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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 7, 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>
Item 5. Other Events and Regulation FD Disclosure
On November 7, 2000 Allied Waste Industries, Inc. (the "Company" or "Allied")
issued a press release announcing its financial results for the three and nine
months ended September 30, 2000. The press release along with unaudited
supplemental data is provided herein.
2
<PAGE>
Contact: Michael Burnett
480-627-2785
FOR IMMEDIATE RELEASE
ALLIED WASTE ANNOUNCES THIRD QUARTER 2000 RESULTS
SCOTTSDALE, AZ - November 7, 2000 - Allied Waste Industries, Inc. (NYSE: AW)
today announced financial results for the third quarter of 2000. The company
highlighted the following third quarter information:
|X| Adjusted EPS was $0.27 and adjusted cash EPS was $0.45;
|X| Adjusted free cash flow was $213.1 million;
|X| Revenues were $1.475 billion and EBITDA adjusted for acquisition
related and unusual costs was $533.5 million;
|X| Debt was reduced by $232.8 million in the third quarter to
approximately $9.74 billion.
For the third quarter ended September 30, 2000, EBITDA (earnings before
interest, taxes, depreciation and amortization), adjusted for acquisition
related and unusual costs, was $533.5 million. Adjusted net income available to
common shareholders was $51.3 million, or $0.27 per share, on revenues of $1.475
billion. The adjusted results for the third quarter ended September 30, 2000
exclude the after-tax effects of acquisition related and unusual costs and of
the extraordinary loss on the early retirement of debt. These charges decreased
earnings per share by $0.21 and $0.04, respectively, in the third quarter.
Adjusted cash EPS (adjusted earnings per share plus after-tax goodwill
amortization and less after-tax capitalized interest) was $0.45.
For the nine months ended September 30, 2000, EBITDA adjusted for acquisition
related and unusual costs was $1.5 billion on revenues of $4.31 billion.
Adjusted net income available to common shareholders was $122.2 million or $0.64
per share and adjusted cash EPS was $1.22.
"We are pleased with the strong cash flow the company is generating, as well as
with the related reduction of debt that occurred during the quarter," said Tom
Van Weelden, Chairman and CEO of Allied Waste. "Our management team continues to
execute its business plan and to focus on operational efficiencies and
appropriate cash management."
Free Cash Flow
Adjusted free cash flow for the quarter ended September 30, 2000 was $213.1
million and over $400 million for the nine months ended September 30, 2000.
Adjusted free cash flow is defined as adjusted EBITDA plus other non-cash
expenses, less cash interest, adjusted cash taxes, closure, post-closure and
environmental expenditures, capital expenditures (excluding acquisitions) and
changes in non-acquisition related working capital.
Balance Sheet Information
During the third quarter, total debt decreased by $232.8 million to
approximately $9.74 billion at September 30, 2000. Capacity on the Company's
revolving credit facility was approximately $590 million at September 30, 2000.
3
<PAGE>
Consistent with its reporting of prior quarterly results since the acquisition
of BFI, Allied Waste has not provided September 30, 1999 historical results of
operations for comparison. Such comparisons are not meaningful due to the
magnitude and financial structure of the BFI acquisition, which was completed on
July 30, 1999. Beginning in the fourth quarter of 2000, Allied will provide year
to year comparative results.
Allied Waste will host a conference call related to the third quarter earnings
on Wednesday, November 8th at 9:00 a.m. EST which will be broadcast live over
the Internet on our website at www.alliedwaste.com. A playback of the call will
be available on the site after the call. The Company also filed supplemental
data on Form 8-K which is accessible on the website or through the SEC EDGAR
Database.
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 September 30, 2000, the Company
operated 338 collection companies, 152 transfer stations, 164 landfills and 75
recycling facilities in 40 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.
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<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
For the Three Months Ended
September 30, 2000
----------------------------------------------------------------------
% of
Reported Adjustments(1) As Adjusted Revenue
---------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue............................................ $ 1,474,731 $ -- $ 1,474,731 100.0%
Cost of operations................................. 834,123 -- 834,123 56.6
Sales, general and administrative expenses......... 107,085 -- 107,085 7.3
Depreciation and amortization...................... 116,240 -- 116,240 7.9
Goodwill amortization.............................. 56,236 -- 56,236 3.8
---------------- ------------------ ----------------
Operating income before acquisition related
and unusual costs.............................. 361,047 -- 361,047 24.5
Acquisition related and unusual costs.............. 48,591 (48,591) --
---------------- ------------------ ----------------
Operating income................................. 312,456 48,591 361,047 24.5
Equity in earnings of unconsolidated
subsidiaries..................................... (10,194) -- (10,194) (0.7)
Interest expense, net.............................. 220,426 -- 220,426 14.9
---------------- ------------------ ----------------
Net income before income taxes................... 102,224 48,591 150,815 10.2
Income tax provision............................... 72,447 8,726 81,173 5.5
Minority interest.................................. 1,037 -- 1,037 0.1
---------------- ------------------ ----------------
Net income before extraordinary loss............. 28,740 39,865 68,605 4.7
Extraordinary loss, net of income tax benefit(2)... 6,782 (6,782) --
---------------- ------------------ ----------------
Net income....................................... 21,958 46,647 68,605 4.7
Preferred dividends(3)............................. 17,340 -- 17,340 1.2
---------------- ------------------ ----------------
Net income to common shareholders................ $ 4,618 $ 46,647 $ 51,265 3.5
================ ================== ================
Income per common share............................ $ 0.02 $ 0.27
================ ================
Cash income per common share(4).................... $ 0.29 $ 0.45
================ ================
Weighted average common and common
equivalent shares................................ 192,028 192,028
================ ================
------------------------------------------------------------------------------------------------------------------------------
EBITDA $ 484,932 $ 533,523 36.2%
------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Adjustments remove the effects of the acquisition related and unusual costs, primarily associated with the
acquisition of Browning-Ferris Industries, Inc. ("BFI"), and a $26.1 million non-cash charge associated
with the loss on an asset sale.
(2) Extraordinary loss reflects write-off of deferred debt issuance costs in connection with the early extinguishment of
debt.
(3) Preferred dividends reflect the 6.5% dividends related to the $1 billion Series A Senior Convertible Preferred Stock.
(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>
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<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
For the Nine Months Ended
September 30, 2000
----------------------------------------------------------------------
% of
Reported Adjustments(1) As Adjusted Revenue
---------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue............................................ $ 4,314,878 $ -- $ 4,314,878 100.0%
Cost of operations................................. 2,494,200 -- 2,494,200 57.8
Sales, general and administrative expenses......... 317,944 -- 317,944 7.4
Depreciation and amortization...................... 342,821 -- 342,821 7.9
Goodwill amortization.............................. 164,894 -- 164,894 3.8
---------------- ------------------ ----------------
Operating income before acquisition related
and unusual costs............................... 995,019 -- 995,019 23.1
Acquisition related and unusual costs.............. 105,517 (105,517) --
---------------- ------------------ ----------------
Operating income................................. 889,502 105,517 995,019 23.1
Equity in earnings of unconsolidated
subsidiaries..................................... (37,981) -- (37,981) (0.9)
Interest expense, net.............................. 654,185 -- 654,185 15.2
---------------- ------------------ ----------------
Net income before income taxes................... 273,298 105,517 378,815 8.8
Income tax provision............................... 168,089 33,915 202,004 4.7
Minority interest.................................. 3,816 -- 3,816 0.1
---------------- ------------------ ----------------
Net income before extraordinary loss............. 101,393 71,602 172,995 4.0
Extraordinary loss, net of income tax benefit(2)... 13,266 (13,266) --
---------------- ------------------ ----------------
Net income....................................... 88,127 84,868 172,995 4.0
Preferred dividends(3)............................. 50,829 -- 50,829 1.2
---------------- ------------------ ----------------
Net income to common shareholders................ $ 37,298 $ 84,868 $ 122,166 2.8
================ ================== ================
Income per common share............................ $ 0.20 $ 0.64
================ ================
Cash income per common share(4).................... $ 0.93 $ 1.22
================ ================
Weighted average common and common
equivalent shares................................ 191,105 191,105
================ ================
------------------------------------------------------------------------------------------------------------------------------
EBITDA $ 1,397,217 $ 1,502,734 34.8%
------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Adjustments remove the effects of the acquisition related and unusual costs, primarily associated with
the acquisition of Browning-Ferris Industries, Inc. ("BFI") and a $26.1 million non-cash charge associated
with the loss on an asset sale.
(2) Extraordinary loss reflects the write-off of deferred debt issuance costs in connection with the early
extinguishment of debt.
(3) Preferred dividends reflect the 6.5% dividends related to the $1 billion Series A Senior Convertible Preferred Stock.
(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>
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<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
Statement of Cash Flows Data
(amounts in thousands, unaudited)
Three Months Ended
September 30, 2000
---------------------
<S> <C>
Operating activities --
Net income..................................................................................... $ 21,958
Adjustments to reconcile net income to cash provided by operating activities --
Provisions for:
Depreciation and amortization................................................................ 172,476
Non-cash acquisition related and unusual costs............................................... 26,114
Undistributed earnings of equity investment in unconsolidated subsidiaries................... (10,194)
Doubtful accounts............................................................................ 5,274
Accretion of debt and amortization of debt issuance costs.................................... 10,888
Deferred income taxes........................................................................ 65,333
Gain on sale of assets....................................................................... (2,120)
Extraordinary loss, net of income tax benefit................................................ 6,782
Change in operating assets and liabilities, excluding the effects of
purchase acquisitions --
Accounts receivable, prepaid expenses, inventories and other................................. (5,309)
Accounts payable, accrued liabilities, unearned income and other............................. 55,859
Acquisition related and non-recurring accruals............................................... (49,127)
Closure and post-closure provision............................................................. 16,678
Closure and post-closure expenditures.......................................................... (13,385)
Environmental expenditures..................................................................... (7,697)
----------------------
Cash provided by operating activities............................................................ 293,530
----------------------
Investing activities --
Cost of acquisitions, net of cash acquired................................................... (102,808)
Proceeds from divestitures, net of cash divested............................................. 117,817
Accruals for acquisition price and severance costs........................................... (3,462)
Capital expenditures, excluding acquisitions................................................. (107,261)
Capitalized interest......................................................................... (11,887)
Proceeds from sale of fixed assets........................................................... 4,773
Change in deferred acquisition costs and notes receivable.................................... 9,267
----------------------
Cash used for investing activities............................................................... (93,561)
----------------------
Financing activities --
Proceeds from long-term debt................................................................. 409,000
Payments of long-term debt................................................................... (635,562)
----------------------
Cash used for financing activities............................................................... (226,562)
----------------------
Decrease in cash and cash equivalents............................................................ (26,593)
Cash and cash equivalents, beginning of period................................................... 139,206
----------------------
Cash and cash equivalents, end of period......................................................... $ 112,613
======================
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
Balance Sheet Data
(amounts in thousands, except per share data, unaudited)
September 30, 2000
----------------------
<S> <C>
ASSETS
Current assets --
Cash and cash equivalents......................................................................... $ 112,613
Accounts receivable, net of allowance of $44,895.................................................. 854,353
Prepaid and other current assets.................................................................. 163,789
Deferred income taxes, net........................................................................ 166,428
----------------------
Total current assets............................................................................ 1,297,183
Property and equipment, net....................................................................... 3,893,583
Goodwill, net..................................................................................... 8,673,303
Other assets, net................................................................................. 647,349
----------------------
Total assets.................................................................................... $ 14,511,418
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities --
Current portion of long-term debt................................................................. $ 97,857
Accounts payable.................................................................................. 486,083
Accrued closure, post-closure and environmental costs............................................. 175,543
Accrued interest.................................................................................. 175,255
Other accrued liabilities......................................................................... 592,809
Unearned revenue.................................................................................. 224,818
----------------------
Total current liabilities....................................................................... 1,752,365
Long-term debt, less current portion.............................................................. 9,641,614
Deferred income taxes............................................................................. 270,028
Accrued closure, post-closure and environmental costs............................................. 849,563
Other long-term obligations....................................................................... 267,339
Commitments and contingencies
Series A senior convertible preferred stock, 1,000 shares authorized, issued and
outstanding, liquidation preference of $1,078 per share......................................... 1,052,207
Stockholders' equity.............................................................................. 678,302
----------------------
Total liabilities and stockholders' equity...................................................... $ 14,511,418
======================
</TABLE>
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<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 Nine Months
Ended Ended
September 30, 2000 September 30, 2000
--------------------- ---------------------
<S> <C> <C>
Revenues --
Gross revenue......................................................... $ 1,772,706 $ 5,169,035
Less intercompany revenue............................................. (297,975) (854,157)
--------------------- ---------------------
Revenue............................................................. $ 1,474,731 $ 4,314,878
===================== =====================
Revenue Mix --
Collection(1)......................................................... 62.0% 62.0%
Landfill(1)........................................................... 24.0% 23.1%
Transfer.............................................................. 5.8% 5.1%
Recycling............................................................. 4.6% 6.0%
Other................................................................. 3.6% 3.8%
--------------------- ---------------------
Total............................................................... 100.0% 100.0%
===================== =====================
Internalization Based on Disposal Volumes............................... 65% 63%
===================== =====================
Landfill Volumes in Tons................................................ 17,763 50,633
===================== =====================
Internal Growth (year over year), unadjusted............................ 2.7% 6.0%
===================== =====================
Internal Growth (year over year), excluding commodity................... 3.9% 5.2%
===================== =====================
Interest Expense --
Interest expense, gross............................................... $ 223,738 $ 681,422
Interest suspended for assets held for sale........................... (407) (24,808)
Interest income....................................................... (1,906) (3,248)
Capitalized interest for development projects......................... (11,887) (32,916)
Accretion of debt and amortization of debt issuance costs............. 10,888 33,735
--------------------- ---------------------
Net interest expense................................................ $ 220,426 $ 654,185
===================== =====================
Cash EPS --
Adjusted net income................................................... $ 68,605 $ 172,995
Add: Non-deductible goodwill amortization........................... 42,42,611 128,183
Deductible goodwill amortization, net of taxes at 39.5%........ 8,243 22,210
Less: Capitalized interest, net of taxes at 39.5%................... (7,192) (19,914)
--------------------- ---------------------
Adjusted net income for cash EPS...................................... $ 112,267 $ 303,474
===================== =====================
Weighted average common and common equivalent shares --
Diluted(2)..................................................... 250,978 249,126
===================== =====================
Cash EPS - Diluted............................................. $ 0.45 $ 1.22
===================== =====================
<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 58,950 and 58,021
shares of Series A Senior convertible preferred stock in addition to
the 192,028 and 191,105 of weighted average common shares for the three
and nine months ended September 30, 2000, respectively.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
(amounts in thousands)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, 2000 September 30, 2000
-------------------- ---------------------
<S> <C> <C>
Acquisitions --
Annualized revenue acquired................................................ $ 49,539 $ 472,634
Annualized revenue acquired (after intercompany eliminations).............. 49,539 458,895
Divestitures --
Annualized revenue divested................................................ $ (60,517) $ (770,434)
Annualized revenue divested (after intercompany eliminations).............. (59,475) (635,995)
Summary of Acquisition Related Costs --
Transition costs........................................................... $ 17,046 $ 59,766
Net adjustments to BFI related accruals.................................... 6,976 24,190
Loss on asset sale......................................................... 26,114 26,114
Reversal of acquisition related accruals................................... (1,545) (4,553)
-------------------- ---------------------
Total reported acquisition related costs.......................... $ 48,591 $ 105,517
==================== =====================
Capital Expenditures --
Fixed asset purchases...................................................... $ 56,866 $ 170,559
Cell development........................................................... 50,395 119,778
-------------------- ---------------------
Total............................................................. $ 107,261 $ 290,337
==================== =====================
Estimate of Remaining 2000 Transition Costs --
Estimate of remaining 2000 transition costs at December 31, 2000............................... $ 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 at June 30, 2000........................ (19,280)
Transition costs incurred during the three months ended September 30, 2000..................... (17,046)
Reduction of estimated remaining 2000 transition costs at September 30, 2000................... (15,000)
---------------------
Estimated remaining 2000 transition costs at September 30, 2000................................ $ 20,954
=====================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
ALLIED WASTE INDUSTRIES, INC.
Summary Data Sheet
(amounts in thousands, except percentages)
(unaudited)
For the Three Months Ended
September 30, 2000
----------------------------------------------
Reported As Adjusted
--------------------- ---------------------
<S> <C> <C>
Free Cash Flow:
EBITDA......................................................... $ 484,932 $ 533,523
Other Non-cash items:
Closure and post-closure provision.......................... 16,678 16,678
Doubtful accounts........................................... 5,274 5,274
Gain on sale of assets...................................... (2,120) (2,120)
Non-cash acquisition related and unusual costs.............. 26,114 --
Less: Cash interest.................................................. (220,675) (220,675)
Cash taxes..................................................... 19,258 (13,040)
Closure, post-closure and environmental expenditures........... (21,082) (21,082)
Capital expenditures, excluding acquisitions................... (107,261) (107,261)
Acquisition related and non-recurring expenditures............. (49,127) --
Accruals for acquisition price and severance costs............. (3,462) --
Changes in working capital..................................... 50,550 50,550
Remove change in accrued interest from working capital......... (2,497) (2,497)
Remove change in accrued taxes from working capital............ (26,297) (26,297)
--------------------- ---------------------
Free cash flow before market development.................... $ 170,285 $ 213,053
===================== =====================
From June 30
through
September 30, 2000
---------------------
Rollforward of Debt Balance:
Debt balance at June 30, 2000........................................................... $ 9,972,279
Free cash flow before market development................................................ (170,285)
Market development, divestitures and swaps, net......................................... (29,049)
Decrease in cash........................................................................ (26,593)
Accretion and other adjustments......................................................... (6,881)
---------------------
Debt balance at September 30, 2000...................................................... $ 9,739,471
=====================
At September 30,
2000
---------------------
Capital Structure:
Long-term debt (including current portion).............................................. $ 9,739,471
Equity (including series A senior convertible preferred stock).......................... 1,730,509
---------------------
Debt to total capitalization............................................................ 84.9%
=====================
Days Sales Outstanding: 53 days
=====================
Shares Outstanding:
Third quarter weighted average common and common equivalent shares:
Basic................................................................................... 188,789
Diluted................................................................................. 192,028
</TABLE>
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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/THOMAS W. RYAN
------------------------------------------------------
Thomas W. Ryan
Executive Vice President & Chief Financial Officer
Date: November 7, 2000
