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2002-140
ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS ACCEPTING COMPETITIVE BEST VALUE BIDS AND AWARDING A CONTRACT FOR THE PURCHASE OF RESIDENTIAL CURBSIDE RECYCLING AND PROCESSING SERVICES TO THOSE DENTON RESIDENTIAL SOLID WASTE CUSTOMERS AS DETERMINED BY THE CITY COUNCIL; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (REQUEST FOR BIDS NO. 2832 - RESIDENTIAL CURBSIDE RECYCLING AND PROCESSING SERVICES; AWARDED TO TRINITY WASTE SERVICES.) WHEREAS, the City has heretofore solicited, received and tabulated competitive best value bids, as well as alternate bids, for the purchase of necessary materials, equipment, supplies or services in accordance with the procedures of State law and the City of Denton, Texas ordinances; and WHEREAS, the City Manager or a designated employee of the City with authority, have reviewed and recommended that the herein described bids are the best value bids for the materials, equipment, supplies or services as shown in the "Bid Proposals" submitted therefore based on the selection criteria set forth in the requests for bids; and WHEREAS, the City Council hereby finds the bid of Abitibi Consolidated, Inc. does not meet the minimum qualifications requirements set forth in the request for bids, and is therefore rejected; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipment, supplies or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and conclusions set forth in the preamble of this ordinance are incorporated within the body of the ordinance. SECTION 2. That the numbered option in the following numbered bids for materials, equipment, supplies, or services, shown in the "Bid Proposals" on file in the office of the City Purchasing Agent, is hereby accepted and approved as being the best value bid for such items: BID NUMBER SERVICE VENDOR AMOUNT 2832 Base Bid - Residential Curbside Trinity Waste Services $1.47' Recycling and Processing Services 2832 Recyclables - Payment Schedule** (**City also accepts Bidder's Recyclables - Payment Schedule; City may sell certain recyclables to Bidder fxom time-to-time as specified therein) *Collection of residential curbside recycling and processing services based on one day per week, selected by Bidder; amount shown is per customer, per month; exclusive of City container/contract administration fee. SECTION 3. That by the acceptance and approval of the above numbered items of the submitted bids, the City accepts the offer of the persons submitting the bids for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Bid Invitations, Bid Proposals, and related documents. SECTION 4. That the City Manager is hereby authorized to execute any and all necessary written contracts for the performance of the services in accordance with the bids accepted and approved herein, provided that such contracts are made in accordance with and relating to the items specified in Section 1, which written contract(s) shall be attached hereto; provided that the written contract is in accordance with the above Request to Submit Bids, Bid Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. SECTION 5. That by the acceptance and approval of the above numbered items of the submitted bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved bids or pursuant to a written contract made pursuant thereto as authorized herein. SECTION 6. and approval. That this ordinance shall become effective immediately upon its passage PASSED AND APPROVED this /d~'~ dayof ~ EULINE BROCK, MAYOR ,2002. ATTEST: JENNIFER WALTERS, QITY SECRETARY APPROVED AS TO LEGAL FORM: HERBE~/~ ATTORNEY By: "~ ' '-~ /~ S:\Our Documents\Ordinanees\02XResidenfial Recycling and Processing Bid No, 2832-Ord.doc Page 2 STATE OF TEXAS COUNTY OF DENTON CONTRACT FOR RESIDENTIAL CURBSIDE RECYCLING AND PROCESSING SERVICES THIS CONTRACT is made and entered into as of the 14th day of May, 2002, by and between the City of Denton, Texas, a Texas Municipal Corporation, with its principal offices at 215 East McKinney Street, Denton, Texas 76201 (hereinafter "OWNER"); and Allied Waste Systems, Inc., a Delaware Corporation, d/b/a Trinity Waste Services, with its Division office at 4200 East 14~ Street, Plano, Texas 75074, (hereinafter "RECYCLING PROVIDER"); the parties acting herein by and through their respective duly-authorized representatives and officers: PREAMBLE WHEREAS, the City Council has carefully studied and evaluated the issue of the need for residential curbside recycling and processing services; and the City Council has decided to move forward with the residential recycling program and has instructed the Solid Waste Department to implement such a program utilizing an outside RECYCLING PROVIDER; accordingly the Solid Waste Department Staff has therefore assembled Request for Best Value Bids No. 2832, to provide the City of Denton with Bid Proposals respecting the provision of residential curbside recycling and processing services by outside recycling providers; and WHEREAS, the City has lawfully put the proposal out for bid, and accordingly has solicited, received, reviewed, and evaluated the applicable bids; the City Council has accepted and approved the Bid Proposal of RECYCLING PROVIDER, as determined by recommendation of Staff, following the lawful evaluation and determination of the successful bidder; and WHEREAS, the City Council desires to promote residential curbside recycling and processing services utilizing the services of an outside RECYCLING PROVIDER, within the City of Denton, Texas, and to enjoy and to reap the environmental benefits and other benefits of curbside recycling and processing in several ways; and WHEREAS, the City Council desires to enter into a Contract to engage the services of RECYCLING PROVIDER in order to execute the City's planned residential curbside recycling and processing program; and the RECYCLING PROVIDER is willing to do so, and is willing to enter into the following Contract with the OWNER; and WHEREAS, RECYCLING PROVIDER and OWNER stipulate that they shall be bound by the terms and provisions of the accepted Bid Proposal of RECYCLING PROVIDER and the Request for Best Value Bids No. 2832 (hereafter the "Bid Request') .of the OWNER as to the particulars of the General Scope of Services (Section II of the Bid Request); the particulars of the Cost of Services (Section III of the Bid Request) and the particulars of the General Requirements (Section IV of the Bid Request) provision regarding the recycling and processing services engagement; and that said Bid Proposal and Bid Request documents shall prevail in the event there is any conflict that arises between the parties in interpreting the meaning of this CONTRACT, as it Page 1 of 19 pertains to those three (3) areas solely; NOW THEREFORE WITNESSETH, that in consideration of the terms, conditions, mutual promises, mutual covenants and the mutual agreements herein contained, the parties hereto do hereby AGREE as follows: TERMS AND PROVISIONS ARTICT.F.T. INCORPORATION OF PREAMBLE The RECYCLING PROVIDER and the OWNER hereby agree and stipulate that the recitations and provisions set forth and expressed above in the Preamble to this Contract, are true and correct and are hereby incorporated by reference into this Contract for all purposes. ARTICT.F. Il. EMPLOYMENT OF RECYCLING PROVIDER The OWNER hereby contracts with the RECYCLING PROVIDER, as an independent contractor, and the RECYCLING PROVIDER hereby agrees to perform the services herein in connection with the Project as stated in the Articles to follow. ARTICI.E III. APPLICABLE STANDARDS The RECYCLING PROVIDER shall perform all services provided for hereunder promptly, with diligence, and in accordance with the standards customarily obtained for such services in the State of Texas. The services set forth herein are in connection with the following described project (the "Project"): Providing residential curbside recycling and processing services throughout the City of Denton, Texas as specified in the Bid Proposal and the Request for Best Value Bids No. 2832 for the period beginning on the effective date of this Contract and ending five (5) years thereafter, unless otherwise extended or earlier terminated, as provided for in this Contract. ARTICI .F. IV. SCOPE OF SERVICES The RECYCLING PROVIDER shall perform the following Basic Services in accordance with the Standards provided for in Article III. hereinabove, to wit: To perform all those services that are set forth in the RECYCLING PROVIDER'S "Bid Proposal" (hereafter the "Bid Proposal") under Request for Best Value Bids No. 2832 (~,r~fier the "Re_quest for Bi~ds") to the City of Denton, Texas, signed by /t~l~_ (Name)~ ~-~ (Title)_.z~,_~. of RECYCLING PROVIDER, ,d, ated ~.. (Month/Date)//-/z, 2002; which Bid Proposal is attached hereto as Exhibit "A and is mcorporated herewith by reference. Page 2 of 19 To perform all those services that are set forth in the OWNER'S "Request for Best Value Bids No. 2832 "which is dated March 17, 2002, together with all Addenda which are issued in connection therewith by the OWNER; which "Request For Best Value Bids No. 2832" document is attached hereto as Exhibit "B" and is incorporated herewith by reference. Exhibits "A" and "B" hereto shall govern, in the event that there is any conflict regarding the interpretation of the provisions of the Contract respecting those matters set forth in the Preamble hereto. If there is any conflict that arises between the terms of this Contract and any other provision of Exhibit "A" and/or Exhibit "B," then the terms and conditions of tiffs Contract shall control over the terms and conditions of the attached Exhibits. AR TIC. I ,F, V ACCEPTABLE RECYCLABLE MATERIALS A. The Contractor shall collect the following acceptable recycling materials under this Contract: · All classes of paper (including, but not limited to newspaper; office paper; junk mail; magazines; telephone books; and catalogs); · Corrugated cardboard and chipboard (including, but not limited to cereal boxes); · Aluminum, steel, tin food and beverage cans and containers; · Glass bottles, jugs, and jars (excluding ceramic containers); · Plastic bottles, jugs, and jars; · Such other materials that may be added by the mutual consent of OWNER and RECYCLING PROVIDER. B. The residents of OWNER are not required to pre-crash recycled cans or other recyclable materials. C. The RECYCLING PROVIDER, at any time, may propose that other recyelable materials be included by the OWNER and RECYCLING PROVIDER for residential pickup, in addition to those materials specified in Article V.A. above. ARTICI,F. VI. MATERIALS THAT ARE NOT COLLECTED A. The RECYCLING PROVIDER shall not collect those materials that are not on the acceptable recycling materials list set forth in Article V.A. hereinabove. When RECYCLING PROVIDER does not collect a product set out at a residence, the RECYCLING PROVIDER will provide the'residential recycling customer with a written explanation explaining the reason(s) why RECYCLING PROVIDER did not collect the product. The written explanation shall be in the form of RECYCLING PROVIDER'S "Notice of Non-Collection" and shall be attached either to the fi'ont door of the recycling customer, or alternatively to the recycling container. This form shall specify the nature of the problem or violation, as well as any action necessary to correct the problem or violation. For example: Items set out for collection which would not be collected by RECYCLING Page 3 of 19 PROVIDER would include pizza boxes; plastic furniture; window glass. B. The RECYCLING PROVIDER'S drivers shall record all "Notice of Non-Collection" documents that are delivered to OWNER'S residential recycling customers, as well as any verbal resident communications received by RECYCLING PROVIDER concerning recycling service in a "Driver Communication Summary Log." This Log shall be completed and submitted by RECYCLING PROVIDER to OWNER on a monthly basis. ARTICLE VTT. RECYCLING MATERIALS PERFORMANCE REQUIREMENTS OWNER requires the RECYCLING PROVIDER to collect 100% of acceptable recycling materials (as defined in Article V.A. above) that are properly placed out for collection. RECYCLING PROVIDER shall process at least 95% by weight of the recyclables collected, with no greater than 10% of the collected recyclables being allowed for disposal. RECYCLING PROVIDER shall comply with these three (3) requirements for each calendar month of this Contract. In the event that the market changes for a specific processed material to the point that the material is not marketable for the processing facility processing Denton's recyclables, that specific material shall be excluded fi:om this Article's disposal performance requirements for the period of time that the material has no market value. Processed material which is used as an alternate daily cover ("ADC") in a landfill, will not be considered material disposed of, for purposes of th/s Article, provided that it has been approved through a permit modification from the Texas Natural Resources Conservation Commission ("TNRCC") to use the material as an ADC. RECYCLING PROVIDER shall maintain adequate written records to substantiate monthly compliance with these three (3) requirements. The OWNER may periodically audit the RECYCLING PROVIDER'S compliance with the three (3) requirements of Article VII. The parties agree that a failure of RECYCLING PROVIDER to meet these three (3) requirements shall be an act of default and shall also be grounds for terminating this Contract. ARTICI .E V]]'I. BUYER AUTHORIZATION/RECYCLABLE MATERIALS PROCESSING SITE RECYCLING PROVIDER shall complete, comply with, and provide information to the OWNER as required in the OWNER'S Bid Request, Section 11.5. "Buyer Authorization"; and Section 11.7. "Recycling Materials Processing Site and Information." OWNER acknowledges that RECYCLING PROVIDER has complied with this Article. ARTtCt .F. IX. IMPLEMENTATION AND OPERATIONS PLAN RECYCLING PROVIDER shall complete, comply with, and provide information to the OWNER, as required in the OWNER'S Bid Request, Sections 11.8.1. through 11.8.9. "Implementation and Operations Plan." OWNER acknowledges that RECYCLING PROVIDER has complied with this Article. Page 4 of 19 ARTTO].,~, 'K CURBSIDE COLLECTION METHODOLOGY RECYCLING PROVIDER shall complete, comply with, and provide for all of the requirements stated in OWNER'S Bid Request, Section 11.9.1. through 11.9.12. entitled "Curbside Collection Methodology - Bins, Carts," and shall submit all other required information to OWNER. ARTTO. T .P. XI CONTAINER INVENTORY LEVELS RECYCLING PROVIDER shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Section 11.10.1., "Container Inventory Levels." ARTICLE XII. PROPOSED SERVICE AREA ROUTE PLAN RECYCLING PROVIDER shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Section 11.11., "Proposed Service Area Route Plan." ARTICLF. XIII. HOURS AND DAYS OF COLLECTION RECYCLING PROVIDER shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Section 11.12.1. through 11.12.4., "Hours and Days of Collection." ARTIC]',F, XIV. PUBLIC EDUCATION PLAN OF RECYCLING PROVIDER RECYCLING PROVIDER shall provide and shall agree to fund the annual Public Education Plan as required, and shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Sections II. 14.1 through II. 14.4., "Public Education Plan." ARTIC. I.E XV. RECYCLING PROVIDER'S CUSTOMER SERVICE PLAN A. RECYCLING PROVIDER shall provide OWNER a detailed description of its Customer Service Plan as required by OWNER'S Bid Request, Section II.15.1., "Customer Service Plan." OWNER acknowledges that RECYCLING PROVIDER has pmvided its Customer Service Plan. B. RECYCLING PROVIDER shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Sections 11.15.2. through 11.15.5. These requirements expressly include the "City of Denton Telephone Log" which shall be prepared by RECYCLING PROVIDER and submitted to the OWNER along with each monthly invoice for services rendered under the Contract, as provided in OWNER'S Bid Request, Section 11.15.4. Page 5 of 19 ARTTC. T .F, XVT. MISSED COLLECTIONS OF CURBSIDE RECYCLING RECYCLING PROVIDER shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Sections 11.16.1. through 1I. 16.4., "Missed Collections." ARTIC~I ,F, XrVll. REQUIRED REPORTING REQUIREMENTS BY RECYCLING PROVIDER RECYCLING PROVIDER shall complete end comply with all of the requirements stated in OWNER'S Bid Request, Sections 11.17.1. through 11.17.6., "Reporting." This Article expressly includes all reports, whether monthly, quarterly, annual, or special, referred to in OWNER'S Bid Request. RECYCLING PROVIDER shall submit the required monthly reports to OWNER along with each of its monthly invoices for services rendered, as provided in OWNER'S Bid Request, Section 11.17.2. ARTTCT .F. XVITT. CITY DESIGNATED HOLIDAYS RECYCLING PROVIDER shall comply with all of the requirements stated in OWNER'S Bid Request, Sections 11.18.1. through 1I. 18.3., "City Designated Holidays." ARTICT.F. XTX. INCLEMENT wEATHER DAYS RECYCLING PROVIDER shall comply with all of the requirements stated in OWNER'S Bid Request, Sections 11.19.1 through 11.19.4. "Inclement Weather Days." RECYCLING PROVIDER understends that if no curbside recycling collection service is provided due to inclement weather on a given day or days, then that will accordingly result in a reduction of revenue paid by OWNER to RECYCLING PROVIDER, calculated as specified, in accordence with OWNER'S Bid Request, Section II.19.4. ARTIC, I,E XX. ADDITIONAL SERVICES Any Additional Services to be performed by RECYCLING PROVIDER, if authorized by OWNER, which are not included as basic services in the above-described scope of services, set forth in Article IV above, shall be later agreed-upon by OWNER and the RECYCLING PROVIDER, who shall determine, in writing, and upon City Council approval, the scope of such Additional Services, the amount of compensation for such additional services, and other essential terms pertaining to the provision of such Additional Services by RECYCLING PROVIDER. ARTTCI ,~ ~1 TERM Page 6 of 19 The parties hereto hereby agree that this Contract shall be effective on the 4t~ day of November, 2002, the first date upon which the RECYCLING PROVIDER provides residential recycling collection services under the Contract. This Contract shall remain in effect for a term of five (5) years following its effective date. This Contract may be sooner terminated in accordance with the other provisions of this Contract. ARTICI~F. XXI[ EXTENSIONS OF TERM This Contract may further be renewed for two (2) additional two (2) year renewal terms. Following the initial five (5) year Contract term provided for in Article XXI, and with the agreement of the OWNER and RECYCLING PROVIDER, this Contract may be renewed in writing. There may be two (2) separate renewal terms of two (2) years each. If either party elects to not extend the Contract under the renewal term provision stated in Article XXII herein, the party not wishing to renew the Contract must provide written notice to the other party at least six months in advance of the expiration of the existing Contract term, or applicable renewal term. If either party does not wish to renew the Contract for any reason, then the Contract shall not be extended. Both parties understand that the two (2) renewal terms are optional. This Contract may only be renewed if the parties are not in default at the time of the commencement of the renewal term. The terms of the Contract, if extended, shall remain the same, with the exception of "Compensation," as well as any other provisions to which OWNER and RECYCLING PROVIDER may agree. "Compensation" shall be adjusted by the parties by the index specified in Paragraph 111.1.5. of the Bid Request, in the event of any renewal of this Contract. ARTICT.F. TIME IS OF THE ESSENCE TIME IS OF THE ESSENCE IN THE PERFORMANCE AND COMPLETION OF THIS CONTRACT. RECYCLING PROVIDER shall make all reasonable efforts to complete the services set forth herein as expeditiously as possible and to meet the schedule(s) reasonably established by the OWNER, acting through its Director of Solid Waste or his designee. ARTTCI ,F, X'Xq'V. COMPENSATION A. COMPENSATION TERMS: 1. The RECYCLING PROVIDER shall provide Required Residential Curbside Recycling Services ("Recycling Services") in the City of Denton, Texas. Recycling Services requires that all single family, duplex, triplex, and fourplex residents of the City (Rate Codes SWR and RPT) shall pay OWNER for Recycl'mg Services. OWNER shall provide all customer billing services. 2. The amount of the RECYCLING PROVIDER'S monthly invoice for Recycling Services shall be calculated as follows: Page 7 of 19 · Number of Accounts X the Monthly Unit Rate = Invoice Amount · RECYCLING PROVIDER'S Monthly Unit Rate for the initial term of this Contract is $1.47 per calendar month 3. For purposes of determining RECYCLING PROVIDER'S monthly invoice, the number of accounts shall be determined and provided by the OWNER to the RECYCLING PROVIDER within ten (10) days of the last day of the month for which Recycling Service was provided. The number of accounts shall be the number of active residential solid waste accounts, charged at a Solid Waste residential rate (Rate Codes SWR and RPT) in OWNER'S applicable rate ordinance on the last business day of the calendar month for which service was provided, and is being billed. For example: the number of accounts for calculating the invoice for January shall be the number of accounts at the close of business on the final business day of January. It is further agreed that no monthly adjustments or allowances shall be made for accounts due to residents moving in or out during the month. Also no monthly adjustments or allowances shall be made on accounts written off by OWNER for non-payment. OWNER'S Customer Service Department's count of accounts shall be reduced by the Solid Waste Department's most current list of "Residential Customers Not Receiving Solid Waste Services" on the last day of the calendar month for which service was invoiced. The final figure obtained in this Subparagraph 3, is termed the "Number of Accounts" for purposes of establishing the monthly invoice amount. B. B~LINGANDPAYMENT: 1. OWNER shall pay RECYCLING PROVIDER monthly. RECYCLING PROVIDER shall invoice and shall submit to OWNER along with the billing invoice, all required monthly reports, by twenty (20) calendar days following the month for which RECYCLING SERVICE was provided. OWNER will pay to RECYCLING PROVIDER the mount of the monthly invoice, less all penalties or disputed amounts, within fifteen (15) business days of the OWNER'S receipt of the monthly invoice as well as all required monthly reports. OWNER is under no obligation to pay for a monthly invoice until all of the required monthly reports have been submitted, along with the monthly invoice. 2. OWNER and RECYCLING PROVIDER agree that Recycling Services which are not provided due to inclement weather, will result in reductions of normal monthly ratepayer revenue paid to the OWNER, and will therefore result in lower monthly invoices, and lower amounts of payments from OWNER to RECYCLING PROVIDER. Revenue reductions shall be based upon calculations utilizing the number of normally scheduled pick-up days that RECYCLING PROVIDER would perform Recycling Services during the month, versus the number of actual days that service was provided. For example: Inclement Weather Monthly service days during the month = 18 Actual days service was provided = 17 (due to one inclement weather day) Normal monthly payment per residence to RECYCLING PROVIDER = $1.47 17 days / 18 days = 94% $1.47 x 94% = $1.38 Actual monthly payment per residence to RECYCLING PROVIDER = $1.38 Page 8 of 19 3. OWNER and RECYCLING PROVIDER agree that the Monthly Unit Rate established in this Contract, and utilized in this Article XXIV shall be the rate established, exclusive of any sales tax; exclusive of any future state or federal fees which could possibly be imposed on Recycling Services during the term of this Contract; and exclusive of any local administrative fees for Recycling Services. In the event that a Contract extension is agreed upon the Monthly Unit Rate will adjust one time, commencing with the first year of the Contract extension. C. PAYMENT FOR CONTRACT EXTENSION(S): 1. The Monthly Unit Rate per residence, per month for Recycling Services will increase or decrease for any Contract extension beyond the initial contractual term. The effective date of the new rate will be the first day of the first month of the Contract extension. The new rate shall be effective, and shall remain in effect for the balance of the Contract extension term(s). The Monthly Unit Rate shall be determined by utilizing the "U.S. City Average Consumer Price Index - All Urban Consumers (CPI-U) from the Bureau of Labor Statistics, Southwestern Statistical Summary, Special Index - All Items Less Shelter." The formula for calculation of the new Monthly Unit Rate for periods after the initial Contract term, shall be calculated by using the following stated methodology: CPI Example Calm]lation: CPI for the current period Less CPI for the previous period Index point change 185.00 17000 15.00 Divided by the previous period CPI 170.00 Equals (quotient plus 1.0) 1.088 Initial Contract Monthly Unit Rate = $1.47 (for five years) Example - Contract Extension Monthly Unit Rate = $1.47 x 1.088 = $1.60 (rounded to the nearest penny) For purposes of calculating the new Monthly Unit Rate, OWNER and RECYCLING PROVIDER agree to use the most current month's CPI-U Index data available from six (6) months prior to the end of the initial Contract term (in other words from April 2007 for the first extension of the Contract). This would be the current period CPI-U. The previous period CPI-U will be for the month that is 24 months prior to the "current period" CPI-U (i.e. April 2005). 2. Once determined, the new Monthly Unit Rate shall apply for all renewal term(s) of the Contract. No other materials collection charges are allowed pursuant to this Contract. 3. OWNER and RECYCLING PROVIDER agree that no penalty charges and no interest charges shall be paid on any outstanding invoices or for any disputed invoice amounts. D. ADDITIONAL SERVICES: The provisions of OWNER'S Bid Request, Section ~I.3. shall apply to the Recyclables Payments Schedule listed in this paragraph, for all listed recyclables delivered to RECYCLING PROVIDER by the OWNER or OWNER'S agents, during the term of Page 9 of 19 this Contract. The OWNER may, from time to time, have available recycled materials collected from the City of Denton's drop-off collection sites. The OWNER shall have the option to deliver pre-sorted and commingled recycling materials to the processing facility of the RECYCLING PROVIDER. RECYCLING PROVIDER'S payments to OWNER for recyclables received, processed, and recycled are: OWNIRR '.q Drop-Off Material~: Commingled paper (mixed) OCC #60NP #80NP Office paper Steel Aluminum Flint glass Amber glass Green glass 50% of Average Houston Listing - Waste News 50% of High Side Southwest Listing OCC - OBM 50% of High Side Southwest Listing #6 News - OBM 50% of High Side Southwest Listing #8 News - OBM 50% of Average Houston Listing - Waste News 50% of High Side Houston Listing - Waste News Price sold less $0.05 per pound 25% of Low Side Houston Listing - Waste News 25% of Low Side Houston Listing - Waste News 25% of Low Side Houston Listing - Waste News RECYCLING PROVIDER shall pay over to OWNER the amount due and owing to OWNER for the above listed recyclables received, processed, and recycled on a once monthly basis, and shall include a separate remittance to: "City of Denton, Texas Solid Waste Department," for such payment along with the monthly invoice for Recycling Services and the required monthly reports. RECYCLING PROVIDER agrees to recycle the above materials within sixty (60) days after receipt of same fi'om the OWNER. RECYCLING PROVIDER agrees to maintain an accurate log, open to OWNER'S reasonable inspection, stating how and where the type of material was received; the name of the OWNER'S agent transmitting the material to RECYCLING PROVIDER; the weight of the material processed; where the material was taken by RECYCLING PROVIDER; the date recycled. ARTI(21,F. X'XV RECYCLING PROVIDER PENALTIES RECYCLING PROVIDER shall complete and comply with all of the requirements stated in OWNER'S Bid Request, Section IV.I.1 through IV.1.3. ARTICI .I~ XX'VI. INDEPENDENT CONTRACTOR RECYCLING PROVIDER shall provide services to OWNER as an independent contractor, not as an employee of the OWNER. RECYCLING PROVIDER shall not have or claim any right arising from employee status. Page 10 of 19 A R TI'iTT .E X'XVII OBSERVATION AND REVIEW OF THE WORK The RECYCLING PROVIDER will exercise reasonable care and due diligence in discovering and promptly reporting to the OWNER any defects or deficiencies in the work of RECYCLING PROVIDER. ARTICI.F XXYTFI. iNDEMNITY AGREEMENT The RECYCLING PROVIDER shall indemnify and save and hold harmless the OWNER and its officials, officers, agents, attorneys, employees, and recycling customers of the OWNER, ~om and against any and all liability, claims, demands, damages, losses and expenses, including but not limited to court costs and reasonable attorney fees incurred by the OWNER, and including without limitation damages for bodily and personal injury, death, or property damage, resulting from the negligent acts or omissions of the RECYCLING PROVIDER or its officers, shareholders, agents, attorneys and employees in the execution, operation, or performance of this Contract. Nothing in this Contract shall be construed to create a liability to any person who is not a party to this Contract and nothing herein shall waive any of the party's defenses, both at law or equity, to any claim, cause of action or litigation filed by anyone not a party to this Contract, including the defense of governmental immunity, which defenses are hereby expressly reserved. ARTIC. I.F. XXtX. INSURANCE As soon as is practicable after notification of the bid award, and prior to the signing of this Contract, the RECYCLING PROVIDER shall file with the Purchasing Department of the City, the certificates of insurance as set forth below. During the performance of the curbside recycling and processing services under this Contract, RECYCLING PROVIDER shall also maintain the following insurance, set forth in Article XXX, with an insurance company licensed to do business in the State of Texas by the State Insurance Board or any successor agency thereto, that has a rating with A. M. Best Rate Carders of at least an "A" or above. Further, all deductibles and self-insured retentions, if any, shall be declared in the Bid Proposal. If the OWNER requests, the insurer shall reduce or eliminate such deductibles or self- insured retentions with respect tO the City; or the RECYCLING PROVIDER shall provide a bond guaranteeing the payment of losses and related investigations, claim administration, and defense expenses. Liability policies shall be endorsed to provide that the City of Denton, Texas, its officials, agents, employees, and volunteers are named as additional insured. Such liability policies shall contain a provision that it is primary to any other insurance available to the additional insured with respect to claims covered under the policy and that this insurance applies separately to each insured against whom claim is made or suit is brought. All policies of insurance required to be maintained hereunder shall be endorsed to read: "Said policy shall not be cancelled, non-renewed or materially changed without thirty (30) days advance Page 11 of 19 written notice being given to the OWNER [the City of Denton, Texas] except when the policy is being cancelled for non-payment of premium, in which case ten (10) days advance written notice is required." Should any policy of required insurance be provided under a form of coverage that includes a general annual aggregate limit, pmviding for claims investigation or legal defense costs to be included in the general annual aggregate amount, then RECYCLING PROVIDER shall either double the occurrence limits, or shall obtain "Owner's and Contractor's Protective Liability Insurance." Should any required insurance lapse during the term of this Contract, or any extension thereof, requests for payments made by the RECYCLING PROVIDER originating after such lapse of coverage shall not be processed unless and until OWNER receives satisfactory written evidence of the coverage being reinstated, as required hereunder. In the event the policy or policies of insurance are not reinstated, OWNER may, at its sole option, terminate this Contract, effective on the date of the lapse of coverage. ARTICI,F,, XXX. REQUIRED INSURANCE COVERAGE RECYCLING PROVIDER shall maintain the listed insurance coverage for the benefit of the OWNER as required, and in accordance with Article .XXIX above, which specifically includes the following minimum coverage: General Liability Insurance with combined single limits of not less than $1,000,000 shall be provided and maintained by the RECYCLING PROVIDER. The policy shall be written on an occurrence basis either in a single policy or in a combination of underlying and umbrella or excess policies. In the event that Commercial General Liability Form (ISO Form CG 0001 or other current edition) is used, coverage shall include Coverage A (including the premises; operations; products; completed operations; independent contractors; contractual liability covering this Contract; and broad form property damage coverage) and Coverage B (including personal injury). In the event that Comprehensive General Liability Form (ISO Form GL 0002 Current Edition and ISO Form GL 0404) is used it shall include at a minimum, the following coverage: (1) Bodily Injury and Property Damage Liability for premises, operations, products and completed operations, independent contractors and property damage resulting ~om explosion, collapse, or underground (XCU) exposures; and (2) Broad Form Contractual Liability (preferably by endorsement) covering this Contract; with personal injury liability and broad form property damage liability. Commercial Automobile Liability Insurance with Combined Single Limits (CSL) of not less than $1,000,000 either in a single policy or in a combination of basic and umbrella or excess policies. The policy will include bodily injury and property damage liability arising out of the operation, maintenance and use of all automobiles, tracks, and other mobile equipment used in conjunction with this Contract. C. Worker's Compensation Insurance in accordance with statutory requirements, and in addition to meeting the minimum statutory requirements for issuance of such insurance, shall provide Employer's Liability Insurance with limits of not less than $100,000 for each accident; Page 12 of 19 $100,000 per each employee; and a $500,000 policy limit for occupational disease. The OWNER need not be named as an "Additional Insured," but the insurer shall agree to waive all rights of subrogation against the OWNER, its officials, agents, employees, and volunteers for any work performed for OWNER by RECYCLING PROVIDER. Excess Liability Coverage (or Umbrella Coverage) with a minimum policy limit of $1,000,000, covering in excess of the insurance policies listed in Article XXX.A., XXX.B. and XXX.C., above. ARTIC. T.F. ~7XT PERFORMANCE BOND REQUIRED The RECYCLING PROVIDER shall file with the City of Denton Purchasing Department, as soon as practicable following notification of the bid award, subsequent to City Council approval, and prior to the signing of this Contract, a performance bond in the minimum amount as determined in this Article below. The performance bond shall be in an amount equal to: the product of the Number of Accounts times the Monthly Unit Rate times the Number of Months Remaining in the Contract term (however, not to exceed 24 months in any event), plus ten (10%) percent; such bond to be adjusted one (1) year later, and upon each subsequent annual contract anniversary date thereafter. For purposes of this initial calculation, the number of units to be used is 19,900. The RECYCLING PROVIDER shall be required to keep and maintain at all times, throughout the Contract term and any renewal(s) thereof, a performance bond, in full force and effect. The performance bond is intended to serve as further security held by the OWNER for RECYCLING PROVIDER'S faithful performance of the Contract. RECYCLING PROVIDER shall pay all premiums for the performance bond. A certificate issued by a lawfully-authorized representative of the bonding company, showing that all required premiums have been paid in full, will accompany the bond and any replacement thereof, before its filing with OWNER is effective. The performance bond shall be issued by a duly authorized corporate surety company presently authorized to do business in the State of Texas. Before its filing is effective, the performance bond will require the written approval of the City Attorney of the City of Denton, Texas as to form and content. ARTTCI.F~ X'XXII. WRITTEN GENERAL ASSURANCES RECYCLING PROVIDER represents that all of the statements made by its officers, employees, attomeys, or other representatives regarding the "Written General Assurances" to the Bid Request in Articles .IV.5.1. through IV.5.5.; Article IV.6., "List of Recently Disposed and Pending Recycling Services List"; and Article IV.7., "History of Regulatory Compliance" are each tree and correct and shall constitute representations made to the OWNER to induce OWNER'S acceptance of RECYCLING PROVIDER'S competitive bid. These representations shall expressly survive the bid process and the signing of the Contract. Further, RECYCLING PROVIDER agrees to promptly supplement or to otherwise continuously update these representations promptly in writing, following the signing of this Contract, whenever there is a material change of Page 13 of 19 circumstances, so long as this Contract, or any extension thereof, is in force and effect. ARTICI .F. xxxr[II ACTS OF DEFAULT AND TERMINATION OF CONTRACT A. An act of default shall arise when RECYCLING PROVIDER and/or OWNER shall substantially fail to fulfill its obligations under this Contract. Once an act of default has occurred, the non-defaulting party shall provide the defaulting party with twenty (20) days written notice, specifically describing the default, the curative action necessary, and an opportunity to cure the default. If the default is cured within the time provided in the notice, then no further steps may be taken toward terminating this Contract. If however, the default is not cured within that time, and no extension of time is obtained in writing by the defaulting party, then the non-defaulting party may proceed with termination of the Contract, if that party so elects. B. This Contract may be terminated in whole or in part in the event of either party substantially falling to fulfill its obligations under this Contract. No such termination shall be effected unless: (1) the defaulting party is given written notice of default as set forth in Article XXXIII.A., above and the alleged breach is not cured to the non-defaulfmg party's satisfaction; (2) written notice shall be delivered to the defaulting party at the notice address provided herein in Article XXXVI, by means of certified mall, return receipt requested, of the non-defaulting party's intent to terminate the Contract, and sett'mg forth specifically, the reason(s), and specifying the non-performance (if applicable) of provisions of the Contract, or other reasons, and a period of not less than thirty (30) days to fully cure such failure; and (3) an opportunity for consultation between the parties, to take place in Denton, Texas, prior to any termination of the Contract [the consultation is to take place with/n the thirty (30) days following issuance of the termination letter specified in Article XXXITi.B. hereinabove.] ARTICI ,F. XXXIV. RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval of the work described herein by the OWNER shall not constitute, nor be deemed a release of the responsibility and liability of the RECYCLING PROVIDER, its officers, agents, or employees, for the completeness and competency of their work performed pursuant to this Contract; nor shall such approval by the OWNER be deemed as any assumption of such responsibility by the OWNER for any defect in the work prepared by the RECYCLING PROVIDER, its officers, agents, or employees. ARTICT.F, XXXV ALTERNATE DISPUTE RESOLUTION The parties shall first make efforts to settle any disputes arising under this Contract, except as to disputes specifically otherwise provided for by this Contract (or by the Bid Request and Bid Proposal), by submitting the dispute to arbitration, mediation, or other means of alternate dispute resolution. If the parties should fail to agree on the form of dispute resolution within ten (10) days, then they shall be deemed to have selected mediation. The parties shall diligently pursue and cooperate in achieving a resolution of the problem. Each party shall be responsible for one-half of the reasonable costs of alternate dispute resolution. Page 14 of 19 ARTICI.I~. xx'XVl NOTICES All notices, communications, and reports required or pen:aiRed under this Contract shall be personally delivered to; or telecopied to; or mailed to the respective parties by depositing same in the United States mail at the addresses shown below, postage prepaid, certified mail, return receipt requested, unless otherwise specified herein. To RECYCLING PROVIDER: To OWNER: Trinity Waste Services Attn.: General Manager 4200 East 14~ Street Plano, Texas 75074 Fax: (972) 422-5683 City of Denton, Texas Atto: City Manager 215 East McKinney Street Denton, Texas 76201 Fax: (940) 349-8596 and Shirlene Sitton Recycling Manager City of Denton, Texas 901-A Texas Street Denton, Texas 76209 Fax: (940) 349-7117 All notices under this Contract shall be effective upon their actual receipt by the party to whom such notice is given, or three (3) days after mailing of the notice, whichever event shall first occur. RECYCLING PROVIDER and/or OWNER shall promptly notify the other party in writing of any change of name, business address, representative, fax number, or other identifying information. ARTTC1.1~ XXXVII. ENTIRE AGREEMENT This Contract consisting of nineteen (19) pages and two (2) Exhibits constitutes the complete and final expression of the Contract of the parties and is intended as a complete and exclusive statement of the terms of their agreements, and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communications, understandings, and agreements which may have been made in connection with the subject matter of this Contract; SAVE AND EXCEPT the Bid Proposal and Bid Request (including any and all Addendums issued by OWNER in connection therewith) of the parties as stated herein. ARTICI .F. XXXVIII SEVERAB1LITY If any provision of this Contract is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable fxom the remainder of this Contract, and shall not cause the remainder to be invalid or unenforceable. In such event, the parties shall reform Page 15 of 19 this Contract, to the extent reasonably possible, to replace such stricken provision with a valid and enfomeable provision which comes as close as possible to expressing the original intentions of the parties respecting any such stricken provision. ARTICI,R XXXIX COMPLIANCE WITH LAWS RECYCLING PROVIDER shall comply with all federal, state, local laws, roles, regulations, and ordinances applicable to the work performed by RECYCLING PROVIDER hereunder, expressly including, without limitation, those dealing with employment, personal safety, fire code safety, and environmental issues, as they may now read or as they may hereafter be amended. ARTIC. I.F. DISCRIMINATION PROHIBITED In performing the services required hereunder, RECYCLING PROVIDER shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. AR TTC. I .F. XI3 PERSONNEL RECYCLING PROVIDER represents that it has or will secure at its own expense all personnel required to perform all the services required under this Contract. Such personnel shall not be employees or officers of, nor have any contractual relations with the OWNER. RECYCLING PROVIDER shall immediately inform the OWNER in writing of any conflict of interest or potential conflict of interest that RECYCLING PROVIDER may discover, or which may arise during the term of this Contract. OWNER requires that RECYCLING PROVIDER carefully safeguard all documents, data, and information provided by OWNER to RECYCLING PROVIDER incident to this engagement. RECYCLING PROVIDER recognizes that such documents; data; and information; possibly involve sensitive, competitive issues; in some cases, confidential information; and in some cases proprietary information; and the disclosure of such information by RECYCLING PROVIDER to any third party, without the express written consent of OWNER, is expressly prohibited by OWNER, and would likely cause economic loss and detriment to OWNER. Any such unauthorized disclosure of information by RECYCLING PROVIDER shall constitute an act of default respecting this Contract. RECYCLING PROVIDER represents to OWNER that it will safeguard OWNER's information and will, upon OWNER'S reasonable request, provide OWNER with RECYCLING PROVIDER'S policies regarding its procedures for identifying conflicts of interest, and its procedures and safeguards which are in place which would apply to RECYCLING PROVIDER'S treatment and handling of OWNER'S documents, data, and information. C. OWNER agrees that it will safeguard all documents, data, and information provided by RECYCLING PROVIDER incident to this engagement. OWNER recognizes that such documents, data, and information, possibly involve sensitive, competitive issues; in some Page 16 of 19 cases, confidential information; and in some cases, proprietary information; and the disclosure of such information by OWNER to any third party, without the express written consent of RECYCLING PROVIDER, is expressly prohibited by RECYCLING PROVIDER, and would likely cause economic loss and detriment to the RECYCLING PROVIDER. Any such unauthorized disclosure of information by OWNER shall constitute an act of default respecting this Contract. All services required hereunder will be performed by RECYCLING PROVIDER or under its direct supervision. All personnel engaged in performing the work provided for in this Contract, shall be qualified; shall meet all the requirements of an employee of the City of Denton, Texas; and shall be authorized and permitted under applicable state and local laws to perform such services. A R TIC~I .F. Xrl .Il ASSIGNABILITY The RECYCLING PROVIDER shall not assign any interest in this Contract and shall not transfer any interest in this Contract (whether by assignment, novation or otherwise) without the express written consent of the OWNER. No assignment of this Contract shall be approved by the OWNER unless the transferee entity shall have financial worth and resources equal to or greater than RECYCLING PROVIDER. RECYCLING PROVIDER shall also promptly notify OWNER of any change of its name as well as of any material change in its corporate structure, its location, and/or in its operations. ARTTCT.1R, XI,III MODIFICATION No waiver or modification of this Contract or of any covenant, condition, limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Contract, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed. The parties further agree that the provisions of this Article will not be waived unless as herein set forth. ARTTCT ,F, XT ,IV RIGHT TO ACCESS AND RIGHT TO EXAMINE BOOKS AND DOCUMENTS RECYCLING PROVIDER agrees that OWNER shall, until the expiration of three (3) years after the final payment made by OWNER under this Contract (or any lawful extension thereof), have access to and the right to examine any directly pertinent books, documents, papers and records of the RECYCLING PROVIDER involving transactions relating to this Contract. RECYCLING PROVIDER agrees that OWNER shall have access during normal working hours to all necessary RECYCLING PROVIDER facilities and shall be provided adequate and appropriate working space in order to conduct examinations or audits in compliance with this Article. OWNER shall give RECYCLING PROVIDER reasonable advance notice of all intended examinations or audits. Page 17of19 FU-RISDICTION. C~OICE O~ LAW, AND V~NU~ This Contract shall be govemed by and construed in accordance with the laws of the State of Texas. Jurisdiction over this Contract, in all cases, shall be in the District Courts of Denton County, Texas. Venue of any suit or cause of action under this Contract shall lie exclusively in Denton County, Texas. ARTTC. T .R XT ,V~ THE PROJECT/COORDINATION OF WORK RECYCLING PROVIDER shall commence, can3, on, and complete its work on the Project with all applicable dispatch, and in a sound, economical, efficient manner, and in accordance with the provisions hereof. In accomplishing the Project, the Contractor Representative shall take such steps as are appropriate to ensure that the work involved is properly coordinated with any related work being carried on by the OWNER. ARTICI,~. XI.VII. OBLIGATION OF OWNER TO ASSIST The OWNER shall assist and fully cooperate with the RECYCLING PROVIDER by placing at the RECYCLING PROVIDER'S disposal all available information pertinent to the Project, including previous reports, any other data relative to the Project and arranging for the access to, and making all provisions for the RECYCLING PROVIDER to enter in or upon, public and private property as required for the RECYCLING PROVIDER to perform services under this Contract. OWNER and RECYCLING PROVIDER agree that RECYCLING PROVIDER is entitled to rely upon any background information furnished to it by OWNER without the need for further inquiry or investigation into such information. ARTIC, I,I~, XI,V[[I. CAPTIONS The captions of this Contract are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Contract. ARTf(2T .F. XI,TX AUTHORITY TO SIGN CONTRACT OWNER is represented by its duly authorized City Manager, who is empowered to execute this Contract as the act and deed of the City Council of the City of Denton, Texas, OWNER. RECYCLING PROVIDER is represented by its duly authorized officer, who is empowered to execute this Contract as the act and deed of the RECYCLING PROVIDER. ARTICI,F, T.. COUNTERPARTS OWNER and RECYCLING PROVIDER shall execute four (4) originals of th/s Contract, Page 18 of 19 each of which shall have the effect of an original. IN WITNESS WHEREOF, the City of Denton, Texas, OWNER, has executed this Contract in four (4) original counterparts, by and through its duly authorized City Manager; and RECYCLING PROVIDER has ?~qecuted this Contract by and through its duly authorized undersigned officer, on this the /z['~ day of ~__~,, 2002, but effective as of May 14, 2002. "OWNER" CITY OF DENTON, TEXAS A Municipal Corporation ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY By: "RECYCLING PROVIDER" ALLIED WASTE SYSTEMS, INC. A Delaware Corporation d/b/a Trinity Waste Services District Manager ATTEST: By: sE.~C~TARY Page 19 of 19 CITY OF DENTON, TEXAS REQUEST FOR BEST VALUE BIDS Bid Number 2832 TO PROVIDE THE CITY OF DENTON WITH RESIDENTIAL CURBSIDE RECYCLING AND PROCESSING SERVICES Prepared by Denton Municipal Utilities Solid Waste Department Director of Solid Waste, A.Vance Kemler "Dedicated to Quali~y Service" SECTION I z INTRODUCTION / BACKGROUND - I. 1. Solid Waste Master Plan - City of Denton ' 1.2. Solid Waste Residential Customers and Recycled Tonnage 1.3. City of Denton Existing Recycling Services 1.4. Bidder Contact Information 1.5 Bid Opening 1.6 Bid Documents TABLE OF CONTENTS 1 1 1 .2 2 2 SECTION II - GENERAL SCOPE OF SERVICES II. 1. Overview H.2. Best Value Bid Request II.3. Acceptable Recyclable Materials H.4. Materials Not Collected 11.5. Buyer Authorization II. 6. Recycling Materials Performance Requirements II.7. Recyclable Materials Processing Site and Information I1.8. Implementation and Operations Plan II.9. Curbside Collection Methodology - Bins, Carts 11.10. Container Inventory Levels II. 1 I. Proposed Service Area Route Plan II. 12. Hours and Days of Collection 1I. 13. Contract Term 11.14. Public Education Plan II. 15. Customer Service Plan II. 16. Missed Collections II. 17. Reporting II. 18. City Designated Holidays H. 19. Inclement Weather Days 4 4 5 5 6 6 6 7 8 10 11 11 11 12 13 14 14 16 17 SECTION III - COST OF SERVICES (Bids, Materials) III. 1. Base Bid -Residential Curbside Recycling Services 1~.2. Alternate Bid #1- Residential Curbside Recycling Services, with Senior Citizens Voluntary exemption III.3. Materials Payments lg 2O 2O SECTION IV - GENERAL REQUIREMENTS IV. 1. Contractor Penalties IV.2. General Compliance Requirements IV.3. Insurance Requirements IV.4. Bond Requirements IV.5. Written General Assurances IV. 6. List of Recently Disposed and Pending Recycling Services Litigation 22 22 22 25 26 27 · TABLE OF CONTENTS :, :. ::.. IV.7. History of Regulatory Compliance IV. 8. City of Denton Visits / Designated Representatives 13/'.9. Disqualification of Bidders IV. 10. Contract Termination IV. 11. Proposal Evaluation and Selection Criteria 27 27 28 28 28 SECTION V - BID SIqF. ET AND ACKNOWLEDGEMENT Bidder's Curbside Recycling Collection Charges Recydables Payment Schedule Contractor Acknowledgement 30 31 32 BID SUBMITTAL ATTACHMENTS 1. Buyer Authorization Forms 2. Recycling Materials Processing Site Information 3. Implementation and Operations Plan 4. Vehicle Master List Form 5. Alternate Plan of Action 6. Proposed Service Area Route Plan 7. Customer Service Plan 8. Monthly, Quarterly, and Annual Reports 9. Written General Assurances 10. List of Recently Disposed and Pending Litigation 11. History of Regulatory Compliance 12. Designated Representative 13. Full Bid Understanding and Compliance Agreement 33 34 35 36 37 38 39 40 41 42 43 44 45 ATTACHMENTS 1. Denton Street Map and Demographic Report 2. Contractor Minimum Employee Requirements 3. Recycling Container Text Imprim 46 60 62 SECTION I . -' INTRoDuCTION / BACKGROUND .. ~ -' ' ' ' Solid Waste Master Plan - City of Denton -- . '~ ' .... LL The City Council reco~onized tl~t the benefits of a comprehensive solid waste management plan would result in the cost-effective ronnagement of the cOmmunit~s solid waste system, provide for the conservation of natural resources and energy, improve air and water quality, and ensure compliance with state and federal regulations. In January 1994, the Denton City Council and the Public Utilities Board directed the City staff to initiate a community developed and supported solid waste management plan. The Denton City Council appointed a Solid Waste Advisory Committee that began the task of developing the Solid Waste Master Plan in February, 1994. The Committee completed its task and published its Master Plan in March, 1995. The Plan calls for a comprehensive and integrated approach to managing Denton's solid waste over the nex~ twenty years based on the following guiding principles: · cost · educational opportunities · flexibility · economic development oppommities · risk · environmental stewardship The plan goal is to acheive a 50% diversion of waste from disposal and increase la~dt~ll life. The plan strategies include public education, source reduction, composting, landfill optimization and recycling. L2. Solid Waste Residential Customers and Recycled Tonnage 1.2.1 Denton is located approximately thirty miles north of Dallas along Interstate 35- East. The city has a population currently estimated at over 81,000 within a 62 square mile area. Its 335 miles of streets provide access to over 19,500 single family residential accounts (Code SWR and RPT) that receive City of Denton residential curbside solid waste collection service. During fiscal year 2001 the City collected 2,858 tons of recyciables through its drop off recycling facilities. 1.2.2 All Bidders will be provided a City of Denton Street Map and Demographic Report, Attachment 1, for bid preparation purposes. Denton's solid waste residential customer address listings will be provided to the successful bidder if requested. 1.3. City of Denton Existing Recycling Services The City of Denton's residences and businesses currently.receive the following recycling services: -1- City of Denton : Bid Number 2832 ': · . Multi-material and single material drop off centers', '~ '~ . '. .' -;'..'.... ~- pap Hecti ~- ' ~ · , Selected white er co otis ;' ' ~ ..... · ~Used oil and. 0iifiltor collection centers .;" ', · . _: . · Weekly yardwaste collections . ': - · · Composting and composting maierials sales · Curbside appliance collections for appliance reuse and recycling L4. Bidder Contact Information Any Bidder questions concerning this bid document should be provided in writing by mail or fax to the City of Denton Purchasing Depa~ h~,ent. Address mail or send faxes to: Mr. Tom Shaw, Purchasing Agent City of Denton 901 A Texas Street Denton. Texas, 76209 Purchasing Departmem Fax Number: 940-349-7302 Atto: Mr. Tom Shaw Please reference bid number 2832 in all correspondence. A pre-bid conference will be held on Friday, March 22, 2002 at 2:00 PM on the second floor of the City's Municipal Service Center, in the conference room, 901-A Texas Street, Denton, Texas. L5 Bid Opening The Bid opening will occur on Thursday, April 11, 2002 at 2:00 PM on the second floor of the City's Municipal Service Center, in the conference room, 901-A Texas Street, Demon, Texas. Bid documents shall be submitted to Mr. Shaw, in the City of Denton Purchasing Department, at the address listed below prior to the 2:00 PM bid opening on April 11, 2002. Late bids will not be accepted. Mr. Tom Shaw, Purchasing Agent City of Denton 901 A Texas Street Denton. Texas, 76209 L6 Bid Documents 1.6.1 Bid documents submitted 'are to be organized in a format that includes section tabs labeled as "Bid Sheet", "Bid Submittal Attachment 1", "Bid Submittal Attachment 2", etc. These sections shall comaln and discuss all relevant information applicable to each Bid City of Denton Bid Number 2832 . . Submittal number. All additional bid document infoixnation ~rovided, which is in addition tO that reqUested thrOUgh the Bid specifications, is to be arranged in the document~'under appropriatelY labeled section tabs, following the_ Bid submittal section tab~. 1.6.2 Bidders shall submit five complete sets, one ori~nal set and four c°pieSl °fbid ' documents to Mr. Shaw, Pm'ebbing Agem, prior tO the bid opening. CityofDenton BidNumber2832 1~1. Overview SECTION 11 SCOPE OF SERVICES A major emphasis ofDenton's Solid Waste Master Plan is on the eXtension of the landfill's life, located at 1100 S. Mayhill Road, Denton~ Texas 76208. The Plan cites recycling activities as a key component in reducing the amount of landfill space consumed. Consequently, one of the Plan's primary strategies to prolong landfill life is for the City to provide residential curbside recycling services. The City of Denton is requesting bids from responsible recycling finns to provide Denton's residential solid waste customers with curbside recycling services as described within this bid document. Qualified bidders must have a minimum of five years experience in recycling materials collection and processing comparable in scope to the services specified. The City of Denton has developed this bid in order to select a private sector recycling Contractor to provide Denton's residential solid waste customers with curbside recycling collection services. Following an evaluation of bids submitted, the City Council is expected to award the bid for the provision of curbside recycling services in the City of Denton. This schedule anticipates that residential curbside recycling services would begin in late calendar year 2002, tentatively November 4, 2002. IL2. Best Value Bid Request II.2.1 Each Bidder is requested to bid on providing once per week curbside recycling services to each Denton residential customer on one of their regular waste collection days, currently Monday, Tuesday, Thursday, or Friday. In the future, intergovernmental agreements with other government entities in the area may allow for the provision of residential curbside recycling services. The bidder agrees to provide these services at the same price or below, and under the same conditions to these entities, if the community is no greater distance from their processing facility. The City provides both twice per week collection of bagged refuse and once per week automated collection of refuse contained in various sizes of carts. The successful bidder will collect recyclables from one-half of the customers on twice per week refuse routes on their first collection day of the week, and the other half on the second collection day of the week. For once a week automated refuse collection routes, recyclables will be collected on their regular refuse collection day. 11.2.2 One curbside recycling'bid will be considered, with one alternate bid. They are: Base Bid - The Contractor will provide Required Residential Curbside Recycling Services with the City providing all customer billing services. This bid requires all City of Denton Bid Number 2832 single family, duplex, and triplex residents (Account Codes SWR or RPT),to iJayfor :" Alternate Bid #1 - The Contractor,will provide ReSidential Curbside'Recycllng' Services as in the Base Bid, except Senior Citizens will be able to Voluntarily request Exemption from cuthside recycling fees and services for themselves if they are'age 65 or older. These services are discussed in additional detail within this document. All general specifications provided under the Introduction/Background, Scope Of Services, General Requirements, and Bid Submittal Attachments within this document apply to the Base Bid and Alternate Bid #1, unless specifically described differently within the document. IL3. Acceptable Recyclable Materials 11.3.1 The Contractor will collect the following Acceptable Recyclable Materials under this contract: · All Classes of Paper (including but not limited to; Newspaper, Office Paper, Junk Mail, Magazines, Telephone Books, and Catalogs) · Corrugated Cardboard & Chipboard (i.e. Cereal boxes, etc.) · Aluminum, Steel, and Tin food and beverage cans / containers · Glass Bottles, Jugs, and Jars (excluding ceramic containers) · Plastic Bottles, Jugs, and Jars Other materials may be added by mumai consent of the City and Contractor II.3.2 Denton's citizens are not required to pre-crush recycled cans or other materials. 11.3.3 The Contractor may request approval from the City to add additional recyclable materials for curbside collection. 11_4. Materials Not Collected .II.4.1 Materials which are placed out for collection which are not on the Acceptable Recyclable Materials list provided in Section 3.1 should not be collected. When non- collection of a set out product occurs, the Contractor wilt provide the resident with an explanation why the product wasn't collected. The Contractor's Notice Of Non-Collection shall be in writing and attached to the front door of the residence or to the recycling container. The Contractor's notice shall indicate the nature of the problem or violation and the correction required. Examples of items set out for collection which would not be collected include window glass, plastic furniture, and pizza boxes. 11.4.2 The driver will record all Notice's of Non-Collection delivered to Denton's residents, and all verbal communications from Denton's residents concerning the CityofDenton Bid Number 2832' .... Commun'cation Summary Log The Drive collectton sermces m a Driver i . r .. Communication Summary Log will be submitted monthly tothe Cityas a standard [eport. H.5. Buyer Authorization ...' . ':' .' ,.. i:.. .. Thc Bidder is requested to complete Bid Submittal Attachment 1,'Buyer Authorization Form, for all commodity buyers that the Bidder sold recyclable commodtues, fi.om the facility that processed Dento s recyclables, over the previou~ two calendar years. The Bidder may make the necessary copies of this form in order tO submit completed forms with the bid submittal. This form provides the Bidder's authorization for each commodity buyer to provide information to the City of Denton about the quantities of recyclable materials sent to these buyers over the previous two years. Submittal of this completed document(s) authorizes the City of Denton to contact each commodity buyer that the Bidder Company has sold recyclable products to over the previous two calendar years and only obtain Bidder historical materials tonnage information. Bidders that consider their Buyer Authorization Form information to be proprietary must preface their proprietary information with the statement "The following information is proprietary and exempt fi.om the Public Information Act". This proprietary information will be returned to the bidder after the City Council has acted on this bid. 11.6. Recycling MateriAls Performance Requirements Denton requires the Contractor to collect 100% ofacceptahle recyclable materials placed out for collection. The Contractor must process at least 95% (by weight) of the recyclables collected with no greater than 10% of the collected recyclables being allowed for disposal. The Contractor must maintain adequate records on a monthly reporting basis to substantiate compliance with these requirements. Failure to comply with these requirements will be grounds for termination of this contract. Compliance is met by the Contractor achieving all three performance criteria every calendar month. The City will periodically audit the Contractor's records to determine compliance for all three performance criteria; 100% recyclable materials collections, greater than 95% (by weight) processing, and less than 10% disposal. In the event that the market changes for a specific processed material to the point that the material is not marketable for the processing facility processing Denton's recyclables, that specific material will be excluded from this section's disposal performance requirements for the period of time that the material has no market value. Processed material used as an alternate daily cover (ADC) in a landfill will not be considered material disposed of, for the purposes of this section, if it has been approved through a permit modification fi.om the TNRCC to use the material as ADC. H.7. Recyclable Materials Processing Site and Information The Contractor is required to provide information in Bid Submittal Attachment 2 regarding the processing site where Denton's recyclable materials will be processed; its location, permit/license information, annual materials tonnages processed for the previous two years, materials capable &being processed, and any other site information that may be ..' City of Denton . i' Bid Number 2832 descriptive of the facility s ability to meet tho performance reqmrements of this b~d and : contract. ,, . -, '-': '. ILS. Implementation'and Operation, s~Plan - ?_:._ : · ' -- H.8.1 The Contractor will provide an Implementation and Operations Plan, Bid Submittal Attachment 3, detailing the number and type of vehicles to be used, number of personnel, operational procedures, etc. that the Contractor will employ to comply .w~th the requirements set forth in this bid specification and contract tO provide residential curbside recycling collection services. 11.8.2 Denton County is currently included in the Dallas/Fort Worth nonattalnment area under the Clean Air Act by the Texas Natural Resource Conservation Commission. As a result, the City of Denton Solid Waste Department has made a commitment to only purchase Iow emissions vehicles (LEV) when available. LEV usage by the Contractor is recommended by the City of Denton. The Contractor must comply with the Clean Air Act and associated TNRCC requirements for the Dalla.qFort Worth non-attainment area in the performance of this contract. 11.8.3 The Contractor will submit a Vehicle Master List, provided as Bid Submittal Attachment 4, which lists all vehicles planned for use in Denton under this contract, both front line and back-up vehicles. Front line vehicles specified for use in Denton are to be clearly identified as such. Vehicle information provided in the Vehicle Master List will reflect the current fleet only at the time of the anticipated implementation date provided. As vehicles ere deleted or added to the Contractor's recycling fleet for use in Denton, the City will be provided an updated Vehicle Master List within ten (10) business days so Denton's on file Vehicle Master List will continually remain current. 11.8.4 The Contractor will provide an Alternate Plan of Action, Bid Submittal Attachment 5, describing their Plan to provide replacement personnel and/or vehicles for the completion of routes in case of vehicle breakdown or labor shortages. 11.8.5 The Contractor will clearly identify the Company Name, and Telephone Number of the. company's local office, Denton or Dallas/Fort Worth metroplex area, on each of it's vehicle cab doors or equally conspicuous location on all curbside recycling collection vehicles. All text, letters and numbers, will be at least two inches in height and in a contrasting color from its background that can easily be distinguished from the cab or body color. 11.8.6 Each collection vehicle shall be kept in good operating condition at all times, meeting all Department of Transportation (DOT) requirements. The City of Denton reserves the right to inspect any Contractor vehicle that may be used in the performance of this contract at any time. If the vehicle is determined by City personnel to be unsafe, or does not meet DOT requirements, the driver shall immediately discontinue operating the vehicle, and telephone the Contractor's local office to repair the vehicle. Il'the repair cannot be completed within thirty (30) minutes the Contractor will provide a replacement 7 · 'City of Denton Bid Number 2832 vehicle. In repairing a flat tire, if the local repalrma~ cannot be at the truck sitewithin One - hour, a replacement vehicle will be required for completion of the route. · ':: .: ' · ~, ,' ': II.8.7. Each collection vehicle shall be kept clean at all times, requmng a minimum of one complete washing each week. If the vehicle is determined by City personnel to be not~cib y '~ dirty, or having not been washed within the prior week, the Contractor's representative. shall be notified, and the Contractor shall clean the vehicle prior to the next day that the vehicle returns to service within the City of Denton. H.8.8 All the Contactor's work personnel operating in Denton shall be required to meet the City of Denton employee minimum hiring qualifications for drivers and background check standards, provided in Attachment 2 II.8.9 The Contractor's employees that drive collection vehicles are required to possess a commercial drivers license (CDL) which meets all DOT requirements for the vehicles being operated. The Contractor will provide a certification that all drivers operating vehicles requiring a CDL used in the performance of this contract possess a valid CDL. This certification will be provided prior to the implementation date of the program and annually thereafter. 11.9. Curbside Collection Methodology - Bins, Carts H.9.1 All Denton residences covered under the scope of this contract are initially planned for service utilizing a curbside recycling eighteen gallon bin. H.9.2 The City will provide eighteen gallon bins for cuthside recycling usage by Denton's solid waste residential customers. The bins delivered by the Contractor to Denton's residences will be dearly marked on one side with City of Denton approved text and the recycling logo on the opposite side, of adequate size and being of heat imprinted permanent markings identifying the container as a City of Denton curbside recycling container. All bins are the property of the City of Denton. The bins will not be provided with lids. II.9.3 The City will provide sixty-four gallon carts with the approved recyclables imprinted on the lid using black text on a tan background, similar to that shown in Attachment 3. The carts will be clearly marked with City of Denton text of heat imprinted permanent markings identifying the cart as a City of Denton curbside recycling container. All carts will be heat imprinted with serial numbers. All carts are the property of the City of Denton. I1.9.4 The Contractor's designated representative(s) will be required to sign for the receipt of specific quantities of bins and carts accepted from Denton's bin and cart inventory stock for use and distribution to Denton's customers. The Contractor will store them, and then deliver the bin(s) and/or carts to Denton's curbside customers beginning no later than one week prior to program implementation. The service addresses to receive containers will be provided by the City. All additional bins delivered, in excess of one per 8 City of Denton Bid Number 2832 residence, will be recorded by the Contractor 'on the Container Distribution Li~t. All carts delivered will be recorded by the Contractor on the Confiner Distribution List;as further described in H.9.5. '.. ~ ~ ~ · .~, -~ 11.9.5 The Contractor will deliver carts, and additional bins, upon request by Denton's recycling customers, to Denton's residences. Cart serial numbers will be recorded by the Contractor and forwarded to the City by facsimile within five business days of the date a cart is placed in service, for recording on the resident's utility account record (Required for billing purposes). The Contractor shall maintain a Container l~istribution List of all carts and additional bins in service, by serial number which will include at a minin~nm the customer's name, address, delivery date, quantity delivered, retrieval date, container condition, etc. Additional bins delivered will be recorded by the Contractor and forwarded to the City by facsimile within five business days of the date an additional bin is placed in service, for recording on the resident's utility ac£ount record (Required for billing purposes). The Contractor shall submit their current Container Distribution List quarterly in the months of January, April, July, and October, and at the end of each contract term, or as o~en as requested by the City of Denton. II.9.6 The Contractor will request and receive fi'om the City of Denton, for the initial distribution of curbside recycling containers, and on a monthly basis thereat~er, the City's list of Residential Customer's Not Receiving Solid Waste Service. These residences are not provided with City of Denton refuse collection services, and the Contractor_will not provide curbside recvclino containers or services to these residents, nor will the Contractor be paid for services to these residences. Before any curbside recycling containers are distributed to Denton's residents, the current list should always be in the possession of the deliveryman and reviewed in order to ensure curbside container distribution remains in compliance with the City of Denton solid waste service procedures. II.9.7 A minimum of thirty days prior to implementing the curbside recycling program, the Contractor will advertise in the local newspaper that six'W-four gallon carts are available in lieu of or in addition to the standard eighteen gallon bin, and/or multiple bins · 5" 7" minimum), are available. The conspicuous bilingual newspaper advertisement ( x requires prior approval by the City, and must be inserted a minimum of twice per week in the major local newspaper with one day each week being a Sunday. The Contractor will provide a local or toll free telephone number for Denton's residential customers to call to place additional bin or cart orders. Sample bins and carts for public viewing and handling are to be placed by the Contractor in at least six City selected locations, but less than ten, where Denton's residents will have the oppommity to view and manurer the bin and cart. Over this thirty day time period, the Contractor will document all resident's telephoned container requests, and provide their requested containers during the container distribution process. During the container distribution process, the Contractor will document all residents receiving carts and/or additional bins on the Container Distribution List of any quantity or combination requested. Prior to the Contractor s delivery of recyc g containers to Denton's residents, all containers must be fully assembled by the Contractor and ready for use. 9 City of Denton Bill lqnmher 2832 ~ 11.9.8 ff a resident elects to receive a comainer(s) (bin or cart) which is of a size or : quantity greater than the standard eighteen gallon bin, the resident wili agree to pay a rental andmalntenance fee per 30 day billing period to ~he.City, to be charged on their utility bill, for each additional container provided., :'" i i ~. . . ~ .. : .. 11.9.9 During the te~m of the contract, when ~a new Denton resident moves into a residence, they will be contacted by the Contractor and offered a standard recycling bin(s) or cart fi-om the Contractor. The Contractor is to be aware that there may be existing recycling containers in the home, left there fi.om the prior occupants, once the Contractor develops and implements this procedure. If the new customers request an additional bin(s) 'or cart(s), the Contractor will update the Container Distribution List. The City will provide the Contractor with the name and address of new customer solid waste accounts by facsimile within five business days, and the Contractor will provide the new account customer with a recycling container(s), ff not already present in the residence, within five business days of receipt of the facsimile. If the new account customer moves into a residence with an existing cart, and the new customer wants a bin in lieu of the cart, the Contractor will provide a bm, collect the cart and return the cart to their storage facility or the City, adjust the container inventory, and forward the facsimile to the City within five bus'mess days. II.9.10 The Contractor will be responsible for educating and informing Denton's residents that recycling containers remain with the residences upon moving. The Contractor will develop and recommend procedures, within two months of program implemennttin, for City approval, enabling the recycling containers to remain inside the residence for utilization by the next occupant of the home, following a customer move out. 11.9.11 Containers lost or damaged by the resident will be replaced by the Contractor upon receiving a request for replacement by the resident. The Contractor will deliver the replacement container requested, record the information on the Container Distribution List, and forward this information to the City by facsimile within five business days of the date a replacement container is placed in service, for recording on the resident's utility account record (Required for billing purposes). The facsimile the Contractor sends will separately identify these containers as replacments for lost or damaged containers. II.9.12 The Contractor will provide fi.ont door service to residents incapable of transporting their container(s) to the curb. II. 10. Container Inventory Levels 11.10. I The Contractor will maintain, for customer distribution, the following minimum container inventory at their storage facility at all times, except during the final ninety days of the initial contract term or any renewal term. Bins- 50 Carts - 5 10 · City of Denton .. ~Bid Number 2832 , .'. ': .: Th~ Contract0~ Will establish its own collien ro~f~ fei the c611ectign 6£ i,' .-~. recyclable material,~ and Submit the Pr,op. osed Seryice Are~ l~oute P!an,:Bjd;~b?itta/ Attachment 6, and schedule to the Cityat bid submittal. At least three weeks prior to" curbside recycling implementation, the Contractor will submit their Proposed l)et~iled Route Plan. Following City approval of the Contractor's Detailed Route Plan, any changes in collection routes or days Of collection will require prior approval by the City. The Contractor will als0 be required.to notify all affected residents at least two weeks in advance of a route change through a mailing to each affected resident and a bilingual public notice (5" x 7") in the major local Sunday newspaper. The proposed route plan submitted with Bid Submittal Attachment 6 will be "service area route plan", not the "detailed route plan" by street. H.12. Hours and Days of Collection II. 12.1 Unless otherwise approved by the City, the Contractor must conduct curbside recycling collections between the hours of 7:00 A.M. and 6:00 P.M. on one oftbe resident's regular waste collection days, currently Mondays, Tuesdays, Thursdays, or Fridays, for Denton's manual collection residents. H. 12.2 Those Denton residents receiving residential automated containerized service one time per week will receive curbside recycling collection service on their collection day. H.12.3 The Contractor agrees that no collections will be made on Saturdays, Sundays, or City designated holidays on which refuse collection is not provided. II. 12.4 All Denton's residents will receive curbside recycling collections on City of Denton designated holiday weeks. The Contractor will provide residential customer notification in the major local newspaper with a minimum 5" x 7" bilingual advertisement to Denton's residents on the Wednesday oftbe week prior to the holiday, of their curbside recycling collection day for the upcoming holiday week. During holiday weeks the Contractor may collect recycling materials on Wednesdays, if the City also provides refuse collection service on that same day. ILl3. Contract Term 1I. 13.1 The initial contract term will be for five years, beginning on the first day the Contractor p~0vides collection servcies under this contract, or one-hundred twenty (120) days from the date the City Council makes an award of this bid, whichever is earlier. II. 13.2 Thera may be two renewal terms of two years each. Six months prior to the end of the initial contract term, and with the agreement of both parties, the contract may be renewed for one renewal term of two additional years (seven year contract total). Six months prior to the end of the first renewal term, the contract may be renewed for the final two year renewal term period, if agreed by both parties (nine year contract total). ll City of Denton Bid Numlxx 2832 11.13.3 If either party elects to not extend the conhsct under:He'renewal te ~ Pr0vision the contract, the Party not wishing to renew the contract must. provide written n0~ce to. other party af least six months in advice of the expiration of the existing contract term. Both renewal terms are optional by either party. " 11.14. Public EdUcation Plan 11.14.1 The City, schools and other community groups currently are involved inpubiic education programs, some of which include recycling education. In addition to those current programs the Contractor is responsible for providing support for the Denton recycling educational program as a requirement of this contract. The Contractor will provide $32,000 of financial support during the first year of the contract, and $22,000 annually for all subsequent years of the contract. This financial support, the Community Public Education Fund, will provide funding to acquire educational materials, publications, and supplies as directed by the City representative. 11.14.2 Prior to the implementation of recycling collection, the Contractor will develop in conjunction with the City representative and approved by the City representative a brochure to be distributed with the recycling container(s). The brochure will fully describe the upcoming residential cmbside collection services to be provided. The brochure, delivered to each residential address during container distribution by the Contractor, must clearly inform Denton's residents of the curbside collection start date, recyclables collected, recyclables not collected, collection procedures, container guidelines, customer's collection days, the problem resolution process, the Contractor's toll flee customer contact telephone number, and any other relevant information. Additional copies of the introductory brochure will be provided by the Comractor to new residents upon move in and others upon request over the life oftbe contract. All publications will be bilingual ' (English and Spanish). Brochure costs will be funded by the Contractor, and will be funded fi.om the Community Public Education Fund discussed in Section lI. 14.1. 11.14.3 The Contractor will participate in Denton's Texas Recycles Day, Arts and Ja77 Festival, Cinco-de-Mayo celebration, and the Great American Cleanup. The City will pay for booth space at the Arts and JaTz Festival and the Cinco de Mayo celebration, which will be staffed by the Contractor's representative(s). Materials distributed to the public that are specifically produced for Deaton's curbside recycling program will be funded fi-om the Community Public Education Fund. At a minimum, the contractor is expected to be present during these events, provide for the collection of recyclable materials, and process these materials, as directed by the City representative. II. 14.4 The Contractor will be a sponsor for the Keep Denton Beautiful (KDB) organization with a minimum contribution of $3,000 per calendar year payable no later than January I st of each year to support their recycling education program. Failure to provide this contribution to KDB by January 1st of each year will result in a Notice of 12 City of Denton Bid Number 2832 Non-comPliance and may be cause for contract terminatiun.'.Tbe Contractor's contribution will be funded from the Contractor Public Educatio~i Fund as discussed in Section' H. 14:1..~ 1L15. Customer Service Hah ' · IL 15.1 The Contractor will provide the City a detailed description of the Contractor's Customer Service Plan, Bid Submittsl Attachment 7, including the number of available office customer service personnel, average mm-around time on customer service complaints/inquiries, sample City of Denton customer service reports, customer service center location, customer service telephone policies, and any other pertinent, applicable, or related customer service information which may be beneficial to the City and the understanding of the Contractor's Customer Service Plan and procedures. 11.15.2 The Contractor shall provide a toll free customer contact telephone number a minimum of thirty days prior to initiating curbside recycling services. Using this telephone number, Denton's residential customers may contact the Contractor regarding all customer service questions, service delivery concerns and problems, complaints, container ordering, materials collected, and/or any other curbside recycling or educational issues. During this thirty day period, and following for the duration of the contract, the Contractor shall record all telephone conversations, either initiated by Denton's residents or the Contractor, on the City of Denton Telephone Log. II. 15.3 The Contractor agrees upon award of the contract to immediately secure an annual toll free listing in the major Denton telephone directory under the name by which it conducts business in Denton. The Contractor agrees to keep the telephone staffed for residents calls during the hours of 7:00 A.M. through 6:00 P.M., Monday through Friday. The Contractor will keep the telephone staffed with sufficient personnel, and identify the number of personnel available to service telephone calls from Denton's residents during the hours listed. 11.15.4 All Denton resident telephone communications are to be recorded on a dedicated City of Denton Telephone Log, which along with other reports, is to be submitted monthly to the City along with the Monthly Residential Billing Invoice. Contractor recorded counnunication information on the City of Denton Telephone Log should, at a minimum, include the following data: · Date and Time of telephone call · Customer's name · Customer's address · Customer's telephone number · Customer's reason for calling (List.comment, request, complaint, concern, etc.) · Was resolution required? · When was the issue resolved? · How was the issue resolved? · Was the customer satisfied? 13 City of Denton Bid Number 2832 . - * Was a f0lloWUp contact required, did it ioccur, and when9 ...... II. 15.5' CUStomer communications and/or complaints not responded too and resolved by .. the Contractor within twenty-four houIs will be charged a penalty Per occurranee, foreach day over 24 hours that the noncommuni~ation or nbnresolUfion 'continues. The City will be : the sole determinant as to whether a timely response occurred by the Contractor, within twenty-four hours, and if a penalty is due. (Sec. 1V. 1. Contractor Penalties) ILl6. Missed Collections II. 16.1 Upon the timely notification ora missed collection, and if the Contractor has a collection vehicle in Denton at the time of a missed collection notification, the Contractor shall contact the route driver in Denton and instruct the driver to return to the missed collection location and collect the missed materials prior to ending work for the day. II. 16.2 Ifa missed collection occurs, and it is determined that the route driver has akeady left Denton for the day, the Contractor shall arrange for the collection of the customers recycling materials no later than the next day the Contractor is serving a collection route in the City. 11.16.3 If the customer fails to place their recycling materials out for collection by 7:00 A.M. on their designated collection day, this does not constitute a missed collection, ffthe route driver has already completed the route in question, it will not be the fault of the route driver, and will not require the route driver to return to the address in question to provide recycling collection services on the day in question. II. 16.4 Ifa dispute arises-between the Contractor and a customer as to whether the Contractor actually failed to make a collection when materials were at the curb, i.e. missed collection, the decision by the City designated representative shall be final. The Contractor agrees to abide by the City's decision. In the event of City determination of a missed collection, and City notification, the route driver shall remm to the address and collect the recycling materials the same day, if the Contractor's designated representative is notified by 1:00 P.M. of the same collection day. ~1.17. Reporting II. 17.1 Monthly, quarterly, annual, and special reports will be provided to the City of Denton Solid Waste Department to the Designated Representative address listed within this document. The Bidder will provide samples of all required reports in their Bid Submittal Attachment 8. These sample City of Denton required monthly, quarterly, annual, and special reports will provide all information required in this specification. The City, not the Contractor, will establish acceptable formats for these reports. The Comractor will provide the following information for the required monthly, quarterly, annual, and special reports listed. 14 City of Denton B~d Number 2832 Monthly Reports Required: - 1. Driver Communication SUmmaryLOg' se~. 11, 4.2 2. CitY of Denton Telephone L?g -'Sec. IL 15.4 Monthly Reports Required: - Sec. II.6. ~' 3. Collected weight of t~jdables from Denton, by day and route 4. Recycled weight, by material bom the processing facilitY 5. Weight of rejected/residue material fi'om the processing facilitY that will be . disposed of 6. Number of Billing Addresses Served, as of the last day of the month 7. Average Weight of Recyclables Per Residence Per Route Served Per Month The above monthly reports will be rolled up quarterly into a Quarterly Report and rolled up annually into an Annual Report. Quarterly Reports Required: 8. Container Distribution List - Sec. II, 9.4 Annual Reports Required: 9. COD Curhside Recycling Summary - Sec. 1I, 17.5 The City may delete, or modif~ reporting information from time to time. II. 17.2 The Contractor will submit to the City all monthly reports with each monthly billing invoice. They are to be mailed together. Quarterly and annual reports will be submitted to the CitY within four weeks after the end of the reporting period. II. 17.3 The Contractor agrees to provide the reporting information listed above to the City of Denton staffat monthly, quarterly, and annual fi'equencies, or as requested by the City. The Contractor is required to provide, Bid Submittal Attachment 8, samples of the Comractor's designed monthly, quarterly, annual, and special reports to serve Denton and to be provided monthly to the City of Denton's designated representative. II. 17.4 As previously stated, Denton expects a very high percentage of materials collected to be recyclable and deliverable to markets. The Contractor should make every effort to attain high materials processed,-high materials sales, and minimal rejects landfilled. (Sec. II.6.) 11.17.5 The Contractor will provide an annual City of Denton Curbside Recycling Summary document delivered to ~the CitY of Denton's resid6nts as a tri-folded one page report for inclusion as a utility bill "stuffer", reporting the results of Denton's residents recycling efforts on a fiscal year by year comparison basis. This document will be provided to the City during the fourth quarter of each calendar year, for the CitY's fiscal year, and becomes due following completion of the first partial fiscal year, and each year thereat~er for the term of the contract. The contractor will obtain prior City approval in the design, format, and presentation data included within this document. The most recent count of 15 City of Denton Bid Number 2832 'utility bills was 39,000 per monthly billing cycle. 'The City will provide the mos! current number of monthly billings to the Contractor annually. ·: '. ~ · .... . . . 1/.17.6 The City will conduct two Pa~rticipation Surveys per fiscal year to:determine the number of residential units that are Pimicipating in the recycling program (setting out recyclables). The City will survey four areas established by the Directoi' of Solid Waste. Each area will contain a minimum of 300 homes. Each survey will be conducted for five full weeks. The city will record all residential units placing recyclables out for coHecfi0n, by address, and date. The city will provide a report of the number of different residential units participating in the program on a (1) weekly, (2) bi-weekly, (3) monthly and (4) five- week period. This report will be provided to the Contract Manaser within 30 calendar days after the completion of the survey period. The surveys will be started on the second Monday of the following calendar months: January, and July. IL18. City Designated Holidays H. 18.1 The Contractor will adjust the residential curbside recycling pickup schedule for the seven holidays listed below. During weeks which contain these holidays, the Contractor will perform pickup services on the remaining days of the week during the hours of 7:00 A.M. and 6:00 P.M., Monday through Friday. Residential curhside recycling shah not occur on the holidays listed. All residential cuthside recycling customers will receive a weekly pickup for ah weeks, including holiday weeks. II. 18.2 City of Denton Curbside Recycling Holidays: · New Year's Day (January lst) · Martin Luther King Day · Memorial Day · Independence Day (July 4th) · Labor Day · Thanksgiving Day · Christmas Day (December 25th) II. 18.3 All Denton's residents will receive curbside recycling collections on City of Denton designated holiday weeks. The Contractor will provide written notification in the major local Denton newspaper, Wednesday edition, with a 5" x T' bilingual advertisement to Denton's residents on the week prior to the holiday, of.their curbside recycling collection day for the upcoming holiday week. The City designated representative mUst be provided sufficient time, two work days, to review and approve the proposed newspaper notification prior to the Contractor submitting and scheduling for printing the notification of the revised pickup schedule, so that Denton's residents are informed of the schedule revision on Wednesday of the week prior to the holiday. During holiday weeks the Contractor may collect recycling materials on Wednesdays, iftbe City provides refuse collection service on that day. 16 City of Denton . Bid Number 2832 H. 19. Inclement Weather ])ays II.19.1 On days that the Denton Independent School r striet Closes schoel e' t? :' ? inclement weather, the Contractor may, request to the City representative to suspenn~ · ~ :.' .. service for that day, subject to notiflcafi6n and approval from the city. . ~. : - 11.19.2 An event sufficiently serious to prevent the collection of recyclables would be rare and unplanned. The Contractor will fax a notice to the City's designated representative as early as possible to notify the City of their inability to collect recyclables on such a day. The Contractor will include the reason for non-collection and this record will be placed in the City's contract management file for this project. Collection service for the area not collected under this section will resume on the next scheduled collection day. Immediately following the farting to the City of the notification of suspended services, the Contractor's representative will telephone the City's representative to discuss the collection schedule and obtain approval. Iq. 19.3 No make up day will be required for suspended service on City approved inclement weather days. If service is suspended due to inclement weather, curbside volumes collected on the citizens next collection day should generally be greater. Under these conditions, the route driver must be prepared to collect high amounts of recyclable products on this heavier than normal collection day in containers other than those provided by the Contractor. II. 19.4 Curbside collection services not provided due to inclement weather will result in reductions of normal monthly citizen revenue paid to the Contractor. Revenue reductions will be based on calculations performed using the number of normally scheduled pickup days the Contractor would perform services during the month, versus the number of actual days service was provided. Inclement Weather Example: Monthly service days during the month = 18 Actual days service was provided = 17 (Due to an Inclement Weather Day) Normal monthly payment per residence to the Bidder = $1.50 17 days / 18 days = 94% $1.50 X 94% = $1.41 Actual monthly payment per residence to the Bidder = $1.41 17 . 'City of Denton · Bid Number 2832 ' ' : ' '. ~' . i,' SECTION'ili , -. ·" ' - " ' ' COST,OF SERVICES The City will COnsider one curbside'r ,evycling bid, ,with one alternate bid. Bidders may bid. on one or both bids. They are: Base Bid - The Contractor will provide Required Residential Curbside Recycling Services with the City providing all customer billing services. This bid requires all single family, duplex, and triplex residents (Code SWR and RPT) to pay for curbside recycling services. Alternate Bid #1 - The Contractor will provide Residential Curbside Recycling Services as in the Base Bid, except Senior Citizens will be able to Voluntarily request Exemptions from curbside recycling fees and services for themselves if they are age 65 or older. Both bids listed above are to be bid as the monthly rate to be charged per residential household to provide full residential curbside recycling COllection and processing services described above, exclusive of any franchise fees, sales tax, or other City administrative fees. H].l. Base Bid - The Contractor will provide Required Residential Curbside Recycling Services to all residential solid waste customers. This bid requires aH single family, duplex, and triplex residents (Account Codes SWR and RPT) to pay for curhside recycling services. IR 1. I In the area provided within this bid document, Section V, the Contractor must specifically state in dollars and cents the Monthly Unit Rate per residential customer that they will charge the City to collect curbside recyclables from each residential solid waste customer as detailed in Section II General Scope of Services. Denton's residential solid waste customers are identified under account codes SWR and RPT. Such fee charged by the Contractor to collect eurbside recyclables exclusive of any taxes, franchise fee, other fees or charges as approved by the City of Denton must be the only collections fee invoiced the City. llI. 1.2 The amount of the Contractor's monthly invoice for residential curbside recycling collection and proccssing services will be calculated as follows: Number of Accounts multiplied by the Monthly Unit Rate = Invoice Amount For the purposes of this calculation the number of accounts will be provided by the City of Denton to the Contractor within ten calendar days of the last day of the month for which service was provided. The number of accounts will be the number of active residential solid waste accounts, charged at a Solid Waste Residential Rate (Account Code SWR and RPT) in the City's rate ordinance, on the last business day (close of business) of the calendar month for which service was provided and is being billed. (i.e., number of 18 · City of Denton Bid Number 2832 '. &cC°unts for calculating Januaty's invoice will bethe number of accounts at the close of · business on the last business day of January) No monthly edjus~tments will b~nmd~ for; ' acCOunts due'to residents moving in or' 0ur during the month, or accounts va4tte.n.off:foi: · :'~ " non-payment. TheCu~tomer Service D,epasi~ent'i COunt of accounts will be reduced by the Solid Waste Depm h~xent's most current list of Residential Customers No~ ReCeiving Solid Waste Service on the last day of the calendar month for which Service was invoiced. This final figure is termed the Number of Aeeouuts for the purpose of establishing the montmy invoice amount. ,; - III. 1.3 The Contractor will be paid monthly. The Contractor will invoice and submit together with the billing invoice all required monthly reports to the City for services provided under this COntract by the tweutieth c,~lendar (10th) day of the following month for which service was provided. The City will pay the Contractor's monthly invoice, less any penalties or disputed amounts, within fit~een 05) business days of the receipt of the invoice and all required monthly reports. m.l.4 The Monthly Unit l~te will be the rate established inthe COntract for the initial term of the contract, exclusive of' any sales tax, any future state or federal fees which may be impoSed on this type of service during the term oftMs contract, or local administrative fees. If a contract extension(s) is granted, the MontMy Unit Rate will adjust one time during the full life of the COntract, beginning with the first year of the contract extension. III. 1.5 Price adjustments to the Monthly Unit l~te per residence per month for residential COd)side recycling will increase or decrease for any contract extension beyond the initial COntract term. The new rate will become effective beginning in the first month of a contract extension and remain in effect during the balance of any Contractor's contract extension term with the City of Denton. The £ormula for the new rate will utilize the US City Average Consumer Price Index - All Urban Consumers (CPI-U) from the Bureau of Labor Statistics Southwestern Statistical Summary, Special Index "All Items Less Shelter".The formula for calculation of the new Monthly Unit Rate for periods beyond the initial contract term will be calculated using the following methodology: CPI Example Calculation: CPI for Current Period Less CPI for Previous Period Equals index point change Divided by previous period CPI Equals (Quotient plus 1.0) 185.00 (All Items Less Shelter) 170.00 (24 months prior to "Current Period") 15.00 170.00 1.088 (Rate Adjustment Multiplier) Initial Contract MomMy Unit-Rate ~ $1.50 (For 5 years) Contract'Extension MomMy Unit Rate = $1.50 x (1.088) = $1.63 The most current month's cumulative CPI-U index data available from data six months prior to the end of the initial contract will be used in the calculation to determine the new Monthly Unit Rate. 19 City of Denton Bid Number 2832 The new Monthly Unit Rate calculated will apply through any contract renewal terms of I~} 1.6 No'other materials collection cl)arges are all0wed under the contract. No penalty and interest charges will be paid on outStanding invoices or disputed invoice amounts. III. 1.7 If new Denton citizens move into a home where the recycling container is not present on the property, the citizen will receive a Standard recycling bin(s) or cart fi.om the Contractor. Additional bins and carts will be recorded on the Container Distribution List by the Contractor. Prior to container delivery, the Residential Customer's Not Receiving Solid Waste Service liSt should be checked by the Contractor. 1II. 1.8 The Contractor will be responsible for educating and informing residents that the recycling containers remain at the residence following a cuStomer move out. The Contractor will develop and submit written procedures to the City designated representative for approval within two months of program implementation. m. 1.9 Denton residents may request replacement for lost or damaged containers. The resident will be charged for the replacment container. The Contractor will report within five days, to the City representative, the customer's name and address, to be charged for the container. They will be provided by the Contractor and all procedures apply as if they were new cuStomers. (Sec. III. 1.7) m.2. Alternate Bid #1 - The Contractor will provide Residential Curbside Recycling Services as in the Base Bid, except Senior Citizens will be able to Voluntarily request Exemptions from curbside recycling fees and services for themselves if they are age 65 or older. 111.2.1 The Contractor is requested to bid for the provision of Required Residential Curbside Recycling Servcies with Senior Citizens able to Voluntarily Exempt themselves from curhside recycling fees and services if they are age 65 or older. The bid discussion stated within this document under the General Scope of Services, General Reequirements, and Bid Submittal Attachments and the Base Bid will similarly apply to this alternate bid, except that resident's age 65 and older will have a choice to voluntarily participate or not participate in the residential curhside recycling program. m.2.2 The City currently has approximately 3,000 homeowners age 65 or older. m.3. Recyclables Payments The City may from time to time have available recycled materials collected fi-om Denton's drop-offcollection sites. The City would like the option to deliver pre-sorted and comingled recycling materials to the Contractor's processing facility. The City requests the Contractor provide the rates they would pay the City for these materials: 20 City of Denton Bid N~!mher 2832 ' Denton's Drop-Off Site Materials: Comingled Paper (1V~ed Paper) OCC ~6ONP #80NP Office Paper Steel Aluminum Flint Glass Amber Glass Green Glass 21 City of Denton 'Bid N.mher 2832 GENERAL REQUIREMENTS ~ ' IV.I. Contractor Penalties , IV.I.1 Contractor Penalties will be assessed for resident complaints which are'not responded to and resolved within twenty-four hours, if there are over ten unresolved complaints within one billing month. Prompt problem resolution (within twenty-four. hours) for Denton's residents is requked. IV.I.2 Contractor Penalties assessed will be charged through a reduction in the monthly invoice amount paid to the Contractor. 1V. 1.3 Penalties will be assessed if more than ten (10) separate incidences of customer complaints are made during each calendar month which are not resolved within twenty- four hours of the customers notification to the Contractor. ffan excess often penalties are reported which were not resolved within twenty-four hours, the Contractor will be charged a penalty of $5.00 per unresolved complaint for all complaints during the month that were not resolved within twenty-four hours. IV.2. General Compliance Requirements The Contractor must comply with all Federal, State, and Local laws and regulations including, without limitations, those regarding employment, personal safety, vehicular safety, fire code safety, and environmental issues. IV.3. Insurance Requirements IV.3.1 Bidder's attention is directed to the insurance requirements below. It is highly recommended that bidders confer with their respective insurance carriers or brokers to determine in advance of Bid submission the availability of insurance certificates and endorsements as prescribed and provided herein. If an apparent low bidder fails to comply strictly with the insurance requirements, that bidder may be disqualified from award of the contract. Upon bid award, all insurance requirements shall become contractual obligations, which the successful bidder shall have a duty to maintain throughout the course of this contract. IV.3.2 Standard Provisions Without limiting any of the other obligations or liabilities of the Contractor, the Contractor shall provide and maintain until the contracted work has been completed and accepted by the City of Denton, Owner, the minimum insurance coverage as indicated hereinafter. · As soon as practicable after notification of the bid award, and prior to contract signing, the Contractor shall file with the Purchasing Department satisfactory certificates 22 · city of Denton : . · Bid Number 2832 ::~' Of insurance, containing the bid number and title of the pr0ject.'C0ntra~or' may, Upon i written request to the Purchasing Department, ask for clarification of any insuranb, e .: '~ · ~. requirements a~ any timei however, Contractors are strOngly~ad~ised tO make:'~¢h requ.est~ : pfiorto bid opening, since the insm'ance requirements may nrt be m0dified:~"~,aived iffier~ bid opening unless a written exception'has been submitted with the bid.'crntra~or shall not commence any work or deliver any material until he or she receiVes notification that the contract has been accepted, approved, and signed by the City of Denton. All insurance policies proposed or obtained m sat~sfacta0n of these requirements shall comply with the following general specifications, and shall be maintained in compliance with these general specifications throughout the duration of the Contract, or longer, if so noted: Each policy shall be issued by a company authorized to do business in the State of Texas with an A.M. Best Company rating of at least A. Any deductibles or self-insured retentions shall be declared in the bid proposal. If requested by the City, the insurer shall reduce or eliminate such deductibles or self- insured retentions with respect to the City, its officials, agents, employees and volunteers; or~ the contractor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Liability policies shall be endorsed to provide the following: Name as additional insured the City of Denton, its Officials, Agents, Employees and volunteers. That such insurance is primary to any other insurance available to the additional insured with respect to claims covered under the policy and that this insurance applies separately to each insured against whom claim is made or suit is brought. The inclusion of more than one insured shall not operate to increase the insurer's limit of liability. All policies shall be endorsed to read: "Said policy shall not be cancelled, nonrenewed or materially changed without 30 days advanced written notice being given to the owner (City) except when the policy is being cancelled for nonpayment of premium in which case 10 days · advance written notice is required." Should any of the required insurance be provided under a claims-made form, Contractor shall maintain such i:overage continuously throughout the term of this contract and, without lapse, for a period of three years beyond the contract expiration, such that occurrences arising during the contract term which give rise to claims made after expiration of the contract shall be covered. Should any of the required insurance be provided under a form of coverage that includes a general annual aggregate limit providing for claims investigation or legal 23 City of Denton Bid Number 2832 defense costs to be included in the general annual aggregate, limit,'the Contractor shall either double the occurrence limits or obtain Owners and'C~ntractors Protective i [_ Liability Insurance. : ~ "":: ~' Should an required insurance laps~ during the contract t6rm; requests for'I~ayments Y orJ~nnting after such lapse shall not be processed until the. City receives satisfactory evidence of reinstated coverage as required by this contract, effective as of the lapse date. ffinsurance is not reinstated, City may, at its sole option, terminate this agreement effective on the date &the lapse. IV.3.3 Specific Additional Insurance Requirements All insurance policies proposed or obtained in satisfaction of this Contract shall additionally comply with the following marked specifications, and shall be maintained in compliance with these additional specifications throughout the duration of the Contract, or longer, if so noted: General Liability Insurance: General Liability insurance with combined single limits of not less than $1.000.000 shall be provided and maintained by the Contractor. The policy shall be written on an occurrence basis either in a single policy or in a combination of underlying and umbrella or excess policies. If the Commercial General Liability form (ISO Form CG 0001 current edition) is USed~ Coverage A shall include premises, operations, products, and completed operations, independent contractors, contractual liability covering this contract and broad form property damage coverage. Coverage B shall include personal injury. Coverage C, medical payments, is not required. If the Comprehensive General Liability form (ISO Form GL 0002 Current Edition and ISO Form GL 0404) is used, it shall include at least: Bodily injury and Property Damage Liability for premises, operations, products and completed operations, independent contractors and property damage resulting fi.om explosion, collapse or underground (XCU) exposures. Broad form contractual liability (preferably by endorsement) covering this contract, personal injury liability and broad form property damage liability. Automobile Liability Insurance: Contractor shall provide Commercial Automobile Liability- insurance with Combined Single Limits (CSL) of not less than $1,000,000 either in a single policy or in a City of Denton .. Bid Number 2832 combination of basic and umbrella or excess policies. The policy will include bodily injury and property damage liability arising out of the operation, maintenan6e and'use of ~:~ . all automobiles and mobile equipment Used in conjunction with.this contrats[ Satisfaction of the above requk~ment shall be m the form of a policy endorsement for~ Any auto, or All owned, hired and non-owned autos. Workers Compensation InsuranCe: Contractor shall purchase and maintain Worker's Compensation insurance which, in addition to meeting the minimum statutory requirements for issuance of such insurance, has Employer's Liability limits of at least $100,000 for each accident, $100,000 per each employee, and a $500,000 policy limit for occupational disease. The City need not be named as an "Additional Insured" but the insurer shall agree to waive all rights of subrogation against the City, its officials, agents, employees and volunteers for any work performed for the City by the Named Insured IV.3.4 Additional Insurance Excess (or Umbrella) Liability Insurance with a minimum limit of $1,000,000 coveting in excess of the proceeding insurance policies. IV.4. Bond Requirements IV.4.1 Bid Bond Requirements Each bid must be accompanied by a cashier's check, certified check or acceptable bidders bond payable without recourse tO the City of Denton, Texas in amount not less than Five Thousand Dollars ($5000) submitted as a guarantee that the bidder will enter into a contract and execute any required bonds, and insurance certificate, within fifteen (15) days after the notification of the award of the contract to the Bidder. The Bid bond will require approval by the City Attorney. 1V.4.2 Performance Bond Requirements As soon as practicable after notification of the bid award, and prior to contract signing, the Contractor shall file with the Purchasing Department a performance bond in the.amount required by the City. During the term of this agreement and for the term of any renewals, the successful Bidder will be required to furnish and keep in full force and effect a performance bond as further security for the performance of the curbside recycling contract. The performance bond will be in an amount equal to the product of the Number 0f Accounts times the 25 City of Denton Bid Number 2832 ;Monthly Unit Rate times the number 0~months !emaining in the contract termplus i0%,' adjuSted on each ContraCt anniversary date. The Bidder will pay all premiums for ~the bond. A certificate for the sure~y showing that the bOnd Premi~uns' ai-e~pald aCC°mpany the bond.-The Performanc~ bond will be issued by.a duly authOrized .corPorate surety company authorized to do business in the State ofTexas. The Performance bond will require approval by the city Attorney. ' ' IV.5. Written General Assurances IV.5.1 The Contractor is required to provide assurance, Bid Submittal Attachment 9, that it has or will acquire the personnel and equipment resources necessary to render timely and efficient collections and associated services as stated in this bid and that it has the management and financial ability to perform such services. IV.5.2 The Contractor is required to provide written assurance, Bid Submittal Attachment 9, that it will conduct collections and associated activities in compliance with generally accepted bus'mess practices and ethics, as well as abiding by all local, state, and federal laws and regulations governing solid waste, recycling, collection and processing operations. IV.5.3 The Contractor must state, Bid Submittal Attachment 9, whether or not it intends to subcontract out aH or any portion of the services required in this specification and subcontract at any time during the contract term. IV. 5.4 The Contractor is required to provide the City with the two most recent professionally prepared and audited annual financial reports, Bid Submittal Attachment 9, at the time of bid submittal. If the Bidder considers this information to be proprietary, the Bidder must preface their proprietary information submitted in this attachment with the statement "The following information is proprietary and exempt from the Public Information Act". This proprietary information will be returned to the bidder after the City Council has acted on this bid. IV.5.5. The Contractor is required to provide a list of aH Cities in the North Central Texas Council of Governments area, Bid Submittal Attachment 9, that the Contractor currently provides curbside recycling services too. In addition, the Contractor will provide the City of Denton a contact name and telephone number. The Contractor grants the City of Denton permission to contact the cities on their list to discuss curbside recycling services provided by the Contractor. Ir'the Bidder considers this information to be proprietary, the Bidder muSt preface thew proprietary information submitted in this attachment with the statement "The following information is proprietary and exempt fi.om the Public Information Act". This proprietary information will be returned to the bidder after the City Council has acted on this bid. 26 City of Denton . Bid Number 2832 IV.6~ List of Recently Disposed and Pending RecyclingServices Litigation The Contractor is required to provide inf~ormation, Bid Submittal Attachment 10 . for'all recycling issues in the North ,Central Texas Council of Governments area on any' current and/or pending litigation and/or any litigation settled or disposed ~within the previous two years against the Contractor, including its pa~vllt company which involved performance or compliance under a contract to provide recycling services. IV.'/. History of Regulatory Complianee The Contractor will provide a list of current pending administrative orders or violations of local, state, and federal laws, rules, and codes for any recycling operations in the North Central Texas Council of Governments area operated or owned by the Contractor which the Contractor has been cited, reprimanded, or punished, Bid Submittal Attachment 11, including its parent company. Include documentation regarding any recycling operations violations documented, settled, or disposed of within the previous two years. IV.8. City of Denton Visits/Designated Representatives IV. 8.1 The Contractor is invited to visit the City of Denton and meet with the Solid Waste Department's administrative staffto familiarize themselves with Denton in general and the City's residential solid waste and recycling operations. To arrange a visit, please contact the City of Denton's designated representative for the Curbside Recycling Contract: City of Denton Representative: Shirlene Sitton City Representative (Print Name) Recycling Mana~,er Title 901 A Texas Street Street Address Denton Tx. 76209 City State Zipcode 940 - 349 - 8467 Office Telephone Number 940 ~ 349 - 7117 Fax Number 940 - 390 - 3412 Shirlene. Sitton~CityofDenton.com Mobile Telephone Number . E-mail Address 27 City of Denton Bid Number 2832 IV.8.2 The Contractor will provide the City a liaison name, address, and telePhone number of a designated representative, Bid sabmittal Attaehment 12, in charge of City of Denton services whom the City may contact as needed for any recycling purposes. The City: '..'~. requires that telephone calls to the Coqtractor's designated respresentative shall be . returned within the same day if called prior to 3:00 PM. ~ IV.9. Disqualification of Bidders Bidder's may be disqualified for any of the following reasons: · The Bidder is involved in litigation with the City of Denton · Failure to provide all of the requested information in the Bid Document Failure to comply and agree to conform to the City's requested procedures IV.10. Contract Termination IV. 10.1 An act of default shall arise when Contractor and/or City shall substantially fail to fulfill its obligations under this Contract. Once an act of default has occurred, and Notice of Default is provided, which specifically describes the default, the non-defaulting party shall provide the defaulting party twenty (20) days fi-om the receipt of such written notice, to provide the curative action necessary, and an opportunity to cure the default. If the default is cured within the time provided in the notice, then no further steps may be taken toward terminating this Contract. ffhowever, the default is not cured within that time, and no extension of time is obtained in writing by the defaulting party, then the non-defaulting party may proceed with termination of the Contract, Notice of Terminntinn, if that party so elects. IV. 10.2 This Contract may be terminated in whole or in part in the event of either party substantially failing to fulfill its obligations under this Contract. No such termination shall be effected unless: (1) the defaulting party is given written notice of default as set forth in the contract and IV. 10.1 above and the alleged breach is not cured to the non-defaulting party's satisfaction; (2) a written Notice of Default shall be delivered to the defaulting party at the notice address provided herein in the contract, by means of certified mail, remm receipt requested, of the non-defaulting party's intent to terminate the Contract, and setting forth specifically, the reason(s), and specifying the non-performance (if applicable) of provisions of the Contract, or other reasons, and a period of not less than thirty (30) days to fully cure such failure; and (3) an opportunity for consultation between the parties, to take place in Denton, Texas, prior to any termination of the Contract. [Any consultation is to take place within the thirty (30) days following issuance of the Notice of Default specified in the contract.] IV.11. Proposal Evaluation and Selection Criteria IV. 11.1 The Bidder's submitted documentation to provide residential curbside recycling services within the City of Denton will be evaluated in the following areas, and weighted by the City based upon the percentages listed. City of Denton Bid Number 2832 · Cost - 72.5% · Implementation and Operations Plan- 10% ' · Customer S~rvice Plan - 5% .:. · Recyclable Materials Sales Progr~am - 5% · Company experience and performance - 2.5% · Client satisfaction- 2.5% Processing site capabilities and performance - 2.5% IV. 11.2 None of the areas listed above will be the sole basis for Contractor selection, but Cost is the single most important item Each bid submittal will be considered on all items provided above. IV. 11.3 AH City of Denton bid evaluative and submittal materials containing proprietary information will remain private and confidential with the City of Denton. The proprietary information will be returned to the Bidder at the end of the evaluation and selection process, if requested by the Bidder. IV. 11.4 The City may choose to conduct telephone or in-person interviews with any or all bidders as part of the bid evaluation and selection process. The City is under no obligation to interview any Bidder, and if it chooses to do so, will do so of its own decision. An interview is for information and clarification purposes only and does not mean or imply any obligation on the part of the City. 29 City of Denton Bid Number 2832 v - , ·: ~ BID SHiP, ET AND ACKNOWI,F~DGEMENT . ~. ~: Bidder's Curbside Recycling Colle~0on Chnrges -' - ': ' - . .... Bidders must bid on the Base Bid. Bidders are not required to respond, but are encouraged to respond to Alternate Bid #1, and the Recyclables Payment Schedule. The Bidder fully agrees to provide the stated curbside recycling services clearly defined herein for the following monthly charge per solid waste residential account. Prices are to be recorded per residential unit per month, both vumericaHy and in writing. Base Bid - The Contractor to provide Required Residential Curbside Recycling Services with the City providing aH customer billing services. This bid requires all single family, duplex, triplex, and fourplex residents (Code SWR and RPT) to pay for curbside recycling services. Unit Pdce: Number Written Amount Alternate Bid #1 - The Contractor to provide Residential Curbside Recycling Services as in the Base Bid, except Senior Citizens will be able to Voluntarily request Exemptions from curbside recycling fees and services for themselves if they are age 65 or older. Unit Price: Number Written Amount The City reserves the right to select one of'the bids listed above as either the Base Bid, or Alternate Bid #1, or to reject both bids. 3o · Ci/y of Demon ~Bid Number 2832 ReCYclables Payment Schedule 'The City mayfrom time to time have availabie recycled materials cOllected fi~m Dent0n's drop-off cOllection sites. The,City would like the option tO deliver pr~2sb~ed and cOmingled recycling materials to the Cofitractor's processing facility. The City requests the Contractor provide the rates they would pay the City for these materials. Bidder's may bid an any or all cOmmodities delivered by the City to the Contractor' s processing facility. Denton's Drop-Off Site Materials: Comingled Paper (IVfixed Paper) OCC #60NP #80NP Office Paper Steel Aluminum Flint GlaSs Amber Glass Green Glass Payment to City The Bidder should provide pricing or the percentage (%) of an index price which they will pay for materials. Example~ OCC .. 50% of High Side Southwest Listing 31 City of Denton Bid Number 2832 Contractor Acknowledgement ~'~ .' .' ~' · rsta ding plian Agree ',- ' ' Full Bid Unde n and Corn ce ment -..~ . . ~. ,~ The Contractor hereby acknowledgns t~hat it understands and will comply'w~th all terms, conditions, requirements, fees, and specifications contained in and as apart 9fthis bid document. Based on its compliance with all terms, conditions, requirements, fees, and specifications contained herein and as a part of this bid document, the Contractor's authorized representative shall sign and submit Bid Submittal Attachment 13. 32 City of Denton Bid Number 2832 Bid Submittal Attachment 1' Buyer Authorization Form' Please duplicate and complete this form for each commodity buyer· Bidder Company Name Bidder's Authorized Representative (Printed Name, Title) Bidder's Signature) hereby grants the Solid Waste Department Representative of the City of Denton, Texas authorization to contact, Commodity Company Name to obtain historical information related to recyclable materials sales from the Bidder Company to the Commodity Buyer Company over the previous two years. Information requests to the Bidder's recyclable materials comm6dity buyers will consist of the following information on an annual basis for up to two years. · Tonnages Sold by Product Class Commodity Buyer Information Requested: Please complete the information below. Company Name City and State (Location) Company Contact (Person) Contact Telephone Number Recycled Products Buyer Accepts Comnqents: 33 City of Denton Bid Number 2832 · ~i Bid Submittal Attachment Sire'information Recycling Materials PrOcessing 34 City of Denton Bid Number 2832 Bid Submittal Attachment. 3 ~- ImPlementation and Operations Plan' City of Denton Bid Number 2832 Bid Submittal Attachment Vehicle. Master List Fo~m Bidder Company Name Fro~l Line = FL 2 3 4 5 6 7 9 I0 36 City of Denton Bid Number 2832 Bid Submittal Attachment Alternate Plan of Actio 37 City of Denton Bid Number 2832 "Bid .Submittal Attachment 6 Proposed Service 'Area Route Plan 38 City of Denton Bid Number 2832 Bid Submittal Attachment 7 Customer ServicePlan 39 City of Denton Bid Number 2832 Bid Submittal Attachment 8 · Monthly, Quarterly and Annual RepOrts City of Denton Bid Number 2832 Bid Submittal Attachment 9 Written General AssuranCes 41 City of Denton Bid Number 2832 · ~ ' Bid Submittal Attachment 10 -. · · List of RecentlY Disposed a'nd Pending Litigation 42 City of Denton Bid Number 2832 Bid Submittal Attachment 11 "~ .,:. -..' ~. - ItiStor~ of Regulato~ C°mplianee ..... ., . . . . . - .:..,- .~-=?:.~ ·'~._~..,' ~ - 43 City of Denton Bid Number 2832 Bid Submittal Attachment 12 Designated Representative Contractor Respresentative: The Contractor will provide the following information in Bid Submittal Attachment 14. Contractor Representative (Prim Name) Title Street Address City State Zipcode Office Telephone Number Fax Number Mobile Telephone Number E-mail Address City of DentOn Bid Nmber 2832 Bid submittal Attachment 13 Full Bid Understanding and ComplianCe Agreement The Contractor hereby acknowledges that it understands and will comply With all terms, conditions, requirements, fees, and specifications contained in and as a part of this bid document. Based on its compliance with all terms, conditions; requirements, fees, and specifications contained herein and as a part of this bid document, the Contractor's authorized representative shall sign and submit Bid Submittal Attachment 15. Company Name Company Authorized Representative (Printed Name, Title) Company Authorized Representative (Signature) 45 City of Denton Bid Number 2832 · -' ': .. Attachment I ..... . · e© p' g phi ' Denton Str t Ma and Demo ra c Information Economic Development Welcome to the City of Denton's Economic Development Depamnent. In adaltion to Economic Development, Comm~mity Development and the Main Street Program repol~ to the FA:onomi¢ Development Director. ,' The office of Economic Development serves as the City's customer service contact for new and existing businesses. The focal points of our office are jub creation, business recruitment and expansion, ~mall business formation and assistance, and international Wade and relations. Our services span from assisting qnalifled businesses in obtaining HUB (Historically Unde~filized Eh~nin~s) status to development facilitation and incentive negotiations. Economic Development places sixang emphasis on economic restructuring based on bnniness retention and recruitment. With monthly b.~iness relation visits and the · quarterly Mayor and Council Breakfast Program, the City has developed a greater understanding and awareness of the needs, challenges and future direction of local businesses. Our office is currently working with the planning Department Small Area Plan staffto develop and implement small area plans in the F~y Smoot Area, the Southeast Denton Area and Denia Area. Economic Development is also implementing the newly established Neighborhood Empowerment Program. The City's oppommities in the international marketplace continue to strengthen through the City's participation in the North American International Trade Corridor Partnership, Sister Cities and DisUict Export Council initiatives. Economic Development also hosts an ever-increasing number of international delegations interested in Denten's business climate, awurd-winnln§ municipal pmgramn and university research capabilities. The Main SUeet Program is a worldwide program to l-~vi~ahz~ downtown areas. The Denton Main Street Program began in 1989. Since then, there have been marked physical and financial improvements in the area. Over $24 million have been reinvcsted in Denton's Historic Downtown since 1989. The Denton Main Street Association is a 501 (c) (6) non-profit orgnni?ation. While the City of Denton supports the Main Street Program by funding administrative costs, all promotion, advertising and events are funded by the private sector through the Main Street Association. Downtown management in Denton is truly a public-private partnership. The mission statement of the Denton Main Street Program is "Through the combined efforts of public/private partnerships will preserve and market the downtown area as a community t~usure, focusing on historic preservation, continuing reinvestment and developing heritage tourism." Our vision is to maintain Denton's downtown area as the focus of the community where history is preserved, businesses thrive and citizens and visitors dine, shop, live and enjoy the arts and entertainment. For information on Main Street, visit www.dentonmalnstmct.org. The Community Development Division administers funding designated to assist low and moderate-income citizens. Various funding sources are used to provide these services including Federal Community Development Block Grant (CDBG) and HOME funding. Community Development's programs include: Home Improvement Loans, Homebuyer's Assistance, Emergency Repair and Micro-Enterprise Loans. Staff works with more than 25 social service agencies that receive funding support from the City of Denton. Comm~mity Development's funding is also used to demolish substandard buildings and complete public facilities projects, which improve water and sewer services, streets and drainage services and sidewalks and City of Denton Bid Number 2832 parks services. For more information on Community Development, please contact their office ~t (940) 349- 7726. · .. : - _ . · .v~-la~me ' hip 'Economic Dcve nt Partners The City of Denton and the Denton Chamber of Commerce formed an eCOnomic development parmership m 1987. Under the contract, The Chamber' s egonomig development ofl~ce performs the industry recndfing and marketing activities, which focus on targeted industries. The offices work together to provide information to proq:n~ive businesses, allies and citizens. For more information on Denlon Chamber of Commerce, please visit www.denton-chnmber, ore. Location An independent community of 64.428 square miles, Denton is only 38 miles north-northwest of Dallan and 36 miles north-northeast of Fort Worth. Denton is stra~gically located on the Interstate 35 Corridor, the North American Free Trade Agreement (NAFTA) Highway, at the junction where 1-35E and 1-35W join to continue north to Canada. Proximity to the DFW International Airport, Alliance Air~ort and to the major highways and railways of the region makes Denton an ideal location for citizens, businesses and industry. -35W £-635 DAI.L AS [-20 ._~-45 Quality of Life Denton is a unique commltnity whose diversity gives it strength. Although Denton is no longer a small towa, there are certaln qualities of small town life that our citizens hold dear. Thc historic downtown is the heart of Denton; the square and surrounding streets are used every day and night as a gathering place for commerce, civic events and entertainment. 47 City of Denton Bid Number 2832 Not only is Denton the coanty seat of Dent0n County, but it is als° the home of two maj0r anivgrsities '? the. University of North Texas (IJlqT) and Texas Woman's University (TWU). These two ing-titutiOas . ' ' sio°nificantly conm'bute to the economic base (two of the city's largest -emPl6yC[s) and,to tl~ d~verse 9~1 ,tufil)l, ~ -'. activity Denton en~oys. Mom than 35,000 students are enrolled'in un~rgraduate a~l graduate pro~m~ on univemty c~mpus~ Dentun~ UNThasbeenreco~ni?od~ncel9?6bytheCarne~eFoundationasaDoctorallResea~ch Univer~ty. UNT operates a Health Science Center in Fort Worth and opened a third c~mp~ recently in southern Dallas. Named as one of the "1 O0 Best College Buys' and ~ 1 ~0 Most Wired College Campuses," UNT is also internationally acclaimed fur ils Grammy-wlnnin§ music pro,ram. '~ . TWU, the largest university in the world primarily serving women, offers bacbelors, masers and doctoral de~rces in more than 100 fields of study. TWU's Denton campus is one of three ~mpuses dedieated to health service fields. The other two campuses are located in D~II~ and Houston. The university h'braty houses the vast Women's Collection - the largest searce of research material about Southern and Southwestern women in the nation. Many pe~onning groups provide Denton with an endless supply of cultural and ente~inment opportunities. The Greater Denton Arts Council, Denton Community Theater, Denton Civic Ballet, Denton Light Opera Company, Bach Society, LINT College of Music, UNT Dance and Dr'amn Doparl~ent and TV~IJ Dan~ and Theater A~s Depam~ent top the list. In addition, year-round festivals and events draw thousands of visitors from outside the Denton area. The City maintains 25 parks and open spac~ and 8 m~z~atianal facilities that offer expansiv~ leisure opporlunities and appeal to ev¢~7one from rock climbers to jazz enthusiasts. The City's Parks and Recreation Department has won the National Gold Metal Award for Excellence twice. In the near future, Denton is expecting the addition of an Aquntics Cenler to include indoor and outdoor pools and a water recreation park. The Aquatics Center is a partnership betwecn the City of Denten and the Denten Indel~ndent School District. Jane 5, 1999 marked the exciting grand opening of the Greanbelt Corridor. Rn~ning north and south along the Elm Fork of the Trinity River, the Greenbelt connects Lake Ray Roberts and Lake Lew~.. e. The Greenbelt preserves the natural habitat of the river, pmtecls water quality and creates many umque recreational opporlunities, su¢li as hiking, biking, eancein§, head,back riding, fishing and wildlife viewing. 48 City of Denton · Bid Number 2832 The Rock Climbing Waft at Denia Recreational Center Denton County Courthouse 49 City of Denton Bid Number 2832 Population GroWth Denton 50,021 66,270 80,537 82,976 97,075 32.5% 21.5% Denton Cotmt~ 143,101 273,525 432,976 453,853 577,581 91.1% 58.2% Sound:: National Decision Sy~-nns Rcpo~ May 1999, U.S. Bu~au of C~mus, Cea~us 2000 & * Es~ma~ calculated from City of D~nton's planning Land Area and Estimates 64.4 75,000 122,498 184,955 5 Mile ETJ, ' 2020) · 181 9,009 15,329 ~our~e: RU~T, HOK. City of Denton Gtowlh M~ plan, 1998, City of Denton's plarming & Developmen~ ~ · Cummt land ama is 64.428 square mile~ 27,950 Race White 58,132 77.2 349,999 87.3 60,886 75.6 358,739 88.5 Black or A~ican American 7,907 10.5 17,239 4.3 7,329 9.1 20,116 5.0 Asian 3,389 4.5 12,428 3.1 2,738 3.4 10,185 2.5 AH Other (not Hispanic) 5,873 7.8 21,248 5.3 9,584 11.9 16,461 4.0 Hispanlc Origin 13,151 21.6 28,187 7.0 13,151 21.6 28,187 7.0 Source: National Decision Systems Repo~ May 1999, U.S. Census Bmcau, Census 2000. Note: Th~Ce~susinclmtca Hispanic population in White. Tlm figures have bec~scparatcd forclarklication. Duc to the C~nsus format which allowed participa~ to select mo~ than one race/ethnicity, these figu~a will ma balance ~ ~ t~ to ~ o~ ~on figure. 50 City of Danton Bid Number 2832 Profile Under 5 Yems 5~9Years 4,974 - ~ ~ ~ : :'35,387 4,493 4,330 10 to 14 Years 15 to 19 Years 8,055 20 to 24 Years 14,907 25 to 34 Years 14,364 35 to 44 Years 10,392 45 to 54 Years 7,963 55 to 59 Years 2,683 6O to 64 Years 1,992 65 to 74 Years 3,091 75 to 84 Years 2,257 85 Years and Over 1,016 ,~urce: U.S. Camsus Bureau, C4msus 2000. ~ 34,105- · ~ 32,355 31,502 ~. 35,584 78,122 81,985 55,302 16,552 10,379 12,403 6,887 2,413 Per Ca ~ita Income City of Dentnn $ 12,057 $ 18,474 53.2% ~)elltrm CO[lllty $16,114 $ 26,334 63.4% Sotwee: U.S. Census Bureau, Cereus 2000. Household Income Cit~, of Denton Denton Count $ 0 - 24,999 440/0 $ 0 - 24,999 200/0 $ 25,000 - 49,999 26% $ 25,000 - 49,999 25% $ 50,000 - 99,999 22% $ 50,000 - 99,999 36% $ 100,000- 149,999 5% $ 100,000 - 149,999 12% $ 150,000 and Over 3% $150,000 and Over 7% Source: Maiketview Comparisen R~po~L Clarflas, Inc. 2001. 51 City of Denton Bid Number 2832 Economic Indicators (FBI) (after tax) $1,246,265,000 $1,235,080,000 ~ $ 8,627,101,000 Median Household Effective Buying Income $ 28,670 $ 29,183 $ 47,952 Percentage of Households by EBI Group: $ 20,000 - $ 34,999 20.3% 19.8% 17.8% $ 35,000 - $ 49,999 15.4% 15.9% 17.3% $ 50,000 and over 26.8% 27.2% 47.7% Buying Power Index 0.0326 0.0297 0.1677 goure~: 8alea & ~ bl,~g~at. Survey of Buying Pow~. g~afl~r 1999 and Sqman~r 2000. t~etau ~mcs oy ~tore ~Jrou p Total Retail $1,178,688,000 $1,309,768,000 $5,501,681,000 Food & Beverage Stores $125,282,000 $86,461,000 $708,538,000 Food Services & Drinldn$ Establishments $99,086,000 $161,474,000 $403,117,000 General Merchandise $186,206,000 $217,685,000 $913,071,000 Furniture & Home Furniture and Electronics & Appliances $51,149,000 $88,876,000 $387,616,000 Motor Vehicle & Parts Dealers $451,553,000 $368,836,000 $1,532,842,000 Other (Apparel, gasoline, building materials, etc.) $265,412,000 $386,436,000 $1,556,497,000I Source: Sales & Marketing Management, Survey of Buying Power, Sqaember 1999 and September 2000. 52 City of Denton. · Bid Number 2832 ACCRA Cost of Livin Index U.S. Average = 100 - · - Composite (All Itemg) 100.6 · 101.1 ' "99.5 Grocery Items 97.9 99.2 96.2 H0nnin~ 99.2 96.9 96.6 l. Itilifi ~'q 97.9 107.2 99.0 Transportation 104.1 104.7 104.4 ~-It,~lth ~ 107.3 106.8 102.2 Mige~llan~llg Good~ & S~vice$ 101.6 102,2 101.7 gouro~: ACCRA ( American Chamber ofCommarcg Rammrc~ars Associalioa) www.acon~or~ Avera Cost of A )artments in Denton Et~teieney $ 400 1 Bedroom $ 530 2 Bedroom $ 648 3 B~droom $850 Source: Community Development Department, City of Denton - March 2000. Information herein deemed refiable bm not guaranteed. Provided by the Greater Denton Wise County Association of Realtors. Copyright: 1999 by North Texas Real Estate Information Systems, Inc. Labofforce Wa :Rates for Selected Occupations Acco. ntant $ 12.08 $ 36.48 $ 19.16 Bookk~.,~r 7.10 17.57 11.53 Chemical Plant Operator 12.34 25.23 18.88 Common Laborer 5.99 14.34 8.75 Electronics Technician 10.07 26.74 16.79 Forklift Operator 7.76 18.41 11.49 lathe Operator 8.95 20.52 13.65 Machine Operator 7.81 19.84 12.00 Maehinigt 8.69 21.12 14.30 Mainlenan~:¢ Electrician 11.31 31.81 19.13 Maint~nanc~ Mee~hanic 7.74 22.17 13.62 Office Clerk - Typist 6.48 15.14 9.77 Or, ce Manager 7.00 19.02 11.14 Order Clerk (Material, Merchandise) 7.08 16.71 10.78 Pot ter/Custediarff.la nimr 5.79 13.44 7.90 prndnefinn Ase.~mhler 6.76 20.27 10.75 Secretary 7.20 16.62 11.18 Shipping and Receiving Clerk 6.70 15.63 9.99 Tool and Die M~rker 11.84 27.45 18.60 Truck Driver, Light 6.40 18.05 10.33 Warehouse 5.90 15.39 8.35 Welder 8.34 19.71 12.58 Source: U.S. Department of Labor, Bureau of Labor Statistics, Jul ' 2001. 53 .. City of Denton ~r Bid N. mher 2832 ' : U.S... '5.5% 6.7% 7.4% 6.8% 6.1% 5.5% 5.0% '4.4% 4.0% 3.7% 3.7%. ' 4~7% ' Texas 6.2% 6.6% 7.5% 7.0% 6.4% 5~9% 5.0% :4.5% 4.4% 4.2% '4.3% 5.4% Denton County 4.8% 5.6% 5.3% 4.3% 4.2% 3.7% 3.0% 2.0% 1.6% ~1.8% 2.1% 3.3% City of Denton 6.5% 7.5% 7.5% 6.2% 6.0% 5.4% 4.3% 2.8% 2.4% 2.7% ' ~3.1% 4.7% Source: Texas Worlcforce Commission, July 2001. · Current Available Laborforce City of Denton 61,283 Denton County 271,422 Dallas MSA 2,031,655 Source: TexasWorkforce Commission, June2001. Ma or Public Em ,ers University of North Texas 5,900 Denton Independent School District 2,000 Denton State School 1,353 Denton County (County Government) 1,227 City of Denton (Municipal Government) 1,200 Texas Woman's University 1,131 FEIMA (Federal Emergency Management Agency) 750 Source: Chamber ofCommerce, Jauuary2001. *Does not include retail. Ma or Private Em doyers Peterbilt Motors (Diesel Trucks) 1,325 Boeing Company-Corinth (Military & Commercial Electronics) 1,733 Denton Regional Medical Center (Hospital) 865 Victor Equipment Company (Welding Equipment) 500 Denton Community Hospital (Hospital) 500 General Telemarketing, Inc. (Call Center) 390 Sally Beauty Supply (Corporate Office) 361 Jostens, Inc. (Class Rings) 350 First State Bank (Bank) 350 Anderson Merchandisers (Distribution/Warehouse) 310 Andrew Corporation (Microwave Antennae) 310 CBS Mechanical (Construction Services) 275 54 City of Denton Bid Number 2832 . ·The Infinity Panners (Custom Interiors for Corporal6 J~) · _'., : -270 Denton Publighing Company {Daily Nev~spaper) ' ' 175' 160 Acme Brick (Brick Mamd'acturer) The Associates (Call Center) 160 SCI Enclosures (Plastic Molding) ' 150 Safety-Kleen (Recycled Solvents and Blended Fuels) 140 Denton Good Samaritan Village (Retirement Community) 140 Skyfab (Sheet Metal Work) 130 United Copper Industries (Copper Wire Manufacturing) 126 Russell-Newman M~nuthcturing (l.~lles' l.ingerie) 120 II arllggon Hotel & F. agle Point Golf Course (Hotel) 120 Mayday Mannfaeturing (Aerospace Maeh?ed Part~^, 100 Source: Denton Chamber of Commerce, January 2001. *Does not include retail. SAT S¢ .... Verbal Math Total Denton Independent School District 514.0 512.0 1026.0 Texas 494.0 .499.0 993.0 U.S. 506.0 513.0 1019.0 Source: Denton Independent School District 55 City of Denton Bid Number 2832 BUilding Permits , for ye~r-To-Date~Jtme 2001 Source: City of Denton Planning and Development Department Monthly Report, June 2001. 56 City of Denton Bid Number 2832 CityofDenton $0.51315 $0.50815 $0.50815 '.'~ $0.052815 Denton County 0.25590 0.24875 0.23504 : 0.23193 Denton Independent School District 1.77500 1.85000 1.70000 1.84400 Total $2.54405 $2.60690 $2.44319 $2.6040800 Source: Denton County Appraisal District Sales Tax Rates State 6.25% City 1.50% Total 7.75% Source: City of Denton Fiscal Operations Department Distribution of Tax Base % of % of % of Net Tax Net Tax % of Net Tax Net Tax Tota Single- Value Total Value Total Value Total Value 1 Family $ $ Residentia $ 45.6 / $ 46.0 1,106,696,1 927,309,73 31.5 I 886,082,6530 / 974,098,608 5 84 47.13 4 0 -14.10 Multi- Family Residentia 10.2I 470,074,99 15.9 1 198,126,7630I 210,816,212 9.97 257,579,624 10.97 4 7 5.77 Commerci 39.~ I 39.5 1,185,788,3 40.2 al 769,593,426 835,681,543 0 877,139,393 37.35 74 8 0.67 Undevelo 134,844,79 ped 78,431,483 4.04 [ 78,722,045 3.77 94,987,359 4.05 I 4.58 0.54 Other 10,809,952 0.55 14,995,586 0.71 11,796,338 0.50 14,708,604 0.50 -0.05 $1,943,044, 100. $2,115,313, 100. $2,348,198, 100.0 $3,059,636, 100. Total 27700 994 00 898 0 733 ~00 Source: City of Denton Finance Department 57 City of Denton Bid Number 2832 Economic Development Incentives : .;.. ~: ., .: ...... : Tax Abatement:' The CitY ofDentonadopted a tax abatement policy that is available to new and expanding businesses, corPOrate office headquarters and distribution centers. The policy provides between 25% .a? 50% in abatement for up to ten years. Hi~tory .and philosophy of the firm, project specifications, and the potential impact on the Community are factors that are considered during the application approval process. Freeport Exemption: The City of Denton, Denton County and Denton Independent School District passed the Freeport Amendment, which exempts certain business personal property from ad valorem taxes. Goods, wares, merchandise, other tangible personal property and ores (other than oil, natural gas and other petroleum products) are exempt fi-om ad valorem taxation if the property is (1) used for assembling, storing, manufacturing processing or fabricating and (2) is shipped outside the state no longer than 175 days after it is acquired~ For additional information, contact the Denton Central Appraisal District at www.dentoncad.com. Infrastructure Assistance: The City of Denton promotes economic growth through a program ofinfi-astructure financing. This program is available to industrial, distribution and corporate headquarter prospects which have committed to building facilities in Denton. Commercial and retail prospects which sell a majority of their goods and services to individuals or businesses outside of Denton may also qualify. An economic analysis is performed on each project to determine project costs and benefits over a five-year period. The results of the analysis are an important factor in the project approval process. Denton Municipal Electric Industrial Development Rider: New and existing industrial and commercial service customers may receive a reduction in their demand billing. The incentive is available to those customers whose electric service represents demand not previously served by the City at any location in the City's service area in the last 12 months and where such metered demand is in excess of 225 KVA or 200 KW per month. The monthly demand billing will be adjusted in accordance with the following table: Reduction to First Year 50% Second Year 40% Third Year 30% Fourth Year 20% Fifth Year 10% 58 City of Denton Bid Number 2832 :.~ industrial Revenue Bonds: The City of Denton has'~stablished a' ,-~ .-: '- .' '. : -' non-pr°fit industrial devel0,Pment corporation autfiorized t0 !s~e tax.-exeml~[ or:~aXab.!e.. ::"revenue bonds unde~ Texas Development Corp0riition Act ~f 1979.'~Eligible'prgjects must · '~ .. p~-omote the develbpment or expansion of manufacturing fac_'flities in Dent0t~ ~B0nd' ' proceeds may be used for land, depreciable propeWj, inventory, raw matenals~, finance ... charges and research and development costs. 59 City of Denton Bid Number 2832 Attachment 2 Contractor Minimum Employee Requirements - · The Contractor's employees are requil'ed to meet the minim/un City of Denton 'employee requirements listed below: · Pass a drug screen test · Possess a Class "C" Texas driver's license or a CDL commenSUrate With the vehicles to be operated, meeting all DOT requirements and agree to a review of your driving record · Produce information required under the Immigration Reform and Control Act (I-9 Form) · Pass a criminal history background check · Show proof of automobile liability insurance (for employees that will be required to drive their personal vehicle to conduct city business) Standards of Review on Background Checks As a part of the application process, the City of Denton conducts pre-employment criminal histoPy background checks for all positions and driving record history checks for all positions requiring a driver's license. The applicant's failure to identify any incidents as requested on the employment application, unless allowed by law, and the subsequent revelation of the incident pursuant to the criminal history and driving record background checks will automatically disqualify the applicant from employment with the City of Denton. Criminal History Background Checks: A criminal history background check that reflects the following will automatically disqualify an applicant from employment with the City of Denton: Conviction* of a crime involving violence (including bnt not limited to, murder, attempted murder, felony assault, sexual assault, indecency with a child, etc.) Conviction* ora crime involving the use ora deadly weapon A criminal history background check that reflects conviction(s)* of the following may disqualify an applicant from employment with the City of Denton. Each incident will be evaluated on a case by case basis and factors such as the job applied for, time elapsed, frequency, age of applicant at the time of commission and circumstances surrounding the offense will be considered: Theft, fraud, or burglary Arson or criminal mischief Criminal trespass Kidnapping/Enticing a child City of Denton Bid Number 2832 · .. ' Public lewdness/Disorderly conduct/Indecent Exposure · , · Driving under the influence or driving while intoxicated Possession, manufacture, or distn'oution of a controlled substfinc~e Stalking or harassment ,, Deadly conduct or terroristic threat Misdemeanor assault Any other felony not previously listed above The above is intended to be illustrative and is not inclusive of all offenses that could be included in these criteria. The City of Denton reserves the right to reject an applicant based upon the applicant's criminal history if the applicant's history is inconsistent with the functions of the position applied for or if employment of the applicant will place the City of Denton's reputation in a negatively viewed position. Driving Record History Checks: A drying record that reflects the following will automatically disqualify an applicant from a position requiring a driver's license: Three (3) or more moving violations, accidents, or any combination in the previous 12 months. Four (4) or more moving violations, accidents, or any combination in the previous 36 months. D.W.I. or D.U.I. conviction in the previous 36 months, including probated sentence. Suspended, expired, or non-Texas license within 30 days of hire. 61 City of Denton Bid Number 2832 ~t_ Attae. hment 3 ing , Recyclable Not recyclable News/office paper/junk mail Magazines/catalogs Chipboard/cereal boxes Corrugated cardboard Plastic bottles, jugs, and jars Aluminum, steel, and tin food and beverage cans/containers Glass bottles, jugs, and jars · FoOd soiled material(Pizza boxes, ect.) · Styrofoam of any description · Plastic take out containers/Tupperware · Disposable diapers · Frozen food bags/zip lock bags · Milk cartons & juice boxes · Toxic containers · Window glass · Light bulbs 62 REQUEST FOR BEST VALUE BIDS Bid Number 2832 CITY OF DENTON, TEXAS Addendum # 1 March 28, 2002 The Pre-bid meeting was held on Friday, March 22, 2002. This addendum is provided to the meeting's attendees and vendors that have been sent bid documents. The first portion ofthis addendum addresses vendor questions and responses. In addition, changes and corrections to the specification and a copy of the contract are included in this addendum and become a part of the bid specifiction. Questions, Clarifications and Responses 1. Will the mailing of public notices in Section 11.11 be paid for by the Community Public Education Fond? The fund will pay for the first two notices during the initial contract tenn. This question relates to Section 11.9.7, Section H. 17.5 concerning funding of the annual recycling summary and Section 11.18.3 concerning notice for holidays. See the addendum for language clarifying the funding. 2. "Does the City have and will the City provide an estimated number of households to be serviced in each of the "zip code" areas as set forth on the City of Denton map provided with the bid documentT' The Solid Waste Department recently re-routed its residential collection routes to accomodate growth. We don't route or count customers by zip code, since the Contractor will be collecting recyclables on the four days of the week that the City collects refuse, we have provided the house counts for those four quadrants that will correspond to a recycling collection.day. See the addendum for the count in Section II. 11. 3 .a."Since customers will have a choice between the 18 gallon bin and a roll-ont cart, it appears that this would cause several problems for a proposed contractor that intended to or wanted to source seperate the recycling at the curb, because with the roll-out cart, you cannot seperate at the curb." The Contractor can seperate recyclables at the curb fi.om a bin or a cart, if they wish to use that kind of collection system. Others vendors at the pre-bid meeting did not see this as a problem. F:~Shared~ep6Solid Waste~ECYCLING\Curbsid~3rd Curbside Bid #2832\Curbside Recycling Addendum # lBid 2832 .dec b.''when using the roll-out carts, the material put into the collection vehicle cannot be viewed and unacceptable materials cannot be rejected and tagged." : If seperating at the curb as described in 3.a. above, your ~epreSemative would be able.to detect unacceptable materials. Since the preponderence of containers will be 18 gallon bins,' itl. i does not appear likely that a Contractor ~ be using aUtomated collection equipment tO collect the few carts that may be used in the City. ffthe Contractor is manually tipping carts into a rear loader or side loader, they will be able to see unacceptable material in the hopper as they would when emptying bins into the same hopper. c."In addition having the material co-mingled will also cause greater contamination of the materials fi.om crushed glass, thus reduc'mg thc amount of material that can be recycled. This would interfere with the requirements of Sec. 11.6 requiring 95% of the materials collected (by weight) to be recycled. Having the carts will also require additional types of vehicles and additional personnel to service what could be a very small number of households, thus increasing the basic service cost. Will the City consider deleting this option of having carts?" All other vendors say they can meet the performance requirements of Section 11.6 as the specifications are written. Carts do not require special tracks to service them. Carts will not be deleted from the specification. · 4. a"Ifthe City continues to offer this cart option, are the roll-out carts the type that are divided for paper products on one side and all other products on the other side, or is all material co- mingled in the cart? The carts have no internal divders, all materall is co-mingled. b."Does the City have any preliminary figures on how many households may opt for the roll-out The City has no information on how many residents may wish to opt for carts. 5. Does the City have an estimate of the number of households that will require "front door" pickup as per Sec. II.9.127' Currently the City provides about fir3, (50) residents with "front door" refuse collection service. 6. "Sec. 11.4 dealing with the Public Education Fund, requires that the Contractor provide $32,000.00 the first year and $22,000.00 each year anually. If the contract period is scheduled to begin Nov. 1, 2002, will this $32,000 fund period begin from Nov. 1, 2002 to Oct. 31, 2003?" Yes, the funds will be used during each 12 month period of the contract term beginning on the effective date of the contract. 7. "Does the City have the approximate dates of when each of the events stated in Sec. H. 14.3 OCCUr?" Texas Recycle Day is in the Fall, The Great American Clean up is in the Srping, the Arts and Jazz Festival in usually in April and Cinco de May is in May. 8 .a. Will vendors receive questions and answers proposed by other vendors?" Yes, all vendors are provided with the same information. b."if any amendments are issued to this Bid document will they be mailed or faxed or posted to a website, if posted to a website, whieh website do we need to review for amendmentT' FSSharedkDepfiSolid Wa.~tekREC YCLlNG\Curbside~3rd Cuxbside Bid #2832\Cuxbside Recycling Addendum # 1Bid 2832 .doc · All Addenda will be mailed or "FEDEXed" to those vendors that were provided with bid documents. ' :: · ' ' ' - 9. Ifa person move out and takes a bin, are we (the vendor/contractor) stuck with the cost of the bin (Section 11.9.10)? ', ~ . In those situations where a bin or cart is not leR at the residence aRer a "move out", the new resident will call and ask for a container. 1) If there was a bin at the residence, the City will provide a replacement container for the Contractor (at no cost to the Contractor) and the Contractor will deliver the bin. 2) If there was a cart at the residence, the contracor will nofifiy the City of the missing cart and its serial number. The City will bill the previous resident for the cart. TheCity will provide a replacement container for the Contractor (at no cost to the contractor) and tbeCcontractor will deliver the bin. In the situation where a resident moves into a residence with a cart and they don't want to use the cart, but want a bin. The Contaractor will eschange the cart for a bin adjust the cart inventory to reflect its new location(i.e, to inventory or returned to City, or a new address...) 10. Do we report everything (Section II.15.4)? Include in your bid submittals samples of all required reportsset up specifically for the City of Denton which include all required information. 11 .Do we need to submit the Bid Bond to the City Attorney prior to the bid due date (Section W.4. ~)? No, just meet the requirements of the cited section. If submitting a cashier's check, that check will be returned when the City Council awards the bid. Nowhere in the material does it talk about rebates? TThe Contractoer is not expected to share or rebate any portion of the revenue t~om the sale of processed Denton recyclables. General Comments Reviewed with Pre-Bid Attendees · This is a Best Value Bid and will be evaluated based on the criteria described in the bid specification. · Inital contract term is five (5) years. · Provide ail completed Bid Submittal Attachmentsin order, behind the Bid Sheet, with bid submittal. · Provide sample reports for all required reports, meeting requirements of the bid specification, as part oftbe bid submittal package. · Sign acknowledgement of receipt of all addenda issued for this bid- · Performance requirements will be audited. · Base bid response is required, though a response to the alternate is optional. · Proprietary information should be provided in a seperate envelope with the bid submittal and identified as such. This proprietary information will be kept confidential and returned to the bidder, if requested, following City Council action on the bid. F:~Sha~ed~)~xptkgolid Waste~RECYCL1NG\Curbside~3rd Curbside Bid #2832\Cuxbside Recycling Addendum # 1Bid 2832 .doc Addendum # 1 to' Bid Documents 1.Cover Sheet and Table of Contents Add the following to the t~ont cover page of the bid: "March 17, 2002 Includes Addendum # 1" Add Attachment 4 to the Table of contents. The cover and Table of Contents should read: F:~SharedkDeptkSolid WastckRECYCLlNG\CurbsideX3rd Curbaide Bid #2832\Curbside Recycling Addendum # 1Bid 2832 .doc CITY OF DENTON, TEXAS REQUEST FOR BEST VALUE BH)S Bid Number 2832 TO PROVIDE THE CITY OF DENTON WITH RESIDENTIAL CURBSIDE RECYCLING AND PROCESSING SERVICES Prepared by Denton Municipal Utilities Solid Waste Department Director of Solid Waste, A. Vance Kemler March 17, 2002 Includes Addendum # 1 "Dedicated to Quali~y Service" F:~hared~)ept~Solid Waste~REC YCLING\CurbsideBrd Curbside Bid #2832\Curbside Recycling Addendum # 1Bid 2832 .doc TABLE OF CONTENTS SECTION I - INTRODUCTION / BACI~GROUND I. 1. Solid Waste Master Plan - City of Denton 1.2. Solid Waste Residential Customers and Recycled Tonnage 1.3. City of Denton Existing Recycling Services 1.4. Bidder Contact Information 1.5 Bid Opening 1.6 Bid Documents 1 1 1 2 2 2 SECTION II - GENERAL SCOPE OF SERVICES II. 1. Overview II.2. Best Value Bid Request II.3. Acceptable Recyclable Materials II.4. Materials Not Collected 11.5. Buyer Authorization 11.6. Recycling Materials Performance Requirements II.7. Recyclable Materials Processing Site and Information 11.8. Implementation and Operations Plan II.9. Curbside Collection Methodology - Bins, Carts II. 10. Container Inventory Levels II. 11. Proposed Service Area Route Plan 11.12. Hours and Days of Collection 11.13. Contract Term H. 14. Public Education Plan II. 15. Customer Service Plan II. 16. Missed Collections H. 17. Reporting II. 18. City Designated Holidays H. 19. Inclement Weather Days 5 6 8 4 4 10 11 11 11 12 13 14 14 16 17 SECTION m- COST OF SERVICES (Bids, Materials) III. 1. Base Bid -Residential Curbside Recycling Services m.2. Alternate Bid Itl- Residential Curbside Recycling Services, with Senior Citizens Voluntmy exemption m.3. Materials Payments 18 2O 20 SECTION IV - GENERAL REQUIREMENTS IV. 1. Contractor Penalties 22 IV.2. General Compliance Requkements 22 IV.3. Insurance Requirements 22 IV.4. Bond Requirements 25 IV.5. Written General Assurances 26 IV.6. List of Recently Disposed and Pending Recycling Services Litigation 27 F:XSharedkDept~Solid Was~\REC YCLING\Curbsidek3rd Curbside Bid #2832\Curbside Recycling Addendum # IBid 2832 .doc TABLE OF CONTENTS (Continued) IV. 7. History ofRegulat°ry Compliance ' ~ IV. 8. City of Denton Visits / Designated Representatives IV.9. Disqualification of Bidders IV. 10. Contract Termination IV. 11. Proposal Evaluation and Selection Criteria SECTION V - BID SHEET AND ACKNOWLEDGEMENT Bidder's Curbside Recycling Collection Charges Recyclables Payment Schedule Contractor Acknowledgement BID SUBMITTAL ATTACKS 1. Buyer Authorization Forms 2. Recycling Materials Processing Site Information 3. Implementation and Operations Plan 4. Vehicle Master List Form 5. Alternate Plan of Action 6. Proposed Service Area Route Plan 7. Customer Service Plan 8. Monthly, Quarterly, and Annual Reports 9. Written General Assurances 10. List of Recently Disposed and Pending Litigation 1 I. History of Regulatory Compliance 12. Designated Representative 13. Full Bid Understanding and Compliance Agreement 33 ATTACHMENTS I. Denton Street Map and Demographic Report 2. Contractor Minimum Employee Requirements 3. Recycling Container Text Imprint 4. Contract for Curbside Recycling and Processing Services 27 27 28 28 28 30 31 32 34 35 36 37 38 39 40 41 42 43 44 45 F:~Shared~pt~golid WasteLREC YCLlNG~Curbsidek3rd Curbside Bid #2832\Curbside Recycling 3d,tondum # IBid 2832 .doc 2.Section ILg. 10. The word "residences" on line two and" impleme.ntatm on line three are rmspeu~ ~ . Section should read: "' II 9} i 0 The Contractor will be respons~blo fpr educating and informing Dent~n s residents tim recycling containers remain with the residence upon moving. TheContractor will des'ei°Pand recommend procedures, within two months of program implementafion~ for City approval, enabling the recycling containers to remain inside the residence for utilizafionby the next occupant of the home, following move out. 3.Section I~.11. Is expanded to clari~ the use of Community Public Education Funds. Section 11.11. should read: Section ILll Proposed Service Area Route Plan The Contractor will establish its own collection routes for the collection of recyclable materials, and submit the Proposed Service Area Route Plan, Bid Submittal Attachment 6, and schedule to the City at bid submittal. At least three weeks prior to cothside recycling implementation, the Contractor will submit to the City for approval their Proposed Detailed Route Plan. Following City approval of the Contractor's Detailed Route Plan, any changes in collection routes or days of collection will requke prior approval by the City. The Contractor will also be required to notify all affected residents at least two weeks in advance of a route change through a mailing to each affected resident and a bilingual public notice (5" x 7") in the major local Sunday newspaper. The proposed route plan submitted with Bid Submittal Attachment 6 will be a "service area route plan", not the "detailed route plan" by street. The Community Public Education Fund will pay for the public notices of the first two routing changes during the initial term of the contract and one public notice during any renewal term(s). The Contractor will be responsible for funding all other public notices of routing changes during the contract. The most recent physical house counts per quadrant are: Quadrant 1- 5,422, Quadrant 2 - 5,243, Quadrant 3 - 4,392 and Quadrant 4 - 4,261. Of these homes, 15 mobility impaired customers receive front door service. 4.Section H. 17.5 Is expanded to clarify the use of Community Public Education Funds. Section H.17.5 should read: SectionII. 17.5 The Contractor will provide an annual City of Denton Curbside Recycling Summary document delivered to the City of Denton's residents as a tri-folded one page report for inclusion as a utility bill "stuffer", reporting the results of Denton's residents recycling efforts on a fiscal year by year comparison basis. This document will be provided to the City during the fourth quarter of each calendar year, for the City's fiscal year, and becomes due following completion of the first partial fiscal year, and each year thereafter for the term of the contract. The contractor will obtain prior City approval in.the design, format, and presentation data included within this document. The most recent count of utility bills was 39,000 per monthly billing cycle. The City will provide the most current number of monthly billings to the Contractor annually. The Community Public Education Fund will pay for the annual Curbside Keeycling Summary "bill" stuffer. F:~SharedkDept~Solid Waste~RECYCLING\CurbsideBrd Curbsicle Bid #2832~Cutbside Recycling Addendum # lBid 2832 .doc S.Section 11.18.3 Is expanded to clar~ the use of Community Public Education Funds; Section 11_18~3 should read: · ... : ~ , .... .~/ ,* .. Section I/.18.3 All~Denton's residents will receive curbsidc recycling COlleeti°~ On City 0f/. Denton designated holiday weeks. The Contractor will provide written notification in the major local Denton newspaper, Wednesday edition, with a 5" x 7" bilingual advertisement to Denton's residents on the week prior to the holiday, of their curbside recycling collection day for the upcoming holiday week. The City designated representative must be provided s~fllcient'time, two work days, to review and approve the proposed newspaper notification prior to the Contractor submitting and scheduling for printing the notification of the revised pickup schedule, so that Denton's residents are informed of the schedule revision on Wednesday of the week prior to the holiday. During holiday weeks the Contractor may collect recycling materials on Wednesdays, if the City provides refuse collection service on that day. The Community Public Education Fund will pay for each notice of the holiday schedule. 6.SectionXL9.7 Is expanded to clarify the use of Community Public Education Funds Section IL9.7 should read: 11.9.7 A minimum of thirty days prior to implementing the curbside recycling progxam, the Contractor will advertise in the local newspaper that sixty-four gallon carts are available in lieu of or in addition to the standard eighteen gallon bin, and/or multiple bins are available. The conspicuous bilingual newspaper advertisement (5" x T' minimum), requires prior approval by the City, and must be inserted a minimum of twice per week in the major local newspaper with one day each week bein8 a Sunday. The Contractor will provide a local or toll free telephone number for Denton's residential customers to call to place additional bin or cart orders. Sample bins and · carts for public viewing and handling are to be placed by the Contractor in at least six City selected locations, but less than ten, where Denton's residents will have the opportunity to view and manurer the bin and cart. Over this thirty day time period, the Contractor will document all resident's telephoned container requests, and provide their requested containers during the container distribution process. During the container distribution process, the Contractor will document aH residents receiving carts and/or additional bins on the Container Distribution List of any quantity or combination requested. Prior to the Contractor's delivery of recycling containers to Denton's residents, aH containers must be fully assembled by the Contractor and ready for use.. The Community Public Education Fund will pay for this notice. 7.SecfionIV.4.2 A change in the maximum number of months used to determine the amount of the performance bond has been made. Section IV.4.2 should read: Section IV.4.2 Performance Bond Requirements As soon as practicable at~er notification of the bid award, and prior to contract signing, the Contractor shall file with the Purchasing Department a performance bond in the amount required by the City. During the term of this agreement and for the term of any renewals, the successful Bidder F:~Shared~Dept~Solid Waste~RECYCLING\Curbside~3rd Curbside Bid #2832\Curbside Recycling Addendum # lBid 2832 .doc will be required to furnish and keep in full force and effect a performance bohd as further security for the performance of the curbside recycling contract. The peff~ormance, b0nd~!.be ~ ..an, . amount equal to the product of the Number Of Accounts times the Month!y~Umt Rate trines the number'of months remaining in the contract tern}. (n°t to excelS4 mofiths)~p[~u~ 1_:0%, a~uste~t.o, on each contract anniversary date. The Bidder will pay all premiums for the bond. A certmcate xor the surety showing that the bond premiums are paid in full will accompany the bond. The . , performance bond will be issued by a duly authorized corporate surety company aUthorized to do business in the State of Texas. The Performance bond will require approval by the.City Attorney. 8. Bid Sheet and Acknowledgement. Make changes and provide for acknowledgement ofrec~pt of addendum # 1. Bid Sheet and Acknowledgement should read: FSShared~Dept~Solid Waste~REC YCLINI3\CmbsideX3rd Curbside Bid #2832\Curbside Recycling Addendum # lBid 2832 .doc · BH) SHEET AND ACKNOWI,EDGEMENT Bidder, s Curbside Recycling Collection Charges " ' ' ' Bidders must bid on the'Base Bid. Bidders'are not required tO respond, but are encouraged to resPOnd to Alternate Bid #1, and the ReCyclables Paymem Schedule. ' ' , The Bidder fully agrees to provide the stated curbside recycling services cleaity defined herein for the following monthly charge per solid waste residential account. Prices are to be recorded per residential unit per month, both numerically and in writing. Base Bid - The Contractor to provide Required Residential Curbside Recycling Services with the City providing all customer billing services. This bid requires all single family, duplex, triplex, and fourplex residents (Code SWR and RPT) to pay for curbside recycling services. Unit Price: Number Written Amount Alternate Bid #1 - The Contractor to provide Residential Curbside Recycling Services as in the Base Bid, except Senior Citizens will be able to Voluntarily request Exemptions fi.om curbside recycling fees and services for themselves if they are age 65 or older. Unit Price: iqumber Written Amount The City reserves the right to select one of the bids listed above as either the Base Bid, or Alternate Bid #1, or to reject both bids. Recyclables Payment Schedule The City may from time to time have available recycled materials collected from Denton's drop-off collection sites. The City would like the option to deliver pre-sorted and comingled recycling materials to the Contractor's processing facility. The City requests the Contractor provide the rates they would pay the City for these materials. Bidder's may bid an any or all commodities delivered by the City to the Contractor's processing facility. I~ntnn's l~r~.n.[MT git~ Mntodala.- P~yment t~ t~ity Comingled Paper (Mixed Paper) OCC #60NP #80NP Office Paper . · F:~ShareclXrk~fiSolid WasteREC YCLlNO\Curbside~3rd Ctabside Bid #2832\Curbside Recycling Addendum # IBid 2832 .doc Steel ' Flint'Glass · AmberGlass The Bidder should provide pricing or the percentage (%) of an index price which they will pay for materials. Example: OCC 50% of High Side Southwest Listing Contractor Acknowledgement Full Bid Understanding and Compliance Agreement The Contractor hereby acknowledges that it understands and will comply with all terms, conditions, requirements, fees, and specifications contained in and as a part of this bid document. Based on its compliance with all terms, conditions, requirements, fees, and specifications contained herein and as a part of this bid document, the Contractor's authorized representative shall sign and submit Bid Submittal Attachment 13. (Bidder Company Name) (Signature of Authorized Represemative) Notice of Receipt of Addendum # 1: . The undersigned acknowledges receipt ofAddundum # 1. (Signature of Authorized Representative) FSSharedkDepfiSolid WastekRECYClAIqG\Curbside~3rd Curbside Bid #2832~Curbside Recycling Addendum # IBid 2832 .doc 9. Correct Bid Attachment number in text. Page should read: Bid Submittal Attachment 12' Designated Representative Contractor Representative: The Contractor will provide the following information in Bid Submittal Attachment i2. Contractor Representative (Print Name) Title Street Address City State Zipcode Office Telephone Number Fax Number Mobile Telephone Number E-mail Address F:kShared~Dept~Solid Waste~REC YCLING\Curbside~3rd Curbside Bid #2832\Curbside Recycling Addendum # lBid 2832 .doc 10. Correct Bid Attachment number in text. Page should read: Bid Submittal Attachment 13 Full Bid Understanding and Compliance Agreement The Contractor hereby acknowledges that it understands and will comply with all terms', conditions, requirements, fees, and specifications contained in and as a part of this bid document. Based on its compliance with all terms, conditions, requirements, fees, and specifications contained herein and as a part of this bid document, the Contractor's authorized representative shall sign and submit Bid Submittal Attachment 13. Company Name Company Authorized Representative (Printed Name, Title) Company Authorized Representative (Signature) 11. Add as Attachment 4, the Contract for Residential Curbside Recycling and Processing Services. F:kSharedXDepfiSolid WastekRECYCLING\CurbsideX3rd Curbside Bid #2832\Curbside Recycling Addendum # IBid 2832 .doc CITY OF DENTON BID NUMBER 2832 RESIDENTIAl, CURBSIDE RECYCLING AND PROCESSING SERVICES FOR CITY OF DENTON BID DUE DATE: APRIL 11, 2002 2:00 p.m. PRESENTED BY: TRINITY WASTE SERVICES 4200 E. 14TM STREET PLANO, TEXAS 75074 972-422-2341 * 800-766-1758 £ax-972-4220-5683 April 11, 2002 Tom D. Shaw, CPM City of Denton Purchasing Department 901~B Texas Street Denton, Texas 76201 RE: Bid for Residential Curbside Recycling & Processing Services Dear Mr. Shaw, Trinity Waste Services wishes to thank the City of Denton for the opportunity to offer the enclosed proposal for: REQUEST FOR BIDS RESIDENTIAL CURBSIDE RECYCLING & PROCESSING SERVICES Due: April 11, 2002 2:00 p.m. Throughout this proposal, Trinity Waste Services will demonstrate our capabilities in operations, customer service' and financial stability to provide Denton the absolute best service available. Being a part of one of the largest solid waste / recycling company's in North America, as well as one of the largest solid waste companies in Fort Worth and surrounding counties, Trinity Waste Services will be able to provide the expertise and professionalism to successfully carry out the requirements of the contract and meet any extraordinary circumstances that may arise. That added to the fact of our current knowledge of the area can guarantee you the most effective service. Finally, Trinity Waste Services has provided solid waste and recycling services to the DFW area since 1960, and has the knowledge and experience to institute and provide a seamless recycling program to the residents of Denton. Trinity Waste Services will provide Denton a well-defined, efficient and practical program to meet the resident's needs while at the same time presenting the most cost effective approach available. Given our extensive experience hauling solid waste and recycling Trinity fully understands the requirements of the city and is prepared to meet those obligations as outlined in this proposal. The number of other municipalities Trinity services throughout the metroplex demonstrates our commitment to service. Trinity Waste Services TRINITY WASTE SERVICES, 6100 Elliott Reeder Road, Fort Worth, Texas 76117 Tel: (817) 332-7301 Fax: (817) 831-2020 Customer Service Fax (817) 831-7489 currently has sixt~-~even (67) Solid waste,and / or recychng fr~chise agreements- in'effect as"0f this date. We are confident in our ability to provide ~UPerior service for Denton now and far into · the future. Trinity waste Services owns and operates our three area Material Recovery Facilities (Recycling centers) as well as, one transfer station, and seven permitted landfills that service Dallas, Tarrant, Collin, and surrounding counties, i We respectfully submit this bid for your consideration while bearing in mind, "there's more to recycling collection and processing than a cheap price". Anyone can offer a low rate. The difference is whom can you trust? Who can deliver what they promise? Who can maintain the enormous task of recycling collection and processing over the duration of the contract? We feel our history of performance for the cities listed in this bid proves our claim to provide superior service, competitive rates, and the assurance that your recyclable materials are processed for remm to commerce in a responsible manner. Trinity Waste Services agrees to be bound by the bid submitted and to provide the services specified in the contract Sincerely, Trinity Waste Services Tom Sellers General Manager Municipal Marketing Manager jdtV041 l AMERICAN INSTITUTE OF ARCHITECTS Bid Bond ........ "' ' .... KNOW ALL MEN BY THESE PRESENTS, THAT WE Tdnity waste Services 6100 Elliot Reeder Road Fort Worth, TX 76117 as Principal, hereinafter called the Principal, and Travelers Casualty and Surety Company of America One Tower Square -13 CZ Harfford~ CT 06183-6014 a corporation duly organized under the laws of the State of CT as Surety, hereinafter called the Surety, are held and firmly bound unto City of Denton 901A Texas Street Denton, TX as Obligee, hereinafter called the Obligee, in the sum of Five Thousand Dollars Dollars ($ $5,000.00 ), for the payment of which sum well and truly to be made, the said Principal and the said Surety, bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has submitted a bid for Recycling Contract - Curbside Single Stream Collection - Bid #2832 NOW, THEREFORE, if the Obligee shall accept the bid of the Principal and the Principal shall enter into a Contract with the Obligee in accordance with the terms of such bid, and give such bond or bonds as may be specified in the bidding or Contract Documents with good and sufficient surety for the faithful performance of such Contract and for the prompt payment of labor and materials furnished in the prosecution thereof, or in the event of the failure of the Principal to enter such Contract and give such bond or bonds, if the Principal shall pay to the Obligee the difference not to exceed the penalty hereof between the amount specified in said bid and such larger amount for which the Obligee may in good faith contract with another party to perform the Won~ covered by said bid, then this obligation shall be null and void, otherwise to remain in full force and effect. Signed and sealed this 11th day of April 2002 Dawn L. Morgan ~m~) Trinity Waste Services r . . (PrfncipaO (Seal) ~ / .-.. . - (Title) Travelers Casualty and Surety Company of America A#orr~y-in-F~ct ~' 'Jam~s I. Moore Su't~t~Phone No. 860-277-0111 ALS. DOCUMENT A310 · BID BOND · ALS, · FEBRUARY 1970 ED. · THE AMERICAN (Seal) (~itle) INSTITUTE OF ARCHITECTS, 1735 N.Y. AVE., N. J,V., WASHINGTON, D.C. 20006 TRAVELERS CASUALTY AND SURETY COMPANY O~ ~RICA ~ C~TY ~ ~TY CO~ ~OTON C~Ty CO~ Hartford, Co~e~icut 06183-9062 ~4 PO~R O~ A~O~Y ~ CRRT~CA~ OF ~U~HO~Y OF A~O~Y(S)-~-~AcT ,~ ' '~ gm0 S ' ' o~er ~ obli~t~ ~ ~ ~ of a ~ ~i~nn~, or ~o~ ~md~ng and ~ ~ ~ ~ ~nt ~eto VO'f~: ' "' ' ' ' ' ' · ' - ~ ~d revo~ ~e ~.~v~ ~ or ~. VO'I~: ~t ~e C~Sn' ~ ~d~ ~y V~ Chsi~sn. ~y EX--ye Vi~ ~ ~y S~ ~ ~nt ~ ~y ~ ~d~t ~y ~legate ~ ~ my ~ of ~ forego~ a~ ~ o~ ~ mo~ offi~ or e~lo~ of ~ ~y, ~9~ ~ ~h ~ch ~fion is VO- ~ ~t ~y ~ r~i~snc~, ~n~t of ~, or ~ ob~ h ~ na~e of a ~( r~i~, ~ ~fio~ ~or Vi~ ~t ~ ~y ~ ~ ~y S~ V~ ~ ~ Tr~, my ~t T~, ~ ~ S~ or ~y ~s~t S~ ~ ~y a~ ~d ~M ~ ~e ~y' s ~ by a S~ or ~ S~, ~ ~) ~y ~ (~ s~, if by ~e or more ~y offi~ p~t ~ a ~ deleg~ of ~od~. ~ Power off Aflo~ey ~d CeaSe of ~orily h si~ed ~d s~ed by faaslmile (m~ or p~ ~der ~d by authofi~ of ~e foRo~g S~g ~olu~on void by ~e Boar~ of Dkectors of ~~ C~U~ ~ S~TY CO~ O~ ~CA~ ~~ C~U~ ~ g~ CO~ ~d ~GTON C~U~ CO~, w~& ~lu~on ~ now ~ ~ ~o~ ~ ~: VOID: ~t ~e ~s~ of ~ of ~ fo~0~ offi~: ~g my Ex--ye ~ ~g my S~ ~ ~d~g ~y Vi~ ~e~d~g ~y ~t Vi~ ~g ~y-S~, ~y ~t S~, ~ ~e ~ of ~ ~y ~y ~ ~ by ~e to ~y ~w~ of aR~y or ~ ~y ~ re~ ~ ~ ~t Vi~ ~, R~t ~t S~ ~ A~meys-~-F~t for or ~ ~ ~ ~glmile d~ or f~e s~ ~ ~ v~d ~d b~ ~e C~p~y ~ ~y ~h ~ so executM ~d ~ ~ ~& it ~ a~h~. 14)0 b'~andam~ 12~ WITNESS WHEREOF; TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA., TRAVELERS CASUALTY AND SURETY COMPANY and ~AllMINGTON CASUALTY COiViPANY ha¥c caused this instnunc~t to b signed by theft Senior Vi~ Presideut and.theft corporate sca~, to be hereto affixed this 27th day of Mawh 2001. ·/' . ~ · [~.. .... - .~. - TRAV~LlmS CASUALTY AND -~o~13[.COMPANY'-~ · .:- ~}SS. Hartford ..... ::2 ' · ~'~- I~ARMINGTON CAKOALTY COMPANY coum~ eec George W. Thompson Senior Vice President On this 27th day of Mar~ 2001 before roe.personally came GEORGE W. THOMPSON to me known, who, bcing'by mc duly sworn, did depose and say: that he/she is Senior Vice President og. TRAVEI,I~.RS CASUALTY AND SURETY COMPANY OF AMERICA, TRAVELERS CASUALTY AND SURETY COMPANY and FARMINGTON CASUALTY COMI'ANY, thc corporation~ described in ~ which executed tl~ abow instrume~ flint ke,/ah~ knows the scab of said corpor~ons; that th~ seah ~ffi~rd to the said instrumem ar~ such corpora~ seals; and ~hzt hdshe execuled the ~id instrument on I~hzlf of the corporations by authority of his/her office under the S~ndl.g P.~olufions thexco~: Mycommlsslon expires December 31,2002 Notary Public Carol A. Thompson # CEI{r~iCATE I, the undersigned, Assistant Secretary of TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, TRAVELERS CASUALTY AND SURETY COMPANY and F~GTON CASUALTY COMPANY, stock corporations of the State of Connect/cut, DO ~Y CF, RTnrY that the foregoing and attach~cl Power of Attomcy and Certificate of Authority re,~in~/n, full'force and has not been revoked; and fu_,lhcrmore, that thc Standing Resolution~ of thc Boards of Directors, as §et fora in the Codiflcatc of Authority, are now in forcc. Sign~dandSc~edatthcH~/~c~ffic~ft~Company~inth~City~fHar~rd~S~ate~fConnc~ticut Datcdthis llth dayof April ,20 0~ 'ee'e Kori M. Johanson Assistant Secretary, Bond G-23208-B ss. ~TATE .OF . Illinois · ~OUNTYOF :' Cook . ' ' - -- I, Dawn L. Morgar~ Notary Public of Cook in the State of Illinois , do hereby certify that James I. MoOre Attorney-in-Fact, of the Travelers Casualty and Surety Company of America who is personally known Ko me to be the same person whose name County, is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed, sealed and delivered said instrument, for and on behalf of the Travelers Casualty and Surety Company of America for the uses and purposes therein set forth. Given under my hand and notadal seal at my office in the City of in said County, this 11th day of April Countryside A.D., 2002 OFFICIAL SEAL.. DAWN L MORGAN I~JSLIC, srA~'[ OF ILLINOI~ { MY cOMMISSION EX.RES:0312 Notary Public Dawn L. M[~gan My Commission expires: March 29, 2004 D ,WAS , I..' D..'U ' ' R...I POt/~fER dF A'n-0RNEY Allied Waste Industries, Inc., incorporated under the laws ~f the State of Delaware, and having its chief place of business at 15880 N. Greenway-Hayden loop, Suite 100, Scottsdale, Adzona, 85260, hereby makes, constitutes and appoints Weible, Cahill & Forker, LLC acting through and by William P.. Weible, William F. Cahill, Molly Moran, Esther C. Jimenez, Patricla J. Kenis, Phyllis Boyd, Laura E. Fish, Kimberley K. Libers or Melissa Newman, its true and lawful attorney and affix its corporate seal to and deliver for and on behalf as surety thereon or othen~ise, bonds of any of the following classes, to wit: Surety bonds and/or bid bonds to the United States of Ameeic~ or agency thereof, including those required or permitted under the laws or regulations relating to Customs or Internal Revenue; license and permit bonds or other indemnity bonds under the laws, ordinances of regulations of any state, city, town, village, board, other body organization, public or private; bonds to transportation companies; lost instrument bonds; lease bonds, worker's compensation bonds; miscellaneous surety bonds; and bonds on behalf of notaries public; sheriffs, deputy shedffs and similar public officials. Surety bonds and/or bid bonds on behalf of Allied Waste Industries, Inc. and its subsidiaries, included, but not limited to, Allied Services, LLC, Allied Waste Systems, Inc., Allied Waste Transportatiee, Inc., American Disposal Services of Missouri, Inc. and BFI Waste Systems of North America, Inc., BFI Waste Services, LLC in connection with bonds, proposals, or contracts. To sign and seal all bid bonds and surety bonds on behalf of Alliod Waste Industries, Inc. and its subsidiaries, relating to the provision of solid waste collection, transportation, recycling, or disposal services by Allied Waste Industries, Inc. and its subsidiaries. Allied Waste Industries, Inc. hereby agrees to ratify and confirm whatsoever Weible, Cahill & Forker, LLC shall lawfully do pursuant to this power of attorney and the procedural guidelines set forth to Weible, Cahill & Company, LLC, and until notice or revocation has been given by Allied Waste Industries, Inc. the acts of the said attorney shall be binding on the undersigned. IN WITNESS WHEREOF this POWER OF ATTORNEY has been signed this 2- b'~'~day of ,c'~l~t~.,~ , on behalf of Allied Waste industries, Inc. by its Vice President, Legal, Mr. Steven M. Helm. · Stateof /-)r;Z.~rt~ ) Countyof lql0~'/~_o/-)o,_. ) Subscribed and sworn before me this ~(.,,-H,, day of ~ br~tl3.-i"cl ,20 02. by Steve M. Helm· 15880 N. Greenway-Hayden Loop, $te 200 /Scoftsdole, AZ 85260 /480.627.2700 Notao/Public Executive Summary Trinity Waste Services as part of this Executive Summary will provide the City with a brief explanation of our Bid for Recycling Processing. In order to meet the objectives as defined by the City, Trinity will address each aspect of the Bid and adhere to the guidelines set forth. Trinity Waste Services desires to transport all recycling materials from residential units within the City to our Material Recovery facility in Plano. Trinity will maximize the aesthetic living conditions for Denton residents and maintain and improve positive communication between the City, the residents, and our company. This Bid contains several major components. We will describe each portion in order of their relative position in the RFB. SEALED PACKAGE Trinity Waste Services has provided the City one original & four copies of the Bid for their evaluation and consideration. Item 1 Cover Letter - Trinity Waste Services has provided a cover letter containing the specific information requested. Item 2 Aooropriate Bid Securit3' - Trinity Waste Services has provided its Bid Bond, payable unconditionally to the City of Denton, in the mount of $5,000 to guarantee our appropriate participation if selected. Item 3 Executive Summary - Trinity Waste Services has provided an Executive Summary. Item 4 Bidder Price Schedule - Bidder's Curbside Recycling Collection Charges Item 5 Recyclables Payment Schedule - Bidder's proposed prices for Denton's Drop-off Site Materials. Item 6 Bid Submittal Attachment 1 - Buyer Authorization Form Item 7 Bid Submittal Attachment 2 - Recycling Materials Processing Site Information Item 8 Bid Submittal Attachment 3 - Implementation & Operations Plan Trinity Waste Services is offering the City of Denton a complete and efficient package for recycling services as explained in Attachment 15. Item 9 Item 10 Item 11 Item 12 Item 13 Item 14 Item 15 Item 16 Item 17 Item 18 Item 19 Bid Submittal Attachment 4 - Vehicle Master List Bid Submittal Attachment 5 - Alternate Plan of Action Bid Submittal Attachment 6 - Proposed Service Area Route Plan Bid Submittal Attachment 7 - Customer Service Plan Trinity Waste Services has the most comprehensive customer service program of any company of our kind in the industry. In 1995, Trinity undertook a corporate wide reformation of our customer service policies. The program described in this Bid details the efforts, accomplishments and results of our state-of-the-art Customer Service Program. Every aspect of our business is monitored and the resulting service level to the customer has never been better. In the last 18 months Trinity has sent out many individual pieces of direct mail and postcards to our residential customers with information about recycling service related issues and governmental regulations. Bid Submittal Attachment 8 - Monthly, Quarterly & Annual Reports Bid Submittal Attachment 9 - Written General Assurances Firm Background - Trinity Waste Services has provided a brief history and description of our company including size, personnel, qualifications, years of experience and other detailed information relating to our background and competency. Financial History - Trinity Waste Services has provided the annual reports for 1999 and 2000 of parent-corporation Allied Waste Industries certified by a nationally recognized firm of independent certified public accountants. Bid Submittal Attachment 10 - List of Recently Disposed & Pending Litigation Bid Submittal Attachment 11 - History of Regulatory Compliance Bid Submittal Attachment 12 - Designated Representative Bid Submittal Attachment 13 - Full Bid Understanding & Compliance Agreement Experience and References - Trinity Waste Services has provided a reference list of all cities in the North Central Texas COG area in which we currently provide service. The recycling contracts are noted. Item 20 Disposal'and Processing Sites - Trinity Waste Services currently o~ms and operates six (6) Subtitle D compliant MS~V landfills in the Dallas/Fort Worth market. Our total capacity and combined life of sites add up to more than 100 years of existing and usable landfill space. Trinity also was the first Recycler in Dallas/Fort Worth to offer curbside recycling. Since that time, Trinity has maintained the cutting competitive edge of recycling by owning and operating our own Material Recovery Facility at 2550 Austin Road, Fort Worth, Texas. We were the first to offer mixed paper and cardboard into the curbside program and our list of acceptable materials has continued to grow and expand without additional cost passed through to the customer. We have just recently completed and placed in operation the new Trinity Waste Services Fort Worth Transfer Station / Material Recovery Facility. This $6.5 million investment now provides a front door to our disposal sites as well as a large-scale recycling center to divert usable portions of the waste stream. This facility assures long-term cost effective disposal for our customers. City of Denton Bid Number 2832 SECTION V BID SHEET AND ACKNOWLEDGEMENT ' ' Bidder's Curbside Recycling Coffee, on Charges ~" · Bidders must bid on the Base Bid. Bidders are not required to respond, but are encouraged to respond to Alternate Bid #1, and the Recycables Payment Schedule. The Bidder fully agrees to provide the stated curbside recycling services clearly defined herein for the following monthly charge per solid waste residential account. Prices are to be recorded per residential unit per month, both numerically and in writing. Base Bid - The Contractor to provide Required Residemial Curbside Recycling Services with the City providing all customer billing services. This bid requires all single family, duplex, triplex, and fourplex residents (Code SWR and RPT) to pay for curbside recycling services. Unit Price: $1.47 Number One dollar and forty-seven cents Written Amount Alternate Bid #1 - The Contractor to provide Residential Curbside Recycling Services as in the Base Bid, except Senior Citizens will be able to Voluntarily request Exemptions ~om curbside recycling fees and services for themselves if they are age 65 or older. Unit Price: $1.72 One dollar and seventy-two cents Number Written Amount The City reserves the right to select one of the bids listed above as either the Base Bid, or Alternate Bid #1, or to reject all bids. C:\WINWORD~DATA\CONTRACTxPROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Recyclables Payment Schedule" . ~ ~ ~ , ,' . i. The City may from time to time have available recycled materials c0ilect~d.fr0m "-. '.' ~ Dent°n's drop-off COlleCtion sites. The City w0_Ul,'d like.the 0ptiop t0'd.el~iv~r pre.-_.mrted:and i "commingled recYciin~ materials to the Contractor s Processing facility. The City'.requests the Contractor provide the rates'fiaey ~/ould pay the City fo~ Lhese 'materials.' .... Bidder's may bid any or.all commodities delivered by the City to the Contractor's processing facility. Denton's Drop-Off Site Materials: Commingled Paper (Mixed Paper) OCC #60NP #80NP Office Paper Steel Aluminum Flint Glass Amber Glass Green Glass Payment to City 50% of the Average Houston Listing Waste News 50% of High Side Southwest Listing OCC - OBM 50% of High Side Southwest Listing # 6 News - OBM 50% of High Side Southwest Listing # 8 News - OBM 50% of the Average Houston Listing Waste News 50% of High Side Houston Listing - Waste News Price sold less $.05 per pound 25% of the Low Side Houston Listing Waste News 25% of the Low Side Houston Listing Waste News 25% of the Low Side Houston listing Waste News The Bidder should provided pricing or the percentage (%) of an index price which they will pay for materials. Example: OCC 50% of High Side Southwest Listing C:\WiNWORD\DATA\CONTRACT~PROPOSAL\Denton 4-11-02\Cut'bside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 "The following information is proprietary and exempt from the Public Information Act" Bid Submittal Attachment 1 · BuYer_ _Auth°rization Form ~ ': ,.' .i. ,~ · Please duplicate and complete this form for each commodity buyer. Trinity Waste Services Bidder Company Name Tom Sellers, General Manager Bidder's Authorized Representative (Printed Name, Title) (Bidder's Signature) hereby grants the Solid Waste Department Representative of the City of Denton, Texas authorization to contact, Materials Marketing Group, Allied Waste Industries, Commodity Company Name to obtain historical information related to recyclable materials sales from the Bidder Company to the Commodity Buyer Company over the previous two years. Information requests to the Bidder's recyclable materials commodity buyers will consist of the following information on an annual basis for up to two years. · Tonnages Sold by Product Class Commodity Buyer Information Requested: Please complete the information below. Company Name MMG, Allied Waste Industries City and State (Location) Houston, Texas Company Contact (Person) Jeff Boyd Contact Telephone Number 281-870-7405 ofc/ 281-460-7060 cell Recycled Products Buyer Accepts All Paper Grades, Corrugated Boxes, Newspapers, Chipboard, Plastics, Glass and Metals Comments: See attached sheet C:\WINWORD\DATA\CONTRACT~PROPOSAL~Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 "The following information is proprietary and exempt fi.om the Public Information Act" Trinity Waste Services Material Marketing . Trinity Waste Services and Allied Wfiste Industries Company, employees a unique and successful approach to marketing recyclable materials. All of the materials collected fi.om Allied Waste recycleries are brokered fi.om the Materials Marketing Group. This group is comprised of several marketing managers. These managers have a minimum of ten years recycling/marketing experience each. Allied Waste Industries markets over 1.5 million tons/year of recyclables domestically, as well as in Canada, Asia, South America and Mexico. Allied Waste is currently the largest marketer by volume of recyclables in the U.S. Although Allied Waste has many national and international contracts for the disposition of recyclables around the world, we are constantly upgrading and updating our market contracts to meet the volatile nature of the marketplace. Closing, the Loop True recycling does not take place until the collected and processed materials re-enter the manufacturing cycle. To "close the loop" in the recycling process, Trinity has entered into agreements with numerous major manufacturing companies on a local, regional and/or national basis, that consume recyclable materials as a primary feedstock, thus assuring the City of Denton market continuity. Because of the changing markets, materials and demands, Trinity is constantly exploring and developing new marketing oppommities in order to deliver the highest degree of service. We pride ourselves on our ability to be flexible and reactivate to the changes in a municipality's needs. Trinity is committed to "closing the loop" of recycling through identification and development of new 'markets for recyclables. Unfortunately, there are materials in the marketplace identified as recyclable, when in fact the costs and processes required render them unattractive for re-use. Trinity will assure the City of Denton marketability of all recyclables collected. It would be fiscally irresponsible for any contractor to collect, sort, or store "recyclables" without market availability. C:\WINWORD~DATA\CONTRACTxPROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 · .. -: , .Bid Submittal At,..c. ment2iah · Recycling Materials Processing Site lnformaoon Trinity Waste Services currently owfis and operates a total of (3) 'Material Recovery Facilities in the Dallas/Fort Worth market. The recycling needs of the City of Denton will be served primarily at our Plano Recyclery. With the completion to a $1.5 million dollar capital building project in April 2001 to the existing $5.5 million dollar structure, the capabilities of our Plano Recyclery have increased tremendously. Our new single stream processing line, believed to be the only one of its kind in use today, includes the latest innovations in automated material processing. The elevated line is housed in a 80,000 square foot facility on property adjacent to our Piano hauling operations. The system is able to recycle many items once destined for disposal in landfills. Redundancies built into our process allow for increased capture rates and ensure a cleaner, more marketable product. The facility currently processes in excess of 4,500 tons of material each month. Material separation is accomplished, in part, through the use of five fast-moving, spinning, classifying screens of various sizes and dimensions. An air classifier is used to further separate.light items such as plastic containers fi.om heavy items such as glass and cans. An Eddy current separates aluminum fi.om commingled containers and a magnetic field pulls tin and steel containers out of the stream, depositing them in a storage bunker. Paper, magazines, junk mail, corrugated cardboard and newsprint are all sorted, separated and stored prior to being baled and packaged for transport. A high-pressure glass crusher reduces bottles and containers to the consistency of sand, fine enough to be safely handled with gloves. The sand will be used as a soil amendment for compost and for sanding icy roads. Additional uses for the product in the building and construction arenas are being pursued. By expanding the types of items accepted at the Piano facility and eliminating the need to presort recyclables, we hope to encourage participation by homeowners and businesses. Increased participation will lead to greater diversion and a cleaner environment. The Plano Recyclery is located at: Trinity Waste Services (MRF) 4200 East 14th Street Piano, Texas 75074 972-422-2341 contact: Frank Sienkiewicz C:\WINWORD'~DATA\CONTRACT~PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Items Processed: Plastic Bottles Jugs & Jars Glass Bottles Jugs & Jars (any color). . i :Steel Cans ' ~' ~ ' : Tin Cans ~ Corrugated Containers Chipboard (cereal boxes) Catalogs 'Junk. Mai.[ . . . MagaZines ., · NewsPapers, ~ Magazines Aluminum Cans All other classes of Paper - includes, but not limited to: Office paper, magazines and telephone books In addition to the Piano Recyclery, Trinity operates a Material Recovery Facility 0VIRF) in Richland Hills that is 25,000 square feet and processes approximately 40,000 tons monthly. Trinity Waste Services long range plan is to continue to expand the list of acceptable material as markets permit, along with future site modifications and expansions to accommodate the projected increases in volume. This facility is currently operating at less than half of the maximum total capacity it was designed to process. Trinity also owns and operates the largest recycling facility ever constructed in Dallas County. The 76,000 square foot plant can process approximately 5,000 tons of fibers each month. A sort line for high grade fiber recovery is also housed in the facility. A commercial Material Recovery Facility is operated at the Fort Worth Hauling Company site. The facility was primarily designed to recover corrugated cardboard from ail commercial front loads and compacted industrial recycling accounts in Tarrant County. The facility has a total capacity of over 3,000 tons per month. C:\WINWORD\DATA\CONTRACT~PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submitlal Forms.doc City of Denton Bid Number 2832 Bid Submittal Attachment 3 Implementation and'Operatlons Plan i Trinity Waste Services will utilize tw~ to four sideload automators to collect commingled recyclables to service the city. These vehicles wilt allow us to service either carts or bins in a proficient manner, whichever we are picking up. We anticipate ordering these trucks upon successful award of this contract, but reserve the right to 'utilize other collection equipment as deemed appropriate. This equipment will allow us to service the City using only our own fulltime employees with a one man per truck operation. Our Operations Manager and Residential Supervisor will have daily involvement with maintaining our quality of service to the City. Our entire fleet is equipped with modem radio communications with our office and supervisors. Trinity Waste Services will service the City's residences as mandated in the City's contract on one of their existing service days for their trash service. We will use the City's four quadrants as they currently exist for trash service. Our hours of operation will be from 7:00 a.m. to 6:00 p.m. C:\WINWORD\DATA\CONTRAC2~,PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Bid Submittal Attachment List --e..c.e ~.~as.~r ~ Unit # V.I.N. Number" ' Year/Make/Model Body New Pending Denton Contract Unknown ' Bridgeport New Pending Denton Contract Unknown Bridgeport New Pending Denton Contract Unknown Bridgeport 401576 1HTSHAAR81H331371 00 INTERNATIONAL MCNEILUS 467315 1M2K195CXTM007544 96 MACK MR688S HElL 457315 1M2AC07C8TM001756 96 MACK LE613 MCNEILUS 421577 1HTSHADT22H536645 02 INTERNATIONAL PAK MOR C:\WINWORD\DATA\CONTRACT~PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 - Bid Submittal Attachment 5 ,: . ~ . ~- pi n : Alternate a of Action . · ! ~ . .: We have sufficient spare equipment in our existing fleet to service the city should any situations occur which could cause a volume spike in activity, or when me~.~a~nical difficulties do occur. Our fleet list as submitted is only for our Plano location,~ have additional equipment at our other two larger facilities in the N.E. Texas District should an occasion arise where the need exist for further resources. In case of employee illness or emergency, we have sufficient employees to cover any shortage. We are not currently a union workplace. However, if ever a union is voted in and a strike were to take place, we have a contingency plan in which management would be pulled in to cover all routes. Given the experience, size, and resources of Trinity Waste Services we are well equipped and our people are dedicated to ensuring your service needs are met when operational challenges occur. C:\WINWORD\DATA\CONTKACTxPROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 SubmiRal Forms.doc City of Denton Bid Number 2832 Bid Submittal Attachment 6 pr s dS opo e ervice Area Route Plan ' Trinity Waste Services will service the residents in each Quadrant according to their appropriate Trash Service Day. A detailed route plan will be devised and implemented if Trinity Waste Services is chosen to be the service provider of Denton. C:\WINWORD\DATA\CONTRACT~PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Bid Submittal Attachment 7 CUstomer Service Plan Trinity Waste Services is committed to providing the best service in the industry by consistently meeting or exceeding our customers' expectations. We pledge that any complaints or requests will be addressed immediately and every reasonable effort will be taken to resolve the situation as soon as possible. A special 800 number will be established for Denton residents. This procedure applies to all complaints or requests for service that come directly to Trinity Waste Services, Customer Service Department: Complaint or request is logged and an open file is created Complaint or request is then sent to the appropriate department for resolution Once the complaint or request has been resolved, the file is closed A log will be kept for the City of Denton This procedure applies to all complaints or requests for service that are first directed to the City of Denton: Complaint(s) or request(s) are to be faxed to Trinity Waste Services, Customer Service Department at 972-422-6456 or 1-800-766-1758 Complaint or request is logged and an open file is created Complaint or request is sent to the appropriate department for a resolution Once the complaint or request has been resolved, the file is closed A log will be kept for the City of Denton The City of Denton will be promptly notified of any extraordinary situation that cannot be resolved in a reasonable manner or time period. Trinity Waste Services personnel will communicate and work closely with City officials until any such situation has been resolved Trinity Waste Services will periodically check in with the City designated representative to address any unresolved extraordinary situations as well as any on going or reoccurring problems. Trinity Waste Services delivers great customer service; guaranteed. In the event of a missed service, we agree to e0rrect the situation promptly or assume the appropriate penalty. C:\WINWORD~DATA\CONTRACT~PROPOSAL~Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Customer Service Customer Service is part of almost ~very organization. Some companies realize its importance and focus on value, need, and results while others simply call their receptionist a customer service representative. At Trinity Waste Services customer service is a core value. Over the last three years, we at Trinity Waste Services in the Plano, Dallas and Fort Worth market have made a direct investment of over $250,000 in our customer service department toward the goal of providing exceptional value to our customers and partners. At Trinity, every single associate is a customer service representative to one degree or another. Professional uniformed drivers, courteous and helpful accounts receivable personnel, and all members of our management team are dedicated to providing quality service and addressing problems or concerns expeditiously, fairly and professionally. Experienced, full-time Customer Service Representatives (CSR's) are dedicated to responding to Commemial / Industrial and Residential requests and concerns. These associates have been trained to listen, evaluate, and respond to any situation that may arise. Each Trinity route track and supervisor vehicle is equipped with a closed channel two-way radio, which allows drivers to be contacted promptly. Our Customer Service Center (CSC) is located in the Piano office and is accessible by dialing: (972) 422-2341 or 1-800-766-1758 Our Customer Service fax number is: (972) 422-6456 The majority of complaints from residential customers concem missed service. Our customer service representatives will first correct the problem. Following up with customer education is a key component in eliminating reoccurring problems. Our CSR's will work with customers on issues such as proper preparation of recyclables, pickup schedules and other recycling and collection issues. C:\WlNWORD\DATA\CONTRACT\PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc ~0 · Iii::: ~m ~o,~s of soi~d waste this year. E i 250 mll,lor~ ton~ a year by 20! O. 2] 0 ing 1999 Alii ' t aiegic inifi dWa~t~ d t0oks rll ' ' · e an er - eye 's r atives tO further its growth arid firml~;.position the company for th'e .future. This included the acquisition of Browning-Ferris Industries, Inc., which transformed Allied Waste into the second largest solid waste company in the nation. As a result, the company experienced a few growing pains -- all part of the territory when you raise your sights and triple the size of your company in six months. Growing pains aside, solid waste management is still an essential service and it's nearly recession proof. Rega£dless of the economy, Americans will always generate garbage, and they will always need someone to haul it off and dispose of it responsibly. With this simple truth in mind, we have refined our proven business model and laid out a long-term plan for unlocking the value of the tremendous asset base that is Allied Waste. So... let's talk trash with Allied Waste Chairman and Chief Executive Officer Tom Van Weelden. 1999 has been a pretty rough year for the solid waste industry overall. Allied Waste has drawn a fair amount of scrutiny. How do you intend to overcome the skepticism moving forward? ifil; At this point, there is no catalyst in the industry or the company that is fundamentally going to change anybody's mind. That's certain. We could produce the world's greatest annual report, but it would not change anybody's mind. Our goal with this annual report is to help investors better understand who we are and what we're doing. At the end of the day, we realize the only thing that is going to change anybody's mind is for us to deliver results. And that's what we intend to do. In last year's annual report, we stated that Allied Waste is a forward-looking company with a convincing vision and dedicated plan for the future. We looked at 1998 not as the peak, but as the foundation from which we could take the company to new heights. Even though we traveled down a bumpy road in 1999, we still believe this to be true. [ 5 Now that Atlied~ has shifted from a fast-moving~ growth-oriented, company to a cash-flow., driVenr company, how will you continue to create value for investors? - A: We have always told investors that our rapid consolidation-led growth would slow at some point With the completion of the BFI acquisition, and the peliding divestitures"find ':: · asset swaps, we have reached that point. I believe we have assemb.?d.~h6 most outstaii~ng'~ · .collection of assets in the solid wast~ industrY,` I~af done l~Iow' ~w~ in[end t~ unlock the?~al~ ' .of these assets. Going forward, it all com~s down t6 ohr ability tO ~ont~ol costg and deliver- . ~- margins on'a much larger ~asset base than before..The focus Will:be on operating effi,ctently '' 'an~l ongoing .rationalizatiOn of ~he ~SSe~ 'base i0 deliver stead~r;-p~edic~able cash flow. i.' With the BFI purchase, Allied now has about alu:ce times the assets to manage. How will the'.' company's new size impact the business strategy? ,.. :~ ~ . ~[: It's important to emphasize that the acquisition of BFI was consistent with the strategic plan we have articulated for the last six years. We have always had a very pragmatic ~. ... · approach to growth. We have always acquired to operate and always to deliver long-term value to our investors. Therefore, our plan will remain the same as it was when we had ~. $9 million in revenue, 10 years ago. Our strategy is relatively simple: we want to own find manage vertically integrated solid waste operations in the United States and to be number one or number two in every market that we're in. It's all about understanding what we own and how these assets fit with our long-term objec- tives. What contributes? What doesn't? The goal is to maximize the value of those assets that contribute and eliminate those assets that don't. You fine-tune your operations, and you don't allow the new size of the company to change the fundamental business strategy. This was a cash flow-driven business before the industry consolidation. Going forward, it wiil remain a cash flow-driven business. Part of your business strategy in the past has been taking a disciplined approach to growth. Going forward, do you need to demonstrate a different kind of discipline? ~' It's the same discipline, only now our focus is on internal growth instead of external growth. It's much like a ball team owner who decides to trade his star player to get three guys who he thinks -- from a chemistry perspective -- will do better as a team. In a way that's what we did when we acquired BFI's assets. We saw good chemistry in the assembled asset base. Yet, if you're out to build a winning team -- that team being the best company out there -- you have to make tough choices and disciplined decisions. There's no doubt the BFI acquisition definitely took discipline. But having the confidence to know we can deliver the potential value of that acquisition also requires discipline, and that doesn't necessarily mean stopping future acquisitions. Although the company's top strategic goal now is to &lever the balance sheet, strategic acquisitions will continue to be used to fur- rhet improve the returns of our asset base. Does deleveraging require the same type of discipline? ~: Discipline, yes, as'well as a plan. There are three primary ways to pay down debt. Either you generate free cash flow from operations, sell assets or issue equity. We intend to do the first two. And we will rely primari- ly on the discipline and expertise of our management team to do this. The majority of our senior operating management team were formerly private operators. And, as a private opera- tor, the focus is always on cash maximization. We are drawing upon that experience in our renewed focus on operational excellence through reduced spending and increased cash flow. Another important component is to control expenditures. Historically capital expenditures ;in th!s industry have been about 13 percent of revenues. Our goal is to bring capital expenditures down to-10.percem of.revenue in 2000. And the integration of assets and mterual~za~tmn of w~aste wdl continue to be key components to unlocking the value of the company, r ~ 10i: Ye~.~;Fhe ~oncep~ is s?aightfor~'d. By'dis~ing ' .~ "' ~ ~W~'~ operate, ~.ear~ able-~o ~:aptfire tl{~ pr0fi~s frohi all segments ~f the so!id waste 'services. This improves iiaaegins, and margin-improvements drive earnings and cash flow. On the other hand, in instances where waste flows are diverted to landfills we do not own or operate, we are not capturing those, incremental margins. At the e~d. of1999, approximately 61 percent of the waste collected by Allied Waste. was disposed of at land- fills we own and/or operate. Our goal is to achieve a compiny'-wide intei-nalization rate of 70 percent in the next two to three years. We expect to accomplish this through tuck-in acquisitions, by completing divestitures in markets that don't fit our business model, and by developing additional transfer station and landfill capacity. Shortly after we acquired Laidlaw in 1996, our internalization rate dropped to 50 percent. In the wake of that transaction, we continually improved operating cash flow and the capital structure by selling and buying assets to integrate the company's core markets. Within the next two years, we brought it back up to nearly 70 percent. It's something we've done before, and something we know we can do again. How would you snmmarize Allied's performance in 19997 ~.' It was a year coupled with great successes and some pretty big disappointments. Our biggest success was the strategic acquisition of BFI, which was completed on July 30, 1999, and the significant progress made on the integration process in just five short months. The biggest disappointment was the challenges that were created from problems within the industx3r and the impact this had on Allied Waste's divestiture program. While the company's performance for the year was mixed, we are confident that we have established a base for strong performance in the future. What are your plans for the next 12 months? ~: Our top priority is to execute the business strategy now underway, and that means fulfilling the promise of 1999 strategic moves. Our primary objectives are to achieve operational excellence throughout our business and to reduce the company s deb. Multiple initiatives are currently underway to ensure that these objectives are achieved. These initiatives focus on optimizing our core businesses through operating improvements, an intensified focus on asset utilization and prudent capital allocation. A top priority for 2000 is to complete the pending asset divestiture program now underway. Reducing costs, while maintaining .high levels of customer service, is another integral part of our business strategy and how we do business. We expect these initiatives to contribute to Allied Waste's performance in 2000 and lead to greater free cash flow in the following years. What do you~i~igider to be Allied's biggest challenge going forward? .~d'. A.' We need to demonstrate to investors our ability not only to set e~ations, but to better manage and achieve them. For example, one factor that impacted the company's results last year and which has challenged us moving into 2000 is ofir underestim, ation of th~ time that would be required to ' ~ i complete the asset divestitures and fully, r.~?e the,ol3er~ behtfits of the BH ac4ulsition. ,~ ' ~While.we ~-efilized approximately ~p2i3'~fiillion ~nh~t cash proc~ed~ fr~i~ asset sales i~i ~' - ' · it'is fitw clear tfiat'~:tr~ain?om~0~tfitS ~)¥ th~'diW~iiture t~'bg~m ~re b&~d on s0m~ very ' . optimistic timifig assumptions. As a result,' we are giving ourselves some extra time in 2000 to ' fully refine our ol~erating and financial pl~n~;.' ' ~ ' .... ' So wh~t should investors expect from Allied Waste in the future? A: Investors can expect a return to a focus on cash fl~w and debt reduction. Our goal is to move Allied Waste's debt to a level that is more consistent with a value driven company. At the same time, the company will become more focused on delivering above average bottom- line growth and less focused on growing the top-line. Free cash flow and the concept of cash earnings per share will be the major financial performanc~ objectives used by Allied to bench- mark the company's performance. If investors take a longer-term view of the company -- looking three to five-years out -- I think they will better understand the inherent value we saw in the BFI transaction and the long-term potential of the combined company. What would you like to say to Allied Waste's investors and others who may be interested in the company? ~: First, I'd like to assure investors that all of our plans and all of our a~tions are designed to grow shareholder value -- both over the long-term and short-term. During this past year, we faced a number of uncertainties, skeptics and changing market dynamics. Our company will continue to face challenges. But I am convinced that our focus is right and with vigorous execution of our business plan we can achieve the goals we've set. We have a lot of bright people with the wherewithal to make a difference- people who understand the stakes, the demands, the pace of what we're trying to achieve. In many ways, 1999 was not easy, and I am immensely grateful for their dedication and perseverance in difficult times. And, I'm grateful to those shareholders who've stayed with Allied Waste throughout this exciting and challenging period. I also want to express my personal thanks to Henry Hirvela, our Chief Financial Officer, who made the decision to leave the company about the time of this writing. His many years of support and service have been an asset to Allied Waste and he will be missed. I was also deeply saddened during this past year by the deaths of Josie and Warren Razore, the father and son team who founded and built Rabanco Companies into a premier solid waste company in the Pacific Northwest. I would like to recognize the Razores for their combined contributions to the solid waste industry in Washington and nationally, and especially to Allied Waste. Thanks to the contributions of many individuals, today Allied is well positioned as a multi- regional, integrated company with geographic, operational and financial diversity. Regaining investor confidence and restoring credibility for Allied Waste, and the solid waste industry, is the next step and it requires a long-term focus. We're in this for the long-term. Tom Van Weelden Chairman and Chief Executive Officer What'We accomplished · ·Completed acquisition of the industry'~'second-largest company, Browning~Fe~is-: - Industries, Inc. ' Made measurable progress toward.the task bf integrating two'div;trse ~lt~es into a single, cohesive operating enterprise. · Successfully·integrated business processes and systems company-wide. · Removed mote than $330 million of costs by eliminating routes and closing facilities. · Began the process of rationalizing assets within our key markets. · Completed~ comprehensive internal review of the company's balance sheet, asset valuations, accounting processes and systems changes. · Generated approximately $926 million in net proceeds from asset divestitures, which was used to pay down debt. Where we go from here · . It's time to unlock the value of the tremendous asset base we have assembled. We have reformulated our long-term business plan to incorporate the BH assets. We have identified several short- and long-term goals, a~ well as specific plans of action to get us there. Now, the successful execution of thos~ plans will require dedicated focus,-C°ntinued discipline and, most importantly, time. -~ '. ~. 10 ] ~ p !e e,-~', ,,,. . ? ., . mprove asset utlhzatlon. ~ ~ Maxlm~, o r, :,We must continuously rationalize our -' .. . ~ . -This'refers tO initiatives that:demand ongoing asset base. ~ do~g so, glied will focus ~' ' success i~ C~n~oliing b~n'and mainte- On high-re~ market* ~ou~ asset ' ' ' ' ' . ~.' nance cxpens~s;.redacing, capital ing the capital stm~ure and continued swaps and selected tuCk-in acquisitions, while completing plans to divest certain improvement in all areas of operations, while non-core and non4ntegrated assets. maintaining high levels of customer service. Key Decrease financial leverage Net proceeds from divestitures will be used to repay debt. In addition, manage- ment will focus on increasing cash flow by controlling capital expenditures and optimizing operating cash flow. ocking the Value rowth ;md Allied will drive ~ build shakeholder ~a!ue:i~'i~e' con~irig years. 's us has~'s ack':t lng the Ow't t nmarv' bt~in4~'~;;~ opposed ~o growing the-businesS, i~)g~e~.~q~ ~tr~figth 3will be in its operational leadership. With that in mind, hi, fi's an' operational perspective from Allied Waste's Vice President ahd_ Chief Operating Officer Larry Henk Allied Waste has undergone tremendous growth in the past several years. What impact has this had on the company's basic philosophies of local management accountability and marketplace execution? 10i: These philosophies have been critical to our success in th~ past. They are firmly intact and remain the operating foundation of our company. In fact, as we grow, local accountability and marketplace execution become even more important. We operate a decentralized business model, with centralized control. For example, our corporate operations oversee financial reporting, internal audits, regulatory and environmental compliance, accounting systems, treasury and legal issues, and human resources. Then we push accountability and responsibility down to the regional operations with regard to business planning and development and the evaluation and integration of acquisitions. And, on the district operations level, responsibility and accountability lie in areas such as customer service, employee motivation, internal growth, profit and loss results, productivity, and sales and marketing. This approach allows us to maintain control of the overall business on a Corporate level by establishing effective controls and accountability. Yet, it also fosters growth and a spirit of entrepeeneurism on a local level. It also maximizes our resources and creates higher levels of operating efficiency. Regardless of our size, we are and will remain a local company. We are in the local market, working for our customers and ourselves every day. How important are more acquisitions to the company's success? Do you need more mass to achieve greater success? ~: Bigger is not necessarily better. When we set out to build our company in ~992, our goal was not to be the biggest-- but rather to run vertically integrated solid waste operations and build density and volume in key markets. Even though BFI was the culmination of a growth strategy that relied heavily on acquisitions, ~our focus was always on buying to operate, rather than buying just for growth's sake. Acquisition decisions have always been based upon the value each asset could add to the company. Today, acquisitions will be the icing on the cake, rather than the cake itself. As we identify new opportunities, we'll gauge the operating benefits, the synergies and the advantages for our CUstomers and ourselves just as we have in the past. We will judge each opportunity by the return we can achieve, by the increased value the acquisition can bring to our share- holders. We recognize that shareholder value remains the critical obiective. If an acquisition increases shareholder value, meaning it fits our business model and can help deliver cash flow, then we'll move forward. Otherwise, we will pass. [ 13 City of Denton Bid Number 2832 Bid Submittal Attachment 8 Monthly, Quarterly and Annnal Re o s See attached C:\WINWORDXDATA\CONTRACT~PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc Z ~ 0 'I' I-- Z 0 O0 Z City of Denton ~id NUmber 2832 ~Bid Submittal Attachment 9 " Written General Assurances · Highlighted Benefits of Trinity Waste Services Proposal for the City Of Denton · Full service. Single vendor supplies aH recycling services to the City, irleluding collection, processing and disposal of contamination, no subcontracting · Established Customer Service Center and Procedures · Proven service provider with track record of responsiveness to customer concerns · Trinity provides direct supervision of crews working in Denton · State-of-the-art single stream recyclable processing center · Expanded list of recyclable commodities accepted in the curbside program · Vast network of disposal capabilities; no reliance on disposal agreements · Fleet upgrades, communications equipment, track appearance standards / wash program C:\WINWORD\DATA\CONTRACT~PROPOSAL\Denton 4~ 11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Firm Background Trinity Waste Services and or our predeces.s0rs have been faithfully pr0_giding solid Waste service to the DFW Metroplex and the surrounding coimties sine6 1960: sined tha(time We have maintained steady growth through additional' acquisitions, :exPafisign,..and the addition of new cities to our list of satisfied customers. Trinity was the first company to offer curbside recycling in Dallas/Fort Worth. We currently provide curbside to over 250,000 homes in the D/FW area. Our Material Recovery Facilities located in Duncanville, Plano, Fort Worth and Richland Hills are equipped with state of the art processing equipment and each is capable of processing over 4,000 tons of material each month. Trinity has established long-term contracts with numerous manufacturers to ensure the marketability of the material processed. Trinity Waste Services in the Dallas/Fort Worth market has an estimated annual gross revenue of more than $240,000,000. We currently employ over 950 people locally and over 28,000 nationwide, with our parent corporation, Allied Waste Industries. Approximately 87% of our work force are directly engaged in solid waste or recycling collection, processing or disposal. Every manager, driver, maintenance person or staff assistant has undergone extensive training on a variety of issues all relating to serving the customer better. Our commitment to community service is apparent by the number of local activities we support both financially and with our time and talents. Our commitment to education is expressed in the number of area students who have taken advantage of our Mobius curriculum and program. Since its inception, thousands of children in the D/FW area have had the opportunity to learn more about our environment, recycling and their role in preserving their own future. Trinity's devotion to safety is and always will be a top priority. We have a full time Safety Manager who's sole responsibility is total compliance with all local, state, and federal laws with regards to solid waste and recycling services. Single operator collection tracks are equipped with a rear-mounted camera to maximize your safety. Each driver associate attends monthly safety meetings; all designed to give our customers and the cities the peace of mind that we are taking every precaution and every known remedy to make safety an ongoing obligation we take very seriously. C:\WINWORD\DATA\CONTRACTxPROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submit*al Forms.doc Z Z § ? ~© o o o° ~ 0 0 0 :~o~ o .om oOoOoO§O~ ~© © 0000~ O0 0 ~ Financial Review M~nagement's Discussion and Analysis of Financial Condition and Results of Operations Consolidated Financial Statements Notes to Consolidated Financial Statements Report of Independent Public Accountants Corporate Information 18 38 42 78 79 Allied Waste indushies, f~tc. 1999 Anneal Report 17 "' 'J~ :' ~ Mananement's DisCussion and Ana ysis of F nanc al CondlhOn"and Res~ilts of Opbratlons ... ' .-' "; ':',:*;' -. '' 'The followine discussibn Should be read in ~njlnction ~iib b~Z ~onsbiidat~d Financial · . ~ .. -.~...', · .. Statements and tbe not_es tb~reto, indt~ded elsew~e?~ tJ~rein, ...it. ~'~ ,~ q, :~ , ~; ~;,~.~ ~.., ' ~. -. '., "'.:. ~'. ;,:, . ~. · -.qntroducton .... :',.. -."."." '. ."- .~ ~., ~',.-.. - '---.'..~,~-.:?,~:'.,,5:..;?:~ .-.. · .': " " '_ We have eiperjencCd signif~can~ growth, prm~anly~ res,ult~g. (rpm th, e acq..ul~lg!~n~.?f. ~yhd - ' ~- " ~ · waste bus nesses Since January 1, 1993,'we have completed 225 acquisltlons;mdu&ng - -' ' 55 acquisitions in 1999. Our Consolidated Financial Statements have been restated tO reflect the acqnis tion of companies accounted for using ihe poolmg-of-mterests ~method for business combinations in 1997 and 1998. The results gf opeF;~ti~s'fo~'the ~cq~isitions a~:cunnted for'under the purchase method for busines~ combiiiations are ini:ludTd in our fifiancial statements only from the applicable date of acquisition.~As · result, we believe .~ -- - our historical results of operations for the periods presented are not directly comparable to our current results of operations. ~. In June 1998, we. acquired the Rabanco Companies I~Rabanco') in a transacti6n accounted for using the pooling-of-interests method for business combinations. Rabanco provided solid waste collection, recycling, transportation and disposal services in. the Pacific Northwest and generated annual revenue of approximately $160 million, excluding the effects of the internalization of waste volumes. In August 1998, we acquired Illinois Recycling Services, Inc. and its affiliates (~Illinois Recycling") in a transaction accounted for using the pooling-of-interests method for business combinations. Illinois Recycling provided solid waste collection, 'recycling and - ' transportation services primarily in the Chicago metropolitan area and northern Indiana and generated annual revenue of approximately $80 million, excluding the effects of the internalization of waste volumes. -.' In October 1998, we acquired American Disposal Services, Inc. ("ADSI') in a trunsactiofi accounted for using the pooling-of-interests method for business combinations. ADSI was a vertically integrated solid waste management company providing collection, transfer, recycling and disposal services to approximately 485,000 customers in 12 states, primarily in the Midwest and Northeast United States and generated annual revenue of approximately $240 million, excluding the effects of the internalization of waste volumes. In December 1998, we completed a private offering of an aggregate of $1.7 billion of senior notes. The proceeds were used to retire indebtedness and leases and for general corporate purposes. i On July 30, 1999, we completed the acqms~tion of BFI in a transaction accounted for as ; a purchase. As a result of the acquisition, each share of BFI common stock was converted '. into the right to receive $45 in cash. Including assumed and refinanced debt, the cost of I acquiring BFI was approximately $9.6 billion. Financing for the acquisition was obtained i from draws $4.7 billion from credit facilities with a capacity of $7.1 billion (the "1999 Credit Facility'), the sale of $1.0 billion of newly issued senior convertible preferred · ~ stock (the ~Preferred Stock") and the sale of $2.0 billion of 10% Senior Subordinated Notes due 2009 {the ~1999 Notes~}. With the completion of the acquisition of BFI, we operate in 42 states and serve approximately 9.9 million commercial and residential customers from a base of assets including '151 active landfills, 148 transfer stations, 95 recycling facilities and 340 collection companies. .' In connection with the acquisition of BFI, we initiated an asset divestiture program, whereby we would sell, for cash or through simultaneous buy and sell transactions, certain non-core assets that do not fit with our vertical integration operating strategy. The net ' proceeds from ~h!s.initi~tive ai?...e, xpecte4 to generate approx.i_m~tel~ $1.6 billion (net of approximately $150 million of tax}. As of December 31, 1999, we had completed d~vesntures' wh~cli generated $92~ mflbon of proceeds and were comprised of the sale of the shares of SITA, S.A., the sale of the BFI medical waste operations and the sale of ' certain n~wcore; iion-int~rated asseti'~ : & '.' ' ' - . - '' · ~ i' '-. ~ :; '/'' ' Additiunall we have ent~i'~d into {,ari~h~ agreements t6 drvllt 6f BFl's'Cafia~lian · operations, BFI Gas Services and °thor nori4cure, ~hon:ini~gr~ted as'seti; Which ,are expected to generate approximately $$92 mdhon of proceedsi Thes~ d~vesutures are recorded as ~Assets Held for Sale~. inlthe COnsolidateS FinanCial gtat~m~nts as of December 31, 1999 and are exl~cted to be completed during 2000. In connection with the sale of these identified assets, we anticip~t~ entering into definitive 9greements to acquire certain assets which would further integrate existing markets. We anticipate spending approximately $575 million on such acquisitions during 2000. We also intend to divest other non-core assets during 2000 Which we WOuld anticipate generating approximately $535 million of proceeds. These assets ha~'e not been specifically identified and approved for sale by management and the board of directors and are not classified as Assets Held for Sale at December 31, 1999. As of February 22, 2000, we had completed the sales of assets subsequent to year end for approximately $137 million and acquired assets for approximately $107 million, which were pending as noted above. Status of Integration of BFL In connection with the acquisition of BFI on July 30, 1999, we anticipated annual cost savings of approximately $360 million by the end of 2000 resulting from corporate and field SG&A savings, operations labor cost savings, market cost savings and asset buy and sell agreements. As of December 31, 1999, we had achieved approximately $335 million in annual cost savings through headcount reductions of approximately 2,900 employees, the closure of 51 facilities, 96 route rationalizations and other cost savings. Internalization increased from 57% at the time of the acquisition to 61% at December 31, 1999. The remaining $25 million of cost savings is expected to be achieved in 2000 in connection with the completion of the divestiture initiative, which includes asset buy and sell agreements. Additionally, as of December 31, 1999, we have completed the management information systems conversions from BFI's systems to Allied's systems for financial reporting, payroll, fixed assets and maintenance tracking. Subsequent to December 31, 1999, we completed the cbnversion of the general ledger and accounts payable from BFI's SAP system to Allied's system. We have not experienced any significant operational, accounting or reporting issues related to these conversions. Accounting Policies. Subsequent to the acquisition of BFI, we evaluated our capitalized interest policy to assess the methodology of the calculation with the change in the business strategy resulting from the acquisition. Under the new methodology, the area of the landfill under development is defined as only the portion of the permitted acreage currently undergoing active cell development. The costs upon which interest is capitalized continue to include the.actual acquisition, permitting and construction costs incurred for cell development. Consistent with the prior policy, as construction of an area is completed and the area becomes available for use, the cell no longer qualifies for interest capitalization. The adoption of this method, which was accounted for as a change in accounting principle, reflects the change in our operating strategy as a result of the BFI acquisition. The impact of the change in accounting principle was a cumulative charge in 1999 of approximately $64.3 million, net of related income tax benefit. ,~.~ *General ..,, ,,:. * · --- ,:, .~ Revenues. Our revenues are attributable ~)rimarily to fees charged to customer~ for waste collection, transfer, recy~l!ng and disposal services. We generally provide collection services under di~'ect agreements with out Cflst0mers or pursuarit to contracts with municipalities. Commercial and municipal '~n~ract terms, g~nerally 'r~nge from one to' ~ ~'. . ' · five years and Commonly have automatic renewal options. Our. Jandfill operafion~ include both Company-owned landfill~ ~nd those oPerated for municipali[ies for a fee. In ~ach · geograph,c reg,on m which we ~are located, We provide collection, traflsfer dnd disposal services. The following tables show for the periods indicated the percent~age of our total reported revenues attributable to services provided and rever~u~s attributable to geographic regions. The data below has been restated to give effect to acquisitions that were accounted for using the pooling-of-interests method for business combinations. Year Ended Deceml~r 31, 1999 1998 1997 Collection"~ Transfer LandfillI' Other Total revenues 60.7% 55.7% 5Z2% 5.6 7.1 6.7 25.3 29.9 26.4 8.4 Z3 9.7 100.0% 100.0% 100.0% Year Ended December 31, 1999 1998 1997 Atlantic 10% 7% 6% Central 12 19 19 Great Lakes 13 19 15 Midwest 10 10 10 Northeast 16 11 14 Southeast 9 4 4 Southwest 12 9 11 West 18 21 21 Total revenues 100% 100% 100% Our strategy is to develop vertically integrated operations to ensure internalization of the waste we collect and thus realize higher margins from our operations. By disposing of waste at company-owned and/or operated landfills, we retain the margin generated through disposal operations that would otherwise be earned by third-party landfills. Approximately 61% of the waste we collect as measured by' disposal volumes was disposed of at landfills we own and/or operate in 1999 which includes the results of operations of BFI since July 30, 1999. In addition, transfer stations are an integral part of the disposal process. We locate our transfer stations in areas where our landfills are outside of the population centers in which we collect waste. Such waste is transferred to long-haul trailers and economically transported to our landfills. 20 ] Allied Wasle Industries, Inc. 1999 Annual Report Expenses Cost of operat ons includes abor, maintenance and repail's, equipment and · '~: .~'- - facilit~ rent; fltilities arid taxes, the costs of ongoing environmental compliance, safety .... 'and insurafice,,di~Po~al C~(}~ts~.d:~b_'.si:~ 9i'i~d~pendefi~hiulers transp°rting °ur waste · to'~he disl{0~al sit~. Disp~k~l costs'includ~e'cer(ain landfill taxes, host community fees, · ' ' payments under ag~cen~r~:s' with 'r'~l~'t0 ia"n~tl~,ll s!te~s ~.h, at are fi~t owned,.l~nd, fi!l site · -... -_: maintefiance; fuel and. other equipm~,n'~.0per~tixig expe'nses and a~5:ruals for e~nmated , .... -.~ ~:; closure an'd p~t-closu~e'inouitoi-ir~g:expenses hnfi~ipg}~.d.'ib'b~,in~:urred in.th~ future. f.; ':' ,',., .~ ,..:We ush a lifeicycle a~cohnting meihofl"for landfills a'~4. :.. . '..~:',',-, ,:, dositre liabilifies:.~his' met. hod applies.the cosys'as!~}:~?te~ wtlhlac'q_m.nng, devel°ping, _ - .. closing and monitoring th& landfills 9v~r'the aisociated !anO0!.l capacity base~d on ~.:. consumption. On an annual basis, w~ update the dev~10pnient c~ost'~stimates (which .--; include the costs to develop the site as well as the indlviaual cell constroctipn costs), . .~clnsure and post-closure cost estimates and future Capacity estimates, for ~ach'landfill. The cost estimates are prepared by. lo~al company and thfi'd-part~ ~ngineels based on the applicable' local, state and federal regulations and site specific permit requirements. Future capacity estimates are updated,.u~ing aerial, surveys of each landfill performed annually, by third-party engineers to estimate utilized disposal capacity and remaining disposal capacity. These cost and capacity estimates are reviewed and approved by senior operations management annually. Selling, general and administrative expenses include management, clerical and administrative compensation and overhead, sales cost, community relations' expenses and provisions for estimated uncollectible accounts receivable. Depreciation and amortization includes depreciation of fixed assets and amortization of other intangible assets and landfill airspace. We use the units of production method for purposes of calculating the amortization rate at each landfill. This methodology divides the costs associated with acquiring, permitting and developing the entire landfill by the total remaining capacity of that landfill. The resulting per unit amortization rate is applied to each unit disposed at the landfill and is recorded as expense for that period. Costs associated with developing the landfill include direct costs such as excavation, liners, leachate collection systems, engineering and legal fees, and capitalized interest. Estimated total future development cost for our 151 active landfills is approximately $2.6 billion, excluding interest to be capitalized, and we expect that this amount will be spent over the remaining operating lives of the landfills. We have available disposal capacity of approximately 2.7 billion cubic yards of capacity as of December 31, 1959. Goodwill amortization includes the amortization of costs paid in excess of the net assets acquired in purchase business combinations. In connection with potential acquisitions, we incur and.capitalize certain transaction costs and integration costs, which include stock registration, legal, accounting, consulting, engineering and other direct costs. When an' acquisition is completed and is accounted for using the pooling-of-interests method for business combinations, these costs are charged to the statement of operations as acquisition related costs. When a completed acquisition is accounted for using the purchase method for business combinations, these costs are capitalized. We routinely evaluate capitalized transaction and integration costs, and we expense those costs related to acquisitions not likely to occur. We expense indirect acquisition costs, such as executive salaries, general corporate overhead and other corporate services, as incurred. We capitalize certain direct landfill development costs, such as engineering, construction and permitting costs, and amortize based on consumed airspace. We believe that the costs associated with engineering, owning and operating landfills will increase in the future as a result of federal, state and local regulation and a growing coramuuity Allied Waste Industries, Inc. 1999 Annual Report awareness of the landfill permitting process. We cannot assure you whether we will be able t~ raise pric~s sufficiently to offset these inc£eased expenses. We expense all ' indirect landfill development~ costs, such as executive salaries, general corporate 9verhead, public affair~ and other cox:pbrate services, as incurred. Closure and post-closure costs represent~ our financial c0mn~itment for the 3eg~latory required costs associated w.i$h our future ~obligations for final Clo~u?? whi~:h is the . closure of a cell of a landfill once the cell is no longer receiving waste, fifi~l pos~-closure monitoring and maintenance bf land.fills, which is usually reqfilred fo~'~uplto ~6'y~ars :. after a landfill's final closure. We establis_h ~:losUre and post'Closure ~-~lUi~ements based on the standards of Subtitle D as implemented on a state-by~-siate basis. We base closure and post-closure accruals on cost estimates for capping and coverifig a landfill, methane gas control, leachate management and g~oundwater monit0ri~, and other operational and maintenance costs to be incurred after the site discontinues accepting waste. We prepare site-specific closure and post-closure engineering cost estimates annually for landfills owned and/or operated by us for which we are responsible for closure and post-closure. .:. We accrue and charge closure and post-closure costs based on accepted tonnage as landfill airspace is consumed to ensure that the total closure and post-closure obligations are fully accrued for each landfill at the time that the site discontinues accepting waste and is closed. For landfills purchased, we assess and accrue the closure and post-closure liability at the time we assume closure responsibility based upon the estimated closure and post-closure costs and the percentage of airspace utilized as of the date of acquisition. After the date of acquisition, we accrue and charge closure and post-closure costs as airspace is consumed. We update and approve estimated closure and post-closure liabilities annually based on assessments performed by in-house and independent environmental engineers. Such costs may change in the future as a result of permit modifications or changes in legislative or regulatory requirements. We accrue closure and post-closure cost estimates based on the present value of the future obligation. We discount future costs where we believe that both the amounts and timing of related payments are reliably determinable. We annually update our estimates of future closure and post-closure costs. We account for the impact of changes, which are determined to be changes in estimates, on a prospective basis. In 1999, we calculated the net present value of the closure and post-closure commitment assuming inflation of 2.5% and a risk-free capital rate of 7.0%. We accrete discounted amounts previously recorded to reflect the effects of the passage of time. We currently estimate total future payments for closure and post-closure to be $2.7 billion. The present value of such estimate is $1.0 billion. At December 31, 1999 and 1998, accruals for landfill closure and post-closure costs (including costs assumed through acquisitions) were approximately $517.3 million and $154.5 million, respectively. The accruals reflect a portfolio of landfills with estimated remaining lives, based on current waste flows, that range from one to over 150 years, and an estimated average remaining life of approximately 39 years. 22 ] AJIied Waste IndusUle$, loc. 1999 Annultl Report .i Year 2000 Up, d?e~ We did not. experience an)~ ~ignificant.m~lfunctions.ur errors in · : ::-':'" ' -" ':" o'ur opera'ti~'ti' business systems 'when the d~t~'changed from i999 to 2000. Based · :.on operations since,January?l., 2000, ~..49 not expect any significant impact to our ongoing business as a result of the '~Year 2000 issue." However/it is possible that the ' gull impact of the date c~an. ge, which ~98..9f~ concem~due to comPuter programs that . use two dig~ts ~nstead of four &gits to. de m~ years, has not been fully recognized. . ' ' ' We believe that any future problems are likely to be mbfor and ~orrectable. In addition, · ~ . .' . we could still be neganvely affected if the Year 2000 Or'mmdar issues adversely affect · ~ - :. 5 ': i ·:. ~ ~ .tur customers'or suppliers. We currentll/m'e hot awareTo£ any Significant year.2000 ' : , ' ~ ~ Or similar problems that have arisen for'gut ~:ustom'ers ahd ~uppliers. We will'continue to monitor Year 2000 matters in our ongoing operations and as a par~ of our acquisition due diligence. We spent less than $500,000 on Year 2000 readiness efforts. Results of Operations The following table sets forth the percentage relationship that thc various items bear to revenues and the percentage change m dollar amounts for the periods indicated. We have restated the statement of operations data to give effect to acquisitions that were accounted for using the pooling-of-interests method for business combinations. See Note 2 to our Consolidated Financial Statements. Statement of Operations Data Revenues Cost of operations Selling, general and administrative expenses Depreciation and amortization Goodwill amortization Acquisition related and unusual costs Operating income (loss) Equity in earnings of unconsolidated affiliates Interest expense, net Income (loss) before income taxes Income tax expense (benefit) Minority interest Income (loss) before extraordinary losses and cumulative effect of change in accounting principle Extraordinary losses, net of income tax benefit Cumulative effect of change in accounting principle, net of income tax benefit Net income (loss) Dividends on Preferred Stock Net income (loss) available to common shareholders 100.0% 100.0% I12.0% 100.0% 17.5% 58.3 56.6 118.4 58.0 14.8 6.9 9.9 48.5 13.2 (12.2) 8.2 9.5 83.1 9.8 13.4 3.3 1.9 260.6 2.0 15.5 17.7 20.1 85.4 0.3 7,973.6 5.6 2.0 527.6 16.7 (86.6) (0.6) -- 100.0 -- -- 13.0 5.4 416.4 7.9 (20.6) (6.8) (3.4) (317.1) 8.8 (146.4) (0~3) 2.8 -- 3.0 8.7 0.1 -- 100.0 -- -- (6.6) (6.2) (128.2) $.8 (227.2) 0.1 7.9 (97.4) 4.0 134.6 2.0 -- 100.0 -- -- (8.7) (14.1) (29.4) 1.$ (1,027.8) 0.8 -- 100.0 -- (100.0) (9.5)% (14.1)% (41.9)% 1.8% (1,027.8)% Years Ended December 31, 1999 and 1998 Revenues. Revenues in 1999 were $3.3 billion compared to $1.6 billion in 1998, an increase of 112%. The increase in revenues is primarily attributable to the acquisition of BFI on July 30, 1999 and the inclusion in our results of BFI revenues for the period July 31, 1999 through December 31, 1999. BFI's 1998 pro forms revenue adjusted to reflect the sale of BH's Canadian operations and Medical Waste operations was approximately $3.8 billion. Nlled Waste Indusbf~, Ine. 1999 Annual Report [ 23 -. · ' /. ' .i~. ' Cost of Operations. Cost Of ,o. pi~rations in 1999 was $1.9. billion compared to $892.3 .: "~ ""' '~':" ' ~ ':~:" ' ' milli6h in 1}98,'~n'inci:eas~'0f llS.4%~'The ii~rease in cost of operations Wag primarily -" ': ~'~' ? ~';~'?: a~ti:ibia~able t6 the inCl"sion o~'l~FI's cost of operations associated with ~he revenues · "" "' ' -'" 'from'july 31, 1999 tht:0Ugh 15e~ember 31, i999. As a.perceni:age of revenues, cost of . operanons mcrea?ed to 58.3% in 1999 from 56.6% ~n 1998, pnmardy due to the change · · . m revenue m~x resulting from the acqmsmon of BFL BFI s revenue m~x was more heawly . . : . - . wmghted towards collecuon rev, enue which has lower margins than landfill revenues. - and Administrative Expenses. SG&:A expenses m 1999 were .~ . ,, : . Selling, Gener~il .... . .... - ' : $23i'.4 :.. . . million compared to $155.8 million in 1998,.an increase of 48.5%, and reflecf~ our acquisition of BFI. A~ ~ percentige of revenues, SG&A decreased to ~.9% in 1999 from 9.9% in 1998. This decrease is the result of achieving the cost savings associated wkh the acquisition of BFI and significantly increasing the revenues as noted above. Depreciation and Amortizati0h. DepreciatiOn and amortization in '1999 'was $273.4 million compared to $149.3 million in 1998, an increase of 83.1%, and reflects our acquisition of BFI. As a percentage of revenues, depreciation and amortization expense decreased to 8.2% in 1999 from 9.5% in 1998. The decrease is primarily due to the significant increase in revenues from our acquisition of BFI which more than offset the corresponding increase in depreciation due to the acquisition of BFI. Additionally, as required by generally accepted accounting principles, we ceased recording depreciation on assets held for sale during 1999. Such depreciation would have been approximately :$6.3 million. Goodwill Amortization. Goodwill amortization in 1999 was $110.7 million compared to $30.7 million in 1998, an increase of 260.6%. The increase in goodwill amortization was due to an increase in goodwill of approximately $7 billion primarily resulting from the acquisition of BFI. Acquisition Related and Unusual Costs. During the year ended December 31, 1999, we recorded $588.9 million of acquisition related and unusual costs primarily associated with the $9.6 billion acquisition of BH, which was accounted for as a purchase. The costs primarily relate to environmental related matters, litigation liabilities, risk management liabilities, loss contract provisions, transition costs, the write-off of deferred costs relating to the acquisition. These costs are comprised of the following: . We recorded a charge of approximately $267.0 million related to changes in estimates of environmental liabilities associated with BFI's operations. In connection with our due diligence and integration process, assessments of the acquired operations were performed by third-party and in-house engineers. Based on these assessments, we made changes in accounting estimates of approximately {i)$133.7 million associated with the Superfund accrual for over 150 CERCLA cases in which BFI was involved, {ii} $30.3 million associated with the remedial accrual for sites in which BFI was involved with remedial action plans, {iii} $56.3 million associated with the environmental accrual for various containment and treatment matters at 76 active or closed BFI landfills, and {iv} $46.7 million associated with the accrual for the remedial and closure requirements of four BFI hazardous waste facilities. Management believes the environmental accrual as of December 31, 1999 represents the most probable outcome of these matters. We do not expect that adjustments to these estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our consolidated liquidity, financial position or/-esults of operations. As of December 31, 1999, we believe that it is possible that the ultimate outcome of the environmental matters could result in approximately $33 million of additional liability. We recorded 9 charge of approximately $$3.5 million related to changes in estimates of litigation liabilities a~soci~t~l With BFI's ope[at~ons. In co_nnection with our due diligence 'and integration.process, ?sessments of the acquired operations and ~utstanding litigation were performed by third-party and in,house legal counsel. We evaluated over 150 cases involving eMployee-related matters~ ifisurance related matters, regulatory matters, collectinn~ ~atters and ~)fx~'act di~13Ul~eS. Accb'~'dingly, ~ve increased the litigation 'accrual ba~ed on the' inost probable 'loss to. be inc~'red.'i~. 'i'i ' ~' "' Management.believes the litigation accrual as of December 31, 1999 represents the most probable outcome' of outst~fiding assessmeniS,~ Cl~ims 'h~l ~:ah~, We 7d0',not expect that adjustments to estimates, which are reasonably Possible'iff th~ near t~m~ and that may resu!t in changes to recorded amounts, will have a maierial' effec~.on.!~u~ consolidated liquidity, financial position'or results of operations. As Of Decembe? 31, 1999, we believe that it is possible that the ultimate outcome of the litigation matters'could result in approximately $10 million of additional liability. . , We recorded an increase of approximately $20.0 million to the self-insurance accruals based on the results of a third-party actuarial review performed in connection with due diligence and integration of the BFI acquisition. As of September 30, 1999, we instituted a guaranteed cost insurance program for all casualty insurance coverages. As a result, we are fully insured for any such claims occurring subsequent to that date. In connection with the integration of the BFI acquisition, we reviewed the existing contracts of the business for recoverability. Several contracts were identified which were in a loss position when the direct costs (excluding any non-variable costs) attributable to the contract were deducted from the revenue to be generated by the contract. Consistent with our accounting policies, we recorded a charge of approximately $32.6 million to operations for the anticipated excess of costs over revenues of the identified contracts. As a result of the acquisition of BFI, management reassessed the level of acquisitions that it would pursue in the future and decided that certain companies that were being considered will no longer be pursued. Accordingly, we wrote off $26.1 million of deferred charges previously incurred in connection with these potential acquisitions. Additionally, we wrote off $33.8 million of commitment fees paid in connection with a portion of the financing of the BFI acquisition. These fees were associated with funds that were not ultimately drawn due to alternative sources of financing becoming available. However, as secured financing for the entire purchase price of the acquisition was a condition of the signing of the merger agreement with BFi, and the debt associated with these fees was not incurred, the cost was written off at the time of the acquisition. In connection with the integration plan for BFI, we identified and notified approximately 1,500 employees that they would be retained for a specified period, generally not exceeding 12 months from the acquisition date, to perform transition related functions. Subsequent to the specified time period, they will be terminated. Additionally, we identified certain offices and operations, which are duplicative, and we are in the process of consolidating these operations. As these transition costs are not accruable until committed or paid, approximately $67.~4 million of transition costs were expensed during 1999. Additionally, we accrued approximately $10.0 million of committed transition costs during the yeah We estimate that we may incur approximately $115 million of additional transition expenses associated with the integration of BFI through the completion of our plan. Additionally, we recorded approximately $43.5 million of non-cash asset impairments related to the valuation of Allied Assets Held for Sale, approximately $1.8 million of non-cash asset impairmeats related to duplicate facilities, and approximately $0.4 million of restructuring and abandonment costs related to other 1999 acquisitions. Allied Waste Indus~ies, Inc. 1999 Annual Repod ~ 25 {in thousands) Year Ended December 31, Any subsequent changes in estimakes of acquisition related.and unusual costs will be included in the acquisition related and unusual costs caption of the statement of operations in the period in .which the change 'in estimate is made. During 1999, approximately $7.2 million of accrued acquisition related costs associated with 1998 acquisitions were reversed to acquisition related aiad unusual costs. The following tabl7 reflects the cash actiyity feinted to the acquisition relai;ed and unusual costs accrue~l during 1999: " " ' ' ' ~i999 '"' · - Additions 1999 ' Balance through Non-C~sh 1999 Remaining Restructuring and abandonment costs Environmental, litigation, and regulatory compliance costs Asset impairments Total · $ 7~350 ' $ -- $(74,6541 $ 2,696 387 --. -- 387 32,643 -- (6,058) 26,585 380,500 -- (9,455) 371,045 105,186_ (105,186) -- -- $596,066 $(I05,186) $(90,167) $400,713 Additionally during 1999, we revered approximately $7.2 million of accruals to acquisition r~lated and unusual costs related to 1998 acquisitions. Interest Expense, Net. lnter~t expense, net of interest income was $435.8 million in 1999 cOmPared to $84.4 million in 1998, an increase of 416.4%. The increase in interest expense is primarily due to the increase in debt of approximately $8 billion from the acquisition of BFI, which was outstanding for five months in 1999. Additionally, capitalized interest decreased to $25.5 million in 1999 from $67.5 million in 1998 due to the change in accounting principle. Income Taxes. Income taxes reflect an effective tax rate of (3.9)% in 1999 and 80.3% in 1998. The effective income tax rate in 1999 deviates from the federal statutory rate of 35% primarily due to the non-deductible nature of certain acquisition related charges and the non-deductibility of the amortization related to $6.7 billion of goodwill recorded in connection with the acquisition of BFI. The' effective income tax rate in 1998 deviates from the federal statutbry rate primarily due to applying the pooling-of-interests method of accounting for business combinations (including the initial recording of deferred income taxes and non-deductible transaction costs, partially offset by the absence of income taxes on S-Corporation pre-combination earnings). Without considering the effect of the acquisitinn-related charges the 1999 effective tax rate is 47.5%. Extraordinary Loss, Net. In July 1999, in connection with our financing of the BFI acquisition, we replaced our credit facility and recognized an extraordinary charge of approximately $5.3 million ($3.2 million net of income tax benefit) related to the write-off of previously deferred debt issuance costs. Cumulative Effect of Change in Accounting Principle, Net. In connection with the acquisition of BFI, we changed our capitalized interest policy to more accurately reflect our long-term business strategy. As a result, we recorded a charge of $64.3 million, net ' of related tax, during 1999, to reflecl the cumulative effect on prior years of the change in the method of interest capitalization. Dividends on Preferred Stock. Dividends on Preferred Stock were $27.8 million in 1999 and reflect the 6.5% dividend on the Preferred Stock issued on'July 30, 1999 in connection with the financing of the acquisition of BFI. Dividends were not paid in cash, instead, .~ ~.~,.. the liquidation preference of the Preferred Stock increased by accrued, but unpaid dividends. ........ Years. Ended December.31 1998 and 1997 Revenues. Rev&mies'm-1998 were $1.6 bdlion compared to $1.3 billion iff i997, a-fi ~ncrease of 17.5~;/o. The inckease in revenues attributable to exissmg op~e/'ation~ ("Internal Growth") wis 1~% with.approximately 5°/~ attributible to net Volume increases ............ and approximately 3% attributable to pi'icSjncrease?. Th.e additi~natyi'venu~ growth is ~attributable' to companies.a~quired hct ~f ?evenfies iol4,"~ub~qtient't9 th.~ sam~ period in the prior ~rear. .. -' '.~-)..:~;. '~ . ~ .-~ ~.. ' Cost of Operations. Cost of operations in 1998 was $892.3 inChon.compared to ' '$777~3:million'in" 1997, an mcrease of 14.8 %. Thts increase in' ¢0s} of Operations was primarily attribfitaBle-t0' th~'increas~ in revenues'described above. As a percentage of revenues, cost ~f oper~i~'fii:decreased to 56.6% in 1998 fr6m $8.0% in 1997. The 1997 operating margin decreased from the previously reported margin due to the restatements for companies acquired stibsequen~ to December 31, 1997 anil accounted for using the pOoling-of-interests m~thod for business combinations. The 1998 operating margin was favorably impacted by an increase in internalization of third-party disposal volumes to 68% in 1998 from approximately 53% in 1997, as restated, increased volumes at the landfills, and other cost savings from the integration of acquisitions. Selling, General and Administrative Expenses. SG&A expense in 1998 was $155.8 million compared to $177.4 million in 1997, a decrease of 12.2%. As a percentage of revenues, SG&A decreased to 9.9% in 1998 from 13.2% in 1997. The 1997 SG&A expense increased from the previously reported amount due to the restatements for companies acquired subsequent to December 31, 1997 and accounted for using the pooling-of-interests method for business combinations. The 1998 SG&A expense decreased due to a reduction in certain sales and administrative functions and related facilities completed at the beginning of the second quarter of 1998 in accordance with our continuing acquisition integration plan. Additionally, the decrease in SG&A as a percentage of revenues is due to the continued increase in revenues while reducing overhead costs. Depreciation and Amortization. Depreciation and amortization in 1998 was $149.3 million compared to $131.7 million in 1997, an increase of 13.4%. In addition to the depreciation and amortization of acquired companies, the increase in depreciation and amortization was due to a 7.6 ~ increase in internalized landfill tonnage and an 11.1% increase in capital expenditures. As a percentage of revenues, depreciation and amortization did not change significantly. Goodwill Amortization. Goodwill amortization in 1998 was $30.7 million compared to $26.6 million in 1997, an increas~ of 15.$%. The increase in goodwill amortization was due to a 22.6% increase in goodwill. As a percentage of revenues, goodwill amortization did not change significantly. Acquisition Related and Unusual Costs. During the year ended December 31, 1998, we recorded acquisition related and unusual costs in the amount of $317.6 million. These costs consist of transaction and deal costs, employee severance and transition costs, environmental related matters, litigation liabilities, regulatory compliance matters, restructuring and abandonment costs, and loss contract provisions and non-cash asset impairment charges. We do not anticipate that future costs to be incurred in connection with the 1998 acquisitions will be significant as restructuring and transition activities associated with these acquisitions had been substantially completed as of December 31, 1998. 4~'he 1998 acquisition related and unusual costs discussed below predominantly relate to acquisitions accounted for as poolings-of-interests and consist of the following: ~(. .... Direct transaction and deal costs of $51.2 million including investment banker, att6rney, accountant, environmental asgessm~nt and ·other third-party fees. Approximately $11.7 ( :~ ¢ ' "' ' million was acc~'ued at December 31, 1998 -and was paid in the first six months of 1999. ,~,: .,: :~: , . : r, ~ Employee severance and transition costs of $73.6 million consist of $39.3 million in ::'~' ~ .~ ' "termination pa~,men~s made t~ employees of ac~luired c0mpanieS based on ~:hange of · -.. ' ... control provisioni in preexisting contracts and $34.3 iniliio~ iof Costs ass0ciat~;d with · severance paym~nt, s under exit or. integration :plans implemented, ~iff'connectiod. . , _, , With' i- acquisition~ made during 1998.. Exit plans Primgrily related tO the ~liminat}on .gf; · · ' ~. 7 duplicate~corporate and administ~'fi~ive offices of~:ompanies ~/cquired. lntegr~ti0n plans' · included the combination of field activities'for human resource, accounting, facility 'maintenance, health and safety c?mpliance and customer service activities of companies acquired with field activities similar to ouis. The exit and integration plans called for the termination of approximately 800 empl°yeek who performed managerial, sales, administrative support, maintenance and repair, 'or hauling and landfill operations duties. All employees were identified and notified of their severance or transition benefits at the time management approved the plan, which occurred at or around the time of the acquisitions. Approximately $10.1 million was accrued at December 31, 1998, the majority of which has been paid in 1999. Environmental related matters, litigation liabilities and regulatory compliance matters assumed in acquisitions totaled $73.4 million. Subsequent to the acquisitions, we made certain changes in accounting estimates due to events and new information becoming available for environmental liabilities of approximately $41.1 million, litigation liabilities of approximately $20.8 million and regulatory compliance liabilities of approximately $11.5 million. As part of our acquisition due diligence process, environmental assessments were performed at the time of acquisition by third-party and in-house engineers. The assessments were performed at over 150 operating sites owned or used by the 54 companies acquired by Allied in 1998. Additional environmental liabilities were accrued based on the results of the assessments and represent the most probable outcome of these identified contingent matters. Additional accrued environmental liability of $27.1 million was comprised of required remedial activities identified at 28 separate locations. These locations include eight landfills acquired by Allied, 15 landfills not owned by Allied, but used for disposal by collection companies acquired, and transfer stations and maintenance facilities acquired. Required remedial activities include containment, the removal of waste improperly disposed of, extraction and treatment of landfill gas removal and disposal of contaminated soil and groundwater treatment and legal and administrative costs of the settlement of Superfund claims. The additional $14 million of environmental accruals related to removal and treatment of leachate at landfills, the level of which exceeded permitted amounts at seven of the acquired landfills. At December 31, 1998, approximately $41.1 million and $15.8 million was accrued for environmental matters and legal and regulatory compliance matters, respectively, which are expected to be disbursed in future periods. The change in estimate relating to litigation and regulatory compliance liabilities was accrued based on legal due diligence performed, by·in-house and outside legal counsel for acquired companies at the time of acquisition and the determination of the most probable loss incurred. As a result of this legal due diligence, we identified 14 companies acquired in business combinations accounted for as poolings-of-interest whicb had '. an aggregate of 54 asserted and unasserted claims involving matters such as contract disputes, employment related disputes, real and personal property and sales tax issues and billing disputes. Additionally, we identified regulatory compliance issues related 28 ] Allied Waste Industries, Inc. 1999 Antuml Report . to 12 companies acquired, Which included citations for certain state and federal health, :' , ~ ' ' ' ~' ~:'' 7!. · safety and transportation Violations and tl~e associated costs of fines, assessments and .'- . required maMi'~i~n~e~6~'t~:~·lSring facilities and equipment into compliance. · ~ "Restri~CtUring and ~{haod0nment cost~!i~re $42:1 million in business combinations : .... ~. ' · ' "' ':~ 7 · i," ~ ' accOunted for ~ po01ing'-of-int~res¥'s/Cost~ ~b relocate' ~edundant Opekations'and ~ "- . -' ' ,, to transition them to common mf0,rmanon systems were $23.1, mdhon. Redundant . ,. . . .:. ' .~ operations ,consisted primarily of actlvmes for human resources, accounting fambty ' ' ' '~ --' a ' 'r ' ~ inaintenan~i:;~health and Safety comi31ifi~ficii and Customer ge~vice ~,hich were 'performed · '- ~ . : , ;, '-~ ~ ¢-~ · ,in field offices of companies acquired: Abandonment i:osts and losses ~h ~he disposal . ., of duplicate revenue producing assets rela~ing to specifically identified transfer stations ..... and recycling facilities were $8.8 million. Revenue a~d ~n~t .operating income of the ~ . · .: , abandoned operations represented less than one percent of Our c0nsplidatad amounts· ~:. ,. , :.: Additionally, $10.2 million of costs were incurred fo5 the disposition of redundant non- revenue producing assets. This includes $7.6 million that was accrued at December 31, 1998 in accordance with exit and integratior~ plans and is expected to be paid in 1999. This · ' accrual-is for payments under non-cancelable lease agreements for corporate offices to be vacated and other costs to close corporate facilities after operations have ceased under exit plans implemented during 1998 at five companies acquired. Loss contract provisions were $7.6 million for losses associated with collection contracts and other contractual obligations assumed in acquisitions. Approximately $5 million was accrued at December 31, 1998 and was paid as of September 30, 1999. Non-cash asset impairment charges aggregating $69.7 million were recorded during the fourth quarter of 1998, related to assets held for future use and assets, which were disposed of, in the first and second quarters of 1999. Interest Expense, Net. Interest expense net of interest income was $84.4 million in 1998 as compared to $106.3 million in 1997, a decrease of 20.6%. The decrease in net interest expense was due to an increase in capitalized interest to $67.5 million in 1998 from $37.6 -. million in 1997. The increase in capitalized interest is a result of the acquisition of 21 landfills during 1998 primarily financed with our common stock instead of cash. Therefore, we had a significant increase in assets under development without a corresponding increase in interest bearing debt. Additionally, net ifiterest expense was impacted by an overall reduction in the average.interest rate partially offset by a net increase in outstanding debt. Income Taxes. Income taxes reflect an effective tax rate of 80.3% in 1998 and 34.3% in 1997. The increase is primarily caused by the income tax accounting effects of asset write-downs and applying the pooling-of-interests method of accounting for business combinations (including the iniiial recording of deferred income taxes and non-deductible transaction costs, partially offset by the absence of income taxes on S-Corporation pre-combination earnings}. This resulted in a one-time income tax provision of $61.1 million. Without considering the effect of pooled companies and asset write-downs, the 1998 effective tax rate is 40.5%, which deviates from the federal statutory rate Of 35%, due to the effects of differences in the treatment of goodwill for book and tax purposes, state income taxes, and other permanent differences. Extraordinary Loss, Net. In December 1998, we replaced our 1996 Notes and Seni0~ Discount Notes with $1.7 billion in senior notes and recognized a charge of approxi- mately $201.2 million ($121.7 million net of income tax benefit} related to premiums paid for the early paymeni of the 1996 Notes and the Senior Discount' Notes and the wtite-off of previously deferred debt issuance costs. In June 1998, we replaced our credit facility and recognized an extraordinary charge of approximately $5.1 million {$3.1 million net of income tax benefit} related to the write-off of previously deferred debt issuance costs. In September 1997, we sold -18~6 million shares of common stock:with net proceeds~ of approximately $J27.4 million (the "Equity Offering"). We used $203 million of the net proceeds to retire a portion of the term loan facility of the 1997 Credit Agreement {as defined below) and $~71 million to repay the entire amount outstanding on the · rev?lying ~redit ~facility. As a result of the early repayment of dibt ouistanding under '. . the term loa~/facility, we rec,ogmzed an extraordinary charge In the third quarter of ".1997 of approximiitely $1.3 mil!~on'($0.8, m~illion net of income tax benefit} for the "':' ~' ' ' wi' teloff of pi'evi0usly def~ri~d ~lel~ i'~shfir/c~ ~:o~ts. · % ~' ? . '~' : '. · ' · ' In May 1997, ~4e repurchased from Laidlaw~ Inc. two junior subordinated debentures with an aggregate face amount of $318 million and a warrant to acquire 20.4 million shares of common stock, used as partial consideration for the acquisition of the solid waste operations of Laidlaw, loc., for an aggregate purchase pric~ of $230 million in cash. An extraordinary ·charge to earnings related to the repurchase of approximately $65.7 million ($39.4 million net of income tax benefit) was recto:ted. In addition, we replaced our $1.275 billion bank agreement with the $900 million senior credit facility {the "1997 Credit Agreement") in June 1997 and recognized an extraordinary charge of approximately $21.6 million ($13.0 million net of income tax benefit). Liquidity and Capital Resources Historically, we have satisfied our acquisition, capital expenditure and working capital needs primarily through bank financing and public offerings and private placements of debt and equity securities. Between January 1992 and December 1999, we completed total debt financings in excess of $14.3 billion and equity financings in excess of $1.4 billion, excluding stock issued for consideration in business combinations. Due to acquisitions and the capital requirements of our previous business strategy, we have used amounts in excess of the cash generated from operations to fund acquisitions and capital expenditures. In the furore we anticipate that cash flow from operations, less acquisitions and capital requirements, will be sufficient to service our long- and short-term debt. However, over the next several quarters, transition and integration costs associated with the BFI acquisition may cause us to have negative cash flow from operations or may cause us to incur additional amounts of debt. In connection with acquisitions~ we have assumed or incurred indebtedness with relatively short-term repayment schedules, thereby increasing our current and medium-term liabilities. Also, for certain acquisitions, current liabilities are recorded for acquisition related and unusual costs that require payment in the near term. Current liabilities periodically include scheduled payments required under our 1999 Credit Facility. In addition, we have acquired operating equipment using financing leases, which have short, an~ medium-term maturities. Also we use excess cash generated from operations to pay down amounts owed on our revolving line of credit, which is classified as long-term debt. As a result, we periodically have low levels of working capital or working capital deficits. 30 3 Allied Wa~e Industries, lng. 1999 An.gal Regolt Dudng the year~s 9nded D~ce~.b~?. 31, 1999, .1998 and 1997, our cash flows from operating, investing and flnhncing were.as follows: (in mil[ions} Year Ended Dec~mber 31, 1997 Operating Activities · : ..... ,Net i~come (loss) ,9 ,..; ~ ., '~ - Nbn4ash' acquisition ~elate~ an~l u~nsual ~osts and asset impairments Non-cash operating expenses") · Cumulative effect of change in accounting principle Gain on sale of assets Extraordinary losses due to early extinguishments of debt, net of income tax benefit and cash premium paid Cash premium paid due to early extinguishments of debt Change in operating assets and liabilities, net Cash provided by operating activities Investing Activities Cost of acquisitions, net of cash acquired Capital expenditures, and net contributions to unconsolidated subsidiaries Capitalized interest Proceeds from sale of assets Change in deferred acquisition costs and notes receivable Cash used for investing activities Financing Activities Net proceeds from sale of common stock and exercise of stock options and warrants Net proceeds from sale of Preferred Stock Net proceeds from long-term debt, ~;et of issuance costs Repayments of long-term debt Other Cash provided by financing acfi~x~es Increase (decreasel in cash and cash~uivalents "." $ (28g.7).~'-'$-4223~1)' ':$ 24.0 ".-~ t05.2"- - ~Ss~2 :'-' -- 318.8 -. . 245.8 '- 187.3 64.3 -- (5.3) (3.5) (7.2) 3.2 119.0 50.5 -- (173.2) (64.4) 291.5 116.2 (62.7) 489.0 169.4 127.5 (7,574.4) (313.0) (498.7) (356.2) (301.7) (188.0) (25.5) (67.5) (37.6) 522.1 12.1 530.1 (28.5) (8.2) (7.9) (7,462.5) (678.3) (202.1) 10.2 11.3 329.0 973.9 -- -- 8,672.3 2,725.3 1,336.8 (2,601.2) (2,265.7) (1,791.8) -- 44.4 163.9 7,055.2 515.3 37.9 $ 81.7 $ 6.4 $ (36.7) As of December 31, 1999, we had cash and cash equivalents of $121.4 million. Our capital expenditure and working capital requirements have increased significandy, reflecting our rapid growth through acquisition and devdopment of revenue producing assets, and will increase further compared to the years ended December 31, 1999 and 1998 due to the acquisition of BFI. During 1999, we acquired solid waste operations, excluding the BF1 acquisition, representing approximately $381.2 million in annual revenues ($332.7 million net of intercompany eliminations}, and sold operations representing approximately $372.5 million in annual revenues. Subsequent to December 31, 1999, we sold certain assets with annual revenues of approx'nnatuly $120 million for consider- ation of approximately $137 million. For the calendar year 2000, we expect to spend approximately $675 million for capital expenditures, closure and post-closure,.and additional remediation expenditures relating to our landfill ope~'atinns. We also expect to spend approximately $300 million after tax, for non-recurring integration and transaction costs primarily related to the acquisition of BFI. The acquisition of additional waste operations would require additional capital amounts and capital expenditure requirements. Allied Waste Ifldustde~ lnG. 1999 Annual Report [ 31 As of December 31, 1999, our debt structure consisted primarily of $5.2 billion outstanding under the 1999 Credit Facility, $2.0 billion of the 1999 Notes, $1.7 billion of the 1998 Senior Notes and $1.3 billion of debt assumed in connection with the BF1 acquisition. As of December 31, 1999 there is aggregate availability Under the revolving credit facility of the 1999 Credit Facility of approximately $1~0 billi6n toCbe used for working capital, letters of credit, acquisitions ~nd other ged¢~'al.'cqi:~orat~ p~rpqses. The indentures relating to the 1999 Credit Agreement, the. 1999 Notes arid the 1998 Senior Notes contain financial and operating cbyen~t~' fifi~ res~ri~:ti~)ns 6fi ~a'ur abil!~y- . m complete acquisitions, pay dividends, incur indebtedness; inake'.inve'stm~irs and take certain other corporate actions. A substantial portion of bur avfiilable'calsh will be required to service this indebtedness. For fiscal 2000, our debt'service is e~pected to be approximately $1.2 billion consisting Of approximately $371 million in prin~cipal repayments and approximately $870 million in annual interest'payments. These amounts may vary depending upon changes in interest rates. We are also required to provide financial assurances to governmental agencies under applicable environmental regulations relating to oul landfill operations and collectiofi contracts. We satisfy these financial assurance requirements by issuing performance bonds, letters of credit, insurance policies or trust deposits as they relate to landfill closure and post-closure costs and performance under certain collection contracts. At December 31, 1999, we had outstanding approximately $1.5 billion in financial assurance instruments, represented by $701.7 million of performance bonds, $656.6 million of insurance policies, $52.1 million of trust deposits and $105.8 million of letters of credit. During the calendar year 2000, we expect to be required to provide approximately $1.5 billion in financial assurance instruments relating to our landfill operations. We have lease facilities (the "Lease Facilities") that allow us to enter into equipment leases at rates ranging from similar term treasury note rates plus 1.55% for terms of 36 to 84 months. We had equipment leases outstanding at December 31, 1999 and !998 of $14.8 million and $36.6 million, respectively. Subtitle D and other regulations that apply to the non-hazardous waste disposal industry have required us, as well as others in the industry, to alter operations and to modify or replace pre-Subtitle D landfills. Such expenditures have been and will continue to be substantial. Further regulatory changes could accelerate expenditures for closure and post-closure monitoring and obligate us to spend sums in addition to those presently reserved for such purposes. These factors, together with the other factors discussed above, could substantially increase our operating costs and our ability to invest in our facilities. Our ability to meet future capital expenditure and working capital requirements, to make scheduled payments of principal, to pay interest, or tO refinance our indebtedness, and to fund capital amounts required for the expansion of the existing business depends on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond our control. On the basis of historical financial information, including recent operating history of both Allied and BFI, we believe that available cash fl0w, together with available borrowings under the new credit facility, our lease facilities and other sources of liquidity, will be adequate to meet our anticipated future requirements for working capital, acquisition related and integration costs, letters of credit, capital expenditures, scheduled payments of principal and interest on debt incurred under the new credit facility, the assumed BFI debt, the 1998 Senior Notes, the 1999 Notes and other debt, and capital amounts required for growth. However, we may have to refinance the principal payment at maturity on the 1998 Senior Notes, the 1999 Notes and other debt. We cannot assure you that our business will generate sufficient cash flow from operations, that we will be able to avail 32 ~ Allied Waste In~lushies, Inc. 1999 Annual Iteped ourselves to futurefinancings in an amount sufficient to enable us to service our..-. - · · -;~ ::' '-' ' ~ ' ...... :?~' ' ' ~ndebtedne~s Or t6 make n~cessa~y c~pital.~xpenditures, or that any r. efinancing would - -' '" - ~ ' be'~vailable Oix.~ommercially~.Teaso~iable terms, if at all. Further, depending on the timing, ~' - · ' ..... ' - am6unt and structure of any possible future acquisitions and the avallabibty o,f funds . , . - _~ . under the new~ credit facility, we may ~eed to false additional capital. We may raise '3~ "x : ~ :~-'.' ':;&" :~::...... 'Jfr %: :;~uch'fu~n~l~ ~h[dugh a~idiii°~n,~l'~nl~;fi~cifig~ ~ 13ubli& or.'priv~ite' ~ffering~ of.our debt ~ . ' and eqmty se,c. urmes. We cannot assure y~u~.that we wdl ,be able to secure such funding, ;;:; 5.' ~ ':" · :~ -. ,~ ~ 0ui' ability ~o pul'sue our.~tisinessi~rat~gY-~n'~;.b~'impaired and results of operations · .: · for future periods'may b~ fi~gativel] affected..(See Note 6 i6 Allied's C6i~solidated -Financial Statements). ,, '~ .... ::;)~y~-,~.'~ ',~.'- '~' Significant Financing Events . ,_. - - · In July 1999, in connection with the completion of the acquisition of BFI, we entered into new financing arrangements and repaid all amounts borrowed under the then existing credit facility and all amounts borrowed by BFI under its commercial paper program. The new financing arrangements were (i) the 1999 Credit Facility for Allied Waste North America, Inc. (~Allied NA'; a wholly owned consolidated subsidiary of Allied), which is guaranteed by us and substantially alt of our subsidiaries (including BFI and its subsidiaries), from a bank group for $7.1 billion to provide financing for the acquisition of BFI and working capital for us following the acquisition, (ii) the sale of the $2.0 billion principal amount 1999 Notes by Allied NA which are guaranteed by us and substantially all of our subsidiaries (including BFI and its subsidiaries), and (iii) the sale for $1.0 billion of the Preferred Stock. In connecfion-with the completion of the acquisition of BFI we also guaranteed certain of BFI's remaining debt and, for the 1998 Senior Notes and for certain of BFI's remaining debt, provided collateral (pari passu with the 1999 Credit Facility) consisting of certain of BFI's assets. Both the New Credit Facility and the 1999 Notes contain resti:icti0ns on Allied's ability to make acquisitions, purchase fixed assets above certain amounts, pay dividends, incur additional indebtedness, make investments, loans or advances, enter into certain transactions with affiliates or enter into a merger, consolidation or sale of all or a substantial portion of Allied's assets. The 1999 Credit Facility, the 1999 Notes and the Preferred Stock contain provisions, which could require repayment, in some cases at a premium upon a defined ~change of control~ of Allied and the Preferred Stock also contain restrictions on Allied's ability to pay cash dividends on common stock. In December 1998, Allied NA issued an aggregate principal amount of $1.7 billion of senior notes in a Rule 144A offering which was subsequently registered for public trading with the SEC in January 1999. We used the net proceeds .from the 1998 Senior Notes to fund the purchase of all of the outstanding 1996 Notes and Senior Discount Notes, to repay borrowings outstanding under the Senior Credit Facility and certain capital lease obligations and for general corporate purposes. We guarantee the 1998 Senior Notes and substantially all of Allied NA's current and future subsidiaries, the guarantees of which are expressly subordinated to the guarantees of Allied NA's Credit Agreement. In June 1998, we repaid $486.8 million outstanding under the 1997 Credit Agreement and entered into a new credit agreement (the ~Credit Agreement~). The Credit Agreement provides an $800 million five-year senior secured revolving credit facility and a $300 million five-year senior secured term loan facility (together with the revolving credit facility, the ~Seninr Credit Facility'). The term loan facility is a funded, amortizing senior secured term loan with annual principal payments increasing from $75 million in 2001, to $105 million in 2002, and to $120 million in 2003. Principal under the revolving credit facility is due .upon maturity. Allied Waste Industries, Inc. t999 Annual Repod ~ 33 On September, 30, 1997, we.~'~paid $203 million outstanding under the term loan ~:~ility and $7i million ~t~an~ding ufid~' the re¥olving credit facility of the 1997 Credit Agire~ment. In connection with this repayment, we amended the 1997 Credit ,Agreement in October 17~7~ prov!ding for faci ~/to finance certain acqms~ttons prior to March 31, 1998, and a semor secured ' ~ $600 million revolving ~re&t facd~ty due December 2003. ~.:In June 1997, we ~epaid our.semor credst~facd~O/and entered into the.J997 Credit' ~Agreemenc The 1997 Credit Agreement provides a six arid ofi~-half year s~nio/' secured $500 million term loan facility and a six and o~e-half year.senior secu{ed '$400 million revolving credit facility. · ' · In May 1997, Allied, pursuani t6 the Laidhiv/Securities purchase Agreement with the Laidlaw Group andcertain private securities investment funds affiliated with either (i) Apollo Advisors H, L.P., or (ii} the Blackstune Group (the "Apollo/Blackstone Investurs~), repurchased from the Laidlaw Group, the Allied Debentures and the Warrant for an aggregate purchase price of $230 million in cash. Also pursuant to the Laidlaw Securities Purchase Agreement, the Apollo/Blackstone Investors purchased all of the common stock held by Laidlaw. In connection with the Repurchase, Allied issued $418 million aggregate face amount of the Senior Discount Notes in a private offering on May 15, 1997. The net proceeds of $230 million realized from the sale of the Senior Discount Notes were used to pay the cash consideration in the Repurchase. New Accounting Standards In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, an amendment of SFAS No. 133. This statement defers, for one-year, the effective date of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to those fiscal years beginning after June 15, 2000. SFAS No. 133 requires all derivatives to be recorded as either assets or liabilities and the instruments to be measured at fair value. Gains or losses resulting from changes in the values of those derivatives are to be recognized immediately or deferred, depending on the use of the derivative, and whether or not it qualifies as a hedge. We will adopt SFAS No. 133 by January 1, 2001, as required. We are currently assessing the impact of this statement on our results of operations and financial position. Disclosure Regarding Forward Looking Statements This annual report include? forward-looking s~atements within the meaning of Section 27A of the Securities Act'of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Forward Looking Statements")~ All statements other than statements of histu6cal fact included in this report, are Forward Looking Statements. Although we believe that the expectations reflected in such Forward Looking Statements are reasonable, we can give no assurance that such expectations will prove.to be correct. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, number of acquisitions and projected or anticipated benefits from acquisitions, including whether and when the acquisitions will be accretive to earnings, made by or to be made by us, or projections involving anticipated revenues, earnings, levels of capital expenditures or other aspects of operating results and the underlying assumptions including internal growth as well as general economic and financial market conditions. All phases of our operations are subject to a number of uncettaimies, risks and other influences, many 34 ] Allied W~ste Industries, Inc. 1999 of which are outside of our control and any one of which, or a combination of whic~h, ' ~ - .. could materially affect the results of our operations and whether Forward Looking "-"'~ ' ' Statements madelb-y..~s~nltimately,prove to be accurate. Such important factors :._ ' "~ '" ("Important Factors~l that could cause actual results to differ materially from our expectations are disclosed in this sectinn and elsewheire in this repo/t. All shbs~quent ~ -~ ' ;~- '.written and oral ForWard Lboking stafefii~n~s attribi~table to us or persons acting on i . --:~:: ~.... ~ · "~ ~ ~' 'our beh;,lfrare e~pressly qu'~lified in th~ii~fitir~Ty b~ khe lmpo~gn~ F4ctoi:s fJescribed .. ,r .-..-.~.~ . : , ,.. ~ .' '.~: '~; ~, V below that ctfild ~:afi~e r/ctdal resnltg to differ ~from:our yxpectanons. Shareholders,. '.... '- - .~: e-":p'oteatial inves;tors and other readers.are'urged to consider these factors ir/evaluating · -i .' ....... .? ' ' g: "-' Forward Looking Statements and ~6'~fftioned not to i31a~ undue reliance on these Forward Looking Statemetits. The Forw~ird Looking'Statements made herein are only made as of the date of this filing ~nd we undertake no obligation to publicly update such Forward Looking Statements tb"reflect subsequent events or ctrcumstaoces. Leverage Ability to Service Debt. We have substantial indebtedness with significant debt service requirements. At December 31, 1999, our consolidated debt was approximately $10.2 billion. The degree to which we are leYeraged has important consequences, including the following (i) our ability to obtain additional financing in the future may be impaired, {ii) a portion of our cash flow from operations is required to be dedicated to the payment of principal and interest on our debt, thereby reducing funds available to us for other purposes, (iii) we may be vulnerable in the event of an economic downturn in our business, and (iv) to the extent our outstanding debt under our 1999 Credit Facility is at variable rates that have not been hedged, we will be vulnerable to increases in interest rates. In addition, a portion of our bank debt provides for increasing interest rates if that portion is not repaid by July 30, 2000. Accordingly, if we are unable to repay this portion from the proceeds of asset divestitures or otherwise, our vulnerability to changes in interest rates will be greaten Our ability to meet our debt service obligations will depend on our future operating performance and financial results, which will be subject in part to factors beyond our control. Although we believe that our cash flow will be adequate to meet our interest payments, we cannot assure that we will continue to generate earnings in the future sufficient to cover our fixed charges and if we are unable to borrow sufficient funds under either the 1999 Credit Facility or from other sources, we may be required to refinance all or a portion of our assets. There can be no assurance that a refinancing would be possible, nor can there be any assurance as to the timing of any asset sales or the proceeds, which we could realize therefrom. If for any reason, including a shortfall in anticipated operating results or proceeds from asset sales, we were unable to meet our debt service obligations, we would be in default under the terms of certain of our debt agreements. In the event of such a default, the holders of such debt could elect to declare all of such debt immediately due and payable, including accrued and unpaid interest, and to terminate their commitments with respect to funding obligations under such debt. In addition, &uch holders could proceed against any collateral which, in the case of the 1999 Credit Facility, consists of the capital stock Of our subsidiaries and substantially all of our assets and the assets of our .subsidiaries. Any default with respect to any of our debt could result in a default under other debt or result in bankruptcy. Competition. The solid waste collection and disposal business is highly competitive and requires substantial amounts of capital. We compete with numerous waste manage- ment companies, one of which has significantly larger operations and greater resources. We also compete with those counties and municipalities that maintain their own waste collectio~ and disposal operations. Forward Looking Statements assume that we will be able to effectively compete with the other waste management companies and Allied Waste Industries, InC. 1996 Annuai Repofl [ 35 municipalities and that ~;e Will be able to maintain or improve margins (or pricing of services) on existing or acquired ~operations and effectively compete with government owned and operated landfills which enjoy c/~rtain competitive advantages from tax-exempt financing and tax revenue subsidies. ~, Availability of Acquisition Targets. Our 'ongOing ..... ~ · . , ~ . . , acquisition'program is pa~t of our ~ .~ .growth strategy. In addition, obtaining l~andfill permits'has be, come'i/~creasingly difficult, · .time consuming and expensivei' We cannot assure that w~ will succeed in obtaining .landfill permits o~ locating appropriate acquisition candidates tfiat carl bi acquired at price levels that we'consider apPropriate. The~ .l~orward Looking Statements assume that a number of acquisition candidates and landfill properties sufficient to meet our goals will be available and that we will be able to complete the acquisitions at prices that we have experienced in the past two years. In addition, federal and state antitrust and similar policies may limit our ability to pursue acquisitions. Divestitures. Our Forward Looking Statements assume that we will be able to exit certain regional markets and sell certain non-strategic businesses. There can be no assurance as to whether or when transactions will close or the amounts to be received in such transactions, including transactions under definitive agreement, and whether we will be successful in negotiating asset sales at a pace and on terms sufficient to achieve our goals. Integration. Our financial position and results of operations depend to a large extent on the integration of recently acquired businesses including the acquisition of BFI completed on July 30, 1999. Before the acquisition of BFI, Allied and BFI operated as separate entities. We may not be able to maintain the levels of operating efficiency that Allied or BFI had achieved or might achieve separately. Successful integration of BFI's operations will depend upon our ability to manage those operations and to eliminate redundant and excess costs. Because of difficulties in combining operations, we may not be able to achieve the cost savings, increases in internalization rates, and other size related benefits that we hope to achieve after the acquisition. Failure to achieve effective integration in the anticipated time period or at all could have an adverse effect on our future results of operations. Ongoing Capital Requirements. To the extent that internally generated cash and cash available under our existing credit facilities are not sufficient to provide the cash required for future operations, capital expenditures, acquisitions, debt repayment obligations and/or financial assurance obligations, we wi I require additional equity and/or debt financing in order to provide such cash. We have incurred significant debt obligations in the last two years, which entail substantial debt service costs. The Forward Looking Statements assume that we will be able to raise the capital necessary to' finance such requirements at rates that are as good as or better than those we are currently experiencing. We cannot assure, however, that such financing and hedging and other means of fixing interest rates on our debt will be available or, if available, that we will find such terms regarding debt service costs and interest rates consistent with the assumptions of Forward Looking Statements or otherwise satisfactory. Se~ "Liquidity and Capital Resources". Economic Conditions. Our business is affected by general economic conditions. The Forward Looking Statements assume that we will be able to achieve internal volume and price growth, which is not impacted by an economic downturn. As our revenue continues to grow it is likely th:it the rates of internal growth will reflect growth rates, which are less than those experienced in 15'99. We cannot assure that an economic downturn will not result in a reduction in the volume of waste being disposed of at our operations and/or the ptice that we can charge for our services. Allied Waste lladustl'ies, Inc. 199~ Annual Report Weather Conditions. Protracted periods of inclement weather ~ay _adversely affect our ~i~era~ns by ii~i~iferin~ ~!~h collect(oh' a~d landfill operati0m, d~laying the development o~ landfill capacity a~d/oi'~ reducing th~ volume ~f.Waste ge~/e~at~d by our Customers. In addition, particularly harsh weather conditiofls_ may result in. the~t.emporary suspension of cettain of our operations. The F0rwfird Looki~ ~(9~//men,ts.d&.h~ ~ssum~ that such weather conditions will occur. ' "' -.~ ~'~ '. ' '. ~ :? :? ."'. ,'~v' ~:'~ '.-, :' ~ .' [ Depend~c-e-on Sehiorlg~iiage.m, ent. i:~e~ ure l~ig?Jy id.tpe rn.~t ~upon ~r:~en~9~ .? ~.: ~- mann ement ~eam In addlt on, as we continue to grow, our reqm. rements for opet~atlons management with waste industry expeneoce wdl also.mcrease..The avadabdlty of such experienced management is not known. Our Chief Fmancml Officer announced h~s forthcom ng resignation in~ February 2000. The Fot~vard: · ..,. ~ Ltok~ng..~ · ~ ....:~Statements' .' assume. that experienced management will be available when n~eded by us ~it compensanon levels that are within industry norms. We may also i~ncounter diffi'cul~y']n the a~similation and retention of employees. The Ioss~if the services 'df ~iny memb~}"0~?enior manage- ment or the inability to hire experienced operations manag~me.nt could have a material adverse effect on us. Influence of Government Regulation and Other Third Party Actions. Our operations are subject to and substantially affected by extensive federal, state and local laws, regulations, orders and permits, Which govern environmental protection, health and safety, zoning and other matters. These regulations may impose restrictions on operations that could adversely affect our results, such as limitations on the expansion of disposal facilities, limitations on or the banning of disposal of out-of-state waste or certain categories of waste or mandates regarding the disposal of solid waste. Because of heightened public concern, companies in the waste management business may become subject to judicial and administrative proceedings involving federal, state or local agencies. These governmental agencies may seek to impose fines or to revoke or deny renewal of operating permits or licenses for violations of environmental laws or regulations, or to require remediation of environmental problems at sites or nearby properties, resulting from transportation or predecessors' transportation and collection operations, all of which could have a material adverse effec~ on us. Liability may also arise from actions brought by other third parties such as individuals or community groups in connection with the permitting or licensing of operations, any alleged violations of such permits and licenses or other matters. The Forward Looking Statements assume that there Will be no materially negative impact on our operations due to government regulation or other third-patry actions. Potential Environmental Liability. We may incur liabilities for the deterioration of the environment as a result of our operations. Any substantial liability for environmental damage could materially adversely affect ouk operating ~esults and financial condition. Due to the limited nature of our insurance coverage of environmental liability, if we were to incur substantial financial liability for environmental damage, our business and financial condition could be materially adversely affected. The Forward Looking Statements assume that we will not incur any material environmental liabilities other than those for which a provision has been recorded in the Consolidated Financial Statements and disclosed in the notes thereto. Allied Waste Industries, Inc. t999 Annual Repeal [ 37 Allied Waste Industries;:lnc; Consolidated Statements of Operations Revenues · ~ .... '. , :' ' ' $3,341,071 $1,575,612 Co. st of operations exc~luding acquisition related and unusual costs ~ .1,948,964. ~,. 892,273 Selling,~g~oeral ~d administrative expenses~xdudii~' '~ c'~""~ ": ':- ' ;. '" '.-'. ' [ acquis on related and unusual costs ' : ' ":~ · ~ .... ' 231,366 ' 15~,835 Depreciation and amortization ' ' Goodw'dl amortizatiOn Acquisition related and unusual costs Operating income Equity in earnings of unconsolidated affiliates Interest income Interest expense Income (loss) before income taxes Income tax expense (benefit) Minority interest Income (loss) before extraordinary losses and cumulative effect of change in accounting principle Extraordinary losses, net of income tax benefit Cumulative effect of change in accounting prino_'ple, net of income tax benefit Net income (loss) Dividends on preferred stock Net income (loss) available to common shareholders ~1,340,661 777,289 "'i77,396 · 273,368 '149,260 - ~'131,658 110,726 30,705 26,580 588,855 317,616 3,934 187,792 29,923 223,804 (20,785) -- -- (7,212) (4,030) (1,765} 443,044. 88,431 108,045 (227,255) (54,478) 117,524 (8,756) 43,773 40,277 2,751 -- -- (221,250) (98,251) 77,247 3,223 124,801 53,205 64,255 -- -- (288,728) (223,052) 24,042 27,789 -- 381 $ (316,517) $ (223,052) $ 23,661 Basic EPS Income (loss) available to common shareholders before extraordinary losses and cumulative effect of change In accounting principle, net of income tax benefit Extraordinary losses, net of income tax benefit Cumulative effect of change in accounting principle, net of income tax benefit Net ~ncome (loss) available to common shareholders Weighted average common shares $ (1.33) $ (0.54) $ 0.47 (0.02) (0.68) (0.33) (0.34) -- -- $ (1.69) $ (1.22) $ 0.14 187,801 182,796 164,888 Diluted EPS Income (loss) available to common shareholders before extraordinary . losses and cumulative effect of change in accounting principle, net of income tax benefit Extraordinary losses, net of income tax benefit Cumulative effect of change in accounting principle, net of income tax benefit Net income (loss) available to common shareholders Weighted average common and common equivalent shares $ (1.33) $ (0.54) $ 0.44 (0.02) (0.68) (0.30) (0.34) -- -- $ (1.69) $ (1.22) $ 0.14 187,801 182,796 172,958 Pro forma amounts, assuming the change in accounting principle is applied retroactively: Net income (loss) available to common shareholders Diluted earnings (loss) per share $ (256,265) $ 5,085 $ 0.40) $ 0.03 38 ] Allied Waste Industries, Inc. 1999 Annual Repod Allied Wa~steJndus!fies, inc. Consolidated Balance Sheets (in thousand% exc~p! per share amount) .~ . As of Decembe~ 31, Cash and cash equivalents' !' :i.' ~?:=7 :~.~&~;'r.i'.~.$ ".'i21,~40~ ~ ~39,742 Accotmts~'recei~ble, net of allowance of,$59,490 and $13,907 "-'.."..~'.;':':'.~!?.?;!~86.7,~67 ~ 225,087 l~r~paid and other current assets Deferred income taxes, net Assets held for sale Total current assets Property and equipment, net Goodwill, net Other assets, net Total assets · 891,900 143,750 .-' 2,248,422 - 499,904 3,738,388 1,776,025 ' · '8,23S,929 1,327,470 737,362 149,193 $14,963,101 $3,752,592 Liabilities and Stockholders' Equity Current Liabilities: Current portion of long-term debt Accounts payable Accrued closure, post-closure and environmental costs Accrued interest Other accrued liabilities Unearned revenue Total current liabilities Long-term debr~ less current portion Deferred income taxes Accrued closure, post-closure and environmental costs Other long-term obligations Commitments and contingencies Series A senior convertible preferred stock, 1,000 shares authorized, issued and outstanding, liquidation preference of $1,028 per share Stockholders' Equity: Common stock Additional paid-in capital Retained deficit Total stockholders' equity Total liabilities and stockholders' equity 1,002,928 $ 21,516 481,318 106,082 134,968 41,938 158,251 7,892 613,663 228,934 238,371 48,511 2,629,499 454,873 9,240,291 2,118,927 204,786 -- 860,574 205,982 388,396 42,736 1,001,559 -- 1,885 1,845 1,205,399 1,208,906 ~569,288) (280,677) 637,996 930,074 $14,963,101 $3,752,592 The accompanying Notes to Consolidated Financial Statements are an integral part of d~se balance sheets. . Allied Waste Industries, Inr,. 1999 Annual Report ~ 39 (in thouaands) - Allied Waste Industries, Inc'..Consolidated Statements o! Stockholders' Equity Balance as of December 31, 1996 ' ' Additional Total C~mmon Paid-in Retained - 'Stockholders' Stock ~apital ' D~ficit . Equir/ $~,501 $ 4391060 -~ ~(55,344)"-$ 3'85,21~ '~ Common stock issued, net · ' Warrants repurchas~d '-. ~ ~ Stock grant amortization Stock options and warrants exercised 9% Cumulative Convertible preferred stock and convertible notes converted Dividends declared on preferred stock Equity transactions of pooled compames Net income Balance as of December 31, 1997 Common stock issued, net Stock grant amortization Stock options and warrants exercised Equity transactions of pooled companies Net loss Balance as of December 31, 1998 Common stock issued, net Stock options and warrants exercised Dividends declared on Series A Senior Convertible Preferred Stock Equity transactions of pooled companies Net loss Balance as of December 31, 1999 (1) 221 r. '~, 35~7,798 ': .'..~ ,:..,,(~7 - 358,019 (49,000) ...,~,-.--: ,.. ,. . - (49,000) ._.~. .,. ~381.' :. -- , '" 381' 13 4,~9~ ?)I'" i~ (' 4,208 17 2,154 -- 2,190 -- (381) . -- (381) 62 245,050 (~324) 23~788 -- -- 24,042 24,042 1,814 999,277' /<!:~(38,626) 962,465 13 26,474 -- 26,487 -- 1,251 -- 1,251 18 23,547 -- 23,565 -- 158,357 (18,999) 139,358 -- -- (223,052) (223,052) -- 1,845 1,208,906 (280,677) 930,074 -- 2 220 -- 222 -- 14 20,480 -- 20,494 -- -- (27,789} -- (27,789) -- 24 3,582 117 3,723 -- -- -- (288,728) (288,728) $-- $1,885 $1,205,399 $(569,288) $ 637,996 The accompanying Notes to Consolidated Financial Star.neats are an integral paxz of theae statement& 40 3 Allied Waste Industries, Inc. 1999 Anoual Reood {in thousands} = Year Ended December · Allied Waste Industries, Inc. Consolidated Statements of Cash Flows 1999 199S 1997 Operating'Activities ' ' Net income .(lqss) '~ :' .Adjustmefits to Reconcile Net Income {l~ss} ._ to Cash Provided by Operating Activities: : -' Provisions for:' . · _: , D~pre~at!on and amortization. Non-cash acquisition related and unusual costs and asset impairments Gumulative effect of change in accounting principle, net Of income tax benefit '- '.- Undistributed earnings of equity investment in hnconsolidated subsidiary D6ubtful accounts · Accretion of senior discount notes and amortization of debt issuance costs Deferred income tax provision (benefit) Gain on sale of assets Extraordinary losses due to early extinguishments of debt, net of income tax benefit and cash premium paid Cash premium paid due to early extinguishments of debt Change in Operating Assets and Liabilities, Excluding the F~fects of Purchase Acquisitions: Accounts receivable, prepaid expenses, inventories and other Accounts payable, accrued liabilities, unearned income Acquisition accruals related costs Closure and post-closure provision Closure, post-closure and environmental expenditures Cash provided by operating activities Investing Activities Cost of acquisitions, net of cash acquired Accruals for acquisition price Net contributions to unconsolidated subsidiaries Capital expenditures, excluding acquisitions Capitalized interest Proceeds from sale of assets Proceeds from sale of assets held for sale Ghange in deferred acquisition costs and notes receivable Gash used for investing activities Financing Activities Net proceeds from sale of common stock, and exercise of stock options and warrants Net proceeds from sale of preferred stock Proceeds from long-term debt, net of issuance costs Repayments of long-term debt Repurchase of warrant Other long-term obligations Dividends paid Equity transactions of poo!ed companies Cash provided by financing activities Increase {decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Gash and cash equivalents, end of period . g, :. $:( 8) ,052) ' ,042 ~ 384,0~4 , . ¥179,965 '! .-158,238 64,255 13,217 -- -- 10,305 8,086 4,228 27,155 33,057 26,630 (115,964) 24,636 (1,794} (5,346) (3,521) (7,250) 3,223 118,957 50,518 -- (173,159) (64,439) (100,586) (58,517) (131,840) 13,099 159,862 70,803 382,643 20,244 -- 35,242 17,607 12,920 (38,784) (23,000) (14,590) 489,011 169,393 127,466 (7'589,597) (312,986) (498,706} (17'0n) -- -- (339,192) (301,742) (188,005) (25,474) (67'499) (37,568) 53,246 12,070 5,404 468,880 -- 524,716 (28,555) (8,184) (7,926) (7,462,532) - (678,341) (202,085) 10,198 11,324 329,019 973,881 -- -- 8,672,295 2;725,262 1,336,780 (2d601,190} (2,265,741} (1,791,799) -- -- (49,000) -- 2,745 12,886 -- -- (525) -- 41,780 200,563 7,055,184 515,370 37,924 81,663 6,422 (36,695) 39,742 33,320 70,015 $ 121,405 $ 39,742 $ 33,320 Allied Wasle Indus~tes, Iflc. 1699 Annual Repert 41 Notes to Consoiic~i~i~:Hnancial stai'e~'nts ~ 1. Organization and Summary of Significant Accounting Policies ~ . ~ · ~' Allied Waste Industries, Inc., a Delaware corporation, ("Alli~d'~ i~r'"we") is th~ second" argest tion-hazardous solid waste mfi~agdment comp?y:ia t~ilJai~ed Stat~s, ak measured by revenues. We prowde non-hazardous waste collection, transfer, recychng find disposal services in 42 states located primarily in the Aklfihti? C~ eiitkhl, G.reat "' Lakes, Midwest, Northeast, Southeast, Sotlthwei~'a'~d West'~gi0hs ~)f the United States. _. ~ On July 30, 1999, we completed the acquisition of B~owning-Ferris Industries, Inc. ("BFI") for approximately $7.7 billion of cash and the ~tssumption of approximately $1.9 billion of BFI debt. Prior to the acquisition, BFI was.the.second largest nonThazardous solid waste company in North America and provided integrated solid waste management services, including residential, commercial:and industrial collection, transfer~ disposal and recycling. As of the date of acquisition, BFI serviced approximately 7.3 million customers through a network of 221 collection companies, 86 transfer stations, 84 landfills, and 102 recycling facilities and had annual revenues of approximately $4.2 billion. Principles of Consolidation and Presentation. The Consolidated Financial Statements include the accounts of Allied and our subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The Consolidated Financial Statements and accompanying notes have also been restated to reflect material acquisitions accounted for as poolings-of-interests (See Note 2). Certain reclassifications have been made to the prior period financial statements Cash and Cash Equivalents. Cash equivalents are investments with original maturities '~-? of less than 90 days and are stated at quoted market prices. ~ash and cash equivalents are net of approximately $169.2 million and $32.7 million of outstanding checks and deposits in transit at December 31, 1999 and 1998, respectively. · Concentration of Credit Risk. Financial instruments that potentially subject us to concentrations 9f credit risk co~sist of cash and Cash equivalents and trade receivables. We place our cash and cash equivalents with high quality financial institutions and limit the amount of credit exposure with any one financial institution. We provide services to approximately 9.9 million residential, commercial and industrial customers throughout the United States. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising our customer base. We perform ongoing credit evaluations of our customers, but do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends and other information. Property and Equipment. Property and equipment are recorded at cost, which includes interest to finance the acquisition and construction of major capital additions during the development phase, primarily landfills and transfer stations, until they are completed and ready for their intended use. Depreciation is provided on the straight-line method over the estimated useful lives of buildings (30-40 years}, vehicles and equipment (3-1.5 years}, containers and compactors ($-10 years} and furniture and office equipment {3 $ years) Statement of Financial Accounting Standard Nb. 121 ("SFAS 121 "), Accountin~?-',:% for the Impairment of Long-lived Assets and Long-lived Assets~ to be Disposed of, ~ Allied Waste Indusb'ies, Inc. 1999 Annual Report requires that long-lived assets, such as property and equipment, and certain identifiable_. :' intangibles be review~ed for imp~iirment.wh~never events 6r changes in cir/:ffms~'ances indicate the carrying amount of an asset may.not be recoverablel · ' ':. ~ ' ~ ~ The cost bf landfill air~pace, including Origih~l.a~quisition L0~i an~l 'inc~/'rred and ~ ". · .:Projtc~ed landfill, cdnstruction co,ts, is amurti~ed over the i:apacity Of the landfill 'based bna ~e'r Unit basis ~s landfill airspace is ~:onsufi~l. w~ periddiCally:irdvie~,'th~'¥ealiz-: :' ability of our mvestment.~n'operaung !an~lfills, Should events and circumstances "· ,: : indicate that any of o~r lan,dfill~ be reviewed for possible ~mpattment, S,uch rewew for :. ~ec~verability :will ~be made in accordance :xvi~hTanerging Issues Task For~e 'Discussion Issue No. 95-23 (aEITF ~5z23~'! ~b.e Treqtmq~t of Certain Site Resto?ationl.' ~ ' Environmental Exit Costs Wbe~ ~Testing a Long-lived Asset fo~ Impairm'-ent( The ' EITF outlines how cash flows fo~ ~nvirgnm~tal exit costs should .b~ determined Expenditures for major renewals and betterments are capitalized, while expenditures for maintenance and repairs, which do not improve assets or extend their useful lives, are charged to expense as incurred. For the years ended December 31, 1999, 1998 and 1997, maintenance and repair expenses charged to cost of operations were $275.6 million, $99.8 million and $80.9 million, respectively. When property is retired, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Goodwill. Goodwill is the cost in excess of fair value of identifiable assets in purchase business combinations and is amortized on a straight4ine basis over 40 years. We allocate goodwill when appropriate, to the district operating the assets based on a percentage of acquired assets' earnings before interest, taxes, depreciation and amortization ("EBITDA') to the total acquired EBITDA. In accordance with SFAS 121, we continually review for estimated useful life of goodwill might warrant revision or that the balance may not be recoverable. We evaluate possible impairment by comparing estimated future cash flows, before interest expense and on an undiscounted basis, and the net book value of assets including goodwill. If undiscounted cash flows are insufficient to recover assets, further analysis is performed in order to determine the amount of the impairment. We record an impairment loss equal to the amount by which the carrying amount of the assets exceeds their fair market value. Fair market value is usually determined based commensurate with the risks involved. In instances where goodwill is identified with assets that are subject to an impairment loss, the carrying amount of the identified goodwill is reduced before making any reduction to the carrying amounts of impaired long-lived assets. See Note 1 -- Acquisition related and unusual costs for a discussion of current year asset impairments recorded. Goodwill amortization of $110.7 million, $30.7 million and $26.6 million was recorded for the years ended December 31, 1999, 1998 and 1997, respectively. Accumulated goodwill amortization was $185.3 million and $74.6 million at December 31, 1999 and 1998, respectively. Other Assets. Other assets include notes receivable, landfill closure deposits, deferred charges, investments in unconsolidated subsidiaries, prepaid pension costs and miscella- neous non-current assets. Deferred charges include costs incurred to acquire businesses and to obtain debt financing. Upon consummation of an acquisid0n, deferred costs relating to acquired businesses accounted for as purchases are allocated to goodwill or landfill airspace while costs relating to acquired businesses accounted for as poolings-of-interests are expensed. Direct costs related to acquisitions under evaluation are capitalized and reviewed for realization on a periodic basis. These costs are expensed when management determines that the capitalized costs provide no future benefit. Upon funding of debt offerings, deferred costs are capitalized as debt issuance costs and amo~ized using the interest method over the'life of the related.debt. Miscellaneous assets include consulting and non-competition' ag~'eemefits; which are a~mo~ized in accordance Wits t~ terms of the respective agreenients and cbfitracts, generally not exceeding five years. Accrued Clos~r~ hnd Post:cloiure Co~t~ Accrued closur~ and pos~-closure costs represe~ an estimate. Of the pre~enf ~;alue of th9 futi~re obligati~n'a~o~:iated With closure and ~i~ postq:losiire'~tnito~ing'tf n0si-ha~ardoas'solid Waste: landfills g/~ ~urrently own and/or operdte.:S'i~e:'/p~ifiC/~lYsui~afid I~OSt-~losu~'~'dngineeri~/g ctst es'ti~i[~s'"~/r~ prepared an~i~all); for I~hdfills ownea and/or operated by us roi; Which We'a~"~fisible'fo~ clo~ure find posf-clogurt..The impact ~f changes determified to be 'changes in es~ mates, based on the annual update, are acconnte~ for on a prospective basis. The present value ' of estimated future costs a~'~ accrued on a per unit b~sis as landfill airspace is consumed. Discofinting of future costs is applied where we believe that both the amounts and timing of related payments are 'reliably determinable. Environmental Costs. We accrue for costs associated with environmental remediatinn obligations when such costs are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value as the timing of cash payments is not reliably determinable. Recoveries of environmental remediation costs from other parties are recorded when their receipts are deemed probable. Environmental liabilities and apportionment of responsibility among potentially responsible parties are accounted for in accordance with the guidance provided by the AICPA Statement of Position 96-1 (~SOP 96-1~) ~Envirunmental Remediation Liabilities. ~ Other Long-term Obligations. Other long-term obligations include the non-current portions of insurance accruals, legal accruals, loss contract and restructuring accruals and other obligations not expected to be paid within the following year. Revenue. Advance billings are recorded as unearned revenue, and revenue is recognized when services are provided usually within 90 days. Loss Contracts. We review our revenue producing contracts in the ordinary course of business to determine if the direct costs, exclusive of any non-variable costs, to service the contractual arrangements exceed the revenues to be produced by the contract. Any resulting excess direct costs over the life of the contract are expensed at the time of such determination. Change in Accounting Principle. We evaluated our capitalized interest policy to assess the comparability of the calculation with the change in the business strategy resulting from the acquisition of BFI. As a result of this assessment, we changed the method of calculating capitalization of interest under Statement of Financial Accounting Standard No. 34, Capitalization of Interest Cost ("SFAS 34~). Previously, interest was capitalized using a methtd that defined the area of a landfill under development as all acreage considered available for development. Actual acquisition, permitting and construction costs incmsred related to the area under development qualified for interest capitalization. Any costs incurred related to areas already'developed and accepting waste no longer qualified for interest capitalization. Under the new methodology, the area of a landfill under development is defined as only the portion of the permitted acreage currendy undergoing active cell development. The effect of this change in definition is to substan- tially reduce the acreage qualifying for interest capitalization. The costs upon which intere~:.. s capitalized continue to include the actual acqulsmon, pernnttmg and construcnon costs incurred for cell development. Consistent with the prior policy, as construction of an area is completed and the area becomes available for use, the cell no longer qualifies for interest capitalization. 44 ] Allied Waste Industries. lng. 1999 Al~nust ~lepori . .: . T~e adoption of this method,, which is accounted for as a change in a~:c_ounting principle~ · , -.... · . . '5 .' ~. 71 .. ._reflects. the. change in our opera~ing strategy as a result of the BFI acquisition. Previously our strategy ,~as focfised 6n~-tbe-a~:quismon and flevelopment of waste disposal capacity. · ~.3 Through the BFI acquisition, we substgntially achier'ed our previous strategy and are ~'~'~'~ - ' ' " :" ..... ~ .... ' ~: ' ' now focusing on the increased utilizatioii 6f l~,tidfill Capacity. '~.- ~' ' ' ~ :.~-~ :- ~ ' The impact of the chang~ in a~Scounting principle s a cumula~.~ve:ch~rge O~ appr.o, ximately . ~ . '~ ' ~' $106 2 million {$64 3 million net of mcom,e, ta~xes) The effect'of the chang~ on the year . · ' .... ~ ' . , .~; : .. r,'5 ended December $1, 1999 was ~o decreate n~t income before'cuifiu~l&~ive' effect of a .:'. --' ~hange in accounting principlei'by $14.8 million. IS0.08 per ghare) and ne~g i~6ome after ~ il ' ": · · ' "'-' :" ~" cumulative effe~ of a change m"~cco~lfitifig principle $79.1 million ($0.42 per share). '" 'The pro forma amounts shown off bur Consolidated Statements of Operations reflect ~' ' : ' ~: ' ' ' ' ' the effect Of retroactive applicfition on'capitalized in'erect in the prior periods that ' ' ' ' : · · ' Would have been recorded had the new methbd been in effect during these periods and ';'~ '- ~' the'related income tax benefit/ Acquisition Related and Unusual Costs. 1999 During the year ended December 31, 1999, we recorded $588.9 million of acquisition related and unusual costs primarily associated with the $9.6 billion acquisition of BFI, which was accounted for as a purchase (See Note 2). The costs primarily relate to environmental related matters, litigation liabilities, risk management liabilities, loss contract provisions, transition costs and the write-off of deferred costs relating to the acquisition. These costs are comprised of the following: We recorded a charge of approximately $267.0 million related to changes in estimates of environmental liabilities associated with BFI's operations. In connection with our due diligence and integration process, assessments of the acquired operations were performed by third-party and in-house engineers. Based on these assessments, we made changes in accounting estimates of approximately (i) $133.7 million asstciated with the Superfund accrual for over 150 CERCLA cases in which BFI was involved, (ii) $30.3 million associate~t with the remedial accrual for sites in which BFI was involved with remedial action plans, (iii) $56.3 million associated with the en~ironmentai accrual for various containment and treatment matters at 76 active or closed BFI landfills, and (iv) $46.7 . million associated with the accrual for the remedial and closure requirements of four BH hazardous waste facilities. Management believes the environmental accrual as of December 31, 1999 represents the most probable outcome of these matters based on our intended remediation plans. We do not expect that adjustments to these estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our consolidated liquidity, financial position or results of operations. We recorded a charge of approximately $93.5 million related to changes in estimates of litigation liabilities associated with BFI's operations. In connection with our due diligence and integration process, assessments of the acquired operations and outstanding litigation were performed by third-party and in-house legal counsel. We evaluated over 150 cases. involving employee-related matters, insurance related matters, regulatop/matters, collection matters and contract disputes. Accordingly, we increased the litigation accrual based on the most probable loss to be incurred. Management believes the litigation accrual as of December 31, 1999 represents the most probable outcome of outstanding assessments, claims and cases. We do not expect that adjustments to estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our consolidated Allied Waste Industfles, Inc. 1999 Annual Report [ 45 - ~' - -liquidity, financiaLposmon or results of operationsi-As of December 31, 1999, we . ' '" ~-- -~ " believe that it is possible that the ultimate-oii~ome-of the' litigation matters could result ' ' in approximhtely $10 million~of additional liability. .; We recorded an increase of apprommately $20.0 mfihon to the self-insurance accruals based on the results of a th~rd-party actuarial review,performed m connection with . ~" ' . . '.' "due diligence and integra~iofi of i~e~l~l ~4ui~i~ib~.'A~ 0f.$ept~mbe~ 30,",19~9, we = · · ..... msntuted a guaranteed cost insurance program for all casualty msuranc,~ coverages. "'- ' - - ' ' ~ As a result, we are fully ~nsured for any such claims 6ccurnng siibsequent to that date. In connection with the integranon of the B~ ?~quisition, ~e reviewed the existing contracts of the business for recoverability. Several contracts were identified which were in a loss position when t~e direct costs (excluding any non-variable type Co'ts) attributable to the contract were deducted from the revenue to be generated by the c0ntractl Consistent with our accounting policies, we re~orded ~ cha~ge of approximati~ly $32.6 million to operations for the excess of costs over revenues of the identified contracts. As a result of the acquisition of'BFI, management reassessed the level of acquisitions that it would pursue in the future and decided that certain companies that were being targeted will no longer be pursued. Accordingly, we wrote off $26.1 million of deferred charges previously incurred in connection with these potential acquisitions. Additionally, we wrote off $33.8 million of c6mmitment fees paid in connection with a portion of the financing of the BFI acquisition. These fees were associated with funds that were not ultimately drawn due to alternative sources of financing becoming available. However, as secured financing for the entire purchase price of the acquisition was a condition of the signing of the merger agreement with BFI, and the debt associ- ated with these fees was not incurred, the cost was written off in the third quarter. In connection with the integration plan for BFI, we identified and notified approximately~ 1,500 employees that they would be retained for a specified period, generally not exceeding ~ nine months from the acquisition date, to perform transition related functions. Subsequent~ to the specified time period, they will be terminated. Additionally, we identified certain offices and operations, which are duplicative, and we are in the process of consolidating these operations. As these transition costs are not accruable until committed or paid, approximately $67.4 million of transition costs were expensed during 1999. Additionally, we accrued approximately $10.0 million of committed transition costs during the year. We estimate that we may incur approximately $115 million of additional transition expenses associated with the integration of BFI over the subsequent quarters. Additionally, we recorded approximately $43.5 million of non-cash asset impairments related to the valuation of Allied assets held for sale, approximately $1.8 million of non-cash asset impairments related to duplicative facilities, and approximately $0.4 million of restructuring and abandomment costs related to other 1999 acquisitions. Any subsequent changes in estimates of acquisition related and unusual costs will be indoded in the acquisition related and unusual costs caption of the statement of operations in the period in which the change in estimate is made. During 1999, approximately $7.2 million of accrued acquisition related costs associated with 1998 acquisitions 46 ] Aflred Wasle Indush'les, Inc. 1999 Annuar Repod -. The following table reflects th~ casl~ ac[ivj.ty .related to t_he~a~qgisition T¢!9,t¢O a~d , .:~ ~ . unusual costs accrued during 1~99: :- "' - ' - .... : ";?"'" ;"" :'~'~~":? ~: ? '.-Re~rmg and abandonment cos~' :' ~' ~ . '= ' · . '-~ = - '~ -387'~.? ~: .,-~ 7' = ." ;~ ~ ' · '5 -~ ' 387 ~con~am - ' . '-. : ., .~ ' 321643..~ ~. --., ..~(6,058)..,% 26, 85 En~i~on~ehtal,'lifigation,' '~' ' ' ' " afid'~lato~ compliance costs .... 38~,500.- ~ ~ (9,455} 371,~5 T0ml ~ ' $596,066 $ {105,186) ' ~ $(90,167) $400.713 1998 . During the year ended December 31, 1998, we recorded acquisition related and unusual costs in the amount of $317.6 million. These costs consist of transaction and deal costs, employee severance and transition costs, environmental related matters, litigation liabilities, regulatory compliance matters, restructuring and abandonment costs, loss contract provisions and non-cash asset impairment charges. We do not anticipate that future costs to be incurred in connection with the 1998 acquisitions will be significant as restructuring and transition activities associated with these acquisitions had been substantially completed as of December 31, 1998. The 1998 acquisition related and unusual costs discussed below predominantly relate to acquisitions accounted for as poolings-of-interests and consist of the following: Direct transaction and deal costs of $51.2 million including investment banker, attorney, accountant, environmental assessment and other third-party fees. Approximately $11.7 million was accrued at December 31, 1998 and was paid during the first six months of 1999. Employee severance and transition costs of $73.6 million consisted of $39.3 million in termination payments made to employees of acquired companies based on change of control provisions in preexisting contracts and $34.3 million of costs associated with severance payments under exit or integration plans implemented in connection with acquisitions made during 1998. Exit plans primarily related to the elimination of duplicate corporate and administrative offices of companies acquired. Integration plans included the combination of field activities for human resource, accounting, facility maintenance, health and safety compliance and customer service activities bf companies acquired with field activities similar to ours. The exit and integration plans called for the termination of approximately 800 employees who performed managerial, sales, administrative support, maintenance and repair, or hauling and landfill operations duties. All employees were identified and notified of their severance or transition benefits at the time management approved the plan, which occurred at or around the time of the acquisitions. Approximately $10.1 million was accrued at December 31, 1998, substantially all of which has been paid in 1999. Environmental related matters, litigation liabilities and regulatory compliance matters assumed in acquisitions totaled $73.4 million. Subsequent to the acquisitions; we made certain changes in accounting estimates due to events and new information becoming available for environmental liabilities of approximately $41.1 million, litigation liabilities of approximately $20.8 million and regulatory compliance liabilities of approximately $11.5 million. Allied Waste Industries, lac. 1999 A#nua[ Repofl [ 47 · -'"As part of ou? icquisition due diligence process, environmer~tal assessments were performed at the time of acquisition by third-part~ hnd in-house engineers~ The assessments were performed at over 150 operating sites o~vned or used by the 54 companies acquired by Allied. in 1998. Additional environmer~tal liabilities were a,cf:rue4 based on the .results of ~.. the assessments and represent' the mfst prObable outc6me Of these identified matters. Additional accrued environmental liability bf.$27:J, fiiilli'o:h',~,i~ c~i~prised of required remedial activlnes ~dentlfied at 28 separate Iocatio~s:~:Th~e !Ocati6n/inc ude eight landfills ~acquired by Allied, 15 lan'drill,s n6t oWned bY2Alljedi but, usi~d'for ,5~ sposal by collection co/npanies acquired, and 't~ani'~(~'~atibns '~nd ga~i~;~' ~iiifi~ ~eqfi~red Required remedial act~vmes ~nclude the' removal and treafment of wastejmp~:operly disposed of, containment and abatement i)f landfill gas migrationS' rem0~al '~ad disposal of contaminated soil and hazardous waste and legal and admi~?ratix;e.~oStsl Of the settlement of Superfund claims. The additional $14 million of envirO ~n~bental accruals related to removal and treatment of leachate at landfills, the level Of ~hich exceeded permitted amounts at seven of the acquired landfills. At December 31, 1998, approxi- mately $41.1 million and $15.8 million was accrued for environmental matters and legal and regulatory compliance matters, respectively, which are expected to be disbursed in future periods. The change in estimate relating to litigation and regulatory compliance liabilities was accrued based on legal due diligence performed by in-house and outside legal counsel for acquired companies at the time of acquisition and the determination of the most probable loss incurred. As a result of this legal due diligence, we identified 14 companies acquired in business combinations accounted for as poolings-of-interest which had an aggregate of 54 asserted and unasserted claims involving matters such as contract disputes, employment related disputes, real and personal property and sales tax issues and billing disputes. Additionally, we identified regulatory compliance issues related to 12 companies acquired, which included citations for certain state and federal health.,~.. safety and transportation violations and the associated costs of fines, assessments and required, maintenance costs to bring facilities and equipment into compliance. Restructuring and abandonment costs were $42.1 million in business combinations accounted for as pooling-of-interests. Costs to relocate redundant operations and to transition them to common information systems were $23.1 million. Redundant operations consisted primarily of activities for human resources, accounting, facility maintenance, health and safety compliance and customer service which were performed in field offices of companies acquired. Abandonment costs and losses on the disposal of duplicate revenue producing assets relating to specifically identified transfer stations and recycling facilities were $8.8 million. Revenue and net operating income of the abandoned operations represented less than one percent' of our consolidated amounts. Additionally, $10.2 million of costs were incurred for the disposition of redundant non-revenue producing assets. This includes $7.6 million that was accrued at December 31, 1998 in accordance with exit and integration plans, substantially all of which has been paid in 1999. This accrual was for payments under non-cancelable lease agreements for corporate offices that were vacated and othei costs to close corporate facilities after operation~ have ceased under exit plans implemented during 1998 at five companies acquired. Loss contract provisions were $7.6 million for losses associated with collection contracts and other contractual obligations assumed in acquisitions. Approximately $5 million was accrued at December 31, 1998 and was paid dfring 1999. 48 ~ Allied Waste Induslr[es, Inc. 1999 Annual Report During the fourth quarter of 1998, we recognized non-cash asset impairl~ent charges . aggregating $69.7 million. The,s,e charges rtlated to assets held for future use and assets which were dtsposed of dunng the first s~x months of 1999. An ~mpa~rment charge of ' · ' $45.9 million, with no associated tax beu~fi~; ~vas recor~ted relating tOgoodwill recorded by American_Disposal Services, Inc. (. ADSI ) m connection with ADSI s ~ -Sel~tember 1997 acqmsmon of Fred Barbara Trucking, a private waste transportation · . ': business. Additionally, an im'p~if,m..ent cha~e 6f $23.8 million Was rectrded ftr the ~. '" '.' - ~'nte-~wn to net reali~ible ~iluk 'less ctst of disposal of assets to be sold relating to non-core or non-integrated operatmg dist~'!cts.' .... . · : . : . ':. - · -' Any subsequent changes in estimates of ai:qnisition related and unusual costs will be included in the acquisition related and unusual costs caption, of tl~e statement Of operations in the period in which the change in e~timht~ i~: made. During 19~9, approximately $7.2 million accrued acquisition-related costs a~s~ciated with 1998 acquisitions were reversed to acquisition related and unusual costs. The following table reflects the activity related to the 1998 acquisition related and unusual costs: 1998 Balance 1998 Non-Cash 1998 1999 1999 Remaining Expense Charges Expenditure~ Expenditures Adjustments Dec. 31, 1999 Transaction and deal costs $ 51,200 Severance and transition costs 73,619 Restructuring and abandonment costs 42,098 Loss contracts 7,569 Environmental, litigation and regulatory compliance costs 73,416 Asset impairments 69,714 Total $317,616 $ -- $ (39,529) $(10,552) $ (719) $ -- -- (63,493) (8,800) (854) 472 (18,514) (15,954) (2,353) (4,680} 597 -- (2,587) (4,623) (359) -- -- (16,482) (16,589) (599) 39,746 (69,714) .... $(88,228) $(138,045) $(43,317) $(7,211) $40,815 Extraordinary Losses. 1999 In July 1999, we replaced our credit facility and recognized an extraordinary charge of approximately $5.3 million ($3.2 million net of income tax benefit) related to the write-off of previously deferred debt issuance costs. 1998 In December 1998, we replaced our 1996 Notes and Senior Discount Notes with $1.7 billion in senior notes and recognized a charge of approximately $201.2 million {$121.7 million net of income tax benefit} related to premiums paid for the early payment of the 1996 Notes and the Senior Discount Notes and the write-off of previously deferred debt issuance costs, in June 1998, we replaced our credit facility and recognized an extraordinary charge of approximately $5.1 million ($3.1 million net of income tax benefit) related to the write-off of previously deferred debt issuance costs. Allied Wasle IndL~lrles, lac. 1999 Aanuat Repod [ 49 In M~y 199'~, we ~epurchased from the Lai.dlaw, Inc. two junior subordinated debentures with an aggregate face am.~unt of $318 million and a warrant to acquire 20.4 million shares of c~nmon stOck, ~sed as partial consideratiox/for the acquisition of the Solid Q 'i waste~p~r~:i~s~f~aid~a~.~c~.f~.a~aggregatepu~chase~ri~e~f$2~mi~i~nin ,"~ ..: · 'c&sh. An eXtra6rdinary' ~ha~g~ to earnings related -to' the repd~chase of apl6roximately ~ '$63.7 milfiofi'i($39.4' milH0n net of in;:om~ tax benef t) was recoi'ded In~addi~ion~:/ve · r~pla'ced Our $1~;Z75 billion B:~fik'Agre~'m~[ witl~ the $90{~'mill~ofi seni~'Cr~dit~ f~cility (the '"1997 'C~cedit Agie~m~nt~) in June 199~ and recognized an e~tr~0~:difiaby charge "of approximately $21.6 millioxi' ($13.0 million net of income tax benefit). ~ In September 1997, we so!d ~8.6 million shares of common stock with net proceeds · . from the equity offering of approximately $327.4 million· We used $203 million of the net proceeds from the'equity offering tO retire a portion of the term loan facility of the 1997 Credit Agreement and $71 million to repay the entire amount outstanding on the revolving credit facility. As a result of the early repayment of debt outstanding under the term loan facility, we recognized an extraordinary charge in the third quarter of 1997 of approximately $1.3 million ($0.8 million net of income tax benefit) for the write-off of previously deferred debt issuance costs· Statements of Cash Flows. The supplemental cash flow disclosures and non-cash transactions for the three years ended December 31, 1999 are as follows: (in thousands) $ 312,623 $ 62,386 $ 86,125 (74,855) 33,653 17,244 S. upplemental Disclosures: Interest paid (net of amounts capitalized) Income taxes paid (proceeds received) Non-cash Transactions: Common stock, preferred stock or warrants issued in acquisitions or as commissions Capital leases Debt and liabilities incurred or assumed in acquisitions Debt converted to common stock Non-cash purchase and sale of operating business $ 1,573 $124,854 $ 73,570 -- 1,187 38,693 1,850,162 65,409 207,806 -- -- 2,265 -- -- 181,434 Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Final settlement amounts could differ from those estimates. Interest Rate Protection Agreements. Interest rate protection agreements are used to reduce interest rate risks and interest cost~ of our debt portfolio. We enter into these agreements to change the fixed/variable interest rate mix of the portfolio to reduce our aggregate exposure to increases in interest rates. We do not hold or issue derivative financial instruments for trading purposes. Hedge accounting treatment is applied to interest rate derivative contracts that ate designated as hedges of specified debt positions. Amounts payable or receivable under interest rate swap agreements are recognized as adjustments to interest expense in the periods in which they accrue. Net premiums paid for derivative financial instruments are deferred and recognized ratably over the ff~ life of the instruments. Under hedge accounting treatment, current period income is not '~'~ $0 ] Allied Wade Industries, Inc. 1969 Annual Report affected by the increase or decrease in the fair market value of derivative instruments . i as interest rates change because these instruments are not reflected in the financial ·" ~ · statements at fair market value:~:~.,'_- :.,.¥;'~.. · ' Fair Value of Financial Insiruments. The following disclosure-of the estimated fair value ~,'. · of financial in~irumems is mfid~ in accordaoce mith the refl~ir~?ents'°f Statement °f ~.," ' ' ' Finafidal Account)ng Standards No. 107 .~S~S 1077}; Dis~!qfurfs'A~OUt Fair Value .... !:"' "' '~ ~ ' ..... 'of Financidl Inst~aments Our financial insikUfiaents as defineii:bY ,SFAS 10Z ~nclude · - ' '"'"cash money marl~et funds, acctunts rece vable accounts payable and lqng-termdebt- ": "; ' "~ ' ~ We ~ave d~r~ined ~h~ estim&~ed faii val~"imouuts at Dec~bei~J'l~i'i999'using · . available market information a~d valuatifn"meih~d01ogies~ 9nsiderable judgmen(is required in interpreting market data to develop the estimates o~ fair,,value. Accordingly, the estimates may not be indicative of the amounts that ~:ould be ~ealized in a ~;urrefit market exchange· The use of different market assumptions o~ valugtion metht~d?10gies could have a material effect on th~ estimated fair value am0uni The carrying value of cash, money market funds, accounts receivable and accounts payable approximate fair values due to the short-term maturities of these instruments (See Note 6 for fair value of debt). Stock-based Compensation Plans. We account for our stock-based compensation plans under Accounting Principles Board Opinion No. 25, ("APB 25~) which does not require a charge to the statement of operations for the estimated fair value of stock options issued with an exercise price equal to the fair value of the common stock on the date of grant. Statement of Financial Accounting Standards No. 123 ("SFAS 123~), Accounting [or Stock-based Compensation requires that companies, which do not elect to account for stock-based compensation as prescribed by this statement, disclose the pro forma effects on earnings and earnings per share as if SFAS 123 had been adopted. Additionally, . certain other disclosures with respect to stock compensation and the related assumptions are used to determine the pro forma effects of SFAS 123 (See Note 11). Recently Issued Accounting Pronouncements. In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 137, Accounting [or Derivative Instruments and Hedging Activities - Deferral of tbe Effective Date FASB Statement No. 133, an amendment of SFAS No. 133. This statement defers, for one year, the effective date of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to those fiscal years beginning after June 15~ 2000. SFAS No. 133 requires all derivatives to be recorded as either assets or liabilities and the instruments to be measured at fair value. Gains or losses resulting from changes in the values of those derivatives are to be recognized immediately or deferred, depending on the use of the derivative, and whether or not it qualifies as a hedge. We will adopt SFAS No. 133 by January 1, 2001, as required. We are currently assessing the impact of this statement on our results of operations and financial position. 2. Business Combinations and Divestitures Acquisitions accounted for under the poolings-of-interests method are reflected in the results of operations as if the acquisition occurred on the first day of the earliest year presented. Acquisitions accounted for under the purchase method are reflected in the results of operations since the effective date of the acquisition. For those acquisitions accounted for using the purchase method, we allocate the cost of the acquired business to the assets acquired and liabilities assumed based upon their estimated fair values. These estimates are revised during the allocation period as necessary when, and if, information regarding contingencies becomes available to further define and quantify assets acquired and liabilities assumed. The allocation period raj-les but generally does not exceed one year. To the extent contingencies are resolved or settled during the Allied Waste i~duslrie$, Inc. 1999 Annual Report [ $1 (in thousands) allocatitn period, such items are included in the revised· allocation of the purchase price. Purchase accounting adjustments,'acqui~ition related costs and other possible charges that may arise from the acquisitions ma3' materially imp~/ct our future consolidated financial position and consolidated financial results of operations. · i ' The acquisition of BFI has "' ..... : ~ been accounted ftr hsa purchase and, accordingly, thd · bpe~ating results Of BFI h&ve b~n inciuded in 0isr Consolidated Fin~a~ia! Statements · ' s~nce the date of acqms~tmn. The excess of the aggregate purchase prick over the fair ~ ' ~ 4~i "~f~p 6 $6 on.'" market va ue of net assets Was c rid pr ximatfily .71billi . The following table reflects the allocation of purchase p~ice for the acquisiti~i of BFI, giving effect to asset divestitures described 'in Note 3: Current assets, including assets classified as held for sale Property and equipment, net Goodwill Non-current assets Current liabilities Long-term debt Other long-term obligations Total net assets $ 2~584,387 1,943,906 6,672,992 678,139 (1,142,469) (1,755,501) (1,327,003) $ ~654,451 Included in current liabilities above is approximately $139.7 million of transactions, severance and transition costs of which $99.0 million remains to be paid as of December 31, 1999. During 1999, we acquired two companies in transactions accounted for as poolings- !~7.~ of-interests. As the impact of these poolings on net assets, revenues and net income was ~." less than one percent of our consolidated net assets, revenues and net income, prior period financial statements were not restated to include historical operating results of the acquired companies. The following table summarizes acquisitions for the three years ended December 31, 1999, excluding the acquisition of BFI: 1999 1998 1997 Number of businesses acquired accounted for as: Poolings-of-interests Purcha's~s Total acquisitions Total consideration (in millions} Shares of common stock issued (in millions) 2 19 9 52 35 26 5~ 54 35 $46~5 $2,32~0 $730.8 1.6 79.5 Z0 Unaudited Pro Forma Statement of Operations Data. The following table compares, for the years ended December 31, 1999 and 1998, reported consolidated results of operations to unaudited pro'forma consolidated data as if all of the companies acquired in 1999 and 1998 accounted for using the purchase method for business combinations were acquired as of January 1, 1998: $2 ] Allied Wa~le Industries, Inc. 1999 Annual Report (in ~housands, excep~ pe~ share da¢i) . ~ ........ Reported Pro Form~ II~ Reported ' Pro Formsll~ Revenfes $3,341,071 $5,434,956 -$1 575 612 $5,179,803 Net Ios~ before extra}3rdina~y Iosse~ arid cumulativ~ ~ffe~ct .'.' .... ~ ..... ' of chafige in accounting principle : Net loss avadable to common shareholders before . ,.. ·~: ~ .- · ,~, .: ,~, ~ ~,- . ~extraor&nary losses and cumulative effect of change~- ' :m accounung ..... pnnciple':"'" '" ' ' :' ~ :- ' ~ ~ '~: .5: (249,039)'" -" '~(45j,~6}. ' '(98,:i51) :: :.-(414~235) Ne/loss ~vailable to' coinmofi' sh~reholde'rs beftr~ - "- : ~' 5.,:: ~ ..::- :- :.. ~. '- :::: ' ' .: extraordinary losses' find cumulative effect of change ' ~ " : ' ' . in accounting princ}ple'p/:r common share-basic (1:33) (2.42) .(0.54) . (2.25} Net loss available to common shareholders before ' e~traordinary loses and cumulative effect of change ...... ' ' ' "in accbunting principle p~r common share-diluted 0.33) (2.42} (0.54) (2.25) The p~o forma results otr operations exclude planned divestitures of certain BFI operations resulting from the acquisition of BFI and exclude any proiected annual cost savings. This data does not purport to be indicative of our results of operations that might have occurred, nor which might occur in the future. 3. Assets Held for Sale The ability to successfully implement our vertical integration business plan is a key consideration in determining whether we will continue to operate in a specific market. In the normal course of business, we have exited markets in which the execution of the vertical integration business plan was not practicable. In October 1998, we formalized plans to dispose of certain operating districts (the "Operating Districts~) that represented non-core or non-integrated operations. We entered into agreements to sell these operations and in accordance with SFAS 121 recorded an impairment loss to reduce the carrying value of the assets to net realizable value including an accrual for the cost of disposal. We completed the sale of these assets during the first six months of 1999. In July 1999, management formalized plans to dispose of certain operations required to be divested by governmental order as a condition for approval of the acquisition of BFI (the *Allied Divestitures~). Additionally, management identified other Allied operating districts {the "Allied Operations") in which our vertical integration plan was not practicable as a result of the BFI transaction and therefore these districts were identified for divestiture. All of these operations had been owned prior to the acquisition of BFL In accordance with SFAS .121, an impairment loss of $43.5 million was recorded during 1999 to reduce the carrying value of the assets to the net realizable value including an accrual for the cost of disposal. We completed the sale of certain assets of the Allied Divestitures for approximately $23.0 million during the fourth quarter of 1999. Accordingly, this amount is not included in assets held for sale in the consolidated balance sheets at December 31, 1999. The results of operations before depreciation and amortization, acquisition related expenses and other income/expense of the Operating Districts, the Allied Divestitures and Allied Operations included in consolidated operating income, in accordance with SFAS 121, was approximately $11.1 million during the 12 months ended December 31, 1999. From the date the assets were classified as held for sale, we excluded from our Consolidated Statements of Operations, in accordance with SFAS 121, depreciation and amortization in the amount of $6.3 million. Allied Waste Indush'les, Inc. 19g9 Anneal Repert [ 53 (in thousands) Accounts receivable, net Other current assets Property and equipmenh net Other long-term assets Current liabilities Long-term liabilities Total net assets BF! Assets:':Concurrent with the acquisition of BFI, certain BFI operations were identified by management as non-core or non-integrated operations and are expected m be divested along with certain operations required by governmental order ~o be dive~ted. These operations include BFI',s Cangdi~n operatioo~ {"BFI Cagada-.l, medical waste operation~.. ("BFI Medical Waste"), gas systems operations ("BFI Ga.s"} and certain so'lid waste ~ operations ("BFI Solid Waste Diyestitures~) Icollectively, the ,BFI.D!vestitures~} The sales of these operations are being accounted for in=adordlni~e with E~rging'lssUes Task Force Issue 87-11 -- Allocation of Purcbase Price to Asset~ to Be SOld. The BFI Divestitures are' being carried at the net reali~abi~ ~i,~k;baie~l'~,d~it~e ~uir=~ ~erms of transactions expected to be closed !n2009 im;!uding acc~ab got ?,st of disposal, operating income and allocable interest expe_nse: .According!y, app. rgxir~tely $49.7 million of consolidated operating income exd~gg acquisition related.charges and other income and approximately $~5.5 million of allo~ab!e interes~ expense related to the BFI Divestitures were excluded from the consolidated statements o~op~afions for the 12 months ended December 31, 1999 and was included in assets held for sale on the consolidated balance sheet. We completed the sale of BF1 Medical Waste to Stericycle, Inc. for approximately $410.5 million, in cash and certain assets of the BFI Solid Waste Divestitures for approximately $27.7 million during the fourth quarter of 1999. Accordingly, these amounts are not included in assets held for sale in the consolidated balance sheets at December 31, 1999. At December 31, 1999, and 1998, the assets held for sale totaled $891.9 million and $143.8 million, respectively, and are classified as current assets on the Consolidated Balance Sheets and are summarized as follows: December 31, December 31, [ 1999 1998 (in thousands} $ 90,396 $ 16,608 16,478 4,460 616,973 55,869 247,383 106,214 5,405 1,595 {64,682) (1,785) (20,053) (39,211) $891,900 $143,750 4. Property and Equipment Property and equipment at December 31, 1999 and 1998 is as follows: ~999 1998 Land and improvements Land held for permitting as tandfills"1 Landfills Buildings and improvement Vehicles and equipment Containers and compactors Furniture and office equipment Accumulated depreciation and amortization $ 437,119 $ 168,569 98,914 95,463 1,637,782 1,063,598 454,416 162,989 1,114,130 500,811 611,889 247,173 120,636 18,655 4,474,886 2,257,258 (736,498) (481,233) $3,738,388 $1,776,025 54 ] ' Allied WeSle lfldt]stries, let.. 1999 AJtfluel flepod 5, Investments In Unconsolidated Subsidiaries . We use the equity, method,of a.c~ounti~g for investments in unconsolidated subsidiaries over which we exercise control through a 20% to .$0% ownership interest. The summarized combined balance sheet and the statement of operations data l~resented in the table below indicates amounts related tO the following, equity inv~s~ees acquired in .the BFI acquisition in which ~e~ ~xerci~e ~ontr~l th;0iig~'a American Ref-Fuel Company,- American' Ref-Fuel Company.of Hempstead, American' Ref-Fuel Company'of Essex, 'Ainerican Ref-Fd~l Company'of S6uthi~a~tern Connei:ticut, American Ref-Fuel Company of Niagara;'LP, Americafi~Ref~Fuel Company of SEMASS, LP, American Ref-Fuel Operations of SEMASS, LP. There were-n6 investments m unconsolidated subsidiaries prior to the acquismon of BFI. Summarized Combined Balance Sheet Data. thousands) Current assets Property and equipment, net of accumulated depreciation Other non-current assets Current liabilities Long-term debt, net of current portion Other long-term liabilities Retained earnings $ 147,863 1,116,711 248,378 127,989 1,123,414 199,828 61,721 Summarized Combined Statement of Operations Data. thousands) ~or the Period July 31, 1999 through December 31, 1999 (unaudited) Total revenue Operating income Net income $146,940 52,216 2~328 Our investments in and advances to equity investees approximates $274.7 million at December 31, 1999, consisting of investments in excess of underlying equity of $170.1 million, subordinated note and other receivables of $73.7 million, and our proportional share of net assets of $30.9 million. For the period from July 31, 1999 through December 31, 1999, our equity in earnings of equity investees and dividends received from equity investees were approximately $20.8 million and $34.0 million, respectively. Differences between the equity in earnings of equity investees we reported and our proportionate share of the combined earnings of the related investees have resulted principally from accounting differences in the recognition of expenses, goodwill amortization and the elimination of intercompany transactions. Allied Waste Industries, Inr,. 1999 Annual Repro1 ~ $$ LOh '" = ' :' ' Long-term debt'a~'December 31, 1999 and 1998 consists of the following: a (in thous nde) ~ ~' , , Sen or cred t fac I ty, w~ ghted average interest and effective rate of 6.00% ~ . $ ' :, -- = $ 300,000 Revolving credit facility, effective rate of 9.00% .. ~, .-:: ~: ~ Sefiior notes nterest, at 7.38%,.effective. tare.: of Z41%, net. ' '"" ..' "i i .; ' ' '!~': ' : of unamortized discount of $274 and $331 Senior notes, interest and effective rate of 7.63% Senior notes, interest at 7.88%, effective rite of 7.91%,'net of unamortized discount of $1,417 and $1,522 Asset sale term loan facility, effective rate of 9.00% Tranche A term loan facility, effective rate of 8.68% Tranche B term loan facility, effective rate of 8.88% Tranche C term loan facility, effective rate of 9.13% Tranche D term loan facility, effective rate of 10.50% Senior subordinated notes, interest at 10.00%, effective rate of 9.92%, including unamortized premium of $8,119 Senior notes, interest at 6.10%, effective rate of 8.63%, net of unamortized discount of $10,671 Senior notes, interest at 6.38%, effective rate of 9.78%, net of unamortized discount of $25,446 Senior notes, interest at 7.88%, effectiv~ rate of 9.08%, net of unamortized discount of $3,240 Debentures, interest at 7.40%, effective rate of 10.38%, net of unamortized discount of $81,526 Debentures, interest at 9.25%, effective rate of 9.95%, net of unamortized discount of $4,778 Market value put securities, interest at 6.08%, effective rate of 6.32%, net of unamortized discount of $295 Solid waste revenue bond obligations, weighted average interest rate of 6.30% and 7.02%, weighted average effective rate of 6.50% and 7.02% at December 31, 1999 and 1998, respectively, net of unamortized discount of $5,131 and $0, respectively Notes payable to banks, finance companies, and individuals, weighted average interest rates of 5%-10% and principle payable through 2007, secured by vehicles, equipment, real estate, accounts receivable or stock of certain subsidiaries Notes payable to individuals and a commercial company, interest of 5%-10%, principal and interest payable through 2006, unsecured Obligations under capital leases of vehicles and equipment, weighted average interest of 8.00% and 8.10% at December 31, 1998 and 1999, respectively Current portion 224,726 .' i 224,669 600,000 600,000 873;583 873,478 99,496 -- · 1,750,000 -- 1,250,000 -- 1,500,000 -- 500,000 -- 2,008,119 -- 146,018 -- 135,754 -- 66,261 -- 278,474 -- 94,722 -- 249,705 -- 316,299 81,050 54,648 6,326 15,624 18,296 14,790 36,624 10,243,219 2,140,443 1,002,928 21,516 $ 9,240,291 $2,118,927 56 ] Allied Waste IndUstries, Inc. 1999 Annual Repeal In connection with the BFI acquisition iO,July. 1999, we repai_dthe Sqnior Credit Facili_ty. and entered into a new credit facility {the "!999 Credit Facility"). The ~9.99 Credit Facility provides a $1..5,billign six-year revolving credit facility, a.$q56 million two- year asset sale term loan (the "Asset Sale Term Loan".}, a $1,750 mi!!ign six-y.e.~r.. Tranche A te~'m ]~an'ith~:"Traffch~'-6"Term. L~an';}, ~,$1,~250 million seven-;year Tranche B term loan (the'~'Tranche B ~einn'Loan"}, a $1,500 mil!i~ ~ig~tcy~-~i.~ .Tranche C term loan (the ~Tranch~ QTerm Loan") and a'$500 milli6n eig~(~j'ea, r . Tran/:he D term 19an (the. ~anch, e D Te.rm Loan~}. The 1999 C~'edit Fa;cility'bears initr~st';~' (al an ~lt~rnate.~s(Rate; Eurodollar Rate, both terms defined in'th~ 1999 Credit Facility,' plus in ~ithei' ~ase, an applicable margin and may be used for acquisitiOns, the issuance Of le~t?s of ~'edit, working capital and other general corporate purposes. Of the' $1.5 billion a~ailable under the Revolving Credit Faffili~, no more th~an $800 million may b~ used to support the issuance of letters of credit. As of December 31, 1999, approximately $1.0 billion was available on this facility. We are required to make prepayments on the 1999 credit Facility upon completion of certain asset sales and issuances of debt or equity securities. Proceeds from asset sales are to be applied first to reduce borrowings under the Asset Sale Term Loan, second to reduce the borrowings under the Tranche A, B and C Term Loans on a pro rata basis or the Tranche D Term Loan. Required prepayments are to be made based on a percentage of the net proceeds of any debt incurreoce or equity issuance. Proceeds of an issuance of debt or equity are first applied to reduce borrowings under the Tranche D Term Loan, second to reduce borrowings under the Asset Sale Term Loan and third to reduce the borrowings under the Tranche A, B and C Term Loans on a pro rata basis. In July 1999, Allied Waste North America, Inc. (~Allied NA'; a wholly owned consoli- dated subsidiary of Allied issued $2.0 billion of senior subordinated notes (the ~1999 Notes") in a Rule 144A offering. In January 2000, these notes were exchanged for substantially identical notes (which are also referred as the 1999 Notes} registered under the Securities Exchange Act of 1933. Interest accrues on the 1999 Notes at an interest rate of 10% per annum, payable semi-annually on May 1 and November 1 beginning on November 1, 1999. We used the proceeds from the 1999 Notes as partial financing of the acquisition of BFI. We, together with substantially all of our subsidiaries, guarantee the 1999 Notes. In connection with the BFI acquisition on July 30, 1999, we assumed all of BFI's debt securities with the exception of commercial paper that was paid off in connection with the acquisition. BFI's debt securities were recorded at their fair market values as of the date of the acquisition in accordance with Emerging Issues Task Force Issue 98-1 -- Valuation o[ Debt Assumed in a Purchase Business Combination. The effect of revaluing the debt secutities formerly owned by BFI resulted in an aggregate discount from the face amount of $137.0 million. The debt assumed in connection with the acquisition, includes 6.08% Market Value Put Securities (~MVPs") with a face amount of $250.million due January 18, 2002, 6.10% Senior Notes with a face amount of $156.7 million due January 15, 2003, 6.375% Senior Notes with a face amount of $161.2 million due January 15, 2008, 7.875% Senior Notes with a face amount of $69.5 million that. mature on March 15, 2005, 9.25% Debentures with a face amount of $99.5 million that mature on May 1, 2021, 7.40% Debentures with a face amount of $360.0 million due September 15, 2035 and solid waste revenue bond obligations with an aggregate face amount of $236.2 million, a weighted average interest rate of approximately 6.06% and various maturity dates through the year 2027. Allied Waste Industries, Inc~ 1999 Annual Repofl E $7 ' : '.! ~'.' ;' ..:.:~' '. The MVPs,have a mandat?iT/put on Janua~'~y 18; 2000. First National Bank of Chicago : ' holds an option to Purchase'the MVPs. We repaid the MVPs on January 18, 2000 when First National Bank of Chk:ago did not e/~ercise its option to purqhase the MVPs. ? . .., . The 6.10% Senior Notes, 6~375% Senio~ Notes and 9.25%. Debentures. . are not ~, t~;.. = . . redeemable prior to maturity and are not Subject to any ~inking'fund.. ' ~ "'> ' · : ~e 7.40% Debentfires a'i~ 'riot sfibj~t t0 in~ s~nking2fuhd and re'ay b~ redeemed as a at any ume. The redempuon puce ~s equal to the greater .. ~ .... of {i} the principal amount of the debentures, and {ii} th~ pr~sefit Value 0~ hmre prin- cipal and interest paymenti discounted 'at a rate ~pecified'under the ierms of the indenture. ?. . ~ In December 1998, Allied NA issued an igg}~gite of $1.7 billion of senior notes consisting of $225 million 7.375% senio} flores due 2004, $600 million 7.625% senior notes due 2006 and $875 million 7.875% senior notes due 2009 in a Rule 144A offering which were subsequently registered for public trading with the SEC in Janua~ 1999. Interest acc~ed on the 1998 Senior Notes is payable semi-annually on Janua~ 1 and July 1~ be~nning on July 1, 1999. We used the net proceeds from the 1998 Senior Notes to fund the redemption of the 1996 Notes and the Senior Discount Notes pursuant to tender offers we commenced in November 1998 and completed in December 1998, to repay borrowings outstanding under the Senior Credit Facili~ and ce~ain capital lease obligations, and for general corporate purposes. We, together with substantially all of our subsidiaries, guarantee the 1998 Senior Notes. In June 1998, we repaid $486.8 million outstanding under the 1997 Credit Agreement and entered into a new credit agreement (the ~Credit A~ment'}. ~e Credit Agreement provides an $800 million five-year senior secured revolving credit facility and a $300 million five-year senior secured te~ loan facili~ (together with the revolving credit facili~, the "Senior Credit Facili~'}. The term loan facili~ is a funded, amo~izing seNor secured term loan with annual principal payments increasing from $75 million in 2001, to $105 ~llion in 2002, and to $120 million in 2003. Principal under ~e revolving cre~t faciliw is due upon mat~ri~. Fu~e Maturities of Long-term Debt. Aggregate future maturities of long-term debt outstanding at December 31, 1999: (in thousands) Maturity 1999 2000 $ 1,002,928"~ 2001 118,889 2002 271,783 2003 5i0,977 2004 689,417 Thereafter 7,649,225 $10,243,219 Consists of $111.0 million that will In repaid in 2000 based on thc terms of the indebtedness and S891.9 mil[ion of other non-current debt classified as current related to the amounts to 1~ repaid fl~m the pro~*ds of the asset divestirores classified as assets held for sale in current assets on the balance sheet. .... ~:' ~8 ' ri Allied Waste I.duUrie$, Inc. 1999 Annual Report 'i Futui'e paymept~s under capital leases, the principal amounts of which are included - · -:' above in future maturities of 14~'g-term debt, are as follows at D~cember 31 1999: (in thousands) -' ' :' ' ?' .... ~ ..... Matufit-/ . . · .- ....... ? ~ ,," _ ' ~ ..~ ? . ~.,.Pyinclpal '!; =: ~: lntere& ;Fotal 2000 '" 2o0~ '~ ' "· 2002 '. ~. · -. 2003- '~',-'~-' 2004 Therea~er · $'" '"""~$1 $4 . '. = . ' .~ .!~ :3,495':.~'~" ,030 ,525 '"': ~+: ~ ~ 8~Z,t;'i~i :~',. ~8p.:: 5' 317 ~, ~' '1,216')} 7 :'.-'12~ - 1,339 .: 782 :'.~.: :' 79 861 $14,790 ":. $2,812 ' $17~602 Fair Value of Debt and Interest Rate Protection Agreements. :We have interest rate risk relating to long-term variable rate debt. To manage th~ potepfial interest rate volatility, we enter into interest rate swaps. Interest rate swaps are used to manage the proportion of fixed and variable rate debt based on market conditions. We do not hold or issue derivative instruments for trading purposes. The fair value of our debt and hedging instruments are subject to change as a result of potential changes in market rates and prices. The table below provides information about our long-term debt and interest rate hedges by aggregate principal or notional amounts and weighted average interest rates for instruments that are sensitive to changes in interest rates. The financial instruments are grouped by market risk exposure category. Fair Value at Dec~ 31, 1999 Long-term Debt: Fixed Rate Debt: Principal amount Weighted average interest rate Variable Rate Debt: Principal amount Weighted average interest rate~:~ Interested Rate Swaps~ Callable: Notional amount Weighted average interest rate Non-callable: Notional amount Weighted average interest rate $4,725,018 8.44% $5,518,201 8.84% $2,650,000 5.74% $ 450,000 5.78% $4,280,180 $5,518,201 $ 14,402 $ 1,049 2000 2001 . 2002 L6ng-term Debt: Fixed Rate Debt: · ~.",. Priqcipal amount . $25,048 ... $6,409 ~,393 $148497 {307,8- $4,725,01*~z~.. ¢, , ;- .Weight.ed average '~ . ./h~terest:rate ' ': . 7.63°/.0 ' Principal amount $977,880' Weighted average interest ratem 9.67% Interest Rate Swaps131 ' Callable: Notional amount $1,500,000 $1,150,000 Weighted average interest rate Non-callable: Notional amount Weighted average interest rate /8.02% 7.95% 6.~13% 7.38%-';" ./,'-:8.71%: ? 8.44% $112,480 $262,480 $362,480 ' $461,500 ' $3i341,381 $5,518201 8.63% 8.66% 8.67% 8.68% '~i- ~. 8.73% 8.84% 5.68% 5.81% -- $ 450,000 -- -- 5.78% -- -- -- $2,650,000 -- 5.74% -- $ 450,000 -- 5.78% Consists of $86 million that will be repaid in 2000 based on the terms o~ the indebtedness and $891.9 million of long-term debt to be repaid from the proceeds of the asset divestitures. Reflects the rate in effect as of December 31, 1999 and includes all applicable margins. Actual future rates may vary. All interest rate swaps enable us to pay a fixed intel-st rate in exchange for receiving variable interest rates ac LIBOR. We have assumed that interest rate swaps that are callable by the counterparo' will be called on the exercise dace. Debt Covenants. Our 1999 Credit Facility contains certain financial covenants, including, but not limited to, an EBITDA ratio and an interest expense coverage ratio. Additionally, these covenants limit among other things, our ability and our subsidiaries' ability to incur additional indebtedness and liens, make acquisitions and purchase fixed assets above certain amounts, pay dividends, make optional prepayments on certain subordinated indebtedness, make investments, loans or advances, enter into certain transactions with affiliates or consummate a merger, consolidation or sale of all or substantially all of our assets. The 1998 Senior Notes and the 1999 Notes contain certain financial and operating covenants and restrictions which may, in certain circumstances, limit our ability to complete acquisitions, pay dividends, incur indebtedness, make investments and take certain other corporate actions. At December 31, 1999, we were in compliance with all applicable covenants. Substantially all of our subsidiaries are jointly and severally liable fsr the obligations under the 1998 Senior Notes, the 1999 Notes and the 1999 Credit Facility through unconditional guarantees issued by current and future subsidiaries which are all, except in one minor case, wholly-owned by us. In addition, the 1999 Credit Facility is secured by substantially all the personal property and a pledge of the stock of substantially all of our present and future subsidiaries. 60 ] Allied Waste Indastfles, Inc. 1999 Amtoal Repofl 7. LandfillAccounting ...~ ,-:' ..... We have a network of 1.~1 owhbd or operated active landfills with a net book value of approximat~l~'$1~4 ~illJ~i~"IJ~'~ber 317 1999. The landfills have operating lives ranging from one to over 150 years based on available capacity using current annual volumes. The average Ife of ouf landfills approximates 39 years..We u~e a life-cycle ac<(ounting method for landfills'and the'r&lated closure ,and l~0St-closuie liabilities. This method a~plies.the,costs as;bellied with icq ~uiring;:devel0~in~,'~iosiriga"d m6niioring ~the landfdls over. the assocmted landfill capacity and associated consumpt~nn. On an annual basis, we update the dev~lopnient cost esumates (which include the costs to develop the site as well as the mthwdual cell construction costs), closure and post-closure cost estimates and future capacity estimates for each landfill. The cost estimates are prepared by local company and third-party engineers based on the applicable local, state and federal regulations and site specific permit'requirements. Futt~re capacity estimates are updated using aerial surveys Of each landfill performed annually by third-party engineers to estimate utilized disposal capacity and remaining disposal capacity. These cost and capacity estimates are reviewed and approved by senior operations management annually. Landfill Assets. We use the units of production method for purposes of calculating the amortization rate at each landfill. This methodology divides the costs associated with acquiring, permitting and developing the entire landfill by the total remaining capacity of that landfill. The resulting per unit amortization rate is applied to each unit disposed at the landfill and is recorded as expense for that period. We expensed approximately $81.5 million, or an average of $1.28 per cubic yard consumed, related to landfill amortization during the year ended December 31, 1599. The following is a rollforward of our investment in our landfill assets excluding land held for permitting as landfills: Cumulative Net Book Value Net Book Change in of Landfills Net Book Value Aecouming Acquired During 1999, Landfill . Landfill Value at at Dec. 31,1998 Principle il} net of ]Dive~irnres il} Development Costs Amortization Dec. 31, 1999 $924,698 (85,965) 501,735 162,754 (81,549) $1,421,673 Costs associated with ~eveloping the landfill include direct costs such as excavation, . liners, leachate collection systems, engineering and legal fees, and capitalized interest. Estimated total future development cost for our 151 active landfills is approximately $2.6 billion, excluding capitalized interest, and we expect that this amount will be spent over the remaining operating lives of the landfills. We have available disposal capacity of approximately 2.7 billion cubic yards as of December 31~ 1999. We classify this total disposal capacity as either permitted (having received the final permit from the governing authorities) and deemed permitted. Our internal requirements to classify capacity as deemed permitted are as follows: 1. Control of and access to the land where the expansion permit is being sought. 2. All geologic and other technical siting criteria for a landfill have been met, or a variance from such requirements has been received {or can reasonably be expected to- be achieved}. -' .-:3.The political pi'ocess has been assessed and there are no indentified impediments that cann& be resolved. : . . 4. We are actively pursuing the expansio~ permit and an expectation that the final local, stat~ hnd federal p~rmits will be i'eceived within the next five years. 5.Senior operations management approval has been obtained. · :' '" . .... Upgn sui:i:~sifully meeting ~he pr~ced?/g cr~i'ia, the costs associated with developing, &onstru~ting, ~:losing and monitoring the'total additional future capacity are considered 'in the calculation of the amortization and closui'e and post-closur~ rates. At December 31, 1999, we had2.11 billion ~:Ul~ic yards of permitted capacity, and at 37 of our landfills, 545.0 million cubic yards of deemed permitted capacity. The following table reflects landfill airspace activity for active la~dfills we owned or operated for the 12 months ended December 31, 1999: (airspace in millions of cubic yards) ~',. Additions to Additions to Changes in Balance as of Acquisitions, net Deemed Permitted Airspace Engineering Balance as of Permitted airspace 1,167.3 976.3 -- 20.2 (63.8) 8.0 2,108.0 Number of landfills 76 75 .... 151 Deemed airspace 268.3 273.7 35.6 {16.2} -- (16.41 545.0 Number of landfills 21 13 3 -- -- -- 37 Total airspace 1,435.6 1,250.0 35.6 4.0 (63.8) (8.4) 2,653.0 Number of landfills 76 75 .... 151 Allied and its engineering'consultants continually monitor the progress of obtaining local, state and federal approval for each of its expansion permits. If it is determined ~ that the expansion no longer meets our criteria, the capacity is removed from our total available capacity, the costs to develop that capacity and the associated closure and post-closure costs are removed from the landfill amortization base, and rates are adjusted prospectively. In addition, any value assigned to deemed permitted capacity would be written-off to expense during the period in which it is determined that the criteria are no longer met. Management periodically reviews the realizability of its investment in our landfill asset base. As part of our annual review, we will evaluate any events and circumstances which may indicate that a landfill be reviewed for impairment. Such review for recoverability will be made using undiscounted cash flows to measu?e ~ecoverability in accordance with E1TF 95-23. 62 ] Allied Wade Industries, Inc. 1999 Annual Repeal under the Environmental Protection Agency's Subtitle D regulatiofis are compiled and updated annually for each landfill from local and regtonal company engineers and reviewed by senior management. The future estimated closure, and post-cldsure costs art increased at an inflation rate Of 2.5%,-arid discounted i~t a~ris.~-5~ee capital rate of 7;0%~'per annum; based on thi~ timing of the amounts to be ~xpended. The follo//ring table ~s a summary of the closure and pf~st-closure costs :.,. :~ '..' ?. -~.-; ::: ~ Closure and Post-closure. Estimated co,s? 'for. closu[._e .a.~E~ l~ost-closurg._a~, ~e_qgire_d ' Discounted Closure and Post-closure Liability Recorded: - Current Portion Non-current Portion Total Estimated Remaining Closur~ and Post-closure Costs to be Expended: Discounted Undiscounted Estimated Total Future Payments: 2000 2001 2002 2003 2004 Thereafxer $ .75,316 $ 28,938 442,032 125,609 $ 517,348 $ 154,547 $1,046,538 $ 396,520 2,689,485 1,227,792 $ 75,316 66,652 56,688 68,166 56,514 2,366,149 Our periodic closure and post-closure expense has two components. The first component is the site specific per unit closure and post-closure expense. The per unit rate is derived by dividing the estimated total remaining discounted closure and post-closure costs by the remaining disposal capacity at each landfill (consistent with the capacity used to calculate landfill amortization rates). We use the resulting site-specific rates to record expense during a given period based upon the consumption of disposal capacity during that period. The second component is the accretion expense necessary to increase the accrued closure and post-closure reserve balance to its future, or undiscounted, value. To accomplish this, we accrete our closure and post-closure accrual balance using the current risk-free capital rate and charge this accretion as an operating expense in that period. We charged approximately $35.2 million, or an average of $0.55 per cubic yard consumed, related to per unit closure and post-closure expense and periodic accretion during the year ended December 31, 1999. Changes in estimates of costs o~' capacity are treated on a prospective basis. Environmi:ntal Costs. In connection with the acquisition of companies, we engage independent environmental consulting firms to assist in conducting an environmental assessment of companies acquired from third parties. Several contaminated landfills and other properties were identified during 1999 and 1998 that would require us to incur costs for incremental closure and post-closure measures, remediation activities and litigation costs in the future. Based on information available, we recorded a provision of $267.0 and $41.1 million for environmental matters, in the 1999 and 1998 statements of operations, respectively, and expect these amounts to be disbursed over the next 30 years. Allied Waste Indushles, Inc, 1999 Anrmal Report [ ~3 in thou~n~sl · ..~ ~.;fhe ultimate amounts for environmental liabilities cannot be dete.i'mined and estimates of such liabilitips made by us, after consultation with our independent environmental engineers, require assumptions about future events due to a' number of uncertainties including the extent of the contamination, the appropriate remedy, the financial viability.=~ . of other potentially responsible parties and the final apporti°r~meht of reiponsibility ~g>3: among the potehtially responsible parties. Where we have ~5Oncluded that our estimated share of potential liabilities is probable,-h ~r0,~ision has .l~hti ill'Si: in ihe'COns°!idated Fmanoal Statements. Since the ulnmate outcome of these matters may differ frOm the estimates used in our assessment tO date, the recorded liabilities Will be peri6dicaily evaluated, as additional information becomes availabl~ to ascertain whe~h_er the accrued liabilities are adequate. We have determined that the recorded liability for environmenta matters as of December 31, 1999 and 1998 of approximately $478.2 million and $93.4 million, respectively, represents the most probable outcome of these contirigen} matters. We do not reduce our estimated obligations for proceeds from other potentially responsible parties or insurance companies. If receipt is probable, proceeds are recorded as an offset to environmental expense in operating income. There were no significant recovery receivables outstanding as of December 31, 1999 and 1998. We do not expect that adjustments to estimates, which are reasonably possible in the near term and that may result in changes to recorded amounts, will have a material effect on our consolidated liquidity, financial position or results of operations. However, we believe that it is reasonably possible the ultimate outcome of environmental matters, excluding closure and post-closure, could result in approximately $33 million of additional liability. The following table shows the activity and balances related to environmental accruals and for closure and post-closure accruals related to open and closed landfills from December 31, 1996 through December 31, 1999: Environmental costs $ 45,100 $ -- $ 20,895 $ (2,233) $ 63,762 Open landfills closure and post-closure costs 81,572 9,579 21,287 (8,687) 103,751 Closed landfills closure and post-closure costs 41,209 3,341 -- (3,670) 40,880 Environmental costs $ 63,762 $ 41,100 $ -- $(11,489} $ 93,373 Open landfills closure and post-closure costs 103,751 15,384 3,820 {1,596} 121,359 Closed landfills closure and post-closure costs 40,880 2,223 -- (9,915} 33,188 Environmental costs $ 93,373 $267,034 $131,909 $(14,122) $478,194 Open landfills closure and post-closure costs 121,359 28,163 175,955 (11,677) 313,800 Closed landfills closure and post-closure costs 33,188 7,079 176,266 -(12,985} 203,548 It~ Amounts consist primarily of liabilities related to acquired companies. 64 ] Allied Waste Industries, fnc. 1999 Aflnual Repod :,, ,.. 8, Emplpyee Benefit Plans . : - ~ ,.,. .~ -'*. .... Effective J~ly 30,~ ~99~, ih' corm'L~tion with the acquisition of BFI, g/e fi~sum~d t~vo - ' ' defined benefit retirement planfi covering s.~st~antially all BFI employees in the United ~:~ "'" ' " States except' roi C"ertain'employ~es sufii~:~ ~'~collective bai:~inin~'~greefi~efits~ The · ~ .... '. "-BFI retirement plaii was amended on July 30, 1999.t6 fr~eze;fuiur6 Credited service, · :: - , .'.'~: .~·.,, - ' '-.~ but interest credits.will continue to accrue3 Certain umon participants ? . ~. -. - ~,~ ~ ~., . :,,.., ,: to receive 2 ~ annual serv]cecred]ts m addmo~ to interest credits through the duranon . .- ~ ..... . ~of the current colic&ire bargaining'agreements.. The befi~fits :,.,., .... %are based on year"of service and the empl0~ee;~ ~o~'~e~,tiofi. :~a~- ~;n~;;l f~ndi~g policy for each pension ialan is t6 make annual Contributions to the plans as determined to be required by the plans' actuary. .. . . . ,. ~. '3. ' The BFI San Marco Pension Plan covers substantially all employees of tfiis location. Benefits are based on the employee's years of service and compensation Using the average of earnings over the highest five consecutive calendar years out of the last 15 years of service. For both plans, an actuarial valuation report Was prepared as of September 30, 1999 and used, as permitted by Statement of Financial Accounting Standards No. 132, Employers' Disclosures about Pensions and Other Postretiremen~ Benefits ("SFAS 132'), for the following disclosures: (in millions} As of December 31, 1999 $(249.1) 304.3 $ 55.2 7.75% 4.0% 10.25% Actuarial present value of projected benefit obligation Plan assets at fair market value, primarily commercial paper, common stocks and mutual funds Projected benefit obligation less than plan assets (prepaid pension costs) Discount rate Rate of increase in compensation levels Expected long-term rate of return on assets The net pension benefit for the period from July 30, 1999 to December 31, 1999 of $4.7 million is comprised of the expected return on plan assets of $13.2 million less interest cost of the $8.5 million. Actual loss on plan assets, benefits paid, and actuarial gains recognized during the period from July 30, 1999 to December 31, 1999 were $2.6 million, $2.2 million and $5.0 million, respectively. 9. Redeemable Preferred Stock In connection with the BFI acquisition, our Board of Directors adopted a resolution creating a series of one million shares of preferred stock having a par value of $0.10 per share. These shares were designated as Series A Senior Convertible Preferred Stock (~Preferred Stock~) and are entitled to vote on, among other things, all matters on which the holders of Common Stock are entitled to vote. Each share of Preferred Stock has the number of votes equa{ to the number of shares of Gommon Stock then issuable upon conversion. Shares of Preferred Stock will be entided to cumulative quarterly dividends in an amount ~qual to 6.5% per annum of the sum of liquidation preference plus accrued but unpaid dividends for prior quarters, if dividends are not p~id in cash, the bquidation pri:ference of the Preferred Stock increases by any accrued and unpaid dividends. Allied Waste Industries, Inc. 1999 Annual Report [ 65 --. ) '. : . 5.'::2~V~ -;::The Preferred Stock. ha~:a, r~deinption price of its then liqui~tfiti6n.., preference per share, ' ~ ' together with any accrued and unpaid dividends. R~demption of the Preferred Stock "~ ': is at our oPtion in whole, but not in'part, at any time on or after )uly 30, 2004. After ~:" :' ' Jul~ 30, 3002, We have the right io ~deem th~ Preferred Stock in wh~le, but not in pa~7, :'~¥ : · '~ ..... ' ' ' .' "~ at the r~d~mP~io'n pii~:~ ~fily if the'tl4~h'curr'~n~ ma~ke~ price ~xceeds'$2~'per sha~e ~ 'i~ i.,3L''~'r.:' '. ~' : · . .: ' :.The, Preferred. Sharehoidei's. have the right,to' "convert' each:shar~itf P;eferr~d Stock nto ~ '.. r. · ~ :,: 5 ' ~'~ , the number of shares of C0mmtn St~k bbt'iined by dividing the ~:~dempti°n'pfice plus · · .'. :' :'.. ' -. - any accrUed and unpaid dividends oa the conversion dati~b,y die'i:ohv~,rsi0n p~i~e Of '. "~ . ' $18 per share, subject to ~ustOmary:anti-dilUtion adjustments, upon~a ~:hang~ in · control, we ate required to make an Offer to, purchase fo[ cash all ~a~es Of Preferred Stock at 101% of liquidation preference plus accrued but unpaid dividends. The amounts added to the liquidation p~eference during the five months ended December 31~ 1999 of the Preferred Stock were approximately $27.6 million or $27.61 per share. " - 10. Stockholders' Equity Our authorized, issued and outstanding shares of common stock are as follows: L~sued and Issued and Outstanding at Outstanding at Authorized December 31, Deceml~r 31, Shares 1999 1998 (in thou~ands~ except per share data) Common stock, $0.01 par, net of 570 treasury shares 300,000 188,519 184,495 Warrants to Purchase Common Stock Warrants to purchase common shares at December 31~ 1999 and 1998 are summarized as follows: 1999 Number of shares 347,827 647,827 Purchase price per share $4.60 $4.60-$5.25 Expiration Dates 2003 1999-2003 11. Stock Option Plans The 1991 Incentive Stock Plan ("1991 Plan"}, the 1993 Incentive Stock Plan ("1993 Plan") and the 1994 Incentive Stock Plan {~ 1994 Plan,' collectively the "Plans"} provide for the grant of non-qualified stock options, incentive stock options, shares of restricted stock, shares of phantom stock and stock bonuses. During 1999, the 1991 plan was amended so that the maximum number of shares that may be granted may not exceed 8.0% of the number of fully diluted shares of common stock on the date of grant of an award. An additional maximum number of shares of 500,000 and 2,000,000 common shares may be granted under the 1993 Plan and the 1994 Plan, respectively. After taking into account previously granted awards, awards covering approximately 7,649,575 shares of common stock were available under the Plans. The Compensation Committee of the Board of Directors generally determines the exercise price, term and other conditions applicable to each option granted. The 1994 Amended and Restated Non-Employee Director Stock Option Plan provides for the grant of non-qualified options to each member of the Board of Directors, who is not also our employee, at a price equal to the fair market value of a common share 9n the date of grant. The mammum number of shares, wh,ch may be granted under i~. the plan, ~s 1,150,000 common shares. All opnons granted under the plan are fully veste~ and exercisable on the date of grant and expire ten years from the grant date. 66 ] Allied Y~a~te Industries, I~c. 1999 Annual Repod Year Ended December Options outstanding, beginning of period Options granted Options exercised Options terminated Options outstanding, end of period Options exercisable, end of period Year Ended l~cember 81, Risk free interest rate Expected life Dividend rate Expected volatility A summary o~ the status of our stock option.plans at December 31, 19~,.199g .and 1997 and for the years then ended is p~resented in the table and narrative below: 10,786,000 $12.97 8,831,266 $ 8.19 ', '5,449,0~6. :,~ 6.10 6,085,000 13.11 3,6.56,562 22.29 {1,231,771} 7.97 (1,701,828} 8.50 .... {437,78b) i 6.04 1224,100) 16.88 -- -- (141,090) i~ 9.10 15,415,129 13.37 10,786,000 12.97 8,831,266 8.19 6,628,574 12.52 6,220,735 11.02 3,498,598 6.67 We account for our stock-based compensation plans under APB 25, under which no compensation expense has been recognized, as all options have been granted with an exercise price equal to the fair value of our Common Stock upon the date of grant. The fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: 1999 1998 1997 5.2% to 6.3% 4.7% to 5.6% 5.8% to 7.6% 5 years 5 years 5 years 0% 0% 0% 47% to 50% 44% to 46% 25% to 50% Using these assumptions, pro forma net income (loss) and net income (Ioss).per share would reflect additional compensation expense recognized over the vesting period~ of the options. The pro forma income for 1997 includes the impact of certain of our options whose vesting accelerated in 1997 due to a change in control related to an equity financing transaction in connection with the acquisition of the solid waste assets of Laidlaw, Inc. The pro forma loss for 1998 includes the impact of certain ADSI options that vested in 1998 due to a change in control related to the acquisition of ADSI. The resulting pro forma net income (loss), and pro forma net income (loss) per share is as follows: (in thousands, except I~r share data} year Ended December 31, 1999 1998 1997 Net Income (loss): Net Income (loss) Per Share: As reported $ (288,728) $(223,052) $24,042 Pro forma (298,184} (229,928) 11,329 As reported $ (1.54) $ (1.22} $ 0.14 Pro forma (1.59) (1.26) 0.07 Felly Vested Partially Vested The folld~in~' tables summarize informatign about stock options outstandin~g December 31, 1999 which are fully vested, partially vested and non-vested: Options Outstanding and Exercisable ' Rqnge of Number - ; Weighted Average Weighted Aver Exercise Prices Outstanding ' ~ ' Remaining Life, · 'Exercise Price '~- $ 4.27--$ 8.38 $ ~8.50'-$12.25 $16=.4 ~ $21.97 $22.84---$27.27 Range of Exercise Prices 2,070,515 i .: ' ;','$:~e~ ~, . % 75 5.23 1,413,399 '. ' ' )':,~y~s -, :;'3 iS 9.71 5~6,132 -' 8 years . '. :' ~ $19.71 933,139 ! 1 ye~ir '. ' $26.12 Options Outstanding $ 4.49--$10.00 2,244,144 8 years $ 9.80 $11.38--$15.88 160,000 8 years $14.75 $18.94--$21.19 2,207,800 :':9 ~/ears $21.06 Range of Exercise Prices Options Exercisable Number Outstanding Weighted Average Weighted Average Remaining Lde Exercise Price $ 4.49--$10.00 989,455 8 years $ 9.60 $11.38--$15.88 74,667 8 years $14.27 $18.94~$21.19 631~267 9 years $21.06 Non-vested Range of Exercise Prices Opdons Outstanding Number Weighted Average Weighted Average Outstanding Remaining Life Exercise Price $ 4.27--$ 7.31 801,067 10 years $ 9.50~$13.31 3,833,300 10 years $15.00~$21.19 1,235,633 12 years $20.01 68 ] Allied Wasle IndusWles, Inc. 1999 Annual Repofl . -....: .~ .. ~ -~:12. Net Income (Loss) Per Common Share ..... :~-:. ' Net income (loss) per common share Is EalcUlated by dividing net income (loss), I~:ss . '- dividen~l rgquirement~ on preferred stock, by the weighted average number'of common ' ~ . shares and commgn share equivalents out~t~nding during each pei-iod ~s i'estated to . ' -, .... reflect acqmsmons.'account~ed for as poohngs-of-mterests: The computation of basic'. .. ' ". : ' earmngs per share and diluted earmngs per share ~s as follows . Basic Earnings per Share Computation . Income [loss) before extraordinary losses and cumulative . - -'.~ effect'of change in ai:counting prmclple Less: preferred stock dividends - Income {loss) available to common shareholders before extraordinary losses and cumulative effect o{ change in accounting principle Weighted average common shares outstanding Basic ?rnings per share before extraordinary loss and cumulative effect of change in accounting principle Diluted Eamings per Share Computation Income (loss) before extraordinary losses and cumulative effect of change in accounting principle Preferred dividends Income (loss) available to common shareholders before extraordinary losses and cumulative effect of change in accounting principle Weighted average common shares outstanding Effect of stock options and warrants, assumed exercisable Effect of shares assumed pursuant to hold-back arrangements Weighted average common and common equivalent shares outstanding Diluted earnings per share before extraordinary losses and cumulative effect of change in accounting principle $(221,250) '${98,251}. $ .77,247 27,789 - -- · 381 $(249,039) $(98~.51) $ 76,866 187,801 182,796 164,888 $ {1.33} $ (0.54) $ 0.47 $(221,250) $(98,251) $ 77,247 27,789 -- 381 $(249,039) $(98,251) $ 76,866 187,801 182,796 164,888 -- -- 6,657 -- -- 1,413 187,801 182,796 172,958 $ (1.33) $ (0.54) $ 0.44 Conversion has not been assumed for the Series A Senior Convertible Preferred Stock in 1999 into 57,099,364 common shares, as the effects would not be dilutive. Conversion has not been assumed for 7% preferred stock and convertible notes in 1997, as the effects would not be dilutive. 13. Income Taxes We account for income taxes using a balance sheet approach whereby deferred tax assets and liabilities are determined based on the differences in financial reporting and income tax basis of assets, other than non-deductible goodwill and liabilities. The differences are measured using the income tax rate in effect during the year of measurement. We file a consolidated tax return that will include BFI after July 30, 1999. The acquisition of BFI, which was accounted for as a purchase business combination, resulted in approximately $6.7 billion of goodwill, $6.5 billion of which is not amortiz- able for income tax purposes. The impact Of the non-deductible amortization during 1999 is reflected in the reconciliation of the federal statutory tax rate to the effective tax rate. The tax accounts established at July 30, 1999, relating to BFI purchase accounting include approximately $100 million of ne~ operating losses, which will result in a $35 million refund of prior period tax payments, and $768 million of capital loss carryfonvard. As of December 31, 1999, approximately $400 million of BFI capital Allied Waste Induslr[es, Inc. 1~69 Anflual Repeal [ 69 loss carryforwx~d,remains unused that will expire if not used b~. th~ end of 2003. We belie'~e that anticipated divestitures relating to the BFI acquisition will generate suffi- cient capital gain~ to offset most of the capital loss carryforward and We have established a $49 million valuation allowance against the deferred tjx, asset for the amount Of the cairyfnrw~ird which m~i~r'not offset capital gains. As of December 31, 1999 approximately $1 9 ,billion of BFI state net operating logs ~ai-ryforg, ards remain uhused that wi I exP re at var ous times between 2000 and :2019 ~f not u~ed. We have established a $28 mdhon valuanon allowance for the possLb, dtty tliat some of these state carryforwards may not be used. '. ~ . ~..~ ~.i, :'- ? ',;, ': ~ .~L~' In addition to the BFI carryforwards, w~ have state net i3pi~rating logs~: 6f approxi- mately $289 million as of December 31, 1999, which ~ill expire at variousfimes between 2000 and 2019 if not used. We also have federal minimum tax credit of approximately $15.6 million as of December 31, 1999, Which are not subject to expiration. The net current deferred tax asset includes the ~urrent b~nefit we expect to receive from the use of our net operating loss, capital loss and minimum tax credit carryforwards. · . . The balance sheet classification and amount of the tax accounts established relating to BFI are based on certain assumptions that could possibly change based on the ultimate outcome of certain tax matters. As these tax accounts were established in purchase accounting, any future changes relating to these amounts will result in balance sheet reclassifications, which may include an adjustment to the goodwill relating to BFI. The increase in total valuation allowance during the year of $136 million is principally due to the BFI acquisition. Subsequent recognition of tax benefits would result ia an adjustment to goodwill in an amount up to $127 million. In addition to the valuation allowance relating to the BFI capital loss and state net operating loss carryforward, the net deferred tax asset includes a valuation allowance of $12 million and $3 million as of December 31, 1999 and 1998, respectively, to reflect possible limitations on our ability to use other state net operating loss carryforwards. The components of the income tax provision (benefit} consist of the following: (in thousands) Year Ended December 31, 1999 1998 1997 Current tax provision Deferred provision (benefit) Total $65,300 $ 2,000 $78,418 (74,056) 41,773 (38,141} $ (8,756) $43,773 $40,277 The reconciliation of the federal statutory tax rate to our effective tax rate is as follows: 1999 1998 1997 Federal statutory tax rate Consolidated state taxes, net of federal benefit Taxes of pooled companies Amortization of goodwill Non-deductible wtiteoff of goodwill and business combination costs Other permanent differences Effective tax rate (35.0)% (35.0)% 35.0% (0.4) 9.2 3.1 (0.1) 70.6 (5.1) 11.2 3.7 0.6 16.2 28.8 -- 4.2 3.0 0.7 {3.9}% 80.3% 34.3% Tax benefits for the extraordinary items in 1999, 1998 and 1997 were based on our then;/' ~ ordinary combined federal and state rates of 39.5%, 39.5% and 40%, respectively. Tax~ benefit for the cumulative effect of change in accounting principle in 1999 was based o on our ordinary combined federal and state rate of 39.5 g. 70 ] Allied Wasle Industries, lac. 1999 Annual Repoa The components of ~he net deferred tax asset (liability) are as follows:~:.:.-~ z- (in thousands) : ' '~ ~ ~ ~ J Year Faded December 31, - : - - 1999 1998 Deferred tax liabilit~ relating primarily to prdpeny consisting · of landfill assets, fixed assets and debt basis &fferences ,: D fe dTaxAss~t R luff 'To · i. · EnVironmental closur~ and POst:closure l:i:.serites Otherr~erves '~" '' ' - ' Net operating loss, capital loss and minim/un tax credit carryforwa~'ds Valuation allowance .... Total deferred tax asset Net deferred tax asset (liability} , :~ - -l~z., .... .. ~,.' 61,982 '% ~'23,995 :. 3!7,769 _-~, 120,293 278,232 ' ' 35,940 - 519,371 177,152 S (89,523} ~ 56,210 The change in the non-current deferred tax liability includes deferred taxes related to 1999 acquisitions the most significant of which was BFI where the financial basis of assets acquired differed from the tax basis of those assets. Deferred income taxes have not been provided as of December 31, 1999, on approximately $21 million of undistributed earnings of foreign affiliates which are considered to be permanently reinvested. 14. Commitments and Contingencies We are subject to extensive and evolving laws and regulations and have implemented our own environmental safeguards to respond to regulatory requirements. In the normal course of conducting our operations, we may become involved in certain legal and administrative proceedings. Some of these actions may result in fines, penalties or judgments against us, which may have an impact on earnings for a particular period. We accrue for litigation and regulatory compliance contingencies when such costs are probable and reasonably estimable. We expect that matters in process at December 31, 1999, which have not been accrued in the consolidated balance sheet, will not have a material adverse effect on our consolidated liquidity, financial position or results from operations. In connection with certain acquisitions, we have entered into agreements to pay royalties based on waste tonnage disposed at specified landfills. The royalties are generally payable quarterly and amounts earned, but not paid, are accrued in the accompanying consolidated balance sheets. We have operating lease agreements for service facilities, office space and equipment. 'Future minimum payments under non-cancelable operating leases with terms in excess of one year are as follows: (in ~housands) 20O0 2001 2002 2003 2004 Thereaher $32,749 29,266 26,831 24,364 19,263 58,904 allied Wasle Industries, Inc. 1999 Annual Resort ~ 71 Rental i~pelige-under such ~6f~erating le~ses w~ approximately $26.9 milli?n,'$13.9 million and $12.2 million for the three year~ ended December 31, 1999,/'espectively. · We have entel'ed into employment agredments with. c~[t~in of our exe(~utive officers for per~ods up to three years. We have agreed to pay se~verance amounts equal to a mult~pl · ;of defined compensation .under certain clrcumstances.~ln the event of a material change in' control, as defined in the employment'agreemet~[g3' 0~t,e~minfitiqrl 9f a!l ex. ecutive "officers unde~"s~h' agreemen~s~ we would i~e requi~d ~ n~'a'~ay~t~'(~f'~pl~imately $12.3 milhon, ~n addltmn to a reimbursement payment to ehmlnate the effect of any excisq taxes associated with,this payment. ! .~i~ .'. 'i'?..i:.-~.:~-~-~:~.i~;~ ~ :' ', ' As a condition of the mergar agreement among A~li~d dnd BH, ~v~'ale required t° provide severance benefits to certain employees of BFI who'~do 'n'6t l~ive employment agregments and who would not otherwise receive severance pay uppn termination, if terminated within 12 months following the date of acqaisif~ion. ; We carry a broad range of insurance coverage for protection of our assets and operations from certain risks including environmental impairment liability insurance for certain landfills. We are also required to provide financial assurances to governmental agencies under applicable environmental regulations relating to our landfill operations and collection contracts. These financial assurance requirements are satisfied by us issuing performance bonds, letters of credit, insurance policies or trust deposits to secure our obligations as they relate to landfill closure and post-closure costs and performance under certain collection contracts. At December 31, 1999 we had outstanding approximately $1.5 billion in financial assurance instruments, represented by $701.7 million of performance bonds, $656.6 million of insurance policies, $52.1 million of trust deposits and $105.8 million of letters of credit. During calendar year 2000, we expect no material increase in financial assurance obligations relating to our landfill operations and collection contracts~.~:,.~ We have issued bank letters of credit in' the aggregate amount of approximately $539.2 million at December 31, 1999, including approximately $105.8 million relating to financial assurances to government agencies. These financial instruments are issued in the normal course of business and are not reflected in the accompanying balance sheets. The underlying obligations of the financial instruments are valued based on the likelihood of performance being required. We do not expect any material losses to result from these off balance sheet instruments based on historical results, and therefore, we are of the opinion that the fair value of these instruments is zero. Certain of our subsidiaries have 50% ownership interests in American Ref-Fuel pavmer- ships that construct, own and operate facilities which g~nerate and sell electricity from the incineration of solid waste. Subgtantially all of the remaining ownership interests are held by Duke/UAE Ref-Fuel LLC, an entity indirectly owned 65% by Duke Capital Corporation ("Duke Capital") and 35% by United American Energy Corporation. The five facilities currently in commercial operation under this ownership structure are located in Hempstead, New York, Essex County in New Jersey, Preston, Connecticut, Niagara Falls, New York and Rochester, Massachusetts. Financing arrangements for four of these proiects include agreements with Allied and Duke Capital to each severally fund one-half of each partnership's cash deficiencies resulting from the partnership's failure to perform. 72 ~ Allied Waste Industries, thC, 1999 Annual nepod With respect to the facilities located in Hempstead, New Y_0rk, Esje~5 ~County in New . Jersel/and Preston Connecticut, Allied and Duke Capital generally will not be required to fund cash deficiencies dssociated w!th waste deliveries by the sponsoring municipality below certain' minimum levels, change~ in law or terminfition of incineration service for reasons bther than default I~y ~he resp~cti~ p~rtnership. Iff)he eVent bf a partnership default' which results in te}minafion~ of incineration ser$i~'e; We' ma~' limif our fifiancial pbligati~ns by partfierShiP as'fgli~W~' ~: '. i.~.: :, i~., ~! ~:: ~ i~..'.!' :i.' ',' ':'i:. ')! ''~' ~: . Hempstead, New York.-- Funding of 50% of periodic~i$ay~fient~ related tg.~' ,' outstanding debt. Average annu~ debt service on $0%.0f ~be 'd~bt'8~e; the next five years is $12 million. We have guaranteed $15 million of additignal partnership debt and annual debt service on such debt is estimated to be. $0.5 .milliofi~ Essex County in New Jersey -- Funding of 50% of cash deficiencie~ including debt service up to $$0 to $100 million, depending upon the circumstances. Average annual debt service on 30% of the debt over the next'five years is $10 million. Preston, Connecticut -- Funding of 50% of periodic payments related to outstanding debt. Average annual debt service on 50% of the debt over the next five years is $$ million. With respect to the facilities located in Niagara Falls, New York and Rochester, Massachusetts, we may limit our financial obligations by partnership as follows: Niagara Falls, New York -- Funding of $0% of partnership cash deficiencies relating'to debt service. Average annual debt service on 50% of the debt over the next five years is estimated to be $3 million. SEMASS in Rochester, Massachusetts -- Under support agreements and guarantees (i~ lending up to 50% of $5 million to the SEMASS Partnership under certain circumstances, (ii~ deferring up to 50% of $7 million of operating cost reimbursement, and ~iiil funding up to 50% of $$ million in operating damages. These obligations have been assigned to the lenders. Average annual debt service on 50% of the debt over the next five years is approximately $20 million. 15. Related Party Transactions Transactions with related parties are entered into only upon approval by a majority of our independent directors and only upon terms comparable to those that would be available from unaffiliated parties. In connection with the receipt in April 1995 of all permits necessary to develop a landfill on certain real estate acquired in July 1992, we were obligated to pay $5.6 million to the previous owners of the real estate, which included certain of our then current stockholders. During the years ended December 31, 1998 and 1997, we paid principal of $1.7 million and $13(5,000, respectively, to our stockholders related to the receipt of permits. We fully repaid these promissory notes in 1998. In 1998, we sold certain assets to a relative of an officer for approximately $1.5 million. No gain or loss was recognized on this transaction. Allied Waste Industries, Ine. 1999 A~nu? Repeal [ 73 ..,::~16~ Segment Reporting -- . · .:' .'~ -~ We classify our operations in~o eigh~ U.S. geographic regions: Atlantic, Central, Northeast, Southeast, Great Lakes, M, idwest, Southwest and West. Our revenues are derived from 6ne industrY segment; ~hich includes the collection, transfer, recycling ~ and disposal of non-hlza~,~ous solid ,Waste. We evaluate' p~rf~rmance based on sever~l"~:¢~ factors, of which the primary financial measure s EBITDA before acquisition related and unusual costs. The accounting pohcles of the business segment~ .are the same as those described in thi~ Organization and Summary of Significant Accounting Policies (See Note I}. The tables below reflect certain geographic information relating to our operations/ 1999 Depreciation and amortization 1998 1997 $ 313,65S $ 405r557 $ 437'978 $ 323,984 $ 516,517 $ 308,742 S 400,357 $ 610,799 $ 17,281 $3,341,071 56,841 94,918 119,244 72,353 94,704 49,315 79,606 104,529 -- 671,510 $ 104,387 $ 300,183 $ 296.894 $ 159,344 $ 164,701 $ 57,274 $ 148,768 $ 338,058 $ 5,803 51,575,612 14,728 56,322 68,675 37.524 .21.314 12,743 35.626 34,25~ -- 281,421 11,858 29,366 41,794 22533 13,006 5,829 20,111 28,397 6,871 179,965 31,348 89,360 132,002 67,561 33,380 14,337 5S,026 116,661 (13,371} 198,064 $47.108 747.767 445,185 439,215 98.729 376.442 595,290 2,10S,367 5,556~16~'~'' 4S~752 42,416 67~987 31,023 8.064 I0~302 35~142 54~149 3,907 301.742 $ 80,484 $ 238,031 $ 205,701 $ 132,973 $ 185,107 $ 47,320 $ 148,544 $ 275,721 $ 25,980 51,340,661 2,987 28,263 34,120 30,996 20,938 12,763 28,376 17,379 -- 176,224 6,152 25,203 29,384 20,607 16,296 5,345 20,923 23,088 11,240 15S,238 19,104 59,134 78,864 58~q88 39,050 12,345 36,642 62,000 (151) 385,976 126,974 668,175 590,671 353,235 214,307 81,606 384,467 553,735 1,108,428 4,0Sl,7~S 21,263 21,830 57,650 20,710 9~974 10,362 19,157 23,151 3,908 188,005 -:t :-., ./5_ ~2:. ~- ....... Reconciliation of reportable segment primary' financial measure and assets to operating ' ~ ;'::- ~ * income (loss andS~tal assets, respecti~;ely: . - : 'Year Ended D~cember 31. -" . ~ 1999 ' : . -' 77:199/s .? .=...-..~ ' - - 997 ' Total EBITDA I~efore n6niiecurring charges for reportable'segments '- - $ 1,160 741 - ': $ '.527,504' ~' 55385 976 - Depreciation and amonSz~fion for reportable segments '; :: :. · ~. ':~: .;,. 2.. 3{}4,09~4,?['x~-377,?,q5, ~:. :!. 158,338 Acquisition related and uniasual costs ;' : ...... 5 588~8~5 ' '" ": ,: 317,~;1'6" ':~ - 3,934 Operating income - * $ 187,792 . '!t~ :'29,923 $223,804 Assets ' ' Total assets for reportable segments $25,540,911 $ 5 556,167 Elimination of investments {10,577,810} .{1,803,575) Total assets $14,963,101 $ 3,7.~2,592 Year Ended December 31, Percentage of our total revenue attributable to services provided: 1999 1998 1997 Collection Transfer Land flUI~ Other Total revenues 60.7% 55.7% 57.2% 5.6 7.1 6.7 25.3 29.9 26.4 8.4 7.3 9.7 100.0% 100.0% 100.0% The portion o~ collection and third party transfer revenues at~ibutable to disposal charges for waste collected by us and disposed at our landfills have been excluded horn collection and t~ansfer revenues and included in landfill revenues. 17. Selected Quaderly Financial Data (unaudited) The following table summarizes the unaudited consolidated quarterly results of operations as reported for 1999 and as reported and restated for poolings-of-interests for 1998: (in thousands, except Fer share amounts} First Quarter 5econdQuarter Third Quartetal Fourth Quarter 1999 Operating Revenues: $408,045 $463,357 $1,085,628 $1,384,041 Gross profit 178,031 206,345 449,937 557,794 Income {loss) before income taxes, extraordinary items and cumulative effect of change in accounting principah°l 56,237 79,277 ' {432,710) 69,941 Net income (loss)m (31,081) 46,894 (335,553) 31,012 Basic earnings (10ss) per common sharelu (0.17) 0.25 (1.84) 0.08 Diluted earnings (loss) per common shareu~ (0.17) 0.25 (1.84) 0.08 0) The fixst and *econd quartm's have been restated to reflect the effect change in accounting principle (See Note 1 }. Il) Includes approximately $548.7 million of acquisition related and unusual costs. Allied Waste Industries, Inc. 1999 Annual Repeft [ 75 ·: .{in thousands, except ~..r share amountsl ' 3':c' '." - · :' . ." FirstQuarter Second Quarter Third Quarter Fou~h Qa31Xer 1998 Operating Revenues: As reported As restated . $29~,692 $334,290 39~,S5~ '. 4!5 740 , ? $223,755 ' · 357,900 $407,119 ~07,n9 As reported . 104,504 135,096 ;~147,3~ 79 686 'As'restated ': ' .; 152,084 171,998: >' :180,571 178,686 Income (loss) Before Income Taxes and Extraordinary Items: · , .' . ~ ' ' ' ,' Asreported ' 28,387 .: 8~b~;~: 28,245 ' {J65,457) As restated 46,292 22,690 41,997 (165,457) Net Income (loss): ., As reported 16,749 (9,$01)' :' 11,122~ (274,817} As restated 31,565 1,589 18~,611: ¥ (274,817) Basic Earnings (loss) Per Common Share: As reported 0.16 (0.08) ' 0.08 (1.50) As restated 0.17 0.01 0.10 (1.50) Diluted Earnings (loss) Per Common Share: As reported 0.16 (0.07) 0.08 (1.50) As restated 0.17 0.01 0.10 {1.50} 18. Summarized Financial Data of Allied Waste North America, Inc. (in thousands) As discussed in Note 6, the 1998 Senior Notes and the 1999 Notes issued by Allied NA (our wholly-owned subsidiary) and certain debt of BFI (all of which BFI debt is no longer registered under the Securities Exchange Act of 1934) are guaranteed by us. Our guarantee is full, unconditional and joint and several of Allied NA's and BFI's debt. The separate complete financial statements of Allied NA and BFI have not been included herein as we have determined that such disclosure is not considered to be material. However, summarized balance sheet data for Allied NA and subsidiaries as of December 31, 1999 and 1998 is as follows: Summarized Consolidated Balance Sheet Data. December 31, D~cember 31, 1999 1998 Property and equipment, net Goodwill, net Other non-current assets Current liabilities Long-term debt, net of current portion Due to parent Other long-term obligations Retained earnings (deficit) $2,248,422 $ 499,904 3,738,388 1,776,025 8,238,929 1,327,470 737,362 149,193 2,629,499 445,528 9,240,291 2,118,927 2,091,951 1,083,515 1,453,756 268,407 (452,396} (163,785) Summarized Statement o rations Dat Year Ended December 3~., 1999 I; Operating costs and expenses : 1998 $1,575,612 ' ~'; . . .. 3,~53,279 .1,545,689 /Operating income. : -' . ~.- · -- , , . ~ L ~..'c!;. )'..,:~.,,,~ - ' ": C 9. '%187,792 - :::?29,923 Net Ipss before ex~ra, ordmary loss and cumula, tave effect o{ghange m acco~unung principle' . :(221,250) . {80,338) : -- :- 3,223 - 72,202 ExtraordinaiT loss, net". , :~umulative effeci .o.f change m accounting principal, net Net loss ' (288,728) 052,540) 19. Subsequent Events On January 18, 2000, we repurchased the $250 million 6.08% MVPs when First . National Bank of Chicago did not exercise its option to purchase the securities. The proceeds to repurchase the MVPs were obtained from a draw on our revolving credit facility. r:., Allied Wane Mdudrle% Inc. 1969 Annual Report [ 77 · ~Report of Independent Public Accountants -~ : · . :-..: -. -: . . :.. · . · To. Allied. Waste Industries,' Inc.: cash flows for ~ach of the ~hree years in~ the p~ritd i~vide~ D~:~biff~31~ 1999. These Schedule-II referred to below are the respons~bd~ty of the Company's management. Our responsibility is to express an opinion'0n'~hese financial statements and Schedule II referred to below based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and pcrform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes ~xamining, on a test b~isi evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Allied Waste Industries, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and fheir cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. As explained in Note 1 to the financial statements, effective January 1, 1999, the Company changed its method of accounting for the capitalization of interest. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II listed in Item 14 of Part IV herein is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Phoenix, Arizona February 22, 2000 · Board ef Directors. ~ -. :. ',: Corporate Officers...i, :i.' ." !"'~'i ....... i.'. ' ~ · - .... "' ' -'Thomas H Van'Wee den - . C' · '- ~ Thomas H. Van Weelden . - '..:. Chairman, Chief Executive Officer and president _ '~ .~i .. :?~hai~'~an, Chief Execut,ve '~:~':~ >' ' An;~d Waste Industries Inc :~ ' ' ". ~' * . ".?~'~ ~:~ ?.?Off~e~ and President '..r , . Semor Managing Dlrecto - , ' ' ' ': ~' 3'~ic~~ ~ri~he;t ''::'::' : ' The'[lackstone Group 9 '* : '- ' ' ' ~ ~.': ~,,.~:~x"q · ... Y-~- · . ' ~ '~ ~mer ~p~ratmg ~gr cer Founding Principal · Apollo 'Advisers, LP. Dennis Hendrix ~) Retired Chairman and Chiet Executive Officer 'Pan Energy Corporation David B. Kaplan m Limited Partner Apollo Advisors, L.P. Nolan Lehmann (2) President Equus Capital Management Corporation Howard A. Lipson omi Senior Managing Director The Blackstone Group i~ ,~ HenLr~ L[ Uir~ela l~all ~: Vice President' M- ~i~ Fi~aricial '0 fficer Peter S. Hathaway Vice President Chief Accounting Officer Steven M. Helm Vice President Legal and Corporate Secretary Michael G. Hannon Vice President Mergers and Acquisitions i Roger A. Ramsey u)~a) Former Chairman and Chief Executive Officer Allied Waste Industries, Inc. Founding Principal Apollo Advisers, L.P. and Lion Advisors, L.P. Warren B. Rudman Partner Paul, Weiss, Rifkind, Wharton and Garrison Chairman Wireless Cable International, Inc. James S. Eng Controller I/ G.Thomas Rochford, Jr. Treasurer Donald W. Slager Vi~e President Operations Richard Van Hattem, Jr. Vic~ President · Corporate Services and Development Jo Lynn White Assistant Corporate Secretary and Corporate Counsel Allied Waste Industries, [n~. 1999 Annual Repod [ 79 Operating Managemenl Terry Armstrong ' ' Regional Vice President, Atlantic Region B_ob Doyle Regmn. al Vice President, Southeast Region Joe Duncan Regional Vice President, Midwest Region Roger Groen, Jr. Regional Vice President, Central Region Rick Krall Regional Vice President, Southwest Region Denny Marchetti Regional Vice President, Northeast Region Don Swierenga Regional Vice President, West Region Jim Van Weelden Regional Vice President, Great Lakes Region Pete Lindemulder Manager, Market Integration Joe Mrjenovich Manager, Market Integrat!on Doug Haan Manager, Market Integration Investo'r Information.~;.,-.... Corporate Headquarters Allied Waste Industries, Inc_..' · . ·: . 15880 N. Greenway-Hayden"Loop The annual meeting ~f sharehold~i~ 'Will -be held at the Marriott at McDowell Mountain, 16770 N. Perimeter Drive, Scottsdale, Arizona 85260, on Wednesday, May 3, 2000, at 9:00 a.m. Mountain~'$tandard Time. lqotice of the meeting and proxy materials were sent to shareholders with this annual report. Independent Public Accountants Arthur Andersen LLP Phoenix, Arizona Registrar and Transfer Agent Shareholders with questions concerning stock certificates, account information Or stock transfers should contact our transfer agent: American Stock Transfer & Trust Attn: Shareholder Services 40 Wall Street New York, NY 10005 Phone: 718-921-8381 Fax: 718-259-1144 Toll Free: 800-937-5449 Form I O-K and Other Investor Information ' A copy of the Annual Report of Allied Waste Industries, Inc. on Form 10-K, filed'with the Securities and Exchange Commission, may be obtained by shareholders, without charge, by calling 480-627-2700 or upon written request to: Investor Relations Allied Waste Industries, Inc. 15880 lq. Greenway-Hayden Loop Suite 100 Scottsdale, AZ 85260 Allied Waste Iml~lstde,s, Inc. 1999 Annual Report ? i':1~' N~ ~reenw~y-Hayde. Loop Suite 100 Scotlsdale, AZ 85260 480-627-2700 www.nwifl.com (~ity of Denton Bid Number 2832 " Bid Submittal-Attachment 10 ~.~ ..-. List of Recently. Disposed and Pending LitigatiOfi, Trinity Waste Services has no current or pending litigation against any':i~ Divisions or our parent company, Allied Waste Industries. Trinity Waste, .Services does not have any disposed or settled litigation fxom two years prior. C:\WINWORDXDATA\CONTRACT~PROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 bmittal Att h '- ry of Re o ant '.' Trinity Waste Services takes great pride in our commitment and our record of environmental compliance. Trinity Waste Services has no current or pending administrative orders or violations of any federal, state or local laws, rules or codes. There have been no settled or negotiated violations in the pa~t three years. C:\WINWORD\DATA\CONTRACTxPROPOSAL\Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Bid submi~l Attachment 12 Designated Representatives Contractor Respresentafive: , , The Contractor will provide the following information in Bid SUbmittfil John Osteen Contractor Representative (Print Name) Operations Manager Title 4200 E. 14th Street Street Address Piano City Texas 75074 State Zipcode 972-633-2731 FaxNumber 972-422-2341,ext. 1019 Office TelephoneNumber 214-435-7197 Mobile Telephone Number josteen~awin.com E-mail Address C:\WINWORD'xDATA\CONTRACT~PROPOSAL'~Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc City of Denton Bid Number 2832 Bid Submittal Attachment 13 , Full Bid Understanding and 'Compliance'Agreement ~ Full Bid Understan~ling and Compliance Agreement The Contractor hereby acknowledges that it understands and will comply with all terms, conditions, requirements, fees, and specifications contained in and as a part of this bid document. Based on its compliance with all terms, conditions, requirements, fees, and specifications contained herein and as a part of this bid documem arid all of its addenda, the Contractor's authorized representative shall sign below. Trinity Waste Services Company Name Tom Sellers, General Manager Company Authorized Representative (Printed Name, Title) Company Authorized Representative (Signature) Acknowledgement of Receipt of Addendum The bidder must acknowledge receipt of each addendum received, with their authorized representative's signature adjacent to each addendum received, in the space below, and submit this acknowledgement as part of the bid submittal. Addendumlreceived: V(.;---~-- ~.~~ (Autorizcd Representative's Signature) C:\WINWORD~DATA\CONTRACT~PROPOSAL~Denton 4-11-02\Curbside Recycling Bid 2832 Submittal Forms.doc "The following information is proprietary and eXempt fxom flae Public Information Act." .CITY Alvarado * Argyle * Azle Bartonville * Bedford * Benbrook Blue MoUnd * Colleyville Copper Canyon * DeSoto Edgecliff Village Euless * Flower Mound MUNICIPAL CONTRACTS IN NORTH CENTRALTEXAS BEING PERFORMED BY TRINITY WASTE SERVICES CONTACT Debra Howe Michael Webb Jerry Guillory John Mayall Chuck Barnett Cary Conldin Frances Johnson Dianne MeWethy Chuck Wainscott Lynda Humble Charles Talbot Bill Ridgway Steve Williams PHONE 817 790-3351 940 464-7273 817 444-2541 817 430-4052 817 952-2101 817 249-3000 817 232-0661 817 577-7575 940 241-2677 972 230-9643 817 293-4313 817 685-1400 972 874-6000 * Indicates cities utilizing Trini~'s curbside recycling program. "The following information is proprietary and exempt fi.om the Public Information Act." page two Municipal Contracts in Texas * Grapevine Hasler * Hurst * Keller * Lakeside Lakewood Village * Mansfield * Melissa Mesquite * Midlothian Newark * North Richland Hills * Oak Point Ovilla * Parker * Piano Matt Singleton Sandy Hart Allan Weegar Lyle Dresher Bill Mohr Dawn Sendziak Clayton Chandler Susan Bradley Mark Hindman Lou Jameson Sherry Edgemon Larry Cunningham Stacey Beard Scott Campbell Betty McMenamy Nancy Nevil 817 410-3104 817 439-5931 817 788-7028 817 431-1517 817 237-1234 972 294-5555 817 473-9371 972 838-2338 972 288-7711 972 775-3481 817 489-2201 817 427-6000 972 294-2312 972 617-7262 972 442-6811 972 964-4104 * Indicates cities utilizing Trinity's curbside recyclingprogratra I]HATY "The following information is proprietary and exempt t~om the Pubtic Information Act." page three Municipal Contracts in Texas * Richardson * Richland Hills River Oaks Roanoke * Roclovall * Sachse * Saginaw Sanctuary * Southlake Trophy Club * Watauga Westlake * Westover Hills * Wylie Clay Gooch Jim Quin June Wedlake Jimmy Stathatos Julie Couch Bill Atkinson Dolph Johnson Floyd Galloway Shana Yelverton Bill LeGrand Nancy Meadows Ginger Crosswy Earle Shields Biff Johnson 972 744-4204 817 299-1800 817 626-5421 817 491-2411 972 771-7700 972 495-1212 817 232-4640 817 677-3008 817 481-1519 817 430-1911 817 514-5800 817 430-0941 817 737-3127 972 442-8100 * Indicates cities utilizing TriniO~'s curbside recyclingprogratrr "The following information is proprietary and exempt l~om the Public Information Act." Experience and References Trinity Waste Services is one of the largest commemial solid waste haulers in the Metroplex. We currently provide solid waste service to over 250,000 homes in the D/FW area. We also provide curbside recycling to more than 240,000 homes from our Dallas, Plano and Fort Worth divisions. We are contracted with many local communities to provide residential solid waste collection and/or curbside recycling services. We are fully staffed with dedicated, well-trained service professionals. The average driver has been with Trinity Waste Services and its predecessors for more than ten years. References: City of Arevle On October 1, 2000, the City of Argyle renewed the contract for an additional three years. Trinity was awarded the extension based on past performance and reliability. City of Argyle P.O. Box 609 506 North Highway 377 Argyle, Texas 76226 Contact: Michael Webb, City Manager (940) 464-7273 Approximately 744 homes Three year franchise on all residential solid waste and curbside recycling. City of DeSoto On March 18, 1997, the City of DeSoto voted unanimously to enter into negotiations with Trinity Waste Services for a 5 year contract. Trinity currently provides service to DeSoto. The city went out for bids and Trinity was awarded the contract based on price, financial stability, and past performance. City of DeSoto 211 E. Pleasant Run Road DeSoto, Texas 75115 (972) 230-9688 Contact: Lynda Humble / Acting Assistant City Manager Approximately 10,000 homes Trinity franchise for residential, commercial, and industrial solid waste, and residential curbside recycling. "The following information is proprietary and exempt from the Public Information Act." Town of Flower Mound On October 1, 1996, the Town of Flo~,er Mound entered into a contract w~th. BFI, Inc., now doing business as Trinity Waste Services, to provide fully automated solid Waste services and curbside recycling services to the residents of the Town. RFP's are now being reviewed. Town of Flower Mound 2121 Cross Timbers Road Flower Mound, Texas 75028 (972) 539-6006 Contact: Van James, Town Manager Approximately 16,700 homes Trinity franchise for residential, commercial and industrial solid waste, and residential curbside recycling. City of Grapevine On May 2, 1995, the City of Grapevine went out for bid on solid waste and recycling services. Trinity Waste Services was awarded a ten (10) year contract based on the combination of price, service, and past performance. City of Grapevine 413 South Main Street Grapevine, Texas 76051 (817) 481-0300 Contact: Matt Singleton / Public Works Director Approximately 10,000 homes Trinity franchise for all residential, commercial, and industrial solid waste, and residential curbside recycling. City of Hurst On February 13, 1996, the City of Hurst renewed the contract for an additional eight (8) year period. Trinity was awarded the extension based on service performance and reliability. Take All service was also added at this time. City of Hurst 1505 Precinct Line Road Hurst, Texas 76054 (817) 788-7000 Contact: Allan Weegar / City Manager Approximately 9,800 homes Trinity franchise for all residential, commercial, and industrial solid waste, and residential curbside recycling. "The following information is proprietary and exempt fi'om the Public Information Act." City of Mesquite ' ' On November 1, 1996, the City of Mesquite turned over the operation of the Mesquite owned Type I landfill to Trinity Waste Services for an operating agreement through 2006. Trinity also took over all commercial and industrial solid waste and recycling service for Mesquite for the same period. City of Mesquite 711 North Galloway Mesquite, Texas 75185 Contact: Mark Hindman Approximately 1,200 Commercial customers and landfill operating agreement City of North Richland Hills On August 1, 1997, the City of North Richland Hills renewed the contract for an additional five (5) year period. Trinity was awarded the extension based on service performance and reliability. City of North Richland Hills 7301 NE Loop 820 North Richland Hills, Texas 76180 (817) 581-5500 Contact: Larry Curmingham / City Manager Approximately 15,900 homes Five year franchise on all residential, commercial, and industrial solid waste and curbside recycling. City of Parker On November 1, 2001, the City of Parker renewed the contract for both solid waste and curbside recycling for an additional five years. Trinity was awarded the renewal based on past performance and reliability. City of Parker 5700 E. Parker Road Parker, Texas 75002 (972) 442-6811 Contact: Betty McMenamy / City Manager Approximately 482 homes Five year franchise on all residential solid waste curbside and recycling. "The following information is proprietary and exempt from' the Public Information Act."~ Cit~ofPlano i= .. On February 1, 2000, the City of Plano'renewed the recycling and commercial franchise for an additional five years. Trinity was awarded the extension based on reliability, service performance and the expansion of the Plano facility. City of Plano 4120 West Plano Parkway P.O. Box 860358 (75086-0358) Piano Texas 75093 (972) 964-4130 Contact: Nancy Nevil, Director of Solid Waste Approximately 54,000 homes Five year franchise on all commercial and industrial solid waste and the processing of all residential recycling. City of Sachse On August 1, 2000, the City of Sachse voted to sign a new contract for a five year period with Trinity Waste Services. We were awarded the renewal/new contract based on our ability to provide "exceptional service". City of Sachse 3033 6th Street Sachse, Texas 75048 (972) 495-1212 Contact: Bill Atkinson / City Manager Approximately 2,300 homes Trinity franchise for all residential, commercial, and industrial solid waste, and residential curbside recycling. City of Saginaw On November 1, 1997, Trinity Waste Services began a new five year franchise agreement with the city. Trinity Waste Services was able to offer the city the lowest rates with the most consistent service. City of Saginaw 333 W. McLeroy Saginaw, Texas 76179 (817) 232-4640 Contact: Nan Stanford / City Manager Approximately 3,300 homes Five year franchise on all residential, commercial, and industrial solid waste and curbside recycling. "The following information is proprietary and exempt t~om the Public Information Act." Town of Trophy Club On March 18, 1997, the Town of Troph3 Club voted unanimously to renew the contract for all solid waste collection and disposal to Trinity Waste Services for a period of five (5) years. Town of Trophy Club 100 Municipal Drive Trophy Club, Texas 76262 (817) 430-1911 Contact: Bill LeGrand / Public Works Director Approximately 1,600 homes Trinity franchise for all residential, commercial, and industrial solid waste collection and disposal. Ci~ of Watauga On June 28, 1999, Trinity Waste Services began a new eight year franchise agreement with the City of Watauga. Trinity Waste Services was able to offer the city the lowest rates with the most consistent service. City of Watauga 7101 Whitley Road Watauga, Texas 76148 (817) 514:5818 Contact: Dale Cheatham / City Manager Approximately 7,400 homes Eight year franchise on all residential, commercial, and industrial solid waste and curbside recycling. Cit~ of Wylie On September 1, 2000, the City of Wylie renewed the existing solid waste and recycling contract for an additional five years, based on service, reliability and price. City of Wylie 2000 Highway 78 North Wylie, Texas 75098 (972) 442-8120 Contact: Anthony "Biff" Johnson / City Manager Approximately 5,100 homes Trinity franchise for residential solid waste, curbside recycling. and residential DALLAS/FT WORTH LANDFILLS BFIltasca Landfill-Permit# 241C 2559 FM66 ltasca, Texas76055 254-687-2511 BFI Lewisville Landfill-Permit # 1749A 801 E. College Street Lewisville, Texas 75057 972-436-4217 Turkey Creek Landfill-Permit# 1417B 9100 S. IH 35W Alvarado, Texas 76009 817-790-2912 Trinity Oaks Landfill-Permit # 556 11340 C F Hawn Freeway Dallas, Texas 75253 972-286-1266 Camelot Landfill-Permit # 1312A BFI Mexia Landfill-Permit # 1558A 580 Huff'roes Boulevard 3048 LCR 460 Lewisville, Texas 75056 Mexia, Texas 76667 972-492-3888 (special waste not accepted) 254-562-3889 ECD Landfill-Permit# 1745A 5703 N. IH 45 Ennis, Texas 75119 972-875-5374 Fort Worth Transfer Station / Material Recovery Facility Fort Worth, Texas Facility Location - Approximately 4.5 miles north east of downtown Fort Worth on State Highway 121. The address for the facility is 6200 Elliott Reeder Road, Fort Worth Texas, 76117. From State Highway 121 exit Carson Street and proceed south to Elliott Reeder Road, a'avel east on Elliott Reeder to the site entrance. The phone number is (817) 332-7301, and the fax number is (817) 831-3189. Facility Description - The facility is a Type V Municipal Solid Waste Transfer Station and Material Recovery Facility owned and operated by Trinity Waste Services, an Allied Waste Industries Company. The facility opened in November 2001 and is designed to process up to 3,000 tons of municipal solid waste per day and recycle up to 20 tons per hour of old corrugated cardboard (OCC). Permit Boundary - Approximately 8 acres, the building footprint is approximately 42,750 square feet Zoning - The City of Fort Worth approved a Planned Development Special Use Permit for the site in July, 1998 Development Permit - The Texas Natural Resource Conservation Commission (TNRCC) issued Permit No. MSW-2275 for the site on May 9, 2000. Design Capacity - 3,000 tons per day Daily Volume Limits - no regulatory/permitted limits Hours of Operation - The facility is permitted to operate 24 hours per day, seven days per week; the current operating hours are from Monday at 12:01 a.m. to Saturday at 4:00 p.m. Design Summary - Approximately 24,100 square feet of the building footprint is used for MSW transfer operations and approximately 17,600 square feet is used for recycling operations. The remaining 1,050 square feet are used for office areas and employee facilities. The MSW transfer and recycling operations are totally enclosed. It is an "over the top" transfer facility with two loading hoppers and a two lane tunnel for transfer trailers. Loads rich in OCC am emptied on the recycling side and pushed onto a sorting conveyor. The conveyor allows for the separation of waste from the OCC stream. The separated waste falls to the floor and is pushed onto the tipping floor, the oCC continues into a baler. The baled OCC is stored inside the building until it is shipped offsite for reuse. Environmental Management - The tipping floor and push walls are washed down on a weekly basis at the completion of processing. Wash water is collected in several trench drains and discharged to the sanitary sewer system under a permit with the City of Fort Worth. Litter along access roads and around the building is collected at least twice weekly. Closure Financial Assurance - In place and approved by the TNRCC State Fees - $1,25/ton or $0.25/Ioose cubic yard and $0.40/compacted cubic yard Tnrkey Creek Landfill Alvarado, Texas Facility Location - Approx. 3.5 miles south of Alvarado, Johnson County, Texas (appr6x. 35 miles south of Fort Worth, Texas). Address of the facility is 9100 South I35W, Alvarado, Texas 76009. Federal Express address is 9100 South 135W, Alvarado, Texas 76009. Phone number is (817) 790-2912. Fax number is (817) 790-2838. Facility Description - The facility is an active Municipal Solid Waste (MSW) landfill owned and operated by Turkey Creek Landfill TX, L.P., an Allied Waste Industries Company affiliated with Trinity Waste Services. Initially permitted in 1983. Laidlaw Waste Systems acquired landfill in 1994; Allied acquired site when it purchased Laidlaw in December 1996. Turkey Creek Landfill accepts MSW, sp6cial wastes, Construction & Demolition (C&D), etc. Gate Volume - 935 tons per day average over the past 12~month period. Total Property Owned -219.6 acres Zoning and/or Local Siting Permit - none required by local (county or below) Development Permit/Permit to Construct - 150.7 acres - approved during 1989 Expansion by Texas Department of Health (now Texas Natural Resoume Conservation Commission - TNRCC) Approved Disposal Capacity - 20,295,921 airspace cubic yards Daily Volume Limits -no limits established Operating Permi'dPermit to Dispose- 92acres(1983 permit) - 150.7 acres ( 1989 permit expansion) Remaining Disposal Capacity (1/99) - I5,680,000 cubic yards Life of Site at Current Voinme - over 30 years Current Capacity without further construction (1/99) - 1,007,000 cubic yards Liner Description - Pre-RCRA Subtitle D areas (prior to September 1993 - approx. 20 acres) have a 3 foot thick constructed clay liner. Since then, all liners constructed have been composite linem consisting of two foot thick constructed clay liners overlaid with 60 mil HDPE plastic liners, leachate collection systems and two feet of protective cover. Leachate Collection System - On top of the composite liner there is a drainage layer consisting of either a geonet and geotextile or one foot of shredded tire chips. The liner is sloped towards six inch perforated leachate collection lines allowing leachate to drain to the pipes. These pipes (contained within gravel chimney drains) in turn drain to sumps at the toe of the landfill's interior slope. Within these sumps them is an electric pump that automatically pumps when the leachate head on the liner reaches twenty-four inches. The leachate is pumped into a leachate storage tank with a capacity of 100,000 gallons. The leachate is then pumped into tanker trailers as needed and hauled to a local POTW for disposal. Landfill Gas System - There is no landfill gas system as it is not required or needed. Environmental Monitoring - 27 Groundwater monitoring wells monitored semiannually 13 landfill gas probes monitored quarterly 2 surface water outfalls monitored quarterly and sampled biennially Closure/Post Closure Financial Assurance - In place and approved by the TNRCC State Fees - $1.25/ton or $0.25/1oose cubic yard and $0.40/compacted cubic yard BFI Itasca Landfill ltasca, Texas Facility Location - Approx. 3 miles east of Itase~a, Hill County, Texas. Address of the facility 2559 FM 66, Itasca, Texas 76055. From 1-35W exit FM 66 and proceed east approximately I mile to the landfill entrance. Phone number is (254) 6872-2511. Fax number is (254) 684-9843. Facility Description - Thc facility is an active Municipal Solid Waste (MSW) landfill owned and operated by BFI Waste Systems of North America Inc., an Allied Waste Industries Company affiliated with Trinity Waste Services. The facility was originally permitted in 1977; Allied acquired site when it purchased BFI Waste Systems of North America, Inc., in 1999. The BFI Itasca Landfill accepts MSW, Class I Waste, Special Wastes, Construction & Demolition (C&D), etc. Gate Volume - 700 tons per day average over the past 12-manth period. Total Property Owned - 598.8 acres Zoning and/or Local Siting Permit - none required by local (county or below) Development Permit/Permit to Construct - 269.3 acres - approved during 1997 Expansion through the TNRCC Approved Disposal Capacity - 40,700,000 airspace cubic yards Daily Volume Limits - no limits established Operating Permit/Permit to Dispose - 269.3 acres (1983 permit) Remaining Disposal Capacity (2/00)- 37,430,000 cubic yards Life of Site at Current Volume - over 100 years Liner Description - Pre-RCRA Subtitle D areas have 'a 3 foot thick constracted clay liner. Since then, all liners constructed have been composite liners consisting of three foot thick constructed clay liners overlaid with 60 mil HDPE plastic liners, leachate collection systems and two feet of protective cover. The three foot clay liner thickness is required for the facility to accept Class I waste. Leachate Collection System - On top of the composite liner there is a drainage layer consisting of either a geonet and geotextile. The liner is sloped towards six inch perforated leachate collection lines allowing leachate to drain to the pipes. These pipes (contained within gravel chimney drains) in turn drain to sumps at the toe of the landfill's interior slope. Within these sumps there is an electric pump that automatically pumps when the leachate head in the sump reaches approximately twenty-four inches. The leachate is pumped into a leachate storage tank. The leachate is then pumped into tanker trailers as needed and hauled to a local POTW for disposal or re-circulated over areas with an approved subtitle D composite liner. Landfill Gas System - The facility has an active gas collection system consisting of 18 vertk:al gas collection wells and one "candlestick" flare. The average system flow is 350 cubic feet per minute. Environmental Monitoring - 18 Groundwater monitoring wells monitored semiannually 13 landfill gas probes monitored quarterly 2 surface water out-falls monitored quarterly and sampled biennially Closure/Post Closure Financial Assurance - In pla6e and approved by the TNRCC State Fees - $1.25/ton or $0.25/1oose cubic yard and $0.40/compacted cubic yard camelot La~df'dl ~' Lewisville, Texas ' . ' Facility Location - Camelot Landfill is located i~ Lewisville; Texas at 580 Huff'mas Boulevard. !t is approximately 3 miles north east of the intersection of Businass Highway 121 and 1-35E. Phone number is (~72) 492-3888. Fax number is (972) 492-4943. Facility Description - The facility is an active Type I Municipal Solid Waste (MSW) landfill owned by the City of Farmers Branch and operated by Camelot Landfill TX, L.P., an Allied Waste Industries Company affiliated with Trinity Waste Services. The facility was originally permitted in 1979; Allied began operating the site in October of 1998. Camelot Landfill accepts MSW, and Construction & Demolition (C&D). Gate Volume - 1,500 tons per day average. Total Permitted Property- 351.6 acres Zoning - Agricultural/Open, Lew, isville considers the site an acceptable non-conforming land use Approved Disposal Capacity - 24,500,000 ah'space cubic yards Daily Volume Limits - no limits established Operating Permit/Permit to Dispose - 207.4 acres Remaining Disposal Capacity (5/01) - 13,500,000 cubic yards Life of Site at Current Volume - approximately 15 years Liner Description - Pre-RCRA Subtitle D areas have a 3-foot thick constructed clay liner. Since then, all liners constructed have been composite liners consisting of two foot thick constructed clay liner overlaid with 60 mil HDPE plastic liners, leachate collection systems and protective cover. Leachate Collection System - On top of the composite liner there is a drainage layer consisting of either drainage geocomposite or shredded tire chips. The liner is sloped towards six inch perforated leachate collection lines allowing leachate to drain to the pipes. These pipes (contained within gravel chimney drains) in tuna drain to sumps at the toe of the landfill's interior slope. Within these sumps there is an electric pump that automatically pumps when the leachate head in the sump reaches approximately twenty-four inches. The leachate is pumped into a leachate storage tank. The leachate is then pumped to a Lewisville sewer line along the western permit boundary or re- circulated over areas with an approved subtitle D composite liner. Landfill Gas System - The facility has a passive gas venting system consisting of 8 passive gas wells Environmental Monitoring - 14 Groundwater monitoring wells monitored semiannually 18 landfill gas probes monitored quarterly 6 surface water out-falls monitored quarterly Closure/Post Closure Financial Assurance - In place and approved by the TNRCC State Fees - $1.25/ton or $0.25/1oose cubic yard and $0.40/compacted cubic yard BFI Lewisvillc Landfill Lewisville, Texas Facility Location - The BFI Lewisville Landfil! is located in Lewisville, Texas at 801 East College Street.' It is approximately 1.5 miles north east of the intersection of Business Highway 121 and 1-35E. Phone number is (972) 436-4217. Fax number is (972) 436-8129. Facility Description - The facility is an active Type IV Municipal Solid Waste (MSW) landfill owned and operated by Lewisville Landfill TX, L.P., an Allied Waste Industries Company affiliated with Trinity Waste Services. The facility was originally permitted in 1986; Allied acquired when it purchased BFI in 1999. Lewisville Landfill accepts construction & demolition (C&D) debris and some special waste in accordance with the site approved QA/QC Plan for the Disposal of Special Waste. Gate Volume - 1,700 tons per day average. Total Property Owned - 337.6 acres, the permit boundary is 84.7 acres Zoning - Heavy Industrial Approved Disposal Capacity - 7,780,000 airspace cubic yards Daily Volume Limits - r~o limits established Operating Permit/Permit to Dispose - 75.0 acres Remaining Disposal Capacity (5/01 ) - 3,717,713 cubic yards Life of Site at Current Volume - approximately 5 years Liner Description - 3-foot thick constructed clay liner with a permeability of 1.0 x 10-7 em/sec overlain by one foot of protective soil cover. Leachate Collection System - None required o Landfill Gas System -None required Environmental Monitorin~ - 7 Groundwater monitoring wells monitored annually 4 surface water out-falls monitored quarterly Closure/Post Closure Financial Assurance - In place and approved by the TNRCC State Fees - $1.25/ton or $0.25/1oose cubic yard and $0.40/compacted cubic yard