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 collection of such materials from 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 and Port-O-Let(R) portable sanitation services to municipalities and commercial and special event customers.
The Company's wholly owned Chemical Waste Management, Inc. subsidiary (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. The Company's chemical waste management services provided through CWM, 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. Through CWM, the Company also furnishes radioactive waste management services, primarily to electric utilities and governmental entities. Prior to January 24, 1995, the Company's ownership of CWM was approximately 79%, with the balance being publicly held. On that date, the Company acquired the publicly held shares of CWM in a merger of a Company subsidiary into CWM. See "Acquisitions and Dispositions" below.
Wheelabrator Technologies Inc., an approximately 56%-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 them 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 processes, precision profile wire screens for use in groundwater wells and other industrial and municipal 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 LOGO
Printed on Recycled Paper
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 and radioactive 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. Rust also has an approximately 40% interest in NSC Corporation, a publicly traded provider of asbestos abatement services ("NSC"). The Company has proposed to acquire the shares of Rust not owned by CWM and WTI. In addition, Rust has entered into an agreement to combine its hazardous and radioactive substance remediation operations with a third party. See "Acquisitions and Dispositions" herein.
The Company provides comprehensive waste management and related services internationally, primarily through Waste Management International plc, a subsidiary owned approximately 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 ten countries in Europe and in Argentina, Australia, Brunei, Hong Kong, Indonesia, Malaysia, Taiwan, Singapore and New Zealand. Waste Management International also has an approximately 20% interest in Wessex Water Plc, an English publicly traded company providing water treatment, water distribution, wastewater treatment and sewerage services ("Wessex").
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 then 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 became 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 12 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 30 to 38 of the Company's 1994 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. In addition, the demand for certain of the Company's services may be adversely affected by the amendment or repeal or reduction in enforcement of federal, state and foreign laws and regulations on which the Company's businesses engaged in providing such services are dependent. 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, amended, repealed or enforced, or any failure of legislation or regulations to 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, 1994 represented approximately 18%, 6% and 28%, respectively, of the Company's 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 1995. The Company's subsidiaries lease numerous office and operating facilities throughout the world. For the year ended December 31, 1994, aggregate annual rental payments on real estate leased by the Company and its subsidiaries approximated $130,366,000.
The principal fixed assets of Waste Management consist of vehicles and equipment (which include, among other items, approximately 18,900 collection and transfer vehicles, 1,495,000 containers and 20,500 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, 1994, 105 solid waste disposal facilities, aggregating approximately 64,000 total acres, including approximately 14,080 permitted acres, were owned by Waste Management in the United States and Canada and 29 facilities, aggregating approximately 14,370 total acres, including approximately 6,040 permitted acres, were leased from parties not affiliated with Waste Management under leases expiring from 1995 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, 1994, 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 disposed sites aggregated approximately 10,500 acres, including approximately 3,050 permitted acres.
The principal property and equipment of Rust consist of Rust's vehicles, equipment and scaffolding inventory, which as of December 31, 1994 represented (including its subsequently sold headquarters buildings) approximately 19% of Rust's total consolidated assets. The principal fixed assets utilized in Rust's operations at December 31, 1994 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 its corporate offices in Birmingham, Alabama and numerous office, warehouse and equipment and scaffolding yard facilities in various locations throughout the United States.
WTI currently owns, operates or leases 16 trash-to-energy facilities, six cogeneration and small power production facilities, two coal handling facilities, four 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, 1994 consisted of vehicles and equipment (which included, among other items, approximately 6,600 collection, transportation, and other route vehicles and approximately 300 pieces of landfill and other heavy equipment), and approximately 280,000 containers, including approximately 3,150 stationary compactors. In addition, Waste Management International owns approximately 700 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, 1994 consisted of 49 solid waste landfills owned, leased or operated by Waste Management International aggregating approximately 3,400 acres, of which 2,470 are permitted, 8 hazardous waste landfills owned or leased by Waste Management International aggregating approximately 1,120 acres, of which approximately 970 acres are permitted, and trash-to-energy, other treatment, storage, or disposal and various other manufacturing, office and warehouse facilities owned, leased or operated by Waste Management International.
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, 1994, CWM and its subsidiaries (other than Rust) were involved in three such governmental proceedings, WTI was involved in two such proceedings and Rust was involved in one such proceeding (described below) where it is believed that sanctions involved in each instance may exceed $100,000.
On October 4, 1994, the United States Department of Justice commenced litigation against an indirect subsidiary of Rust and others in the United States District Court for the District of Idaho alleging that the defendants violated the National Emissions Standards for Hazardous Air Pollutants of the Clean Air Act while engaged in asbestos removal activities in 1989 and 1990 prior to Rust's acquisition of the subsidiary. The lawsuit sought civil penalties and injunctive relief. The Department of Justice and the subsidiary negotiated a resolution of the matter, and on January 26, 1995, the District Court approved a Consent Decree which conclusively resolved the lawsuit with respect to the subsidiary. Pursuant to the Consent Decree, the subsidiary paid a civil penalty of $353,800.
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, 1994, 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.
Following 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. In March 1994, WTI and the IRS filed a Stipulation of Settlement with the U.S. Tax Court to resolve the dispute for an aggregate amount of approximately $70,000,000. On April 15, 1994, WTI paid approximately $29,800,000, its share of the stipulated settlement liability, and a former affiliate of WTI paid approximately $19,200,000, to the IRS. The Tax Court subsequently accepted the stipulation of settlement. Under a tax sharing agreement between WTI and a second former affiliate of WTI, WTI was to be indemnified by the second former affiliate for approximately $21,000,000 of the total stipulated settlement liability beyond the $29,800,000 agreed WTI share. After the second former affiliate of WTI refused to honor its indemnification commitment to WTI, WTI instituted suit against it. In December 1994, after trial, judgment was entered in favor of WTI against the second former affiliate, requiring it to pay its obligation to WTI, which it did in February 1995.
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 are contesting 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 future 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 1994.
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 52, 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 and intends to retire from the Company effective March 31, 1995.
Dean L. Buntrock, age 63, 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. From May 1993 to January 1995, Mr. Buntrock was also Chairman
of the Board of CWM, a position he had also held from 1986 to 1991. Mr. Buntrock is also a director of WTI, Rust, Waste Management International, Boston Chicken, Inc. and First Chicago Corporation.
Herbert A. Getz, age 39, 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 Vice President and Secretary of Rust from January 1993 to May 1994. He served as Vice President, Secretary and General Counsel of WTI from November 1990 until May 1993. Mr. Getz commenced employment with the Company in 1983. He is a director of NSC.
Thomas C. Hau, age 59, 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 LLP.
James E. Koenig, age 47, 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 and Rust.
D. P. Payne, age 52, has been elected Senior Vice President of the Company effective April 1, 1995, a position he previously held from 1990 to 1993. He has also been Chairman of the Board of Directors of CWM since March 1995 and served as President and Chief Executive Officer of CWM from 1991 to March 1995. Prior to becoming employed by the Company in 1990, Mr. Payne had been Vice President and Area General Manager of the Midwestern Area of International Business Machines Corporation. He is also a director of Rust.
Phillip B. Rooney, age 50, 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, as Chairman of the Board of Rust. Mr. Rooney is also a director of 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 53, has been Vice President and Chief Environmental Officer of the Company since 1992. He held the same position 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 22, 1995, the Company had approximately 65,000 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 and 1993 the Company purchased approximately 7,600,000 shares and 8,400,000 shares, respectively, of its common stock under this program. No Company shares were repurchased in 1994.
During 1994, the Company sold put options on 17,900,000 shares of its common stock in conjunction with the repurchase program. The put options give the holders the right at maturity to require the Company to repurchase its shares at specified prices. In the event the options are exercised, the Company may elect to pay the holder in cash the difference between the strike price and the market price of the Company's shares, in lieu of repurchasing the stock. Options on 9,000,000 shares expired unexercised in 1994, as the price of the Company's stock was in excess of the strike price at maturity. Options on 4,700,000 shares were exercised in February 1995, and the Company elected to settle them for cash. The remaining 4,300,000 options expire in July and August 1995, at strike prices ranging from $25.588 to $28.833 per share. The Company sold additional put options in February and March 1995 to replace those which matured. For additional information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Capital Structure" incorporated by reference herein.
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, 1994 is derived from the Company's Consolidated Financial Statements, which have been audited by Arthur Andersen LLP, 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.
-------- /1/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. /2/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. /3/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 2, 11 and 13 to the Company's Consolidated Financial Statements. /4/The results for 1993 include a non-taxable gain of $15,109,000 (before minority interest) 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 Note 13 to the Company's Consolidated Financial Statements. /5/The results for 1994 include a charge of $9,200,000 (before tax and minority interest) recorded by Rust to write off assets and recognize costs of exiting certain of Rust's service lines and closing offices in a consolidation of its engineering and construction groups. See Note 13 to the Company's Consolidated Financial Statements. /6/Certain amounts have been restated to conform to 1994 classifications.
Reference is made to the ratio of earnings to fixed charges for each of the years ended December 31, 1990, 1991, 1992, 1993 and 1994, 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 30 to 38 of the Company's 1994 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, 1993 and 1994, Consolidated Statements of Income, Stockholders' Equity and Cash Flows for each of the years in the three-year period ended December 31, 1994 and Notes to Consolidated Financial Statements set forth on pages 39 to 59 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 15 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 14 paragraphs under the caption "Election of Directors" beginning on page 2 of the Company's proxy statement for the annual meeting scheduled for May 12, 1995 (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 10 through 16 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 9 of the Proxy Statement, for certain information respecting ownership of common stock of the Company, 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 second paragraph under the caption "Compensation of Directors" on page 14 and the paragraph under the caption "Compensation Committee Interlocks and Insider Participation" on page 16 of the Proxy Statement and the information set forth under the caption "Certain Transactions" beginning on page 23 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 STATEMENTS, SCHEDULE AND REPORTS ON FORM 8-K.
(a) Financial Statements, Schedule 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, 1992, 1993 and 1994; (ii) Consolidated Balance Sheets--December 31, 1993 and 1994; (iii) Consolidated Statements of Stockholders' Equity for the three years ended December 31, 1994; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 1992, 1993 and 1994; (v) Notes to Consolidated Financial Statements; and (vi) Report of Independent Public Accountants.
II. Schedule (i) Schedule II--Reserves (ii) Report of Independent Public Accountants on Schedule
All other schedules have been omitted because 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/.
-------- /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 was 1-9253, and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
(b) Reports on Form 8-K.
The registrant filed a report on Form 8-K dated October 14, 1994 reporting under Item 5 the issuance of a news release stating that a definitive merger agreement had been reached for the Company's acquisition of the shares of CWM not then owned by it and stating the terms of the merger.
WMX TECHNOLOGIES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE
($000'S OMITTED)
SCHEDULE II--RESERVES -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
--------
(A) Reserves of companies accounted for as purchases.
(B)Includes reserves for doubtful long-term notes receivable.
-------------------------------------------------------------------------------- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
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 1994 filed as an exhibit to and incorporated by reference in this Form 10-K, and have issued our report thereon dated February 6, 1995 (except with respect to the matter discussed in Note 17, as to which the date is March 14, 1995). Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule included on page 41 of this Form 10-K is the responsibility of Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states 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 LLP ARTHUR ANDERSEN LLP
Chicago, Illinois, February 6, 1995
WMX TECHNOLOGIES, INC.
EXHIBIT INDEX
-------- *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 was 1-9253 and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-1
-------- *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 was 1-9253 and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-2
-------- *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 was 1-9253 and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-3
-------- *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 was 1-9253 and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246. EX-4
-------- *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 was 1-9253 and Wheelabrator Technologies Inc.'s file number under that Act is 0-14246.
EX-5