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 July 31, 2005

 

 

 

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 August 31 2005:

 

Class A Common Stock

 

23,913,103

 

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,

 

July 31,

 

ASSETS

 

2005

 

2005

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

8,578

 

$

6,773

 

Restricted cash

 

70

 

71

 

Accounts receivable - trade, net of allowance for doubtful accounts of $707 and $604

 

51,726

 

56,642

 

Notes receivable - officers/employees

 

88

 

87

 

Refundable income taxes

 

874

 

573

 

Prepaid expenses

 

4,371

 

4,104

 

Inventory

 

2,538

 

2,504

 

Other current assets

 

1,138

 

1,179

 

Total current assets

 

69,383

 

71,933

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and amortization of $324,903 and $341,278

 

412,753

 

431,515

 

Goodwill

 

157,492

 

158,264

 

Intangible assets, net

 

2,711

 

2,436

 

Restricted cash

 

12,124

 

12,175

 

Notes receivable - officers/employees

 

916

 

916

 

Deferred income taxes

 

3,155

 

69

 

Investments in unconsolidated entities

 

37,699

 

36,928

 

Net assets under contractual obligation

 

1,392

 

1,078

 

Other non-current assets

 

14,829

 

14,542

 

 

 

643,071

 

657,923

 

 

 

 

 

 

 

 

 

$

712,454

 

$

729,856

 

 

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

 

2



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)

(in thousands, except for share and per share data)

 

 

 

April 30,

 

July 31,

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

2005

 

2005

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current maturities of long-term debt

 

$

281

 

$

315

 

Current maturities of capital lease obligations

 

632

 

643

 

Accounts payable

 

46,107

 

48,104

 

Accrued payroll and related expenses

 

9,688

 

4,902

 

Accrued interest

 

4,818

 

11,891

 

Deferred income taxes

 

1,419

 

41

 

Current accrued capping, closure and post-closure costs

 

5,290

 

4,064

 

Other accrued liabilities

 

24,519

 

24,529

 

Total current liabilities

 

92,754

 

94,489

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

378,436

 

389,580

 

Capital lease obligations, less current maturities

 

1,475

 

1,310

 

Accrued capping, closure and post-closure costs, less current maturities

 

21,338

 

22,959

 

Other long-term liabilities

 

11,705

 

11,549

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

Series A redeemable, convertible preferred stock -

 

 

 

 

 

Authorized - 55,750 shares, issued and outstanding - 53,750 shares, liquidation preference of $1,000 per share plus accrued but unpaid dividends

 

67,964

 

68,814

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Class A common stock -

 

 

 

 

 

Authorized - 100,000,000 shares, $0.01 par value; issued and outstanding - 23,860,000 and 23,873,000 shares as of April 30, 2005 and July 31, 2005, respectively

 

239

 

239

 

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

 

767

 

740

 

Additional paid-in capital

 

274,088

 

273,381

 

Accumulated deficit

 

(136,322

)

(133,215

)

Total stockholders’ equity

 

138,782

 

141,155

 

 

 

 

 

 

 

 

 

$

712,454

 

$

729,856

 

 

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
July 31,

 

 

 

2004

 

2005

 

 

 

 

 

 

 

Revenues

 

$

123,672

 

$

132,000

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Cost of operations

 

78,277

 

85,587

 

General and administration

 

15,515

 

17,218

 

Depreciation and amortization

 

17,223

 

16,134

 

 

 

111,015

 

118,939

 

Operating income

 

12,657

 

13,061

 

Other expense/(income), net:

 

 

 

 

 

Interest income

 

(58

)

(167

)

Interest expense

 

7,146

 

7,517

 

Loss from equity method investment

 

68

 

70

 

Other expense

 

530

 

51

 

Other expense, net

 

7,686

 

7,471

 

 

 

 

 

 

 

Income from continuing operations before income taxes and discontinued operations

 

4,971

 

5,590

 

Provision for income taxes

 

2,209

 

2,483

 

 

 

 

 

 

 

Income from continuing operations before discontinued operations

 

2,762

 

3,107

 

 

 

 

 

 

 

Income from discontinued operations (net of income tax provision of $56)

 

81

 

 

Net income

 

2,843

 

3,107

 

Preferred stock dividend

 

838

 

850

 

Net income available to common stockholders

 

$

2,005

 

$

2,257

 

 

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

 

4



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Unaudited)

(in thousands, except for per share data)

 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

Earnings Per Share:

 

 

 

 

 

Basic:

 

 

 

 

 

Income from continuing operations before discontinued operations available to common stockholders

 

$

0.08

 

$

0.09

 

Income from discontinued operations, net

 

 

 

 

 

 

 

 

 

Net income per common share available to common stockholders

 

$

0.08

 

$

0.09

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

24,492

 

24,852

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Income from continuing operations before discontinued operations available to common stockholders

 

$

0.08

 

$

0.09

 

Income from discontinued operations, net

 

 

 

 

 

 

 

 

 

Net income per common share available to common stockholders

 

$

0.08

 

$

0.09

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

25,092

 

25,218

 

 

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)

 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net income

 

$

2,843

 

$

3,107

 

Adjustments to reconcile net income to net cash provided by operating activities -

 

 

 

 

 

Depreciation and amortization

 

17,223

 

16,134

 

Depletion of landfill operating lease obligations

 

1,347

 

1,428

 

Loss from equity method investment

 

68

 

70

 

Loss on sale of equipment

 

276

 

99

 

Deferred income taxes

 

1,755

 

1,721

 

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

 

 

 

 

 

Accounts receivable

 

(3,347

)

(4,924

)

Accounts payable

 

458

 

1,997

 

Other assets and liabilities

 

(910

)

2,989

 

 

 

16,870

 

19,514

 

Net Cash Provided by Operating Activities

 

19,713

 

22,621

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Acquisitions, net of cash acquired

 

(3,582

)

(1,044

)

Additions to property, plant and equipment

- growth 

 

(5,309

)

(14,941

)

 

- maintenance

 

(17,599

)

(19,675

)

Payments on landfill operating lease contracts

 

(9,363

)

(428

)

Proceeds from sale of equipment

 

188

 

324

 

Proceeds from assets under contractual obligation

 

579

 

314

 

Net Cash Used In Investing Activities

 

(35,086

)

(35,450

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from long-term borrowings

 

44,850

 

35,955

 

Principal payments on long-term debt

 

(34,306

)

(24,931

)

Proceeds from exercise of stock options

 

240

 

 

Net Cash Provided by Financing Activities

 

10,784

 

11,024

 

Net decrease in cash and cash equivalents

 

(4,589

)

(1,805

)

Cash and cash equivalents, beginning of period

 

8,007

 

8,578

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

3,418

 

$

6,773

 

 

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

 

6



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(in thousands)

 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

Cash paid during the period for -

 

 

 

 

 

Interest

 

$

2,558

 

$

276

 

Income taxes, net of refunds

 

$

117

 

$

528

 

 

 

 

 

 

 

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

 

 

 

 

 

Summary of entities acquired in purchase business combinations -

 

 

 

 

 

Fair value of assets acquired

 

$

3,704

 

$

1,129

 

Cash paid, net

 

(3,582

)

(1,044

)

 

 

 

 

 

 

Liabilities assumed and holdbacks to seller

 

$

122

 

$

85

 

 

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

 

7



 

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. (the “Parent”) and Subsidiaries (the “Company”) as of April 30, 2005 and July 31, 2005, the consolidated statements of operations for the three months ended July 31, 2004 and 2005 and the consolidated statements of cash flows for the three months ended July 31, 2004 and 2005 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 conjunction with the Company’s audited consolidated financial statements as of and for the twelve months ended April 30, 2005.  These were included as part of the Company’s Annual Report on Form 10-K for the year ended April 30, 2005 (the “Annual Report”).  The results for the three months ended July 31, 2005 may not be indicative of the results that may be expected for the fiscal year ending April 30, 2006.

 

2.                                      RECLASSIFICATIONS

 

The Company divested the assets of Data Destruction Services, Inc. (“Data Destruction”) during the quarter ended October 31, 2004.  The transaction required discontinued operations treatment under SFAS No. 144, therefore the operating results of Data Destruction have been reclassified from continuing to discontinued operations for the three months ended July 31, 2004.

 

Effective November 1, 2004 the Eastern region was divided into the North Eastern and South Eastern regions because of a change in the Company’s internal reporting structure.  Therefore, segment data for the three months ended July 31, 2004 has been revised to reflect changes in the Company’s segment classifications. 

 

3.                                      BUSINESS COMBINATIONS

 

During the three months ended July 31, 2005, the Company acquired three solid waste hauling operations.  The Company also recorded additional expenditures related to landfill development for a landfill closure project acquired in the fourth quarter of fiscal year 2005.  These transactions were in exchange for total consideration of $1,062 including $1,044 in cash and $18 in liabilities assumed.  During the three months ended July 31, 2004, the Company acquired four solid waste hauling operations.  These transactions were in exchange for total consideration of $3,704 including $3,582 in cash and $122 in liabilities assumed.  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 including the value of non-compete agreements with the residual amounts allocated to goodwill. 

 

The following unaudited pro forma combined information shows the results of the Company’s operations as though each of the acquisitions made in the three months ended July 31, 2004 and 2005 had been completed as of May 1, 2004.

 

8



 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

Revenue

 

$

123,868

 

$

132,115

 

Income from continuing operations before discontinued operations

 

$

2,780

 

$

3,117

 

Net income

 

$

2,861

 

$

3,117

 

Diluted net income per common share

 

$

0.08

 

$

0.09

 

 

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, 2004 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.

 

4.                                      GOODWILL AND INTANGIBLE ASSETS

 

The following table shows the activity and balances related to goodwill from April 30, 2005 through July 31, 2005:

 

 

 

North Eastern
Region

 

South Eastern
Region

 

Central
Region

 

Western
Region

 

FCR
Recycling

 

Total

 

Balance, April 30, 2005

 

$

25,340

 

$

31,645

 

$

30,158

 

$

53,450

 

$

16,899

 

$

157,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

 

31

 

741

 

 

772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 31, 2005

 

$

25,340

 

$

31,645

 

$

30,189

 

$

54,191

 

$

16,899

 

$

158,264

 

 

Intangible assets at April 30, 2005 and July 31, 2005 consist of the following:

 

 

 

Covenants not
to compete

 

Customer
lists

 

Total

 

Balance, April 30, 2005

 

 

 

 

 

 

 

Intangible assets

 

$

16,299

 

$

688

 

$

16,987

 

Less accumulated amortization

 

(13,670

)

(606

)

(14,276

)

 

 

$

2,629

 

$

82

 

$

2,711

 

 

 

 

 

 

 

 

 

Balance, July 31, 2005

 

 

 

 

 

 

 

Intangible assets

 

$

16,344

 

$

688

 

$

17,032

 

Less accumulated amortization

 

(13,967

)

(629

)

(14,596

)

 

 

$

2,377

 

$

59

 

$

2,436

 

 

Amortization expense for the three months ended July 31, 2004 and 2005 was $401 and $323, respectively.  The intangible amortization expense estimated as of July 31, 2005, for the five years following 2005 is as follows:

 

2006

 

2007

 

2008

 

2009

 

2010

 

$

1,030

 

$

770

 

$

398

 

$

236

 

$

121

 

 

9



 

5.                                      NEW ACCOUNTING STANDARDS

 

In December 2004, the FASB issued SFAS 123R, Share-Based Payment.  SFAS 123R replaces SFAS 123 and supersedes APB Opinion No. 25 requiring public companies to recognize compensation expense for the cost of awards of equity instruments. This compensation cost will be measured as the fair value of the award on the grant date estimated using an option-pricing model. SFAS 123R was originally issued with implementation required for interim and annual periods beginning after June 15, 2005.  On April 14, 2005, the Securities and Exchange Commission (“SEC”) amended the effective date to the beginning of the first fiscal year after June 15, 2005.  The Company is evaluating the various transition provisions under SFAS 123R and will adopt SFAS 123R effective May 1, 2006, which is expected to result in increased compensation expense in future periods.

 

6.                                      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.

 

The New Hampshire Superior Court in Grafton, NH ruled on February 1, 1999 that the Town of Bethlehem, NH could not enforce an ordinance purportedly prohibiting expansion of the Company’s landfill subsidiary North Country Environmental Services, Inc. (“NCES”), at least with respect to 51 acres of NCES’s 87 acre parcel, based upon certain existing land-use approvals. As a result, NCES was able to construct and operate “Stage II, Phase II” of the landfill. In May 2001, the Supreme Court denied the Town’s appeal. Notwithstanding the Supreme Court’s 2001 ruling, the Town continued to assert jurisdiction to conduct unqualified site plan review with respect to Stage III and has further stated that the Town’s height ordinance and building permit process may apply to Stage III. On September 12, 2001, the Company filed a petition for, among other things, declaratory relief. On December 4, 2001, the Town filed an answer to the Company’s petition asserting counterclaims seeking, among other things, authorization to assert site plan review over Stage III, which commenced operation in December 2000, as well as the methane gas utilization/leachate handling facility operating in Stage III, and also an order declaring that an ordinance prohibiting landfills applies to Stage IV expansion. The trial related to the Town’s jurisdiction was held in December 2002 and on April 24, 2003, the Grafton Superior Court upheld the Town’s 1992 ordinance preventing the location or expansion of any landfill, ruling that the ordinance may be applied to any part of Stage IV that goes beyond the 51 acres; ruling that the Town’s height ordinance is valid within the 51 acres; upholding the Town’s right to require Site Plan Review, except that there are certain areas within the Town’s Site Plan Review regulation that are preempted; and ruling that the methane gas utilization/leachate handling facility is not subject to the Town’s ordinance forbidding incinerators.  On May 27, 2003, NCES appealed the Court ruling to the New Hampshire Supreme Court.  On March 1, 2004, the Supreme Court issued an opinion affirming that NCES has all of the local approvals that it needs to operate within the 51 acres.  If successful in obtaining state permits for development and operation within the 51 acres, NCES expects to be able to provide from three to five years of disposal capacity.  The Supreme Court’s opinion left open for further review the question of whether the Town’s 1992 ordinance can prevent expansion of the facility outside the 51 acres, remanding to the Superior Court two legal claims raised by NCES as grounds for invalidating the 1992 ordinance.  An interlocutory appeal to the Supreme Court by NCES regarding a Superior Court judge’s denial of a motion to recuse herself was denied on November 18, 2004.  The parties have filed numerous motions for summary judgment before the trial court.  On April 19, 2005, the Superior Court judge granted NCES’ partial motion for summary judgment, ruling that the 1992 ordinance is invalid because it distinguishes between “users” of land rather than “uses” of land, and that the state statute preempts

 

10



 

the Town’s ability to issue a building permit for the methane gas utilization/leachate handling facility to the extent the Town’s regulations relate to design, installation, construction, modification or operation.  A remand trial will be scheduled for the remaining issues not resolved by summary judgment.  Such unresolved issues include whether the Town can impose site plan review requirements outside the 51 acres, and whether the 1992 ordinance contravenes the general welfare of the community.  Prior to the remand trial, the court held a mandatory mediation on August 12, 2005, which resulted in settlement discussions that remain ongoing.

 

On March 10, 2005, the Zoning Enforcement Officer (ZEO) for the Town of Hardwick, Massachusetts rendered an opinion that a portion of the current Phase II footprint of the Company’s Hardwick Landfill is on land that is not properly zoned.  On April 7, 2005, the Company appealed the opinion to the Hardwick Zoning Board of Appeals (ZBA).  On July 13, 2005, the ZBA denied the Company’s appeal.  On August 1, 2005, the Company appealed the ZBA’s decision to the State’s Land Court.  The Company proposed a plan to implement an interim closure of the affected lot which included relocation of waste from an unlined area on a lot unaffected by the decision to the affected lot.  The ZEO issued a letter prohibiting the Company from relocating waste onto the affected lot.  The Company has appealled the ZEO decision to the ZBA.  The Company hopes to enter into settlement discussions with the Town in an effort to settle all appeals.  The Company and the Town executed a Host Community Agreement on June 7, 2005, which provides the Town with certain immediate benefits and will provide certain deferred benefits upon receipt of approvals for the rezoning of the existing landfill area and an expansion area, which the Company expects to apply for in the future.

 

On May 25, 2005, the Company was served with an antitrust summons by the Office of the Attorney General of the State of Maine pursuant to their investigation of whether the Company and the City of Lewiston have entered into an agreement to operate a municipal landfill in restraint of trade or commerce and whether such an agreement would constitute an acquisition of assets that may substantially lessen competition or tend to create a monopoly.  The summons seeks the production of documents related to the Company’s operations in the State of Maine.  In July, 2005, the Maine Department of Environmental Protection (MEDEP) expressed additional concerns with the Operating Services Agreement related to whether or not it violates a Maine statute prohibiting the development of commercial landfills.  The Company is negotiating with both the Attorney General’s office and the MEDEP.  The Company believes it has meritorious defenses to these claims.

 

On June 23, 2005, the Company was advised that the State’s Attorney for Chittenden County, Vermont has initiated a formal investigation through the State’s Inquest process to determine if there is any criminal culpability in connection with the fatality on January 28, 2005 of a driver of the Company’s subsidiary All Cycle Waste, Inc. that occurred on the job when the driver’s rear-loader trash truck rolled over him when he was behind it.  The Company is cooperating with the investigation.  On July 21, 2005, the Company settled with the Vermont Occupational Safety and Health Administration, which was conducting a separate investigation of potential safety violations, by agreeing to pay a penalty in the amount of $28 in connection with four alleged general duty clause violations in connection with the accident.

 

On July 12, 2005, NCES received notice from the Attorney General of the State of New Hampshire that it has commenced an official investigation into allegations that asbestos was delivered to the NCES landfill by a third party and disposed there on several occasions between 1999 and 2002.  NCES is cooperating with the investigation.

 

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.

 

11



 

7.                                      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 on the results of operations or financial condition.

 

8.                                      EARNINGS PER SHARE

 

The following table sets forth the numerator and denominator used in the computation of earnings per share:

 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

Numerator:

 

 

 

 

 

Income from continuing operations before discontinued operations

 

$

2,762

 

$

3,107

 

Less: preferred stock dividends

 

(838

)

(850

)

Income from continuing operations before discontinued operations available to common stockholders

 

$

1,924

 

$

2,257

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Number of shares outstanding, end of period:

 

 

 

 

 

Class A common stock

 

23,524

 

23,873

 

Class B common stock

 

988

 

988

 

Effect of weighted average shares outstanding during period

 

(20

)

(9

)

Weighted average number of common shares used in basic EPS

 

24,492

 

24,852

 

Impact of potentially dilutive securities:

 

 

 

 

 

Dilutive effect of options and contingent stock

 

600

 

366

 

Weighted average number of common shares used in diluted EPS

 

25,092

 

25,218

 

 

For the three months ended July 31, 2004 and 2005, 6,250 and 6,843 common stock equivalents related to options and redeemable convertible preferred stock, respectively, were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive.

 

9.                                      COMPREHENSIVE INCOME

 

Comprehensive income is defined as the change in net assets of a business enterprise during a period from transactions generated from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Accumulated other comprehensive income included in the accompanying balance sheets consists of changes in the fair value of the Company’s interest rate swap and commodity hedge agreements as well as the cumulative effect of the change in accounting principle due to the adoption of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended.  Also included in accumulated other comprehensive income is the change in fair value of certain securities classified as available for sale as well as the Company’s portion of the change in the fair value of commodity hedge agreements of the Company’s equity method investment, US GreenFiberComprehensive income for the three months ended July 31, 2004 and 2005 is as follows:

 

12



 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

Net income

 

$

2,843

 

$

3,107

 

Other comprehensive (loss) income

 

111

 

(26

)

Comprehensive income

 

$

2,954

 

$

3,081

 

 

The components of other comprehensive income for the three months ended July 31, 2004 and 2005 are shown as follows:

 

 

 

Three Months Ended July 31,

 

 

 

2004

 

2005

 

 

 

Gross

 

Tax
effect

 

Net of
Tax

 

Gross

 

Tax
effect

 

Net of
Tax

 

Changes in fair value of marketable securities
during the period

 

$

 

$

 

$

 

$

(49

)

$

(17

)

$

(32

)

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

 

187

 

76

 

111

 

227

 

84

 

143

 

Reclassification to earnings for interest rate
swap contracts

 

 

 

 

(137

)

 

(137

)

 

 

$

187

 

$

76

 

$

111

 

$

41

 

$

67

 

$

(26

)

 

10.                               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 thirty-one commodity hedge contracts as of July 31, 2005.  These contracts expire between August 2005 and April 2008.  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 July 31, 2005 the fair value of these hedges was an obligation of $644, with the net amount (net of taxes of $261) recorded as an unrealized loss in accumulated other comprehensive income.

 

On May 9, 2005, the Company entered into three separate interest rate swap agreements with three banks for a notional amount of $75,000.  The contracts are forward starting contracts that will effectively fix the interest index rate on the entire notional amount at 4.4% from May 4, 2006 through May 5, 2008.  These agreements will be specifically designated to interest payments under the revolving credit facility and will be accounted for as effective cash flow hedges pursuant to SFAS No. 133.  As of July 31, 2005, the fair value of these swaps was $73, with the net amount (net of taxes of $29) recorded as an unrealized gain in accumulated other comprehensive income.

 

11.                               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 consolidated 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.

 

13



 

During fiscal 1996, the FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, which defines a fair value based method of accounting for stock-based employee compensation and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also allows an entity to continue to measure compensation costs for those plans using the intrinsic method of accounting prescribed by APB Opinion No. 25. Entities electing to remain with the accounting in APB Opinion No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value based method of accounting defined in SFAS No. 123 had been applied. In addition, the Company has adopted the disclosure requirements of SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure.

 

In accordance with SFAS No. 123 and SFAS No. 148, the Company has computed, for pro forma disclosure purposes, the value as of the grant date of all options granted using the Black-Scholes option pricing model as prescribed by SFAS No. 123, using the following weighted average assumptions for grants in the three months ended July 31, 2004 and 2005.

 

 

 

Three Months
Ended
July 31, 2004

 

Three Months
Ended
July 31, 2005

 

 

 

 

 

 

 

Risk free interest rate

 

3.95% - 3.97%

 

3.63% - 3.76%

 

Expected dividend yield

 

N/A

 

N/A

 

Expected life

 

5 Years

 

5 Years

 

Expected volatility

 

45.88%

 

40.35%

 

 

The total value of options granted would be amortized on a pro forma basis over the vesting period of the options. Options generally vest over a one to three year period. If the Company had accounted for these plans in accordance with SFAS No. 123, the Company’s net income and net income per share would have changed as reflected in the following pro forma amounts:

 

 

 

Three Months Ended
July 31,

 

 

 

2004

 

2005

 

Net income available to common stockholders, as reported

 

$

2,005

 

$

2,257

 

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

 

376

 

432

 

Net income available to common stockholders, pro forma

 

$

1,629

 

$

1,825

 

 

 

 

 

 

 

Basic income per common share:

 

 

 

 

 

As reported

 

$

0.08

 

$

0.09

 

Pro forma

 

$

0.07

 

$

0.07

 

Diluted income per common share:

 

 

 

 

 

As reported

 

$

0.08

 

$

0.09

 

Pro forma

 

$

0.06

 

$

0.07

 

 

14



 

12.                               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.  Effective November 1, 2004 the Eastern region was divided into the North Eastern and South Eastern regions because of a change in the Company’s internal reporting structure.  Segment data for the three months ended July 31, 2004 has been revised to reflect changes in the Company’s segment classifications. 

 

The Company classifies its operations into North Eastern, South Eastern, Central, Western and FCR Recycling.  The Company’s revenues in the North Eastern, South 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 North 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 paper, metals, aluminum, plastics and glass.  Included in “Other” are ancillary operations, mainly major customer accounts.

 

15



 

 

 

North Eastern

 

South Eastern

 

Central

 

Western

 

FCR

 

 

 

Region

 

Region

 

Region

 

Region

 

Recycling

 

Three Months Ended July 31, 2004 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside revenues

 

$

23,415

 

$

23,882

 

$

28,692

 

$

23,978

 

$

19,599

 

Depreciation and amortization

 

5,042

 

4,043

 

3,546

 

3,167

 

925

 

Operating income

 

1,003

 

(621

)

5,924

 

3,818

 

2,839

 

Total assets

 

$

171,815

 

$

129,563

 

$

119,911

 

$

136,550

 

$

55,165

 

 

 

 

Other

 

Total

 

Three Months Ended July 31, 2004 (1)

 

 

 

 

 

 

 

 

 

 

 

Outside revenues

 

$

4,106

 

$

123,672

 

Depreciation and amortization

 

500

 

17,223

 

Operating income

 

(306

)

12,657

 

Total assets

 

$

73,263

 

$

686,267

 

 

 

 

North Eastern

 

South Eastern

 

Central

 

Western

 

FCR

 

 

 

Region

 

Region

 

Region

 

Region

 

Recycling

 

Three Months Ended July 31, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside revenues

 

$

27,596

 

$

24,397

 

$

29,511

 

$

25,522

 

$

20,499

 

Depreciation and amortization

 

4,740

 

2,910

 

3,745

 

3,217

 

1,088

 

Operating income

 

1,866

 

523

 

4,682

 

3,380

 

3,005

 

Total assets

 

$

177,078

 

$

139,203

 

$

128,812

 

$

154,108

 

$

65,676

 

 

 

 

Other

 

Total

 

Three Months Ended July 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Outside revenues

 

$

4,475

 

$

132,000

 

Depreciation and amortization

 

434

 

16,134

 

Operating income

 

(395

)

13,061

 

Total assets

 

$

64,979

 

$

729,856

 

 


(1) Effective in fiscal year 2006, the Company has modified its internal reporting of the measurement of segment profit or loss.  Segment data for the three months ended July 31, 2004 has been conformed to reflect this modification.

 

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

 

 

 

Three Months Ended
July 31,

 

 

 

2004 (1)

 

2005

 

Collection

 

$

61,690

 

$

65,267

 

Landfill/disposal facilities

 

20,434

 

23,263

 

Transfer

 

11,596

 

11,649

 

Recycling

 

29,952

 

31,821

 

Total revenues

 

$

123,672

 

$

132,000

 

 

16



 


(1) Revenue attributable to services provided for the three months ended July 31, 2004 has been revised to conform with the classification of revenue attributable to services provided in the current fiscal year.

 

13.                               NET ASSETS UNDER CONTRACTUAL OBLIGATION

 

Effective June 30, 2003, the Company transferred 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 this transaction 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.

 

Net assets under contractual obligation amounted to $1,392 and $1,078 at April 30, 2005 and July 31, 2005, respectively.

 

Effective August 1, 2005, the Company transferred certain recycling operations to a former employee who had been responsible for managing those businesses. 

 

Consideration for this transaction was in the form of a note receivable amounting up to $1,435 which is payable within six years of the anniversary date of the transaction to the extent of free cash flow generated from the operations. 

 

Net assets of these businesses amounted to $283 and $399 at April 30, 2005 and July 31, 2005, respectively.

 

14.                               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 Company 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, 2005 and July 31, 2005, and the condensed consolidating results of operations for the three months ended July 31, 2004 and 2005 and the condensed consolidating statements of cash flows for the three months ended July 31, 2004 and 2005 of (a) 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, 2005

(In thousands, except for share and per share data)

 

ASSETS

 

Parent

 

Guarantors

 

Non-
Guarantors

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

(2,383

)

$

10,146

 

$

815

 

$

 

$

8,578

 

Restricted cash

 

 

70

 

 

 

70

 

Accounts receivable - trade, net of allowance for doubtful accounts

 

76

 

50,998

 

652

 

 

51,726

 

Refundable income taxes

 

874

 

 

 

 

874

 

Inventory

 

 

2,538

 

 

 

2,538

 

Other current assets

 

596

 

4,161

 

840

 

 

5,597

 

Total current assets

 

(837

)

67,913

 

2,307

 

 

69,383

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,928

 

411,506

 

(1,681

)

 

412,753

 

Goodwill

 

 

157,492

 

 

 

157,492

 

Deferred income taxes

 

3,155

 

 

 

 

3,155

 

Investment in subsidiaries

 

(18,424

)

 

 

18,424

 

 

Net assets under contractual obligation

 

 

1,392

 

 

 

1,392

 

Other non-current assets

 

25,430

 

36,287

 

10,941

 

(4,379

)

68,279

 

 

 

13,089

 

606,677

 

9,260

 

14,045

 

643,071

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany receivable

 

587,569

 

(589,512

)

(2,436

)

4,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

599,821

 

$

85,078

 

$

9,131

 

$

18,424

 

$

712,454

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Parent

 

Guarantors

 

Non -
Guarantors

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

 

$

281

 

$

 

$

 

$

281

 

Accounts payable

 

1,425

 

44,654

 

28

 

 

46,107

 

Accrued payroll and related expenses

 

2,243

 

7,320

 

125

 

 

9,688

 

Accrued interest

 

4,816

 

2

 

 

 

4,818

 

Deferred income taxes

 

1,419

 

 

 

 

1,419

 

Current accrued closure and post-closure costs

 

 

4,748

 

542

 

 

5,290

 

Other current liabilities

 

3,975

 

10,474

 

10,702

 

 

25,151

 

Total current liabilities

 

13,878

 

67,479

 

11,397

 

 

92,754

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

377,760

 

676

 

 

 

378,436

 

Other long-term liabilities

 

1,437

 

30,085

 

2,996

 

 

34,518

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A redeemable, convertible preferred stock, authorized - 55,750, issued and outstanding - 53,750, liquidation preference of $1,000 per share plus accrued but unpaid dividends

 

67,964

 

 

 

 

67,964

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

Class A common stock -

 

 

 

 

 

 

 

 

 

 

 

Authorized - 100,000,000 shares, $0.01 par value; issued and outstanding - 23,860,000 shares

 

239

 

101

 

100

 

(201

)

239

 

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

 

767

 

1,276

 

(53

)

(1,223

)

767

 

Additional paid-in capital

 

274,088

 

48,035

 

2,596

 

(50,631

)

274,088

 

Accumulated deficit

 

(136,322

)

(62,574

)

(7,905

)

70,479

 

(136,322

)

Total stockholders’ equity

 

138,782

 

(13,162

)

(5,262

)

18,424

 

138,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

599,821

 

$

85,078

 

$

9,131

 

$

18,424

 

$

712,454

 

 

18



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JULY 31, 2005

(Unaudited)

(In thousands, except for share and per share data)

 

ASSETS

 

Parent

 

Guarantors

 

Non-
Guarantors

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

(2,019

)

$

8,337

 

$

455

 

$

 

$

6,773

 

Restricted cash

 

 

71

 

 

 

71

 

Accounts receivable - trade, net of allowance for doubtful accounts

 

46

 

55,700

 

896

 

 

56,642

 

Refundable income taxes

 

573

 

 

 

 

573

 

Other current assets

 

216

 

6,801

 

857

 

 

7,874

 

Total current assets

 

(1,184

)

70,909

 

2,208

 

 

71,933

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,882

 

429,946

 

(1,313

)

 

431,515

 

Goodwill

 

 

158,264

 

 

 

158,264

 

Deferred income taxes

 

69

 

 

 

 

69

 

Investment in subsidiaries

 

(12,694

)

 

 

12,694

 

 

Other non-current assets

 

25,053

 

35,109

 

12,292

 

(4,379

)

68,075

 

 

 

15,310

 

623,319

 

10,979

 

8,315

 

657,923

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany receivable

 

604,155

 

(606,585

)

(1,949

)

4,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

618,281

 

$

87,643

 

$

11,238

 

$

12,694

 

$

729,856

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Parent

 

Guarantors

 

Non -
Guarantors

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,389

 

$

46,655

 

$

60

 

$

 

$

48,104

 

Accrued payroll and related expenses

 

1,269

 

3,626

 

7

 

 

4,902

 

Accrued interest

 

11,888

 

3

 

 

 

11,891

 

Deferred income taxes

 

41

 

 

 

 

41

 

Other current liabilities

 

3,338

 

13,273

 

12,940

 

 

29,551

 

Total current liabilities

 

17,925

 

63,557

 

13,007

 

 

94,489

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

388,980

 

600

 

 

 

389,580

 

Other long-term liabilities

 

1,407

 

31,092

 

3,319

 

 

35,818

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A redeemable, convertible preferred stock, authorized - 55,750, issued and outstanding - 53,750, liquidation preference of $1,000 per share plus accrued but unpaid dividends

 

68,814

 

 

 

 

68,814

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

Class A common stock -

 

 

 

 

 

 

 

 

 

 

 

Authorized - 100,000,000 shares, $0.01 par value; issued and outstanding - 23,873,000 shares

 

239

 

101

 

100

 

(201

)

239

 

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

 

740

 

860

 

(85

)

(775

)

740

 

Additional paid-in capital

 

273,381

 

48,506

 

2,596

 

(51,102

)

273,381

 

Accumulated deficit

 

(133,215

)

(57,073

)

(7,699

)

64,772

 

(133,215

)

Total stockholders’ equity

 

141,155

 

(7,606

)

(5,088

)

12,694

 

141,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

618,281

 

$

87,643

 

$

11,238

 

$

12,694

 

$

729,856

 

 

19



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JULY 31, 2004

(Unaudited)

(In thousands)

 

 

 

Parent

 

Guarantors

 

Non -
Guarantors

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

 

$

122,540

 

$

3,874

 

$

(2,742

)

$

123,672

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of operations

 

97

 

78,003

 

2,919

 

(2,742

)

78,277

 

General and administration

 

(173

)

15,434

 

254

 

 

15,515

 

Depreciation and amortization

 

441

 

14,987

 

1,795

 

 

17,223

 

 

 

365

 

108,424

 

4,968

 

(2,742

)

111,015

 

Operating income (loss)

 

(365

)

14,116

 

(1,094

)

 

12,657

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense/(income), net:

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(7,003

)

(16

)

(39

)

7,000

 

(58

)

Interest expense

 

7,373

 

6,735

 

38

 

(7,000

)

7,146

 

Loss (income) from equity method investments

 

(5,858

)

68

 

 

5,858

 

68

 

Other expense/(income), net:

 

26

 

506

 

(2

)

 

530

 

Other expense, net

 

(5,462

)

7,293

 

(3

)

5,858

 

7,686

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operation before income taxes and discontinued operations

 

5,097

 

6,823

 

(1,091

)

(5,858

)

4,971

 

Provision (benefit) for income taxes

 

2,254

 

(56

)

11

 

 

2,209

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before discontinued operations

 

2,843

 

6,879

 

(1,102

)

(5,858

)

2,762

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net

 

 

81

 

 

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

2,843

 

6,960

 

(1,102

)

(5,858

)

2,843

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividend

 

838

 

 

 

 

838

 

Net income (loss) available to common stockholders

 

$

2,005

 

$

6,960

 

$

(1,102

)

$

(5,858

)

$

2,005

 

 

20



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JULY 31, 2005

(Unaudited)

(In thousands)

 

 

 

Parent

 

Guarantors

 

Non -
Guarantors

 

Elimination

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

 

$

131,112

 

$

3,073

 

$

(2,185

)

$

132,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of operations

 

3

 

85,197

 

2,572

 

(2,185

)

85,587

 

General and administration

 

(84

)

17,051

 

251

 

 

17,218

 

Depreciation and amortization

 

370

 

15,644

 

120

 

 

16,134

 

 

 

289

 

117,892

 

2,943

 

(2,185

)

118,939

 

Operating income (loss)

 

(289

)

13,220

 

130

 

 

13,061

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense/(income), net:

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(7,612

)

(60

)

(106

)

7,611

 

(167

)

Interest expense

 

7,931

 

7,173

 

24

 

(7,611

)

7,517

 

Loss (income) from equity method investments

 

(6,178

)

70

 

 

6,178

 

70

 

Other expense/(income), net:

 

(13

)

64

 

 

 

51

 

Other expense/(income), net

 

(5,872

)

7,247

 

(82