<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (date of earliest event reported): March 12, 1997
USA WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Commission file number 1-12154
-------
DELAWARE 73-1309529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 FANNIN, SUITE 4000
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 512-6200
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED
The audited historical combined balance sheet of Laidlaw Solid Waste
Management Group - Canadian Operations as at August 31, 1996 and
combined statements of operations and cash flows for the year then
ended and the unaudited historical combined balance sheet of
Laidlaw Solid Waste Management Group - Canadian Operations as at
November 30, 1996 and combined statements of operations and cash flows
for the three months ended November 30, 1996 are set forth as ATTACHMENT
A and are incorporated herein by reference.
(b) PRO FORMA FINANCIAL INFORMATION
Pro forma financial information for the business acquired subsequent to
December 31, 1996 is set forth as ATTACHMENT B and are incorporated
herein by reference.
(c) EXHIBITS
23.1 Consent of Independent Accountants.
<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, thereunto duly authorized.
USA WASTE SERVICES, INC.
By: /s/ GREGORY T. SANGALIS
---------------------------------
Gregory T. Sangalis
Vice President, General Counsel
& Secretary
July 22, 1997
<PAGE> 4
Attachment A
REPORT OF INDEPENDENT ACCOUNTANTS
We have audited the accompanying combined balance sheet of Laidlaw Solid Waste
Management Group - Canadian Operations (as defined in Note 1) as of August 31,
1996 and the related combined statements of operations and cash flows for the
year then ended. These financial statements are the responsibility of the
management of Laidlaw Inc. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of the Laidlaw Solid
Waste Management Group - Canadian Operations as of August 31, 1996, and the
combined results of its operations and its cash flows for the year then ended in
conformity with United States generally accepted accounting principles.
October 16, 1996 (except for Notes 1 and 8
which are as at January 15, 1997) Coopers & Lybrand
Hamilton, Canada Chartered Accountants
<PAGE> 5
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
COMBINED BALANCE SHEETS
(US $000's)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
(Unaudited)
November 30 August 31
1996 1996
$ $
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Trade and other accounts receivable (net of
allowance for doubtful accounts of $622;
August 31, 1996 - $634) 44,573 42,562
Inventories 2,574 2,613
Income taxes recoverable (Note 8) 47,536 49,236
Other current assets 5,263 5,919
-------- --------
99,946 100,330
-------- --------
FIXED ASSETS
Land, landfill sites and improvements 73,412 72,042
Buildings 29,911 27,897
Vehicles and other 239,478 229,665
-------- --------
342,801 329,604
Less: Accumulated depreciation and amortization (170,794) (164,594)
-------- --------
172,007 165,010
-------- --------
OTHER ASSETS
Goodwill (net of accumulated amortization
of $18,401; August 31, 1996 - $17,363) 116,566 113,490
Deferred charges 11,399 11,351
Other 1,388 1,482
-------- --------
129,353 126,323
-------- --------
401,306 391,663
======== ========
</TABLE>
<PAGE> 6
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
COMBINED BALANCE SHEETS
(US $000's)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
(Unaudited)
November 30 August 31
1996 1996
$ $
- ------------------------------------------------------------------
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Accounts payable 28,425 29,237
Accrued liabilities 9,727 9,324
Current portion of long-term debt (Note 3) 77 243
------- -------
38,229 38,804
LONG-TERM DEBT (Note 3) 142 264
DEFERRED INCOME TAXES (Note 8) 21,235 21,130
ENVIRONMENTAL AND OTHER LONG-TERM
LIABILITIES (Note 4) 8,497 8,360
------- -------
68,103 68,558
------- -------
COMMITMENTS AND CONTINGENCIES (Note 5)
NET INVESTMENT BY LAIDLAW INC. 333,203 323,105
------- -------
401,306 391,663
======= =======
</TABLE>
<PAGE> 7
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
COMBINED STATEMENTS OF OPERATIONS
(US $000's)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Unaudited)
For the
Three Months For the
Ended Year Ended
November 30 August 31
1996 1996
$ $
- --------------------------------------------------------------------------------
<S> <C> <C>
REVENUE 71,549 262,179
------ -------
Operating expenses (Note 6) 51,648 188,759
Selling, general and administrative expenses (Note 6) 5,098 19,175
Depreciation and amortization 7,413 30,121
------ -------
INCOME FROM OPERATIONS 7,390 24,124
------ -------
Allocated interest expense (Note 1) 2,680 11,244
Interest portion of closure and post-closure costs 102 406
Interest on long-term debt and other interest 147 250
Interest, dividend and other income (344) (1,139)
------ -------
INCOME BEFORE INCOME TAXES 4,805 13,363
DEFERRED INCOME TAX EXPENSE (Notes 1 and 8) 2,419 6,775
------ -------
NET INCOME 2,386 6,588
====== =======
</TABLE>
<PAGE> 8
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
COMBINED STATEMENTS OF CASH FLOWS
(US $000's)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Unaudited)
For the
Three Months For the
Ended Year Ended
November 30 August 31
1996 1996
$ $
- --------------------------------------------------------------------------------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN):
Operating activities 9,829 28,887
Investing activities (13,922) (65,871)
Financing activities 14,191 96,850
------- -------
10,098 59,866
NET INVESTMENT BY LAIDLAW INC. - BEGINNING OF PERIOD 323,105 263,239
------- -------
NET INVESTMENT BY LAIDLAW INC. - END OF PERIOD 333,203 323,105
======= =======
OPERATING ACTIVITIES
Net Income 2,386 6,588
Items not affecting cash:
Depreciation and amortization 7,413 30,121
Deferred income taxes 1,329 6,775
Other (408) (3,725)
------- -------
10,720 39,759
Cash used in financing working capital
excluding the effect of acquisitions:
Trade and other accounts receivable (2,011) (4,722)
Inventories 39 (654)
Other current assets 656 (2,308)
Accounts payable and accrued liabilities 425 (3,188)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,829 28,887
======= =======
</TABLE>
<PAGE> 9
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
COMBINED STATEMENTS OF CASH FLOWS (CONT'D)
(US $000's)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(Unaudited)
For the
Three Months For the
Ended Year Ended
November 30 August 31
1996 1996
$ $
- ---------------------------------------------------------------------------
<S> <C> <C>
INVESTING ACTIVITIES
Purchase of fixed assets (9,538) (20,437)
Net proceeds from sale of fixed and other assets 983 1,658
(Increase) decrease in deferred charges 71 (1,278)
Expended on acquisitions (Note 7) (5,532) (46,046)
Net decrease in other assets 94 232
------- -------
NET CASH USED IN INVESTING ACTIVITIES (13,922) (65,871)
======= =======
FINANCING ACTIVITIES
Repayment of long-term debt (491) (327)
Net advances from Laidlaw Inc. 14,682 97,177
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 14,191 96,850
======= =======
</TABLE>
<PAGE> 10
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS
(US $000'S)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
Under the terms of a Stock Purchase Agreement dated September 17, 1996
(the "Laidlaw Agreement") among Allied Waste Industries, Inc. ("Allied")
and certain affiliates of Allied, and Laidlaw Inc. ("Laidlaw") and certain
affiliates of Laidlaw, Allied purchased the solid waste management
business of Laidlaw (the "Laidlaw Solid Waste Management Group"). The
Laidlaw Solid Waste Management Group provides solid waste collection,
compaction, disposal, recycling, resource recovery, transportation and
transfer services to commercial, industrial and residential customers in
the United States and Canada. Laidlaw conducted the solid waste management
business directly and indirectly through its subsidiaries, Laidlaw Waste
Systems, Inc. Laidlaw Waste Systems (Canada) Ltd. and Laidlaw Medical
Services Ltd. ("Medical Services").
Subsequent to the Laidlaw Agreement, a Share Purchase Agreement dated
January 15, 1997 (the "Agreement") among USA Waste Services, Inc. ("USA
Waste") and certain affiliates of USA Waste, and Allied and certain
affiliates of Allied was entered into. Under the terms of the Agreement,
USA Waste has offered to purchase the Canadian operations of the Laidlaw
Solid Waste Management Group ("Laidlaw Solid Waste Management Group -
Canadian Operations" or the "Group") from Allied. The Group provides solid
waste collection, compaction, disposal, recycling, transportation and
transfer services to commercial, industrial, and residential customers in
Canada. Allied conducts this business directly or indirectly through its
subsidiaries, Allied Waste Holdings (Canada) Ltd., Laidlaw Waste Systems
Ltd., and Medical Services.
Interest expense associated with intercompany financing with the Group's
parent, Laidlaw, has been allocated to the Group based on its share of the
parent's net assets. Income taxes have been calculated using applicable
Canadian income tax rates applied to the Group's income for tax purposes.
These special purpose financial statements give effect to the combination
of the operations constituting the Laidlaw Solid Waste Management Group -
Canadian Operations. The Group's intercompany loans and advances have been
excluded from the combined balance sheet.
The surplus funds of the Group are regularly transferred to Laidlaw, and
any financing requirements are provided by Laidlaw. Accordingly, no cash
or bank indebtedness balances are reported in these combined financial
statements.
<PAGE> 11
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts for certain revenues and
expenses during the reported period. Actual results could differ from
those estimates.
A summary of significant accounting policies followed in the preparation
of these combined financial statements is as follows:
(a) INVENTORIES
Inventories are valued at the lower of cost, determined on a first-in,
first-out basis, and replacement cost.
(b) FIXED ASSETS
Landfill sites, preparation costs, and improvements are recorded at cost
and amortized on the basis of landfill capacity utilized during the year.
Depreciation and amortization of other property and equipment is provided
substantially on a straight-line basis over their estimated useful lives
which are as follows:
Buildings 20 to 40 years
Vehicles and other 5 to 15 years
Management periodically reviews the carrying values of its fixed assets to
determine whether such values are recoverable. Any resulting write downs
are charged against income.
<PAGE> 12
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(c) OTHER ASSETS
Goodwill is amortized on a straight-line basis over forty years. The Group
reviews the value assigned to goodwill to determine if its recoverability
has been impaired by conditions affecting the Group. The amount of any
impairment is charged against income.
Deferred charges are amortized on a straight-line basis over a two to nine
year period depending on the nature of the deferred costs.
(d) FINANCIAL INSTRUMENTS
The Group's accounts receivable, accounts payable and long-term debt
constitute financial instruments. Based on available market information,
the carrying value of these instruments approximates their fair value as
at August 31, 1996. Concentrations of credit risk in accounts receivable
are limited, due to the large number of customers comprising the Group's
customer base throughout Canada. The Group performs ongoing credit
evaluations of its customers, but does not require collateral to support
customer accounts receivable. The Group establishes an allowance for
doubtful accounts based on the credit risk applicable to particular
customers, historical trends and other relevant information.
(e) REVENUE
Amounts billed to customers prior to providing the related services are
deferred and later reported as revenues in the period in which the
services are rendered.
(f) ENVIRONMENTAL LIABILITIES
Environmental liabilities include accruals for costs associated with
closure and post-closure monitoring and maintenance of the Group's
landfills and remediation at certain of the Group's facilities. The Group
accrues for closure and post-closure costs over the life of the landfill
site as airspace is consumed.
(g) FOREIGN CURRENCY TRANSLATION
The majority of the Group's transactions and account balances are
denominated in Canadian dollars. For the presentation in these combined
financial statements, the accounts are translated to U.S. dollars on the
following basis:
Assets and liabilities at the exchange rate in effect at the balance sheet
date and revenue and expenses at weighted monthly average exchange rates
for the year.
<PAGE> 13
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(h) ACCOUNTING PRONOUNCEMENT NOT YET REQUIRED TO BE ADOPTED
The Group does not expect the adoption of "SFAS" No. 121 "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" to have a materially adverse effect on the Group's financial position
or results of operations. In 1997 the Group is required to adopt SFAS No.
121, issued by the Financial Accounting Standards Board. SFAS No. 121
requires that long-lived assets be reviewed for impairment whenever events
or circumstances indicate that the carrying amount of the asset may not be
recoverable. If the sum of the expected future cash flows (undiscounted and
without interest charges) from an asset to be held and used in operations
is less than the carrying value of the asset, an impairment loss must be
recognized in the amount of the difference between the carrying value and
the fair value. Should events and circumstances indicate that any of the
Group's landfills be reviewed for possible impairment, such review for
recoverability will be made in accordance with Emerging Issues Task Force
Discussion Issue ("EITF") 95-23. The EITF outlines how cash flows for
environmental exit costs should be determined and measured.
SFAS No. 121 has been adopted for the unaudited period ended November 30,
1996. The Group has evaluated these issues and has determined that no
events or circumstances have occurred that require the evaluation of any of
the Group's landfills for possible impairment.
(i) INTERIM REPORTING
The combined balance sheets of Laidlaw Solid Waste Management Group -
Canadian Operations as of November 30, 1996, the related, combined
statements of operations for the three months ended November 30, 1996 and
the combined statements of cash flows for the three months ended November
30, 1996 are unaudited. In the opinion of management, such financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of financial position,
results of operations, and cash flows for the period presented.
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
(Unaudited)
November 30 August 31
1996 1996
$ $
<S> <C> <C>
Notes due at various dates from 1998 to 2002
with interest rates from 0% to 8% 219 507
Less: Current portion 77 243
--- ---
142 264
=== ===
</TABLE>
The aggregate amount of minimum payments required on long-term debt in
each of the years indicated is as follows:
$
Year ending August 31, 1997 243
1998 168
1999 32
2000 32
2001 32
---
507
===
<PAGE> 14
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
4. ENVIRONMENTAL LIABILITIES
The Group has recorded liabilities for closure and post-closure monitoring
and environmental remediation costs as follows:
August 31
1996
$
Current portion of environmental liabilities,
included in accrued liabilities 748
Non-current portion of environmental liabilities 5,409
-----
6,157
=====
The Group, in the normal course of its business, expends funds for
environmental protection and remediation, but does not expect these
expenditures to have a materially adverse effect on its financial
condition or results of operations, since its business is based upon
compliance with environmental laws and regulations and its services are
priced accordingly.
Closure and post-closure costs for the Group's landfills are based upon
the local landfill regulations governing the facility. Costs include such
items as final capping of the site, methane gas and leachate management,
groundwater monitoring, and operation and maintenance costs to be incurred
during the period after the facility closes and ceases to accept waste.
The Group has also established procedures to routinely evaluate potential
remedial liabilities at sites which it owns or operated, or to which it
transported waste. The Group routinely reviews and evaluates sites
requiring remediation, giving consideration to the nature (i.e. owner,
operator, transporter or generator), and the extent (i.e. amount and
nature of waste hauled to the location, number of years of site operation
by the Group, or other relevant factors) of the Group's alleged connection
with the site, the accuracy and strength of evidence connecting the Group
to the location, the number, connection and financial ability of other
named and unnamed potentially responsible parties and the nature and
estimated cost of the likely remedy. Where the Group concludes that it is
probable that a liability has been incurred, provision is made in the
financial statements, based upon management's judgement and prior
experience, for the Group's best estimate of the liability. Such estimates
are subsequently revised as deemed necessary as additional information
becomes available.
<PAGE> 15
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
4. ENVIRONMENTAL LIABILITIES (CONT'D)
Estimates of the extent of the Group's degree of responsibility for
remediation of a particular site and the method and ultimate cost of
remediation require a number of assumptions and are inherently difficult.
The ultimate outcome of these items may differ from current estimates. The
Group believes that its extensive experience in the environmental services
business provides a reasonable basis for making its estimates. However,
these estimates may include a range of possible outcomes. In such cases,
the Group provides for the amount within the range that constitutes its
best estimate. The Group's best estimate is at the higher range of
possible outcomes. While the Group does not currently anticipate that any
adjustment to its estimates would be material to its financial statements,
it is reasonably possible that technological, regulatory or enforcement
developments, the results of environmental studies or other factors could
necessitate the recording of additional liabilities that could be
material. The impact of such future events cannot be estimated at the
current time.
Where the Group believes that both the amount of a particular
environmental liability and the timing of the payments are reliably
determinable, the cost in current dollars is discounted to present value,
assuming inflation of 3% and a risk free discount rate of 8%. Had the
Group not discounted any portion of its liability, the amount recorded
would have been increased by approximately $9.4 million as at August 31,
1996.
The majority of the Group's active landfill sites have estimated remaining
lives ranging from 3 to approximately 23 years based upon current site
plans and anticipated annual volumes of waste. As at August 31, 1996, the
Group estimates that during this remaining site life, it will provide for
an additional $24.0 million of closure and post-closure costs, including
accretion for the discount recognized to date.
Anticipated payments of environmental liabilities for each of the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
$
<S> <C>
Year ending August 31, 1997 748
1998 466
1999 1,154
2000 804
2001 663
Thereafter 26,625
------
30,460
======
</TABLE>
<PAGE> 16
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
5. COMMITMENTS AND CONTINGENCIES
(a) LEASE COMMITMENTS
Rental expense incurred under operating leases amounted to $2,412 in the
year ended August 31, 1996.
Rentals payable under operating leases for premises and equipment are as
follows:
<TABLE>
<CAPTION>
$
<S> <C>
Year ending August 31, 1997 2,241
1998 2,031
1999 1,874
2000 1,731
2001 1,143
Thereafter 5,062
------
14,082
======
</TABLE>
(b) LEGAL PROCEEDINGS
The Group is subject to extensive and evolving laws and regulations and
has implemented its own environmental safeguards to respond to regulatory
requirements. In the normal course of business, the Group provides for
closure and post-closure accruals to comply with all governmental
regulations.
In the normal course of conducting its operations, the Group may become
involved in certain legal and administrative proceedings. Some of these
actions may result in fines, penalties or judgements against the Group
which may have an impact on the financial results for a particular period.
Management expects that such matters in process at August 31, 1996 will
not have a materially adverse effect on this Group's financial position or
its results from operations.
(c) LETTERS OF CREDIT AND GUARANTEES
At November 30, 1996, the Group has $14,124 (August 31, 1996 - $14,503) in
outstanding letters of credit, of which the most significant are in
support of the Group's undertakings in respect of landfill closure and
post-closure activities required in obtaining regulatory operating
permits.
In addition, Laidlaw Inc. and its affiliates have provided guarantees and
additional letters of credit in the aggregate amount of approximately $40
million (August 31, 1996 - $40 million) for closure and post-closure
activities and bid bonds.
<PAGE> 17
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
6. RELATED PARTY TRANSACTIONS
Included in operating expenses and selling, general and administrative
expenses are management fee income, insurance premiums and rental charges
paid to affiliated companies as follows:
<TABLE>
<CAPTION>
For the
Year Ended
August 31
1996
$
<S> <C>
Management fees income - net 3,787
=====
Insurance premiums expense 184
=====
Rental charges expense 198
=====
The Group directly incurs all of the significant costs of doing business
</TABLE>
<PAGE> 18
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
7. ACQUISITIONS
A summary of the Group's acquisitions of solid waste management companies
for the year ended August 31, 1996 is as follows:
<TABLE>
<CAPTION>
$
<S> <C>
Assets acquired - at fair value:
Fixed assets 10,661
Goodwill 34,336
Long-term investments and other assets 6,606
------
51,603
Long-term liabilities assumed 7,397
Working capital 1,840
------
Expended in acquisitions 46,046
======
Number of businesses acquired 6
======
Annualized revenue acquired (unaudited) 38,000
======
</TABLE>
PRO FORMA DATA (UNAUDITED)
The condensed pro forma statement of operations data, as if acquisitions
for the year ended August 31, 1996 had occurred at the beginning of the
year, is as follows:
<TABLE>
<CAPTION>
$
<S> <C>
Statement of operations data:
Revenue 275,170
Net income 6,915
</TABLE>
<PAGE> 19
LAIDLAW SOLID WASTE MANAGEMENT
GROUP - CANADIAN OPERATIONS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONT'D)
(US $000'S)
- --------------------------------------------------------------------------------
8. INCOME TAXES
The Company's effective income tax rates are as follows:
<TABLE>
<CAPTION>
(Unaudited)
For the
Three Months For the
Ended Year Ended
November 30 August 31
1996 1996
% %
<S> <C> <C>
Statutory Canadian federal income tax 29.1 29.1
Net provincial income taxes 14.4 14.4
Expenses not deductible 6.9 7.2
---- ----
50.4 50.7
==== ====
</TABLE>
The tax effect of temporary differences which comprise deferred income
taxes shown on the balance sheet are as follows:
<TABLE>
<CAPTION>
(Unaudited)
November 30 August 31
1996 1996
$ $
<S> <C> <C>
Deferred tax assets:
Accrued remediation and closure costs 2,659 2,621
Other 1,221 1,204
------ ------
Net deferred tax assets 3,880 3,825
Excess of tax over book depreciation 25,115 24,955
------ ------
Net deferred tax liability 21,235 21,130
====== ======
</TABLE>
As per the Laidlaw Agreement and the Agreement, any loss carryforwards,
loss carry backs, and income tax credits for tax purposes, included in
income taxes recoverable which result in tax benefits to the Group, must
ultimately be refunded to Laidlaw Inc. As at November 30, 1996, the entire
income tax recoverable balance of $47,536 (August 31, 1996 - $49,236)
consisted of such items.
<PAGE> 20
ATTACHMENT B
USA WASTE SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On March 12, 1997, USA Waste Services, Inc. (the "Company") acquired all of
Canadian solid waste subsidiaries of Allied Waste Industries, Inc. ("Allied")
for US $518,000,000 in a transaction accounted for as a purchase. The acquired
businesses ("Allied-Canada") include seven landfills, 41 collection operations,
and eight transfer stations. Allied purchased these Canadian solid waste
subsidiaries under the terms of a Stock Purchase Agreement dated September 17,
1996 (the "Laidlaw Agreement") between Allied and Laidlaw Inc. ("Laidlaw"), in
which Allied purchased all the sold waste management business of Laidlaw. The
Pro Forma Condensed Consolidated Financial Statements give effect to the
purchase of the Canadian operations of the Laidlaw Solid Waste Management Group
("Laidlaw Solid Waste Management Group - Canadian Operations").
On February 7, 1997, the Company issued $535,275,000 of 4% convertible
subordinated notes, due on February 1, 2002 ("Notes Offering"). The notes are
convertible into shares of the Company's common stock at a conversion price of
$43.56 per share. Concurrent with the Notes Offering, the Company completed a
public offering of 11,500,000 shares of its common stock, priced at $35.125 per
share ("Equity Offering") for net proceeds of approximately $387,438,000. The
proceeds from the Notes Offering and Equity Offering were primarily used to
repay debt under the Company's Credit Facility and for general corporate
purposes.
The accompanying pro forma condensed consolidated balance sheet as of December
31, 1996 has been prepared as if the acquisition, Notes Offering and Equity
Offering which occurred after December 31, 1996 were consummated as of that
date. The accompanying pro forma condensed consolidated statements of
operations for the year ended December 31, 1996 present the pro forma results
of operation of the Company as if the acquisition, Notes Offering and Equity
Offering had occurred on January 1, 1996. The accompanying pro forma
condensed consolidated financial statements should be read in conjunction with
the Company's Consolidated Financial Statements and related notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 as amended by Form 10-K/A filed April 30, 1997.
<PAGE> 21
USA WASTE SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands, Except Share and Par Value Amounts)
(Unaudited)
December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Allied-Canada Adjustments
ASSETS USA Waste (Note 2) (Note 2)
---------------- ---------------- -----------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalent $ 23,511 $ - $ -
Accounts receivable, net 210,038 36,673 (1,600) (a)
Notes and other receivables 25,579 7,900 (400) (a)
Deferred income taxes 39,714 47,536 (47,536) (a)
Prepaid expenses and other 41,139 7,837 (200)
---------------- ---------------- -----------------
Total current assets 339,981 99,946 (49,736)
Notes and other receivables 49,059 - -
Property and equipment, net 1,810,251 172,007 105,250 (a)
Excess of cost over net assets of acquired
businesses, net 433,913 116,566 203,434 (a)
Other intangibles, net 83,486 - 5,000 (a)
Other assets 113,815 12,787 (11,399) (a)
Total assets ---------------- ---------------- -----------------
$ 2,830,505 $ 401,306 $ 252,549
================ ================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 94,900 $ 28,425 $ -
Accrued liabilities 172,916 9,727 12,058 (a)
Deferred revenues 23,450 - -
Current maturities of long-term debt 28,695 77 (77) (a)
---------------- ---------------- -----------------
Total current liabilities 319,961 38,229 11,981
Long-term debt 1,158,305 142 (142) (a)
518,000 (b)
Deferred income taxes 8,786 21,235 43,765 (a)
Closure, post-closure and other liabilities 188,177 8,497 12,148 (a)
---------------- ---------------- -----------------
1,675,229 68,103 585,752
---------------- ---------------- -----------------
Commitments and contingencies - - -
Stockholders' equity:
Preferred stock, $1.00 par value; 10,000,000 shares
authorized: none issued - - -
Common stock, $.01 par value; 300,000,000 shares
authorized; 139,609,250 historical shares issued and
outstanding (151,109,250) pro forma shares issued and
outstanding 1,396 - -
Additional paid-in capital 1,255,856 333,203 (333,203) (c)
Retained earnings (accumulated deficit) (85,649) - -
Foreign currency translation adjustment (15,843) - -
Less treasury stock at cost (484) - -
---------------- ---------------- -----------------
Total stockholders' equity 1,155,276 333,203 (333,203)
---------------- ---------------- -----------------
Total liabilities and stockholders' equity $ 2,830,505 $ 401,306 252,549
================ ================ =================
</TABLE>
<TABLE>
<CAPTION> Other
Pro Forma
Adjustments
ASSETS (Note 3) Pro Forma
---------------- ----------------
<S> <C> <C>
Current Assets:
Cash and cash equivalent $ - $ 23,511
Accounts receivable, net - 245,111
Notes and other receivables - 33,079
Deferred income taxes - 39,714
Prepaid expenses and other - 48,776
---------------- ----------------
Total current assets - 390,191
Notes and other receivables - 49,059
Property and equipment, net - 2,087,508
Excess of cost over net assets of acquired
businesses, net - 753,913
Other intangibles, net - 88,486
Other assets 14,000 (d) 129,203
Total assets ---------------- ----------------
$ 14,000 $ 3,498,360
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ - $ 123,325
Accrued liabilities - 194,701
Deferred revenues - 23,450
Current maturities of long-term debt - 28,695
---------------- ----------------
Total current liabilities - 370,171
Long-term debt (383,438) (d) 1,302,867
Deferred income taxes - 73,786
Closure, post-closure and other liabilities - 208,822
---------------- ----------------
(383,438) 1,955,646
---------------- ----------------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $1.00 par value; 10,000,000 shares
authorized: none issued - -
Common stock, $.01 par value; 300,000,000 shares
authorized; 139,609,250 historical shares issued and
outstanding (151,109,250) pro forma shares issued and
outstanding 115 (d) 1,511
Additional paid-in capital 387,323 (d) 1,643,179
Retained earnings (accumulated deficit) - (85,649)
Foreign currency translation adjustment - (15,843)
Less treasury stock at cost - (484)
---------------- ----------------
Total stockholders' equity 387,438 1,542,714
---------------- ----------------
Total liabilities and stockholders' equity $ 14,000 $ 3,498,360
================ ================
</TABLE>
See notes to pro forma condensed consolidated financial statements
<PAGE> 22
USA WASTE SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
For the year ended December 31, 1996
<TABLE>
<CAPTION>
PREACQUISITION OTHER
PERIOD PRO FORMA PRO FORMA
ALLIED-CANADA ADJUSTMENTS ADJUSTMENTS
USA WASTE (NOTE 2) (NOTE 2) (NOTE 3) PRO FORMA
----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating Revenues $ 1,313,388 $ 268,698 $ - $ - $ 1,582,086
----------- --------- -------- ----------- -----------
Costs and expenses:
Operating (exclusive of depreciation and
amortization shown below) 704,917 194,225 - - 899,142
General and administrative 160,539 19,478 - - 180,017
Depreciation and amortization 153,168 30,334 6,013 (e) - 195,601
6,086 (f)
Merger costs 120,656 - - - 120,656
Unusual items 63,800 - - - 63,800
----------- --------- -------- ----------- -----------
1,203,080 244,037 12,099 - 1,459,216
----------- --------- -------- ----------- -----------
Income from operations 110,308 24,661 (12,099) - 122,870
----------- --------- -------- ----------- -----------
Interest expense (45,547) (11,404) 11,404 (g) 33,112 (j) (43,515)
(31,080)(h)
Interest income 5,267 - - - 5,267
Other, net 8,060 703 - - 8,763
----------- --------- -------- ----------- -----------
(32,220) (10,701) (19,676) 33,112 (29,485)
----------- --------- -------- ----------- -----------
Income before income taxes 78,088 13,960 (31,775) 33,112 93,385
Provision for income taxes 45,142 7,034 (13,076)(i) 13,245 (k) 52,345
----------- --------- -------- ----------- -----------
Net Income $ 32,946 $ 6,926 $(18,699) $ 19,867 $ 41,040
=========== ========= ======== =========== ===========
Earnings per common share $ 0.24 $ 0.27
=========== ===========
Weighted average number of common and
common equivalent shares outstanding 139,740 11,500 (l) 151,240
=========== =========== ===========
</TABLE>
See notes to proforma condensed consolidated financial statements.
<PAGE> 23
USA WASTE SERVICES, INC.
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed consolidated financial
statements (the "Pro Forma Financial Statements") for USA Waste Services, Inc.
(the "Company") have been prepared based upon certain pro forma adjustments to
the historical consolidated financial statements of the Company set forth in
its previously filed Annual Report on Form 10-K for the year ended December 31,
1996, as amended by Form 10-K/A filed April 30, 1997.
The Pro Forma Financial Statements are based on certain assumptions and
preliminary estimates which are subject to change, but management does not
believe any possible deviations will be material to the Pro Forma Financial
Statements. The Pro Forma Financial Statements do not purport to be indicative
of the results which would actually have been obtained had the acquisition,
Notes Offering and Equity Offering been completed on the dates indicated or
which may be obtained in the future.
2. BUSINESS ACQUIRED
On March 12, 1997, USA Waste Service, Inc. (the "Company") acquired all of the
Canadian solid waste subsidiaries of Allied Waste Industries, Inc. ("Allied")
for US $518,000,000 in a transaction accounted for as a purchase. The acquired
businesses ("Allied-Canada") include seven landfills, 41 collection operations,
and eight transfer stations. Allied purchased these Canadian solid waste
subsidiaries under the terms of a Stock Purchase Agreement dated September 17,
1996 (the "Laidlaw Agreement") between Allied and Laidlaw Inc. ("Laidlaw"), in
which Allied purchased all the solid waste management business of Laidlaw. The
Pro Forma Condensed Consolidated Financial Statements give effect to the
purchase of the Canadian operations of Laidlaw Solid Waste Management Group
("Laidlaw Solid Waste Management Group - Canadian Operations").
The pro forma adjustments which have been made to the acquired business are
described below:
a) Reflects the adjustments to the historical balance sheet of the
business acquired for the purchase price allocation. The Company
has allocated the cost of the acquired business to the assets
acquired and liabilities assumed based on estimates of fair
values thereof. The increase in accrued liabilities and closure,
post-closure, and other liabilities is due to a working capital
purchase price adjustment included in the purchase agreement to
be paid to the previous owners of approximately $8,200,000 in
addition to the original $518,000,000 purchase price, based on
working capital information as if the transaction had occurred
on December 31, 1996. The increase also includes approximately
$10,000,000 for unfavorable contracts assumed by USA Waste, and
approximately $6,000,000 of other liabilities and exit costs,
including
<PAGE> 24
severance costs, legal fees, and other transaction costs
relating to the acquisition. Management does not believe that
any possible deviations of estimated fair value and actual fair
value will be material to the Pro Forma financial statements.
b) Reflects the financing of the US $518,000,000 purchase price of
the acquisition from the Company's credit facility, as if the
transaction had occurred January 1, 1996. In connection with the
actual financing of the acquisition, the Company entered into a
$350,000,000 note bearing interest at the bankers' acceptance
rate plus 0.45%, maturing in seven years. Of the remaining
balance of the purchase price, $80,000,000 was borrowed by the
Company under its existing credit senior revolving credit
facility and $88,000,000 was from the proceeds of the Company's
Notes Offering and Equity Offering in February, 1997.
c) Reflects the elimination of the equity of the business acquired.
d) Reflects the decrease in long-term debt for the effects of the
assumed utilization of net proceeds from the Equity Offering and
Notes Offering and the issuance of $535,275,000 of 4%
Convertible Subordinated Debt under the Notes Offering, as if
such transactions had occurred on December 31, 1996, as follows:
<TABLE>
<S> <C>
Proceeds from Equity Offering $387,438,000
Proceeds from Notes Offering 535,275,000
Less: Notes Offering Transaction Costs (14,000,000)
------------
Net Proceeds 908,713,000
4% Convertible Subordinated Debt (535,275,000)
------------
Change in Long-term debt $373,438,000
============
</TABLE>
e) Reflects additional depletion due to the allocation of the
purchase price of the acquisition. Landfill costs are depleted
over the anticipated life of the site on a units-of-production
basis.
f) Reflects additional amortization of goodwill and customer lists
due to the allocation of the purchase price of the acquisition.
Goodwill is amortized over a 40 year period on a straight-line
basis. Customer lists are amortized from 5 to 7 years on a
straight-line basis.
g) Reflects the elimination of all the acquired business' interest
expense that was allocated from its previous corporate
affiliate.
h) Reflects interest expense at a rate of 6% on the $518,000,000 of
indebtedness incurred in connection with financing the business
acquired as if the acquisition had occurred on January 1, 1996.
i) Reflects the income tax effect related to the above adjustments
to the operations of the business acquired using the measurement
principles contained in SFAS 109.
<PAGE> 25
3. OTHER PRO FORMA ADJUSTMENTS
j) Reflects the changes in interest expense as a result of the
following financing transactions as if these transactions had
occurred on January 1, 1996:
o Reduction in interest expense of $54,523,000 due to the
use of net proceeds of $908,713,000 from the sale of
Common Stock and 4% Subordinated Debt to finance the
$518,000,000 purchase price of the business acquired and
to repay $366,488,000 under the revolving line of credit
that existed at January 1, 1996, and to repay
$24,225,000 of other indebtedness that existed at
January 1, 1996, all with an average interest rate of
6%.
o Increase in interest expense of $21,411,000 due to the
issuance of $535,275,000 of 4% Convertible Subordinated
Debt.
k) Reflects the income tax effect of the above pro forma adjustment
using the measurement principles contained in SFAS 109.
l) Reflects the additional weighted average common and common
equivalent shares outstanding which have been included to
reflect the Equity Offering as if it had occurred January 1,
1996.
<PAGE> 26
USA WASTE SERVICES, INC.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
23.1 Consent of Independent Accountants
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
USA Waste Services, Inc. on Form S-3 (File Nos. 33-42988, 33-43809, 33-76226,
33-85018, 333-00097, 333-08573, 333-17421, 333-17453, and 333-21035), on Form
S-4 (File Nos. 33-77110, 33-59259, 33-60103, 33-63981, 333-02181, 333-08161,
and 333-14109), and on Form S-8 (File Nos. 33-43619, 33-72436, 33-84988,
33-84990, 33-59807, 33-61621, 33-61625, 33-61627, 333-14115, and 333-14613), of
our report dated October 16, 1996 (except for Notes 1 and 8 which are as at
January 15, 1997), on our audit of the financial statements of Laidlaw Solid
Waste Management Group - Canadian Operations as at August 31, 1996 and for the
year then ended, which is included in this Current Report on Form 8-K/A.
COOPERS & LYBRAND
Chartered Accountants
Hamilton, Canada
July 22, 1997
