1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 31, 1997
Commission File Number 1-8368
LAIDLAW ENVIRONMENTAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0228924
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Gervais Street, Columbia, South Carolina 29201
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 933-4200
Title of each class Name of each exchange on which registered
Common Stock New York Stock Exchange
Par Value $1.00 Pacific Exchange, Inc.
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $257,192,000 as of October 14, 1997.
The number of shares of the issuer's common stock outstanding as of October 14,
1997 was 180,549,911.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended August
31, 1997 are incorporated in Parts I and II of Form 10-K.
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held November 25, 1997 are incorporated in Part III of Form 10-K.
1
2
PART I
ITEM 1. BUSINESS.
GENERAL
Laidlaw Environmental Services, Inc. (the "Company" or "Registrant")
provides hazardous and industrial waste management services throughout North
America. The Company collects, transports, treats and disposes of waste by
incineration, landfilling and other methods at its facilities located in the
United States and Canada. The Company also operates waste processing, recycling
and repackaging facilities and has analytical laboratories at its facilities in
several states.
On May 15, 1997, pursuant to a February 6, 1997, stock purchase
agreement (the "Stock Purchase Agreement") between Rollins Environmental
Services, Inc. ("Rollins") and Laidlaw Inc. ("Laidlaw"), Rollins acquired the
hazardous and industrial waste operations of Laidlaw ("Old LESI" or the
"Accounting Acquirer") (the "Acquisition"). The business combination was
accounted for as a reverse acquisition using the purchase method of accounting.
Rollins issued 120 million common shares and a $350 million 5% subordinated
convertible debenture, and paid $349.1 million in cash ($400 million, less debt
of $50.9 million assumed), to Laidlaw to consummate the Acquisition. Coincident
with the closing of the Acquisition, the continuing legal entity changed its
name from Rollins Environmental Services, Inc. to Laidlaw Environmental
Services, Inc. As a result of the Acquisition, Laidlaw owns 67% of the issued
common shares of the Company. The Company accordingly adopted the Accounting
Acquirer's fiscal year-end of August 31.
Old LESI consisted of all direct and indirect subsidiaries of Laidlaw
engaged in the hazardous and industrial waste business, other than JTM
Industries, Inc. and its subsidiary, KBK Enterprises, Inc. Prior to the
Acquisition, Old LESI provided hazardous and industrial waste services from 85
service locations in 26 states and seven Canadian provinces. Although Old LESI
was a conglomerate of separate entities, these entities conducted such services
primarily under the name "Laidlaw Environmental Services."
The Registrant was incorporated in Delaware in 1968. Its principal
executive office is located at 1301 Gervais Street, Suite 300, Columbia, South
Carolina 29201 and its telephone number is 803-933-4200.
The Company, in providing hazardous and industrial waste services, is
engaged in five primary lines, or classes, of business: (a) service center, (b)
landfill, (c) incineration, (d) transportation and (e) specialty services,
including polycholorinated biphenyl ("PCB") management, wastewater treatment and
other specialty services.
The Company's revenues and income are derived from one industry segment
and principally in the United States, which includes the collection,
transportation, processing/recovery and disposal of hazardous and industrial
wastes. The segment renders services to a variety of commercial, industrial,
governmental and residential customers. Substantially all revenues represent
income from unaffiliated customers.
The percentages of the Company's gross revenue contributed by its
business classes for the last three fiscal years ended August 31, were as
follows:
1997 1996 1995
---- ---- ----
Service Centers 38% 39% 41%
Landfill 22% 25% 21%
Incineration 11% 4% 4%
Transportation 12% 12% 15%
Specialty Services 17% 20% 19%
--- --- ---
Total Revenue 100% 100% 100%
=== === ===
2
3
SERVICE CENTER
Service centers across the United States and Canada provide a link from
the customer to the final disposal or treatment facility. Waste materials are
transported from a customer site to a service center, where they are temporarily
stored or consolidated with compatible waste streams for more efficient
transportation to final treatment and/or disposal destinations. All of the
Company's service centers in the United States have Part B permits under the
United States Resource Conservation and Recovery Act ("RCRA") that, among other
things, allow the Company to store waste for up to one year for bulking and/or
transfer purposes. Additionally, the Company operates smaller satellite
locations which act as local collection points for the service centers. Through
its service center network, the Company can access its customers quickly in
order to collect their waste streams, thus enabling customers to remain in
compliance with on-site storage regulations.
The Company typically sends one or more chemists to customer sites to
sample, segregate, prepare and package waste material for transportation. If the
amount of the material is large enough, the waste may be routed directly to one
of the Company's permitted treatment and disposal facilities. Customers with low
volume waste streams can have their streams transported to the nearest service
center and have it consolidated with compatible wastes from other generators
until there is sufficient material for treatment and disposal. After "profiling"
(chemically identifying) the waste materials, the Company's chemists inventory
the waste in such a manner as to ensure that the wastes are stored with other
chemically compatible waste. Each storage location is designed to separate
chemically incompatible material and to allow for easy access once a full
shipment of similar material has accumulated. Materials are then shipped to the
appropriate disposal sites. This collection and treatment system affords smaller
generators high levels of service and allows them to benefit from the economy of
scale normally available only to high volume customers.
The Company also has on-site field operations headquartered at its
service centers, including lab-packing services, field services and household
hazardous waste collection programs.
The Company performs a variety of resource recovery processes at many
of its service centers. Resource recovery involves the distillation of used
solvents to remove contaminants and then the return of the material to the
market as a solvent or for use as fuel. Most of these hazardous materials come
from the aerospace and transportation industries and the metals finishing
industries. Fuel substitution, mainly in the energy intensive cement
manufacturing process, is the most prevalent form of resource recovery.
Service centers are the largest source of waste streams for the
Company's treatment and disposal facilities. In 1997, 68% of disposal was routed
to intercompany locations. A diverse mix of locations allows the service centers
also to serve as hubs for regional sales efforts, local community hazardous
material collection efforts and other geographically specific initiatives. The
Company provides hazardous waste services from 53 locations composed of 23
permitted sites and 30 satellite offices in 32 states, seven Canadian provinces
and Puerto Rico.
LANDFILL
The Company operates 12 landfills located throughout the United States
and Canada. A total of eight landfills are designed and permitted for the
disposal of hazardous wastes. Four landfills are operated for non-hazardous
industrial waste disposal, and to a lesser extent, municipal solid waste.
The Company operates eight of the 23 permitted hazardous waste
landfills in North America, with 52 million cubic yards of remaining permitted
capacity (which at current fill rates represents in excess of 50 years of
capacity). Of these facilities, six are located in the United States and two in
Canada.
In the United States, the Company's hazardous waste landfills have been
issued RCRA Subtitle C permits. The EPA's permitting process for RCRA Subtitle C
landfills is very rigorous. Before a permit can be issued, the applicant must
provide detailed waste analysis, spill prevention and control counter-measure
plans, detailed design specifications (which include liner design, leak
detection systems and rainwater removal systems), groundwater monitoring,
employee training and geologic/hydrogeologic investigations. Furthermore, the
applicant must post financial assurance instruments for landfill cell and site
closure and post-closure care. All six of the Company's United States hazardous
waste landfills have received Part B landfill permits and meet or exceed
Subtitle C requirements. These permits are generally issued for periods of five
or ten years, after which the permit must be reviewed by state and/or federal
regulators before the permit can be renewed for additional terms. Management is
not aware of any issues at any of the Company's sites that would
3
4
preclude the renewal of its Part B landfill permits. During the last 12 months,
approximately 0.9 million cubic yards of hazardous wastes were disposed of in
these landfills.
In addition to its hazardous waste landfill sites, the Company operates
four non-hazardous industrial landfills with over 209 million cubic yards of
remaining permitted capacity. The Company's non-hazardous landfill facilities
are permitted to accept commercial industrial waste, including wastes from
foundries, demolition and construction, machine shops, automobile manufacturing,
printing, metal fabrications and recycling. The Company's facility in Carbon
County, Utah also accepts municipal solid waste. During the last 12 months, 1.4
million cubic yards of non-hazardous wastes were disposed of in these landfills.
INCINERATION
The Company offers a wide range of technological capabilities and
locations to customers through a collection of incineration facilities.
Incineration is the preferred method for the treatment of organic hazardous
waste, because it effectively destroys the contaminants at temperatures in
excess of 2,000 degrees Fahrenheit. High temperature incineration effectively
eliminates organic wastes such as herbicides, plastics, halogenated solvents,
pesticides, pharmaceutical and refinery wastes, regardless of whether they are
gases, liquids, sludges or solids. Federal and state incineration regulations
require a destruction and removal efficiency of 99.99% for most organic wastes
and 99.9999% for PCBs and dioxin.
The Company operates four United States-based solids and liquids
capable incinerators with annual capacity of over 250,000 tons, two hazardous
waste liquid injection incinerators in Canada, and one in the United States, and
two lower volume specialty incineration facilities in the United States.
The Company's incineration facilities in Bridgeport, New Jersey; Deer
Park, Texas; Coffeyville, Kansas; and Aragonite, Utah, are designed to process
liquid organic wastes, sludges, solids, soil and debris. The Deer Park facility
has two kilns and a rotary reactor. Additionally, the Deer Park facility has an
on-site landfill for the disposal of ash and other waste material produced as a
result of the incineration process. The landfill is built and permitted to RCRA
hazardous waste standards.
The Company's incineration facilities in Roebuck, South Carolina,
Mercier, Quebec and Sarnia, Ontario are liquid injection incinerators, designed
primarily for the destruction of liquid organic waste. The Mercier facility also
has a system to blend and destroy pumpable sludges. Typical wastestreams include
wastewater containing concentrated organic levels not amenable to conventional
physical/chemical waste treatment, pesticide and herbicide waste, waste with
high chlorinated organic concentrations and flammable materials.
All but one of the Company's United States incineration facilities have
received Part B permits under RCRA. The facility in Roebuck, South Carolina has
received EPA approval for that portion of the Part B permit under EPA authority;
however, the required state permit which was originally issued in 1987 is
currently under appeal. Part B permits are generally issued for periods of five
or ten years, after which the permit must be reviewed by state and/or federal
regulators before the permit can be renewed for additional terms. Management is
not aware of any issues at any of the Company's sites that would preclude the
renewal of any of its Part B permits.
During fiscal year 1997, the Company closed its incinerators at Baton
Rouge, Louisiana, and Clive, Utah, reducing utilization of less efficient and
redundant facilities. During fiscal year 1998, the Company plans to close its
incinerators at Coffeyville, Kansas, and Roebuck, South Carolina, reducing
excess capacity. These four closures will eliminate approximately 244,000 tons
of practical capacity from the off-site commercial incineration market. The
industry's total off-site commercial incinerator practical capacity was
estimated at 1.26 million tons in 1996, according to EI Digest.
TRANSPORTATION
The Company's transportation operations facilitate the movement of
materials between locations, which is key to the operation of the Company's
network of hazardous and industrial waste facilities. Transportation may be
accomplished by truck, rail, or other mode, with company-owned assets or in
conjunction with third party transporters.
4
5
Specially designed containment systems, vehicles and other equipment
permitted for hazardous waste transport, along with drivers trained in
transportation skills and hazardous waste procedures, provide for the movement
of customer waste streams.
SPECIALTY SERVICES
Other specialty services provided by the Company include PCB management
services, wastewater treatment, harbor and channel dredging, remedial
construction and consulting, industrial services, analytical services,
biological treatment, and paint and solvent recovery.
The Company recycles PCB contaminated oils and reclaims metals from PCB
contaminated equipment. The Company accomplishes this recycling and reclamation
through a de-chlorination process operated from seven facilities mainly in the
eastern United States and Canada.
The Company provides field services for industrial customers at their
sites and at government installations, federal and state Superfund sites,
laboratories and schools across North America. These activities range from
typical environmental remediation and construction to specialized services. The
Company recently adopted its INSITE program, an environmental outsourcing
program that allows companies to achieve their environmental goals while
focusing on their core business.
The Company also offers a range of wastewater treatment technology,
facilities and customer services. Wastewater treatment is provided from four
facilities and consists of four basic business lines: hazardous wastewater
treatment, mobile treatment, sludge dewatering/drying and non-hazardous
wastewater treatment. These services include the reduction, treatment and
disposal of both hazardous and non-hazardous wastewater, sludges and solids for
both bulk and drummed waste. The Company removes hazardous components from
hazardous industrial liquids and/or chemically/physically makes hazardous
industrial liquids non-hazardous through blending and treatment technology.
Specialized techniques reduce residues by recycling/reusing spent products.
Batch treatment technologies also enable the Company to handle hard-to-treat
wastewater streams.
Hazardous wastewater treatment involves the safe detoxification of
hazardous components from liquid waste streams. The hazardous properties are
neutralized (pH adjustment) and/or reduced to non-leachable state, through a
multi-step treatment process. The resulting treated effluent is tested prior to
discharge to ensure compliance with discharge limits, while the sludge is
dewatered and tested to ensure that it meets the requirements for off-site
disposal as a non-hazardous waste. Because certain wastes carry hazardous waste
designation throughout the treatment system, these wastes are treated separately
to minimize dewatered sludge disposal costs. The Company's wastewater treatment
facilities are fully-permitted and approved (as applicable) under the United
States Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA").
Mobile wastewater treatment and dewatering equipment is used to dewater
industrial sludges at the generators' sites. Turn-key services include
laboratory, trained operators, treatment supplies and equipment, dewatering and
stabilization technology--all designed to provide optimal treatment chemistry
that reduces the volume of sludge generated for off-site disposal.
Sludge drying uses transportable equipment that reduces the amount of
entrained liquid in dewatered sludge. This process is particularly effective for
organic sludges that must be incinerated at high cost. Drying greatly reduces
ultimate disposal and transportation costs by minimizing the volume of waste
sent off-site for treatment.
The Company treats non-hazardous waste streams at all of its hazardous
wastewater plants and operates a facility specifically designed for
non-hazardous wastewater and consumer goods destruction in Chattanooga,
Tennessee.
In connection with the Acquisition, the Company's hazardous
wastewater facility in Nashville, Tennessee was closed in May of 1997.
5
6
COMPETITION
The hazardous and industrial waste management industry is highly
competitive. The sources of competition vary by locality and by type of service
rendered, with competition coming from the other major waste services companies
and thousands of privately owned firms in North America which offer waste
services. The Company also competes with municipalities and larger plants which
provide their own waste services. In acquiring new contracts and maintaining
business, the Company experiences competition primarily in the areas of pricing
and service.
Total hazardous waste industry revenues for 1995 were estimated to have
been approximately $3 billion. Prior to the Acquisition, Old LESI, Rollins and
three other large waste management companies accounted for 65% of the hazardous
waste management industry's revenues in 1995, according to EI Digest (October
1996). The pro forma combined revenues of the Company for the year ended August
31, 1996, would have given the Company a 30% market share of the hazardous waste
industry revenues for 1995.
Service center competition consists of two companies with national
coverage providing varying forms of waste collection assets or facilities. A
number of companies also compete on a local and regional basis.
Ten of the 15 hazardous waste landfills not operated by the Company are
operated by three competitors with landfill facilities spread throughout the
United States.
Competitors operate large-scale incinerators at eight locations
throughout North America. Other companies have applied for or received permits
to construct and operate hazardous waste incinerators. Competition is also
encountered from cement kilns, which use hazardous waste-derived fuel as a
supplemental fuel source.
CUSTOMERS
The Company conducts business with more than 18,000 customers. These
customers represent diverse industries, including automotive manufacturers and
suppliers, chemical and petrochemical, computer and micro-processor
manufacturers, primary metals, paper, furniture, aerospace and pharmaceutical,
and are located throughout the United States and Canada. During fiscal 1997 no
one customer accounted for more than six percent of the Company's consolidated
revenues.
The hazardous waste management business is cyclical to the extent that
it is dependent upon a stream of waste from cyclical industries. If those
cyclical industries slow significantly, the business that the Company receives
from those industries is likely to slow.
SEASONALITY
Adverse winter weather moderately affects some of the Company's
operations, particularly during the second fiscal quarter. The main reason for
this effect is reduced volumes of waste being received at the Company's
facilities and higher operating costs associated with operating in sub-freezing
weather and high levels of snowfall.
REGULATIONS
The collection and disposal of solid and hazardous wastes are subject
to laws and regulations promulgated by United States, Canadian or other foreign,
state, territorial, federal, provincial or local courts, executive offices,
legislatures, governmental agencies or ministries, commissions or
administrative, regulatory or self-regulatory authorities or instrumentalities
which regulate health, safety, the environment, zoning and land-use.
Environmental laws and regulations require hazardous waste disposal facilities
to obtain permits, which generally outline the procedures under which the
facilities must be operated. Governmental authorities have the power to enforce
compliance with these, regulations, and violations of permit conditions, or of
the regulations, even if unintentional, may result in fines, shutdowns, remedial
work or revocation of the permit. Regulations vary but generally govern
collection, storage and disposal activities and the location and use of
facilities and impose restrictions to prohibit or minimize air and water
pollution.
6
7
The Company's business is significantly affected by federal, state,
provincial and local environmental law, including RCRA, the Toxic Substances
Control Act, CERCLA, the Clean Water Act and the Clean Air Act, and
corresponding state laws and related regulations and enforcement practices.
Safety standards under the Occupational Safety and Health Act are also
applicable to the Company's business.
RCRA provides for the establishment of a national hazardous waste
management program through a comprehensive regulatory system. Among other
things, it defines hazardous wastes and provides standards for generators,
transporters and disposers of hazardous wastes, and for the issuance of permits
for sites where such material is treated, stored or disposed. These regulations
also require Company facilities to demonstrate financial assurance for sudden
and accidental and, in the case of land based treatment facilities, non-sudden
and gradual pollution occurrences. Financial assurance for future closure and
post-closure expenses must also be maintained. The Company believes that each
facility operating under interim status will be issued its final RCRA permit and
that each permit will be renewed at the end of its existing term. However, any
such issuance or renewal could include conditions requiring further capital
expenditures or corrective actions. Although the Company also believes that each
of its operating facilities complies in all material respects with the
applicable requirements of RCRA, it may be necessary to expend considerable
time, effort and money to keep existing or acquired facilities of the Company in
compliance with applicable requirements, including new regulations, to maintain
existing permits and approvals and to obtain the permits and approvals necessary
to increase their capacity.
CERCLA, among other things, imposes financial liability for damages and
the cleanup of sites from which there is a release or threatened release of
hazardous substances into the environment. Present and past owners and operators
of sites which release hazardous substances, as well as generators and
transporters of the waste material, are jointly and severally liable for
remediation costs and environmental damages. Given the substantial costs
involved in a CERCLA cleanup and the difficulty of obtaining insurance for
environmental impairment liability, such liability could have a material impact
on the Company's business, financial condition and future prospects.
The Clean Water Act regulates the discharge of pollutants into surface
waters and sewers from a variety of sources, including disposal sites and
treatment facilities. The Company is required to obtain discharge permits and
conduct sampling and monitoring programs. The Clean Air Act regulates the
emission of certain potentially harmful substances into the air. These
regulations also impact the Company's operations. The Company believes each of
its operating facilities complies in all material respects with the applicable
requirements.
ENVIRONMENTAL LIABILITIES AND CAPITAL EXPENDITURES
A portion of the Company's capital expenditures are related to
compliance with environmental laws and regulations. The Company estimates
capital spending of approximately $1 million for fiscal year 1998, and $3
million in the aggregate for the fiscal years 1999 through 2001 in order to
comply with RCRA, the Clean Air Act and other environmental laws and regulations
currently in effect.
In addition to these capital expenditures, the Company may incur costs
in connection with closure activities at certain of its sites. When the Company
discontinues using or changes the use of a hazardous waste management unit,
formal closure procedures must be followed, and such procedures must be approved
by federal or state environmental authorities. In some cases, costs are incurred
to complete remedial cleanup work at the site. In addition at certain of the
Company's other operating sites, remedial cleanup work is required as part of
the RCRA Corrective Action Program or other state and federal programs. As shown
in the Company's Consolidated Balance Sheet and more fully described in Note 6
of the Notes to Consolidated Financial Statements, incorporated herein by
reference, the Company has recorded liabilities of $183.1 million as of August
31, 1997, for remedial cleanup work, Superfund site liability, closure
activities and certain other environmental expenses related to its operating and
previously closed sites.
With respect to various operating facilities, the Company is required
to provide financial assurance with respect to certain statutorily required
closure and post-closure obligations totaling $450 million at August 31, 1997.
Historically, Laidlaw provided certain of these financial assurances in the form
of parental guaranties. As a result of the Acquisition, the Company will be
obligated to provide most of these financial assurances. The Company intends to
provide the required financial assurance through a combination of letters of
credit and insurance policies, as allowed by the applicable regulatory
authorities.
7
8
EMPLOYEES
As of August 31, 1997, 4,500 employees provided the Company's hazardous
waste services, of whom 1,500 were executive, supervisory, clerical and sales
personnel. Approximately 12% of the Company's employees were represented by
various collective bargaining groups. Management believes that its relations
with its employees are excellent.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information with respect to the
executive officers and significant employees of the Company:
Name Age Position Held
--------------------------- ---------- ----------------------------------------------------------
Kenneth W. Winger 59 President and Chief Executive Officer
Michael J. Bragagnolo 51 Executive Vice President and Chief Operating Officer
Paul R. Humphreys 38 Senior Vice President, Finance and Chief Financial Officer
Henry H. Taylor 53 Vice President, General Counsel and Secretary
Kenneth W. Winger became President and Chief Executive Officer on May
15, 1997 in connection with the Acquisition. Mr. Winger served as President and
Chief Operating Officer of Old LESI from July 1995 until May 1997. He served as
Executive Vice President for Business Development of Laidlaw Waste Systems,
Ltd., a former subsidiary of Laidlaw, from January 1995 until July 1995. Prior
to that, Mr. Winger served as Senior Vice President for Corporate Development
with Laidlaw from May 1991.
Michael J. Bragagnolo became Executive Vice President and Chief
Operating Officer on May 15, 1997 in connection with the Acquisition. He joined
Old LESI in January of 1997 as the Executive Vice President after serving as
Executive Vice President of U.S. Operations for Laidlaw Waste Systems, Ltd.
since 1992.
Paul R. Humphreys became Senior Vice President, Finance and Chief
Financial Officer on May 15, 1997 in connection with the Acquisition. He joined
Old LESI in January 1995 as Vice President of Finance. He previously served as
Manager of Finance for Laidlaw for more than five years.
Henry H. Taylor became Vice President, General Counsel and Secretary on
May 15, 1997 in connection with the Acquisition. Prior to the Acquisition, he
had served as Vice President of Legal and Regulatory Affairs and Secretary of
Old LESI since September 1995. Mr. Taylor joined Old LESI in May 1990 as Vice
President of Legal Affairs.
ITEM 2. PROPERTIES.
The Company operates in 32 states, seven Canadian provinces and Puerto
Rico. The Company provides hazardous waste services from 53 service centers and
satellite offices, operates 12 landfills, nine incinerators, eight
transportation centers and 24 other facilities. All facilities are owned except
two service centers, three transportation centers and seven other facilities. To
provide these services, the Company utilizes approximately 1,000 trucks and
tractors, 700 other vehicles, and 1,700 trailers.
ITEM 3. LEGAL PROCEEDINGS.
The business of the Company's hazardous and industrial waste services
is continuously regulated by federal, state, provincial and local provisions
that have been enacted or adopted, regulating the discharge of materials into
the environment or primarily for the purpose of protecting the environment. The
nature of the Company's businesses results in its frequently becoming a party to
judicial or administrative proceedings involving all levels of governmental
authorities and other interested parties. The issues that are involved generally
relate to applications for permits and licenses by the Company and their
conformity with legal requirements and alleged technical violations of existing
permits and licenses. The Company does not believe that these issues will be
material to the Company's operations or financial condition. At August 31, 1997,
subsidiaries of the Company were involved in three proceedings of the latter
8
9
type relating primarily to activities at waste treatment, storage and disposal
facilities where the Company believes sanctions involved in each instance may
exceed $100,000.
In the United States, CERCLA imposes financial liability on persons who
are responsible for the release of hazardous substances into the environment.
Present and past owners and operators of sites which release hazardous
substances, as well as generators and transporters of the waste material, are
jointly and severally liable for remediation costs and environmental damage. At
August 31, 1997, the Company had been notified that it was a potentially
responsible party in connection with 22 locations in its hazardous waste
management and other businesses. The Company continually reviews its status with
respect to each location and the extent of its alleged contribution to the
volume of waste at the location, the available evidence connecting the Company
to that location and the numbers and financial soundness of other potentially
responsible parties at the location. Based upon presently available information,
the Company does not believe that potential liabilities arising from its
involvement with these locations will be material to the Company's operations or
financial condition.
VILLE MERCIER FACILITY. On May 10, 1991, representatives of the
Ministry of the Environment of the Province of Quebec conducted a search on
property of a subsidiary of the Company in Ville Mercier pursuant to a search
warrant issued on the basis of allegations that the subsidiary, prior to its
acquisition, had during the years 1973, 1974 and 1975, illegally buried between
500 and 600 barrels of industrial waste in the ground on the site. As a result
of that search and the finding of barrels of industrial waste, the subsidiary
immediately undertook an investigation and submitted a restoration plan to the
Ministry of the Environment and in fact, commenced the restoration activity. On
May 24, 1991, the Minister of the Environment issued an order under the
provisions of the Environment Quality Act, ordering the subsidiary to collect
all the contaminants dumped, emitted, issued or discharged into the environment.
This order was issued without notice to the subsidiary at a time when the
subsidiary was already carrying out its restoration plan. The subsidiary has
filed a motion in the Superior Court in the Province of Quebec and the District
of Montreal seeking an order to, among other things, cancel and annul the order
on the basis, that the burial of the barrels between 1973 and 1975 did not
constitute an actual and current discharge, emission or deposit of contaminants
into the environment, justifying the 1991 order under the law and that the order
did not identify the contaminants that the subsidiary was required to remove,
their location, or a time frame in which this should be accomplished. Management
believes that the restoration plan submitted by the subsidiary as amended after
consultation with the Ministry of the Environment has been implemented and that
any contamination resulting from the barrels of industrial waste has been
remediated.
By letter dated June 19, 1992, and unrelated to the barrels of
industrial waste referred to above, the Quebec Ministry of the Environment
requested the subsidiary to advise the Ministry, within 30 days of receipt of
the request, of its intentions concerning the carrying out of certain
characterization studies of soil and water and restoration work with respect to
certain areas of the Ville Mercier property. In 1968, the Quebec government
issued two permits to an unrelated company to dump organic liquids into lagoons
on the Ville Mercier property. By 1971, groundwater contamination had been
identified. In 1972, the Quebec government provided an alternate water supply to
Ville Mercier. In the same year, the permit authorizing the dumping of liquids
was terminated and a permit to operate an organic liquids incinerator on the
property was granted to an entity which was indirectly acquired by the Company
in 1989. In 1973, the Quebec government contracted with the incinerator operator
to incinerate the pumpable liquids in the lagoons. In 1980, the incinerator
operator removed, solidified and disposed of the non-pumpable material from the
lagoons in a secure cell and completed the closure of the lagoons at its own
expense. In 1983, the Quebec government constructed, and continues to operate, a
groundwater pumping and treatment facility near the lagoons. The Company
believes that its subsidiary is not the party responsible for the lagoon and
groundwater contamination. By letter dated July 17, 1992, the subsidiary
responded by first denying any responsibility for the decontamination and
restoration of its site and secondly by proposing that the Quebec Ministry of
the Environment and the subsidiary form a working group to find the most
appropriate technical solution to the contamination problem. On November 16 and
25, 1992, the Minister of the Environment, pursuant to the provisions of the
Environment Quality Act, served the subsidiary with two Notices alleging that
the subsidiary was responsible for the presence of contaminants on its property
and that of its neighbor and ordering the subsidiary to take all the necessary
measures to excavate, eliminate or treat all of the contaminated soils and
residues located within the areas defined in the Notices and to recover and
treat all of the contaminated waters resulting from the aforementioned measures.
The Notices further provided that failing the receipt by the Department of
Environment, within ten days of the date of service of the Notices, of an
undertaking by the subsidiary to carry out the aforementioned measures, the
Minister of the Environment would proceed to do the work and would claim from
the subsidiary the direct and indirect costs relating to such work. By letter
dated November 25, 1992, the subsidiary responded by reiterating its position
that it had no responsibility for the contamination associated with the
discharges of wastes into the former Mercier Lagoons between 1968 and 1972 and
proposing to submit the
9
10
question of responsibility to the Courts for determination as expeditiously as
possible through the cooperation of the parties' respective attorneys.
Concurrently, the subsidiary undertook to prepare and submit to the Department
of the Environment a technical plan to address the contamination on the site
identified in the notices. This plan was developed with the assistance of highly
qualified experts from Quebec and elsewhere in North America drawing upon all
available information and was submitted to the Minister of the Environment. By
letter dated December 7, 1992, the subsidiary submitted to the Minister of the
Environment a document entitled "Detailed Scope of Work for the Groundwater
Contamination Panel Ville Mercier, Quebec." This proposal by the subsidiary was
refused by the Minister of the Environment by letter dated December 22, 1992 on
the grounds that it did not meet the terms of the above mentioned Notices issued
against the subsidiary. The Minister published a request for tenders for the
preparation of plans and specifications with respect to the excavation and
storage of the contaminated soils. The Minister also retained six independent
experts to review the subsidiary's technical plan. This panel of experts
subsequently submitted to the Minister of the Environment its recommended
methodology to address the contamination on the site.
The Minister of the Environment convened a public hearing which
reviewed the report submitted to the Minister by the experts he retained and
recommended to the Minister what remedial plan should be instituted to address
the contamination on the site.
The subsidiary filed legal proceedings seeking a court determination of
the liability associated with the contamination of the former Mercier lagoons.
The subsidiary asserted that it has no responsibility for the contamination on
the site. The Minister claimed that the subsidiary is responsible for the
contamination and should reimburse the Province of Quebec for costs incurred to
the present in the amount of $17.8 million Canadian and should be responsible
for future remediation costs.
Pursuant to the Stock Purchase Agreement (as described in Part I Item 1
of this report), Laidlaw and Laidlaw Transportation, Inc. agreed to indemnify
and hold harmless the Company and its subsidiaries for any damages resulting
from the remediation of contaminated soils and water arising from the former
lagoon sites and operation of the incinerator at Mercier, Quebec but only to the
extent that the aggregate cash expenditure with respect to such damages exceeds
in the aggregate (i) $1 million during such year and (ii) since the Acquisition
(as described in Part I, Item 1, to this report) an amount equal to the product
of $1 million times the number of years that have elapsed since the Acquisition;
however, there shall be no indemnification for any cash expenditures incurred
more than six years after the Acquisition.
LAIDLAW ENVIRONMENTAL SERVICES OF SOUTH CAROLINA, INC. FINANCIAL
ASSURANCE. A subsidiary of the Company, Laidlaw Environmental Services of South
Carolina, Inc. ("LESSC"), owns and operates a hazardous waste landfill near the
Town of Pinewood in Sumter County, South Carolina. South Carolina law requires
that hazardous waste facilities provide evidence of financial assurance for
potential environmental cleanup and restoration in form and amount to be
determined by the South Carolina Department of Health and Environmental Control
("DHEC").
In its order dated May 19, 1994, the Board of DHEC (the "Board")
decided that over a ten year period LESSC must establish a cash funded trust in
the amount of $133 million adjusted for inflation as financial assurance for
potential environmental cleanup and restoration. In August 1994, LESSC paid
approximately $14 million cash into the trust fund as a first installment. The
cash funded trust now stands at approximately $17 million. LESSC appealed to the
South Carolina Circuit Court contesting the legality of the Board's
determination.
In June 1995, DHEC promulgated, and the South Carolina legislature
approved, regulations governing financial assurance for environmental cleanup
and restoration giving owner/operators of hazardous waste facilities the right
to choose from among six options for providing financial assurance. The options
include insurance, a bond, a letter of credit, a cash trust fund and a corporate
guaranty with a financial test.
In June 1995 under authority of the new regulations, LESSC submitted
financial assurance for potential environmental cleanup and restoration composed
of a combination of the existing State Permitted Sites Fund (this is a state of
South Carolina fund created by statute and funded by hazardous waste disposal
taxes) in the amount of approximately $8 million and the balance of a total
package of $135 million by way of a corporate guaranty by Laidlaw in the amount
of approximately $127 million. LESSC also left in place the existing cash trust
fund in the amount of approximately $17 million. DHEC accepted LESSC's financial
submittal. On September 15, 1995, DHEC issued a declaratory ruling finding the
new regulations applicable to financial assurance requirements for LESSC. A
group of parties opposed to the ruling appealed the declaratory ruling to the
South Carolina Circuit Court. The opposing parties
10
11
include Citizens Asking for a Safe Environment, Energy Research Foundation,
County of Sumter, Sierra Club, County of Clarendon, The Sumter County
Legislative Delegation, the South Carolina Department of Natural Resources and
the South Carolina Public Service Authority. In June 1996, LESSC submitted and
DHEC accepted a similar financial assurance package for the state fiscal year
ended June 30, 1997. In June 1997, LESSC submitted a financial assurance package
consisting of the State Permitted Sites Fund (approximately $9 million), the
cash trust fund in the amount of approximately $17 million and the balance of a
total package of approximately $135 million in insurance coverage. This
submittal is pending acceptance by DHEC.
LESSC's appeal of the May 19, 1994 DHEC order and the opposing parties'
appeal of the September 15, 1995, DHEC declaratory ruling were consolidated in
the South Carolina Circuit Court in the case captioned Laidlaw Environmental
Services of South Carolina, Inc. et. al., Petitioners vs. South Carolina
Department of Health and Environmental Control and South Carolina Board of
Health and Environmental Control, Respondents - Energy Research Foundation, et
al., Intervenors, Docket Numbers C/A 94-CP-43-175, 94-CP-43-178, 94-CP-40-1412
and 94-CP-40-1859. A decision was issued by the Circuit Court on August 19, 1997
finding the regulation legally valid and applicable to financial assurance
requirements of the Pinewood landfill. Opposing parties have appealed the
decision to the South Carolina Court of Appeals. A decision adverse to the
Company could result in the reinstatement of the May 19, 1994 DHEC order. The
Company believes that the regulations promulgated in June 1995 are legally valid
and applicable to financial assurance requirements for the Pinewood landfill.
TAX MATTERS. The consolidated federal income tax returns of Laidlaw
Transportation, Inc. and its U.S. subsidiaries (collectively, "LTI") (which
until May 15, 1997, included certain of the subsidiaries of the Company) for the
fiscal years ended August 31, 1986, 1987 and 1988, have been under audit by the
Internal Revenue Service. In March 1994, LTI received a statutory notice of
deficiency proposing that LTI pay additional taxes relating to disallowed
deductions in those income tax returns. The principal issue involved, relates to
the timing and the deductibility for tax purposes of interest attributable to
loans owning to related foreign persons. LTI has petitioned the United States
Tax Court (captioned as Laidlaw Transportation, Inc. & Subsidiaries et al. vs.
Commissioner of Internal Revenue, Docket Nos. 9361-94 and 9362-94) for a
redetermination of claimed deficiencies of approximately $49.6 million (plus
interest of approximately $80.3 million as of August 31, 1997). In October 1997,
LTI received a statutory notice of deficiency proposing that the subsidiaries
pay additional taxes of approximately $143.5 million (plus interest of
approximately $121.0 million as of August 31, 1997) relating to disallowed
deductions in federal income tax returns for the fiscal years ended August 31,
1989, 1990 and 1991, based on the same issues. LTI intends to vigorously contest
these claimed deficiencies. The Company anticipates that the Internal Revenue
Service will propose adjustments for the same issue in subsequent taxation
years. Pursuant to the Stock Purchase Agreement (as described in Part I, Item 1
to this report), Laidlaw and Laidlaw Transportation, Inc. agreed to be
responsible for any tax liabilities resulting from these matters. The Company
believes that the ultimate disposition of these issues will not have a
materially adverse effect upon the Company's consolidated financial position or
results of operations.
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 fiscal 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The section entitled "Common Stock and Dividend Information" appearing
in the Company's 1997 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA.
The section entitled "Selected Financial Data" appearing in the
Company's 1997 Annual Report to Stockholders is incorporated herein by
reference.
11
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing in the Company's 1997 Annual
Report to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and notes thereto set forth in the Company's
1997 Annual Report to Stockholders are incorporated herein by reference, and
indexed under Item 14(a)(1). See also the financial statement schedules
appearing herein, as indexed under Item 14(a)(2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The section entitled "Executive Officers of the Registrant" in Part I,
Item 1 of this Annual Report on Form 10-K and the section entitled "Section
16(a) Beneficial Ownership Reporting Compliance" and "Proposal 1: Election of
Directors" in the Company's definitive proxy statement to be filed pursuant to
Regulation 14A for the Annual Meeting of Stockholders to be held on November 25,
1997 (the "Proxy Statement"), are incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The sections entitled "Compensation of Officers and Directors" and
"Compensation Committee Interlocks and Insider Participation" in the Proxy
Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The section entitled "Beneficial Ownership" in the Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The section entitled "Certain Relationships and Related Transactions"
in the Proxy Statement is incorporated herein by reference.
12
13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a). The following documents are filed as part of this report:
(1). Financial statements and the notes thereto set forth in the
Company's 1997 Annual Report to Stockholders which are incorporated herein by
reference:
Report of Independent Accountants to the Stockholders (page 31).
Consolidated Statements of Income for the three fiscal years ended
August 31, 1997, 1996 and 1995 (page 16).
Consolidated Balance Sheets as of August 31, 1997 and 1996 (page 17).
Consolidated Statements of Cash Flows for each of the three fiscal
years ended August 31, 1997, 1996 and 1995 (page 18).
Consolidated Statements of Stockholders' Equity for each of the three
fiscal years ended August 31, 1997, 1996 and 1995 (page 19).
Notes to Consolidated Financial Statements (pages 20 - 30).
The Company's 1997 Annual Report to Stockholders is not to be deemed
filed as part of this report except for those parts thereof specifically
incorporated by reference herein.
(2). Financial statement schedules required to be filed by Item 8 of
this form:
Page 17 -- Schedule II -- Valuation and qualifying accounts.
Page 18 -- Independent accountant's report on financial statement
schedules.
All other schedules have been omitted since they are inapplicable or
not required, or the information has been included in the financial statements
or the notes thereto.
(3). Exhibits:
(3)(a) Restated Certificate of Incorporation of the Company dated May
13, 1997, and Amendment to Certificate of Incorporation dated May 15,
1997, filed as Exhibit 3(a) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by reference.
(3)(a)(i) Certificate of Correction Filed to Correct a Certain Error in
the Restated and Amended Certificate of Incorporation of the Company
dated October 15, 1997.
(3)(b) Bylaws of the Company filed as Exhibit 4(ii) to the
Registrant's Current Report on Form 8-K dated July 29, 1997, and
incorporated herein by reference.
(4)(a) Rights Agreement dated as of June 14, 1989 between the Company
and First Chicago Trust Company as successor to Registrar and
Transfer Company, as Rights Agent filed as an Exhibit to the
Registrant's Form 8-K filed on June 13, 1995 and incorporated herein
by reference.
(4)(b) Amendment No. 1 dated as of March 31, 1995 to the Rights
Agreement between the Company and First Chicago Trust Company as
successor to Registrar and Transfer Company, as Rights Agent filed as
an Exhibit to the Registrant's Form 8-K filed on June 13, 1995 and
incorporated herein by reference.
(4)(c) Credit Agreement among Laidlaw Chem-Waste, Inc., Laidlaw
Environmental Services (Canada) Ltd., Toronto Dominion (Texas) Inc.,
The Toronto-Dominion Bank, TD Securities (USA) Inc., the Bank of Nova
Scotia, NationsBank, N.A. and The First National Bank of Chicago and
NationsBank, N.A. as Syndication Agent dated as of May 9, 1997, filed
as Exhibit 4(c) to the Registrant's Form 10-Q for the Quarter ended
March 31, 1997, and incorporated herein by reference.
(4)(d) $350,000,000 5% Subordinated Convertible Pay-In-Kind Debenture
due 2009 issued by Registrant on May 15, 1997 to Laidlaw Inc. the form
of which was included as an appendix to the Registrant's Definitive
Proxy Statement on Form DEF 14A, filed on May 1, 1997 and incorporated
herein by reference.
(4)(e) Registration Rights Agreement dated May 15, 1997 between
Registrant, Laidlaw Transportation, Inc. and Laidlaw Inc. included as
an appendix to the Registrant's Definitive Proxy Statement on Form DEF
14A, the form of which was filed on May 1, 1997 and incorporated herein
by reference.
13
14
(4)(f) Indenture dated as of May 1, 1993 between the Industrial
Development Board of the Metropolitan Government of Nashville and
Davidson County (Tennessee) and NationsBank of Tennessee, N.A., filed
as Exhibit 4(f) to the Registrant's Form 10-Q for the Quarter ended May
31, 1997, and incorporated herein by reference.
(4)(g) Indenture of Trust dated as of February 1, 1995 between Carbon
County, Utah and West One Bank, Utah, now known as U.S. Bank, as
Trustee, filed as Exhibit 4(g) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by reference.
(4)(h) Indenture of Trust dated as of August, 1995 between Tooele
County, Utah and West One Bank, Utah, now known as U.S. Bank, as
Trustee, filed as Exhibit 4(h) to the Registrant's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by reference.
(4)(i) Indenture of Trust dated as of July 1, 1997 between Carbon
County, Utah and U.S. Bank, a national banking association, as Trustee,
filed as Exhibit 4(i) to the Registrant's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(j) Indenture of Trust dated as of July 1, 1997 between Tooele
County, Utah and U.S. Bank, a national banking association, as Trustee,
filed as Exhibit 4(j) to the Registrant's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(k) Indenture of Trust dated as of July 1, 1997 between California
Pollution Control Financing Authority and U.S. Bank, a national banking
association, as Trustee, filed as Exhibit 4(k) to the Registrant's Form
10-Q for the Quarter ended May 31,1997, and incorporated herein by
reference.
(4)(l) Stock Purchase Agreement between Westinghouse Electric
Corporation (Seller) and Rollins Environmental Services, Inc. (Buyer)
for National Electric, Inc. dated March 7, 1995, filed as an Exhibit to
the Registrant's Form 8-K filed on June 13, 1995, and incorporated
herein by reference.
(4)(m) Second Amendment to Stock Purchase Agreement (as referenced in
Exhibit (4)(l) above, dated May 15, 1997, among Westinghouse Electric
Corporation, Rollins Environmental Services, Inc. and Laidlaw Inc.,
filed as Exhibit 4(m) to the Registrant's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(n) Promissory Note dated May 15, 1997 for $60,000,000 from Laidlaw
Environmental Services, Inc. to Westinghouse Electric Corporation,
filed as Exhibit 4(n) to the Registrant's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(o) Guaranty Agreement dated May 15, 1997 by Laidlaw Inc. to
Westinghouse Electric Corporation guaranteeing Promissory Note dated
May 15, 1997 (as referenced in Exhibit (4)(n)) from Laidlaw
Environmental Services, Inc. to Westinghouse Electric Corporation,
filed as Exhibit 4(o) to the Registrant's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(10)(a) Rollins Environmental Services, Inc. 1982 Incentive Stock
Option Plan, filed with Amendment No. 1 to the Company's Registration
Statement No. 2-84139 on Form S-1 dated June 24, 1983 and incorporated
herein by reference.
(10)(b) Rollins Environmental Services, Inc. 1993 Stock Option Plan,
filed with the Company's Proxy Statement for the Annual Meeting of
Stockholders held January 28, 1994 and incorporated herein by
reference.
(10)(c) Stock Purchase Agreement dated February 6, 1997, among the
Registrant, Laidlaw Inc., and Laidlaw Transportation, Inc. included as
an appendix to the Registrant's Definitive Proxy Statement on Form DEF
14A, filed on May 1, 1997, and incorporated herein by reference.
(10)(e) Management Incentive Plan for fiscal year 1996, filed as
Exhibit 10(e) to the Registrant's Form 10-Q for the Quarter ended May
31, 1997, and incorporated herein by reference.
(12) Computation of ratio of earnings to fixed charges
14
15
(13) The Company's 1997 Annual Report to Stockholders, certain portions
of which have been incorporated herein.
(21) Subsidiaries of the Registrant
(23) Consent of Independent Accountants
(27) Financial data schedule
(b). Reports on Form 8-K
The Company filed a Current Report on Form 8-K on June 11, 1997, which
contained Item 4 related to the change in the Registrant's certifying
accountant, and Item 5 related to the appointment of two additional directors.
The Company filed an Amended Current Report on Form 8-K/A, on July 28,
1997, amending the Form 8-K dated May 30, 1997, which contained Item 7 related
to the financial statements of businesses acquired and pro forma financial
information.
The Company filed a Current Report on Form 8-K on July 29, 1997, which
contained Item 5 related to the amendment of its By-laws and Item 7 related to
the exhibits.
15
16
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.
DATE: October 14, 1997 LAIDLAW ENVIRONMENTAL SERVICES, INC.
---------------- ------------------------------------
(Registrant)
/s/ K. W. Winger
------------------------------------
Kenneth W. Winger
President 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 dates indicated.
Signature Title Date
- --------- ----- ----
/s/ J. R. Bullock Chairman of the Board October 14, 1997
- -------------------------- and Director
James R. Bullock
/s/ K. W. Winger President, Chief Executive Officer October 14, 1997
- -------------------------- and Director
Kenneth W. Winger
/s/ Paul R. Humphreys Senior Vice President, Finance October 14, 1997
- -------------------------- and Chief Financial Officer
Paul R. Humphreys
/s/ J. R. Grainger Director October 14, 1997
- --------------------------
John R. Grainger
/s/ L. W. Haworth Director October 14, 1997
- --------------------------
Leslie W. Haworth
/s/ John W. Rollins, Sr. Director October 14, 1997
- --------------------------
John W. Rollins, Sr.
/s/ John W. Rollins, Jr. Director October 14, 1997
- --------------------------
John W. Rollins, Jr.
/s/ David E. Thomas, Jr. Director October 14, 1997
- --------------------------
David E. Thomas, Jr.
/s/ Henry B. Tippie Director October 14, 1997
- --------------------------
Henry B. Tippie
Director
- --------------------------
James L. Wareham
Director
- --------------------------
Grover C. Wrenn
16
17
ITEM 14 (2.)
LAIDLAW ENVIRONMENTAL SERVICES, INC.
Schedule II - Valuation and Qualifying Accounts
($ in Thousands)
Additions
Balance at --------------------
Beginning Charged to Balance at
Description of Period Expense Other(1) Deductions(1) End of Period
- ---------------------------------------------------------------------------------------------------
Year ended August 31
1997
Allowance for doubtful accounts $ 4,985 $1,633 $2,171 $1,553 $ 7,236
Amortization of intangible assets 12,962 2,216 0 3,509 11,669
1996
Allowance for doubtful accounts $ 5,705 $1,306 $ 0 $ 2,026 $ 4,985
Amortization of intangible assets 12,079 2,054 0 1,171 12,962
1995
Allowance for doubtful accounts $ 1,719 $ 214 $6,037 $ 2,265 $ 5,705
Amortization of intangible assets 9,854 2,225 0 0 12,079
(1) Represents balances of acquired and disposed business and holding gain
(loss) on Canadian balances translated into U.S. dollars at the exchange
rate prevailing at the end of the year.
17