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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER: 1-12154
__________
USA WASTE SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1309529
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5400 LBJ FREEWAY
SUITE 300 - TOWER ONE
DALLAS, TEXAS 75240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(214) 383-7900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NO CHANGE
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
__________
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK AS OF MAY 1, 1996:
COMMON STOCK $.01 PAR VALUE 66,014,914 SHARES
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Par Value Amounts)
(Unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 16,591 $ 13,164
Accounts receivable, net 61,006 58,333
Notes and other receivables 13,133 13,802
Deferred income taxes 15,600 15,600
Prepaid expenses and other 25,411 19,223
------ --------
Total current assets 131,741 120,122
Notes and other receivables 17,208 11,704
Property and equipment, net 599,869 593,293
Excess of cost over net assets of acquired
businesses, net 95,643 91,250
Other intangible assets, net 27,639 27,528
Other assets 69,109 64,140
-------- --------
Total assets $941,209 $908,037
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,457 $ 32,364
Accrued liabilities 20,295 27,924
Deferred revenues 6,007 6,030
Current maturities of long-term debt 41,601 38,925
-------- --------
Total current liabilities 100,360 105,243
Long-term debt, less current maturities 354,978 334,860
Closure, post-closure, and other liabilities 61,887 65,085
-------- --------
Total liabilities 517,225 505,188
------- -------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value;
10,000,000 shares authorized;
none issued -- --
Common stock, $.01 par value;
150,000,000 shares authorized; 66,082,850 and
65,975,048 shares issued, respectively 661 660
Additional paid-in capital 728,924 727,971
Accumulated deficit (303,447) (323,963)
Less treasury stock at cost, 144,975 shares and
138,810 shares, respectively (2,154) (1,819)
--------- --------
Total stockholders' equity 423,984 402,849
------- -------
Total liabilities and stockholders' equity $941,209 $908,037
======= =======
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended
March 31,
----------
1996 1995
-------- --------
Operating revenues $124,629 $101,242
-------- --------
Costs and expenses:
Operating 69,598 58,279
General and administrative 14,542 16,890
Depreciation and amortization 14,875 12,980
Unusual items -- 693
----- --------
99,015 88,842
-------- --------
Income from operations 25,614 12,400
-------- --------
Other income (expense):
Interest expense:
Nonrecurring interest -- (3,512)
Other (5,767) (8,212)
Interest and other income, net 2,033 1,845
-------- --------
(3,734) (9,879)
-------- --------
Income before provision for income taxes 21,880 2,521
Provision for income taxes 1,364 2,337
------- --------
Net income $20,516 $ 184
======== ========
Earnings per common share $ 0.31 $ 0.00
======== ========
Weighted average number of common and
common equivalent shares outstanding 66,964 51,088
======== ========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In Thousands)
(Unaudited)
Additional
Preferred Common Paid-in Accumulated Treasury
Stock Stock Capital Deficit Stock
----- ----- ------- ------- -----
Balance, December 31, 1995 $ -- $ 660 $727,971 $(323,963) $(1,819)
Common stock issued in acquisitions -- 1 1,160 -- --
Common stock returned for acquisition
settlement -- -- -- -- (751)
Common stock issued from treasury upon
exercise of stock options -- -- (82) -- 219
Common stock issued from treasury upon
exercise of stock warrants -- -- (125) -- 197
Net income -- -- -- 20,516 --
------- --- ------- ------- -----
Balance, March 31, 1996 $ -- $ 661 $728,924 $(303,447) $(2,154)
======= === ======= ======== ======
The accompanying notes are an integral part of these condensed
consolidated financial statements.
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USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three months ended March 31,
-----------------------------
1996 1995
---------- -----------
Cash flows from operating activities:
Net cash provided by operating activities $14 ,431 $14,163
------- ------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (12,246) --
Capital expenditures (14,680) (16,044)
Loans and advances to others (7,659) (5,426)
Collection of loans to others 1,158 102
Proceeds from sale of assets 633 4,155
Increase in restricted assets (499) 9,430)
Other -- (384)
-------- --------
Net cash used in investing activities (33,293) (27,027)
-------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 32,000 17,000
Principal payments on long-term debt (9,920) (10,792)
Proceeds from exercise of stock options 137 30
Proceeds from exercise of warrants 72 517
-------- --------
Net cash provided by financing activities 22,289 6,755
------ -------
Increase (decrease) in cash and cash equivalents 3,427 (6,109)
Cash and cash equivalents at beginning of period 13,164 30,161
------ ------
Cash and cash equivalents at end of period $16,591 $24,052
======= ======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated balance sheets of USA Waste Services, Inc. ("the
Company") as of March 31, 1996 and December 31, 1995, the related condensed
consolidated statements of operations for the three months ended March 31, 1996
and 1995, the condensed consolidated statement of stockholders' equity for the
three months ended March 31, 1996, and the condensed consolidated statements of
cash flows for the three months ended March 31, 1996 and 1995 are unaudited.
In the opinion of management, such financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of financial position, results of operations, and cash flows
for the periods presented. The financial statements included herein should be
read in connection with the Company's Consolidated Financial Statements and
related notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and to the Company's Joint Proxy Statement and
Prospectus dated April 2, 1996 included in the Company's Registration Statement
on Form S-4 filed in connection with the acquisition of Western Waste
Industries ("Western") (see Note 5).
1. LONG-TERM DEBT:
Long-term debt consists of the following (in thousands):
March 31, December 31,
1996 1995
---------- ---------
Credit Facility:
Revolving credit facility $ 83,613 $ 51,613
Term loan facility 209,228 215,835
Industrial revenue bonds 80,500 82,250
Other 23,238 24,087
------ --------
396,579 373,785
Less current maturities 41,601 38,925
------- --------
$354,978 $334,860
======= =======
On June 30, 1995, in connection with the acquisition of Chambers Development
Company ("Chambers"), the Company entered into a $550,000,000 financing
agreement consisting of a $300,000,000 five-year revolving credit and letter of
credit facility and a $250,000,000 term loan facility. Borrowings under the
credit facility are collateralized by all the stock and intercompany receivables
of the Company and its subsidiaries, whether now owned or hereafter acquired.
Revolving credit loans under the credit facility are limited to $180,000,000 at
March 31, 1996, less the amount of any future industrial revenue bonds enhanced
by letters of credit under the credit facility. Loans bear interest at a rate
based on the Eurodollar rate or the prime rate, plus a spread not to exceed
1.75% per annum. The credit facility may also be used for letters of credit
purposes with variable fees from 0.75% to 1.75% per annum charged on amounts
issued. A commitment fee of up to .5% is required on the unused portion of the
credit facility.
On May 7, 1996, in connection with the acquisition of Western, the Company
replaced its existing credit facility with a $750,000,000 senior revolving
credit facility ("Credit Facility"). The Credit Facility will be used to
refinance existing bank loans and letters of credit as well as fund additional
acquisitions and working capital. The Credit Facility will be available for
standby letters of credit of up to $300,000,000. Loans under the Credit
Facility bear interest at a rate based on the Eurodollar rate plus a spread not
to exceed 0.75% per annum (spread initially set at 0.405% per annum). The
Credit Facility requires a facility fee not to exceed 0.38% per annum on the
entire available credit facility (facility fee initially set at 0.22% per
annum). The Company's liquidity will be enhanced by the Credit Facility as the
financial covenants are less restrictive and principal reductions are not
required for a three year period.
2. BUSINESS COMBINATIONS:
During the three months ended March 31, 1996, the Company acquired 13
collection businesses for approximately $12,246,000 in cash and 64,624 shares
of the Company's Common Stock. These acquisitions were accounted for under the
purchase method of accounting and the pro forma effect of the acquisitions is
not material to the Company's financial condition or its results of operations.
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USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. INCOME TAXES:
The difference in federal income taxes at the statutory rate and the
provision for income taxes is primarily due to the net change in the valuation
allowance. The valuation allowance for deferred tax assets had a net decrease
of $5,814,000 in the first quarter of 1996 due to changes in the Company's
gross deferred tax assets and liabilities and the realizations of a portion of
the Company's net deferred tax asset. Future taxable income was projected
utilizing annualized first quarter taxable income. Based on this analysis of
taxable income, the Company has restored the net deferred tax asset to
$15,600,000. If the Company's current trend of profitability continues,
additional net deferred tax assets of up to approximately $87,800,000 could be
recognized in future periods.
4. COMMITMENTS AND CONTINGENCIES:
Environmental matters -- The Company is subject to extensive and evolving
federal, state, and local environmental laws and regulations that have been
enacted in response to technological advances and the public's increased
concern over environmental issues. As a result of changing governmental
attitudes in this area, management anticipates that the Company will
continually modify or replace facilities and alter methods of operation. The
majority of the expenditures necessary to comply with the environmental laws
and regulations are made in the normal course of business. Although the
Company, to the best of its knowledge, is in compliance in all material
respects with the laws and regulations affecting its operations, there is no
assurance that the Company will not have to expend substantial amounts for
compliance in the future.
Legal matters -- See Part II, Item 1, of this Form 10-Q for discussion of
legal matters.
Insurance -- The Company self-insures certain of its comprehensive general
liability and workers' compensation risks, while maintaining third-party
coverage to protect against catastrophic loss. The Company has not incurred
significant fines, penalties, or liabilities for pollution or environmental
liabilities at any of its facilities; however, the Company's operating results
could be adversely affected in the future in the event of uninsured losses.
Employment agreements -- The Company has entered into employment agreements
with certain of its executives and officers. These employment agreements
include provisions governing compensation and benefits to be paid upon
termination of employment with the Company or certain changes in control of the
Company. Under certain conditions, the agreements can be terminated by the
Company or the employee. Upon termination of an agreement, the employee's
compensation would continue at approximately 75% of the employee's prior
compensation for periods ranging from three to five years. During the three to
five year period, the employee would be available to the Company on a part-time
basis for consulting and also would not be permitted to engage in any
activities in direct competition with the Company. If these executives were to
be terminated without cause during 1996 or if certain executives elected to
terminate their agreements, the aggregate annual compensation on a part-time
basis would be approximately $1,250,000. If a change in control were to occur
in 1996 and the executives were to elect to take the change in control
payments, they would receive approximately $6,473,000. As of March 31, 1996,
the Company has not recorded any accruals in the financial statements related
to these employment agreements.
Other commitments and contingencies -- The Company is a party to certain
other litigation arising in the normal course of business. In addition,
contingencies of an environmental nature currently exist at certain of its
disposal sites. Management believes that the ultimate outcome of these matters
will not have a material adverse effect on the Company's financial position and
results of operations.
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USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. MERGER WITH WESTERN WASTE INDUSTRIES:
On May 7, 1996, the Company consummated an Agreement and Plan of Merger (the
"Merger Agreement") to acquire Western through a merger transaction ("Western
Merger") accounted for as a pooling of interests. Under the terms of the Merger
Agreement, the Company issued 1.50 shares of its Common Stock for each share of
Western outstanding common stock. Prior to the Western Merger, the Company
owned approximately 4.1% of Western's outstanding shares (634,900 common shares
of Western were recorded at cost of $12,596,000 in other assets in the condensed
consolidated balance sheets at March 31, 1996 and December 31, 1995), which were
canceled on the Western Merger's effective date. The Western Merger increased
the Company's outstanding shares of Common Stock by approximately 23.1 million
shares and the Company assumed options under Western's stock option plans
equivalent to approximately 5.2 million underlying USA Waste shares of Common
Stock. Following the Western Merger, the Company's Board of Directors was
expanded from 9 to 11 members, with approval to appoint a twelfth member at a
later date. See Part II, Item 5, of this Form 10-Q for USA Waste supplemental
condensed consolidated financial information.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion reviews the Company's operations for the three
months ended March 31, 1996 and 1995, and should be read in conjunction with
the Company's condensed consolidated financial statements and related notes
thereto included elsewhere herein, as well as the Company's consolidated
financial statements and related notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and the Company's
Joint Proxy Statement and Prospectus dated April 2, 1996, included in the
Company's Registration Statement on Form S-4 filed in connection with the
acquisition of Western.
INTRODUCTION
The Company provides non-hazardous solid waste management services,
consisting of collection, transfer, disposal, soil remediation, and recycling
services in 21 states. Since August 1990, the Company has experienced
significant growth principally through the acquisition and integration of solid
waste businesses and is now the fourth largest non- hazardous solid waste
company in North America. The company owns or operates 29 landfills, 22
transfer stations, and 45 collection companies serving more than 500,000
customers.
The Company's revenues consist primarily of fees charged for its collection
and disposal services. Revenues for collection services include fees from
residential, commercial, industrial, and municipal collection customers. A
portion of these fees are billed in advance; a liability for future service is
recorded upon receipt of payment and revenues are recognized as services are
actually provided. Fees for residential services are normally based on the
type and frequency of service. Fees for commercial and industrial services are
normally based on the type and frequency of service and the volume of solid
waste collected.
The Company's revenues from its landfill operations consist of disposal
fees (known as tipping fees) charged to third parties and are normally billed
monthly. Tipping fees are based on the volume or weight of solid waste being
disposed of at the Company's landfill sites. Fees are charged at transfer
stations based on the volume of solid waste deposited, taking into account the
Company's cost of loading, transporting, and disposing of the solid waste at a
landfill. Intercompany revenues between the Company's landfill and collection
operations have been eliminated in the financial statements presented herein.
Operating expenses include direct and indirect labor and the related taxes
and benefits, fuel, maintenance and repairs of equipment and facilities,
tipping fees paid to third party landfills, property taxes, and accruals for
future landfill closure and post-closure costs. Certain direct landfill
development expenses are capitalized and depreciated over the estimated useful
life of a site as capacity is consumed, and include acquisition, engineering,
upgrading, construction, and permitting costs. All indirect development
expenses, such as administrative salaries and general corporate overhead, are
expensed in the period incurred.
General and administrative costs include management salaries, clerical and
administrative costs, professional services, facility rentals, and related
insurance costs, as well as costs related to the Company's marketing and sales
force.
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RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the period to
period change in dollars (in thousands) and percent for the various Condensed
Consolidated Statements of Operations items:
Period to Period
Change for the
Three Months Ended
March 31,
1996 and 1995
-------------------
$ %
----- -----
Operating revenues $23,387 23.1%
------
Costs and expenses:
Operating 11,319 19.4
General and administrative (2,348) (13.9)
Depreciation and amortization 1,895 14.6
Unusual items (693) (100.0)
-------
10,173 11.5
------
Income from operations 13,214 106.6
------
Other income (expense):
Interest expense:
Nonrecurring interest 3,512 100.0
Other 2,445 29.8
Interest and other income, net 188 10.2
-------
6,145 62.2
-------
Income before provision for income taxes 19,359 767.9
Provision for income taxes (973) (41.6)
-------
Net income $20,332 11,050.0%
======
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The following table presents, for the periods indicated, the percentage
relationship that the various components of the Condensed Consolidated
Statements of Operations bear to operating revenues:
Three Months Ended
March 31,
-----------------
1996 1995
-------- --------
Operating revenues:
Disposal 30.6% 31.9%
Waste collection 52.3 52.1
Transfer stations 12.0 9.9
Other 5.1 6.1
---- ------
100.0 100.0
----- -----
Costs and expenses:
Operating 55.8 57.6
General and administrative 11.7 16.7
Depreciation and amortization 11.9 12.8
Unusual items -- 0.7
----- -----
79.4 87.8
----- -----
Income from operations 20.6 12.2
----- -----
Other income (expense):
Interest expense:
Nonrecurring interest -- (3.4)
Other (4.6) (8.1)
Interest and other income, net 1.6 1.8
---- ----
(3.0) (9.7)
----- -----
Income before provision for income taxes 17.6 2.5
Provision for income taxes 1.1 2.3
----- -----
Net income 16.5 0.2%
==== =====
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Operating Revenues
Operating revenues were $124,629,000 for the three months ended March 31,
1996, an increase of $23,387,000, or 23.1%, as compared to the corresponding
period of 1995. The increase in operating revenues is attributable to the
effect of acquisitions, less dispositions, and the growth in operating revenues
from comparable operations, excluding the negative impact of severe weather
conditions in certain market areas, and the decline in certain non-core
businesses which do not provide a significant contribution to earnings.
Acquisitions during 1996 and the effect of acquisitions made during 1995
accounted for an approximate 20% increase in operating revenues. Operating
revenues from comparable disposal and collection operations increased
approximately 1% due to price increases and approximately 9.1% due to volume
increases, with the negative impact of the harsh weather conditions in 1996 and
declines in other non-core revenues accounting for the remaining decrease of
approximately 7%.
Operating Costs and Expenses
Operating costs and expenses increased $11,319,000, or 19.4%, for the three
months ended March 31, 1996, as compared to the first quarter of 1995. The
increase in operating costs and expenses in 1996 is primarily attributable to
the impact of new business acquisitions, net of dispositions, made in 1995 and
1996 of $16,183,000. Offsetting the increase due to acquisitions is the effect
of reduced operating costs and expenses of approximately $2,800,000 for the
existing Chambers operations since the Company's merger with Chambers in June
1995, and the increased utilization of internal disposal from 50% in the first
quarter of 1995 to 53%, which equates to approximately $1,000,000 in decreased
costs, for the corresponding period of 1996. Operating
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costs and expenses for other comparable operations decreased $1,064,000 due to
the Company's ability to service internal growth without a proportionate
increase in costs.
As a percentage of operating revenues, operating costs and expenses
decreased from 57.6% in the first quarter of 1995 to 55.8% for the
corresponding period in 1996. This decrease occurred for the reasons described
above despite the effect of the change in the mix of operating revenues for
services provided, which would generally result in an increase in the
percentage of operating costs to operating revenues. Operating revenues for
disposal operations decreased from 31.9% in the first quarter of 1995 to 30.6%
for the corresponding period of 1996, which increases operating costs as a
percentage of operating revenues since disposal operations generally have lower
operating cost margins than collection and transfer station operations.
General and Administrative
General and administrative expenses decreased $2,348,000 for the three
months ended March 31, 1996, compared to the first quarter of 1995, and
were down as a percent of operating revenues. This is the result of the
Company's ability to integrate new business acquisitions without a
proportionate increase in general and administrative expenses and cost
reductions as a result of the merger with Chambers consummated in June 1995.
Depreciation and Amortization
Depreciation and amortization increased $1,895,000 for the three months
ended March 31, 1996, compared to the first quarter of 1995 due primarily to
the acquisition of new businesses. As a percentage of operating revenues,
depreciation and amortization decreased due to improved utilization of
equipment through the internal volume growth in the collection and disposal
operations without a corresponding increase in equipment and facilities.
Unusual Items
In 1995, the unusual items include $693,000 of severance and other
termination benefits paid to former Chambers employees in connection with
its pre-merger reorganization.
Income from Operations
For reasons discussed above, income from operations as a percent of
operating revenues in the first quarter of 1996 was 20.6% as compared to 12.2%
as in the first quarter of 1995. The improvement in recurring operations is
the result of economies of scale realized by the Company with respect to recent
acquisitions and improvements in comparative operations.
Other Income and Expense
Other income and expense consists of interest expense, interest income, and
other income. Interest expense, gross of amounts capitalized, decreased as a
result of an overall reduction in indebtedness and the refinancing of Chambers
pre-merger indebtedness and the Company's existing indebtedness to lower rates
at June 30, 1995. In addition, $3,512,000 of nonrecurring interest was
incurred during the three months ended March 31, 1995, relating to extension
fees and other charges associated with the aforementioned debt refinancing by
Chambers. Capitalized interest for the first quarter of 1996 was approximately
$1,573,000 as compared to $1,258,000 in the first quarter of 1995.
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Provision for Income Taxes
The provision for income taxes decreased $973,000 for the three months
ended March 31, 1996, as compared to the corresponding period of 1995. The
1995 provision for income taxes represents current income taxes of USA Waste
and Chambers on a separate basis. The decrease in the provision for income
taxes in 1996 is the result of the change in the valuation allowance and
corresponding recognition of the benefit for a portion of the Company's net
deferred tax asset.
Net Income
For the reasons discussed above, net income increased $20,332,000 during
the three months ended March 31, 1996 as compared to the corresponding period
of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company operates in an industry that requires a high level of capital
investment. The Company's capital requirements basically stem from (i) its
working capital needs for its ongoing operations, (ii) capital expenditures for
cell construction and expansion of its landfill sites, as well as new trucks
and equipment for its collection and hauling operations, and (iii) business
acquisitions. The Company's strategy is to meet these capital needs first from
internally generated funds and secondly from various financing sources
available to the Company, including the issuance of its Common Stock. It is
further part of the Company's strategy to minimize working capital while
maintaining available commitments under bank credit agreements to fund any
capital needs in excess of internally generated cash flow.
As of March 31, 1996, the Company had working capital of $31,381,000 (a
ratio of current assets to current liabilities of 1.31:1) and a cash balance of
$16,591,000, which compares to working capital of $14,879,000 (a ratio of
current assets to current liabilities of 1.14:1) and a cash balance of
$13,164,000 as of December 31, 1995. During the first three months of 1996,
the Company received net cash from operations of $14,431,000, and received net
cash from financing activities of $22,289,000. These funds were used primarily
to fund investments in other businesses of $12,246,000 and for capital
expenditures of approximately $14,680,000.
The Company's capital expenditure and working capital requirements have
increased reflecting the Company's business strategy of growth through
acquisitions and development projects. The Company's budgeted cash
requirements for the remainder of 1996 include estimated capital expenditures
of approximately $75,000,000. The Company intends to finance the remainder of
its 1996 capital requirements through internally generated cash flow and
amounts available under its revolving credit facility. At March 31, 1996, the
available line of credit for cash borrowings was $93,875,000.
On May 7, 1996, in connection with the acquisition of Western, the Company
replaced its existing credit facility with a $750,000,000 senior revolving
credit facility ("Credit Facility"). The Credit Facility will be used to
refinance existing bank loans and letters of credit as well as fund additional
acquisitions and working capital. The Credit Facility will be available for
standby letters of credit up to $300,000,000. Loans under the Credit Facility
bear interest at a rate based on the Eurodollar rate plus a spread not to
exceed 0.75% per annum (spread initially set at 0.405% per annum). The Credit
Facility requires a facility fee not to exceed 0.38% per annum on the entire
available credit facility (facility fee initially set at 0.22% per annum). The
Company's liquidity will be enhanced by the Credit Facility as the financial
covenants are less restrictive and principal reductions are not required for a
three year period.
The Company's business plan is to grow through acquisitions as well as
development projects. The Company has issued equity securities in business
acquisitions where appropriate and expects to do so in the future.
Furthermore, the Company's future growth will depend greatly upon its ability
to raise additional capital. Management believes that it can arrange the
necessary financing required to accomplish its business plan; however, to the
extent the Company is not successful in its future financing strategies the
Company's growth could be limited.
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The Company recently entered the New York City solid waste market on April
17, 1996, upon acquiring certain collection and paper processing operations of
Barretti Carting Corp. and related entities for approximately $15,000,000 in
cash. The Company has not yet closed on a related New York City transfer
station pending the receipt of proper permits and government approvals. Upon
receipt of such approvals the Company would be obligated to acquire these
assets for approximately $16,000,000 in cash. The Company regularly engages in
discussions relating to potential acquisitions and has identified several
possible acquisition opportunities. The Company may announce acquisition
transactions at any time.
SEASONALITY AND INFLATION
Because the volumes of certain types of waste, such as yard clippings and
construction debris, tend to be higher in the spring and summer, the Company
experiences seasonal variations in its revenues. As a result, during spring
and summer, the Company's revenues tend to be higher than its revenues in fall
and winter. In addition, during the winter, harsh weather conditions often
temporarily affect the Company's ability to collect, transport, and dispose of
waste, as experienced by certain operating locations in the first quarter of
1996. The seasonal impact is often offset by revenues added through
acquisitions such that the Company's reported revenues have historically
reflected increases in period to period comparisons.
The Company believes that inflation and changing prices have not had, and
are not expected to have, any material adverse effect on the results of
operations in the near future.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to various litigation matters arising in the
ordinary course of business. Management believes that the ultimate resolution
of these matters will not have a material adverse impact on the Company's
financial condition. In the normal course of its business and as a result of
the extensive government regulation of the solid waste industry, the Company
periodically may become subject to various judicial and administrative
proceedings involving federal, state, or local agencies. To date, the Company
has not been required to pay any material fine or had a judgment entered
against it for violation of any environmental law. From time to time the
Company also may be subjected to actions brought by citizen's groups in
connection with the permitting of landfills or transfer stations, or alleging
violations of the permits pursuant to which the Company operates. The Company
also may be subject to claims for personal injury or property damage arising
out of accidents involving its vehicles.
On or about March 8, 1993, an action was filed in the United States
District Court for the Western District of Pennsylvania, captioned Option
Resource Group, et al. v. Chambers Development Company, Inc., et al., Civil
Action No. 93-354. This action was brought by a market maker in options in
Chambers stock and two of its general partners and asserts federal securities
law and common law claims alleging that Chambers, in publicly disseminated
materials, intentionally or negligently misstated its earnings and that
Chambers' officers and directors committed mismanagement and breach of
fiduciary duties. These plaintiffs allege that, as a result of large amounts
of put options traded on the Chicago Board of Options Exchange between March 13
and March 18, 1992, they engaged in offsetting transactions resulting in
approximately $2,100,000 in losses. The plaintiffs in Option Resource Group
had successfully requested exclusion from a now settled class action of
consolidated suits instituted on similar claims ("Class Action") and Option
Resource Group is continuing as a separate lawsuit. Discovery has been
completed and a pretrial conference is scheduled for May 17, 1996. Plaintiffs
filed a motion for summary judgment which is untimely under the court's case
management. The court has stayed responses to the motion for summary judgment.
In response to discovery on damages, the plaintiffs reduced their damages claim
to $433,000 in alleged losses, plus interest and attorneys' fees, for a total
damage claim of $658,000, as of August 21, 1995. The Company intends to
continue to vigorously defend against this action. Management of the Company
believes the ultimate resolution of such complaint will not have a material
adverse effect on the Company's financial position or results of operations.
On August 3, 1995, Frederick A. Moran and certain related persons and
entities filed a lawsuit against Chambers Development Company, Inc., certain
former officers and directors of Chambers, and Grant Thronton, LLP, in the
United States District Court for the Southern District of New York under the
caption Moran, et al. v. Chambers, et al., Civil Action No. 95-6034.
Plaintiffs, who claim to represent approximately 484,000 shares of Chambers
stock, requested exclusion from the settlement agreements which resulted in the
resolution of the Class Action and assert that they have incurred losses
attributable to shares purchased during the class period and certain additional
losses by reason of alleged management misstatements during and after the class
period. The claimed losses include damages to Mr. Moran's business and
reputation. The Judicial Panel on Multidistrict Litigation has transferred
this case to the United States District Court for the Western District of
Pennsylvania. The Company has filed its answer to the complaint and intends to
vigorously defend against these claims. The case is currently in discovery.
Management of the Company believes the ultimate resolution of such complaint
will not have a material adverse effect on the Company's financial position or
results of operations.
On or about February 1, 1996, an action was filed in the Circuit Court of
Cook County, Illinois, captioned Allabastro v. USA Waste Services, Inc., Action
No. 96L01165. The case was subsequently removed to the United States District
Court for the Northern District of Illinois, Action No. 96-CV-1336. The
plaintiff alleges to have entered into an oral agreement with the Company for
brokerage services and is demanding a fee of $950,000 based on the alleged
contract and on common law for acting as a broker/advisor to the Company in its
1993 purchase of an Indiana landfill and hauling operation from Chambers.
Based on the same facts, the plaintiff is also demanding an additional
$36,250,000 fee in connection with the June 1995 merger of Chambers with the
Company. The plaintiff is also seeking unspecified damages for acting as a
management advisor to the Company in its procurement of a landfill
renovation/operation contract in Charleston, West Virginia. Interest and other
costs are also demanded. The case is in the early stages of discovery. The
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Company has filed its answer and intends to vigorously defend against this
action, and management believes the ultimate resolution of this suit will not
have a material adverse effect on the Company's financial position or results
of operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during
the first quarter of 1996.
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ITEM 5. OTHER INFORMATION
The following supplemental condensed consolidated balance sheets of USA
Waste as of March 31, 1996 and December 31, 1995, and the related supplemental
condensed consolidated statements of operations for the three months ended
March 31, 1996 and 1995 are presented for informational purposes. These
financial statements are in effect a restatement of the historical financial
statements as if the Western Merger was consummated as of the beginning of the
periods presented. These financial statements do not include the impact of
certain cost and expense savings and other economic benefits that are expected
to be realized as a result of the Western Merger.
USA WASTE SERVICES, INC. SUPPLEMENTAL
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Par Value Amounts )
(Unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 26,309 $ 18,223
Accounts receivable, net 89,143 90,427
Notes and other receivables 13,133 13,802
Deferred income taxes 20,101 20,101
Prepaid expenses and other 34,258 26,110
---------- ----------
Total current assets 182,944 168,663
Notes and other receivables 17,208 11,704
Property and equipment, net 810,059 799,512
Excess of cost over net assets of acquired businesses, net 112,908 108,664
Other intangible assets, net 33,737 34,127
Other assets 75,040 67,694
--------- --------
Total assets $1,231,896 $1,190,364
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,187 $ 40,333
Accrued liabilities 38,637 48,618
Deferred revenues 6,007 6,030
Current maturities of long-term debt 42,854 40,157
---------- ----------
Total current liabilities 128,685 135,138
Long-term debt 430,117 410,683
Closure, post-closure, and other liabilities 84,078 87,156
---------- ----------
642,880 632,977
--------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value;
10,000,000 shares authorized; none issued -- --
Common stock, $.01 par value; 150,000,000 shares
authorized; 87,529,268 and 87,030,697 shares
issued, respectively 875 870
Additional paid-in capital 802,960 796,235
Accumulated deficit (212,665) (237,899)
Less treasury stock at cost, 144,975 and
138,810 shares, respectively (2,154) (1,819)
--------- ---------
Total stockholders' equity 589,016 557,387
-------- ----------
Total liabilities and stockholders' equity $1,231,896 $1,190,364
========= =========
See accompanying notes.
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USA WASTE SERVICES, INC. SUPPLEMENTAL
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
Operating revenues $193,070 $168,880
-------- --------
Costs and expenses:
Operating 113,977 101,450
General and administrative 24,034 26,163
Depreciation and amortization 20,914 19,343
Unusual items -- 693
----- ---------
158,925 147,649
-------- --------
Income from operations 34,145 21,231
------ ---------
Other income (expense):
Interest expense:
Nonrecurring interest -- (3,512)
Other (6,580) (9,687)
Interest and other income, net 2,202 2,322
-------- -------
(4,378) (10,877)
-------- --------
Income before provision for income taxes 29,767 10,354
Provision for income taxes 4,533 5,816
-------- --------
Net income $ 25,234 $ 4,538
========== =========
Earnings per common share $ 0.28 $ 0.06
======== =========
Weighted average number of common and
common equivalent shares outstanding 91,213 74,305
====== =========
See accompanying notes.
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USA WASTE SERVICES, INC.
NOTES TO SUPPLEMENTAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The supplemental condensed consolidated financial statements assume the
issuance of USA Waste Common Stock in exchange for all outstanding Western
Common Stock, excluding 634,900 shares of Western Common Stock held by USA
Waste. Such financial statements also assume that the Western Merger is
accounted for using the "pooling of interests" method of accounting pursuant to
Opinion No. 16 of the Accounting Principles Board. The pooling of interests
method of accounting assumes that the combining companies have been merged from
their inception, and the historical financial statements for periods prior to
consummation of the Merger are restated as though the companies have been
combined from their inception.
The supplemental condensed consolidated financial statements do not include
any adjustment for estimated nonrecurring costs directly related to the Merger
which are expected to be included in operations of the Company within the twelve
months succeeding the consummation of the Merger. Such costs (which are
currently estimated for purposes of this presentation to be approximately $27.0
million) include the severance benefits to be paid to certain officers of
Western of approximately $1.2 million and an additional $2.0 million to be
funded by USA Waste in connection with charitable contributions to be made at
the direction of an affiliate of USA Waste. Actual merger costs may vary from
such estimate.
Certain reclassifications have been made to the historical financial
statements of USA Waste and Western to conform to the supplemental
presentation. Such reclassifications are not material to the supplemental
condensed consolidated financial statements.
SUPPLEMENTAL ADJUSTMENTS
Adjustments to the supplemental condensed consolidated financial statements
were as follows:
(A) All significant intercompany balance sheet and statement of operations
items between USA Waste and Western have been eliminated in the supplemental
condensed consolidated financial statements. In February 1992, USA Waste
acquired a 55% interest in a hauling company from a third party where Western
owned the remaining 45%. In March 1993, USA Waste acquired the remaining 45%
from Western. The supplemental condensed financial statements reflect the
combined company's 100% ownership of the acquired hauling company as of February
1992. Western's earnings in minority interest from February 1992 through March
1993 and the gain on sale to USA Waste of $2,829,000 have been eliminated. The
excess cost over net assets of acquired businesses, net of accumulated
amortization reported by USA Waste has also been eliminated.
(B) Common stock, additional paid-in capital, and other assets have been
adjusted to eliminate USA Waste's investment of 634,900 shares of Western
Common Stock.
(C) Adjustments have been made to reclassify Western's depreciation and
amortization from operating expenses and general and administrative expenses to
a separate line item to conform to the presentation of USA Waste as if the
companies had been combined since their inception.
(D) The stockholders' equity accounts have been adjusted to reflect the
assumed issuance of 21,446,418 shares as of March 31, 1996 and 21,055,649
shares as of December 31, 1995 of USA Waste Common Stock for all issued and
outstanding share of Western Common Stock (based on the exchange ratio of 1.50
shares of USA Waste Common Stock for each share of Western Common Stock
outstanding). The actual number of shares of USA Waste Common Stock to be
issued pursuant to the Merger will be based upon the number of shares of
Western issued and outstanding immediately prior to the consummation of the
merger, excluding USA Waste's ownership in Western consisting of 634,900
shares.
(E) Income from continuing operations available to common shareholders per
share for each period is based on the combined weighted average number of
shares outstanding, after giving effect to the issuance of 1.5 shares of
USA Waste Common Stock for each share of Western Common Stock outstanding.
Fully diluted earnings per share are considered equal to primary earnings per
share for all periods presented because the addition of potentially dilutive
securities that are not common stock equivalents would have been either
antidilutive or not material.
20
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1(a) - Amendment to Registrant's Restated Certificate of Incorporation.
3.1(b) - Conformed Copy of Registrant's Restated Certificate of
Incorporation.
3.2 - Bylaws [Incorporated by Reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-4, File No.
33-60103].
4.1 - Specimen Stock Certificate [Incorporated by reference to Exhibit
4.3 of the Registrant's Registration Statement on Form S-3, File
No. 33-76224].
10.1 - 1990 Stock Option Plan [Incorporated by reference to Exhibit
10.1 of the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990].
10.2 - 1993 Stock Incentive Plan [Incorporated by reference to Exhibit
4.4 of the Registrant's Registration Statement on Form S-8, File
No. 33-72436].
10.3 - Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated by
reference to Exhibit 10.3 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994].
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22
10.4 - Form of Employment Agreement between the Registrant and each of
John E. Drury, Donald F. Moorehead, Jr., David Sutherland-Yoest,
and Charles A. Wilcox [Incorporated by reference to Exhibit
10.18 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994].
10.5 - Employment Agreement between the Registrant and Earl E. DeFrates
[Incorporated by reference to Exhibit 10.19 of the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1994].
10.6 - Employment Agreement between the Registrant and Gregory T.
Sangalis [Incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-4, File No.
33-59259].
10.7 - Revolving Credit and Term Loan Agreement dated as of June 27,
1995, among the Registrant, its subsidiaries, The First National
Bank of Boston, Bank of America Illinois, J.P. Morgan Securities
Inc., an Morgan Guaranty Trust Company of New York
[Incorporated by reference to Exhibit 10.19 to the Registrant's
Quarterly Report on Form 10-Q dated June 30, 1995, as amended by
Form 10-Q/A].
10.8 - Shareholders Agreement dated December 18, 1995, among USA Waste
Services, Inc., Donald F. Moorehead, Jr., John E. Drury, John
G. Rangos, Sr., John G. Rangos Jr., Alexander W. Rangos, and John
Rangos Development Corporation, Inc. [Incorporated by reference
to Exhibit 1 to Schedule 13D dated December 17, 1995 relating to
the Registrant].
22
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10.9 - Consulting and Non-Compete Agreement dated June 25, 1995,
between the Registrant John G. Rangos, Sr. [Incorporated by
reference to Exhibit 10.21 to the Registrant's Quarterly Report
on Form 10-Q/A dated June 30, 1995].
10.10 - Employment Agreement dated June 25, 1995, between the Registrant
and Alexander W. Rangos [Incorporated by reference to Exhibit
10.22 to the Registrant's Quarterly Report on Form 10-Q/A dated
June 30, 1995].
10.11 - Employment Agreement dated December 18, 1995, between the
Registrant and Kosti Shirvanian [Incorporated by reference to
Exhibit 10.18 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995].
11.1 - Computation of Earnings Per Common Share.
27.1 - Financial Data Schedule.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
USA WASTE SERVICES, INC.
Registrant
May 14, 1996 BY: s/ Earl E. DeFrates
- ----------------- ---------------------------
Date Earl E. DeFrates,
Executive Vice President,
Chief Financial Officer
May 14, 1996 BY: s/ Bruce E. Snyder
- ----------------- -------------------------
Date Bruce E. Snyder,
Vice President - Controller,
Chief Accounting Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1(a) Amendment to Registrant's Restated Certificate of Incorporation.
3.1(b) Conformed Copy of Registrant's Restated Certificate of
Incorporation.
11.1 Computation of Earnings per common share.
27.1 Financial Data Schedule.
1
Exhibit 3.1(a)
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
USA WASTE SERVICES, INC.
USA WASTE SERVICES, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of the corporation a
resolution was adopted proposing and declaring advisable the following
amendment to the Restated Certificate of Incorporation of the corporation and
directing that the amendment be considered at the annual meeting of
stockholders:
RESOLVED, that the Restated Certificate of Incorporation of USA
Waste Services, Inc. be amended by deleting Article Eleventh in its
entirety and that Article Twelfth shall be renumbered and known as
Article Eleventh.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of the corporation was duly called and
held on May 7, 1996, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That the amendment was duly adopted in accordance with the
applicable provisions in Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, USA Waste Services, Inc. has caused this certificate
to be signed by its authorized officer this 7th day of May, 1996.
USA WASTE SERVICES, INC.
By /s/ Earl E. DeFrates
----------------------------------
Name: Earl E. DeFrates
--------------------------
Title: Executive Vice President
-------------------------
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1
Exhibit 3.1(b)
RESTATED CERTIFICATE OF INCORPORATION
OF
USA WASTE SERVICES, INC.
(Conformed Copy -- As Amended As Of May 7, 1996)
The original Certificate of Incorporation of USA Waste Services,
Inc. was filed with the Secretary of State of the State of Delaware on April
28, 1995. The original Certificate of Incorporation is hereby amended and
restated pursuant to 8 Del. C. Section 245 to read in its entirety as follows:
First: The name of the Corporation is USA Waste Services, Inc.
Second: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street in the City
of Wilmington, County of New Castle. The name and address of its registered
agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware.
Third: The nature of the business, objects and purposes to be
transacted, promoted or carried on by the Corporation is:
To engage in any lawful activity for which corporations may be
organized under the General Corporation Law of Delaware.
Fourth: The total number of shares of capital stock which the
Corporation shall have authority to issue is one hundred sixty million
(160,000,000), divided into one hundred fifty million (150,000,000) shares of
Common Stock of the par value of one cent ($0.01) per share and ten million
(10,000,000) shares of Preferred Stock of the par value of one cent ($0.01) per
share.
A. No holder of Common Stock or Preferred Stock of the
Corporation shall have any pre-emptive, preferential, or other right to
purchase or subscribe for any shares of the unissued stock of the Corporation
or of any stock of the Corporation to be issued by reason of any increase of
the authorized capital stock of the Corporation or of the number of its shares,
or of any warrants, options, or bonds, certificates of indebtedness,
debentures, or other securities convertible into or carrying options or
warrants to purchase stock of the Corporation or of any stock of the
Corporation purchased by it or its nominee or nominees or other securities held
in the treasury of the Corporation, whether issued or sold for cash or other
consideration or as a dividend or otherwise other than, with respect to
Preferred Stock, such rights, if any, as the Board of Directors in its
discretion from time to time may grant and at such price as the Board of
Directors in its discretion may fix.
B. The holders of Common Stock shall have the right to one vote
per share on all questions to the exclusion of all other classes of stock,
except as by law expressly provided, as otherwise herein expressly provided or
as contained within a certificate of designation, with respect to the holders
of any other class or classes of stock.
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C. The Board of Directors is authorized, subject to limitations
prescribed by law, by resolution or resolutions to provide for the issuance of
shares of Preferred Stock in series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the
designation, powers, preferences, and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof. The authority of
the Board with respect to each series shall include, but not be limited to,
determination of the following:
(1) The number of shares constituting that series and the
distinctive designation of that series;
(2) The dividend rights and dividend rate on the shares of that
series, whether dividends shall be cumulative, and, if so, from which
date or dates, and the relative rights of priority, if any, of payment
of dividends on shares of that series;
(3) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
(4) Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or
exchange including provision for adjustment of the conversion or
exchange rate in such events as the Board of Directors shall determine;
(5) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in cash on redemption,
which amount may vary under different conditions and at different
redemption dates;
(6) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(7) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series;
(8) Any other relative rights, preferences and limitations of
that series; or
(9) Any or all of the foregoing terms.
D. Except where otherwise set forth in the resolution or
resolutions adopted by the Board of Directors of the Corporation providing for
the issue of any series of Preferred Stock created thereby, the number of
shares comprising such series may be increased or decreased (but not below the
number of shares then outstanding) from time to time by like action of the
Board of Directors of the Corporation. Should the number of shares of any
series be so decreased, the shares constituting such decrease shall resume the
status which they had prior to adoption of the resolution originally fixing the
number of shares of such series.
E. Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or otherwise),
purchased or otherwise acquired by the Corporation, or which, if convertible or
exchangeable, have been converted into or exchanged for shares of stock of any
other class or classes, shall have the status of authorized and unissued shares
of Preferred Stock and may be reissued as a part of the series of which they
were originally a part or may be reclassified or reissued as part of a new
series of Preferred Stock to be created by
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resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, all subject to the conditions or restrictions
adopted by the Board of Directors of the Corporation providing for the issue of
any series of Preferred Stock and to any filing required by law.
Fifth: The Corporation is to have perpetual existence.
Sixth: Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide. Meetings of stockholders may be
held within or without the State of Delaware, as the bylaws may provide. The
books of the Corporation may be kept (subject to any provision contained in the
statutes of the State of Delaware) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or
in the bylaws of the Corporation.
Seventh: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
Delaware or any amendment thereto or successor provision thereto, or (iv) for
any transaction from which the director derived an improper personal benefit.
If the General Corporation Law of Delaware hereafter is amended to authorize
the further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended General Corporation Law of Delaware. Neither this
Restated Certificate of Incorporation nor any amendment, alteration, or repeal
of this Article, nor the adoption of any provision of the Restated Certificate
of Incorporation inconsistent with this Article, shall adversely affect,
eliminate, or reduce any right or protection of a director of the Corporation
hereunder with respect to any act, omission or matter occurring, or any action,
suit, or claim that, but for this Article, would accrue or arise, prior to the
time of such amendment, modification, repeal, or adoption of an inconsistent
provision. All references in this Article to a "director" shall also be deemed
to refer to such person or persons, if any, who pursuant to a provision of the
Restated Certificate of Incorporation in accordance with subsection (a) of
Section 141 of the Delaware General Corporation Law, exercise or perform any of
the powers or duties otherwise conferred or imposed upon the board of directors
by the Delaware General Corporation Law.
Eighth: This Corporation shall, to the maximum extent permitted from
time to time under the law of the State of Delaware, indemnify and upon request
shall advance expenses to any person who is or was a party or is threatened to
be made a party to any threatened, pending or completed action, suit,
proceeding or claim, whether civil, criminal, administrative or investigative,
by reason of the fact that such person is or was or has agreed to be a director
or officer of this Corporation or any of its direct or indirect subsidiaries or
while such a director or officer is or was serving at the request of this
Corporation as a director, officer, partner, trustee, employee or agent of any
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, against expenses (including
attorney's fees and expenses), judgments, fines, penalties and amounts paid in
settlement incurred in connection with the investigation, preparation to defend
or defense of such action, suit, proceeding or claim; provided, however, that
the foregoing shall not require this Corporation to indemnify or advance
expenses to any person in connection with any action, suit, proceeding, claim
or counterclaim initiated by or on behalf of such person. Such indemnification
shall not be exclusive of other indemnification rights arising under any
bylaws, agreement, vote of directors or stockholders or otherwise and shall
inure to the benefit of the heirs and legal representatives of such person.
Any person seeking indemnification
30
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under this Article shall be deemed to have met the standard of conduct required
for such indemnification unless the contrary shall be established.
Ninth: (A) Except as otherwise provided in this Restated Certificate of
Incorporation or the Bylaws of the Corporation relating to the rights of the
holders of any class or series of Preferred Stock, voting separately by class
or series, to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be as fixed from time to time by,
or in the manner provided in, the bylaws of the Corporation. Unless approved
by at least two-thirds of the incumbent directors, the number of directors
which shall constitute the whole Board of Directors shall be no fewer than
three and no more than nine.
(B) Commencing with the election of directors at the 1995 Annual
Meeting of Stockholders, the directors, other than those who may be elected by
the holders of any class or series of Preferred Stock voting separately by
class or series, shall be classified, with respect to the time for which they
severally hold office, into three classes, Class I, Class II and Class III,
which shall be as nearly equal in number as possible, as shall be provided in
the manner specified in the bylaws of the Corporation. Each initial director
in Class I shall hold office for a term expiring at the 1996 annual meeting of
stockholders; each initial director of Class II shall hold office initially for
a term expiring at the 1997 annual meeting of stockholders; and each initial
director of Class III shall hold office for a term expiring at the 1998 annual
meeting of stockholders. Notwithstanding the foregoing provision of this
Article, each director shall serve until his successor is duly elected and
qualified or until his earlier death, resignation or removal. At each annual
meeting of stockholders following the 1995 annual meeting, the successors to
the class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election and until their successors
have been duly elected and qualified or until their earlier death, resignation
or removal.
(C) Except as otherwise provided pursuant to the provisions of this
Restated Certificate of Incorporation or the bylaws of the Corporation relating
to the rights of the holders of any class or series of Preferred Stock, voting
separately by class or series, to elect directors under specified
circumstances, any director or directors may be removed from office at any
time, with or without cause but only by the affirmative vote, at any annual
meeting or special meeting (as the case may be) of the stockholders, of not
less than two-thirds of the total number of votes of the then outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, but only if notice of
such proposal was contained in the notice of such meeting.
(D) In the event of any increase or decrease in the authorized
number of directors, the newly created or eliminated directorships resulting
from such increase or decrease shall be appointed or determined by the Board of
Directors among the three classes of directors so as to maintain such classes
as nearly equal as possible. No decrease in the authorized number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
(E) Vacancies in the Board of Directors, however caused, and
newly-created directorships shall be filled solely by a majority vote of the
directors then in office, whether or not a quorum, and any director so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of the class to which the director has been chosen expires and
when the director's successor is elected and qualified, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
(F) Notwithstanding the foregoing, whenever the holders of any one
or more classes or
31
5
series of Preferred Stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies, and other features of such directorships shall be governed by the
terms of this Restated Certificate of Incorporation applicable thereto, and
such directors so elected shall not be divided into classes pursuant to this
Article unless expressly provided by such terms.
(G) Notwithstanding any other provision of this Restated Certificate
of Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Restated Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative vote, at any
regular meeting or special meeting of the stockholders, of not less than
two-thirds of the total number of votes of the then outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to amend or
repeal, or to adopt any provision inconsistent with the purpose or intent of,
this Article, but only if notice of the proposed alteration or amendment was
contained in the notice of such meeting.
Tenth: In furtherance of, and not in limitation of, the powers
conferred by statute, the Board of Directors is expressly authorized to adopt,
amend or repeal the bylaws of the Corporation, or adopt new bylaws, without any
action on the part of the stockholders; provided, however, that no such
adoption, amendment or repeal shall be valid with respect to bylaw provisions
which have been adopted, amended or repealed by the stockholders; and further
provided, that bylaws adopted or amended by the Directors and any powers
thereby conferred may be amended, altered or repealed by the stockholders.
Eleventh: The Corporation reserves the right at any time, and from time
to time, to amend, alter, change, or repeal any provision contained in this
Restated Certificate of Incorporation, and other provisions authorized by the
laws of the State of Delaware at the time in force may be added or inserted, in
the manner now or hereafter prescribed by law; and all rights, preferences, and
privileges of whatsoever nature conferred upon stockholders, directors, or any
other persons whomsoever by and pursuant to this Restated Certificate of
Incorporation in its present form or as hereafter amended are granted subject
to the rights reserved in this Article; provided, however, that the Corporation
shall not amend Article Ninth to be effective on a date other than a date on
which directors are elected.
32
1
USA WASTE SERVICES, INC.
EXHIBIT 11.1 COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED MARCH 31,
-------------------------
1996 1995
------- ------
Primary
Net income $20,516 $184
------- ------
Number of common shares outstanding 65,938 50,657
Effect of using weighted average common stock
outstanding (44) (477)
Common stock equivalents (1) 1,070 908
------- ------
Total 66,964 51,088
======= ======
Earnings per common share $0.31 $0.00
======= ======
Fully Diluted
Net income $20,516 $184
------- ------
Number of common shares outstanding 65,938 50,657
Effect of using weighted average common stock
outstanding (44) (477)
Common stock equivalents (1) 1,268 974
------- ------
Total 67,162 51,154
======= ======
Earnings per common share (2) $0.31 $0.00
======= ======
- ---------------
(1) Common stock equivalents were determined based on the "Treasury
Stock Method" as set forth in Accounting Principles Board Opinion
No. 15.
(2) The dilutive effect between primary and fully dilutive earnings
(loss) per common share is less than 3% or is anti- dilutive for
all periods presented and is therefore not disclosed in the
consolidated statements of operations.
5
3-MOS
DEC-31-1996
JAN-01-1996
MAR-31-1996
16,591,000
0
78,081,000
(3,942,000)
0
131,741,000
846,428,000
(246,559,000)
941,209,000
100,360,000
354,978,000
661,000
0
0
423,323,000
941,209,000
124,629,000
124,629,000
69,598,000
99,015,000
(2,033,000)
0
5,767,000
21,880,000
1,264,000
20,516,000
0
0
0
20,516,000
0.31
0.31
