<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JANUARY 26, 2000
Commission file number: 1-14267
REPUBLIC SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 65-0716904
(State of Incorporation) (I.R.S. Employer Identification No.)
REPUBLIC SERVICES, INC.
110 S.E. 6TH STREET, 28TH FLOOR
FORT LAUDERDALE, FLORIDA 33301
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 769-2400
Page 1 of 13 pages.
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ITEM 5. OTHER EVENTS
On January 26, 2000, Republic Services, Inc. issued a press release to announce
operating results for the three and twelve months ended December 31, 1999, a
copy of which is included herein by reference and attached hereto as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) Exhibits
EXHIBIT NO. DESCRIPTION
----------- -----------
99 Press Release of the Company dated January 26, 2000.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
January 26, 2000 REPUBLIC SERVICES, INC.
By: /s/ Tod C. Holmes
-----------------------------
Tod C. Holmes
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Charles F. Serianni
-----------------------------
Charles F. Serianni
Chief Accounting Officer
(Principal Accounting Officer)
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EXHIBIT 99
REPUBLIC CONTACTS
Media Inquiries: Will Flower (954) 769-6392
Investor Inquiries: Tod Holmes (954) 769-2387
Ed Lang (954) 769-3591
REPUBLIC SERVICES, INC. REPORTS AN 11% INCREASE IN
COMPARABLE EARNINGS PER SHARE THE COMPANY EXPANDS FINANCIAL DISCLOSURES
FORT LAUDERDALE, FLA., JANUARY 26, 2000...Republic Services, Inc.
(NYSE: RSG) today reported that for the three months ended December 31, 1999,
pro forma net income was $52.5 million, or $0.30 per share. This represents an
11% increase from $47.6 million, or $0.27 per share, for the comparable period
last year. Revenue increased 30% to $488.8 million from $377.4 million for the
same period in 1998. Pro forma operating income for the three months ended
December 31, 1999, increased 33% to $105.6 million compared to $79.4 million for
the same quarter last year. Operating margins expanded to 21.6% compared to
21.0% in the comparable quarter in 1998.
For the year ended December 31, 1999, pro forma net income increased by
16% to $206.8 million, or $1.18 per share, from $177.6 million, or $1.01 per
share, for the comparable period last year. Revenue increased 34% to $1,838.5
million from $1,369.1 million for the same period last year. Pro forma operating
income for the year ended December 31, 1999, increased 40% to $397.5 million
compared to $284.3 million last year. Year-to-date operating margins rose to
21.6% compared to 20.8% last year.
Pro forma operating results for the three and twelve months ended
December 31, 1999 exclude pre-tax charges of $.5 million and $6.9 million,
respectively, for costs related to the Company's separation from its former
parent company, AutoNation, Inc. (NYSE: AN). Pro forma operating results also
exclude a $2.9 million loss on the sale of the Company's only international
operation, a collection and disposal business in Costa Rica, in November 1999.
- more -
4
<PAGE> 2
PAGE II
Commenting on the Company's performance James E. O'Connor, Chief
Executive Officer of Republic Services, said, "We are pleased with our strong
performance during the fourth quarter of 1999. The operating platform which was
formed in late 1998 and throughout 1999 - including the addition of 12
landfills, 17 transfer stations and 18 new markets - permitted us to internalize
48% of the waste we collected into our own disposal facilities. In addition, our
focus on the fundamentals of the business helped us achieve our internal growth
rate objective which was 7 to 8% during 1999. We believe that our continued
focus on the fundamental elements of the waste business in our existing markets
will serve us well in fiscal 2000 and beyond."
Mr. O'Connor also announced that, "Beginning with this quarter, we are
providing additional information regarding the Company's operating results. We
believe that this information will help investors better understand the
Company's financial condition."
Republic Services, Inc. is a leading provider of solid waste
collection, transfer and disposal services in the United States. The Company's
various operating units are focused on providing solid waste collection services
for commercial, industrial, municipal and residential customers.
# # #
CERTAIN STATEMENTS AND INFORMATION INCLUDED HEREIN CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE FEDERAL PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE, OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED, IN OR BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHER THINGS, WHETHER
THE COMPANY'S ESTIMATES AND ASSUMPTIONS CONCERNING ITS SELECTED BALANCE SHEET
ACCOUNTS, CLOSURE AND POST-CLOSURE COSTS, AVAILABLE AIRSPACE, AND PROJECTED
COSTS AND EXPENSES RELATED TO THE COMPANY'S LANDFILLS AND PROPERTY, PLANT AND
EQUIPMENT, TURN OUT TO BE CORRECT OR APPROPRIATE, AND VARIOUS FACTORS THAT WILL
IMPACT THE ACTUAL BUSINESS AND FINANCIAL PERFORMANCE OF THE COMPANY SUCH AS
COMPETITION IN THE SOLID WASTE INDUSTRY; DEPENDENCE ON ACQUISITIONS FOR GROWTH;
THE COMPANY'S ABILITY TO MANAGE GROWTH; COMPLIANCE WITH AND FUTURE CHANGES IN
ENVIRONMENTAL REGULATIONS; THE COMPANY'S ABILITY TO OBTAIN APPROVAL FROM
REGULATORY AGENCIES IN CONNECTION WITH EXPANSIONS AT THE COMPANY'S LANDFILLS;
THE ABILITY TO OBTAIN FINANCING ON ACCEPTABLE TERMS TO FINANCE THE COMPANY'S
OPERATIONS AND GROWTH STRATEGY AND FOR THE COMPANY TO OPERATE WITHIN THE
LIMITATIONS IMPOSED BY FINANCING ARRANGEMENTS; THE COMPANY'S DEPENDENCE ON KEY
PERSONNEL; GENERAL ECONOMIC CONDITIONS; DEPENDENCE ON LARGE, LONG-TERM
COLLECTION CONTRACTS; RISK ASSOCIATED WITH UNDISCLOSED LIABILITIES OF ACQUIRED
BUSINESSES; THE RISKS AND COSTS ASSOCIATED WITH THE DATE CHANGE IN THE YEAR
2000; RISKS ASSOCIATED WITH PENDING LEGAL PROCEEDINGS; AND OTHER FACTORS
CONTAINED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
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REPUBLIC SERVICES, INC.
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue $ 488.8 $ 377.4 $ 1,838.5 $ 1,369.1
Expenses:
Cost of operations 290.4 231.0 1,101.1 842.7
Depreciation, amortization and depletion 45.4 29.8 163.2 106.3
Selling, general and administrative 47.4 33.5 171.4 120.8
AutoNation overhead charges -- 3.7 5.3 15.0
--------- --------- --------- ---------
Operating income 105.6 79.4 397.5 284.3
Interest expense, net (19.5) (3.8) (60.7) (5.9)
Other income (expense), net (0.7) (1.2) (0.5) (0.9)
--------- --------- --------- ---------
Income before income taxes 85.4 74.4 336.3 277.5
Provision for income taxes 32.9 26.8 129.5 99.9
--------- --------- --------- ---------
Net income $ 52.5 $ 47.6 $ 206.8 $ 177.6
========= ========= ========= =========
Basic and diluted earnings per share $ 0.30 $ 0.27 $ 1.18 $ 1.01
========= ========= ========= =========
Weighted average common and
common equivalent shares outstanding 175.5 175.4 175.7 175.4
========= ========= ========= =========
Amortization of goodwill and other intangibles $ 9.0 $ 5.6 $ 32.9 $ 17.9
EBITDA $ 151.0 $ 109.2 $ 560.7 $ 390.6
</TABLE>
Note: These Pro Forma Consolidated Statements of Operations have been
prepared assuming the Company's initial public offering and the
repayment in full of amounts due to AutoNation, Inc. had occurred as of
January 1, 1998. Pro Forma Consolidated Statements of Operations for
the three and twelve months ended December 31, 1999 exclude pre-tax
charges of $.5 million and $6.9 million, respectively, for costs
related to the Company's separation from its former parent company,
AutoNation, Inc. They also exclude a $2.9 million loss on the sale of
the Company's operation in Costa Rica.
6
<PAGE> 4
REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue $ 488.8 $ 377.4 $ 1,838.5 $ 1,369.1
Expenses:
Cost of operations 290.4 231.0 1,101.1 842.7
Depreciation, amortization and depletion 45.4 29.8 163.2 106.3
Selling, general and administrative 47.4 33.5 171.4 120.8
AutoNation overhead charges -- 3.7 5.3 15.0
Other charges 0.5 -- 6.9 --
--------- --------- --------- ---------
Operating income 105.1 79.4 390.6 284.3
Interest expense, net (19.5) (3.8) (60.7) (43.2)
Other income (expense), net (3.6) (1.2) (3.4) (0.9)
--------- --------- --------- ---------
Income before income taxes 82.0 74.4 326.5 240.2
Provision for income taxes 31.6 26.8 125.7 86.5
--------- --------- --------- ---------
Net income $ 50.4 $ 47.6 $ 200.8 $ 153.7
========= ========= ========= =========
Basic and diluted earnings per share $ 0.29 $ 0.27 $ 1.14 $ 1.13
========= ========= ========= =========
Weighted average common and
common equivalent shares outstanding 175.5 175.4 175.7 135.6
========= ========= ========= =========
</TABLE>
Note: Prior to the Company's initial public offering in July 1998, all of the
Company's common stock was owned by AutoNation, Inc.
7
<PAGE> 5
REPUBLIC SERVICES, INC.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
The following information should be read in conjunction with the
Company's audited Consolidated Financial Statements and notes thereto appearing
in the Company's Form 10-K as of and for the year ended December 31, 1998. It
should also be read in conjunction with the Company's Unaudited Condensed
Consolidated Financial Statements and notes thereto appearing in the Company's
Form 10-Q as of and for the nine months ended September 30, 1999.
CASH FLOW
The following table reflects certain components of the Company's
consolidated statements of cash flows for the three and twelve months ended
December 31, 1999 (in millions):
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------ -------------------
<S> <C> <C>
Depreciation, amortization and depletion of
property and equipment $ 36.4 $ 130.3
Amortization of intangible assets $ 9.0 $ 32.9
Capital expenditures $ (76.4) $ (294.5)
</TABLE>
During December 1999, the Company entered into a $100.0 million
operating lease facility established to finance the acquisition of operating
equipment (primarily revenue-producing vehicles). At December 31, 1999, $36.1
million was outstanding under the lease facility. The $36.1 million acquisition
of vehicles is included in the capital expenditure amounts reflected in the
table above.
Capital expenditures include $1.1 million and $5.6 million of
capitalized interest for the three and twelve months ended December 31, 1999,
respectively.
As of December 31, 1999, accounts receivable were $250.9 million, net
of allowance for doubtful accounts of $14.2 million, resulting in days sales
outstanding of 45 days (34 days net of deferred revenue).
REVENUE
The following table reflects total revenue of the Company by revenue
source for the three and twelve months ended December 31, 1999 (in millions):
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
--------------------------- ----------------------------
<S> <C> <C> <C> <C>
Collection:
Residential $ 103.7 21.2% $ 391.2 21.3%
Commercial 148.5 30.4% 548.5 29.8%
Industrial 117.0 23.9% 432.8 23.5%
Other 12.6 2.6% 46.7 2.6%
-------- ----- -------- -----
Total collection 381.8 78.1% 1,419.2 77.2%
Transfer and disposal 119.0 425.1
Less: Intercompany (47.4) (159.1)
-------- --------
Transfer and disposal, net 71.6 14.7% 266.0 14.5%
Other 35.4 7.2% 153.3 8.3%
-------- ----- -------- -----
Total revenue $ 488.8 100.0% $1,838.5 100.0%
======== ===== ======== =====
</TABLE>
8
<PAGE> 6
The following table reflects the Company's revenue growth for the three
and twelve months ended December 31, 1999:
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------ -------------------
<S> <C> <C>
Price 2.5% 2.3%
Volume 5.3% 5.8%
---- ----
Total internal growth 7.8% 8.1%
---- ----
Acquisitions 21.7% 26.2%
---- ----
Total revenue growth 29.5% 34.3%
==== ====
</TABLE>
SELECTED BALANCE SHEET ACCOUNTS
The following table reflects the activity in the Company's allowance
for doubtful accounts, accrued closure and post-closure, accrued self-insurance
and amounts due to former owners during the twelve months ended December 31,
1999 (in millions):
<TABLE>
<CAPTION>
Allowance for Closure and Amounts Due to
Doubtful Accounts Post-Closure Self-Insurance Former Owners
----------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998 $ 22.1 $ 73.4 $ 28.0 $ 26.7
Additions charged to expense 9.6 17.9 54.8 --
Additions due to acquisitions, net 2.3 69.6 2.0 42.2
Usage (19.8) (8.6) (46.4) (21.9)
------ ------ ------ ------
Balance, December 31, 1999 14.2 152.3 38.4 47.0
Current portion 14.2 23.7 21.7 47.0
------ ------ ------ ------
Long-term portion $ -- $128.6 $ 16.7 $ --
====== ====== ====== ======
</TABLE>
Additions to accrued liabilities related to acquisitions are
periodically reviewed during the year subsequent to the acquisition. During such
reviews, accrued liabilities which are considered to be in excess of amounts
required for a specific acquisition are reversed and charged against goodwill
(cost in excess of net assets acquired).
CLOSURE AND POST-CLOSURE COSTS
Landfill site closure and post-closure costs include estimated costs to
be incurred for final closure of landfills and estimated costs for providing
required post-closure monitoring and maintenance of landfills. These costs are
accrued and charged to cost of operations based upon consumed airspace in
relation to total available disposal capacity using the units-of-consumption
method of amortization. The Company estimates future cost requirements for
closure and post-closure monitoring and maintenance for its solid waste
facilities based on the technical standards of the Environmental Protection
Agency's Subtitle D regulations and applicable state and local regulations.
These estimates do not take into account discounts for the present value of
total estimated costs.
During the twelve months ended December 31, 1999, the Company consumed
approximately 27.1 million cubic yards of airspace. During this same period,
charges to expense for closure and post-closure were $17.9 million, or $.66 per
cubic yard. As of December 31, 1999, accrued closure and post-closure costs were
$152.3 million and, assuming that all available landfill capacity is used, the
Company expects to expense approximately $528.4 million of additional closure
and post-closure costs over the remaining lives of these facilities.
The Company's estimates for closure and post-closure do not take into
account discounts for the present value of total estimated costs. If total
estimated costs were discounted to present value, they would be lower. Thus, if
the Company discounted such costs, assuming closure and post-closure payments
were made ratably over the life of the landfill and the post-closure period,
respectively, and assuming the costs in current dollars are inflated by 2% until
the expected time of payment and then discounted to present value at 6%, closure
and post-closure expense would be reduced to $9.9 million, or $.37 per cubic
yard, for the twelve months ended December 31, 1999, a reduction of $8.0
million, or $.29 per cubic yard, from recorded
9
<PAGE> 7
expense. In addition, if the Company discounted such costs, the present value of
the expected future expense related to closure and post-closure assuming all
available landfill capacity is used would decrease to $222.8 million.
LIFE CYCLE ACCOUNTING
The Company uses life cycle accounting and the units-of-consumption
method to recognize certain landfill costs. In life cycle accounting, all costs
to acquire, construct, close and maintain a site during the post-closure period
are capitalized or accrued and charged to expense based upon the consumption of
cubic yards of available airspace. Costs and airspace estimates are developed
annually by independent engineers together with the Company's engineers. These
estimates are used by the Company's operating and accounting personnel to
annually adjust the Company's rates used to expense capitalized costs and accrue
closure and post-closure costs. Changes in these estimates primarily relate to
modifications of available airspace, inflation and changes in regulations.
Modifications of available airspace include the addition of airspace which lies
in an expansion area that is determined as likely to be permitted.
LIKELY TO BE PERMITTED EXPANSION AIRSPACE
Before airspace included in an expansion area is determined as likely
to be permitted and, therefore, included in the Company's calculation of total
available disposal capacity, the following criteria must be met:
1. The land associated with the expansion airspace is either
owned by the Company or is controlled by the Company pursuant
to an option agreement;
2. The Company is committed to supporting the expansion project
financially and with appropriate resources;
3. There are no identified fatal flaws or impediments associated
with the project, including political impediments;
4. Progress is being made on the project;
5. The expansion is attainable within a reasonable time frame;
and
6. The Company believes it is likely the expansion permit will be
received.
Upon meeting the Company's expansion criteria, the rates used at each
applicable landfill to expense costs to acquire, construct, close and maintain a
site during the post-closure period are adjusted to include likely to be
permitted airspace and all additional costs to be capitalized or accrued
associated with the expansion airspace.
The Company has identified three sequential steps that a landfill,
which includes likely to be permitted expansion airspace in its total available
disposal capacity, generally follows to obtain an expansion permit. These steps
are as follows:
1. Obtaining approval from local authorities;
2. Submitting a permit application with state authorities; and
3. Obtaining permit approval from state authorities.
Once a landfill meets the Company's expansion criteria, management
continuously monitors each site's progress in obtaining the expansion permit. If
at any point it is determined that an expansion area no longer meets the
required criteria, the likely to be permitted airspace is removed from the
landfill's total available capacity and the rates used at the landfill to
expense costs to acquire, construct, close and maintain a site during the
post-closure period are adjusted accordingly. The Company has never been denied
an expansion permit for a landfill that included likely to be permitted airspace
in its total available disposal capacity, although no assurances can be made
that all future expansions will be permitted as designed.
10
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AVAILABLE AIRSPACE
The following table reflects landfill airspace activity for landfills
owned or operated by the Company for the twelve months ended December 31, 1999:
<TABLE>
<CAPTION>
Balance as of New Landfills Changes in Balance as of
December 31, Expansions Acquired, Net Permits Airspace Engineering December 31,
1998 Undertaken of Divestitures Granted Consumed Estimates 1999
----------- ---------- -------------- -------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Permitted airspace:
Cubic yards (in millions) 1,145.5 -- 148.0 34.6 (27.1) 3.1 1,304.1
Number of sites 48 7 55
Expansion airspace:
Cubic yards (in millions) 84.6 184.6 135.1 (34.6) -- -- 369.7
Number of sites 7 11 4 (2) 20
------- ----- ------- ------- ------- ------- -------
Total available airspace:
Cubic yards (in millions) 1,230.1 184.6 283.1 -- (27.1) 3.1 1,673.8
======= ===== ======= ======= ======= ======= =======
Number of sites 48 7 55
======= ===== ======= ======= ======= ======= =======
</TABLE>
As of December 31, 1999, the Company owned or operated 55 solid waste
landfills with total available disposal capacity estimated to be 1.7 billion
in-place cubic yards. Total available disposal capacity represents the sum of
estimated permitted airspace plus an estimate of airspace which is likely to be
permitted. These estimates are developed annually by independent engineers
together with the Company's engineers utilizing information provided by annual
aerial surveys. As of December 31, 1999, total available disposal capacity is
estimated to be 1.3 billion in-place cubic yards of permitted airspace plus .4
billion in-place cubic yards of expansion airspace which has been determined by
the Company as likely to be permitted. Before airspace included in an expansion
area is determined as likely to be permitted and, therefore, included in the
Company's calculation of total available disposal capacity, it must meet the
Company's expansion criteria.
As of December 31, 1999, 20 of the Company's landfills meet the
criteria for including expansion airspace in their total available disposal
capacity. At projected annual volumes, these 20 landfills have an estimated
remaining average site life of 37 years, including the expansion airspace. The
total estimated remaining life of all of the Company's landfills is 38 years.
As of December 31, 1999, three of the Company's landfills that meet the
criteria for including expansion airspace had obtained approval from local
authorities and are proceeding into the state permitting process. Also, as of
December 31, 1999, eight of the Company's 20 landfills that meet the criteria
for including expansion airspace had submitted permit applications to state
authorities. The remaining nine landfills that meet the criteria for including
expansion airspace are in the process of obtaining approval from local
authorities and have not identified any fatal flaws or impediments associated
with the expansions at either the local or state level.
INVESTMENT IN LANDFILLS
The following table reflects changes in the Company's investments in
landfills for the twelve months ended December 31, 1999 and the future expected
investment as of December 31, 1999 (in millions):
<TABLE>
<CAPTION>
Landfills
Balance as of Acquired, Transfers
December 31, Capital Net of And
1998 Additions Divestitures Adjustments
------------- --------- ------------ -----------
<S> <C> <C> <C> <C>
Non-depletable landfill land $ 55.3 $ 1.9 $ 8.7 $ (19.5)
Landfill development costs 452.3 25.8 306.5 43.0
Construction in progress
-landfill -- 32.9 -- 11.4
Accumulated depletion and
amortization (90.3) -- .5 (1.0)
-------- -------- -------- --------
Net investment in landfill
land and development costs $ 417.3 $ 60.6 $ 315.7 $ 33.9
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Additions Balance as of Expected Total
Charged to December 31, Future Expected
Expense 1999 Investment Investment
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Non-depletable landfill land $ -- $ 46.4 $ -- $ 46.4
Landfill development costs -- 827.6 1,041.2 1,868.8
Construction in progress
-landfill -- 44.3 -- 44.3
Accumulated depletion and
amortization (44.3) (135.1) -- (135.1)
-------- -------- -------- --------
Net investment in landfill
land and development costs $ (44.3) $ 783.2 $1,041.2 $1,824.4
======== ======== ======== ========
</TABLE>
11
<PAGE> 9
As of December 31, 1998, the Company owned or operated 48 solid waste
landfills with total available disposal capacity estimated to be 1.2 billion
in-place cubic yards. The Company's net investment in these landfills, excluding
non-depletable land, was $362.0 million, or approximately $.29 per cubic yard.
As of December 31, 1999, the Company owned or operated 55 solid waste
landfills with total available disposal capacity estimated to be 1.7 billion
in-place cubic yards. The Company's net investment in these landfills, excluding
non-depletable land, was $736.8 million, or $.44 per cubic yard. The $.15
increase in the Company's investment per cubic yard from December 31, 1998 to
December 31, 1999 is primarily due to the net acquisition of seven landfills.
During the twelve months ended December 31, 1999, the Company's depletion and
amortization expense relating to landfills was $44.3 million, or $1.63 per cubic
yard.
As of December 31, 1999, the Company expects to spend an estimated
additional $1.0 billion on its existing landfills, primarily related to cell
construction and environmental structures, over their expected remaining lives.
The Company's total expected gross investment, excluding non-depletable land,
estimated to be $1.9 billion, or $1.14 per cubic yard, is used in determining
the Company's depletion and amortization expense based upon airspace consumed
using the units-of-consumption method. The Company's estimates for expected
future investment in landfills do not take into account discounts for the
present value of total estimated costs (for further information, see "Closure
and Post-Closure Costs").
PROPERTY, PLANT AND EQUIPMENT
The following tables reflect the activity in the Company's property,
plant and equipment accounts for the twelve months ended December 31, 1999 (in
millions):
Gross Property, Plant and Equipment
<TABLE>
<CAPTION>
Balance as of Acquisitions, Balance as of
December 31, Capital Net of Transfers and December 31,
1998 Additions Retirements Divestitures Adjustments 1999
------------- -------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Other land $ 79.6 $ 4.6 $ -- $ 2.0 $ (3.4) $ 82.8
Non-depletable landfill
land 55.3 1.9 -- 8.7 (19.5) 46.4
Landfill development
costs 452.3 25.8 -- 306.5 43.0 827.6
Vehicles and equipment 806.4 138.9 (32.0) 48.5 (.5) 961.3
Buildings and
improvements 152.0 8.0 (1.1) 14.9 13.7 187.5
Construction in progress -
landfill -- 32.9 -- -- 11.4 44.3
Construction in progress -
other 23.5 46.2 -- (1.7) (43.6) 24.4
-------- -------- -------- -------- -------- --------
Total $1,569.1 $ 258.3 $ (33.1) $ 378.9 $ 1.1 $2,174.3
======== ======== ======== ======== ======== ========
</TABLE>
12
<PAGE> 10
Accumulated Depreciation, Amortization and Depletion
<TABLE>
<CAPTION>
Balance as of Additions Acquisitions, Balance as of
December 31, Charged to Net of Transfers and December 31,
1998 Expense Retirements Divestitures Adjustments 1999
------------ ---------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Landfill development
costs $ (90.3) $ (44.3) $ -- $ 0.5 $ (1.0) $(135.1)
Vehicles and equipment (353.5) (80.1) 27.5 3.0 3.2 (399.9)
Buildings and improve-
ments (29.2) (5.9) 0.9 0.9 (0.5) (33.8)
------- ------- ------ ------ ------ -------
Total $(473.0) $(130.3) $ 28.4 $ 4.4 $ 1.7 $(568.8)
======= ======= ====== ====== ====== =======
</TABLE>
###
CERTAIN STATEMENTS AND INFORMATION INCLUDED HEREIN CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE FEDERAL PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE, OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED, IN OR BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHER THINGS, WHETHER
THE COMPANY'S ESTIMATES AND ASSUMPTIONS CONCERNING ITS SELECTED BALANCE SHEET
ACCOUNTS, CLOSURE AND POST-CLOSURE COSTS, AVAILABLE AIRSPACE, AND PROJECTED
COSTS AND EXPENSES RELATED TO THE COMPANY'S LANDFILLS AND PROPERTY, PLANT AND
EQUIPMENT, TURN OUT TO BE CORRECT OR APPROPRIATE, AND VARIOUS FACTORS THAT WILL
IMPACT THE ACTUAL BUSINESS AND FINANCIAL PERFORMANCE OF THE COMPANY SUCH AS
COMPETITION IN THE SOLID WASTE INDUSTRY; DEPENDENCE ON ACQUISITIONS FOR GROWTH;
THE COMPANY'S ABILITY TO MANAGE GROWTH; COMPLIANCE WITH AND FUTURE CHANGES IN
ENVIRONMENTAL REGULATIONS; THE COMPANY'S ABILITY TO OBTAIN APPROVAL FROM
REGULATORY AGENCIES IN CONNECTION WITH EXPANSIONS AT THE COMPANY'S LANDFILLS;
THE ABILITY TO OBTAIN FINANCING ON ACCEPTABLE TERMS TO FINANCE THE COMPANY'S
OPERATIONS AND GROWTH STRATEGY AND FOR THE COMPANY TO OPERATE WITHIN THE
LIMITATIONS IMPOSED BY FINANCING ARRANGEMENTS; THE COMPANY'S DEPENDENCE ON KEY
PERSONNEL; GENERAL ECONOMIC CONDITIONS; DEPENDENCE ON LARGE, LONG-TERM
COLLECTION CONTRACTS; RISK ASSOCIATED WITH UNDISCLOSED LIABILITIES OF ACQUIRED
BUSINESSES; THE RISKS AND COSTS ASSOCIATED WITH THE DATE CHANGE IN THE YEAR
2000; RISKS ASSOCIATED WITH PENDING LEGAL PROCEEDINGS; AND OTHER FACTORS
CONTAINED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
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