SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 28, 2004
Commission file number: 1-14267
REPUBLIC SERVICES, INC.
Delaware (State of Incorporation) |
65-0716904 (I.R.S. Employer Identification No.) |
Republic Services, Inc. 110 S.E. 6th Street, 28th Floor Fort Lauderdale, Florida (Address of Principal Executive Offices) |
33301 (Zip Code) |
Registrants telephone number, including area code: (954) 769-2400
Page 1 of 3 pages.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 28, 2004, Republic Services, Inc. issued a press release to announce operating results for the three months ended March 31, 2004, a copy of which is incorporated herein by reference and attached hereto as an Exhibit.
Page 2 of 3 pages.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
April 28, 2004 | REPUBLIC SERVICES, INC. |
|||
By: | /s/ Tod C. Holmes | |||
Tod C. Holmes | ||||
Senior Vice President and Chief Financial Officer (Principal Financial Officer) | ||||
By: | /s/ Charles F. Serianni | |||
Charles F. Serianni Vice President and Chief Accounting Officer (Principal Accounting Officer) |
Page 3 of 3 pages.
Exhibit 99.1
REPUBLIC CONTACTS
Media Inquiries: Investor Inquiries: |
Will Flower Tod Holmes Ed Lang |
(954) 769-6392 (954) 769-2387 (954) 769-3591 |
REPUBLIC SERVICES, INC. REPORTS HIGHER
FIRST QUARTER EARNINGS PER SHARE OF $0.36
o
|
Internal growth of 6.2% | ||
o
|
Free cash flow on target |
Fort Lauderdale, FL, April 28, 2004...Republic Services, Inc. (NYSE: RSG) today reported that revenue for the three months ended March 31, 2004 increased 7.2 percent to $637.3 million compared to $594.6 million for the same period in 2003. The Companys internal growth during that period was 6.2%, with 2.9% from price and 3.3% from volume. Net income for the three months ended March 31, 2004 was $56.9 million, or $0.36 per diluted share, compared to $54.6 million, or $0.33 per diluted share, last year before the cumulative effect of changes in accounting principles. Operating income for the three months ended March 31, 2004 was $110.0 million compared to $105.4 million for the same period last year.
Commenting on these results, James E. OConnor, Chairman & Chief Executive Officer of Republic Services, said, Republic Services is performing very well. I am pleased with the Companys success in implementing its pricing strategy in conjunction with our operating and cost initiatives. The Company has recorded its highest internal growth rate since 2000 and we are well-positioned to achieve our 2004 financial objectives.
Republic Services, Inc. is a leading provider of solid waste collection, transfer and disposal services in the United States. The Companys operating units are focused on providing solid waste services for commercial, industrial, municipal and residential customers.
Certain statements and information included herein constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied in or by such forward-looking statements. Such factors include, among other things, whether the Companys estimates and assumptions concerning its selected balance sheet accounts, final capping, closure, post-closure and remediation costs, available airspace, and projected costs and expenses related to the Companys landfills and property and equipment, and labor, fuel rates and economic and inflationary trends, turn out to be correct or appropriate, and various factors that will impact the actual business and financial performance of the Company such as competition and demand for services in the solid waste industry; the Companys ability to manage growth; compliance with, and future changes in, environmental regulations; the Companys ability to obtain approval from regulatory agencies in connection with expansions at the Companys landfills; the ability to obtain financing on acceptable terms to finance the Companys operations and growth strategy and for the Company to operate within the limitations imposed by financing arrangements; the ability of the Company to repurchase common stock at prices that are accretive to earnings per share; the Companys dependence on key personnel; general economic and market conditions including, but not limited to, inflation and changes in commodity pricing, fuel, labor and other variable costs that are generally not within the control of the Company; dependence on large, long-term collection contracts; dependence on acquisitions for growth; risks associated with undisclosed liabilities of acquired businesses; risks associated with pending legal proceedings; and other factors contained in the Companys filings with the Securities and Exchange Commission.
##
REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Ended March 31, |
||||||||
2004 |
2003 |
|||||||
Revenue |
$ | 637.3 | $ | 594.6 | ||||
Expenses: |
||||||||
Cost of operations |
403.5 | 367.7 | ||||||
Depreciation, amortization and depletion |
58.0 | 56.8 | ||||||
Accretion |
3.3 | 3.1 | ||||||
Selling, general and administrative |
62.5 | 61.6 | ||||||
Operating income |
110.0 | 105.4 | ||||||
Interest expense, net |
(18.7 | ) | (18.2 | ) | ||||
Other income (expense), net |
0.5 | 0.8 | ||||||
Income before income taxes |
91.8 | 88.0 | ||||||
Provision for income taxes |
34.9 | 33.4 | ||||||
Income before cumulative effect of changes
in accounting principles |
56.9 | 54.6 | ||||||
Cumulative effect of changes in
accounting principles, net of tax |
| (37.8 | ) | |||||
Net income |
$ | 56.9 | $ | 16.8 | ||||
Basic earnings per share: |
||||||||
Before cumulative effect of changes
in accounting principles |
$ | 0.36 | $ | 0.34 | ||||
Cumulative effect of changes in
accounting principles, net of tax |
| (0.23 | ) | |||||
Basic earnings per share |
$ | 0.36 | $ | 0.11 | ||||
Weighted average common shares
outstanding |
156.0 | 162.1 | ||||||
2
REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(In millions, except per share data)
Three Months Ended March 31, |
||||||||
2004 |
2003 |
|||||||
Diluted earnings per share: |
||||||||
Before cumulative effect of changes
in accounting principles |
$ | 0.36 | $ | 0.33 | ||||
Cumulative effect of changes in
accounting principles, net of tax |
| (0.23 | ) | |||||
Diluted earnings per share |
$ | 0.36 | $ | 0.10 | ||||
Weighted average common and common
equivalent shares outstanding |
158.4 | 163.3 | ||||||
Cash dividend per common share |
$ | 0.06 | $ | | ||||
3
REPUBLIC SERVICES, INC.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
The following information should be read in conjunction with the Companys audited Consolidated Financial Statements and notes thereto appearing in the Companys Form 10-K as of and for the year ended December 31, 2003.
CHANGES IN ACCOUNTING PRINCIPLES
During the first quarter of 2003, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (SFAS 143). SFAS 143 required the Company to change the methodology it used to record closure and post-closure costs related to its landfills. Upon adopting SFAS 143, the Company no longer records closure and post-closure expense as a component of cost of operations. Instead, amortization expense is recorded on the capitalized portion of the obligation and accretion expense is recorded using the effective interest method.
As of January 1, 2003, the Company recorded an after-tax expense of $20.8 million as a cumulative effect of a change in accounting principle resulting from the adoption of SFAS 143. In addition, the Company also recorded an after-tax expense of $17.0 million as a cumulative effect of a change in accounting principle relating to its accounting for methane gas collection systems.
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 generally accepted accounting principles (GAAP), for the three months ended March 31, 2004 and 2003 is calculated as follows (in millions):
Three months ended | ||||||||
March 31, |
||||||||
2004 |
2003 |
|||||||
Net income |
$ | 56.9 | $ | 16.8 | ||||
Cumulative effect of changes in accounting principles,
net of tax |
| 37.8 | ||||||
Provision for income taxes |
34.9 | 33.4 | ||||||
Other (income) expense, net |
(.5 | ) | (.8 | ) | ||||
Interest expense, net |
18.7 | 18.2 | ||||||
Depreciation, amortization and depletion |
58.0 | 56.8 | ||||||
Accretion |
3.3 | 3.1 | ||||||
Operating income before depreciation, amortization,
depletion and accretion |
$ | 171.3 | $ | 165.3 | ||||
The Company believes that the presentation of operating income before depreciation, amortization, depletion and accretion is useful to investors because it provides important information concerning the Companys operating performance exclusive of certain non-cash costs. Although depreciation, amortization, depletion and accretion are considered operating costs in accordance with GAAP, they represent the allocation of non-cash costs associated with long-lived assets acquired or constructed in prior years. Operating income before depreciation, amortization, depletion and accretion also demonstrates the Companys ability to execute its 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 the Companys customer base and services provided, pursuing strategic acquisitions that augment the Companys existing business platform, repurchasing shares of common stock at prices that provide value to the Companys shareholders, paying cash dividends, maintaining the Companys investment grade rating and minimizing debt.
4
CASH FLOW
During the three months ended March 31, 2004, cash provided by operating activities was $190.3 million, cash used in investing activities was $44.4 million and cash used in financing activities was $90.8 million.
The Company defines 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 the sale of property and equipment as presented in the Companys consolidated statement of cash flows. The Companys free cash flow for the three months ended March 31, 2004 is calculated as follows (in millions):
Three months ended | ||||
March 31, 2004 |
||||
Cash provided by operating activities |
$ | 190.3 | ||
Purchases of property and equipment |
(38.8 | ) | ||
Proceeds
from the sale of property and equipment |
1.7 | |||
Free cash flow |
$ | 153.2 | ||
The Company believes that the presentation of free cash flow, which is a non-GAAP financial measure, provides useful information regarding the Companys recurring cash provided by operating activities after expenditures for property and equipment, net of proceeds from the sale of property and equipment. It also demonstrates the Companys ability to execute its financial strategy as previously discussed and is a key metric used by the Company to determine compensation. Free cash flow does not represent the Companys cash flow available for discretionary expenditures because it excludes certain expenditures that are required or that the Company has committed to such as debt service requirements and dividend payments. The Companys definition of free cash flow may not be comparable to similarly titled measures presented by other companies.
Capital expenditures include $.4 million of capitalized interest for the three months ended March 31, 2004 and 2003, respectively.
As of March 31, 2004, accounts receivable were $250.0 million, net of allowance for doubtful accounts of $17.7 million, resulting in days sales outstanding of approximately 35 (or 23 days net of deferred revenue).
STOCK REPURCHASE PROGRAM
During the three months ended March 31, 2004, the Company paid approximately $93.1 million to repurchase 3.5 million shares of its stock. As of March 31, 2004, the Company had repurchased a total of 29.1 million shares of its stock for approximately $577.4 million. The Company is currently authorized to repurchase up to an additional $172.6 million under its repurchase program including the $75.0 million increase to the program approved by its Board of Directors in April 2004.
DIVIDEND
In July 2003, the Company announced that its Board of Directors initiated a quarterly cash dividend of $.06 per share. In January 2004, the Company paid a dividend of $9.4 million to shareholders of record as of January 2, 2004. As of March 31, 2004, the Company recorded a dividend payable of approximately $9.3 million to shareholders of record at the close of business on April 1, 2004, which has been paid. In April 2004, the Companys Board of Directors declared a regular quarterly dividend of $.06 per share for shareholders of record on July 1, 2004.
5
REVENUE
The following table reflects total revenue of the Company by revenue source for the three months ended March 31, 2004 and 2003 (in millions):
Three months ended | ||||||||
March 31, |
||||||||
2004 |
2003 |
|||||||
Collection: |
||||||||
Residential |
$ | 157.1 | $ | 145.4 | ||||
Commercial |
182.6 | 173.9 | ||||||
Industrial |
129.5 | 120.5 | ||||||
Other |
13.8 | 12.5 | ||||||
Total collection |
483.0 | 452.3 | ||||||
Transfer and disposal |
233.2 | 215.3 | ||||||
Less: Intercompany |
(120.4 | ) | (112.2 | ) | ||||
Transfer and disposal, net |
112.8 | 103.1 | ||||||
Other |
41.5 | 39.2 | ||||||
Total revenue |
$ | 637.3 | $ | 594.6 | ||||
The following table reflects the Companys revenue growth for the three months ended March 31, 2004 and 2003:
Three months ended | ||||||||
March 31, |
||||||||
2004 |
2003 |
|||||||
Core price |
2.3 | % | 1.6 | % | ||||
Fuel surcharges |
.1 | .1 | ||||||
Commodities |
.5 | .5 | ||||||
Total price |
2.9 | 2.2 | ||||||
Core volume |
3.5 | 2.8 | ||||||
Non-core volume |
(.2 | ) | .3 | |||||
Total volume |
3.3 | 3.1 | ||||||
Total internal growth. |
6.2 | 5.3 | ||||||
Acquisitions |
1.0 | 1.7 | ||||||
Taxes (a) |
| .7 | ||||||
Total revenue growth |
7.2 | % | 7.7 | % | ||||
(a) | Represents taxes levied on landfill volumes in certain states that are passed on to customers. |
6