1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO ___________
COMMISSION FILE NUMBER: 1-14267
REPUBLIC SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 65-0716904
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
110 S.E. 6TH STREET
FT. LAUDERDALE, FLORIDA 33301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 769-6000
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[ ]
On August 6, 1998 the registrant had 79,724,417 outstanding shares of
class A common stock, par value $.01 per share and had 95,688,083 outstanding
shares of class B common stock, par value $.01 per share.
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REPUBLIC SERVICES, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE
----
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets as
of June 30, 1998 and December 31, 1997.................................................... 3
Unaudited Condensed Consolidated Statements of Operations
for the Three and Six Months Ended June 30, 1998 and
1997...................................................................................... 4
Unaudited Condensed Consolidated Statement of Shareholder's
Equity (Deficit) for the Six Months Ended June 30, 1998................................... 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1998 and 1997........................................... 6
Notes to Unaudited Condensed Consolidated Financial Statements............................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................................................. 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................................... 20
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.................................................... 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................................. 22
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
1998 1997
---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ....................................... $ 17.1 $ --
Restricted cash ................................................. 13.2 18.8
Accounts receivable, less allowance for
doubtful accounts of $16.3 and $13.6,
respectively ................................................ 155.8 131.0
Inventory ....................................................... 11.8 11.7
Other current assets ............................................ 17.1 14.4
---------- ----------
Total Current Assets ...................................... 215.0 175.9
PROPERTY AND EQUIPMENT, NET ........................................ 861.1 801.8
INTANGIBLE AND OTHER ASSETS, NET ................................... 505.9 370.3
---------- ----------
$ 1,582.0 $ 1,348.0
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable ................................................ $ 41.0 $ 40.2
Accrued liabilities ............................................. 80.5 57.6
Deferred revenue ................................................ 38.4 29.5
Amounts due to Parent ........................................... 1,830.0 266.1
Other current liabilities ....................................... 48.7 42.7
---------- ----------
Total Current Liabilities ................................. 2,038.6 436.1
LONG-TERM DEBT, NET OF CURRENT MATURITIES .......................... 62.4 64.3
ACCRUED ENVIRONMENTAL AND LANDFILL COSTS ........................... 49.0 46.0
DEFERRED INCOME TAXES AND OTHER LIABILITIES ........................ 55.7 50.8
COMMITMENTS AND CONTINGENCIES.......................................
SHAREHOLDER'S EQUITY (DEFICIT):
Investment by Parent ............................................ -- 749.8
Preferred stock, par value $.01 per share;
50,000,000 shares authorized; none issued .................... -- --
Common stock:
Class A, par value $.01 per share;
250,000,000 shares authorized; none
issued .................................................... -- --
Class B, par value $.01 per share;
125,000,000 shares authorized; 95,688,083
shares issued and outstanding ............................. 1.0 1.0
Additional paid-in capital (deficit) ............................ (624.7) --
---------- ----------
Total Shareholder's Equity (Deficit) ...................... (623.7) 750.8
---------- ----------
$ 1,582.0 $ 1,348.0
========== ==========
The accompanying notes are an integral part of these statements.
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REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
REVENUE ................................... $ 335.9 $ 283.7 $ 636.7 $ 546.9
EXPENSES:
Cost of operations ..................... 231.7 210.8 441.4 401.1
Selling, general and administrative .... 33.5 25.8 65.6 57.7
--------- --------- --------- ---------
OPERATING INCOME .......................... 70.7 47.1 129.7 88.1
INTEREST EXPENSE .......................... (31.9) (6.8) (37.3) (14.4)
INTEREST AND OTHER INCOME ................. .4 .2 1.2 3.2
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES ..................... 39.2 40.5 93.6 76.9
PROVISION FOR INCOME TAXES ................ 14.1 14.6 33.7 27.8
--------- --------- --------- ---------
NET INCOME ................................ $ 25.1 $ 25.9 $ 59.9 $ 49.1
========= ========= ========= =========
BASIC AND DILUTED EARNINGS PER
SHARE .................................. $ .26 $ .27 $ .63 $ .51
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING ............................ 95.7 95.7 95.7 95.7
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
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REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (DEFICIT)
(IN MILLIONS)
ADDITIONAL
COMMON STOCK PAID-IN
INVESTMENT ------------------- CAPITAL
BY PARENT CLASS A CLASS B (DEFICIT)
---------- ------- ------- --------
BALANCE AT DECEMBER 31, 1997 ........ $ 749.8 $ -- $ 1.0 $ --
Net income ...................... 59.9 -- -- --
Business acquisitions contributed
by Parent .................... 128.3 -- -- --
Dividend to Parent .............. (2,000.0) -- -- --
Dividend from Resources ......... 437.3 -- -- --
Transfer to additional paid-in
capital (deficit) ............ 624.7 -- -- (624.7)
---------- ------ ------ --------
BALANCE AT JUNE 30, 1998 ............ $ -- $ -- $ 1.0 $ (624.7)
========== ====== ====== ========
The accompanying notes are an integral part of this statement.
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REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
SIX MONTHS ENDED
JUNE 30,
---------------------
1998 1997
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES OF
CONTINUING OPERATIONS:
Net income ........................................... $ 59.9 $ 49.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ..................... 49.7 42.1
Changes in assets and liabilities, net of
effects from business acquisitions:
Accounts receivable ......................... (19.3) (8.9)
Prepaid expenses and other assets ........... (1.0) 22.6
Accounts payable and accrued liabilities .... (16.4) (5.7)
Other liabilities ........................... 67.7 30.5
-------- --------
140.6 129.7
-------- --------
CASH USED IN INVESTING ACTIVITIES:
Purchases of property and equipment .................. (71.1) (68.3)
Other ................................................ 9.8 (6.1)
-------- --------
(61.3) (74.4)
-------- --------
CASH USED IN FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt ....... .6 6.8
Payments of notes payable and long-term debt ......... (27.9) (62.7)
(Decrease) increase in amounts due to Parent ......... (34.9) 19.7
Other ................................................ -- 5.8
-------- --------
(62.2) (30.4)
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS ................... 17.1 24.9
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........ -- 24.2
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .............. $ 17.1 $ 49.1
======== ========
The accompanying notes are an integral part of these statements.
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(TABLES IN MILLIONS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of Republic Services, Inc. and its subsidiaries (the
"Company") and have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
related to the Company's organization, significant accounting policies and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. As of June 30, 1998, the Company was a wholly owned subsidiary of
Republic Industries, Inc. (together with its subsidiaries, the "Parent"). These
unaudited condensed consolidated financial statements exclude the accounts of
the Company's subsidiary, Republic Resources Company, Inc. ("Resources"), the
common stock of which was distributed to Parent in June 1998. All significant
intercompany accounts and transactions have been eliminated. These unaudited
condensed consolidated financial statements reflect, in the opinion of
management, all material adjustments (which include only normal recurring
adjustments) necessary to fairly state the financial position and the results of
operations for the periods presented and the disclosures herein are adequate to
make the information presented not misleading. Operating results for interim
periods are not necessarily indicative of the results that can be expected for a
full year. These interim financial statements should be read in conjunction with
the Company's audited consolidated financial statements and notes thereto
appearing in the Company's Prospectus dated June 30, 1998.
These unaudited condensed consolidated financial statements reflect the
accounts of the Company as a subsidiary of Parent subject to corporate general
and administrative expense allocations as described in Note 11, Related Party
Transactions. Such information does not necessarily reflect the financial
position or results of operations of the Company as a separate, stand-alone
entity.
All historical share and per share data of the Company's common stock,
par value $.01 per share ("Common Stock" which is designated when issued as
either "Class A Common Stock" or "Class B Common Stock"), for all periods
included in the unaudited condensed consolidated financial statements and the
notes thereto have been retroactively adjusted for the recapitalization of
Parent's 100 shares of common stock previously outstanding into 95,688,083
shares of Class B Common Stock in July 1998, as more fully described in Note 7,
Shareholder's Equity.
In May 1998, Parent announced its intention to separate the Company
from the Parent (the "Separation"). Parent also announced its intention to
distribute its remaining shares of Common Stock in the Company as of the
distribution date to Parent's shareholders in 1999, subject to certain
conditions and consents (the "Distribution"). The Company and Parent have
entered into certain agreements providing for the Separation and governing
various interim and ongoing relationships between the companies. The
Distribution is contingent, in part, on Parent obtaining a private letter ruling
from the Internal Revenue Service to the effect that, among other things, the
Distribution will qualify as a tax-free distribution for federal income tax
purposes under Section 355 of the Internal Revenue Code of 1986, as amended, in
form and substance satisfactory to Parent.
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In July 1998, the Company completed an initial public offering of
approximately 63.2 million shares of its Class A Common Stock ("Initial Public
Offering") resulting in net proceeds of approximately $1.4 billion. In addition,
in July 1998 the Company repaid in full all remaining amounts due to Parent
through the issuance of shares of Class A Common Stock and through proceeds from
the Initial Public Offering. Following the Initial Public Offering and the
repayment of amounts due to Parent, Parent owned approximately 63.9% of the
outstanding shares of Class A and Class B Common Stock which represents
approximately 88.7% of the combined voting power of all of the outstanding
shares of the Class A and Class B Common Stock. Following the Initial Public
Offering and the repayment of amounts due to Parent, the Company had the
following shares of Common Stock outstanding:
CLASS A CLASS B TOTAL
------ ------- -------
Recapitalization of Parent's common stock .... -- 95.7 95.7
Repayment of amounts due to Parent ........... 16.5 -- 16.5
Initial Public Offering ...................... 63.2 -- 63.2
------ ------- -------
79.7 95.7 175.4
====== ======= =======
The following unaudited pro forma consolidated financial data has been
prepared assuming the Initial Public Offering and the repayment in full of the
amounts due to Parent had occurred as of the beginning of each period presented
for pro forma statement of operations data and as of June 30, 1998 for pro forma
balance sheet data:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Pro Forma Statement of Operations Data:
Operating income ........................ $ 70.7 $ 47.1 $ 129.7 $ 88.1
Interest expense ........................ (.7) (2.2) (1.4) (3.7)
Interest and other income ............... .4 .2 1.2 3.2
--------- --------- --------- ---------
Income from continuing
operations before income taxes ...... 70.4 45.1 129.5 87.6
Provision for income taxes .............. 25.3 16.3 46.6 31.7
--------- --------- --------- ---------
Net income .............................. $ 45.1 $ 28.8 $ 82.9 $ 55.9
========= ========= ========= =========
Basic and diluted earnings per share .... $ .26 $ .16 $ .47 $ .32
========= ========= ========= =========
Weighted average shares outstanding ..... 175.4 175.4 175.4 175.4
========= ========= ========= =========
JUNE 30, 1998
------------------------
PRO FORMA AS REPORTED
---------- ----------
Balance Sheet Data:
Amounts due to Parent ................... $ -- $ 1,830.0
Total debt .............................. 73.8 73.8
Total shareholders' equity (deficit) .... 1,206.3 (623.7)
The unaudited pro forma consolidated financial data are provided for
informational purposes only and should not be construed to be indicative of the
Company's consolidated financial position or results of operations had the
transactions and events described above been consummated on the dates assumed
and do not project the Company's financial condition or results of operations
for any future date or period.
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
2. BUSINESS COMBINATIONS
Parent has acquired various businesses operating in the solid waste
services industry using cash and/or shares of its common stock ("Parent Common
Stock"). These businesses were contributed by Parent to the Company subsequent
to their acquisition. The Company has applied the same accounting method used by
Parent in accounting for business combinations.
Businesses acquired through June 30, 1998 and accounted for under the
purchase method of accounting are included in the unaudited condensed
consolidated financial statements from the date of acquisition.
During the six months ended June 30, 1998, Parent acquired various solid
waste services businesses which were contributed to the Company. The aggregate
purchase price paid by Parent in transactions accounted for under the purchase
method of accounting was $128.3 million consisting of $60.3 million in cash and
3.4 million shares of Parent Common Stock valued at $68.0 million.
The assets and liabilities contributed by Parent to the Company based upon
the preliminary purchase price allocations for business combinations accounted
for under the purchase method of accounting (including historical accounts of
1997 immaterial acquisitions accounted for under the pooling of interests method
of accounting) consummated during the six months ended June 30 were as follows:
SIX MONTHS ENDED
JUNE 30,
---------------------
1998 1997
-------- --------
Property and equipment ........ $ 23.9 $ 25.8
Intangible assets ............. 142.5 85.1
Other assets .................. 10.0 2.5
Working capital deficiency .... (22.7) (9.6)
Debt assumed .................. (25.4) (15.6)
Investment by Parent .......... (128.3) (88.2)
The Company's unaudited pro forma consolidated results of operations
assuming all significant acquisitions accounted for under the purchase method of
accounting had occurred as of the beginning of each period presented are as
follows:
SIX MONTHS ENDED
JUNE 30,
----------------------
1998 1997
--------- ---------
Revenue ................................. $ 646.7 $ 603.5
Net income .............................. $ 60.3 $ 51.1
Basic and diluted earnings per share .... $ .63 $ .53
Common shares outstanding ............... 95.7 95.7
The unaudited pro forma consolidated results of operations are
presented for informational purposes only and may not necessarily reflect the
future results of operations of the Company or what the results of operations
would have been had the Company owned and operated these businesses as of the
beginning of each period presented.
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
JUNE 30, DECEMBER 31,
1998 1997
---------- -----------
Land, landfills and improvements ................. $ 441.4 $ 420.1
Furniture, fixtures, trucks and equipment ........ 726.9 668.9
Buildings and improvements ....................... 139.9 126.6
---------- ----------
1,308.2 1,215.6
Less: accumulated depreciation, amortization
and depletion ................................ (447.1) (413.8)
---------- ----------
$ 861.1 $ 801.8
========== ==========
4. INTANGIBLE AND OTHER ASSETS
Intangible and other assets consist primarily of the cost of acquired
businesses in excess of the fair value of net assets acquired and other
intangible assets. The cost in excess of the fair value of net assets acquired
is amortized over 40 years on a straight-line basis. Other intangible assets
include values assigned to customer lists, long-term contracts and covenants not
to compete and are amortized generally over periods ranging from 5 to 25 years.
Accumulated amortization of intangible assets at June 30, 1998 and
December 31, 1997 was $64.5 million and $57.9 million, respectively.
5. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
JUNE 30, DECEMBER 31,
1998 1997
------- -----------
Bonds payable under loan agreements with California Pollution Control Financing
Authority; interest
at prevailing market rates ...................................................... $ 43.1 $ 43.1
Other notes; secured by real property,
equipment and other assets ...................................................... 30.7 32.0
------- -------
73.8 75.1
Less: current portion (included in other
current liabilities) ................................................... (11.4) (10.8)
------- -------
$ 62.4 $ 64.3
======= =======
In July 1998, the Company entered into a $1.0 billion unsecured revolving
credit facility with a group of banks. $500.0 million of the facility has a term
of 364 days and the remaining $500.0 million has a term of 5 years. Borrowings
under the facility bear interest at LIBOR based rates.
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6. AMOUNTS DUE TO PARENT
Amounts due to Parent consist of the following:
June 30, December 31,
1998 1997
-------- ------------
Due to Republic Corporate Management Company
("RCMC")........................................................... $139.5 $107.8
Notes payable to Resources............................................. 255.9 158.3
Company notes payable.................................................. 1,434.6 --
-------- ------
$1,830.0 $266.1
======== ======
Due to RCMC includes allocations of various expenses from Parent
including general and administrative expenses, risk management premiums, income
taxes and other costs. Such liabilities are non-interest bearing and have no
specified repayment terms. In July 1998, the Company repaid amounts due to RCMC
through the issuance of 5.8 million shares of Class A Common Stock.
Notes payable to Resources represent borrowings under revolving credit
facilities to fund the Company's operations and to repay debt assumed in
acquisitions. Borrowings under these facilities bear interest at prime plus 50
basis points and are payable on demand. Interest expense on notes payable to
Resources was $5.0 million and $4.6 million for the three months ended June 30,
1998 and 1997, respectively, and $9.7 million and $10.7 million for the six
months ended June 30, 1998 and 1997, respectively. In July 1998, the Company
repaid the notes payable to Resources through the issuance of 10.7 million
shares of Class A Common Stock.
Company notes payable ("Company Notes") were issued in April 1998 in
payment of the $2.0 billion dividend to Parent described in Note 7,
Shareholder's Equity. The Company Notes have a term of one-year and bear
interest at a rate of LIBOR plus 30 basis points. Interest expense on the
Company Notes was $26.2 million for the three months ended June 30, 1998. In
June 1998, the Company prepaid a portion of amounts outstanding under the
Company Notes totaling $565.4 million using cash, a receivable from Resources
and assets received from the Resources Dividend as described in Note 7,
Shareholder's Equity. In July 1998, the Company prepaid all remaining amounts
outstanding under the Company Notes using the net proceeds from the Initial
Public Offering.
7. SHAREHOLDER'S EQUITY
In April 1998, the Company declared a $2.0 billion dividend to Parent
that it paid in the form of the Company Notes.
In June 1998, the Company received a dividend of certain assets from
Resources totaling approximately $437.3 million (the "Resources Dividend") that
was used to prepay a portion of the Company Notes.
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REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In July 1998, the Company amended and restated its Certificate of
Incorporation to authorize capital stock consisting of (a) 50,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), and (b)
750,000,000 shares of Common Stock, of which 250,000,000 shares have been
authorized as Class A Common Stock, 125,000,000 shares have been authorized as
Class B Common Stock and 375,000,000 shares may be designated by the Company's
Board of Directors as either Class A Common Stock or Class B Common Stock. In
addition, all 100 shares of common stock previously held by Parent were
converted into 95,688,083 shares of Class B Common Stock. The Class A Common
Stock and Class B Common Stock are identical in all respects, except holders of
Class A Common Stock are entitled to one vote per share while holders of Class B
Common Stock are entitled to five votes per share on all matters submitted to a
vote of the stockholders, including the election of directors.
8. INCOME TAXES
Income taxes have been provided for based upon the Company's
anticipated annual effective income tax rate.
9. STOCK OPTIONS
In July 1998, the Company adopted the 1998 Stock Incentive Plan ("Stock
Incentive Plan") to provide for grants of options to purchase shares of Class A
Common Stock to employees, non-employee directors and independent contractors of
the Company who are eligible to participate in the Stock Incentive Plan. The
Company has reserved 20,000,000 shares of Class A Common Stock for issuance
pursuant to options granted under the Stock Incentive Plan and Substitute
Options (as defined below). As of June 30, 1998, no options were outstanding
under the Stock Incentive Plan.
Following the Distribution the Company intends to issue substitute
options under the Stock Incentive Plan (collectively, "Substitute Options") in
substitution for grants under Parent's stock option plans as of the date of the
Distribution (collectively, "Parent Stock Options") held by individuals employed
by the Company as of the date of the Distribution (the "Company Employees").
Such Substitute Options will provide for the purchase of a number of shares of
Class A Common Stock determined based on a ratio of average trading prices of
Parent Common Stock and Class A Common Stock immediately prior to the
Distribution. It is not possible to specify how many shares of Class A Common
Stock will be subject to Substitute Options. It is expected that some Parent
Stock Options consisting of stock options held by the Company Employees will be
exercised and that some will be forfeited, and that additional Parent Stock
Options will be granted, prior to the date of the Distribution. In addition, the
remaining balance of unexercised Parent Stock Options will be converted into
Substitute Options by reference to the ratio described above, which will not be
known until the time of the Distribution.
10. EARNINGS PER SHARE
Earnings per share is computed by dividing net income by the number of
common shares outstanding during the period after giving retroactive effect to
the recapitalization of the 100 shares of common stock held by Parent into
95,688,083 shares of Class B Common Stock. Diluted earnings per share equals
basic earnings per share for all periods presented since the Company had no
common share equivalents outstanding during the periods presented. As described
in Note 1, Basis of Presentation, following the Initial Public Offering, the
Company had approximately 175.4 million shares of Class A and Class B Common
Stock outstanding.
12
13
REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11. RELATED PARTY TRANSACTIONS
Parent's corporate general and administrative costs not specifically
attributable to its operating subsidiaries have been allocated to the Company
based upon the ratio of the Company's invested capital to Parent's consolidated
invested capital. Such allocations are included in the Company's selling,
general and administrative costs and were approximately $3.7 million and $2.5
million for the three months ended June 30, 1998 and 1997, respectively, and
$7.5 million and $4.6 million for the six months ended June 30, 1998 and 1997,
respectively. These amounts approximate management's estimate of Parent's
corporate general and administrative costs required to support the Company's
operations. Management believes that the amounts allocated to the Company are
reasonable and are no less favorable to the Company than the expenses the
Company would incur to obtain such services on its own or from unaffiliated
third parties.
In June 1998, the Company and Parent entered into a services agreement
(the "Services Agreement") pursuant to which Parent will provide to the Company
certain accounting, auditing, cash management, corporate communications,
corporate development, financial and treasury, human resources and benefit plan
administration, insurance and risk management, legal, purchasing and tax
services. In exchange for the provision of such services, fees will be payable
by the Company to Parent in the amount of $1.25 million per month, subject to
review and adjustment as the Company reduces the amount of services it obtains
from Parent from time to time. The Company believes that the fees for services
that will or may be provided under the Services Agreement will be no less
favorable to the Company than could be obtained by the Company internally or
from unaffiliated third parties.
The Company participates in Parent's combined risk arrangement programs
for property, casualty and general liability insurance. The Company was charged
for annual premiums of $9.7 million and $7.6 million during the six months ended
June 30, 1998 and 1997, respectively. The Company's liability for unpaid and
incurred but not reported claims under the Parent's combined risk management
programs was estimated to be approximately $17.8 million and $12.6 million at
June 30, 1998 and December 31, 1997, respectively, and is included in other
current liabilities in the accompanying unaudited condensed consolidated balance
sheets.
12. LEGAL MATTERS
The Company is a party to various general legal proceedings which have
arisen in the ordinary course of business. While the results of these matters
cannot be predicted with certainty, the Company believes that losses, if any,
resulting from the ultimate resolution of these matters will not have a material
adverse effect on the Company's consolidated results of operations, cash flows
or financial position. However, unfavorable resolution could affect the
consolidated results of operations or cash flows for the quarterly periods in
which they are resolved.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
unaudited condensed consolidated financial statements and notes thereto included
under Item 1. In addition, reference should be made to the Company's audited
consolidated financial statements and notes thereto and related Management's
Discussion and Analysis of Financial Condition and Results of Operations. As of
June 30, 1998, the Company was a wholly owned subsidiary of Republic Industries,
Inc. (together with its subsidiaries, the "Parent"). All references to
historical share and per share data of the Company's common stock, par value
$.01 per share ("Common Stock" which is designated when issued as either "Class
A Common Stock" or "Class B Common Stock") have been retroactively adjusted for
the recapitalization of Parent's 100 shares of common stock previously
outstanding into 95,688,083 shares of Class B Common Stock in July 1998, as more
fully described in Note 7, Shareholder's Equity, of notes to unaudited condensed
consolidated financial statements.
In May 1998, Parent announced its intention to separate the Company
from the Parent (the "Separation"). Parent also announced its intention to
distribute its remaining shares of Common Stock in the Company as of the
distribution date to Parent's shareholders in 1999, subject to certain
conditions and consents (the "Distribution"). The Company and Parent have
entered into certain agreements providing for the Separation and governing
various interim and ongoing relationships between the companies. The
Distribution is contingent, in part, on Parent obtaining a private letter ruling
from the Internal Revenue Service to the effect that, among other things, the
Distribution will qualify as a tax-free distribution for federal income tax
purposes under Section 355 of the Internal Revenue Code of 1986, as amended, in
form and substance satisfactory to Parent.
In July 1998, the Company completed an initial public offering of
approximately 63.2 million shares of its Class A Common Stock ("Initial Public
Offering") resulting in net proceeds of approximately $1.4 billion. In addition,
in July 1998 the Company repaid in full all remaining amounts due to Parent
through the issuance of Class A shares of Common Stock and through proceeds from
the Initial Public Offering. Following the Initial Public Offering and the
repayment of amounts due to Parent, Parent owned approximately 63.9% of the
outstanding shares of Class A and Class B Common Stock which represents
approximately 88.7% of the combined voting power of all of the outstanding
shares of the Class A and Class B Common Stock. Following the Initial Public
Offering and the repayment of amounts due to Parent, the Company had the
following shares of Common Stock outstanding:
CLASS A CLASS B TOTAL
------- ------- -------
Recapitalization of Parent's common stock .... -- 95.7 95.7
Repayment of amounts due to Parent ........... 16.5 -- 16.5
Initial Public Offering ...................... 63.2 -- 63.2
------ ------- -------
79.7 95.7 175.4
====== ======= =======
The accompanying unaudited condensed consolidated financial statements
reflect the accounts of the Company as a subsidiary of Parent subject to
corporate general and administrative expense allocations as described in Note
11, Related Party Transactions. Such information does not necessarily reflect
the financial position or results of operations of the Company as a separate,
stand-alone entity.
BUSINESS COMBINATIONS
The Company makes decisions to acquire or invest in businesses based on
financial and strategic considerations.
14
15
Parent has acquired various businesses operating in the solid waste
services industry using cash and/or shares of its common stock ("Parent Common
Stock"). These businesses were contributed by Parent to the Company subsequent
to their acquisition. The Company has applied the same accounting method used by
Parent in accounting for business combinations.
Businesses acquired through June 30, 1998 and accounted for under the
purchase method of accounting are included in the unaudited condensed
consolidated financial statements from the date of acquisition.
During the six months ended June 30, 1998, Parent acquired various
solid waste services businesses which were contributed to the Company. The
aggregate purchase price paid by Parent in transactions accounted for under the
purchase method of accounting was $128.3 million consisting of $60.3 million in
cash and 3.4 million shares of Parent Common Stock valued at $68.0 million.
CONSOLIDATED RESULTS OF OPERATIONS
Net income was $25.1 million or $.26 per share for the three months
ended June 30, 1998 as compared to $25.9 million or $.27 per share for the three
months ended June 30, 1997. Net income was $59.9 million or $.63 per share for
the six months ended June 30, 1998 as compared to $49.1 million or $.51 per
share for the six months ended June 30, 1997.
The following table sets forth revenue and cost of operations, selling,
general and administrative expenses, Parent overhead allocations and operating
income with percentages of revenue for the periods indicated (in millions):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------------ ------------------------------------------
1998 % 1997 % 1998 % 1997 %
-------- ------- -------- ------- -------- ------- -------- -------
Revenue ...................... $ 335.9 100.0 $ 283.7 100.0 $ 636.7 100.0 $ 546.9 100.0
Expenses:
Cost of operations ......... 231.7 69.0 210.8 74.3 441.4 69.3 401.1 73.3
Selling, general
and administrative
expenses ............... 29.8 8.9 23.3 8.2 58.1 9.1 53.1 9.7
Parent overhead
allocations ............ 3.7 1.1 2.5 .9 7.5 1.2 4.6 .9
-------- ------- -------- ------- -------- ------- -------- -------
Operating Income ............. $ 70.7 21.0 $ 47.1 16.6 $ 129.7 20.4 $ 88.1 16.1
======== ======= ======== ======= ======== ======= ======== =======
Revenue was $335.9 million and $283.7 million for the three months
ended June 30, 1998 and 1997, respectively, an increase of 18%. Acquisitions
accounted for 8% of the increase, price and primarily volume accounted for 5% of
the increase and "tuck-in" acquisitions accounted for 5% of the increase.
Revenue was $636.7 million and $546.9 million for the six months ended June 30,
1998 and 1997, respectively, an increase of 16%. Acquisitions accounted for 6%
of the increase, price and primarily volume accounted for 5% of the increase and
"tuck-in" acquisitions accounted for 5% of the increase.
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All of the Company's revenue sources showed increases in aggregate
dollar amounts for the three and six months ended June 30, 1998 versus the
comparable 1997 periods. The following table reflects total revenue of the
Company by revenue source excluding intercompany disposal revenue:
THREE MONTHS SIX MONTHS
ENDED JUNE 30, INCREASE ENDED JUNE 30, INCREASE
-------------------- ----------------- -------------------- -----------------
1998 1997 $ % 1998 1997 $ %
-------- -------- ------- ------ -------- -------- ------- ------
Collection .............. $ 262.5 $ 223.8 $ 38.7 17.3 $ 502.3 $ 428.2 $ 74.1 17.3
Transfer and
disposal ............ 31.9 31.5 .4 1.3 62.3 61.3 1.0 1.6
Sale of recycling
materials ........... 11.4 10.7 .7 6.5 23.7 20.6 3.1 15.0
Other ................... 30.1 17.7 12.4 70.1 48.4 36.8 11.6 31.5
-------- -------- ------- -------- -------- -------
Total Revenue .... $ 335.9 $ 283.7 $ 52.2 18.4 $ 636.7 $ 546.9 $ 89.8 16.4
======== ======== ======= ======== ======== =======
Cost of operations was $231.7 million and $441.4 million for the three
and six months ended June 30, 1998, respectively, versus $210.8 million and
$401.1 million for the comparable 1997 periods. The increases in aggregate
dollars are primarily due to acquisitions. Cost of operations as a percentage of
revenue was 69.0% and 69.3% for the three and six months ended June 30, 1998,
respectively, versus 74.3% and 73.3% for the comparable 1997 periods. The
decreases in such costs as percentages of revenue are primarily a result of
improved operating efficiencies.
Selling, general and administrative expenses were $29.8 million and
$58.1 million for the three and six months ended June 30, 1998, respectively,
versus $23.3 million and $53.1 million for the comparable 1997 periods. Selling,
general and administrative expenses as a percentage of revenue were 8.9% and
9.1% for the three and six months ended June 30, 1998, respectively, versus 8.2%
and 9.7% for the comparable 1997 periods. The increases in aggregate dollars are
primarily due to acquisitions.
PARENT OVERHEAD ALLOCATIONS
Parent overhead allocations include allocations of general and
administrative costs not specifically attributable to its operating
subsidiaries. Such allocations are based upon the ratio of the Company's
invested capital to Parent's consolidated invested capital and were $3.7 million
and $7.5 million for the three and six months ended June 30, 1998, respectively,
as compared to $2.5 million and $4.6 million for comparable 1997 periods. These
allocations approximate management's estimate of Parent's corporate overhead
required to support the Company's operations. Management believes that the
amounts allocated to the Company are reasonable and are no less favorable to the
Company than the expenses the Company would incur to obtain such services on its
own or from unaffiliated third parties.
In June 1998, the Company and Parent entered into a services agreement
(the "Services Agreement") pursuant to which Parent will provide certain
services to the Company for a fee of $1.25 million per month. See Note 11,
Related Party Transactions, of notes to unaudited condensed consolidated
financial statements for discussion of the Services Agreement.
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INTEREST EXPENSE
Interest expense was incurred primarily on amounts due to Parent.
Interest expense was $31.9 million and $37.3 million for three and six months
ended June 30, 1998, respectively, as compared to $6.8 million and $14.4 for the
comparable 1997 periods. The increases in interest expense for the three and six
months ended June 30, 1998 versus the comparable 1997 periods are attributable
to interest on the amounts due to Parent. All amounts due to Parent were repaid
in full in July 1998 through the issuance of shares of Class A Common Stock and
proceeds from the Initial Public Offering.
INCOME TAXES
The provision for income taxes was $14.1 million and $33.7 million for
the three and six months ended June 30, 1998, respectively, as compared to $14.6
million and $27.8 million for the comparable 1997 periods. Income taxes have
been provided based upon the Company's anticipated annual effective tax rate.
Following the Initial Public Offering, the Company will no longer be
included in the Parent's consolidated federal income tax return.
ENVIRONMENTAL AND LANDFILL MATTERS
The Company provides for accrued environmental and landfill costs which
include landfill site closure and post-closure costs. Landfill site closure and
post-closure costs include estimated costs to be incurred for final closure of
the landfills and estimated costs for providing required post-closure monitoring
and maintenance of landfills. These costs are accrued based on consumed
airspace. The Company estimates its future cost requirements for closure and
post-closure monitoring and maintenance for its solid waste facilities based on
its interpretation of the technical standards of the Environmental Protection
Agency's Subtitle D regulations. These estimates do not take into account
discounts for the present value of such total estimated costs. Engineering
reviews of the future cost requirements for closure and post-closure monitoring
and maintenance for the Company's operating landfills are performed on an annual
basis. Such reviews provide the basis upon which the Company estimates future
costs and revises the related accruals. Changes in these estimates primarily
relate to permit modifications, inflation and changes in regulations, all of
which are taken into consideration annually.
The current and long-term portion of accrued closure and post-closure
costs associated with landfills are included in other current liabilities and
accrued environmental and landfill costs, respectively, in the Company's
unaudited condensed consolidated balance sheets. The increase in such accruals
resulted from the normal accrual of closure and post-closure costs based on
airspace consumed plus additional costs associated with new landfills acquired
and internally developed during the period.
Costs related to environmental remediation activities are accrued by
the Company through a charge to income in the period such liabilities become
probable and can be reasonably estimated.
FINANCIAL CONDITION
At June 30, 1998, the Company had $17.1 million of unrestricted cash.
As previously discussed, in July 1998, the Company completed the
Initial Public Offering resulting in net proceeds of approximately $1.4 billion.
In July 1998, the Company repaid in full all remaining amounts due to Parent
through the issuance of shares of Class A Common Stock and through proceeds from
the Initial Public Offering. Following the Initial Public Offering, the Company
had total debt outstanding and shareholders' equity of approximately $73.8
million and $1.2 billion, respectively.
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18
Prior to the Initial Public Offering, the Company's needs for working
capital and capital for general corporate purposes, including acquisitions, had
been satisfied pursuant to Parent's corporate-wide cash management policies.
Following the Initial Public Offering, the Company will be financed autonomously
and Parent will no longer provide funds to finance the Company's operations or
acquisitions. The Company's operating cash flow will be retained by the Company
subsequent to the Initial Public Offering to finance its working capital,
acquisition and other requirements. Additionally, in July 1998, the Company
entered into a $1.0 billion unsecured revolving credit facility with a group of
banks. $500.0 million of the facility has a term of 364 days and the remaining
$500.0 million has a term of 5 years. Borrowings under the facility bear
interest at LIBOR based rates. Proceeds from the facility will be used to
satisfy future working capital requirements, capital expenditures and
acquisitions.
The Company believes that it has sufficient financial resources
available to meet its anticipated capital requirements and obligations as they
come due.
CASH FLOWS
Cash and cash equivalents increased by $17.1 million and $24.9 million
during the six months ended June 30, 1998 and 1997, respectively. The major
components of these changes are discussed below.
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities was $140.6 million and $129.7
million during the six months ended June 30, 1998 and 1997, respectively. The
increase is due to expansion of the Company's business.
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows from investing activities consist primarily of cash used for
capital additions. Capital additions were $71.1 million and $68.3 million during
the six months ended June 30, 1998 and 1997, respectively.
The Company believes capital expenditures will increase due to
expansion of the Company's business. In addition, following the Initial Public
Offering, the Company expects to use primarily cash for business acquisitions.
The Company intends to finance capital expenditures and acquisitions through
cash on hand, cash flow from operations, the Company's $1.0 billion revolving
credit facility and other financings.
CASH FLOWS FROM FINANCING ACTIVITIES
Cash flows from financing activities during the six months ended June
30, 1998 and 1997 included commercial bank and affiliate borrowings and
repayments of debt. Proceeds from bank and affiliate borrowings were used to
fund capital additions, repay debt and expand the Company's business during the
periods.
SEASONALITY
The Company's operations can be adversely affected by periods of
inclement weather which could delay the collection and disposal of waste, reduce
the volume of waste generated or delay the construction or expansion of the
Company's landfill sites and other facilities.
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YEAR 2000 SYSTEMS COSTS
The Company utilizes software and related technologies that may be
affected by the date change in the year 2000 ("Year 2000"). The Company is in
the process of evaluating the full scope and related costs to ensure that the
Company's systems continue to meet its internal needs and those of its
customers. The majority of the Company's information systems are supported by
third party vendors who are responsible for system modifications to address the
Year 2000 issue. Anticipated costs for system modifications will be expensed as
incurred and are not expected to have a material impact on the Company's
consolidated results of operations. However, the Company cannot measure the
impact that the Year 2000 issue will have on its vendors, suppliers, customers
and other parties with which it conducts business.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
requires computer software costs associated with internal use software to be
expensed as incurred until certain capitalization criteria are met. The Company
will adopt SOP 98-1 beginning January 1, 1999. Adoption of this statement will
not have a material impact on the Company's consolidated financial position or
results of operations.
In April 1998, the AICPA issued Statement of Position 98-5, "Reporting
on the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires all costs
associated with pre-opening, pre-operating and organization activities to be
expensed as incurred. The Company's accounting policies conform with the
requirements of SOP 98-5, therefore adoption of this statement will not impact
the Company's consolidated financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. SFAS 133 cannot be applied retroactively. The Company will adopt SFAS 133
beginning January 1, 2000. Adoption of this statement is not expected to have a
material impact on the Company's consolidated financial position or results of
operations.
FORWARD-LOOKING STATEMENTS
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 by such forward-looking statements. Such factors include, among other
things, competition in the solid waste industry; dependence on acquisitions for
growth; compliance with environmental regulations; dependence on Parent for
certain services; 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 Company's
dependence on key personnel; general economic conditions; dependence on large,
long-term collection contracts; and other factors contained in the Company's
filings with the Securities and Exchange Commission.
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20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Subsequent to the repayment of all remaining amounts due to Parent in
July 1998, the Company's market sensitive financial instruments consist
primarily of variable rate debt that is not material to the Company's
consolidated financial position. Therefore, management believes the Company does
not have material exposure to market risk.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
SALES OF UNREGISTERED SECURITIES. On July 1, 1998, the Company issued 16,474,416
shares of Class A Common Stock to subsidiaries of Parent in satisfaction of an
aggregate of approximately $395.4 million of intercompany payables and amounts
due to such subsidiaries, which amounts were included in amounts due to Parent
in the Company's unaudited condensed consolidated financial statements. The
issuance of the Class A Common Stock was made pursuant to the exemption from the
registration requirements provided by Section 4(2) of the Securities Act of
1933, as amended.
USE OF PROCEEDS FROM SALES OF REGISTERED SECURITIES. On July 7, 1998, the
Company completed an initial public offering of 63,250,000 shares of its Class A
Common Stock, $0.01 par value per share (the "Offering"). The shares of Class A
Common Stock sold in the Offering were registered under the Securities Act of
1933, as amended, on a Registration Statement on Form S-1 (Commission
Registration No. 333-52505), that was declared effective by the Securities and
Exchange Commission ("SEC") on June 30, 1998. The managing underwriters in the
Offering were Merrill Lynch & Co., Deutsche Bank Securities and Donaldson,
Lufkin & Jenrette Securities Corporation (the "U.S. Underwriters") as to
50,600,000 shares offered and sold in the United States and Canada, and Merrill
Lynch International, Deutsche Bank and Donaldson, Lufkin & Jenrette
International (the "International Underwriters," and together with the U.S.
Underwriters, the "Underwriters") as to 12,650,000 shares offered and sold
outside the United States and Canada. The Offering was completed after all of
the 63,250,000 shares of Class A Common Stock which were registered, including
8,250,000 shares sold pursuant to the exercise by the Underwriters of all of
their options to cover over-allotments, were sold at a price of $24.00 per
share. The aggregate price of the Offering amount registered and sold for the
Company's account was $1,518,000,000, including an aggregate of $75,900,000 in
underwriting discounts to the Underwriters. The following table sets forth an
estimate of all expenses incurred in connection with the Offering, other than
underwriting discounts, all of which amounts are estimated except for the fees
of the SEC, the National Association of Securities Dealers, Inc. ("NASD") and
the New York Stock Exchange:
SEC registration fee................................. $ 457,250
NASD filing fee...................................... 30,500
New York Stock Exchange original listing fee......... 245,600
Accounting fees and expenses......................... 3,000,000
Legal fees and expenses.............................. 2,400,000
Printing and engraving expenses...................... 1,150,000
Miscellaneous fees and expenses...................... 216,650
----------
Total................................................ $7,500,000
==========
After deducting underwriting discounts and estimated offering expenses described
above, on July 7, 1998,
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the Company received net proceeds from the Offering of approximately
$1,434,600,000. On July 7, 1998, the Company used all of the net proceeds to
prepay $1,434,600,000 of certain notes payable to Parent, as described in the
Registration Statement. None of the net proceeds from the Offering were paid
directly or indirectly to any directors or officers of the Company or their
associates, to persons owning 10 percent or more of any class of equity
securities of the Company, or to affiliates of the Company, except that Parent
owns approximately 63.9% of the total outstanding shares of Class A Common Stock
and Class B Common Stock of the Company and Parent is an affiliate of the
Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS:
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Certificate of Incorporation of Republic
Services, Inc.
3.2 Amended and Restated Bylaws of Republic Services, Inc.
4.1 Long Term Credit Agreement dated as of July 10, 1998
among Republic Services, Inc., Bank of America National Trust
and Savings Association, as Administrative Agent, and the
several financial institutions party thereto.
10.1 Separation and Distribution Agreement dated as of June 30,
1998 by and between Republic Services, Inc. and Republic
Industries, Inc.
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10.2 Employee Benefits Agreement dated as of June 30, 1998 by and
between Republic Services, Inc. and Republic Industries, Inc.
10.3 Services Agreement dated as of June 30, 1998 by and between
Republic Services, Inc. and Republic Industries, Inc.
10.4 Tax Indemnification and Allocation Agreement dated as of
June 30, 1998 by and between Republic Services, Inc. and
Republic Industries, Inc.
10.5 1998 Stock Incentive Plan (incorporated by reference to
Exhibit 10.5 of the Company's Registration Statement on Form
S-1/A filed on June 29, 1998, Registration No. 333-52505).
27.1 Financial Data Schedule for the Six Months Ended June 30, 1998
(for SEC use only)
27.2 Financial Data Schedule for the Six Months Ended June 30, 1997
(for SEC use only)
(b) REPORTS ON FORM 8-K:
None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant, Republic Services, Inc., has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
REPUBLIC SERVICES, INC.
By: /s/ Tod C. Holmess
----------------------------------
Tod C. Holmes
CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING OFFICER)
Date: August 13, 1998
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