Document/Exhibit Description Pages Size
1: 10-K Annual Report 55 311K
3: EX-10.10 L-T Incentive Plan 5 29K
2: EX-10.8 Incentive Bonus Plan 4 18K
4: EX-12 Ratio of Earnings to Fix 2± 9K
5: EX-13.1 Mgmt Discussion 17± 76K
6: EX-13.2 Consolidated Fin Stmts 34± 167K
7: EX-21 Subsidiaries 33 115K
8: EX-23 Consent of Ia 1 6K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
[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
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-7327
----------------
WMX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
[Download Table]
DELAWARE 36-2660763
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3003 BUTTERFIELD ROAD, OAK BROOK, ILLINOIS 60521
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (708) 572-8800
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
[Download Table]
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
COMMON STOCK, $1.00 PAR NEW YORK STOCK EXCHANGE ZURICH STOCK EXCHANGE
VALUE CHICAGO STOCK EXCHANGE GENEVA STOCK EXCHANGE
LONDON STOCK EXCHANGE BASLE STOCK EXCHANGE
FRANKFURT STOCK EXCHANGE
[Download Table]
LIQUID YIELD OPTION NOTES DUE 2001 NEW YORK STOCK EXCHANGE
8 3/4% DEBENTURES DUE 2018 NEW YORK STOCK EXCHANGE
LIQUID YIELD OPTION NOTES DUE 2012 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
$14,108,866,000 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 23, 1994, THE REGISTRANT HAD ISSUED
AND OUTSTANDING AN AGGREGATE OF 483,615,700 SHARES OF ITS COMMON STOCK OF
RECORD.
DOCUMENTS INCORPORATED BY REFERENCE
THOSE SECTIONS OR PORTIONS OF THE REGISTRANT'S 1993 ANNUAL REPORT TO
STOCKHOLDERS AND OF THE REGISTRANT'S PROXY STATEMENT FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 13, 1994 DESCRIBED IN PARTS II, III AND IV
HEREOF ARE INCORPORATED BY REFERENCE IN THIS REPORT.
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PART I
ITEM 1. BUSINESS.
GENERAL
WMX Technologies, Inc. (formerly named Waste Management, Inc.) is a leading
international provider of environmental, engineering and construction,
industrial and related services. Unless the context indicates to the contrary,
as used in this report the terms "Company" and "WMX Technologies" refer to WMX
Technologies, Inc. and its subsidiaries.
Through Waste Management, Inc. (formerly named Waste Management of North
America, Inc.), a wholly owned subsidiary of the Company (referred to herein,
together with its subsidiaries and certain affiliated companies providing solid
waste management and related services, as "Waste Management" or "WMI"), the
Company provides integrated solid waste management services in North America to
commercial, industrial, municipal and residential customers, as well as to
other waste management companies. These services consist of solid waste
collection, transfer, resource recovery and disposal services. As part of these
services, the Company is engaged in providing, through its Recycle America(R)
and Recycle Canada(R) programs, paper, glass, plastic and metal recycling
services to commercial and industrial operations and curbside recycling
services for such materials to residences; in removing methane gas from
sanitary landfill facilities for use in electricity generation; and in
providing medical and infectious waste management services to hospitals and
other health care and related facilities. In addition, through WMI the Company
provides street sweeping and parking lot cleaning services, portable fencing
and power pole services and Port-O-Let(R) portable sanitation services to
municipalities and commercial customers.
Chemical Waste Management, Inc., an approximately 79%-owned subsidiary of the
Company (referred to herein, together with its subsidiaries other than Rust (as
defined below), as "CWM"), is a leading provider of hazardous waste management
services in the United States. Its chemical waste management services,
including transportation, treatment, resource recovery and disposal, are
furnished to commercial and industrial customers, as well as to other waste
management companies and to governmental entities. CWM also furnishes
radioactive waste management services, primarily to electric utilities and
governmental entities.
Wheelabrator Technologies Inc., an approximately 55%-owned subsidiary of the
Company (referred to herein, together with its subsidiaries, as "WTI"),
provides a wide array of environmental products and services in North America
and abroad. WTI's clean energy group 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 clean energy group, WTI 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. WTI's clean water group is
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. The clean
water group 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. WTI's clean air group
designs, fabricates and installs technologically advanced air pollution
emission control and measurement systems and equipment, including systems which
remove pollutants from the emissions of WTI's trash-to-energy facilities as
well as power plants and other industrial facilities.
Rust International Inc., a subsidiary owned approximately 56% by CWM and 40%
by WTI (referred to herein, together with its subsidiaries, as "Rust"),
furnishes engineering, construction, environmental and infrastructure
consulting, hazardous substance remediation and a variety of 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.
Printed on recycled paper LOGO
2
The Company provides comprehensive waste management and related services
internationally, primarily through Waste Management International plc, a
subsidiary owned 56% by the Company, 12% by Rust and 12% by WTI (referred to
herein, together with its subsidiaries, as "Waste Management International").
Waste Management International provides a wide range of solid and hazardous
waste management services (or has interests in projects or companies providing
such services) in various countries in Europe and in Argentina, Australia,
Brunei, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore and Taiwan.
On January 1, 1993, CWM and WTI formed Rust and acquired 58% and 42%,
respectively, of Rust's outstanding shares. Rust was created to serve the
engineering, construction, environmental and infrastructure consulting,
hazardous substance remediation and on-site industrial and related services
markets, which the managements of CWM, WTI and The Brand Companies, Inc.
(referred to herein as "Brand") believed could be served more effectively by
organizing the Company's several business units serving those markets into a
single integrated company. WTI contributed primarily its engineering and
construction and environmental and infrastructure consulting services
businesses and its recently formed international engineering unit based in
London. CWM contributed primarily its hazardous substance remediation services
business, its approximately 56% ownership interest in Brand, and its 12%
ownership interest in Waste Management International. On May 7, 1993, Brand was
merged into a subsidiary of Rust, and shares of Brand (other than those owned
by Rust or exchanged for cash in the merger) were converted into shares of
Rust. As a result of such merger, Brand is now a wholly owned subsidiary of
Rust.
The Company also owns an approximately 28% interest in ServiceMaster Consumer
Services L.P., a provider of lawn care, pest control and other consumer
services. The remaining ownership interest is held indirectly by ServiceMaster
Limited Partnership.
Through the end of 1992, the Company categorized its operations into four
industry segments-solid waste management and related services; hazardous waste
management and related services; energy, environmental and industrial projects
and systems; and international waste management and related services
(consisting of comprehensive waste management and related services provided
outside the United States, Canada and Mexico). Beginning in 1993, the Company
categorized the operations of Rust, which was formed from businesses
contributed by CWM and WTI, as a fifth industry segment--engineering,
construction, industrial and related services--and modified the name of its
energy, environmental and industrial projects and systems segment to "trash-to-
energy, water treatment, air quality and related services."
The following table shows the respective revenues of these segments for the
Company's last three years, presented as if the above-described Rust
transaction had occurred prior to the periods presented:
[Download Table]
(000'S OMITTED)
YEAR ENDED DECEMBER 31
----------------------------------
1991 1992 1993
---------- ---------- ----------
Solid Waste Management and Related
Services.................................. $3,961,111 $4,309,614 $4,702,166
Hazardous Waste Management and Related
Services.................................. 720,048 755,088 661,860
Engineering, Construction, Industrial and
Related Services.......................... 1,236,979 1,441,050 1,534,465
Trash-to-Energy, Water Treatment, Air
Quality and Related Services.............. 746,042 928,313 1,142,219
International Waste Management and Related
Services.................................. 1,075,070 1,445,734 1,411,211
Eliminations of Intercompany Revenue....... (188,336) (218,772) (316,344)
---------- ---------- ----------
Consolidated Revenue....................... $7,550,914 $8,661,027 $9,135,577
========== ========== ==========
For information relating to expenses and identifiable assets attributable to
the Company's different industry segments, see Note 10 to the Company's
Consolidated Financial Statements filed as an exhibit to
3
this report and incorporated by reference herein. For interim periods, the
revenues and net income of certain of the Company's businesses may fluctuate
for a number of reasons, including there being for some businesses less
activity during the winter months.
Regulatory or technological developments relating to the environment may
require companies engaged in environmental services businesses, including the
Company, to modify, supplement or replace equipment and facilities at costs
which may be substantial. Because certain of the businesses in which the
Company is engaged are intrinsically connected with the protection of the
environment and the potential discharge of materials into the environment, a
material portion of the Company's capital expenditures is, directly or
indirectly, related to such items. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" set forth on pages 32 to 39 of
the Company's 1993 Annual Report to Stockholders (which discussion is filed as
an exhibit to this report and incorporated by reference herein) for a review of
property and equipment expenditures by the Company for the last three years.
The Company does not expect such expenditures, which are incurred in the
ordinary course of business, to have a materially adverse impact on its and its
subsidiaries' combined earnings or its or its subsidiaries' competitive
position in the foreseeable future because the Company's businesses are based
upon compliance with environmental laws and regulations and its services are
priced accordingly.
Although the Company strives to conduct its operations in compliance with
applicable laws and regulations, the Company believes that in the existing
climate of heightened legal, political and citizen awareness and concerns,
companies in the environmental services industry, including the Company, will
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend funds for remedial work and related activities
with respect to waste treatment, disposal and trash-to-energy facilities. Where
the Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Such estimates are subsequently revised, as necessary,
as additional information becomes available. While the Company does not
anticipate that the amount of any such revision will have a material adverse
effect on the Company's operations or financial condition, the measurement of
environmental liabilities is inherently difficult and the possibility remains
that technological, regulatory or enforcement developments, the results of
environmental studies, or other factors could materially alter this expectation
at any time. Such matters could have a material adverse impact on earnings for
one or more fiscal quarters or years.
While in general the Company's environmental services businesses have
benefited substantially from increased governmental regulation, the
environmental services industry itself has become subject to extensive and
evolving regulation by federal, state, local and foreign authorities. Due to
the complexity of regulation of the industry and to public pressure,
implementation of existing and future laws, regulations or initiatives by
different levels of government may be inconsistent and difficult to foresee.
The Company makes a continuing effort to anticipate regulatory, political and
legal developments that might affect its operations but is not always able to
do so. The Company cannot predict the extent to which any legislation or
regulation that may be enacted or enforced in the future may affect its
operations.
The Company was incorporated in Delaware in 1968 and subsequently succeeded
to certain businesses owned by its organizers and others. The Company's common
stock is listed on the New York Stock Exchange under the trading symbol "WMX"
and is also listed on the Frankfurt Stock Exchange, the London Stock Exchange,
the Chicago Stock Exchange and the Swiss Stock Exchanges in Basle, Zurich and
Geneva.
4
Unless the context indicates to the contrary, all statistical and financial
information under Item 1 and Item 2 of this report is given as of December 31,
1993 and, where such information relates to any period prior to 1993, it is
presented as if Rust had been in existence throughout such period. Statistical
and financial data appearing under the caption "Solid Waste Management and
Related Services" relate only to the Company's WMI group of subsidiaries and do
not include any data relating to CWM, Rust, WTI or Waste Management
International. See "Hazardous Waste Management and Related Services,"
"Engineering, Construction, Industrial and Related Services," "Trash-to-Energy,
Water Treatment, Air Quality and Related Services" and "International Waste
Management and Related Services."
SOLID WASTE MANAGEMENT AND RELATED SERVICES
At December 31, 1993, Waste Management conducted solid waste management and
related services operations in 49 states, the District of Columbia and five
Canadian provinces. During 1991, 1992 and 1993, operations in California,
Florida and Pennsylvania together accounted for approximately 35%, 34% and 34%,
respectively, of WMI revenue. No customer accounted for as much as 2% of WMI
revenue in 1991, 1992 or 1993.
Fees paid to Waste Management by its solid waste collection customers
(including charges paid by such customers for disposal) accounted for
approximately 78% of WMI revenue in 1991 and 77% in 1992 and 1993. Transfer and
disposal services provided to municipalities, counties and other waste
management companies accounted for approximately 22% of such revenue in 1991
and 23% in 1992 and 1993.
Collection
Waste Management provides solid waste collection services to approximately
1,004,100 commercial and industrial customers. Collection services are also
provided to approximately 11,276,700 homes and apartment units. Waste
Management's revenue from commercial, industrial and apartment collection
services (including revenues from recycling services) accounted for
approximately 70% of its solid waste collection revenue in 1991, 1992 and 1993.
See "Recycling and Resource Recovery--Recycling" for a description of recycling
services.
Commercial and Industrial
Many of Waste Management's commercial and industrial customers utilize
containers to store solid waste. These containers, ranging from 1 to 45 cubic
yards in size, are usually provided to the customer as part of WMI's services.
Stationary compactors, which reduce the volume of the stored waste prior to
collection, are frequently installed on the premises of large volume customers
and are usually provided to these customers in conjunction with WMI's
collection services. Containerization enables Waste Management to service most
of its commercial and industrial customers with collection vehicles operated by
a single employee. Compaction serves to decrease the frequency of collection.
Commercial and industrial collection services (which include containerized
service to apartment buildings) are generally performed under one- to three-
year service agreements, and fees are determined by such considerations as
market factors, collection frequency, type of equipment furnished, the type and
volume or weight of the waste collected, the distance to the disposal facility
and cost of disposal.
Residential
Most of Waste Management's residential solid waste collection services are
performed under contracts with, or franchises granted by, municipalities giving
WMI exclusive rights to service all or a portion of the homes in their
respective jurisdictions. Such contracts or franchises usually range in
duration from one to five years. The fees received by Waste Management are
based primarily on market factors, frequency and type of service, the distance
to processing or disposal facilities and cost of processing or disposal.
Residential collection fees are either paid by the municipalities out of tax
revenues or service charges or are paid directly by the residents receiving the
service.
5
TRANSFER
In order to reduce costs of transportation from collection points to disposal
sites, Waste Management operates 117 solid waste transfer stations. A transfer
station is a facility where solid waste is received from collection vehicles
and then transferred to and compacted in large, specially constructed trailers
for transportation to disposal or resource recovery facilities. This procedure
reduces costs by improving utilization of collection personnel and equipment.
The services of these facilities are provided to municipalities or counties
and in most instances are also used by Waste Management and by other collection
companies. Fees are generally based upon such considerations as market factors,
the type and volume or weight of the waste transferred, the extent of
recycling, the transport distance involved and the cost of disposal.
Recycling and Resource Recovery
Recycling
Waste Management provides recycling services in the United States and Canada
through its Recycle America(R) and Recycle Canada(R) programs. Recycling
involves the removal of reusable materials from the waste stream for processing
and sale for use in various applications. Participating commercial and
industrial operations use containers to separate recyclable paper, glass,
plastic and metal wastes for collection, processing and sale by WMI. Fees are
determined by such considerations as market factors, frequency of collection,
the type and volume or weight of the recyclable material, the distance the
recyclable material must be transported and the value of the recyclable
material.
As part of its residential solid waste collection services,WMI provides
curbside recycling services to municipalities in the United States and Canada,
also through its Recycle America(R) and Recycle Canada(R) programs. Curbside
recycling services involve the use of specially designed, compartmentalized
vehicles to collect recyclable paper, glass, plastic and metal waste materials
which may be separated by residents into different waste containers provided to
them for such purpose. The recyclable materials are then typically deposited at
a local facility where they are sorted further and processed for resale.
In 1993,WMI provided curbside recycling services to approximately 5.8 million
households pursuant to more than 750 contracts in the United States and Canada.
In 1992, WMI provided such services to more than 5.2 million households.
Waste Management operates 113 materials recovery facilities for the
processing of recyclable materials. Such processing consists of separating
recyclable materials according to type and baling or otherwise preparing the
separated materials for sale.
Waste Management also participates in joint ventures with Stone Container
Corporation and American National Can Corporation to engage, respectively, in
the businesses of marketing paper fibre and aluminum, steel, and glass
containers for recycling. In each case WMI sells to the joint venture, or has
the joint venture market, the paper fibre or containers collected by WMI. The
joint ventures sell or market the materials to Stone Container, American
National Can or other parties who will process them for reuse. The joint
venture with American National Can also owns and operates three glass
processing facilities. During 1993, the joint ventures processed approximately
3.7 million tons of recyclable materials. WMI also provides tire recycling and
yard waste composting services.
Energy Recovery
At 31 WMI-owned or -operated sanitary landfill facilities, Waste Management
is engaged in methane gas recovery operations. These operations involve the
installation of a gas collection system into a sanitary landfill facility.
Through the gas collection system, gas generated by decomposing solid waste is
collected and
6
transported to a gas-processing facility at the landfill site. Through physical
processes methane gas is separated from contaminants. The processed methane gas
is then either (i) sold directly to industrial users or (ii) sold to an
affiliate of the Company which uses it as a fuel to power an electricity-
generation facility. Electricity generated by the facility is sold, usually to
public utilities. WMI or an affiliate of WMI typically enters into long-term
sales contracts, often under terms or conditions which are subject to approval
by regulatory authorities.
WMX Technologies also engages in other resource recovery activities through
WTI's trash-to-energy and independent power operations and Waste Management
International's operations. See "Trash-to-Energy, Water Treatment, Air Quality
and Related Services" and "International Waste Management and Related
Services."
Disposal
Waste Management operates 133 solid waste sanitary landfill facilities. Of
this number, 105 are owned by Waste Management and the remainder are leased
from, or operated under contract with, others. Additional facilities are in
various stages of development. All of the sanitary landfill facilities are
subject to governmental regulation. See "Regulation--Solid Waste."
A sanitary landfill site must have geological and hydrological properties and
design features which limit the possibility of water pollution, directly or by
leaching. Sanitary landfill operations, which include carefully planned
excavation, continuous spreading and compacting of solid waste and covering of
the waste, are designed to maintain sanitary conditions, insure optimum
utilization of the airspace and prepare the site for ultimate use for other
purposes.
Suitable sanitary landfill facilities have become increasingly difficult to
obtain because of land scarcity, local resident opposition and expanding
governmental regulation. As its existing facilities become filled, the solid
waste disposal operations of Waste Management are and will continue to be
materially dependent on its ability to purchase, lease or obtain operating
rights for additional sites and obtain the necessary permits from regulatory
authorities to operate them. To develop a new facility, WMI must expend
significant time and capital resources without any certainty that a permit will
ultimately be issued for such facility. In addition, there can be no assurance
that additional sites can be obtained or that existing facilities can continue
to be operated. However, management believes that the facilities currently
available to WMI are sufficient to meet the needs of its current operations for
the foreseeable future.
In varying degrees, Waste Management utilizes its own sanitary landfill
facilities to accommodate its disposal requirements for collection and transfer
operations. In 1991, 1992, and 1993 approximately 48%, 50%, and 52%,
respectively, of the solid waste collected by WMI was disposed of in sanitary
landfill facilities operated by it. Usually these facilities are also used by
other companies and government agencies on a noncontract basis for fees
determined by such considerations as market factors and the type and volume or
weight of the waste.
Related Services
Waste Management also provides several types of services which are compatible
with its solid waste collection operations. Included in these operations are
medical and infectious waste management services, portable fencing and power
pole services, portable sanitation services and street sweeping and parking lot
cleaning services.
Waste Management's medical and infectious waste management services consist
of collecting, transporting, treating and disposing of medical and infectious
waste generated by hospitals, pharmaceutical manufacturers, medical clinics,
physician and dentist offices and other sources.
7
Waste Management provides portable fencing and power pole services to
construction sites, port facilities and industrial and governmental customers.
Rental rates vary depending on the type and size of the fencing or power poles
provided to the customer, the duration of the rental period and local market
conditions. Waste Management also provides portable sanitation services to the
same types of customers. The portable sanitation services, which are marketed
under the Port-O-Let(R) trade name, are also used at numerous public
gatherings.
These related services are marketed and performed primarily by employees
operating out of WMI's solid waste operations facilities who also may have
responsibility for some phase of solid waste marketing or operations.
HAZARDOUS WASTE MANAGEMENT AND RELATED SERVICES
CWM's principal business (excluding Rust) is to provide hazardous waste
management services consisting of chemical and radioactive waste
transportation, treatment, resource recovery and disposal services. For each of
the three years in the period ended December 31, 1993, such services accounted
for the following percentages of CWM's hazardous waste management and related
services revenue:
[Download Table]
YEAR ENDED DECEMBER 31
-------------------------
1991 1992 1993
------- ------- -------
Treatment, resource recovery and disposal............ 63.2% 68.5% 70.6%
Special services..................................... 21.4 15.3 18.6
Transportation....................................... 15.4 16.2 10.8
Until December 31, 1992, CWM also provided environmental and industrial
specialty contracting services through a group of regional and local companies
owned by Brand, as well as hazardous substance remediation services, which
businesses were contributed to Rust on January 1, 1993. See "General."
Chemical Waste Management Services
In the United States, most chemical wastes generated by industrial processes
are handled "on-site" at the generators' facilities. Since the mid-1970's,
public awareness of the harmful effects of unregulated disposal of chemical
wastes on the environment and health has led to extensive and evolving federal,
state and local regulation of chemical waste management activities. The major
federal statutes regulating the management of chemical wastes include the
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the Toxic
Substances Control Act ("TSCA") and the Comprehensive Environmental Response,
Compensation and Liabilities Act of 1980, as amended ("CERCLA" or "Superfund"),
all primarily administered by the United States Environmental Protection Agency
("EPA"). CWM's business is heavily dependent upon the extent to which
regulations promulgated under these or similar state statutes and their
enforcement over time effectively require wastes to be managed in facilities of
the type owned and operated by CWM. See "Regulation--Hazardous Waste," "--RCRA"
and "--Superfund."
The chemical wastes handled by CWM include industrial by-products and
residues that have been identified as "hazardous" pursuant to RCRA, as well as
other materials contaminated with a wide variety of chemical substances. CWM
operates chemical waste treatment, storage and disposal facilities in 18 states
and is able to service customers in most parts of the country through this
network of facilities. Additionally, certain chemical wastes, such as
polychlorinated biphenyls ("PCBs"), are transported greater distances because
they can be accepted only at a limited number of treatment or disposal
facilities. CWM also owns a majority interest in a subsidiary which operates a
resource recovery facility, a disposal facility and storage facilities in
Mexico.
The ongoing chemical waste management services provided by CWM are typically
performed pursuant to nonexclusive service agreements that obligate CWM to
accept from the customer chemical wastes conforming to the provisions of the
agreement. Fees are determined by such factors as the chemical
8
composition and volume or weight of the wastes involved, the type of
transportation or processing equipment utilized and distance to the processing
or disposal facility. CWM periodically reviews and adjusts the fees charged for
its services.
Treatment, Resource Recovery and Disposal
CWM's treatment and resource recovery operations involve processing chemical
wastes through the use of thermal, physical, chemical or other treatment
methods at one or more of CWM's facilities. The residual material produced by
these interim processing operations is either disposed of by burial in a secure
disposal cell or by deep well injection, or it may be managed through one of
CWM's resource recovery programs.
Thermal treatment refers primarily to processes that use incineration as the
principal mechanism for waste destruction. Physical treatment methods include
distillation, evaporation and separation, all of which basically result in the
separation or removal of solid materials from liquids. Chemical treatment
methods include chemical oxidation and reduction, chemical precipitation of
heavy metals, hydrolysis and neutralization of acid and alkaline wastes and
essentially involve the transformation of wastes into inert materials through
one or more chemical reaction processes. CWM has developed a program of
reclamation and reuse of certain chemical wastes, particularly solvent-based
wastes, that are generated by certain industrial cleaning operations and metal
finishing and other industrial processes.
CWM's secure land disposal facilities either have interim status or have been
issued permits under RCRA. See "Regulation--RCRA." In general, CWM's secure
land disposal facilities have received the necessary permits and approvals to
accept chemical wastes, although some of such sites may accept only certain
chemical wastes. Only chemical wastes in a stable, solid form which meet
applicable regulatory requirements may be buried in CWM's secure disposal
cells. These land disposal facilities are sited, constructed and operated in a
manner designed to provide long-term containment of such waste.
At three of its locations, CWM isolates treated chemical wastes in liquid
form by injection into deep wells. Deep well technology involves drilling wells
in suitable rock formations far below the base of fresh water and separated
from it by other substantial geological confining layers.
Transportation
Chemical waste may be collected from customers and transported by CWM or
delivered by customers to CWM's facilities. Chemical waste is transported by
CWM primarily in specially constructed tankers and semi-trailers, including
stainless steel and rubber or epoxy-lined tankers and vacuum trucks, or in
containers or drums on trailers designed to comply with applicable regulations
and specifications of the U.S. Department of Transportation ("DOT") relating to
the transportation of hazardous materials. CWM's chemical waste transportation
fleet includes approximately 400 tractors and 920 trailers. CWM may utilize the
services of subcontractors to transport waste in some circumstances. CWM
operates 35 transportation centers from which its fleet is dispatched or at
which fleet maintenance operations are conducted. CWM also operates several
facilities at which waste collected from or delivered by customers may be
analyzed and consolidated prior to further shipment.
Low-Level and Other Radioactive Waste Services
Radioactive wastes with varying degrees of radioactivity are generated by
nuclear reactors and by medical, industrial, research and governmental users of
radioactive material. Radioactive wastes are generally classified as either
high-level or low-level. High-level radioactive waste, such as spent nuclear
fuel and waste generated during the reprocessing of spent fuel from nuclear
reactors, contains substantial quantities of long-lived radionuclides and is
the ultimate responsibility of the federal government. Low-level radioactive
waste, which decays more quickly than high-level waste, largely consists of dry
compressible wastes (such as
9
contaminated gloves, paper, tools and clothing), resins and filters which have
removed radioactive contaminants from nuclear reactor cooling water, solidified
wastes from power plants which have become contaminated with radioactive
substances and irradiated hardware.
CWM provides comprehensive low-level radioactive waste management services in
the United States consisting of disposal, processing and various other special
services, and transportation. To a lesser extent, it provides services with
respect to radioactive waste that has become mixed with regulated chemical
waste. CWM generally enters into long-term service agreements with its
customers. A particular agreement may include all or part of the services
performed by CWM.
Disposal
CWM's radioactive disposal operations currently involve low-level radioactive
waste only. Its Barnwell, South Carolina facility is one of two licensed
commercial low-level radioactive waste disposal facilities in the United States
and has been in operation since 1971.
Fees for burial are set by CWM based upon volume, level of radioactivity and
handling considerations. A trust has been established and funded to pay the
estimated cost of decommissioning the Barnwell facility. A second fund, for the
extended care of the facility, is funded by a surcharge on each cubic foot of
waste received. CWM may be liable for additional costs if the extra charges
collected to restore and maintain the facility are insufficient to cover the
cost of restoring or maintaining the site after its closure (which CWM has no
reason to expect).
Eight southeastern states have joined together to form the Southeast
Interstate Low-Level Radioactive Waste Management Compact (the "Southeast
Compact"). The Southeast Compact initially designated the Barnwell site as the
disposal facility to receive all low-level radioactive waste generated in the
eight-state compact region through 1992, and designated North Carolina as the
next state to host the regional disposal facility. Federal law allows continued
access to the Barnwell facility by generators located outside the compact
region. In exchange for such continued access, generators outside of the
Southeast Compact region pay surcharges to the State of South Carolina for each
cubic foot of waste disposed by CWM. Federal law also establishes milestones
for states that are not part of a compact region with an operating disposal
facility. If the development of new facilities does not progress in accordance
with such milestones, penalties may be imposed in the form of higher surcharges
for disposal at the Barnwell facility and, ultimately, denial of access to the
Barnwell facility. During 1992, South Carolina adopted legislation allowing the
Barnwell site to continue operating until December 31, 1995, and to continue
receiving waste generated outside the Southeast Compact until June 30, 1994.
The Southeast Compact subsequently increased the surcharges payable by
generators located outside the compact region. CWM has advised the Company that
CWM expects the South Carolina legislature to consider extending to December
31, 1995 the date the Barnwell site must stop accepting waste generated outside
the Southeast Compact, but there can be no assurance that such extension will
be obtained.
During the third quarter of 1989, CWM entered into contracts with the
responsible agencies for the Southeast Compact and the Central Midwest Low-
Level Radioactive Waste Compact (whose member states are Illinois and Kentucky)
(the "Central Midwest Compact") to site, license, construct, operate and close
new regional low-level radioactive waste disposal facilities for those
Compacts, which facilities are intended to be located in North Carolina and
Illinois, respectively. During the third quarter of 1990, CWM also entered into
a similar contract for the Appalachian States Low-Level Radioactive Waste
Compact (whose member states are Pennsylvania, West Virginia, Maryland and
Delaware). The terms of these contracts range from 20 to 30 years. Because of
the difficulties associated with the process of siting and licensing such
facilities, their development has not in each case proceeded in the manner and
on the schedule contemplated by the respective Compact authorities. For
example, in October 1992, a special state commission which had been examining
the siting of the proposed disposal facility in Illinois declined to approve
it, as a consequence of which the timetable for establishing such a facility is
uncertain. CWM was subsequently directed to stop certain of its work under its
contract with the Central Midwest Compact.
10
At this time the Company and CWM are unable to predict the effect which these
developments might have upon CWM's business.
Special Services
CWM processes low-level radioactive waste at its customers' plants to enable
such waste to be shipped in dry rather than liquid form to meet the
requirements for receipt at disposal facilities and to reduce the volume of
waste that must be transported. Processing operations include solidification,
demineralization, dewatering and filtration.
Other services offered by CWM include decommissioning nuclear facilities,
which involves dismantling buildings and equipment (projects that typically are
nonrecurring), providing electro-chemical, abrasive and chemical removal of
radioactive contamination, and providing management services for spent nuclear
fuel storage pools.
Transportation
Most low-level radioactive waste is transported by truck to burial sites.
CWM's transportation fleet consists of 25 tractors and 85 heavy-duty trailers,
including specialty trailers such as shielded vans, drop decks and lowboys.
Transportation terminals are located in South Carolina and Illinois.
Low-level radioactive waste requiring additional shielding must be
transported in shipping casks licensed by the U. S. Nuclear Regulatory
Commission ("NRC"). CWM owns 60 such casks, as well as a variety of other
containers designed to meet the varying needs of the nuclear industry.
ENGINEERING, CONSTRUCTION, INDUSTRIAL AND RELATED SERVICES
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. The types of engineering,
construction and environmental and infrastructure consulting services provided
by Rust include process and design engineering, plant, facility and related
infrastructure construction, project and construction management and oversight
services, site analyses, remedial investigations, feasibility studies,
environmental assessments, and architectural services. The types of hazardous
substance remediation and other on-site industrial and related services
provided by Rust include on-site remediation of hazardous substances,
scaffolding, industrial cleaning and maintenance and nuclear and utility
services and maintenance. In addition, Rust provides engineering and
environmental and infrastructure consulting services to clients in several
countries outside of North America.
Until May 1993, Brand engaged in the asbestos abatement business. In May
1993, Brand sold substantially all of its asbestos abatement business to NSC
Corporation ("NSC"). See "Acquisitions and Dispositions." As a result of that
transaction Rust has an approximately 40% interest in NSC, of which the
remaining ownership interests are held approximately 40% by OHM Corporation and
20% by the public.
Engineering, Construction and Environmental and Infrastructure Consulting
Services
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; process piping; mechanical; structural; heating,
ventilation and air conditioning ("HVAC"); and civil. The construction services
provided by Rust include primarily the new construction and retrofitting of
power generation and 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 requisitions and
procures equipment and construction materials for clients and performs quality
assurance and quality control oversight of vendor manufacturing practices and
provides infrastructure and marine construction, dredging, underwater diving
11
and dismantling and demolition services. Rust's engineering and construction
services are provided on a stand-alone basis but are also provided together
under engineering, procurement and construction contracts which include
engineering services, procurement of facility equipment and materials and
construction 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. Such services are provided primarily to private
industry and also to federal, state and local governments, including the
Department of Defense (the "DOD") and the Department of Energy (the "DOE"). The
services include performing remedial investigations for the purpose of
characterizing hazardous waste sites, preparing feasibility studies setting
forth recommended alternative remedial actions, and providing engineering
design and construction oversight services for remediation projects. The
services provided also include the siting, permitting, design and construction
oversight of solid and hazardous waste landfills and related facilities. Study,
design and construction oversight services are also provided, primarily to
municipalities, 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.
Additional services provided through Rust include environmental assessment
services, the design of systems to properly and safely store, convey, treat and
dispose of industrial, hazardous and radioactive materials and consulting
services regarding disposal, waste minimization methods and techniques, air
quality regulation and industrial hygiene and safety.
Through a series of acquisitions completed during the period from late 1992
through February 1994, Rust has developed an international engineering and
consulting business performing projects in 24 countries. In Europe, Rust has
offices in the United Kingdom, Germany, Sweden and Italy, and in the Asia-
Pacific region, in Australia, Hong Kong, China, Singapore, Malaysia and
Indonesia. Rust also has an office in Dubai, U.A.E. Rust's foreign subsidiaries
provide process and design engineering services, environmental and
infrastructure engineering services and construction management services to
national, regional and local governments and to clients in the utility and
industrial power and general manufacturing industries. In addition, Rust
provides engineering and consulting services to Waste Management International
worldwide.
Rust received 45%, 43%, and 52% of its total consolidated revenues in 1991,
1992 and 1993, respectively, from the performance of engineering, construction
and environmental and infrastructure consulting services.
Remediation and Other On-Site Industrial and Related Services
Hazardous Substance Remediation Services
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 the DOE in connection with such projects as the
remediation of military bases and other government installations, the EPA in
connection with CERCLA projects and various state environmental agencies. Rust
treats hazardous substances on-site using a variety of methods and
technologies, including, among others, mobile incineration technology, thermal
desorption to separate organic contaminants from soils or solids for subsequent
treatment of the organic vapor stream, sludge drying, soil washing,
stabilization and, to a lesser extent, bioremediation, which involves the
breakdown of hazardous substances with microorganisms. 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.
Hazardous substance remediation services provided to Rust's private industry
clients often involve the implementation of "records of decision" promulgated
by the EPA in response to results of EPA
12
environmental analysis and investigation. In connection with the remediation of
military bases and other government installations, the DOD and DOE are
experimenting with awarding multi-disciplined remediation contracts to a single
company capable of providing the management services necessary to oversee the
entire project. The company selected is, in effect, the project's general
contractor. In August 1993, the U.S. Army Corps of Engineers awarded to Rust
two such contracts under which Rust could be paid up to $350 million over a
ten-year period. Under such contracts, Rust will perform work pursuant to
individual delivery orders negotiated on a project-by-project basis, and there
can be no assurance that the delivery orders ultimately issued or successfully
negotiated and performed by Rust will aggregate $350 million in fees. Rust
intends to utilize its integrated approach to providing a full range of
engineering, construction, environmental consulting, on-site hazardous
substance remediation and other industrial services to pursue additional
comprehensive federal government environmental services contracts.
On-Site Industrial and Related Services
Rust provides various on-site industrial and related services. Such services
consist primarily of scaffolding, industrial cleaning, catalyst handling, plant
and nuclear and utility services. Rust provides scaffolding services primarily
to the chemical, petrochemical and utilities industries, as well as other
clients. In most cases, the 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's
catalyst handling services include the unloading, screening, classifying for
reuse, disposing and reloading of catalyst, primarily to customers in the
refining, petrochemical, chemical and gas processing industries using solid
catalyst in reactors to convert, through chemical reactions, various
hydrocarbon substances into higher grades or specific products and to remove
unwanted byproducts. Rust's on-site plant services include providing personnel
to perform mechanical and electrical services, equipment installation, welding,
HVAC, warehousing and inventory management services and technical support in
the area of industrial hygiene and safety training. 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.
Rust received 55%, 57% and 48% of its total consolidated revenues in 1991,
1992 and 1993, respectively, from the performance of hazardous substance
remediation and other on-site industrial and related services (including
asbestos abatement services until the May 1993 transfer of that business, as
described in "Acquisitions and Dispositions").
TRASH-TO-ENERGY, WATER TREATMENT, AIR QUALITY AND RELATED SERVICES
Wheelabrator Clean Energy
WTI, 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 nearly 800 megawatts of electric generating
capacity, which ranks it among the nation's largest independent power
producers.
WTI's 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
13
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, WTI 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.
WTI 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.
Wheelabrator Clean Water
Through its Wheelabrator Clean Water group ("Wheelabrator Clean Water"), WTI
develops projects that purify water, treat wastewater, treat and manage
biosolids, and compost organic wastes. WTI also provides technologies and
services used to treat drinking water as well as industrial and municipal
process and water. 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.
Wheelabrator Clean Water typically enters into multi-year contracts with
biosolids generators under which WTI is paid by the generator to beneficially
reuse the biosolids.
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. Regulations governing sludge
management were issued by the 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.
Wheelabrator Clean Water also develops and operates facilities at which
biosolids are dried and pelletized. WTI 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. WTI has approximately 565 dry-tons-per-day
of biosolids drying capacity either in operation, under construction or in
advanced stages of development. Sludge which has been dried is 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.
Wheelabrator Clean Water is also a leading provider of a comprehensive range
of water and wastewater treatment services to municipalities throughout the
United States, 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. 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.
Though its Wheelabrator Engineered Systems Inc. subsidiary ("WES"),
Wheelabrator Clean Water engineers and manufacturers 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 products. WES also designs
14
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.
WTI 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. WTI also
manufactures high-alloy combustion grates used in the high-temperature furnaces
of its trash-to-energy facilities.
Wheelabrator Clean Air
WTI's Wheelabrator Clean Air group ("Wheelabrator Clean Air") designs,
fabricates and installs advanced air pollution emission control and measurement
technologies. WTI offers electrostatic precipitators, flue-gas desulfurization
systems (scrubbers), fabric-filter systems (baghouses) and nitrogen oxide
("NOx") control systems, which remove pollutants from the emissions of WTI's
trash-to-energy systems, 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. Wheelabrator Clean Air's activities involve both
custom and pre-engineered systems for emission 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 volatile organic compounds ("VOCs") from air and
liquid sources and NOx from air sources. Both VOCs and NOx are major
contributors to the creation of smog. WTI'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, trash-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 for its expertise in VOC and NOx control systems and scrubbers,
as well as additional applications for CEMs. See "Regulation--Trash-to-Energy,
Water Treatment, Air Quality and Related Services."
INTERNATIONAL WASTE MANAGEMENT AND RELATED SERVICES
The Company is a leading provider of comprehensive waste management and
related services internationally, primarily through Waste Management
International, which conducts essentially all of the waste management
operations of the Company located outside North America. The operations of
Waste Management International are managed on a country by country basis and
are divisible into two broad categories: collection services and treatment and
disposal services.
The Company has had international operations since the mid-1970's. However,
the bulk of the Company's international operations and revenues are derived
from the acquisition over the last six years of numerous companies and
interests in Europe in various of its service lines. In 1993, the Company
completed numerous acquisitions including, among others: in the U. K., the
acquisition by the joint venture company formed in 1992 by Waste Management
International and Wessex Water Plc ("Wessex") (an English publicly traded
company providing water distribution, wastewater treatment and sewerage
services, in which Waste Management International acquired a 15% interest in
1991, which was increased to 20% in February 1993) of Waste Management Limited,
a solid waste collection and disposal company, and related business and assets;
in France, a company engaged in solid waste collection in industrial cleaning;
in The Netherlands, a company engaged in the collection and transportation of
solid waste and the sorting of demolition waste; and in Germany, a group of
companies providing waste collection services and recyclables sorting. In 1993,
Waste Management International also acquired other businesses in the U. K.,
Germany, France, The Netherlands, Finland, Italy, Denmark, Sweden, Austria,
Australia, New Zealand and Taiwan.
15
In accordance with its objective of maintaining a local identity, Waste
Management International, in certain cases, operates through companies or joint
ventures in which Waste Management International and its affiliates own less
than a 100% interest.
Because of the timing, number and size of Waste Management International's
Italian acquisitions, the portion of Waste Management International's revenues
in 1991, 1992 and 1993 derived from Italian operations was 46%, 38% and 32%,
respectively. During 1991 and 1992, revenues from Sweden were also 10% or more
of Waste Management International's revenues. Revenues from The Netherlands
were more than 10% of Waste Management International's revenues in 1993.
While Waste Management 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. In addition,
price adjustment provisions based on certain formulas or indices may not
accurately reflect the actual impact of inflation on the cost of performance.
In August 1991, each of CWM and WTI acquired a 15% fully diluted interest in
a predecessor of Waste Management International from a subsidiary of the
Company pursuant to the exercise of previously granted options. See
"Acquisitions and Dispositions." In April 1992, Waste Management International
sold 75,000,000 ordinary shares (20% of the post-offering outstanding shares)
in an initial public offering. The proceeds of the offering, approximately
$700,000,000, were used to retire third party debt and to repay advances from
the Company. Immediately following the public offering, Waste Management
International was owned 56%, 12% and 12% by the Company, WTI and CWM,
respectively. CWM subsequently transferred its interest in Waste Management
International to Rust in connection with the formation of Rust in January 1993.
Collection Services
Collection services include collection and transportation of solid, hazardous
and medical wastes and recyclable material from residential, commercial and
industrial customers. The residential solid waste collection process, as well
as the commercial and industrial solid and hazardous waste collection process,
is similar to that utilized by the Company in the United States. Waste
Management International provides collection services as of the date of this
report to governmental and private customers in ten 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. Waste Management
International operates 76 waste transfer facilities, 15 of which are for
hazardous waste, 58 of which are for solid waste and three of which are for
both types of waste.
At December 31, 1993, Waste Management 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 (including
provision of recycling services to over one million households) and commercial
and industrial collection services to more than 140,000 solid waste 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 formulas for
periodic price increases or adjustments.
Street, industrial premises, office, parking lot and port cleaning services
are also performed by Waste Management International, along with portable
sanitation/toilet services for such occasions as outdoor concerts and special
events.
16
Waste Management International's commercial and industrial solid and
hazardous waste collection services are generally contracted for by individual
establishments. In addition to solid waste collection customers, customers
include small quantity waste generators, as well as larger petrochemical,
pharmaceutical and other industrial customers, which may seek collection of
hazardous, chemical or medical wastes or residues. Contract terms and prices
vary substantially between jurisdictions and types of customer.
Treatment and Disposal Services
Treatment and disposal services include processing of recyclable materials,
operation of both solid and hazardous waste landfills, operation of municipal,
trash-to-energy and hazardous waste incinerators, and provision of hazardous
waste treatment and site remediation services and water treatment services. The
operation of solid waste landfills is currently Waste Management
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.
Once collected, solid wastes may be processed in a recyclables processing
facility. Unprocessed solid wastes, or the portion of the waste stream
remaining after recovery of recyclable materials, require disposal, which may
be accomplished through incineration (in connection with which the energy value
may be recovered in a trash-to-energy facility) or through disposal in a solid
waste landfill. The relative use of landfills versus incinerators differs from
country to country and will depend on many factors, including the availability
of land, geological and hydrological conditions, the availability and cost of
technology and capital, and the regulatory environment. The main determinant of
disposal method is generally the disposal cost per cubic meter at local
landfills, as incineration is generally more expensive.
At present, in most countries in which Waste Management International
operates, landfilling is the predominant disposal method employed. Waste
Management International owns or operates landfills in Italy, Sweden, France,
Spain, Australia, the United Kingdom, Germany, Denmark, Argentina and New
Zealand. The Company 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. Waste Management International believes
it has access to sufficient solid waste landfill capacity to meet its current
needs.
Demand for solid waste incineration is affected by landfill disposal costs
and government regulations. The incineration process for non-hazardous solid
waste has also been influenced by two significant factors in recent years: (i)
increasingly strict control over air emissions from incinerators; and (ii)
increasing emphasis on trash-to-energy incinerators, which utilize heat
produced by incinerators to generate electricity and other energy. Incineration
generates approximately 30% residue (by weight), which is either landfilled or,
where permitted, recycled for use as a road base or in other construction uses.
Waste Management 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. Under its current permits,
the facility is able to produce 18 megawatts of steam-generated electricity and
sold approximately 69,000 megawatt hours to the local power grid in 1993
(enough power for about 17,000 homes). In 1992, Waste Management International
entered into a contract with the County of Gutersloh, Germany to design,
construct, own and operate a trash-to-energy facility. The facility is being
designed with a capacity of converting 268,000 metric tons per year of
municipal waste and sewage sludge into energy and the County has guaranteed to
provide to the facility at least 205,000 metric tons of waste
17
and sewage sludge per year. The facility would be capable of producing enough
electricity to power more than 35,000 homes. Waste Management International
also operates five small conventional municipal solid waste incinerators in
Italy and one small plant in each of Sweden and New Zealand.
Waste Management International owns or operates hazardous waste treatment
facilities in Finland, Italy, Sweden, France, Germany, the United Kingdom, The
Netherlands, Hong Kong and New Zealand, has nearly completed the 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. The Brescia hazardous waste
treatment plant in Italy reduces and stabilizes waste through a number of
treatment processes, including physical-chemical treatment, biological
treatment, filtration and sludge stabilization, prior to final landfilling at
Waste Management International's nearby secure hazardous waste landfill or
other permitted disposal. The facility has a modern laboratory for analyzing
waste streams. The SAKAB facility in Norrtorp, Sweden is the largest hazardous
waste treatment facility in Sweden and utilizes physical-chemical treatment,
incineration and landfilling technologies. Waste Management International's ATM
facility in Moerdijk, which is near Rotterdam in The Netherlands, handles a
broad range of chemical wastes, polluted liquids (including wastewater
associated with ship cleaning services) and contaminated soils. A paint waste
treatment facility began operation at Waste Management International's ATM
facility in 1992. In Hong Kong, a comprehensive hazardous waste treatment
facility (including a hazardous waste incinerator) began commercial operation
in June 1993.
In addition, Waste Management International believes that water and
wastewater treatment offer future opportunities. In Europe, higher
environmental standards, particularly for wastewater discharges have expanded
demand for upgrading and refurbishing as well as for new facilities. In the
developing nations of Asia and South America, the major growth in demand is for
greenfield projects to provide secure sources of clean water and to ensure the
safe treatment of industrial wastewater. In 1993, Waste Management
International established, in connection with Wessex, one of the United
Kingdom's leading water companies, a new central organization to jointly
develop activities in this sector outside of England and Wales. Waste
Management International believes it is well equipped to take advantage of
these opportunities, particularly in conjunction with the design, construction
and operating expertise of WTI and Rust.
REGULATION
While in general the Company's environmental services businesses have
benefited substantially from increased governmental regulation, the
environmental services industry itself has become subject to extensive and
evolving regulation by federal, state, local and foreign authorities. In
particular, the regulatory process requires firms in the Company's industries
to obtain and retain numerous governmental permits to conduct various aspects
of their operations, any of which may be subject to revocation, modification or
denial. As a result of governmental policies and attitudes relating to the
industries, which are subject to reassessment and change, the Company believes
that its ability to obtain applicable permits from governmental authorities on
a timely basis, and to retain such permits, could be impaired. The Company is
not in a position at the present time to assess the extent of the impact of
such potential changes in governmental policies and attitudes on the permitting
processes, but it could be significant. In particular, adverse decisions by
governmental authorities on permit applications submitted by the Company may
result in abandonment of projects, premature closure of facilities or
restriction of operations, which could have a material adverse effect on the
Company's earnings for one or more fiscal quarters or years.
Federal, state, local and foreign governments have also from time to time
proposed or adopted other types of laws, regulations or initiatives with
respect to the environmental services industry. Included among them are laws,
regulations and initiatives to ban or restrict the international, interstate or
intrastate shipment of wastes, impose higher taxes on out-of-state waste
shipments than in-state shipments, reclassify certain categories of hazardous
wastes as non-hazardous and regulate disposal facilities as public utilities.
Certain state and local governments have promulgated "flow control"
regulations, which attempt to require that all waste generated within the state
or local jurisdiction must go to certain disposal sites. The United States
18
Congress has from time to time considered legislation that would enable or
facilitate such bans, restrictions, taxes and regulations. Due to the
complexity of regulation of the industry and to public pressure, implementation
of existing or future laws, regulations or initiatives by different levels of
government may be inconsistent and difficult to foresee. The Company makes a
continuing effort to anticipate regulatory, political and legal developments
that might affect operations but is not always able to do so. The Company
cannot predict the extent to which any legislation or regulation that may be
enacted or enforced in the future may affect its operations. Such matters could
have a material adverse impact on the Company's financial condition or earnings
for one or more fiscal quarters or years.
In addition to environmental laws and regulations, federal government
contractors, including the Company, are subject to extensive regulation under
the Federal Acquisition Regulation and numerous statutes which deal with the
accuracy of cost and pricing information furnished to the government, the
allowability of costs charged to the government, the conditions under which
contracts may be modified or terminated, and other similar matters. Various
aspects of the Company's operations are subject to audit by agencies of the
federal government in connection with its performance of work under such
contracts as well as its submission of bids or proposals to the government.
Failure to comply with contract provisions or other applicable requirements may
result in termination of the contract, the imposition of civil and criminal
penalties against the Company, or the suspension or debarment of all or a part
of the Company from federal government work, which could have a material
adverse impact upon the Company's financial condition or earnings for one or
more fiscal quarters or years. Among the reasons for debarment are violations
of various statutes, including those related to employment practices, the
protection of the environment, the accuracy of records and the recording of
costs. Some state and local governments have similar suspension and debarment
laws or regulations.
Because of heightened public awareness of environmental issues, companies in
the environmental service business, including the Company, may in the normal
course of their business be expected periodically to become subject to judicial
and administrative proceedings. Governmental agencies may seek to impose fines
on the Company or revoke, deny renewal of, or modify the Company's operating
permits or licenses. The Company is also subject to actions brought by private
parties or special interest groups in connection with the permitting or
licensing of its operations, alleging violations of such permits and licenses,
or other matters. In addition, increasing governmental scrutiny of the
environmental compliance records of the Company, CWM, WTI, Rust, Waste
Management International or their affiliates could cause a private or public
entity seeking environmental services to disqualify the Company from competing
for one or more projects, on the grounds that these records display inadequate
attention to environmental compliance.
Solid Waste
Operating permits are generally required at the state and local level for
landfills, transfer stations and collection vehicles. Operating permits need to
be renewed periodically and may be subject to revocation, modification, denial
or non-renewal for various reasons, including failure of the Company to satisfy
regulatory concerns. With respect to solid waste collection, regulation takes
such forms as licensing of collection vehicles, truck safety requirements,
vehicular weight limitations and, in certain localities, limitations on rates,
area, time and frequency of collection. With respect to solid waste disposal,
regulation covers various matters, including landfill location and design,
groundwater monitoring, gas control, liquid runoff and rodent, pest, litter and
traffic control. Zoning and land use requirements and limitations are
encountered in the solid waste collection, transfer, resource recovery and
disposal phases of the Company's business. In almost all cases the Company is
required to obtain conditional use permits or zoning law changes in order to
develop transfer station, resource recovery or disposal facilities. In
addition, the Company's disposal facilities are subject to water pollution laws
and regulations. Air and noise pollution laws and regulations may also affect
the Company's operations. Governmental authorities have the power to enforce
compliance with these various laws and regulations and violators are subject to
injunctions, fines and revocation of permits. Private individuals may also have
the right to sue to enforce compliance. Safety standards under the Occupational
Safety and Health Act ("OSHA") are also applicable.
19
In September 1991, the EPA promulgated rules pursuant to RCRA amendments
adopted in 1984 which will serve as minimum requirements for land disposal of
municipal wastes. States seeking delegation of EPA's authority to regulate the
local disposal of municipal waste programs were required to adopt rules that
meet the minimum federal requirements by October 1993. The federal regulations
require many states to adopt more stringent requirements than previously
applied to the siting, construction, operation and closure of municipal waste
landfill facilities. Failure by states to adopt more stringent minimum
requirements resulted in the imposition of such requirements by law in October
1993 as to all but the smallest landfills. States without delegation of
authority to administer their programs in lieu of the federal programs under
the new requirements may not issue permits for new facilities or for the
expansion of existing facilities in certain circumstances in certain areas. In
addition, the failure of states to receive delegation of authority to
administer programs may increase costs to meet inconsistent federal and state
laws applicable to the same facility. The Company does not believe that the
adoption of the more stringent minimum requirements will have a material
adverse effect on the Company's operations. See also "RCRA" and "Superfund"
below for additional regulatory information.
Hazardous Waste
CWM is required to obtain federal, state, local and foreign governmental
permits for its chemical waste treatment (including resource recovery), storage
and disposal facilities. Such permits are difficult to obtain, and in most
instances extensive geological studies, tests and public hearings are required
before permits may be issued. CWM's chemical waste treatment, storage and
disposal facilities are also subject to siting, zoning and land use
restrictions, as well as to regulations (including certain requirements
pursuant to federal statutes) which may govern operating procedures and water
and air pollution, among other matters. In particular, CWM's operations in the
United States are subject to the Safe Drinking Water Act (which regulates deep
well injection), TSCA (pursuant to which the EPA has promulgated regulations
concerning the disposal of PCBs), the Clean Water Act (which regulates the
discharge of pollutants into surface waters and sewers by municipal, industrial
and other sources) and the Clean Air Act (which regulates emissions into the
air of certain potentially harmful substances). In its transportation
operations, CWM is subject to the jurisdiction of the Interstate Commerce
Commission and regulated by the DOT and by regulatory agencies in each state.
Employee safety and health standards under OSHA are also applicable.
Of CWM's chemical waste treatment, resource recovery or disposal facilities
in the United States, all but three have been issued permits under RCRA. Such
facilities without RCRA permits continue to have interim status. Final permits
are to be issued jointly by authorized states, subject to EPA oversight, and by
the EPA. The regulations governing issuance of permits contain detailed
standards for hazardous waste facilities on matters such as waste analysis,
security, inspections, training, preparedness and prevention, emergency
procedures, reporting and recordkeeping. Once issued, a final permit has a
maximum fixed term of 10 years, and such permits for land disposal facilities
are required to be reviewed five years from the date of issuance. The issuing
agency (either the EPA or an authorized state) may review or modify a permit at
any time during its term.
The Company believes that CWM maintains each of its operating treatment,
storage or disposal facilities in substantial compliance with the applicable
requirements promulgated pursuant to RCRA, and CWM expects that each facility
with interim status ultimately can qualify to be issued a RCRA permit. It is
possible, however, that the issuance of a permit could be made conditional upon
the initiation or completion of modifications or corrective actions at
facilities, which might involve substantial additional capital expenditures on
the part of CWM. Although the Company is informed that CWM anticipates the
reauthorization of each permit at the end of its term if the facility's
operations are in compliance with applicable requirements, there can be no
assurance that such will be the case.
The radioactive waste services of CWM are also subject to extensive
governmental regulation. Due to the extensive geological and hydrological
testing and environmental data required, and the complex political
20
environment, it is difficult to obtain permits for radioactive waste disposal
facilities. Various phases of CWM's low-level radioactive waste management
services are regulated by various state agencies, the NRC and the DOT.
Regulations applicable to CWM's operations include those dealing with
packaging, handling, labeling and routing of radioactive materials, and
prescribe detailed safety and equipment standards and requirements for
training, quality control and insurance, among other matters. Employee safety
and health standards under OSHA are also applicable.
See also "RCRA" and "Superfund" below for additional regulatory information.
Engineering, Construction, Industrial and Related Services
RCRA, state law analogues, TSCA and other environmental statutes and
regulations impose strict operational requirements on the performance of
certain aspects of hazardous substances remedial work. These requirements
specify complex methods for identification, storage, treatment and disposal of
wastes generated during a project. Failure to meet these requirements could
result in termination of contracts, substantial fines and other penalties. In
addition, when Rust's remedial activities at any site involve the treatment,
storage or disposal of hazardous waste, it must adhere to the permitting and
substantive requirements of these regulations. The cost and complexity of
permit or license applications for remedial work can be considerable;
frequently, such applications must undergo significant and time-consuming
redrafting before being deemed complete by the regulatory agency. Furthermore,
Rust may not receive the necessary permits at the end of this application
process, for any of a variety of reasons such as perceived compliance problems,
the permitting authority's judgment that the application, even if complete,
fails to meet technical or regulatory requirements and community opposition to
the project. Any of these reasons can also cause significant delays in the
issuance of necessary permits. It is also possible that the liability imposed
by Superfund could, under certain limited factual circumstances, apply to
activities of Rust. See also "RCRA" and "Superfund" below for additional
regulatory information.
The practice of engineering and architecture is regulated by state statutes.
All states require architects and engineers to be registered by their
respective state registration boards as a condition to offering or rendering
professional services. Many states also require companies offering or rendering
professional services, such as Rust, to obtain certificates of authority.
Rust's businesses are also subject to OSHA and to DOT regulations concerning
the transportation of hazardous materials.
Trash-to-Energy, Water Treatment, Air Quality and Related Services
WTI's business activities are subject to environmental regulation under
federal, state and local laws and regulations, including the Clean Air Act, the
Clean Water Act and RCRA. The Company believes that WTI's business is conducted
in an environmentally responsible manner in material compliance with applicable
laws and regulations. The Company does not anticipate that WTI's 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 of 1990 it is probable that the air
pollution control systems at certain trash-to-energy projects owned or operated
by WTI's subsidiaries will be required to be modified by the end of the decade
to comply with the more stringent regulations promulgated thereunder. Although
the expenditures related to such modifications, if required, will likely be
significant, they are not expected to have a material adverse effect on WTI's
liquidity or results of operations. While WTI frequently obtains the right to
pass on to the long-term contract users of its facilities increased capital and
operating costs resulting from changes in law, there can be no assurance 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, by-products and residues generated
thereby. The Clean Air Act Amendments of 1990 specifically
21
prohibit the EPA from regulating ash generated from trash-to-energy facilities
as a hazardous waste under RCRA for a two-year period following enactment.
Whether or not such ash may be regulated as a hazardous waste under RCRA has
been the subject of conflicting court decisions. Although WTI does not
anticipate that regulation of such ash, if and when it occurs, will adversely
affect WTI in any material manner, any such development could require
significant additional expenditures to achieve compliance with such
requirements or policies. There can be no assurance that in such event WTI
would be able to recover all such costs from its customers.
WTI's businesses are also 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 WTI believes would not be affected by the repeal or modification
of PURPA, the future growth of WTI's trash-to-energy and other small power
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.
RCRA
Pursuant to RCRA, the EPA has established and administers a comprehensive,
"cradle-to-grave" system for the management of a wide range of industrial by-
products and residues identified as "hazardous" wastes. States that have
adopted hazardous waste management programs with standards at least as
stringent as those promulgated by the EPA may be authorized by the EPA to
administer their programs in lieu of RCRA.
Under RCRA and federal transportation laws, a transporter must deliver
hazardous waste in accordance with a manifest prepared by the generator of the
waste and only to a treatment, storage or disposal facility having a RCRA
permit or interim status under RCRA. Every facility that treats or disposes of
hazardous wastes must obtain a RCRA permit from the EPA or an authorized state
and must comply with certain operating standards. The RCRA permitting process
involves applying for interim status and also for a final permit. Under RCRA
and the implementing regulations, facilities which have obtained interim status
are allowed to continue operating by complying with certain minimum standards
pending issuance of a permit.
Amendments to RCRA enacted in 1984 expanded its scope by, among other things,
adding certain wastes to the hazardous category and providing for the
regulation of hazardous wastes generated in quantities greater than 100
kilograms per month. Additionally, the amendments impose restrictions on land
disposal of certain hazardous wastes and prescribe more stringent standards for
hazardous waste land disposal facilities. Land disposal of certain types of
untreated hazardous wastes was banned except where the EPA determined that land
disposal of such wastes and treatment residuals should be permitted. In
accordance with the amendments, the disposal of liquids in hazardous waste land
disposal facilities was prohibited in 1985.
The EPA currently is considering a number of fundamental changes to its
regulations under RCRA that could facilitate exemptions from hazardous waste
management requirements, including policies and regulations that could
implement the following changes: redefine the criteria for determining whether
wastes are hazardous; prescribe treatment levels which, if achieved, could
render wastes non-hazardous; encourage further recycling and waste
minimization; reduce treatment requirements for certain wastes to encourage
alternatives to incineration; establish new operating standards for combustion
technologies; and indirectly encourage on-site remediation.
In addition to the foregoing provisions, RCRA regulations require the Company
to demonstrate financial responsibility for possible bodily injury and property
damage to third parties caused by both sudden and
22
nonsudden accidental occurrences. See "Insurance." Also, RCRA regulations
require WMI and CWM to provide financial assurance that funds will be available
when needed for closure and post-closure care at their waste treatment, storage
and disposal facilities, the costs of which could be substantial. Such
regulations allow the financial assurance requirements to be satisfied by
various means, including letters of credit, surety bonds, trust funds, a
financial (net worth) test and a guarantee by a parent corporation.
SUPERFUND
Superfund provides for EPA-coordinated response and removal actions to
releases of hazardous substances into the environment, and authorizes the
federal government either to clean up facilities at which hazardous substances
have created actual or potential environmental hazards or to order persons
responsible for the situation to do so. Superfund assigns liability for these
response and other related costs to parties involved in the generation,
transfer and disposal of such hazardous substances. Superfund has been
interpreted as creating strict, joint and several liability for costs of
removal and remediation, other necessary response costs and damage to natural
resources. Liability extends to owners and operators of waste disposal
facilities (and waste transportation vehicles) from which a release occurs,
persons who owned or operated such facilities at the time the hazardous
substances were disposed, persons who arranged for disposal or treatment of a
hazardous substance at or transportation of a hazardous substance to such a
facility, and waste transporters who selected such facilities for treatment or
disposal of hazardous substances, as well as to generators of such substances.
Liability may be trebled if the responsible party fails to perform a removal or
remedial action ordered under the law. For additional information concerning
potential Superfund liability, see "Legal Proceedings" below.
Superfund created a revolving fund to be used by the federal government to
pay for the cleanup efforts. In late 1990, federal Superfund spending through
the end of the government's 1994 fiscal year was authorized to a maximum of
$5.1 billion.
The U. S. Congress is expected to reauthorize and revise the Superfund
statute in 1994 or 1995. In addition to possible changes in the statute's
funding mechanisms and provisions for allocating cleanup responsibility, it is
possible that Congress also will fundamentally alter the statute's provisions
governing the selection of appropriate site cleanup remedies. For example,
Congress is expected to consider whether to continue Superfund's current
reliance on stringent technology standards issued under other statutes (such as
RCRA) to govern removal and treatment of remediation wastes or to adopt new
approaches such as national or site-specific risk based standards. This and
other potential policy changes could significantly affect the stringency and
extent of site remediation, the types of remediation techniques that will be
employed, and the degree to which permitted hazardous waste management
facilities will be used for remediation wastes.
International Waste Management and Related Services
Waste Management International's operations are subject to the general
business and environmental laws and regulations of the countries where the
services are performed and, in Europe, to European Union regulations and
directives. In general, environmental laws and regulations and enforcement
thereof outside the United States are not as stringent as in the United States,
with certain exceptions. However, such laws and regulations vary markedly from
country to country and are evolving rapidly. The treaty on European Union,
signed in December 1991, came into force in November 1993 and will in the
future further strengthen the development and enforcement of European Union
environmental law. Increased privatization of solid waste services, increased
public awareness of the potentially harmful effects of unregulated disposal of
hazardous wastes on the environment and human health, and technological
advances have led to extensive and evolving national and European Union
regulation of waste management activities. While Waste Management International
believes that its waste management and related services operations are in
substantial compliance with applicable laws and regulations, Waste Management
International is unable to predict the course of development of such laws and
regulations.
23
COMPETITION
Waste Management is the largest provider of comprehensive solid waste
management services in North America and CWM is a leading provider of
comprehensive hazardous waste management services in the United States.
Waste Management encounters intense competition, primarily in the pricing and
rendering of services, from various sources in all phases of its solid waste
management and related operations. In the solid waste collection phase,
competition is encountered, for the most part, from national, regional and
local collection companies as well as from municipalities and counties (which,
through use of tax revenues, may be able to provide such services at lower
direct charges to the customer than can Waste Management) and some large
commercial and industrial companies which handle their own waste collection. In
the solid waste transfer, resource recovery and disposal phases of its
operations, competition is encountered primarily from municipalities, counties,
local governmental agencies, other national or regional waste management
companies and certain large corporations not primarily involved in the solid
waste management services business. The Company also encounters intense
competition in pricing and rendering of services in its medical and infectious
waste management, portable fencing and power pole, portable sanitation and
street sweeping and parking lot cleaning services businesses from numerous
large and small competitors.
CWM encounters competition from a number of sources, including several
national or regional firms specializing primarily in chemical waste management,
local waste management concerns and, to a much greater extent, generators of
chemical wastes which seek to reduce the volume of or otherwise process and
dispose of such wastes themselves. The basis of competition is primarily
technical expertise and the price, quality and reliability of service.
The service industries in which Rust competes are highly competitive. Rust
encounters intense competition, primarily in pricing, quality and reliability
of services from various sources in all aspects of its engineering,
construction, environmental and infrastructure consulting, hazardous substance
remediation, and on-site industrial and related services operations.
WTI experiences substantial competition in all aspects of its business. It
competes with a large number of firms, both nationally and internationally some
of which may have substantially greater financial and technical resources than
WTI. The principal competitive factors with respect to its 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
attractive development opportunities is intense, as there are a number of
competitors in the industry interested in such opportunities.
Waste Management International encounters intense competition from local
companies and governmental entities in particular countries, as well as from
major international companies. Pricing, quality of service and type of
equipment utilized are the primary methods of competition for collection
services, and proximity of suitable treatment or disposal facilities, technical
expertise, price, quality and reliability of services are the primary methods
of competition for treatment and disposal services.
Pursuant to the First Amended and Restated International Business
Opportunities Agreement, dated January 1, 1993, by and among CWM, WTI, Waste
Management International, Inc., Waste Management International, Rust and the
Company (as amended, the "IBOA"), which agreement is also a successor to
certain prior agreements among certain of the parties, each of CWM, WTI and
Rust has agreed that, until the later of July 1, 2000 or the date on which the
Company ceases to beneficially own a majority of the outstanding voting equity
interests of such subsidiary or ceases to beneficially own a majority of the
outstanding voting equity interests of Waste Management International, and in
each case no longer has an option to obtain such ownership, such subsidiary
will not engage in waste management services; design,
24
development, construction and operation of trash-to-energy facilities;
collection, storage, processing, treatment or disposal of hazardous wastes
(including hazardous substance remediation services); or design, engineering
and construction (where the customer is seeking third-party operation), and
maintenance of water, wastewater and sewage treatment facilities (including
facilities for treating hazardous waste streams whether or not the customer is
seeking third-party operation) outside North America (i.e., the United States,
its territories and possessions, Canada and Mexico) (the "Waste Management
International Allocated Activities"), except with respect to licensing of
technology and minor interests by CWM, WTI or Rust in publicly held entities.
WTI may engage outside North America in the design, engineering, construction,
operation and maintenance of chimneys and air pollution control facilities (the
"WTI Allocated Activities"). Rust may engage outside North America in
activities relating to (i) architectural services, (ii) engineering and design
services and procurement, construction and construction management services
(including marine construction and dredging), other than those relating to the
Waste Management International Allocated Activities and the WTI Allocated
Activities, (iii) scaffolding services, (iv) demolition and dismantling
services, (v) environmental consulting services, and (vi) industrial facility
and power plant maintenance services (the "Rust Allocated Activities"). Each of
CWM, WTI, Rust and the Company have agreed that, until the later of (x) July 1,
2000 or (y) the date on which the Company ceases to beneficially own a majority
of the outstanding voting equity interests of Waste Management International
(including ordinary shares owned by Rust and WTI, if majority-owned by the
Company), and no longer has an option to obtain such ownership, it and its
affiliated entities shall not participate outside North America in the Waste
Management International Allocated Activities except through Waste Management
International. Sales by the Company of recyclables, licensing of technology,
minor investments by the Company in publicly held entities and the interest of
the Company in an existing city cleaning business in Venezuela are also
permitted activities of the Company outside North America. Waste Management
International has agreed that for the same time periods as are applicable to
CWM, WTI, Rust and the Company above in this paragraph, it will not engage in
North America in the type of activities included within the Waste Management
International Allocated Activities outside North America, in the WTI Allocated
Activities or the Rust Allocated Activities. Businesses or assets acquired by a
party to the IBOA which are in the domain of another party thereto (according
to the allocations described above) must be offered for sale to the other party
at fair market value.
By agreement among the parties, the Company is responsible for determining
business allocations among CWM, WTI, Rust, the Company and Waste Management
International which are not controlled by the allocations set forth in the
preceding paragraph. In this connection CWM, WTI, Rust, the Company and Waste
Management International have agreed that in order to minimize the potential
for conflicts of interest among various subsidiaries under the common control
of the Company and for so long as the Company shall have beneficial ownership
of a majority of the outstanding voting equity interests of such subsidiary (or
an option to obtain such ownership), the Company has the right to direct future
business opportunities to the Company or the Company-controlled subsidiary
which, in the Company's reasonable and good faith judgment, has the most
experience and expertise in that line of business, provided that the Company
may not allocate a business opportunity to a particular subsidiary if such
business opportunity would involve the subsidiary in a breach of its agreement
not to compete as described in the immediately preceding paragraph.
Opportunities outside North America relating to the provision of future waste
management services are generally to be allocated to Waste Management
International, except that opportunities outside North America relating to the
WTI Allocated Activities and the Rust Allocated Activities are generally to be
allocated to WTI and Rust, as the case may be. Environmental opportunities
other than waste management activities are to be allocated in the Company's
good faith judgment. No party is liable for consequential damages, except for
lost profits, for any breach of the IBOA. Until such time as the Company ceases
to control a majority of the shares of CWM, the Company has also agreed not to
engage directly or indirectly in the storage, processing, treatment or disposal
of certain radioactive or hazardous waste in the United States, Canada or
Mexico, except through CWM.
25
INSURANCE
While the Company believes it operates professionally and prudently, its
business exposes it to risks such as the potential for harmful substances
escaping into the environment and causing damage or injuries, the cost of which
could be substantial. The Company currently maintains liability insurance
coverage for occurrences under various environmental impairment, primary
casualty and excess liability insurance policies. The Company believes that its
policies comply with applicable environmental regulatory financial
responsibility requirements.
The market for non-sudden environmental impairment liability insurance is
still constricted, with only a few insurance companies currently offering
coverage and with coverage entailing limited amounts with restrictive terms and
high premium costs. Consequently, the Company has determined to maintain
coverage under only one non-sudden environmental impairment liability insurance
policy. Under that policy, losses paid by the carrier must be reimbursed by the
Company over a period of years, subject to a requirement that the Company make
advance deposits with the carrier for such purpose. A claim under such an
insurance policy which does not transfer risk, if successful and of sufficient
magnitude, could have a material adverse effect on the Company's business,
results of operations or financial condition.
EMPLOYEES
WMX Technologies and its subsidiaries employ a total of approximately 72,600
persons in their worldwide operations. Of this number, the Company employs
approximately 32,100 persons in its WMI solid waste and related services
operations, including approximately 24,000 persons employed in solid waste
collection, transfer, resource recovery and disposal activities, and
approximately 8,100 persons employed in managerial, executive, sales, clerical,
data processing and other solid waste and related activities. At December 31,
1993, approximately 5,260 of Waste Management's employees in its solid waste
and related services operations were represented by various labor unions under
collective bargaining agreements expiring on various dates through 1998.
Agreements covering an aggregate of approximately 1,670 employees expire in
1994. Waste Management has not experienced a significant work stoppage and
considers its employee relations to be good.
CWM (excluding Rust) employed approximately 4,400 persons at December 31,
1993. Approximately 200 of CWM's employees were employed as managers or
executives, approximately 3,200 were employed in hazardous waste
transportation, treatment, resource recovery and disposal activities (including
approximately 900 performing technical, analytical or engineering services),
and approximately 1,000 were employed in sales, clerical, data processing and
other hazardous waste-related activities. At December 31, 1993, approximately
250 of CWM's employees were represented by various labor unions under
collective bargaining agreements expiring on various dates through 1997. Five
collective bargaining agreements will expire in 1994. CWM has not experienced a
significant work stoppage and considers its employee relations to be good.
At December 31, 1993, WTI had approximately 3,800 full-time employees. WTI
considers relations with its employees to be good.
Rust employed approximately 15,900 persons at December 31, 1993, of whom
approximately 5,100 provided technical or engineering services (excluding craft
personnel hired on a temporary basis). At that date, approximately 2,100 of
Rust's employees were represented by various labor unions. Rust believes its
employee relations are good.
As of December 31, 1993, Waste Management International employed
approximately 16,400 persons. Of this number, Waste Management International
employed approximately 12,900 persons in its collection service operations,
1,400 in its treatment and disposal services operations and 2,100 in
administrative functions. At December 31, 1993, approximately 12,700 Waste
Management International employees were represented by labor unions. Waste
Management International considers its employee relations to be good.
26
ACQUISITIONS AND DISPOSITIONS
Since August 1971, the Company has acquired a number of companies, and
certain assets of other companies, engaged in various phases of the
environmental services industry. See Note 2 to WMX Technologies' Consolidated
Financial Statements filed as an exhibit to this report and incorporated herein
by reference. The amounts and types of consideration generally have been
determined by direct negotiations with the owners of the businesses acquired.
In most instances, the owners of the acquired businesses were few in number,
and often certain key former owners have continued to operate the businesses
following acquisition by the Company. During 1993, the Company continued to
acquire additional operations in the environmental services industry.
Acquisitions have historically contributed significantly to the Company's
growth. The Company's growth prospects may be affected by the availability of
additional business acquisitions at reasonable prices and the Company's ability
to finance such acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" filed as an exhibit to this
report and incorporated herein by reference for a discussion of capital
expenditures by the Company, including acquisitions. Other well-capitalized
companies also compete intensely for businesses available to be acquired. The
Company is continually engaged in the process of considering and negotiating
additional acquisitions, although with many of the Company's strategic goals
achieved, the emphasis will be on businesses that promise above-average returns
or meet remaining strategic objectives. Some future acquisitions could be
material. The acquisition of businesses also entails certain inherent risks.
Although the Company generally performs an investigation of businesses to be
acquired, because of the nature of the liabilities involved in these
businesses, there can be liabilities which will not become known until after
the transactions are consummated. The Company seeks to minimize the impact of
these liabilities and expenditures by obtaining indemnities and warranties from
the seller which may be supported by deferring payment of a portion of the
purchase price. These indemnities and warranties, if obtained, may not,
however, fully cover the liabilities due to their limited scope, amount, or
duration, the financial limitations of the indemnitor or warrantor, or other
reasons. Businesses purchased may require expenditures to make up for deferred
maintenance and to improve the quality or quantity of assets acquired. In
certain cases, the Company establishes reserves in respect of the anticipated
costs of remediation for acquired sites.
In September 1988, CWM acquired newly issued common and convertible preferred
shares from Brand equivalent to a 49% ownership interest in Brand. Most of the
consideration was paid in cash, with the balance consisting of CWM's asbestos
abatement businesses which were transferred to Brand and CWM's agreement, among
other matters, to furnish certain services to Brand. In October 1990, CWM
exercised options increasing its ownership of Brand capital stock to a majority
interest. In January 1993, CWM contributed its Brand shares to Rust.
In September 1990, the Company engaged in a merger transaction whereby WTI
became a majority-owned subsidiary of the Company. In the transaction, each
share of WTI common stock (other than those held by the Company, WTI or their
respective affiliated companies) was converted into the right to receive .574
of a share of WTI common stock and .469 of a share of common stock of the
Company, which resulted in the Company's issuance of a total of 14,855,341
shares of its common stock. Prior to the merger, the Company owned
approximately 22% of the outstanding shares of common stock of WTI. The
Company's 22% interest in WTI was acquired as the result of the Company's
contribution of certain businesses to a subsidiary of WTI in 1988.
As part of the merger, the Company, WTI and CWM also entered into certain
ancillary agreements. The principal elements of the ancillary agreements
include (i) an agreement of the Company to use all reasonable efforts to assist
WTI in obtaining and maintaining a rating of "A" or better for WTI's debt
securities (and in connection with which the Company may be required to
purchase up to $200 million of WTI subordinated debt or preferred stock), (ii)
an option permitting WTI to purchase the Company's medical waste disposal
business at a 15% discount from the fair market value of such business, (iii)
provisions for the
27
joint development by WTI and the Company of recycling services and technology,
and including the grant to WTI of royalty-free licenses to certain recycling
and gas-recovery technology owned by the Company, and (iv) an agreement (as
amended and restated effective as of July 1, 1993) (A) pursuant to which the
Company will make various services available to WTI, WTI will lend its excess
cash to the Company, the Company will fund WTI's capital requirements (subject
to a limit of the amount of funds loaned by WTI to the Company plus, until
September 1995, $100 million) and the Company will assist WTI in procuring
insurance and surety bonds, (B) which provided for the allocation of business
opportunities among the Company and its majority-owned subsidiaries (such
provisions having been superseded by the arrangements described above under
"Competition") and (C) which includes an option enabling the Company to
maintain its majority ownership of WTI.
The ancillary agreements also included certain options whereby in August
1991, CWM and WTI each acquired a 15% fully diluted equity interest in newly
issued common stock of a predecessor of Waste Management International, which
predecessor then held substantially all of the waste management and related
services business interests of the Company outside North America. CWM financed
the purchase by issuing a 10-year, convertible subordinated debenture to the
Company in the amount of $168,974,000 with interest payable at 6% per year. In
December 1992, the debenture was converted in accordance with its terms into
8,046,380 shares of CWM common stock. WTI acquired the Waste Management
International shares by issuing approximately 12,000,000 shares (as adjusted
for a two-for-one stock split) of its common stock to the Company. Each of the
interests acquired by CWM and WTI in the option exercise was converted into a
15% equity interest in Waste Management International in 1991, which became 12%
as a result of the Waste Management International initial public offering in
April 1992. In January 1993, CWM contributed its interest in Waste Management
International to Rust.
In May 1993, pursuant to an agreement (the "NSC Purchase Agreement") by and
among NSC, NSC's wholly owned subsidiary, NSC Industrial Services Corp., Brand,
WMX and OHM Corporation, previously an approximately 70% stockholder of NSC,
Brand transferred its asbestos abatement business to NSC in exchange for an
approximately 41% interest in NSC Corporation and two industrial services
companies of NSC. Rust assumed the rights and obligations of Brand under the
NSC Purchase Agreement upon consummation of the merger of Brand into a
subsidiary of Rust.
In August 1993, Rust acquired EnClean, Inc., an industrial and environmental
services business providing hydroblasting, industrial vacuuming, chemical
cleaning, separation technology, site remediation and catalyst handling
services. The acquisition expanded Rust's presence primarily in the Gulf Coast
area and added chemical cleaning and catalyst handling to the services already
provided by Rust.
In September 1993, CWM announced plans to, among other things, eliminate
approximately 1,200 positions by year-end 1994, consolidate operations in its
treatment and land disposal group, restructure its sales and service regions,
sell selected service centers in marginal service lines and geographies, seek
joint venture partners and review other strategic alternatives for its Port
Arthur, Texas incinerator and centralize additional functions. CWM is
restructuring its hazardous waste management and related services operations on
the assumption that future base business revenue growth, if any, will not keep
pace with the recovery in the general economy, and plans not to make
investments which are primarily supported by non-recurring (event business)
volumes.
In January 1994, the Company agreed to sell its Modulaire(R) mobile office
services business to the GE Modular Space Division of Transport International
Pool, Inc., a subsidiary of General Electric Co. The sale is expected to be
closed prior to the end of the second quarter of 1994.
The Company has also acquired numerous companies and interests in companies
internationally through Waste Management International or its predecessors. See
"International Waste Management and Related Services."
28
ITEM 2. PROPERTIES.
The principal property and equipment of the Company consists of land
(primarily disposal sites), buildings and waste treatment or processing
facilities (other than disposal sites), and vehicles and equipment, which as of
December 31, 1993 represented approximately 18%, 6% and 30%, respectively, of
the Company's and its subsidiaries' total consolidated assets. The Company
believes that its vehicles, equipment and operating properties are well
maintained and suitable for its current operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" filed
as an exhibit to this report and incorporated by reference herein for a
discussion of property and equipment expenditures by the Company for the last
three years and the capital budget for 1994. The Company's subsidiaries lease
numerous office and operating facilities throughout the world. For the year
ended December 31, 1993, aggregate annual rental payments on real estate leased
by the Company and its subsidiaries approximated $117,296,000.
The principal fixed assets of Waste Management consist of vehicles and
equipment (which include, among other items, approximately 18,200 collection
and transfer vehicles, 1,453,000 containers and 18,000 stationary compactors in
the United States and Canada). WMI owns or leases real property in most states
and Canadian provinces in which it is doing business. At December 31, 1993, 105
solid waste disposal facilities, aggregating approximately 65,700 total acres
including approximately 15,745 permitted acres, were owned by Waste Management
in the United States and Canada and 28 facilities, aggregating approximately
11,640 total acres including approximately 6,530 permitted acres, were leased
from parties not affiliated with Waste Management under leases expiring from
1994 to 2085.
The principal fixed assets of CWM (excluding Rust) consist of its network of
transportation, treatment, storage and disposal facilities and its fleet of
transportation vehicles. At December 31, 1993, CWM owned or leased in the
United States a total of 20 treatment, resource recovery or disposal
facilities. At such date, CWM's chemical waste facilities with secure land
disposal sites aggregated approximately 10,500 acres, including approximately
3,050 permitted acres. CWM believes that, at current rates of utilization, the
permitted and other potentially useable acres included in such total have
sufficient capacity to enable CWM to conduct secure land disposal operations
for more than 30 years, although not all of CWM's facilities have such
capacity.
The principal property and equipment of Rust consist of Rust's headquarters
buildings, vehicles, equipment and scaffolding inventory, which as of December
31, 1993 represented approximately 20% of Rust's total consolidated assets. The
principal fixed assets utilized in Rust's operations at December 31, 1993
consisted of vehicles and equipment (which included, among other items, air
monitoring equipment, decontamination trailers, mobile laboratory trailers,
vacuum trucks, office trailers, pieces of heavy excavating machinery, mobile
waste treatment units and scaffolding inventory). Rust believes that its
vehicles, equipment and scaffolding inventory are well maintained and suitable
for its current operations. Rust leases numerous office, warehouse and
equipment and scaffolding yard facilities in various locations throughout the
United States.
WTI currently owns, operates or leases 14 trash-to-energy facilities, five
cogeneration and small power production facilities, two coal handling
facilities, three biosolids drying and pelletizing facilities and various other
manufacturing, office and warehouse facilities. Facilities leased or operated
(but not owned) by WTI are under leases or agreements having terms expiring
from the years 1996 to 2011, subject to renewal options in certain cases.
The principal property and equipment of Waste Management International
consist of land (primarily disposal sites), buildings and other waste treatment
or processing facilities (other than disposal sites), vehicles and equipment.
Waste Management International believes that its vehicles, equipment, and
operating properties are well maintained and suitable for its current
operations, although, due to its many recent acquisitions, vehicles are not
standardized. The principal fixed assets utilized in Waste Management
International's collection services operations at December 31, 1993 consisted
of vehicles and equipment
29
(which included, among other items, approximately 6,300 collection,
transportation, and other route vehicles and approximately 280 pieces of
landfill and other heavy equipment), approximately 270,000 containers, and
approximately 2,300 stationary compactors. In addition, Waste Management
International owns approximately 690 pieces of hazardous waste equipment,
consisting predominately of containers and collection vehicles. The principal
fixed assets utilized in Waste Management International's treatment and
disposal services operations at December 31, 1993 consisted of (i) 16 solid
waste landfills, aggregating approximately 1,200 total acres including
approximately 1,060 permitted acres, owned by Waste Management International,
(ii) 14 solid waste landfills, aggregating approximately 890 total acres
including approximately 860 permitted acres, leased from parties not affiliated
with Waste Management International under leases expiring from 1995 to 2015,
(iii) seven secure hazardous waste landfills owned or leased by Waste
Management International aggregating approximately 830 acres including
approximately 520 permitted acres, and (iv) owned, operated or leased trash-to-
energy facilities, other treatment, storage, or disposal facilities and various
other manufacturing, office and warehouse facilities. Waste Management
International also operates 20 other solid waste landfills.
ITEM 3. LEGAL PROCEEDINGS.
Some of the businesses in which the Company is engaged are intrinsically
connected with the protection of the environment and the potential for the
unintended or unpermitted 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 where 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 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. From time to time the Company pays fines or penalties
in environmental proceedings relating primarily to waste treatment, storage or
disposal facilities. At December 31, 1993, CWM and its subsidiaries (other than
Rust) were involved in three governmental proceedings (other than those
described below) and WTI and Rust were each involved in one such proceeding
where it is believed that sanctions involved in each instance may exceed
$100,000.
On November 12, 1993, the Supreme Court of the State of Louisiana denied
CWM's application for a writ of review of an opinion of the Louisiana First
Circuit Court of Appeal affirming an administrative order that imposed a fine
of approximately $262,000 for certain incidents occurring in 1987 and 1988 at
CWM's Lake Charles, Louisiana facility, including alleged unpermitted storage
of waste and alleged failures to mark the accumulation date on two containers,
to remove or overpack waste from a container in poor condition, to keep
hazardous waste containers closed, to properly design and operate the
containment system in a fuels loading and unloading area, to provide an
adequate number of warning signs, and to take certain actions to prevent fires.
On December 30, 1993, a subsidiary of CWM entered into a stipulation of
settlement with the New Jersey Department of Environmental Protection and
Energy in connection with certain matters occurring in 1992 and 1993 at CWM's
Newark, New Jersey facility, including alleged failures to follow required
procedures for rejecting hazardous wastes, to comply with certain requirements
for managing incompatible wastes and to prepare a manifest before transporting
certain waste, and the alleged shipment of waste to an unauthorized facility.
CWM's subsidiary agreed to pay civil penalties aggregating approximately
$218,000. In settling these matters, CWM's subsidiary did not admit violations
of law.
The Company or certain of its subsidiaries have been identified as
potentially responsible parties in a number of governmental investigations and
actions relating to waste disposal facilities which may be subject to remedial
action under Superfund. The majority of these proceedings are based on
allegations that certain
30
subsidiaries of the Company (or their predecessors) transported hazardous
substances to the facilities in question, often prior to acquisition of such
subsidiaries by the Company. Such proceedings arising under Superfund typically
involve numerous waste generators and other waste transportation and disposal
companies and seek to allocate or recover costs associated with site
investigation and cleanup, which costs could be substantial.
As of December 31, 1993, the Company or its subsidiaries had been notified
that they are potentially responsible parties in connection with 104 locations
listed on the Superfund National Priority List ("NPL"). Of the 104 NPL sites at
which claims have been made against the Company, 19 are sites which the Company
has come to own over time. All of the NPL sites owned by the Company were
initially sited by others as land disposal facilities. At each of the 19 owned
facilities, the Company is working in conjunction with the government to
characterize or to remediate identified site problems. In addition, at these 19
facilities the Company has either agreed with other legally liable parties on
an arrangement for sharing the costs of remediation or is pursuing resolution
of an allocation formula. The 85 NPL sites at which claims have been made
against the Company and which are not owned by the Company are at different
procedural stages under Superfund. At some, the Company's liability is well
defined as a consequence of a governmental decision as to the appropriate
remedy and an agreement among liable parties as to the share each will pay for
implementing that remedy. At others, where no remedy has been selected or the
liable parties have been unable to agree on an appropriate allocation, the
Company's future costs are substantially uncertain.
The Company periodically reviews its role, if any, with respect to each such
location, giving consideration to the nature of the Company's alleged
connection to the location (e.g., owner, operator, transporter or generator),
the extent of the Company's alleged connection to the location (e.g., amount
and nature of waste hauled to the location, number of years of site operation
by the Company or other relevant factors), the accuracy and strength of
evidence connecting the Company to the location, the number, connection and
financial ability of other named and unnamed potentially responsible parties at
the location, and the nature and estimated cost of the likely remedy. Where the
Company concludes that it is probable that a liability has been incurred, a
provision is made in the Company's financial statements for the Company's best
estimate of the liability based on management's judgment and experience,
information available from regulatory agencies and the number, financial
resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of a
specific site, as well as the typical allocation of costs among such parties.
If a range of possible outcomes is estimated and no amount within the range
appears to be a better estimate than any other, then the Company provides for
the minimum amount within the range, in accordance with generally accepted
accounting principles. Sites subject to state action under state laws similar
to the federal Superfund statute are treated by the Company in the same way as
NPL sites.
The Company's estimates are subsequently revised, as deemed necessary, as
additional information becomes available. While the Company does not anticipate
that the amount of any such revisions will have a material adverse effect on
the Company's operations or financial condition, the measurement of
environmental liabilities is inherently difficult and the possibility remains
that technological, regulatory or enforcement developments, the results of
environmental studies, or other factors could materially alter this expectation
at any time. Such matters could have a material adverse impact on financial
condition or earnings for one or more fiscal quarters or years.
The Company and certain of its subsidiaries are currently involved in civil
litigation and governmental proceedings relating to the conduct of their
business. While the outcome of any particular lawsuit or governmental
investigation cannot be predicted with certainty, the Company believes that
these matters will not have a material adverse effect on its results of
operations or financial condition.
On September 17, 1993, H. Peter Kriendler, a stockholder of CWM, filed suit
in the U. S. District Court for the Northern District of Illinois, Eastern
Division, alleging that CWM had violated Section 10(b) of the
31
Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Two similar suits
were filed in that Court on September 30, 1993 and October 13, 1993, and on
October 29, 1993 the Court and the parties agreed to consolidate them with the
first action. These lawsuits allege that CWM violated federal securities laws
by engaging in misrepresentations of, or failures to disclose, material
information concerning primarily (i) alleged overvaluation of certain of CWM's
assets, principally its incineration facilities, (ii) alleged overstatement of
CWM's earnings for 1992 and the first quarter of 1993 due to failure to write
down the value of such assets and other matters and (iii) the alleged existence
of certain adverse hazardous waste treatment and disposal industry conditions
and trends. The lawsuits also allege, among other things, liability on the part
of the Company for the above-described alleged violations. The lawsuits seek to
represent a class of persons consisting of all purchasers of CWM's common stock
during the period of February 4, 1993 through September 3, 1993 and to recover
compensation for damages allegedly suffered by such class due to the above-
described alleged violations. The Company and CWM believe that they have
meritorious defenses to these lawsuits and intend to contest the lawsuits
vigorously.
In an examination of WTI's federal income tax returns for the period 1986-
1988, the Internal Revenue Service (the "IRS") in January 1993 proposed a
significant adjustment related to the 1988 sale of a former subsidiary, which
WTI disputed. Under a tax sharing agreement between WTI and a predecessor of
WTI, WTI is indemnified by the predecessor for the full amount of any liability
assessed with regard to this issue by the IRS. In March 1994, WTI and the IRS
filed a Stipulation of Settlement with the U.S. Tax Court which resolved the
dispute. WTI believes that the predecessor will be able to meet its
indemnification obligation in respect of the agreed tax liability.
The Company has brought suit against a substantial number of insurance
carriers in an action entitled Waste Management, Inc. et al. v. The Admiral
Insurance Company, et al. pending in the Superior court in Hudson County, New
Jersey. In this action the Company is seeking a declaratory judgment that
environmental liabilities asserted against the Company or its subsidiaries, or
that may be asserted in the future, are covered by insurance policies purchased
by the Company or its subsidiaries. The Company is also seeking to recover
defense costs and other damages incurred as a result of the assertion of
environmental liabilities against the Company or its subsidiaries for events
occurring over at least the last 25 years at approximately 130 sites and the
defendant insurance carriers' denial of coverage of such liabilities. The
defendants have denied liability to the Company and have asserted various
defenses, including that environmental liabilities of the type for which the
Company is seeking relief are not risks covered by the insurance policies in
question. The defendants have indicated that they intend to contest these
claims vigorously. Discovery is currently underway in this proceeding and is
expected to continue for several years. No trial date has been set. The Company
is unable at this time to predict the outcome of this proceeding. No amounts
have been recognized in the Company's financial statements for any potential
recoveries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the Company's security holders during the fourth
quarter of 1993.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages of the Company's executive officers
(as defined by regulations of the Securities and Exchange Commission), the
positions they hold with the Company and summaries of their business
experience. Executive officers are elected by the Board of Directors and serve
at the discretion of the Board.
J. Steven Bergerson, age 51, has been Senior Vice President-Law and
Compliance, since August 1992. He has been a Vice President of the Company
since 1984 and was General Counsel of the Company from 1974 until August 1992.
Mr. Bergerson has been employed by the Company since 1973.
32
Dean L. Buntrock, age 62, has been a director of the Company and has served
as Chairman of the Board and Chief Executive Officer of the Company since 1968.
From September 1980 to November 1984, he also served as President. Since May
1993, Mr. Buntrock has also been Chairman of the Board of CWM, a position he
previously held from 1986 to September 1991. Mr. Buntrock is also a director of
WTI, Rust, Waste Management International, Boston Chicken, Inc., Stone
Container Corporation and First Chicago Corporation.
Herbert A. Getz, age 38, has been a Vice President of the Company since May
1990 and General Counsel since August 1992. He has also been Secretary of the
Company since January 1988. He also served as Assistant General Counsel of the
Company from December 1985 until August 1992. Mr. Getz has also held the
offices of Vice President, General Counsel and Secretary at WMI from April 1989
until December 1993, and has been Vice President and Secretary of Rust since
January 1993. He served as Vice President, Secretary and General Counsel at WTI
from November 1990 until May 1993. He is a director of NSC. Mr. Getz commenced
employment with the Company in 1983.
Thomas C. Hau, age 58, has been a Vice President and the Controller and
Principal Accounting Officer of the Company since he commenced employment with
the Company in September 1990. From 1971 until his employment by the Company,
Mr. Hau was a partner of Arthur Andersen & Co.
James E. Koenig, age 46, has been a Senior Vice President of the Company
since May 1992, Treasurer of the Company since 1986 and its Chief Financial
Officer since 1989. Mr. Koenig first became a Vice President of the Company in
1986. From 1984 to 1986, Mr. Koenig was Staff Vice President and Assistant to
the Chief Financial Officer of the Company. Mr. Koenig has been employed by the
Company since 1977. Mr. Koenig also served as Vice President, Chief Financial
Officer and Treasurer of WTI from November 1990 to May 1993. He also serves as
a director of WTI, Waste Management International, Rust and CWM.
Phillip B. Rooney, age 49, has served as a director of the Company since 1981
and as its President and Chief Operating Officer since November 1984. Since
January 1994, he has also served as Chairman of the Board and Chief Executive
Officer of WMI. Mr. Rooney commenced employment with the Company in 1969 and
first became an officer of the Company in 1971. Since November 1990, he has
served as Chairman of the Board and Chief Executive Officer of WTI, and since
January 1993 he has served as Chairman of the Board of Rust. Mr. Rooney is also
a director of CWM, Waste Management International, Rust, WTI, Illinois Tool
Works, Inc., Caremark International Inc., Urban Shopping Centers, Inc., and
ServiceMaster Management Corporation, the general partner of ServiceMaster
Limited Partnership.
Donald A. Wallgren, age 52, has been Vice President and Chief Environmental
Officer of the Company since January 1994. From 1993 to January 1994, Mr.
Wallgren was Vice President--Environmental Management of the Company's former
corporate service subsidiary, WMX Technology and Services, Inc. He held the
same position at the Company from 1992 to 1993 and at WMI from 1989 to May
1990. From 1990 to 1992 he served as Vice President--Recycling, Development and
Environmental Management of WMI. Mr. Wallgren has been employed by the Company
since 1979.
33
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is traded on the New York Stock Exchange and the
Chicago Stock Exchange under the symbol "WMX." The following table sets forth
by quarter for the last two years the high and low sale prices of the Company's
common stock on the New York Stock Exchange Composite Tape as reported by the
Dow Jones News Retrieval Service, and the dividends declared by the Board of
Directors of the Company on its common stock.
[Download Table]
1992 QUARTERLY SUMMARY
---------------------- CASH DIVIDENDS
HIGH LOW DECLARED PER SHARE
---------- ---------- ------------------
First......................... 46 5/8 37 3/4 $.11
Second........................ 41 1/4 32 7/8 .13
Third......................... 36 7/8 32 .13
Fourth........................ 41 5/8 34 .13
1993 QUARTERLY SUMMARY
---------------------- CASH DIVIDENDS
HIGH LOW DECLARED PER SHARE
---------- ---------- ------------------
First......................... 40 1/4 33 5/8 $.13
Second........................ 36 3/8 29 1/4 .15
Third......................... 33 1/8 29 1/2 .15
Fourth........................ 30 5/8 23 .15
At March 23, 1994, the Company had approximately 71,250 stockholders of
record.
Due in part to the high level of public awareness of the business in which
the Company is engaged, regulatory enforcement proceedings or other unfavorable
developments involving the Company's operations or facilities, including those
in the ordinary course of business, may be expected to engender substantial
publicity which could from time to time have an adverse impact upon the market
price for the Company's common stock.
In September 1990, WMX Technologies announced its authorization to purchase
up to 25,000,000 shares of its common stock from time to time over the
following 24-month period in the open market or in privately negotiated
transactions. This program has been extended through September 1996. During
1992, the Company purchased approximately 7.6 million shares of its common
stock under this program. During 1993, the Company purchased approximately 8.4
million shares of its common stock under this program.
34
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.
[Download Table]
YEAR ENDED DECEMBER 31
----------------------------------------------------------
1989/1/ 1990/2/ 1991/3/ 1992/4/ 1993/5/
---------- ----------- ----------- ----------- -----------
(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
Revenue................. $4,413,742 $ 6,034,406 $ 7,550,914 $ 8,661,027 $ 9,135,577
Net income.............. $ 562,135 $ 684,762 $ 606,323 $ 850,036 $ 452,776
Earnings per common and
common equivalent
share.................. $ 1.22 $ 1.44 $ 1.23 $ 1.72 $ .93
Total assets............ $6,405,209 $10,518,243 $12,572,310 $14,114,180 $16,264,476
Long-term debt, less
portion payable within
one year............... $1,503,817 $ 3,139,623 $ 3,782,973 $ 4,312,511 $ 6,145,584
Dividends per share..... $ .29 $ .35 $ .42 $ .50 $ .58
--------
/1/The results for 1989 include a non-taxable gain of $70,826,000 resulting
from the public offering of 5,000,000 shares of common stock of CWM in
October 1989 and special charges of $112,000,000 before tax.
/2/The results for 1990 include an extraordinary charge of $24,547,000, or $.05
per share, representing the Company's percentage interest in the writedown
by WTI of WTI's investment in the stock of The Henley Group, Inc. and Henley
Properties Inc. to market value.
/3/The results for 1991 include a special charge of $296,000,000, before tax
and minority interest, primarily to reflect then current estimates of the
environmental remediation liabilities at waste disposal sites previously
used or operated by the Company and its subsidiaries or their predecessors.
See Note 11 to the Company's Consolidated Financial Statements.
/4/The results for 1992 include a non-taxable gain of $240,000,000 (before
minority interest) resulting from the initial public offering of Waste
Management International; special charges of $219,900,000, before tax and
minority interest, primarily related to writedowns of the Company's medical
waste business, CWM incinerators in Chicago, Illinois and Tijuana, Mexico
and Brand's investment in its asbestos abatement business and certain
restructuring costs incurred by Brand and CWM related to the formation of
Rust, and one time after-tax charges aggregating $71,139,000, or $.14 per
share, related to the cumulative effect of adopting two new accounting
standards. See Notes 1, 9 and 11 to the Company's Consolidated Financial
Statements.
/5/The results for 1993 include a non-taxable gain of $15,109,000 relating to
the issuance of shares by Rust, as well as the Company's share of a special
asset revaluation and restructuring charge of $550,000,000, before tax and
minority interest, recorded by CWM related primarily to a revaluation of
CWM's thermal treatment business, and a provision of approximately
$14,000,000 to adjust deferred income taxes resulting from the 1993 tax law
change. See Notes 1 and 11 to the Company's Consolidated Financial
Statements.
/6/Certain amounts have been restated to conform to 1993 classifications.
Reference is made to the ratio of earnings to fixed charges for each of the
years ended December 31, 1989, 1990, 1991, 1992 and 1993, as set forth in
Exhibit 12 to this report, which ratios are incorporated herein by reference.
35
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 32 to 39 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 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 40 to 58 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 13 to
the Consolidated Financial Statements referred to in Item 8(a) above and
incorporated herein by reference.
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.
Reference is made to the information set forth in the 12 paragraphs under the
caption "Election of Directors" beginning on page 1 of the Company's proxy
statement for the annual meeting scheduled for May 13, 1994 (the "Proxy
Statement") for a description of the directors of the Company, which paragraphs
are incorporated herein by reference. Information concerning the executive
officers of the Company is set forth above under "Executive Officers of the
Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
Reference is made to the information set forth under the caption
"Compensation" on pages 11 through 19 of the Proxy Statement, which
information, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to the information, including the tables and the footnotes
thereto, set forth under the caption "Securities Ownership of Management" on
pages 4 through 10 of the Proxy Statement, for certain information respecting
ownership of common stock of the Company, CWM, WTI, Waste Management
International and Rust, which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the first paragraph on page 18 and the paragraph under
the caption "Compensation Committee Interlocks and Insider Participation" on
page 19 of the Proxy Statement and the information set forth under the caption
"Certain Transactions" beginning on page 25 of the Proxy Statement for certain
information with respect to certain relationships and related transactions,
which paragraphs are incorporated herein by reference.
36
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Financial Statements, Schedules and Exhibits.
I. Financial Statements--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--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 Stockholders' Equity for the three
years ended December 31, 1993;
(v) Notes to Consolidated Financial Statements; and
(vi) Report of Independent Public Accountants.
II. Schedules.
(i) Schedule II--Amounts Receivable from Officers and Employees;
(ii) Schedule V--Property and Equipment;
(iii) Schedule VI--Accumulated Depreciation and Amortization of
Property and Equipment;
(iv) Schedule VIII--Reserves;
(v) Schedule IX--Short-term Borrowings;
(vi) Schedule X--Supplementary Income Statement Information; and
(vii) Report of Independent Public Accountants on Schedules.
All other schedules have been omitted since the required information
is not significant or is included in the financial statements or the
notes thereto, or is not applicable.
III. Exhibits.
The exhibits to this report are listed in the Exhibit Index elsewhere
herein. Included in the exhibits listed therein are the following
exhibits which constitute management contracts or compensatory plans or
arrangements/1/:
[Download Table]
(i) 1981 Stock Option Plan for Non-Employee Directors of registrant
(Exhibit 19 to registrant's report on Form 10-Q for the quarter
ended June 30, 1982)
(ii) WMX Technologies, Inc. 1982 Stock Option Plan, as amended to
March 11, 1988 (Exhibit 10.3 to registrant's 1988 annual report
on Form 10-K)
(iii) Deferred Director's Fee Plan, as amended (Exhibit 10.3 to
registrant's 1990 annual report on Form 10-K)
(iv) Director's Phantom Stock Plan (Exhibit 10.9 to registrant's 1984
annual report on Form 10-K)
(v) Employment Agreement, dated as of September 1, 1986, by and
between the registrant and Phillip B. Rooney (Exhibit 19.4 to
registrant's report on Form 10-Q for the quarter ended September
30, 1986)
(vi) WMX Technologies, Inc. Corporate Incentive Bonus Plan (filed
with this report)
(vii) WMX Technologies, Inc. Supplemental Executive Retirement Plan,
as amended and restated May 14, 1993 (Exhibit 10 to the
registrant's report on Form 8-K dated July 15, 1993)
(viii) Chemical Waste Management Inc. 1992 Stock Option Plan (Exhibit
10.31 to Chemical Waste Management, Inc.'s 1991 annual report on
Form 10-K)
37
[Download Table]
(ix) Supplemental Retirement Benefit Agreement, dated as of January
1, 1989, by and between the registrant and Peter H. Huizenga
(Exhibit 10.16 to Post-Effective Amendment No. 2 to registrant's
registration statement on Form S-1, Registration No. 33-13839)
(x) Chemical Waste Management, Inc. 1986 Stock Option Plan, as
amended (Exhibit 10.1 to Chemical Waste Management, Inc.'s 1989
annual report on Form 10-K)
(xi) Chemical Waste Management, Inc. 1986 Stock Option Plan for Non-
Employee Directors (Exhibit 10.2 to Chemical Waste Management,
Inc.'s registration statement on Form S-1, Registration No. 33-
8509)
(xii) Chemical Waste Management, Inc. Deferred Director's Fee Plan
(Exhibit 10.5 to Chemical Waste Management, Inc.'s registration
statement on Form S-1, Registration No. 33-8509)
(xiii) WMX Technologies, Inc. Director's Charitable Endowment Plan
(Exhibit 10.20 to registrant's 1989 annual report on Form 10-K)
(xiv) Supplemental Retirement Benefit Agreement dated as of January 1,
1991 by and between registrant and Donald F. Flynn (Exhibit
10.17 to registrant's 1990 annual report on Form 10-K)
(xv) Consulting Agreement dated as of January 1, 1991 by and between
registrant and Donald F. Flynn (Exhibit 10.18 to registrant's
1990 annual report on Form 10-K)
(xvi) Restricted Unit Plan for Non-Employee Directors of Wheelabrator
Technologies Inc. as amended through June 10, 1991 (Exhibit
19.03 to the report on Form 10-Q of Wheelabrator Technologies
Inc. for the quarter ended June 30, 1991)
(xvii) 1988 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its subsidiaries (the "WTI 1988 Stock
Plan") (Exhibit 28.1 to Amendment No. 1 to the registration
statement of Wheelabrator Technologies Inc. on Form S-8,
Registration No. 33-31523)
(xviii) Amendments dated as of September 7, 1990 to the WTI 1988 Stock
Plan (Exhibit 19.02 to the 1990 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xix) Amendment dated as of November 1, 1990 to the WTI 1988 Stock
Plan (Exhibit 19.04 to the 1990 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xx) 1986 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its subsidiaries (the "WTI 1986 Stock
Plan") (Exhibit 28.2 to Amendment No. 1 to the registration
statement of Wheelabrator Technologies Inc. on Form S-8,
Registration No. 33-31523)
(xxi) Amendment dated as of November 1, 1990 to the WTI 1986 Stock
Plan (Exhibit 19.03 to the 1990 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xxii) Description of consulting agreement between registrant and
Alexander B. Trowbridge (Exhibit 10.22 to registrant's 1989
annual report on Form 10-K)
(xxiii) WMX Technologies, Inc. 1992 Stock Option Plan (Exhibit 10.31 to
registrant's registration statement on Form S-1, Registration
No. 33-44849)
(xxiv) WMX Technologies, Inc. 1992 Stock Option Plan for Non-Employee
Directors (Exhibit 10.32 to registrant's registration statement
on Form S-1, Registration No.
33-44849)
(xxv) Wheelabrator Technologies Inc. 1992 Stock Option Plan (Exhibit
10.45 to the 1991 annual report on Form 10-K of Wheelabrator
Technologies Inc.)
(xxvi) Deferred Director's Fee Plan of Wheelabrator Technologies Inc.
adopted June 10, 1991 (Exhibit 19.02 to the quarterly report on
Form 10-Q of Wheelabrator Technologies Inc. for the quarter
ended June 30, 1991)
38
[Download Table]
(xxvii) Waste Management International plc Share Option Plan (Exhibit
10.1 to the registration statement on Form F-1 of Waste
Management International plc, Registration No. 33-46511)
(xxviii) Amendment dated as of December 6, 1991 to the WTI 1986 Stock
Plan (Exhibit 19.01 to the 1991 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xxix) Amendment dated as of December 6, 1991 to the WTI 1988 Stock
Plan (Exhibit 19.02 to the 1991 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xxx) Amendment dated as of December 6, 1991 to the Restricted Unit
Plan for Non-Employee Directors of Wheelabrator Technologies
Inc. (Exhibit 19.05 to the 1991 annual report on Form 10-K of
Wheelabrator Technologies Inc.)
(xxxi) Rust International Inc. 1993 Stock Option Plan (Exhibit 10.41 to
the registrant's 1992 annual report on Form 10-K)
(xxxii) Rust International Inc. 1993 Stock Option Plan for Non-Employee
Directors (Exhibit 10.42 to the registrant's 1992 annual report
on Form 10-K)
(xxxiii) Amendment No. 1 dated as of May 29, 1992 to Consulting Agreement
dated as of January 1, 1991 by and between registrant and Donald
F. Flynn (Exhibit 19.1 to the registrant's 1992 annual report on
Form 10-K)
(xxxiv) WMX Technologies, Inc. Long Term Incentive Plan (as amended and
restated as of January 27, 1994) (filed with this report)
--------
/1/In the case of reference to documents filed under the Securities Exchange
Act of 1934, the registrant's file number under that Act is 1-7327, Chemical
Waste Management, Inc.'s file number under that Act is 1-9253 and Wheelabrator
Technologies Inc.'s file number under that Act is 0-14246.
(b) Reports on Form 8-K.
The registrant did not file any reports on Form 8-K during the fiscal
quarter ended December 31, 1993.
39
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[Download Table]
DEDUCTIONS
BALANCE ---------------------- BALANCE
BEGINNING AMOUNTS AMOUNTS END OF
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF YEAR
-------------- --------- --------- --------- ----------- -------
1991
E. Bacom................. $ -- $118 $ -- $-- $ 118
S. Bergerson............. -- 545 -- -- 545
R. Broglio............... 913 17 (930) -- --
H. Buirkle............... 2,100 19 (2,119) -- --
D. Buntrock.............. 1,619 492 (1,619) -- 492
D. Coleman............... 147 -- (147) -- --
T. Collins............... 146 -- (146) -- --
J. Dempsey............... 1,240 -- (1,240) -- --
M. Dingman............... 8,316 121 (8,437) -- --
C. Dirkes................ 680 28 (360) -- 348
E. Falkman............... 194 -- (2) -- 192
M. Farrell............... 361 5 (366) -- --
P. Feira................. 798 25 (484) -- 339
D. Flynn................. 440 406 (440) -- 406
H. Gershowitz............ 110 -- (110) -- --
R. Gilbert............... 1,458 35 (1,493) -- --
J. Girsch................ 208 -- (208) -- --
J. Groenboom............. -- 103 -- -- 103
F. Habeishi.............. 457 3 (460) -- --
E. Hardin................ 146 1 (147) -- --
J. Heeney................ 195 4 (199) -- --
R. Houpt................. 100 -- (100) -- --
W. Hulligan.............. 372 -- (372) -- --
C. Jasperse.............. -- 181 -- -- 181
R. Jeffrey............... -- 129 -- -- 129
R. Jericho............... 151 -- (151) -- --
W. Katzman............... 337 2 (339) -- --
J. Kehoe................. 1,712 79 (1,157) -- 634
W. Keightley............. 570 13 (583) -- --
B. Keough................ 1,142 21 (1,163) -- --
A. Leibowitz............. 101 1 (102) -- --
P. Meister............... 3,692 145 (2,007) -- 1,830
P. Montrone.............. 5,544 92 (5,636) -- --
F. Moore................. -- 109 -- -- 109
D. Neel.................. 457 2 (459) -- --
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40
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
(CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[Download Table]
DEDUCTIONS
BALANCE --------------------- BALANCE
BEGINNING AMOUNTS AMOUNTS END OF
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF YEAR
-------------- --------- --------- --------- ----------- ---------
1991 (CONTINUED)
T. Noel..................... $ -- $ 281 $ -- $ -- $ 281
R. Patel.................... 434 28 (300) -- 162
W. Poor..................... 685 3 (688) -- --
D. Price.................... -- 159 -- -- 159
J. Range.................... 190 -- (190) -- --
J. Rohrer................... 457 14 (271) -- 200
D. Rozendale................ 1,142 5 (1,147) -- --
R. Russell.................. 1,188 10 (1,198) -- --
J. Sanford.................. 685 47 -- -- 732
D. Schmitt.................. 1,142 15 (1,157) -- --
G. Seegers.................. 173 -- (173) -- --
S. Shapiro.................. 913 12 (925) -- --
L. Shipp.................... 457 2 (459) -- --
S. Sillars.................. 247 7 (175) -- 79
K. Skiles................... 123 -- (123) -- --
M. Sylvers.................. 457 15 (271) -- 201
B. Tobecksen................ 133 54 -- -- 187
P. Vardy.................... 121 -- (121) -- --
R. Whitaker................. 570 33 (603) -- --
N. Wichowski................ -- 110 -- -- 110
J. Wood..................... 131 2 (133) -- --
T. Wright................... -- 780 -- -- 780
====== ====== ======= ==== =========
1992
E. Bacom.................... $ 118 $ 117 $ (118) $ -- $ 117
P. Banfield................. -- 167 -- -- 167
S. Bergerson................ 545 -- (545) -- --
B. Biggs.................... -- 210 -- -- 210
T. Blackman................. -- 1,945 -- -- 1,945
D. Buntrock................. 492 -- (492) -- --
S. Clark.................... -- 100 -- -- 100
J. Dempsey.................. -- 1,228 -- -- 1,228
C. Dirkes................... 348 -- (348) -- --
E. Falkman.................. 192 -- (3) -- 189
P. Feira.................... 339 -- (339) -- --
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41
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
(CONTINUED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[Download Table]
DEDUCTIONS
BALANCE --------------------- BALANCE
BEGINNING AMOUNTS AMOUNTS END OF
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF YEAR
-------------- --------- --------- --------- ----------- -------
1992 (CONTINUED)
D. Flynn...................... $ 406 $248 $ (406) $ -- $ 248
J. Girsch..................... -- 282 -- -- 282
J. Groenboom.................. 103 -- (103) -- --
J. Haden...................... -- 207 -- -- 207
W. Hulligan................... -- 132 -- -- 132
J. Jack....................... -- 151 -- -- 151
C. Jasperse................... 181 -- (181) -- --
R. Jeffrey.................... 129 -- (129) -- --
W. Katzman.................... -- 400 -- -- 400
J. Kehoe...................... 634 7 (641) -- --
D. Kelly...................... -- 100 -- -- 100
J. Koenig..................... -- 310 -- -- 310
R. Kraai...................... -- 180 -- -- 180
J. Kruszka.................... -- 163 (1) -- 162
P. Meister.................... 1,830 40 (1,870) -- --
F. Moore...................... 109 -- (109) -- --
T. Noel....................... 281 -- (281) -- --
T. O'Brien.................... -- 300 -- -- 300
R. Patel...................... 162 5 (167) -- --
R. Paul....................... -- 169 -- -- 169
D. Price...................... 159 -- (159) -- --
J. Rohrer..................... 200 -- (200) -- --
J. Rooney..................... -- 238 (38) -- 200
J. Sanford.................... 732 12 (744) -- --
F. Schroeder.................. -- 313 -- -- 313
S. Sillars.................... 79 -- (79) -- --
R. Stevenson.................. -- 120 -- -- 120
S. Storelli................... -- 270 (85) -- 185
M. Sylvers.................... 201 -- (201) -- --
B. Tobecksen.................. 187 -- (187) -- --
N. Wichowski.................. 110 -- (110) -- --
D. Wilt....................... -- 100 -- -- 100
T. Wright..................... 780 -- (780) -- --
====== ===== ======= ==== ======
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42
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
(CONCLUDED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[Download Table]
DEDUCTIONS
BALANCE --------------------- BALANCE
BEGINNING AMOUNTS AMOUNTS END OF
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF YEAR
-------------- --------- --------- --------- ----------- -------
1993
E. Bacom...................... $ 117 $ 55 $ (117) $ -- $ 55
P. Banfield................... 167 167 (167) -- 167
B. Biggs...................... 210 187 (182) -- 215
T. Blackman................... 1,945 -- (515) -- 1,430
S. Clark...................... 100 -- -- -- 100
J. Dempsey.................... 1,228 310 (1,538) -- --
E. Falkman.................... 189 -- (189) -- --
D. Flynn...................... 248 177 (248) -- 177
J. Girsch..................... 282 -- (282) -- --
J. Haden...................... 207 -- (207) -- --
W. Hulligan................... 132 -- (132) -- --
J. Jack....................... 151 -- (151) -- --
W. Katzman.................... 400 130 (24) -- 506
D. Kelly...................... 100 3 (103) -- --
J. Koenig..................... 310 -- (310) -- --
R. Kraai...................... 180 -- (40) -- 140
J. Kruszka.................... 162 -- (1) -- 161
M. Magee...................... -- 170 (20) -- 150
T. O'Brien.................... 300 -- -- -- 300
R. Paul....................... 169 -- (169) -- --
W. Reichert................... -- 160 -- -- 160
J. Rooney..................... 200 -- -- -- 200
D. Schoenberger............... -- 206 (37) -- 169
F. Schroeder.................. 313 -- -- -- 313
R. Stevenson.................. 120 -- (12) -- 108
S. Storelli................... 185 20 -- -- 205
D. Wilt....................... 100 -- -- -- 100
====== ====== ======= ==== ======
The Company's general policy is not to advance monies to officers or employees
except for relocation or temporary situations. It has, however, adopted a
policy of making interest-free loans available to employees whose exercise of
non-qualified stock options results in ordinary income to them in excess of
$10,000 at the time of such exercise. These receivables are due on or before
April 15 of the year following such exercise (extended to November 30, 1992 for
loans made by the Company and CWM in 1991 and to May 31, 1993 for loans made by
the Company and CWM in 1992). Sufficient shares are withheld from the shares
issued to the debtor to fully secure the loan at the time it is made. In
addition, certain receivables included above were owed by officers or employees
of acquired companies at the time of acquisition by the Company.
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43
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE V--PROPERTY AND EQUIPMENT
--------------------------------------------------------------------------------
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[Enlarge/Download Table]
BALANCE ASSETS OF
BEGINNING PURCHASED ADDITIONS RETIREMENTS BALANCE END OF
OF YEAR COMPANIES AT COST OR SALES OTHER YEAR
----------- --------- ---------- ----------- -------- --------------
1991
Land, primarily disposal
sites.................. $ 1,943,112 $ 63,526 $ 501,084 $ (28,498) $ (466) $2,478,758
Buildings............... 780,905 15,498 156,522 (17,508) 23,782 959,199
Vehicles and equipment.. 4,660,466 83,169 752,015 (144,933) (28,052) 5,322,665
Leasehold improvements.. 69,944 2,845 12,159 (3,603) 4,736 86,081
----------- -------- ---------- --------- -------- ----------
Total.................. $ 7,454,427 $165,038 $1,421,780 $(194,542) $ -- $8,846,703
=========== ======== ========== ========= ======== ==========
EFFECT OF
BALANCE ASSETS OF FOREIGN
BEGINNING PURCHASED ADDITIONS RETIREMENTS CURRENCY BALANCE END
OF YEAR COMPANIES AT COST OR SALES OTHER TRANSLATION(A) OF YEAR
----------- --------- ---------- ----------- -------- -------------- -----------
1992
Land, primarily disposal
sites.................. $ 2,478,758 $124,180 $ 515,309 $ (44,002) $ 3,335 $ (28,746) $ 3,048,834
Buildings............... 959,199 33,275 149,437 (18,490) 2,014 (23,608) 1,101,827
Vehicles and equipment.. 5,322,665 169,636 957,390 (205,469) (1,702) (101,198) 6,141,322
Leasehold improvements.. 86,081 3,439 10,529 (4,256) (3,647) (1,454) 90,692
----------- -------- ---------- --------- -------- ---------- -----------
Total.................. $ 8,846,703 $330,530 $1,632,665 $(272,217) $ -- $ (155,006) $10,382,675
=========== ======== ========== ========= ======== ========== ===========
1993
Land, primarily disposal
sites.................. $ 3,048,834 $129,047 $ 531,179 $ (70,746) $ 4,721 $ (17,623) $ 3,625,412
Buildings............... 1,101,827 46,907 115,835 (31,424) 4,728 (14,734) 1,223,139
Vehicles and equipment.. 6,141,322 259,727 1,047,288 (521,104) (7,140) (64,049) 6,856,044
Leasehold improvements.. 90,692 7,854 24,876 (19,651) (2,309) (1,200) 100,262
----------- -------- ---------- --------- -------- ---------- -----------
Total.................. $10,382,675 $443,535 $1,719,178 $(642,925) $ -- $ (97,606) $11,804,857
=========== ======== ========== ========= ======== ========== ===========
(A) Effect of foreign currency translation not material in 1991.
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44
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY AND
EQUIPMENT
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[Enlarge/Download Table]
BALANCE PROVISION BALANCE
BEGINNING CHARGED RETIREMENTS END OF
OF YEAR TO INCOME OR SALES OTHER YEAR
---------- --------- ----------- -------- ---------------
1991
Landfill improvements... $ 338,098 $116,311 $ (8,968) $ (1,391) $ 444,050
Buildings............... 99,189 36,149 (12,754) 18,270 140,854
Vehicles and equipment.. 1,272,444 371,991 (97,287) (17,834) 1,529,314
Leasehold improvements.. 27,683 6,927 (2,555) 955 33,010
---------- -------- --------- -------- ----------
Total.................. $1,737,414 $531,378 $(121,564) $ -- $2,147,228
========== ======== ========= ======== ==========
EFFECT OF
BALANCE PROVISION FOREIGN BALANCE
BEGINNING CHARGED RETIREMENTS CURRENCY END OF
OF YEAR TO INCOME OR SALES OTHER TRANSLATION (A) YEAR
---------- --------- ----------- -------- --------------- ----------
1992
Landfill improvements... $ 444,050 $148,197 $ (2,845) $ 727 $ (5,914) $ 584,215
Buildings............... 140,854 47,378 (1,474) 6,708 (2,945) 190,521
Vehicles and equipment.. 1,529,314 432,578 (117,109) (5,354) (24,932) 1,814,497
Leasehold improvements.. 33,010 8,772 (3,474) (2,081) (988) 35,239
---------- -------- --------- -------- ---------- ----------
Total.................. $2,147,228 $636,925 $(124,902) $ -- $ (34,779) $2,624,472
========== ======== ========= ======== ========== ==========
1993
Landfill improvements... $ 584,215 $166,100 $ (11,726) $ 108 $ (4,007) $ 734,690
Buildings............... 190,521 54,521 (3,295) 1,025 (2,350) 240,422
Vehicles and equipment.. 1,814,497 471,274 (247,167) 125 (16,350) 2,022,379
Leasehold improvements.. 35,239 10,405 (5,947) (1,258) (532) 37,907
---------- -------- --------- -------- ---------- ----------
Total.................. $2,624,472 $702,300 $(268,135) $ -- $ (23,239) $3,035,398
========== ======== ========= ======== ========== ==========
(A) Effect of foreign currency translation not material in 1991.
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45
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE VIII--RESERVES
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EFFECT OF
BALANCE CHARGED ACCOUNTS FOREIGN BALANCE
BEGINNING TO WRITTEN CURRENCY END OF
OF YEAR INCOME OFF OTHER (A) TRANSLATION (B) YEAR
--------- ------- -------- --------- --------------- -------
1991--Reserve for
doubtful accounts (C).. $39,366 $30,318 $(26,856) $6,323 $ -- $49,151
======= ======= ======== ====== ======= =======
1992--Reserve for
doubtful accounts (C).. $49,151 $31,195 $(24,080) $6,301 $(4,732) $57,835
======= ======= ======== ====== ======= =======
1993--Reserve for
doubtful accounts (C).. $57,835 $33,326 $(33,518) $7,646 $(1,970) $63,319
======= ======= ======== ====== ======= =======
--------
(A)Reserves of companies accounted for as purchases.
(B)Effect of foreign currency translation not material in 1991.
(C)Includes reserves for doubtful long-term notes receivable.
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46
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE IX--SHORT-TERM BORROWINGS
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[Enlarge/Download Table]
MAXIMUM WEIGHTED
BALANCE WEIGHTED AMOUNT AVERAGE AMOUNT AVERAGE
END OF AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
YEAR INTEREST RATE DURING YEAR DURING YEAR (A) DURING YEAR (B)
---------- ------------- ----------- --------------- ---------------
1991--Commercial Paper $ 470,447 5.72% $ 729,630 $ 598,055 6.81%
========== ==== ========== ========== ====
1992--Commercial Paper $ 837,733 3.72% $ 855,277 $ 625,833 4.27%
========== ==== ========== ========== ====
1993--Commercial Paper $1,376,197 3.36% $1,983,147 $1,436,289 3.41%
========== ==== ========== ========== ====
--------
(A) Average is computed using daily balances.
(B) Weighted average rate is computed by dividing interest expense applicable
to commercial paper by the weighted average amount outstanding during the
year.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
47
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
During 1991, 1992 and 1993 maintenance and repairs charged to costs and
expenses in the Consolidated Statements of Income were as follows:
[Download Table]
1991 1992 1993
-------- -------- --------
Maintenance and repairs............................. $442,478 $513,444 $550,732
======== ======== ========
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
48
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To WMX Technologies, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in the WMX Technologies, Inc.
(formerly Waste Management, Inc.) Annual Report to Stockholders for 1993 filed
as an exhibit to and incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 16, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedules included on pages 40 through 48 of 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 financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic 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 financial statements
taken as a whole.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
February 16, 1994
49
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.
WMX TECHNOLOGIES, INC.
/s/ Dean L. Buntrock,
By___________________________________
Dean L. Buntrock,
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]
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Dean L. Buntrock )
------------------------------------ )
Dean L. Buntrock Director, Chairman of the )
Board and Chief Executive )
Officer )
/s/ Jerry E. Dempsey )
------------------------------------ )
Jerry E. Dempsey Director )
/s/ Phillip B. Rooney )
------------------------------------ )
Phillip B. Rooney Director )
/s/ Donald F. Flynn )
------------------------------------ )
Donald F. Flynn Director )
/s/ Peter H. Huizenga )
------------------------------------ )
Peter H. Huizenga Director )
/s/ Peer Pedersen )
------------------------------------ )
Peer Pedersen Director )
/s/ James R. Peterson )
------------------------------------ )
James R. Peterson Director ) March 29, 1994
/s/ Alexander B. Trowbridge )
------------------------------------ )
Alexander B. Trowbridge Director )
/s/ Howard H. Baker, Jr. )
------------------------------------ )
Howard H. Baker, Jr. Director )
/s/ H. Jesse Arnelle )
------------------------------------ )
H. Jesse Arnelle Director )
/s/ Thomas C. Hau )
------------------------------------ )
Thomas C. Hau Vice President, Controller )
and Principal Accounting )
Officer )
/s/ James E. Koenig )
------------------------------------ )
James E. Koenig Senior Vice President, Chief )
Financial Officer, )
Treasurer and Principal )
Financial Officer )
50
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
[Download Table]
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
1. Inapplicable
2. Inapplicable
3.1(a) Restated Certificate of Incorporation of registrant, as amended
as of May 24, 1985 (incorporated by reference to Exhibit 4.1 to
registrant's report on Form 10-Q for the quarter ended
June 30, 1985)
3.1(b) Certificate of Amendment of Restated Certificate of
Incorporation of registrant, recorded May 23, 1986 (incorporated
by reference to Exhibit 4(c) to registrant's registration
statement on Form S-8, Registration No. 33-6265)
3.1(c) Certificate of Designation of Preferred Stock of registrant,
filed January 30, 1987 (incorporated by reference to Exhibit
3.1(c) to registrant's 1986 annual report on Form 10-K)
3.1(d) Certificate of Amendment of Restated Certificate of
Incorporation of registrant, recorded May 15, 1987 (incorporated
by reference to Exhibit 4.5(d) to registrant's registration
statement on Form S-4, Registration No. 33-15518)
3.1(e) Certificate of Amendment of Restated Certificate of
Incorporation of registrant, filed May 19, 1989 (incorporated by
reference to Exhibit 3(e) to registrant's registration statement
on Form S-3, Registration No. 33-30190)
3.1(f) Certificate of Amendment of Restated Certificate of
Incorporation of registrant, filed May 18, 1990 (incorporated by
reference to Exhibit 4(h) to registrant's registration statement
on Form S-8, Registration No. 33-35936)
3.1(g) Conformed copy of Certificate of Incorporation of registrant, as
amended (incorporated by reference to Exhibit 3.1(g) to
registrant's registration statement on Form S-4, Registration
No. 33-36119)
3.2 By-laws of registrant, as amended and restated as of December
12, 1991 (incorporated by reference to Exhibit 3.2 to
registrant's registration statement on Form S-1, Registration
No. 33-44849)
4.1(a) Rights Agreement dated as of February 6, 1987, between the
registrant and Harris Trust and Savings Bank, which includes as
Exhibit A the form of Certificate of Designation of Preferred
Stock, as Exhibit B, the form of Rights Certificate and, as
Exhibit C, the Summary of Rights (incorporated by reference to
Exhibit 4 to registrant's report on Form 8-K dated January 26,
1987)
4.1(b) Certificate of Adjustment relating to April 1987 stock split
pursuant to Section 12 of the Rights Agreement (incorporated by
reference to Exhibit 4.3(b) to registrant's registration
statement on Form S-1, Registration No. 33-13839)
--------
*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
1-7327, Chemical Waste Management, Inc.'s file number under that Act is 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-1
[Download Table]
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
4.1(c) Certificate of Adjustment relating to December 1989 stock split
pursuant to Section 12 of the Rights Agreement (incorporated by
reference to Exhibit 4.3(c) to registrant's 1989 annual report
on Form 10-K)
4.2 Trust Indenture for Liquid Yield Option Notes due 2012
(incorporated by reference to Exhibit 4(a) to registrant's
registration statement on Form S-3, Registration No. 33-24615)
4.3(a) Trust Indenture dated as of August 1, 1989 (incorporated by
reference to Exhibit 4.3(a) to registrant's 1990 annual report
on Form 10-K)
4.3(b) First Supplemental Indenture dated as of December 1, 1990
(incorporated by reference to Exhibit 4.3(b) to registrant's
1990 annual report on Form 10-K)
4.3(c) Trust Indenture dated as of June 1, 1993 (incorporated by
reference to Exhibit 4 to the registrant's current report on
Form 8-K dated July 15, 1993)
5. Inapplicable
6. Inapplicable
7. Inapplicable
8. Inapplicable
9. None
10.1 1981 Stock Option Plan for Non-Employee Directors of registrant
(incorporated by reference to Exhibit 19 to registrant's report
on Form 10-Q for the quarter ended June 10, 1982)
10.2 WMX Technologies, Inc. 1982 Stock Option Plan, as amended to
March 11, 1988 (incorporated by reference to Exhibit 10.3 to
registrant's 1988 annual report on Form 10-K)
10.3 Deferred Director's Fee Plan, as amended (incorporated by
reference to Exhibit 10.3 to registrant's 1990 annual report on
Form 10-K)
10.4 Director's Phantom Stock Plan (incorporated by reference to
Exhibit 10.9 to registrant's 1984 annual report on Form 10-K)
10.5 Employment Agreement, dated as of September 1, 1986, by and
between the registrant and Phillip B. Rooney (incorporated by
reference to Exhibit 19.4 to registrant's report on Form 10-Q
for the quarter ended September 30, 1986)
10.6 Intercorporate Agreement, dated as of September 3, 1986, between
Chemical Waste Management, Inc. and the registrant (the "CWM
Intercorporate Agreement") (incorporated by reference to Exhibit
10.6 to Chemical Waste Management, Inc.'s registration statement
on Form S-1, Registration No. 33-8509)
10.7 Amendment No. 1 dated as of January 1, 1992 to CWM
Intercorporate Agreement (incorporated by reference to Exhibit
10.7(b) to registrant's 1991 annual report on Form 10-K)
--------
*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
1-7327, Chemical Waste Management, Inc.'s file number under that Act is 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-2
[Download Table]
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
10.8 WMX Technologies, Inc. Corporate Incentive Bonus Plan
10.9 WMX Technologies, Inc. Supplemental Executive Retirement Plan,
as amended and restated as of May 14, 1993 (incorporated by
reference to Exhibit 10 to the registrant's current report on
Form 8-K dated July 15, 1993)
10.10 WMX Technologies, Inc. Long Term Incentive Plan (as amended and
restated as of January 27, 1994)
10.11 Supplemental Retirement Benefit Agreement, dated as of January
1, 1989, by and between the registrant and Peter H. Huizenga
(incorporated by reference to Exhibit 10.16 to Post-Effective
Amendment No. 2 to registrant's registration statement on Form
S-1, Registration No. 33-13839)
10.12 Chemical Waste Management, Inc. 1986 Stock Option Plan, as
amended (incorporated by reference to Exhibit 10.1 to Chemical
Waste Management, Inc.'s 1989 annual report on Form 10-K)
10.13 Chemical Waste Management, Inc. 1986 Stock Option Plan for Non-
Employee Directors (incorporated by reference to Exhibit 10.2 to
Chemical Waste Management, Inc.'s registration statement on Form
S-1, Registration No. 33-8509)
10.14 Chemical Waste Management, Inc. Deferred Director's Fee Plan
(incorporated by reference to Exhibit 10.5 to Chemical Waste
Management, Inc.'s registration statement on Form S-1,
Registration No. 33-8509)
10.15 WMX Technologies, Inc. Director's Charitable Endowment Plan
(incorporated by reference to Exhibit 10.20 to registrant's 1989
annual report on Form 10-K)
10.16 Supplemental Retirement Benefit Agreement dated as of January 1,
1991 by and between registrant and Donald F. Flynn (incorporated
by reference to Exhibit 10.17 to registrant's 1990 annual report
on Form 10-K)
10.17 Consulting Agreement dated as of January 1, 1991 by and between
registrant and Donald F. Flynn (incorporated by reference to
Exhibit 10.18 to registrant's 1990 annual report on Form 10-K)
10.18 Restricted Unit Plan for Non-Employee Directors of Wheelabrator
Technologies Inc. as amended through June 10, 1991 (incorporated
by reference to Exhibit 19.03 to the report on Form 10-Q of
Wheelabrator Technologies Inc. for the quarter ended June 30,
1991)
10.19 1988 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its subsidiaries (the "WTI 1988 Stock
Plan") (incorporated by reference to Exhibit 28.1 to Amendment
No. 1 to the registration statement of Wheelabrator Technologies
Inc. on Form S-8, Registration No. 33-31523)
10.20 Amendments dated as of September 7, 1990 to the WTI 1988 Stock
Plan (incorporated by reference to Exhibit 19.02 to the 1990
annual report on Form 10-K of Wheelabrator Technologies Inc.)
--------
*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
1-7327, Chemical Waste Management, Inc.'s file number under that Act is 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-3
[Download Table]
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
10.21 Amendment dated as of November 1, 1990 to the WTI 1988 Stock
Plan (incorporated by reference to Exhibit 19.04 to the 1990
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.22 1986 Stock Plan for Executive Employees of Wheelabrator
Technologies Inc. and its subsidiaries (the "WTI 1986 Stock
Plan") (incorporated by reference to Exhibit 28.2 to Amendment
No. 1 to the registration statement of Wheelabrator Technologies
Inc. on Form S-8, Registration No. 33-31523)
10.23 Amendment dated as of November 1, 1990 to the WTI 1986 Stock
Plan (incorporated by reference to Exhibit 19.03 to the 1990
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.24 Description of consulting agreement between registrant and
Alexander B. Trowbridge (incorporated by reference to Exhibit
10.22 to registrant's 1989 annual report on Form 10-K)
10.25 WMX Technologies, Inc. 1992 Stock Option Plan (incorporated by
reference to Exhibit 10.31 to registrant's registration
statement on Form S-1, Registration No.
33-44849)
10.26 WMX Technologies, Inc. 1992 Stock Option Plan for Non-Employee
Directors (incorporated by reference to Exhibit 10.32 to
registrant's registration statement on Form S-1, Registration
No. 33-44849)
10.27 Wheelabrator Technologies Inc. 1992 Stock Option Plan
(incorporated by reference to Exhibit 10.45 to the 1991 annual
report on Form 10-K of Wheelabrator Technologies Inc.)
10.28 Deferred Director's Fee Plan of Wheelabrator Technologies Inc.
adopted June 10, 1991 (incorporated by reference to Exhibit
19.02 to the quarterly report on Form 10-Q of Wheelabrator
Technologies Inc. for the quarter ended June 30, 1991)
10.29 Waste Management International plc Share Option Plan
(incorporated by reference to Exhibit 10.1 to the registration
statement on Form F-1 of Waste Management International plc,
Registration No. 33-46511)
10.30 Amendment dated as of December 6, 1991 to the WTI 1986 Stock
Plan (incorporated by reference to Exhibit 19.01 to the 1991
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.31 Amendment dated as of December 6, 1991 to the WTI 1988 Stock
Plan (incorporated by reference to Exhibit 19.02 to the 1991
annual report on Form 10-K of Wheelabrator Technologies Inc.)
10.32 Amendment dated as of December 6, 1991 to the Restricted Unit
Plan for Non-Employee Directors of Wheelabrator Technologies
Inc. (incorporated by reference to Exhibit 19.05 to the 1991
annual report on Form 10-K of Wheelabrator Technologies Inc.)
--------
*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
1-7327, Chemical Waste Management, Inc.'s file number under that Act is 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-4
[Download Table]
EXHIBIT
NUMBER DOCUMENT DESCRIPTION*
------- ---------------------
10.33 Rust International Inc. 1993 Stock Option Plan (incorporated by
reference to Exhibit 10.41 to registrant's 1992 annual report on
Form 10-K)
10.34 Rust International Inc. 1993 Stock Option Plan for Non-Employee
Directors (incorporated by reference to Exhibit 10.42 to
registrant's 1992 annual report on Form 10-K)
10.35 Amendment No. 1 dated as of May 29, 1992 to Consulting Agreement
dated as of January 1, 1991 by and between registrant and Donald
F. Flynn (incorporated by reference to Exhibit 19.1 to
registrant's 1992 annual report on Form 10-K)
10.36 First Amended and Restated International Business Opportunities
Agreement by and among registrant, Chemical Waste Management,
Inc., Wheelabrator Technologies Inc., Waste Management
International, Inc., Waste Management International plc and Rust
International Inc., dated as of January 1, 1993 (incorporated by
reference to Exhibit 28 to the registration statement on Form S-
3 of Wheelabrator Technologies Inc., Registration No. 33-59606)
10.37 Amendment Agreement dated as of January 28, 1994 relating to the
International Business Opportunities Agreement (incorporated by
reference to Exhibit 10.19 to the 1993 annual report on Form 10-
K of Chemical Waste Management, Inc.)
10.38 Chemical Waste Management, Inc. 1992 Stock Option Plan
(incorporated by reference to Exhibit 10.20 to the 1991 annual
report on Form 10-K of Chemical Waste Management, Inc.)
11. None
12. Computation of ratio of earnings to fixed charges
13.1 Management's Discussion and Analysis of Financial Condition and
Results of Operations
13.2 Financial Statements, Supplementary Data and Report of
Independent Accountants
14. Inapplicable
15. Inapplicable
16. None
17. Inapplicable
18. None
19. Inapplicable
20. Inapplicable
21. List of subsidiaries of registrant
22. Inapplicable
23. Consent of Independent Public Accountants
24. None
25. Inapplicable
26. Inapplicable
27. Inapplicable
28. None
--------
*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
1-7327, Chemical Waste Management, Inc.'s file number under that Act is 1-9253
and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-5
Dates Referenced Herein and Documents Incorporated by Reference
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