Document/Exhibit Description Pages Size
1: 10-K Annual Report 46 250K
2: EX-10.2 Tax Shring Agmt Amendmt 4 17K
3: EX-10.36 Intercorporate Agmt 31 105K
4: EX-10.39 Corp.Incntv Bonus Plan 5 22K
5: EX-10.40 Long Term Incentive Plan 6 29K
6: EX-10.46 Amended Directors Plan 2 9K
7: EX-10.49 Amended Services Agrmt 2 11K
8: EX-10.53 Amendment Agreement 3 15K
9: EX-13.1 Mgmt's Disc.& Anal 8 49K
10: EX-13.2 Consol. Fin.Stmts. 23 113K
11: EX-21 List of Subsidiaries 4 19K
12: EX-23.1 Consent of Art. Andrsn 1 7K
13: EX-23.2 Consent of Art. Andrsn 1 7K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 1993
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: 0-14246
WHEELABRATOR TECHNOLOGIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-2678047
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 603/929-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock, $0.01 par value New York Stock Exchange
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 X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K . [X]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY
STOCKHOLDERS WHO WERE NOT AFFILIATES (AS DEFINED BY REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION) OF THE REGISTRANT WAS APPROXIMATELY
$1,593,000,000 AT FEBRUARY 1, 1994 (BASED ON THE CLOSING SALE PRICE ON THE NEW
YORK STOCK EXCHANGE COMPOSITE TAPE ON JANUARY 31, 1994, AS REPORTED BY THE WALL
STREET JOURNAL (MIDWEST EDITION)). AT MARCH 1, 1994, THE REGISTRANT HAD ISSUED
AND OUTSTANDING AN AGGREGATE OF 188,897,599 SHARES OF ITS COMMON STOCK.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR
ENDED DECEMBER 31, 1993 ARE INCORPORATED BY REFERENCE INTO PARTS II AND IV.
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 5, 1994 ARE INCORPORATED BY REFERENCE INTO PART
III.
================================================================================
PART I
ITEM 1 -- BUSINESS
GENERAL
Wheelabrator Technologies Inc. provides a wide array of environmental
products and services in North America and abroad through three principal
business lines. The Company's energy group ("Wheelabrator Clean Energy") is a
leading developer of facilities and systems for, and provider of services to,
the trash-to-energy, energy and independent power markets. Through the
subsidiaries comprising Wheelabrator Clean Energy, the Company develops,
arranges financing for, operates and owns facilities that dispose of trash and
other waste materials in an environmentally acceptable manner by recycling it
into energy in the form of electricity and steam.
The Company's water group ("Wheelabrator Clean Water") is comprised of
several subsidiaries principally involved in the design, manufacture and
operation of facilities and systems used to purify water, to treat municipal and
industrial wastewater, to treat and manage biosolids resulting from the
treatment of wastewater by converting them into useful fertilizers, and to
recycle organic wastes into compost material useable for horticultural and
agricultural purposes. Wheelabrator Clean Water also designs and manufactures
various products and systems used in water and wastewater treatment facilities
and industrial facilities, precision profile wire screens for use in groundwater
wells and other industrial applications, and certain other industrial equipment.
The Company's air group ("Wheelabrator Clean Air") designs, fabricates and
installs technologically-advanced air pollution emission control and measurement
systems and equipment, including systems which remove pollutants from the
emissions of the Company's trash-to-energy facilities as well as power plants
and other industrial facilities. Through its subsidiaries, Wheelabrator Clean
Air also provides technologies and systems designed to treat air streams which
contain nitrogen oxide ("NOx") and volatile organic compounds ("VOCs"), the
major contributors to the creation of smog.
The majority of the businesses of the Company have been managed together as
a group since the early 1980s. The Company's predecessor companies and
subsidiaries have been active in project development for approximately 20 years,
and in related activities since the turn of the century. Unless the context
indicates to the contrary, as used in this report, the terms "Company" and "WTI"
refer to Wheelabrator Technologies Inc. and its subsidiaries. Unless otherwise
indicated, all statistical and financial information under Item 1 and Item 2 of
this report is given as of December 31, 1993.
The Company (then known as The Henley Group, Inc.) was incorporated in
Delaware in December 1985. The name of the Company was changed in December 1988
to The Wheelabrator Group Inc. and again in August 1989 to Wheelabrator
Technologies Inc.
Approximately 55% of the Company's common stock, par value $0.01 per share
(the "Common Stock"), outstanding as of March 1, 1994 was owned by WMX
Technologies, Inc. ("WMX") or its affiliates. All Common Stock share and per
share figures have been adjusted to reflect the two-for-one stock split in the
form of a 100% stock dividend distributed in January 1993.
1
ORGANIZATION OF RUST INTERNATIONAL INC.
On December 31, 1992, WTI entered into an Organizational Agreement (the
"Organizational Agreement") with Chemical Waste Management, Inc., an
approximately 79%-owned subsidiary of WMX ("CWM"), and The Brand Companies,
Inc., which as of that date was an approximately 56%-owned subsidiary of CWM
("Brand"), pursuant to which WTI and CWM agreed to organize Rust International
Inc. ("Rust") and to acquire newly issued shares of Rust in exchange for
contributing certain of their respective businesses and assets to Rust. Pursuant
to the Organizational Agreement, on January 1, 1993 WTI contributed 100% of the
stock of its engineering, design, construction and environmental consulting
subsidiaries, 100% of the stock of its international engineering unit based in
London, certain disposal credits for use at facilities owned or operated by
subsidiaries of WMX (see "Patents, Trademarks, Licenses and Other Agreements"),
and cash, prefunded acquisition costs and promissory notes having an aggregate
value of approximately $68 million. CWM contributed its hazardous substances
remediation services business and all of its shares of Brand, as well as its 12%
interest in the ordinary shares of Waste Management International plc ("WM
International") and approximately $141 million in indebtedness due to CWM from
Brand. On May 7, 1993, Brand merged into a subsidiary of Rust. Pursuant to such
merger, Brand stockholders (other than Rust) received one share of common stock
of Rust or, at the option of each Brand stockholder, $18.75 in cash for each
share of Brand common stock. As a result of such merger, Rust is owned
approximately 40% by WTI, 56% by CWM, and 4% by public stockholders. Through its
equity ownership of Rust, the Company will continue to have an interest in that
company's engineering, construction and environmental and infrastructure
consulting businesses, as well as the hazardous substance remediation and other
on-site industrial and related businesses operated by Rust. The business of Rust
is discussed below under "Equity Investments--Rust International Inc."
The organization of Rust had no effect on the Company's 1992 and prior
historical financial statements. The Company accounts for its investment in Rust
using the equity method, which results in a reduction of revenue, operating
expenses and selling and administrative costs for 1993 compared to prior years.
SERVICES AND PRODUCTS
Prior to January 1, 1993, the Company's operations were categorized into
two business segments -environmental operations and environmental and
infrastructure engineering services. Environmental operations accounted for 66%
of the Company's total consolidated revenue in 1991, 63% in 1992 and 100% in
1993. Environmental and infrastructure engineering services accounted for 34% of
the Company's total consolidated revenue in 1991 and 37% in 1992. The operations
which comprised the environmental and infrastructure engineering services were
contributed to Rust on January 1, 1993. Thus, the Company did not realize any
revenue from such operations in 1993. See "Equity Investments--Rust
International Inc." For information relating to revenues, operating profit and
identifiable assets attributable to the Company's segments, see Note 9 to the
Company's Consolidated Financial Statements incorporated by reference into this
part. For 1993, the Company reports in a single segment with three lines of
business: Wheelabrator Clean Energy, Wheelabrator Clean Water and Wheelabrator
Clean Air.
Wheelabrator Clean Energy
The Company, through Wheelabrator Environmental Systems Inc. and its
subsidiaries, is a leading developer, operator and owner of trash-to-energy and
independent power facilities in the United States. These facilities, either
owned, operated or under construction, give WTI approximately 854 megawatts of
electric generating capacity, which ranks it among the nation's largest
independent power producers. WTI's
2
trash-to-energy projects utilize proven boiler and grate technology capable of
processing up to 3,000 tons of trash per day per facility. The heat from this
combustion process is converted into high-pressure steam, which typically is
used to generate electricity for sale to public utility companies under long-
term contracts.
WTI's trash-to-energy development activities involve a number of
contractual arrangements with a variety of private and public entities,
including municipalities (which supply trash for combustion), utilities or other
power users (which purchase the energy produced by the facility), lenders,
public debtholders, joint venture partners and equity investors (which provide
financing for the project) and the contractors or subcontractors responsible for
building the facility. In addition, the Company often identifies and acquires
sites for the facility and for the disposal of residual ash produced by the
facility and obtains necessary permits and licenses from local, state and
federal regulatory authorities.
The Company also develops, operates and, in some cases, owns independent
power projects, which either cogenerate electricity and thermal energy or
generate electricity alone for sale to utilities. Cogeneration is a technology
which allows the consecutive use of two or more useful forms of energy from a
single primary fuel source, thus providing a more efficient use of a fuel's
total energy content. These power systems use waste wood, waste tires, waste
coal or natural gas as fuel, and employ state-of-the-art technology, such as
fluidized-bed combustion, to insure the efficient burning of fuel with reduced
emission levels.
One of the most significant costs of developing and operating the Company's
energy and biosolids projects may be debt service or lease rentals payable in
connection with financing for the project. See "Wheelabrator Clean Water."
Financing structures vary substantially from transaction to transaction. The
amount of annual financing cost is directly related to the capital cost of the
facility, which may vary greatly from plant to plant, even with regard to
similarly sized plants, due to a number of factors. These include the type of
technology utilized, the amount of site preparation required and, where
applicable, the form of energy generated and the proximity to the energy
delivery point. For a description of some of the methods used to finance WTI's
facilities, see "Financing Capabilities and Funding Support Agreements."
A description of Wheelabrator Clean Energy projects in operation or under
construction which are owned, leased or operated under long-term operating
agreements by the Company's subsidiaries or affiliates is contained in Item 2 --
Properties. In addition to the projects described in Item 2, the Company has a
number of projects in development that, in most cases, are subject to
contingencies, many of which are beyond WTI's control. Such contingencies
include, without limitation, obtaining required permits or approvals, obtaining
equity and/or debt financing and consummating required project agreements.
Wheelabrator Clean Water
Through Wheelabrator Clean Water, the Company develops projects that purify
water, treat wastewater, treat and manage biosolids, and compost organic wastes.
The Company also provides technologies and services used to treat drinking water
as well as industrial and municipal process and wastewater.
The Company offers generators of biosolids, consisting of the non-hazardous
sludges resulting from treatment of industrial and municipal wastewater,
alternatives to landfilling or ocean dumping. Wheelabrator Clean Water provides
a range of biosolids management services to over 400 communities, including land
application, drying, pelletizing, stabilization and composting of non-hazardous
biosolids. See "Regulations--Environmental Regulations." Wheelabrator Clean
Water typically enters into multi-year contracts with biosolids generators under
which the Company is paid by the generator to beneficially use the biosolids.
Regulations
3
governing sludge management were issued by the Environmental Protection Agency
("EPA") in December 1992 under the Clean Water Act. The regulations encourage
the beneficial use of municipal sewage sludge by recognizing the resource value
of biosolids as a fertilizer and soil conditioner, and establish requirements
for land application designed to protect health and the environment. These new
regulations are expected to expand opportunities available to the Company.
Land application involves the application of non-hazardous biosolids as a
natural fertilizer on farmland pursuant to rigorous site-specific permits issued
by applicable state authorities. Biosolids are also used in land-reclamation
projects such as strip mines. Land-applied sludges are often stabilized prior to
application using proprietary technology. Wheelabrator Clean Water also develops
and operates facilities at which biosolids are dried and pelletized. The Company
has three facilities currently in operation, including a recently completed
facility in New York City, and two other facilities, one under construction and
the other in the late stages of development, in Baltimore, Maryland. These
facilities incorporate a variety of biosolids drying and emission control
technologies, some proprietary and some licensed to the Company under exclusive
licensing arrangements. See "Patents, Trademarks, Licenses and Other
Agreements." The Company has approximately 565 dry-tons-per-day of biosolids
drying capacity either in operation, under construction or in advanced stages of
development. Biosolids which have been dried are generally used as fertilizer by
farmers, commercial landscapers and nurseries and as a bulking agent by
fertilizer manufacturers.
Development of dryer facilities generally involves various contractual
arrangements with a variety of private and public entities, including
municipalities (which generate the biosolids), lenders, contractors and
subcontractors which build the facilities, and end-users of the fertilizer
generated from the treatment process. See "Financing Capabilities and Funding
Support Agreements." A description of dryer projects in operation or under
construction which are owned or operated by Wheelabrator Clean Water under long-
term operating agreements is contained in Item 2 -- Properties.
Wheelabrator Clean Water is also a leading provider of a comprehensive
range of water and wastewater treatment services to municipalities throughout
the United States. The Company provides services pursuant to approximately 30
contracts, including water and wastewater treatment plant start-up assistance,
plant operations and maintenance, planning and management, training of plant
supervisors, operators and laboratory and maintenance personnel, refining
process systems, management systems for process control, and plant diagnostic
evaluations and energy audits. During 1993, Wheelabrator Clean Water
geographically expanded its operations by obtaining contracts to operate two
industrial wastewater treatment facilities in Canada. Plant maintenance and
operation agreements generally range in length from 3 to 10 years and often
provide the owner of the facility with renewal options. The majority of the
contracts are fixed price or lump sum contracts. During 1993, the Company
continued negotiations with a municipality towards the privatization of a
publicly-owned water and wastewater treatment system pursuant to an Executive
Order issued in 1992 intended to facilitate the privatization of municipally-
owned facilities. In addition, during 1993 the Company commenced negotiations
with several industrial concerns towards the development, ownership and
operation of wastewater treatment facilities adjacent to existing industrial
facilities. Because development of such facilities will generally involve a
variety of contractual arrangements, as with development of the Company's other
projects, there can be no assurance that such discussions will result in the
development of any such facilities.
Wheelabrator Clean Water also designs and supplies enclosed automated
composting systems which recycle organic wastes into beneficial products which
are used by commercial landscapers, nurseries and fertilizer manufacturers.
These composting systems, which consist of a series of parallel concrete bays
through which organic waste is advanced and agitated during the composting
process, are sold to municipalities and landfill
4
operators, among others. The Company has provided its proprietary and automated
in-vessel composting technology to 17 facilities in operation, eight more under
construction, and three additional facilities in development that it will own
and operate.
Through its Wheelabrator Engineered Systems Inc. subsidiary ("WES"),
Wheelabrator Clean Water engineers and manufactures a variety of environmental
products and systems. WES provides single-source, advanced-systems solutions
related to drinking water, industrial process water, wastewater, slurry pumping
and high solids dewatering. WES also provides systems designed to remove solids
from liquid streams through the use of self-cleaning bar/filter screens,
grinders, macerators, conveyors and compactor systems. WES provides high
technology water purification and wastewater treatment systems which utilize a
variety of technologies including demineralizers, reverse osmosis and vacuum
degasification. WES also designs and installs process technology systems
utilizing evaporators, crystallizers, electrodialysis, dialysis, reverse osmosis
and ultrafiltration for treating industrial process wastewater. Through its
Johnson Screen unit, WES produces profile wire screen products for groundwater
production, hydrocarbon processing, food processing and coal/mineral processing.
The Company's engineered products are provided to municipal and industrial
customers. In most situations, the Company will provide assistance to help the
end-user select the appropriate technology for a given application. Turnkey
systems provided by the Company range in value from $250,000 to over $30
million, and are typically designed and installed within 12 months following
acceptance of a customer order. On such projects, the Company typically enters
into lump-sum contracts under which the Company receives payments throughout the
contract term based upon a predetermined schedule.
The Company also manufactures Wheelabrator machines, a line of nonpolluting
materials cleaning equipment for use by a variety of industrial customers,
including foundries, steel processors, automobile producers and rubber and
plastics producers, in cleaning and finishing metal and other materials. The
Company manufactures portable, fully-enclosed Wheelabrator systems for cleaning
surfaces such as ship decks and hulls and other difficult-to-clean surfaces.
These systems capture the emissions particulate generated by such operations,
preventing contamination of the environment. In addition, spare parts for
materials cleaning systems are produced. The Company also manufactures high-
alloy combustion grates used in the high-temperature furnaces of its trash-to-
energy facilities.
Wheelabrator Clean Air
Wheelabrator Clean Air designs, fabricates and installs advanced air
pollution emission control and measurement technologies. The Company offers
electrostatic precipitators, flue-gas desulfurization systems (scrubbers),
fabric-filter systems (baghouses) and Nox control systems, which remove
pollutants from the emissions of WTI's trash-to-energy facilities, as well as
power plants and other industrial facilities. Wheelabrator Clean Air also
designs and constructs tall concrete chimneys and silos to help utilities and
industrial companies meet environmental requirements. The Company's expertise in
air pollution control technologies and chimney design and construction, as well
as the expertise in mechanical construction and process engineering of the
Company's Rust affiliate, are used in the design and construction of the
Company's trash-to-energy and biosolids facilities. These capabilities
strengthen WTI's competitive position, while reducing its exposure to risk in
the management of large-scale projects, by providing greater ability to ensure
quality control and timely completion.
5
Wheelabrator Clean Air's activities involve both custom and pre-engineered
systems for emissions control. The custom engineering division licenses a
patented process for the removal of hydrogen sulfide from gaseous and liquid
streams. The process prevents the formation of sulfur dioxide emissions, thereby
controlling acid rain and odor problems. Wheelabrator Clean Air also provides a
full range of technologies and services for destroying or recycling VOCs from
air and liquid sources and Nox from air sources. Both VOCs and Nox are major
contributors to the creation of smog. The Company's VOC and Nox control systems
are utilized by customers in a variety of industries, including oil refineries,
chemical plants and automobile production facilities. Complementing the emission
control divisions is a measurement division which designs and installs
continuous emissions monitoring systems ("CEMs") for the utility, waste-to-
energy, industrial furnace and petrochemical industries, all of which are
affected by regulations requiring the continuous monitoring of stack emissions.
WTI anticipates that the Clean Air Act Amendments of 1990, along with
existing and proposed regulations issued thereunder, will generate additional
business opportunities to apply its expertise in VOC and Nox control systems and
scrubbers, as well as additional applications for CEMs. Pursuant to the Clean
Air Act Amendments, the EPA has issued a list of hazardous chemicals, over half
of which are VOCs requiring the implementation of maximum available control
technology ("MACT") to limit emissions. The existing MACT rules, as well as
those in development for specific industries, will require compliance from both
new and existing VOC emissions sources. The "acid rain" provisions of the Clean
Air Act Amendments require additional controls for Nox emissions from a variety
of sources. See "Regulations--Environmental Regulations."
REGULATIONS
Environmental Regulations
The Company's business has benefitted in general from increased
governmental regulation relating to solid waste, wastewater, air pollution and
other environmental concerns, including increasingly stringent air and water
quality regulations (which in turn benefit its air pollution control and water
and biosolids treatment businesses). WTI's own business activities are also
subject to environmental regulation under the same federal, state and local laws
and regulations which apply to the Company's customers, including the Clean Air
Act, the Clean Water Act, and the Resource Conservation and Recovery Act of
1976, as amended ("RCRA").
WTI believes that it conducts its businesses in an environmentally
responsible manner and believes itself to be in material compliance with
applicable laws and regulations. WTI does not anticipate that maintaining
compliance with current requirements will result in any material decrease in
earnings. There can be no assurance, however, that such requirements will not
change so as to require significant additional expenditures. In particular,
pursuant to the Clean Air Act Amendments it is probable that the air pollution
control systems at certain trash-to-energy projects owned or operated by the
Company's subsidiaries will be required to be modified by the end of the decade
to comply with the more stringent regulations promulgated thereunder. The
Company has already completed a retrofit of the air pollution control systems at
its oldest trash-to-energy facility located in Saugus, Massachusetts. Although
the expenditures related to such modifications, to the extent required, will
likely be significant, they are not expected to have a material adverse effect
on the Company's liquidity or results of operations. WTI frequently obtains the
right to pass on to the long-term contract users of its trash-to-energy
facilities increased capital and operating costs resulting from changes in law.
There can be no assurance, however, that in such event WTI would be able to
recover, for each project, all such increased costs from its customers.
Moreover, it is possible that future developments, such as increasingly strict
requirements of environmental laws and enforcement policies thereunder, could
affect the manner in which WTI operates its projects and conducts its business,
including the handling, processing or disposal of the wastes,
6
by-products and residues generated thereby. See Item 3 -- Legal Proceedings -
Regulatory. Regulations issued by the EPA in December 1992 under the Clean Water
Act may affect the Company's ability to market pellets derived from its drying
and pelletizing facilities as fertilizer without first obtaining additional
permits for their use. The Company anticipates that the EPA may suspend
enforcement of certain provisions of such regulations for a period of three
years pending additional study. The Company does not believe, however, that
implementation of these regulations in their original form would have a material
adverse effect on the Company's operations or financial position.
During 1992, the U.S. Court of Appeals for the Seventh Circuit issued a
ruling in a case in which the Company was not a party, finding that the ash
generated by a trash-to-energy facility could be subject to regulation as a
hazardous waste. The Seventh Circuit decision was contrary to an earlier
decision issued by the U.S. Court of Appeals for the Second Circuit, upholding a
District Court determination in a case involving a subsidiary of the Company. In
that case, the Court determined that the residual ash generated at the Company's
facility is not subject to regulation as a hazardous waste within the provisions
of RCRA. In late 1992, the Supreme Court vacated the Seventh Circuit decision
and ordered the Seventh Circuit to reconsider the case in light of an EPA
interpretation of RCRA stating that ash from trash-to-energy facilities is not
subject to regulation as a hazardous waste. Upon reconsideration, the Seventh
Circuit reaffirmed its original decision. The parties each filed a writ of
certiorari with the U.S. Supreme Court. The Court granted the writs and heard
oral arguments in the case in January 1994. A decision is pending. WTI does not
believe that a decision upholding the Seventh Circuit's earlier ruling would
adversely affect the Company in any material manner, primarily because of the
patented Wes-Phix(R) technology utilized by the Company. Wes-Phix(R) immobilizes
certain constituents in the ash which thereby enables it to be disposed of as
non-hazardous waste. Any such development could, however, require significant
additional expenditures to achieve compliance with such requirements or
policies. There can be no assurance that, in such event, the Company would be
able to recover all such costs from its customers.
Public Utility Regulatory Policies Act
Wheelabrator Clean Energy's business is subject to the provisions of
various energy-related laws and regulations, including the Public Utility
Regulatory Policies Act of 1978 ("PURPA"). The ability of WTI's trash-to-energy
and small power production facilities to sell power to electric utilities on
advantageous terms and conditions and to avoid burdensome public utility
regulation depends, in part, upon the continuance in effect of PURPA, which
generally exempts WTI from state and federal regulatory control over electricity
prices charged by, and the finances of, WTI and its energy producing
subsidiaries. While most of WTI's existing projects sell electricity pursuant to
long-term contracts or rate orders, which management believes would not be
affected by the repeal or modification of PURPA, the future growth of the
Company's trash-to-energy and other small power production facilities business
and the legal status of its existing projects could be materially and adversely
affected if the various benefits of PURPA were repealed or substantially
reduced.
COMPETITION
WTI experiences substantial competition in all aspects of its business. It
competes with a number of firms, both nationally and internationally, some of
which may have greater financial and technical resources than WTI. The principal
competitive factors with respect to its Wheelabrator Clean Water and
Wheelabrator Clean Energy project development activities include technological
performance, service, technical know-how, price and performance guarantees.
Competing for selection as a project developer may require commitment of
substantial resources over a long period of time, without any certainty of being
ultimately selected. Competition for
7
attractive development opportunities is intense, as there are a number of
competitors in the trash-to-energy, biosolids management and water and
wastewater treatment industries interested in such opportunities. The Company
believes that its comprehensive project development capabilities, operating
experience, financing capabilities and, through its affiliation with Rust,
engineering and turnkey construction experience, will enable it to continue to
compete effectively.
In the air pollution control business, the Company competes with a
relatively small group of large national and international firms. The primary
competitive factors in the air pollution control industry are price,
technological capabilities and service. In its biosolids handling and treatment
and composting businesses, the Company competes with several large national and
regional firms and numerous competitors who provide service in local markets. In
the biosolids and composting markets, the principal competitive factors are
price, availability of sites for beneficial reuse of biosolids and technical
experience. See "Patents, Trademarks, Licenses and Other Agreements."
At the time of the 1990 merger between WTI and a subsidiary of WMX which
resulted in WMX's acquisition of a controlling interest in the Company (the
"1990 Merger"), the Company was granted an option to acquire an equity interest
in WMX's international waste services operations, now conducted through WM
International. In connection with the acquisition of an equity interest in WM
International in 1991, the Company agreed that it would not conduct waste
management services operations or engage in the operation and maintenance of
water and wastewater treatment facilities outside of North America, other than
through its ownership interest in WM International, until the later of (i) July
1, 2000 and (ii) the date on which WMX ceases to beneficially own a majority of
the outstanding shares of Common Stock or a majority of all outstanding voting
equity interests of WM International.
In connection with the initial public offering of ordinary shares of WM
International, the Company, WM International, CWM and WMX entered into an
International Business Opportunities Agreement, which incorporates certain
previously existing agreements among certain of the parties thereto which were
made in connection with the 1990 Merger. The International Business
Opportunities Agreement was amended and restated in connection with the
organization of Rust, described above under "Organization of Rust International
Inc.," and Rust became a party thereto. Under the Amended and Restated
International Business Opportunities Agreement, the parties agreed that in order
to minimize the potential for conflicts of interest among various subsidiaries
under the common control of WMX, WMX has the right to direct business
opportunities to the WMX controlled subsidiary which, in the reasonable and good
faith judgment of WMX, has the most experience and expertise in the particular
line of business involved. Opportunities in North America relating to (i) the
manufacture or assembly of well screens, materials cleaning equipment, pumps and
packaged water and wastewater treatment facilities; (ii) the operation and
maintenance and, with respect to item (c) below, design, engineering and
construction, of (a) municipal trash-to-energy facilities, (b) water, wastewater
and sewage treatment facilities (excluding facilities designed to treat
hazardous waste streams), (c) chimneys and air pollution control equipment and
facilities, and (d) small power projects and independent power generation
facilities (except for landfill gas recovery facilities which are covered under
the Intellectual Property Licensing Agreement described under "Patents,
Trademarks, Licenses and Other Agreements"); and (iii) facilities which treat or
otherwise stabilize ash residues from trash-to-energy facilities, have been
allocated to the Company. The Agreement allocates certain business
opportunities, some of which were previously allocated to WTI, to Rust in
connection with the transfer (described above) of WTI's engineering,
environmental consulting and construction businesses to Rust.
8
RESEARCH AND DEVELOPMENT
The Company undertakes research and development in numerous areas of its
operations, including energy generation, environmental control and the handling
and recovery of waste materials and waste gases, water, wastewater and
industrial process water technologies, and VOC catalyst and control
technologies. WTI spent approximately $3.9 million, $2.6 million and $4.1
million on research and development during 1991, 1992 and 1993, respectively. In
addition, WTI receives significant benefits from technological advances realized
in connection with specific projects undertaken on its own behalf or under
contracts with customers. Significant technological benefits are also realized
through WTI's experience in operating its existing projects.
PATENTS, TRADEMARKS, LICENSES AND OTHER AGREEMENTS
The Company owns or licenses a number of patents and patent applications or
other proprietary technology that are important to various aspects of its
business. While certain of such licenses or patented technology may be material
to the development of a given project, the Company believes that its overall
business depends primarily on such factors as project development capability,
engineering skill, and research and production techniques rather than on patent
protection.
Pursuant to a long-standing arrangement between WTI and von Roll Ltd. ("von
Roll"), WTI has an exclusive license in the United States and Mexico to use
certain combustion-grate technology owned by von Roll. WTI uses this technology
in its trash-to-energy projects. The license agreement runs through December 31,
1995, subject to additional three-year-term renewals unless either party gives
12 months' written notice of termination to the other. Either party to the
license agreement may also terminate the contract upon one year's written notice
and payment of a termination fee.
WTI has an agreement (the "Boiler Purchase Agreement") with Babcock &
Wilcox Company ("B&W"), whereby B&W has agreed to provide, and WTI has agreed to
purchase, certain boilers suitable for use in WTI's trash-to-energy facilities
having a combustion capacity equal to or greater than 250 tons-per-day. In
addition, B&W agrees to maintain the confidentiality of the Company's
proprietary information incorporated in the boiler design, and not to use such
information except for the purpose of manufacturing boilers for sale to WTI or
its affiliates. The confidentiality provisions will survive the termination of
the Boiler Purchase Agreement. The Boiler Purchase Agreement will remain in
effect until June 30, 1994, subject to additional three-year term renewals
unless either party gives 12 months written notice of termination to the other.
Neither party has provided such notice. Accordingly, the Boiler Purchase
Agreement will automatically renew as of July 1, 1994 for a three-year term
ending June 30, 1997.
The Company possesses foreign and domestic patents on various biosolids
treatment processes. The Company has a license agreement with Seghers
Engineering N.V. of Bruges, Belgium, granting Wheelabrator Clean Water the
exclusive right to use and market the Seghers Zerofuel sludge incineration
system, including the Seghodryer indirect multi-stage dryer for sludge, within
the United States and Canada. The license agreement was renegotiated in April
1993 to remain in effect through the year 2011 provided that Wheelabrator Clean
Water meets specified levels of equipment orders or makes certain minimum
payments under the agreement. The new agreement also gives Wheelabrator Clean
Water additional options with respect to pricing and manufacturing, and includes
a future option allowing Wheelabrator Clean Water to acquire the unrestricted
right to use the Seghers technology within the United States and Canada. In
addition, Wheelabrator Clean Water holds several patents relating to the
processing of biosolids through an indirect biosolids dryer system.
9
In 1988, the Company entered into a Land Option Agreement, amended as of
June 1, 1992, with Waste Management of North America, Inc., now known as Waste
Management, Inc. ("WMI"), a wholly-owned subsidiary of WMX, providing WTI with
the right, subject to certain restrictions and payment of a $10 million option
renewal fee after 10 years, to acquire or lease sites for future trash-to-
energy, biosolids management, organic waste composting or, subject to certain
pre-conditions, medical waste incineration and autoclave facilities at any of
WMI's existing or future landfills in the United States and Canada. In addition,
in 1988 the Company entered into an Airspace Dedication Agreement (the "ADA")
with WMI permitting WTI, for a period ending August 12, 2008, and subject to
certain conditions and restrictions, to reserve capacity at WMI landfills for
the disposal of ash residue ("Ash Residue") from the Company's trash-to-energy
facilities, to dispose of such residues and waste at such landfills for fees
generally on terms at least as favorable as those charged to other customers,
and granting disposal credits aggregating $70 million to be credited against
future Ash Disposal fees (of which $30 million in disposal credits were
transferred to Rust on January 1, 1993). In 1992, the ADA was amended and
restated to expand the types of waste covered by the ADA to include non-
hazardous biosolids, by-pass waste from facilities owned or operated by WTI and
special wastes removed from third-party sites being remediated by WTI or any of
its affiliates (the "Other Waste"). In addition, the definition of Ash Residue
was expanded to include, under certain circumstances, ash residue from medical
waste incineration facilities. As amended and restated, the ADA also provides
for disposal credits to be applied against disposal fees paid by WTI and its
subsidiaries under separately negotiated disposal arrangements with WMI. Under
the ADA, as amended and restated, WTI may reserve not more than a total of 35%
of the airspace available for the disposal of the type of waste proposed for
disposal at any disposal site at a price-per-ton rate that will generally not be
greater than the most favorable per ton price charged by the disposal site to
customers other than WTI.
In connection with the 1990 Merger, the predecessor of WM International,
Waste Management International, Inc. ("WMII"), and WMI entered into an
Intellectual Property Licensing Agreement with WTI. WM International has
succeeded to the rights and obligations of WMII under the Intellectual Property
Licensing Agreement as well as certain other agreements to which WTI and WMII
were parties. Pursuant to the Intellectual Property Licensing Agreement: (i) WM
International granted WTI a 10-year, non-exclusive, royalty-free license, with
two successive 5-year renewal options, to the "BRINI" recycling and composting
technology owned by WM International; (ii) WMI granted WTI a 10-year, non-
exclusive, royalty-free license, with two successive 5-year renewal options, to
the Recycle America(R) and Recycle Canada(R) trademarks and logos and the
related materials separation and processing technology of WMI for use in
conjunction with recycling operations at or adjacent to any WTI facility; (iii)
WMI agreed to use reasonable efforts to enable WTI to sell recyclable materials
to joint ventures or other markets developed by WMI; (iv) WMI agreed, to the
extent consistent with its business plans, to use good faith efforts to develop
its curbside recycling programs and free-standing recyclable materials recovery
facilities to also support WTI facilities; (v) WTI agreed to designate WMI as
the provider of recyclable collection services for WTI facilities to the extent
possible, before offering such opportunity to any third party; (vi) WMI granted
WTI a 10-year, non-exclusive, royalty-free license, with two successive 5-year
renewal options, to all of WMI's proprietary technology and know-how in the area
of landfill gas recovery and the conversion of such gas to energy (such license
does not extend to the use by WTI of technology and know-how at sanitary
landfill sites owned, operated or maintained by WMI or its subsidiaries and
affiliates, other than WTI and its subsidiaries); and (vii) WMI agreed that only
WTI, and not WMI, may develop the business of designing, constructing, operating
and maintaining landfill gas recovery facilities for governmental, industrial
and third party customers. To the extent WTI develops landfill gas recovery
technology and know-how during the period of its license (and renewals) from
WMI, it will share such technology and know-how with WMI on a similar royalty-
free basis. WTI may waive its rights to develop landfill gas recovery systems on
a case-by-case basis in those situations in which financial objectives specified
by the Company's Board of
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Directors can not be achieved by WTI through development of such projects.
Projects waived by WTI may be developed by WMI.
The licenses and related rights and obligations to conduct business granted
under the Intellectual Property Licensing Agreement terminate, as to facilities
not already operational, contractually committed or the subject of, or
contemplated by, a bid or other submission previously made by the Company or
WMI, as the case may be, at the earlier of the termination of the stated license
periods, the expiration of any patent licensed under the agreement, or the date
on which the Company is no longer a majority-owned subsidiary of WMX.
WTI, WMX, CWM, Rust and WM International are also parties to a First
Amended and Restated Master License Agreement which was modified on January 1,
1993 to add Rust as a party to the existing Master License Agreement originally
entered into in connection with the public offering of ordinary shares of WM
International. Under the Master License Agreement, as amended, each of WTI,
WMX, Rust and CWM, on the one hand, and WM International, on the other, is
granted the right to license, on a non-exclusive basis, certain proprietary
rights of the other. The consideration for any such license will be based upon
the fair market value of a license for the licensed technology at the time of
grant, but may not exceed the most favorable price charged an unaffiliated
licensee for a comparable license.
BACKLOG
WTI's backlog was $11.7 billion and $11.4 billion as of December 31, 1992
and 1993, respectively. WTI expects that approximately $912 million, or 8%, of
the December 1993 backlog will be executed during 1994. Approximately $11.0
billion of this backlog relates to long-term contracts associated with trash-to-
energy, cogeneration, biosolids drying and pelletizing and coal-handling
services at facilities operated by WTI, of which approximately $589 million, or
5%, will be executed during 1994. Approximately $358 million of backlog at
December 31, 1992 related to the businesses contributed by WTI to Rust on
January 1, 1993.
RAW MATERIALS
Raw materials used by the Company, including fuel for its projects (such as
trash, waste wood, waste tires, waste coal and natural gas) and construction
materials, are generally readily available from many different suppliers.
Substantially all of the solid waste disposed at the Company's energy projects
is commonly obtained through long-term supply contracts with solid waste
disposal authorities and municipalities under which minimum disposal fees are
fixed and which generally provide for escalation in accordance with various
price indexes. With respect to WTI's manufacturing businesses, the principal
raw materials are carbon steel, steel alloy plate, stainless steel wire and
plate and scrap metals. The raw materials necessary to each of the Company's
businesses are readily available from a variety of sources and the Company does
not anticipate any difficulty in obtaining such materials.
EMPLOYEES
As of December 31, 1993, the Company had approximately 3,800 full-time
employees. WTI considers relations with its employees to be satisfactory.
11
FINANCING CAPABILITIES AND FUNDING SUPPORT AGREEMENTS
Financing Capabilities
Each trash-to-energy, cogeneration, and biosolids drying and pelletizing
project developed by the Company requires substantial amounts of capital that
generally range from $30 million to $400 million. Historically, such capital
requirements have been financed through the issuance of project debt and the
investment of internal funds and outside equity. The debt has primarily
consisted of long-term tax-exempt or taxable bonds secured by a pledge of
project revenues and assets, with certain additional security being provided, in
some cases, directly or indirectly, by WTI, WMX or another project support
entity. WTI has also used partnership, joint venture and sale and leaseback
structures to bring third-party equity into its project financings. The Company
expects to finance its working capital requirements with its available cash. To
the extent required, the Company has additional cash available to it pursuant to
the Restated Funding Agreement described below or through the working capital
program established between the Company and WMX described below under "Master
Intercorporate Agreement." Certain agreements with respect to the Company's
financing capabilities and funding support are described below.
Restated Funding Agreement
Pursuant to a Restated Funding Agreement between WMX and WTI, WMX agreed to
use reasonable efforts to assist WTI, at WTI's request, in obtaining and
maintaining a credit rating of "A" or better from Standard & Poor's Corporation
or Moody's Investors Service for WTI's long-term unsecured debt securities.
WMX's obligations under the Restated Funding Agreement, which terminate on
August 12, 2008, may involve anything from contingent credit support obligations
to and including WMX's purchase from WTI of up to $200 million principal amount
of WTI securities, which may be either debt, equity or a combination thereof
(the "Securities"). WMX's obligations will be deemed satisfied by the purchase
of such Securities, even if the purchase of all of the Securities does not
enable WTI to obtain an "A" rating. In addition, the obligation to purchase any
of the Securities will be suspended if WTI does not reasonably demonstrate its
ability to pay interest or cash dividends, as the case may be, on the
Securities. WMX's obligations will also be suspended during any period in which
WTI obtains and maintains an "A" rating and will be reduced to the extent that
the purchase of a lesser amount of Securities will allow WTI to obtain or
maintain such a rating. Any Securities issued to WMX will be subject to
mandatory repayment or redemption in equal annual installments during the
twenty-five years following their date of issuance, and they may be prepaid or
redeemed by WTI, at its option, if the directors of WTI not otherwise affiliated
with WMX or WTI conclude that such repayment or redemption is in the best
interests of the Company and its stockholders. Any Securities redeemed or
prepaid prior to August 12, 2008 will restore availability under the $200
million purchase obligation referred to above. WTI has an implied "A" credit
rating from Standard & Poor's Corporation and an implied "A3" credit rating from
Moody's Investors Service. The attainment of such ratings did not involve the
sale of any Securities to WMX.
Master Support Agreement
Under a Master Support Agreement between Resco Holdings Inc. ("Resco"), a
wholly-owned subsidiary of WTI, and Allied-Signal Inc. ("Allied Signal"), Resco
is required to reimburse Allied-Signal for any credit support payments Allied-
Signal is required to make under various credit support agreements with respect
to trash-to-energy projects of Resco. In addition, Resco is required to
maintain its Consolidated Tangible Net Worth (as defined in the Master Support
Agreement) at an amount which, as of December 31, 1993, equalled $547.3 million,
and which is automatically increased (but not decreased) to 90% of Resco's
Consolidated
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Tangible Net Worth at the end of each quarter. As of December 31, 1993, Resco
was in compliance with this provision. Resco is prohibited from paying cash
dividends or acquiring any shares of its capital stock if its Consolidated
Tangible Net Worth is, or would as a consequence of such payment or acquisition
be, less than the required amount. The Master Support Agreement also restricts
the ability of Resco to subject its property or the properties of its
subsidiaries to liens securing indebtedness for money borrowed or similar
indebtedness and may require Resco, under certain circumstances, to refinance
indebtedness of trash-to-energy projects for which Allied-Signal's credit
support is provided. Allied-Signal is providing credit support in respect of
two of the Company's trash-to-energy facilities pursuant to the Master Support
Agreement.
Master Intercorporate Agreement
In connection with the 1990 Merger, WTI, WMX and CWM entered into a Master
Intercorporate Agreement. Among other things, WTI and WMX agreed to implement a
cash management and working capital program under the agreement. The agreement
was amended and restated in 1993 to modify certain aspects of the cash
management program established thereunder. Subject to certain restrictions
specified in the agreement, WMX agreed to fund WTI's working capital
requirements at rates equal to or lower than those WTI would otherwise be able
to obtain on the open market. The Company may borrow up to $100 million from
WMX until September 1995 pursuant to the Master Intercorporate Agreement, plus
the amount of cash invested by WTI with WMX. Except for the $100 million
funding commitment which expires in September 1995, the remaining obligations of
WMX under the Master Intercorporate Agreement will terminate at the time that
both (i) WMX does not own a majority of the capital stock of WTI and (ii) WMX
does not exercise, prior to its expiration, the option to maintain majority
ownership of the capital stock of WTI (as provided in the Master Intercorporate
Agreement).
ACQUISITIONS
During 1993, the Company acquired a number of businesses engaged in
providing various environmentally-related services. The amounts and types of
consideration generally have been determined by direct negotiations with the
owners of the businesses acquired. The acquisitions involved several
businesses engaged in providing water and air quality-related environmental
products and services as well as independent power.
EQUITY INVESTMENTS
Rust International Inc.
The Company owns approximately 40% of the outstanding common stock of Rust.
Approximately 56% of Rust's common stock is held by CWM and the remaining 4% is
held by public stockholders.
Rust is a leading provider, through its subsidiaries, of engineering,
construction and environmental and infrastructure consulting services, hazardous
substance remediation services and other on-site industrial and related
services, primarily to clients in government and in the chemical, petrochemical,
nuclear, energy, utility, pulp and paper, manufacturing, environmental services
and other industries. In addition, Rust provides engineering and environmental
and infrastructure consulting services to clients in several countries outside
of North America.
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Rust's engineering, construction and environmental and infrastructure
consulting services business provides process and design engineering,
construction, marine construction, dismantling and demolition services,
architectural, automation, environmental and infrastructure engineering services
and project management services to clients in federal, state and local
governments, to municipalities and utilities and to clients in the chemical,
petrochemical, pulp and paper, automotive, iron and steel, aerospace, food and
beverage, tobacco, mining, utility and industrial power and general
manufacturing industries.
The industrial engineering services provided by Rust are of two general
types -- process engineering and facility design engineering. Process engineers
create the processes by which facilities operate, such as chemical,
petrochemical, energy and pulp and paper plants. Design engineering services
provided by Rust encompass the following disciplines: architectural; electrical;
control systems (which involves developing the logic and instrumentation
necessary to control, for instance, a plant's electrical system); process
piping; mechanical (equipment layout); structural; heating, ventilation and air
conditioning ("HVAC"); and civil (site work, grading and draining).
Rust's construction services include primarily the new construction and
retrofitting of power generation facilities including coal-fired powerplants,
nuclear power plants, gas turbine and cogeneration plants, industrial
facilities, including chemical, petrochemical, pulp and paper, food and
beverage, iron and steel, automotive, utility and industrial power and other
manufacturing facilities. Rust also provides infrastructure and marine
construction services, which include building, maintaining and repairing
infrastructure such as highways, airports, ports, major civil work, piers,
wharves and bridges. In addition, the Company provides dredging and underwater
diving services to its clients. Rust also provides dismantling and demolition
services.
Rust's environmental and infrastructure consulting services provide
alternative solutions for client problems relating to removing and disposing of
hazardous and toxic substances and managing solid waste, water and wastewater,
groundwater and air resources. Rust provides such services primarily to private
industry but also to federal, state and local governments, including the
Department of Defense ("DOD") and Department of Energy ("DOE"). Rust's services
include performing remedial investigations for the purpose of characterizing
hazardous waste sites and preparing feasibility studies setting forth
recommended remedial actions.
Rust also provides services in connection with the siting, permitting,
design and construction oversight (including construction quality assurance) of
solid and hazardous waste landfills and related facilities such as leachate
collection and disposal and gas recovery and electric generation systems.
Study, design and construction oversight services are also provided, primarily
to municipalities and, to some extent, private industry in connection with
wastewater collection and treatment, potable water supply treatment and
distribution, stormwater management and the building of streets, highways,
airports, bridges, waterways and rail services. In addition, Rust designs
systems required to properly and safely store, convey, treat and dispose of
industrial, hazardous and radioactive materials and provides consulting services
to its clients regarding disposal and waste minimization methods and techniques.
Rust performs on-site hazardous chemical and radioactive substance
remediation services for clients in the chemical, petrochemical, automotive and
other manufacturing industries and for federal, state and local government
entities, including the DOD and DOE in connection with such projects as the
remediation of military bases and other government installations, the
Environmental Protection Agency in connection with Superfund projects, and
various state environmental agencies. Rust's hazardous substance remediation
services also include the containment and closure of contaminated sites and the
cleaning, relining and sealing of liquid containment and treatment ponds,
lagoons and other surface impoundments.
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Rust provides scaffolding services primarily to the refinery, chemical,
petrochemical and electric utility industries, and to a lesser extent, pulp and
paper plants, nuclear facilities and general commercial clients. In most cases,
Rust's scaffolding services are provided in conjunction with periodic, routine
cleaning and maintenance of refineries, chemical plants and utilities, although
such services are also performed in connection with new construction projects.
Rust performs four types of industrial cleaning services--water blasting,
chemical cleaning, vacuuming and water filtration--primarily for clients in the
petrochemical, chemical, and pulp and paper industries, utilities, and to a
lesser extent, the government sector. Rust provides additional on site plant
services to the chemical, petrochemical, and pulp and paper industries as well
as to general commercial and industrial clients, including mechanical and
electrical services, equipment installation, welding, HVAC, warehousing and
inventory management. Rust assists clients in the nuclear and utility
industries in solving electrical, mechanical, engineering and related technical
services problems. Rust also provides spent fuel storage (rerack) services to
the nuclear power industry. In addition, Rust also designs and provides to its
clients other nuclear and utility maintenance service-related products,
including fire protection seals, nozzle dams and manway cover elevator systems.
Waste Management International plc
The Company owns approximately 12% of the outstanding ordinary shares of WM
International. Approximately 56% of WM International's outstanding ordinary
shares are held indirectly by WMX, and an additional 12% of such shares are held
by Rust, in which the Company owns a 40% equity interest. The remaining
outstanding ordinary shares of WM International are held by public stockholders.
WM International is a leading international provider of comprehensive waste
management and related services and conducts essentially all of the waste
management operations located outside of North America of WMX and its
affiliates. The operations of WM International are managed on a country by
country basis and are divisible into two broad categories: collection services
and treatment and disposal services.
Collection services provided by WM International include collection and
transportation of solid, hazardous and medical wastes and recyclable material
from residential, commercial and industrial customers. Through its
subsidiaries, WM International provides collection services to governmental and
private customers in nine European countries, Argentina, Australia, Brunei,
Malaysia, New Zealand and Taiwan. Business is obtained through public bids or
tenders, negotiated contracts, and, in the case of commercial and industrial
customers, direct contracts. WM International's collection services encompassed
approximately 1,700 separate municipal contracts (the largest number of which
are in Italy) serving over 6.3 million households and commercial and industrial
collection services to more than 140,000 solid waste customers and approximately
29,600 hazardous waste customers, as well as related services. The size,
specifications, provisions and duration of municipal contracts vary
substantially, with some such contracts also covering landfill disposal or
street-sweeping or other cleaning services. Pricing for municipal contracts is
generally based on volume of waste, number and frequency of collection pick-ups
and disposal arrangements. Longer-term contracts typically have formulae for
periodic price increases or adjustments.
Street, industrial premises, office, parking lot and port cleaning services
are also performed by WM International, along with portable sanitation/toilet
services for such occasions as outdoor concerts and special events.
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Treatment and disposal services include processing of recyclable materials,
operation of both solid waste landfills and hazardous waste landfills, operation
of municipal, trash-to-energy and hazardous waste incinerators, provision of
hazardous waste treatment and site remediation services, and water treatment
services. The operation of solid waste landfills is currently WM
International's most significant treatment and disposal service. Treatment and
disposal services are provided under contracts which may be obtained through
public bid or tender or direct negotiation, and are also provided directly to
other waste service companies. At December 31, 1993, Waste Management
International operated 23 waste treatment facilities, 32 recycling and
recyclables processing facilities, 11 incinerators and 57 landfills. Three of
the 11 incinerators are hazardous waste incinerators.
At present, in most countries in which WM International operates,
landfilling is the predominant disposal method employed. WM International owns
or operates landfills in Italy, Sweden, France, Spain, Australia, the United
Kingdom, Germany, Denmark, Argentina and New Zealand. WM International is also
constructing a solid waste landfill in Hong Kong. Landfill disposal agreements
may be separate contracts or an integrated portion of collection or treatment
contracts. In addition, landfills may accept waste on a reserved space or per
load basis. WM International believes it has access to sufficient solid waste
landfill capacity to meet its current needs.
WM International's trash-to-energy incinerator in Hamm is a German-designed
plant and the only privately operated trash-to-energy facility in Germany. It
is among the first trash-to-energy facilities to fully comply with that
country's stringent new air pollution requirements. The facility serves the
household and commercial solid waste incineration needs of a population of over
550,000 in Hamm and nearby towns. WM International also operates five small
conventional municipal solid waste incinerators in Italy and one small plant in
each of Sweden and New Zealand.
WM International owns or operates hazardous waste treatment facilities in
Finland, Italy, Sweden, Germany, the United Kingdom, The Netherlands, Hong Kong
and New Zealand, has nearly completed construction of a hazardous waste
treatment facility in Indonesia, and has entered into agreements with the
governments of Argentina and Venezuela to develop hazardous waste treatment
facilities in those countries.
While WM International has considerable experience in mobilizing for and
managing foreign projects, its operations continue to be subject generally to
such risks as currency fluctuations and exchange controls, the need to recruit
and retain suitable local labor forces and to control and coordinate operations
in different jurisdictions, changes in foreign laws or governmental policies or
attitudes concerning their enforcement, political changes, local economic
conditions and international tensions.
WM International records and reports its earnings in pounds sterling.
Currency fluctuations affecting the pounds sterling exchange rates will cause
the Company's earnings from WM International to fluctuate. The Company may from
time to time engage in hedging transactions in order to mitigate the effect of
such exchange fluctuations.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages of the Company's executive officers
(as defined by the regulations of the Securities and Exchange Commission), the
principal positions they hold with the Company and with WMX and its affiliates
as of December 31, 1993, and summaries of their business experience. Experience
shown with WTI includes experience with a predecessor of WTI prior to the August
1989 merger of such
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predecessor into Resco. Executive officers are elected by the Board of
Directors and serve at the discretion of the Board of Directors. Phillip B.
Rooney, the Company's Chairman and Chief Executive Officer, is also an executive
officer of WMX and certain of its affiliates. While he will devote less than
all of his working time to WTI's business, the Company anticipates that he will
devote sufficient time to the Company's business as reasonably may be required
to fulfill the duties of his office.
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NAME AND TITLE AGE BUSINESS EXPERIENCE
-------------------------------------- --- ---------------------------------------------------------------
Phillip B. Rooney..................... 49 A director of WTI since September 1988. Chairman of the
Chairman of the Board and Board and Chief Executive Officer of WTI since November
Chief Executive Officer 1990. President and Chief Operating Officer of WMX since
November 1984. Chairman of the Board of Rust since January
1993. Chairman of the Board and Chief Executive Officer of
WMI since January 1994. Mr. Rooney is also a director of
WMX, CWM, WM International and Rust.
John M. Kehoe, Jr..................... 60 President and Chief Operating Officer of WTI since January
President and 1993. Vice President of WTI from December 1991 to
Chief Operating Officer December 31, 1992. President of Wheelabrator Environmental
Systems Inc. ("WESI"), a subsidiary of WTI, from November
1990. Managing Director of WTI from June 1988 to November
1990.
John T. Dowd.......................... 56 Senior Vice President and General Manager of Wheelabrator
Senior Vice President and Clean Water Systems Inc. and Wheelabrator Clean Air Systems
General Manager Inc. since November 1992. Vice President and General
Wheelabrator Clean Air Systems Manager of Wheelabrator Clean Water Systems Inc. from
Inc. and Wheelabrator Clean Water August 1991 to November 1992. Vice President - Business
Systems Inc. Development of WESI from January 1989 to August 1991.
James F. Wood......................... 51 Senior Vice President and General Manager of WESI since
Senior Vice President November 1992. Vice President-Plant Operations of WESI from
and General Manager September 1990 to November 1992. Managing Director of WTI
Wheelabrator Environmental from April 1989 to September 1990. Vice President-Plant
Systems Inc. Services of WESI from May 1988 to April 1989.
John D. Sanford....................... 40 Vice President, Chief Financial Officer and Treasurer of WTI
Vice President, since May 1993. Staff Vice President-Finance of WTI from
Chief Financial Officer February 1993 to May 1993. Vice President and Chief Financial
and Treasurer Officer of WESI from August 1987 to May 1993.
Mark P. Paul.......................... 44 Vice President and General Counsel of WTI since May 1993.
Vice President and Associate General Counsel and Staff Vice President of WTI
General Counsel from February 1993 to May 1993. Vice President and General
Counsel of WESI from September 1987 to May 1993.
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[Enlarge/Download Table]
NAME AND TITLE AGE BUSINESS EXPERIENCE
-------------------------------------- --- -----------------------------------------------------------------------------
Richard S. Haak, Jr................... 39 Controller of WTI since November 1993. Vice President and
Controller Controller-Operations of WESI from September 1987 until
November 1993.
ITEM 2 -- PROPERTIES
The Company's principal executive offices are located at Liberty Lane,
Hampton, New Hampshire 03842. These offices also serve as the headquarters of
the Company's Wheelabrator Clean Energy group. The Company believes that its
property and equipment are generally well maintained, in good operating
condition and adequate for its present needs. The inability to renew any short-
term real property lease by the Company or any of its subsidiaries would not
have a material adverse effect on its results of operations. WTI regularly
upgrades and modernizes facilities and equipment and expands its facilities as
necessary.
The following tables set forth the Company's principal facility locations in
operation or under construction and their use (including those operated by the
Company for others under long-term contracts or similar arrangements) as of
December 31, 1993.
DESCRIPTION OF OWNED, LEASED AND/OR LONG-TERM OPERATED PROJECTS
Set forth below is a description of projects in operation or under
construction which are owned, leased or operated under long-term operating
agreements by WTI subsidiaries, partnerships or joint ventures controlled by WTI
subsidiaries. Unless indicated to the contrary below, each project is owned by
subsidiaries or affiliates of the Company. While WTI exercises, or will
exercise, operating control over each such project, WTI has no ownership
interest in certain of the projects.
Projects in Operation
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DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
----------------------------------------------------- ------ ---------- ---------------------------------------------
1. Amarillo, Texas N/A 3,500,000 Owned and operated since 1976 by WTI
Coal Handling Facility TPY and its predecessors.
2. Anderson, California 6mW 210 TPD Owned and operated by WTI since mid-
Wood Waste Cogeneration 1993.
Facility
3. Baltimore, Maryland 60mW 2,250 TPD Owned and operated by WTI from 1985
Trash-to-Energy Facility to 1988. Operated by WTI since 1988
Owner: Ford Motor Credit Company ("Ford Credit") under a long-term lease expiring in 2007,
with certain renewal and purchase
options.
4. Bridgeport, Connecticut 70mW 2,250 TPD Operated since 1988 by WTI under a
Trash-to-Energy Facility long-term lease expiring in 2008, with
Owner: Ford Credit certain renewal and purchase options.
18
[Enlarge/Download Table]
DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
------- ------ ---------- -------------------------------------
5. Broward County, Florida 70mW 2,250 TPD Owned and operated by WTI since mid-
South Site 1991.
Trash-to-Energy Facility
6. Broward County, Florida 70mW 2,250 TPD Owned and operated by WTI since early
North Site 1992.
Trash-to-Energy Facility
7. Claremont, 5mW 200 TPD Owned and operated by WTI since 1987.
New Hampshire
Trash-to-Energy Facility
8. Cobb County, Georgia N/A 35 DTPD Operated by WTI since late 1992 under a
Biosolids Dryer and subcontract expiring in 1996, with a
Pelletizer renewal option.
Owner: Cobb County,
Georgia
9. Concord, New Hampshire 14mW 575 TPD Owned and operated by WTI since 1989.
Trash-to-Energy Facility
10. Earth, Texas N/A 3,500,000 Owned and operated since 1982 by WTI
Coal Handling Facility TPY and its predecessors.
11. Frackville, Pennsylvania 47mW 1,700 TPD Owned and operated by WTI since 1989.
Anthracite Culm
Cogeneration Facility
12. Hagerstown, Maryland N/A 16 DTPD Operated by WTI since late 1992 under a
Biosolids Dryer and lease expiring in 1998, with a renewal
Pelletizer option.
Owner: Hagerstown,
Maryland
13. Gloucester County, 14mW 575 TPD Owned and operated by WTI since 1990.
New Jersey
Trash-to-Energy Facility
14. Millbury, Massachusetts 45mW 1,500 TPD Operated by WTI since 1987 under a
Trash-to-Energy Facility long-term lease expiring in 2007, with
Owner: Ford Credit certain renewal and purchase options.
15. New York, New York N/A 300 DTPD Owned and operated by WTI since mid-
Biosolids Dryer and 1993.
Pelletizer
16. North Andover, Massachusetts 40mW 1,500 TPD Owned and operated by WTI since 1985.
Trash-to-Energy Facility
19
[Enlarge/Download Table]
DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
------- ------ ---------- --------
17. Norwalk, California 28mW 5,600 MCF Operated by WTI since 1988 under a
Gas Cogeneration Facility per day lease expiring in 2008, with an option to
Owner: Signal Capital buy, subject to prior rights of the State of
Corporation California to purchase the lease and the
facility after 2003.
18. Pinellas County, Florida 75mW 3,000 TPD Operated by WTI since 1983 under a
Trash-to-Energy Facility long-term contract expiring in 2003.
Owner: Pinellas County,
Florida
19. Saugus, Massachusetts 40mW 1,500 TPD Operated by WTI since 1975; wholly-
Trash-to-Energy Facility owned by WTI since 1987.
20. Shasta County, California 49mW 2,400 TPD Operated by WTI since 1988 under a
Wood Waste Small Power long-term lease expiring in 2007, with
Production Facility renewal and purchase options.
Owner: Ford Credit
21. Sherman Station, Maine 18mW 800 TPD Operated by a partnership in which WTI
Wood Waste Cogeneration has a 60% interest since 1986. Leased by
Facility under a long-term contract expiring
Owner: Chrysler Financial in 2006, with renewal and purchase
Corporation options.
22. Spokane, Washington 26mW 800 TPD Operated by WTI since late 1991 under a
Trash-to-Energy Facility long-term contract expiring in 2011.
Owner: City of Spokane,
Washington
23. Tampa, Florida 20mW 1,000 TPD Operated by WTI since 1988 under a
Trash-to-Energy Facility long-term contract expiring in 2005.
Owner: City of Tampa,
Florida
24. Westchester County, 60mW 2,250 TPD Owned and operated since 1984 by
New York Westchester Resco Company L.P.
Trash-to-Energy Facility ("Westchester Resco") (1)
---------------------
(1) Westchester Resco is a limited partnership, 75% held by WTI, and 25% held
indirectly by John Hancock Mutual Life Insurance Co. as a limited partner.
20
Projects Under Construction
[Enlarge/Download Table]
DESIGN DESIGN
PROJECT OUTPUT CAPACITY COMMENTS
------- ------ ---------- ---------------------------------------
1. Baltimore County, Maryland N/A 110 DTPD Construction financing provided by WTI
Biosolids Dryer and from available cash; construction
Pelletizer expected to be completed in mid-1994.
2. Falls Township, Pennsylvania 53mW 1,500 TPD Construction financing provided by WTI
Trash-to-Energy Facility from available cash; construction
expected to be completed in mid-1994.
3. Lisbon, Connecticut 13mW 500 TPD Construction expected to be completed
Trash-to-Energy Facility in late 1995. Will be operated by WTI
Owner: Eastern Connecticut under a long-term contract expiring 25
Resource Recovery Authority years from commencement of principal
operations.
4. Polk County, Florida 40mW 1,000 TPD Construction financing provided by WTI
Urban Waste-To-Energy from available cash; construction
Facility expected to be completed in mid-1994.
Owned by a partnership in which WTI
owns an 81% interest.
KEY: mW--Megawatts DTPD--Dry Tons Per Day TPD--Tons Per Day
TPY--Tons Per Year MCF--Thousands of Cubic Feet
Non-Project Facilities
Set forth below is a list of all of the primary non-project facilities
owned by the Company as of December 31, 1993, and each of the principal plants
and offices leased by the Company as of that date. Such list does not purport
to be a complete list of all of the Company's leased properties.
[Enlarge/Download Table]
LOCATION SITE USE NATURE OF INTEREST
-------- -------- ------------------
Annapolis, Maryland......... Offices Lease
Altrincham, United Kingdom.. Manufacturing facility and office space Own
Commerce, California........ Manufacturing facility and office space Lease
Chatelleurault, France...... Manufacturing facility Own
Dublin, Ireland............. Manufacturing facility Own
Hampton, New Hampshire...... Offices Lease
LaGrange, Georgia........... Manufacturing facility and office space Own
Largo, Florida.............. Manufacturing facility Lease
Moorpark, California........ Manufacturing facility and office space Lease
New Brighton, Minnesota..... Manufacturing facility and office space Own
Naperville, Illinois........ Offices Lease
Parker, Arizona............. Carbon regeneration facility Own building/lease site
Pittsburgh, Pennsylvania.... Offices Lease
21
[Download Table]
LOCATION SITE USE NATURE OF INTEREST
-------- -------- ------------------
Rochester, New Hampshire.... Biosolids compost facility Own building/lease site
Schaumburg, Illinois........ Offices Lease
Sturbridge, Massachusetts... Manufacturing facility Own
Walterboro, South Carolina.. Foundry Own
ITEM 3 -- LEGAL PROCEEDINGS
Saugus, Massachusetts Trash-to-Energy Facility
On December 4, 1990, a lawsuit was filed against the Company in Essex
County Superior Court in the Commonwealth of Massachusetts ("Essex County
Court") over the estimated cost of retrofitting certain pollution control
equipment at the Company's Saugus, Massachusetts trash-to-energy facility (the
"Saugus Facility"), together with the cost of certain modifications to the ash
disposal site located adjacent to the Saugus Facility, and the costs associated
with operation and maintenance expenses of the Saugus Facility. The lawsuit,
brought by thirteen communities whose municipal waste is disposed at the Saugus
Facility, sought declaratory judgment, monetary damages and other relief based
upon allegations that some of the costs incurred were not properly recoverable
under the terms of their respective service agreements with the Company. The
lawsuit also named as defendants several of the Company's other subsidiaries.
On March 2, 1992, the Company filed a lawsuit in Essex County Court against
the plaintiffs in the foregoing action alleging non-payment of costs billed to
them pursuant to their respective service agreements for amounts expended by the
Company in retrofitting the Saugus Facility. Upon the Company's motion, the
parties were ordered to arbitrate the dispute as provided in the various service
agreements. The Company and the communities commenced the arbitration in early
1993. The "Arbitrator's Final Award," issued on November 9, 1993, provided
that: (i) the Company was not entitled to recover the cost of capital
improvements to the ash landfill or to receive incremental operating costs
related to such capital improvements; (ii) the Company was entitled to charge
the communities their proportionate shares of approximately $54 million of
capital improvements to the Saugus Facility (the Company had sought
approximately $59 million); and (iii) the Company was entitled to charge the
communities their proportionate shares of incremental operating costs resulting
from such capital improvements.
Following the issuance of the Arbitrator's Final Award, the parties
voluntarily dismissed with prejudice the communities' appeal of the order to
arbitrate issued in the Company's 1992 lawsuit. These actions conclusively
ended all disputes arising out of the retrofit of the Saugus Facility and the
adjacent ash disposal site.
Regulatory
The business in which the Company is engaged is intrinsically connected
with the protection of the environment and involves the potential for the
discharge of materials into the environment. In the ordinary course of
conducting its business activities, the Company becomes involved in judicial and
administrative proceedings involving governmental authorities at the federal,
state and local level including, in certain instances, proceedings instituted by
citizens or local governmental authorities seeking to overturn governmental
action in which governmental officials or agencies are named as defendants
together with the Company or one or more of its subsidiaries, or both. In the
majority of the situations where proceedings are commenced by governmental
authorities, the matters involved relate to alleged technical violations of
licenses or permits pursuant to which
22
the Company operates or is seeking to operate or laws or regulations to which
its operations are subject or are the result of different interpretations of the
applicable requirements. At December 31, 1993, the Company was involved in one
such proceeding relating to activities at its Westchester, New York trash-to-
energy facility. The EPA has alleged that the facility exceeded its emission
limits of sulphur dioxide ("SO\\2\\"). The EPA and the Company are negotiating
a consent order which is expected to include the installation of a sorbent
injection system (to reduce the SO\\2\\ emissions) and sanctions in an amount
which may exceed $100,000.
Other
In January 1993, the Internal Revenue Service ("IRS") completed an
examination of the Company's consolidated federal income tax returns for the
period 1986-1988. The IRS proposed a significant adjustment related to the 1988
sale of a former subsidiary, which the Company disputed. In March 1994, WTI and
the IRS filed a Stipulation of Settlement with the U.S. Tax Court which resolved
the treatment of the disputed matter. Although the Company is primarily liable
for the amount of the tax due as a result of the settlement (plus interest),
under a Tax Sharing Agreement between the Company and a predecessor of the
Company now known as Koll Real Estate Group, Inc. ("KREG"), the Company is
indemnified by KREG and a former subsidiary of KREG, Abex, Inc. ("Abex"), for
the full amount of any liability assessed with regard to this issue by the IRS
(subject to the remaining availability of any portion of the Company's $50
million obligation referred to in Note 3 of Notes to Consolidated Financial
Statements included elsewhere in this report). Management believes that KREG
and Abex will be able to satisfy their indemnification obligations in respect of
the agreed tax liability.
In addition, there are other routine lawsuits and claims pending against
WTI and its subsidiaries incidental to their businesses. In the opinion of the
Company's management, the ultimate liability, if any, with respect to the above
proceedings and such other lawsuits and claims will not have a material adverse
effect on the business and properties of the Company, taken as a whole, or its
financial position or results of operations.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock is traded on The New York Stock Exchange under the symbol
"WTI." The table below sets forth by quarter, for the last two years, the high
and low sales prices of the Common Stock on The New York Stock Exchange
Composite Tape as reported by The Wall Street Journal (Midwest Edition) and also
shows the cash dividends declared per share during such periods:
[Download Table]
Market Price (1)
---------------------- Cash Dividends
1992 High Low Declared Per Share
---- --------- --------- ------------------
First Quarter $ 18-5/16 $14-15/16 $0.01
Second Quarter $15-15/16 $ 13 $0.01
Third Quarter $ 17-1/8 $ 13 $0.01
Fourth Quarter $ 19-1/2 $ 15-5/16 $0.01
23
[Download Table]
1993
----
First Quarter $23-1/2 $18-1/8 $0.02
Second Quarter $21-1/4 $17-5/8 $0.06
Third Quarter $20 $14-3/4 --
Fourth Quarter $18-1/8 $14-5/8 --
------------------
(1) All per share prices and dividends have been adjusted to reflect the two-
for-one stock split in the form of a 100% stock dividend distributed in
January 1993.
----------------------------------------
The approximate number of holders of record of Common Stock as of March 1,
1994 was 22,600. In January 1993, the Company effected a two-for-one stock
split paid in the form of a 100% stock dividend. During 1993, the Board of
Directors declared, and the Company paid, total dividends in the amount of $0.08
per share. In May 1993, the Board of Directors announced its intention to
thereafter consider the payment of an annual dividend in lieu of quarterly
dividends. Future cash dividends will be considered by the Board of Directors
based upon the Company's earnings and financial position and such other business
considerations as the Board of Directors considers relevant.
On March 15, 1994, WTI announced that the Board of Directors had authorized
the repurchase of up to 3,800,000 shares of Common Stock from time to time over
the following 24-month period in the open market or in privately negotiated
transactions. Under a similar program initiated in 1992, WTI repurchased a
total of approximately 4,160,000 shares of Common Stock over a period of two
years.
24
ITEM 6 -- SELECTED FINANCIAL DATA
The following selected consolidated financial information for each of the
five years in the period ended December 31, 1993 is derived from the Company's
Consolidated Financial Statements, which have been audited by Arthur Andersen &
Co., independent public accountants, whose report thereon is incorporated by
reference in this report. The information below should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Company's Consolidated Financial Statements, and the related
Notes, and the other financial information which are filed as exhibits to this
report and incorporated herein by reference.
WHEELABRATOR TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED SELECTED FINANCIAL DATA
(000's omitted except per share amounts)
[Enlarge/Download Table]
Years Ended December 31
-----------------------------------------------------------
1989 1990 1991 1992 1993
RESULTS OF OPERATIONS
Revenue $1,006,964 $1,151,873 $1,173,449 $1,483,054 $1,142,219
Income before extraordinary
item and accounting changes 58,481 47,406 126,059 176,382 163,102
Net income (loss) 58,481 (70,190) 126,059 134,152 163,102
Earnings (loss) per common share:
Before extraordinary item and
accounting changes 0.37 0.30 0.73 0.94 0.86
Net income (loss) 0.37 (0.44) 0.73 0.71 0.86
Weighted average common shares
outstanding 156,400 158,400 172,400 188,200 188,900
Dividends declared per share -- -- -- .04 .08
FINANCIAL CONDITION (at year end)
Total assets $2,249,652 $2,325,818 $2,743,830 $2,997,073 $3,090,278
Working capital 197,804 265,363 516,084 251,464 5,570
Long-term project debt 945,282 987,949 987,058 857,625 776,858
Stockholders' equity 577,487 545,978 891,351 1,039,343 1,286,838
----------------------------
. The 1990 loss of $70.2 million, or $0.44 per share, reflects a
restructuring charge, an unrealized loss on investments in common stock and
the cumulative effect of a change in accounting method.
. 1991 net income includes a $47.1 million pretax gain on the sale of certain
foreign equity investments.
. 1992 income before extraordinary item and accounting changes includes a
$47.0 million nontaxable gain relating to the initial public offering of
shares by Waste Management International plc. See Note 2 of Notes to
Consolidated Financial Statements.
. 1992 net income includes one-time charges of $42.2 million relating to the
adoption of two new financial accounting standards. See Note 1 of Notes to
Consolidated Financial Statements.
25
. Beginning in 1993, the Company no longer consolidates the financial results
of certain businesses contributed to form, in part, Rust International Inc.
("Rust"). Revenues from the contributed businesses amounted to
approximately $380.4 million, $423.8 million, $397.8 million and $554.7
million in 1989, 1990, 1991 and 1992, respectively. Beginning in 1993, the
Company's share of Rust's net income is included in equity in earnings of
affiliates. See Note 2 of Notes to Consolidated Financial Statements.
. 1993 income includes a $7.7 million nontaxable gain related to issuance of
stock by Rust and a $6.5 million increase in the tax provision due to the
revaluing of deferred taxes as a result of the August enactment of the
Omnibus Budget Reconciliation Act of 1993. See Notes 2 and 3 of Notes to
Consolidated Financial Statements.
. Share and per share data for all periods reflect the two-for-one stock
split effected on January 7, 1993. See Note 1 of Notes to Consolidated
Financial Statements.
. The increases in weighted average shares outstanding in 1991 and 1992 are
primarily due to shares issued in connection with acquisitions. See Note 2
of Notes to Consolidated Financial Statements.
. The increases in stockholders' equity at December 31, 1991 and 1992
primarily reflect income for each year and the effect of acquisitions. The
increase in stockholders' equity at December 31, 1993 primarily reflects
income for the year, the effects of acquisitions and the January 1, 1993
formation of Rust. See Note 2 of Notes to Consolidated Financial
Statements.
----------------------------------------------
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to Management's Discussion and Analysis of Financial
Condition and Results of Operations set forth on pages 25 through 31 of the
Company's 1993 Annual Report to Stockholders (the "Annual Report") which
discussion is filed as an exhibit to this report and incorporated herein by
reference.
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) The Consolidated Balance Sheets as of December 31, 1992 and 1993,
Consolidated Statements of Income, Cash Flows and Changes in Stockholders'
Equity for each of the years in the three-year period ended December 31, 1993
and Notes to Consolidated Financial Statements set forth on pages 32 through 53
of the Annual Report are filed as an exhibit to this report and incorporated
herein by reference.
(b) Selected Quarterly Financial Data (Unaudited) is set forth in Note 10 of
the Notes to Consolidated Financial Statements referred to in Item 8(a) above
and incorporated herein by reference.
(c) Rust International Inc.'s Consolidated Balance Sheets as of December 31,
1992 and 1993, Consolidated Statements of Income, Cash Flows and Changes in
Stockholders' Equity for each of the years in the three-year period ended
December 31, 1993 and Notes to Consolidated Financial Statements are
incorporated herein by reference to pages F-1 through F-17 of Rust's 1993 annual
report on Form 10-K. Rust's file number under the Securities Exchange Act of
1934 is 1-11896.
26
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors. The information appearing under the caption "Election of
Directors" on pages 2 through 4 of the Company's Proxy Statement for the Annual
Meeting of Stockholders to be held May 5, 1994 (the "Proxy Statement"), is
incorporated herein by reference.
Executive Officers. Information with respect to executive officers of WTI is
set forth under the caption "Executive Officers of the Registrant" in Item 1 of
this report.
ITEM 11 -- EXECUTIVE COMPENSATION
Information appearing under the caption "Compensation" on pages 7 through 11
of the Proxy Statement is incorporated herein by reference.
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information appearing under the caption "Principal Stockholder" on page 2 of
the Proxy Statement and under the caption "Securities Ownership of Management"
on pages 4 through 6 of the Proxy Statement is incorporated herein by reference.
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information appearing under the caption "Certain Transactions and Other
Matters" on pages 18 through 25 of the Proxy Statement, under the second full
paragraph on page 3 of the Proxy Statement and under the first full paragraph on
page 4 of the Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS:
The following financial statements and supplementary data of the Company are
filed as an exhibit hereto and incorporated herein by reference:
(i) Consolidated Statements of Income for the years ended December 31,
1991, 1992 and 1993.
(ii) Consolidated Balance Sheets as of December 31, 1992 and 1993.
(iii) Consolidated Statements of Cash Flows for the years ended
December 31, 1991, 1992 and 1993.
(iv) Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1991, 1992 and 1993.
27
(v) Notes to Consolidated Financial Statements.
(vi) Report of Independent Public Accountants -- Arthur Andersen & Co.
Rust International Inc.'s Consolidated Balance Sheets as of December 31,
1992 and 1993, Consolidated Statements of Income, Cash Flows and Changes in
Stockholders' Equity for each of the years in the three-year period ended
December 31, 1993 and Notes to Consolidated Financial Statements are
incorporated herein by reference to pages F-1 through F-17 of Rust's 1993 annual
report on Form 10-K. Rust's file number under the Securities Exchange Act of
1934 is 1-11896.
(2) SCHEDULES:
The following financial statement schedules of the Company are included in
this report:
(i) Report of Independent Public Accountants on Schedules--Arthur
Andersen & Co.
(ii) Schedule II--Amounts Receivable From Officers, Employees and Related
Parties.
(iii) Schedule V--Property and Equipment.
(iv) Schedule VI--Accumulated Depreciation and Amortization
of Property and Equipment.
Financial statement schedules of Rust International Inc. are incorporated by
reference to pages F-18 through F-23 of Rust's 1993 annual report on Form 10-K.
Rust's file number under the Securities Exchange Act of 1934 is 1-11896.
All other schedules have been omitted since they are not applicable, not
required, or the information is included in the above-referenced financial
statements or notes thereto.
(3) EXHIBITS:
The exhibits to this report are listed in the Exhibit Index contained
elsewhere herein. Included in the exhibits listed therein are the following
exhibits which constitute management contracts or compensatory plans or
arrangements:*
(i) Restricted Unit Plan for Non-Employee Directors of the registrant as
amended through June 10, 1991 (incorporated by reference to Exhibit
19.03 to the registrant's quarterly report on Form 10-Q for the
quarter ended June 30, 1991).
(ii) Amendment, dated as of December 6, 1991, to the Restricted Unit Plan
for Non-Employee Directors of the registrant (incorporated by
reference to Exhibit 19.05 to registrant's 1991 annual report on
Form 10-K).
(iii) Deferred Director's Fee Plan adopted June 10, 1991 (incorporated by
reference to Exhibit 19.02 to the registrant's quarterly report on
Form 10-Q for the quarter ended June 30, 1991).
------------------
* In the case of incorporation by reference to documents filed under the
Securities Exchange Act of 1934, the registrant's file number under that Act is
0-14246. Exhibits not incorporated by reference are filed with this report.
28
(iv) 1988 Stock Plan for Executive Employees of Old WTI and its
subsidiaries ("1988 Stock Plan") (incorporated by reference to
Exhibit 28.1 to Amendment No. 1 to the registrant's registration
statement on Form S-8, Reg. No. 33-31523).
(v) Amendments, dated as of September 7, 1990, to the 1988 Stock Plan
(incorporated by reference to Exhibit 19.02 to the registrant's 1990
annual report on Form 10-K).
(vi) Amendment, dated as of November 1, 1990, to the 1988 Stock Plan
(incorporated by reference to Exhibit 19.04 to the registrant's 1990
annual report on Form 10-K).
(vii) Amendment, dated as of December 6, 1991, to the 1988 Stock Plan
(incorporated by reference to Exhibit 19.02 to the registrant's 1991
annual report on Form 10-K).
(viii) 1986 Stock Plan for Executive Employees of the registrant and its
subsidiaries ("1986 Stock Plan") (incorporated by reference to
Exhibit 28.2 to Amendment No. 1 to the registrant's registration
statement on Form S-8, Reg. No. 33-13720).
(ix) Amendment, dated as of November 1, 1990, to the 1986 Stock Plan
(incorporated by reference to Exhibit 19.03 to the registrant's 1990
annual report on Form 10-K).
(x) Amendment, dated as of December 6, 1991, to the 1986 Stock Plan
(incorporated by reference to Exhibit 19.01 to the registrant's
1991 annual report on Form 10-K).
(xi) 1991 Performance Unit Plan of the registrant (incorporated by
reference to Exhibit 10.48 of the registrant's 1990 annual report on
Form 10-K).
(xii) Wheelabrator Technologies Inc. Corporate Incentive Bonus Plan (as
amended and restated as of March 8, 1993) (incorporated by reference
to Exhibit 10.36 to the registrant's 1992 annual report on Form 10-
K).
(xiii) Wheelabrator Technologies Inc. Corporate Incentive Bonus Plan (as
amended and restated as of March 14, 1994).
(xiv) Wheelabrator Technologies Inc. Long Term Incentive Plan (as amended
and restated as of March 14, 1994).
(xv) Retirement Plan for Non-Employee Directors of the registrant
(incorporated by reference to Exhibit 10.32 to the registrant's 1988
annual report on Form 10-K).
(xvi) Amendment, dated as of September 7, 1990, to the Retirement Plan for
Non-Employee Directors of the registrant (incorporated by reference
to Exhibit 19.01 to the registrant's 1990 annual report on Form 10-
K).
(xvii) Amendment, dated June 10, 1991, to the Retirement Plan for Non-
Employee Directors of the registrant (incorporated by reference to
Exhibit 19.01 to the registrant's quarterly report on Form 10-Q for
the quarter ended June 30, 1991).
29
(xviii) 1991 Stock Option Plan for Non-Employee Directors ("1991 Directors
Plan") of the registrant adopted June 10, 1991 (incorporated by
reference to Exhibit 19.04 to the registrant's quarterly report on
Form 10-Q for the quarter ended June 30, 1991).
(xix) Amendment to 1991 Directors Plan dated as of December 22, 1993.
(xx) 1992 Stock Option Plan of the registrant (incorporated by reference
to Exhibit 10.45 to the registrant's 1991 annual report on Form 10-
K).
(B) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the fiscal quarter
ended December 31, 1993.
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in Oak Brook, Illinois on
the 29th day of March 1994.
WHEELABRATOR TECHNOLOGIES INC.
By /s/ PHILLIP B. ROONEY
---------------------------------------
PHILLIP B. ROONEY,
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
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 date indicated.
[Enlarge/Download Table]
Name Title Signature Date
--------------------------- ---------------------------- --------------------------- --------------
Phillip B. Rooney Director, Chairman of the /s/ PHILLIP B. ROONEY March 29, 1994
Board and Chief Executive ---------------------------
Officer Phillip B. Rooney
John D. Sanford Vice President, Treasurer /s/ JOHN D. SANFORD March 29, 1994
and Chief Financial Officer ---------------------------
John D. Sanford
Richard S. Haak, Jr. Controller and Principal /s/ RICHARD S. HAAK, JR. March 29, 1994
Accounting Officer ---------------------------
Richard S. Haak, Jr.
Dean L. Buntrock Director /s/ DEAN L. BUNTROCK March 29, 1994
---------------------------
Dean L. Buntrock
William M. Daley Director /s/ WILLIAM M. DALEY March 29, 1994
---------------------------
William M. Daley
Donald F. Flynn Director /s/ DONALD F. FLYNN March 29, 1994
---------------------------
Donald F. Flynn
Paul M. Montrone Director /s/ PAUL M. MONTRONE March 29, 1994
---------------------------
Paul M. Montrone
James E. Koenig Director /s/ JAMES E. KOENIG March 29, 1994
---------------------------
James E. Koenig
Manuel Sanchez Director /s/ MANUEL SANCHEZ March 29, 1994
---------------------------
Manuel Sanchez
Thomas P. Stafford Director /s/ THOMAS P. STAFFORD March 29, 1994
---------------------------
Thomas P. Stafford
31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULES
To the Stockholders and the Board of Directors
of Wheelabrator Technologies Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Wheelabrator Technologies
Inc.'s annual report to stockholders incorporated by reference in this Form
10-K, and have issued our report thereon dated March 17, 1994. Our report on the
consolidated financial statements includes an explanatory paragraph with respect
to the change in the method of accounting for income taxes and postretirement
benefits other than pensions as discussed in Note 1 to the financial statements.
Our audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed in Item 14(a)(2) in this Form 10-K are
the responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
New York, New York,
March 17, 1994
F-1
SCHEDULE II
WHEELABRATOR TECHNOLOGIES INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
[Enlarge/Download Table]
BALANCE BALANCE BALANCE
DECEMBER 31, AMOUNTS DECEMBER 31, AMOUNTS DECEMBER 31,
1990 ADDITIONS COLLECTED 1991 ADDITIONS COLLECTED 1992
------------ --------- ----------- ------------ --------- ----------- ------------
Equity Purchase Program Notes (1)
Ronald J. Broglio.............. $ 913,462 $ 17,224 $ (930,686) $ -- $ -- $ -- $ --
Harold W. Buirkle.............. 2,099,986 18,822 (2,118,808) -- -- -- --
Salvatore J. Caltagirone....... 96,681 1,353 (98,034) -- -- -- --
Michael D. Dingman............. 8,315,653 121,347 (8,437,000) -- -- -- --
Clifford T. Dirkes............. 680,245 27,895 (360,550) 347,590 556 (348,146) --
Michael J. Farrell............. 361,034 5,426 (366,460) -- -- -- --
Paul J. Feira.................. 798,304 24,492 (483,946) 338,850 1,857 (340,707) --
Rodney C. Gilbert.............. 1,457,644 35,268 (1,492,912) -- -- -- --
Farid G. Habeishi.............. 456,731 2,998 (459,729) -- -- -- --
Edwin M. Hardin................ 146,388 573 (146,961) -- -- -- --
John J. Heeney................. 195,184 3,554 (198,738) -- -- -- --
John M. Kehoe, Jr.............. 1,711,765 79,033 (1,157,280) 633,518 17,363 (650,881) --
William C. Keightley........... 569,938 13,215 (583,153) -- -- -- --
Bruce W. Keough................ 1,141,828 20,967 (1,162,795) -- -- -- --
Arthur Liebowitz............... 101,219 1,377 (102,596) -- -- -- --
Paul M. Meister................ 3,691,701 145,199 (2,007,036) 1,829,864 51,769 (1,881,633) --
Paul M. Montrone............... 5,543,767 92,229 (5,635,996) -- -- -- --
David S. Neel.................. 456,731 1,907 (458,638) -- -- -- --
Ramanlal L. Patel.............. 433,562 27,633 (299,628) 161,567 5,947 (167,514) --
[Download Table]
BALANCE
AMOUNTS DECEMBER 31,
ADDITIONS COLLECTED 1993
--------- ----------- ------------
Equity Purchase Program Notes (1) $ -- $ -- $ --
Ronald J. Broglio.............. -- -- --
Harold W. Buirkle.............. -- -- --
Salvatore J. Caltagirone....... -- -- --
Michael D. Dingman............. -- -- --
Clifford T. Dirkes............. -- -- --
Michael J. Farrell............. -- -- --
Paul J. Feira.................. -- -- --
Rodney C. Gilbert.............. -- -- --
Farid G. Habeishi.............. -- -- --
Edwin M. Hardin................ -- -- --
John J. Heeney................. -- -- --
John M. Kehoe, Jr.............. -- -- --
William C. Keightley........... -- -- --
Bruce W. Keough................ -- -- --
Arthur Liebowitz............... -- -- --
Paul M. Meister................ -- -- --
Paul M. Montrone............... -- -- --
David S. Neel.................. -- -- --
Ramanlal L. Patel.............. -- -- --
(1) Indebtedness indicated was related to purchases of common stock by
participants in the Company's Equity Purchase Program. See Note 6 of Notes
to Consolidated Financial Statements for a further description of the Equity
Puchase Program. Such indebtedness was represented by nonrecourse promissory
notes issued to the Company which were secured by shares of Common Stock of
the Company purchased under such program as well as shares of the common
stock of WMX issued in connection with the 1990 Merger. The Company will not
issue additional shares of Common Stock under the Equity Purchase Program.
F-2
SCHEDULE II (CONTINUED)
[Enlarge/Download Table]
BALANCE BALANCE BALANCE
DECEMBER 31, AMOUNTS DECEMBER 31, AMOUNTS DECEMBER 31,
1990 ADDITIONS COLLECTED 1991 ADDITIONS COLLECTED 1992
----------- --------- ------------- ------------ --------- ------------ ------------
Equity Purchase Program
Notes (1) (CONTINUED)
William R. Poor........... $ 685,097 $ 2,901 $ (687,998) $ -- $ -- $ -- $ --
John W. Rohrer............ 456,731 14,241 (271,089) 199,883 742 (200,625) --
David S. Rozendale........ 1,141,828 4,851 (1,146,679) -- -- -- --
Richard R. Russell........ 1,187,963 9,626 (1,197,589) -- -- -- --
John D. Sanford........... 685,097 47,266 -- 732,363 20,461 (752,824) --
David L. Schmitt.......... 1,141,828 14,725 (1,156,553) -- -- -- --
Steven G. Shapiro......... 913,462 11,964 (925,426) -- -- -- --
L. Roland Shipp........... 456,731 1,823 (458,554) -- -- -- --
Scott G. Sillars.......... 246,865 6,707 (174,683) 78,889 2,218 (81,107) --
Michael K. Sylvers........ 456,731 15,707 (271,146) 201,292 1,068 (202,360) --
Ronald C. Whitaker........ 569,938 33,342 (603,280) -- -- -- --
James F. Wood............. 131,383 1,738 (133,121) -- -- -- --
Other Notes
Donald F. Flynn........... -- -- -- -- -- -- --
Jerome D. Girsch.......... -- -- -- -- 154,871 -- 154,871
----------- -------- ------------ ---------- ------- ---------- --------
$37,245,477 $805,403 $(33,527,064) $4,523,816 $256,852 $(4,625,797) $154,871
=========== ======== ============ ========== ======== =========== ========
[Download Table]
BALANCE
AMOUNTS DECEMBER 31,
ADDITIONS COLLECTED 1993
--------- ------------ ------------
Equity Purchase Program
Notes (1) (CONTINUED)
William R. Poor........... $ -- $ -- $ --
John W. Rohrer............ -- -- --
David S. Rozendale........ -- -- --
Richard R. Russell........ -- -- --
John D. Sanford........... -- -- --
David L. Schmitt.......... -- -- --
Steven G. Shapiro......... -- -- --
L. Roland Shipp........... -- -- --
Scott G. Sillars.......... -- -- --
Michael K. Sylvers........ -- -- --
Ronald C. Whitaker........ -- -- --
James F. Wood............. -- -- --
Other Notes
Donald F. Flynn........... 176,633 -- 176,633
Jerome D. Girsch.......... -- (154,871) --
-------- --------- --------
$176,633 $(154,871) $176,633
======== ========= ========
(1) Indebtedness indicated was related to purchases of common stock by
participants in the Company's Equity Purchase Program. See Note 6 of Notes
to Consolidated Financial Statements for a further description of the Equity
Puchase Program. Such indebtedness was represented by nonrecourse promissory
notes issued to the Company which were secured by shares of Common Stock of
the Company purchased under such program as well as shares of the common
stock of WMX issued in connection with the 1990 Merger. The Company will not
issue additional shares of Common Stock under the Equity Purchase Program.
F-3
SCHEDULE V
WHEELABRATOR TECHNOLOGIES INC.
PROPERTY, PLANT AND EQUIPMENT
(000'S OMITTED)
[Enlarge/Download Table]
BALANCE AT NET ASSETS BALANCE
BEGINNING ADDITIONS FROM SALES AND OTHER AT END
OF PERIOD AT COST ACQUISITIONS RETIREMENTS CHANGES* OF PERIOD
---------- --------- ------------ ------------ ---------- ----------
Year ended December 31, 1991
Land......................... $ 34,119 $ 250 $17,669 $ (197) $ 75 $ 51,916
Land options................. 171,484 -- -- -- -- 171,484
Buildings and improvements... 145,540 5,408 2,411 (12,467) 58,359 199,251
Machinery and equipment...... 507,551 17,172 18,413 (6,823) 221,424 757,737
Construction in progress..... 380,885 107,014 -- -- (284,717) 203,182
---------- -------- ------- -------- --------- ----------
Total....................... $1,239,579 $129,844 $38,493 $(19,487) $ (4,859) $1,383,570
========== ======== ======= ======== ========= ==========
Year ended December 31, 1992
Land......................... $ 51,916 $ 3,499 $ 467 $ (35) $ (87) $ 55,760
Land options................. 171,484 -- -- -- 114,323 285,807
Buildings and improvements... 199,251 39,510 8,210 (1,851) 7,849 252,969
Machinery and equipment...... 757,737 13,355 21,414 (6,382) 204,700 990,824
Construction in progress..... 203,182 91,661 26,930 -- (210,178) 111,595
---------- -------- ------- -------- --------- ----------
Total....................... $1,383,570 $148,025 $57,021 $ (8,268) $ 116,607 $1,696,955
========== ======== ======= ======== ========= ==========
Year ended December 31, 1993
Land......................... $ 55,760 $ -- $ 176 $ (192) $ (2,341) $ 53,403
Land options................. 285,807 -- -- -- -- 285,807
Buildings and improvements... 252,969 12,027 6,608 (5,504) (42,637) 223,463
Machinery and equipment...... 990,824 28,162 4,635 (4,686) 57,641 1,076,576
Construction in progress..... 111,595 251,448 -- -- (115,656) 247,387
---------- -------- ------- -------- --------- ----------
Total......... $1,696,955 $291,637 $11,419 $(10,382) $(102,993) $1,886,636
========== ======== ======= ======== ========= ==========
--------------------
* Represents the effect of translating foreign balance sheets to U.S.
Dollars, finalization of purchase price adjustments, and transfers from
construction in progress. In 1992, primarily reflects the impact of the
restatement of assets related to business combinations consummated before
the adoption of FAS 109 on a gross basis rather than on a net-of-tax basis
previously used. In 1993, primarily reflects the impact of the
contribution of certain businesses to form, in part, Rust International
Inc. See Note 2 of Notes to Consolidated Financial Statements for a
further description of the Company's investment in Rust International Inc.
F-4
SCHEDULE VI
WHEELABRATOR TECHNOLOGIES INC.
ACCUMULATED DEPRECIATION
(000'S OMITTED)
[Enlarge/Download Table]
BALANCE AT BALANCE
BEGINNING ADDITIONS SALES AND OTHER AT END
OF PERIOD AT COST RETIREMENTS CHANGES* OF PERIOD
--------- ---------- ------------ --------- ---------
Year ended December 31, 1991
Buildings and improvements... $ 29,737 $ 7,937 $(11,605) $ 6,421 $ 32,490
Machinery and equipment...... 100,976 27,684 (4,367) (7,098) 117,195
-------- ------- -------- -------- --------
Total....................... $130,713 $35,621 $(15,972) $ (677) $149,685
======== ======= ======== ======== ========
Year ended December 31, 1992
Buildings and improvements... $ 32,490 $15,147 $ (1,101) $ (214) $ 46,322
Machinery and equipment...... 117,195 44,339 (5,284) (858) 155,392
-------- ------- -------- -------- --------
Total....................... $149,685 $59,486 $ (6,385) $ (1,072) $201,714
======== ======= ======== ======== ========
Year ended December 31, 1993
Buildings and improvements... $ 46,322 $13,487 $ (61) $ (2,133) $ 57,615
Machinery and equipment...... 155,392 49,101 (3,698) (25,694) 175,101
-------- ------- -------- -------- --------
Total....................... $201,714 $62,588 $ (3,759) $(27,827) $232,716
======== ======= ======== ======== ========
-------------------
* Represents the effect of translating foreign balance sheets to U.S. Dollars
and finalization of purchase price adjustments. In 1993, primarily
reflects the impact of the contribution of certain businesses to form, in
part, Rust International Inc. See Note 2 of Notes to Consolidated
Financial Statements for a further description of the Company's investment
in Rust International Inc.
F-5
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
[Download Table]
Sequential
Description Page
of Exhibit* Number**
----------- -----------
1. Inapplicable.
2.01 Agreement and Plan of Merger, dated March 30, 1990
and amended as of July 24, 1990, among the
registrant, WMX Technologies, Inc. ("WMX") and WM
Sub, Inc. (incorporated by reference to Exhibit 2.01
to the registrant's statement on Form S-4, Reg. No.
33-36118).
2.02 Rust International Inc. Organizational Agreement,
dated as of December 31, 1992 ("Organizational
Agreement"), by and among the registrant, The Brand
Companies, Inc. ("Brand") and Chemical Waste
Management, Inc. ("CWM") (incorporated by reference
to Exhibit 7 to Amendment No. 6 to Statement on
Schedule 13D filed on January 5, 1993 by WMX, the
registrant and CWM relating to securities of Brand).
3.01 Restated Certificate of Incorporation of the
registrant (incorporated by reference to Exhibit 3.01
to registrant's 1989 annual report on Form 10-K).
3.02 Certificate of Amendment to the registrant's Restated
Certificate of Incorporation dated May 6, 1993
(incorporated by reference to Exhibit 19 to the
registrant's report on Form 10-Q for the quarter
ended March 31, 1993).
3.03 By-Laws of the registrant as amended through November
1, 1990 (incorporated by reference to Exhibit 3.03 to
the registrant's 1990 annual report on Form 10-K).
4. None.
5. Inapplicable.
6. Inapplicable.
7. Inapplicable.
8. Inapplicable.
9. None.
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-1
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
[Download Table]
Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.01 Tax Sharing Agreement ("TSA"), dated as of December
15, 1988, between the registrant and Koll Real Estate
Group, Inc. ("KREG") (incorporated by reference to
Exhibit 10.02 to Amendment No. 3 on Form 8 to KREG's
registration statement on Form 10, Commission File
No. 0-17189).
10.02 Amendment to the TSA dated February 14, 1994.
10.03 Master Support Agreement, dated as of February 26,
1986, among Allied-Signal Inc. ("Allied Signal"), the
registrant and Signal Capital Corporation, as amended
and restated as of January 27, 1987, and as further
amended and restated as of December 7, 1988, among
Allied-Signal, Wheelabrator Technologies Inc. ("Old
WTI"), the Guaranteeing Subsidiaries referred to
therein, the Non-Company Resco Subsidiaries referred
to therein, the registrant and KREG (incorporated by
reference to Exhibit 10.22 to Amendment No. 3 on Form
8 to KREG's registration statement on Form 10,
Commission File No. 0-17189).
10.04 Assignment, Assumption and Release Agreement, dated
as of December 7, 1988, among the registrant, Old
WTI, the Old Guaranteeing Subsidiaries (as defined
therein) and Allied-Signal (incorporated by reference
to Exhibit 10.22B to Amendment No. 3 on Form 8 to
KREG's registration statement on Form 10, Commission
File No. 0-17189).
10.05 Assignment and Assumption Agreement, dated as of
December 7, 1988, among the registrant, Old WTI and
KREG (incorporated by reference to Exhibit 10.18B to
KREG's 1988 annual report on Form 10-K, Commission
File No. 0-17189).
10.06 Land Option Agreement, dated as of August 12, 1988,
between Old WTI and Waste Management, Inc. ("WMI")
(incorporated by reference to Exhibit 10.15 to the
registrant's 1988 annual report on Form 10-K).
10.07 Amendment No. 1 to Land Option Agreement, dated as of
June 1, 1992, between Resco Holdings Inc. ("Resco"),
as successor by merger to Old WTI, and WMI
(incorporated by reference to Exhibit 19.01 to the
registrant's 1992 annual report on Form 10-K).
10.08 Second Amended and Restated Airspace Dedication
Agreement, dated as of December 13, 1992, between
Resco and WMI (incorporated by reference to Exhibit
19.02 to the registrant's 1992 annual report on Form
10-K).
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
** This information appears only on the manually signed original of this report.
E-2
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
[Download Table]
Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.09 Disposal Agreement, dated as of March 1, 1989,
between Waste Management Inc. of Florida and Broward
Waste Energy (incorporated by reference to Exhibit
10.17A to the registrant's 1988 annual report on Form
10-K).
10.10 Guaranty, dated August 2, 1988, from WMX to the
registrant and Wheelabrator Technologies of North
America Inc., formerly known as Wheelabrator
Technologies Inc. ("WTNA") (incorporated by reference
to Exhibit 10.19 to the registrant's 1988 annual
report on Form 10-K).
10.11 Development Agreement, dated as of August 12, 1988,
between Old WTI and WMI (incorporated by reference to
Exhibit 10.21 to the registrant's 1988 annual report
on Form 10-K).
10.12 Amendment No. 1 to Development Agreement, dated as of
January 15, 1990, between Old WTI and WMI
(incorporated by reference to Exhibit 10.63 to
registrant's registration statement on Form 10-K).
10.13 Amendment No. 2 to Development Agreement, dated as of
June 1, 1992, between Resco and WMI (incorporated by
reference to Exhibit 19.03 to the registrant's 1992
annual report on Form 10-K).
10.14 Restricted Unit Plan for Non-Employee Directors of
the registrant, as amended through June 10, 1991
(incorporated by reference to Exhibit 19.03 to the
registrant's quarterly report on Form 10-Q for the
quarter ended June 30, 1991).
10.15 Amendment, dated as of December 6, 1991, to the
Restricted Unit Plan for Non-Employee Directors of
the registrant (incorporated by reference to Exhibit
19.05 to the registrant's 1991 annual report on Form
10-K).
10.16 Deferred Director's Fee Plan adopted June 10, 1991
(incorporated by reference to Exhibit 19.02 to the
registrant's quarterly report on Form 10-Q for the
quarter ended June 30, 1991).
10.17 Lease Agreement, dated as of September 15, 1987,
between The Connecticut Bank and Trust Company, N.A.,
as Owner Trustee, lessor, and Wheelabrator Millbury
Inc., lessee (incorporated by reference to Exhibit
10.51 to the registrant's 1988 annual report on Form
10-K).
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-3
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
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Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.18 Lease Agreement, dated as of December 30, 1987, as
amended and restated as of April 1, 1988, between The
Connecticut Bank and Trust Company, N.A., as
Corporate Owner Trustee, and Donald E. Smith, as
Individual Owner Trustee, lessor, and Signal Shasta
Energy Company Inc., lessee (incorporated by
reference to Exhibit 10.52 to the registrant's 1988
annual report on Form 10-K).
10.19 Lease Agreement, dated as of September 15, 1988,
between The Connecticut Bank and Trust Company, N.A.,
lessor, and Baltimore Refuse Energy Systems Company,
Limited Partnership, lessee (incorporated by
reference to Exhibit 10.40 to registrant's
registration statement on Form S-4, Reg. No. 33-
36118).
10.20 Second Amendment and Restatement of Lease Agreement,
dated as of May 1, 1988, between the First National
Bank of Boston, as Corporate Owner Trustee, James E.
Mogavero, as Individual Owner Trustee, lessor, and
Bridgeport Resco, lessee (incorporated be reference
to Exhibit 10.41 to registrant's registration
statement on Form S-4, Reg. No. 33-36118).
10.21 Modification Agreement, dated as of August 24, 1989,
among the registrant, Old WTI, WMI, KREG and Resco
(incorporated by reference to Exhibit 28.01 to the
registrant's Form 8-K dated August 24, 1989).
10.22 Assignment, Assumption and Release Agreement, dated
December 18, 1989, among KREG, Henley Holdings, Inc.,
Henley, Henley Support Co. Two, the registrant and
Resco amending the Modification Agreement
(incorporated by reference to Exhibit 10.69 to the
registrant's registration statement on Form S-4, Reg.
No. 33-36118).
10.23 Letter Agreement, dated October 25, 1990, among the
registrant, WMI, Resco, Henley and Henley Support Co.
Two amending the Modification Agreement (incorporated
by reference to Exhibit 10.46 to the registrant's
1990 annual report on Form 10-K).
10.24 Letter Agreement, dated November 8, 1991, among the
registrant, Henley, KREG, WMX, WMI, New Henley
Holdings Inc. and WTNA, amending the Modification
Agreement (incorporated by reference to Exhibit 10.23
to the registrant's 1991 annual report on Form 10-K).
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-4
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
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Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.25 1988 Stock Plan for Executive Employees of Old WTI
and its subsidiaries ("1988 Stock Plan")
(incorporated by reference to Exhibit 28.1 to
Amendment No. 1 to the registrant's registration
statement on Form S-8, Reg. No. 33-31523).
10.26 Amendments, dated as of September 7, 1990, to the
1988 Stock Plan (incorporated by reference to Exhibit
19.02 to the registrant's 1990 annual report on Form
10-K).
10.27 Amendment, dated as of November 1, 1990, to the 1988
Stock Plan (incorporated by reference to Exhibit
19.04 to the registrant's 1990 annual report on Form
10-K).
10.28 Amendment, dated as of December 6, 1991, to the 1988
Stock Plan (incorporated by reference to Exhibit
19.02 to the registrant's 1991 annual report on Form
10-K).
10.29 1986 Stock Plan for Executive Employees of the
registrant and its subsidiaries ("1986 Stock Plan")
(incorporated by reference to Exhibit 28.2 to
Amendment No. 1 to the registrant's registration
statement on Form S-8, Reg. No. 33-31523).
10.30 Amendment, dated as of November 1, 1990, to the 1986
Stock Plan (incorporated by reference to Exhibit
19.03 to the registrant's 1990 annual report on Form
10-K).
10.31 Amendment, dated as of December 6, 1991, to the 1986
Stock Plan (incorporated by reference to Exhibit
19.01 to the registrant's 1991 annual report on Form
10-K).
10.32 Restated Funding Agreement, dated as of September 7,
1990, among Resco, the registrant and WMX
(incorporated by reference to Exhibit 10.34 to the
registrant's 1990 annual report on Form 10-K).
10.33 Medical Waste Option Agreement, dated as of September
7, 1990, between WMI and the registrant (incorporated
by reference to Exhibit 10.36 to the registrant's
1990 annual report on Form 10-K).
10.34 Amendment No. 1 to Medical Waste Option Agreement,
dated as of June 1, 1992, between WMI and the
registrant (incorporated by reference to Exhibit
19.04 to the registrant's 1992 annual report on Form
10-K).
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-5
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
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Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.35 Intellectual Property Licensing Agreement, dated as
of September 7, 1990, by and among Waste Management
International, Inc. ("WMII"), WMI and the registrant
(incorporated by reference to Exhibit 10.37 to the
registrant's 1990 annual report on Form 10-K).
10.36 Amended and Restated Master Intercorporate Agreement,
dated as of November 1, 1993, by and among WMX, CWM
and the registrant.
10.37 Lease and Agreement, dated as of April 1, 1990,
between Asset Title Holding, Inc., lessor, and the
registrant, lessee (incorporated by reference to
Exhibit 10.40 to the registrant's 1990 annual report
on Form 10-K).
10.38 Wheelabrator Technologies Inc. Corporate Incentive
Bonus Plan (as amended and restated as of March 8,
1993) (incorporated by reference to Exhibit 10.36 to
the registrant's 1992 annual report on Form 10-K).
10.39 Wheelabrator Technologies Inc. Corporate Incentive
Bonus Plan (as amended and restated as of March 14,
1994).
10.40 Wheelabrator Technologies Inc. Long Term Incentive
Plan (as amended and restated as of March 23, 1994).
10.41 1991 Performance Unit Plan of the registrant
(incorporated by reference to Exhibit 10.48 of the
registrant's 1990 annual report on Form 10-K).
10.42 Retirement Plan for Non-Employee Directors of the
registrant (incorporated by reference to Exhibit
10.32 to the registrant's 1988 annual report on Form
10-K).
10.43 Amendment, dated as of September 7, 1990, to the
Retirement Plan for Non-Employee Directors of the
registrant (incorporated by reference to Exhibit
19.01 to the registrant's 1990 annual report on Form
10-K).
10.44 Amendment, dated June 10, 1991, to the Retirement
Plan for Non-Employee Directors of the registrant
(incorporated by reference to Exhibit 19.01 to the
registrant's quarterly report on Form 10-Q for the
quarter ended June 30, 1991).
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-6
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
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Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.45 1991 Stock Option Plan for Non-Employee Directors of
the registrant ("1991 Directors Plan") adopted June
10, 1991 (incorporated by reference to Exhibit 19.04
to the registrant's quarterly report on Form 10-Q for
the quarter ended June 30, 1991).
10.46 Amendment to 1991 Directors Plan dated as of December
22, 1993.
10.47 1992 Stock Option Plan of the registrant
(incorporated by reference to Exhibit 10.45 to the
registrant's 1991 annual report on Form 10-K).
10.48 Rust Intercorporate Services Agreement, dated as of
January 1, 1993, by and among the registrant, Rust
International Inc. ("Rust"), WMX and CWM
(incorporated by reference to Exhibit 10.42 to the
registrants's 1992 annual report on Form 10-K).
10.49 Amendment No. 1 to Rust Intercorporate Services
Agreement dated as of August 10, 1993 by and among
the registrant, Rust, WMX and CWM.
10.50 Organizational Agreement (see Item 2.02 hereof).
10.51 Third Amended and Restated International Development
Agreement, dated as of January 1, 1993, among the
registrant, WMX, CWM, WMII, Waste Management
International B.V. ("WMIBV"), Waste Management
International plc ("WM International"), Rust, WTI
International Holdings Inc. ("WTI International") and
RIH Inc. ("RIH") (incorporated by reference to
Exhibit 19.05 to the registrant's 1992 annual report
on Form 10-K).
10.52 First Amended and Restated International Business
Opportunities Agreement ("IBOA"), dated as of January
1, 1993, by and among the registrant, WMX, CWM, WM
International, WMII and Rust (incorporated by
reference to Exhibit 28 to the registrant's
registration statement on Form S-3, Reg. No. 33-
59606).
10.53 Amendment Agreement, dated as of January 28, 1994, by
and among the registrant, WMX, CWM, WM International,
WMII and Rust amending the IBOA.
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-7
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
[Download Table]
Sequential
Description Page
of Exhibit* Number**
----------- -----------
10.54 Amended and Restated Master Dividend Deed dated,
December 30, 1992, by and among the registrant, CWM,
WMII, WMX's foreign nominee, WM International, WMIBV,
RIH and WTI International (incorporated by reference
to Exhibit 19.07 to the registrant's 1992 annual
report on Form 10-K).
10.55 Reimbursement Agreement dated March 10, 1993, between
WMX and the registrant (incorporated by reference to
the registrant's registration statement on Form S-1,
Reg. No. 33-47575).
11. None.
12. None.
13.1 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
13.2 Consolidated Financial Statements and Supplementary
Data.
14. Inapplicable.
15. Inapplicable.
16. None.
17. Inapplicable.
18. None.
19. Inapplicable.
20. Inapplicable.
21. List of subsidiaries of the registrant.
22. None.
23.1 Consent of Arthur Andersen & Co. regarding the
registrant.
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-8
WHEELABRATOR TECHNOLOGIES INC.
EXHIBIT INDEX
[Download Table]
Sequential
Description Page
of Exhibit* Number**
----------- -----------
23.2 Consent of Arthur Andersen & Co. regarding Rust.
24. None.
25. Inapplicable.
26. Inapplicable.
27. Inapplicable.
28. None.
99.01 Rust's Consolidated Balance Sheets as of December 31,
1992 and 1993, Consolidated Statements of Income,
Cash Flows and Changes in Stockholders' Equity for
each of the years in the three-year period ended
December 31, 1993 and Notes to Consolidated Financial
Statements (incorporated by reference to pages F-1
through F-17 of Rust's 1993 annual report on Form 10-
K, Commission File No. 1-11896).
99.02 Financial statement schedules of Rust (incorporated
by reference to pages F-18 through F-23 of Rust's
1993 annual report on Form 10-K, Commission File No.
1-11896).
------------------
* In the case of incorporation by reference to documents filed by the
registrant under the Securities Exchange Act of 1934, the registrant's file
number under that Act is 0-14246.
**This information appears only on the manually signed original of this report.
E-9
Dates Referenced Herein and Documents Incorporated by Reference
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