Date: October 29, 2008
Source: Allied Waste Industries, Inc.
Allied Waste Industries, Inc. (NYSE: AW), the nation's second
largest waste services company, today reported financial results for its
third quarter and nine-months ended
Total revenue for the third quarter was a record
"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
Third quarter operating income before depreciation and amortization,
loss from divestitures and asset impairments, or EBITDA, inclusive of
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
For the nine-month period ended
Merger Update
The merger of Allied Waste and Republic Services continues
on track with an anticipated completion in
The merger, which is expected to generate at least
"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
Allied Waste has filed supplemental data on Form 8-K that is accessible on the Company's website or through the SEC EDGAR System.
Allied Waste will host a conference call related to the
third quarter results on
Information regarding *use of non-GAAP financial measures may be found in the accompanying schedules.
About Allied Waste Industries, Inc.
Allied Waste is America's second largest non-hazardous solid
waste services company and an environmental leader. Headquartered in
Websites: alliedwaste.com and disposal.com.
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in millions, except per share data and percentages)
(unaudited)
For the Three For the Three
Months Ended Months Ended
September 30, % of September 30, % of
2008 Revenues 2007 Revenues
Revenue $1,606.2 100.0% $1,556.3 100.0%
Cost of operations 986.0 61.4% 966.7 62.0%
Selling, general and
administrative expenses 155.6 9.7% 156.5 10.1%
Merger related costs (A) 12.5 0.8% -- --%
Depreciation and
amortization 134.1 8.3% 142.7 9.2%
(Gain) loss from
divestitures and asset
impairments (B) (0.3) (0.0)% 39.0 2.5%
Operating income 318.3 19.8% 251.4 16.2%
Interest expense and
other (C) 108.8 6.8% 130.3 8.4%
Income before income
taxes 209.5 13.0% 121.1 7.8%
Income tax expense 96.9 6.0% 53.8 3.5%
Minority interests 0.1 0.0% 0.4 0.0%
Income from continuing
operations 112.5 7.0% 66.9 4.3%
Discontinued operations,
net of tax (D) -- --% (39.7) (2.6)%
Net income 112.5 7.0% 27.2 1.7%
Dividends on Series D
Preferred Stock -- --% (9.4) (0.6)%
Net income available to
common shareholders $112.5 7.0% $17.8 1.1%
Weighted average common and
common equivalent shares 446.4 382.4
Diluted income per share
from continuing operations $0.26 $0.15
Diluted income per share $0.26 $0.05
(A) 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.
(B) 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.
(C) 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.
(D) 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.
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in millions, except per share data and percentages)
(unaudited)
For the Nine For the Nine
Months Ended Months Ended
September 30, % of September 30, % of
2008 Revenues 2007 Revenues
Revenue $4,672.7 100.0% $4,548.4 100.0%
Cost of operations (A) 2,906.3 62.2% 2,853.5 62.7%
Selling, general and
administrative
expenses (B) 447.7 9.6% 480.7 10.6%
Merger related costs (C) 21.5 0.4% -- --%
Depreciation and
amortization (A) 411.6 8.8% 412.6 9.1%
Loss from divestitures
and asset impairments (D) 23.5 0.5% 40.5 0.9%
Operating income 862.1 18.5% 761.1 16.7%
Interest expense and
other (E) 324.9 7.0% 424.4 9.3%
Income before income
taxes 537.2 11.5% 336.7 7.4%
Income tax expense 239.7 5.2% 144.1 3.2%
Minority interests 1.0 0.0% 0.4 0.0%
Income from continuing
operations 296.5 6.3% 192.2 4.2%
Discontinued operations,
net of tax (F) -- --% (33.9) (0.7)%
Net income 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) 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.
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%
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%
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%
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
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, September 30,
2008 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
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, September 30,
2008 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
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 For the Nine Months
Ended 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
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 Nine Months Ended
September 30, 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 Nine Months Ended
September 30, 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 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.
ALLIED WASTE INDUSTRIES, INC.
SUMMARY DATA SHEET
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
(amounts in millions, except per share data)
(unaudited)
Following is a summary of adjusted diluted income per share from continuing operations (per share amounts):
Three Months Ended Nine Months Ended
September 30, 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 Company's 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 Company's 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 Nine Months Ended
September 30, 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
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 http://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,
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
Republic's directors and executive officers is available in its Annual
Report on Form 10-K for the year ended
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
Other factors which could materially affect our forward-looking
statements can be found in the Company's 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
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