UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 1, 2002 ------------ CASELLA WASTE SYSTEMS, INC. --------------------------- (Exact name of registrant as specified in its chapter) Delaware 000-23211 03-0338873 - ------------------------------- ------------------------ ------------------- (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) 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 -------------- -------------------------------------------------------- (Former name or former address, if changed since last report)
Item 5. OTHER EVENTS. On July 1, 2002, Casella Waste Systems, Inc. (the "Company") announced its intention to sell $175.0 million of senior subordinated notes due 2012. Concurrently with the offering, the Company expects to obtain a new credit facility of $300.0 million. A copy of the Company's press release announcing the foregoing is attached as Exhibit 99.1. The Company also announced its financial results for the fourth quarter and its 2002 fiscal year, and provided guidance on its expected performance for its 2003 fiscal year. A copy of the Company's press release announcing the foregoing is attached as Exhibit 99.2. Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. The following exhibits are being filed herewith. EXHIBIT NUMBER DESCRIPTION 99.1 Casella Waste Systems, Inc. Press Release dated July 1, 2002, announcing its intention to sell senior subordinated notes and to enter into a new credit facility. 99.2 Casella Waste Systems, Inc. Press Release dated July 1, 2002, announcing its financial results and providing guidance on fiscal year 2003.
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CASELLA WASTE SYSTEMS, INC. BY: /s/ JOHN W. CASELLA ------------------------------ Name: John W. Casella Title: Chief Executive Officer Date: July 3, 2002
EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 99.1 Casella Waste Systems, Inc. Press Release dated July 1, 2002, announcing its intention to sell senior subordinated notes and to enter into a new credit facility. 99.2 Casella Waste Systems, Inc. Press Release dated July 1, 2002, announcing its financial results and providing guidance on fiscal year 2003.
Exhibit 99.1 FOR IMMEDIATE RELEASE CASELLA WASTE SYSTEMS, INC. ANNOUNCES NOTE OFFERING RUTLAND, VERMONT (July 1, 2002)--Casella Waste Systems, Inc. (Nasdaq: CWST), announced today its intent to sell $175,000,000 of senior subordinated notes. Concurrent with the offering, Casella Waste Systems expects to obtain a new senior secured credit facility of $300 million. Net proceeds from the offering, together with initial borrowings from the new senior secured credit facility, would be used to repay the borrowings outstanding under Casella Waste Systems' senior secured credit facility. The notes are being sold in the United States to qualified institutional buyers in reliance on Rule 144A, and outside the United States in compliance with Regulation S, under the Securities Act of 1933, as amended. These securities will not be registered under the Securities Act of 1933, as amended, or any applicable state laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This announcement shall not constitute an offer to sell or a solicitation of an offer to buy the securities. Casella Waste Systems, headquartered in Rutland, Vermont, provides collection, transfer, disposal and recycling services primarily in the eastern United States. This news release contains forward looking statements about Casella Waste Systems, Inc. within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Casella Waste Systems' intent to sell senior subordinated notes; reduce borrowings under the revolving credit facility; and diversify sources of credit. These forward looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those predicted in any such forward-looking statement include Casella Waste Systems'
ability to sell the notes; ability to obtain a new revolving credit facility and general economic conditions. These and other risks are detailed from time to time in Casella Waste Systems' periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its report on Form 10-K for its fiscal year ended April 30, 2001. CONTACT: RICHARD NORRIS, CHIEF FINANCIAL OFFICER; OR JOSEPH FUSCO, VICE PRESIDENT; (802) 775-0325. - -30- 07/01/02
Exhibit 99.2 FOR IMMEDIATE RELEASE CASELLA WASTE SYSTEMS, INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2002 RESULTS; PROVIDES FISCAL YEAR 2003 GUIDANCE RUTLAND, VERMONT (July 1, 2002)--Casella Waste Systems, Inc. (Nasdaq: CWST), a regional, non-hazardous solid waste services company, today reported financial results for the fourth quarter and its 2002 fiscal year, and gave guidance on its expected performance for its 2003 fiscal year. FOURTH QUARTER AND FISCAL 2002 RESULTS For the quarter ended April 30, 2002, the company reported pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of $21.1 million; pro forma revenues for the quarter were $97.0 million. Pro forma net income for the quarter was $1.6 million. The company's fully diluted pro forma earnings per share (EPS) was $0.03. For the fiscal year ended April 30, 2002, the company reported pro forma EBITDA of $92.0 million; pro forma revenues for the twelve-month period were $419.9 million. Pro forma net income was $10.1 million; fully diluted pro forma EPS was $0.29. The company also announced that it had generated $33.0 million of operating free cash flow for fiscal year 2002; as of April 30, 2002, the company had cash on hand of $4.3 million, and had an outstanding total debt level of $288.8 million. "Quarter after quarter, we continue to execute on our top priorities: strengthening and leveraging our core solid waste assets; striving for the highest levels of excellence in our operations in areas like customer service, safety and training; and positioning the company to capitalize on its emerging opportunities for responsible growth," John W. Casella, chairman and chief executive officer, said. Results for the quarter ended April 30, 2002 are reported pro forma to reflect the elimination of (i) revenue related to recyclable commodity hedge contracts; (ii) a loss on the
disposal of discontinued operations; and (iii) the elimination of a net loss on the sale and impairment of certain assets. Results for the twelve months ended April 30, 2002 are reported pro forma to reflect, in addition to the foregoing, (i) the elimination of gains and losses on the sale of certain assets; (ii) an equity loss; (iii) losses arising from the bankruptcy of Enron; and (iv) the elimination of a change in accounting principle. More detailed financial results are contained in the tables accompanying this release, including the company's results on a GAAP basis. FISCAL 2003 OUTLOOK The company also announced its guidance for its fiscal year 2003, which began May 1, 2002. For the fiscal year 2003, the company believes that its results will be in the following ranges: o Revenues between $415 million and $435 million; o EBITDA between $87 million and $91 million; o Operating free cash flow between $19 million and $24 million; and o Capital expenditures between $38 million and $40 million. "When comparing the projected range of fiscal 2003 EBITDA with fiscal 2002 EBITDA performance of $92 million, it's important to take a number of factors into consideration," Casella said, "including the following: o "Our strategic divestiture of non-core assets reduced EBITDA by $1.7 million; o "Our insurance premiums have risen by approximately $6 million for fiscal 2003, reflecting the significant cost of insurance coverage post the September 11 attacks; o "Our Woburn landfill is expected to close in the first quarter of fiscal 2003, which we've only partially offset with an agreement to acquire 700,000 tons of capacity in eastern Massachusetts.
"It's also important to note the assumptions we have not built into our EBITDA guidance," Casella said. "First, we've budgeted for flat volume growth over the next year," Casella said. "To the extent the economy improves, this represents upside to our numbers. Also, assuming we are successful in completing the note offering and bank refinancing that we are also announcing today, we expect to pursue a selective and opportunistic acquisition program marked by a responsible approach to growth. Our EBITDA guidance assumes no growth through acquisitions other than a minimal amount of small tuck-ins. "In addition, we are not incorporating sustained upside growth in commodity prices this year," Casella said. "If commodity prices stay at current levels for the duration of the fiscal year, they would be above our current budget projection." COMPANY ACQUIRES DISPOSAL CAPACITY IN E. MASSACHUSETTS The company also announced today that it had completed a transaction giving the company slightly more than 700,000 tons of construction and demolition disposal capacity over the next three years in its eastern Massachusetts market. The agreement with New England Waste Management Corp. allows the company to partially replace the annual tonnage capacity the company had at the Woburn, Mass. landfill. IMPACT OF ACCOUNTING RULE CHANGES UNDER SFAS NO. 142 The company also said it will be adopting accounting changes required under SFAS No. 142 eliminating the amortization of goodwill and requiring an annual assessment of goodwill impairment. In accordance with this rule, the company's remaining goodwill will not be amortized going forward and, upon adoption, it is expected that certain goodwill arising from the acquisition of KTI, will be impaired in the estimated amount of $63.0 million, and the amount of the impairment will be charged to earnings as a cumulative effect of a change in accounting principles.
Casella Waste Systems, headquartered in Rutland, Vermont, provides collection, transfer, disposal and recycling services primarily in the northeastern United States. For further information, contact Richard Norris, chief financial officer; or Joseph Fusco, vice president; at (802) 775-0325, or visit the company's website at http://www.casella.com. The company will host a conference call to discuss these results on Tuesday, July 2, 2002 at 10:00 a.m. EST. Individuals interested in participating in the call should dial 719-457-2641 at least 10 minutes before start time. The call will also be webcast; to listen, participants should visit the investor section of Casella Waste Systems' website at http://www.casella.com/value.htm and follow the appropriate link to the webcast. A replay of the call will be available by calling 719-457-0820 (conference code 279488) or by visiting the company's website, before 11:59 p.m. EST, Tuesday, July 9, 2002. SAFE HARBOR STATEMENT Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by the context of the statements, including words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are forward-looking statements. Such forward-looking statements, and all phases of our operations, involve a number of risks and uncertainties, any one or more of which could cause actual results to differ materially from those described in our forward-looking statements. Such risks and uncertainties include or relate to, among other things, our ability to complete the refinancing of our senior bank credit facilities and issue senior subordinated notes; our ability to make acquisitions and otherwise develop
additional disposal capacity; general economic conditions; and fluctuations in the commodity pricing of our recyclables. Other factors which could materially affect such forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission, including risk factors detailed in Management's Discussion and Analysis in our Form 10-K for the fiscal year ended April 30, 2001 and in our most recently-filed Form 10-Q. (tables follow) - -30- 07/01/02
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except amounts per share) Three Months Ended --------------------------------------------------- April 30, April 30, April 30, 2001 2002 2002(1) (Proforma) ---------------- --------------- ------------------ Revenues $99,583 $97,506 $97,001 ---------------- --------------- ------------------ Operating Expenses: Cost of Operations 67,865 64,156 64,156 General and Administration 17,512 11,916 11,916 Depreciation and Amortization 12,567 12,306 12,306 Impairment Charge 59,619 0 0 Restructuring and Other Non-recurring Charges 9,964 (438) 0 ---------------- --------------- ------------------ 167,527 87,940 88,378 ---------------- --------------- ------------------ Operating Income (67,944) 9,566 8,623 ---------------- --------------- ------------------ Other (Income) Expense: Interest Expense, Net 8,746 6,792 6,792 (Income) Loss from Equity Method Investments, net 9,731 (549) (549) Gain on Sale of Bangor Hydro warrants (1,605) 0 0 Minority Interest 77 (151) (151) Other (Income) Expense 3,392 480 192 ---------------- --------------- ------------------ 20,341 6,572 6,284 ---------------- --------------- ------------------ Income (Loss) from Continuing Operations before Income Taxes (88,285) 2,994 2,339 Provision for Income Taxes (13,811) 363 777 ---------------- --------------- ------------------ Net Income (Loss) from Continuing Operations (74,474) 2,631 1,562 (Income) Loss from Discontinued Operations, net of Income Taxes 16,972 0 0 Loss on Disposal of Discontinued Operations, net of Income Taxes 1,443 1,950 0 Cumulative Effect of Change in Accounting Principle, net of Income Taxes 0 0 0 ---------------- --------------- ------------------ Net Income (Loss) (92,889) 681 1,562 ---------------- --------------- ------------------ Accretion of Preferred Stock Dividend 680 744 744 ---------------- --------------- ------------------ Net Income (Loss) Available to Common Stockholders ($93,569) ($63) $818 ================ =============== ================== EBIT (67,944) 9,566 8,623 EBITDA 14,129 21,585 21,080 Common Stock and Common Stock Equivalent Shares Outstanding, Assuming Full Dilution 23,184 23,751 24,390 ================ =============== ================== Earnings (Loss) per Share ($4.04) $0.00 $0.03 ================ =============== ================== Twelve Months Ended --------------------------------------------------- April 30, April 30, April 30, 2001 2002 2002(1) (Proforma) ---------------- --------------- ------------------ Revenues $479,816 $420,821 $419,933 ---------------- --------------- ------------------ Operating Expenses: Cost of Operations 323,703 275,706 275,706 General and Administration 62,612 53,105 52,373 Depreciation and Amortization 52,883 50,696 50,696 Impairment Charge 59,619 0 0 Restructuring and Other Non-recurring Charges 9,964 (438) 0 ---------------- --------------- ------------------ 508,781 379,069 378,775 ---------------- --------------- ------------------ Operating Income (28,965) 41,752 41,158 ---------------- --------------- ------------------ Other (Income) Expense: Interest Expense, Net 38,647 30,571 30,571 (Income) Loss from Equity Method Investments, net 26,256 (1,899) (4,291) Gain on Sale of Bangor Hydro warrants (3,131) (1,654) 0 Minority Interest 1,026 (154) (154) Other (Income) Expense 3,209 (2,826) (89) ---------------- --------------- ------------------ 66,007 24,038 26,037 ---------------- --------------- ------------------ Income (Loss) from Continuing Operations before Income Taxes (94,972) 17,714 15,121 Provision for Income Taxes (12,731) 5,887 5,025 ---------------- --------------- ------------------ Net Income (Loss) from Continuing Operations (82,241) 11,827 10,096 (Income) Loss from Discontinued Operations, net of Income Taxes 15,448 0 0 Loss on Disposal of Discontinued Operations, net of Income Taxes 3,846 4,096 0 Cumulative Effect of Change in Accounting Principle, net of Income Taxes 0 250 0 ---------------- --------------- ------------------ Net Income (Loss) (101,535) 7,481 10,096 ---------------- --------------- ------------------ Accretion of Preferred Stock Dividend 1,970 3,010 3,010 ---------------- --------------- ------------------ Net Income (Loss) Available to Common Stockholders ($103,505) $4,471 $7,086 ================ =============== ================== EBIT (28,965) 41,752 41,158 EBITDA 92,475 92,164 92,008 Common Stock and Common Stock Equivalent Shares Outstanding, Assuming Full Dilution 23,189 24,169 24,169 ================ =============== ================== Earnings (Loss) per Share ($4.46) $0.19 $0.29 ================ =============== ================== The accompanying notes are an integral part of these consolidated financial statements. 1
NOTES: (1) Proforma amounts reflect the following: Three months ended, April 30, 2002: (i) the elimination of revenue amounting to $505 related to accounting for commodity hedge contracts in accordance with FAS 133 arising from the Enron bankruptcy. (ii) the elimination of net restructuring charge adjustments of $438. (iii) the elimination of $288 in other expense related to additional gain on the sale of Multitrade group as well as the impairment of USPL equity holdings. (iv) the elimination of a Loss on Disposal of Discontinued Operations. Twelve months ended, April 30, 2002 (in addition to the foregoing): (i) the elimination of the equity loss from New Heights amounting to $2,392. (ii) the elimination of the gain on sale of Bangor Hydro warrants amounting to $1,654. (iii) the elimination of the gain on sale of the Multitrade group ($4,006) and S&S Disposal ($691), which are included in Other Income. (iv) the elimination of the Loss on Disposal of Discontinued Operations, which includes the sale of the Tire business, and the writedown of a Commercial Recycling facility to net realizable value. (v) the elimination of the writeoffs related to commodity hedge contracts and trading with Enron. These amounts are included in Revenues, G&A expenses and Other Income ($2,021). (vi) the elimination of a change in accounting principle. (2) Proforma Revenue Proforma Revenue represents revenue eliminating divested operations (PERC, Multitrade, Timbers, Manner Resins, US Fiber, TWM, Erie Hauling, S&S Disposal, Ameri-Can and Resource Transfer Station) as if they had been sold as of May 1, 2000. Proforma Revenue is not a measure of financial performance under generally accepted accounting principles, but is provided because the Company understands that certain investors use this information when analyzing the financial position and performance of the Company. THREE MONTHS ENDED: 04/30/01 07/31/01 10/31/01 01/31/02 04/30/02 -------- -------- -------- -------- -------- Solid Waste Operations 67,504 82,194 82,374 74,219 70,590 Recycling 26,110 23,503 23,225 23,449 24,126 Other 4,906 3,461 3,648 3,521 2,790 -------------- -------------- --------------- --------------- --------------- Proforma Revenue 98,520 109,158 109,247 101,189 97,506 -------------- -------------- --------------- --------------- --------------- (3) Proforma EBITDA Proforma EBITDA represents operating income (earnings before interest and taxes, or "EBIT") plus depreciation and amortization expense, impairment charge, restructuring charge, legal settlements, other miscellaneous charges and merger-related costs less minority interest eliminating divested operations (PERC, Maine Energy Minority Interest, Multitrade, Timbers, Manner Resins, US Fiber, TWM, Erie Hauling, S&S Disposal, Ameri-Can and Resource Transfer Station) as if they had been sold as of May 1, 2000. Proforma EBITDA is not a measure of financial performance under generally accepted accounting principles, but is provided because the Company understands that certain investors use this information when analyzing the financial position and performance of the Company. THREE MONTHS ENDED: 04/30/01 07/31/01 10/31/01 01/31/02 04/30/02 -------- -------- -------- -------- -------- Solid Waste Operations 16,739 22,489 23,580 18,705 19,072 Recycling 1,221 1,195 1,827 1,854 2,378 Other (686) (466) (176) 494 135 -------------- -------------- --------------- --------------- --------------- Proforma EBITDA 17,274 23,218 25,231 21,053 21,585 -------------- -------------- --------------- --------------- --------------- 2