EXHIBIT 99.2
REPUBLIC CONTACTS
Media Inquiries: Will Flower (954) 769-6392
Investor Inquiries: Tod Holmes (954) 769-2387
Ed Lang (954) 769-3591
REPUBLIC SERVICES, INC. REPORTS
SECOND QUARTER EARNINGS OF $0.37 PER SHARE
o Company initiates quarterly dividend
o Company on target to meet
2003 financial objectives
FORT LAUDERDALE, FLA., JULY 30, 2003...Republic Services, Inc. (NYSE: RSG) today
reported net income of $60.4 million, or $0.37 per share, for the three months
ended June 30, 2003, versus $61.0 million, or $0.36 per share, for the
comparable period last year. Revenue in the second quarter of 2003 increased 6.5
percent to $637.3 million from $598.2 million for the same period in 2002.
Operating income for the three months ended June 30, 2003 was $113.5 million,
compared to $116.3 million for the same quarter last year. EBITDA for the three
months ended June 30, 2003 increased by 6.2% to $176.0 million compared to
$165.7 million for the same period in 2002.
For the six months ended June 30, 2003, net income, before the cumulative effect
of changes in accounting principles, was $115.0 million, or $0.70 per share,
versus $115.9 million, or $0.69 per share, for the comparable period last year.
Revenue increased 7.1 percent to $1,231.9 million from $1,150.1 million for the
same period in 2002. Operating income for the six months ended June 30, 2003 was
$218.9 million compared to $223.2 million for the same period last year. EBITDA
for the six months ended June 30, 2003 increased by 7.7% to $341.3 million
compared to $317.0 million for the same period in 2002.
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 at its landfills. As of January 1, 2003,
in accordance with APB No. 20, the Company recorded an after-tax expense of
$37.8 million as a cumulative effect of a change in accounting principle
relating to the adoption of SFAS 143 and a change in accounting principle
relating to methane gas collection systems. These changes do not effect the
Company's cash flows.
Including the cumulative effect of the changes in accounting principles, net
income for the six months ended June 30, 2003 was $77.2 million, or $0.47 per
share. If the changes in accounting principles were effective January 1, 2002,
net income for the six months ended June 30, 2003 and 2002 would have been
$115.0 million, or $0.70 per share, and $114.8 million, or $0.68 per share,
respectively.
"The Company's strong cash flow allows us to fund growth, continue to repurchase
stock and introduce a quarterly dividend," said James E. O'Connor, Chairman and
Chief Executive Officer of Republic Services, Inc. "We are on target to achieve
our 2003 financial objectives. Our field organization's continued diligence has
allowed us to overcome higher fuel and insurance costs. We remain focused on our
revenue and cost initiatives. Providing excellent customer service, managing
operational costs and increasing customer retention remain key focal points for
the organization."
Republic Services, Inc. is a leading provider of solid waste collection,
transfer and disposal services in the United States. The Company's operating
units are focused on providing solid waste services for commercial, industrial,
municipal and residential customers.
2
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 Company's 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 Company's 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 Company's
ability to manage growth; compliance with, and future changes in, environmental
regulations; the Company's ability to obtain approval from regulatory agencies
in connection with expansions at the Company's landfills; the ability to obtain
financing on acceptable terms to finance the Company's 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 Company's 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 Company's
filings with the Securities and Exchange Commission.
###
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REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Ended June 30,
---------------------------
2003 2002
-------- --------
Revenue $ 637.3 $ 598.2
Expenses:
Cost of operations 399.3 371.5
Depreciation, amortization and depletion 59.4 49.4
Accretion 3.1 --
Selling, general and administrative 62.0 61.0
-------- --------
Operating income 113.5 116.3
Interest expense, net (17.5) (18.2)
Other income (expense), net 1.5 0.3
-------- --------
Income before income taxes 97.5 98.4
Provision for income taxes 37.1 37.4
-------- --------
Net income $ 60.4 $ 61.0
======== ========
Basic and diluted earnings per share $ 0.37 $ 0.36
======== ========
Weighted average common shares 162.5 167.5
======== ========
Pro forma amounts assuming the
changes in accounting principles are
applied retroactively:
Net income $ 60.4 $ 60.4
Basic and diluted earnings per share $ 0.37 $ 0.36
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REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Six Months Ended June 30,
-------------------------
2003 2002
--------- ---------
Revenue $ 1,231.9 $ 1,150.1
Expenses:
Cost of operations 767.0 713.5
Depreciation, amortization and depletion 116.2 93.8
Accretion 6.2 --
Selling, general and administrative 123.6 119.6
--------- ---------
Operating income 218.9 223.2
Interest expense, net (35.7) (36.7)
Other income (expense), net 2.3 0.4
--------- ---------
Income before income taxes 185.5 186.9
Provision for income taxes 70.5 71.0
--------- ---------
Income before cumulative effect of changes
in accounting principles 115.0 115.9
Cumulative effect of changes in
accounting principles, net of tax (37.8) --
--------- ---------
Net income $ 77.2 $ 115.9
========= =========
Basic and diluted earnings per share:
Before cumulative effect of changes
in accounting principles $ 0.70 $ 0.69
Cumulative effect of changes in
in accounting principles, net of tax (0.23) --
--------- ---------
Basic and diluted earnings per share $ 0.47 $ 0.69
========= =========
Weighted average common shares 162.9 168.3
========= =========
Pro forma amounts assuming the
changes in accounting principles are
applied retroactively:
Net income $ 115.0 $ 114.8
Basic and diluted earnings per share $ 0.70 $ 0.68
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REPUBLIC SERVICES, INC.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
The following information should be read in conjunction with the
Company's audited Consolidated Financial Statements and notes thereto appearing
in the Company's Form 10-K as of and for the year ended December 31, 2002. It
should also be read in conjunction with the Company's Unaudited Condensed
Consolidated Financial Statements and notes thereto appearing in the Company's
Form 10-Q as of and for the three months ended March 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.
The following table summarizes the adjustments to net income and
earnings per share for the three and six months ended June 30, 2002 as if SFAS
143 and the Company's change in accounting principle relating to its methane gas
collection systems were adopted January 1, 2002:
THREE MONTHS ENDED
JUNE 30, 2002
-----------------------------------
NET INCOME BASIC AND DILUTED
(IN MILLIONS) EARNINGS PER SHARE
------------- ------------------
Reported $61.0 $ .36
SFAS 143:
Reversal of closure and post-closure expense previously reported 4.2 .03
Reversal of landfill purchase price amortization previously reported .2 --
Accretion expense (1.7) (.01)
Landfill amortization (2.8) (.02)
----- -----
Total adjustments for SFAS 143 (.1) --
Methane Gas Collection Systems:
Reversal of depreciation previously recorded .1 --
Depletion expense (.6) --
----- -----
Total adjustment for methane gas collection systems (.5) --
----- -----
Adjusted $60.4 $ .36
===== =====
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SIX MONTHS ENDED
JUNE 30, 2002
-----------------------------------
NET INCOME BASIC AND DILUTED
(IN MILLIONS) EARNINGS PER SHARE
------------- ------------------
Reported $115.9 $ .69
SFAS 143:
Reversal of closure and post-closure expense previously reported 7.6 .05
Reversal of landfill purchase price amortization previously reported .4 --
Accretion expense (3.1) (.02)
Landfill amortization (5.1) (.03)
------ ------
Total adjustments for SFAS 143 (.2) --
Methane Gas Collection Systems:
Reversal of depreciation previously recorded .2 --
Depletion expense (1.1) (.01)
------ ------
Total adjustment for methane gas collection systems (.9) (.01)
Adjusted $114.8 $ .68
====== ======
EBITDA
EBITDA for the three and six months ended June 30, 2003 and 2002 is
calculated as follows (in millions):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
2003 2002 2003 2002
------- ------- ------- -------
Net income $ 60.4 $ 61.0 $ 77.2 $ 115.9
Cumulative effect of changes in accounting
principles, net of tax -- -- 37.8 --
Provision for income taxes 37.1 37.4 70.5 71.0
Other (income) expense, net (1.5) (.3) (2.3) (.4)
Interest expense, net 17.5 18.2 35.7 36.7
Accretion 3.1 -- 6.2 --
Depreciation, amortization and depletion 59.4 49.4 116.2 93.8
------- ------- ------- -------
EBITDA $ 176.0 $ 165.7 $ 341.3 $ 317.0
======= ======= ======= =======
The Company believes that the presentation of EBITDA, which is a
non-GAAP financial measure, provides useful information regarding the Company's
results of operations as it is a basis the Company uses to value potential
acquisition candidates. The Company's definition of EBITDA may not be comparable
to similarly titled measures presented by other companies.
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CASH FLOW
The following table reflects certain components of the Company's
unaudited consolidated statements of cash flows for the three and six months
ended June 30, 2003 (in millions):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
2003 2002 2003 2002
------- ------- ------- -------
Depreciation, amortization and
depletion of property and
equipment $ 58.2 $ 48.1 $ 113.7 $ 90.2
Amortization of intangible assets $ 1.2 $ 1.3 $ 2.5 $ 3.6
Accretion expense $ 3.1 $ -- $ 6.2 $ --
Capital expenditures $ (64.1) $ (67.6) $ (88.1) $(105.2)
During the three and six months ended June 30, 2003, cash used in
investing activities was $97.8 million and $121.9 million, respectively. Also
during the three and six months ended June 30, 2003, cash provided by (used in)
financing activities was $27.8 million and $(24.3) million, respectively.
The Company defines free cash flow as cash provided by operating
activities less purchases of property and equipment plus proceeds from the sale
of equipment as presented in the Company's consolidated statement of cash flows.
The Company's free cash flow for the three and six months ended June 30, 2003 is
calculated as follows (in millions):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2003
------------------ ----------------
Cash provided by operating activities $151.5 $252.3
Purchases of property and equipment (64.1) (88.1)
Proceeds from the sale of equipment 1.5 2.9
------ ------
Free cash flow $ 88.9 $167.1
====== ======
The Company believes that the presentation of free cash flow, which is
a non-GAAP financial measure, provides useful information regarding the
Company's ability to execute its financial strategy. In addition, the Company
uses free cash flow to determine compensation. The Company's definition of
free cash flow may not be comparable to similarly titled measures presented by
other companies.
Capital expenditures include $.6 million and $1.0 million of
capitalized interest for the three and six months ended June 30, 2003 and 2002,
respectively.
As of June 30, 2003, accounts receivable were $264.6 million, net of
allowance for doubtful accounts of $18.7 million, resulting in days sales
outstanding of approximately 37 (or 25 days net of deferred revenue).
STOCK REPURCHASE PROGRAM
During the three months ended June 30, 2003, the Company paid
approximately $30.7 million to repurchase 1.4 million shares of its stock. As of
June 30, 2003, the Company had repurchased a total of 21.5 million shares of its
stock for approximately $386.9 million and is authorized to repurchase up to an
additional $63.1 million under its repurchase programs.
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REVENUE
The following table reflects total revenue of the Company by revenue
source for the three and six months ended June 30, 2003 and 2002 (in millions):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
2003 2002 2003 2002
-------- -------- -------- --------
Collection:
Residential $ 149.4 $ 130.5 $ 294.8 $ 255.1
Commercial 175.7 174.6 349.6 345.7
Industrial 133.0 128.3 253.5 246.2
Other 12.5 13.6 25.0 25.7
-------- -------- -------- --------
Total collection 470.6 447.0 922.9 872.7
-------- -------- -------- --------
Transfer and disposal 249.3 221.6 464.6 408.7
Less: Intercompany (127.9) (110.7) (240.1) (208.0)
-------- -------- -------- --------
Transfer and
dispoal, net 121.4 110.9 224.5 200.7
Other 45.3 40.3 84.5 76.7
-------- -------- -------- --------
Total revenue $ 637.3 $ 598.2 $1,231.9 $1,150.1
======== ======== ======== ========
The following table reflects the Company's revenue growth for the three
and six months ended June 30, 2003 and 2002:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
2003 2002 2003 2002
---- ---- ---- ----
Core price 1.8% 1.3% 1.7% 1.3%
Commodities .2 .4 .4 .1
--- --- --- ---
Total price 2.0 1.7 2.1 1.4
--- --- --- ---
Core volume 1.8 1.3 2.3 .5
Non-core volume .3 -- .3 .2
--- --- --- ---
Total volume 2.1 1.3 2.6 .7
--- --- --- ---
Total internal growth 4.1 3.0 4.7 2.1
Acquisitions 1.8 .9 1.7 1.4
Taxes* .6 -- .7 --
--- --- --- ---
Total revenue growth 6.5% 3.9% 7.1% 3.5%
=== === === ===
- ----------
* Represents taxes levied on landfill volumes in certain states that are passed
on to customers.
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