SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 17, 1996
Allied Waste Industries, Inc.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
0-19285 88-0228636
(Commission File Number) (IRS Employer Identification No.)
7201 East Camelback Road, Suite 375
Scottsdale, Arizona 85251
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 423-2946
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Container Corporation of Carolina
(i) Report of Independent Public Accountants
(ii) Balance Sheets - December 31, 1995 and March 31, 1996
(unaudited)
(iii) Statements of Operations for the Year Ended December 31,
1995 and the Three Months Ended March 31, 1996
(unaudited)
(iv) Statements of Shareholders' Equity for the Year Ended
December 31, 1993 and 1994 and Three Months Ended
March 31, 1996 (unaudited)
(v) Statements of Cash Flows for the Year Ended December 31,
1995 and the Three Months Ended March 31, 1996
(unaudited)
(vi) Notes to Financial Statements
(b) Pro Forma Combined Financial Statements of Allied Waste
Industries, Inc.
(i) Introduction
(ii) Pro Forma Combined Balance Sheet - March 31, 1996
(unaudited)
(iii) Pro Forma Combined Statement of Operations for the Three
Months Ended March 31, 1996 (unaudited)
(iv) Pro Forma Combined Statement of Operations for the Year
Ended December 31, 1995 (unaudited)
(v) Pro Forma Combined Statement of Operations for the Year
Ended December 31, 1994 (unaudited)
(vi) Pro Forma Combined Statement of Operations for the Year
Ended December 31, 1993 (unaudited)
(vii) Notes to Pro Forma Combined Financial Statements
(unaudited)
(c) Exhibits
23 Consent of Coopers & Lybrand, L.L.P.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Container Corporation of Carolina:
We have audited the accompanying balance sheet of Container Corporation of
Carolina as of December 31, 1995 and the related statements of income,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Container Corporation of
Carolina as of December 31, 1995 and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed further in Footnote 10, on May 17, 1996, the Company entered into
an agreement and plan of merger.
/s/ Coopers & Lybrand, L.L.P.
Coopers & Lybrand, L.L.P.
Charlotte, North Carolina
May 20, 1996
<PAGE>
CONTAINER CORPORATION OF CAROLINA
BALANCE SHEETS
December 31, 1995 and March 31, 1996
__________
ASSETS
December 31, March 31,
1995 1996
(unaudited)
Current assets:
Cash $ 426,611 $ 63,593
Accounts receivable:
Trade, net of allowance for
doubtful accounts of $105,000 4,809,083 5,023,971
Other 1,036,482 1,169,690
Parts and supplies inventories 493,752 538,640
Prepaid expenses 266,239 279,506
Total current assets 7,032,167 7,075,400
Property and equipment, net 16,403,921 16,488,098
Intangible assets, net 4,066,543 3,980,131
Cash value of life insurance
(net of policy loans of $518,432 at
December 31, 1995 and $1,418,432
at March 31, 1996) 1,531,716 685,128
Other assets 497,555 568,755
$ 29,531,902 $ 28,797,389
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
debt $ 14,942,949 $ 14,216,386
Accounts payable 5,045,482 4,795,441
Services billed in advance 1,986,440 1,999,736
Accrued liabilities 1,447,645 1,140,425
Total current liabilities 23,422,516 22,151,988
Deferred compensation 91,645 128,475
Long-term debt 2,317,542 2,509,752
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock, no par value;
1,000 shares authorized; 110.78
issued and outstanding at
December 31, 1995 and
March 31, 1996 307,763 307,763
Retained earnings 4,783,906 5,121,438
Shareholder receivables (1,391,470) (1,422,027)
Total shareholders' equity 3,700,199 4,007,174
$ 29,531,902 $ 28,797,389
The accompanying notes are an integral part of the financial statements
<PAGE>
CONTAINER CORPORATION OF CAROLINA
STATEMENTS OF INCOME
for the Year Ended December 31, 1995 and
for the Three Months Ended March 31, 1996
December 31, March 31,
1995 1996
(unaudited)
Operating revenue $ 38,026,565 $ 10,151,447
Operating expenses 29,339,556 7,724,975
Gross profit 8,687,009 2,426,472
Selling, general and administrative 6,275,453 1,643,826
expenses (including officers compensation
of $523,941 and $180,324, respectively)
Loss on equipment abandonment (289,598) --
Intangible asset write-off (236,722) --
Income from operations 1,885,236 782,646
Other income (expense):
Interest expense, net of interest income (1,373,797) (340,982)
Income taxes (Note 1) -- --
Other, net 13,179 34,945
Net income $ 524,618 $ 476,609
Net income per share $ 4,736 $ 4,302
The accompanying notes are an integral part of the financial statements
<PAGE>
CONTAINER CORPORATION OF CAROLINA
STATEMENTS OF SHAREHOLDERS' EQUITY
for the Year Ended December 31, 1995 and
the Three Months Ended March 31, 1996
Common Stock Retained Shareholder
Shares Amount Earnings Receivables Total
Balance,
December 31,
1994 110.78 $ 307,763 $ 5,097,300 $ (2,066,433) $ 3,338,630
Net income -- -- 524,618 -- 524,618
Shareholder loans -- -- -- (104,140) (104,140)
Shareholder
repayments -- -- -- 779,103 779,103
Distributions -- -- (838,012) -- (838,012)
Balance,
December 31,
1995 110.78 307,763 4,783,906 (1,391,470) 3,700,199
Net income
(unaudited) -- -- 476,609 -- 476,609
Shareholder loans
(unaudited) -- -- -- (143,774) (143,772)
Shareholder
repayments
(unaudited) -- -- -- 113,215 113,215
Distributions
(unaudited) -- -- (139,077) -- (139,077)
Balance, March 31,
1996
(unaudited) 110.78 $ 307,763 $ 5,121,438 $ (1,422,027) $ 4,007,174
The accompanying notes are an integral part of the financial statements
<PAGE>
CONTAINER CORPORATION OF CAROLINA
STATEMENTS OF CASH FLOWS
for the Year Ended December 31, 1995 and
for the Three Months Ended March 31, 1996
December 31, March 31,
1995 1996
(unaudited)
Cash flows from operating activities:
Net income $ 524,618 $ 476,609
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,171,439 771,128
(Gain)loss on sale, disposal and
abandonment of property and equipment 324,850 (27,444)
Write off of intangible assets 236,722 --
Changes in operating assets and
liabilities:
Accounts receivable (505,313) (348,096)
Parts and supplies inventories 68,716 (44,888)
Prepaid expenses (47,396) (13,267)
Other assets (252,800) (71,077)
Accounts payable 1,240,208 250,206
Services billed in advance 84,820 13,296
Accrued liabilities 616,399 (307,220)
Deferred compensation 12,922 36,830
Net cash provided by operating
activities 5,475,185 736,077
Cash flows from investing activities:
Capital expenditures (4,002,079) (1,295,475)
Proceeds from sale of fixed assets 263,053 53,779
Collection on loans to affiliated company
or shareholders 1,069,312 113,215
Loans to affiliated companies or shareholders (176,325) (143,772)
Acquisition of companies (1,464,068) --
Borrowings against cash value of life
insurance policies -- 900,000
Increase in cash value of life insurance
policies (272,117) (53,412)
Net cash used in investing activities (4,582,224) (425,665)
Cash flow from financing activities:
Long-term debt proceeds 17,954,996 5,279,778
Principal payments on long-term debt (17,653,710) (5,814,131)
Distribution to shareholders (838,012) (139,077)
Net cash provided (used) by
financing activities (536,726) (673,430)
Net increase (decrease) in cash 356,235 (363,018)
Cash, beginning of period 70,376 426,611
Cash, end of period $ 426,611 $ 63,593
Note: Supplemental cash flow information is included in Note 8 to the
financial statements.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
The data presented for the three months ended March 31, 1996 is unaudited and
includes, in the opinion of management, all adjustments necessary for a fair
presentation of financial position and results of operations as of and for
such date and period.
Container Corporation of Carolina (the "Company") is primarily in the
business of refuse hauling and disposal. Substantially all services are
provided to commercial and residential customers located in North Carolina,
South Carolina, and Georgia. The more significant accounting policies are
as follows:
BUSINESS COMBINATIONS - The Company had minor acquisitions during 1995, all
of which have been recorded using the purchase method of accounting.
CASH - All cash is principally held by one high quality financial
institution. The balance held at December 31, 1995 and at certain times
during the three months ended March 31, 1996 exceeded FDIC insured limits.
PARTS AND SUPPLIES INVENTORIES - Parts and supplies inventories are stated
at the lower of cost (determined by the first-in, first-out method) or
market.
PROPERTY AND EQUIPMENT - Property and equipment are carried at cost, net of
accumulated depreciation. Depreciation is calculated primarily by the
straight-line method over the estimated useful lives of the assets, ranging
from five to forty years. Gains or losses from dispositions are charged or
credited to income in the period of disposal. Maintenance, repairs and
renewals of a minor nature are charged to expense as incurred. Renewals
and replacements that extend the useful lives of property and equipment are
capitalized.
INTANGIBLE ASSETS - Intangible assets include goodwill, customer lists, and
non compete agreements, which are carried at cost. The intangible assets
are amortized on a straight-line basis over the estimated useful lives of
the assets ranging from 3 to 20 years.
INCOME TAXES - The Company is taxed as an S Corporation. Under the S
Corporation election, taxable income or loss is allocated directly to
shareholders.
CONCENTRATIONS OF CREDIT RISK - The concentration of credit risk with
respect to trade accounts receivable is limited due to the large number of
customers comprising the Company's customer base, the contractual
arrangement with certain types of customers and the dispersion of the
customer base throughout North Carolina, South Carolina, and Georgia.
Generally, the Company does not require collateral or other security to
support trade accounts receivable.
EARNINGS PER SHARE - The computation for earnings per share is based on the
weighted average shares outstanding during each period. The weighted
average number of shares outstanding was 110.78 for both periods.
ESTIMATES - The preparation of 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 December
31, 1995 and March 31, 1996 and the reported amounts of revenues and
expenses during the periods \then ended. Actual results could differ from
those estimates. More significant estimates include environmental
reserves, insurance loss reserves, depreciation of equipment and intangible
assets, and bad debt reserves.
<PAGE>
2. Property and Equipment:
Property and equipment as of December 31, 1995 and March 31, 1996,
consists of the following:
December March 31,
1995 1996
(unaudited)
Land and land improvements $ 662,876 $ 662,876
Buildings 4,327,565 4,327,565
Containers and compactors 15,751,223 16,251,647
Trucks and automobiles 10,919,897 10,836,874
Office and shop equipment 2,474,704 2,459,348
Construction in progress 90,775 144,746
34,227,040 34,683,056
Accumulated depreciation 17,823,119 18,194,958
$ 16,403,921 $ 16,488,098
Depreciation and amortization expense was $2,866,807 and $684,716 for the
year ended December 31, 1995 and for the three months ended March 31, 1996,
respectively. Office and shop equipment includes capital leases with a
total cost of $333,669 as of December 31, 1995 and March 31, 1996.
Accumulated amortization on the capital leases was $252,239 and $274,447 at
December 31, 1995 and March 31, 1996, respectively.
At December 31, 1995, the Company abandoned certain trucks and equipment
which were no longer in service resulting in a loss of $289,598. The cost
and accumulated depreciation were $1,292,493 and $1,002,895 respectively.
The Company also leases certain trucks and automobiles under operating
leases. Approximate minimum rental obligations under these leases for the
years ended December 31, are as follows:
1996 $ 747,529
1997 717,365
1998 624,150
1999 543,018
2000 288,070
Rent expense was approximately $702,755 and $350,893 for the year ended
December 31, 1995 and the three months ended March 31, 1996, respectively.
<PAGE>
3. Intangible Assets:
Intangible assets consists of the following:
December 31, March 31,
1995 1996
(unaudited)
Non compete agreements $ 2,423,701 $ 2,423,701
Customer lists 3,229,342 3,229,342
Goodwill 785,610 785,610
6,438,653 6,438,653
Accumulated amortization 2,372,110 2,458,522
$ 4,066,543 $ 3,980,131
Amortization expense was $304,632 and $86,412 for the year ended December
31, 1995 and the three months ended March 31, 1996.
Non compete agreements include $336,087 related to a five year non compete
agreement with a former shareholder and accumulated amortization of $72,819
and $89,623 at December 31, 1995 and March 31, 1996, respectively.
During 1995 $462,790 of intangible assets and $226,068 of accumulated
amortization relating to residential customer operations was written-off
since the Company no longer provides residential service to the specific
territory.
4. Long-Term Debt:
Long-term debt as of December 31, 1995 and March 31, 1996 consists of the
following:
December 31, March 31,
1995 1996
(unaudited)
Term bank loan due in monthly installments
of $83,333 plus interest at 9% through
July 1996, with lump sum payment of
$5,133,833 due in August 1996 $ 5,672,078 $ 5,273,139
Term bank loan due in monthly installments
of $29,223 plus interest at 9% through
July 1996, with lump-sum payment of
$1,299,690 due in August 1996 1,439,690 1,399,801
Working capital line of credit with a
bank, interest at prime plus 1.25% 7,000,000 6,812,000
Note payable due in monthly installments
of $27,323 through July 1997 including
interest at 10% 185,040 107,052
Notes payable to former shareholder, due
in annual installments of $98,490 for
1996, 1997 and 1998 and $203,860 in 1999
and 2000 plus interest at 8% 604,702 506,211
Note payable due in monthly installments
of $19,262 through August 2001 including
interest at 8% 1,148,369 1,006,165
Note payable due in monthly installments
of $11,639 through October 1999 including
interest at 9.75% 445,222 420,962
Note payable due in monthly installments
of $10,200 through July 1999 including
interest at 10.75% 362,610 341,571
Note payable due in monthly installments
of $11,069 through August 1999 including
interest at 9.75% 353,994 343,565
Other 48,786 41,242
17,260,491 16,726,138
Current maturities of long-term debt 14,942,949 14,216,386
$ 2,317,542 $ 2,509,752
<PAGE>
4. Long-Term Debt, continued:
The prime rate was 8.5% as of December 31, 1995.
The Company has a working capital line of credit available, expiring in
August 1996. Borrowings under the line of credit are limited in amount to
certain borrowing base requirements, as defined in the agreement, not to
exceed $7,000,000. The borrowing base requirement was approximately
$13,600,000 and $13,540,000 as of December 31, 1995 and March 31, 1996,
respectively. The line of credit and term bank loan contain various
covenants, the most restrictive of which requires the Company to maintain a
minimum net worth. The Company has received a letter of intent from a
financial institution to refinance the Term Loan and Working Capital line
of credit.
Principal payments are required on long-term debt as follows:
1996 $ 14,942,949
1997 559,481
1998 696,216
1999 687,453
2000 235,300
Thereafter 139,092
$ 17,260,491
All property and equipment, accounts receivable, inventories and proceeds
from officers' life insurance are pledged as collateral on the Company's
term bank loans and line of credit and other asset purchase financing
arrangements.
5. Employee Benefit Plans:
The Company has a profit-sharing plan covering substantially all employees.
The plan provides for participant contributions on a pretax compensation
reduction bases (a "401(k)" arrangement), whereby employees meeting certain
minimal standards of service may elect to defer receipt of 1% to 15% of
annual compensation and contribute that amount to the plan. The Company
matches these contributions up to 4% of covered compensation at a
percentage determined annually by the board of directors. In addition to
contributions required by the "401(k)" arrangement, the Company may make
additional annual discretionary contributions, as authorized by the board
of directors. Contributions to the plan were $67,601 and $29,049 for the
year ended December 31, 1995 and the three months ended March 31, 1996,
respectively.
The Company also provides selected employees participation in an unfunded
nonqualified deferred compensation plan, under which participants may elect
to defer any portion of the annual compensation. The Company provides an
annual return of 7.5% on deferred amounts, and may choose to make
discretionary contributions to the plan.
<PAGE>
5. Employee Benefit Plans, continued:
The Company also provides four employees deferred compensation contracts
which provide benefits of $4,000 per month for 125 months per employee.
The benefits are payable the later of the employee's retirement or age 65.
The benefit may also be paid if the employee terminates employment other
than by his voluntary action or for cause before age 65. In that event,
the amount of the benefit depends on the employees years of service with
the Company. Death benefits provided under the deferred compensation
arrangements are funded with life insurance policies on the lives of the
employees. The Company recognizes the cost of insurance expense currently,
deferred compensation expense is recognized over the period of the
employees active employment, beginning at the first vesting period under
the contract.
6. Environmental Remediation:
In January 1996, the Company was notified by the South Carolina Department
of Health and Environmental Control ("DHEC") that the Company's transfer
station was in violation of certain regulations. The Company has accrued
$300,000 for remediation of its transfer station, and $120,000 in related
costs during the year ended December 31, 1995. The transfer station
remediation costs are estimated by an independent environmental engineer at
between $175,000 and $400,000 based on information and data provided by
DHEC and the Company. If site contamination is greater than currently
estimated, the remediation costs could be substantially higher than the
amount accrued. The Company and its advisors are currently developing a
site testing and remediation plan to be approved by DHEC.
7. Related Party Transactions:
Amounts due from affiliates include $521,236 due from shareholders and
affiliated companies at December 31, 1995 and $870,234 due under notes
receivable from shareholders at December 31, 1995 and March 31, 1996. A
summary of transactions with related parties including Northeast Sanitary
Landfill, Inc. ("NESL"), a company owned by the shareholders of the Company
through October 31, 1995, Company shareholders and others is as follows:
December 31, March 31,
1995 1996
Revenue and (expense):
Interest income on shareholder notes $ 166,603 $ 24,883
Landfill fees to NESL (1,511,907) --
Rent (210,000) (52,500)
The shareholders receivables and notes have no stated repayment terms. The
notes bear interest at prime (8.5% at December 31, 1995) plus 1.25%.
8. Supplemental Cash Flow Information:
December 31, March 31,
1995 1996
Interest paid $ 1,568,904 $ 378,033
Noncash financing and investing
activities:
Acquisitions of property, plant
and equipment included in
accounts payable 662,185 184,469
<PAGE>
9. Commitments/Contingencies:
CCC entered into a purchase commitment in October 1995, whereby the Company
is required to dispose of a minimum of 6,500 tons of non-hazardous MSW
(municipal solid waste) per month collected in the greater Columbia area at
Northeast Sanitary Landfill (NESL), in Columbia, South Carolina, over the
next ten (10) years. The price of disposal per each ton to be at "Base
Rate" of $19.75 at this minimum required volume level. The base rate will
increase by not less than 5% nor more than 9% per year. CCC has entered
into an agreement not to compete with NESL during this period of time.
In addition, CCC is committed to dispose of all waste taken to its transfer
station facility in Fort Mill, South Carolina, at NESL, through February
1996.
10. Subsequent Event:
On May 17, 1996 the Company entered into an Agreement and Plan of Merger.
This agreement, to be accounted for as a pooling of interest, calls for the
shareholders of the Company to receive 6,842,105 shares of Allied Waste
Industries, Inc. (AWIN). AWIN shares closed at $9.25 on May 17, 1996.
This transaction is expected to close on or about June 30, 1996. As part
of this agreement it is expected that the term loan and working capital
line of credit discussed in Footnote 7 will be extinguished.
<PAGE>
PRO FORMA COMBINED FINANCIAL STATEMENTS
The accompanying unaudited pro forma combined balance sheet gives effect
to the acquisition of Container Corporation of Carolina completed subsequent
to March 31, 1996 which is considered to be significant and the conversion of
certain subordinated convertible debentures into Common Stock as if each had
occurred on March 31, 1996. The unaudited pro forma combined statements of
operations for the three months ended March 31, 1996 and the years ended
December 31, 1995, 1994 and 1993 give effect to the Pooling Acquisition (See
Note 2) as if it had occurred on January 1, 1993 and to the Purchase
Acquisitions (See Note 2) and Financing Transactions (See Note 4) as if each
had occurred on January 1, 1995.
The pro forma financial data do not purport to present the financial
position or results of operations of the Company as if the transactions to
which they give effect had actually occurred as of such dates, nor are they
necessarily indicative of the results of operations that may be achieved in
the future.
The pro forma combined statements of operations should be read in
conjunction with the Notes to Pro Forma Financial Statements and the
historical consolidated financial statements of the Company.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
(amounts in thousands)
Pro Forma
Adjustments
Related to
Purchase Purchase
Acquisitions Acquisitions
and and
Pooling Pooling
Historical Acquisitions Acquisitions Pro
(Note 1) (Note 2) (Note 3) Forma
ASSETS
Cash and cash equivalents $ 4,345 $ 64 $ -- $ 4,409
Other current assets 40,893 7,011 -- 47,904
Total current assets 45,238 7,075 -- 52,313
Property and equipment,
net 296,647 16,488 -- 313,135
Goodwill, net 93,353 -- -- 93,353
Other assets 12,551 5,234 -- 17,785
Total Assets $ 447,789 $ 28,797 $ -- $ 476,586
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,642 $ 7,936 $ -- $ 43,578
Current portion of long-
term debt 14,538 14,216 (13,485)(a) 15,269
Long-term debt, net of
current portion 165,330 2,510 11,484 (a)(b) 179,324
Other long-term
liabilities 44,355 128 -- 44,483
Stockholders' equity 187,924 4,007 2,001 (b) 193,932
Total liabilities and
equity $ 447,789 $ 28,797 $ -- $ 476,586
The accompanying notes are an integral part of this pro forma combined
balance sheet.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
(in thousands except for per share amounts and number of shares)
Pro Forma
Adjustments
Related to
Purchase Purchase
Acquisitions Adjustments
and Pooling and Pooling Financing
Historical Acquisitions Acquisitions Transactions Pro
(Note 1) (Note 2) (Note 3) (Note 4) Forma
Revenues $ 46,437 $ 11,363 $ -- $ -- $ 57,800
Cost of
Operations 24,365 7,765 -- -- 32,130
Selling,
general and
administrative
expenses 8,284 1,783 -- -- 10,067
Depreciation
and
amortization
expense 6,601 872 9(a) -- 7,482
Pooling costs 928 -- -- -- 928
Operating
income 6,259 943 (9) -- 7,193
Interest income (42) -- -- -- (42)
Interest expense 1,634 341 -- (949)(b)(c) 1,026
Income from
continuing
operations 4,667 602 (9) 949 6,209
Other income -- (36) -- -- (36)
Income from
continuing
operations
before income
taxes and
minority
interest 4,667 638 (9) 949 6,245
Income taxes 2,100 246 (3) 365 2,708
Income before
minority
interest 2,567 392 (6) 584 3,537
Minority interest 6 -- -- -- 6
Net income 2,561 392 (6) 584 3,531
Preferred
dividends (288) -- -- -- (288)
Net income to
common
shareholders $ 2,273 $ 392 $ (6) $ 584 $ 3,243
Net income per
common share $ 0.05 $ 0.05
Weighted
average common
and common
equivalent
shares 50,453,644 59,908,041
The accompanying notes are an integral part of this pro forma combined
financial statement.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(in thousands except for per share amounts and number of shares)
Pro Forma
Adjustments
Related to
Purchase Purchase
Acquisitions Adjustments
and Pooling and Pooling Financing
Historical Acquisitions Acquisitions Transactions Pro
(Note 1) (Note 2) (Note 3) (Note 4) Forma
Revenues $ 178,581 $ 47,046 $ (207)(b) $ -- $ 225,420
Cost of
Operations 90,864 31,278 (207)(b) -- 121,935
Selling,
general and
administrative
expenses 31,337 7,402 -- -- 38,739
Depreciation
and
amortization
expense 23,898 4,288 335 (a) -- 28,521
Pooling costs 1,531 -- -- -- 1,531
Operating
income 30,951 4,078 (335) -- 34,694
Interest income (520) -- -- -- (520)
Interest expense 9,708 1,387 393 (c) 103 (a) 6,541
(539)(b)
(4,511)(c)
Conversion
fee on debt
securities
converted 56 -- -- -- 56
Income from
continuing
operations 21,707 2,691 (728) 4,947 28,617
Other expense -- 512 -- -- 512
Income from
continuing
operations
before income
taxes and
minority
interest 21,707 2,179 (728) 4,947 28,105
Income taxes 9,751 839 (280) 1,905 12,215
Income before
minority
interest 11,956 1,340 (448) 3,042 15,890
Minority interest 42 -- -- -- 42
Net income 11,914 1,340 (448) 3,042 15,848
Preferred
dividends (4,070) -- -- 2,743 (d) (1,327)
Conversion fee
on equity
securities
converted (2,151) -- -- -- (2,151)
Net income
to common
shareholders $ 5,693 $ 1,340 $ (448) $ 5,785 $ 12,370
Net income per
common share $ 0.17 $ 0.21
Weighted average
common and
common
equivalent
shares 32,941,196 59,029,644
The accompanying notes are an integral part of this pro forma combined
financial statement.
<PAGE>
ALLIED WASTE INDUSTRIES,
PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
(Unaudited)
(in thousands except for per share amounts and number of shares)
Pooling
Historical Acquisitions Pro
(Note1) (Note 2) Forma
Revenues $ 122,376 $ 34,208 $ 156,584
Cost of operations 73,506 25,206 98,712
Selling, general and administrative
expenses 28,274 4,692 32,966
Depreciation and amortization expense 13,661 2,892 16,553
Operating income 6,935 1,418 8,353
Interest income (963) -- (963)
Interest expense 11,975 1,344 13,319
Income from continuing operations (4,077) 74 (4,003)
Other income -- (397) (397)
Income from continuing operations
before income taxes and
minority interest (4,077) 471 (3,606)
Income taxes (689) 181 (508)
Income before minority interest (3,388) 290 (3,098)
Minority interest 23 -- 23
Net income before extraordinary
(loss) (3,365) 290 (3,075)
Extraordinary loss (3,029) -- (3,029)
Net loss (6,394) 290 (6,104)
Preferred dividends (3,773) -- (3,773)
Net income (loss) to common
shareholders $ (10,167) $ 290 $ (9,877)
Loss per share:
Loss before extraordinary item $ (0.40) $ (0.28)
Extraordinary loss $ (0.17) $ (0.12)
Loss per common share $ (0.57) $ (0.40)
Weighted average common and
common equivalent shares 17,802,709 24,644,814
The accompanying notes are an integral part of this pro forma combined
financial statement.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1993
(Unaudited)
(in thousands except for per share amounts and number of shares)
Pooling
Historical Acquisition Pro
(Note1) (Note 2) Forma
Revenues $ 75,344 $ 31,201 $ 106,545
Cost of operations 44,025 22,949 66,974
Selling, general and administrative
expenses 14,082 4,415 18,497
Depreciation and amortization expense 7,138 3,097 10,235
Operating income 10,099 740 10,839
Interest income (199) -- (199)
Interest expense 6,137 1,367 7,504
Income from continuing operations 4,161 (627) 3,534
Other income -- (1,020) (1,020)
Income from continuing operations
before income taxes and minority
interest 4,161 393 4,554
Income taxes 1,694 151 1,845
Income before minority interest 2,467 242 2,709
Minority interest 11 -- 11
Net income 2,456 242 2,698
Preferred dividends (927) -- (927)
Net income to common shareholders $ 1,529 $ 242 $ 1,771
Net income per common share $ 0.10 $ 0.08
Weighted average common and
common equivalent shares 15,324,116 22,166,221
The accompanying notes are an integral part of this pro forma combined
financial statement.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
1. Historical
The historical balances represent the financial position and results of
operations of Allied Waste Industries, Inc. (the "Company" or "Allied") for
each of the indicated dates and periods as reported in the Consolidated
Financial Statements of the Company included elsewhere in these pro forma
financial statements. The historical Consolidated Financial Statements have
been restated to reflect acquisitions prior to March 31, 1996 accounted for as
poolings-of-interests.
2. Purchase Acquisitions and Pooling Acquisitions
The pro forma adjustments in the pro forma combined statements of
operations for the three months ended March 31, 1996 and the years ended
December 31, 1995, 1994 and 1993 give effect to, (i) the acquisition of
companies accounted for using the purchase method for business combinations
completed subsequent to January 1, 1995, which are individually or in the
aggregate considered to be significant (the "Purchase Acquisitions"),
as if each had occurred on January 1, 1995, and (ii) the acquisition of
companies accounted for using the pooling-of-interests method for business
combinations completed or for which a definitive agreement has been entered
in 1996 which are, in the aggregate considered to be significant (the
"Pooling Acquisitions"), as if each had occurred on January 1, 1993. The
adjustments in the March 31, 1996 pro forma combined balance sheet give
effect to the Pooling Acquisitions completed or for which a definitive
agreement has been entered subsequent to March 31, 1996.
January 1995 -- Allied acquired Pen-Rob, Inc. ("Pen-Rob") in a
transaction accounted for as a purchase and Sun Services and Liquid Waste
Removal, Inc. in a transaction accounted for as a pooling-of-interests for
total consideration of approximately $2.4 million, including approximately
147,000 shares of common stock.
June 1995 -- Allied acquired Illinois Development Corporation ("IDC") and
L&M Disposal, Inc. for total consideration of approximately $4.7 million,
including approximately 8,000 shares of common stock, in transactions
accounted for as purchases.
September 1995 -- Allied acquired Duckett Disposal, Inc. and Brickyard
Disposal and Recycling, Inc. in transactions accounted for as purchases and
Empire Disposal Service, Inc. and A&W Disposal Services, Inc. in transactions
accounted for as poolings-of-interests for total consideration of
approximately $17.0 million, including approximately 251,000 shares for
common stock.
January 1996 -- Allied acquired Service Waste, Inc. for total consideration
of approximately $6.2 million, including approximately 778,000 shares of
common stock, in a transaction accounted for as a purchase.
February 1996 -- Allied acquired Clayco Sanitation Company, Inc. in a
transaction accounted for as a purchase and United Sanitary, Inc. and
Hustlers Sanitary Service, Inc. in transactions accounted for as poolings-
of-interests for total consideration of approximately $7.2 million,
including approximately 445,000 shares of common stock.
May 1996 -- Allied entered into a definitive agreement to acquire
Container Corporation of Carolina for approximately 6.8 million shares of
common stock, subject to adjustment, in a transaction that will be accounted
for as a pooling-of-interests.
<PAGE>
3. Pro Forma Adjustments
The pro forma adjustments reflected in the pro forma combined financial
statements give effect to the following:
Pro Forma Combined Balance Sheet:
(a) To reflect the expected repayment of debt subsequent to the
closing of the acquisition with proceeds from the $80 million
credit agreement between the Company and NatWest Bank, N.A. as
agent (the "Credit Agreement").
(b) To reflect the conversion of convertible debt into 362,040 shares
of the Company's common stock.
The adjustment to reflect the issuance of common stock to the stockholder of
Container Corporation of Carolina is offset by the adjustment to reflect the
elimination of investment in subsidiary upon closing of the acquisitions.
Pro Forma Combined Statements of Operations:
(a) To reflect adjustments to selling, general and administrative
expenses to record the amortization of goodwill recorded in
connection with the Purchase Acquisitions.
(b) To eliminate rent expense and rental revenue between Allied and
IDC.
(c) To reflect interest expense on debt issued or assumed in
connection with acquired companies.
4. Financing Transactions
In January 1995, the interest rate on the $100 million Senior Subordinated
Notes issued in January 1994 ("the Notes") increased from 10.75% to 12.0%.
In January 1995, the Company issued 11,709,602 shares of common stock of
which 3,529,412 shares were issued for the conversion of 3,000 shares of
Series E preferred stock which were issued in December 1994 in connection
with the acquisition of the Midwest Entities. The pro forma financial
statements assume that the 11,709,602 shares of common stock were issued on
January 1, 1995 and remove the effect of dividends declared and paid in
common stock on the Series E preferred stock. The pro forma financial
statements assume the conversion of approximately $5 million of convertible
subordinated debt into 1,483,680 shares of common stock as of January 1,
1995. In addition, the pro forma financial statements assume (i) the sale
of 7,606,282 shares of common stock in January 1996 and (ii) the issuance
of approximately 7.7 million shares of common stock upon conversion of
certain preferred stock and convertible debt and exercise of warrants
(collectively, the "Public Offering").
In December 1995, certain holders of preferred stock, convertible debt and
warrants converted their preferred stock or convertible debt into or
exercised their warrants for, an aggregate of approximately 8 million
shares of Common Stock and Inducement Conversion Shares. In addition, the
Company completed a Public Offering in January 1996.
<PAGE>
The transaction adjustments reflected in the pro forma combined financial
statements give effect to the following:
(a) To reflect the increase in interest expense on the $100 million
of Senior Subordinated Notes from 10.75% to 12%.
(b) To reflect reduction of interest expense resulting from the
issuance of 1,483,680 shares of common stock upon the conversion of
$5 million of convertible subordinated debt.
(c) To reflect reduction of interest expense resulting from (i) the
conversion of certain convertible subordinated debt into Common
Stock and (ii) the repayment of certain indebtedness from the
proceeds of the sale of 6.5 million shares of Common Stock and the
exercise of the underwriters option to purchase an additional
1,106,282 shares of Common Stock.
(d) To remove the effect of dividends declared and paid in common
stock on the Series E Preferred Stock related to the issuance of
the 11,709,602 shares common stock to TPG Partners, L.P., of which
3,529,412 shares were issued for the conversion of 3,000 shares of
Series E Preferred Stock.
<PAGE>
5. Pro Forma Net Income Per Common Share
Pro forma net income per common share is calculated by dividing
pro forma net income to common shareholders less requirements on
Series D preferred stock, 7% preferred stock and 9% preferred
stock by the pro forma weighted average common and common
equivalent shares outstanding during the periods. Pro forma
weighted average common and common equivalent shares have been
computed as follows:
Three Months
Year Ended December 31, Ended
March 31,
1993 1994 1995 1996
Historical weighted average
common shares 15,089,296 17,802,709 30,951,640 48,138,976
Common stock equivalents --
Stock options and warrants -- -- 1,989,556 2,314,668
Conversion of Series C
Preferred into common
shares 234,820 -- -- --
Pro forma effect of
issuing common shares for
companies acquired and
accounted for as a
purchase --
Service Waste, Inc. -- -- 889,445 302,998
Companies acquired and
accounted for as a
pooling-of-interests:
Container Corporation of
Carolina, Inc. 6,842,105 6,842,105 6,842,105 6,842,105
Common shares issued to TPG -- -- 962,433 --
Common shares issued in
connection with the
Public Offering -- -- 6,500,000 1,642,857
Common shares issued in
connection with underwriters
over-allotment option -- -- 1,106,282 279,610
Conversion of convertible
subordinated debt into
common shares -- -- 1,845,720 362,040
Conversion of Series C
Preferred into common shares -- -- 233,533 --
Conversion of Series D
Preferred into common shares -- -- 731,255 --
Conversion of 9% Preferred
into common shares -- -- 4,859,991 --
Conversion of $90 Preferred
into common shares and
issuance of Inducement
Conversion Shares -- -- 1,343,374 --
Conversion of convertible
subordinated debt into
common shares -- -- 220,437 --
Exercise of warrants and
issuance of Inducement
Conversion Shares -- -- 553,873 24,787
22,166,221 24,644,814 59,029,644 59,908,041
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant, Allied Waste Industries, Inc., has caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
ALLIED WASTE INDUSTRIES, INC.
By: /s/ PETER S. HATHAWAY
Peter S. Hathaway
Vice President, Chief Accounting
Officer and Treasurer
(Principal Accounting Officer)
Date: June 21, 1996
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Allied Waste Industries, Inc. on Form S-4 (Registration No. 33-3585) of our
report dated May 20, 1996, on our audit of the financial statements of
Container Corporation of Carolina as of December 31, 1995 and for the year
then ended, which report is included in the Form 8-K/A-1.
/s/ Coopers & Lybrand, L.L.P.
Coopers & Lybrand, L.L.P.
Charlotte, North Carolina
June 19, 1996
