EX-99.5 8 g19668exv99w5.htm EX-99.5 EX-99.5
Exhibit 99.5
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., the Combined Financial Statements of Commercial Clean-up Enterprises, Inc. and We Haul of South Florida, Inc. (collectively “Commercial Clean-up”) and the Financial Statements of RIP, Inc. (the “RIP Landfill”). 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 Operation” 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, 2008, filed on October 23, 2008. These Unaudited Pro Forma Condensed Consolidated Financial Statements should also be read with the Combined Financial Statements of Commercial Clean-up and the Financial Statements of the RIP Landfill, which are included elsewhere in this filing.
     In December 2008, we acquired certain assets of Commercial Clean-up, a construction and demolition hauling operation in Fort Myers and Naples, Florida, for a total purchase price of $6.1 million, of which $1.6 million is deferred and payable as we collect waste volumes from within the counties of Charlotte, Lee and Collier, Florida.
     In December 2008, we acquired the RIP Landfill, a construction and demolition waste landfill in Citrus Country, Florida, for an aggregate purchase price of $7.7 million. Should the site be permitted as a Class I landfill, Class III landfill, transfer station or a construction and demolition operation, the sellers are entitled to future royalties at varied rates per ton based on the volume and type of waste deposited at the site.
     The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2008 and for the year ended December 31, 2007 have been prepared on a basis to reflect the following events as if each event occurred as of January 1, 2007:
  •   Acquisition of Commercial Clean-up and the RIP Landfill.
 
  •   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, 2008 has been prepared on a basis to reflect the acquisition of Commercial Clean-up and the RIP Landfill as if these acquisitions had occurred as of September 30, 2008.
     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.

 

 

WASTE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
For the Year Ended December 31, 2007

 
                                         
                                         
            Commercial     RIP                  
    Actual     Clean-up     Landfill     Adjustments     Pro Forma  
Revenue
   $ 461,447     $ 8,043     $ 508     $ (2,210 ) (a)   $ 467,788  
Operating and other expenses:
                                        
Cost of operations (exclusive of depreciation depletion and amortization)
     301,573       5,632       317       (2,210 ) (a)     305,312  
Selling, general and administrative expense (exclusive of depreciation depletion and amortization)
     64,239       2,115       181       —       66,535  
Depreciation, depletion and amortization
     54,891       1,045       47       27  (b)     56,010  
Foreign exchange gain and other
     (69 )     (129 )     (69 )     —       (267 )
 
                              
Income (loss) from operations
     40,813       (620 )     32       (27 )     40,198  
Interest expense
     40,679       296       —       (296 ) (c)     41,410  
 
                             731   (c)        
 
                              
Income (loss) from continuing operations before income taxes
     134       (916 )     32       (462 )     (1,212 )
Income tax provision
     14,437       —       —       40   (d)     14,477  
 
                              
Net income (loss) from continuing operations
                                        
 
   $ (14,303 )   $ (916 )   $ 32     $ (502 )   $ (15,689 )
 
                              
Basic and diluted loss per share — continuing operations
   $ (0.31 )                           $ (0.34 )
 
                                    
Weighted average common shares outstanding — basic and diluted
     46,007                               46,007  
 
                                    

 

WASTE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
For the Nine Months Ended September 30, 2008
                                         
                                         
            Commercial     RIP                  
    Actual     Clean-up     Landfill     Adjustments     Pro Forma  
Revenue
   $ 370,635     $ 4,031     $ 151     $ (1,613 ) (a)   $ 373,204  
Operating and other expenses:
                                        
Cost of operations (exclusive of depreciation depletion and amortization)
     242,661       2,744       183       (1,613 ) (a)     243,975  
Selling, general and administrative expense (exclusive of depreciation depletion and amortization)
     47,943       1,271       103       —       49,317  
Depreciation, depletion and amortization
     34,826       655       21       20  (b)     35,522  
Foreign exchange gain and other
     (322 )     (48 )     (5 )     —       (375 )
 
                              
Income (loss) from operations
     45,527       (591 )     (151 )     (20 )     44,765  
Interest expense
     25,770       129       —       (129 ) (c)     26,172  
 
                             402   (c)        
 
                              
Income (loss) from continuing operations before income taxes
     19,757       (720 )     (151 )     (293 )     18,593  
Income tax provision
     6,892       —       —       30   (d)     6,922  
 
                              
Net income (loss) from continuing operations
   $ 12,865     $ (720 )   $ (151 )   $ (323 )   $ 11,671  
 
                              
Basic and diluted earnings per share — continuing operations
   $ 0.28                             $ 0.25  
 
                                    
Weighted average common shares outstanding:
                                        
Basic
     46,076                               46,076  
 
                                    
Diluted
     46,085                               46,085  
 
                                    

 

WASTE SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
As of September 30, 2008
                                         
                                         
                                         
            Commercial     RIP                  
    Actual     Clean-up     Landfill     Adjustments     Pro Forma  
ASSETS
                                        
Current assets:
                                        
 
                                        
Cash and cash equivalents
   $ 40,995     $ 31     $ 96     $ (9,611 ) (e)   $ 31,384  
 
                             (127 ) (f)        
 
                                        
Accounts receivable
     62,281       406       —       (126 ) (e)     62,155  
 
                             (406 ) (f)        
 
                                        
Prepaid expenses and other current assets
     7,375       —       34       1   (e)     7,376  
 
                             (34 ) (f)        
 
                              
 
                                        
Total current assets
     110,651       437       130       (10,303 )     100,915  
 
                                        
Property and equipment, net
     194,742       4,811       141       (318 ) (e)     199,173  
 
                             (203 ) (f)        
 
                                        
Landfill sites, net
     190,108       —       2,028       6,849   (e)     198,985  
Goodwill and other intangible assets, net
     385,420       —       —       1,642   (e)     387,062  
Other assets
     19,562       47       —       (2,400 ) (e)     17,162  
 
                             (47 ) (f)        
 
                              
 
                                        
Total assets
   $ 900,483     $ 5,295     $ 2,299     $ (4,780 )   $ 903,297  
 
                              
 
                                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                        
Current liabilities:
                                        
Accounts payable
   $ 22,353     $ 353     $ 6     $ (126 ) (e)   $ 22,353  
 
                             (233 ) (f)        
 
                                        
Accrued expenses and other current liabilities
     70,437       101       41       (130 ) (e,f)     72,091  
 
                             1,642   (e)        
 
                                        
Notes payable to shareholders
     —       1,236       —       (1,236 ) (f)     —  
Short-term financing and current portion of
long-term debt
     1,906       593       —       (593 ) (f)     1,906  
 
                              
Total current liabilities
     94,696       2,283       47       (676 )     96,350  
Long-term debt
     399,110       1,584       —       (1,584 ) (f)     399,110  
Deferred income taxes, accrued closure, post closure and other obligations
    48,435       —       1,159       1   (e)     49,595  
 
                              
 
                                        
Total liabilities
     542,241       3,867       1,206       (2,259 )     545,055  
 
                              
 
                                        
Shareholders’ equity:
                                        
Common stock
     439       10       —       (10 ) (f)     439  
Additional paid-in capital
     513,131       496       3,545       (4,041 ) (f)     513,131  
Accumulated other comprehensive income
     50,711       —       —       —       50,711  
Accumulated deficit
     (206,039 )     922       (2,452 )     1,530   (f)     (206,039 )
 
                              
 
                                        
Total shareholders’ equity
     358,242       1,428       1,093       (2,521 )     358,242  
 
                              
 
                                        
Total liabilities and shareholders’ equity
   $ 900,483     $ 5,295     $ 2,299     $ (4,780 )   $ 903,297  
 
                              

 

 

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except per share data)
     The following table reflects the preliminary allocation of purchase price based upon a preliminary estimate of the fair value of assets being acquired and liabilities being assumed by us as follows:
                         
    Commercial                  
    Clean-up     RIP Landfill     Total  
Purchase price:
                        
Cash paid and other consideration
   $ 4,413     $ 7,724     $ 12,137  
 
                        
Deferred purchase price
     1,642       —       1,642  
 
                  
Total purchase price
     6,055       7,724       13,779  
 
                  
Allocated as follows:
                        
Working capital assumed:
                        
Prepaid expenses and other current assets
     1       —       1  
Accrued expenses and other current liabilities
     (12 )     —       (12 )
 
                  
Net working capital
     (11 )     —       (11 )
Property and equipment
     4,424       7       4,431  
Landfill sites
     —       8,877       8,877  
Accrued closure, post-closure and other obligations assumed
     —       (1,160 )     (1,160 )
 
                  
Net book value of assets acquired and liabilities assumed
     4,413       7,724       12,137  
 
                  
Excess purchase price to be allocated
   $ 1,642     $ —     $ 1,642  
 
                  
Allocated as follows:
                        
Goodwill
   $ 1,506     $ —     $ 1,506  
Other intangible assets
     136       —       136  
 
                  
Total allocated
   $ 1,642     $ —     $ 1,642  
 
                  
     Included in the purchase price for Commercial Clean-up in the above table is the utilization of a $0.5 million receivable due us from Commercial Clean-up at the time the acquisition was consummated.
     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 generally does not exceed one year from the date of consummation of an acquisition. Adjustments to the allocation o f 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 elimination of revenue recognized by us and expense recognized by Commercial Clean-up for disposal costs billed to Commercial Clean-up by us.
 
  b)   Reflects the amortization of intangible assets exclusive of goodwill, based on an estimate of intangible values. These intangible assets include non-competition agreements and are amortized over the life of the expected benefit to be received by such intangibles, which approximates five years. The amortization for the year ended December 31, 2007 and the nine months ended September 30, 2008 is less than $0.1 million.

 

 

  c)   Reflects the elimination of interest expense recognized by Commercial Clean-up for all periods presented as none of the Commercial Clean-up debt was assumed as part of the acquisition. This interest expense totaled $0.3 million and $0.1 million for the year ended December 31, 2007 and the nine months ended September 30, 2008, respectively.

Also reflects interest expense of $0.7 million and $0.4 million for the year ended December 31, 2007 and the nine months ended September 30, 2008, respectively, related to the draw on our credit facility used to fund the acquisitions of Commercial Clean-up and the RIP Landfill. The draw is net of a $0.1 million receivable due us from Commercial Clean-up at September 30, 2008, which was utilized as payment towards the purchase price for Commercial Clean-up. The draw is also net of $2.4 million of acquisition deposits made towards the RIP Landfill acquisition prior to the time this acquisition was consummated. The rates used in the pro forma adjustment for the year ended December 31, 2007 and the nine months ended September 30, 2008 were 7.9% and 5.8%, 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 periods presented.
 
  d)   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.
 
  e)   Reflects the payment of the purchase price for Commercial Clean-up and the RIP Landfill and the preliminary allocation of the purchase price for the estimated of the fair value of assets acquired and liabilities assumed. The payment of the purchase price is net of a $0.1 million receivable due us from Commercial Clean-up at September 30, 2008, which was utilized as payment towards the purchase price for Commercial Clean-up. The payment of the purchase price is also net of $2.4 million of acquisition deposits made towards the RIP Landfill acquisition prior to the time this acquisition was consummated.
 
  f)   Reflects the elimination of assets not acquired and liabilities not assumed as part of the acquisitions of Commercial Clean-up and the RIP Landfill.
     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.