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Filed by Allied Waste
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Industries, Inc. Pursuant to
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Rule 425 under the
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Securities Act of 1933 and
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deemed filed pursuant to
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Rule 14a-12 under the
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Securities Exchange Act of
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1934
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Subject Company:
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Allied Waste Industries, Inc.
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(Commission File No.
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001-14705)
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EXHIBIT 99.1
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Contact:
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James P. Zeumer
Senior Vice President, Public Affairs,
Communications and Investor Relations
480-627-2785
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FOR IMMEDIATE RELEASE
ALLIED WASTE REPORTS THIRD QUARTER 2008 RESULTS
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Q3 Earnings Increase to $0.26 Per Share, Including $0.02 Per Share of Merger-Related
Costs
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Strong Pricing Drives Revenue to Record $1.6 Billion
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Operating Income Increases 27% to $318 Million
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Company Provides Update on Proposed Merger with Republic Services
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Phoenix, AZ October 29, 2008 Allied Waste Industries, Inc. (NYSE: AW), the nations second
largest waste services company, today reported financial results for its third quarter and
nine-months ended September 30, 2008. For the quarter, income from continuing operations increased
68% to $112.5 million, or $0.26 per share, including $0.02 per share associated with merger-related
costs. Prior year income from continuing operations was $66.9 million, or $0.15 per share. Prior
year earnings include loss on divestiture, impairment and debt refinancing costs of $0.09 per
share. On an adjusted basis, 2008 third quarter earnings were $0.28* per share, an increase of 17%
over prior earnings of $0.24* per share.
Total revenue for the third quarter was a record $1.61 billion, an increase of $50 million, or
3.2%, over $1.56 billion in the third quarter 2007. Higher revenue for the quarter benefited from
a 7.6% increase in average price, of which 370 basis points were associated with the companys fuel
recovery fee, partially offset by a 4.4% decrease in volumes. Lower volumes for the quarter
primarily reflect the impact of U.S. economic conditions.
By remaining focused on our strategic, long-term performance metrics including pricing,
operating efficiencies and cash flow, while rapidly adjusting our operations to near-term economic
challenges, Allied Waste has reported strong financial performance, said John Zillmer, Chairman
and Chief Executive Officer. Our local management teams have done a great job in delivering
excellent third quarter results and in continuing to strengthen our overall operating platform as
we approach the merger with Republic Services.
Third quarter operating income before depreciation and amortization, loss from divestitures and
asset impairments, or EBITDA, inclusive of $12.5 million of merger-related costs, increased 4.4% to
$452.1* million, compared with $433.1* million last year. Reported EBITDA for the quarter as a
percentage of revenue increased 20 basis points to 28.1%, compared with 27.9% for the same period
last year. Merger-related costs reduced EBITDA as a percentage of revenue for the quarter by 0.8%.
For the third quarter, operating costs as a percentage of revenue dropped 60 basis points as the
company continued to benefit from strong pricing, combined with a number of internal initiatives to
lower expenses and to drive greater efficiencies throughout its operations. EBITDA margins for the
quarter also reflect the positive impact of company actions to reduce SG&A expenses, which declined
as a percentage of revenue to 9.7% from 10.1% last year.
Cash flow from operations in the third quarter 2008 was $281.3 million, compared with $284.2
million in the comparable quarter last year. Free cash flow for the third quarter was $144.7*
million, compared with prior year free cash flow of $168.8* million reflecting slightly higher
capital expenditures in the third quarter of 2008.
For the nine-month period ended September 30, 2008, Allied Wastes revenues were $4.67 billion, as
strong pricing drove a $124.3 million increase over the prior year. Operating income for the
period gained 13.3% to $862.1 million, inclusive of $45.0 million of merger-related costs, losses from divestitures and asset
3
impairments. Income from continuing operations was $296.5 million for
the first nine months of 2008, compared with $192.2 million for the comparable 2007 period. Diluted
income from continuing operations for the first-nine months increased 55% to $0.68 per share,
compared with $0.44 per share in the prior year.
Merger Update
The merger of Allied Waste and Republic Services continues on track with an anticipated completion
in mid-December 2008. In the joint proxy statement / prospectus of the companies dated October 10,
2008, shareholders of record as of October 6, 2008 are being asked to vote in favor of the merger
at each companys respective shareholder meeting which will be held on November 14, 2008.
The merger, which is expected to generate at least $150 million in annual integration synergies in
the third year after closing, will strengthen the national service platform of the companies and
link collection, transfer, recycling and disposal operations into an efficient network spanning 40
states and serving 13 million customers. The resulting company will be one of the nations leading
waste and environmental services providers, with pro forma 2007 revenue of approximately $9 billion
and industry-leading margins and returns on invested capital.
The significant growth and synergy opportunities supporting this transaction are even more
compelling given the challenging economic conditions facing the country and our industry, said
Donald Slager, President and Chief Operating Officer. The Allied Waste and Republic teams have
done a great job working through the requirements needed to achieve our targeted fourth quarter
closing and in completing extensive planning work in support of the successful post-merger
integration of these two companies.
Allied Waste has filed supplemental data on Form 8-K that is accessible on the Companys website or
through the SEC EDGAR System.
Allied Waste will host a conference call related to the third quarter results on Wednesday, October
29, 2008, at 5:00 p.m. ET. The call will be broadcast live over the Internet on the Companys
website:
www.alliedwaste.com
. A replay of the call will be available on the site after the call.
Information regarding *use of non-GAAP financial measures may be found in the accompanying
schedules.
About Allied Waste Industries, Inc.
Allied Waste is Americas second largest non-hazardous solid waste services company and an
environmental leader. Headquartered in Phoenix, AZ, Allied Waste provides waste collection,
transfer, recycling and disposal services to millions of residential, commercial and industrial
customers in over 100 major markets spanning 38 states and Puerto Rico. Our team of over 22,000
dedicated employees operates within a highly efficient, integrated organization that generated 2007
revenue of $6.1 billion.
Websites:
alliedwaste.com
and
disposal.com
4
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in millions, except per share data and percentages)
(unaudited)
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For the Three
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For the Three
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Months Ended
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% of
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Months Ended
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% of
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September 30, 2008
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Revenues
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September 30, 2007
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Revenues
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Revenue
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$
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1,606.2
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100.0
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%
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$
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1,556.3
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100.0
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%
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Cost of operations
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986.0
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61.4
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%
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966.7
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62.0
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%
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Selling, general and administrative expenses
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155.6
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9.7
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%
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156.5
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10.1
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%
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Merger related costs
(A)
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12.5
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0.8
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%
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%
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Depreciation and amortization
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134.1
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8.3
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%
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142.7
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9.2
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%
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(Gain) loss from divestitures and asset
impairments
(B)
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(0.3
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(0.0
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)%
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39.0
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2.5
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%
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Operating income
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318.3
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19.8
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%
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251.4
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16.2
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%
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Interest expense and other
(C)
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108.8
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6.8
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%
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130.3
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8.4
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%
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Income before income taxes
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209.5
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13.0
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%
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121.1
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7.8
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%
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Income tax expense
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96.9
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6.0
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%
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53.8
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3.5
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%
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Minority interests
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0.1
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0.0
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%
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0.4
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0.0
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%
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Income from continuing operations
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112.5
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7.0
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%
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66.9
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4.3
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%
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Discontinued operations, net of tax
(D)
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%
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(39.7
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(2.6
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)%
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Net income
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112.5
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7.0
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%
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27.2
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1.7
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%
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Dividends on Series D Preferred Stock
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%
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(9.4
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)
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(0.6
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)%
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Net income available to common shareholders
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$
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112.5
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7.0
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%
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$
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17.8
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1.1
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%
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Weighted average common and
common equivalent shares
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446.4
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382.4
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Diluted income per share from
continuing operations
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$
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0.26
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$
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0.15
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Diluted income per share
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$
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0.26
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$
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0.05
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(A)
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Merger related costs of $12.5 million (or $0.02 per share) represent
transaction costs, primarily financial advisor and legal fees,
associated with the proposed merger with Republic Services, Inc.
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(B)
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Loss from divestitures and asset impairments for 2007 includes $14.5
million (or $0.03 per share) of loss on divestiture primarily related
to a landfill sale in the South region and $24.5 million (or $0.04 per
share) of asset impairment charge associated with a landfill in the
Midwest region resulting from changes in anticipated long-term closure
and post-closure costs.
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(C)
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Interest expense and other for 2007 includes $13.3 million (or $0.02
per share) related to the write-off of deferred financing costs and
premiums paid in conjunction with the early repayment of debt.
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(D)
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Discontinued operations includes the sale of certain operations in the
Midwest and South regions. Included in the 2007 discontinued
operations are $0.1 million of net income and a $39.8 million loss,
net of tax, from the sale of these operations.
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5
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in millions, except per share data and percentages)
(unaudited)
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For the Nine
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For the Nine
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Months Ended
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% of
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Months Ended
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% of
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September 30, 2008
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Revenues
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|
September 30, 2007
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|
Revenues
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Revenue
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$
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4,672.7
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100.0
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%
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$
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4,548.4
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100.0
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%
|
Cost of operations
(A)
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|
2,906.3
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|
62.2
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%
|
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|
2,853.5
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|
62.7
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%
|
Selling, general and administrative expenses
(B)
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|
447.7
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|
9.6
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%
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|
480.7
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10.6
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%
|
Merger related costs
(C)
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|
21.5
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0.4
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%
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%
|
Depreciation and amortization
(A)
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|
411.6
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|
8.8
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%
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|
412.6
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|
|
9.1
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%
|
Loss from divestitures and asset impairments
(D)
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|
23.5
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|
0.5
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%
|
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|
40.5
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|
0.9
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%
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|
Operating income
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|
862.1
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|
|
18.5
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%
|
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|
761.1
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|
|
16.7
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%
|
Interest expense and other
(E)
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|
|
324.9
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|
|
7.0
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%
|
|
|
424.4
|
|
|
|
9.3
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%
|
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|
|
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|
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|
Income before income taxes
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|
537.2
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|
|
11.5
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%
|
|
|
336.7
|
|
|
|
7.4
|
%
|
Income tax expense
|
|
|
239.7
|
|
|
|
5.2
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%
|
|
|
144.1
|
|
|
|
3.2
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%
|
Minority interests
|
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|
1.0
|
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|
|
0.0
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%
|
|
|
0.4
|
|
|
|
0.0
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%
|
|
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|
|
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|
Income from continuing operations
|
|
|
296.5
|
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|
|
6.3
|
%
|
|
|
192.2
|
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|
|
4.2
|
%
|
Discontinued operations, net of tax
(F)
|
|
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|
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%
|
|
|
(33.9
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)
|
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|
(0.7
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)%
|
|
|
|
|
|
|
|
|
|
|
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|
Net income
|
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|
296.5
|
|
|
|
6.3
|
%
|
|
|
158.3
|
|
|
|
3.5
|
%
|
Dividends on Series D Preferred Stock
|
|
|
(6.2
|
)
|
|
|
(0.1
|
)%
|
|
|
(28.1
|
)
|
|
|
(0.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders
|
|
$
|
290.3
|
|
|
|
6.2
|
%
|
|
$
|
130.2
|
|
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and
common equivalent shares
|
|
|
445.0
|
|
|
|
|
|
|
|
381.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per share from
continuing operations
|
|
$
|
0.68
|
|
|
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per share
|
|
$
|
0.68
|
|
|
|
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
Cost of operations for 2008 includes a $1.6 million (or $0.00 per
share) net favorable adjustment related to environmental reserves,
consisting of a $10.6 million increase as a result of changes in cost
estimates and new matters, offset by a $12.2 million decrease
primarily related to a favorable resolution of an environmental
obligation at a closed landfill in the East region. We also revised
our estimated asset retirement obligation relating to this landfill
and recognized the related charge of $7.7 million (or $0.01 per share)
in depreciation and amortization. Cost of operations for 2008 also
includes $1.1 million (or $0.00 per share) of severance costs
associated with the workforce reduction.
|
|
(B)
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|
Selling, general and administrative expenses for 2008 include a $12.8
million (or $0.02 per share) adjustment due to the favorable
resolution of a BFI acquisition related claim, partially offset by
$5.8 million (or $0.01 per share) of expenses related to the workforce
reduction and regional realignment.
|
|
(C)
|
|
Merger related costs of $21.5 million (or $0.05 per share) represent
transaction costs, primarily financial advisor and legal fees,
associated with the proposed merger with Republic Services, Inc.
|
|
(D)
|
|
Loss from divestitures and asset impairments for 2008 of $23.5 million
(or $0.03 per share) primarily related to impairment charges
associated with two landfill closures in the Midwest region. Loss
from divestitures and asset impairments for 2007 includes $16.0
million (or $0.03 per share) of loss on divestiture primarily related
to a landfill sale in the South region and $24.5 million (or $0.04 per
share) of asset impairment charge associated with a landfill in the
Midwest region resulting from changes in anticipated long-term closure
and post-closure costs.
|
|
(E)
|
|
Interest expense and other for 2007 includes $59.2 million (or $0.10
per share) related to the write-off of deferred financing costs and
premiums paid in conjunction with the early repayment of debt.
|
|
(F)
|
|
Discontinued operations includes the sale of certain operations in the
Midwest and South regions in 2007. Included in the 2007 discontinued
operations are $2.1 million of income from operations and a $36.0
million loss, net of tax, from the sale of those operations.
|
6
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
STATEMENT OF OPERATIONS DATA
(amounts in millions, except percentages and tons data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Revenue
|
|
|
|
|
|
|
|
|
Gross revenue
|
|
$
|
1,924.4
|
|
|
$
|
1,879.1
|
|
Less intercompany revenue
|
|
|
(318.2
|
)
|
|
|
(322.8
|
)
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
1,606.2
|
|
|
$
|
1,556.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix (based on net revenue)
|
|
|
|
|
|
|
|
|
Collection
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
312.3
|
|
|
$
|
304.9
|
|
Commercial
|
|
|
422.2
|
|
|
|
390.5
|
|
Roll-off
|
|
|
333.0
|
|
|
|
332.0
|
|
Recycling
|
|
|
59.5
|
|
|
|
53.8
|
|
|
|
|
|
|
|
|
Total Collection
|
|
|
1,127.0
|
|
|
|
1,081.2
|
|
Disposal
|
|
|
|
|
|
|
|
|
Landfill (net of $183.7 and $188.4 of intercompany)
|
|
|
220.1
|
|
|
|
214.9
|
|
Transfer (net of $91.3 and $99.1 of intercompany)
|
|
|
114.4
|
|
|
|
112.7
|
|
|
|
|
|
|
|
|
Total Disposal
|
|
|
334.5
|
|
|
|
327.6
|
|
Recycling Commodity
|
|
|
61.0
|
|
|
|
66.4
|
|
Other
|
|
|
83.7
|
|
|
|
81.1
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,606.2
|
|
|
$
|
1,556.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internalization Based on Disposal Volumes
|
|
|
73
|
%
|
|
|
73
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landfill Volumes in Thousands of Tons
|
|
|
17,857
|
|
|
|
18,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year over Year Internal Growth (excluding commodity)
|
|
|
|
|
|
|
|
|
Average per unit price change
|
|
|
7.6
|
%
|
|
|
5.6
|
%
|
Volume change
|
|
|
(4.4
|
)%
|
|
|
(3.7
|
)%
|
|
|
|
|
|
|
|
Total
|
|
|
3.2
|
%
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year over Year Internal Growth (including commodity)
|
|
|
2.3
|
%
|
|
|
2.5
|
%
|
|
|
|
|
|
|
|
7
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
STATEMENT OF OPERATIONS DATA
(amounts in millions, except percentages and tons data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Revenue
|
|
|
|
|
|
|
|
|
Gross revenue
|
|
$
|
5,605.5
|
|
|
$
|
5,512.2
|
|
Less intercompany revenue
|
|
|
(932.8
|
)
|
|
|
(963.8
|
)
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
4,672.7
|
|
|
$
|
4,548.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Mix (based on net revenue)
|
|
|
|
|
|
|
|
|
Collection
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
917.7
|
|
|
$
|
899.5
|
|
Commercial
|
|
|
1,234.1
|
|
|
|
1,140.9
|
|
Roll-off
|
|
|
970.9
|
|
|
|
969.5
|
|
Recycling
|
|
|
172.9
|
|
|
|
155.2
|
|
|
|
|
|
|
|
|
Total Collection
|
|
|
3,295.6
|
|
|
|
3,165.1
|
|
Disposal
|
|
|
|
|
|
|
|
|
Landfill (net of $539.8 and $561.4 of intercompany)
|
|
|
634.7
|
|
|
|
624.4
|
|
Transfer (net of $273.0 and $296.6 of intercompany)
|
|
|
319.0
|
|
|
|
330.6
|
|
|
|
|
|
|
|
|
Total Disposal
|
|
|
953.7
|
|
|
|
955.0
|
|
Recycling Commodity
|
|
|
193.7
|
|
|
|
190.9
|
|
Other
|
|
|
229.7
|
|
|
|
237.4
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,672.7
|
|
|
$
|
4,548.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internalization Based on Disposal Volumes
|
|
|
73
|
%
|
|
|
73
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landfill Volumes in Thousands of Tons
|
|
|
52,335
|
|
|
|
55,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year over Year Internal Growth (excluding commodity)
|
|
|
|
|
|
|
|
|
Average per unit price change
|
|
|
6.9
|
%
|
|
|
5.8
|
%
|
Volume change
|
|
|
(4.5
|
)%
|
|
|
(3.2
|
)%
|
|
|
|
|
|
|
|
Total
|
|
|
2.4
|
%
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year over Year Internal Growth (including commodity)
|
|
|
2.3
|
%
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
8
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
STATEMENT OF OPERATIONS DATA
(amounts in millions, except percentages)
(unaudited)
The following tables provide the components of our cost of operations and as a percentage of
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Labor and related benefits
|
|
$
|
268.9
|
|
|
|
16.7
|
%
|
|
$
|
271.3
|
|
|
|
17.4
|
%
|
Transfer and disposal costs
|
|
|
116.5
|
|
|
|
7.3
|
|
|
|
116.0
|
|
|
|
7.5
|
|
Maintenance and repairs
|
|
|
117.1
|
|
|
|
7.3
|
|
|
|
122.8
|
|
|
|
7.9
|
|
Transportation and subcontractor costs
|
|
|
134.3
|
|
|
|
8.4
|
|
|
|
127.7
|
|
|
|
8.2
|
|
Fuel
|
|
|
111.0
|
|
|
|
6.9
|
|
|
|
78.1
|
|
|
|
5.0
|
|
Disposal and franchise fees and taxes
|
|
|
89.8
|
|
|
|
5.6
|
|
|
|
93.4
|
|
|
|
6.0
|
|
Landfill operating costs
|
|
|
42.8
|
|
|
|
2.7
|
|
|
|
42.6
|
|
|
|
2.7
|
|
Risk management
|
|
|
32.0
|
|
|
|
2.0
|
|
|
|
39.8
|
|
|
|
2.6
|
|
Costs of goods sold
|
|
|
18.4
|
|
|
|
1.1
|
|
|
|
21.3
|
|
|
|
1.4
|
|
Other
|
|
|
55.2
|
|
|
|
3.4
|
|
|
|
53.7
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of operations
|
|
$
|
986.0
|
|
|
|
61.4
|
%
|
|
$
|
966.7
|
|
|
|
62.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Labor and related benefits
|
|
$
|
804.0
|
|
|
|
17.2
|
%
|
|
$
|
809.6
|
|
|
|
17.8
|
%
|
Transfer and disposal costs
|
|
|
344.3
|
|
|
|
7.4
|
|
|
|
336.6
|
|
|
|
7.4
|
|
Maintenance and repairs
|
|
|
349.7
|
|
|
|
7.5
|
|
|
|
364.8
|
|
|
|
8.0
|
|
Transportation and subcontractor costs
|
|
|
385.5
|
|
|
|
8.3
|
|
|
|
385.0
|
|
|
|
8.5
|
|
Fuel
|
|
|
318.5
|
|
|
|
6.8
|
|
|
|
221.4
|
|
|
|
4.9
|
|
Disposal and franchise fees and taxes
|
|
|
265.3
|
|
|
|
5.7
|
|
|
|
272.4
|
|
|
|
6.0
|
|
Landfill operating costs
|
|
|
127.2
|
|
|
|
2.7
|
|
|
|
123.1
|
|
|
|
2.7
|
|
Risk management
|
|
|
93.5
|
|
|
|
2.0
|
|
|
|
120.5
|
|
|
|
2.6
|
|
Costs of goods sold
|
|
|
58.1
|
|
|
|
1.2
|
|
|
|
56.2
|
|
|
|
1.2
|
|
Other
|
|
|
160.2
|
|
|
|
3.4
|
|
|
|
163.9
|
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of operations
|
|
$
|
2,906.3
|
|
|
|
62.2
|
%
|
|
$
|
2,853.5
|
|
|
|
62.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables provide the components of our selling, general and administrative expenses and
as a percentage of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Salaries
|
|
$
|
100.9
|
|
|
|
6.3
|
%
|
|
$
|
96.9
|
|
|
|
6.2
|
%
|
Rent and office costs
|
|
|
9.1
|
|
|
|
0.6
|
|
|
|
9.2
|
|
|
|
0.6
|
|
Professional fees
|
|
|
13.4
|
|
|
|
0.8
|
|
|
|
16.1
|
|
|
|
1.0
|
|
Provision for doubtful accounts
|
|
|
5.2
|
|
|
|
0.3
|
|
|
|
6.9
|
|
|
|
0.4
|
|
Other
|
|
|
27.0
|
|
|
|
1.7
|
|
|
|
27.4
|
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and administrative expenses
|
|
$
|
155.6
|
|
|
|
9.7
|
%
|
|
$
|
156.5
|
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
Salaries
|
|
$
|
297.5
|
|
|
|
6.4
|
%
|
|
$
|
292.1
|
|
|
|
6.4
|
%
|
Rent and office costs
|
|
|
28.2
|
|
|
|
0.6
|
|
|
|
29.5
|
|
|
|
0.6
|
|
Professional fees
|
|
|
37.3
|
|
|
|
0.8
|
|
|
|
52.5
|
|
|
|
1.2
|
|
Provision for doubtful accounts
|
|
|
17.6
|
|
|
|
0.4
|
|
|
|
17.7
|
|
|
|
0.4
|
|
Other
|
|
|
67.1
|
|
|
|
1.4
|
|
|
|
88.9
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and administrative expenses
|
|
$
|
447.7
|
|
|
|
9.6
|
%
|
|
$
|
480.7
|
|
|
|
10.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
BALANCE SHEET
(amounts in millions, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
Cash and cash equivalents
|
|
$
|
102.7
|
|
|
$
|
230.9
|
|
Restricted cash
|
|
|
35.8
|
|
|
|
26.1
|
|
Accounts receivable, net of allowance of $21.5 and $21.2
|
|
|
770.2
|
|
|
|
691.0
|
|
Prepaid and other current assets
|
|
|
88.1
|
|
|
|
81.9
|
|
Deferred income taxes
|
|
|
103.9
|
|
|
|
128.3
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,100.7
|
|
|
|
1,158.2
|
|
Property and equipment, net
|
|
|
4,532.7
|
|
|
|
4,430.4
|
|
Goodwill
|
|
|
8,016.0
|
|
|
|
8,020.0
|
|
Other assets, net
|
|
|
338.8
|
|
|
|
340.1
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
13,988.2
|
|
|
$
|
13,948.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
402.4
|
|
|
$
|
557.3
|
|
Accounts payable
|
|
|
444.1
|
|
|
|
496.8
|
|
Current portion of accrued capping, closure,
post-closure and environmental costs
|
|
|
81.3
|
|
|
|
96.0
|
|
Accrued interest
|
|
|
103.6
|
|
|
|
99.6
|
|
Other accrued liabilities
|
|
|
571.4
|
|
|
|
757.7
|
|
Unearned revenue
|
|
|
256.4
|
|
|
|
239.7
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,859.2
|
|
|
|
2,247.1
|
|
Long-term debt, less current portion
|
|
|
6,067.7
|
|
|
|
6,085.6
|
|
Deferred income taxes
|
|
|
472.3
|
|
|
|
400.3
|
|
Accrued capping, closure, post-closure and
environmental costs, less current portion
|
|
|
793.7
|
|
|
|
771.4
|
|
Other long-term obligations
|
|
|
568.9
|
|
|
|
540.1
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Series D senior mandatory convertible preferred stock,
$0.10 par value, 2.8 million shares authorized, 2.4
million shares issued and outstanding in 2007,
liquidation preference of $250.00 per share, net of
$19.2 million of issuance costs
|
|
|
|
|
|
|
580.8
|
|
Common stock
|
|
|
4.3
|
|
|
|
3.7
|
|
Additional paid-in capital
|
|
|
3,456.3
|
|
|
|
2,843.3
|
|
Accumulated other comprehensive loss
|
|
|
(29.5
|
)
|
|
|
(29.5
|
)
|
Retained earnings
|
|
|
795.3
|
|
|
|
505.9
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
4,226.4
|
|
|
|
3,904.2
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
13,988.2
|
|
|
$
|
13,948.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days sales outstanding
|
|
42 days
|
|
43 days
|
|
|
|
|
|
|
|
10
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
STATEMENT OF CASH FLOWS
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
September 30, 2008
|
|
|
September 30, 2007
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
112.5
|
|
|
$
|
27.2
|
|
Discontinued operations, net of tax
|
|
|
|
|
|
|
39.7
|
|
Adjustments to reconcile net income to cash provided by
operating activities from continuing operations
|
|
|
|
|
|
|
|
|
Provisions for:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
134.1
|
|
|
|
142.7
|
|
Stock-based compensation expense
|
|
|
6.7
|
|
|
|
5.4
|
|
Doubtful accounts
|
|
|
5.2
|
|
|
|
6.9
|
|
Accretion of debt and amortization of debt issuance costs
|
|
|
4.3
|
|
|
|
5.0
|
|
Deferred income tax expense
|
|
|
66.4
|
|
|
|
40.3
|
|
Gain on sale of fixed assets
|
|
|
(4.1
|
)
|
|
|
(2.6
|
)
|
Non-cash change in merger accruals
|
|
|
3.0
|
|
|
|
|
|
Non-cash change in acquisition accruals
|
|
|
(0.3
|
)
|
|
|
|
|
(Gain) loss from divestitures and asset impairments
|
|
|
(0.3
|
)
|
|
|
39.0
|
|
Write-off of deferred debt issuance costs
|
|
|
0.4
|
|
|
|
1.8
|
|
Other non-cash items
|
|
|
(1.5
|
)
|
|
|
(0.9
|
)
|
Change in operating assets and liabilities, excluding the effects
of acquisitions
|
|
|
|
|
|
|
|
|
Accounts receivable, prepaid expenses, inventories
and other assets
|
|
|
(26.9
|
)
|
|
|
(24.4
|
)
|
Accounts payable, accrued liabilities, unearned income
and other
|
|
|
(0.1
|
)
|
|
|
9.3
|
|
Capping, closure and post-closure accretion
|
|
|
14.4
|
|
|
|
13.7
|
|
Capping, closure, post-closure and environmental expenditures
|
|
|
(32.5
|
)
|
|
|
(18.9
|
)
|
|
|
|
|
|
|
|
Cash provided by operating activities from continuing operations
|
|
|
281.3
|
|
|
|
284.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Cost of acquisitions, net of cash acquired
|
|
|
|
|
|
|
(2.2
|
)
|
Proceeds from divestitures, net of cash divested
|
|
|
|
|
|
|
95.4
|
|
Proceeds from sale of fixed assets
|
|
|
6.0
|
|
|
|
3.9
|
|
Capital expenditures, excluding acquisitions
|
|
|
(144.1
|
)
|
|
|
(130.9
|
)
|
Capitalized interest
|
|
|
(3.4
|
)
|
|
|
(5.2
|
)
|
Other
|
|
|
(0.4
|
)
|
|
|
0.2
|
|
|
|
|
|
|
|
|
Cash used for investing activities from continuing operations
|
|
|
(141.9
|
)
|
|
|
(38.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt, net of issuance costs
|
|
|
(0.3
|
)
|
|
|
200.0
|
|
Payments of long-term debt
|
|
|
(143.8
|
)
|
|
|
(449.5
|
)
|
Payments of preferred stock dividends
|
|
|
|
|
|
|
(9.4
|
)
|
Net receipts from restricted trusts
|
|
|
35.3
|
|
|
|
5.8
|
|
Net proceeds from sale of common stock, exercise of stock
options and other
|
|
|
2.8
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
Cash used for financing activities from continuing operations
|
|
|
(106.0
|
)
|
|
|
(249.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used for discontinued operations
|
|
|
(0.1
|
)
|
|
|
(3.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
33.3
|
|
|
|
(8.0
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
69.4
|
|
|
|
75.5
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
102.7
|
|
|
$
|
67.5
|
|
|
|
|
|
|
|
|
11
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
STATEMENT OF CASH FLOWS
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Nine
|
|
|
For the Nine
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
September 30, 2008
|
|
|
September 30, 2007
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
296.5
|
|
|
$
|
158.3
|
|
Discontinued operations, net of tax
|
|
|
|
|
|
|
33.9
|
|
Adjustments to reconcile net income to cash provided by
operating activities from continuing operations
|
|
|
|
|
|
|
|
|
Provisions for:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
411.6
|
|
|
|
412.6
|
|
Stock-based compensation expense
|
|
|
17.9
|
|
|
|
15.7
|
|
Doubtful accounts
|
|
|
17.6
|
|
|
|
17.7
|
|
Accretion of debt and amortization of debt issuance costs
|
|
|
13.1
|
|
|
|
15.4
|
|
Deferred income tax expense
|
|
|
149.1
|
|
|
|
111.7
|
|
Gain on sale of fixed assets
|
|
|
(10.2
|
)
|
|
|
(7.7
|
)
|
Non-cash change in merger accruals
|
|
|
11.3
|
|
|
|
|
|
Non-cash change in acquisition accruals
|
|
|
(15.1
|
)
|
|
|
(2.2
|
)
|
Loss from divestitures and asset impairments
|
|
|
23.5
|
|
|
|
40.5
|
|
Write-off of deferred debt issuance costs
|
|
|
0.4
|
|
|
|
7.2
|
|
Other non-cash items
|
|
|
(5.3
|
)
|
|
|
(2.6
|
)
|
Change in operating assets and liabilities, excluding the effects
of acquisitions
|
|
|
|
|
|
|
|
|
Accounts receivable, prepaid expenses, inventories
and other assets
|
|
|
(104.5
|
)
|
|
|
(59.0
|
)
|
Accounts payable, accrued liabilities, unearned income
and other
|
|
|
(45.5
|
)
|
|
|
(2.2
|
)
|
Payment related to an IRS matter
|
|
|
(195.7
|
)
|
|
|
|
|
Capping, closure and post-closure accretion
|
|
|
43.0
|
|
|
|
41.5
|
|
Capping, closure, post-closure and environmental expenditures
|
|
|
(68.9
|
)
|
|
|
(38.8
|
)
|
|
|
|
|
|
|
|
Cash provided by operating activities from continuing operations
|
|
|
538.8
|
|
|
|
742.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Cost of acquisitions, net of cash acquired
|
|
|
(0.6
|
)
|
|
|
(75.0
|
)
|
Proceeds from divestitures, net of cash divested
|
|
|
0.8
|
|
|
|
166.2
|
|
Proceeds from sale of fixed assets
|
|
|
15.8
|
|
|
|
12.0
|
|
Capital expenditures, excluding acquisitions
|
|
|
(501.0
|
)
|
|
|
(496.1
|
)
|
Capitalized interest
|
|
|
(10.0
|
)
|
|
|
(14.3
|
)
|
Other
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used for investing activities from continuing operations
|
|
|
(494.8
|
)
|
|
|
(407.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt, net of issuance costs
|
|
|
556.8
|
|
|
|
1,379.1
|
|
Payments of long-term debt
|
|
|
(858.9
|
)
|
|
|
(1,778.5
|
)
|
Payments of preferred stock dividends
|
|
|
(9.4
|
)
|
|
|
(28.1
|
)
|
Net receipts from restricted trusts
|
|
|
115.4
|
|
|
|
50.5
|
|
Net proceeds from sale of common stock, exercise of stock
options and other
|
|
|
23.9
|
|
|
|
21.5
|
|
|
|
|
|
|
|
|
Cash used for financing activities from continuing operations
|
|
|
(172.2
|
)
|
|
|
(355.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used for discontinued operations
|
|
|
|
|
|
|
(5.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(128.2
|
)
|
|
|
(26.6
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
230.9
|
|
|
|
94.1
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
102.7
|
|
|
$
|
67.5
|
|
|
|
|
|
|
|
|
12
ALLIED WASTE INDUSTRIES INC.
SUMMARY DATA SHEET
FREE CASH FLOW DATA
(amounts in millions)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
|
|
Ended September 30,
|
|
|
Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Free Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities from
continuing operations
|
|
$
|
281.3
|
|
|
$
|
284.2
|
|
|
$
|
538.8
|
|
|
$
|
742.0
|
|
Payment related to an IRS matter, net of
tax benefit
|
|
|
(8.0
|
)
|
|
|
|
|
|
|
172.7
|
|
|
|
|
|
Payments of merger related costs
|
|
|
9.5
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
Debt refinancing costs
|
|
|
|
|
|
|
11.6
|
|
|
|
|
|
|
|
56.9
|
|
Proceeds from sale of fixed assets
|
|
|
6.0
|
|
|
|
3.9
|
|
|
|
15.8
|
|
|
|
12.0
|
|
Capital expenditures, excluding acquisitions
|
|
|
(144.1
|
)
|
|
|
(130.9
|
)
|
|
|
(501.0
|
)
|
|
|
(496.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
|
144.7
|
|
|
|
168.8
|
|
|
|
236.5
|
|
|
|
314.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market development and other investing
activities, net
|
|
|
(0.4
|
)
|
|
|
93.5
|
|
|
|
0.4
|
|
|
|
91.2
|
|
Cash provided by (used for) discontinued operations
|
|
|
(0.1
|
)
|
|
|
(3.8
|
)
|
|
|
|
|
|
|
(5.9
|
)
|
Capitalized interest
|
|
|
(3.4
|
)
|
|
|
(5.2
|
)
|
|
|
(10.0
|
)
|
|
|
(14.3
|
)
|
Debt issuance costs
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
(1.7
|
)
|
|
|
(20.7
|
)
|
Payments on preferred stock dividends
|
|
|
|
|
|
|
(9.4
|
)
|
|
|
(9.4
|
)
|
|
|
(28.1
|
)
|
Debt refinancing costs
|
|
|
|
|
|
|
(11.6
|
)
|
|
|
|
|
|
|
(56.9
|
)
|
Accretion, stock option exercises and other
|
|
|
2.0
|
|
|
|
2.5
|
|
|
|
21.4
|
|
|
|
17.4
|
|
Payment related to an IRS matter, net of
tax benefit
|
|
|
8.0
|
|
|
|
|
|
|
|
(172.7
|
)
|
|
|
|
|
Payments of merger related costs
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
(10.2
|
)
|
|
|
|
|
Change in cash (including restricted cash)
|
|
|
(33.0
|
)
|
|
|
13.8
|
|
|
|
118.5
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in debt
|
|
$
|
108.0
|
|
|
$
|
248.6
|
|
|
$
|
172.8
|
|
|
$
|
297.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt balance at beginning of period
|
|
$
|
6,578.1
|
|
|
$
|
6,861.3
|
|
|
$
|
6,642.9
|
|
|
$
|
6,910.6
|
|
Decrease in debt
|
|
|
108.0
|
|
|
|
248.6
|
|
|
|
172.8
|
|
|
|
297.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt balance at end of period
|
|
$
|
6,470.1
|
|
|
$
|
6,612.7
|
|
|
$
|
6,470.1
|
|
|
$
|
6,612.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE COMPUTATION
(amounts in millions, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months
|
|
|
|
September 30,
|
|
|
Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Diluted earnings per share computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
112.5
|
|
|
$
|
66.9
|
|
|
$
|
296.5
|
|
|
$
|
192.2
|
|
Add: Interest expense, net of tax, for senior
convertible debentures
|
|
|
1.6
|
|
|
|
1.5
|
|
|
|
4.6
|
|
|
|
4.4
|
|
Less: Dividends on preferred stock
|
|
|
|
|
|
|
(9.4
|
)
|
|
|
|
|
|
|
(28.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations available to
common shareholders
|
|
$
|
114.1
|
|
|
$
|
59.0
|
|
|
$
|
301.1
|
|
|
$
|
168.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
433.1
|
|
|
|
369.3
|
|
|
|
418.5
|
|
|
|
368.6
|
|
Dilutive effect of stock awards and contingently
issuable shares
|
|
|
13.3
|
|
|
|
13.1
|
|
|
|
26.5
|
|
|
|
13.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and common
equivalent shares outstanding
|
|
|
446.4
|
|
|
|
382.4
|
|
|
|
445.0
|
|
|
|
381.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from
continuing operations
|
|
$
|
0.26
|
|
|
$
|
0.15
|
|
|
$
|
0.68
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
(amounts in millions, except percentages)
(unaudited)
In addition to disclosing financial results in accordance with generally accepted accounting
principles (GAAP), the Company also discloses gross profit, gross margin (gross profit as a
percentage of revenue), operating income before depreciation and amortization, loss from
divestitures and asset impairments, adjusted diluted income per share from continuing operations
and free cash flow, which are non-GAAP measures.
We believe that our presentation of gross profit and gross margin is useful to investors because
they are indicators of the strength and performance of our ongoing business operations, including
our ability to grow revenue and manage the associated direct costs. While selling, general and
administrative costs, depreciation and amortization and gain or loss from divestitures and asset
impairments are considered components of operating income under GAAP, management uses gross profit
and gross margin to evaluate business growth and the efficiency of our operations. Following is a
reconciliation of gross profit and gross margin
(in millions, except percentages)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Revenue
|
|
$
|
1,606.2
|
|
|
$
|
1,556.3
|
|
|
$
|
4,672.7
|
|
|
$
|
4,548.4
|
|
Less: Cost of operations
|
|
|
(986.0
|
)
|
|
|
(966.7
|
)
|
|
|
(2,906.3
|
)
|
|
|
(2,853.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
620.2
|
|
|
$
|
589.6
|
|
|
$
|
1,766.4
|
|
|
$
|
1,694.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
38.6
|
%
|
|
|
38.0
|
%
|
|
|
37.8
|
%
|
|
|
37.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe that our presentation of operating income before depreciation and amortization, loss
from divestitures and asset impairments is useful to investors because it is an indicator of the
strength and performance of our ongoing business operations, including our ability to fund capital
expenditures and our ability to incur and service debt. While depreciation and amortization and
loss from divestitures and asset impairments are considered operating costs under GAAP, these
expenses are non-cash and primarily represent the allocation of costs associated with long-lived
assets acquired or constructed in prior years. Management uses operating income before depreciation
and amortization, loss from divestitures and asset impairments to evaluate the operations of our
geographic operating regions. Following is a reconciliation of operating income before
depreciation and amortization, loss from divestitures and asset impairments to operating income
(in
millions)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Operating income before
depreciation and amortization,
loss from divestitures and asset
impairments
|
|
$
|
452.1
|
|
|
$
|
433.1
|
|
|
$
|
1,297.2
|
|
|
$
|
1,214.2
|
|
Gain (loss) from divestitures and
asset impairments
|
|
|
0.3
|
|
|
|
(39.0
|
)
|
|
|
(23.5
|
)
|
|
|
(40.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before
depreciation and amortization
|
|
|
452.4
|
|
|
|
394.1
|
|
|
|
1,273.7
|
|
|
|
1,173.7
|
|
Less: Depreciation and amortization
|
|
|
(134.1
|
)
|
|
|
(142.7
|
)
|
|
|
(411.6
|
)
|
|
|
(412.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
318.3
|
|
|
$
|
251.4
|
|
|
$
|
862.1
|
|
|
$
|
761.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe our presentation of adjusted diluted income per share from continuing operations, which
excludes charges such as closure, post-closure and environmental reserve adjustments, merger
related costs, loss from divestitures and asset impairments, adjustments for a BFI acquisition
related claim, workforce reduction and regional realignment costs and debt refinancing costs,
provides an understanding of operational activities before the financial impact of certain unusual
or otherwise non-operational items, including refinancing decisions made for the long-term benefit
of the Company. Management uses this measure, and believes investors find it helpful, in
understanding the ongoing performance of our operations separate from items that have a
disproportionate impact on our results for
14
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
(amounts in millions, except per share data)
(unaudited)
a particular period. Comparable costs have been
incurred in prior periods, and similar types of adjustments can reasonably be expected to be
recorded in future periods.
Following is a summary of adjusted diluted income per share from continuing operations
(per share
amounts
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Diluted income per share from
continuing operations
|
|
$
|
0.26
|
|
|
$
|
0.15
|
|
|
$
|
0.68
|
|
|
$
|
0.44
|
|
Add: Closure, post-closure and
environmental reserve adjustments
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
Add: Merger related costs
|
|
|
0.02
|
|
|
|
|
|
|
|
0.05
|
|
|
|
|
|
Add: Loss from divestitures and asset
impairments
|
|
|
|
|
|
|
0.07
|
|
|
|
0.03
|
|
|
|
0.07
|
|
Less: Adjustments for a BFI acquisition
related claim
|
|
|
|
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
Add: Workforce reduction and regional
realignment costs
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
Add: Debt refinancing costs
|
|
|
|
|
|
|
0.02
|
|
|
|
|
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted income per share from
continuing operations
|
|
$
|
0.28
|
|
|
$
|
0.24
|
|
|
$
|
0.76
|
|
|
$
|
0.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow is defined as cash flow from operations less capital expenditures, plus a payment
related to an IRS matter, payments of merger related costs, debt refinancing costs and proceeds
from fixed asset sales. Management believes the presentation of free cash flow is useful to
investors because it allows them to better assess and understand the Companys ability to meet debt
service requirements and the amount of recurring cash generated from operations after expenditures
for fixed assets and other unusual items. Free cash flow does not represent the Companys residual
cash flow available for discretionary expenditures since we have mandatory debt service
requirements and other required expenditures that are not deducted from free cash flow. Free cash
flow does not capture debt repayment and/or the receipt of proceeds from the issuance of debt. We
use free cash flow as a measure of recurring operating cash flow. The most directly comparable
GAAP measure to free cash flow is cash provided by operating activities from continuing operations.
Following is a reconciliation of free cash flow to cash provided by operating activities from
continuing operations
(in millions)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Free cash flow
|
|
$
|
144.7
|
|
|
$
|
168.8
|
|
|
$
|
236.5
|
|
|
$
|
314.8
|
|
Add: Capital expenditures
|
|
|
144.1
|
|
|
|
130.9
|
|
|
|
501.0
|
|
|
|
496.1
|
|
Add (less): Payment related to an IRS
matter, net of tax benefit
|
|
|
8.0
|
|
|
|
|
|
|
|
(172.7
|
)
|
|
|
|
|
Less: Payments of merger related costs
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
(10.2
|
)
|
|
|
|
|
Less: Debt refinancing costs
|
|
|
|
|
|
|
(11.6
|
)
|
|
|
|
|
|
|
(56.9
|
)
|
Less: Proceeds from sale of fixed assets
|
|
|
(6.0
|
)
|
|
|
(3.9
|
)
|
|
|
(15.8
|
)
|
|
|
(12.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities
from continuing operations
|
|
$
|
281.3
|
|
|
$
|
284.2
|
|
|
$
|
538.8
|
|
|
$
|
742.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
Additional Information and Where to Find It
This communication is being made in respect of the proposed business combination involving Republic
and Allied. In connection with the proposed transaction, Republic filed with the SEC a
Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus, as amended, and
each of Republic and Allied plan to file with the SEC other documents regarding the proposed
transaction. The definitive Joint Proxy Statement/Prospectus has been mailed to stockholders of
Republic and Allied. INVESTORS AND SECURITY HOLDERS OF REPUBLIC AND ALLIED ARE URGED TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to obtain free copies of the Registration
Statement and the definitive Joint Proxy Statement/Prospectus (when available) and other documents
filed with the SEC by Republic and Allied through the website
maintained by the SEC at
www.sec.gov
.
Free copies of the Registration Statement and the definitive Joint Proxy Statement/Prospectus
(when available) and other documents filed with the SEC can also be obtained by directing a request
to Republic Services, Inc., 110 SE 6th Street, 28th Floor, Fort Lauderdale, Florida, 33301
Attention: Investor Relations or by directing a request to Allied Waste Industries, Inc., 18500
North Allied Way, Phoenix, Arizona 85054, Attention: Investor Relations.
Participants in Solicitation
Republic, Allied and their respective directors and executive officers and other persons may be
deemed to be participants in the solicitation of proxies in respect of the proposed transaction.
Information regarding Republics directors and executive officers is available in its Annual Report
on Form 10-K for the year ended December 31, 2007, which was filed with the SEC on February 21,
2008, and its proxy statement for its 2008 annual meeting of stockholders, which was filed with the
SEC on April 2, 2008, and information regarding Allieds directors and executive officers is
available in Allieds Annual Report on Form 10-K, for the year ended December 31, 2007, which was
filed with the SEC on February 21, 2008 and its proxy statement for its 2008 annual meeting of
stockholders, which was filed with the SEC on April 10, 2008. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the definitive Joint Proxy
Statement/Prospectus and other relevant materials to be filed with the SEC when they become
available.
Safe Harbor for Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words
anticipated, expected, will and similar words and phrases are used in this press release to
identify the forward-looking statements. These forward-looking statements, although based on
assumptions that we consider reasonable, are subject to risks and uncertainties which could cause
actual results, events or conditions to differ materially from those expressed or implied by the
forward-looking statements. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we can give no assurance that the expectations will
prove to be correct.
The forward-looking statements in this press release relate to our expectations regarding the
proposed merger with Republic Services. Among the factors that could cause actual results to
differ materially from the expectations expressed in the forward-looking statements are: (1) the
general political and economic conditions in the United States, negative changes in which could (a)
make it more difficult for us to predict economic trends, (b) cause a decline in the demand for our
services (particularly in the commercial and industrial sectors), (c) cause a decline in the price
of commodities sold by us or (d) increase competitive pressure on pricing; (2) the overall
competitive nature of the waste management industry, which could cause pressure on pricing and the
loss of business; (3) our ability or inability to successfully identify and integrate acquired
businesses and any liabilities associated with acquired businesses, which could impact our costs;
(4) our ability or inability to implement market development initiatives, pass on
16
increased costs
to customers, execute operational improvement plans and divest under-performing assets, and to
realize the anticipated benefits of these initiatives; (5) our ability or inability to generate
revenue growth and offset the impact of inflation and business growth on our costs through price
increases, including the potential impact of price increases on volumes; (6) changes in capital
availability or costs, which, among other
things, could affect our financial results due to our variable interest rate debt; (7) severe
weather conditions, which could impair our financial results by causing increased costs, loss of
revenue, reduced operational efficiency or disruptions to our operations; (8) our ability to
operate our business as we desire, which may be limited by restrictive covenants in our debt
agreements, our ability to obtain required permits on a timely basis (or at all), regulatory
requirements and other factors; (9) compliance with existing and future legal and regulatory
requirements, including limitations or bans on disposal of certain types of wastes or on the
transportation of waste, which could limit our ability to conduct or grow our business, increase
our costs to operate or require additional capital expenditures; (10) changes in site remediation
requirements or our estimates of the costs to comply with existing requirements, which could
increase our costs, including costs for final capping, closure, post-closure and other remediation
obligations; (11) the outcome of existing and any future legal proceedings, including any
litigation, audit or investigation brought by or before any governmental body, which could result
in increased costs or restrictions on our ability to operate; (12) environmental liabilities in
excess of our reserves or insurance coverage, if any; (13) increases in the costs in commodity,
insurance, oil and fuel prices that make it more expensive to operate our business, including our
ability or inability to reduce the impact of any such cost increases through cost reduction
initiatives and other methods; (14) workforce factors, including potential increases in our costs
if we are required to provide additional funding to any multi-employer pension plan to which we
contribute and the negative impact on our operations of union organizing campaigns, work stoppages
or labor shortages; (15) the negative effect that trends toward requiring recycling, waste
reduction at the source and prohibiting the disposal of certain types of wastes could have on
volumes of waste going to landfills and waste-to-energy facilities; (16) changes by the Financial
Accounting Standards Board or other accounting regulatory bodies to generally accepted accounting
principles or policies; (17) acts of war, riots or terrorism, including the events taking place in
the Middle East, the current military action in Iraq and the continuing war on terrorism, as well
as actions taken or to be taken by the United States or other governments as a result of further
acts or threats of terrorism, and the impact of these acts on economic, financial and social
conditions in the United States; (18) any further offer made by Waste Management, Inc. to acquire
Republic Services; (19) the risk that a condition to the closing of the proposed Allied Republic
merger would not be satisfied; (20) risk that the combined company may not be able to achieve
anticipated synergies or other results of operations; and (21) the timing and occurrence (or
non-occurrence) of transactions and events which may be subject to circumstances beyond our
control.
Other factors which could materially affect our forward-looking statements can be found in the
Companys periodic reports filed with the Securities and Exchange Commission, including risk
factors detailed in Item 1A, Risk Factors in our Form 10-K for the year ended December 31, 2007.
Shareholders, potential investors and other readers are urged to consider these factors carefully
in evaluating our forward-looking statements and are cautioned not to place undue reliance on
forward-looking statements. The forward-looking statements made herein are only made as of the
date of this press release and the Company undertakes no obligation to publicly update these
forward-looking statements to reflect subsequent events or circumstances.
17
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