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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 20, 1999
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 (480) 627-2700
Not Applicable
(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events
On July 30, 1999, Allied Waste Industries, Inc. ("Allied") completed
the acquisition of Browning-Ferris Industries, Inc. ("BFI") under which
Allied acquired BFI for $45 in cash per BFI common share. The
transaction was structured as a merger of BFI with a subsidiary of
Allied and was subject to the satisfaction of certain conditions. Prior
to the completion of the transaction, BFI sold its equity interest in
SITA, S.A. to Suez Lyonnaise des Eaux, S.A. for approximately $444.0
million. Subsequent to the transaction, Allied entered into definitive
merger agreements to divest of certain non-core and non-integrated
assets including (i) the medical waste operations of BFI to Stericycle,
Inc. for approximately $410.5 million, which was completed in November,
1999, (ii) the Canadian operations of BFI to Waste Management, Inc. for
approximately $225.0 million, (iii) certain assets of BFI Gas Services,
Inc. to Gas Recovery Systems, Inc. for approximately $63.0 million and
(iv) certain government mandated and other identified non-core or
non-integrated operations for an aggregate of approximately $700.5
million. The pro forma statements of operations do not reflect
potential acquisitions expected in 2000.
The financial statements and pro forma financial statements included
herein are for informational purposes and should be read in connection
with the Form 8-K filed on March 16, 1999 announcing this transaction
and the Agreement and Plan of Merger.
Item 7. Financial Statements
(a) Pro Forma Combined Financial Statements of Operations
(i) Introduction
(ii) Pro Forma Combined Statement of Operations for the Nine Months
Ended September 30, 1999 (unaudited)
(iii) Pro Forma Combined Statement of Operations for the Year Ended
December 31, 1998 (unaudited)
(iv) Notes to Pro Forma Combined Financial Statements (unaudited)
<PAGE>
PRO FORMA COMBINED FINANCIAL STATEMENTS
The financial data presented below for the nine months ended September 30, 1999
and for the fiscal years ended December 31, 1998 for Allied and September 30,
1998 for BFI are derived from Allied's consolidated financial statements and
related notes, and BFI's consolidated financial statements and related notes.
See Allied's and BFI's consolidated financial statements in Allied's 1998 Form
10-K/A, Allied's September 30, 1999 Form 10-Q and BFI's 1998 Form 10-K/A,
respectively.
The unaudited summary pro forma combined statement of operations for the nine
months ended September 30, 1999 and the year ended December 31, 1998 give effect
to the acquisition of BFI and certain divestitures of non-core or non-integrated
operations as if each had occurred on January 1, 1998.
These statements of operations do not purport to be indicative of the combined
results of operations of Allied and BFI that might have occurred had the BFI
acquisition been completed on such dates, nor are they indicative of future
results of operations. The pro forma combined financial statements do not give
effect to any cost savings or other benefits of the business combination, which
may result from the integration of Allied's and BFI's operations.
The unaudited pro forma combined statements of operations should be read in
conjunction with the notes to the unaudited pro forma combined financial
statements of operations, the historical consolidated financial statements of
Allied and related notes and the historical consolidated financial statements of
BFI and related notes. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation-Disclosure Regarding Forward-Looking
Statements" in Allied's 1998 Form 10-K/A.
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(In thousands, unaudited)
Pro Forma
Adjustments
Historical Related to the
Allied(1) BFI(2) BFI Dispositions(4) Pro Forma
Acquisition(3)
------------ ------------ ----------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues................................. $ 1,957,031 $ 2,487,436 $ -- $ (488,879) $ 3,955,588
Cost of operations....................... 1,122,718 1,615,310 -- (314,624) 2,423,404
Selling, general and administrative expense 140,769 318,704 -- (41,756) 417,717
Depreciation and amortization expense.... 168,529 236,888 -- (40,534) 364,883
Goodwill amortization.................... 57,881 10,166 92,210 (a) (3,462) 156,795
Acquisition related and unusual costs.... 549,774 (56,880) -- 469 493,363
------------ ------------ ----------------- --------------- ------------
.........
Operating income (loss).................. (82,640) 363,248 (92,210) (88,972) 99,426
Interest expense, net.................... 227,321 69,420 297,899 (b) 235 594,875
Equity income of unconsolidated affiliates (11,265) (32,742) -- 2,995 (41,012)
------------ ------------ ----------------- --------------- ------------
Net income (loss) before income tax expense
(benefit), minority interest,
extraordinary loss
and cumulative effect of change in (298,696) 326,570 (390,109) (92,202) (454,437)
accounting principle...............
Income tax expense (benefit)............. (46,434) 155,404 (117,670) (c) (36,490) (45,190)
Minority interest........................ -- 2,796 -- (396) 2,400
------------ ------------ ----------------- --------------- ------------
Net income (loss) before extraordinary loss
and cumulative effect of change in
accounting principle................... (252,262) 168,370 (272,439) (55,316) (411,647)
Dividends................................ 11,219 60,192 (18,565) (d) -- 52,846
------------ ------------ ----------------- --------------- ------------
Net income (loss) to common shareholders
before extraordinary loss and cumulative
effect of change in accounting principle $ (263,481) $ 108,178 $ (253,874) $ (55,316) $ (464,493)
============ ============ ================= =============== ============
Basic EPS:
Net loss before extraordinary loss and
cumulative effect of change in
accounting $ (1.41) $ (2.48)
principle............................
============ ============
Weighted average common shares
outstanding............................ 187,312 187,312
============ ============
Diluted EPS:
Net loss before extraordinary loss and
cumulative effect of change in
accounting $ (1.41) $ (2.48)
principle............................
============ ============
Weighted average common shares
outstanding............................ 187,312 187,312
============ ============
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<FN>
The accompanying notes are an integral part of this pro forma combined statement
of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands, unaudited)
Pro Forma
Adjustments
Historical Pro Forma Related to the
Allied(1) BFI(2) BFI Dispositions(4) Pro Forma
Acquisition(3)
------------ ------------ ----------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues................................. $1,575,612 $ 4,112,782 $ -- $ (809,422) $ 4,878,972
Cost of operations....................... 892,273 2,613,419 -- (505,902) 2,999,790
Selling, general and administrative expense 155,835 515,149 -- (86,290) 584,694
Depreciation and amortization expense.... 149,260 392,347 -- (72,883) 468,724
Goodwill amortization.................... 30,705 17,031 159,404 (a) (6,869) 200,271
Acquisition related and unusual costs.... 247,902 (3,545) -- (6,544) 237,813
Asset impairments........................ 69,714 -- -- -- 69,714
------------ ------------ ----------------- --------------- --------------
Operating income......................... 29,923 578,381 (159,404) (130,934) 317,966
Interest expense, net.................... 84,401 106,036 513,088 (c) 152 703,677
Equity in earnings of unconsolidated -- (51,208) -- 7,846 (43,362)
affiliates...............................
------------ ------------ ----------------- --------------- --------------
Net income (loss) before income tax
expense, (54,478) 523,553 (672,492) (138,932) (342,349)
minority interest and extraordinary loss
Income tax expense....................... 43,773 206,283 (202,670) (d) (53,852) (6,466)
Minority interest........................ -- 2,233 -- -- 2,233
------------ ------------ ----------------- --------------- --------------
Net income (loss) before extraordinary loss (98,251) 315,037 (469,822) (85,080) (338,116)
Dividends................................ -- 133,545 (66,943) (e) -- 66,602
------------ ------------ ----------------- --------------- --------------
Net income (loss) to common shareholders. $(98,251) $ 181,492 $ (402,879) $ (85,080) $ (404,718)
============ ============ ================= =============== ==============
Basic EPS:
Net loss before extraordinary loss....... $ (0.54) $ (2.21)
============ ==============
Weighted average common shares
outstanding............................ 182,796 182,796
============ ==============
Diluted EPS:
Net loss before extraordinary loss....... $ (0.54) $ (2.21)
============ ==============
Weighted average common shares
outstanding............................ 182,796 182,796
============ ==============
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<FN>
The accompanying notes are an integral part of this pro forma combined statement
of operations.
</FN>
</TABLE>
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(unaudited)
1 Allied Historical Statement of Operations
The historical balances represent the results of operations of Allied for
each of the indicated periods as reported in the historical consolidated
financial statements of Allied and includes the results of operations of
BFI since the date of acquisition on July 30, 1999. Acquisition related and
unusual costs recorded in Allied's results of operations for the nine
months ended September 30, 1999 include $548.7 million incurred in
connection with the BFI acquisition.
2. BFI Historical Pro Forma Statement of Operations
The amounts related to the BFI Acquisition in the pro forma combined
statements of operations represent the historical results of operations of
BFI for the seven months ended July 31, 1999 and the year ended September
30, 1998 adjusted to give effect to BFI's divestiture of its operations
outside of North America in March 1998.
3. Pro Forma Adjustments Related to the BFI Acquisition
The pro forma adjustments related to the purchase allocation of the BFI
acquisition give effect to marking the assets and liabilities of BFI to
fair market value in connection with the purchase accounting. Combined
financial position and results of operations may be materially impacted by
other charges, which may arise from the acquisition of BFI.
(a) Goodwill amortization related to $6.5 billion of goodwill
recorded in connection with the acquisition of BFI, net of the
impact of divestitures, based on a 40 year amortization period
and reduced by the elimination of historical goodwill
amortization of BFI.
(b) The net increase in interest expense and the amortization of
debt issuance costs of $710.1 million, net of reduction for
pay down of debt resulting from asset divestitures and
write-off of debt issuance costs of $197.0 million related to
the old Allied credit facility for the year ended December 30,
1998. The net increase in interest expense and the
amortization of debt issuance costs of $414.2 million, net of
reduction for pay down of debt resulting from asset
divestitures and write-off of debt issuance costs of $116.3
million related to the old Allied credit facility for the nine
months ended September 30, 1999.
(c) The income tax expense at Allied's tax rate of 39.5% applied
to deductible items.
(d) The elimination of BFI's historical dividends net of dividends
paid on the senior convertible preferred stock calculated
based on $1 billion of shares outstanding at a 6.5% rate
compounded on a quarterly basis.
4. Dispositions
The pro forma financial statements give effect to the proposed divestitures
of the Canadian operations of BFI for approximately $225.0 million, certain
assets of BFI Gas Services, Inc. operations for $63.0 million, certain
government mandated divestitures other identified non-core or
non-integrated operations for an aggregate sales price of $700.5 million,
and the BFI investment in the common stock of SITA, S.A. which was sold for
$444.0 million and the BFI medical waste operations which were sold for
approximately $410.5 million. The combined sales proceeds excluding the
proceeds from the sale of the common stock of SITA, S.A. which was received
prior to the acquisition of BFI will be used to repay the $556.0 million
Asset Sale Term Loan, $500.0 million under the Tranche D of the credit
facility and $343.0 million under Tranches A, B and C of the credit
facility.
<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
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Peter S. Hathaway
Vice President & Chief Accounting Officer
Date: November 20, 1999
