<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[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, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to .
Commission File No. 1-11822
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TRANSCOR WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0369288
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(State of incorporation) (I.R.S. Employer
Identification No.)
1502 Second Avenue, East, Tampa, Florida 33605
(Address of registrant's principal executive offices,
including zip code)
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(Registrant's telephone number, including area code):
(813) 248-3878
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange
Title of Each Class on Which Registered
-------------------------------- --------------------------
Common Stock, $.001 par value The NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 [ ] No [X]<PAGE>
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. [ ]
As of March 13, 1998, there were 4,000,000 shares of Common Stock
outstanding. The aggregate market value of the voting stock held by non-
affiliates of the registrant as of March 13, 1998, was $1,984,000.
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DOCUMENTS INCORPORATED BY REFERENCE:
NONE<PAGE>
TRANSCOR WASTE SERVICES, INC.
Form 10-K
TABLE OF CONTENTS
Page
No.
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PART I
Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 8
Item 4 Submission of Matters to a vote
of Security Holders . . . . . . . . . . . . . . . . . . . . 9
PART II
Item 5 Market for the Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . . . . . . . 9
PART III
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures . . . . . . . . . 35
Item 10 Directors and Executive Officers of the Registrant . . . . 35
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . 36
Item 12 Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . 39
PART IV<PAGE>
Note: The discussions in this Form 10-K contain forward looking
statements that involve risks and uncertainties. Statements contained in
this Form 10-K that are not historical facts are forward looking
statements that are subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. A number of important factors
could cause future results of TransCor Waste Services, Inc., and its
subsidiaries to differ materially and significantly from those expressed
or implied in past results and in any forward looking statements made by,
or on behalf of, the Company. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in
"Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," as well as those discussed
elsewhere in this Form 10-K. These factors include, without limitation,
those listed in "Risk Factors" in the Company's Registration Statement on
Form S-1 (File No. 33-12677).
PART I
Item 1. Business
The Company
TransCor Waste Services, Inc. (the "Company") provides solid waste
management services to commercial, industrial, residential, and municipal
customers. In connection with such services, the Company currently owns
and operates fully-permitted construction and demolition ("C&D") transfer
and recycling ("T&R") facilities in four of the largest metropolitan
regions in the state of Florida: Jacksonville, Clearwater, Tampa, and
Miami. In addition to its T&R operations, the Company collects and
disposes of all types of non-hazardous solid waste for industrial and
commercial customers in its T&R regions, and it provides residential
garbage collection services for several municipalities in Lee County and
Hillsborough County, Florida. The Company also engages, pursuant to
several municipal contracts, in the residential curbside collection of a
variety of already segregated recyclable forms of solid waste, including
such materials as newspapers, cardboard, plastic, metals, and glass. The
Company also provides demolition and other related services in
conjunction with, and as an economic complement to, its solid waste
management services.
The Company was incorporated under the laws of the State of Florida
on November 6, 1992. The Company is a subsidiary of Kimmins Corp.
("Kimmins"), a publicly-held New York Stock Exchange listed company that
provides specialty contracting services. Kimmins owns 74 percent of the
outstanding stock of the Company.<PAGE>
Company Services
Transfer and Recycling Operations
The Company currently owns and operates fully permitted T&R
facilities in four Florida metropolitan regions, which include Clearwater
(Pinellas County), Tampa (Hillsborough County), Jacksonville (Duval
County), and Miami (Dade County). Non-hazardous C&D debris, and
occasionally where permitted, yard waste are deposited by both the
Company's own collection vehicles and by outside third parties, including
competitive waste disposal companies. Waste material deposited at the
Company's facilities is first weighed on a computerized scale to
determine the fee to be paid to the Company. Then the recyclable waste
is segregated by the Company for resale or donation. The non-recyclable
material is compacted, transferred to trailers, and transported by third-
party haulers to landfills for disposal.
Because the Company's permits allow it to segregate and recycle part
of the C&D debris and yard waste accepted at its T&R facilities (thereby
decreasing the Company's landfill disposal costs) and the Company can
haul economically the non-recyclable waste to outlying rural landfills
(where disposal fees are much lower than those charged by urban disposal
facilities), the Company is frequently able to charge lower rates at its
T&R facilities than those charged by landfill operators in the same
vicinities. In addition, disposal of debris at the Company's T&R
facilities generally requires less time and causes less damage to waste
collection vehicles than landfill disposal. At landfills, haulers of all
types of solid waste and debris must converge on the same weigh stations
and must often travel up to two to three miles over temporary, debris-
laden roads and contend with hard-to-maneuver tipping conditions. In
contrast, the Company's T&R facilities, which generally accept C&D debris
and yard waste primarily, are only approximately four acres in size and
provide haulers with flat concrete-finished surfaces for driving and
tipping. As a result, the Company believes those waste haulers,
including those in competition with the Company's own collection
services, are provided strong economic and other incentives for disposing
of their C&D debris and yard waste at the Company's T&R facilities.
Laws requiring recycling or the achievement of recycling goals have
already been passed and continue to be passed throughout the United
States, including the state of Florida. These laws have resulted from
problems associated with the disposal of an increasing volume of solid
waste, and the Company believes that more state and local governments
will mandate recycling of reusable materials and the composting of yard
waste. The Company currently segregates and recycles C&D debris, and
occasionally where permitted, yard waste at all four of its T&R
facilities. In addition, pursuant to its contracts with the City of
Tampa, Lee County, Hillsborough County, and other municipalities, the
Company provides residential curbside collection of a variety of already
segregated recyclable material, including newspapers, cardboard, plastic,
metals, and glass. The Company disposes of all of the recyclable
material it collects to processors or manufacturers or other recyclers.<PAGE>
The Company's T&R facilities also are used to provide maintenance,
parking, and fueling of the Company's truck fleet and a base of
operations for its regional administrative personnel.
Collection Operations
In addition to its T&R operations, the Company provides solid waste
collection and disposal services for a wide range of customers. In
connection with such services, the Company collects C&D debris and yard
waste for processing at its T&R facilities. It also collects other forms
of non-hazardous solid waste for hauling directly to, and disposal at,
landfills in each of its T&R regions and Fort Myers (Lee County), Florida
(where it has administrative facilities for its collection operations).
The Company currently provides its collection services to approximately
13,000 commercial and industrial customers and to approximately 108,000
residential households. Commercial services are typically provided
pursuant to municipal and private contracts, as well as through a direct
marketing program, with terms of one to three years, industrial services
are typically provided on a project-by-project basis, and residential
services are provided by municipal contract or individual household
request. Municipal contracts typically have a term of five to eight
years.
For the years ended December 31, 1995, 1996 and 1997, St. Lucie
County, Florida, provided approximately 8 percent, 7 percent, and 5
percent, respectively, of the Company's revenue pursuant to a five-year
agreement entered into between the Company and St. Lucie in January 1994
(the "St. Lucie Contract"). Pursuant to such agreement, the Company
provided solid waste collection services to St. Lucie, including the
collection of waste, yard waste, and recyclable materials from
residential customers. The Company's collection fees are calculated
according to specified rates and vary with the type of waste collected
and the method in which collection services are performed. The Company
sold the St. Lucie Contract during 1997 and the related land and
buildings during 1998.
For the years ended December 31, 1995, 1996, and 1997, the City of
Tampa, Florida, provided approximately 1 percent, 6 percent, and 7
percent, respectively, of the Company's revenue pursuant to a five-year
agreement entered into between the Company and the City of Tampa in
August 1995 (the "City of Tampa Contract"). Pursuant to such agreement,
the Company provides solid waste collection services to the City of
Tampa, including the collection of waste and recyclable materials from
residential and commercial customers. The Company's collection fees are
calculated according to specified rates and vary with the type of waste
collected and the method in which collection services are performed.<PAGE>
For the years ended December 31, 1995, 1996 and 1997, Lee County,
Florida, provided approximately 2 percent, 8 percent, and 6 percent,
respectively, of the Company's revenue pursuant to a five-year agreement
entered into between the Company and Lee County in April 1995 (the "Lee
County Contract"). Pursuant to such agreement, the Company provides
solid waste collection services to Lee County, including the collection
of waste and recyclable materials from residential and commercial
customers. The Company's collection fees are calculated according to
specified rates and vary with the type of waste collected and the method
in which collection services are performed.
For the year ended December 31, 1997, Hillsborough County, Florida,
provided approximately 3 percent of the Company's revenue pursuant to an
eight-year agreement entered into between the Company and Hillsborough
County in 1997 (the "Hillsborough County Contract"). Pursuant to such
agreement, the Company provided solid waste collection services to
Hillsborough County, including the collection of waste and recyclable
materials from residential customers. The Company's collection fees are
calculated according to specified rates and vary with the type of waste
collected and the method in which collection services are performed. As a
result of the Hillsborough residential contract, the Company is allowed
to compete with two other waste service providers for the commercial and
industrial waste collection business.
Commercial and Industrial Waste Collection
The Company provides commercial and industrial non-hazardous solid
waste collection services to customers who are serviced by the Company's
route collection system at agreed upon schedules or upon the customer's
request. Commercial and industrial customers generally use waste
containers and/or compactors provided by the Company. Commercial
customers use containers that range in size from one to eight cubic yards
or compactor boxes that range in size from twenty to forty cubic yards.
Compactor boxes are used with customer or Company-owned compactors, which
are designed to reduce the volume of stored waste, thereby permitting
less frequent collection. Commercial containers are lifted and the waste
contents are unloaded into the Company's collection trucks at the
customer's site. Industrial customers use "roll-off" waste containers
that range in size from 10 to 40 cubic yards. Filled roll-off containers
are collected and replaced by empty containers by the Company's roll-off
trucks.
Fees for both commercial and industrial solid waste collections jobs
vary based on such factors as job duration, collection frequency, type of
equipment furnished, type and volume or weight of the waste collected,
distance to the disposal facility, and cost of disposal.<PAGE>
Residential Waste Collection
Residential collection services are typically provided either on a
subscription basis, where the individual household contracts directly
with the Company, or on a municipal contract basis, where the Company
contracts with the municipality to collect from all residences within a
specified area. Municipal contracts provide relatively consistent cash
flow during the contract period and require less administration as
individual billing and debt collection systems are not necessary and
because all residents within the area are served. The Company is
currently performing under several municipal contracts that will provide
at least $10,000,000 in collection revenue in 1998. These contracts are
typically competitively bid and have initial terms of five to eight
years. These contracts also require that the Company provide curbside
collection and recycling of already segregated recyclable materials from
individual residences. Substantially all of the segregated recyclable
waste collected by the Company is delivered to other waste management
facilities for processing or disposal.
Demolition Services
The Company provides demolition services for commercial and
residential customers. Its demolition services include the razing and
dismantling of facilities and structures, the recovery of demolished
material for reuse and recycling, and the disposal of non-recycled
demolition debris. The typical demolition projects of the Company are
single and multistory urban buildings and small warehouses, manufacturing
plants, and other facilities. The Company enters into separate
demolition contracts for each project, which are usually for a term of
less than six months and, to date, have ranged in amounts from $1,500 to
$1,775,000. In connection with the Company's demolition activities, the
Company uses equipment such as bulldozers, front-end wheel loaders, and
roll-off trucks and containers, all of which are stored at the Company's
T&R facilities. By pursuing demolition projects in its existing markets,
the Company can use its T&R facilities to reduce the costs of demolition
waste disposal, which is traditionally one of the most significant costs
associated with demolition projects.
Other Services and Arrangements
The Company can provide certain other specialized solid waste
management services involving particular needs of customers. The
Company's specialized services include using Company-owned trucks and
loaders to remove waste from demolished buildings, burned-out structures,
and closed scrap yards and to clean customer sites after natural
disasters, such as Hurricane Andrew in South Florida and the tornadoes in
the Pinellas County, Florida, area.<PAGE>
Sales and Marketing
In management's view, both the Company's current T&R operations and
its collection and disposal operations still have growth capacity.
Consequently, the Company has increased its sales and marketing efforts
on attracting potential customers to its T&R facilities by emphasizing
the perceived economic and environmental benefits associated with such
use and on obtaining additional collection routes within its operating
regions. To date, the Company's sales and marketing activities
principally have been conducted through the efforts of the Company's
management and its in-house sales staff. However, during the fourth
quarter of 1996, the Company implemented a program to hire and train
additional sales personnel for its T&R facilities to support the
commercial and industrial markets. This sales force operates on an
incentive-based, industry-standard compensation program that management
believes will yield an increase in revenue growth through 1997 and
beyond. In conjunction with the increased sales effort, the Company
implemented an aggressive advertising program.
The Company generally obtains solid waste collection contracts for
its services or for the operation of certain solid waste management
facilities through the process of competitive bidding, purchase orders,
or negotiations. The Company's marketing efforts include selling door to
door, monitoring trade journals and other industry sources for bid
solicitations by various entities, including government authorities and
related instrumentalities, and responding to such bid solicitations,
which may include requests for proposals ("RFPs") and requests for
qualifications ("RFQs"). The Company also attempts to be included on
lists of qualified bidders frequently contained in RFPs and RFQs. In
response to an RFP or RFQ, the soliciting entity requires a written
response within a specified period. Generally, in the case of an RFP, a
bidder submits a proposal detailing its qualifications, the services to
be provided, and the cost of the services to the soliciting entity; and
then such entity, based on its evaluation of the proposals submitted,
awards the contract to the successful bidder. In the case of an RFQ, a
bidder submits a response describing its experience and qualifications.
The soliciting entity then selects the bidder believed to be the most
qualified and negotiates all the terms of the contract, including the
cost of the services. The Company's single largest contract was derived
through competitive bidding, and the Company expects that future
significant customers will be obtained through competitive bidding. The
Company also has obtained customers through recommendations and referrals
from existing customers.<PAGE>
Competition
Although developments in the waste management industry have resulted
in the emergence of large private and public solid waste management
companies and in consolidating trends in the industry, the solid waste
management business is characterized by intense competition. The
Company believes that no single company has a dominant market share of
the solid waste management business in the United States or Florida.
Although competition varies by locality and type of service, the
Company's principal sources of competition are local and regional waste
management companies of varying size, which primarily provide collection
or disposal services to customers in a limited geographic area; large
regional and national waste management companies, which operate over more
extensive geographic areas that provide completely integrated waste
management services, own or operate disposal sites, and engage in various
transfer and resource recovery activities; and counties and
municipalities that maintain their own waste collection and disposal
services for residents and businesses in the locality. National
companies that compete against the Company include, among others,
Browning-Ferris Industries, Republic Waste Industries, and the combining
U.S.A. Waste and Waste Management, Inc. Several competitors are or have
been customers of the Company's transfer and recycling facilities. Many
of the Company's competitors are well established and have much greater
marketing, financial, and other resources than the Company. In addition,
the counties and municipalities that compete with the Company often have
financial advantages due to their access to tax revenues and tax-exempt
financing.
The Company believes that the principal competitive factors in the
industry are price, reputation, service, managerial experience, financial
assurance capability (particularly as it relates to municipal contracts),
and internalization of costs from vertical integration of services
offered. For instance, the City of Jacksonville reduced its landfill
disposal charges and enacted a 12 percent franchise fee during the second
quarter of 1997 on non-residential solid waste management service
revenues of the Company. This resulted in the Company s Jacksonville T&R
facility being less competitive to outside third party waste disposal
companies as the fee was passed on to customers, causing revenues to
decrease by approximately $2,000,000 from 1996 to 1997.<PAGE>
Government Regulation
The solid waste management business is subject to extensive and
frequently evolving federal, state, and local laws and substantial
regulation under these laws by governmental agencies, including the
United States Environmental Protection Agency (the "EPA"), various state
agencies, and county and local authorities acting in conjunction with and
independently of such federal and state entities. Among other things,
these regulatory bodies impose restrictions to control air, soil and
water pollution and requirements that regulate health, safety, zoning,
and land use. Solid waste management companies are required to obtain
and maintain state and local government permits in connection with a
significant part of their operations. Operating permits generally are
required for solid waste management facilities (such as landfills and
recycling operations), transfer stations and certain vehicles, and these
permits are subject to revocation, modification, and renewal.
Federal, state, and local regulations vary; however, they generally
govern disposal activities, govern the location and use of facilities,
and impose restrictions to prohibit or reduce air, soil, and water
pollution. Solid waste management facilities generally are subject to
certain operational, closure, post-closure, monitoring and site
maintenance, and remediation obligations, which could lead to significant
costs for monitoring and corrective measures. Both governmental
authorities and the public have the power to enforce compliance with
these regulations and to obtain injunctions or the imposition of fines
for violations.
The federal statutes of most importance to the Company are the
Resource Conservation and Recovery Act of 1976, as amended, and the EPA's
implementing regulations (collectively, "RCRA"), and the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, ("CERCLA"). RCRA establishes a comprehensive framework for
state and federal regulation of solid and hazardous waste management. It
seeks to prevent the release into the environment of hazardous waste
through the development of solid waste management plans and the
regulation of the generation, treatment, transport, storage, and disposal
of hazardous wastes. It also establishes a program to ensure that non-
hazardous wastes are disposed of in environmentally controlled
facilities. While RCRA was implemented to prevent the release of
hazardous wastes into the environment, CERCLA was designed to establish a
national strategy to remediate or improve existing hazardous
environmental conditions. CERCLA establishes liability for cleanup costs
and environmental damages for current and former facility owners and
operators and persons who generate, transport, or arrange for
transportation of hazardous substances for disposal at a particular
facility. Most states, including Florida, have statutes similar to RCRA
and CERCLA that regulate the handling of hazardous substances, hazardous
wastes, and non-hazardous wastes. Many such statutes impose requirements
that are more stringent than their federal counterparts. The Company
could be subject to substantial liability under these statutes to private
parties and governmental entities, in some instances without any fault,<PAGE>
for fines, remediation costs, and environmental damage because of the
mishandling, release, or existence of any hazardous substances at any of
its facilities or the improper operation of such facilities.
Certain states have recently implemented or are implementing
legislation that mandates recycling as an integral part of their solid
waste management programs. In 1988, the state of Florida enacted a law
that requires each county in the state to recycle 30 percent of its total
municipal solid waste stream by 1994. In addition, many other states
have adopted similar recycling legislation. Although the Company
believes that such legislation has a beneficial impact on the Company's
existing business, to the extent that the Company executes its expansion
plans and acquires or develops one or more landfills, recycling
legislation would reduce the total volume of waste that would otherwise
be available for disposal. The Company currently recycles certain waste
at all four of its T&R facilities and collects recyclable material for
its commercial, industrial, and residential customers.
Amendments to existing statutes and regulations, changes in
regulatory policies, adoption of new statutes and regulations, and the
Company's expansion into other jurisdictions and solid waste management
services could require the Company and others in the industry to
continually modify solid waste disposal facilities and alter methods of
operations at costs that would likely be substantial, which could
adversely affect the Company. In addition, the Company is and will be
required to obtain and maintain government permits in connection with
almost every aspect of its operations, including its operation of its
transfer stations or future proposed solid waste management facilities.
The permits range in length from one year to five years and all may be
renewed upon expiration. The Company believes that it is in substantial
compliance with all federal, state, and local laws and regulations that
govern its material operations.
Potential Liability and Insurance
The solid waste management industry involves potentially significant
risks of statutory, contractual, and common law liability. The Company
carries a broad range of insurance coverage, which the Company considers
to be sufficient to meet regulatory and customer requirements and to
protect the Company's assets and operations. The Company also obtains
additional insurance as required on a contract-by-contract basis. The
Company attempts to operate in a professional and prudent manner and to
reduce its liability risks through specific risk management efforts.
Nevertheless, an under-insured or completely uninsured claim against the
Company, if successful and of a significant amount, could have a material
adverse effect on the Company. The Company has, in the past, been able to
obtain the types and amounts of insurance necessary to effectively
operate.<PAGE>
By policy, the Company does not deal with or handle hazardous waste,
either in its T&R facilities or in connection with its collection routes.
However, the Company's T&R facilities are located on former industrial or
landfill sites where debris and fill may have accumulated or been
deposited by prior owners. Consequently, there is a risk that these
facilities may contain contaminants at more than permissible levels
caused by the prior owners of the Company's facilities. Environmental
studies have been prepared on these facilities by independent engineers
engaged by the Company that indicate that these facilities are not
violating state and federal standards. The Company does not currently
maintain environmental impairment insurance as it believes that it does
not require this type of insurance. The Company also believes it is
common for solid waste management companies that do not generally
participate in the hazardous waste business to forego such insurance, as
such insurance is not cost-effective for them to maintain.
Performance Bonds
The Company is required, in certain instances, to post performance
and payment bonds in connection with contracts or projects with
government entities and, to a lesser extent, private sector customers.
To date, a significant amount of the Company's revenue has been derived
from contracts or projects that required the Company to post such bonds.
In addition to performance and payment bond requirements, new or proposed
legislation in various jurisdictions requires or will require the posting
of substantial bonds. In addition, legislation will require waste
management companies to provide further assurances covering the closure,
post-closure monitoring, and corrective activities for certain waste
management facilities, especially and primarily landfills. The Company's
current bonding coverage is $30 million per project, with an aggregate of
$100 million. Francis M. Williams, Chairman of the Company, has
indemnified the performance bond issuer against default by the Company.
There can be no assurance that in the future the Company can obtain bonds
in the amounts required or can increase its bonding capacity. To date,
the Company has not experienced any difficulty in obtaining such bonds.
Management believes that bonding coverages are adequate for the size and
scope of projects and contracts being performed.
Employees
The Company has approximately 250 full-time employees, 2 of whom are
executive officers of the Company, 6 of whom are employed in professional
capacities, 43 of whom are employed in administrative capacities, 21 of
whom are employed as field supervisors in all of the Company's
operations, and 178 of whom are employed in field operations. Field
supervisors and employees hired for field operations are hired on a
project basis. No employees are covered by collective bargaining
agreements. The Company considers its relationship with its employees to
be satisfactory.<PAGE>
Item 2. Properties
The Company's principal executive offices are located at 1502 Second
Avenue - East, Tampa, Florida 33605. The office has been subleased from
Kimmins since June 1, 1993, and contains renewal options for subsequent
one-year terms. The lease provides for rental payments based on market
rental rates. The lease provides that the Company is responsible for all
expenses including property taxes, telephone service and trash removal
fees, property insurance premiums, other insurance related costs, and all
maintenance and repair costs.
The Company owns and operates the following facilities:
Clearwater, Pinellas County
The Company's Clearwater facility, located on approximately ten
acres, is zoned heavy industrial and contains a T&R building of
approximately 33,000 square feet with modular office space of
approximately 3,000 square feet. The Clearwater facility is subject
to a mortgage securing indebtedness evidenced by a promissory note
with an outstanding principal amount at December 31, 1997, of
$821,000. The note matures on January 1, 1999, and bears interest at
a rate of 1 percent above the lender's prime rate. As additional
security for the lender, the Company executed an assignment of rents
and leases in the event of a default under the mortgage.
Tampa, Hillsborough County
The Company's Tampa facility is located on approximately four and
one-quarter acres in downtown Tampa. The property is zoned heavy
industrial and contains an approximately 15,000 square foot T&R
building. The Tampa facility is subject to a mortgage securing
indebtedness evidenced by a promissory note with an outstanding
principal amount at December 31, 1997, of $525,000. This note
matures on March 1, 2001, and bears interest at a rate of 1.5 percent
above the lender's prime rate.
Jacksonville, Duval County
The Company's Jacksonville facility is located on approximately
ten acres. The property is zoned light industrial and contains an
approximately 37,500 square foot recycling building, 2,000 square
feet of office space, and a 1,500 square foot maintenance shop. The
Jacksonville facility is subject to a mortgage, securing indebtedness
evidenced by a promissory note with an outstanding principal amount
at December 31, 1997, of $1,314,000. The note matures on January 1,
2012, and bears interest at the rate of 8.75 percent per annum. As
additional security for the payments under the notes and the
Company's performance of its obligations under the mortgage, the
Company executed a modification to the mortgage to assign all rents
from the property or to appoint a receiver in the event of a default
under the mortgage.<PAGE>
Miami, Dade County
The Company's Miami facility is located on approximately four and
one-half acres, is zoned industrial, contains an approximately 60,500
square foot T&R building, and contains an office area of
approximately 2,500 square feet that is used for its Miami collection
operations. The Miami facility is subject to a mortgage, which was
refinanced during 1995, securing indebtedness evidenced by a
promissory note with an outstanding principal amount at December 31,
1997, of approximately $828,000. The note matures on July 30, 2003,
and bears interest at a rate of 1.5 percent above the prime rate of
CitiBank, N.A. As additional security for the lender, the Company
executed a conditional assignment of leases, rents, and profits in
the event of a default under the mortgage.
Fort Pierce, St. Lucie County
The Company's Fort Pierce facility is located on approximately two
acres and is zoned heavy industrial. The facility contains an
approximately 1,000 square foot warehouse and office space of
approximately 1,000 square feet. The Fort Pierce facility is subject
to a mortgage securing indebtedness evidenced by a promissory note
with an outstanding principal amount at December 31, 1997, of
approximately $165,000. The note matures on March 1, 1999, and bears
interest at a rate of 3.75 percent above the lender's prime rate.
The land and building comprising this facility were sold in January
1998. Operations had ceased in this facility on November 1997 when
the contract with St. Lucie County was sold. The mortgage was paid
in full using proceeds from the sale of the facility. The Company
recognized a loss of approximately $90,000 on the sale.
Lantana, Palm Beach County
The Company's Lantana facility is located on approximately five
acres and is zoned industrial. The facility contains an
approximately 36,000 square foot building, an office area of
approximately 3,900 square feet, and a maintenance shop of
approximately 7,000 square feet. The Lantana facility is subject to
a mortgage securing indebtedness evidenced by a promissory note with
an outstanding principal amount of approximately $883,000 at December
31, 1997. The note matures on October 18, 2010, and bears interest
at the rate equal to the lender's prime rate. Operations in the
Lantana facility ceased in August 1997.
The Company's cost for land, buildings and improvements is
approximately $2,011,000. As of December 31, 1997, the Company wrote-
down the recorded value of these assets by $500,000, and the facility
is for sale.<PAGE>
Fort Myers, Lee County
The Company's Fort Myers facility is located on approximately two
acres and is zoned industrial. The facility contains a building of
approximately 6,400 square feet and office areas of approximately
2,200 square feet. The Fort Myers facility, which began operations
on October 1, 1995, is subject to a mortgage securing indebtedness
evidenced by a promissory note with an outstanding principal amount
at December 31, 1997, of approximately $323,000. The note matures on
August 9, 2000, and bears interest at the rate of 9.25 percent.
As a result of the recently awarded solid waste franchise
agreement with the City of Cape Coral, Florida, the Company will
require a larger facility to service an increased revenue base. In
early 1998, the Company made a bid on a competitor s idle facility,
which would meet the Company s expansion needs in the Lee County
area. The bid of $700,000 was for land and buildings. The Company
may sell its current facility if its bid for this property is
successful.
Item 3. Legal Proceedings
The Company is involved in various legal actions and claims arising
in the ordinary course of its business, none of which is expected to have
a material effect on the Company's financial position or results of
operations.
During June 1997, Kimmins Recycling Corp. ("KRC"), St. Lucie County,
a political subdivision of the State of Florida, and the City of Fort
Pierce, a municipality organized under the laws of the State of Florida,
were notified of a class action lawsuit filed in the Nineteenth Judicial
Circuit Court of Florida by three residents of St. Lucie County. This
action challenged the propriety of certain contract provisions included
in KRC's solid waste and recyclable materials collection service
agreement with St. Lucie County, which allow KRC to place liens on the
property of delinquent service recipients. The court, permitting KRC to
file counterclaims against the class members, has with KRC's consent
certified the existence of a class. KRC, the county and the city have
filed motions for summary judgment against the class plaintiff's claim,
which is set to be heard on May 26, 1998. At December 31, 1997, the total
amount of lien rights was approximately $474,000.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fourth quarter of 1997.<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
The Company's Common Stock has been traded on The Nasdaq Stock Market
under the symbol "TRCW" since August 21, 1995. The Company's Common
Stock was traded on the Boston Stock Exchange under the symbol "TRW" from
March 25, 1993, to August 21, 1995. Prior to March 25, 1993, the
Company's Common Stock was not publicly held or traded. "The Nasdaq Stock
Market" or "Nasdaq" is a highly-regulated electronic securities market
comprised of competing Market Makers whose trading is supported by a
communications network linking them to quotation dissemination, trade
reporting, and order execution systems. This market also provides
specialized automation services for screen-based negotiations of
transactions, online comparison of transaction, and a range of
informational services tailored to the need of the securities industry,
investors, and issuers. The Nasdaq Stock Market consists of two distinct
market tiers: The Nasdaq National Market and The Nasdaq SmallCap Market.
The Nasdaq Stock Market is operated by The Nasdaq Stock Market, Inc., a
wholly-owned subsidiary of the National Association of Securities
Dealers, Inc.
New quantitative maintenance requirements for continued listing on
the Nasdaq Stock Market became effective on February 23, 1998. One of
the new rules requires that the Company maintain $5,000,000 in market
value of public float. Public float is defined as shares that are not
held by officers, directors, or other persons who are beneficial owners
of more than 10 percent of the total shares outstanding. As of February
20, 1998, the Company's public float was approximately $1,984,000. As
part of Nasdaq's review process, the Company was contacted about
voluntarily moving the Company's listing to The Nasdaq SmallCap Market.
The Company filed the Nasdaq SmallCap Market Transfer Listing Application
on February 23, 1998.
The following table sets forth, for the periods indicated, high and
low bid quotations for the Company's Common Stock as reported by Nasdaq.
1996 High Low
------------------------------------------ --------- ---------
First quarter . . . . . . . . . . . . . . $ 9.000 $ 5.250
Second quarter . . . . . . . . . . . . . $ 7.000 $ 4.000
Third quarter . . . . . . . . . . . . . . $ 5.375 $ 3.500
Fourth quarter . . . . . . . . . . . . . $ 6.000 $ 3.500
1997 High Low
------------------------------------------ --------- ---------
First quarter . . . . . . . . . . . . . . $ 6.875 $ 3.500
Second quarter . . . . . . . . . . . . . $ 4.500 $ 3.000
Third quarter . . . . . . . . . . . . . . $ 4.125 $ 2.875
Fourth quarter . . . . . . . . . . . . . $ 3.750 $ 2.125<PAGE>
The closing price of the Company's stock on March 13, 1998, was
$2.50. In addition, as of March 13, 1998, there were 38 holders of record
of the Common Stock. Many of such holders are brokers and other
institutions holding shares in "street names" for more than one
beneficial owner.
Dividends
The Company has not paid any cash dividends since its inception, and
the Board of Directors does not plan to declare dividends in the
foreseeable future. It is the present intention of the Company's Board
of Directors to retain all earnings in the Company to support the future
growth of the Company's business. Certain of the Company's financial
institutions' debt agreements contain covenants that prohibit the payment
of dividends by the Company without lender approval.
Recent Sales of Unregistered Securities
The following information relates to equity securities of the Company
issued or sold during the year ended December 31, 1997, that were not
registered under the Securities Act in 1993, as amended (the "Securities
Act"):
The Company issued no securities during 1997 that were exempt from
registration under the Securities Act by virtue of Section 4(2) as a
transaction not involving a public offering.<PAGE>
PART III
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosures
None.
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of the Company are as follows:
Name Age Position
--------------------------------------- --------------------------------
Joseph M. Williams . . . . . . 41 President and Secretary
Francis M. Williams . . . . . . 56 Chief Executive Officer and
Chairman of the Board of
Directors
Norman S. Dominiak . . . . . . 53 Vice President, Chief Financial
Officer, and Treasurer
R. Donald Finn . . . . . . . . 54 Director
Barry W. Ridings . . . . . . . 46 Director
All directors of the Company hold office until the next annual
meeting of shareholders and the election and qualification of their
successors. Officers of the Company are elected annually by the Board of
Directors and hold office at the discretion of the Board.
Joseph M. Williams has been President and Chief Executive Officer of
the Company since September 1997, Secretary of the Company since November
1992, and Treasurer from November 1992 until May 1995. Mr. Williams has
served as Secretary of Kimmins since June 1988. Since November 18, 1991,
Mr. Williams has also served as President and has been a Director of
Cumberland Holdings, Inc., a holding company whose wholly-owned
subsidiaries provide reinsurance for specialty sureties and performance
and payment bonds. Since June 1986, Mr. Williams has served as President
and Vice President and has been a Director of Cumberland Real Estate
Holdings, Inc., a company specializing in property management. Mr.
Williams has been employed by Kimmins and its subsidiaries in various
capacities since January 1984. From January 1982 to December 1983, he
was the managing partner of Williams and Grana, a firm engaged in public
accounting. From January 1978 to December 1981, Mr. Williams was
employed as a senior tax accountant with Price Waterhouse & Co. Joseph
M. Williams is the nephew of Francis M. Williams.
Ira D. Cohen resigned as President of the Company in August 1997.<PAGE>
Francis M. Williams has been Chairman of the Board of Directors of
the Company since November 1992 and President of the Company from July 1,
1994 until July 1996. He has been President and Chairman of the Board of
Kimmins since its inception in 1987. From 1981 to 1988, Mr. Williams was
the Chairman of the Board and Chief Executive Officer of Kimmins Corp.
and its predecessors and was sole owner of K Management Corp., the former
parent company of Kimmins Corp. From June 1981 until January 1988, Mr.
Williams was the President and a Director of College Venture Equity
Corp., a small business investment company. Mr. Williams has also been a
Director of the National Association of Demolition Contractors and a
member of the Executive Committee of the Tampa Bay International Trade
Council.
Norman S. Dominiak has been the Treasurer of the Company since May
1995 and its Chief Financial Officer since January 1994. Mr. Dominiak
served as controller of ThermoCor Kimmins, Inc., a subsidiary of Kimmins,
from October 1990 until January 1994. From May 1988 until September
1991, Mr. Dominiak served as Senior Vice President of Creative Edge, a
company engaged in the manufacturing and distribution of educational
products. From October 1982 until April 1988, Mr. Dominiak served as
Senior Vice President of Cecos Environmental Services, Inc., a company
engaged in treatment, transportation, and disposal of hazardous waste.
From 1965 until 1982, Mr. Dominiak was employed in various financial
capacities for the Carborundum Company.
R. Donald Finn has been a Director of the Company since November
1992. For more than the last five years, Mr. Finn has been a partner in
the Law Firm of Gibson, McAskill & Crosby located in Buffalo, New York,
where Mr. Finn has practiced law for more than the last 25 years.
Barry W. Ridings has been a Director of the Company since November
1992. For more than the past five years, Mr. Ridings has been a managing
director of the investment banking firm, Alex, Brown & Sons, Inc. Mr.
Ridings is currently a Director of Norex America, Inc., SubMicron
Systems, Inc., Noodle Kidoodle, Inc., New Valley Corp., Search Capital
Group, Inc., and Telemundo Group, Inc.
Set forth below is information regarding certain key employees of the
Company:
Michael D. O'Brien, 47, has been employed by the Company (including
its predecessor) as Vice President since October 1992. From June 1987 to
October 1992, Mr. O'Brien has served as the Regional Manager of the
Northeast Region of Kimmins Industrial Service Corp., a wholly-owned
subsidiary of Kimmins. From July 1983 to June 1987, Mr. O'Brien served
as Vice President of Jordan Foster Scrap Corporation in Buffalo, New
York, a company specializing in demolition and preparation of scrap for
sale.
John V. Simon, Jr., 42, has been a Vice President of the Company
(including its predecessor) since November 1989. Since May 1981, he has
served as President of Kimmins Contracting Corp. He served as a Vice
President of Kimmins from July 1985 until October 1988.<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance. Pursuant to
Section 16(a) of the Securities Exchange Act of 1934 and the rules issued
thereunder, the Company's executive officers and directors and any
persons holding more than 10 percent of the Company's common stock are
required to file with the Securities and Exchange Commission reports of
their initial ownership of the Company's common stock and any changes in
ownership of such common stock. Specific due dates have been
established, and the Company is required to disclose in its Annual Report
on Form 10-K and Proxy Statement any failure to file such reports by
these dates. Copies of such reports are required to be furnished to the
Company. Based solely on its review of the copies of such reports
furnished to the Company, or written representations that no reports were
required, the Company believes that, during 1996, all of its executive
officers (including the Named Executive Officers), directors and persons
owning more than 10 percent of its common stock complied with the Section
16(a) requirements, except that Francis M. Williams filed four Form 4s
late to report four transactions.<PAGE>
Item 11. Executive Compensation
Summary Compensation Table. The following table provides certain
summary information concerning compensation paid or accrued by the
Company for the chief executive officers for the year ended December 31,
1997. No other executive officers of the Company earned in excess of
$100,000 in salary and bonus for the year ended December 31, 1997:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
---------------------------
Annual Compensation Awards Payouts
---------------------- ------------------- -------
Securi-
Other ties All
Annual Restricted Under- Other
Compen- Stock lying LTIP Compen-
Name and Salary Bonus sation Award(s) Options/ Payouts sation
Principal Position Year ($) ($) ($) ($) SARs (#) ($) ($)
--------------------- ---- -------- ------- ------- ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Francis M. Williams 1997 $ 172,120 $0 $0 $0 0 $0 $996(d)
Chief Executive (a)1996 $ 184,810 $0 $0 $0 0 $0 $995(d)
Officer 1995 $ 271,137 $0 $0 $0 0 $0 $989(d)
Joseph M. Williams 1997 $0 $0 $0 $0 25,000 $0 $0 (d)
President and (b)
Secretary
Ira D. Cohen 1997 $ 67,660 $0 $0 $0 25,000 $0 $993(d)
President (c)1996 $ 57,692 $0 $0 $0 0 $0 $0 (d)
Michael D. O Brien 1997 $ 105,427 $0 $0 $0 25,000 $0 $695(d)
Vice President 1996 $ 95,000 $0 $0 $0 0 $0 $695(d)
1995 $ 91,261 $13,740 $0 $0 5,000 $0 $695(d)
(a) Mr. Francis M. Williams' salary and other compensation are paid by Kimmins.
(b) Mr. Joseph M. Williams employment commenced in September 1997. As a result, no
information regarding compensation prior to such date is provided herein. Mr.
Williams salary and other compensation are not paid by the Company; however, his
services are covered by the management fees paid to Kimmins.
(c) Mr. Cohen's employment commenced in July 1996 and terminated in August 1997. As a
result, no information regarding compensation prior to such date is provided herein.
The Company bought out Mr. Cohen's options upon his resignation.
(d) Represents the Company's contribution to the employee's account of the Company's
401(k) Plan and premiums paid by the Company for term life insurance and long-term
disability. These plans, subject to the terms and conditions of each plan, are
available to all employees.
/TABLE
<PAGE>
During the year ended December 31, 1997, the services of certain of
the Company s officers were provided to the Company by Kimmins and
included in an administrative fee of approximately $1,315,000 paid to
Kimmins during 1997 for such executive services and other services.
Pursuant to the Management Services Agreement, Kimmins provides the
services of Messrs. Francis M. Williams, Joseph M. Williams, Norman S.
Dominiak, and John V. Simon, Jr., as Chairman of the Board, President and
Secretary, Treasurer, and Vice President of the Company, respectively,
as needed, as well as certain financial, accounting, data processing,
and other administrative services, for an annual fee equal to the lower
of the actual cost of such services or 3.0 percent for 1997 and 1.5
percent for 1996 of the gross revenues of the Company. From the list of
executives and key employees, included under Item 10, Directors and
Executive Officers, only Mr. Cohen and Mr. O Brien received compensation
directly from the Company. During 1995, 1996, and 1997, Mr. Francis M.
Williams received salary and other compensation totaling $271,137,
$184,810, and $172,120, respectively, from Kimmins for work performed on
the behalf of Kimmins and its subsidiaries, including the Company. These
amounts were not allocated to any Kimmins subsidiary. The Company and
Kimmins estimate that during 1997 approximately 10 percent of the
professional time of Francis M. Williams was spent on matters concerning
the Company and that the services provided by John V. Simon, Jr., to the
Company were essentially incidental to their overall responsibilities to
Kimmins and no part of their services was allocable to the Company. The
Company estimates that no more than 10 percent of the total professional
time of any of such persons in 1997 has been spent on the affairs of the
Company, except for Joseph M. Williams and Norman S. Dominiak who spent
approximately 50 percent of their total professional time during the
second half of 1997 on affairs of the Company.
1992 Stock Option Plan
In November 1992, the Company adopted a stock option (the "Option
Plan") pursuant to which 250,000 shares of Common Stock have been
reserved for issuance upon the exercise of options designated as either
(i) options intended to constitute incentive stock options ("ISOs") under
the Internal Revenue Code of 1986, as amended (the "Code") or (ii) non-
qualified options. ISOs may be granted under the Option Plan to
employees and officers of the Company. Non-qualified options may be
granted to consultants, directors (whether or not any such director is an
employee), employees, or officers of the Company.<PAGE>
The purpose of the Option Plan is to attract and retain the best
available talent and encourage the highest level of performance to serve
the best interests of the Company and its shareholders. The Option Plan
is administered by the Board of Directors or, at their discretion, by a
committee appointed by the Board of Directors to perform such function.
The Board of Directors or such committee, as the case may be, within the
limitations of the Option Plan, determine, among other things, when to
grant options, the persons to whom options will be granted, the number of
shares to be covered by each option, whether the options granted are
intended to be ISOs or non-qualified options, the duration and rate of
exercise of each option, the option purchase price per share and the
manner of exercise, and whether restrictions such as repurchase rights in
the Company are to be imposed on shares subject to options. In
determining the employees, officers, consultants, and directors to whom
options should be granted and the number of shares to be covered by each
option, the Board of Directors or committee, as the case may be, will
take into account the nature of their duties, their present and potential
contributions to the success of the Company, and other such factors as it
will deem relevant.
ISOs granted pursuant to the Option Plan may not be granted at a
price less than the fair market value of the Common Stock on the date of
grant (or 110 percent of fair market value in the case of persons holding
10 percent or more of the voting stock of the Company). The aggregate
fair market value of shares for which ISOs granted to any employee are
exercisable for the first time by such employee during any calendar year
(pursuant to all stock option plans of the Company and any related
corporation) may not exceed $100,000. Non-qualified options granted
under the Option Plan may be granted at a price determined by the Board
of Directors or committee but may not be less than the par value of such
shares. Options granted pursuant to the Option Plan will expire not more
than ten years from the date of grant (five years in the case of ISOs
granted to persons holding 10 percent or more of the voting stock of the
Company).
Options granted pursuant to the Option Plan are not transferable
during an optionee's lifetime; however, they are transferable at death by
will or by the laws of descent and distribution.
As of December 31, 1997, the Company has granted ten-year options
that are exercisable to purchase an aggregate of 160,000 shares. Of such
options, options to purchase 27,000 shares were granted to Mr. Michael D.
O'Brien and 25,000 shares to Mr. John V. Simon, Jr. Options to purchase
45,000 shares were granted to Joseph M. Williams, and options to purchase
20,000 shares were granted to each of Messrs. Barry W. Ridings and R.
Donald Finn. The 70,000 options granted with an exercise price of $5.00
per share were cancelled during 1994 and subsequently reissued during
1994 with an exercise price of $2.00. All options granted to date are
exercisable at the rate of 20 percent per year, and become fully vested
by December 2002. In addition, 80,000 options granted between May 1,
1995, and October 1, 1997, with exercise prices between $3.12 and $4.38
were canceled during 1997 and subsequently reissued in December 1997 at
an exercise price of $2.50.<PAGE>
Stock Option/SAR Grants in the Last Fiscal Year. No stock options
or stock appreciation rights were granted to Mr. Francis M. Williams
during the year ended December 31, 1997. During 1997 Mr. Cohen was
granted 25,000 options that were canceled effective with his resignation.
In addition, Mr. Williams and Mr. Cohen do not have any stock options or
stock appreciation rights that were granted in previous years.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
--------------------------------------------
Potential
Realizable
Percent Value at
of Total Assumed Annual
Number of Options/ Rates of
Securities SARs Stock Price
Underlying Granted Appreciation
Options/ to Exercise for Option Term
SARs Employees or Base (2)
Granted in Fiscal Price Expiration -----------------
Name (#)(1) Year ($/Sh)(1) Date 5% ($) 10% ($)
----------------------- ----------- --------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Williams (3) 25,000 16.9%$ 3.12 09/11/07 $ 49,054 $124,312
Joseph M. Williams . . 25,000 16.9% 2.50 12/04/07 39,306 99,609
Ira D. Cohen . . . (4) 25,000 16.9% 4.50 02/01/07 70,751 179,296
Michael D. O Brien (3) 2,000 1.4% 3.12 10/01/07 3,924 9,945
Michael D. O Brien . . 2,000 1.4% 2.50 12/04/07 3,144 7,969
R. Donald Finn . . (3) 5,000 3.4% 3.12 09/11/07 9,811 24,862
R. Donald Finn . . . . 5,000 3.4% 2.50 12/04/07 7,861 19,922
R. Donald Finn . . . . 10,000 6.8% 2.50 12/04/07 15,722 39,844
Barry Ridings . . . (3) 5,000 3.4% 3.12 09/11/07 9,811 24,862
Barry Ridings . . . . . 5,000 3.4% 2.50 12/04/07 7,861 19,922
Barry Ridings . . . . . 10,000 6.8% 2.50 12/04/07 15,722 39,844
(1) All options vest and are exercisable in 20 percent increments annually for five
years after the date of grant. The exercise price of all options is the fair
market value of the Company's stock at the time of the grant.
(2) These amounts represent assumed rates of appreciation for the market value of the
Company's stock from the date of the grant until the end of the option period at
rates arbitrarily set by the Securities and Exchange Commission. They are not
intended to forecast possible future appreciation in the Company's stock and any
actual gains on exercise of options are dependent on the future performance of the
Company's stock.
(3) Canceled and reissued on December 4, 1997, with an exercise price of $2.50.
(4) Terminated upon Mr. Cohen's resignation in August 1997.
/TABLE
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-
End Option/SAR Values. No stock options or stock appreciation rights
were granted to Mr. Francis M. Williams during the year ended December
31, 1997. During 1997 Mr. Cohen was granted 25,000 options that were
canceled effective with his resignation. In addition, Mr. Williams and
Mr. Cohen do not have any stock options or stock appreciation rights that
were granted in previous years. There were no stock options exercised by
named executive officers during the fiscal year ended December 31, 1997.
The following table summarizes the net value realized on the exercise
of options in 1996 and the value of outstanding options as of December
31, 1997, for the Named Executives.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Options/SARs Options/SARs at
on Value at Year-End (#) Year-End ($)(1)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
------------------------ --------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
Joseph M. Williams . . . . . 0 $0 21,000/24,000 $4,000/$1,000
Michael D. O Brien . . . . . 0 $0 19,400/7,600 $4,093/$1,062
R. Donald Finn . . . . . . . 0 $0 7,000/13,000 $1,000/$250
Barry W. Ridings . . . . . . 0 $0 7,000/13,000 $1,000/$250
(1) Value is calculated using the Company's closing stock price on December 31, 1997,
of $2.25 per share less the exercise price for such shares.
/TABLE
<PAGE>
<TABLE>
TEN YEAR OPTION/SAR REPRICINGS
<CAPTION>
Market Length of
Price Original
Number of of Stock Exercise Option
Securities at Time Price at Term
Underlining of Time of Remaining
Options/ Repricing Repricing New Date of
SARs or or Exercise Repricing
Repriced or Amendment Amendment Price or
Name Date Amended (#) ($) ($) ($) Amendment
------------------------------ ------------ ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Williams . 10/30/94 20,000 $2.00 $5.00 $2.00 4 years
Secretary 12/04/97 25,000 $2.50 $3.12 $2.50 5 years
Michael D. O'Brien . 10/30/94 20,000 $2.00 $5.00 $2.00 4 years
Vice President 12/04/97 2,000 $2.50 $3.12 $2.50 5 years
John V. Simon, Jr. . 10/30/94 20,000 $2.00 $5.00 $2.00 4 years
Vice President
</TABLE>
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Company's Board of Directors consists
solely of Barry W. Ridings. During the year ended December 31, 1997,
Francis M. Williams, the Company's Chairman of the Board of Directors and
former President, has served as President and Chairman of the Board of
Directors of Kimmins.
Compensation of Directors. During the year ended December 31, 1997,
the Company paid each outside director an annual fee of $5,000 and $1,000
for each board meeting attended. In addition, Directors are reimbursed
for all out-of-pocket expenses incurred in attending Board of Directors
and audit committee meetings.
Other Benefit Arrangements
On November 12, 1992, the Company and Kimmins entered into an
agreement for the proportional sharing of employee benefit costs,
pursuant to which the Company's employees are entitled to participate in
all of Kimmins' employee benefit plans, and the Company is required to
contribute its pro rata share of the costs of such plans, calculated
according to formulae contained in the agreement. The agreement may be
terminated by either party anytime upon 180 days' prior written notice.
Pursuant to the agreement, Kimmins and the Company have agreed to
indemnify each other against any loss, liability, claim, damage, or
expense incurred by the failure by either party to comply with the terms
of the agreement.<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's
common stock beneficially owned as of March 13, 1998, by (i) each person
known by the Company to be the owner of more than 5 percent of the
outstanding shares of Common Stock, (ii) each of the Named Executives,
(iii) each director, and (iv) all executive officers and directors as a
group:
Amount and Percentage of
Nature of Outstanding
Name and address Beneficial Shares Owned
of Beneficial Owner Ownership (1) (1)
---------------------------------- ---------------------- --------------
Kimmins Corp.
1501 Second Avenue, East
Tampa, FL 33605 . . . . . . . . 2,950,000 (2)(3) 72.8%
Francis M. Williams
1501 Second Avenue, East
Tampa, FL 33605 . . . . . . . . 3,206,300 (2)(3)(4) 79.1%
Joseph M. Williams
1501 Second Avenue, East
Tampa, FL 33605 . . . . . . . . 21,000 (5) *
Barry W. Ridings . . . . . . . . 22,000 (6) *
R. Donald Finn . . . . . . . . . 7,000 (7) *
John V. Simon, Jr. . . . . . . . 24,000 (8) *
All officers and directors (2)(3)(4)
as a group (6 persons) . . . . 3,304,700 (5)(6)(7)(8) 81.0%
----------------------------------
* Less than 1 percent
(1) A person is deemed to be the beneficial owner of securities that can
be acquired by such person within sixty days upon the exercise of
warrants or options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants held by such person
(but not those held by any other person), which are exercisable
within sixty days, have been exercised.
(2) Represents 2,950,000 shares of Common Stock owned of record and
beneficially by Kimmins. Kimmins has sole voting and investment
power with respect to all shares of Common Stock beneficially owned
by it. Mr. Francis M. Williams, the Company's Chairman, beneficially
owns approximately 61.5 percent of the total voting shares of Kimmins
and, accordingly, controls Kimmins. As of March 13, 1998, all
executive officers and directors of the Company as a group, including
Mr. Francis M. Williams, beneficially own an aggregate of
approximately 67.2 percent of the voting shares of Kimmins.<PAGE>
(3) Excludes 400,652 shares issuable upon the conversion of the Kimmins
Note. See Item 13, "Certain Relationships and Related Transactions."
(4) Includes 100,000 shares that Mr. Francis M. Williams acquired upon
the consummation of the Company's initial public offering during
March 1993; 142,300 shares owned directly by Mr. Francis M. Williams;
6,000 shares owned by Mr. Williams' wife; and 8,000 shares owned by
Mr. Williams' children.
(5) Represents 21,000 shares that may be purchased by Mr. Williams
pursuant to immediately exercisable options. Does not include 24,000
shares issuable to him upon exercise of options vesting at various
times commencing in October 1998.
(6) Includes 15,000 shares owned by Mr. Ridings, and 7,000 shares that
may be purchased by Mr. Ridings pursuant to immediately exercisable
options. Does not include 13,000 shares issuable to him upon
exercise of options vesting at various times commencing in October
1998.
(7) Represents 7,000 shares that may be purchased by Mr. Finn pursuant to
immediately exercisable options. Does not include 13,000 shares
issuable to him upon exercise of options vesting at various times
commencing in October 1998.
(8) Includes 5,000 shares owned by Mr. Simon and 19,000 shares that may
be purchased by Mr. Simon pursuant to immediately exercisable
options. Does not include 6,000 shares issuable to him upon exercise
of options vesting at various times commencing in October 1998. Also
includes 19,400 shares and 5,000 shares that may be purchased by Mr.
O'Brien and Mr. Dominiak pursuant to immediately exercisable options.<PAGE>
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, thereunder duly
authorized.
TRANSCOR WASTE SERVICES, INC.
Date: April 17, 1998 By: /s/ Joseph M. Williams
---------------------------- ---------------------------------------
Joseph M. Williams
President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Date: April 17, 1998 /s/ Francis M. Williams
---------------------------- ---------------------------------------
Francis M. Williams
Chief Executive Officer and Director
(Principal Executive Officer)
Date: April 17, 1998 /s/ Norman S. Dominiak
---------------------------- ---------------------------------------
Norman S. Dominiak
Vice President, Chief Financial
Officer and Treasurer
(Principal Accounting
and Financial Officer)
Date: April 17, 1998 /s/ R. Donald Finn
---------------------------- ---------------------------------------
R. Donald Finn, Director
Date: April 17, 1998 /s/ Barry W. Ridings
---------------------------- ---------------------------------------
Barry W. Ridings, Director
<PAGE>
