SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
AMENDMENT NO. 1
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
April 1, 1995
Date of Report
(Date of Earliest Event Reported)
Continental Waste Industries, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22602 11-2909512
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
67 Walnut Avenue, Suite 103
Clark, New Jersey 07066
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code:(908)396-0018
Item 7. Financial Statements and Exhibits
Amended by filing the following pro forma financial information.
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIAIRIES
UNAUDITED ADJUSTED COMBINING BALANCE SHEET
AS OF JUNE 30, 1995
(In thousands)
Continental Businesses
Waste Acquired Pro
Industries, Since Forma
Inc. June 30, 1995 Adjustments Combined
CURRENT ASSETS:
Cash and cash equivalents 3,795 54 - 3,849
Accounts and note receivable 6,705 244 - 6,949
Other current assets 5,239 149 (44) 5,344
Total current assets 15,739 447 (44) 16,142
LANDFILLS, PROPERTY AND
EQUIPMENT,
net 67,422 2,423 796 70,641
EXCESS COST OVER FAIR VALUE 9,980 - 5,496 15,476
OTHER ASSETS 7,971 4 - 7,975
101,112 2,874 6,248 110,234
CURRENT LIABILITIES:
Notes payable - - 1,350 1,350
Current maturities of
long-term debt 786 198 183 1,167
Accounts payable 2,493 77 - 2,570
Other accrued liabilities 5,385 328 230 5,943
Total current liabilites 8,664 603 1,763 11,030
LONG-TERM DEBT 34,902 1,371 4,042 40,315
ACCRUED LANDFILL CLOSURE
COSTS 6,857 - - 6,857
OTHER LONG-TERM LIABILITIES 10,467 - 650 11,117
STOCKHOLDERS' EQUITY:
Equity of acquired companies - 900 (900) -
Common stock 6 - - 6
Additional paid-in-capital 33,541 - 693 34,234
Retained earnings 7,147 - - 7,147
Treasury stock (472) - - (472)
Total stockholders' equity 40,222 900 (207) 40,915
101,112 2,874 6,248 110,234
The accompanying Notes to Unaudited Pro Forma Combining Financial
Statements are an integral part of this balance sheet.
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(In thousands except per share data)
Continental
Waste Victory Businesses Pro Pro
Industries, Waste Acquired Forma Forma
Inc. Incorporated in 1995 Adjustments Combined
REVENUE 28,728 6,212 11,549 - 46,489
COSTS AND EXPENSES
Operating expenses 17,224 3,790 9,201 556 30,771
General and
administrative
expenses 4,485 1,177 1,749 - 7,411
Income from
operations 7,019 1,245 599 (556) 8,307
OTHER INCOME (EXPENSES):
Interest expense (1,881) (1,015) (158) (150) (3,204)
Other income
(expense), net (126) (51) 19 (47) (205)
Income before income
taxes and
extraordinary gain 5,012 179 460 (753) 4,898
PROVISION FOR INCOME
TAXES (2,244) (200) (147) 322 (2,269)
Income (loss) before
extraordinary gain 2,768 (21) 313 (431) 2,629
EARNINGS PER SHARE
Primary before
extraordinary gain 0.66 0.62
Fully diluted before
extraordinary gain 0.60 0.55
Primary weighted
average shares 4,158 67 4,225
Fully diluted weighted
average shares 4,611 67 4,678
The accompanying Notes to Unaudited Pro Forma Combining Financial
Statements are an integral part of this statement.
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(In thousands except per share data)
Continental Businesses
Waste Acquired Pro forma Pro Forma
Industries, Inc. in 1995 Adjustments Combined
REVENUE 20,478 5,585 - 26,063
COSTS AND EXPENSES
Operating expenses 12,135 4,550 153 16,838
General and
administrative
expenses 2,984 701 - 3,685
Income from operations 5,359 334 (153) 5,540
OTHER INCOME (EXPENSES):
Interest expense (1,298) (86) (221) (1,605)
Other income (expense),
net - 1 89 90
Income before income
taxes 4,061 249 (285) 4,025
PROVISION FOR INCOME
TAXES (1,723) (116) 133 (1,706)
Net income 2,338 133 (152) 2,319
EARNINGS PER SHARE
Primary 0.34 0.34
Fully Diluted 0.34 0.33
Primary weighted
average shares 6,848 63 6,911
Fully diluted weighted
average shares 6,961 63 7,024
The accompanying Notes to Unaudited Pro Forma Combining Financial
Statements are an integral part of this statement.
CONTINENTAL WASTE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINING FINANCIAL STATEMENTS
Note 1. Description of Pro Forma Combining Financial Statements
The unaudited pro forma combining financial statements of
Continental Waste Industries, Inc. (the "Company") reflect
certain business acquisitions as if such acquisitions had
occurred on January 1, 1994. The acquisitions included in the
pro forma statements are described below:
1994 Acquisition:
On July 1, 1994, the Company acquired approximately 73% of
the issued and outstanding capital stock of Victory Waste
Incorporated ("Victory") for 498,855 shares of common stock
("Shares") and various contingent consideration. At that point
Victory owned approximately 54% of the issued and outstanding
common stock of G.E.M. Environmental Management, Inc. ("GEM").
By December 31, 1994, the Company acquired an additional
approximate 23% of Victory, certain options to purchase Victory
common stock and an additional approximate 27% of GEM for an
aggregate of 185,756 Shares and the forgiveness of certain
indebtedness from GEM. See Note 2 of the Notes to Consolidated
Financial Statements included in the Company's annual report or
Form 10-KSB for the year ended December 31, 1994 for a full
description of the Victory acquisition.
The acquisition was accounted for as a purchase and,
accordingly, the purchase price was allocated to the assets
acquired and liabilities assumed based upon management's estimate
of their fair value at the date of acquisition. Those estimated
fair values were adjusted as of December 31, 1994, to reflect
information obtained by the Company's management regarding the
fair values after the original allocation. Certain other
immaterial adjustments to the fair values assigned have been made
as of June 30, 1995, to reflect yet additional information. No
further adjustments are anticipated except to appropriately
account for certain contingencies which have yet to be settled.
The operating results of Victory have been included in the
consolidated results of the Company from the acquisition date.
The principal allocations of the purchase price, excluding
the potential effect of certain contingencies which have yet to
be settled, are as follows (in millions):
Land, landfill sites and improvements $26.1
Excess cost over fair value of net assets acquired 1.3
Assumed indebtedness (11.3)
Accrued landfill closure costs (3.7)
Other net assets (2.8)
$ 9.6
The settlement of outstanding contingencies are not expected
to have a material effect on the above allocation or future
results of operations.
1995 Acquisitions:
From April 1, to August 15, the Company has expanded its
operations through the acquisition of eight businesses engaged in
waste management businesses. Each of these transactions have
been accounted for using the purchase method of accounting.
These entities included ASCO Sanitation, Inc., Larry's Disposal,
Inc., Terre Haute Recycling, Inc., Gilliam Sanitation, Inc.,
Gilliam Transfer, Inc., Anderson Refuse Company, Inc., M.V.
Dulworth, and a 72% interest in Procesa Continental S.A. de C.V.
The aggregate purchase price of these businesses was $7.9
million, plus the assumption or refinancing of $2.1 million of
debt and $1.0 million of future contingent payments. The
purchase prices were paid by issuing 67,020 Shares with a market
value of $797,000 at the time of issuance and cash obtained from
the Company's revolving credit facility (the "Credit Facility")
of $4.8 million.
None of these acquisitions have been individually
significant, each with a purchase price and assets less than 10%
of the Company's December 31, 1994 assets and each with
historical income or loss before income taxes of less than 10% of
the Company's income before income taxes and extraordinary gain
for the year ended December 31, 1994. In addition, the aggregate
of these transactions is less than 10% of the measures described
above except for the aggregate of the absolute values of the
incomes and losses before income taxes of these entities which
total more than 10% but less than 20% of the Company's 1994
income before income taxes and extraordinary gain.
Accordingly, although the acquired businesses are not
integral to each other, their financial position and operating
results were combined for purposes of the pro forma presentation.
Additionally, on June 28, 1995, the Company acquired the
remaining outstanding common stock of Victory and GEM.
For purposes of the accompanying pro forma financial
statements, adjustments have been reflected on an estimated basis
using the most recent information available. No assurances can
be given that the final determination of the fair value of assets
acquired and liabilities assumed in the various acquisitions
(except the acquisition of Victory as described above) will not
differ from the adjustments presented herein. Such determination
will be made within one year of the related acquisition and are
not expected to be materially different from the estimates used
herein.
The pro forma statements are not necessarily indicative of
the results that would have been obtained if the acquisitions had
been consummated at an earlier date and is not intended to be a
projection of future results or trends.
Note 2. Adjustments to the June 30, 1995 Combining Balance Sheet
(in thousands)
Other current assets
Revaluation of certain prepaid expenses $ (44)
Landfills, property and equipment, net
Revaluation of acquired transfer station $ 796
Excess cost over fair value
Anderson Refuse Company, Inc. $ 986
Terre Haute Recycling, Inc. 1,825
Gilliam Sanitation, Inc. 1,587
Procesa Continental S.A. de C.V. 1,098
$ 5,496
Notes payable
Non-interest bearing notes to sellers of
Anderson Refuse Company, Inc. $ 955
Non-interest bearing note to seller of
M.V. Dulworth 195
Non-interest bearing note to seller of
Procesa Continental S.A. de C.V. 200
$ 1,350
Current maturities of long-term debt
Debt due to seller of Gilliam Sanitation, Inc.
at imputed interest of 9.0% $ 183
Other current liabilities
Current portion of determinable contingent
payments $ 230
Long-term debt
Borrowing under the Credit Facility to finance
the acquisitions $ 3,723
Debt due to seller of Gilliam Sanitation, Inc.
at imputed interest of 9.0% 319
$ 4,042
Other long-term liabilities
Long-term portion of determinable contingent
payments $ 570
Minority interest in subsidiaries
(28% of Procesa) 80
$ 650
Equity of acquired companies
Elimination of equity of acquired companies $ (900)
Additional paid-in capital
Issuance of Shares to acquire companies $ 693
Note 3. Adjustments to Combining Statements of Income
Operating results of acquired businesses for periods prior
to their acquisition by the Company are included in the "Victory"
and "Businesses Acquired in 1995" columns, as appropriate. Pre-
acquisition periods for each acquired business extend to their
respective acquisition dates which are as follows:
Victory Waste Incorporated, Inc. July 1, 1994
ASCO Sanitation, Inc. April 1, 1995
Larry's Disposal, Inc. April 28, 1995
Terre Haute Recycling, Inc. July 17, 1995
Gilliam Sanitation, Inc. July 18, 1995
Gilliam Transfer, Inc. July 18, 1995
Anderson Refuse Company, Inc. August 1, 1995
M.V. Dulworth August 1, 1995
Procesa Continental S.A. de C.V. August 15, 1995
Pro forma adjustments (in thousands)
For the Six
For the Year Months
Ended ended
Dec. 31, 1994 June 30, 1995
Operating expenses
Record amortization of Victory's
landfill site revaluation adjustments $ 206 $ -
Record depreciation of other property
revaluation adjustments 69 35
Record amortization of goodwill from
all acquisitions over 25 years 281 118
$ 556 $ 153
Interest expense
Record interest expense on additional
borrowings under the Credit Facility
to finance the acquisitions $ (436) $ (194)
Record interest expense on notes
due to sellers (64) (27)
Eliminate non-recurring interest
expense and deferred refinancing costs
incurred by Victory 350 -
$(150) $ (221)
Other income (expense), net
Eliminate Victory's minority interest
related to GEM $ 56 $ -
Eliminate the Company's minority
interest related to Victory and GEM - 44
Record the Company's minority interest
related to Procesa (103) 45
$ (47) $ 89
Provision for income taxes
Record income tax effect of above
adjustments at the Company's statutory
income tax rate (40%) $ 322 $ 133
Primary and fully dilutive weighted
average shares
Issuance of Shares to acquire companies 67 63
SIGNATURE:
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Continental Waste Industries, Inc.
By: /s/ Carlos E. Aguero
Carlos E. Aguero
President and Chief Executive Officer
Dated: October 11, 1995
