- Company raises adjusted earnings guidance by 3 cents to a new
range of $1.46 to $1.48 per diluted share - Company reaffirms free
cash flow guidance of $700 million to $725 million - Adjusted
EBITDA margins expand to 30.9 percent - Company declares quarterly
dividend of $0.19 per share PHOENIX, Nov. 2 /PRNewswire-FirstCall/
-- Republic Services, Inc. (NYSE: RSG) today reported net income of
$120.5 million, or $0.32 per diluted share, including
merger-related gains and costs and other charges, for the three
months ended September 30, 2009, versus $88.7 million, or $0.48 per
diluted share, for the comparable period last year. Republic's
third quarter 2009 financial results include Allied Waste
Industries, Inc. (Allied) which merged with Republic on December 5,
2008. Republic's income before income taxes for the three months
ended September 30, 2009, includes $0.9 million ($0.00 per diluted
share) of a net loss on disposition of assets, $12.3 million ($0.02
per diluted share) of restructuring charges, $31.8 million ($0.05
per diluted share) of loss on extinguishment of debt, $8.9 million
($0.01 per diluted share) of costs to achieve synergies and a gain
of $8.8 million ($0.01 per diluted share) related to insurance
recoveries resulting from remediation activities. Excluding these
items, net income for the three months ended September 30, 2009
would have been $149.3 million or $0.39 per diluted share. Income
before income taxes for the three months ended September 30, 2008
includes $3.2 million ($.01 per diluted share) of integration costs
related to the Allied merger. Excluding these costs, net income for
the three months ended September 30, 2008 was $90.7 million or
$0.49 per diluted share. Operating income before depreciation,
amortization, depletion and accretion for the three months ended
September 30, 2009 was $627.4 million compared to $248.9 million
for the comparable period in 2008. Excluding the net loss on
disposition of assets, restructuring charges, costs to achieve
synergies, and insurance recoveries recorded during 2009 and the
integration costs recorded during 2008, operating income before
depreciation, amortization, depletion and accretion for the three
months ended September 30, 2009 was $640.7 million, or 30.9% as a
percentage of revenue, compared to $252.1 million, or 30.2% as a
percentage of revenue, for the comparable 2008 period. Revenue for
the three months ended September 30, 2009 increased to $2,073.5
million compared to $834.0 million for the same period in 2008.
Core price for the three months ended September 30, 2009 (assuming
the merger with Allied had occurred on January 1, 2008) increased
2.8%. Offsetting the core price growth of 2.8% for the three months
ended September 30, 2009 were decreases of 10.1% in core volume,
1.9% of commodity pricing and 3.6% in fuel recovery fees. For the
nine months ended September 30, 2009, net income was $459.4
million, or $1.21 per diluted share, compared to $205.5 million, or
$1.11 per diluted share, for the comparable period last year.
Republic's income before income taxes for the nine months ended
September 30, 2009, includes $144.3 million ($0.23 per diluted
share) of net gains on disposition of assets, $55.9 million ($0.09
per diluted share) of restructuring charges, $31.8 million ($0.05
per diluted share) of loss on extinguishment of debt, $31.8 million
($0.05 per diluted share) of costs to achieve synergies and a gain
of $8.8 million ($0.01 per diluted share) related to insurance
recoveries resulting from remediation activities. Excluding these
items, net income for the nine months ended September 30, 2009
would have been $438.6 million or $1.16 per diluted share. Income
before income taxes for the nine months ended September 30, 2008
includes a $34.0 million charge ($0.12 per diluted share) related
to environmental conditions at our Countywide Recycling and
Disposal Facility in Ohio, a $35.0 million charge ($0.12 per
diluted share) related to estimated costs to comply with a consent
decree and settlement agreement related to the Sunrise Landfill in
Nevada and $3.2 million ($0.01 per diluted share) of integration
costs related to the merger with Allied. Excluding these charges
and costs, net income for the nine months ended September 30, 2008
was $251.3 million or $1.36 per diluted share. Operating income
before depreciation, amortization, depletion and accretion for the
nine months ended September 30, 2009 was $1,986.7 million compared
to $635.2 million for the comparable period in 2008. Excluding the
net gain on disposition of assets, restructuring charges, costs to
achieve synergies and insurance recoveries recorded during 2009 and
the remediation charges and integration costs recorded during 2008,
operating income before depreciation, amortization, depletion and
accretion for the nine months ended September 30, 2009 was $1,921.3
million, or 31.0% as a percentage of revenue, compared to $706.4
million, or 28.9% as a percentage of revenue, for the comparable
2008 period. Revenue for the nine months ended September 30, 2009
increased to $6,200.1 million compared to $2,440.7 million for the
same period in 2008. Core price for the nine months ended September
30, 2009 (assuming the merger with Allied had occurred on January
1, 2008) increased 3.2%. Offsetting the core price growth of 3.2%
for the nine months ended September 30, 2009 were decreases of 9.6%
in core volume, 2.4% of commodity pricing and 2.6% in fuel recovery
fees. During the three months ended September 30, 2009, the Company
completed the divestiture of assets and related liabilities
required under the settlement reached with the U.S. Department of
Justice in connection with the Allied merger. After tax proceeds of
$374.6 million related to these divestitures were used to repay
amounts borrowed under the Company's credit facilities. "Based on
our continued solid performance, we are increasing our full year
earnings guidance for the second time this year," said James E.
O'Connor, Chairman and Chief Executive Officer of Republic
Services, Inc. "Our new, full-year adjusted earnings guidance is a
range of $1.46 to $1.48 per share, which represents a three cent
per share increase over our previous guidance. We are also
reaffirming our full-year free cash flow guidance of $700 to $725
million. I am especially pleased to see a 110 basis point increase
in our adjusted year-over-year margins." Commenting on
merger-related synergies, Don Slager, President and Chief Operating
Officer, stated, "We are realizing our synergy savings ahead of
schedule. Our field organization continues to execute our merger
strategy while remaining focused on revenue and cost control
initiatives," said Mr. Slager. "Providing excellent customer
service, managing operational costs and increasing customer
retention remain key focal points for the organization." Quarterly
Dividend Separately, Republic announced that its Board of Directors
has approved a regular quarterly dividend of $0.19 per share to be
paid on January 18, 2010 to shareholders of record on January 4,
2010. Republic Services, Inc. is a leading provider of services in
the domestic, non-hazardous solid waste industry. The Company
provides non-hazardous solid waste collection services for
commercial, industrial, municipal, and residential customers
through 380 collection companies in 40 states. It also owns or
operates 236 transfer stations, 199 solid waste landfills and 78
recycling facilities. Republic serves millions of residential
customers under contracts with more than 3,000 municipalities for
waste collection and residential services. It also serves
commercial customers throughout its expansive service area. For
more information, visit the Republic Services web site at
http://www.republicservices.com/ SUPPLEMENTAL UNAUDITED FINANCIAL
INFORMATION AND OPERATING DATA (in millions, except per share
amounts and percentages) REPUBLIC SERVICES, INC. CONSOLIDATED
BALANCE SHEETS September December 30, 31, 2009 2008 ---- ----
(Unaudited) ASSETS Current assets: Cash and cash equivalents $107.3
$68.7 Accounts receivable, less allowance for doubtful accounts of
$54.2 and $65.7 as of September 30, 2009 and December 31, 2008,
respectively 928.2 945.5 Prepaid expenses and other current assets
189.3 174.7 Deferred tax assets 179.5 136.8 ----- ----- Total
current assets 1,404.3 1,325.7 Restricted cash and marketable
securities 254.9 281.9 Property and equipment, net 6,585.6 6,738.2
Goodwill, net 10,534.0 10,521.5 Other intangible assets, net 517.7
564.1 Other assets 233.6 490.0 ----- ----- Total assets $19,530.1
$19,921.4 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $458.8 $564.0 Notes payable
and current maturities of long-term debt 242.5 504.0 Deferred
revenue 332.7 359.9 Accrued landfill and environmental costs,
current portion 188.4 233.4 Accrued interest 110.5 107.7 Other
accrued liabilities 765.1 796.8 ----- ----- Total current
liabilities 2,098.0 2,565.8 Long-term debt, net of current
maturities 6,813.3 7,198.5 Accrued landfill and environmental
costs, net of current portion 1,251.0 1,197.1 Deferred income taxes
and other long-term liabilities 1,323.2 1,239.9 Self-insurance
reserves, net of current portion 303.7 234.5 Other long-term
liabilities 186.4 203.1 Commitments and contingencies Stockholders'
equity: Preferred stock, par value $0.01 per share; 50.0 shares
authorized; none issued - - Common stock, par value $0.01 per
share; 750.0 shares authorized; 394.6 and 393.4 issued, including
shares held in treasury, as of September 30, 2009 and December 31,
2008, respectively 4.0 3.9 Additional paid-in capital 6,289.7
6,260.1 Retained earnings 1,720.1 1,477.2 Treasury stock, at cost
(14.9 shares as of September 30, 2009 and December 31, 2008)
(457.2) (456.7) Accumulated other comprehensive loss, net of tax
(4.4) (3.1) ---- ---- Total Republic Services, Inc. stockholders'
equity 7,552.2 7,281.4 Noncontrolling interests 2.3 1.1 ----- -----
Total stockholders' equity 7,554.5 7,282.5 ------- ------- Total
liabilities and stockholders' equity $19,530.1 $19,921.4 =========
========= REPUBLIC SERVICES, INC. UNAUDITED CONSOLIDATED STATEMENTS
OF INCOME (in millions, except per share data) Three Months Ended
Nine Months Ended September 30, September 30, ----------------
----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenue
$2,073.5 $834.0 $6,200.1 $2,440.7 Expenses: Cost of operations
1,207.5 499.5 3,643.1 1,553.5 Depreciation, amortization and
depletion 218.3 77.3 658.7 226.9 Accretion 22.2 4.6 67.4 13.5
Selling, general and administrative 225.4 85.6 658.7 252.0 Loss
(gain) on disposition of assets, net 0.9 - (144.3) - Restructuring
charges 12.3 - 55.9 - ---- ---- ---- ---- Operating income 386.9
167.0 1,260.6 394.8 Interest expense (144.8) (22.6) (448.8) (65.1)
Loss on extinguishment of debt (31.8) - (31.8) - Interest income
0.5 2.6 1.7 7.9 Other income (expense), net 1.3 (1.6) 2.8 (0.7)
---- ---- ---- ---- Income before income taxes 212.1 145.4 784.5
336.9 Provision for income taxes 91.1 56.7 323.9 131.4 ----- -----
----- ----- Net income 121.0 88.7 460.6 205.5 Less: net income
attributable to noncontrolling interests (0.5) - (1.2) - ---- ----
---- ---- Net income attributable to Republic Services, Inc. $120.5
$88.7 $459.4 $205.5 ====== ===== ====== ====== Basic earnings per
share attributable to Republic Services, Inc. stockholders: Basic
earnings per share $0.32 $0.49 $1.21 $1.13 ===== ===== ===== =====
Weighted average common shares outstanding 379.7 182.3 379.3 182.6
===== ===== ===== ===== Diluted earnings per share attributable to
Republic Services, Inc. stockholders: Diluted earnings per share
$0.32 $0.48 $1.21 $1.11 ===== ===== ===== ===== Weighted average
common and common equivalent shares outstanding 381.1 184.1 380.3
184.4 ===== ===== ===== ===== Cash dividends per common share $0.19
$0.19 $0.57 $0.53 ===== ===== ===== ===== REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Nine
Months Ended September 30, ----------------- 2009 2008 ---- ----
Cash Provided by Operating Activities: Net income $460.6 $205.5
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation and amortization of property and equipment
389.9 145.7 Landfill depletion and amortization 216.3 76.5
Amortization of intangible and other assets 52.5 4.7 Accretion 67.4
13.5 Non-cash interest expense - debt 76.0 - Non-cash interest
expense - other 33.3 - Restructuring and synergy related charges
33.2 - Stock-based compensation 11.6 9.5 Deferred tax provision 5.6
24.1 Provision for doubtful accounts, net of adjustments 16.8 6.4
Excess income tax benefit from stock option exercises (1.4) 1.8
Asset impairments 10.4 - Loss on extinguishment of debt 31.8 - Gain
on disposition of assets, net (156.2) (1.1) Other non-cash items
(0.1) 2.5 Change in assets and liabilities, net of effects from
business acquisitions and divestitures: Accounts receivable 1.0
(33.9) Prepaid expenses and other assets 2.6 (42.6) Accounts
payable and accrued liabilities (94.8) 7.0 Restructuring and
synergy related expenditures (53.4) - Capping, closure and
post-closure expenditures (60.2) (9.8) Remediation expenditures
(42.6) (29.1) Other liabilities 12.1 93.5 ---- ---- Cash Provided
by Operating Activities 1,012.4 474.2 ------- ----- Cash Used in
Investing Activities: Purchases of property and equipment (542.5)
(264.1) Proceeds from sales of property and equipment 22.8 5.8 Cash
used in acquisitions, net of cash acquired (0.1) (13.4) Cash
proceeds from divestitures, net of cash divested 473.3 - Change in
restricted cash and marketable securities 27.1 (6.4) Other - (0.2)
----- ----- Cash Used in Investing Activities (19.4) (278.3) -----
------ Cash Used in Financing Activities: Proceeds from notes
payable and long-term debt 948.2 693.4 Proceeds from senior notes
645.4 - Payments of notes payable and long-term debt (2,323.7)
(663.2) Premiums paid on extinguishment of debt (18.0) - Fees paid
to issue and retire senior notes and certain hedging relationships
(9.0) - Issuances of common stock 17.9 20.2 Excess income tax
benefit from stock option exercises 1.4 3.9 Purchases of common
stock for treasury (0.5) (138.4) Cash dividends paid (216.1) (93.7)
------ ----- Cash Used in Financing Activities (954.4) (177.8)
------ ------ Increase in Cash and Cash Equivalents 38.6 18.1 Cash
and Cash Equivalents at Beginning of Period 68.7 21.8 ----- -----
Cash and Cash Equivalents at End of Period $107.3 $39.9 ======
===== The following information should be read in conjunction with
our audited consolidated financial statements and notes thereto
appearing in our Form 10-K as of and for the year ended December
31, 2008 and our current report on Form 8-K filed June 5, 2009. It
should also be read in conjunction with our unaudited consolidated
financial statements and notes thereto appearing in our Form 10-Q
as of and for the six months ended June 30, 2009. REVENUE The
following table reflects our total revenue by line of business for
the three and nine months ended September 30, 2009 and 2008: Three
Months Ended Nine Months Ended September 30, September 30,
------------------ ----------------- 2009 2008 2009 2008 ---- ----
---- ---- Collection: Residential $548.0 $216.2 $1,644.6 $633.4
Commercial 634.4 259.2 1,926.8 762.5 Industrial 396.2 161.3 1,173.4
476.3 Other 6.5 5.9 20.1 16.2 ---- ---- ---- ---- Total collection
1,585.1 642.6 4,764.9 1,888.4 Transfer and disposal 789.4 304.7
2,374.9 886.6 Less: Intercompany (392.7) (154.0) (1,191.3) (455.2)
------ ------ -------- ------ Transfer and disposal, net 396.7
150.7 1,183.6 431.4 Other 91.7 40.7 251.6 120.9 ----- ----- -----
----- Total revenue $2,073.5 $834.0 $6,200.1 $2,440.7 ========
====== ======== ======== The following table summarizes our
adjusted revenue for the three and nine months ended September 30,
2009 and 2008 which assumes our merger with Allied occurred on
January 1, 2008: Three Months Ended Nine Months Ended September 30,
September 30, ------------------ ----------------- 2009 2008 2009
2008 ---- ---- ---- ---- Republic Services, Inc. $2,073.5 $834.0
$6,200.1 $2,440.7 Allied Waste Industries, Inc. - 1,606.2 - 4,672.7
-------- ------- -------- ------- 2,073.5 2,440.2 6,200.1 7,113.4
Less: Divestitures (3.1) (56.7) (9.0) (104.4) Less: Intercompany
revenue - (7.2) - (22.1) ------- ---- ------- ----- Adjusted
revenue $2,070.4 $2,376.3 $6,191.1 $6,986.9 ======== ========
======== ======== Adjusted revenue is used to calculate internal
growth for the three and nine months ended September 30, 2009.
Intercompany revenue relates to prior year transactions between
Republic and Allied that would have been eliminated if the
companies had merged on January 1, 2008. The following table
reflects changes in our core adjusted revenue for the three and
nine months ended September 30, 2009 and 2008. For comparative
purposes, we have presented the components of our revenue changes
for the three and nine months ended September 30, 2008 assuming our
merger with Allied occurred on January 1, 2008. Our presentation
also eliminates revenue associated with divested assets in the
quarter the assets were sold and the comparable quarter in the
prior year. Three Months Nine Months Ended Ended September 30,
September 30, -------------- -------------- 2009 2008 2009 2008
---- ---- ---- ---- Core price 2.8% 4.2% 3.2% 4.3% Fuel surcharges
(3.6) 2.8 (2.6) 1.9 Commodities (1.9) 0.3 (2.4) 0.6 ---- --- ----
--- Total price (2.7) 7.3 (1.8) 6.8 Core volume (10.1) (3.1) (9.6)
(2.9) ----- --- ----- ---- Total internal growth (12.8)% 4.2%
(11.4)% 3.9% ===== === ===== === Certain prior year amounts have
been reclassified to conform to the current year's presentation. We
believe that the presentation of adjusted revenue and changes in
adjusted revenue above provides useful information to investors
because it allows investors to understand increases or decreases in
our revenue that are driven by changes in the operations of the
newly combined company, and not merely by the addition of Allied's
revenues for periods after the merger. This information has been
prepared for illustrative purposes and is not intended to be
indicative of the revenue that would have been realized had the
merger been consummated at the beginning of the periods presented
or the future results of the combined operations. MERGER WITH
ALLIED We completed our acquisition of Allied effective December 5,
2008. In accordance with the purchase method of accounting, the
purchase price paid has been allocated to assets and liabilities
acquired based upon their estimated fair values as of the effective
date of the merger, with the excess of the purchase price over the
net assets acquired being recorded as goodwill. We are in the
process of valuing all of the assets and liabilities acquired in
the merger, and, until we have completed our valuation process,
there may be adjustments to our estimates of fair values and the
resulting preliminary purchase price allocation. As a condition of
the merger with Allied in December 2008, the Department of Justice
(DOJ) required us to divest of certain assets and related
liabilities. As of September 30, 2009 we are complete with our
required divestitures. The following table summarizes our revenue,
costs and expenses for the three and nine months ended September
30, 2008 assuming the merger with Allied occurred on January 1,
2008: Three Months Ended Nine Months Ended September 30, 2008
September 30, 2008 ------------------ ------------------ Allied
Republic Total Allied Republic Total ------ -------- ----- ------
-------- ----- Revenue $1,606.2 $834.0 $2,440.2 $4,672.7 $2,440.7
$7,113.4 Cost of operations 973.0 499.5 1,472.5 2,868.8 1,553.5
4,422.3 ----- ----- ------- ------- ------- ------- Gross profit
633.2 334.5 967.7 1,803.9 887.2 2,691.1 Depreciation, amortization,
depletion, and accretion 148.5 81.9 230.4 454.6 240.4 695.0
Selling, general and administrative 154.2 85.6 239.8 442.2 252.0
694.2 Loss on disposition of assets and merger related costs 12.2 -
12.2 45.0 - 45.0 ---- ----- ---- ---- ----- ---- Operating income
$318.3 $167.0 $485.3 $862.1 $394.8 $1,256.9 ====== ====== ======
====== ====== ======== We believe that the presentation of revenue
and expenses above provides useful information to investors because
it allows investors to understand increases or decreases in our
revenue and expenses that are driven by changes in the operations
of the newly combined company, and not merely by the addition of
Allied's revenues and expenses for periods after the merger. This
information has been prepared for illustrative purposes and is not
intended to be indicative of the results of operations that would
have actually occurred had the acquisition been consummated at the
beginning of the periods presented or the future results of the
combined operations. RECONCILIATION OF CERTAIN NON-GAAP MEASURES
Operating Income before Depreciation, Amortization, Depletion and
Accretion Operating income before depreciation, amortization,
depletion and accretion (OIDADA), which is not a measure determined
in accordance with GAAP, for the three and nine months ended
September 30, 2009 and 2008 is calculated as follows: Three Months
Ended Nine Months Ended September 30, September 30, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net income
attributable to Republic Services, Inc. $120.5 $88.7 $459.4 $205.5
Noncontrolling interests 0.5 - 1.2 - Provision for income taxes
91.1 56.7 323.9 131.4 Other (income) expense, net (1.3) 1.6 (2.8)
0.7 Interest income (0.5) (2.6) (1.7) (7.9) Loss on extinguishment
of debt 31.8 - 31.8 - Interest expense 144.8 22.6 448.8 65.1
Depreciation, amortization and depletion 218.3 77.3 658.7 226.9
Accretion 22.2 4.6 67.4 13.5 ---- ---- ---- ---- OIDADA $627.4
$248.9 $1,986.7 $635.2 ====== ====== ======== ====== We believe
that the presentation of OIDADA is useful to investors because it
provides important information concerning our operating performance
exclusive of certain non-cash costs. OIDADA demonstrates our
ability to execute our financial strategy which includes
reinvesting in existing capital assets to ensure a high level of
customer service, investing in capital assets to facilitate growth
in our customer base and services provided, maintaining our
investment grade credit rating and minimizing debt, paying cash
dividends, and maintaining and improving our market position
through business optimization. This measure has limitations.
Although depreciation, amortization, depletion and accretion are
considered operating costs in accordance with GAAP, they represent
the allocation of non-cash costs generally associated with
long-lived assets acquired or constructed in prior years. Our
definition of OIDADA may not be comparable to similarly titled
measures presented by other companies. Adjusted Earnings Reported
diluted earnings per share were $0.32 and $0.48 for the three
months ended September 30, 2009 and 2008, respectively, and $1.21
and $1.11 for the nine months ended September 30, 2009 and 2008,
respectively. During the three and nine months ended September 30,
2009 and 2008, we recorded a number of gains, charges (recoveries)
and other expenses that impacted our OIDADA, pre-tax income, net
income attributable to Republic Services, Inc., ("Net Income -
Republic") and diluted earnings per share. These items primarily
consist of the following: Three Months Ended September 30, 2009
---------------------------------- Net Diluted Pre-tax Income -
Earnings OIDADA Income Republic per Share ------ ------ --------
--------- As reported $627.4 $212.1 $120.5 $0.32 Loss on
disposition of assets, net 0.9 0.9 1.4 - Restructuring charges 12.3
12.3 7.6 0.02 Loss on extinguishment of debt - 31.8 19.7 0.05 Costs
to achieve synergies 8.9 8.9 5.5 0.01 Remediation recoveries (8.8)
(8.8) (5.4) (0.01) Pre-merger integration costs - - - - ------
------ ------ ----- Adjusted $640.7 $257.2 $149.3 $0.39 ======
====== ====== ===== Three Months Ended September 30, 2008
---------------------------------- Net Diluted Pre-tax Income -
Earnings OIDADA Income Republic per Share ------ ------ --------
--------- As reported $248.9 $145.4 $88.7 $0.48 Loss on disposition
of assets, net - - - - Restructuring charges - - - - Loss on
extinguishment of debt - - - - Costs to achieve synergies - - - -
Remediation recoveries - - - - Pre-merger integration costs 3.2 3.2
2.0 0.01 ----- ----- ----- ----- Adjusted $252.1 $148.6 $90.7 $0.49
====== ====== ===== ===== Nine Months Ended September 30, 2009
------------------------------------ Net Diluted Pre-tax Income -
Earnings OIDADA Income Republic per Share ------ ------ --------
--------- As reported $1,986.7 $784.5 $459.4 $1.21 Gain on
disposition of assets, net (144.3) (144.3) (88.7) (0.23)
Restructuring charges 55.9 55.9 34.1 0.09 Loss on extinguishment of
debt - 31.8 19.7 0.05 Costs to achieve synergies 31.8 31.8 19.5
0.05 Remediation charges (recoveries) (8.8) (8.8) (5.4) (0.01)
Pre-merger integration costs - - - - ----- ----- ----- -----
Adjusted $1,921.3 $750.9 $438.6 $1.16 ======== ====== ====== =====
Nine Months Ended September 30, 2008
---------------------------------- Net Diluted Pre-tax Income -
Earnings OIDADA Income Republic per Share ------ ------ --------
--------- As reported $635.2 $336.9 $205.5 $1.11 Gain on
disposition of assets, net - - - - Restructuring charges - - - -
Loss on extinguishment of debt - - - - Costs to achieve synergies -
- - - Remediation charges (recoveries) 68.0 69.0 43.8 0.24
Pre-merger integration costs 3.2 3.2 2.0 0.01 ----- ----- -----
----- Adjusted $706.4 $409.1 $251.3 $1.36 ====== ====== ======
===== We believe that the presentation of adjusted OIDADA, adjusted
pre-tax income, adjusted net income attributable to Republic
Services, Inc., and adjusted diluted earnings per share, which
excludes gain and loss on disposition of assets, restructuring
charges, loss on extinguishment of debt, costs to achieve
synergies, remediation charges (recoveries) and pre-merger
integration costs which are not measures determined in accordance
with GAAP, provide an understanding of operational activities
before the financial impact of certain non-operational items. We
use these measures, and believe investors will find them helpful in
understanding the ongoing performance of our operations separate
from items that have a disproportionate impact on our results for a
particular period. Comparable charges and costs have been incurred
in prior periods, and similar types of adjustments can reasonably
be expected to be recorded in future periods. Our definition of
adjusted OIDADA, adjusted pre-tax income, adjusted net income
attributable to Republic Services, Inc., and adjusted diluted
earnings per share may not be comparable to similarly titled
measures presented by other companies. Cash Flow We define free
cash flow, which is not a measure determined in accordance with
GAAP, as cash provided by operating activities less purchases of
property and equipment plus proceeds from sales of property and
equipment as presented in our unaudited consolidated statements of
cash flows. Our free cash flow for the three and nine months ended
September 30, 2009 and 2008 is calculated as follows: Three Months
Nine Months Ended Ended September 30, September 30, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Cash provided
by operating activities $324.8 $162.7 $1,012.4 $474.2 Purchases of
property and equipment (187.4) (98.7) (542.5) (264.1) Proceeds from
sales of property and equipment 6.1 2.5 22.8 5.8 ---- ---- ----
---- Free cash flow $143.5 $66.5 $492.7 $215.9 ====== ===== ======
====== Purchases of property and equipment as reflected on our
unaudited consolidated statements of cash flows and the free cash
flow presented above represent amounts paid during the period for
such expenditures. A reconciliation of property and equipment
reflected on our unaudited consolidated statements of cash flows to
property and equipment received during the period is as follows:
Three Months Nine Months Ended Ended September 30, September 30,
------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ----
Purchases of property and equipment per the unaudited consolidated
statements of cash flows $187.4 $98.7 $542.5 $264.1 Adjustments for
property and equipment received during the prior period but paid
for in the following period, net (7.3) 1.5 (41.5) (26.4) ---- ----
----- ----- Property and equipment received during the current
period $180.1 $100.2 $501.0 $237.7 ====== ====== ====== ====== The
adjustments noted above do not affect either our net change in cash
and cash equivalents as reflected in our unaudited consolidated
statements of cash flows or our free cash flow. We believe that the
presentation of free cash flow provides useful information
regarding our recurring cash provided by operating activities after
expenditures for property and equipment, net of proceeds from sales
of property and equipment. It also demonstrates our ability to
execute our financial strategy as previously discussed and is a key
metric we use to determine compensation. The presentation of free
cash flow has material limitations. Free cash flow does not
represent our cash flow available for discretionary expenditures
because it excludes certain expenditures that are required or that
we have committed such as, debt service requirements and dividend
payments. Our definition of free cash flow may not be comparable to
similarly titled measures presented by other companies. As of
September 30, 2009, accounts receivable was $928.2 million, net of
allowance for doubtful accounts of $54.2 million, resulting in days
sales outstanding of approximately 41 (or 26 net of deferred
revenue). CASH DIVIDENDS In July 2009, we paid a cash dividend of
$72.1 million to stockholders of record as of July 1, 2009. As of
September 30, 2009, we recorded a dividend payable of $72.2 million
to stockholders of record at the close of business on October 1,
2009, which has been paid. In October 2009, our Board of Directors
declared a regular quarterly dividend of $0.19 per share payable to
stockholders of record as of January 4, 2010, which will be paid on
January 18, 2010. UPDATED FINANCIAL GUIDANCE Adjusted Diluted
Earnings per Share The following is a summary of anticipated
adjusted diluted earnings per share for the twelve months ended
December 31, 2009 excluding gain on disposition of assets, loss on
extinguishment of debt and insurance recoveries: (Anticipated)
Twelve Months Ended December 31, 2009 ---- Diluted earnings per
share (excluding items previously described) $ 1.28 - 1.30
Restructuring charges and cost to achieve synergies 0.18
------------ Adjusted diluted earnings per share $ 1.46 - 1.48
============ We believe that the presentation of adjusted diluted
earnings per share, which excludes gain on disposition of assets,
loss on extinguishment of debt, charges related to the integration
of our businesses and insurance recoveries provides an
understanding of operational activities before the financial impact
of certain gains on disposition of assets, merger related costs and
insurance recoveries. We use this measure, and believe investors
will find it helpful, in understanding the ongoing performance of
our operations when the integration process is complete. Comparable
charges and costs have been incurred in prior periods, and similar
types of adjustments can reasonably be expected to be recorded in
future periods. Our definition of adjusted diluted earnings per
share may not be comparable to similarly titled measures presented
by other companies. Adjusted Free Cash Flow We define adjusted free
cash flow, which is not a measure determined in accordance with
GAAP, as cash provided by operating activities, less purchases of
property and equipment net of proceeds from sales of property and
equipment, plus merger related costs. Our actual adjusted free cash
flow for the nine months ended September 30, 2009 and our
anticipated adjusted free cash flow for the twelve months ended
December 31, 2009 are calculated as follows: (Actual) (Anticipated)
Nine Months Twelve Months Ended Ended September 30, December 31,
2009 2009 ---- ---- Cash provided by operating activities $1,012.4
$1,334 - 1,359 Purchases of property and equipment, net of proceeds
from sales (519.7) (835) Merger related expenditures, net of tax
62.5 86 Divestiture related tax payments 74.3 115 ------ -----
Adjusted free cash flow $629.5 $ 700 - 725 ====== ============= We
believe that the presentation of adjusted free cash flow provides
useful information regarding our recurring cash provided by
operating activities after expenditures for property and equipment,
net of proceeds from sales of property and equipment, plus merger
related costs and divestiture related tax payments. It also
demonstrates our ability to execute our financial strategy. The
presentation of adjusted free cash flow has material limitations.
Adjusted free cash flow does not represent our cash flow available
for discretionary expenditures because it excludes certain
expenditures that are required or that we have committed such as,
debt service requirements and dividend payments. Our definition of
adjusted free cash flow may not be comparable to similarly titled
measures presented by other companies. INFORMATION REGARDING
FORWARD-LOOKING STATEMENTS Certain statements and information
included herein constitute forward-looking information about us
that is intended to be covered by the safe harbor for
"forward-looking statements" provided by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
statements that are not historical facts. Words such as "guidance,"
"expect," "will," "may," "anticipate," "could" and similar
expressions are intended to identify forward-looking statements.
These statements include statements about the expected benefits of
the merger, our plans, strategies and prospects. Forward-looking
statements are not guarantees of performance. These statements are
based upon the current beliefs and expectations of our management
and are subject to risk and uncertainties that could cause actual
results to differ materially from those expressed in, or implied or
projected by, the forward-looking information and 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. Among the factors
that could cause actual results to differ materially from the
expectations expressed in the forward-looking statements are: --
our ability to successfully integrate Allied's and Republic's
operations and to achieve synergies or create long-term value for
stockholders as expected, including the possibility that we will
experience significant and unexpected transaction- and
integration-related costs; -- the impact on us of our substantial
post-merger indebtedness, including on our ability to obtain
financing on acceptable terms to finance our operations and growth
strategy and to operate within the limitations imposed by financing
arrangements and the fact that any downgrade in our bond ratings
could adversely impact us; -- general economic and market
conditions including, but not limited to, the current global
economic and financial market crisis, inflation and changes in
commodity pricing, fuel, labor, risk and health insurance and other
variable costs that are generally not within our control, and our
exposure to credit and counterparty risk; -- whether our estimates
and assumptions concerning our selected balance sheet accounts,
income tax accounts, final capping, closure, post-closure and
remediation costs, available airspace, and projected costs and
expenses related to our landfills and property and equipment
(including our estimates of the fair values of the assets and
liabilities acquired in our acquisition of Allied), and labor, fuel
rates and economic and inflationary trends, turn out to be correct
or appropriate; -- competition and demand for services in the solid
waste industry; -- the fact that price increases or changes in
commodity prices may not be adequate to offset the impact of
increased costs, including but not limited to labor, third-party
disposal and fuel, and may cause us to lose volume; -- our ability
to manage growth and execute our growth strategy; -- our compliance
with, and future changes in, environmental and flow control
regulations and our ability to obtain approvals from regulatory
agencies in connection with operating and expanding our landfills;
-- our ability to retain our investment grade ratings for our debt;
-- our dependence on key personnel; -- our dependence on large,
long-term collection, transfer and disposal contracts; -- the fact
that our business is capital intensive and may consume cash in
excess of cash flow from operations; -- that any exposure to
environmental liabilities, to the extent not adequately covered by
insurance, could result in substantial expenses; -- risks
associated with undisclosed liabilities of acquired businesses; --
risks associated with pending and any future legal proceedings,
including our matters currently pending with the Department of
Justice and Internal Revenue Service; -- severe weather conditions,
which could impair our financial results by causing increased
costs, loss of revenue, reduced operational efficiency or
disruptions to our operations; -- 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; -- any litigation, audits or
investigations brought by or before any governmental body; --
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; -- 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; -- changes by the Financial Accounting
Standards Board or other accounting regulatory bodies to generally
accepted accounting principles or policies; -- acts of war, riots
or terrorism, including the events taking place in the Middle East
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;
and -- the timing and occurrence (or non-occurrence) of
transactions and events which may be subject to circumstances
beyond our control. The risks included here are not exhaustive.
Refer to "Part I, Item 1A -- Risk Factors" in our Annual Report on
Form 10-K for the year ended December 31, 2008, for further
discussion regarding our exposure to risks. Additionally, new risk
factors emerge from time to time and it is not possible for us to
predict all such risk factors, nor to assess the impact such risk
factors might have on our business or the extent to which any
factor or combination of factors may cause actual results to differ
materially from those contained in any forward-looking statements.
Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof.
Except to the extent required by applicable law or regulation, we
undertake no obligation to update or publish revised
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated
events. DATASOURCE: Republic Services, Inc. CONTACT: Media, Will
Flower, +1-480-718-6565, or Investors, Ed Lang, +1-480-627-7128,
both of Republic Services, Inc. Web Site:
http://www.republicservices.com/
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