<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the period from January 1, 1998 to December 31, 1998
Commission File Number 0-20854
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
PHILIP SERVICES CORP. 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
PHILIP SERVICES CORP.
100 KING STREET WEST
HAMILTON, ONTARIO L8N4J6
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<PAGE> 2
PHILIP SERVICES CORP.
401(k) PLAN
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1998:
Item 27(a) - Schedule of Assets Held for Investment Purposes 11
Item 27(b) - Schedule of Loans or Fixed Income Obligations 12
Item 27(d) - Schedule of Reportable Transactions 13
Item 27(e) - Schedule of Nonexempt Transactions 14
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator of
Philip Services Corp. 401(k) Plan
We have audited the accompanying statements of net assets available for
benefits of the Philip Services Corp. 401(k) Plan (the "Plan") as of December
31, 1998 and 1997, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules,
as listed in the table of contents, for the year ended December 31, 1998
are presented for the purpose of additional analysis and are not a required
part of the basic financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
These schedules are the responsibility of the Plan's management. Such schedules
have been subjected to the auditing procedures applied in our audit of the
basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic 1998 financial
statements taken as a whole.
The accompanying financial statements have been prepared assuming that Philip
Services Corp. (the "Company") will continue as a going concern. As discussed
in Note 1 to the financial statements, the Company was not in compliance with
the provisions of its existing credit agreement during 1998 which raises
substantial doubt about its ability and the Plan's ability to continue as a
going concern. Management's plans concerning these matters are also described
in Note 1. The financial statements do not include any adjustment that might
result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
Houston, Texas
June 28, 1999
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<PAGE> 4
PHILIP SERVICES CORP.
401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
Spectrum Growth Fund $ 15,688,935 $ 3,672,517
Growth & Income Fund 13,196,258 8,252,328
Prime Reserve Fund 12,923,532 2,903,664
New Horizons Fund 10,887,142 5,966,111
Blue Chip Growth Fund 8,294,585
Capital Appreciation Fund 8,143,456 5,054,344
Balanced Fund 6,530,257
International Stock Fund 5,272,954 1,999,161
New Income Fund 3,935,047 1,763,780
Spectrum Income Fund 2,135,201 875,569
Philip Services Common Stock Fund 642,047
Participant Loans 4,718,808 1,606,101
--------------- ---------------
Total investments 92,368,222 32,093,575
--------------- ---------------
RECEIVABLES:
Participant contributions 489,637 52,930
Employer contributions 205,164 21,248
--------------- ---------------
Total receivables 694,801 74,178
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 93,063,023 $ 32,167,753
=============== ===============
</TABLE>
See notes to financial statements.
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<PAGE> 5
PHILIP SERVICES CORP.
401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
CONTRIBUTIONS:
Employee $ 14,343,907 $ 4,815,322
Employer 6,413,833 1,351,159
Rollovers 49,654,519 636,986
--------------- ---------------
Total contributions 70,412,259 6,803,467
INVESTMENT INCOME:
Net appreciation (depreciation) in fair value
of investments (6,732,871) 1,576,344
Dividend income 5,849,888 2,130,146
Interest income 329,149 125,376
--------------- ---------------
Net investment income (553,834) 3,831,866
PARTICIPANT WITHDRAWALS AND DISTRIBUTIONS (8,963,155) (3,553,515)
ADMINISTRATIVE EXPENSES (505)
--------------- ---------------
NET INCREASE IN NET ASSETS AVAILABLE FOR
BENEFITS 60,895,270 7,081,313
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 32,167,753 25,086,440
--------------- ---------------
End of year $ 93,063,023 $ 32,167,753
=============== ===============
</TABLE>
See notes to financial statements.
-3-
<PAGE> 6
PHILIP SERVICES CORP.
401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
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1. THE PLAN AND PLAN DESCRIPTION
The following description of the Philip Services Corp. 401(k) Plan (the
"Plan") provides only general information. Participants should refer to
the Plan document for a more complete description of the Plan's
provisions.
GENERAL - The Plan is a defined contribution plan for eligible employees
of Philip Services Corp. (the "Company") and is subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"). As
such, the Plan meets minimum funding standards required under these
provisions. The Plan is directed by a 401(k) committee which is composed
of employees appointed by the Company's Board of Directors.
During 1998, the Serv-Tech Inc. Consolidated Retirement Savings 401(k)
Plan, the Roth Bros. Smelting Employee's Deferred Savings and Profit
Sharing Plan and Trust, the Allwaste, Inc. Employee Retirement Plan, the
Luria Bros.-Connell Limited Partnership Profit Sharing and Savings Plan,
the RMF Global, Inc. 401(k) Savings & Retirement Plan, the Cousins
Employees Savings & Retirement Plan, the 21st Century Environmental
Management, Inc. 401(k) Plan, the Industrial Services Technologies, Inc.
401(k) Savings Plan and the Eltex Chemical Employees 401(k) Plan were
merged into the Plan. These mergers resulted in rollover contributions of
approximately $47.9 million. In connection with the merger of these plans
the Blue Chip Growth Fund, the Balanced Fund and Philip Services Stock
Fund became investment options under the Plan.
During 1998, the Department of Labor ("DOL") conducted an audit of the
Allwaste, Inc. Employee Retirement Plan (the "Allwaste Plan") for plan
years 1995, 1996, and 1997. As a result of the audit, the Company agreed
to contribute $34,966 to the Allwaste Plan. Subsequent to December 31,
1998, the Company transferred $28,109 to T. Rowe Price to be allocated to
the accounts of the affected participants, with the remainder paid
directly to former participants. As of December 31, 1998 the $28,109 was
included in employer contributions receivable.
CONTRIBUTIONS AND VESTING - A participant may elect to contribute between
1% and 15% of annual compensation. Participant contributions to the Plan
are fully vested at the time they are made. The Company matches 50% of
participant contributions up to a maximum of $3,000 per year. A
participant obtains full vesting in his or her Company matching
contributions account balance and earnings thereon upon the earlier of
the date on which he or she completes one year of participation or the
date on which he or she completes five years of employment. Any employee
who was a participant in the Plan on February 18, 1994, is fully vested in
his or her Company matching contributions accounts at all times.
Nonvested amounts forfeited by participants are used to offset future
employer contributions. For the years ended December 31, 1998 and 1997,
forfeited accounts totaled $126,277 and $26,569, respectively.
INVESTMENT FUNDS - A participant may direct the investment of his or her
account balances and contributions to any one or more of the following
investment funds:
New Horizons Fund: A mutual fund investing principally in common
stock of smaller companies with high growth potential. This fund is
publicly traded as the T. Rowe Price New Horizons Fund, Inc.
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<PAGE> 7
Growth & Income Fund: A mutual fund investing principally in blue
chip common stocks with other investments in preferred stocks and
convertible bonds. This fund is publicly traded as the T. Rowe
Price Growth & Income Fund, Inc.
Capital Appreciation Fund: A mutual fund investing principally in
common stocks with growth and capital appreciation prospects.
Additionally, this fund invests in convertible bonds and preferred
stocks. This fund is publicly traded as the T. Rowe Price Capital
Appreciation Fund, Inc.
Prime Reserve Fund: A money market mutual fund invested in the T.
Rowe Price Prime Reserve Fund, Inc.
New Income Fund: A bond mutual fund investing in United States
Government and high quality corporate bonds. This fund is publicly
traded as the T. Rowe Price New Income Fund, Inc.
International Stock Fund: A mutual fund investing principally in a
diversified portfolio of long-term marketable securities of
established non-United States issuers. This fund is publicly traded
as the T. Rowe Price International Stock Fund.
Spectrum Growth Fund: A mutual fund investing principally in stock
funds with growth and capital appreciation prospects. This fund is
publicly traded as the T. Rowe Price Spectrum Growth Fund.
Spectrum Income Fund: A mutual fund investing in income-oriented
funds with high current income and price appreciation prospects.
This fund is publicly traded as the T. Rowe Price Spectrum Income
Fund.
Balanced Fund: A mutual fund investing in a diversified portfolio
consisting of approximately 60% in common stocks and the balance in
fixed income securities and cash reserves. This fund is publicly
traded as T. Rowe Price Balanced Fund, Inc.
Blue Chip Growth Fund: A mutual fund investing in common stocks of
large and medium-sized blue chip companies that have the potential
for above average growth in earnings. This fund is publicly traded
as T. Rowe Price Blue Chip Growth Fund, Inc.
Philip Services Stock Fund: Funds are invested in the common stock
of Philip Services Corp. Effective April 1, 1999, the Philip
Services Stock Fund discontinued future allocation and
reallocations of investments by plan participants into the Fund.
However, participants were allowed to retain any investments in the
Fund as of March 31, 1999.
All of the mutual funds held by the Plan are managed by T. Rowe Price
Associates, Inc., the trustee of the Plan. In addition T. Rowe Price
holds the shares of the Philip Services Stock Fund.
PARTICIPANT LOANS - The Plan may make loans to actively employed
participants of not less than $1,000 nor more than the lessor of $50,000
or 50% of the current value of the vested balance in the participant's
account. The $50,000 limitation is reduced by the participant's highest
outstanding loan balance during the prior one-year period. A participant
may not obtain more than one loan during any 12-month period and may not
have more than two loans outstanding at a given time. The interest rate on
loans is prime plus 1%, as determined quarterly by the trustee. The
interest rate on existing loans ranges from 6.00% to 11.00%. The interest
rate is fixed for the term of the loan, and the repayment period may be
from one to five years. Participant loans are secured by the participants'
account balances.
During 1998 and 1997, loans were made in the amount of $2,506,017 and
$1,016,137, respectively.
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<PAGE> 8
At December 31, 1998, loans amounting to $30,104 were in default as
defined by the Plan.
WITHDRAWALS AND DISTRIBUTIONS - The Plan provides for in-service
withdrawals to participants which are limited to the participant's vested
account balances and are subject to certain other restrictions and
requirements. Upon separation from service, a participant's account
balances may be distributed in a lump sum or kept in the Plan. A
participant whose account balances exceed $3,500 may elect a deferred
distribution or installment payment over a period ending not later than
April 1 of the year following the calendar year in which the participant
attains age 70 1/2. As of December 31, 1998 and 1997, there were no
amounts payable to participants who have terminated or withdrawn from the
Plan.
BASIS OF PRESENTATION - The Company is a supplier of metals recovery and
industrial services to major industry sectors throughout North American
and Europe. The Company applies proprietary technology to reduce the cost
and downtime associated with industrial cleaning and plant turnaround
activities, and to recover value from industrial by-products and metal
bearing residuals.
As of December 31, 1998, the Company was not in compliance with the
provisions of its existing credit agreement as amended (the "Credit
Facility"). On April 26, 1999, the Company's lending syndicate approved a
lock-up agreement as amended on June 21, 1999 (the "Lock-up Agreement")
which sets forth a new capital structure for the Company and the
conditions that govern the restructuring of approximately $1 billion in
secured term loans outstanding under the Credit Facility. Under the terms
of the Lock-up Agreement, the lenders will convert the outstanding
approximately $1 billion of secured syndicated debt into $300 million of
senior secured debt, $100 million of convertible secured payment in-kind
debt and 91% of the common shares of the restructured Company. The secured
payment in-kind debt is convertible into 25% of the common shares of the
restructured Company on a fully-diluted basis as of the restructuring
date. The senior secured debt and the secured payment in-kind debt each
have a term of five years. The Lock-up Agreement also provides that the
Board of Directors of the restructured Company will consist of nine
directors who will be nominated by the new 91% shareholders (i.e., the
lenders). The nominees will include two members of the existing Board. The
sale of the utilities division of the Company on May 18, 1999 resulted in
a reduction of the restructured senior secured debt from $300 million to
$250 million.
The Company filed a voluntary application to reorganize with the
appropriate court in Canada and filed voluntary petitions with the
appropriate court in the United States on June 25, 1999. The applications
include, in addition to the arrangements reached with the Company's
lenders described above, proposals that would adjust the amounts owing to
certain unsecured creditors and the realization value of the Company's
assets. Upon filing, the Company has access to $100 million of
debtor-in-possession financing to support its working capital requirements
during the restructuring process. Upon receipt of court approval of the
application, the $100 million debtor-in-possession financing will be
repaid by a $100 million working capital facility to be established. The
courts have confirmed the Company's access to proceeds remaining from
previous sales of non-core assets of over $400 million.
The ability of the Company to continue as a going concern is
dependent on the courts approval of the voluntary application to
reorganize contemplated by the Lock-up Agreement. It is uncertain what
impact, if any, the Company's ability to continue as a going concern
will have on the Plan or the net assets available for benefits.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared
under the accrual method of accounting.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
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<PAGE> 9
RECLASSIFICATIONS - Certain reclassifications have been made to prior
year amounts to conform to the current year presentation.
PLAN EXPENSES - Administrative expenses, to the extent not paid by the
Company, are paid from Plan assets.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
INVESTMENTS - Investments are recorded at fair value based on quoted
market prices as determined by the trustee. Dividends and interest income
from investments are recorded as earned on the accrual basis, and
allocated to participants based upon their proportionate investment in
each fund. Purchases and sales of securities are recorded on a trade-date
basis.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments, which consists of the realized gains or losses, and the
unrealized appreciation or depreciation of those investments. The cost
basis of securities sold is determined by a moving weighted average for
the shares in each fund.
PLAN TERMINATION - While the Board of Directors of the Company has not
expressed an intention to do so, it may terminate the Plan at any time,
subject to the provisions of ERISA. Upon termination, all participants
become fully vested and the Plan's assets will be distributed to the
participants on the basis of their net asset account balances existing at
the date of termination.
TAX STATUS - The Internal Revenue Service has determined and informed the
Company by a letter dated August 14, 1995, that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code ("IRC").
The Plan has been amended since receiving that determination letter.
However, the Plan administrator and the Plan's tax counsel believe that
the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC. The Company is currently
requesting an updated determination letter from the IRS. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
EXCESS CONTRIBUTION - Upon failure of nondiscrimination tests, the Plan
would accrue a liability equal to the excess contribution and excess
aggregate contribution to be refunded. The Plan has not completed the
nondiscrimination tests for the year ended December 31, 1998. Management
does not believe that the impact of excess contributions, if any, will be
material to the financial statements.
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<PAGE> 10
3. INVESTMENTS
Investments that comprised 5% or more of the net assets available for
benefits at December 31 were as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Spectrum Growth Fund $ 15,688,935 $ 3,672,517
Growth & Income Fund 13,196,258 8,252,328
Prime Reserve Fund 12,923,532 2,903,664
New Horizons Fund 10,887,142 5,966,111
Blue Chip Growth Fund 8,294,585
Capital Appreciation Fund 8,143,456 5,054,344
Balanced Fund 6,530,257
International Stock Fund 5,272,954 1,999,161
New Income Fund 3,935,047 1,763,780
Participant loans 4,718,808 1,606,101
</TABLE>
4. SUBSEQUENT EVENT
Subsequent to year end several plans of companies acquired by the Company
are in the process of merging into the Plan.
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<PAGE> 11
5. FUND INFORMATION - ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS
The allocation of changes in net assets available for benefits to
investment programs for the years ended December 31, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
PRIME NEW GROWTH & CAPITAL NEW SPECTRUM
RESERVE INCOME INCOME APPRECIATION HORIZONS INCOME
1998 FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Rollovers $ 8,624,879 $ 1,697,046 $ 2,942,185 $ 2,582,075 $ 3,846,559 $ 621,307
Employee 2,136,600 603,195 1,860,275 1,147,261 1,341,651 414,323
Employer 933,285 289,014 870,070 528,592 627,678 191,267
------------ ------------ ------------ ------------ ------------ ------------
Total contributions 11,694,764 2,589,255 5,672,530 4,257,928 5,815,888 1,226,897
INVESTMENT INCOME:
Net appreciation (depreciation)
in fair value of investments (112,876) (270,583) (817,800) 44,558 (36,493)
Dividend income 592,127 272,467 1,203,411 1,212,628 562,492 133,221
Interest income 78,149 15,988 40,104 31,818 39,189 6,480
------------ ------------ ------------ ------------ ------------ ------------
Net investment income 670,276 175,579 972,932 426,646 646,239 103,208
PARTICIPANT WITHDRAWALS
AND DISTRIBUTIONS (2,120,647) (337,994) (1,515,433) (1,065,884) (1,072,677) (127,313)
INTERFUND TRANSFERS, Net (128,372) (230,063) (112,799) (482,796) (419,083) 74,085
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 10,116,021 2,196,777 5,017,230 3,135,894 4,970,367 1,276,877
NET ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 2,910,211 1,768,137 8,271,070 5,064,049 5,983,733 878,455
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 13,026,232 $ 3,964,914 $ 13,288,300 $ 8,199,943 $ 10,954,100 $ 2,155,332
============ ============ ============ ============ ============ ============
<CAPTION>
PHILIP
SPECTRUM INTERNATIONAL SERVICES BLUE CHIP
GROWTH STOCK STOCK BALANCED GROWTH PARTICIPANT
1998 FUND FUND FUND FUND FUND LOANS
<S> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Rollovers $ 10,851,185 $ 2,706,469 $ 5,043,060 $ 4,979,545 $ 3,045,206 $ 2,715,003
Employee 2,249,419 672,802 1,199,399 963,788 1,755,194
Employer 997,404 317,396 513,014 400,428 745,685
------------ ------------ ------------ ------------ ------------ ------------
Total contributions 14,098,008 3,696,667 6,755,473 6,343,761 5,546,085 2,715,003
INVESTMENT INCOME:
Net appreciation (depreciation)
in fair value of investments 226,418 396,665 (7,674,607) 542,900 968,947
Dividend income 1,368,114 202,631 4,472 163,896 134,429
Interest income 49,055 18,817 21,185 13,434 14,930
------------ ------------ ------------ ------------ ------------ ------------
Net investment income 1,643,587 618,113 (7,648,950) 720,230 1,118,306
PARTICIPANT WITHDRAWALS
AND DISTRIBUTIONS (1,543,763) (571,926) (175,114) (494,216) (335,892) 397,704
INTERFUND TRANSFERS, Net (2,079,590) (442,462) 1,765,751 6,371 2,048,958
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 12,118,242 3,300,392 697,160 6,576,146 8,377,457 3,112,707
NET ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 3,679,907 2,006,090 1,606,101
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 15,798,149 $ 5,306,482 $ 697,160 $ 6,576,146 $ 8,377,457 $ 4,718,808
============ ============ ============ ============ ============ ============
<CAPTION>
1998 TOTAL
<S> <C>
CONTRIBUTIONS:
Rollovers 49,654,519
Employee 14,343,907
Employer 6,413,833
------------
Total contributions 70,412,259
INVESTMENT INCOME:
Net appreciation (depreciation)
in fair value of investments (6,732,871)
Dividend income 5,849,888
Interest income 329,149
------------
Net investment income (553,834)
PARTICIPANT WITHDRAWALS
AND DISTRIBUTIONS (8,963,155)
INTERFUND TRANSFERS, Net
------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 60,895,270
NET ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 32,167,753
------------
End of year $ 93,063,023
============
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
PRIME NEW GROWTH & CAPITAL NEW SPECTRUM
RESERVE INCOME INCOME APPRECIATION HORIZONS INCOME
1997 FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Rollovers $ 23,342 $ (48) $ 114,056 $ 276,298 $ 25,164
Employee 410,579 251,689 924,981 699,161 $ 1,009,481 172,702
Employer 154,957 78,080 247,758 186,404 277,834 53,828
------------ ------------ ------------ ------------ ------------ ------------
Total contributions 588,878 329,721 1,286,795 1,161,863 1,287,315 251,694
INVESTMENT INCOME:
Net appreciation (depreciation) in fair
value of investments -- 36,041 10,505,559 23,878 400,439 28,805
Dividend income 130,933 113,095 458,930 679,302 153,443 54,274
Interest income 16,359 7,242 23,808 17,788 29,963 4,579
------------ ------------ ------------ ------------ ------------ ------------
Net investment income 147,292 156,378 1,533,297 720,968 583,845 87,658
PARTICIPANT WITHDRAWALS
AND DISTRIBUTIONS (393,326) (215,193) (761,943) (613,027) (1,027,084) (65,152)
ADMINISTRATIVE EXPENSE (112) (22) (153) (55) (109) (11)
INTERFUND TRANSFERS, Net 113,780 (54,002) 254,777 (9,105) (293,497) 84,514
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 456,512 216,882 2,312,773 1,260,644 550,470 358,703
NET ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 2,453,699 1,551,255 5,958,297 3,803,405 5,433,263 519,752
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 2,910,211 $ 1,768,137 $ 8,271,070 $ 5,064,049 $ 5,983,733 $ 878,455
============ ============ ============ ============ ============ ============
<CAPTION>
SPECTRUM INTERNATIONAL
GROWTH STOCK PARTICIPANT
1997 FUND FUND LOANS TOTAL
<S> <C> <C> <C> <C>
CONTRIBUTIONS:
Rollovers $ 179,607 $ (712) $ 19,279 $ 636,986
Employee 911,948 434,781 4,815,322
Employer 207,695 144,603 1,351,159
------------ ------------ ------------ ------------
Total contributions 1,299,250 578,672 19,279 6,803,467
INVESTMENT INCOME:
Net appreciation (depreciation) in fair
value of investments 94,931 (58,309) 1,576,344
Dividend income 422,776 117,393 2,130,146
Interest income 14,979 10,658 125,376
------------ ------------ ------------ ------------
Net investment income 532,686 69,742 3,831,866
PARTICIPANT WITHDRAWALS
AND DISTRIBUTIONS (420,077) (336,121) 278,408 (3,553,515)
ADMINISTRATIVE EXPENSE (22) (21) (505)
INTERFUND TRANSFERS, Net (8,211) (88,256)
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 1,403,626 224,016 297,687 7,081,313
NET ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 2,276,281 1,782,074 1,308,414 25,086,440
------------ ------------ ------------ ------------
End of year $ 3,679,907 $ 2,006,090 $ 1,606,101 $ 32,167,753
============ ============ ============ ============
</TABLE>
******
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<PAGE> 13
PHILIP SERVICES CORP.
401(k) PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES,
DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT,
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, INTEREST RATE, COLLATERAL, CURRENT
LESSOR OR SIMILAR PARTY AND PAR OR MATURITY VALUE COST VALUE
<S> <C> <C> <C>
* T. Rowe Price Spectrum Growth Fund $ 15,518,332 $ 15,688,935
* T. Rowe Price Growth & Income Fund 13,467,985 13,196,258
* T. Rowe Price Prime Reserve Fund 12,923,532 12,923,532
* T. Rowe Price New Horizons Fund 10,685,855 10,887,142
* T. Rowe Price Blue Chip Growth Fund 7,328,153 8,294,585
* T. Rowe Price Capital Appreciation Fund 9,000,144 8,143,456
* T. Rowe Price Balanced Fund 6,025,116 6,530,257
* T. Rowe Price International Stock Fund 4,934,585 5,272,954
* T. Rowe Price New Income Fund 4,036,177 3,935,047
* T. Rowe Price Spectrum Income Fund 2,166,586 2,135,201
* Philip Services Corp. Common Stock 6,716,646 642,047
* Participant loans Maturities primarily from one to five years
with interest rates from 6% to 11.0% 4,718,808 4,718,808
------------ ------------
$ 97,521,919 $ 92,368,222
TOTAL ============ ============
</TABLE>
* Party-in-interest
-11-
<PAGE> 14
PHILIP SERVICES CORP.
401(k) PLAN
ITEM 27(b) - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
AS OF DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT RECEIVED UNPAID
IDENTITY DURING REPORTING BALANCE
AND ORIGINAL YEAR AT AMOUNT OVERDUE
ADDRESS AMOUNT ------------------ END ---------------------
OF OBLIGOR DESCRIPTION OF LOAN OF LOAN PRINCIPAL INTEREST OF YEAR PRINCIPAL INTEREST
<S> <C> <C> <C> <C> <C> <C>
Employee #1 9.75% interest, beginning September 29, 1995, $ 6,000 $ 4,495 $ 2,164 $ 625
60 monthly payments maturing August 31, 2000
Employee #1 9.25% interest, beginning February 14, 1997, 1,000 965 902 90
52 bi-weekly payments maturing January 29, 1999
Employee #2 8.25% interest, beginning December 27, 1996, 77 1,397 1,138 652 97
bi-weekly payments maturing December 10, 1999
Employee #3 8.5% interest, beginning May 31, 1996, 77 bi- 2,113 2,041 1,739 258
weekly payments maturing May 14, 1999
Employee #4 8.25% interest, beginning January 3, 1997, 103 4,000 4,000 4,000 342
weekly payments maturing December 25, 1998
Employee #5 8.5% interest, beginning January 2, 1998, 103 3,000 3,000 1,436 196
weekly payments maturing December 24, 1999
Employee #6 8.25% interest, beginning October 18, 1996, 25 1,500 120 120 1
bi-weekly payments maturing October 3, 1997
Employee #7 8.5% interest, beginning May 31, 1996, 103 3,000 3,000 3,000 265
weekly payments maturing May 22, 1998
Employee #8 8.25% interest, beginning February 14, 1997, 259 500 500 165 65
weekly payments maturing February 1, 2000
Employee #9 10.25% interest, beginning October 28, 1996, 120 5,700 4,622 1,086 439
bi-weekly payments maturing October 2001
Employee #10 10.00% interest, beginning September 4, 1995, 181 6,500 6,223 2,272 1,507
bi-weekly payments maturing August 31, 2002
------- ------- ------ -------
Total 34,710 30,104 17,536 3,885
------- ------- ------ -------
</TABLE>
-12-
<PAGE> 15
PHILIP SERVICES CORP.
401(k) PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENT
VALUE
OF ASSET ON
DESCRIPTION OF PURCHASE SELLING COST OF TRANSACTION NET GAIN
PARTY INVOLVED ASSET PRICE (A) PRICE (B) ASSET DATE OR (LOSS)
<S> <C> <C> <C> <C> <C> <C>
Series of transactions in assets involving
more than 5% of the current value of
Plan assets at the beginning of the year:
* Philip Services Corp. Company Stock $ 8,784,659 $ 8,784,659 $ 8,784,659
$ 467,994 651,526 467,994 $(183,532)
* T. Rowe Price International Stock Fund Mutual Fund 3,680,798 3,680,798 3,680,798
988,354 947,064 988,354 41,290
* T. Rowe Price New Horizons Fund Mutual Fund 6,321,668 6,321,668 6,321,668
1,694,933 1,667,214 1,694,933 27,719
* T. Rowe Price New Income Fund Mutual Fund 3,102,643 3,102,643 3,102,643
843,835 841,851 843,835 1,984
* T. Rowe Price Prime Reserve Fund Mutual Fund 12,491,896 12,491,896 12,491,896
2,528,114 2,528,114 2,528,114
* T. Rowe Price Growth and Income Fund Mutual Fund 7,142,998 7,142,998 7,142,998
2,099,246 1,763,722 2,099,246 335,524
* T. Rowe Price Balanced Fund Mutual Fund 6,635,576 6,635,576 6,635,576
648,220 633,963 648,220 14,257
* T. Rowe Price Capital Appreciation Fund Mutual Fund 5,065,144 5,065,144 5,065,144
1,572,916 1,490,759 1,572,916 82,157
* T. Rowe Price Spectrum Income Fund Mutual Fund 1,592,396 1,592,396 1,592,396
344,221 343,211 344,221 1,010
* T. Rowe Price Spectrum Growth Fund Mutual Fund 14,300,417 14,300,417 14,300,417
2,979,639 2,916,356 2,979,639 63,283
* T. Rowe Price Blue Chip Growth Fund Mutual Fund 7,821,508 7,821,508 7,821,508
495,870 527,708 495,870 (31,838)
Individual transactions in assets involving
more than 5% of the current value of Plan
assets at the beginning of the year:
* Philip Services Corp. Company Stock 3,476,616 3,476,616 3,476,616
* T. Rowe Price New Horizon Fund Mutual Fund 1,753,594 1,753,594 1,753,594
* T. Rowe Price Prime Reserve Fund Mutual Fund 3,548,307 3,548,307 3,548,307
* T. Rowe Price Prime Reserve Fund Mutual Fund 3,788,590 3,788,590 3,788,590
* T. Rowe Price Growth & Income Fund Mutual Fund 1,652,367 1,652,367 1,652,367
* T. Rowe Price Balanced Fund Mutual Fund 2,270,640 2,270,640 2,270,640
* T. Rowe Price Capital Appreciation Fund Mutual Fund 1,649,727 1,649,727 1,649,727
* T. Rowe Price Spectrum Growth Fund Mutual Fund 4,644,053 4,644,053 4,644,053
* T. Rowe Price Spectrum Growth Fund Mutual Fund 2,357,114 2,357,114 2,357,114
</TABLE>
* Party-in-interest
(a) Purchase price includes expenses incurred with transactions.
(b) Selling price is net of transaction expense.
-13-
<PAGE> 16
PHILIP SERVICES CORP.
401(k) PLAN
ITEM 27(e) - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RELATIONSHIP
TO PLAN, DESCRIPTION OF TRANSACTION,
EMPLOYER OR INCLUDING MATURITY DATE, INTEREST
IDENTITY OF OTHER PARTY- INTEREST RATE, COLLATERAL, AMOUNT INCURRED
PARTY INVOLVED IN-INTEREST PAR OR MATURITY VALUE LOANED ON LOAN
<S> <C> <C> <C> <C>
Philip Services Employer Lending of monies from the Plan
Corp.* to the Employer (participant and
employer contributions not timely
remitted to the Plan) as follows:
Deemed loan dated April 22, 1998,
maturity April 27, 1998 with
interest at 5.44% per annum 9,022 7
Deemed loan dated May 21, 1998,
maturity June 3, 1998 with interest
at 5.43% per annum 9,064 18
Deemed loan dated July 22, 1998,
maturity November 25, 1998 with
interest at 5.48% per annum 11,078 212
Deemed loan dated August 21,
1999, maturity November 25, 1998
with interest at 5.41% per annum 11,079 160
Deemed loan dated September 22,
1998, maturity November 25, 1998
with interest at 5.35% per annum 11,100 105
Deemed loan dated October 21,
1998, maturity November 25, 1998
with interest at 5.00% per annum 10,878 53
Deemed loan dated November 20,
1998, maturity December 14, 1998
with interest at 4.42% per annum 10,666 31
Deemed loan dated January 22,
1999, maturity February 11, 1999
with interest at 3.06% per annum 15,266 26
Deemed loan dated February 20,
1998, maturity March 11, 1998 with
interest at 5.47% per annum 32,806 98
Deemed loan dated August 21, 1998,
maturity December 21, 1998 with
interest at 5.41% per annum 2,930 53
Deemed loan dated September 22,
1998, maturity December 6, 1998
with interest at 5.35% per annum 1,810 20
Deemed loan dated September 22,
1998, maturity December 21, 1998
with interest at 5.35% per annum 436 6
Deemed loan dated October 21,
1998, maturity December 21, 1998
with interest at 5.00% per annum 1,501 13
Deemed loan dated November 20,
1998, maturity December 21, 1998
with interest at 4.42% per annum 869 3
Deemed loan dated March 20, 1998,
maturity June 22, 1998 with
interest at 5.32% per annum 6,928 99
Deemed loan dated March 20, 1998,
maturity December 29, 1998 with
interest at 5.32% per annum 3,225 135
Deemed loan dated May 21, 1998,
maturity May 22, 1998 with
interest at 5.43% per annum 6,825 1
Deemed loan dated July 22, 1998,
maturity December 29, 1998 with
interest at 5.48% per annum 4,858 118
Deemed loan dated August 21, 1998,
maturity December 29, 1998 with
interest 5.41% per annum 2,075 40
Deemed loan dated May 21, 1998,
maturity May 22, 1998 with
interest at 5.43% per annum 3,471 1
Deemed loan dated June 19, 1998,
maturity October 4, 1998 with
interest at 5.5% per annum 4,899 81
Deemed loan dated July 22, 1998,
maturity July 23, 1998 with
interest at 5.48% per annum 4,898 1
Deemed loan dated July 22, 1998,
maturity December 4, 1998 with
interest at 5.48% per annum 4,413 90
Deemed loan dated November 11,
1998, maturity December 4, 1998
with interest at 4.42% per annum 3,465 6
Deemed loan dated December 21,
1998, maturity January 4, 1999
with interest at 4.28% per annum 2,124 4
Deemed loan dated January 22,
1999, maturity May 21, 1999 with
interest at 4.52% per annum 3,070 45
</TABLE>
* Party-in-interest
-14-
<PAGE> 17
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Philip Services Corp. 401(k) Plan Committee, which administers the Philip
Services Corp. 401(k) Plan, has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Houston and
the State of Texas, on the 28th day of June, 1999.
ALLWASTE EMPLOYEE RETIREMENT
PLAN COMMITTEE
/s/ LARRY D. ROSE
- ------------------------------
Larry D. Rose
/s/ DERWARD B. RHODES
- ------------------------------
Derward B. Rhodes
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
23 - Independent Auditors' Consent
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-64407 of Philip Services Corp. on Form S-8 of our report dated June 28, 1999
appearing in this Annual Report on Form 11-K of the Philip Services Corp. 401(k)
Plan for the year ended December 31, 1998.
DELOITTE & TOUCHE LLP
Houston, Texas
June 28, 1999
