- Company increases 2009 guidance before merger related gains and
costs - Adjusted EPS raised to a range of $1.43 to $1.45 per
diluted share - Free Cash Flow raised to a range of $700 million to
$725 million - Realized synergy savings and total synergy potential
ahead of original targets - Continued expansion of EBITDA margins -
Company declares quarterly dividend of $.19 per share PHOENIX, July
29 /PRNewswire-FirstCall/ -- Republic Services, Inc. (NYSE: RSG)
today reported net income of $225.9 million, or $.59 per diluted
share, for the three months ended June 30, 2009, versus $40.7
million, or $.22 per diluted share, for the comparable period last
year. Republic's financial results for the three and six months
ended June 30, 2009 include Allied Waste Industries, Inc. (Allied)
which merged with Republic on December 5, 2008. Republic's income
before income taxes for the three months ended June 30, 2009
includes $150.1 million ($.24 per diluted share) of gain from the
disposition of assets related to our merger with Allied, $12.3
million ($.02 per diluted share) of restructuring charges due to
the merger and $10.1 million ($.02 per diluted share) of
incremental costs to achieve projected synergies. Excluding these
items, net income for the three months ended June 30, 2009 would
have been $146.9 million or $.39 per diluted share. During the
three months ended June 30, 2008, our income before income taxes
includes a $34.0 million charge ($.12 per diluted share) related to
environmental conditions at our Countywide Recycling and Disposal
Facility in Ohio, as well as a $35.0 million charge ($.12 per
diluted share) related to estimated costs to comply with a consent
decree and settlement agreement at the Sunrise Landfill in Nevada.
Excluding these charges, net income for the three months ended June
30, 2008 would have been $84.5 million or $.46 per diluted share.
Operating income before depreciation, amortization, depletion and
accretion for the three months ended June 30, 2009 was $761.2
million compared to $166.3 million for the comparable period in
2008. Excluding the gain on disposition of assets, restructuring
charges and costs to achieve synergies recorded in 2009 and the
remediation charges for Countywide and Sunrise incurred during
2008, operating income before depreciation, amortization, depletion
and accretion for the three months ended June 30, 2009 was $633.5
million, or 30.7% as a percentage of revenue, compared to $234.3
million, or 28.3% as a percentage of revenue, for the comparable
2008 period. Revenue for the three months ended June 30, 2009
increased to $2,066.1 million compared to $827.5 million for the
same period in 2008. Core price for the three months ended June 30,
2009 (assuming the merger with Allied had occurred on January 1,
2008) increased 3.4%. Offsetting the core price growth of 3.4% for
the three months ended June 30, 2009 were decreases of 10.3% in
core volume, 2.5% of commodity pricing and 3.1% in fuel charges.
For the six months ended June 30, 2009, net income was $338.9
million, or $.89 per diluted share, compared to $116.8 million, or
$.63 per diluted share, for the comparable period last year.
Republic's income before income taxes for the six months ended June
30, 2009, includes $145.2 million ($.24 per diluted share) of gain
from the disposition of assets related to our merger with Allied,
$43.6 million ($.07 per diluted share) of restructuring charges due
to the merger and $22.9 million ($.04 per diluted share) of
incremental costs to achieve projected synergies. Excluding these
items, net income for the six months ended June 30, 2009 was $289.4
million or $.76 per diluted share. During the six months ended June
30, 2008, our income before income taxes includes a $34.0 million
charge ($.12 per diluted share) related to environmental conditions
at our Countywide Recycling and Disposal Facility in Ohio as well
as a $35.0 million charge ($.12 per diluted share) related to
estimated costs to comply with a consent decree and settlement
agreement related to the Sunrise Landfill in Nevada. Excluding
these charges, net income for the six months ended June 30, 2008
was $160.6 million or $.87 per diluted share. Operating income
before depreciation, amortization, depletion and accretion for the
six months ended June 30, 2009 was $1,359.3 million compared to
$386.3 million for the comparable period in 2008. Excluding the
gain on disposition of assets, restructuring charges and costs to
achieve synergies recorded in 2009 and the remediation charges for
Countywide and Sunrise incurred during 2008, operating income
before depreciation, amortization, depletion and accretion for the
six months ended June 30, 2009 was $1,280.6 million, or 31.0% as a
percentage of revenue, compared to $454.3 million, or 28.3% as a
percentage of revenue, for the comparable 2008 period. Revenue for
the six months ended June 30, 2009 increased to $4,126.6 million
compared to $1,606.7 million for the same period in 2008. Core
price for the six months ended June 30, 2009 (assuming the merger
with Allied had occurred on January 1, 2008) increased 3.4%.
Offsetting the core price growth of 3.4% for the six months ended
June 30, 2009 were decreases of 9.1% in core volume, 2.7% of
commodity pricing and 2.2% in fuel charges. "We continue to
maintain our pricing discipline along with our focus on
integration, synergy savings and operating cost controls," said
James E. O'Connor, Chairman and Chief Executive Officer of Republic
Services, Inc. "As a result of these efforts, we are raising our
financial guidance for full year 2009. Our pricing strategy is the
key to improving margins and earning an adequate return on invested
capital." Updated Financial Guidance Republic Services is
increasing its 2009 guidance for earnings per share, free cash flow
and merger synergies to reflect our first six month performance and
current business conditions. Capital spending is also being changed
to reflect lower volumes. -- Free Cash Flow: We increased
anticipated free cash flow for 2009 to a range of $700 million to
$725 million before merger related expenditures, net of tax. Our
previous guidance for free cash flow was $650 million before merger
related expenditures, net of tax. -- Adjusted Earnings Per Share:
We raised earnings per share guidance to a range of $1.43 to $1.45
per diluted share before gain on disposition of assets,
restructuring charges and costs to achieve synergies. Our previous
guidance was a range of $1.30 to $1.35 per diluted share before
gain on disposition of assets, restructuring charges and costs to
achieve synergies. -- Capital Spending: We anticipate net capital
spending of approximately $800 million. Previous guidance was $845
million. -- Revenue: Revenue guidance for 2009 is presented on a
pro forma basis as if the acquisition of Allied Waste Industries
had been effective January 1, 2008. We are updating 2009 revenue
guidance to reflect weaker economic conditions (but not a loss of
market share) as shown below: Increase (Decrease) --------- Price
3.2% to 3.5% Volume (8.5% to 9.0%) Divestitures (1.5%) Fuel fees
(2.5%) Commodities (2.0%) ------------- Total change (11.0% to
11.8%) ============= -- Margins: EBITDA margins for 2009 are now
anticipated to be approximately 30.5% before gain on disposition of
assets, restructuring charges and costs to achieve synergies.
Previous guidance was 29.5% before gain on disposition of assets,
restructuring charges and costs to achieve synergies. -- Merger
Synergies: In 2009, we anticipate realizing $125 million at
year-end, run-rate synergies as a result of the merger of Republic
Services and Allied. Our previous guidance for the year-end, run
rate synergy was $100 million for 2009. We expect to achieve $165
million to $175 million of annual run rate synergies by the end of
2010. Our previous guidance was $150 million. "Our field
organization and regional teams have performed exceptionally well
as we continue to realize success from the merger of Allied Waste
Industries and Republic Services," said Donald W. Slager, President
and Chief Operating Officer of Republic Services, Inc.
"Additionally, we completed almost all of the required
divestitures. By the end of the second quarter, we received $424
million of pre-tax proceeds. We expect that by the end of August
2009, all of our required divestitures will be complete with
proceeds in excess of $475 million. All of the proceeds from the
sale of these assets are being used to pay down debt." Quarterly
Dividend Separately, Republic announced that its Board of Directors
has approved a regular quarterly dividend of $.19 per share to be
paid on October 15, 2009 to shareholders of record on October 1,
2009. Republic Services, Inc. is a leading provider of solid waste
collection, transfer and disposal services in the United States.
Our operating units are focused on providing solid waste services
for commercial, industrial, municipal and residential customers.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION AND OPERATING DATA (in
millions, except per share amounts and percentages) REPUBLIC
SERVICES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions,
except per share amounts) June 30, December 31, 2009 2008 (1) ----
-------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash
equivalents $67.6 $68.7 Accounts receivable, less allowance for
doubtful accounts of $56.2 and $65.7, respectively 913.5 945.5
Other current assets 271.8 311.5 -------- -------- Total Current
Assets 1,252.9 1,325.7 RESTRICTED CASH AND MARKETABLE SECURITIES
259.3 281.9 PROPERTY AND EQUIPMENT, NET 6,612.9 6,738.2 GOODWILL
AND OTHER INTANGIBLE ASSETS, NET 11,069.2 11,085.6 OTHER ASSETS
252.1 490.0 -------- -------- $19,446.4 $19,921.4 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts
payable, deferred revenue and other current liabilities $1,859.0
$2,061.8 Notes payable and current maturities of long-term debt
327.3 504.0 -------- -------- Total Current Liabilities 2,186.3
2,565.8 LONG-TERM DEBT, NET OF CURRENT MATURITIES 6,768.5 7,198.5
ACCRUED LANDFILL AND ENVIRONMENTAL COSTS 1,282.1 1,197.1 OTHER
LIABILITIES 1,715.9 1,677.5 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; 393.9 and 393.4 issued,
including shares held in treasury, respectively 3.9 3.9 Additional
paid in capital 6,274.7 6,260.1 Retained earnings 1,671.9 1,477.2
Treasury stock, at cost (14.9 and 14.9 shares, respectively)
(457.2) (456.7) Accumulated other comprehensive loss, net of tax
(1.4) (3.1) Total Republic Services, Inc. Stockholders' Equity
7,491.9 7,281.4 Noncontrolling Interests 1.7 1.1 Total
Stockholders' Equity 7,493.6 7,282.5 $19,446.4 $19,921.4 ========
======== (1) Derived from the December 31, 2008 consolidated
balance sheet. REPUBLIC SERVICES, INC. UNAUDITED CONSOLIDATED
STATEMENTS OF INCOME (in millions, except per share data) Three
Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008
REVENUE $2,066.1 $827.5 $4,126.6 $1,606.7 EXPENSES: Cost of
operations 1,226.9 577.5 2,435.6 1,054.0 Depreciation, amortization
and depletion 218.6 76.2 440.5 149.6 Accretion 21.9 4.5 45.2 8.9
Selling, general and administrative 215.8 83.7 433.3 166.4 Gain on
disposition of assets, net (150.1) - (145.2) - Restructuring
charges 12.3 - 43.6 - OPERATING INCOME 520.7 85.6 873.6 227.8
INTEREST EXPENSE (150.5) (21.1) (304.1) (42.5) INTEREST INCOME .5
2.5 1.3 5.3 OTHER INCOME, NET 1.3 .7 1.6 .9 INCOME BEFORE INCOME
TAXES 372.0 67.7 572.4 191.5 Provision for income taxes 145.8 27.0
232.9 74.7 NET INCOME $226.2 $40.7 $339.5 $116.8 Less: Net income
attributable to noncontrolling interests (.3) - (.6) - NET INCOME
ATTRIBUTABLE TO REPUBLIC SERVICES, INC. $225.9 $40.7 $338.9 $116.8
======= ======= ======= ======= BASIC EARNINGS PER SHARE
ATTRIBUTABLE TO REPUBLIC SERVICES, INC. STOCKHOLDERS: Basic
earnings per share $.60 $.22 $.89 $.64 ======= ======= =======
======= Weighted average Common shares outstanding 379.2 182.0
379.1 182.7 ======= ======= ======= ======= DILUTED EARNINGS PER
SHARE ATTRIBUTABLE TO REPUBLIC SERVICES, INC. STOCKHOLDERS: Diluted
earnings per share $.59 $.22 $.89 $.63 ======= ======= =======
======= Weighted average common and common equivalent shares
outstanding 379.9 183.9 379.9 184.5 ======= ======= ======= =======
CASH DIVIDENDS PER COMMON SHARE $.19 $.17 $.38 $.34 ======= =======
======= ======= REPUBLIC SERVICES, INC. UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS (in millions) Six Months Ended June 30,
2009 2008 Cash Provided by Operating Activities: Net income $339.5
$116.8 Net income attributable to noncontrolling interests (.6) -
Adjustments to reconcile net income to cash provided by operating
activities: Depreciation and amortization of property and equipment
260.2 96.3 Landfill depletion and amortization 145.3 50.1
Amortization of intangible and other assets 35.0 3.2 Accretion 45.2
8.9 Non cash interest expense debt 50.6 - Non cash interest expense
other 23.3 - Restructuring and synergy related charges 26.4 - Stock
based compensation 6.8 6.7 Deferred tax provision 6.0 14.8
Provision for doubtful accounts, net of adjustments 9.4 3.2 Income
tax benefit from stock option exercises .5 1.5 Asset impairments
1.8 - Gain on disposition of assets (152.9) - Other non cash items
(.1) .8 Change in assets and liabilities, net of effects from
business acquisitions and divestitures: Accounts receivable 24.6
(24.4) Prepaid expenses and other assets 22.5 (8.2) Accounts
payable and accrued liabilities (106.9) (9.7) Cash paid for
restructuring and synergy related charges (33.2) - Capping, closure
and post closure expenditures (33.2) (4.0) Remediation expenditures
(26.8) (18.1) Other liabilities 37.3 73.6 Cash Provided by
Operating Activities 680.7 311.5 Cash Provided by (Used in)
Investing Activities: Purchases of property and equipment (355.1)
(165.4) Proceeds from sales of property and equipment 16.7 3.3 Cash
used in acquisitions, net of cash acquired (.1) (12.2) Cash
proceeds from divestitures, net of cash divested 424.2 - Change in
restricted cash and marketable securities 22.7 (12.8) Other - (.2)
Cash Provided by (Used in) Investing Activities 108.4 (187.3) Cash
Used in Financing Activities: Proceeds from notes payable and long
term debt 679.5 167.0 Payments of notes payable and long term debt
(1,333.5) (116.5) Issuances of common stock 7.8 14.9 Excess income
tax benefit from stock option exercises .5 2.8 Purchases of common
stock for treasury (.5) (138.4) Cash dividends paid (144.0) (62.7)
Cash Used in Financing Activities (790.2) (132.9) Decrease in Cash
and Cash Equivalents (1.1) (8.7) Cash and Cash Equivalents at
Beginning of Period 68.7 21.8 Cash and Cash Equivalents at End of
Period $67.6 $13.1 ===== ===== 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, 2008 and our current report on Form
8 K, filed June 5, 2009. REVENUE The following table reflects our
total revenue by line of business for the three and six months
ended June 30, 2009 and 2008: Three Months Ended Six Months Ended
June 30, June 30, 2009 2008 2009 2008 Collection: Residential
$550.6 $212.3 $1,096.7 $417.2 Commercial 633.8 254.8 1,292.4 503.3
Industrial 394.3 162.1 777.2 315.0 Other 6.4 5.4 13.6 10.3 Total
collection 1,585.1 634.6 3,179.9 1,245.8 Transfer and disposal
800.5 307.0 1,567.1 581.9 Less: Intercompany (400.2) (156.7)
(780.3) (301.2) Transfer and disposal, net 400.3 150.3 786.8 280.7
Other 80.7 42.6 159.9 80.2 Total revenue $2,066.1 $827.5 $4,126.6
$1,606.7 ======= ======= ======= ======= The following table
summarizes our revenue for the three and six months ended June 30,
2009 and 2008 assuming the merger of Allied Waste occurred on
January 1, 2008. Three Months Six Months Ended June 30, Ended June
30, 2009 2008 2009 2008 Republic Services, Inc. $2,066.1 $827.5
$4,126.6 $1,606.7 Allied Waste Industries, Inc. - 1,582.3 - 3,066.5
2,066.1 2,409.8 4,126.6 4,673.2 Less: Divestitures (5.7) (47.0)
(5.9) (47.7) Less: Intercompany revenue - (6.9) - (14.9) Adjusted
revenue $2,060.4 $2,355.9 $4,120.7 $4,610.6 ======== ========
======== ======== Revenue associated with divested assets is
removed in the quarter in which the assets were sold and the
comparable quarter in the prior year. Adjusted revenue is used to
calculate internal growth for the three and six months ended June
30, 2009. Intercompany revenue relates to prior year transactions
between Republic and Allied that would have been eliminated if the
companies had merged on January 1, 2008. The following table
reflects our core revenue changes for the three and six months
ended June 30, 2009 and 2008. For comparative purposes, we have
presented the components of our revenue changes for the three and
six months ended June 30, 2008 assuming the merger with Allied
occurred on January 1, 2008. Our presentation also eliminates
revenue associated with divested assets in the quarter the assets
were sold and the comparable quarter in the prior year. Three
Months Ended Six Months Ended June 30, June 30, 2009 2008 (1) 2009
2008(1) Core price 3.4% 4.5% 3.4% 4.4% Fuel surcharges (3.1) 1.9
(2.2) 1.5 Commodities (2.5) .6 (2.7) .7 Total price (2.2) 7.0 (1.5)
6.6 Core volume (10.3) (3.1) (9.1) (2.8) Total internal growth
(12.5)% 3.9% (10.6)% 3.8% ====== ===== ===== ===== (1) Certain
prior year amounts have been reclassified to conform to the current
year's presentation. We believe that the presentation of revenue
and changes in revenue above provides useful information to
investors because it allows investors to understand increases or
decreases in our revenue that are driven by changes in the
operations of the predecessor Republic or Allied, and not merely by
the addition of Allied's revenues for periods after the merger.
This information has been prepared for illustrative purposes and is
not intended to be indicative of the revenue that would have been
realized had the acquisition been consummated at the beginning of
the periods presented or the future results of the combined
operations. MERGER WITH ALLIED We completed our acquisition of
Allied effective December 5, 2008. In accordance with the purchase
method of accounting, the purchase price paid has been allocated to
assets and liabilities acquired based upon their estimated fair
values as of the effective date of the merger, with the excess of
the purchase price over the net assets acquired being recorded as
goodwill. We are in the process of valuing all of the assets and
liabilities acquired in the merger, and, until we have completed
our valuation process, there may be adjustments to our estimates of
fair values and the resulting preliminary purchase price
allocation. As a condition of our acquisition of Allied, we reached
a settlement with the U.S. Department of Justice requiring us to
divest of certain operating assets and liabilities. As of June 30,
2009, we had completed approximately 90% of these mandatory
divestitures. These divestitures generated approximately $424
million of pre tax proceeds all of which were used to re pay debt.
The following table summarizes our revenue, costs and expenses for
the three and six months ended June 30, 2008 assuming the merger
with Allied occurred on January 1, 2008. Three Months Ended Six
Months Ended June 30, 2008 June 30, 2008 Allied Republic Total
Allied Republic Total Revenue $1,582.3 $827.5 $2,409.8 $3,066.5
$1,606.7 $4,673.2 Cost of operations 958.9 577.5 1,536.4 1,895.8
1,054.0 2,949.8 Gross profit 623.4 250.0 873.4 1,170.7 552.7
1,723.4 Depreciation, amortization, depletion, and accretion 159.4
80.7 240.1 306.1 158.5 464.6 Selling, general and administrative
146.3 83.7 230.0 288.0 166.4 454.4 Loss on disposition of assets
and merger related costs 14.3 - 14.3 32.8 - 32.8 Operating income
$303.4 $85.6 $389.0 $543.8 $227.8 $771.6 ====== ===== ====== ======
====== ====== We believe that the presentation of revenue and
expenses above provides useful information to investors because it
allows investors to understand increases or decreases in our
revenue and expenses that are driven by changes in the operations
of the predecessor Republic or Allied, and not merely by the
addition of Allied's revenues and expenses for periods after the
merger. This information has been prepared for illustrative
purposes and is not intended to be indicative of the results of
operations that would have actually occurred had the acquisition
been consummated at the beginning of the periods presented or the
future results of the combined operations. RECONCILIATION OF
CERTAIN NON GAAP MEASURES Operating Income before Depreciation,
Amortization, Depletion and Accretion Operating income before
depreciation, amortization, depletion and accretion (OIDADA), which
is not a measure determined in accordance with GAAP, for the three
and six months ended June 30, 2009 and 2008 is calculated as
follows: Three Months Ended Six Months Ended June 30, June 30, 2009
2008 2009 2008 Net income attributable to Republic Services, Inc.
$225.9 $40.7 $338.9 $116.8 Noncontrolling interests .3 - .6 -
Provision for income taxes 145.8 27.0 232.9 74.7 Other income, net
(1.3) (.7) (1.6) (.9) Interest income (.5) (2.5) (1.3) (5.3)
Interest expense 150.5 21.1 304.1 42.5 Depreciation, amortization
and depletion 218.6 76.2 440.5 149.6 Accretion 21.9 4.5 45.2 8.9
====== ====== ====== ====== OIDADA $761.2 $166.3 $1,359.3 $386.3
====== ====== ====== ====== We believe that the presentation of
OIDADA is useful to investors because it provides important
information concerning our operating performance exclusive of
certain non cash costs. OIDADA 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. Our definition of OIDADA may not be
comparable to similarly titled measures presented by other
companies. Adjusted Earnings Reported diluted earnings per share
were $.59 and $.22 for the three months ended June 30, 2009 and
2008, respectively, and $.89 and $.63 for the six months ended June
30, 2009 and 2008, respectively. During the three and six months
ended June 30, 2009 and 2008, we recorded a number of gains,
charges and other expenses that impacted our OIDADA, pre tax
income, net income and diluted earnings per share. These items
primarily consist of the following (in millions, except per share
data): Three Months Ended June 30, 2009 Diluted Pre tax Net
Earnings OIDADA Income Income per Share As reported $761.2 $ 372.0
$225.9 $.59 Gain on disposition of assets (150.1) (150.1) (92.8)
(.24) Restructuring charges 12.3 12.3 7.6 .02 Costs to achieve
synergies 10.1 10.1 6.2 .02 Remediation charges - - - - Adjusted
$633.5 $244.3 $146.9 $.39 ====== ====== ====== ====== Three Months
Ended June 30, 2008 Diluted Pre tax Net Earnings OIDADA Income
Income per Share As reported $ 166.3 $ 67.7 $40.7 $.22 Gain on
disposition of assets - - - - Restructuring charges - - - - Costs
to achieve synergies - - - - Remediation charges 68.0 69.0 43.8 .24
Adjusted $ 234.3 $136.7 $84.5 $.46 ====== ====== ====== ======= Six
Months Ended June 30, 2009 Diluted Pre tax Net Earnings OIDADA
Income Income per Share As reported $1,359.3 $572.4 $338.9 $.89
Gain on disposition of assets (145.2) (145.2) (90.1) (.24)
Restructuring charges 43.6 43.6 26.6 .07 Costs to achieve synergies
22.9 22.9 14.0 .04 Remediation charges - - - - Adjusted $1,280.6
$493.7 $289.4 $.76 ======== ====== ====== ==== Six Months Ended
June 30, 2008 Diluted Pre tax Net Earnings OIDADA Income Income per
Share As reported $386.3 $191.5 $116.8 $.63 Gain on disposition of
assets - - - - Restructuring charges - - - - Costs to achieve
synergies - - - - Remediation charges 68.0 69.0 43.8 .24 Adjusted
$454.3 $260.5 $160.6 $.87 ====== ====== ====== ==== We believe that
the presentation of adjusted OIDADA, adjusted pre tax income,
adjusted net income and adjusted diluted earnings per share, which
excludes the gain on disposition of assets, restructuring charges,
costs to achieve synergies and remediation charges, which are not
measures determined in accordance with GAAP, provide an
understanding of operational activities before the financial impact
of certain non operational items. We use these measures, and
believe investors will find them 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 charges and costs have been incurred in prior periods,
and similar types of adjustments can reasonably be expected to be
recorded in future periods. Our definition of adjusted OIDADA,
adjusted pre tax income, adjusted net income and adjusted diluted
earnings per share may not be comparable to similarly titled
measures presented by other companies. 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 six
months ended June 30, 2009 and 2008 is calculated as follows (in
millions): Three Months Ended Six Months Ended June 30, June 30,
2009 2008 2009 2008 Cash provided by operating activities $168.3
$163.5 $680.7 $311.5 Purchases of property and equipment (161.7)
(83.8) (355.1) (165.4) Proceeds from sales of property and
equipment 11.8 2.3 16.7 3.3 Free cash flow $18.4 $82.0 $342.3
$149.4 ====== ====== ====== ====== 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 Six Months Ended June 30, June 30, 2009 2008
2009 2008 Purchases of property and equipment per the unaudited
condensed consolidated statements of cash flows $161.7 $83.8 $355.1
$165.4 Adjustments for property and equipment received during the
prior period but paid for in the following period, net 10.8 5.9
(34.2) (27.9) Property and equipment received during the current
period $172.5 $89.7 $320.9 $137.5 ====== ====== ====== ====== 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. 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 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. As of June 30, 2009, accounts receivable was
$913.5 million, net of allowance for doubtful accounts of $56.2
million, resulting in days sales outstanding of approximately 40
(or 25 net of deferred revenue). CASH DIVIDENDS In April 2009, we
paid a cash dividend of $72.0 million to stockholders of record as
of April 1, 2009. As of June 30, 2009, we recorded a dividend
payable of $72.1 million to stockholders of record at the close of
business on July 1, 2009, which has been paid. In July 2009, our
Board of Directors declared a regular quarterly dividend of $.19
per share payable to stockholders of record as of October 1, 2009,
which will be paid on October 15, 2009. UPDATED FINANCIAL GUIDANCE
Adjusted Diluted Earnings per Share The following is a summary of
anticipated adjusted diluted earnings per share for the twelve
months ended December 31, 2009 excluding gain on disposition of
assets. (Anticipated) Twelve Months Ended December 31, 2009 Diluted
earnings per share $1.23 - 1.25 (excluding gain on disposition of
assets) Restructuring charges and cost to achieve synergies 0.20
Adjusted diluted earnings per share $1.43 - 1.45 ============ We
believe that the presentation of adjusted diluted earnings per
share, which excludes gains on disposition of assets and charges
related to the integration of our businesses, provides an
understanding of operational activities before the financial impact
of certain merger related gains and costs. We use this measure, and
believe investors will find it helpful, in understanding the
ongoing performance of our operations when the integration process
is complete. Comparable charges and costs have been incurred in
prior periods, and similar types of adjustments can reasonably be
expected to be recorded in future periods. Our definition of
adjusted diluted earnings per share may not be comparable to
similarly titled measures presented by other companies. Adjusted
Free Cash Flow We define adjusted 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 net
of proceeds from sales of property and equipment, plus merger
related costs. Our actual adjusted free cash flow for the six
months ended June 30, 2009 and our anticipated adjusted free cash
flow for the twelve months ended December 31, 2009 are calculated
as follows (in millions): (Actual) (Anticipated) Six Months Twelve
Months Ended Ended June 30, December 31, 2009 2009 Cash provided by
operating activities $680.7 $1,414.5 - 1,439.5 Purchases of
property and equipment, net of proceeds from sales (338.4) (800.0)
Merger related expenditures, net of tax 45.5 85.5 Adjusted free
cash flow $387.8 $700.0 725.0 ====== ============== We believe that
the presentation of adjusted 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, plus merger related
costs. It also demonstrates our ability to execute our financial
strategy. The presentation of adjusted free cash flow has material
limitations. Adjusted 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
such as, debt service requirements and dividend payments. Our
definition of adjusted free cash flow may not be comparable to
similarly titled measures presented by other companies. INFORMATION
REGARDING FORWARD LOOKING STATEMENTS Certain statements and
information included herein constitute forward looking information
about us that is intended to be covered by the safe harbor for
"forward looking statements" provided by the Private Securities
Litigation Reform Act of 1995. Forward looking statements are
statements that are not historical facts. Words such as "guidance,"
"expect," "will," "may," "anticipate," "could" and similar
expressions are intended to identify forward looking statements.
These statements include statements about the expected benefits of
the merger, our plans, strategies and prospects. Forward looking
statements are not guarantees of performance. These statements are
based upon the current beliefs and expectations of our management
and are subject to risk and uncertainties that could cause actual
results to differ materially from those expressed in, or implied or
projected by, the forward looking information and 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: --
our ability to successfully integrate Allied's and Republic's
operations and to achieve synergies or create long term value for
stockholders as expected, including the possibility that we will
experience significant and unexpected transaction and integration
related costs or that the timing of and proceeds received from the
mandatory divestiture of certain assets may result in additional
expenditures of money and resources or reduce the benefits of the
merger; -- the impact on us of our substantial post merger
indebtedness, including 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
and that any downgrade in our bond ratings could adversely impact
us; -- general economic and market conditions including, but not
limited to, the current global economic and financial market
crisis, inflation and changes in commodity pricing, fuel, labor,
risk and health insurance and other variable costs that are
generally not within our control and our exposure to credit and
counterparty risk; -- 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; --
competition and demand for services in the solid waste industry; --
the fact that price increases may not be adequate to offset the
impact of increased costs and may cause us to lose volume; -- our
ability to manage growth and execute our acquisition growth
strategy; -- our compliance with, and future changes in,
environmental and flow control regulations and our ability to
obtain approvals from regulatory agencies in connection with
operating and expanding our landfills; -- our dependence on key
personnel; -- 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, including our matters currently pending
with the DOJ and IRS; -- 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. The risks included
here are not exhaustive. Refer to "Part I, Item 1A Risk Factors" in
our Annual Report on Form 10 K for the year ended December 31,
2008, for further discussion regarding our exposure to risks.
Additionally, new risk factors emerge from time to time and it is
not possible for us to predict all such risk factors, nor to assess
the impact such risk factors might have on our business or the
extent to which any factor or combination of factors may cause
actual results to differ materially from those contained in any
forward looking statements. Readers are cautioned not to place
undue reliance on these forward looking statements which speak only
as of the date hereof. Except to the extent required by applicable
law or regulation, we undertake no obligation to update or publish
revised forward looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. DATASOURCE: Republic Services, Inc. CONTACT:
Media Inquiries, Will Flower, +1 480 718 6565, or Investor
Inquiries, Ed Lang, +1 480 627 7128 Web Site:
http://www.republicservices.com/
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