-- Strong and predictable free cash flow PHOENIX, Feb. 26
/PRNewswire-FirstCall/ -- Republic Services, Inc. (NYSE: RSG) today
reported a net loss for the three months ended December 31, 2008,
of $131.7 million, or $.55 per diluted share, compared to net
income of $82.1 million, or $.44 per diluted share, for the same
period in 2007. Our 2008 financial results include Allied Waste
Industries, Inc. (Allied) from the effective date of the merger
which was December 5, 2008. Revenue for the three months ended
December 31, 2008 was $1,244.4 million compared to $796.0 million
for the same period in 2007. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020531/RSGLOGO ) Operating
loss for the three months ended December 31, 2008 was $111.6
million compared to operating income of $139.9 million for the same
period last year. During the three months ended December 31, 2008,
we recorded charges totaling $315.5 million for remediation and
related costs, asset impairments, restructuring, landfill and
intangible asset amortization expense, bad debt expense, legal
settlement reserves and the synergy incentive plan. For the year
ended December 31, 2008, net income was $73.8 million, or $.37 per
diluted share, compared to $290.2 million, or $1.51 per diluted
share, for 2007. Revenue for the year ended December 31, 2008 was
$3,685.1 million compared to $3,176.2 million during 2007.
Operating income for the year ended December 31, 2008 was $283.2
million compared to $536.0 million for 2007. During the year ended
December 31, 2008, we recorded charges totaling $383.5 million for
remediation and related costs, asset impairments, restructuring,
landfill and intangible asset amortization expense, bad debt
expense, legal settlement reserves and the synergy incentive plan.
"I am very pleased with our progress to date concerning the
integration of Republic and Allied following the merger that took
place on December 5, 2008," said James E. O'Connor, Chairman and
Chief Executive Officer of Republic Services. "We have already
completed initiatives that provide an annual benefit of more than
$50.0 million in synergies. I remain confident that we will achieve
the estimated $150.0 million in annual run-rate savings by the end
of 2010." Quarterly Dividend Declared We also announced that our
Board of Directors declared a regular quarterly dividend of $.19
per share for stockholders of record on April 1, 2009. The dividend
will be paid on April 15, 2009. Fiscal Year 2009 Outlook "Despite a
weaker economy, we expect 2009 free cash flow, excluding
merger-related payments, to be approximately $650.0 million, which
compares favorably to 2008," said Donald W. Slager, President and
Chief Operating Officer. "Our field organization is adjusting the
business for changing economic conditions while remaining focused
on the basic aspects of our business including safety, customer
service, pricing, and achieving strong and predictable free cash
flow." Our objectives for 2009 remain consistent with previous
years and once again focus on enhancing shareholder value through
the generation and efficient use of free cash flow. We remain
committed to implementing a broad- based pricing initiative across
all lines of business to recover increasing costs and provide an
adequate return on invested capital. We anticipate using free cash
flow to pay regular quarterly dividends and reduce debt.
Additionally, we expect to use proceeds from sales of asset
divestitures to reduce debt. Our guidance is based on current
economic conditions and does not assume any improvement or
deterioration in the overall economy in 2009 from that experienced
at the end of 2008. Specific guidance is as follows: -- Free Cash
Flow: We anticipate 2009 free cash flow, excluding merger- related
payments, of approximately $650.0 million. We define free cash flow
as cash provided by operating activities less purchases of property
and equipment plus proceeds from sales of property and equipment as
presented in our consolidated statement of cash flows.
Additionally, we expect to realize proceeds from sales of asset
divestitures which are not included in free cash flow. -- Earnings
Per Share: We anticipate reported 2009 earnings per diluted share
before the accounting impact of our merger with Allied and
restructuring charges to be in the range of $1.70 to $1.75 per
share. Reported earnings per diluted share are expected to be in
the range of $1.10 to $1.15 per share. As of the effective date of
the merger, Republic recorded significant changes in the carrying
values of Allied's assets, liabilities and debt, as a result of
assigning fair values in purchase accounting. Republic also
conformed Allied's accounting policies to Republic's. Taken
together, we estimate that the impact of these changes will have
the effect of lowering 2009 earnings by approximately $.60 per
diluted share. This decrease in 2009 earnings consists of the
following (approximately): -- $.17 per diluted share is
attributable to higher depreciation, depletion and amortization, --
$.18 per diluted share is attributable to non-cash interest expense
for amortizing the discount to fair value on Allied's debt, -- $.05
per diluted share is for conforming Allied's accounting policies
with ours, and -- $.20 per diluted share is related to the
integration of our businesses. -- Revenue: We expect 2009 revenue
to increase by approximately 129 percent. This reflects increases
of approximately 139 percent resulting from our merger with Allied
and approximately 4 percent for price increases, which are
partially offset by a decline of approximately 14 percent due to
weaker economic conditions (but not a loss of market share) and
divestitures, as shown below: Increase (Decrease) Price 4.0 %
Volume (8.0) Divestitures (1.5) Fuel fees (2.5) Commodities (2.0)
Total change (10.0)% -- Capital Spending: We anticipate 2009 net
capital spending of approximately $845.0 million. -- Margins:
EBITDA margins for 2009 are anticipated to be approximately 28%, or
approximately 29.5% before costs related to integrating our
businesses. -- Merger Synergies: In 2009, we anticipate realizing
$100.0 million in year-end, run-rate synergies as a result of the
merger of Republic Services and Allied. Our goal for the merger is
$150.0 million in annual run-rate synergies by the end of 2010. The
cost to merge our systems and business units, and thus achieve the
$150.0 million synergies, is projected to be approximately $135.0
million, or $.20 per diluted share, in 2009, and $55.0 million, or
$.08 per diluted share, in 2010. About Republic Services, Inc.
Republic Services, Inc. is a leading provider of services in the
domestic, non-hazardous solid waste industry. We provide solid
waste collection, transfer, disposal and recycling services for
commercial, industrial, municipal and residential customers through
400 collection companies in 40 states and Puerto Rico. We also own
or operate 242 transfer stations, 213 solid waste landfills and 78
recycling facilities. Republic serves millions of residential
customers under contracts with more than 3,000 municipalities for
waste collection and residential services. For more information,
visit the Republic Services web site at
http://www.republicservices.com/. REPUBLIC SERVICES, INC. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except per
share amounts) December 31, December 31, 2008 2007 Assets Current
Assets - Cash and cash equivalents $68.7 $21.8 Accounts receivable,
net of allowance for doubtful accounts of $65.7 and $14.7,
respectively 945.5 298.2 Prepaid expenses and other current assets
174.7 68.5 Deferred tax assets 136.8 25.3 Total Current Assets
1,325.7 413.8 Restricted cash 281.9 165.0 Property and equipment,
net 6,738.2 2,164.3 Goodwill and other intangible assets, net
11,085.6 1,582.2 Other assets 490.0 142.5 Total Assets $19,921.4
$4,467.8 Liabilities and Stockholders' Equity Current Liabilities -
Accounts payable, deferred revenue and other current liabilities
$2,061.8 $626.4 Notes payable and current maturities of long-term
debt 504.0 2.3 Total Current Liabilities 2,565.8 628.7 Long-term
debt, net of current maturities 7,198.5 1,565.5 Accrued landfill
and environmental costs, net of current portion 1,197.1 279.2 Other
long-term liabilities 1,678.6 690.6 Commitments and Contingencies
Stockholders' Equity - Preferred stock, par value $.01 per share;
50.0 shares authorized; none issued - - Common stock, par value
$.01 per share; 750.0 shares authorized; 393.4 and 195.7 shares
issued, including shares held in treasury, respectively 3.9 2.0
Additional paid-in capital 6,260.1 38.7 Retained earnings 1,477.2
1,572.3 Treasury stock, at cost (14.9 and 10.3 shares,
respectively) (456.7) (318.3) Accumulated other comprehensive
income (loss), net of tax (3.1) 9.1 Total Stockholders' Equity
7,281.4 1,303.8 Total Liabilities and Stockholders' Equity
$19,921.4 $4,467.8 REPUBLIC SERVICES, INC. UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share
amounts) Three Months Ended Twelve Months Ended December 31,
December 31, 2008 2007 2008 2007 Revenue $1,244.4 $796.0 $3,685.1
$3,176.2 Expenses: Cost of operations 863.2 497.2 2,416.7 2,003.9
Depreciation, amortization and depletion 127.2 71.6 354.1 305.5
Accretion 10.4 4.5 23.9 17.1 Selling, general and administrative
182.7 82.8 434.7 313.7 Asset impairments 89.8 - 89.8 -
Restructuring charges 82.7 - 82.7 - Operating income (loss) (111.6)
139.9 283.2 536.0 Interest expense (66.8) (23.7) (131.9) (94.8)
Interest income 1.7 3.3 9.6 12.8 Other income (expense), net (0.9)
11.5 (1.6) 14.1 Income (loss) before income taxes (177.6) 131.0
159.3 468.1 Provision (benefit) for income taxes (46.0) 48.9 85.4
177.9 Minority interests 0.1 - 0.1 - Net income (loss) $(131.7)
$82.1 73.8 $290.2 Basic Earnings Per Share: Basic earnings per
share $(0.55) $0.44 $0.38 $1.53 Weighted average common shares
outstanding 239.1 186.2 196.7 190.1 Diluted Earnings Per Share:
Diluted earnings per share $(0.55) $0.44 $0.37 $1.51 Weighted
average common and common equivalent shares outstanding 239.1 188.2
198.4 192.0 Cash dividends per common share $0.19 $0.17 $0.72 $0.55
REPUBLIC SERVICES, INC. UNAUDITED SUMMARY DATA SHEET - STATEMENT OF
OPERATIONS DATA (in millions, except percentages) The following
information should be read in conjunction with our audited
consolidated financial statements and notes thereto appearing in
our Form 10-K as of and for the year ended December 31, 2007. It
should also be read in conjunction with our unaudited condensed
consolidated financial statements and notes thereto appearing in
our Form 10-Q as of and for the nine months ended September 30,
2008. Three Months Ended Twelve Months Ended December 31, December
31, 2008 2007 2008 2007 Collection: Residential $332.6 $203.4
$966.0 $802.1 Commercial 398.9 242.6 1,161.4 944.4 Industrial 235.1
157.3 711.4 645.6 Other 7.0 4.8 23.2 19.5 Total collection 973.6
608.1 2,862.0 2,411.6 Transfer and disposal 456.8 293.0 1,343.4
1,192.5 Less: Intercompany (228.3) (150.4) (683.5) (612.3) Transfer
and disposal, net 228.5 142.6 659.9 580.2 Other 42.3 45.3 163.2
184.4 Total revenue $1,244.4 $796.0 $3,685.1 $3,176.2 The following
table reflects our revenue growth for the three and twelve months
ended December 31, 2008 and 2007: Three Months Ended Twelve Months
Ended December 31, December 31, 2008 2007 2008 2007 Core price 4.1
% 4.3 % 4.0 % 4.2 % Fuel surcharges 1.1 0.6 1.8 0.2 Environmental
fees 0.7 - 0.4 0.2 Commodities (1.3) 1.1 0.1 0.9 Total price 4.6
6.0 6.3 5.5 Core volume (6.4) (1.5) (3.9) (1.5) Non-core volume
(0.2) 0.2 0.1 (0.1) Total volume (6.6) (1.3) (3.8) (1.6) Total
internal growth (2.0) 4.7 2.5 3.9 Acquisitions, net of divestitures
58.0 (0.7) 13.4 (0.5) Taxes 0.3 (0.1) 0.1 - Total revenue growth
56.3 % 3.9 % 16.0 % 3.4 % The increase in our revenue and our
revenue growth for the three months ended December 31, 2008 is
primarily due to our acquisition of Allied Waste Industries, Inc.
(Allied) on December 5, 2008. REPUBLIC SERVICES, INC. UNAUDITED
SUMMARY DATA SHEET - STATEMENT OF OPERATIONS DATA (in millions,
except as noted) SUMMARY OF CHARGES We incurred various charges and
costs during the three and twelve months ended December 31, 2008
and 2007 that are reported within our unaudited consolidated
statements of income and are reflected in the following table:
Three Months Ended Twelve Months Ended December 31, December 31,
2008 2007 2008 2007 Expenses: Cost of operations (1) $87.8 $-
$153.9 $49.1 Depreciation, amortization and depletion (1) (2) (3)
8.4 - 8.4 3.6 Selling, general and administrative (1) (4) (5) (6)
46.8 - 48.7 1.5 Asset impairments (7) 89.8 - 89.8 - Restructuring
charges (8) 82.7 - 82.7 - Operating loss (315.5) - (383.5) (54.2)
Interest expense (9) (10.1) - (10.1) - Other income (expense), net
(1) - - (1.0) (0.7) Income (Loss) before income taxes $(325.6) $-
$(394.6) $(54.9) (1) During the three months ended December 31,
2008, we recorded $65.9 million and $21.9 million of remediation
and related charges related to our Countywide disposal facility in
Ohio and our closed disposal facility in Contra Costa County,
California, respectively. During the twelve months ended December
31, 2008, we recorded $99.9 million, $21.9 million and $35.0
million of remediation and related charges related to our
Countywide facility, our Contra Costa County facility and the
Sunrise Landfill in Nevada. Of the $99.9 million charge recognized
for the Countywide facility, $98.0 million and $1.9 million were
recorded in cost of operations and selling, general and
administrative expenses, respectively. The $21.9 million charge for
our Contra Costa County facility was recorded to cost of
operations. Of the $35.0 million charge recognized for the Sunrise
landfill, $34.0 million and $1.0 million were recorded in cost of
operations and other income (expense), respectively. During the
twelve months ended December 31, 2007, we recorded $45.3 million of
remediation charges for our Countywide disposal facility, of which
$41.0 million was recorded in cost of operations, $2.1 million was
recorded in depreciation, amortization and depletion, $1.5 million
was recorded in selling, general and administrative expenses, and
$.7 million was recorded to other income (expense), net. Also
during the twelve months ended December 31, 2007, we recorded a
$9.6 million charge related to our Contra Costa County disposal
facility, of which $8.1 million was recorded in cost of operations
and $1.5 million was recorded in depreciation, amortization and
depletion. (2) During the three and twelve months ended December
31, 2008, we recorded $2.8 million of incremental landfill
amortization expense as compared to the amortization expense Allied
would have recorded for the same period. The increase in the
landfill amortization expense is the result of conforming Allied's
policies for estimating the costs and timing for capping, closure
and post-closure obligations to Republic's. (3) During the three
and twelve months ended December 31, 2008, we recorded $5.6 million
of intangible asset amortization expense related to the intangible
assets we recorded in the purchase price allocation for the
acquisition of Allied. (4) During the three and twelve months ended
December 31, 2008, we recorded $14.2 million of bad debt expense
related to conforming Allied's methodology for recording allowance
for doubtful accounts with our methodology and $5.4 million to
provide for specific bankruptcy exposures. (5) During the three and
twelve months ended December 31, 2008, we recorded $24.3 million of
settlement charges related to our estimates of the outcome of
various legal matters. (6) During the three and twelve months ended
December 31, 2008, we recorded $2.9 million to accrue for the
synergy incentive plan pro rata over the periods earned. (7) During
the three and twelve months ended December 31, 2008, we recorded
$89.8 million of asset impairment charges, which consist primarily
of $75.9 million related to our Countywide facility, $6.0 million
related to our former corporate headquarters in Florida and $6.1
million related to losses on the expected sales of Department of
Justice required divestitures as a result of our merger with
Allied. (8) During the three and twelve months ended December 31,
2008, we recorded $82.7 million of restructuring charges primarily
related to severance and other employee termination and relocation
benefits attributable to integrating our operations with Allied.
(9) During the three and twelve months ended December 31, 2008, we
incurred $10.1 million of non-cash interest expense primarily
associated with amortizing the discount on the debt we acquired
from Allied that was recorded at fair value in purchase accounting.
REPUBLIC SERVICES, INC. SUPPLEMENTAL UNAUDITED FINANCIAL
INFORMATION MERGER WITH ALLIED We completed our acquisition of
Allied effective December 5, 2008. We issued approximately 195.8
million shares of common stock to Allied stockholders, representing
52% of the outstanding common stock of the combined company on a
diluted basis. The total purchase price paid for Allied, including
the value of common stock issued, our acquisition of Allied's debt
and other costs, totaled approximately $11.5 billion. We have
allocated the preliminary purchase price to the assets and
liabilities acquired based upon their estimated fair values as of
the acquisition date and recorded the resulting goodwill, which
represents the excess of purchase price over the net assets
acquired, of $9.0 billion. Until we have completed our valuation
process for the assets and liabilities acquired, there may be
adjustments, which we believe will be relatively small compared to
our preliminary estimates of the fair values and the resulting
purchase price allocation. Our allocation of purchase price
included allocating values to intangible assets other than
goodwill. The purchase price assigned to each of these intangible
assets and the life over which these assets will be amortized is as
follows: Other Intangibles: Amount Estimated Life (years) Customer
relationships $420.0 10.0 Franchise agreements 60.0 9.0 Other
municipal agreements 30.0 3.0 Non-compete agreements 1.0 2.0
Tradename 30.0 5.0 Total $541.0 Amortization expense for 2009
arising from the $541.0 million of other intangible assets recorded
is expected to be approximately $65.0 million. The debt we acquired
from Allied was recorded at fair value. At the date of the merger,
the fair value of Allied's variable rate debt approximated its book
value. However, because of the tightening of the credit markets,
the fair value of Allied's fixed rate debt was significantly below
its book value, which resulted in the recognition of a $624.3
million discount. Non-cash interest expense for 2009 arising from
amortizing the discount of Allied's debt is expected to be
approximately $90.7 million. This discount will generally be
amortized into interest expense over the terms of the related debt
instruments. The estimated fair value and discount for each fixed
rate debt instrument acquired from Allied is as follows: Fixed-Rate
Debt: Estimated Discount Fair Value $350.0 million senior notes due
2010 $332.5 $17.5 $400.0 million senior notes due 2011 370.0 30.0
$275.0 million senior notes due 2011 257.1 17.9 $450.0 million
senior notes due 2013 421.9 28.1 $425.0 million senior notes due
2014 369.8 55.2 $400.0 million senior notes due 2014 363.0 37.0
$600.0 million senior notes due 2015 531.0 69.0 $600.0 million
senior notes due 2016 518.0 82.0 $750.0 million senior notes due
2017 645.0 105.0 $99.5 million debentures due 2021 92.8 6.7 $360.0
million debentures due 2035 265.9 94.1 $230.0 million convertible
debentures due 2034 201.2 28.8 Other, maturing 2014 through 2027
215.3 53.0 Total $4,583.5 $624.3 In accordance with U.S. generally
accepted accounting principles (GAAP), various liabilities acquired
from Allied were recorded at their fair values using present value
techniques to account for changes in the related liabilities due to
the passage of time. The differences between the estimated fair
values and the undiscounted values for these liabilities will be
amortized into either accretion expense or interest expense,
depending on the type of liability recorded, over the expected term
of the applicable liability. The estimated fair values,
undiscounted values and estimated lives for these liabilities are
as follows: Estimated Undiscounted Estimated Fair Value Amount
Average Life (years) Accrued Capping, Closure, and Post-Closure
Costs $813.1 $3,726.0 38.5 Accrued Environmental Remediation $208.1
$325.9 5.9 Self-Insurance Reserves $172.6 $216.3 3.2 RECONCILIATION
OF CERTAIN NON-GAAP MEASURES Operating Income before Depreciation,
Amortization, Depletion and Accretion Operating income before
depreciation, amortization, depletion and accretion, which is not a
measure determined in accordance with GAAP, for the three and
twelve months ended December 31, 2008 and 2007 is calculated as
follows: Three Months Ended Twelve Months Ended December 31,
December 31, 2008 2007 2008 2007 Net income (loss) $(131.7) $82.1
$73.8 $290.2 Provision (benefit) for income taxes (46.0) 48.9 85.4
177.9 Minority interests .1 - .1 - Other (income) expense, net .9
(11.5) 1.6 (14.1) Interest income (1.7) (3.3) (9.6) (12.8) Interest
expense 66.8 23.7 131.9 94.8 Depreciation, amortization and
depletion 127.2 71.6 354.1 305.5 Accretion 10.4 4.5 23.9 17.1
Operating income before depreciation, amortization, depletion and
accretion $26.0 $216.0 $661.2 $858.6 We believe that the
presentation of operating income before depreciation, amortization,
depletion and accretion is useful to investors because it provides
important information concerning our operating performance
exclusive of certain non-cash costs. Operating income before
depreciation, amortization, depletion and accretion demonstrates
our ability to execute our financial strategy which includes
reinvesting in existing capital assets to ensure a high level of
customer service, investing in capital assets to facilitate growth
in our customer base and services provided, maintaining our
investment grade rating and minimizing debt, paying cash dividends,
and maintaining and improving our market position through business
optimization. This measure has limitations. Although depreciation,
amortization, depletion and accretion are considered operating
costs in accordance with GAAP, they represent the allocation of
non-cash costs generally associated with long- lived assets
acquired or constructed in prior years. For a discussion of
significant items impacting our operating income before
depreciation, amortization, depletion and accretion for the periods
presented above, see Summary of Charges. Diluted Earnings per Share
Following is a summary of adjusted diluted earnings per share for
the three and twelve months ended December 31, 2008 and 2007: Three
Months Ended Twelve Months Ended December 31, December 31, 2008
2007 2008 2007 Diluted earnings per share $(.55) $.44 $.37 $1.51
Remediation and related charges (1) .22 - .48 .18 Asset impairments
(2) .23 - .27 - Restructuring charges (3) .21 - .25 - Landfill
amortization expense (4) .01 - .01 - Intangible amortization
expense (5) .01 - .02 - Bad debt expense (6) .05 - .06 - Legal
settlement reserves (7) .06 - .07 - Synergy incentive plan (8) .01
- .01 - Non-cash interest expense (9) .02 - .03 - Tax impact of
non-deductible items (10) .14 - .16 - Adjusted diluted earnings per
share $.41 $.44 $1.73 $1.69 (1) Remediation and related charges of
$87.8 million during the three months ended December 31, 2008
consist primarily of changes to our estimates of costs incurred at
our Countywide facility in Ohio and our closed disposal facility in
Contra Costa County, California. Remediation and related charges of
$156.8 million during the twelve months ended December 31, 2008
were attributable to the aforementioned disposal facilities as well
as the Sunrise Landfill in Nevada. (2) During the three and twelve
months ended December 31, 2008, asset impairments of $89.8 million
primarily relate to our Countywide facility, our former corporate
headquarters in Florida and losses on expected sales of Department
of Justice required divestitures as a result of our merger with
Allied. (3) During the three and twelve months ended December 31,
2008, we incurred restructuring charges of $82.7 million,
consisting primarily of severance and other employee termination
and relocation benefits attributable to integrating our operations
with Allied. (4) During the three and twelve months ended December
31, 2008, we recorded $2.8 million of incremental landfill
amortization expense as compared to the amortization expense Allied
would have recorded for the same period. The increase in the
landfill amortization expense is the result of conforming Allied's
policies for estimating the costs and timing for capping, closure
and post-closure obligations to Republic's. (5) During the three
and twelve months ended December 31, 2008, we recorded $5.6 million
of intangible asset amortization expense related to the intangible
assets we recorded in the purchase price allocation for the
acquisition of Allied. (6) During the three and twelve months ended
December 31, 2008, we recorded bad debt expense of $14.2 million
related to conforming Allied's methodology for recording the
allowance for doubtful accounts with our methodology and $5.4
million to provide for specific bankruptcy exposures. (7) During
the three and twelve months ended December 31, 2008, we incurred
$24.3 million of settlement charges related to our estimates of the
outcome of various legal matters. (8) During the three and twelve
months ended December 31, 2008, we recorded $2.9 million to accrue
for the synergy incentive plan pro rata over the periods earned.
(9) During the three and twelve months ended December 31, 2008, we
incurred $10.1 million of non-cash interest expense primarily with
amortizing the discount on the debt we acquired from Allied that
was recorded at fair value in purchase accounting. (10)During the
three and twelve months ended December 31, 2008, our effective tax
rate was impacted by several expenses associated with the merger
that are not tax deductible. We believe that the presentation of
adjusted diluted earnings per share, which excludes charges for
remediation and related costs, asset impairments, restructuring,
landfill and intangible asset amortization expense, bad debt
expense, legal settlement reserves, the synergy incentive plan,
non-cash interest expense and the tax impact of non-deductible
items, provides an understanding of operational activities before
the financial impact of certain non-operational items and strategic
and other decisions made for the long-term benefit of the company.
We use this measure, and believe investors will find it helpful, in
understanding the ongoing performance of our operations separate
from items that have a disproportionate impact on our results for a
particular period. Comparable costs have been incurred in prior
periods, and similar types of adjustments can reasonably be
expected to be recorded in future periods. Cash Flow We define free
cash flow, which is not a measure determined in accordance with
GAAP, as cash provided by operating activities less purchases of
property and equipment plus proceeds from sales of property and
equipment as presented in our unaudited condensed consolidated
statements of cash flows. Our free cash flow for the three and
twelve months ended December 31, 2008 and 2007 is calculated as
follows (in millions): Three Months Ended Twelve Months Ended
December 31, December 31, 2008 2007 2008 2007 Cash provided by
operating activities $38.0 $190.7 $512.2 $661.3 Purchases of
property and equipment (122.8) (76.5) (386.9) (292.5) Proceeds from
sales of property and equipment 2.4 1.4 8.2 6.1 Free cash flow
$(82.4) $115.6 $133.5 $374.9 Purchases of property and equipment as
reflected on our unaudited condensed consolidated statements of
cash flows and the free cash flow presented above represent amounts
paid during the period for such expenditures. A reconciliation of
property and equipment reflected on the unaudited condensed
consolidated statements of cash flows to property and equipment
received during the period is as follows (in millions): Three
Months Ended Twelve Months Ended December 31, December 31, 2008
2007 2008 2007 Purchases of property and equipment per the
unaudited condensed consolidated statements of cash flows $122.8
$76.5 $386.9 $292.5 Adjustments for property and equipment received
during the prior period but paid for in the following period, net
11.5 35.5 (14.9) 3.2 Property and equipment received during the
current period $134.3 $112.0 $372.0 $295.7 The adjustments noted
above do not affect either our net change in cash and cash
equivalents as reflected in our unaudited condensed consolidated
statements of cash flows or our free cash flow. A reconciliation of
our projected cash provided by operating activities to the 2009
free cash flow outlook is as follows (in millions): 2009 Outlook
Cash provided by operating activities $1,395.0 Purchases of
property and equipment (860.0) Proceeds from sales of property and
equipment 15.0 Free cash flow $550.0 Free cash flow for 2009
includes approximately $100.0 million of merger- related payments.
Excluding these payments, free cash flow for 2009 would be $650.0
million. We believe that the presentation of free cash flow
provides useful information regarding our recurring cash provided
by operating activities after expenditures for property and
equipment, net of proceeds from sales of property and equipment. It
also demonstrates our ability to execute our financial strategy as
previously discussed and is a key metric we use to determine
compensation. The presentation of free cash flow has material
limitations. Free cash flow does not represent our cash flow
available for discretionary expenditures because it excludes
certain expenditures that are required or that we have committed to
such as debt service requirements and dividend payments. Our
definition of free cash flow may not be comparable to similarly
titled measures presented by other companies. Capital expenditures
include $.6 million and $2.6 million of capitalized interest for
the three and twelve months ended December 31, 2008, and $.9
million and $3.0 million of capitalized interest for the three and
twelve months ended December 31, 2007. As of December 31, 2008,
accounts receivable was $945.5 million, net of allowance for
doubtful accounts of $65.7 million, resulting in days sales
outstanding of approximately 40 (or 25 net of deferred revenue).
SHARE REPURCHASE PROGRAM AND DEBT REPAYMENT During 2008, we
repurchased a total of 4.6 million shares of our common stock for
$138.4 million. As of December 31, 2008, we were authorized to
repurchase up to an additional $248.0 million of common stock under
our existing stock repurchase program. We suspended the share
repurchase program due to the merger with Allied. During 2009, we
intend to use free cash flow to repay debt and to continue paying
dividends. CASH DIVIDENDS In October 2008, we paid a cash dividend
of $34.7 million to stockholders of record as of October 1, 2008.
As of December 31, 2008, we recorded a dividend payable of $72.0
million to stockholders of record at the close of business on
January 2, 2009, which has been paid. In February 2009, our Board
of Directors declared a regular quarterly dividend of $.19 per
share payable to stockholders of record as of April 1, 2009, which
will be paid on April 15, 2009. Information Regarding
Forward-Looking Statements Certain statements and information
included herein constitute "forward- looking statements" within the
meaning of the Federal Private Securities Litigation Reform Act of
1995, including statements with respect to the expected results of
the integration of our merger with Allied and our anticipated 2009
financial results. Words such as "will", "expect," "anticipate" and
similar words and phrases are used in this press release to
identify the forward-looking statements. These forward-looking
statements, although based on assumptions that we consider
reasonable, are subject to risks and uncertainties which could
cause actual results, events or conditions to differ materially
from those expressed or implied by the forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we can give no assurance
that the expectations will prove to be correct. Among the factors
that could cause actual results to differ materially from the
expectations expressed in the forward-looking statements are: --
whether our estimates and assumptions concerning our selected
balance sheet accounts, income tax accounts, final capping,
closure, post- closure and remediation costs, available airspace,
and projected costs and expenses related to our landfills and
property and equipment (including our estimates of the fair values
of the assets and liabilities acquired in our acquisition of
Allied), and labor, fuel rates, and economic and inflationary
trends, turn out to be correct or appropriate; -- various factors
that will impact our actual business and financial performance such
as competition and demand for services in the solid waste industry;
-- our ability to manage growth; -- our ability to successfully
integrate Allied's and Republic's operations and to achieve
synergies or create long-term value for stockholders as expected;
-- our compliance with, and future changes in, environmental
regulations; -- our ability to obtain approvals from regulatory
agencies in connection with operating and expanding our landfills;
-- our ability to obtain financing on acceptable terms to finance
our operations and growth strategy and to operate within the
limitations imposed by financing arrangements; -- our dependence on
key personnel; -- general economic and market conditions including,
but not limited to, the current global economic crisis, inflation
and changes in commodity pricing, fuel, labor, risk and health
insurance, and other variable costs that are generally not within
our control; -- our dependence on large, long-term collection,
transfer and disposal contracts; -- our dependence on acquisitions
for growth; -- risks associated with undisclosed liabilities of
acquired businesses; -- risks associated with pending and any
future legal proceedings; -- severe weather conditions, which could
impair our financial results by causing increased costs, loss of
revenue, reduced operational efficiency or disruptions to our
operations; -- compliance with existing and future legal and
regulatory requirements, including limitations or bans on disposal
of certain types of wastes or on the transportation of waste, which
could limit our ability to conduct or grow our business, increase
our costs to operate or require additional capital expenditures; --
any litigation, audits or investigations brought by or before any
governmental body; -- workforce factors, including potential
increases in our costs if we are required to provide additional
funding to any multi-employer pension plan to which we contribute
and the negative impact on our operations of union organizing
campaigns, work stoppages or labor shortages; -- the negative
effect that trends toward requiring recycling, waste reduction at
the source and prohibiting the disposal of certain types of wastes
could have on volumes of waste going to landfills and waste-
to-energy facilities; -- changes by the Financial Accounting
Standards Board or other accounting regulatory bodies to generally
accepted accounting principles or policies; -- acts of war, riots
or terrorism, including the events taking place in the Middle East,
the current military action in Iraq and the continuing war on
terrorism, as well as actions taken or to be taken by the United
States or other governments as a result of further acts or threats
of terrorism, and the impact of these acts on economic, financial
and social conditions in the United States; and -- the timing and
occurrence (or non-occurrence) of transactions and events which may
be subject to circumstances beyond our control. Other factors which
could materially affect our forward-looking statements can be found
in our periodic reports filed with the Securities and Exchange
Commission. Stockholders, potential investors and other readers are
urged to consider these factors carefully in evaluating our
forward-looking statements and are cautioned not to place undue
reliance on forward-looking statements. The forward-looking
statements made herein are only made as of the date of this press
release, and we undertake no obligation to publicly update these
forward-looking statements to reflect subsequent events or
circumstances. http://www.newscom.com/cgi-bin/prnh/20020531/RSGLOGO
http://photoarchive.ap.org/ DATASOURCE: Republic Services, Inc.
CONTACT: Media, Will Flower, +1-480-718-6565, or Investors, Ed
Lang, +1- 480-627-7128, or Tod Holmes, +1-480-627-2877, all for
Republic Services, Inc. Web site: http://www.republicservices.com/
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