10-Q 1 enso10q1st01.txt ENVIROSOURCE 10Q FOR PERIOD ENDED MARCH 31, 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _________ Commission file number 1-1363 Envirosource, Inc. (Exact name of Registrant as specified in its charter) Delaware 34-0617390 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1155 Business Center Drive, Horsham, Pennsylvania 19044-3454 (Address of principal executive offices) (Zip Code) (215) 956-5500 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period 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 ----- ---- The number of shares outstanding of the Registrant's Common Stock as of the close of business on May 1, 2001 was 5,813,394. PART I. - FINANCIAL INFORMATION ITEM 1. Financial Statements --------------------

See accompanying notes. 2

See accompanying notes. 3

See accompanying notes. 4 ENVIROSOURCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2001 NOTE 1 - BASIS OF PRESENTATION The accompanying condensed consolidated financial statements are unaudited, and have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation have been included. Certain amounts reported in prior periods have been reclassified for comparative purposes. Quarterly operating results are not necessarily indicative of the results that may be expected for the full year. Quarterly financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, as filed with the Securities and Exchange Commission. NOTE 2 - DIVESTITURE On February 1, 2001, the Company sold all of the common stock of its Envirosafe Services of Idaho, Inc. ("ESII") subsidiary. In addition to the Idaho waste landfill operations, the Company's contract with a steel mill in Sterling, Illinois was included in the sale. Cash proceeds from the sale were not significant, however the transaction eliminated the need for Envirosource to provide related financial assurances of at least $12.5 million, which would have been due on February 5, 2001. The Company recorded a $2.3 million pretax gain on the sale during the first quarter of 2001. ESII, including the Sterling operations, contributed approximately $14 million of revenues to the Company's Technologies segment in 2000. As part of the transaction, the purchaser provided a guaranty for ESII's outstanding debt, which consisted of $8.5 million of industrial revenue bonds due November 1, 2002 (see Note 3 below), and it provided financial assurance for the obligations for closure and long-term monitoring of the Idaho landfill site. The holders of the industrial revenue bonds and the appropriate regulatory authorities agreed to accept the purchaser's guaranty and financial assurance to replace those that had previously been provided by Envirosource. Until February 2000, ESII had provided the financial assurances with trust funds of $15 million; at that time a surety bond was substituted and the cash, netting $12.6 million, was returned to the Company. NOTE 3. LONG-TERM DEBT Long-term debt is summarized as follows (in thousands): March 31, December 31, 2001 2000 ------------------- ------------------- 9 3/4% Senior Notes due 2003 $ 270,000 $ 270,000 Revolving credit facility 8,281 3,587 Industrial revenue bond due 2002 -- 8,500 Capital equipment leases and other 15,340 8,735 ------------------- ------------------- 293,621 290,822 Less current maturities (2,068) (1,201) ------------------- ------------------- Long-term debt $ 291,553 $ 289,621 =================== =================== As noted above, the ESII divestiture eliminated the need to repay the $8.5 million of industrial revenue bonds. Also during the 2001 first quarter, the Company entered into capital equipment leases totaling $6.6 million. 5 ENVIROSOURCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2001 NOTE 4 - COMPREHENSIVE LOSS The following table presents total comprehensive losses for the three-month periods ended March 31, 2001 and 2000 (dollars in thousands): Three Months Ended March 31, ------------------------------------- 2001 2000 ----------------- ---------------- Net loss $ (3,677) $ (4,069) Canadian currency translation adjustment (253) (17) ----------------- ---------------- Comprehensive loss $ (3,930) $ (4,086) ================= ================ NOTE 5 - SEGMENT DISCLOSURE Operating information for the Company's reportable segments for the three-month periods ended March 31, 2001 and 2000 can be found in the table on page 9 of this Report. At March 31, 2001, there was no significant change in the basis of segmentation or in the measurement of segment operating results. Identifiable assets of the Company's Technologies business were $11.6 million at March 31, 2001, compared with $30.2 million at December 31, 2000. The decrease was primarily due to the divestiture of ESII, as discussed previously in Note 2. There were no significant changes in identifiable assets in the Company's other reportable segments between December 31, 2000 and March 31, 2001. NOTE 6 - COMMITMENTS AND CONTINGENCIES The Company holds operating permits issued by various environmental agencies that require renewal and modification from time to time. The Company expects to obtain any required renewals and modifications to its existing permits. The Company, its competitors and customers are subject to a complex, evolving array of environmental laws and regulations. Changes in such regulations may not only affect the demand for treatment and disposal services, but could also require the Company to incur significant costs for remediation or other corrective action, facility closure or post-closure monitoring. It is possible that the future imposition of additional environmental compliance requirements could have a material effect on the Company's results of operations or financial condition, but the Company is unable to predict any such future requirements. The Company believes that the consolidated financial statements appropriately reflect all presently known compliance costs in accordance with generally accepted accounting principles. The Company is a party to litigation and proceedings arising in the normal course of its present or former businesses. The Company has recorded obligations primarily pertaining to personal injury claims for certain asbestos-related products distributed during the 1960s and 1970s by two Pennsylvania-based subsidiaries of IU International ("IU"), which the Company acquired in 1988. These subsidiaries are no longer operating entities. The two subsidiaries are participants in the Center for Claims Resolution ("CCR"), a group of companies who have had asbestos-related claims asserted against them. The CCR acts as a central administrative entity to attempt cost-effective claims handling, reduce litigation costs, and, until 2001, effect broad-based claim settlements. 6 ENVIROSOURCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2001 NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED) Early in 2001, with some CCR participants either declaring bankruptcy from excessive costs of asbestos claims, or electing to leave the CCR and provide their own defenses, the CCR changed its procedures and no longer participates in broad-based settlements. The two subsidiaries of the Company elected to continue participating in the CCR, using it solely for defense advice, administrative and claims handling services. Management believes: a) that most of the Company's product liability and related litigation defense costs will ultimately be recovered through insurance coverage in place during the periods covered by such claims, and b) the ultimate exposure to the Company will result primarily from certain insurance companies that provided the Company with insurance coverage for such claims, and have since become insolvent. Management is actively pursuing recovery claims from the insolvent estates and potential reinsurance such insolvent companies may have had with other insurers. Management cannot with any reasonable certainty estimate the ultimate amount of claims probable of assertion, nor can it accurately predict the level of success in securing recoveries from insolvent insurers. However, management has recorded a liability which it believes reflects all currently available information including known claims, and probable insurance coverage. Management will continue to evaluate whether the Company's ultimate liability for product liability claims can be reasonably estimated. If such an estimate is feasible, charges against future operations may be necessary, however the timing or amount of any such charge cannot presently be determined. The Company's outlook on the North American steel industry for 2001, and the related effect on the Company's businesses, indicates a significant challenge to obtain sufficient capital resources to meet all of its objectives for the upcoming year. Current projections indicate operating cash flow for 2001 will likely decrease from the $21.4 million realized in 2000. Several of the Company's customers declared bankruptcy in late 2000 and early 2001; additional filings are certainly possible as the North American steel industry continues to suffer from excess capacity, weak steel prices, high energy costs, and high levels of foreign imported steel. The Company's IMS business requires continuing investment in heavy capital equipment to service its customers. The Company's $270 million of outstanding Senior Notes, which were trading at about 20% of face value at March 31, 2001, require semiannual interest payments of $13.1 million in June and December. The Company also currently has a negative net worth, resulting from losses. However, the Company has, through its positive operating cash flow, continued to service its outstanding debt and other obligations, and is currently in compliance with all of its requirements under its bank credit facility. The ability of the Company to meet its debt obligations in the future will be dependent on its future performance, including the Company's ability to implement a solution to effectively deal with its Senior Notes. Management plans to pursue various alternatives to effectively deal with the Senior Notes, which mature in June 2003. There can be no assurance that any additional financing or refinancing, nor any debt re-capitalization will be possible. The current strain on the Company's capital resources could require the Company to seek easing of restrictions on its revolving credit facility or reductions in capital investment, with subsequently higher operating costs for equipment maintenance and repairs. Management plans to continue maximizing the use of its operating cash flow to meet its investment and financing objectives. 7 ENVIROSOURCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2001 NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED) At March 31, 2001, the Company is committed to spend approximately $8.2 million for additions to capital equipment. This commitment may be partly funded by leases, which the Company has not currently obtained. The Company has also provided $7.9 million of insurance and lease-related standby letters of credit, which reduce the amount available to the Company under its $40 million revolving credit facility. 8 ENVIROSOURCE, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results ------------------------------------------------------------------------ of Operations. -------------- RESULTS OF OPERATIONS

Consolidated revenues in the first quarter of 2001 decreased 15.3% compared with the same quarter of 2000. The decrease was due in part to lower revenues of the Company's IMS business, as steel production levels by IMS customers during the 2001 first quarter decreased significantly from the first quarter of 2000. In addition, the Company's Technologies business reported decreased revenues after the sale of its waste landfill subsidiary in Idaho was completed as of February 1, 2001. Consolidated gross profit for the first quarter of 2001 decreased 21.9%, primarily due to the decrease in revenues. The profit effects of the revenues decrease were offset somewhat by operating improvements at Technologies' waste landfill site in Ohio. Selling, general and administrative expenses for the 2001 first quarter increased 10% from the same quarter of 2000. The increase was primarily due to expenses recorded to reserve for an IMS customer who declared bankruptcy this year. 9 ENVIROSOURCE, INC. RESULTS OF OPERATIONS (CONTINUED) Interest expense for the 2001 first quarter was essentially unchanged from the same quarter of 2000. Included in the Company's results for the 2001 first quarter was a $2.3 million pretax gain on the sale of Technologies' waste landfill subsidiary in Idaho. The Company recorded a 2001 first quarter net loss of $3.7 million, compared with the first quarter 2000 net loss of $4.1 million. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity requirements are primarily for the funding of capital expenditures, working capital needs and debt service obligations. At March 31, 2001, the Company had negative working capital totaling $6.7 million, a decrease of $4.9 million from December 31, 2000. Cash generated from operations of $3.2 million was used primarily to fund investing activities. Investing activities in the 2001 first quarter included $6.2 million of capital expenditures, which were net of $6.6 million of capital lease financing. Capital expenditures during the first quarter of 2000 were $8.1 million. The Company's investment in a facility at a "greenfield" steel mill of an existing IMS customer, which began a year ago, neared completion during the first quarter. As a result, the Company expects capital expenditures in 2001 to be lower than 2000. At March 31, 2001, the Company is committed to equipment additions totaling approximately $8.2 million, most of which the Company expects to spend this year. This commitment may be partly funded by leases, which the Company has not yet obtained. Financing activities in the first quarter of 2001 included net borrowings against the Company's revolving credit facility of $4.7 million, compared with net repayments of $6 million during the same quarter of 2000. At March 31, 2001, after reflecting $8.3 million of outstanding borrowings, $7.9 million of commitments for standby letters of credit, and minimum availability requirements and other limitations totaling $10.4 million, $13.4 million of the facility was unused and available. The facility contains various covenants, which among other things, require the Company to meet certain performance ratios. At March 31, 2001 the Company was in compliance with all such covenants of the agreement. 10 ENVIROSOURCE, INC. Capital Resources ----------------- The Company's primary sources of funds are its cash flow from operations, and its borrowing capacity against its revolving credit facility, as well as the ability to obtain lease financing for equipment. The Company's outlook on the North American steel industry for 2001, and its inherent effect on the Company's businesses, indicates a significant challenge to obtain sufficient capital resources to meet all of its objectives for the upcoming year. Current projections indicate operating cash flow for 2001 will likely decrease from the $21.4 million realized in 2000. Several of the Company's customers declared bankruptcy in late 2000 and early 2001; additional filings are certainly possible as the North American steel industry continues to suffer from excess capacity, weak steel prices, high energy costs, and high levels of foreign imported steel. The Company's IMS business requires continuing investment in heavy capital equipment to service its customers. The Company's $270 million of outstanding Senior Notes require semiannual interest payments of $13.1 million in June and December. The current strain on the Company's capital resources could require the Company to seek easing of restrictions on its revolving credit facility or reductions in capital investment, with subsequently higher operating costs for equipment maintenance and repairs. Management plans to continue maximizing the use of its operating cash flow to meet its investment and financing objectives. Management also plans to pursue various alternatives to effectively deal with the Senior Notes, which mature in June 2003, however there can be no assurance that any additional financing or refinancing, nor any debt re-capitalization will be possible. FORWARD-LOOKING STATEMENTS (SAFE HARBOR STATEMENT) -------------------------------------------------- Certain matters discussed in this report are "forward-looking statements" as defined in the Private Securities Litigation Reform Act (PSLRA) of 1995. Although the Company believes that its forward-looking statements are based on expectations and assumptions that are reasonable, forward-looking statements are inherently subject to risk and uncertainties, some of which cannot be predicted. Various uncertainties exist with respect to the Company's operations and business environment, and their outcomes are dependent on various important risk factors. The Company cautions users of this report that numerous important risk factors discussed below, among others, may have caused prior actual results, and could cause future results, to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Among the factors or uncertainties that could cause actual results to differ from forward-looking statements are: o Dependence on steel mill production; economic conditions - The Company's revenues are impacted by the level of steel production at its customers' sites in North America. In addition to commercial factors such as the demand for steel, steel prices, and foreign imports, other factors such as weather, energy availability and prices, labor issues or mill outages can or could affect production levels of the Company's customers. 11 ENVIROSOURCE, INC. Forward-Looking Statements (continued) o Dependence on key customers; competition - The Company derives significant revenue from a single customer. The loss of any key customer as a result of termination or non-renewal of its contracts could have a material adverse effect on the Company's revenue and operating income. Both the IMS and Technologies operating segments face significant competition in their respective industries. Heightened competition in recent years resulted in the loss of two large steel mill contracts for IMS. The Company's Technologies business experienced significant price reductions for waste processing during the 1990s due to competitive pressures. There can be no assurance that the Company will not continue to experience negative effects from increased competition, with possible future effects of reduced revenue, gross margins, and operating income. o Financial condition of the Company's steel mill customers - Five of the Company's customers that contributed $15.6 million to 2000 revenues declared bankruptcy at or near year-end 2000. More bankruptcies are possible as competition intensifies and more of the Company's customers report operating losses. The Company's provision for bad debt in 2000 increased $2.7 million from the prior year. More customer bankruptcies could impact the Company's revenues and profits through reduced production, cash flow from operations through reduced collections of receivables, and impact the Company's operating expenses by requiring larger provisions for bad debt. o Environmental regulation -The Company is subject to a complex, evolving array of federal, state and local environmental laws and regulations. It is possible that future imposition of additional environmental compliance requirements could have a material effect on the Company, however the Company cannot predict any such future requirements. o Financial leverage and debt service - The Company has $270 million of publicly held debt due in June 2003, which was trading at about 20% of face value at March 31, 2001. The Company also currently has a negative net worth, resulting from losses. However, the Company has, through its positive operating cash flow, continued to service its outstanding debt and other obligations, and is currently in compliance with all of its requirements under its bank credit facility. The ability of the Company to meet its debt obligations in the future will be dependent on its future performance, which is subject to, among other things, the various factors discussed above, and also the Company's ability to implement a solution to effectively deal with its Senior Notes. There can be no assurance that any additional financing or refinancing, nor any debt re-capitalization will be possible. 12 ENVIROSOURCE, INC. PART II - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits. -------- 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Appendix A (pages A-1 to A-3) to the Company's Proxy Statement filed April 29, 1996, in respect of its 1996 Annual Meeting of Stockholders (File No. 1-1363)). 3.2 Amendment of Amended and Restated Certificate of Incorporation (incorporated herein by reference to Page 2 to the Company's Proxy Statement filed April 30, 1997, in respect of its 1997 Annual Meeting of Stockholders (File No. 1-1363)). 3.3 Amendment of Amended and Restated Certificate of Incorporation (incorporated herein by reference to Pages 13 and 14 of the Company's Proxy Statement filed April 30, 1998, in respect of its 1998 Annual Meeting of Stockholders (File No. 1-1363)). 3.4 By-Laws of the Company (incorporated herein by reference to Exhibit C (pages C-1 to C-9) to the Company's Proxy Statement filed April 24, 1987, in respect of its 1987 Annual Meeting of Stockholders (File No. 1-1363)). 3.5 Amendment to the By-Laws of the Company (incorporated herein by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987 (File No. 1-1363)). 3.6 By-Laws Amendment Adopted March 26, 1997 by Unanimous Written Consent of the Board of Directors, Effective June 19, 1997 (incorporated by reference to Exhibit 3.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997 (File No. 1- 1363)). 4.1 Indenture, dated as of July 1, 1993, between the Company and United States Trust Company of New York, as Trustee, relating to the Company's 9-3/4% Senior Notes due 2003, including the form of such Notes attached as Exhibit A thereto (incorporated herein by reference to Exhibit 4.10 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993 (File No. 1-1363)). 4.2 First Supplemental Indenture, dated as of November 2, 1995, between the Company and United States Trust Company of New York, as Trustee, relating to the Company's 9-3/4% Senior Notes due 2003 (incorporated herein by reference to Exhibit 4.15 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1995 (File No. 1-1363)). 13 ENVIROSOURCE, INC. 4.3 Second Supplemental Indenture, dated as of September 24, 1997, between the Company and United States Trust Company of New York, as Trustee, relating to the Company's 9-3/4% Senior Notes due 2003 (incorporated herein by reference to Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997 (File No. 1-1363)). 4.4 Indenture, dated as of September 30, 1997, between the Company and United States Trust Company of New York, as Trustee, relating to the Company's 9-3/4% Senior Notes due 2003, Series B, including the form of such Notes attached as Exhibit A thereto (incorporated herein by reference to Exhibit 4.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997 (File No. 1-1363)). 4.5 Registration Rights Agreement, dated as of September 30, 1997, among the Company and Morgan Stanley Dean Witter, Jeffries & Company, Inc. and NationsBanc Capital Markets, Inc. (incorporated herein by reference to Exhibit 4.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997 (File No. 1-1363)). 4.6 Registration Rights Agreement, dated as of May 13, 1993, among the Company, FS Equity Partners II, L.P., The IBM Retirement Plan Trust Fund and Enso Partners, L.P. (incorporated herein by reference to Exhibit 4.29 to Amendment No. 1 to the Company's Registration Statement on Form S-1, filed June 14, 1993 (File No. 33-62050)). 4.7 Loan Agreement, dated as of June 1, 1994, between the Industrial Development Corporation of Owyhee County, Idaho and Envirosafe Services of Idaho, Inc. relating to $8,500,000 Industrial Revenue Bonds, Series 1994. (The Company agrees to furnish a copy of such agreement to the Commission upon request). 4.8 Loan and Security Agreement, dated as of November 16, 1999, the lenders parties thereto, Bank of America, N.A., as Agent, International Mill Service, Inc. and IMS Alabama, Inc. (incorporated herein by reference to Exhibit 4.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-1363)). 4.9 Amendment Number 1 to Loan and Security Agreement, dated as of December 12, 2000, the lenders parties thereto, Bank of America, N.A., as Agent, International Mill Service, Inc. and IMS Alabama, Inc. (incorporated herein by reference to Exhibit 4.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (File No. 1-1363)). 10.1 Restated Incentive Stock Option Plan of the Company, as amended (incorporated herein by reference to Exhibit A to the Company's Registration Statement on Form S-8, filed January 17, 1989 (File No. 33-26633)). 14 ENVIROSOURCE, INC. 10.2 Stock Option Agreement, dated March 18, 1992, between the Company and Raymond P. Caldiero (incorporated herein by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (File No. 1-1363)). 10.3 Stock Option Agreement, dated March 18, 1992, between the Company and Jeffrey G. Miller (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (File No. 1-1363)). 10.4 Amendment, dated August 5, 1993, to the Stock Option Agreement, dated March 18, 1992, between the Company and Jeffrey G. Miller (incorporated herein by reference to Exhibit 10.22 to Post-Effective Amendment No. 1 to the Company's Registration Statement on Form S-1, filed September 16, 1993 (File No. 33-46930)). 10.5 Stock Option Agreement, dated August 5, 1993, between the Company and Wallace B. Askins (incorporated herein by reference to Exhibit 10.23 to Post-Effective Amendment No. 1 to the Company's Registration Statement on Form S-1, filed September 16, 1993 (File No. 33-46930)). 10.6 Envirosource, Inc. 1993 Stock Option Plan (incorporated herein by reference to Exhibit 10.21 to Amendment No. 1 to the Company's Registration Statement on Form S-1, filed June 14, 1993 (File No. 33-62050)). 10.7 Envirosource, Inc. Stock Option Plan for Non-Affiliated Directors, dated as of January 1, 1995 (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-1363)). 10.8 Supplemental Executive Retirement Plan of the Company, effective January 1, 1995 (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-1363)). 10.9 Envirosource, Inc. 1999 Stock Option Plan (incorporated herein by reference to Appendix A to the Company's Proxy Statement filed April 30, 1999, in respect of its 1999 Annual Meeting of Stockholders (File No. 1-1363)). 10.10 Employment Agreement, dated as of January 20, 1999, between the Company and John T. DiLacqua (incorporated herein by reference to Exhibit 10.19 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999 (File No. 1-1363)). 15 ENVIROSOURCE, INC. 10.11 Employment Agreement, dated as of January 3, 2000, between the Company and John P. Carroll (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-1363)). 10.12 Employment Agreement, dated as of January 3, 2000, between the Company and John C. Heenan (incorporated herein by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-1363)). 10.13 Employment Agreement, dated as of January 3, 2000, between the Company and Leon Z. Heller (incorporated herein by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-1363)). 10.14 Promissory Note of John P. Carroll, dated August 1, 1995, as amended, payable to International Mill Service, Inc. (incorporated herein by reference to Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000 (File No. 1-1363)). 10.15* Letter Agreement, dated February 8, 2000, between the Company and Richard J. Fitz. (b) Reports on Form 8-K. ------------------- During the quarter ended March 31, 2001, the Company filed no current reports on Form 8-K. * Filed herewith. 16 ENVIROSOURCE, INC. SIGNATURES Pursuant to the requirements 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. Dated: May 10, 2001 ENVIROSOURCE, INC. By: /s/ JOHN C. HEENAN ------------------ John C. Heenan Senior Vice President, Treasurer and Chief Financial Officer 17 ENVIROSOURCE, INC. EXHIBIT INDEX Number Description Page ------ ----------- ---- 10.15 Letter Agreement, dated February 8, 2000, between EXHIBIT 1 the Company and Richard J. Fitz.

ENVIROSOURCE INC 10-Q