Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
These Unaudited Pro Forma Condensed Consolidated Financial Statements have been prepared from the Consolidated Financial Statements of Waste Services, Inc. and the Financial Statements of the Miami-Dade County Operations (a division of Republic Services of Florida, a Limited Partnership), which is a subsidiary of Republic Services, Inc. You should read these Unaudited Pro Forma Condensed Consolidated Financial Statements in conjunction with the audited Consolidated Financial Statements of Waste Services, Inc. and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report for 2008 on Form 10-K filed on February 26, 2009, as well as our interim report on Form 10-Q for the quarter ended September 30, 2009, filed on October 29, 2009. These Unaudited Pro Forma Condensed Consolidated Financial Statements should also be read with the Financial Statements of the Miami-Dade County Operations (a division of Republic Services of Florida, a Limited Partnership) as of and for the nine months ended September 30, 2009 and as of and for the year ended December 31, 2008, which are included elsewhere in this filing.
In October 2009, we acquired Republic Services’ operations in Miami-Dade County, Florida (the “Miami-Dade County Operations”) for $32.0 million in cash plus an adjustment for working capital. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2009 and the year ended December 31, 2008 have been prepared on a basis to reflect the following events as if each event occurred as of January 1, 2008:
• | Acquisition of the Miami-Dade County Operations. | ||
• | Additional draw on our credit facility and the associated interest. | ||
• | Tax effects of the foregoing events. |
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2009 has been prepared on a basis to reflect the acquisition of the Miami-Dade County Operations as if the acquisition had occurred as of September 30, 2009.
The pro forma adjustments are based on preliminary estimates, available information and certain assumptions that we believe are reasonable, and may be revised as additional information becomes available. The pro forma adjustments are more fully described in the notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
The Unaudited Pro Forma Condensed Consolidated Financial Statements should not be considered indicative of actual results that would have been achieved had the transactions and events described been completed as of the dates or as of the beginning of the period indicated and do not purport to project the financial condition or results of operations and cash flows for any future date or period.
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WASTE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
For the Nine Months Ended September 30, 2009
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
For the Nine Months Ended September 30, 2009
Miami-Dade County | ||||||||||||||||
Actual | Operations | Adjustments | Pro Forma | |||||||||||||
Revenue | $ | 315,738 | $ | 15,073 | $ | — | $ | 330,811 | ||||||||
Operating and other expenses: | ||||||||||||||||
Cost of operations (exclusive of depreciation, depletion and amortization) | 203,896 | 9,999 | — | 213,895 | ||||||||||||
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization) | 39,034 | 1,735 | — | 40,769 | ||||||||||||
Impairment of goodwill and other assets | — | 16,699 | — | 16,699 | ||||||||||||
Depreciation, depletion and amortization | 32,016 | 678 | 993 | (a) | 33,687 | |||||||||||
Gain on sale of property and equipment, foreign exchange and other | (2,533 | ) | — | — | (2,533 | ) | ||||||||||
Income (loss) from operations | 43,325 | (14,038 | ) | (993 | ) | 28,294 | ||||||||||
Interest expense | 22,418 | 1,356 | (1,356 | ) (b) | 23,424 | |||||||||||
1,006 | (b) | |||||||||||||||
Change in fair value of warrants | (2,103 | ) | — | — | (2,103 | ) | ||||||||||
Income (loss) from continuing operations before income taxes | 23,010 | (15,394 | ) | (643 | ) | 6,973 | ||||||||||
Income tax provision (benefit) | 8,837 | (2,847 | ) | 2,847 | (c) | 9,217 | ||||||||||
380 | (c) | |||||||||||||||
Net income (loss) from continuing operations | $ | 14,173 | $ | (12,547 | ) | $ | (3,870 | ) | $ | (2,244 | ) | |||||
Basic and diluted income (loss) per share — continuing operations | $ | 0.31 | $ | (0.05 | ) | |||||||||||
Weighted average common shares outstanding — | ||||||||||||||||
Basic | 46,206 | 46,206 | ||||||||||||||
Diluted | 46,231 | 46,231 | ||||||||||||||
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WASTE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
For the Year Ended December 31, 2008
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
For the Year Ended December 31, 2008
Miami-Dade County | ||||||||||||||||
Actual | Operations | Adjustments | Pro Forma | |||||||||||||
Revenue | $ | 473,029 | $ | 21,635 | $ | — | $ | 494,664 | ||||||||
Operating and other expenses: | ||||||||||||||||
Cost of operations (exclusive of depreciation, depletion and amortization) | 309,121 | 15,356 | — | 324,477 | ||||||||||||
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization) | 66,474 | 2,336 | — | 68,810 | ||||||||||||
Landfill development project costs | 10,267 | — | — | 10,267 | ||||||||||||
Depreciation, depletion and amortization | 45,348 | 941 | 1,301 | (a) | 47,590 | |||||||||||
Foreign exchange gain and other | 160 | (65 | ) | — | 95 | |||||||||||
Income from operations | 41,659 | 3,067 | (1,301 | ) | 43,425 | |||||||||||
Interest expense | 37,432 | 1,968 | (1,968 | ) (b) | 39,461 | |||||||||||
2,029 | (b) | |||||||||||||||
Income from continuing operations before income taxes | 4,227 | 1,099 | (1,362 | ) | 3,964 | |||||||||||
Income tax provision | 6,183 | 424 | (424 | ) (c) | 6,689 | |||||||||||
506 | (c) | |||||||||||||||
Net income (loss) from continuing operations | $ | (1,956 | ) | $ | 675 | $ | (1,444 | ) | $ | (2,725 | ) | |||||
Basic and diluted loss per share — continuing operations | $ | (0.04 | ) | $ | (0.06 | ) | ||||||||||
Weighted average common shares outstanding — basic and diluted | 46,079 | 46,079 | ||||||||||||||
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WASTE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
As of September 30, 2009
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
As of September 30, 2009
Miami-Dade County | ||||||||||||||||
Actual | Operations | Adjustments | Pro Forma | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 3,209 | $ | 43 | $ | (43 | ) (d) | $ | 3,209 | |||||||
Accounts receivable | 57,585 | 2,278 | 22 | (e) | 59,885 | |||||||||||
Prepaid expenses and other current assets | 9,754 | 200 | (44 | ) (e) | 9,910 | |||||||||||
Total current assets | 70,548 | 2,521 | (65 | ) | 73,004 | |||||||||||
Property and equipment, net | 199,540 | 6,503 | (39 | ) (e) | 206,004 | |||||||||||
Landfill sites, net | 196,349 | — | — | 196,349 | ||||||||||||
Goodwill and other intangible assets, net | 393,514 | 19,218 | 6,300 | (e) | 419,032 | |||||||||||
Other assets | 10,841 | — | — | 10,841 | ||||||||||||
Total assets | $ | 870,792 | $ | 28,242 | $ | 6,196 | $ | 905,230 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 24,100 | $ | 628 | $ | (603 | ) (d) | $ | 24,125 | |||||||
Accrued expenses and other current liabilities | 57,220 | 2,754 | (1,070 | ) (d) | 58,904 | |||||||||||
Short-term financing and current portion of long-term debt | 17,750 | — | — | 17,750 | ||||||||||||
Total current liabilities | 99,070 | 3,382 | (1,673 | ) | 100,779 | |||||||||||
Long-term debt | 355,529 | — | 32,729 | (e) | 388,258 | |||||||||||
Deferred income taxes | 38,100 | — | — | 38,100 | ||||||||||||
Accrued closure, post closure and other obligations | 21,361 | — | — | 21,361 | ||||||||||||
Total liabilities | 514,060 | 3,382 | 31,056 | 548,498 | ||||||||||||
Shareholders’ equity: | ||||||||||||||||
Common stock | 462 | — | — | 462 | ||||||||||||
Additional paid-in capital and other equity | 501,200 | 24,860 | (24,860 | ) (e) | 501,200 | |||||||||||
Accumulated other comprehensive income | 46,102 | — | — | 46,102 | ||||||||||||
Accumulated deficit | (191,032 | ) | — | — | (191,032 | ) | ||||||||||
Total shareholders’ equity | 356,732 | 24,860 | (24,860 | ) | 356,732 | |||||||||||
Total liabilities and shareholders’ equity | $ | 870,792 | $ | 28,242 | $ | 6,196 | $ | 905,230 | ||||||||
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Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except percentage data)
(In thousands, except percentage data)
The following table reflects the preliminary allocation of purchase price for the Miami-Dade County Operations based upon a preliminary estimate of the fair value of assets being acquired and liabilities being assumed by us as follows:
Purchase price: | ||||
Cash paid | $ | 32,729 | ||
Allocated as follows: | ||||
Accounts receivable | 2,300 | |||
Prepaid expenses and other current assets | 156 | |||
Property and equipment | 6,464 | |||
Intangible assets other than goodwill | 6,300 | |||
Accounts payable | (25 | ) | ||
Accrued expenses and other current liabilities | (1,684 | ) | ||
Fair value of net assets acquired | $ | 13,511 | ||
Goodwill allocation | $ | 19,218 | ||
The allocation of purchase price is considered preliminary until we have acquired all necessary information to finalize the allocation of purchase price. Although the time required to obtain all the necessary information will vary, the “allocation period” for finalizing purchase price allocations does not exceed one year from the date of consummation of an acquisition. Adjustments to the allocation of purchase price may decrease those amounts allocated to goodwill and, as such, may increase those amounts allocated to other tangible or intangible assets, which may result in higher depreciation or amortization expense in future periods.
The following notes describe the pro forma adjustments reflected in, and form an integral part of, the Unaudited Pro Forma Condensed Consolidated Financial Statements.
a) | Reflects the amortization of intangible assets exclusive of goodwill, based on an estimate of intangible values. These intangible assets represent customer relationships and are amortized on a declining balance basis over the life of the expected benefit to be received by such intangibles, which is approximately ten years. Amortization for the nine months ended September 30, 2009 and year ended December 31, 2008 is $1.0 million and $1.3 million, respectively. | ||
b) | Reflects the elimination of $1.4 million and $2.0 million of interest expense recognized by the Miami-Dade County Operations for the nine months ended September 30, 2009 and the year ended December 31, 2008, respectively. This interest was charged to the Miami-Dade County Operations from Republic Services, Inc. | ||
Also reflects interest expense of $1.0 million and $2.0 million for the nine months ended September 30, 2009 and year ended December 31, 2008, respectively, related to the draw on our credit facility used to fund the acquisition of the Miami-Dade County Operations. The rates used in the pro forma adjustment for the nine months ended September 30, 2009 and year ended December 31, 2008 were 4.1% and 6.2%, respectively, which were the average rates in effect on our credit facilities for such periods. | |||
We are exposed to variable interest rates under our credit facility, based on a spread over base rate or Eurodollar loans as defined. A 12.5 basis point increase in base interest rates would increase interest expense by less than $0.1 million for the nine months ended September 30, 2009 and year ended December 31, 2008. |
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c) | Reflects the elimination of the income tax provision (benefit) recognized by the Miami-Dade County Operations for the nine months ended September 30, 2009 and the year ended December 31, 2008 of $(2.8) million and $0.4 million, respectively. | ||
Also reflects the provision for deferred taxes at the statutory rate for the temporary differences related to amortizing goodwill, which is amortized over a period of fifteen years for income tax purposes. We have not assumed any additional benefit of the tax losses attributable to the pro forma adjustments because we do not expect to benefit from such losses at this time. | |||
d) | Reflects the elimination of assets not acquired and liabilities not assumed as part of the acquisition of the Miami-Dade County Operations. Liabilities not assumed primarily relate to payroll and related benefits, accounts payable and certain other accrued expenses. | ||
e) | Reflects the payment of the purchase price for the Miami-Dade County Operations and the preliminary allocation of the purchase price for the fair value of assets acquired and liabilities assumed. |
The pro forma adjustments are based on preliminary estimates, available information and certain assumptions that we believe are reasonable, and may be revised as additional information becomes available. The Unaudited Pro Forma Condensed Consolidated Financial Statements should not be considered indicative of actual results that would have been achieved had the transactions and events described been completed as of the dates or as of the beginning of the periods indicated and do not purport to project the financial condition or results of operations and cash flows for any future date or period.
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