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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) JANUARY 16, 1997
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.)
15880 N. GREENWAY/HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
(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)
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<PAGE>
Item 7. Financial Statements and Exhibits
(b) Pro Forma Combined Financial Statements of Allied Waste Industries,
Inc.
(i) Introduction
(ii) Pro Forma Combined Balance Sheet - September 30, 1996
(unaudited)
(iii) Pro Forma Combined Statement of Operations for the Nine
Months Ended September 30, 1996 (unaudited)
(iv) Pro Forma Combined Statement of Operations for the Year
Ended December 31, 1995 (unaudited)
(v) Notes to Pro Forma Combined Financial Statements(unaudited)
2
<PAGE>
PRO FORMA COMBINED FINANCIAL STATEMENTS
Prior to the closing of the acquisition of the Laidlaw Solid Waste Management
Group ("LSW Subsidiaries") on December 30, 1996 and the related financing
(collectively, the "Transactions"), substantially all of the operating assets
and liabilities of Allied Waste Industries, Inc. ("Allied") were contributed
(the "Contribution") from Allied to Allied Waste North America, Inc. ("Allied
U.S.").
The unaudited pro forma combined balance sheet reflects Allied U.S. after the
Contribution and gives effect to the Transactions and the sale of the Canadian
operations of Allied (the "Canadian Sale") as if each had occurred on September
30, 1996. The unaudited pro forma combined statements of operations for the nine
months ended September 30, 1996 and the year ended December 31, 1995 give effect
to (i) the acquisition of companies accounted for using the purchase method for
business combinations completed in 1995 and 1996, which are considered to be
significant; (ii) the completion of the Contribution and the Transactions for
approximately $1.5 billion; (iii) the completion of the Canadian Sale for
approximately $518 million and the application of the proceeds therefrom; (iv)
the issuances of 11.7 million shares of Common Stock in a private placement and
the application of the net proceeds therefrom; (v) the conversion and exercise
of certain convertible securities and warrants into an aggregate of
approximately 9.8 million shares of Allied common stock; and (vi) the completion
of a public offering of 7.6 million shares of Allied common stock, and the
application of the net proceeds therefrom, as if each had occurred on January 1,
1995.
The pro forma adjustments related to the purchase allocation of the Transactions
are preliminary and do not give effect to an appraisal of the assets of the LSW
Subsidiaries which Allied intends to obtain. The unaudited pro forma combined
financial statements do not reflect adjustments for certain financial benefits,
operational efficiencies and non-recurring items. These statements do not
purport to be indicative of the combined financial position or combined results
of operations of Allied and the LSW Subsidiaries that might have occurred, nor
are they indicative of future financial position or results of operations.
The unaudited pro forma combined financial statements should be read in
conjunction with the Notes to Pro Forma Combined Financial Statements and the
historical consolidated financial statements of Allied and the notes thereto.
3
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
LSW Canadian Adjustments Related to
Historical Subsidiaries Sale Acquisitions & Divestitures
(Note 1) (Note 2) (Note 3) (Note 4) Pro Forma
----------- ------------- --------- --------------------------- ----------------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents.................... $ 7,620 $ -- $ -- $ 1,500,000 (a) $ 56,620
1,265,000) (b)
(186,000) (c)
518,000 (d)
(518,000) (e)
Other current assets......................... 62,526 195,866 (51,094) (71,866) (o) 135,432
---------- ----------- ---------- ------------- -------------
Total current assets................... 70,146 195,866 (51,094) (22,866) 192,052
Property and equipment, net.................. 340,729 567,630 (151,010) 100,000 (f) 856,279
(1,070) (o)
Goodwill, net................................ 89,504 204,125 (351,222) 947,804 (g) 686,086
............................
............................
............................
(204,125) (h)
Other assets................................. 36,263 99,712 (12,833) 51,331 (i) 83,631
(14,772) (j)
(76,070) (o)
Total assets........................... $ 536,642 $ 1,067,333 $ (566,159) $ 780,232 $ 1,818,048
========== =========== ============ ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt............ $ 15,259 $ 2,675 $ (243) $ -- $ 17,691
Other current liabilities.................... 44,876 128,272 (38,178) (5,086) (o) 129,884
---------- ----------- ------------ ---------- -------------
Total current liabilities.............. 60,135 130,947 (38,421) (5,086) 147,575
Long-term debt, net of current portion....... 233,132 1,895 (264) 1,500,000 (a) 1,141,510
110,747 (k)
(186,000) (c)
(518,000) (e)
Other long-term liabilities.................. 48,641 81,784 (9,474) 40,000 (l) 168,951
8,000 (p)
Stockholders' equity......................... 194,734 852,707 (518,000) (852,707) (n) 360,012
(14,772) (j)
180,050 (m)
518,000 (n)
Total liabilities and
stockholders' equity................ $ 536,642 $ 1,067,333 $ (566,159) $ 780,232 $ 1,818,048
=========== =========== ========== =========== =============
</TABLE>
The accompanying notes are an integral part of this proforma combined
balance sheet.
4
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS AND NUMBER OF SHARES)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Adjustments
Related to Pro Forma Canadian Related to
Historical Acquisitions Acquisitions for the Sale Canadian Sale
(Note 1) (Note 2) (Note 4) Acquisitions (Note 3) (Note 4)
----------- --------------- ------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues ............ $ 183,896 $ 573,572 $ -- $ 757,468 $(195,076) $ --
Cost of
operations ....... 101,153 396,530 -- 497,683 (140,743) --
Selling, general
and administrative
expenses ......... 27,152 36,799 -- 63,951 (14,775) --
Depreciation and
amortization
expense .......... 23,032 71,753 14,234(b) 109,019 (27,221) --
Pooling costs ....... 6,969 -- -- 6,969 -- --
------------ ------------ ------------ ------------ --------- ---------
Operating
income .......... 25,590 68,490 (14,234) 79,846 (12,337) --
Interest income ..... (257) -- -- (257) -- --
Interest expense .... 6,623 -- 4,968 (d) 115,757 -- --
(10,349)(e) (33,022) (h)
114,515 (f) (1,430) (i)
------------ --------- --------- -------- --------- ---------
Income (loss)
before income
taxes ............ 19,224 68,490 (123,368) (35,654) (12,337) 34,452
Income tax
expense
(benefit) ........ 9,428 27,396 (49,347) (12,523) (4,935) 13,781
------------ ------------ ------------ ------------ --------- ---------
Net income (loss)
before extra-
ordinary loss .... 9,796 41,094 (74,021) (23,131) (7,402) 20,671
Dividends ........... (861) -- -- (861) -- --
------------ ------------ ------------ ------------ --------- ---------
Net income (loss) to
common share-
holders before
extraordinary
loss ............. $ 8,935 $ 41,094 $ (74,021) $ (23,992) $ (7,402) $ 20,671
============ ============ ============ ============ ========= =========
Net income (loss)
per common
share before
extraordinary
loss ............. $ 0.15 $ (0.33)
========= =========
Weighted average
common and
common equivalent
shares ........... $ 59,791,034 72,295,076
========== ==========
Pro Forma Pro Forma
for the Financing
Acquisitions and Transactions
Canadian Sale (Note 5) Pro Forma
------------- ------------ ------------
<S> <C> <C> <C>
Revenues ............ $ $ 562,392 $ -- $ 562,392
Cost of
operations ....... 356,940 -- 356,940
Selling, general
and administrative
expenses ......... 49,176 -- 49,176
Depreciation and
amortization
expense .......... 81,798 -- 81,798
Pooling costs ....... 6,969 -- 6,969
--------- ------- ---------
Operating
income .......... 67,509 -- 67,509
Interest income ..... (257) -- (257)
Interest expense .... 81,305 (409) (b) 80,896
-- -- (33,022)(h)
-- -- (1,430)(i)
--------- ------- ---------
Income (loss)
before income
taxes ............ (13,539) 409 (13,130)
Income tax
expense
(benefit) ........ (3,677) 164 (3,513)
--------- ------- ---------
Net income (loss)
before extra-
ordinary loss .... (9,862) 245 (9,617)
Dividends ........... (861) -- (861)
--------- ------- ---------
Net income (loss) to
common share-
holders before
extraordinary
loss ............. $ (10,723) $ 245 $ (10,478)
========= ======= =========
Net income (loss)
per common
share before
extraordinary
loss ............. $ (0.15) $ (0.14)
=========== ==========
Weighted average
common and
common equivalent
shares ........... 72,295,076 73,114,675
========== ==========
</TABLE>
5
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)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Adjustments Adjustments
Related to Pro Forma Canadian Related to
Historical Acquisitions Acquisitionsfor the Sale Canadian Sale
(Note 1) (Note 2) (Note 4) Acquisitions (Note 3) (Note 4)
------------- ---------- ------------ ------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................... $ 217,544 $ 787,048 $ (207) (a) $ 982,571 $ (258,325) $ --
(21,814) (g)
Cost of operations........... 119,238 533,175 (207) (a) 640,592 (175,630) --
(11,614) (g)
Selling, general
and administrative
expenses ................ 36,708 59,758 (447)(g) 96,019 (22,691) --
Depreciation and
amortization expense...... 27,279 97,330 19,181 (b) 139,798 (33,349) --
(3,992) (g)
Pooling costs................ 1,531 -- -- 1,531 -- --
------------ ----------- ------------ ------------ ---------- ----------
Operating income............. 32,788 96,785 (24,942) 104,631 (26,655) --
Interest income.............. (716) -- -- (716) -- --
Interest expense............. 11,316 13 393 (c) 159,137 -- (44,030) (h)
6,624 (d) (1,906) (i)
(11,897) (e)
152,688 (f)
Conversion fee on debt
securities converted...... 56 -- -- 56 -- --
------------ ----------- ------------ ------------ ---------- ----------
Income (loss) before
income taxes.............. 22,132 96,772 (172,750) (53,846) (26,655) 45,936
Income tax expense
(benefit)................. 9,751 38,709 (69,100) (20,640) (10,662) 18,374
------------ ----------- ------------ ------------ ---------- ----------
Net income (loss) before
extraordinary loss........ 12,381 58,063 (103,650) (33,206) (15,993) 27,562
Dividends.................... (4,070) -- -- (4,070) -- --
Conversion fee on
equity securities
converted................. (2,151) -- -- (2,151) -- --
------------ ----------- ------------ ------------ ---------- ----------
Net income (loss) to
common shareholders
before extraordinary
loss...................... $ 6,160 $ 58,063 $ (103,650) $ (39,427) $ (15,993) $ 27,562
============ =========== ============ ============ ========== ==========
Net income (loss) per
common share before
extraordinary loss........ $ 0.15 $ (0.74)
============ ============
Weighted average
common and common
equivalent shares ........ 40,046,459 53,289,571
============ ============
Pro Forma Pro Forma
for the Financing
Acquisitions and Transactions
Canadian Sale (Note 5) Pro Forma
------------- --------------- --------------
Revenues.................... $ 724,246 $ -- $ 724,246
Cost of operations.......... 464,962 -- 464,962
Selling, general
and administrative
expenses ............... 73,328 -- 73,328
Depreciation and
amortization expense..... 106,449 -- 106,449
Pooling costs............... 1,531 1,531
------------- ------------- ---------------
Operating income............ 77,976 -- 77,976
Interest income............. (716) -- (716)
Interest expense............ 113,201 (125) (a) 108,150
(4,926) (b)
Conversion fee on debt
securities converted..... 56 (56) (c) --
------------- ------------- ---------------
Income (loss) before
income taxes............. (34,565) 5,107 (29,458)
Income tax expense
(benefit)................ (12,928) 2,043 (10,885)
------------- ------------- ---------------
Net income (loss) before
extraordinary loss....... (21,637) 3,064 (18,573)
Dividends................... (4,070) 2,743 (1,327)
Conversion fee on
equity securities
converted................ (2,151) 2,151 --
------------- ------------- ---------------
Net income (loss) to
common shareholders
before extraordinary
loss..................... $ (27,858) $ 7,958 $ (19,900)
============= ============= ===============
Net income (loss) per
common share before
extraordinary loss....... $ (0.52) $ (0.28)
============= ===============
Weighted average
common and common
equivalent shares ....... 53,289,571 71,407,951
============= ===============
</TABLE>
6
The accompanying notes are an integral part of this pro forma combined
financial statement.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. HISTORICAL
The historical balances represent the financial position and results of
operations of Allied for each of the indicated dates and periods as reported in
the historical consolidated financial statements of Allied. The historical
consolidated financial statements have been restated to reflect acquisitions
accounted for as poolings-of-interests.
2. HISTORICAL AMOUNTS RELATED TO ACQUISITIONS
The amounts related to the LSW Subsidiaries in the September 30, 1996 pro forma
combined balance sheet represent the historical combined balance sheet of the
LSW Subsidiaries. The amounts in the pro forma combined statements of operations
represent the results of operations of the companies purchased in 1995 and 1996
("Completed Acquisitions"), including the results of operations of the LSW
Subsidiaries contemplated in the Transactions, for the period prior to
acquisition date, for each period presented.
The following represents acquisitions included in these pro forma combined
financial statements (collectively referred to as the "Acquisitions.").
January 1995 -- Allied acquired Pen-Rob, Inc.("Pen-Rob") for total consideration
of approximately $1.5 million.
May 1995 -- Allied acquired L and M Disposal, Inc. for total consideration of
approximately $518,000.
June 1995 -- Allied acquired Illinois Development Corporation ("IDC") for total
consideration of approximately $4.2 million.
September 1995 -- Allied acquired Duckett Disposal, Inc. ("Duckett") and
Brickyard Disposal and Recycling, Inc. ("Brickyard") for total consideration of
approximately $14.4 million.
January 1996 -- Allied acquired Service Waste, Inc. for total consideration of
approximately $6.2 million, including approximately 778,000 shares of Common
Stock.
February 1996 -- Allied acquired Clayco Sanitation Company, Inc. ("Clayco") for
total consideration of approximately $2.9 million.
December 1996 -- Allied acquired the LSW Subsidiaries for total consideration of
approximately $1.5 billion, as follows (in thousands):
Cash................................ $ 1,200,000
7% Debenture........................ 77,567
Zero coupon debenture............... 33,180
Common Stock........................ 101,288
Warrant............................. 45,000
-------------
Total.......................... $ 1,457,035
=============
7
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The LSW Subsidiaries balance sheet data reflects balances at August 31, 1996.
Amounts for the LSW Subsidiaries statement of operations for the year ended
December 31, 1995 and for the nine months ended September 30, 1996 are for the
12 months ended February 29, 1996 and the nine months ended August 31, 1996,
respectively. Revenues and income before pro forma income taxes of $365.0
million and $43.0 million, respectively, for the six months ended February 28,
1995 have been excluded and replaced with revenues and income before pro forma
income taxes of $367.7 million and $36.1 million, respectively, for the six
months ended February 29, 1996 in the LSW Subsidiaries' pro forma statement of
operations for the year ended December 31, 1995. Revenues and income before pro
forma income taxes of $190.1 million and $21.0 million, respectively, for the
three months ended November 30, 1995 have been excluded in the LSW Subsidiaries'
pro forma statement of operations for the nine months ended September 30, 1996.
Revenues and income before pro forma income taxes of $177.6 million and $15.1
million, respectively, for the three months ended February 29, 1996 have been
included in the LSW Subsidiaries statement of operations for the 12 months ended
February 29, 1996 and the nine months ended August 31, 1996.
3. HISTORICAL AMOUNTS RELATED TO DIVESTITURES
The amounts related to the Canadian Sale in the September 30, 1996 pro forma
combined balance sheet represent the historical combined balance sheet of the
Canadian operations of Allied. The amounts in the pro forma combined statements
of operations represent the results of operations of the Canadian operations of
Allied for the period prior to the divestiture date, for each period presented.
4. 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 completion of a $525 million private placement of
senior subordinated notes (the "Notes") and the funding of $975
million of a senior credit facility (the "Senior Credit Facility").
(b) To reflect cash paid in connection with the acquisition of the LSW
Subsidiaries.
(c) To reflect repayment of debt in connection with the refinancings
contemplated in the Transactions.
(d) To reflect cash received in connection with the Canadian Sale.
(e) To reflect repayment of debt with the proceeds from the Canadian Sale.
(f) To reflect the estimated fair value of land held for permitting as
landfills but currently not in use.
(g) To reflect goodwill recorded in connection with the acquisition of the
LSW Subsidiaries.
(h) To remove goodwill recorded on the books of the LSW Subsidiaries.
(i) To reflect commitment fees paid in connection with the Notes and the
Senior Credit Facility.
(j) To reflect write-off of commitment fees associated with debt repaid
with the proceeds from the Canadian Sale.
8
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(k) To reflect the issuances of the $150 million face value ($78 million
discounted value) of Allied Waste Holdings (Canada) Ltd. 7% debentures
and $168 million face value ($33 million discounted value) of the zero
coupon debenture (collectively, the "Allied Canada Debentures") which
were recorded at a discount using a 14% implicit interest rate, in
connection with the acquisition of the LSW Subsidiaries.
(l) To reflect the deferred tax liability related to temporary differences
between book and tax basis of Allied Canada Debentures and certain
fixed assets in connection with the acquisition of the LSW
Subsidiaries.
(m) To reflect the issuances of 14.6 million shares of Common Stock at
$9.25 per share; and the Warrant, valued at $45 million, in connection
with the acquisition of the LSW Subsidiaries. The Warrant was valued
using a binomial pricing model adjusted for the size of the block of
warrants and the restrictions on the block of warrants.
(n) To reflect the elimination of investment in subsidiary in connection
with the acquisition of the LSW Subsidiaries.
(o) To eliminate income tax assets and liabilities arising prior to the
date of sale of the LSW Subsidiaries and any intercompany investments,
advances and loans not included in the sale. (p) To accrue $8 million
for the estimated costs of severance and transition benefits that are
expected to be paid to approximately 200 employees, primarily
management, sales and administrative, of the LSW Subsidiaries as a
result of the acquisition.
Allied has engaged Emcon Environmental Services, Inc. to perform an
environmental assessment of certain properties to be acquired by Allied in the
Transactions. Although the Emcon work is not complete and due diligence
continues, Emcon has identified certain third-party contaminated waste sites and
landfills of the LSW Subsidiaries. Since the Emcon Environmental Report is not
yet complete, currently no amount or range of amounts can be determined which
would be required to be recorded or disclosed in accordance with SFAS No. 5.
Once the Emcon Environmental Report is completed, remediation plans and related
cost estimates must be determined. Cost, if any, in excess of amounts accrued by
the Laidlaw Sellers will be accounted for in accordance with GAAP when all facts
and circumstances are known.
Pro Forma Combined Statements of Operations
(a) To eliminate rent expense and rental revenue between Allied and IDC.
(b) To reflect the amortization of goodwill recorded in connection with
the Acquisitions, calculated based on a 40 year life of goodwill, as
follows (in thousands):
9
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Year Ended Nine Months
Total December 31, September 30,
Goodwill 1995 1996
----------- ----------- -------------
<S> <C> <C> <C>
L and M Disposal, Inc. for the
4 months ended April 30, 1995.................... $ 601 $ 6 $ --
IDC, for the 5 months
ended May 31, 1995............................... 1,046 11 --
Duckett for the 8 months ended
August 31, 1995.................................. 3,510 59 --
Service Waste, Inc. for the year
ended December 31, 1995......................... 2,649 66 --
Clayco for the year ended December 31,
1995 and the month ended
January 31, 1996................................. 2,703 68 6
LSW Subsidiaries for the year ended
December 31, 1995 and the 9 months
ended September 30, 1996......................... 947,804 18,971 14,228
----------- ----------- ----------
Total pro forma goodwill and amortization.... $ 958,313 $ 19,181 $ 14,234
=========== =========== ==========
</TABLE>
(c) To reflect interest expense on debt issued or assumed in
connection with the Completed Acquisitions, calculated as follows
(in thousands):
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
-----------------
<S> <C>
Duckett seller notes, interest at 7% for 8 months.............. $ 163
Brickyard seller notes, interest at 7% for 8 months............ 148
Clayco seller notes, interest at 9% for 12 months.............. 82
----------
$ 393
==========
</TABLE>
(d) To reflect amortization of fees related to the Notes and the
Senior Credit Facility in connection with the acquisition of the
LSW Subsidiaries, as follows (in thousands):
Fee Amortization Period
--- -------------------
Notes....................... $ 16,536 10 years
Senior Credit Facility...... $ 34,795 7 years
(e) To reflect the reduction of interest expense resulting from the
repayment of certain indebtedness with the proceeds from the
Senior Credit Facility in connection with the acquisition of the
LSW Subsidiaries, calculated as follows (in thousands):
10
<PAGE>
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1995 1996
--------------- --------------
<S> <C> <C>
1994 $100 million senior subordinated notes,
interest at 10.75% for one month during 1995........ $ (897) $ --
1994 $100 million senior subordinated notes,
interest at 12% for 11 months during 1995
and 7 months during 1996............................ (11,000) (7,000)
Credit Agreement, interest at 9.25% for
7 months during 1996................................ -- (1,179)
Credit Facility interest at 7% for 2 months
during 1996........................................ -- (2,170)
-------------- -------------
Total pro forma interest savings............ $ (11,897) $ (10,349)
============== =============
(f) To reflect interest expense related to the Senior Credit Facility, the
Notes, and the Allied Canada Debentures calculated for each period as
follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1995 1996
-------------- -------------
<S> <C> <C>
Senior Credit Facility, interest at 8.5%............... $ 82,875 $ 62,156
Notes, interest at 10.25%.............................. 53,813 40,360
7% Debenture, implicit interest at 14%................. 11,200 8,400
Zero Coupon Debenture, implicit interest at 14% 4,800 3,600
-------------- -------------
Total pro forma interest expense............. $ 152,688 $ 114,516
============== =============
</TABLE>
An increase in the interest rate of one-eighth of a percent on
the Senior Credit Facility would increase interest expense $1.2
million and $0.9 million and decrease net income $0.7 million and $0.5
million for the year ended December 31, 1995 and the nine months ended
September 30, 1996, respectively.
(g) To reflect elimination of revenues and expenses of the LSW
Subsidiaries related to assets that will not be acquired in connection
with the Transactions.
(h) To reflect the reduction of interest expense resulting from the
repayment of $518 million on the Senior Credit Facility with the
proceeds from the Canadian Sale.
(i) To reflect the reduction of interest expense resulting from the
write-off of fees associated with the repayment of $518 million on the
Senior Credit Facility with the proceeds from the Canadian Sale.
5. FINANCING TRANSACTIONS
The pro forma combined financial statements assume that (i) Allied issued 11.7
million shares of Common Stock on January 1, 1995 in connection with a private
placement of equity which closed on January 31, 1995, (ii) 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 9.8 million shares of Common Stock and, (iii) Allied completed a
public offering of 6.5 million shares of Common Stock in January
11
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
1996.
The pro forma combined financial statements do not include the extraordinary
charge of approximately $18 million ($11 million net of income tax benefit)
related to the early extinguishment of debt.
The adjustments related to the financing transactions reflected in the pro forma
combined financial statements give effect to the following:
(a) To reflect reduction of interest expense resulting from the repayment
of certain indebtedness of Allied from the proceeds of the private
placement of equity completed in 1996.
(b) To reflect reduction of interest expense resulting from the conversion
of certain convertible subordinated debt into Common Stock and the
repayment of certain indebtedness from the proceeds of the sale of 7.6
million shares of Common Stock in a public offering completed in 1996.
(c) To reflect the elimination of one-time costs related to the conversion
of debt securities converted in 1995.
6. NET INCOME (LOSS) PER COMMON SHARE
Pro forma net income (loss) 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:
12
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1995 September 30, 1996
-------------------------------- -----------------------------
Pro Forma Pro Forma
for Acquisitions Pro Forma for Acquisition Pro Forma
---------------- --------- --------------- ---------
<S> <C> <C> <C> <C>
Historical weighted average
common shares............................ 37,823,370 37,823,370 57,594,445 57,594,445
Pro forma effect of issuing
common shares for --
Service Waste acquired and
accounted for as a purchase............ 889,445 889,445 100,631 100,631
The LSW Subsidiaries acquired
and accounted for
as a purchase.......................... 14,600,000 14,600,000 14,600,000 14,600,000
Common shares issued pursuant
to a private placement................. -- 962,433 -- --
Common shares issued in
connection with the
public offering........................ -- 7,606,282 -- 638,484
Conversion of convertible
subordinated debt
into common shares..................... -- 1,827,639 -- 172,883
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 and issuances
of inducement conversion shares........ -- 4,859,991 -- --
Conversion of $90 Preferred into
common shares and issuances
of inducement conversion shares........ -- 1,343,374 -- --
To remove the impact of contingently
issuable shares........................ (23,244) (23,244) -- --
Exercise of warrants...................... -- 553,873 -- 8,232
--------------- ------------- --------------- -------------
53,289,571 71,407,951 72,295,076 73,114,675
=============== ============= =============== =============
</TABLE>
7. PRO FORMA MATURITIES OF LONG-TERM DEBT
Aggregate future maturities of pro forma long-term debt outstanding at September
30, 1996 (in thousands):
Maturity
--------
3 months 1996.................... $ 4,046
1997............................. 18,067
1998............................. 14,343
1999............................. 12,256
2000............................. 6,604
2001............................. 6,021
Thereafter....................... 1,097,864
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<PAGE>
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
-----------------------------
Vice President, Treasurer
and Chief Accounting Officer
Date: February 14, 1997
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