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
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:
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
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.
Unless the context indicates to the contrary, all statistical and financial information under Item 1 and Item 2
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
(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.
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
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
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.
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.
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.
PART II
ITEM 5.
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.
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.
ITEM 6.
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.
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/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.
ITEM 7.
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.
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.
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.
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.
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.
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.
PART IV
ITEM 14.
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/:
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/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.
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
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WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
(CONTINUED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
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WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
(CONTINUED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
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WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE II--AMOUNTS RECEIVABLE FROM OFFICERS AND EMPLOYEES
(CONCLUDED) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
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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WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE V--PROPERTY AND EQUIPMENT
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(A) Effect of foreign currency translation not material in 1991.
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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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(A) Effect of foreign currency translation not material in 1991.
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WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE VIII--RESERVES
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(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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WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
($000'S OMITTED)
SCHEDULE IX--SHORT-TERM BORROWINGS
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(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.
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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:
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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
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.
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
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*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
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*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
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*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
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*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
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*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