<PAGE> 1
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 0-9787
---------------
REPUBLIC WASTE INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
---------------
Delaware 73-1105145
(State of Incorporation) (IRS Employer Identification No.)
200 East Las Olas Boulevard, Suite 1400
Ft. Lauderdale, Florida 33301
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (305) 627-6000
---------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
Common Stock, $0.01 Par Value, 62,703,074 shares outstanding
as of November 13, 1995.
==============================================================================
<PAGE> 2
REPUBLIC WASTE INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - Financial Information
ITEM 1 - Financial Statements:
Unaudited Condensed Consolidated Balance Sheets
as of September 30, 1995 and
December 31, 1994 (Restated) . . . . . . . . . . . . . . . . 2
Unaudited Condensed Consolidated Statements
of Operations for the three and nine months
ended September 30, 1995 and 1994 (Restated). . . . . . . . 4
Unaudited Condensed Consolidated Statement
of Stockholders' Equity for the nine months
ended September 30, 1995. . . . . . . . . . . . . . . . . . 5
Unaudited Condensed Consolidated Statements of
Cash Flows for the nine months ended
September 30, 1995 and 1994 (Restated) . . . . . . . . . . . 6
Notes to Unaudited Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . .. . . . . . . . 7
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 15
PART II - Other Information
ITEM 4 - Submission of Matters to a Vote of Security Holders. . . . . 21
ITEM 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1.
REPUBLIC WASTE INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
(Restated)
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . $ 208,026 $ 3,084
Accounts receivable, less allowance for
doubtful accounts of $934 and $445,
respectively . . . . . . . . . . . . . . . . . 15,973 8,004
Prepaid expenses. . . . . . . . . . . . . . . . 1,991 1,135
Other current assets. . . . . . . . . . . . . . 3,692 3,053
--------- ---------
Total current assets . . . . . . . . . . . . 229,682 15,276
Property and equipment, net . . . . . . . . . . . 110,940 86,902
Intangible assets, net of accumulated
amortization of $1,267 and $710,
respectively . . . . . . . . . . . . . . . . . . 84,764 11,307
Net assets of discontinued operations . . . . . . -- 20,292
Other assets. . . . . . . . . . . . . . . . . . . 3,240 1,145
--------- ---------
Total assets . . . . . . . . . . . . . . . . $ 428,626 $ 134,922
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
<PAGE> 4
REPUBLIC WASTE INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
(Restated)
<S> <C> <C>
Current liabilities
Accounts payable. . . . . . . . . . . . . . . . $ 7,779 $ 3,614
Accrued liabilities . . . . . . . . . . . . . . 12,612 5,099
Current maturities of long-term debt and
notes payable. . . . . . . . . . . . . . . . . -- 1,419
Current portion of accrued environmental
and landfill costs . . . . . . . . . . . . . . 1,008 1,404
Other current liabilities . . . . . . . . . . . 416 160
--------- ---------
Total current liabilities. . . . . . . . . . 21,815 11,696
Long-term debt, net of current maturities . . . . -- 13,663
Accrued environmental and landfill costs,
net of current portion . . . . . . . . . . . . . 6,612 8,244
Deferred income taxes . . . . . . . . . . . . . . 10,751 11,232
Other liabilities . . . . . . . . . . . . . . . . 2,569 1,489
--------- ---------
Total liabilities. . . . . . . . . . . . . . 41,747 46,324
--------- ---------
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $0.01 per share;
5,000,000 shares authorized; none issued . . . -- --
Common stock, par value $0.01 per share;
350,000,000 shares authorized; 58,021,056
and 28,275,731 issued, respectively. . . . . . 580 283
Additional paid-in capital. . . . . . . . . . . 381,534 104,161
Retained earnings (accumulated deficit) since
January 1, 1990 . . . . . . . . . . . . . . . 4,765 (15,173)
Notes receivable arising from stock
purchase agreements. . . . . . . . . . . . . . -- (673)
--------- ---------
Total stockholders' equity . . . . . . . . . 386,879 88,598
--------- ---------
Total liabilities and stockholders' equity . $ 428,626 $ 134,922
========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
<PAGE> 5
REPUBLIC WASTE INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
(Restated) (Restated)
<S> <C> <C> <C> <C>
Revenue. . . . . . . . . . . . . . . . $28,525 $15,741 $64,226 $46,519
Expenses:
Cost of operations . . . . . . . . . 19,406 9,283 41,964 28,007
Selling, general and administrative. 5,212 3,551 12,144 11,081
Other (income) expense:
Interest and other income. . . . . . (1,454) (21) (1,622) (129)
Interest expense . . . . . . . . . . 239 258 1,055 852
------- ------- ------- -------
23,403 13,071 53,541 39,811
------- ------- ------- -------
Income from continuing operations
before income taxes . . . . . . . . . 5,122 2,670 10,685 6,708
Income tax provision . . . . . . . . . 1,946 -- 3,469 --
------- ------- ------- -------
Income from continuing operations. . . 3,176 2,670 7,216 6,708
Income from discontinued operations,
net of income tax provision of $0,
$0, $298 and $0, respectively . . . . -- 988 508 1,669
------- ------- ------- -------
Net income . . . . . . . . . . . . . . $ 3,176 $ 3,658 $ 7,724 $ 8,377
======= ======= ======= =======
Primary earnings per common and common
equivalent share:
Continuing operations . . . . . . . $ 0.06 $ 0.09 $ 0.20 $ 0.23
Discontinued operations . . . . . . -- 0.04 0.02 0.06
------- ------- ------- -------
Net income. . . . . . . . . . . . . $ 0.06 $ 0.13 $ 0.22 $ 0.29
======= ======= ======= =======
Fully diluted earnings per common
and common equivalent share:
Continuing operations . . . . . . . $ 0.06 $ 0.09 $ 0.19 $ 0.23
Discontinued operations . . . . . . -- 0.04 0.01 0.06
------- ------- ------- -------
Net income. . . . . . . . . . . . . $ 0.06 $ 0.13 $ 0.20 $ 0.29
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
<PAGE> 6
REPUBLIC WASTE INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Retained Notes
Earnings Receivable
(Accumulated Arising
Deficit) From
Additional Since Stock
Common Paid-In January 1, Purchase
Stock Capital 1990 Agreements
------ -------- ---------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1994,
(Restated) . . . . . . . . . . $ 283 $ 104,161 $ (15,173) $ (673)
Stock issued in acquisitions. . 80 72,720 -- --
Sales of common stock . . . . . 208 231,840 -- --
Purchases and retirements of
treasury stock . . . . . . . . (1) (221) -- --
Exercise of stock options and
warrants . . . . . . . . . . . 10 9,339 -- --
Payments received on notes. . . -- -- -- 673
Reclassification of additional
paid-in capital to effect the
spin-off . . . . . . . . . . . -- (36,305) 36,305 --
Spin-off of Republic
Environmental Systems, Inc.. . -- -- (23,579) --
Distributions to former owners
of acquired companies . . . . -- -- (512) --
Net income. . . . . . . . . . . -- -- 7,724 --
------ --------- ---------- --------
Balance at September 30, 1995 . $ 580 $ 381,534 $ 4,765 $ --
====== ========= ========== ========
</TABLE>
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
5
<PAGE> 7
REPUBLIC WASTE INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
------ ------
(Restated)
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations . . . . . . . . $ 7,216 $ 6,708
Adjustments to reconcile income from continuing
operations to net cash provided by operations:
Depreciation, depletion and amortization . . . 4,806 3,543
Provision for doubtful accounts. . . . . . . . 184 124
Provision for accrued environmental and
landfill costs. . . . . . . . . . . . . . . . 255 308
Gain on the sale of property and equipment . . (60) (245)
Changes in assets and liabilities, net of
effects from business combinations:
Accounts receivable. . . . . . . . . . . . . . (1,672) (78)
Prepaid expenses and other assets. . . . . . . (1,730) (185)
Accounts payable and accrued liabilities . . . (1,000) (1,085)
Income taxes payable . . . . . . . . . . . . . (711) (125)
Other liabilities. . . . . . . . . . . . . . . 1,205 (719)
-------- --------
Net cash provided by continuing operations. . . . . 8,493 8,246
-------- --------
Cash provided by (used in) discontinued operations. (261) 1,279
-------- --------
Cash flows from investing activities:
Net cash used in business combinations. . . . . . (1,867) (756)
Purchases of property and equipment . . . . . . . (11,298) (4,550)
Proceeds from the sale of property and equipment. 622 521
Other investments . . . . . . . . . . . . . . . . (1,293) --
-------- --------
Net cash used in investing activities . . . . . . . (13,836) (4,785)
-------- --------
Cash flows from financing activities:
Exercise of stock options and warrants. . . . . . 6,333 --
Sales of common stock . . . . . . . . . . . . . . 232,048 --
Repayments received on notes receivable arising
from stock purchase agreements . . . . . . . . . 673 --
Capital contribution to Republic Environmental
Systems, Inc . . . . . . . . . . . . . . . . . . (2,520) --
Distribution to former shareholders of
acquired businesses . . . . . . . . . . . . . . (512) (200)
Purchases of treasury stock . . . . . . . . . . . (222) (856)
Payments of long-term debt and notes payable. . . (30,620) (5,144)
Proceeds from long-term debt and notes payable. . 5,366 2,034
-------- --------
Net cash provided by (used in) financing activities 210,546 (4,166)
-------- --------
Increase in cash and cash equivalents . . . . . . . 204,942 574
Cash and cash equivalents:
Beginning of period . . . . . . . . . . . . . . . 3,084 3,822
-------- --------
End of period . . . . . . . . . . . . . . . . . . $208,026 $ 4,396
======== ========
Supplemental disclosure of cash paid for:
Interest. . . . . . . . . . . . . . . . . . . . . $ 924 $ 743
Income taxes. . . . . . . . . . . . . . . . . . . $ 650 $ 336
</TABLE>
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
6
<PAGE> 8
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(000's omitted in all tables except per share amounts)
1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of Republic Waste Industries, Inc. and its wholly-owned
subsidiaries (the "Company") and have been prepared by the Company without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. All significant intercompany accounts and transactions have been
eliminated. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles has been condensed or omitted. These unaudited condensed
consolidated financial statements reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and the results of operations for the
periods presented and the disclosures herein are adequate to make the
information presented not misleading. Operating results for interim periods are
not necessarily indicative of the results that can be expected for a full year.
These interim financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto contained in the
Company's most recent Annual Report on Form 10-K as well as the Company's
audited supplemental financial statements subsequently filed on Form 8-K.
In order to maintain consistency and comparability between periods presented,
certain amounts have been reclassified from the previously reported financial
statements in order to conform with the financial statement presentation of the
current period.
The accompanying financial statements also include the financial position and
results of operations of Kertz Security Systems II, Inc. and Kertz Security
Systems, Inc. (collectively, "Kertz"), with which the Company merged in August
1995. This transaction has been accounted for under the pooling of interests
method of accounting and, accordingly, these financial statements and notes
thereto have been restated as if the companies had operated as one entity since
inception. See Note 2, Business Combinations, for a further discussion of this
transaction.
As discussed in Note 3, Spin-off of RESI, the Company spun-off its hazardous
waste services segment, Republic Environmental Systems, Inc. ("RESI"), to the
Company's stockholders in April 1995 (the "Distribution"). Accordingly, this
segment was accounted for as a discontinued operation and the accompanying
financial statements have been restated to report separately the net assets and
operating results of RESI prior to the distribution date.
2. BUSINESS COMBINATIONS
In August 1995, the Company acquired all of the outstanding shares of common
stock of Hudson Management Corporation and Envirocycle, Inc. (collectively,
"HMC"), each of which was owned by Harris W. Hudson, President of the Company.
The purchase price paid by the Company was approximately $72,800,000 and
consisted of 8,000,000 shares of the Company's common stock, $.01 par value
("Common Stock"). HMC, as the third largest solid waste management company in
Florida, provides solid waste collection and recycling services to commercial,
industrial and residential customers. This acquisition has been accounted for
under the purchase method of accounting and, accordingly, is included in the
Company's financial statements from the date of acquisition.
7
<PAGE> 9
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Company's consolidated results of operations on an unaudited pro forma
basis assuming the acquisition of HMC had occurred at the beginning of each of
the periods presented are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
------ ------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . $ 97,427 $ 80,574
======== ========
Income from continuing operations
before income taxes. . . . . . . . . . . $ 12,327 $ 8,903
======== ========
Net income. . . . . . . . . . . . . . . . $ 8,742 $ 9,710
======== ========
Fully diluted earnings per common and
common equivalent share. . . . . . . . . $ 0.23 $ 0.27
======== ========
</TABLE>
The preliminary purchase price allocation for the HMC acquisition during the
nine months ended September 30, 1995, was as follows:
<TABLE>
<S> <C>
Property and equipment. . . . . . . . . . $ 16,910
Intangible assets . . . . . . . . . . . . 71,110
Working capital deficiency. . . . . . . . (6,602)
Long-term debt assumed. . . . . . . . . . (8,618)
--------
Common stock issued . . . . . . . . . . . $ 72,800
========
</TABLE>
In August 1995, the Company issued 1,090,000 shares of Common Stock in
exchange for all of the outstanding shares of common stock of Kertz. Kertz
provides electronic security monitoring and maintenance to over 30,000
residential and commercial customers predominantly in the South Florida, Tampa
and Orlando areas. The merger with Kertz has been accounted for under the
pooling of interests method of accounting and, accordingly, the accompanying
financial statements have been restated for all periods as if the companies had
operated as one entity since inception.
Details of the results of operations of the previously separate companies for
the periods before the pooling of interests combination was consummated are as
follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
------ ------
<S> <C> <C>
Revenue:
The Company . . . . . . . . . . . . . . $ 55,945 $ 36,307
Kertz . . . . . . . . . . . . . . . . . 8,281 10,212
-------- --------
$ 64,226 $ 46,519
======== ========
Net Income:
The Company . . . . . . . . . . . . . . $ 7,134 $ 8,117
Kertz . . . . . . . . . . . . . . . . . 590 260
-------- --------
$ 7,724 $ 8,377
======== ========
</TABLE>
8
<PAGE> 10
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. SPIN-OFF OF RESI
On April 26, 1995, the Company's stockholders received one share of common
stock of the Company's hazardous waste subsidiary, RESI, for every five shares
of Common Stock owned on April 21, 1995 in connection with the spin-off of
RESI. Approximately 5,400,000 RESI shares were distributed. RESI's common
stock commenced trading on the Nasdaq National Market on April 27, 1995 under
the trading symbol "RESI." The Company has had no direct ownership interest in
RESI since the Distribution.
The hazardous waste services segment of the Company's business was accounted
for as a discontinued operation and, accordingly, the accompanying consolidated
financial statements of the Company have been restated to report separately the
net assets and operating results of these discontinued operations prior to the
distribution date. Revenue of the discontinued operations was $11,856,000,
$12,148,000 and $34,108,000 for three months ended September 30, 1994 and the
nine months ended September 30, 1995 and 1994, respectively. Net income of the
discontinued operations was $988,000, $508,000 and $1,669,000 for the three
months ended September 30, 1994 and the nine months ended September 30, 1995
and 1994, respectively.
In connection with the Distribution, the Company entered into a distribution
agreement with RESI which set forth the terms of the Distribution. Under this
agreement, the Company contributed the intercompany balance to RESI's equity at
the date of the Distribution. In April 1995, the Company contributed
approximately $2,500,000 to RESI to repay RESI's indebtedness and to provide
working capital to RESI. Additionally, the Company reclassified approximately
$36,300,000 to retained earnings from additional paid-in capital to effect the
spin-off under Delaware law. As a result of these transactions, the Company's
equity at the date of the Distribution was reduced by approximately
$23,000,000.
The Company has also entered into various agreements with RESI which govern
certain matters between the two parties such as ongoing corporate services to
be provided by the Company to RESI, property and casualty insurance coverage
for RESI through June 30, 1995, treatment of various tax matters for periods
through the date of the Distribution and indemnification between both parties.
The Corporate Services Agreement is expected to be terminated by the end of
1995.
4. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share is based on the combined
weighted average number of common shares and common share equivalents
outstanding which include, where appropriate, the assumed exercise or
conversion of warrants and options. In computing earnings per common and
common equivalent share, the Company currently utilizes the modified treasury
stock method and in the prior year used the treasury stock method. When using
the modified treasury stock method, the proceeds from the assumed exercise of
all warrants and options are assumed to be applied to first purchase 20% of the
outstanding common stock, then to reduce outstanding indebtedness and the
remaining proceeds are assumed to be invested in U.S. government securities or
commercial paper.
9
<PAGE> 11
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The computations of weighted average common and common equivalent shares used
in the calculations of primary and fully diluted earnings per share are shown
below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Common shares outstanding . . . . . 58,021 28,305 58,021 28,305
Common equivalent shares. . . . . . 20,879 95 20,546 60
Weighted average treasury shares
purchased. . . . . . . . . . . . . (4,495) -- (4,115) --
Effect of using weighted average
common and common equivalent shares
outstanding. . . . . . . . . . . . (19,406) 70 (38,553) 160
------ ------ ------ ------
54,999 28,470 35,899 28,525
====== ====== ====== ======
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
Fully diluted:
Common shares outstanding. . . . . . 58,021 28,305 58,021 28,305
Common equivalent shares . . . . . . 20,979 -- 21,008 --
Weighted average treasury shares
purchased . . . . . . . . . . . . . (4,217) 95 (2,651) 60
Effect of using weighted average
common and common equivalent shares
outstanding . . . . . . . . . . . . (19,469) 70 (38,507) 160
------ ------ ------ ------
55,314 28,470 37,871 28,525
====== ====== ====== ======
</TABLE>
5. PROPERTY AND EQUIPMENT
A summary of property and equipment is shown below:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Land, landfills and improvements . . . $ 83,552 $ 80,601
Vehicles and equipment . . . . . . . . 39,956 15,340
Buildings and improvements . . . . . . 3,255 3,158
Furniture and fixtures . . . . . . . . 837 746
-------- --------
127,600 99,845
Less accumulated depreciation and
depletion . . . . . . . . . . . . . (16,660) (12,943)
-------- --------
$110,940 $ 86,902
======== ========
</TABLE>
10
<PAGE> 12
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Revolving credit facility, secured by
the stock of the Company's subsidiaries,
interest payable quarterly, at prime or
at a Eurodollar rate plus 1.5% (8.3% at
December 31, 1994) . . . . . . . . . . . . $ - $ 12,600
Notes to banks and financial institutions,
secured by equipment and other assets,
interest ranging from 7.0% to 12.9%
(weighted average interest rate of 7.2%
as of December 31, 1994), . . . . . . . . - 1,305
Other notes, secured by equipment and
other assets, interest ranging from 4.0%
to 11.5% (weighted average interest rate
of 6.0% as of December 31, 1994), . . . . - 1,177
------- --------
- 15,082
Less current maturities and notes payable . - (1,419)
------- --------
$ - $ 13,663
======= ========
</TABLE>
In September 1993, the Company entered into a revolving credit facility
agreement with a U.S. commercial bank in the amount of $25,000,000, which
includes a line of credit with $10,000,000 available for standby letters of
credit. In May 1995, the Company extended the due date from September 1996 to
December 1997 and increased the availability under this facility to
$35,000,000. In connection with the equity investment and private placement
transactions, as discussed in Note 7, Stockholders' Equity, the Company
received approximately $232,000,000 in cash during the three months ended
September 30, 1995. The Company used a portion of these proceeds to repay all
outstanding borrowings under the revolving credit facility totaling
approximately $15,500,000 plus interest expense in August 1995. In September
1995, the Company reduced this facility to a $10,000,000 letter of credit
facility and currently has approximately $5,500,000 of available borrowing
capacity.
7. STOCKHOLDERS' EQUITY
In August 1995, the Company issued and sold an aggregate of 8,350,000 shares
of Common Stock and warrants to purchase an additional 16,700,000 shares of
Common Stock to Mr. H. Wayne Huizenga, Westbury (Bermuda) Ltd. (a Bermuda
corporation controlled by Mr. Michael G. DeGroote, former Chairman of the
Board, President and Chief Executive Officer of the Company) and Mr. Harris W.
Hudson, and certain of their assigns for an aggregate purchase price of
$37,500,000. The warrants are exercisable at prices ranging from $4.50 to
$7.00 per share effective August 1995. In August 1995, the Company issued and
sold an additional 1,000,000 shares of Common Stock each to Mr. Huizenga and
Mr. John J. Melk, a director since August 3, 1995, for $13.25 per share for
aggregate proceeds of $26,500,000.
11
<PAGE> 13
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In August 1995, in connection with these equity investments, Mr. Huizenga was
elected Chairman of the Board of Directors and Chief Executive Officer of the
Company and Mr. DeGroote was elected Vice Chairman of the Board. Additionally,
Mr. Hudson was appointed as President of the Company and as a member of the
Board of Directors and Mr. Melk was named as a member of the Board of
Directors.
In July 1995, the Company sold 5,400,000 shares of Common Stock in a private
placement transaction for $13.25 per share, resulting in net proceeds of
approximately $69,000,000 after deducting expenses, fees and commissions. In
September 1995, the Company sold 5,000,000 shares of Common Stock in an
additional private placement transaction for $20.25 per share resulting in net
proceeds of approximately $99,000,000 after deducting expenses, fees and
commissions.
As a result of the transactions discussed above, the Company received
approximately $232,000,000 in cash during the three months ended September 30,
1995. The Company used a portion of these proceeds to repay all outstanding
borrowings under its revolving line of credit facility and debt of HMC and
Kertz during the same period.
In October 1994, the Board of Directors authorized the Company to continue
its stock repurchase program and repurchase up to 1,300,000 shares or 4.8% of
its outstanding Common Stock through October 1995. Through July 1995, 65,000
shares were repurchased for an aggregate value of $222,000 and were
subsequently retired. The Company's stock repurchase program expired in
October 1995.
In August 1995, the Company's shareholders approved an increase in the number
of authorized shares of Common Stock from 100,000,000 to 350,000,000.
8. STOCK OPTIONS AND WARRANTS
The Company has various stock option plans under which shares of Common Stock
may be granted to key employees and directors of the Company. Options granted
under the plans are non-qualified and are granted at a price equal to the fair
market value of the Common Stock at the date of grant.
A summary of stock option and warrant transactions for the nine months ended
September 30, 1995 is as follows:
Options and warrants outstanding at December 31,
1994 . . . . . . . . . . . . . . . . . . . . . . . 3,393
Options granted and warrants sold. . . . . . . . . . 19,858
Options and warrants exercised . . . . . . . . . . . (1,026)
Options and warrants cancelled . . . . . . . . . . . (161)
------
Options and warrants outstanding at September 30,
1995. . . . . . . . . . . . . . . . . . . . . . . . 22,064
======
Average price of options and warrants
exercised . . . . . . . . . . . . . . . . . . . . . $7.44
Prices of options and warrants outstanding at
September 30, 1995. . . . . . . . . . . . . . . . . $2.50 - $24.75
Average price of options and warrants outstanding
at September 30, 1995 . . . . . . . . . . . . . . . $7.92
Vested options and warrants at September 30, 1995. . 19,162
Options available for future grants at September 30,
1995. . . . . . . . . . . . . . . . . . . . . . . . 4,750
12
<PAGE> 14
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
See Note 7, Stockholders' Equity, for a discussion related to the sale of
Common Stock and warrants in August 1995.
9. INCOME TAXES
As part of its tax planning to reduce cash outlays for taxes, the Company
employs a number of strategies such as combining entities to reduce state
income taxes and recapturing taxes previously paid by acquired companies, among
others. When the Company determines that deferred tax assets for which it had
previously recorded no benefit are realizable, the impact is recorded as "tax
reserve adjustments" in the tax provision. The Company's 38% income tax
provision for the first quarter of 1995 was entirely offset by such
adjustments. Accordingly, the Company's income tax provision for the nine
months ended September 30, 1995 was reduced to 32%, while the income tax
provision for the three months ended September 30, 1995 was 38%. The Company's
38% tax provision for the three and nine months ended September 30, 1994 was
entirely offset by tax reserve adjustments and a change in the valuation
allowance.
10. SUBSEQUENT EVENTS
In October 1995, the Company acquired all of the outstanding common stock of
United Waste Service, Inc. ("United") in exchange for 1,500,000 shares of
Common Stock. United provides solid waste collection, transfer and recycling
services in the Atlanta, Georgia metropolitan area and serves over 8,000
residential and commercial customers.
In October 1995, the Company issued 2,600,000 shares of Common Stock in
exchange for all of the outstanding common stock of Southland Environmental
Services, Inc. ("Southland"). Southland provides solid waste collection
services in the Northeast Florida area serving over 70,000 residential and
commercial customers.
The United and Southland mergers will be accounted for under the pooling of
interests method of accounting. The Company's unaudited pro forma consolidated
results of operations, assuming the United and Southland mergers had been
consummated as of September 30, 1995, are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
------ ------
<S> <C> <C>
Revenue. . . . . . . . . . . . . . . . $ 103,053 $ 74,920
========= =========
Net income . . . . . . . . . . . . . . $ 9,630 $ 9,836
========= =========
Fully diluted earnings per common
and common equivalent share . . . . . $ 0.23 $ 0.30
========= =========
</TABLE>
13
<PAGE> 15
REPUBLIC WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In October 1995, the Company entered into a definitive agreement to acquire
all of the outstanding common stock of GDS, Inc. ("GDS") in exchange for
3,003,000 shares of Common Stock. GDS provides solid waste collection and
recycling services for commercial, residential and industrial customers
throughout western North Carolina.
In October 1995, the Company entered into an agreement in principle to
acquire all of the outstanding common stock of Scott Security Systems, Inc. and
affiliates (collectively, "Scott") in exchange for approximately $38,000,000 of
Common Stock. Scott is an electronic security alarm company, providing
monitoring and maintenance to more than 70,000 accounts, primarily residential.
Scott's largest markets include Jacksonville, Orlando and Tallahassee, Florida,
and it has also expanded into other metropolitan areas in the southeast U.S.,
including Charlotte, North Carolina, Savannah, Georgia and Nashville,
Tennessee.
In November 1995, the Company entered into a definitive agreement to acquire
all of the outstanding common stock of J.C. Duncan Company, Inc. and affiliates
(collectively, "Duncan") in exchange for 5,265,055 shares of Common Stock.
Duncan provides solid waste collection and recycling services to approximately
300,000 residential, commercial and industrial customers in the rapidly-growing
Dallas-Fort Worth metropolitan area and throughout west Texas, and also
operates two landfills.
In November 1995, the Company entered into a definitive agreement to acquire
all of the outstanding common stock of Fennell Container Co., Inc. and its
related companies (collectively, "Fennell") in exchange for 3,105,244 shares of
Common Stock. Fennell is a full-service solid waste management company,
providing waste collection, recycling and environmental services to more than
12,000 commercial, industrial and residential customers in and around
Charleston and Greenville, South Carolina. Additionally, Fennell owns a
landfill which is in the final stages of construction and is scheduled to begin
accepting waste under its new permit in early 1996.
14
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included under
Item 1. In addition, reference should be made to the audited consolidated
financial statements and notes thereto and related Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's most recent Annual Report on Form 10-K as well as the Company's
audited supplemental financial statements subsequently filed on Form 8-K.
BUSINESS COMBINATIONS
The Company's current business strategy is to aggressively grow as an
integrated solid waste management company by acquiring and integrating
existing solid waste companies and recycling businesses, and to expand its
recently acquired electronic security services business by internal growth and
by making additional acquisitions in that industry. Further, management
currently anticipates expanding the Company's operations outside of solid waste
management, electronic security services and related lines of business.
Management intends to evaluate various types of service industries which are
capital intensive, fragmented and have relatively high profit margins, seek out
strategic acquisition opportunities in such industries and grow rapidly in such
industries through further acquisitions, consolidation and internal growth.
Management anticipates that the Company will make acquisitions in the future
through the issuance of the Company's common stock, $0.01 par value per share
("Common Stock"), with the proceeds from the equity transactions consummated in
1995, or from borrowings under a credit facility (see Liquidity and Capital
Resources).
In August 1995, the Company issued 8,000,000 shares of Common Stock in
exchange for all of the outstanding shares of common stock of Hudson Management
Corporation and Envirocycle, Inc. (collectively, "HMC"), each of which was
owned by Harris W. Hudson, President of Republic. HMC, as the third largest
solid waste management company in Florida, provides solid waste collection and
recycling services to commercial, industrial and residential customers. This
acquisition was accounted for under the purchase method of accounting and,
accordingly, is included in the Company's financial statements from the date of
acquisition.
In August 1995, the Company issued 1,090,000 shares of Common Stock in
exchange for all of the outstanding shares of common stock of Kertz Security
Systems II, Inc. and Kertz Security Systems, Inc. (collectively, "Kertz").
Kertz provides electronic security monitoring and maintenance to over 30,000
residential and commercial customers predominantly in the South Florida, Tampa
and Orlando areas. The merger with Kertz has been accounted for under the
pooling of interests method of accounting and, accordingly, the accompanying
financial statements have been restated for all periods as if the companies had
operated as one entity since inception.
In October 1995, the Company acquired all of the outstanding common stock of
United Waste Service, Inc. ("United") in exchange for 1,500,000 shares of
Common Stock. United provides solid waste collection, transfer and recycling
services in the Atlanta, Georgia metropolitan area and serves over 8,000
residential and commercial customers. The United merger will be accounted for
under the pooling of interests method of accounting.
15
<PAGE> 17
In October 1995, the Company issued 2,600,000 shares of Common Stock in
exchange for all of the outstanding common stock of Southland Environmental
Services, Inc. ("Southland"). Southland provides solid waste collection
services in the Northeast Florida area serving over 70,000 residential and
commercial customers. The Southland merger will be accounted for under the
pooling of interests method of accounting.
In October 1995, the Company entered into a definitive agreement to acquire
all of the outstanding common stock of GDS, Inc. ("GDS") in exchange for
3,003,000 shares of Common Stock. GDS provides solid waste collection and
recycling services for commercial, residential and industrial customers
throughout western North Carolina.
In October 1995, the Company entered into an agreement in principle to
acquire all of the outstanding common stock of Scott Security Systems, Inc. and
affiliates (collectively, "Scott") in exchange for approximately $38,000,000 of
Common Stock. Scott is an electronic security alarm company, providing
monitoring and maintenance to more than 70,000 accounts, primarily residential.
Scott's largest markets include Jacksonville, Orlando and Tallahassee, Florida,
and it has also expanded into other metropolitan areas in the southeast U.S.,
including Charlotte, North Carolina, Savannah, Georgia and Nashville,
Tennessee.
In November 1995, the Company entered into a definitive agreement to acquire
all of the outstanding common stock of J.C. Duncan Company, Inc. and affiliates
(collectively, "Duncan") in exchange for 5,265,055 shares of Common Stock.
Duncan provides solid waste collection and recycling services to approximately
300,000 residential, commercial and industrial customers in the rapidly-growing
Dallas-Fort Worth metropolitan area and throughout west Texas, and also
operates two landfills.
In November 1995, the Company entered into a definitive agreement to acquire
all of the outstanding common stock of Fennell Container Co., Inc. and its
related companies (collectively, "Fennell") in exchange for 3,105,244 shares of
Common Stock. Fennell is a full-service solid waste management company,
providing waste collection, recycling and environmental services to more than
12,000 commercial, industrial and residential customers in and around
Charleston and Greenville, South Carolina. Additionally, Fennell owns a
landfill which is in the final stages of construction and is scheduled to begin
accepting waste under its new permit in early 1996.
RESULTS OF OPERATIONS
Continuing Operations
In April 1995, the Company distributed the stock of the hazardous waste
services segment of the Company to Republic stockholders (the "Distribution" -
see Discontinued Operations). The following discussion excludes the
operational activity and results of the hazardous waste services segment of the
Company, which has been included in the accompanying consolidated financial
statements as discontinued operations for the periods prior to the
distribution.
16
<PAGE> 18
The following table presents, for the periods indicated, the percentage
relationship which certain captioned items in the Company's Unaudited Condensed
Consolidated Statements of Operations bear to total revenue and other pertinent
data:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statements of Operations Data:
Revenue . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Cost of operations. . . . . . . . . 68.0 59.0 65.3 60.2
Selling, general and administrative
expenses . . . . . . . . . . . . . 18.3 22.5 18.9 23.8
----- ----- ----- -----
Operating income. . . . . . . . . . 13.7% 18.5% 15.8% 16.0%
===== ===== ===== =====
</TABLE>
Revenue
Revenue increased 81.2% to $28,525,000 in the third quarter of 1995 from
$15,741,000 in the third quarter of 1994 due primarily to the acquisition of
HMC, as well as increased volume at existing operations. For the nine months
ended September 30, 1995, revenue increased 38.1% to $64,226,000 compared to
$46,519,000 for the same period of the prior year. This increase was primarily
due to the same factors discussed above.
Cost of Operations
Cost of operations increased $10,123,000, or 109.0%, to $19,406,000 in the
third quarter of 1995 from $9,283,000 in the third quarter of 1994. As a
percentage of revenue, these costs were 68.0% and 59.0% in the third quarter of
1995 and 1994, respectively. The increase in cost of operations as a
percentage of revenue is attributable to the acquisition of businesses
primarily involved in the collection of solid waste which typically have
slightly higher operating costs than those companies primarily involved in the
disposal of solid waste. Cost of operations increased 49.8% to $41,964,000 for
the nine months ended September 30, 1995 from $28,007,000 for the same period
of the prior year. As a percentage of revenue, these costs increased to 65.3%
in 1995 from 60.2% in 1994 as a result of the acquisition of collection
businesses, as discussed above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 46.8% to $5,212,000 in
the third quarter of 1995 from $3,551,000 in the third quarter of 1994. For
the nine months ended September 30, 1995, selling, general and administrative
expenses increased to $12,144,000 from $11,081,000 for the same period of the
prior year. These increases are primarily attributable to the acquisitions and
the additional staff necessary to support the expansion of the Company's
business. Selling, general and administrative expenses during the three and
nine months ended September 30, 1995, as percentages of revenue, decreased
primarily as a result of the relative increase in the Company's revenue base.
Management anticipates that selling, general and administrative expenses will
continue to increase due to the expenditures associated with the expansion of
the Company's business through the development and acquisition of businesses in
the solid waste, security services and other industries.
17
<PAGE> 19
Interest and Other Income
Interest and other income increased to $1,454,000 in the third quarter of
1995 from $21,000 in the third quarter of 1994. For the nine months ended
September 30, 1995, interest and other income increased to $1,622,000 compared
to $129,000 for the same period of the prior year. The increase for both
periods is due to the increase in the Company's cash investments resulting from
the proceeds from the sales of Common Stock during the three months ended
September 30, 1995 (see Liquidity and Capital Resources).
Income Taxes
As part of its tax planning to reduce cash outlays for taxes, the Company
employs a number of strategies such as combining entities to reduce state
income taxes and recapturing taxes previously paid by acquired companies, among
others. When the Company determines that deferred tax assets for which it had
previously recorded no benefit are realizable, the impact is recorded as "tax
reserve adjustments" in the tax provision. The Company's 38% income tax
provision for the first quarter of 1995 was entirely offset by such
adjustments. Accordingly, the Company's income tax provision for the nine
months ended September 30, 1995 was reduced to 32%, while the income tax
provision for three months ended September 30, 1995 was 38%. The Company's 38%
tax provision for the three and nine months ended September 30, 1994 was
entirely offset by tax reserve adjustments and a change in the valuation
allowance. The Company does not anticipate using significant tax reserve
adjustments to reduce its effective income tax rate in future periods.
Environmental and Landfill Matters
The Company provides for accrued environmental and landfill costs which
include landfill site closure and post-closure costs. Landfill site closure
and post-closure costs include costs to be incurred for final closure of the
landfills and costs for providing required post-closure monitoring and
maintenance of landfills. These costs are accrued based on consumed airspace.
The Company estimates its future cost requirements for closure and post-closure
monitoring and maintenance for its solid waste facilities based on its
interpretation of the technical standards of the U.S. Environmental Protection
Agency's Subtitle D regulations. These estimates do not take into account
discounts for the present value of such total estimated costs. The Company
periodically reassesses its methods and assumptions used to estimate such
accruals for environmental and landfill costs and adjusts such accruals
accordingly. Such factors considered are changing regulatory requirements, the
effects of inflation, changes in operating climates in the regions in which the
Company's facilities are located and the expectations regarding costs of
securing environmental services.
Discontinued Operations
In February 1995, the Board of Directors approved the plan for the
Distribution of the stock of RESI to the stockholders of record of the Company.
On April 26, 1995, the Company's stockholders received one share of RESI's
common stock for every five shares of Common Stock owned on April 21, 1995.
Approximately 5,400,000 RESI shares were distributed. RESI's common stock
commenced trading on the Nasdaq National Market on April 27, 1995 under the
trading symbol "RESI." The Company has had no direct ownership interest in
RESI since the Distribution. The hazardous waste services segment of the
Company's business has been accounted for as a discontinued operation and,
accordingly, the accompanying Unaudited Condensed Consolidated Financial
Statements of the Company have been restated to report separately the net
assets and operating results of these discontinued operations for periods prior
to the distribution.
18
<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES
In August 1995, the Company issued and sold an aggregate of 8,350,000 shares
of Common Stock and warrants to purchase an additional 16,700,000 shares of
Common Stock to Mr. H. Wayne Huizenga, Westbury (Bermuda) Ltd. (a Bermuda
corporation controlled by Mr. Michael G. DeGroote, Vice Chairman of the Board
of Republic) and Mr. Harris W. Hudson, and certain of their assigns for an
aggregate purchase price of approximately $37,500,000. The warrants are
exercisable at prices ranging from $4.50 to $7.00 per share effective August
1995. In August 1995, the Company issued and sold an additional 1,000,000
shares of Common Stock each to Mr. Huizenga and Mr. John J. Melk, a director
since August 3, 1995, for $13.25 per share for aggregate proceeds of
approximately $26,500,000.
In connection with the equity investment, Mr. Huizenga was elected Chairman
of the Board of Directors and Chief Executive Officer of Republic and Mr.
DeGroote, former Chairman of the Board, President and Chief Executive Officer
of the Company, was elected Vice Chairman of the Board. Additionally, Mr.
Hudson was appointed as President of the Company and as a member of the Board
of Directors and Mr. Melk was named as a member of the Board of Directors.
In July 1995, the Company sold 5,400,000 shares of Common Stock in a private
placement transaction for $13.25 per share, less expenses, fees and
commissions, for net proceeds of approximately $69,000,000. In September 1995,
the Company sold 5,000,000 shares of Common Stock in an additional private
placement transaction for $20.25 per share resulting in net proceeds of
approximately $99,000,000 after deducting expenses, fees and commissions.
As a result of these transactions, the Company received approximately
$232,000,000 in cash during the three months ended September 30, 1995. The
Company used a portion of these proceeds to repay all outstanding borrowings
under its revolving line of credit facility and debt of HMC and Kertz during
the same period. The Company made capital expenditures of approximately
$11,300,000 during the nine months ended September 30, 1995, which included
funds for the expansion of landfill sites, fixed assets for normal replacement
and market development and expenditures associated with the expansion of the
Company's operations through business acquisitions. Management anticipates
continuing making capital expenditures for the construction of new airspace,
upgrading existing equipment and facilities and complying with current and
proposed regulations during the remainder of 1995, and expects that these
expenditures may increase in the future due to growth of the Company through
business combinations.
The Company's net cash flows from operations increased slightly during the
nine months ended September 30, 1995 as a result of an increase in operating
cash generated by its ongoing business, substantially offset by a settlement of
certain legal liabilities. The Company used its operating cash flows during
the nine months ended September 30, 1995 to repay existing indebtedness and
make capital expenditures. The Company has in the past made capital
expenditures from cash on hand and operating cash flows and anticipates
continuing to do so for the remainder of 1995.
The Company's revolving line of credit facility, which bears interest at the
Eurodollar Offered Rate plus 1.5%, was reduced by the Company to a $10,000,000
letter of credit facility during the third quarter of 1995. Also during this
period, the Company used a portion of the proceeds from its sales of Common
Stock to repay all outstanding borrowings under this facility.
19
<PAGE> 21
As previously discussed, the Company will continue to pursue acquisitions in
the solid waste, electronic security services and other selected service
industries and anticipates financing acquisitions with the proceeds from the
above-mentioned equity transactions as well as through the issuance of Common
Stock. Management believes that the Company currently has sufficient cash and
access to the financial markets to fund current operations and make
acquisitions; however, substantial additional capital may be necessary to fully
implement the Company's aggressive acquisition program. Accordingly, the
Company will seek to replace its existing credit facility with a substantially
larger credit facility, the proceeds from which will be used, among other
things, to make acquisitions and to expand the Company's operations. However,
there can be no assurance that such additional financing will be available, or,
in the event that it is, that it will be available in the amounts or terms
acceptable to the Company
In October 1994, the Board of Directors authorized the Company to continue
its stock repurchase program and to repurchase up to 1,300,000 shares or
4.8% of its outstanding Common Stock, through October 1995. Through July
1995, 65,000 shares were repurchased for an aggregate value of approximately
$222,000 and were subsequently retired. The Company's stock repurchase
program expired in October 1995.
FINANCIAL CONDITION AT SEPTEMBER 30, 1995 COMPARED TO DECEMBER 31, 1994
Cash and cash equivalents increased to $208,026,000 as of September 30, 1995
from $3,084,000 as of December 31, 1994 as a result of the proceeds received in
the third quarter from the private placement and equity transactions.
The increase in accounts receivable, less allowance for doubtful accounts, to
$15,973,000 as of September 30, 1995 from $8,004,000 as of December 31, 1994 is
primarily attributable to the acquisition of HMC in August 1995.
Property and equipment, net, increased to $110,940,000 as of September 30,
1995 from $86,902,000 as of December 31, 1994 primarily due to the acquisition
of HMC.
The increase in intangible assets, net, to $84,764,000 as of September 30,
1995 from $11,307,000 as of December 31, 1994 is primarily a result of the
acquisition of HMC, which was accounted for under the purchase method of
accounting.
Net assets of discontinued operations decreased to zero as of September 30,
1995 from $20,292,000 as of December 31, 1994 due to the spin-off of the
hazardous waste services segment which was consummated in April 1995.
The increase in accounts payable and accrued liabilities to $20,391,000 as of
September 30, 1995 from $8,713,000 as of December 31, 1994 is primarily
attributable to the acquisition of HMC.
Long-term debt, including current maturities and notes payable, decreased to
zero as of September 30, 1995 from $15,082,000 as of December 31, 1994 due to
the payoff of the Company's debt in the third quarter of 1995 from the proceeds
from the private placement and equity transactions.
Total stockholders' equity increased to $386,879,000 as of September 30, 1995
from $88,598,000 as of December 31, 1994 primarily as a result of the equity
investments, private placement transactions and the acquisition of HMC.
20
<PAGE> 22
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Special Meeting of Shareholders on August 3, 1995, the
shareholders voted upon the following proposals:
(1) To issue and sell 10,350,000 shares of Common Stock and warrants
to purchase an additional 16,700,000 shares of Common Stock to H.
Wayne Huizenga, Westbury (Bermuda) Ltd. and Harris W. Hudson and
their respective assigns for an aggregate purchase price of
$64,075,000 (17,374,946 votes were cast for this matter, 13,066
were cast against and there were 22,312 abstentions and broker
non-votes).
(2) To issue 8,000,000 shares of Common Stock in exchange for all of
the outstanding shares of common stock of Hudson Management
Corporation and Envirocycle, Inc. (17,381,156 votes were cast for
this matter, 7,156 were cast against and there were 22,012
abstentions and broker non-votes).
(3) To adopt an amendment to the Company's Certificate of
Incorporation, which increased the number of shares of Common
Stock the Company is authorized to issue from 100,000,000 shares
to 350,000,000 shares (16,422,922 votes were cast for this matter,
982,140 were cast against and there were 5,262 abstentions and
broker non-votes).
(4) To adopt the Company's 1995 Employee Stock Option Plan covering
4,000,000 shares of Common Stock (16,622,837 votes were cast for
this matter, 756,875 were cast against and there were 30,612
abstentions and broker non-votes).
(5) To adopt the Company's 1995 Non-Employee Director Stock Option
Plan covering 1,000,000 shares of Common Stock (16,712,941 votes
were cast for this matter, 669,021 were cast against and there
were 28,362 abstentions and broker non-votes).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- - ------- ---------------------------------------------------------------------
3.1 First Amended and Restated Certificate of Incorporation of Republic
Waste Industries, Inc. (incorporated by reference from Exhibit 3.1
to the Company's Registration Statement on Form S-3, file number
33-62489).
10.1 Stock Purchase Agreement dated May 21, 1995, by and between H. Wayne
Huizenga and Republic Waste Industries, Inc. (incorporated by
reference from Exhibit (c)(1) to the Company's Form 8-K/A dated July
17, 1995).
10.2 Agreement and Plan of Merger dated May 21, 1995 by and among Republic
Waste Industries, Inc., Republic Hudson Acquisition Corporation,
Hudson Management Corporation and Harris W. Hudson and Bonnie J.
Hudson (incorporated by reference from Exhibit (c)(2) to the
Company's Form 8-K/A dated July 17, 1995).
10.3 Agreement and Plan of Merger dated May 21, 1995 by and among
Republic Waste Industries, Inc., Republic Hudson Acquisition
Corporation, Envirocycle, Inc. and Harris W. Hudson and Bonnie J.
Hudson (incorporated by reference from Exhibit (c)(3) to the
Company's Form 8-K/A dated July 17, 1995).
10.4 Stock Purchase Agreement dated May 21, 1995 by and between Harris W.
Hudson and Republic Waste Industries, Inc. (incorporated by reference
from Exhibit (c)(4) to the Company's Form 8-K/A dated July 17, 1995).
10.5 Stock Purchase Agreement dated May 21, 1995 by and between Westbury
(Bermuda) Ltd. and Republic Waste Industries, Inc. (incorporated by
reference from Exhibit (c)(5) to the Company's Form 8-K/A dated July
17, 1995).
10.6 Proxy dated as of May 21, 1995 by MGD Holdings Ltd. in favor of H.
Wayne Huizenga (incorporated by reference from Exhibit (c)(6) to the
Company's Form 8-K/A dated July 17, 1995).
10.7 Stockholder Stock Option Agreement dated as of May 21, 1995 by MGD
Holdings Ltd. in favor of H. Wayne Huizenga (incorporated by reference
from Exhibit (c)(7) to the Company's Form 8-K/A dated July 17, 1995).
10.8 First Amendment to Stock Purchase Agreement dated July 17, 1995 by
and between Republic Waste Industries, Inc. and H. Wayne Huizenga
(incorporated by reference from Exhibit (c)(8) to the Company's Form
8-K/A dated July 17, 1995).
10.9 Republic Waste Industries, Inc. 1995 Employee Stock Option Plan
(incorporated by reference from Exhibit 10.19 to the Company's
Registration Statement on Form S-1, file number 33-63209).
10.10 Republic Waste Industries, Inc. 1995 Non-Employee Director Stock
Option Plan (incorporated by reference from Exhibit 10.20 to the
Company's Registration Statement on Form S-1, file number 33-63209).
10.11 Merger Agreement, dated August 24, 1995, among Republic Waste
Industries, Inc., RS Mergersub, Inc., Southland Environmental
Services, Inc., Felix A. Crawford, individually and as Trustee of the
Felix A. Crawford Revocable Living Trust, and CFP, Ltd. (incorporated
by reference from Exhibit (c)(1) to the Company's Form 8-K, dated
August 24, 1995).
10.12 Merger Agreement, dated as of August 24, 1995, among Republic Waste
Industries, Inc., RKSA, Inc., RKSA II, Inc., Kertz Security Systems,
Inc., Kertz Security Systems II, Inc., Leon H. Brauser, Michael
Brauser, Robert Brauser and Joel Brauser (incorporated by reference
from Exhibit (c)(2.1) to the Company's Form 8-K, dated August 28,
1995).
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K:
Form 8-K/A, dated July 17, 1995, relating to the Company's
Agreements and Plans of Merger with Hudson Management Corporation
and Envirocycle, Inc. and the Company's Stock Purchase Agreements
with H. Wayne Huizenga, Westbury (Bermuda) Ltd. and Harris W.
Hudson.
Form 8-K, dated August 24, 1995, relating to the Company's Merger
Agreement with Southland Environmental Services, Inc.
Form 8-K, dated August 28, 1995, relating to the Company's Merger
Agreement with Kertz Security Systems II, Inc. and Kertz Security
Systems, Inc.
21
<PAGE> 23
Form 8-K, dated September 7, 1995, relating to a private placement
transaction and the reporting of certain financial information for
registration statement purposes.
Form 8-K/A, dated September 26, 1995, relating to a private
placement transaction and the reporting of certain financial
information for registration statement purposes.
Form 8-K, dated October 17, 1995, relating to the Company's merger
with Southland Environmental Services, Inc. and the reporting of
certain financial information for registration statement purposes.
Form 8-K, dated October 31, 1995, relating to the Company's Merger
Agreements and pending mergers with Garbage Disposal Service,
Inc., J.C. Duncan Company, Inc. and its affiliates, and Fennell
Container Co, Inc. and related companies.
22
<PAGE> 24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Republic Waste Industries, Inc., has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
REPUBLIC WASTE INDUSTRIES, INC.
Date: November 14, 1995 By: /s/ GREGORY K. FAIRBANKS
-----------------------------
Gregory K. Fairbanks
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
23
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