UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

ý

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

 

 

For the quarterly period ended January 31, 2004

 

 

 

 

OR

 

 

 

 

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

 

 

For the transition period from to

 

 

 

 

Commission file number 000-23211

 

CASELLA WASTE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

 

Delaware

 

03-0338873

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

25 Greens Hill Lane, Rutland, Vermont

 

05701

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (802) 775-0325

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act) Yes  ý  No  o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of March 4, 2004:

 

Class A Common Stock

 

23,226,946

 

Class B Common Stock

 

988,200

 

 

 



 

PART I.      FINANCIAL INFORMATION

 

ITEM 1.      FINANCIAL STATEMENTS

 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)

 

 

 

April 30,
2003

 

January 31,
2004

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

15,652

 

$

9,295

 

Restricted cash

 

10,839

 

12,436

 

Accounts receivable - trade, net of allowance for doubtful accounts of $895 and $1,465

 

45,649

 

44,790

 

Notes receivable - officers/employees

 

1,105

 

1,105

 

Prepaid expenses

 

5,906

 

6,408

 

Inventory

 

1,740

 

1,732

 

Deferred income taxes

 

4,275

 

6,435

 

Other current assets

 

1,111

 

1,128

 

Total current assets

 

86,277

 

83,329

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and amortization of $201,681 and $254,256

 

302,328

 

336,856

 

Goodwill, net

 

159,682

 

164,328

 

Other intangible assets, net

 

3,014

 

3,960

 

Investments in unconsolidated entities

 

34,740

 

43,687

 

Net assets under contractual obligation

 

3,844

 

5,737

 

Other non-current assets

 

12,756

 

13,273

 

 

 

516,364

 

567,841

 

 

 

 

 

 

 

 

 

$

602,641

 

$

651,170

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

2



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except for share and per share data)

 

 

 

April 30,
2003

 

January 31,
2004

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current maturities of long-term debt

 

$

4,534

 

$

5,425

 

Current maturities of capital lease obligations

 

1,287

 

781

 

Accounts payable

 

33,743

 

31,354

 

Accrued payroll and related expenses

 

7,383

 

6,328

 

Accrued interest

 

5,375

 

8,897

 

Accrued income taxes

 

4,526

 

3,556

 

Accrued closure and post-closure costs, current portion

 

2,962

 

465

 

Other accrued liabilities

 

15,662

 

21,215

 

Total current liabilities

 

75,472

 

78,021

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

302,389

 

328,378

 

Capital lease obligations, less current maturities

 

1,969

 

1,487

 

Accrued closure and post-closure costs, less current maturities

 

22,987

 

22,242

 

Deferred income taxes

 

5,473

 

10,326

 

Other long-term liabilities

 

11,375

 

10,743

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Series A redeemable, convertible preferred stock, 55,750 shares authorized, issued and outstanding as of April 30, 2003 and January 31, 2004, liquidation preference of $1,000 per share plus accrued but unpaid dividends

 

63,824

 

66,248

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Class A common stock -
Authorized - 100,000,000 shares, $0.01 par value issued and outstanding - 22,769,000 and 23,189,000 shares as of April 30, 2003 and January 31, 2004, respectively

 

228

 

232

 

Class B Common Stock -
Authorized - 1,000,000 shares, $0.01 par value 10 votes per share, issued and outstanding - 988,000 shares

 

10

 

10

 

Accumulated other comprehensive (loss) income

 

542

 

(27

)

Additional paid-in capital

 

270,068

 

271,829

 

Accumulated deficit

 

(151,696

)

(138,319

)

Total stockholders’ equity

 

119,152

 

133,725

 

 

 

 

 

 

 

 

 

$

602,641

 

$

651,170

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

3



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

95,801

 

$

104,558

 

$

326,402

 

$

330,420

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of operations

 

61,853

 

67,804

 

213,816

 

214,014

 

General and administration

 

13,797

 

14,733

 

42,972

 

44,087

 

Depreciation and amortization

 

11,627

 

14,614

 

35,915

 

44,356

 

 

 

87,277

 

97,151

 

292,703

 

302,457

 

Operating income

 

8,524

 

7,407

 

33,699

 

27,963

 

 

 

 

 

 

 

 

 

 

 

Other expense/(income), net:

 

 

 

 

 

 

 

 

 

Interest income

 

(73

)

(53

)

(234

)

(192

)

Interest expense

 

6,578

 

6,331

 

20,665

 

18,662

 

Income from equity method investments

 

(607

)

(1,171

)

(2,357

)

(2,069

)

Loss on debt extinguishment

 

3,649

 

 

3,649

 

 

Minority interest

 

 

 

(152

)

 

Other (income)/expense

 

655

 

(343

)

907

 

(723

)

Other expense, net

 

10,202

 

4,764

 

22,478

 

15,678

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes, discontinued operations and cumulative effect of change in accounting principle

 

(1,678

)

2,643

 

11,221

 

12,285

 

Provision (benefit) for income taxes

 

(856

)

1,153

 

4,772

 

1,631

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

(822

)

1,490

 

6,449

 

10,654

 

Reclassification adjustment from discontinued operations (net of income taxes of $27)

 

39

 

 

 

 

Cumulative effect of change in accounting principle (net of income tax (provision) benefit of $189 and ($1,856))

 

 

 

(63,916

)

2,723

 

Net income (loss)

 

(783

)

1,490

 

(57,467

)

13,377

 

Preferred stock dividend

 

778

 

818

 

2,306

 

2,423

 

Net income (loss) available to common stockholders

 

$

(1,561

)

$

672

 

$

(59,773

)

$

10,954

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

4



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before discontinued operations and cumulative effect of change in accounting principle

 

$

(0.07

)

$

0.03

 

$

0.17

 

$

0.34

 

Cumulative effect of change in accounting principle, net

 

 

 

(2.70

)

0.11

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

$

(0.07

)

$

0.03

 

$

(2.53

)

$

0.45

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

23,717

 

24,062

 

23,704

 

23,919

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before discontinued operations and cumulative effect of change in accounting principle

 

$

(0.07

)

$

0.03

 

$

0.17

 

$

0.34

 

Cumulative effect of change in accounting principle, net

 

 

 

(2.67

)

0.11

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

$

(0.07

)

$

0.03

 

$

(2.50

)

$

0.45

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

23,717

 

24,795

 

23,920

 

24,427

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

5



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

 

 

 

Nine Months Ended January 31,

 

 

 

2003

 

2004

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net income (loss)

 

$

(57,467

)

$

13,377

 

 

 

 

 

 

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities -

 

 

 

 

 

Depreciation and amortization

 

35,915

 

44,356

 

Depletion of landfill operating lease obligations

 

 

395

 

Cumulative effect of change in accounting principle, net

 

63,916

 

(2,723

)

Income from equity method investments

 

(2,357

)

(2,069

)

Loss on debt extinguishment

 

3,649

 

 

Gain on sale of assets

 

(57

)

(274

)

Minority interest

 

(152

)

 

Deferred income taxes

 

7,336

 

838

 

Changes in assets and liabilities, net of effects of acquisitions and divestitures -

 

 

 

 

 

Accounts receivable

 

(8,404

)

(2,069

)

Accounts payable

 

5,774

 

(1,068

)

Other assets and liabilities

 

(11,376

)

(4,325

)

 

 

 

 

 

 

 

 

94,244

 

33,061

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities

 

36,777

 

46,438

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Acquisitions, net of cash acquired

 

(2,489

)

(31,889

)

Payments under landfill operating lease contracts

 

 

(4,305

)

Additions to property, plant and equipment

 

(32,161

)

(37,442

)

Proceeds from sale of equipment

 

1,194

 

451

 

(Advances to) distributions from unconsolidated entities

 

500

 

(7,074

)

Proceeds from assets under contractual obligation

 

101

 

515

 

 

 

 

 

 

 

Net Cash Used In Investing Activities

 

(32,855

)

(79,744

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from long-term borrowings

 

375,471

 

124,828

 

Principal payments on long-term debt

 

(354,077

)

(100,933

)

Deferred financing costs

 

(11,119

)

(655

)

Proceeds from exercise of stock options

 

427

 

3,709

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

10,702

 

26,949

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

14,624

 

(6,357

)

Cash and cash equivalents, beginning of period

 

4,298

 

15,652

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

18,922

 

$

9,295

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

Cash paid during the period for -

 

 

 

 

 

 

 

Interest

 

$

20,140

 

$

13,827

 

Income taxes, net of refunds

 

$

414

 

$

764

 

 

 

 

 

 

 

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

 

 

 

 

 

Summary of entities acquired in purchase business combinations

 

 

 

 

 

Fair market value of assets acquired

 

$

2,705

 

$

43,862

 

Cash paid, net

 

(2,489

)

(31,889

)

 

 

 

 

 

 

Liabilities assumed and notes payable to seller

 

$

216

 

$

11,973

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

6



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except for per share data)

 

1.             ORGANIZATION

 

The consolidated balance sheets of Casella Waste Systems, Inc. and Subsidiaries (the “Company” or the “Parent”) as of April 30, 2003 and January 31, 2004, the consolidated statements of operations for the three and nine months ended January 31, 2003 and 2004 and the consolidated statements of cash flows for the nine months ended January 31, 2003 and 2004 are unaudited.  In the opinion of management, such financial statements include all adjustments (which include normal recurring and nonrecurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented.  The consolidated financial statements presented herein should be read in connection with the Company’s audited consolidated financial statements as of and for the twelve months ended April 30, 2003.  These were included as part of the Company’s Annual Report on Form 10-K for the year ended April 30, 2003 (the “Annual Report”).  The results of the three and nine months ended January 31, 2004 may not be indicative of the results that may be expected for the fiscal year ending April 30, 2004.

 

2.             RECLASSIFICATIONS

 

In the fourth quarter of fiscal 2003, the Company entered into negotiations with former employees for the transfer of our domestic brokerage operation and a commercial recycling business.  The commercial recycling business had been accounted for as a discontinued operation since fiscal 2001.  Due to the nature of the transaction, the Company could not retain historical discontinued accounting treatment for this operation.  Therefore the commercial recycling business’ operating results have been reclassified from discontinued to continuing operations for the three and nine months ended January 31, 2003.  Also in connection with the discontinued accounting treatment recorded in fiscal 2001, estimated future losses from this operation had been recorded and classified as losses from discontinued operations.  This amount has been reclassified and offset against actual losses from operations for the three and nine months ended January 31, 2003.

 

In the fourth quarter of fiscal 2003, the Company revised results for the first quarter of fiscal 2003 to include additional goodwill impairment in the amount of $1,091, net of taxes, relating to the Company’s waste-to-energy operations, Maine Energy.  The Company previously reported goodwill impairment upon adoption of SFAS No. 142 in the amount of $62,825, net of taxes.

 

3.             BUSINESS COMBINATIONS

 

During the nine months ended January 31, 2004, the Company acquired seven solid waste hauling operations and one construction and demolition processing facility, which also operates a landfill facility under an operations and management contract, in transactions accounted for as purchases.  These transactions were in exchange for consideration of $31,889 in cash to the sellers.  The Company completed five such acquisitions during the nine months ended January 31, 2003.  The operating results of these businesses are included in the consolidated statements of operations from the dates of acquisition.  The purchase prices have been allocated to the net assets acquired based on their fair values at the dates of acquisition with the residual amounts allocated to goodwill.

 

7



 

The following unaudited pro forma combined information shows the results of the Company’s operations as though each of the acquisitions had been completed as of May 1, 2002.

 

 

 

Nine Months Ended
January 31, 2003

 

Nine Months Ended
January 31, 2004

 

Revenues

 

$

341,202

 

$

334,830

 

Operating income

 

$

36,314

 

$

25,470

 

Net income (loss) available to common stockholders

 

$

(58,905

)

$

8,981

 

Diluted net income (loss) per common share

 

$

(2.46

)

$

0.37

 

Diluted weighted average common shares outstanding

 

23,920

 

24,427

 

 

The foregoing pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisitions taken place as of May 1, 2002 or the results of future operations of the Company.  Furthermore, such pro forma results do not give effect to all cost savings or incremental costs that may occur as a result of the integration and consolidation of the completed acquisitions.

 

In December 2003 the Company commenced operations at Ontario County Landfill, after executing a twenty-five year operation, management and lease agreement with Ontario County, New York.  The Landfill is permitted to accept 2,000 tons per day of municipal solid waste.  The Company made initial payments of $4,266 related to this transaction.  This transaction is accounted for as an operating lease.

 

4.             ADOPTION OF NEW ACCOUNTING STANDARDS

 

(a) SFAS No. 143, Accounting for Asset Retirement Obligations.

 

Effective May 1, 2003, the Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations.  SFAS No. 143 does not change the basic accounting principles that the Company and the waste industry have historically followed for accounting for these types of obligations.  In general, the Company has followed and will continue the practice of life cycle accounting which recognizes a liability on the balance sheet and related expense as airspace is consumed at the landfill to match operating costs with revenues.

 

The primary modification to the Company’s methodology required by SFAS No. 143 is to require that capping, closure and post-closure costs be discounted to present value.  The Company’s estimates of future capping, closure and post-closure costs historically have not taken into account discounts for the present value of costs to be paid in the future.  Under SFAS No. 143, the Company’s estimates of costs to discharge asset retirement obligations for landfills are developed in today’s dollars.  These costs are then inflated by 2.6% to reflect a normal escalation of prices up to the year they are expected to be paid.  These estimated costs are then discounted to their present value using a credit adjusted risk-free rate of 9.5%.

 

Under SFAS No. 143, the Company no longer accrues landfill retirement obligations through a charge to cost of operations, but rather by an increase to landfill assets.  Under SFAS No. 143, the amortizable landfill assets include not only the landfill development costs incurred but also the recorded capping, closure and post-closure liabilities as well as the cost estimates for future capping, closure and post-closure costs. The landfill asset is amortized over the total capacity of the landfill, as airspace is consumed during the life of the landfill with one exception. The exception is for capping for which both the recognition of the liability and the amortization of these costs are based instead on the airspace consumed for the specific capping event.

 

8



 

Upon adoption, SFAS No. 143 required a cumulative change in accounting for landfill obligations retroactive to the date of the inception of the landfill.  Inception of the asset retirement obligation is the date operations commenced or the date the asset was acquired.  To do this, SFAS No. 143 required the creation of the related landfill asset, net of accumulated amortization and an adjustment to the capping, closure and post-closure liability for cumulative accretion.

 

At May 1, 2003, the Company recorded a cumulative effect of change in accounting principle of $2,723 (net of taxes of $1,856).  In addition we recorded a decrease in our capping, closure and post-closure obligations of $7,855, and a decrease in our net landfill assets of $3,228.  The following is a summary of the balance sheet changes for landfill assets and capping, closure and post-closure liabilities at May 1, 2003 (in thousands):

 

 

 

Balance at
April
30, 2003

 

Change

 

Balance at
May 1, 2003

 

Landfill assets

 

$

148,029

 

$

6,166

 

$

154,195

 

Accumulated amortization

 

(63,207

)

(9,394

)

(72,601

)

Net landfill assets

 

$

84,822

 

$

(3,228

)

$

81,594

 

 

 

 

 

 

 

 

 

Capping, closure, and post-closure liability

 

$

25,949

 

$

(7,855

)

$

18,094

 

 

The following table shows the activity and total balances related to accruals for capping, closure and post-closure from April 30, 2003 to January 31, 2004 (in thousands):

 

Balance at April 30, 2003

 

$

25,949

 

Obligations incurred

 

3,432

 

Accretion expense

 

1,477

 

Payments

 

(3,099

)

Acquisitions and other adjustments

 

2,803

 

Cumulative effect of change in accounting principle

 

(7,855

)

Balance at January 31, 2004

 

$

22,707

 

 

(b) SFAS No. 145, Rescission of FASB No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technicial Corrections

 

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No., 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.  SFAS No. 145, among other things, restricts the classification of gains and losses from extinguishment of debt as extraordinary such that most debt extinguishment gains and losses will no longer be classified as extraordinary.  SFAS No. 145 is effective for fiscal years beginning after May 15, 2002.  Upon adoption, gains and losses on future debt extinguishment, if any, will be recorded in pre-tax income.  Prior to the adoption of SFAS No. 145, in the third quarter of fiscal year 2003, the Company recorded an extraordinary loss of $2,170 (net of income tax benefit of $1,479) in connection with the write-off of deferred financing costs related to the old term loan and the old revolver.  This item was reclassified to continuing operations in the financial statements as loss on debt extinguishment in the amount of $3,649.

 

(c) SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities.

 

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses costs such as restructuring, involuntary termination of employees and

 

9



 

consolidating facilities but excludes from its scope exit and disposal activities that are in connection with a business combination and those activities to which SFAS No. 143 and No. 144 are applicable. SFAS No. 146 is effective for exit and disposal activities that are initiated after December 31, 2002.  The Company has not engaged in or initiated any exit or disposal activities since December 31, 2002.

 

(d) FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others

 

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (‘‘FIN 45’’). FIN 45 clarifies the requirement of FASB No. 5, Accounting for Contingencies, relating to a guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. It requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of FIN 45 are effective on a prospective basis to guarantees issued or modified after December 31, 2002. The Company has no guarantees as of January 31, 2004, but will record the fair value of future material guarantees, if any.

 

(e) SFAS No. 148, Accounting for Stock-Based Compensation— Transition and Disclosure—an amendment of FAS 123

 

In December, 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - - Transition and Disclosure - an amendment of FAS 123.  This statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used in reporting results.  SFAS No. 148 is effective for fiscal years ending after December 15, 2002.  The Company has included the required disclosures in these financial statements (Note 10).

 

(f) FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of APB No. 51

 

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of APB No. 51 (“FIN 46”).  FIN 46 requires that unconsolidated variable interest entities be consolidated by their primary beneficiary who absorbs a majority of the entities’ expected losses or residual benefits.  FIN 46 consolidation requirements apply immediately to all variable interest entities created after January 31, 2003 and on June 15, 2003 for those entities already established.  In October 2003, the FASB issued FASB Staff Position (FSP) 46-6, Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities (VIE) which delayed the effective date of FIN 46 to December 15, 2003 for certain VIEs.  The adoption of FIN 46 had no impact on the Company’s consolidated financial statements.

 

(g) SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liability and Equity.

 

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liability and Equity. The statement changes the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity.  The new statement requires that those instruments be classified as liabilities in statements of financial position. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  The Company adopted SFAS No. 150 effective August 1, 2003.  In November 2003, the FASB issued an FSP delaying the effective date for certain instruments and entities.  SFAS No. 150 had no impact on the Company’s consolidated financial statements.

 

10



 

5.             LEGAL PROCEEDINGS

 

In the normal course of its business and as a result of the extensive governmental regulation of the waste industry, the Company may periodically become subject to various judicial and administrative proceedings involving Federal, state or local agencies.  In these proceedings, an agency may seek to impose fines on the Company or to revoke, or to deny renewal of, an operating permit held by the Company.  In addition, the Company may become party to various claims and suits for alleged damages to persons and property, alleged violation of certain laws and for alleged liabilities arising out of matters occurring during the normal operation of the waste management business.

 

In July 1996, Clinton County, New York entered into a privatization agreement with the Company for the Company to run the County’s solid waste management system (the “System”) as a private enterprise, including operations at both the existing unlined landfill, as well as newly constructed lined landfill areas.  During the period of November 21, 1996 to October 9, 1997, the Company performed certain closure activities and installed a cut-off wall at the unlined portion of the landfill.  On or about April 1999, the New York State Department of Labor (the “DOL”) alleged that the Company should have paid prevailing wages in connection with the labor associated with such activities related to the unlined landfill.  The DOL is attempting to apply the prevailing wage provisions of Labor Law § 220 to the Company’s construction activities at the unlined portion of the Clinton County landfill, to include (1) cap construction at the unlined landfill; (2) construction of the “Casella Barrier Wall,” which the New York State Department of Environment Conservation (the “DEC”) required as a precondition to permitting the Phase III expansion of the Lined Landfill; and (3) construction of the “County Barrier Wall,” which the DEC required as a corrective measure to control the historical contamination.  The Company has disputed the allegations and a hearing on only the liability issue was held on September 16, 2002.  Since the hearing did not address damages, relevant payroll documents have not been fully reviewed by either party.  Accordingly, neither side is in a position to estimate wage amounts that might be payable in the event the hearing officer finds that the Company is liable for the payment of such prevailing wages.  In addition, any such estimate will differ depending on whether any liability ruling applies to some or all of the activities described above; and whether it would apply only to activities of the Company or to all subcontractors as well.  In November 2002, both sides submitted proposed findings of fact and conclusions of law.  The hearing officer is expected to make a recommendation to the Department of Labor commissioner during the first quarter of calendar 2004 on the liability issue.  The Company continues to explore settlement possibilities with the State.  Although a loss as a result of these claims is reasonably possible, the Company cannot estimate a range of reasonably possible losses at this time.

 

The Company is a defendant in certain other lawsuits alleging various claims, none of which, either individually or in the aggregate, the Company believes are material to its financial condition, results of operations or cash flows.

 

6.             ENVIRONMENTAL LIABILITIES

 

The Company is subject to liability for any environmental damage, including personal injury and property damage, that its solid waste, recycling and power generation facilities may cause to neighboring property owners, particularly as a result of the contamination of drinking water sources or soil, possibly including damage resulting from conditions existing before the Company acquired the facilities. The Company may also be subject to liability for similar claims arising from off-site environmental contamination caused by pollutants or hazardous substances if the Company or its predecessors arrange to transport, treat or dispose of those materials. Any substantial liability incurred by the Company arising from environmental damage could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is not presently aware of any situations that it expects would have a material adverse impact.

 

11



 

7.             EARNINGS PER SHARE

 

The following table sets forth the numerator and denominator used in the computation of earnings per share from continuing operations before discontinued operations and cumulative effect of change in accounting principle on a basic and diluted basis for the three and nine months ended January 31, 2003 and 2004.

 

 

 

Three Months
Ended January 31,

 

Nine Months
Ended January 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Numerator:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before discontinued operations and cumulative effect of change in accounting principle

 

$

(822

)

$

1,490

 

$

6,449

 

$

10,654

 

Less: Preferred stock dividend

 

(778

)

(818

)

(2,306

)

(2,423

)

Income (loss) from continuing operations before discontinued operations and cumulative effect of change in accounting principle available to common stockholders

 

$

(1,600

)

$

672

 

$

4,143

 

$

8,231

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Number of shares outstanding, end of period:

 

 

 

 

 

 

 

 

 

Class A common stock

 

22,739

 

23,189

 

22,739

 

23,189

 

Class B common stock

 

988

 

988

 

988

 

988

 

Effect of weighted average shares outstanding during period

 

(10

)

(115

)

(23

)

(258

)

Weighted average number of common shares used in basic EPS

 

23,717

 

24,062

 

23,704

 

23,919

 

Impact of potentially dilutive securities:

 

 

 

 

 

 

 

 

 

Dilutive effect of options, warrants, and contingent stock

 

 

733

 

216

 

508

 

Weighted average number of common shares used in diluted EPS

 

23,717

 

24,795

 

23,920

 

24,427

 

 

For the three and nine months ended January 31, 2003, 9,224 and 8,454 common stock equivalents related to options, warrants, and redeemable convertible preferred stock, respectively, were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive.

 

For the three and nine months ended January 31, 2004, 6,195 and 6,703 common stock equivalents related to options, warrants, and redeemable convertible preferred stock, respectively, were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive.

 

8.             COMPREHENSIVE INCOME (LOSS)

 

Comprehensive income (loss) represents the change in the Company’s equity from transactions and other events and circumstances from non-owner sources and includes all changes in equity except those resulting from investments by owners and distributions to owners.  Comprehensive income (loss) for the three and nine months ended January 31, 2003 and 2004 is as follows:

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Net income (loss)

 

$

(783

)

$

1,490

 

$

(57,467

)

$

13,377

 

Other comprehensive (loss) income

 

2,673

 

(1,034

)

4,396

 

(569

)

Comprehensive income (loss)

 

$

1,890

 

$

456

 

$

(53,071

)

$

12,808

 

 

12



 

The components of other comprehensive income (loss) for the three and nine months ended January 31, 2003 and 2004 are shown as follows:

 

 

 

Three Months Ended

 

 

 

January 31, 2003

 

January 31, 2004

 

 

 

Gross

 

Tax
effect

 

Net of
Tax

 

Gross

 

Tax
effect

 

Net of
Tax

 

Change in fair value of interest rate swaps and commodity hedges during period

 

$

4,494

 

$

1,821

 

$

2,673

 

$

(1,738

)

$

(704

)

$

(1,034

)

 

 

$

4,494

 

$

1,821

 

$

2,673

 

$

(1,738

)

$

(704

)

$

(1,034

)

 

 

 

Nine Months Ended

 

 

 

January 31, 2003

 

January 31, 2004

 

 

 

Gross

 

Tax
effect

 

Net of
Tax

 

Gross

 

Tax
effect

 

Net of
Tax

 

Changes in fair value of marketable securities during the period

 

$

(40

)

$

 

$

(40

)

$

 

$

 

$

 

Change in fair value of interest rate swaps and commodity hedges during period

 

7,459

 

3,023

 

4,436

 

(956

)

(387

)

(569

)

 

 

$

7,419

 

$

3,023

 

$

4,396

 

$

(956

)

$

(387

)

$

(569

)

 

9.             DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

 

The Company’s strategy to hedge against fluctuations in the commodity prices of recycled paper is to enter into hedges to mitigate the variability in cash flows generated from the sales of recycled paper at floating prices, resulting in a fixed price being received from these sales.  The Company is party to twenty one commodity hedge contracts as of January 31, 2004.  These contracts expire between August 2004 and August 2006.  The Company has evaluated these hedges and believes that these instruments qualify for hedge accounting pursuant to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended.  As of January 31, 2004 the fair value of these hedges was an obligation of $1,560, with the net amount (net of taxes of $632) recorded as an unrealized loss in accumulated other comprehensive (loss) income.

 

The Company is party to two interest swap agreements as of January 31, 2004 for an aggregate notional amount of $53,000 expiring in February, 2006.  The Company has evaluated these swaps and believes these instruments qualify for hedge accounting pursuant to SFAS No. 133. As of January 31, 2004, the fair value of these swaps was an obligation of $266, with the net amount (net of taxes of $108) recorded as an unrealized loss in other comprehensive (loss) income. The estimated net amount of the existing losses as of January 31, 2004 included in accumulated other comprehensive (loss) income expected to be reclassified into earnings as payments are either made or received under the terms of the interest rate swaps within the next 12 months is approximately $129. The actual amounts reclassified into earnings are dependent on future movements in interest rates.

 

10.          STOCK BASED COMPENSATION PLANS

 

The Company has elected to account for its stock-based compensation plans under APB Opinion No. 25, Accounting for Stock Issued to Employees, for which no compensation expense is recorded in the statements of operations for the estimated fair value of stock options issued with an exercise price equal to the fair value of the underlying common stock on the grant date.

 

SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FAS 123, requires that entities

 

13



 

electing to remain with the accounting in APB Opinion No. 25 disclose pro forma net income and earnings per share as if the fair value based method of accounting defined in SFAS No. 123 had been applied.

 

If the Company applied the recognition provisions of SFAS 123 using the Black-Scholes option pricing model, the resulting pro forma net income (loss) available to common stockholders, and pro forma net income (loss) available to common stockholders per share would be as follows:

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Net income (loss) available to common stockholders, as reported

 

$

(1,561

)

$

672

 

$

(59,773

)

$

10,954

 

Deduct: Total stock-based compensation expense determined under fair value based method, net

 

298

 

287

 

853

 

861

 

Net income (loss) available to common stockholders, pro forma

 

$

(1,859

)

$

385

 

$

(60,626

)

$

10,093

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

 

 

As reported

 

$

(0.07

)

$

0.03

 

$

(2.53

)

$

0.45

 

Pro forma

 

$

(0.08

)

$

0.02

 

$

(2.56

)

$

0.42

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

 

 

As reported

 

$

(0.07

)

$

0.03

 

$

(2.50

)

$

0.45

 

Pro forma

 

$

(0.08

)

$

0.02

 

$

(2.53

)

$

0.41

 

 

In accordance with SFAS 123, the fair value of each option grant has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

 

 

Nine Months
Ended
January 31, 2003

 

Nine Months
Ended
January 31, 2004

 

 

 

 

 

 

 

Risk free interest rate

 

3.00% - 4.50%

 

2.34% - 3.39%

 

Expected dividend yield

 

N/A

 

N/A

 

Expected life

 

5 Years

 

5 Years

 

Expected volatility

 

65.00%

 

65.00%

 

 

The Company has recorded no compensation expense for stock options granted to employees during the three and nine months ended January 31, 2003 or 2004.

 

11.          SEGMENT REPORTING

 

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments in financial statements.  In general, SFAS No. 131 requires that business entities report selected information about operating segments in a manner consistent with that used for internal management reporting.

 

The Company classifies its operations into Eastern, Central, Western and FCR Recycling.  The Company’s revenues in the Eastern, Central and Western segments are derived mainly from one industry segment, which includes the collection, transfer, recycling and disposal of non-hazardous solid waste.  The Eastern Region also includes Maine Energy, which generates electricity from non-hazardous solid waste. The Company’s revenues in the FCR Recycling segment are derived from integrated waste handling services, including processing and recycling of wood, paper, metals, aluminum, plastics and glass and brokerage of recycled

 

14



 

materials.  In September 2002, the Company transferred the export brokerage operation and in June 2003 the Company transferred its domestic brokerage operation and a commercial recycling business to two groups of employees who had managed those businesses.  Included in Other are ancillary operations, mainly major customer accounts, earnings from equity method investees and in the nine months ended January 31, 2003, residue recycling operations.

 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Three Months Ended January 31, 2003 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

36,509

 

$

21,015

 

$

15,931

 

$

18,909

 

$

3,437

 

Inter-segment Revenues

 

8,997

 

10,179

 

2,782

 

4,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

(1,836

)

3,961

 

182

 

(56

)

(3,073

)

Total Assets

 

$

219,535

 

$

107,763

 

$

108,747

 

$

69,630

 

$

80,838

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Three Months Ended January 31, 2003 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

95,801

 

 

 

 

 

 

 

Inter-segment Revenues

 

(26,764

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

 

(822

)

 

 

 

 

 

 

Total Assets

 

$

 

$

586,513

 

 

 

 

 

 

 

 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Three Months Ended January 31, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

39,990

 

$

23,524

 

$

17,947

 

$

18,949

 

$

4,148

 

Inter-segment Revenues

 

11,437

 

11,164

 

3,980

 

176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

(2,560

)

3,567

 

(148

)

1,525

 

(894

)

Total Assets

 

$

270,527

 

$

114,938

 

$

118,214

 

$

67,920

 

$

79,571

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Three Months Ended January 31, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

104,558

 

 

 

 

 

 

 

Inter-segment Revenues

 

(26,757

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

 

1,490

 

 

 

 

 

 

 

Total Assets

 

$

 

$

651,170

 

 

 

 

 

 

 

 

15



 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Nine Months Ended January 31, 2003 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

118,321

 

$

69,992

 

$

51,465

 

$

75,933

 

$

10,691

 

Inter-segment Revenues

 

30,253

 

33,754

 

10,506

 

7,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

(2,377

)

15,516

 

2,714

 

(336

)

(9,068

)

Total Assets

 

$

219,535

 

$

107,763

 

$

108,747

 

$

69,630

 

$

80,838

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Nine Months Ended January 31, 2003 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

326,402

 

 

 

 

 

 

 

Inter-segment Revenues

 

(81,814

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

 

6,449

 

 

 

 

 

 

 

Total Assets

 

$

 

$

586,513

 

 

 

 

 

 

 

 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Nine Months Ended January 31, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

127,502

 

$

76,372

 

$

57,374

 

$

56,420

 

$

12,752

 

Inter-segment Revenues

 

38,002

 

36,864

 

11,583

 

3,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

(5,082

)

14,512

 

1,284

 

2,573

 

(2,633

)

Total Assets

 

$

270,527

 

$

114,938

 

$

118,214

 

$

67,920

 

$

79,571

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Nine Months Ended January 31, 2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

330,420

 

 

 

 

 

 

 

Inter-segment Revenues

 

(89,938

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before discontinued operations and cumulative effect of change in accounting principle

 

 

10,654

 

 

 

 

 

 

 

Total Assets

 

$

 

$

651,170

 

 

 

 

 

 

 

 


(1) Segment data for the three and nine months ended January 31, 2003 have been restated to conform to the classification of data for the current fiscal year.

 

Amounts of the Company’s total revenue attributable to services provided are as follows:

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Collection

 

$

46,945

 

$

51,158

 

$

149,255

 

$

161,997

 

Landfill/disposal facilities

 

13,993

 

17,071

 

46,978

 

52,447

 

Transfer

 

10,369

 

11,088

 

36,835

 

39,748

 

Recycling

 

21,001

 

25,241

 

61,180

 

72,934

 

Brokerage

 

3,493

 

 

32,154

 

3,294

 

Total revenues

 

$

95,801

 

$

104,558

 

$

326,402

 

$

330,420

 

 

16



 

12.          NET ASSETS UNDER CONTRACTUAL OBLIGATION

 

Effective September 30, 2002, the Company transferred its export brokerage operations to former employees, who had been responsible for managing that business.  Consideration for the transaction was in the form of two notes receivable amounting up to $5,460.  These notes are payable within five years of the anniversary date of the transaction to the extent of free cash flow generated from the operations.

 

Effective June 30, 2003, the Company entered into a similar transaction transferring its domestic brokerage operations as well as a commercial recycling business to former employees who had been responsible for managing those businesses.  Consideration for the transaction was in the form of two notes receivable amounting up to $6,925.  These notes are payable within twelve years of the anniversary date of the transaction to the extent of free cash flow generated from the operations.

 

The Company has not accounted for either of these transactions as a sale based on an assessment that the risks and other incidents of ownership have not sufficiently transferred to the buyer. The net assets of the operations are disclosed in the balance sheet as “net assets under contractual obligation”, and are being reduced as payments are made.

 

13.          CONDENSED CONSOLIDATING FINANCIAL INFORMATION

 

The Company’s senior subordinated notes due 2013 are guaranteed jointly and severally, fully and unconditionally by the Company’s significant wholly-owned subsidiaries. The Parent is the issuer and non-guarantor of the senior subordinated notes. The information which follows presents the condensed consolidating financial position as of April 30, 2003 and January 31, 2004; the condensed consolidating results of operations for the three and nine months ended January 31, 2003 and 2004; and the condensed consolidating statements of cash flows for the nine months ended January 31, 2003 and 2004 of (a) the parent company only (“the Parent”), (b) the combined guarantors (“the Guarantors”), each of which is 100% wholly-owned by the Parent, (c) the combined non-guarantors (“the Non-Guarantors”), (d) eliminating entries and (e) the Company on a consolidated basis.

 

17



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF APRIL 30, 2003
(Unaudited)
(In thousands)

 

 

 

Parent

 

Guarantors

 

Non-Guarantors

 

Elimination

 

Consolidated

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,188

 

$

2,686

 

$

778

 

$

 

$

15,652

 

Accounts receivable – trade, net of allowance for doubtful accounts

 

485

 

44,155

 

1,009

 

 

45,649

 

Prepaid expenses

 

613

 

5,138

 

155

 

 

5,906

 

Inventory

 

 

1,740

 

 

 

1,740

 

Deferred taxes

 

3,504

 

 

771

 

 

4,275

 

Other current assets

 

1,237

 

1,103

 

10,715

 

 

13,055

 

Total current assets

 

18,027

 

54,822

 

13,428

 

 

86,277

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and amortization

 

2,996

 

294,109

 

5,223

 

 

302,328

 

Intangible assets, net

 

 

162,696

 

 

 

162,696

 

Investment in subsidiaries

 

(43,783

)

 

 

43,783

 

 

Investments in unconsolidated entities

 

7,778

 

31,341

 

 

(4,379

)

34,740

 

Assets under contractual obligation

 

 

3,844

 

 

 

3,844

 

Other non-current assets

 

11,046

 

1,238

 

472

 

 

12,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,963

)

493,228

 

5,695

 

39,404

 

516,364

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany receivable

 

507,820

 

(509,887

)

(2,312

)

4,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

503,884

 

$

38,163

 

$

16,811

 

$

43,783

 

$

602,641

 

 

 

 

Parent

 

Guarantors

 

Non - Guarantors

 

Elimination

 

Consolidated

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long term debt

 

1,500

 

1,777

 

1,257

 

 

4,534

 

Accounts payable

 

1,350

 

32,285

 

108

 

 

33,743

 

Accrued payroll and related expenses

 

1,368

 

6,015

 

 

 

7,383

 

Accrued interest

 

5,373

 

2

 

 

 

5,375

 

Accrued closure and post-closure costs, current portion

 

 

2,286

 

676

 

 

2,962

 

Other current liabilities

 

7,203

 

5,617

 

8,655

 

 

21,475

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

16,794

 

47,982

 

10,696

 

 

75,472

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

298,500

 

2,318

 

1,571

 

 

302,389

 

Capital lease obligations, less current maturities

 

141

 

1,828

 

 

 

1,969

 

Accrued closure and post closure costs, less current portion

 

 

21,977

 

1,010

 

 

22,987

 

Deferred income taxes

 

5,473

 

 

 

 

5,473

 

Other long-term liabilities

 

 

10,047

 

1,328

 

 

11,375

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A redeemable, convertible preferred stock, 55,750 shares authorized, issued and outstanding, liquidation preference of $1,000 per share plus accrued but unpaid dividends

 

63,824

 

 

 

 

63,824

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

Class A common stock -  Authorized - 100,000,000 shares, $0.01 par value issued and outstanding - 22,769,000 shares

 

228

 

101

 

100

 

(201

)

228

 

Class B common stock - Authorized - 1,000,000 shares, $0.01 par value 10 votes per share, issued and outstanding - 988,000 shares

 

10

 

 

 

 

10

 

Accumulated other comprehensive income

 

542

 

1,190

 

 

(1,190

)

542

 

Additional paid-in capital

 

270,068

 

47,885

 

2,825

 

(50,710

)

270,068

 

Accumulated deficit

 

(151,696

)

(95,165

)

(719

)

95,884

 

(151,696

)

Total stockholders’ equity

 

119,152

 

(45,989

)

2,206

 

43,783

 

119,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

503,884

 

$

38,163

 

$

16,811

 

$

43,783

 

$

602,641

 

 

18



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 31, 2004
(Unaudited)
(In thousands)

 

 

 

Parent

 

Guarantors

 

Non - Guarantors

 

Elimination

 

Consolidated

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,089

 

$

6,414

 

$

792

 

$

 

$

9,295

 

Deferred income taxes

 

5,461

 

 

974

 

 

6,435

 

Other current assets

 

4,556

 

51,068

 

13,038

 

(1,063

)

67,599

 

Total current assets

 

12,106

 

57,482

 

14,804

 

(1,063

)

83,329

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and amortization

 

2,601

 

332,499

 

1,756

 

 

336,856

 

Goodwill

 

 

164,328

 

 

 

164,328

 

Investment in unconsolidated entities

 

13,105

 

34,712

 

249

 

(4,379

)

43,687

 

Investment in subsidiaries

 

(26,059

)

 

 

26,059

 

 

Assets under contractual obligation

 

 

5,737

 

 

 

5,737

 

Other non-current assets

 

10,562

 

6,352

 

319

 

 

17,233

 

 

 

209

 

543,628

 

2,324

 

21,680

 

567,841

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany receivable

 

542,837

 

(546,361

)

(855

)

4,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

555,152

 

$

54,749

 

$

16,273

 

$

24,996

 

$

651,170

 

 

 

 

Parent

 

Guarantors

 

Non - Guarantors

 

Elimination

 

Consolidated

 

LIABILITIES AND STOCKHOLDERS ‘ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES: