 31, 1996, the Company issued Common
Stock for all of the outstanding stock of a solid waste business
which includes one collection and one transfer operation. This
transaction has been accounted for as a pooling-of-interests.
The historical operations of this business are not material to
the Company's consolidated operations and financial position and,
therefore, no restatement of the accompanying Consolidated
Financial Statements was necessary.
During March 1997, the Company completed a public offering
of 3,450,000 shares of its Common Stock. Net proceeds of the
offering were approximately $119.3 million. Approximately $47.2
million of such proceeds have been used to reduce outstanding
indebtedness under the Company's Credit Facility. At March 25,
1997, the Company has cash and cash equivalents of approximately
$69.0 million.
<TABLE>
UNITED WASTE SYSTEMS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
Additions
Charged
Balance to
at Costs Balance
Beginning and the end of
of Period Expenses Other(1) Deductions(2) Period
<S> <C> <C> <C> <C> <C>
Year ended December
31, 1996:
Allowance for
doubtful accounts $ 2,249,324 $ 1,713,711 $ 1,353,986 $2,240,834 $3,076,187
Year ended December
31, 1995:
Allowance for
doubtful accounts $ 1,949,479 $ 1,487,163 $ 244,048 $1,431,366 $2,249,324
Year ended December
31, 1994:
Allowance for
doubtful accounts $ 1,830,792 $ 1,032,149 $ 140,000 $1,053,462 $1,949,479
</TABLE>
(1) Consists of reserves assumed through acquisitions in 1996, 1995 and
1994, respectively.
(2) Uncollectible accounts written-of, net of recoveries.
PART IV
Item 14. Exhibits, Financial Statements and Schedule, and
Reports on Form 8-K
(a)(1) Consolidated Financial Statements
Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1996 and
1995
Consolidated Statements of Operations for the years
ended December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
Schedules other than those listed are omitted as they are not
applicable or the required or equivalent information has been
included in the financial statements or notes thereto.
<PAGE>
(a)(3) Exhibits
Unless otherwise indicated, all exhibits are hereby
incorporated by reference to United Waste Systems, Inc.'s
Registration Statement on Form S-1 Commission File No. 33-53488.
Following the description of each exhibit that is incorporated by
reference to such Registration Statement is a number in
parenthesis. This number indicates the exhibit number by which
such exhibit is identified in such Registration Statement.
3.1 Exhibit 3.1 - Amended and Restated Certificate of
Incorporation dated October 31, 1991, as amended by (i)
Certificate of Increase of Designated Number of Shares
of Series B Cumulative Convertible Preferred stock
dated March 31, 1992, (ii) Certificate of Correction to
Amended and Restated Certificate of Incorporation dated
April 30, 1992, (iii) Certificate of Amendment to
Certificate of Incorporation dated October 9, 1992,
(iv) Certificate of Change of Location of Registered
Office and Registered Agent dated January 28, 1993,
(v) Certificate of Amendment to Certificate of
Incorporation dated August 31, 1993, and (vi)
Certificate of Amendment to Certificate Incorporation
dated June 12, 1996 (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-8
Commission File No. 333-14489).
3.2 By-laws. (3.5)
4.1 Fourth Amended and Restated Credit Agreement dated as
of December 5, 1996 among United Waste Systems, Inc.,
various financial institutions, the First National Bank
of Boston as co-agent and Bank of America Illinois, as
agent. (Incorporated by reference to Exhibit 99 to the
Registrant's current report on Form 8-K dated December
5, 1996).
4.2 Mortgage, Loan and Trust Agreement dated as of August
1, 1989 among Massachusetts Industrial Finance Agency,
Resource Control Composting, Inc. and State Street Bank
and Trust Company, as trustee. (4.8)
4.3 Loan Agreement dated April 1, 1995 between Michigan
Strategic Fund and United Waste Systems, Inc.
(Incorporated by reference to Exhibit 10.1 to the
Registrant's Registration Statement on Form 10-Q for
the Quarterly period ended June 30, 1995).
4.4 Secured Note Agreement dated as of September 1, 1995,
among the Registrant and various parties named therein.
(Incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form 10-Q for
the Quarterly period ended June 30, 1995).
4.5 Indenture dated June 5, 1996 between the Registrant and
Bankers Trust Company, as Trustee. (Incorporate by
reference to exhibit 4.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 1996).
4.6 Registration Rights Agreement dated June 5, 1996
between the Registrant and Goldman Sachs & Co. and
others (Incorporated by reference to Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30 1996).
10.1+ 1992 Stock Option Plan. (10.1)
10.2+ 1992 Disinterested Director Stock Option Plan. (10.2)
10.3 Landfill Lease Agreement dated July 1, 1988 between the
City of Lowell and Resource Control Inc., together with
a form of amendment thereto dated July 1, 1992. (10.4)
10.4 Site Lease dated as of March 20, 1989 between the City
of Springfield and Resource Control Composting, Inc.
(10.5)
10.5 Solid Waste Disposal Services Agreement dated February
12, 1992 among the City of Fitchburg, the Town of
Westminster and RCI Fitchburg, Inc. (10.6)
10.6+ Amended and Restated Employment Agreement dated June
20, 1995 between United Waste Systems, Inc. and Bradley
S. Jacobs. (Incorporated by reference to Exhibit 10.2
to the registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 1995).
10.7+ Amended and Restated Employment Agreement dated June
20, 1995 between United Waste Systems, Inc. and Edward
T. Sheehan. (Incorporated by reference to Exhibit 10.6
to the registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 1995).
10.8+ Amended and Restated Employment Agreement dated June
20, 1995 between United Waste Systems, Inc. and John N.
Milne. (Incorporated by reference to Exhibit 10.3 to
the registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1995).
10.9+ Employment Agreement dated September 27, 1991 between
the registrant and Richard Volonino, together with an
amendment thereto dated November 11, 1992. (10.11)
10.10+ Amended and Restated Employment Agreement dated June
20, 1995 between United Waste Systems, Inc. and Michael
J. Nolan. (Incorporated by reference to Exhibit 10.5
to the registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 1995).
10.11+ Form of Indemnification Agreement entered into by the
registrant with each of its officers and directors.
(10.20)
10.12+ Agreement dated as of October 1, 1991 between the
registrant and Bradley S. Jacobs. (10.21)
10.13+ Form of Warrant dated as of October 17, 1992 issued by
the registrant to John N. Milne. (Incorporated by
reference to Exhibit No. 10.25.1 to the registrant's
Registration Statement on Form S-1, Commission File No.
33-70832)
10.14+ Form of Warrant dated as of October 17, 1993 issued by
the registrant to John N. Milne. (Incorporated by
reference to Exhibit No. 10.25.2 to the registrant's
Registration Statement on Form S-1, Commission File No.
33-70832)
10.15 Landfill Lease Agreement dated May 6, 1983 by and
between Antoinette Zielinski and Connecticut Valley
Sanitary Waste Disposal, Inc., together with addendum.
(Incorporated by reference to Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for 1995).
10.16 Asset Purchase Agreement dated as of June 13, 1991
among Ham Sanitary Landfill, Inc. MAH Equipment, Inc.,
Harry D. Humphrey, Jr., Ronald E. Mann, John H. Allen
and Jacobs Landfill, Inc., together with a form of
amendment thereto dated January, 1992. (10.69)
10.17 Merger Agreement dated September 25, 1992 among Kelly
Run Sanitation, Inc., Marino Fiore, Margaret Fiore,
Gary Fiore, Ralph Fiore and the registrant together
with an amendment thereto dated November 12, 1992.
(10.72)
10.18 Stock Purchase Agreement dated August 31, 1992 among K
& W Landfill, Inc., Roska Route, Inc., Charles Kotlaris
and United Waste Systems of Ontonagon, Inc., together
with an amendment thereto dated November 4, 1992.
(10.76)
10.19 Acquisition Agreement dated April 1, 1992 among the
registrant, Robert P. Foley, Matthew J. Parzych,
Resource Control, Inc., Martone Trucking, Inc.,
Standard Methods, Inc., Northeast Consultants, Inc.,
RCI Hudson, Inc., Resource Control Composting, Inc.,
RCI Clinton, Inc. and RCI Fitchburg, Inc. (10.77)
10.20 Second amendment to Merger Agreement dated September
25, 1992 among Kelly Run Sanitation, Inc., Marino
Fiore, Margaret Fiore, Gary Fiore, Ralph Fiore and
United Waste Systems, Inc. dated December 29, 1992.
(Incorporated by reference to registrant's Current
Report on Form 8-K dated December 18, 1992.)
10.21 Letter Agreement dated as of May 14, 1993, among United
Waste of Northwest Michigan, Inc., Edmire Leasing,
Inc., Ascione Development Company, Edward P. Ascione
and Vida J. Ascione. (Incorporated by reference to
Exhibit No. 10.87 to the registrant's Registration
Statement on Form S-1 Commission File No. 33-70832)
10.22 Asset Purchase Agreement among United Waste Systems,
Inc., United Waste of Northwest Michigan, Inc., Edmire
Leasing, Inc., Michael A. Ascione, Edward G. Ascione,
Renee A. Chwastek, Edward P. Ascione, and Vida J.
Ascione (Incorporated by reference to the registrant's
Current Report on Form 8-K dated May 15, 1993)
10.23 Agreement and Plan of Reorganization among United Waste
Systems, Inc., United Waste of Northwest Michigan,
Inc., Northern A-1 Sanitation Services, Inc., Edward P.
Ascione, Vida J. Ascione, Michael A. Ascione, Edward G.
Ascione, and Renee A. Chwastek. (Incorporated by
reference to the registrant's Current Report on Form
8-K dated May 15, 1993)
10.24 Merger Agreement dated May 14, 1993, among United Waste
Systems, Inc., Traverse Acquisition, Inc., Glen's
Sanitary Landfill, Inc., G.S. And M.S., Inc., George R.
Slater and Margaret E. Slater. (Incorporated by
reference to the registrant's Current Report on Form 8-K dated
May 14, 1993)
10.25 Merger Agreement dated May 14, 1993, among United Waste
Systems, Inc., Holland Acquisition, Inc., West Michigan
Disposal Company, George R. Slater and Margaret E.
Slater. (Incorporated by reference to the registrant's
Current Report on Form 8-K dated May 14, 1993)
10.26+* Amendment to 1992 Stock Option Plan.
10.27+* Amendment to 1992 Disinterested Director Stock Option
Plan.
10.28 Form of Underwriting Agreement dated July 1995, between
United Waste Systems, Inc., and Goldman, Sachs & Co.
and Prudential Securities Incorporated as
representatives of the several underwriters
(Incorporated by reference to exhibit 1 to the
registrant's Current Report on Form 8-K dated July 5,
1995).
10.29 Underwriting Agreement for common stock offering dated
December 15, 1994. (Incorporated by reference to
Exhibit No. 1.1 to the registrant's Registration
Statement on Form S-3, Commission File No. 33-86380)
10.30+ Amended and Restated Employment Agreement dated June
20, 1995 between United Waste Systems, Inc. and Robert
P. Miner. (Incorporated by reference to Exhibit 10.4
to the registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 1995).
10.31 Agreement dated as of September 29, 1995, among United
Waste Systems, Inc., United Waste Systems of
California, Inc. James M. Carroll, Sharon I. Carroll,
Robert J. Carroll, David M. Carroll, Pamela R. Carroll
Sheppard, James M. Sheppard and James M. and Sharon I.
Carroll Revocable Trust and Silver Creek Investments.
(Incorporated by reference to Exhibit 2.1 to the
registrant's Current Report on Form 8-K dated September
29, 1995).
10.32 Stock and Asset Purchase Agreement dated as of
September 19, 1995, among United Waste Systems, Inc.
and Partyka Resource Management Companies, Inc.,
Partyka Resource Management Company, J.F. Partyka &
Son, Inc. Joseph F. Partyka Jr. and Emily L. Partyka.
(Incorporated by reference to Exhibit 2.1 to the
registrant's Current Report on Form 8-K dated September
19, 1995, Items 2 and 7).
10.33 Underwriting Agreement dated as of May 31, 1996 among
the Registrant, Goldman Sachs & Co. and the other
underwriters named herein. (Incorporated by reference
to Exhibit 4.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30 1996).
10.34* Underwriting Agreement dated as of March 3, 1997 among
the Registrant, Goldman, Sachs & Co. and other
underwriters named herein.
11.1** Computation of Earnings Per Share.
12.1* Ratio of Earnings to Fixed Charges
21.1* Subsidiaries of the registrant
23.1** Consent of Ernst & Young LLP
27.1** Financial Data Schedule
99.1* Independent Auditors Report of Hanson Rotter & Green
_______________________________________________
* These exhibits were previously filed with the Company's
original Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
** This exhibit is filed herewith.
+ These exhibits are executive officer or director
compensatory contracts or plans.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the
quarter ended December 31, 1996.
(1) Form 8-K dated September 27, 1996, Item 5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNITED WASTE SYSTEMS, INC.
Date: June 24, 1997 By: Michael J. Nolan
Michael J. Nolan
Chief Financial Officer
Exhibit 11.1
UNITED WASTE SYSTEMS, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Year Ended
December 31, 1996
Primary:
Net Income $ 35,392,792
Historical weighted average
common shares outstanding 37,302,510
Dilution of common stock options
and warrants (1) 2,641,205
Weighted average commmon shares
outstanding 39,943,715
Earnings per common share $ .89
Fully Diluted:
Net Income $ 35,392,792
Interest on convertible
debt 2,250,000
Earnings available to
stockholders $ 37,642,792
Historical weighted average
common shares outstanding 37,302,510
Dilution of common stock options
and warrants (1) 3,047,212
Assumed conversion of convertible
debt 2,564,103
Weighted average commmon shares
outstanding 42,913,825
Earnings per common share $ .88
UNITED WASTE SYSTEMS, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Year Ended
December 31, 1995
Primary:
Net Income $ 28,288,445
Historical weighted average
common shares outstanding 31,369,349
Dilution of common stock options
and warrants (1) 2,600,902
Assumed conversion of convertible
preferred stock 723,250
Weighted average commmon shares
outstanding 34,693,501
Earnings per common share $ .82
Fully Diluted:
Net Income $ 28,288,445
Historical weighted average
common shares outstanding 31,369,349
Dilution of common stock options
and warrants (1) 2,806,202
Assumed conversion of convertible
preferred stock 723,250
Weighted average commmon shares
outstanding 34,898,801
Earnings per common share $ .81
UNITED WASTE SYSTEMS, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Year Ended
December 31, 1994
Primary:
Net Income $ 21,009,699
Dividends on preferred stock (1,275,180)
Earnings available to
stockholders $ 19,734,519
Historical weighted average
common shares outstanding 24,229,869
Dilution of common stock options
and warrants (1) 1,846,552
Weighted average commmon shares
outstanding 26,076,421
Earnings per common share $ .76
Fully Diluted:
Net Income $ 21,009,699
Historical weighted average
common shares outstanding 24,229,869
Dilution of common stock options
and warrants (1) 12,441,830
Assume conversion of convertible
preferred stock 2,481,990
Weighted average commmon shares
outstanding 29,153,689
Earnings per common share $ .72
__________
(1) Based upon the treasury stock approach
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in (i) the
Registration Statements (Form S-3 Numbers: 33-74676; 33-62420;
33-83564; 33-90262; 33-91370; 33-95662; 33-98146; 33-80403;
333-01890; 333-07991; 333-11109; 333-13111; 333-14083; 333-18387;
333-19029; 333-19299; 333-22825; and 333-25183 and any amendments
thereto) and the related Prospectuses and (ii) the Registration
Statement (Form S-8 Numbers: 33-98794, 333-04294 and 333-14489
and any amendment thereto) and the related Prospectus pertaining
to the 1992 Stock Option Plan, Disinterested Director Stock
Option Plan and the options granted outside of the above
referenced plans under individual written compensation contracts
with employees of United Waste Systems, Inc., of our report dated
February 21, 1997 (except for Note 13, as to which the date is
March 25, 1997) with respect to the consolidated financial
statements and schedule of United Waste Systems, Inc. included in
this 10-K/A #2 for the year ended December 31, 1996 filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
MetroPark, New Jersey
June 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,567,854
<SECURITIES> 0
<RECEIVABLES> 58,039,664
<ALLOWANCES> 3,076,000
<INVENTORY> 0
<CURRENT-ASSETS> 87,520,828
<PP&E> 482,387,638
<DEPRECIATION> 94,407,414
<TOTAL-ASSETS> 801,041,694
<CURRENT-LIABILITIES> 75,699,646
<BONDS> 316,668,532
0
0
<COMMON> 39,090
<OTHER-SE> 318,674,323
<TOTAL-LIABILITY-AND-EQUITY> 801,041,694
<SALES> 0
<TOTAL-REVENUES> 335,743,175
<CGS> 206,786,205
<TOTAL-COSTS> 259,892,690
<OTHER-EXPENSES> 251,661
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,949,746
<INCOME-PRETAX> 60,649,078
<INCOME-TAX> 25,256,286
<INCOME-CONTINUING> 35,392,792
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,392,792
<EPS-PRIMARY> .89
<EPS-DILUTED> .88
</TABLE>
