News Releases
Republic Services, Inc.
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
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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
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(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
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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
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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
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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
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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%
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(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
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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
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OIDADA $761.2 $166.3 $1,359.3 $386.3
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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
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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
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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
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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
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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
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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
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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
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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
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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.
First Call Analyst: Flower, Will
FCMN Contact:
SOURCE: 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/