<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 0-20854
---------------------
PHILIP SERVICES CORP.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
ONTARIO N/A
(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification Number)
or Organization)
100 KING STREET WEST, HAMILTON, ONTARIO L8N 4J6
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(905) 521-1600
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ---------------------------------------------- ----------------------------------------------
Common Shares, No Par Value New York Stock Exchange
</TABLE>
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 [ ].
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 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the closing price of Common Shares on the New York
Stock Exchange on April 28, 1998, was approximately $991,777,982 (assumes
officers, directors and all shareholders beneficially owning 5% or more of the
outstanding Common Shares are affiliates).
The number of Common Shares of the Registrant outstanding on April 28, 1998
was 131,144,196.
DOCUMENTS INCORPORATED BY REFERENCE
None
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<PAGE> 2
EXPLANATORY NOTE
This Amendment on Form 10-K/A to the Annual Report on Form 10-K of Philip
Services Corp. ("Philip" or the "Company") for the year ended December 31, 1997
is filed solely to include Item 10 (Directors and Executive Officers of the
Registrant), Item 11 (Executive Compensation), Item 12 (Security Ownership of
Certain Beneficial Owners and Management) and Item 13 (Certain Relationships and
Related Transactions), not previously included in the Form 10-K, as permitted by
General Instruction G(3) of Form 10-K. As previously noted in the Company's
Report on Form 8-K dated April 24, 1998, the Company proposes to file a further
amendment to this Form 10-K with respect to the financial statements contained
therein.
INDEX
TO FORM 10-K/A
<TABLE>
<CAPTION>
10-K/A PART AND ITEM NO. PAGE NO.
- ------------------------ --------
<S> <C> <C>
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 1
Item 11. Executive Compensation...................................... 3
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 6
Item 13. Certain Relationships and Related Transactions.............. 7
</TABLE>
<PAGE> 3
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The name, age and position of each of the directors and executive officers
of the Company as of the date hereof, are as follows:
<TABLE>
<CAPTION>
NAME AND MUNICIPALITY OF RESIDENCE AGE POSITION WITH PHILIP
---------------------------------- --- --------------------
<S> <C> <C>
ALLEN FRACASSI.................................. 45 President, Chief Executive Officer and
Ancaster, Ontario Director
PHILIP FRACASSI................................. 38 President, Metals Services Group and Director
Ancaster, Ontario
HOWARD L. BECK.................................. 65 Chairman and Director
Toronto, Ontario
ROY CAIRNS...................................... 73 Director
St. Catharines, Ontario
NORMAN FOSTER................................... 60 Director
Bloomfield Hills, Michigan
WILLIAM E. HAYNES............................... 54 Director
Houston, Texas
ROBERT L. KNAUSS................................ 67 Director
Houston, Texas
FELIX PARDO..................................... 60 Chief Operating Officer and Director
Cambridge, Massachusetts
DERRICK ROLFE................................... 43 Director
Toronto, Ontario
HERMAN TURKSTRA................................. 64 Director
Hamilton, Ontario
MARVIN BOUGHTON................................. 58 Executive Vice-President and Chief Financial
Burlington, Ontario Officer
ROBERT M. CHISTE................................ 50 Executive Vice-President
Houston, Texas
PETER CHODOS.................................... 46 Executive Vice-President, Corporate
Toronto, Ontario Development
ANTONIO PINGUE.................................. 48 Executive Vice-President, Corporate &
Niagara Falls, Ontario Government Affairs
COLIN SOULE..................................... 42 Executive Vice-President, General Counsel and
Toronto, Ontario Corporate Secretary
JOHN WOODCROFT.................................. 39 President, Industrial Services Group
Dundas, Ontario
</TABLE>
MR. ALLEN FRACASSI has been the President, Chief Executive Officer and a
director of Philip since December 1990. Allen Fracassi and Philip Fracassi, the
founders of the Company, are brothers.
MR. PHILIP FRACASSI has been a director of Philip since December 1990. Mr.
Fracassi was appointed President, Metals Services Group effective March 5, 1998
and previously, was Executive Vice-President and Chief Operating Officer from
December, 1990. Philip Fracassi and Allen Fracassi, the founders of the Company,
are brothers.
1
<PAGE> 4
MR. BECK was appointed Chairman of Philip on March 9, 1994 and has been a
director of Philip since December 1990. From 1991 to 1993, he was Vice-Chairman
of Barrick Gold Corporation (formerly American Barrick Gold Corporation), an
integrated gold mining company, and of The Horsham Corporation, a holding
company. Mr. Beck is on the board of directors of the following companies:
Premdor Inc. since April, 1990; Barrick Gold Corporation since July, 1984;
Canadian Marconi Company since August, 1996, Citibank Canada since November,
1985; Namibian Minerals Corporation since June, 1996; TrizecHahn Corporation
since August, 1996 and Wescam Inc. since October, 1995.
MR. CAIRNS has been a director of Philip since December 1990. Mr. Cairns
has been counsel to, and was previously a partner with, Chown, Cairns, a law
firm.
MR. FOSTER has been a director of Philip since January 1994. Mr. Foster was
the President, By-Products Recovery Group, of Philip from February 1996 to July
1997. Mr. Foster was President and Chief Executive Officer of Nortru, Inc. from
prior to 1991 to July 1997 and President and Chief Executive Officer of
Burlington Environmental Inc. from December 1993 to July 1997.
MR. HAYNES has been a director of Philip since August 6, 1997, and until
July 31, 1997 was a director of Allwaste, Inc. from June 1996. He is the
Chairman, President and Chief Executive Officer and director of Innovative Valve
Technologies, Inc., a publicly traded industrial valve repair and distribution
company in which Philip owns a minority equity interest. He served as the
President and Chief Executive Officer of LYONDELL-CITGO Refining Company Ltd.
from July 1992 to December 1995.
MR. KNAUSS has been a director of Philip since August 6, 1997, and until
July 31, 1997 was a director of Allwaste, Inc. from March 1988. He is the
President and Chief Executive Officer of Baltic International U.S.A., Inc., an
aviation investment company, and a director of the Mexico Fund, Inc., an
investment fund based in Mexico City, and Equus II, Inc., an investment fund
based in Houston, Texas. Mr. Knauss served for twelve years as the Dean and
Distinguished University Professor at the University of Houston Law Center.
MR. PARDO has been a director of Philip since March 1994 and the Chief
Operating Officer since March 5, 1998. From May 1993 to March 1998, Mr. Pardo
was the President and Chief Executive Officer of Ruhr-American Coal Corporation.
From 1992, Mr. Pardo was Chairman of Newalta Corporation, an oil field waste
management company and a partner and director of Quorum Funding, an investment
company.
MR. ROLFE has been a director of Philip since January 1991. Since 1992, Mr.
Rolfe has been the President and Chief Executive Officer of RM Capital
Corporation, an investment company. Mr. Rolfe is also a director of Consolidated
Envirowaste Inc., an organic waste processing company.
MR. TURKSTRA has been a director of Philip since September, 1996 and has
been a member of Turkstra, Mazza, Shinehoft, Mihailovich, Associates, a law
firm, since 1959.
MR. BOUGHTON has been the Executive Vice-President and Chief Financial
Officer of Philip since January 1994 and May 1992, respectively. He was
Vice-President, Finance of Philip from September 1991 to December 1993.
MR. CHISTE was appointed Executive Vice-President on March 5, 1998. From
August 1997 to March 1998, he was President of the Company's Industrial Services
Group. Prior to that he was President and Chief Executive Officer of Allwaste,
Inc. from 1994. Prior to that he was Chief Executive Officer of American
National Power, Inc., a successor to Transco Energy Company focused on the power
generation business in North and South America, from 1984 to 1986. Mr. Chiste is
a director of Franklin Credit Management Corp., a financial services company and
a director of Innovative Valve Technologies, Inc.
MR. CHODOS has been Executive Vice-President, Corporate Development, of
Philip since June 1996. Prior to that, he was a Vice President and Director of
BZW Canada, an investment bank, from May 1992 to June 1996 and was a Managing
Partner of Loewen, Ondaatje, McCutcheon & Company Limited, an investment bank,
from May 1983 to April 1992. Mr. Chodos is a director of Enscor Inc.
MR. PINGUE has been Executive Vice-President, Corporate and Regulatory
Affairs since May 1997. Prior to that he was Senior Vice-President, Corporate &
Government Affairs, of Philip from March 1995. Prior to
2
<PAGE> 5
that, he was Senior-Vice President, Environmental Services and Regulatory
Affairs of the Company from January 1994, and was Vice-President, Environmental
and Regulatory Affairs, of the Company from 1991 to December 1993.
MR. SOULE has been the General Counsel of Philip since October 1991, was
appointed Corporate Secretary of Philip in January 1992, was appointed Senior
Vice-President of Philip in May 1994 and Executive Vice-President of Philip in
May 1997.
MR. WOODCROFT was the Executive Vice-President, Operations from May 1997 to
his appointment as President, Industrial Services Group effective March 5, 1998.
Prior to that he was Senior Vice President, Operations, of Philip from January
1994 and was Vice-President, Acquisitions and Development, of Philip from May
1991 to December 1993.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, and its rules and
regulations thereunder require the Company's executive officers and directors,
and persons who beneficially own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Copies of those reports
are to be furnished to the Company. Based solely on its review of copies of the
reports received by it, or written representations from certain reporting
persons, the Company believes that during 1997 all such filing requirements were
satisfied on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
The table below sets forth the compensation in respect of each of the last
three fiscal years earned by the President and Chief Executive Officer and the
four other most highly compensated executive officers of the Company (the "Named
Executive Officers"). All dollar amounts stated below are expressed in U.S.
dollars, except where otherwise indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ ------------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS COMPENSATION(3)
- --------------------------- ---- ------- ------- --------------- ------------ ---------------
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
ALLEN FRACASSI................ 1997 559,910 -- 19,438(2) 400,000 4,724
President and Chief Executive 1996 365,043 584,070 32,590(2) 75,000 3,468
Officer 1995 366,166 406,078 45,517(2) -- 5,126
PHILIP FRACASSI............... 1997 419,933 -- -- 300,000 4,724
President, Metals Services 1996 292,035 438,052 -- 75,000 4,289
Group 1995 292,933 313,713 -- -- 5,309
JOHN WOODCROFT................ 1997 349,944 -- -- 250,000 4,724
President, Industrial Services 1996 200,774 328,539 -- 60,000 5,019
Group 1995 164,775 98,865 -- 30,000 4,943
ROBERT WAXMAN(4).............. 1997 279,955 -- -- 250,000 4,724
President 1996 244,579 244,579 -- 50,000 7,351
Metals Services Group 1995 183,083 205,053 -- 30,000 5,561
MARVIN BOUGHTON............... 1997 244,961 -- -- 250,000 4,724
Executive Vice President and 1996 193,473 255,530 -- 60,000 4,499
Chief Financial Officer 1995 194,068 97,034 -- 30,000 5,282
</TABLE>
- ---------------
3
<PAGE> 6
NOTES:
(1) Except as noted, perquisites and other personal benefits do not exceed the
lesser of $50,000 and 10% of the total annual salary and bonus for the Named
Executive Officers.
(2) Represents imputed interest benefit on housing loan.
(3) Represents Company's contribution to retirement savings plan or registered
pension plan.
(4) Robert Waxman resigned from the position of President, Metals Services Group
on January 5, 1998.
(5) Robert Chiste, Executive Vice President of Philip, had a total annualized
salary and bonus for 1997 equal to $775,315, plus was paid change in control
payments upon the acquisition of Allwaste, Inc. by Philip, however Mr.
Chiste commenced employment with Philip effective August 1, 1997 and
therefore is not included as a Named Executive Officer during 1997.
(6) All amounts have been converted to U.S. dollars based upon the exchange
rates for Canadian dollars per $1.00 on December 31, 1997, December 31, 1996
and December 31, 1995 of $1.4288, $1.3697, and $1.3655, respectively.
STOCK OPTIONS
The table below sets forth the options granted to the Named Executive
Officers under the Company's stock option plans during the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS GRANTED
SECURITIES UNDERLYING TO EMPLOYEES IN EXERCISE OR GRANT DATE
NAME OPTIONS GRANTED(1) FISCAL YEAR(2) BASE PRICE VALUE EXPIRATION DATE
---- --------------------- --------------- --------------- --------------- ---------------
(#) (CDN$/SECURITY) (CDN$/SECURITY)
<S> <C> <C> <C> <C> <C>
ALLEN FRACASSI................ 400,000 10.5% 18.10 18.10 May 9, 2007
PHILIP FRACASSI............... 300,000 8% 18.10 18.10 May 9, 2007
JOHN WOODCROFT................ 250,000 6.5% 18.10 18.10 May 9, 2007
ROBERT WAXMAN................. 250,000 6.5% 18.10 18.10 May 9, 2007
MARVIN BOUGHTON............... 250,000 6.5% 18.10 18.10 May 9, 2007
</TABLE>
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NOTES:
(1) The Company's employee stock option plans provide for the granting of stock
options to purchase Common Shares of the Company to employees and directors
of the Company at the discretion of the Board of Directors. All options are
subject to certain conditions of service and the provision of a non-
competition agreement. Options granted to the Named Executive Officers in
fiscal 1997 vest in equal monthly amounts over 36 months from the date they
were granted.
(2) A total of 3,821,500 options were granted under the Company's employee stock
option plans during the fiscal year ending December 31, 1997.
The table below sets forth each exercise of options during the fiscal year
ended December 31, 1997 by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SECURITIES AGGREGATE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE OPTIONS AT DECEMBER 31, 1997
NAME ON EXERCISE REALIZED(3) DECEMBER 31, 1997 (CDN $)(4)
---- ----------- ----------- ------------------------- -----------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
(#) (CDN $)
<S> <C> <C> <C> <C>
ALLEN FRACASSI(1)............. -- -- 121,111/363,889 2,506,998/7,532,502
PHILIP FRACASSI(2)............ -- -- 101,666/283,334 2,104,486/5,865,014
JOHN WOODCROFT................ 30,000 254,759 108,611/241,389 2,248,248/4,996,752
ROBERT WAXMAN................. -- -- 94,166/235,834 1,949,236/4,881,764
MARVIN BOUGHTON............... 21,000 163,874 127,611/241,389 2,641,548/4,996,752
</TABLE>
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4
<PAGE> 7
NOTES:
(1) Allen Fracassi holds an additional 389,031 exercisable options to acquire
Common Shares which were granted to him in connection with his sale to the
Company in 1990 of his interest in Philip Environmental Company.
(2) Philip Fracassi holds an additional 387,355 exercisable options to acquire
Common Shares which were granted to him in connection with his sale to the
Company in 1990 of his interest in Philip Environmental Company.
(3) All amounts have been converted to U.S. dollars based upon the exchange rate
of Canadian dollars per $1.00 of $1.4288 on December 31, 1997.
(4) The closing price of the Company's Common Shares on The Toronto Stock
Exchange on December 31, 1997 was Cdn20.70.
COMPENSATION OF DIRECTORS
Each director of the Company who is not a salaried officer or employee of
the Company is paid an annual fee of Cdn$25,000 and a fee of Cdn$1,000 per
meeting (including committee meetings) attended, and each director, when first
appointed to the Board of Directors, receives a one time award of 20,000 options
to acquire Common Shares of the Company. In addition, during 1997, a one time
grant of 20,000 options to acquire Common Shares was granted to each
non-employee Director. The options are granted at an exercise price equal to the
closing price of the Common Shares on The Toronto Stock Exchange on the last
trading day preceding the date of the grant and vest over a period of three
years from the date of the grant. For acting as Chairman of the Board of
Directors, Howard L. Beck was paid a fee of Cdn$150,000 during 1997.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of the Named
Executive Officers. The agreements set forth the benefits to which a Named
Executive Officer would be entitled in the event of termination without cause
before or after an event which gives rise to a change of control of the Company
or in the event of a change in the executive's responsibilities, title,
authority or compensation after an event which gives rise to a change of control
of the Company. In the event of termination without cause prior to a change of
control, a Named Executive Officer would be entitled to a severance payment
equal to two times his base salary plus two times the annual average bonus and
cash value of benefits earned by the Named Executive Officer in the previous two
years. In the event of termination without cause after a change of control or in
the event of a change in the Named Executive Officer's\ responsibilities, title,
authority or compensation within two years of a change in control, a Named
Executive Officer would be entitled to a severance payment equal to three times
his base salary plus three times the annual average of the bonus and cash value
of benefits earned by the Named Executive Officer in the previous two years. In
addition, stock options granted to the Named Executive Officer will fully vest
on termination and will remain exercisable until the expiry of the original term
of such options.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company provides insurance for the benefit of directors and officers of
the Company against liability incurred by, arising from or against them for
certain of their acts, errors or omissions. These policies provide maximum
coverage in any one policy year of an aggregate of $100,000,000 subject to a
$500,000 deductible. In the last completed fiscal year the total premium for
directors' and officers' liability insurance was $571,850. The premiums for the
policy are not allocated between directors and officers as separate groups.
5
<PAGE> 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Shares as of April 30, 1998 by (i) each director of the
Company, (ii) the executive officers of the Company, and (iii) all current
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
DIRECTORS AND EXECUTIVE OFFICERS(1)(2) BENEFICIALLY OWNED BENEFICIALLY OWNED
-------------------------------------- ------------------ --------------------
<S> <C> <C>
Allen Fracassi(3)......................................... 2,440,963 2%
Philip Fracassi(4)........................................ 2,094,485 1.6%
Howard L. Beck(5)......................................... 427,222 *
Roy Cairns(6)............................................. 927,222 *
Norman Foster(7).......................................... 271,088 *
William E. Haynes(8)...................................... 2,156 *
Robert L. Knauss(9)....................................... 49,505 *
Felix Pardo(10)........................................... 192,888 *
Derrick Rolfe(11)......................................... 27,222 *
Herman Turkstra(12)....................................... 35,215 *
Marvin Boughton(13)....................................... 185,278 *
Robert M. Chiste(14)...................................... 567,114 *
Peter Chodos(15).......................................... 137,501 *
Antonio Pingue(16)........................................ 195,278 *
Colin Soule(17)........................................... 160,278 *
John Woodcroft(18)........................................ 165,278 *
All Directors and Executive Officers as a Group (16
persons)................................................ 7,878,693 6%
</TABLE>
- ---------------
* Indicates less than 1.0%.
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from April 30, 1998, whether
pursuant to the exercise of options, conversion of securities or otherwise.
Each beneficial owner's percentage of ownership is determined by assuming
that options to purchase Common Shares that are held by such person and
which are exercisable within 60 days of April 30, 1998 have been exercised.
Unless otherwise noted in the footnotes below, the Company believes all
persons named in the table have sole voting power and investment power with
respect to all Common Shares beneficially owned by them. Options to acquire
Common Shares which vest after 60 days after April 30, 1998 are indicated
separately in the notes that follow.
(2) The address of each of the directors and executive officers is 100 King
Street West, P.O. Box 2440 LCD1, Hamilton, Ontario, Canada L8N 4J6.
(3) Includes 589,308 Common Shares issuable upon the exercise of employee stock
options. Does not include 284,723 Common Shares subject to options which
are not exercisable within 60 days.
(4) Includes 551,521 Common Shares issuable upon the exercise of employee stock
options. Does not include 220,834 Common Shares subject to options which
are not exercisable within 60 days.
(5) Includes 427,222 Common Shares issuable upon the exercise of employee stock
options. Does not include 12,778 Common Shares subject to options which are
not exercisable within 60 days.
(6) Includes 27,222 Common Shares issuable upon the exercise of employee stock
options. Does not include 12,778 Common Shares subject to options which are
not exercisable within 60 days.
(7) Includes 100,000 Common Shares issuable upon the exercise of employee stock
options.
(8) Does not include 20,000 Common Shares subject to options which are not
exercisable within 60 days.
(9) Includes 39,712 Common Shares issuable upon the exercise of employee stock
options. Does not include 20,000 Common Shares subject to options which are
not exercisable within 60 days.
6
<PAGE> 9
(10) Includes 188,888 Common Shares issuable upon the exercise of employee stock
options. Does not include 346,112 Common Shares subject to options which
are not exercisable within 60 days.
(11) Includes 27,222 Common Shares issuable upon the exercise of employee stock
options. Does not include 12,778 Common Shares subject to options which are
not exercisable within 60 days.
(12) Includes 18,889 Common Shares issuable upon the exercise of employee stock
options. Does not include 21,111 Common Shares subject to options which are
not exercisable within 60 days.
(13) Includes 184,278 Common Shares issuable upon the exercise of employee stock
options. Does not include 184,722 Common Shares subject to options which
are not exercisable within 60 days.
(14) Includes 411,554 Common Shares issuable upon the exercise of employee stock
options. Does not include 237,184 Common Shares subject to options which
are not exercisable within 60 days.
(15) Includes 137,501 Common Shares issuable upon the exercise of employee stock
options. Does not include 187,499 Common Shares subject to options which
are not exercisable within 60 days.
(16) Includes 195,278 Common Shares issuable upon the exercise of employee stock
options. Does not include 184,722 Common Shares subject to options which
are not exercisable within 60 days.
(17) Includes 160,278 Common Shares issuable upon the exercise of employee stock
options. Does not include 184,722 Common Shares subject to options which
are not exercisable within 60 days.
(18) Includes 165,278 Common Shares issuable upon the exercise of employee stock
options. Does not include 184,722 Common Shares subject to options which
are not exercisable within 60 days.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Based upon publicly available information filed with the Securities and
Exchange Commission, no person beneficially owns more than 5% of the outstanding
Common Shares as of April 30, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the December 1993 acquisition of Nortru, Inc. ("Nortru")
from Norman Foster, a director of the Company, the Company guaranteed a
$5,950,000 note payable by a wholly-owned subsidiary of the Company to Mr.
Foster. The note, which was unsecured, bore interest at U.S. prime plus 2% and
was payable in equal monthly installments of $165,000 plus interest maturing on
May 20, 1997. The outstanding balance of the note was paid in full by the
Company on May 21, 1997. In addition, in December, 1993, the Company entered
into a non-competition and retention agreement with Mr. Foster, pursuant to
which the Company agreed to pay Mr. Foster an aggregate of $7 million in
consideration for certain non-compete and employment covenants from Mr. Foster.
One payment of $1.4 million due under this agreement was paid in January, 1997,
another payment of 1.4 million was paid in January, 1998 and the final payment
under this agreement is due on December 31, 1998. During 1997, the Company paid
$323,520 in rental payments to Mr. Foster or entities which he controls or has
an ownership interest for properties utilized by the Company in the operation of
its business.
In 1997, a wholly-owned subsidiary of the Company purchased real property
adjacent to its Taro landfill, located in Stoney Creek, Ontario for a purchase
price of $5.08 million from AIC Holdings Inc., a company in which Roy Cairns, a
director of the Company, owns a part interest.
During 1997, the Company paid approximately $2.4 million to Cole Carriers
Corp. ("Coles"), a commercial trucking company controlled by Philip Fracassi and
Allen Fracassi, officers and directors of the Company, for truck transportation
services rendered by Coles to the Company.
The law firm of Turkstra, Mazza, Shinehoft, Mihailovich Associates, of
which Herman Turkstra is counsel, provided services to the Company in 1997. Fees
paid to Mr. Turkstra's firm in 1997 totalled Cdn$570,212.
As at April 30, 1998, the aggregate amount of indebtedness due to the
Company from all current or former officers, directors and employees was
$515,000, consisting of the outstanding balance of a loan made to
7
<PAGE> 10
Allen Fracassi, the President and Chief Executive Officer of the Company, for
the purpose of purchasing a home. The loan is unsecured, non-interest bearing
and payable on demand.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
As at April 30, 1998, the aggregate amount of indebtedness (other than
routine indebtedness) due to the Corporation from all current or former
officers, directors and employees was $515,000.
TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
<TABLE>
<CAPTION>
LARGEST AMOUNT
OUTSTANDING DURING
INVOLVEMENT OF FISCAL YEAR ENDED AMOUNT OUTSTANDING
NAME AND PRINCIPAL POSITION ISSUER OR SUBSIDIARY DECEMBER 31, 1997 AS AT APRIL 1, 1998
--------------------------- -------------------- ------------------ -------------------
<S> <C> <C> <C>
ALLEN FRACASSI(1)..................... Lender $515,000 $515,000
President and Chief Executive Officer
</TABLE>
- ---------------
NOTES:
(1) The loan was made for the purpose of purchasing a home, is unsecured,
non-interest bearing and is due on demand.
8
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated April 30, 1998 PHILIP SERVICES CORP.
By: /s/ ALLEN FRACASSI
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Allen Fracassi
President and Chief Executive
Officer
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