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 October 31, 2003

 

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 126-2 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 November 28, 2003:

 

Class A Common Stock

 

23,032,539

 

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

 

October 31,
2003

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

15,652

 

$

3,594

 

Restricted cash

 

10,839

 

12,503

 

Accounts receivable - trade, net of allowance for doubtful accounts of $895 and $1,096

 

45,649

 

49,450

 

Notes receivable - officers/employees

 

1,105

 

1,105

 

Prepaid expenses

 

5,906

 

6,644

 

Inventory

 

1,740

 

1,739

 

Deferred income taxes

 

4,275

 

4,177

 

Other current assets

 

1,111

 

850

 

 

 

 

 

 

 

Total current assets

 

86,277

 

80,062

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and amortization of $201,681 and $238,750

 

302,328

 

302,498

 

Goodwill, net

 

159,682

 

162,972

 

Other intangible assets, net

 

3,014

 

2,891

 

Investments in unconsolidated entities

 

34,740

 

37,386

 

Net assets under contractual obligation

 

3,844

 

5,898

 

Other non-current assets

 

12,756

 

15,475

 

 

 

 

 

 

 

 

 

516,364

 

527,120

 

 

 

 

 

 

 

 

 

$

602,641

 

$

607,182

 

 

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

 

October 31,
2003

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current maturities of long-term debt

 

$

4,534

 

$

4,415

 

Current maturities of capital lease obligations

 

1,287

 

828

 

Accounts payable

 

33,743

 

30,229

 

Accrued payroll and related expenses

 

7,383

 

6,114

 

Accrued interest

 

5,375

 

5,006

 

Accrued income taxes

 

4,526

 

4,121

 

Accrued closure and post-closure costs, current portion

 

2,962

 

1,000

 

Other accrued liabilities

 

15,662

 

17,135

 

 

 

 

 

 

 

Total current liabilities

 

75,472

 

68,848

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

302,389

 

301,667

 

Capital lease obligations, less current maturities

 

1,969

 

1,650

 

Accrued closure and post-closure costs,  less current maturities

 

22,987

 

18,786

 

Deferred income taxes

 

5,473

 

7,526

 

Other long-term liabilities

 

11,375

 

10,859

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

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

 

63,824

 

65,430

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Class A common stock -
Authorized - 100,000,000 shares, $0.01 par value issued and outstanding - 22,769,000 and 23,032,000 shares as of April 30, 2003 and October 31, 2003, respectively

 

228

 

230

 

 

 

 

 

 

 

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

 

1,007

 

Additional paid-in capital

 

270,068

 

270,977

 

Accumulated deficit

 

(151,696

)

(139,808

)

 

 

 

 

 

 

Total stockholders’ equity

 

119,152

 

132,416

 

 

 

 

 

 

 

 

 

$

602,641

 

$

607,182

 

 

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
October 31,

 

Six Months Ended
October 31,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

114,570

 

$

111,974

 

$

230,601

 

$

225,863

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of operations

 

74,171

 

71,931

 

151,963

 

146,209

 

General and administration

 

14,464

 

14,881

 

29,175

 

29,354

 

Depreciation and amortization

 

12,227

 

14,971

 

24,287

 

29,742

 

 

 

100,862

 

101,783

 

205,425

 

205,305

 

Operating income

 

13,708

 

10,191

 

25,176

 

20,558

 

 

 

 

 

 

 

 

 

 

 

Other expense/(income), net:

 

 

 

 

 

 

 

 

 

Interest income

 

(82

)

(87

)

(161

)

(139

)

Interest expense

 

6,933

 

6,057

 

14,087

 

12,332

 

Income from equity method investments

 

(1,549

)

(863

)

(1,751

)

(898

)

Minority interest

 

 

 

(152

)

 

Other (income)/expense

 

221

 

(221

)

253

 

(380

)

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

5,523

 

4,886

 

12,276

 

10,915

 

 

 

 

 

 

 

 

 

 

 

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

 

8,185

 

5,305

 

12,900

 

9,643

 

Provision (benefit) for income taxes

 

3,470

 

(389

)

5,628

 

478

 

 

 

 

 

 

 

 

 

 

 

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

 

4,715

 

5,694

 

7,272

 

9,165

 

Reclassification adjustment from discontinued operations (net of income tax benefit of $34 and $16)

 

(85

)

 

(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)

 

4,630

 

5,694

 

(56,683

)

11,888

 

Preferred stock dividend

 

769

 

808

 

1,528

 

1,606

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

 

$

3,861

 

$

4,886

 

$

(58,211

)

$

10,282

 

 

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
October 31,

 

Six Months Ended
October 31,

 

 

 

2002

 

2003

 

2002

 

2003

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

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

 

$

0.17

 

$

0.20

 

$

0.24

 

$

0.32

 

Cumulative effect of change in accounting principle, net

 

 

 

(2.70

)

0.11

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

$

0.17

 

$

0.20

 

$

(2.46

)

$

0.43

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

23,710

 

23,933

 

23,697

 

23,848

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

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

 

$

0.16

 

$

0.20

 

$

0.24

 

$

0.31

 

Cumulative effect of change in accounting principle, net

 

 

 

(2.67

)

0.11

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share

 

$

0.16

 

$

0.20

 

$

(2.43

)

$

0.42

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

23,939

 

29,159

 

23,947

 

24,252

 

 

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)

 

 

 

Six Months Ended October 31,

 

 

 

2002

 

2003

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net income (loss)

 

$

(56,683

)

$

11,888

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

24,287

 

29,742

 

Reclassification adjustment from discontinued operations, net

 

39

 

 

Cumulative effect of change in accounting principle, net

 

63,916

 

(2,723

)

Income from equity method investments

 

(1,751

)

(898

)

(Gain) loss on sale of assets

 

220

 

(189

)

Minority interest

 

(152

)

 

Deferred income taxes

 

4,364

 

296

 

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

 

 

 

 

 

Accounts receivable

 

(10,122

)

(6,001

)

Accounts payable

 

11,036

 

(2,193

)

Other assets and liabilities

 

(3,269

)

(6,902

)

 

 

88,568

 

11,132

 

Net Cash Provided by Operating Activities

 

31,885

 

23,020

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Acquisitions, net of cash acquired

 

(1,486

)

(6,098

)

Additions to property, plant and equipment

 

(20,659

)

(28,683

)

Proceeds from sale of equipment

 

340

 

279

 

(Advances to) distributions from unconsolidated entities

 

500

 

(1,348

)

Proceeds from assets under contractual obligation

 

 

354

 

Net Cash Used In Investing Activities

 

(21,305

)

(35,496

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from long-term borrowings

 

54,550

 

60,950

 

Principal payments on long-term debt

 

(59,579

)

(62,569

)

Proceeds from exercise of stock options

 

427

 

2,037

 

Net Cash Provided by (Used In) Financing Activities

 

(4,602

)

418

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

5,978

 

(12,058

)

Cash and cash equivalents, beginning of period

 

4,298

 

15,652

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

10,276

 

$

3,594

 

 

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

 

6



CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

 

Six Months Ended October 31,

 

 

 

2002

 

2003

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

Cash paid during the period for -

 

 

 

 

 

Interest

 

$

11,237

 

$

11,834

 

Income taxes, net of refunds

 

$

471

 

$

568

 

 

 

 

 

 

 

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

 

 

 

 

 

Summary of entities acquired in purchase business combinations

 

 

 

 

 

Fair market value of assets acquired

 

$

1,589

 

$

6,284

 

Cash paid, net

 

(1,486

)

(6,098

)

 

 

 

 

 

 

Liabilities assumed, notes payable and notes receivable forgiven to seller

 

$

103

 

$

186

 

 

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. and Subsidiaries (the “Company” or the “Parent”) as of April 30, 2003 and October 31, 2003, the consolidated statements of operations for the three and six months ended October 31, 2002 and 2003 and the consolidated statements of cash flows for the six months ended October 31, 2002 and 2003 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 six months ended October 31, 2003 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 six months ended October 31, 2002.  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 six months ended October 31, 2002.

 

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 the adoption of SFAS No. 142 in the amount of $62,825, net of taxes.

 

3.                                      BUSINESS COMBINATIONS

 

During the six months ended October 31, 2003, the Company acquired four solid waste hauling operations in transactions accounted for as purchases.  These transactions were in exchange for consideration of $6,098 in cash to the sellers.  The Company completed three such acquisitions during the six months ended October 31, 2002.  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.

 

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.

 

8



 

 

 

Six Months Ended
October 31, 2002

 

Six Months Ended
October 31, 2003

 

Revenues

 

$

233,530

 

$

226,174

 

Operating income

 

$

25,826

 

$

20,633

 

Net income (loss) available to common stockholders

 

$

(58,010

)

$

10,335

 

Diluted net income (loss) per common share

 

$

(2.42

)

$

0.43

 

Diluted weighted average common shares outstanding

 

23,947

 

24,252

 

 

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.

 

4.                                      ADOPTION OF NEW ACCOUNTING STANDARDS

 

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.

 

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.

 

9



 

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 $7,807, 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

 

$

(7,807

)

$

18,142

 

 

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

 

Balance at April 30, 2003

 

$

25,949

 

Obligations incurred

 

2,417

 

Accretion expense

 

1,170

 

Payments

 

(1,897

)

Cumulative effect of change in accounting principle

 

(7,854

)

Balance at October 31, 2003

 

$

19,786

 

 

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. The Company adopted SFAS No. 145 effective May 1, 2003.  Under SFAS No. 145, gains and losses on future debt extinguishment, if any, will be recorded in pre-tax income.  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 Company’s old term loan and old revolver.  This item will be reclassified to continuing operations in the third quarter of fiscal 2004.

 

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 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.

 

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 requirements 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 will record the fair value of future material guarantees, if any.

 

10



 

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).

 

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 delays 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.

 

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.

 

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 (“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

 

11



 

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.

 

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 six months ended October 31, 2002 and 2003.

 

12



 

 

 

Three Months
Ended October 31,

 

Six Months
Ended October 31,

 

 

 

2002

 

2003

 

2002

 

2003

 

Numerator:

 

 

 

 

 

 

 

 

 

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

 

$

4,715

 

$

5,694

 

$

7,272

 

$

9,165

 

Less:  Preferred dividends

 

(769

)

(808

)

(1,528

)

(1,606

)

Income from continuing operations before discontinued operations and cumulative effect of change in accounting principle available to common stockholders - Basic

 

$

3,946

 

$

4,886

 

$

5,744

 

$

7,559

 

Plus: Preferred dividends

 

 

808

 

 

 

Income from continuing operations before discontinued operations and cumulative effect of change in accounting principle available to common stockholders - Diluted

 

$

3,946

 

$

5,694

 

$

5,744

 

$

7,559

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Number of shares outstanding, end of period:

 

 

 

 

 

 

 

 

 

Class A common stock

 

22,724

 

23,032

 

22,724

 

23,032

 

Class B common stock

 

988

 

988

 

988

 

988

 

Effect of weighted average shares outstanding during period

 

(2

)

(87

)

(15

)

(172

)

Weighted average number of common shares used in basic EPS

 

23,710

 

23,933

 

23,697

 

23,848

 

Impact of potentially dilutive securities:

 

 

 

 

 

 

 

 

 

Dilutive effect of options, warrants, convertible preferred stock and contingent stock

 

229

 

5,226

 

250

 

404

 

Weighted average number of common shares used in diluted EPS

 

23,939

 

29,159

 

23,947

 

24,252

 

 

For the three and six months ended October 31, 2002, 8,556 and 7,486 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 six months ended October 31, 2003, 2,065 and 7,070 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 six months ended October 31, 2002 and 2003 is as follows:

 

 

 

Three Months Ended
October 31,

 

S ix Months Ended
October 31,

 

 

 

2002

 

2003

 

2002

 

2003

 

Net income (loss)

 

$

4,630

 

$

5,694

 

$

(56,683

)

$

11,888

 

Other comprehensive income

 

1,297

 

274

 

1,723

 

465

 

Comprehensive income (loss)

 

$

5,927

 

$

5,968

 

$

(54,960

)

$

12,353

 

 

 

The components of other comprehensive income for the three and six months ended October 31, 2002 and 2003 are shown as follows:

 

13



 

 

 

Three Months Ended

 

 

 

October 31, 2002

 

October 31, 2003

 

 

 

Gross

 

Tax
effect

 

Net of
Tax

 

Gross

 

Tax
effect

 

Net of
Tax

 

Changes in fair value of marketable securities during the period

 

$

(3

)

$

 

$

(3

)

$

 

$

 

$

 

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

 

2,186

 

886

 

1,300

 

460

 

186

 

274

 

 

 

$

2,183

 

$

886

 

$

1,297

 

$

460

 

$

186

 

$

274

 

 

 

 

Six Months Ended

 

 

 

October 31, 2002

 

October 31, 2003

 

 

 

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

 

2,965

 

1,202

 

1,763

 

782

 

317

 

465

 

 

 

$

2,925

 

$

1,202

 

$

1,723

 

$

782

 

$

317

 

$

465

 

 

 

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 commodity hedge contracts as of October 31, 2003.  These contracts expire between November 2003 and November 2005.  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 October 31, 2003 the fair value of these hedges was an obligation of $525, with the net amount (net of taxes of $213) recorded as an unrealized loss in accumulated other comprehensive income.

 

The Company is party to two interest swap agreements as of October 31, 2003 for an aggregate notional amount of $53,000 expiring in February, 2004.  The Company has evaluated these swaps and believes these instruments qualify for hedge accounting pursuant to SFAS No. 133. As of October 31, 2003, the fair value of these swaps was an obligation of $160, with the net amount (net of taxes of $65) recorded as an unrealized loss in other comprehensive income. The estimated net amount of the existing losses as of October 31, 2003 included in accumulated other comprehensive 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 $69. 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 electing to remain with the accounting in APB Opinion No. 25 disclose pro forma net income and earnings

 

14



 

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 No. 123 using the Black-Scholes option pricing model, the resulting pro forma net income (loss) available to commons stockholders, and pro forma net income (loss) available to common stockholders per share would be as follows:

 

 

 

Three Months Ended
October 31,

 

Six Months Ended
October 31,

 

 

 

2002

 

2003

 

2002

 

2003

 

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

 

$

3,861

 

$

4,886

 

$

(58,211

)

$

10,282

 

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

 

283

 

443

 

555

 

574

 

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

 

$

3,578

 

$

4,443

 

$

(58,766

)

$

9,708

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

 

 

 

As reported

 

$

0.17

 

$

0.20

 

$

(2.46

)

$

0.43

 

Pro forma

 

$

0.15

 

$

0.19

 

$

(2.48

)

$

0.41

 

Diluted income (loss) per common share:

 

 

 

 

 

 

 

 

 

As reported

 

$

0.16

 

$

0.20

 

$

(2.43

)

$

0.42

 

Pro forma

 

$

0.15

 

$

0.18

 

$

(2.45

)

$

0.40

 

 

In accordance with SFAS No. 123, the fair value of each option grant has been estimated as the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

 

 

Six Months
Ended
October 31, 2002

 

Six Months
Ended
October 31, 2003

 

 

 

 

 

 

 

Risk free interest rate

 

3.00% - 4.50%

 

2.34% - 3.23%

 

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 six months ended October 31, 2002 or 2003.

 

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 materials.  In September 2002, the Company transferred the export brokerage operation and in June 2003 the

 

15



 

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 three and six months ended October 31, 2002, residue recycling operations.

 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Three Months Ended October 31, 2002(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

41,798

 

$

24,505

 

$

18,210

 

$

26,375

 

$

3,682

 

Inter-segment Revenues

 

11,113

 

11,595

 

3,830

 

1,926

 

3,618

 

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

 

(83

)

6,040

 

1,460

 

254

 

(2,956

)

Total Assets

 

$

218,602

 

$

108,045

 

$

108,034

 

$

67,108

 

$

70,793

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Three Months Ended October 31, 2002(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

114,570

 

 

 

 

 

 

 

Inter-segment Revenues

 

(32,082

)

 

 

 

 

 

 

 

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

 

 

4,715

 

 

 

 

 

 

 

Total Assets

 

$

 

$

572,582

 

 

 

 

 

 

 

 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Three Months Ended October 31, 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

43,856

 

$

26,878

 

$

18,822

 

$

17,975

 

$

4,443

 

Inter-segment Revenues

 

13,333

 

13,149

 

4,233

 

118

 

 

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

 

(1,152

)

5,504

 

451

 

648

 

243

 

Total Assets

 

$

242,491

 

$

115,131

 

$

111,542

 

$

69,058

 

$

68,960

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Three Months Ended October 31, 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

111,974

 

 

 

 

 

 

 

Inter-segment Revenues

 

(30,833

)

 

 

 

 

 

 

 

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

 

 

5,694

 

 

 

 

 

 

 

Total Assets

 

$

 

$

607,182

 

 

 

 

 

 

 

 

16



 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Six Months Ended October 31, 2002(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

81,811

 

$

48,977

 

$

35,535

 

$

56,722

 

$

7,556

 

Inter-segment Revenues

 

21,256

 

23,574

 

7,724

 

5,711

 

6,867

 

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

 

(542

)

11,555

 

2,532

 

60

 

(6,333

)

Total Assets

 

$

218,602

 

$

108,045

 

$

108,034

 

$

67,108

 

$

70,793

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Six Months Ended October 31, 2002(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

230,601

 

 

 

 

 

 

 

Inter-segment Revenues

 

(65,132

)

 

 

 

 

 

 

 

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

 

 

7,272

 

 

 

 

 

 

 

Total Assets

 

$

 

$

572,582

 

 

 

 

 

 

 

 

 

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Other

 

Six Months Ended October 31, 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

87,513

 

$

52,847

 

$

39,427

 

$

37,465

 

$

8,611

 

Inter-segment Revenues

 

26,565

 

25,700

 

7,603

 

919

 

2,394

 

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

 

(2,521

)

10,946

 

1,432

 

951

 

(1,643

)

Total Assets

 

$

242,491

 

$

115,131

 

$

111,542

 

$

69,058

 

$

68,960

 

 

 

 

Eliminations

 

Total

 

 

 

 

 

 

 

Six Months Ended October 31, 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside Revenues

 

$

 

$

225,863

 

 

 

 

 

 

 

Inter-segment Revenues

 

(63,181

)

 

 

 

 

 

 

 

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

 

 

9,165

 

 

 

 

 

 

 

Total Assets

 

$

 

$

607,182

 

 

 

 

 

 

 

 


(1)                                  Segment data for the three and six months ended October 31, 2002 has 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
October 31,

 

Six Months Ended
October 31,

 

 

 

2002

 

2003

 

2002

 

2003

 

Collection

 

$

51,043

 

$

55,286

 

$

102,310

 

$

110,839

 

Landfill/disposal facilities

 

17,378

 

17,549

 

32,985

 

35,376

 

Transfer

 

13,324

 

14,413

 

26,466

 

28,660

 

Recycling

 

22,525

 

24,726

 

40,179

 

47,693

 

Brokerage

 

10,300

 

 

28,564

 

3,295

 

Other

 

 

 

97

 

 

Total revenues

 

$

114,570

 

$

111,974

 

$

230,601

 

$

225,863

 

 

17



 

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 will be 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 October 31, 2003; the condensed consolidating results of operations for the three and six months ended October 31, 2002 and 2003; and the condensed consolidating statements of cash flows for the six months ended October 31, 2002 and 2003 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.

 

18



 

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

 

 

19



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF OCTOBER 31, 2003

(Unaudited)

(In thousands)

 

 

 

Parent

 

Guarantors

 

Non -
Guarantors

 

Elimination

 

Consolidated

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,491

 

$

1,832

 

$

271

 

$

 

$

3,594

 

Accounts receivable - trade, net of allowance for doubtful accounts

 

345

 

47,902

 

1,203

 

 

49,450

 

Prepaid expenses

 

2,585

 

4,919

 

 

(860

)

6,644

 

Other current assets

 

4,432

 

2,590

 

13,352

 

 

20,374

 

Total current assets

 

8,853

 

57,243

 

14,826

 

 

80,062

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,573

 

296,652

 

3,273

 

 

302,498

 

Intangible assets, net

 

 

162,972

 

 

 

162,972

 

Investment in subsidiaries

 

(30,051

)

 

 

30,051

 

 

Assets under contractual obligation

 

 

5,649

 

249

 

 

5,898

 

Other non-current assets

 

18,891

 

40,920

 

320

 

(4,379

)

55,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,587

)

506,193

 

3,842

 

25,672

 

527,120

 

 

 

 

 

 

 

 

 

 

 

 

 

Intercompany receivable

 

518,916

 

(522,264

)

(1,031

)

4,379

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

519,182

 

$

41,172

 

$

17,637

 

$

29,191

 

$

607,182

 

 

 

 

Parent

 

Guarantors

 

Non -
Guarantors

 

Elimination

 

Consolidated

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,430

 

$

28,683

 

$

116

 

$

 

$

30,229

 

Accrued closure and post-closure costs, current portion

 

 

476

 

524

 

 

1,000

 

Other current liabilities

 

13,819

 

12,129

 

12,531

 

(860

37,619

 

Total current liabilities

 

15,249

 

41,288

 

13,171

 

 

68,848

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

298,500

 

2,216

 

951

 

 

301,667

 

Deferred income taxes

 

7,526

 

 

 

 

7,526

 

Other long-term liabilities

 

61

 

28,902

 

2,332

 

 

31,295