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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) August 3, 2000
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>
7
Item 5. Other Events
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On August 3, 2000 Allied Waste Industries, Inc. (the "Company" or "Allied")
issued a press release announcing its financial results for the three and six
months ended June 30, 2000. The press release along with unaudited supplemental
data is provided herein.
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2
<PAGE>
Contact: Investor Relations
480-627-2700
FOR IMMEDIATE RELEASE
ALLIED WASTE ANNOUNCES SECOND QUARTER 2000 RESULTS
Scottsdale, AZ - August 3, 2000 - Allied Waste Industries, Inc. (NYSE: AW) today
announced financial results for the second quarter of 2000. The company
highlighted the following second quarter information:
|X| Revenues were approximately $1.46 billion and EBITDA adjusted for
acquisition-related costs was $507.0 million; |X| Adjusted free cash flow was
$145 million; |X| Adjusted EPS was $0.23 and adjusted cash EPS was $0.42; |X|
Internal growth of 6% reflects continuing healthy industry fundamentals; |X|
Debt was reduced by $176.3 million in the second quarter to approximately $9.97
billion.
For the second quarter ended June 30, 2000, EBITDA (earnings before interest,
taxes, depreciation and amortization), adjusted for acquisition-related costs,
was $507.0 million. Adjusted net income available to common shareholders was
$43.0 million, or $0.23 per share, on revenues of $1.46 billion. The adjusted
results for the second quarter ended June 30, 2000 exclude the effects of
acquisition-related costs; these charges decreased earnings per share by $0.07
in the second quarter. Adjusted cash EPS (adjusted earnings per share plus
after-tax goodwill amortization and less after-tax capitalized interest) was
$0.42.
For the six months ended June 30, 2000 EBITDA adjusted for acquisition-related
costs was $969.2 million on revenues of $2.84 billion. Adjusted net income
available to common shareholders was $70.9 million or $0.37 per share and
adjusted cash EPS was $0.77.
Consistent with its reporting of prior quarterly results since the acquisition
of BFI, Allied Waste has not provided June 30, 1999 historical results of
operations for comparison as such comparisons are not meaningful due to the
magnitude and financial structure of the BFI acquisition, which was completed on
July 30, 1999.
"We are pleased with the strong operational and financial results for the second
quarter as we continue to supply our shareholders with greater visibility to the
strength of this Company's operations and cash flow," said Tom Van Weelden,
Chairman and CEO of Allied Waste. "Internal growth remains solid, reflecting the
continued positive fundamentals of the industry, while our debt continues to
decline in accordance with our plan."
Commentary on Free Cash Flow
Free cash flow for the quarter ended June 30, 2000 was $145 million. Free cash
flow is defined as adjusted EBITDA plus other non-cash expenses, less cash
interest, cash taxes, closure, post-closure and environmental expenditures,
capital expenditures (other than for acquisitions) and changes in
non-acquisition related working capital. Days sales outstanding in accounts
receivable (DSO) decreased during the second quarter to 53 days from 55 days
reported for the first quarter of 2000 reflecting the company's continuing
progress in managing cash flow.
3
<PAGE>
Divestiture and Swap Program Update
As of June 30, 2000, Allied Waste has substantially completed its divestiture
program initiated at the time of the acquisition of BFI resulting in net
proceeds of approximately $1.3 billion. The few remaining transactions should
allow the company to achieve its goal of $1.6 billion in net proceeds by
December 2000.
Balance Sheet Information
During the second quarter, total debt decreased by $176.3 million to
approximately $9.97 billion at June 30, 2000, after consideration of market
development and divestiture activity during the period. Capacity on the
Company's revolving credit facility was approximately $545 million at June 30,
2000. The Company's Tranche D Term Loan balance was approximately $123 million
at June 30, 2000.
Allied Waste Industries, Inc., a leading waste services company, provides
collection, recycling and disposal services to residential, commercial and
industrial customers in the United States. As of June 30, 2000, the Company
operated 350 collection companies, 152 transfer stations, 163 landfills and 87
recycling facilities in 42 states.
Safe Harbor for Forward-Looking Statements
Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such by the context of the statements,
including words such as the Company "believes," "anticipates," "expects" or
words of similar import. Similarly, statements that describe the Company's
future plans, objectives or goals are forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those currently
anticipated. Examples of such risks and uncertainties include, without
limitation the ability of Allied to continue its vertical integration business
strategy in a successful manner; the ability of Allied to successfully pursue
and continue a disciplined market development program, the ability of Allied to
successfully integrate the acquired operations, to exit certain regional markets
and certain non-strategic businesses, whether and when the recent transactions
concluded or completed will be accretive to Allied's earnings, the amount of
consideration to be paid and timing of the closing of potential transactions
currently under definitive agreement, and whether Allied will be successful in
negotiating asset sales at a pace sufficient to achieve the Company's stated
goal.
Other factors which could materially affect such forward-looking statements can
be found in the Company's periodic reports filed with the Securities and
Exchange Commission, including risk factors detailed in Management's Discussion
and Analysis in Allied's Form 10-K for the year ended December 31, 1999.
Shareholders, potential investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements. The
forward-looking statements made herein are only made as of the date of this
press release and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
4
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
For the Three Months Ended
June 30, 2000
----------------------------------------------------------------------
% of
Reported Adjustments(1) As Adjusted Revenue
------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenue............................................ $ 1,461,854 $ -- $ 1,461,854 100.0%
Cost of operations................................. 850,121 -- 850,121 58.2
Sales, general and administrative expenses......... 104,697 -- 104,697 7.2
Depreciation and amortization...................... 114,984 -- 114,984 7.9
Goodwill amortization.............................. 54,644 -- 54,644 3.7
------------- ----------------- ---------------
Operating income before acquisition related
costs.......................................... 337,408 -- 337,408 23.1
Acquisition related costs.......................... 20,877 (20,877) --
------------- ----------------- ---------------
Operating income................................. 316,531 20,877 337,408 23.1
Equity in earnings of unconsolidated
subsidiaries..................................... (14,290) -- (14,290) (1.0)
Interest expense, net.............................. 219,956 -- 219,956 15.0
------------- ----------------- ---------------
Net income before income taxes................... 110,865 20,877 131,742 9.0
Income tax provision............................... 61,981 8,691 70,672 4.8
Minority interest.................................. 1,188 -- 1,188 0.1
------------- ----------------- ---------------
Net income....................................... 47,696 12,186 59,882 4.1
Preferred dividends(2)............................. 16,879 -- 16,879 1.2
------------- ----------------- ---------------
Net income to common shareholders................ $ 30,817 $ 12,186 $ 43,003 2.9
============= ================= ===============
Income per common share............................ $ 0.16 $ 0.23
============= ===============
Cash income per common share(3).................... $ 0.37 $ 0.42
============= ===============
Weighted average common and common
equivalent shares................................ 190,449 190,449
============= ===============
------------------------------------------------------------------------------------------------------------------------------------
EBITDA $ 486,159 $ 507,036 34.7%
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<FN>
(1) Adjustments remove the effects of the acquisition-related costs, primarily
associated with the acquisition of Browning-Ferris Industries, Inc.
("BFI").
(2) Preferred dividends reflect the 6.5% dividends related to the $1 billion
Series A Senior Convertible Preferred Stock issued in connection with the
acquisition of BFI.
(3) Cash income per common share adjusts income per common share to remove the
impact of tax effected goodwill amortization and tax effected capitalized
interest.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
For the Six Months Ended
June 30, 2000
----------------------------------------------------------------------
% of
Reported Adjustments(1) As Adjusted Revenue
------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenue............................................ $ 2,840,147 $ -- $ 2,840,147 100.0%
Cost of operations................................. 1,660,077 -- 1,660,077 58.5
Sales, general and administrative expenses......... 210,859 -- 210,859 7.4
Depreciation and amortization...................... 226,581 -- 226,581 8.0
Goodwill amortization.............................. 108,658 -- 108,658 3.8
------------- ----------------- ---------------
Operating income before acquisition related
costs........................................... 633,972 -- 633,972 22.3
Acquisition related costs.......................... 56,926 (56,926) --
------------- ----------------- ---------------
Operating income................................. 577,046 56,926 633,972 22.3
Equity in earnings of unconsolidated
subsidiaries..................................... (27,787) -- (27,787) (1.0)
Interest expense, net.............................. 433,759 -- 433,759 15.3
------------- ----------------- ---------------
Net income before income taxes................... 171,074 56,926 228,000 8.0
Income tax provision............................... 95,642 25,189 120,831 4.3
Minority interest.................................. 2,779 -- 2,779 0.1
------------- ----------------- ---------------
Net income before extraordinary loss............. 72,653 31,737 104,390 3.7
Extraordinary loss, net of income tax benefit(2)... 6,484 (6,484) --
------------- ----------------- ---------------
Net income....................................... 66,169 38,221 104,390 3.7
Preferred dividends(3)............................. 33,489 -- 33,489 1.2
------------- ----------------- ---------------
Net income to common shareholders................ $ 32,680 $ 38,221 $ 70,901 2.5
============= ================= ===============
Income per common share............................ $ 0.17 $ 0.37
============= ===============
Cash income per common share(4).................... $ 0.64 $ 0.77
============= ===============
Weighted average common and common
equivalent shares................................ 189,895 189,895
============= ===============
------------------------------------------------------------------------------------------------------------------------------------
EBITDA $ 912,285 $ 969,211 34.1%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Adjustments remove the effects of the acquisition-related costs, primarily
associated with the acquisition of Browning-Ferris Industries, Inc.
("BFI").
(2) Extraordinary loss reflects the write-off of deferred debt issuance costs
in connection with the early extinguishment of the Asset Sale Term Loan.
(3) Preferred dividends reflect the 6.5% dividends related to the $1 billion
Series A Senior Convertible Preferred Stock issued in connection with the
acquisition of BFI.
(4) Cash income per common share adjusts income per common share to remove the
impact of tax effected goodwill amortization and tax effected capitalized
interest.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
Statement of Cash Flows Data
(amounts in thousands, unaudited)
Three Months Ended
June 30, 2000
-------------------------
<S> <C>
Operating Activities --
Net income..................................................................................... $ 47,696
Adjustments to reconcile net income to cash provided by operating activities --
Provisions for:
Depreciation and amortization................................................................ 169,628
Undistributed earnings of equity investment in unconsolidated subsidiaries................... (12,217)
Doubtful accounts............................................................................ 3,044
Accretion of debt and amortization of debt issuance costs.................................... 10,814
Deferred income taxes........................................................................ 33,524
Gain on sale of assets....................................................................... (2,388)
Change in operating assets and liabilities, excluding the effects of
purchase acquisitions --
Accounts receivable, prepaid expenses, inventories and other................................. (79,041)
Accounts payable, accrued liabilities, unearned income and other............................. 69,209
Acquisition related accruals................................................................. (33,839)
Closure and post-closure provision............................................................. 15,943
Closure and post-closure expenditures.......................................................... (18,232)
Environmental expenditures..................................................................... (8,728)
------------------------
Cash provided by operating activities............................................................ 195,413
------------------------
Investing Activities --
Cost of market development acquisitions, net of cash acquired................................ (23,205)
Proceeds from divestitures, net of swap activity............................................. 178,249
Accruals for acquisition price and severance costs........................................... (6,404)
Net repayment from unconsolidated subsidiaries............................................... 10,902
Capital expenditures, other than for acquisitions............................................ (93,601)
Capitalized interest......................................................................... (10,962)
Proceeds from sale of fixed assets........................................................... 6,819
Change in deferred acquisition costs and notes receivable.................................... (4,202)
------------------------
Cash provided by investing activities 57,596
------------------------
Financing Activities --
Proceeds from long-term debt, net of issuance costs.......................................... 428,000
Payments of long-term debt................................................................... (605,585)
------------------------
Cash used for financing activities............................................................... (177,585)
------------------------
Increase in cash and cash equivalents............................................................ 75,424
Cash and cash equivalents, beginning of period................................................... 63,782
------------------------
Cash and cash equivalents, end of period......................................................... $ 139,206
========================
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
Balance Sheet Data
(amounts in thousands, except per share data, unaudited)
June 30, 2000
----------------------
<S> <C>
ASSETS
Current Assets --
Cash and cash equivalents......................................................................... $ 139,206
Accounts receivable, net of allowance of $45,911.................................................. 860,675
Prepaid and other current assets.................................................................. 239,928
Deferred income taxes, net........................................................................ 102,478
----------------------
Total current assets............................................................................ 1,342,287
Property and equipment, net....................................................................... 3,860,981
Goodwill, net..................................................................................... 8,660,479
Other assets...................................................................................... 725,071
----------------------
Total assets.................................................................................... $ 14,588,818
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities --
Current portion of long-term debt................................................................. $ 117,693
Accounts payable.................................................................................. 447,809
Accrued closure, post-closure and environmental costs............................................. 154,076
Accrued interest.................................................................................. 172,758
Other accrued liabilities......................................................................... 561,562
Unearned revenue.................................................................................. 229,891
----------------------
Total current liabilities....................................................................... 1,683,789
Long-term debt, less current portion.............................................................. 9,854,586
Deferred income taxes............................................................................. 156,066
Accrued closure, post-closure and environmental costs............................................. 867,456
Other long-term obligations....................................................................... 320,176
Commitments and contingencies
Series A Senior convertible preferred stock, 1,000 shares authorized, issued and
outstanding, liquidation preference of $1,061 per share......................................... 1,034,870
Stockholders' equity.............................................................................. 671,875
----------------------
Total liabilities and stockholders' equity...................................................... $ 14,588,818
======================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
(amounts in thousands, except per share data and percentages)
(unaudited)
Statement of Operations Data:
Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
--------------------- ---------------------
<S> <C> <C>
Revenues --
Gross revenue......................................................... $ 1,754,441 $ 3,396,328
Less intercompany revenue............................................. (292,587) (556,181)
--------------------- ---------------------
Revenue............................................................. $ 1,461,854 $ 2,840,147
===================== =====================
Revenue Mix --
Collection(1)......................................................... 61.1% 62.1%
Landfill(1)........................................................... 23.3% 22.7%
Transfer.............................................................. 5.1% 4.7%
Recycling............................................................. 6.7% 6.6%
Other................................................................. 3.8% 3.9%
===================== =====================
Total............................................................... 100.0% 100.0%
===================== =====================
Internalization Based on Disposal Volumes............................... 63.0% 62.0%
===================== =====================
Landfill Volumes in Tons................................................ 16,908 32,870
===================== =====================
Internal Growth (year over year)........................................ 6.0% 6.0%
===================== =====================
Interest Expense --
Interest expense, gross............................................... $ 227,361 $ 457,684
Interest capitalized for assets held for sale......................... (6,518) (24,401)
Interest income....................................................... (739) (1,342)
Capitalized interest for development projects......................... (10,962) (21,029)
Amortization of debt discount and debt issuance costs................. 10,814 22,847
--------------------- ---------------------
Net interest expense................................................ $ 219,956 $ 433,759
===================== =====================
Cash EPS --
Adjusted net income................................................... $ 59,882 $ 104,390
Add: Non-deductible goodwill amortization........................ 42,759 85,572
Deductible goodwill amortization, net of taxes at 39.5%..... 7,190 13,967
Less: Capitalized interest, net of taxes at 39.5%......... (6,632) (12,723)
--------------------- ---------------------
Adjusted net income for cash EPS...................................... $ 103,199 $ 191,206
===================== =====================
Weighted average common and common equivalent shares --
Diluted(2).................................................. 248,461 247,445
===================== =====================
Cash EPS - Diluted.......................................... $ 0.42 $ 0.77
===================== =====================
<FN>
(1) The portion of collection revenues attributable to disposal charges for
waste collected by the Company and disposed at the Company's landfills has
been excluded from collection revenues and included in landfill revenues.
(2) Includes the dilutive impact of the conversion of 58,012 and 57,550 shares
of Series A Senior convertible preferred stock in addition to the 190,449
and 189,895 of weighted average common shares for the three and six months
ended June 30, 2000, respectively.
</FN>
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
(amounts in thousands)
(unaudited)
Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
-------------------- ---------------------
<S> <C> <C>
Market Development Excluding Swap Activity --
Annualized revenue acquired................................................ $ 9,393 $ 163,261
Annualized revenue acquired (after intercompany eliminations).............. 9,393 149,650
Summary of Acquisition Related Costs --
Transition costs........................................................... $ 17,286 $ 42,720
Net adjustments to BFI related accruals.................................... 6,599 17,214
Reversal of acquisition related accruals................................... (3,008) (3,008)
-------------------- ---------------------
Total reported acquisition related costs........................ $ 20,877 $ 56,926
==================== =====================
Capital Expenditures --
Fixed asset purchases...................................................... $ 48,724 $ 113,693
Cell development........................................................... 44,877 69,383
-------------------- ---------------------
Total........................................................... $ 93,601 $ 183,076
==================== =====================
Estimate of Remaining 2000 Transition Costs --
Estimate of remaining 2000 transition costs at December 31, 1999............................... $ 115,000
Transition costs incurred during the three months ended March 31, 2000......................... (25,434)
Transition costs incurred during the three months ended June 30, 2000.......................... (17,286)
Reduction of estimated remaining 2000 transition costs......................................... (19,280)
---------------------
Estimated remaining 2000 transition costs at June 30, 2000..................................... $ 53,000
=====================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
(amounts in thousands, except percentages)
(unaudited)
For the Three Months Ended
June 30, 2000
----------------------------------------------
Reported As Adjusted
--------------------- ---------------------
<S> <C> <C>
Free Cash Flow:
EBITDA......................................................... $ 486,159 $ 507,036
Other Non-cash items:
Closure and post-closure provision.......................... 15,943 15,943
Allowance for doubtful accounts............................. 3,044 3,044
Gain on sale of assets...................................... (2,388) (2,388)
Less: Cash interest.................................................. (216,489) (216,489)
Cash taxes..................................................... (37,661) (29,143)
Closure, post-closure and environmental expenditures........... (26,960) (26,960)
Capital expenditures, other than for acquisitions.............. (93,601) (93,601)
Expenditures for acquisition related costs..................... (33,839) --
Payments for BFI acquisition and severance..................... (6,404) --
Changes in working capital..................................... (9,832) (9,832)
Remove change in accrued interest from working capital......... (10,639) (10,639)
Remove change in accrued taxes from working capital............ 8,127 8,127
Add: Net repayment from unconsolidated subsidiaries................. 10,902 --
--------------------- ---------------------
Free cash flow before market development.................... $ 86,362 $ 145,098
===================== =====================
From March 31
through
June 30, 2000
---------------------
Rollforward of Debt Balance:
Debt balance at March 31, 2000.......................................................... $ 10,148,568
Free cash flow.......................................................................... (86,362)
Market development, divestitures and swaps, net......................................... (157,661)
Increase in cash........................................................................ 75,424
Accretion and other adjustments......................................................... (7,690)
---------------------
Debt balance at June 30, 2000........................................................... $ 9,972,279
=====================
At June 30, 2000
---------------------
Capital Structure:
Long-term debt (including current portion).............................................. $ 9,972,279
Equity (including Series A Senior convertible preferred stock).......................... 1,706,745
---------------------
Debt to total capitalization............................................................ 85.4%
=====================
Days Sales Outstanding: 53 days
=====================
Shares Outstanding:
Second quarter weighted average common and common equivalent shares:
Basic................................................................................... 188,688
Diluted................................................................................. 190,449
</TABLE>
11
<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
---------------------------------------------
Peter S. Hathaway
Vice President & Chief Accounting Officer
Date: August 3, 2000
