EXHIBIT 99.2
STERICYCLE, INC.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition by Stericycle, Inc. ("Stericycle") of certain
assets of the regulated medical waste business (the "Business") of Waste
Management, Inc. using the purchase method of accounting, and are based on
estimates and assumptions set forth below and in the notes to such statements.
The Business represented an insignificant component of Waste Management Inc.
("WMI") consolidated revenues and was not a separate legal entity for which full
audited financial statements were prepared. These pro forma condensed
consolidated financial statements are based upon the historical financial
statements of Stericycle adjusted to give effect to the acquisition on December
20, 1996.
The financial information of Stericycle is based upon its audited
consolidated financial statements for the year ended December 31, 1995 and
its unaudited consolidated financial statements as of and for the nine-month
period ended September 30, 1996. An audited statement of assets to be
acquired as of December 31, 1996 and audited statements of revenues and
direct operating expenses for the years ended December 31, 1996 and 1995 of
the Business are included herein (as Exhibit F-1). The financial information
of the Business is based upon the audited statement of revenues and direct
operating expenses for the year ended December 31, 1995, described above, the
unaudited financial statements of the Business for the nine month period
ended September 30, 1996, and its audited statement of assets to be acquired
as of December 31, 1996.
The unaudited pro forma condensed consolidated statements of operations for the
year ended December 31, 1995 and the nine month period ended September 30, 1996
have been prepared on the assumption that the transaction had occurred on
January 1, 1995. The unaudited pro forma condensed consolidated balance sheet
has been prepared on the assumption that the transaction had occurred as of
Stericycle's latest interim balance sheet, September 30, 1996.
The pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deemed appropriate. Final
purchase accounting adjustments will be made on the basis of appraisals and
evaluations, and therefore may differ from the pro forma adjustments
presented herein. The unaudited pro forma final information does not profess
to represent Stericycle's results of operations or financial position had the
above transaction, in fact, occurred on these dates, or project the combined
Company's financial position or results of operations for any future date or
period. The pro forma condensed consolidated financial statements should be
read in conjunction with Stericycle's consolidated historical financial
statements and notes thereto, contained in Stericycle's Registration
Statement on Form S-1 (Registration No. 333-05665) and Stericycle's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996. The Company's
future historical financial statements will reflect the acquisition of the
Business as of December 20, 1996.
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Stericycle, Inc.
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1996
(In 000's)
(Unaudited)
WMI PRO FORMA PRO FORMA
STERICYCLE, BUSINESS ADJUSTMENTS CONSOLIDATED
INC. ACQUIRED
Assets
Cash and cash equivalents $24,265 ($5,450) (1) $18,815
Accounts receivable, net 4,634 4,634
Parts, supplies, prepaid expenses 1,182 1,182
and other
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Total current assets 30,081 (5,450) 24,631
Property, plant and equipment 15,044 1,810 16,854
Less accumulated depreciation and
amortization
(4,765) (4,765)
10,279 1,810 12,089
Goodwill and other assets 9,455 10,024 (2) 19,479
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Total assets $49,815 $1,810 $4,574 $56,199
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------- ------ ------ -------
Liabilities and shareholders' equity
Current portion of long term debt and
capital lease obligations $1,815 $2,605 (1) $4,420
Accounts payable, accrued liabilities
and deferred revenue
4,361 391 (2) 4,752
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Total current liabilities 6,176 2,996 9,172
Note payable 2,605 (1) 2,605
Industrial development revenue bonds 2,137 2,137
and other
Other liabilities 543 783 (2) 1,326
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Total long-term liabilities 2,680 3,388 6,068
Shareholders' equity 40,959 40,959
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Total liabilities and shareholders' $49,815 $6,384 $56,199
equity ------- ------ -------
------- ------ -------
SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stericycle, Inc.
Pro Forma Condensed Consolidated Statement Of Operations
Nine Months Ended September 30, 1996
(In 000's, Except Share And Per Share Information)
(Unaudited)
WMI
STERICYCLE, INC. BUSINESS PRO FORMA PRO FORMA
ACQUIRED ADJUSTMENTS CONSOLIDATED
Revenues $17,930 $12,304 $30,234
Costs and expenses:
Cost of revenues 14,200 10,125 24,325
Selling, general and administrative
expenses 5,118 1,335 (3) 6,453
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Total costs and expenses 19,318 10,125 1,335 30,778
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(Loss) income from operations (1,388) 2,179 (1,335) (544)
Other income (expense):
Interest expense (308) (137) (4) (445)
Interest income 116 116
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Total other expense (192) (137) (329)
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Net loss ($1,580) ($1,472) ($873)
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Net loss per common share ($0.21) ($0.12)
------ ------
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Weighted average number of
common shares outstanding
7,401,916 7,401,916
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SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stericycle, Inc.
Pro Forma Condensed Consolidated Statement Of Operations
Year Ended December 31, 1995
(In 000's, Except Share And Per Share Information)
(Unaudited)
WMI
STERICYCLE, INC. BUSINESS PRO FORMA PRO FORMA
ACQUIRED ADJUSTMENTS CONSOLIDATED
Revenues $21,339 $15,500 $36,839
Costs and expenses:
Cost of revenues 17,478 13,081 30,559
Selling, general and administrative
expenses 8,137 1,780 (3) 9,917
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Total costs and expenses 25,615 13,081 1,780 40,476
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(Loss) income from operations (4,276) 2,419 (1,780) (3,637)
Other income (expense):
Interest expense (277) (365) (4) (642)
Interest income 9 9
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Total other expense (268) (365) (633)
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Net loss ($4,544) ($2,145) ($4,270)
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------- ------- -------
Net loss per common share ($0.65) ($0.61)
------ ------
------ ------
Weighted average number of
common shares outstanding 6,974,820 6,974,820
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SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stericycle, Inc.
Notes To Pro Forma Condensed Consolidated Financial Statements
(In 000's)
(Unaudited)
A. Unaudited Pro Forma Condensed Consolidated Balance Sheet Adjustments
1. This adjustment reflects the consideration paid for the regulated
medical waste business of WMI, including $5,450 in cash and a $5,210
note payable at 7% interest. Not reflected is the effect, if any,
resulting from adjustments to the purchase price to be determined if
actual revenues achieved by Stericycle are less than or exceed a
stated threshold for a specified period of time following closing. In
the event that the actual revenues differ from the stated threshold,
the purchase price will be increased or decreased. Any adjustment will
be made to the goodwill and the note payable.
2. This adjustment to record goodwill of $10,024 represents the purchase
price of $10,660, less the estimated value of the vehicles and
containers acquired of $1,810 plus an accrual of $1,174 relating to an
unfavorable lease agreement entered into between Stericycle and WMI.
The vehicles will be adjusted based on a physical inventory and the
appraised value of the vehicles and any reduction in purchase price
will reduce the notes payable to WMI. In the event that the parties
cannot agree on the values for the vehicles, WMI would have the right
to retain any vehicles upon which a price could not be agreed.
B. Unaudited Pro Forma Condensed Consolidated Statement of Operations
Adjustments
3. This adjustment records the incremental recurring costs associated
with the consolidation of these operations, such as manager and sales
representative salaries and benefits, as well as expenses estimated to
be incurred in relation to billing, customer support and information
systems support. The adjustment also includes goodwill amortization.
The historical statements of revenue and direct expenses for the
Business of WMI do not reflect these costs.
4. This adjustment reflects the incremental interest expense of the
$5,210 note payable to WMI at 7% interest. The note is payable in
installments of $2,605 and $2,605, respectively, on the first and
second anniversaries of the acquisition.
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