ITEM 1. BUSINESS
GENERAL
Roy F. Weston, Inc. is a professional services organization that provides a broad range of consulting, engineering and design, environmental construction, and facilities, program and business management services to solve environmental and health and safety problems associated with air, water, and land pollution; hazardous material and toxic waste treatment and disposal; workplace hazards; product use; and energy conservation. These services are made available to governmental and industrial clients through the Company's staff of professional and support personnel in offices and laboratories worldwide. The Company assists its clients from the initial identification and definition of a problem, through the planning, evaluation, and design stages, to the implementation of cost-effective, technologically feasible, and politically acceptable solutions. The Company's services include development of cost-effective technologies and solutions to environmental problems; selection of sites, obtaining of governmental permits and the preparation of specifications and designs for constructing remedial systems and facilities; construction, startup, and operation of facilities; laboratory analysis and evaluation of samples of hazardous, toxic, and other environmentally significant materials. The Company's services may be used individually or in combination, as required, to meet its clients' needs.
Since its incorporation in 1957, the Company has been a pioneer in providing solutions to environmental, health and safety problems. As environmental concerns have grown in complexity and become the subject of heightened public awareness and extensive governmental regulation, the Company's strategy has been to build an organization with a high level of sophisticated professional skills and a broad range of scientific, technological, and management resources. The Company provides a total systems approach that involves studying its clients' needs and designing cost-effective, customized solutions that address those needs.
SERVICES
The Company provides its services by combining its professional skills and technological resources in an integrated systems approach, which uses technical information and program management capabilities as well as cost control systems. The services performed by the Company for its clients typically include one or more of the following: consultation with the client to determine the nature and scope of a project; on-site collection of samples; on-site monitoring and measurement of industrial discharges and emissions; analysis of samples in the Company's laboratories or mobile testing units; identification and evaluation of a problem and its impact; development and design of a process for solving a problem; preparation of reports for obtaining regulatory agency permits; design and preparation of drawings and specifications for constructing a facility to effect a solution; construction of a facility or implementation of a cleanup; and operation and maintenance of a facility.
CONSULTING AND ENGINEERING
The Company's consulting and engineering services involve the identification and characterization of a client's problems; the evaluation of alternative solutions; and the selection, design, and development of a technologically feasible, cost-effective, and politically acceptable solution. These services use professionals from many different scientific and technological disciplines to assess the long-term effects and the risks associated with the ultimate environmental impact of clients' activities and products. In performing feasibility studies and environmental impact and risk assessments, the Company's professionals examine the relative effectiveness of various technological approaches for achieving permanent solutions and ensuring that additional environmental concerns are not created in the course of solving the primary problem.
The Company applies its skills to all phases of environmental matters, including those relating to hazardous and toxic substances; major program management; sustainable development services; solid waste management; management of wastewater, groundwater, and air resources; indoor air quality; health and safety; and energy conservation.
HAZARDOUS AND TOXIC SUBSTANCES. Services relating to hazardous and toxic substances include the assessment of potentially hazardous waste and toxic materials; the reduction or elimination of sources of hazardous and toxic materials; the undertaking of remedial investigation and engineering feasibility studies; the operation of hazardous waste treatment systems; and consulting to obtain government environmental permits. The Company provides engineering for the destruction or detoxification and stabilization of hazardous waste.
MAJOR PROGRAM MANAGEMENT. Major program management involves all phases of large-scale environmental and health and safety problems of industry and government. The Company has the ability to accept overall responsibility for siting, evaluating, designing, implementing, and managing environmental programs, and to apply its diversified services, as appropriate, in an integrated systems approach. The Company provides the management systems and the direct involvement of its most senior management to deal with the complexities of the underlying environmental problems, as well as the commitment of large numbers of personnel at geographically dispersed sites for extended time frames. The Company typically bids for contracts as the prime contractor and forms subcontractor teams in those instances where subcontractors provide expertise and staffing that will substantially enhance the Company's ability to obtain and perform contracts. Subcontractors may include certain competitors of the Company. Although the Company believes that major program management will be increasingly used by industry as environmental issues become more challenging, the primary market for major program management services is the federal government.
SUSTAINABLE DEVELOPMENT SERVICES. The Company provides advice and counsel to government and industry to help clients assess and reduce the total environmental impact of their processes, products, and packaging by looking at the full product life cycle from raw materials acquisition, through design, manufacturing, distribution, use and reuse/recycling or disposal. The Company also provides services to integrate environmental, economic, and social considerations in its clients' businesses and operations, intended to improve environmental and financial performance.
SOLID WASTE MANAGEMENT. Solid waste services include planning, decision making, and project implementation for recycling, composting, materials processing, source reduction, waste-to-energy and landfill programs and facilities. The Company provides total solid waste management services, including permitting, siting, procurement, design, construction, testing, and operation of solid waste facilities, as well as expertise in addressing public awareness and acceptance issues that affect the success of solid waste programs and facilities.
MANAGEMENT OF WASTEWATER, GROUNDWATER, AND AIR RESOURCES. Wastewater management services include industrial and municipal feasibility studies, engineering, economic evaluations, and design and consultation regarding the operation of wastewater treatment facilities. Wastewater treatment facilities are required by certain industries for the treatment of polluted water generated by various manufacturing processes and by municipalities for the treatment of sewage. The Company provides groundwater and surface water resource management services, including water quality monitoring and assessment, studies of the impact of surface and subsurface activities on aquifer systems, development of water supplies, and development of resource management programs. Air resources management services include siting and obtaining permits for air pollution control facilities, sampling and monitoring emissions, regulatory compliance, and designing and monitoring of facility construction and other systems for the removal of particulate matter, acid gases, and other pollutants. Regulatory compliance services include reviews of clients' facilities to determine current and future degrees of compliance with pollution standards. Site assessment reviews involve the inspection of a facility to identify the environmental risks and potential environmental effects of discharges of toxic emissions.
INDOOR AIR QUALITY. The Company integrates many of its engineering services to define and solve indoor air quality problems, including asbestos, radon, toxic air pollutants and "sick-building syndrome." Assessment techniques are aided by state-of-the-art electron and optical microscopy and chemical analysis. Industrial hygiene professionals work closely with design engineers in solving indoor air quality problems.
HEALTH AND SAFETY. Health and safety specialists coordinate industrial hygiene, safety, training, and medical surveillance programs; conduct inspections; and prescribe protection and compliance procedures to be used when working with hazardous materials or in hazardous environments.
ENERGY CONSERVATION. The Company conducts major energy conservation engineering and management projects for industry and government, including energy audits, coal conversion studies, alternative energy studies, and cogeneration system studies for energy producers.
CONSTRUCTION AND REMEDIATION
Consistent with the Company's strategy of providing complete solutions to its clients' problems, the Company provides construction and remediation services which can implement the solutions designed by its consulting and engineering group, or designed by others. The Company also provides hazardous waste cleanup; landfill design and construction; water management systems; wastewater system construction and operation; decommissioning and demolition of facilities and process systems; storage tank management; and on-site thermal treatment systems.
The Company has designed and constructed a patented mobile low-temperature thermal desorption system (LT3(R)). The LT3 is designed for stripping volatile organic compounds (VOCs) from soil. The contaminated soils are heated to vaporize moisture and VOCs. The resultant clean soil is then suitable for use as on-site backfill. The Company also has designed and constructed two high-temperature transportable thermal processing systems, the "TIS-5" and the "TIS-20." These systems treat contaminated soils by a thermal process and the clean soil is then suitable for use as on-site backfill. The TIS-5 is permitted by the U. S. Environmental Protection Agency (EPA) under applicable Toxic Substance Control Act of 1976 (TSCA) regulations to burn certain hazardous materials and is operated in accordance with those permit requirements. Additional operating approvals are occasionally required and obtained from state and local authorities.
In late February 1997, the LT3 experienced a fire while being used on a project. No injuries resulted from the fire, but many of the unit's components were fire damaged and some parts will need to be replaced. The Company anticipates that it will be several months before the LT3 can be used again.
Transportable thermal incineration technology has come under the same legislative and regulatory pressures as fixed unit incineration technology. In May 1994, EPA issued a new policy which required additional studies to be conducted before thermal incineration technology could be selected as the remedy at a Superfund site. This policy was applied retroactively to sites where thermal incineration technologies were already selected. The impact on the Company's thermal business has been and is expected to continue to be significant in the United States. The Company has been exploring alternative uses for its thermal units in the international markets should regulatory and legislative action prevent their use at domestic remediation sites. During 1994 and 1995, the Company was scheduled to incinerate soils at two remediation sites, but both contracts were terminated. Although the Company continues to make the equipment available for appropriate uses, it has substantially reduced the carrying value of such equipment on its balance sheet at December 31, 1996.
ANALYTICAL LABORATORY SERVICES
The Company offers services for the detection and measurement of hazardous materials, toxic wastes, and other chemicals and substances found in air, soil, and water, and in industrial wastes and emissions. Services provided by the Company include source sampling and characterization of organic pollutants such as pesticides, herbicides, volatile solvents, dioxins, and PCBs, and inorganic pollutants such as asbestos, trace metals, and sulfur. The Company monitors pollutants to assist clients in complying with environmental regulations and to evaluate the ongoing environmental effects of clients' activities. The Company uses state-of-the-art computer-assisted equipment, such as gas chromatograph/mass spectrometers, to measure trace concentrations of pollutants. A modern microscopy laboratory provides complete optical scanning microscopic measurements for asbestos analysis. The Company also uses a sophisticated data management system to track the status and results of analyses, to perform quality assurance checks, to provide sample management and to produce data reports.
Analytical services are performed in the Company's two laboratories located in Lionville, Pennsylvania, and University Park, Illinois. The Company maintains a sales service center in Stockton, California. The Company is currently certified or approved by 38 states to provide environmental
analyses and is also licensed by the Nuclear Regulatory Commission (NRC) to handle and analyze "mixed wastes" that contain radioactive as well as chemical and biological materials. Additionally, the Company has a laboratory in Auburn, Alabama, certified by the American Industrial Hygiene Association (AIHA).
The Company has entered into an agreement to sell the assets of its Lionville, Pennsylvania and University Park, Illinois laboratories and Stockton, California sales service center. The transaction is subject to certain conditions and is expected to be completed by the end of the second quarter of 1997. Upon completion of the sale, the Company expects that laboratory services required by the Company's clients will be subcontracted, in large part to the buyer of the laboratories.
CUSTOMERS AND MARKETING
The Company's marketing strategy emphasizes its ability to offer a broad range of specialized services designed to meet the needs of its clients in a timely and cost-efficient manner. The Company has the capability to undertake not only small tasks requiring a few professionals, but also the management, staffing, design, and implementation of major projects that last for several years and involve many employees in several geographic locations.
The Company's marketing efforts are directed from offices nationwide to three client sectors: private industry; public works and local government; and the federal government. Senior professionals are responsible for directing the execution of projects, monitoring quality assurance, and integrating the delivery of the Company's services. They also develop and maintain long-term working relationships with clients' management. The Company participates in industrial trade shows and technical conferences concerning environmental and health and safety issues, and sponsors related technical seminars.
FEDERAL
In the federal sector, the Company performs contracts for the Department of Defense (DOD), the Environmental Protection Agency (EPA) and the Department of Energy (DOE), as well as for other federal agencies. The Company develops comprehensive waste management and remediation programs at many priority sites throughout the country.
The Company derived 54%, 57%, and 55% of its consolidated gross revenues from the federal government for the years ended December 31, 1994, 1995, and 1996, respectively. Gross revenue percentages from the DOD, EPA, and DOE for each of the fiscal years are as follows:
The Company is a major provider of services to the federal government and thus is subject to audit with respect to costs and fees charged to the federal government. Revenues associated with federal overhead rates under government cost reimbursable contracts are adjusted when variances are determined on at least an annual basis. Provisions for losses on contracts are recorded when they are identified. As a result of its government contracting business, the Company is, has been and may in the future be subject to audits and investigations by government agencies. In addition to potential damage to the Company's business reputation, the failure by the Company to comply with the terms of any of its government contracts could also result in the Company's suspension or debarment from future government contracts for a significant period of time. The fines and penalties which could result from noncompliance with appropriate standards and regulations, or the Company's suspension or debarment, could have a material adverse effect on the Company's business, particularly in light of the increasing importance to the Company of work for various government agencies.
INDUSTRIAL
The Company provides a full range of services for industrial clients. In addition to complying with regulatory requirements, companies are recognizing that the environmental impact must be considered from the inception of a product, throughout its use and final disposal. Corporate clients, which range from small business concerns to Fortune 500 companies, are offered a wide range of consulting and engineering, analytical, and environmental construction services. Market segments served include automotive; chemicals and allied products; waste management; petroleum; forest products; utilities; electronics; and legal and financial.
PUBLIC WORKS AND LOCAL GOVERNMENT
The Company renders environmental consulting and infrastructure-related activities to many state and local governments and agencies. A growing number of cities, regional authorities, and state governments are instituting long-range programs to update essential facilities. Because these projects require comprehensive environmental planning and engineering, they will continue to be an important business component. Typical projects include the design of water supply and wastewater systems; solid waste management; asbestos management; computer-based geographic mapping; and landfill design.
COMPETITION
The environmental and health and safety markets are very competitive and require highly skilled, experienced technical and management personnel, and sophisticated technological equipment requiring substantial capital investment. Competition is based on, among other things, reputation, quality of service, price, expertise, and local presence. In each of its specific service areas, the Company competes with many engineering and consulting firms that are both larger and smaller than the Company, although no firm currently dominates any significant portion of those service areas. Some of these competitors have greater financial resources than the Company.
PATENTS AND TECHNOLOGY
The Company owns six patents on remediation technologies and has filed additional patent applications. The Company also claims copyright and trade secret protection on certain of its
computer software, publications, and technologies. The company does not believe that such patents and copyrights are a material factor in its business.
BACKLOG
The Company's net contract backlog (excluding estimated project expenses that are directly passed through to customers) was $109.7 million and $101.3 million at December 31, 1995 and 1996, respectively. Additionally, the Company derives revenues from open order contracts and from activities related to emergency responses. As work assignments are approved and funded, the Company includes these amounts in the net contract backlog. As is customary in the industry, contracts are subject to cancellation by the customer, changes in scope of work, and delays in project startup. The Company anticipates that the majority of its backlog will be realized in the current fiscal year.
POTENTIAL LIABILITY AND INSURANCE
A substantial portion of the Company's gross revenues is derived from work involving hazardous materials, toxic wastes, and other pollutants. Such efforts frequently entail significant risks of liability to the Company for environmental damage, personal injury, and fines and costs imposed by regulatory agencies. A substantial number of the Company's contracts require indemnification of a client for performance claims, damages or losses incurred during the performance of the Company's operations.
The Company has been able to insure against most liabilities it incurred in connection with the conduct of it's business. The Company has obtained coverage with commercial carriers to insure against pollution liability claims. Although this insurance covers many of the Company's environmental exposures, there are instances where project- specific pollution insurance policies are necessary. The Company will continue to evaluate exposures associated with each project to determine if additional coverage is necessary. The Company continues to be partially self-insured through its subsidiary, Cardinal Indemnity Company of North America (Cardinal), a wholly-owned insurance company. Cardinal provides professional liability and pollution coverage for deductible amounts of the commercial insurance coverage.
While the insurance carried by the Company may not be sufficient to cover all claims that may arise, and while insurance carriers may not continue to make coverage available to the Company, management believes it has provided an adequate level of insurance.
The Company has also attempted to contractually protect itself through agreements with its clients to limit its liability and indemnify the Company, although the Company has not always been successful in obtaining such agreements. Most of the Company's contracts with EPA involving Superfund monies and some state contracts that employ federal Superfund dollars contain provisions whereby the respective governmental agency agrees to indemnify the Company for third-party claims to the extent that such claims are not covered by insurance and appropriated funds are available, although the Company does not receive any assurance that any such appropriated funds will be made available. EPA has issued Final Response Action Contractor Indemnification Guidance (the Indemnification Guidance) applicable to contracts signed on or after October 16, 1986, the terms of which limit EPA's contractor indemnification under certain Superfund contracts retroactively to 1986, and prospectively, under certain circumstances.
The Indemnification Guidance states that future contracts will not provide for indemnification unless EPA is unable to obtain responsible, competitive proposals without such an indemnification.
The Company has also developed and implemented improvements to its quality assurance and health and safety programs. These programs establish certain minimum requirements for all project work and provide guidance for the development of quality assurance plans and health and safety plans on all projects. The objective of the quality assurance program is to provide assurance that project performance is of appropriate quality for the project requirements. The objective of the health and safety program is to protect project personnel from exposure to hazardous substances and situations. The scope of both programs includes the establishment of policy and procedures, staff training and operational review and audit.
The Company and its employees are subject to various state, local, and federal licenses, laws and regulations, and believes that it is in substantial compliance with those requirements.
PERSONNEL
As of December 31, 1996, the Company had approximately 2,250 employees, many of whom had advanced degrees in a variety of technical disciplines. Of these, 63 employees held doctorates, 402 held master's degrees, 130 were registered professional engineers, and 20 were diplomates of the American Academy of Environmental Engineers. The Company's ability to remain competitive will depend on its ability to attract and retain qualified personnel.
REGULATION
Demand for the Company's services is principally driven by laws and regulations, the reauthorization, modification or elimination of which could significantly affect the Company's business. The reauthorization of several major federal environmental laws that have a significant impact on the work of the Company remains on the agenda of Congress. These include the statutes that:
- Protect the chemical, physical and biological integrity of water in the United States (the Clean Water Act of 1977 and associated laws);
- Regulate the handling of hazardous waste and mandate state oversight of solid waste (the Resource Conservation and Recovery Act of 1976); and,
- Regulate the identification, remediation and accountability for hazardous waste sites (the Superfund Amendments and Reauthorization Act of 1986).
In addition, administrative regulations mandated by the 1990 amendments to the Clean Air Act are likely to play a significant role in the Company's services to its industrial clients in the areas of emission and ambient air monitoring, air quality modeling and permitting, and assistance with compliance certification.
The principal federal laws that affect the Company's business are:
THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980 (CERCLA OR SUPERFUND) AND SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT (SARA) OF 1986: CERCLA addresses past waste disposal practices by providing means for identifying and remediating hazardous waste sites. The law authorizes EPA to compel responsible parties to remediate abandoned sites. Where initial enforcement actions would result in lengthy delays, or where responsible parties cannot readily be identified, CERCLA authorizes funds for cleanups. Congress enacted SARA in 1986 to amend CERCLA and reauthorize Superfund. SARA strengthens EPA's authority to conduct short- and long-term enforcement, and expands state involvement in the cleanup process. SARA also expands EPA's commitment to research and development, training, health assessments and public participation. Sites considered to be most in need of remediation are ranked on EPA's National Priorities List (NPL). By January 1997, some 1,259 federal and nonfederal sites were listed or proposed for the NPL, and some 11,200 other hazardous waste sites remained on the CERCLA inventory of potential trouble spots.
THE CLEAN WATER ACT (CWA): Amended in February 1987, the CWA authorized $18 billion in federal revolving loan funds through 1994 for construction grants and startup money to build wastewater treatment plants. Additional funds were appropriated for fiscal years 1995 and 1996. The Company believes that the CWA is accelerating the market for the municipal wastewater treatment plant design and construction services provided by the Company. Controls imposed by the CWA on toxic effluents also are stimulating industrial expenditures.
THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (RCRA): RCRA controls the present and future management of newly generated hazardous wastes by mandating that private industry -- generators, transporters and disposers -- monitor and regulate their disposal of such wastes. As a result of the growing emphasis on the minimization of industrial process wastes, the increasing shortage of hazardous waste management facilities, and the considerable costs associated with disposal, RCRA will continue to be a key regulatory program.
THE CLEAN AIR ACT (CAA) AND CLEAN AIR ACT AMENDMENTS (CAAA): The CAAA of 1990 charged EPA with promulgating more than 400 regulations and developing guidelines and procedures in the ensuing 10 years. The sweeping provisions of the CAAA are designed to diminish three major threats to the environment: acid rain, urban air pollution, and air toxic emissions. The revisions also establish a national permit program and a stronger enforcement program to make the CAA easier to monitor and ensure compliance. The CAA and the CAAA should continue to increase the Company's activities in emission and ambient air monitoring, air quality modeling and permitting assistance to its industrial clients. Compliance certification, including the development and implementation of data management and reporting systems, should expand the Company's services to industry.
The Company may be pursuing business opportunities related to the restoration and development of environmentally impaired properties, sometimes referred to as "Brownfields". To the extent it does so as an investor or lender, it, and other companies in this arena, may be affected by the "Asset Conservation, Lender Liability and Deposit Insurance Protection Act of 1996". This federal law, and similar state laws, may limit to some degree the Company's potential liability under CERCLA, and RCRA (and State counterparts) should it ultimately need to take title to or obtain an ownership interest in the property in connection with efforts to recover on its loan or investment.
The Company believes that in addition to services required by CERCLA, RCRA, CWA, and CAA, other federal laws will affect demand for the Company's services in the private and public sectors. These include the Safe Drinking Water Act, the National Environmental Policy Act, the Nuclear Waste Policy Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, the Intermodal Surface Transportation and Efficiency Act, the Federal Facilities Compliance Act and the Energy Policy Act.
ITEM 2.
ITEM 2. PROPERTIES
The Company's principal offices are located on a 53-acre tract in West Whiteland Township, Chester County, Pennsylvania, in the suburbs of Philadelphia, and include five major buildings providing a total of approximately 150,000 square feet of space.
The Company also leases an aggregate of approximately 600,000 square feet of office and laboratory space in offices located in 24 states and the District of Columbia. Aggregate lease payments in 1996 were $18.3 million, of which $6.6 million were subject to direct reimbursement from projects. These leases for office and laboratory facilities are generally for 5 years or less.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
ATLANTIC RICHFIELD CO. (ARCO) VS. TORGER L. OAAS; MONTANA POLE AND TREATING CO.; BANK OF MONTANA; RIEDEL ENVIRONMENTAL SERVICES, INC.; ROY F. WESTON, INC.; AND BURLINGTON NORTHERN RAILROAD, U.S. DISTRICT COURT FOR THE DISTRICT OF MONTANA, C.A. NO. CV-90-75-BU-PGH.
In October 1991, ARCO filed a Complaint in the Montana District Court against the Company and others alleging that the Company, which worked at the Montana Pole and Treating site for EPA under the Technical Assistance Team (TAT) contract in 1985, negligently performed its oversight and other duties and caused additional environmental damage at the site.
In November 1995, the Company and all other parties to the litigation reached agreement on the terms of a Consent Decree resolving, among other things, all claims asserted against the Company in the litigation. There was no finding of liability against the Company. The Consent Decree was approved by the Court and made final on July 16, 1996. The Consent Decree resolved all claims asserted against the Company without cost or obligation of the Company. EPA has honored its indemnification obligation under the TAT contract as to the Company's cost to defend.
The Company is subject to certain claims and lawsuits in connection with work performed in the ordinary course of its business. In the opinion of management, such claims and lawsuits currently pending are either adequately covered by insurance or will not result in a material adverse effect on the financial position or results of operations of the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the Company's executive officers:
Officers are elected annually and hold office until their successors are elected and qualified.
WILLIAM J. MARRAZZO, 47, PRESIDENT AND CHIEF EXECUTIVE OFFICER. Mr. Marrazzo has been the President of the Company since September 1990 and the Chief Executive Officer since October 1991. Mr. Marrazzo is also Chairman of the Board of Weston International Holdings, Inc., a wholly-owned subsidiary of the Company. He served as Chief Operating Officer from 1989 to 1991 and as Executive Vice President from 1989 to 1990. Mr. Marrazzo joined the Company in 1988 as a Vice President and a Division Manager. From 1980 to 1988, he was the Commissioner of the Water Department for the City of Philadelphia, with an accountability for its complete management. Financially independent from the City of Philadelphia, the Water Department is one of the nation's largest water and wastewater utilities. Mr. Marrazzo has been a Director of the Company since 1988.
PETER J. MARKS, 55, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER. Mr. Marks has been in his current position since November 1994, having served previously as Manager of the Environmental and Health Sciences Division since 1989, and has been a Vice President since 1979. Mr. Marks is also a Director of Weston International Holdings, Inc., a wholly-owned subsidiary of the Company. Mr. Marks was a Director of the Company from 1994 to 1996.
M. CHRISTINE MURPHY, CPA, 48, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER. Ms. Murphy joined the Company in September 1990. She has been the Executive Vice President, Quality Assurance and Finance since 1990 and Chief Financial Officer since November 1991. She is also Chairman and President of Cardinal Indemnity Company of North America; Chairman and President of Roy F. Weston (Delaware), Inc. and Roy F. Weston (IPR), Inc., wholly-owned subsidiaries of the Company; and a Director of Weston International Holdings, Inc., a wholly-owned subsidiary of the Company. From 1985 to 1989, Ms. Murphy served as the Revenue Commissioner for the City and School District of Philadelphia. Prior to that time, she was a partner with Arthur Young & Co., a predecessor of Ernst & Young. Ms. Murphy was a Director of the Company from 1990 to 1996. Ms. Murphy is a Director of CoreStates Bank, N.A., a wholly-owned subsidiary of CoreStates Financial Corp.
PATRICK G. MCCANN, 43, EXECUTIVE VICE PRESIDENT. Mr. McCann joined the Company in October 1996 as Executive Vice President, Strategic Development. From 1985 to 1996, Mr. McCann was with
Chemical Waste Management, an environmental services company based in Oak Brook, IL. From 1995 to 1996 he was President of Advanced Environmental Technical Services, a Chemical Waste Management affiliate. From 1993 to 1995 Mr. McCann was President of the Technical Services Division of Chemical Waste Management. From 1991 to 1993 he was a Vice President of Chemical Waste Management.
W. DENNIS MORAN, P.E., 57, VICE PRESIDENT AND PRESIDENT OF WESTON INTERNATIONAL. Mr. Moran joined the Company in September 1996 as a Vice President, and as President and Director of Weston International Holdings, Inc., a wholly-owned subsidiary of the Company. From 1994 to 1996 Mr. Moran was Managing Director of Stellwagen Associates, a management consulting firm. From 1970 to 1994 he was with Camp Dresser & McKee Inc., an environmental engineering firm, serving as Senior Vice President-Finance from 1978 to 1984 and as President and Chief Executive Officer of Camp Dresser & McKee International Inc. from 1984 to 1994.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information with respect to this item is incorporated by reference herein from the information in the Company's 1996 Annual Report to Shareholders in Note 7 to the Consolidated Financial Statements on page 21 and under the heading "Stockholder Information" on page 32.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to this item is incorporated by reference herein from the information in the Company's 1996 Annual Report to Shareholders on page 10.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information with respect to this item is incorporated by reference herein from the information in the Company's 1996 Annual Report to Shareholders on pages 7 to 10.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Information with respect to this item is incorporated by reference herein from the information in the Company's 1996 Annual Report to Shareholders on pages 11 to 29.
(b) Selected Quarterly Financial Data (Unaudited) are set forth in Note 16 to the Consolidated Financial Statements contained in the Company's 1996 Annual Report to Shareholders on page 29 and are incorporated by reference herein.
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
Information with respect to this item is set forth in the Company's definitive Proxy Statement (the "Proxy Statement") to be filed with the Securities and Exchange Commission for the Annual Meeting of Shareholders to be held on May 19, 1997, under the headings "Nominees for Election as Directors" and "Compliance with Section 16(a) of the Exchange Act" and is incorporated herein by reference. Information regarding the Company's executive officers is included in Part I on page 12 herein.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is set forth in the Proxy Statement under the heading "Executive Management Compensation" and is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to the ownership of securities of the Company by certain persons is set forth in the Proxy Statement under the heading "Principal Shareholders" and is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to transactions with management and others is set forth in the Proxy Statement under the headings "Compensation Committee Interlocks and Insider Participation," "Insurance and Supplemental Retirement Benefits," and "Other Matters" and is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Consolidated Financial Statements:
The information appearing in the Company's 1996 Annual Report to Shareholders as described in Item 8 is incorporated herein by reference.
2. Financial Statement Schedule:
- Report of Independent Accountants - Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
With the exception of the consolidated financial statements and the independent accountants' report thereon listed in the above index, the information referred to in Items 5, 6, and 7, and the supplementary quarterly financial information referred to in Item 8, all of which are included in the 1996 Annual Report to Shareholders of Roy F. Weston, Inc. and incorporated by reference into this Annual Report on Form 10-K, the 1996 Annual Report to Shareholders is not to be deemed "filed" as part of this report.
3. Exhibits:
The following exhibits are filed herewith unless otherwise indicated:
(b) Reports on Form 8-K. On October 4, 1996 the Company filed a Form 8-K under Item 5, Other Events, which incorporated by reference the Company's News Release dated September 26, 1996 concerning its plans to record a restructuring charge.
Note: Any of the exhibits listed in the foregoing index not included with this Annual Report on Form 10-K may be obtained without charge by writing to Arnold P. Borish, Esq., Corporate Secretary, Roy F. Weston, Inc., 1 Weston Way, West Chester, Pennsylvania 19380-1499.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders Roy F. Weston, Inc.
Our report on the consolidated financial statements of Roy F. Weston, Inc. and Subsidiaries has been incorporated by reference in this Form 10-K from page 11 of the 1996 Annual Report to Shareholders of Roy F. Weston, Inc. and Subsidiaries. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on page 15 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center Philadelphia, Pennsylvania February 5, 1997
ROY F. WESTON, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (THOUSANDS OF DOLLARS)
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, ROY F. WESTON, INC. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
ROY F. WESTON, INC.
By: JOSEPH BORDOGNA --------------- Joseph Bordogna Chairman of the Board
Date: March 27, 1997
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 indicated on the dates indicated.