<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report September 10, 1998
WASTE CONNECTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19674
(Commission File Number)
94-3283464
(IRS Employer Identification No.)
2260 Douglas Boulevard, Suite 280, Roseville, California 95661
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (916) 772-2221
Not Applicable
(Former name or former address, if changed since last report.)
1
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets
On August 11, 1998, Waste Connections, Inc. ("WCI") filed a Form 8-K
describing the merger on July 31, 1998, of WCI Acquisition Corporation, a
Nebraska corporation wholly owned by WCI, into Shrader Refuse and Recycling
Service Company ("Shrader"), a Nebraska corporation, and the acquisition by
Shrader of certain real estate used in Shrader's business. Certain financial
statements of Shrader and certain pro forma financial data were not then
available and therefore were not included in the August 11, 1998, Form 8-K
filing. WCI hereby amends its Form 8-K filed on August 11, 1998, to include the
financial statements and pro forma financial information set forth below in
Item 7.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
Shrader Refuse and Recycling Service Company
Report of Grant Thornton LLP, Independent Auditors
Balance Sheets as of September 30, 1996 and 1997
(Audited) and June 30, 1998 (Unaudited)
Statements of Income for the years ended September 30,
1996 and 1997 (Audited) and the nine months ended
June 30, 1997 and 1998 (Unaudited)
Statement of Stockholders Equity for the years ended
September 30, 1996 and 1997 (Audited) and the
nine months ended June 30, 1998 (Unaudited)
Statements of Cash Flows for the years ended September
30, 1996 and 1997 (Audited) and the nine months
ended June 30, 1997 and 1998 (Unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information.
Waste Connections, Inc. Unaudited Pro Forma Financial Statements
Introduction to Unaudited Pro Forma Consolidated
Financial Statements
Unaudited Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1997
Unaudited Pro Forma Consolidated Statement of
Operations for the six months ended June 30, 1998
Notes to Unaudited Pro Forma Consolidated Statements
of Operations
Unaudited Pro Forma Consolidated Balance Sheet as of
June 30, 1998
Notes to Unaudited Pro Forma Consolidated Balance Sheet
2
<PAGE> 3
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Shrader Refuse and Recycling Service Company
We have audited the accompanying balance sheets of Shrader Refuse and
Recycling Service Company as of September 30, 1996 and 1997, and the related
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Shrader Refuse and Recycling
Service Company at September 30, 1996 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Lincoln, Nebraska
August 24, 1998
3
<PAGE> 4
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- JUNE 30,
1996 1997 1998
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 287 $ 116 $ 342
Marketable equity securities.............................. 246 403 576
Accounts receivable, less allowance for doubtful accounts
of $29 and $32 at September 30, 1996 and 1997,
respectively........................................... 674 897 808
Prepaid expenses.......................................... 37 69 79
------ ------ ------
Total current assets.............................. 1,244 1,485 1,805
Property and equipment, net................................. 3,939 5,195 5,112
Goodwill, net............................................... 223 214 209
Other assets................................................ 122 157 208
------ ------ ------
$5,528 $7,051 $7,334
====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 244 $ 202 $ 323
Accrued liabilities....................................... 100 103 117
Current portion of long-term debt......................... 763 703 703
Current portion of capital lease obligations.............. 18 97 97
------ ------ ------
Total current liabilities......................... 1,125 1,105 1,240
Long-term debt, net of current portion...................... 1,676 1,258 959
Capital lease obligations, net of current portion........... 338 1,583 1,511
Commitments and contingencies (Note F)
Stockholders' equity:
Common stock: $1 par value; 10,000 shares authorized;
8,571 shares issued and outstanding.................. 9 9 9
Retained earnings......................................... 2,338 3,012 3,465
Net unrealized gain on marketable equity securities....... 42 84 150
------ ------ ------
Total stockholders' equity........................ 2,389 3,105 3,624
------ ------ ------
$5,528 $7,051 $7,334
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE
YEAR ENDED MONTHS ENDED
SEPTEMBER 30, JUNE 30,
---------------- ----------------
1996 1997 1997 1998
------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................................ $5,461 $6,896 $5,027 $5,382
Operating expenses:
Cost of operations.................................... 3,861 4,601 3,241 3,479
Selling, general and administrative................... 516 567 426 425
Depreciation and amortization......................... 565 770 546 697
------ ------ ------ ------
4,942 5,938 4,213 4,601
------ ------ ------ ------
Income from operations.................................. 519 958 814 781
Other income (expense):
Interest expense...................................... (206) (292) (219) (287)
Other income, net..................................... 35 59 19 19
------ ------ ------ ------
(171) (233) (200) (268)
------ ------ ------ ------
Net income.............................................. $ 348 $ 725 $ 614 $ 513
====== ====== ====== ======
Pro forma income taxes (unaudited) (Note G)............. $ 141 $ 290 $ 245 $ 206
------ ------ ------ ------
Pro forma net income (unaudited) (Note G)............... $ 207 $ 435 $ 369 $ 307
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1996 AND 1997
AND THE NINE MONTHS ENDED JUNE 30, 1998
(INFORMATION RELATED TO THE NINE MONTHS ENDED JUNE 30, 1998 IS UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN (LOSS) ON
COMMON STOCK MARKETABLE TOTAL
--------------- RETAINED EQUITY STOCKHOLDERS'
SHARES AMOUNT EARNINGS SECURITIES EQUITY
------ ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance October 1, 1995........................ 8,571 $9 $2,154 $ (2) $2,161
Net income..................................... -- -- 348 -- 348
Distributions to stockholders.................. -- -- (164) -- (164)
Change in net unrealized gain (loss) on
marketable equity securities................. -- -- -- 44 44
----- -- ------ ---- ------
Balance at September 30, 1996.................. 8,571 9 2,338 42 2,389
Net income..................................... -- -- 725 -- 725
Distributions to stockholders.................. -- -- (51) -- (51)
Change in net unrealized gain (loss) on
marketable equity securities................. -- -- -- 42 42
----- -- ------ ---- ------
Balance at September 30, 1997.................. 8,571 9 3,012 84 3,105
Net income..................................... -- -- 513 -- 513
Distributions to stockholders.................. -- -- (60) -- (60)
Change in net unrealized gain (loss) on
marketable equity securities................. -- -- -- 66 66
----- -- ------ ---- ------
Balance at June 30, 1998....................... 8,571 $9 $3,465 $150 $3,624
===== == ====== ==== ======
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE> 7
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE
YEAR ENDED MONTHS ENDED
SEPTEMBER 30, JUNE 30,
----------------- ----------------
1996 1997 1997 1998
------- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 348 $ 725 $ 614 $ 513
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 565 770 546 697
Realized (gain) loss on marketable equity securities... 8 (23) (19) (19)
Gain on sale of property and equipment................. (6) (8) -- --
Changes in operating assets and liabilities:
Accounts receivable, net............................. (25) (223) (49) 89
Prepaid expenses..................................... 16 (32) (7) (10)
Other assets......................................... (6) (35) (85) (51)
Accounts payable..................................... 73 (42) (30) 121
Accrued liabilities.................................. 23 3 18 14
------- ------ ------ ------
Net cash provided by operating activities......... 996 1,135 988 1,354
------- ------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment........... (2,010) (655) (395) (609)
Proceeds from sale of property and equipment.............. 6 26 -- --
Purchases of marketable equity securities................. (272) (307) (273) (232)
Proceeds from sale of marketable equity securities........ 81 215 184 144
------- ------ ------ ------
Net cash used in investing activities............. (2,195) (721) (484) (697)
------- ------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt.............................. 1,777 300 120 250
Principal payments on long-term debt and capital lease
obligations............................................ (518) (834) (617) (621)
Cash distributions made to stockholders................... (164) (51) (39) (60)
------- ------ ------ ------
Net cash provided by (used in) financing
activities...................................... 1,095 (585) (536) (431)
------- ------ ------ ------
Net change in cash and cash equivalents..................... (104) (171) (32) 226
Cash and cash equivalents:
Beginning of period....................................... 391 287 287 116
------- ------ ------ ------
End of period............................................. $ 287 $ 116 $ 255 $ 342
======= ====== ====== ======
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION AND
NON-CASH TRANSACTIONS:
Cash paid for interest.................................... $ 206 $ 299 $ 219 $ 287
======= ====== ====== ======
Capital lease obligations incurred for the purchase of
property and equipment................................. $ 376 $1,380 $1,380 $ --
======= ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE A -- ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Organization and Business
Shrader Refuse and Recycling Service Company (the "Company") is a
non-hazardous solid waste services company that provides collection, hauling,
disposal and recycling services to residential and commercial customers in
various counties of Nebraska.
The Company derives a portion of its revenue from exclusive municipal
contracts, of which a significant number will be subject to competitive bidding
at some time in the future. The Company intends to bid on additional municipal
contracts as a means of adding customers. There can be no assurance that the
Company will be the successful bidder to obtain or retain contracts that come up
for competitive bidding.
2. Sale of the Company
On July 31, 1998, the Company's stockholders sold all capital stock of the
Company to Waste Connections, Inc. ("WCI") for cash and common stock of WCI.
3. Interim Financial Information
The unaudited interim financial statements as of June 30, 1998 and for the
nine months ended June 30, 1997 and 1998 have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the nine months ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending September 30,
1998.
4. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
5. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
6. Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of accounts receivable. Credit
risk on accounts receivable is minimized as a result of the large and diverse
nature of the Company's customer base. Credit losses have been within
management's expectations.
7. Marketable Equity Securities
The Company's marketable equity securities are classified as "available for
sale" and stated at market value. Unrealized holding gains and losses on such
securities are reported as a separate component of stockholders' equity until
realized.
8
<PAGE> 9
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE A -- ORGANIZATION, BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Gains and losses on the disposition of marketable equity securities are
determined using the first-in, first-out method. Declines in the fair value of
individual securities below their cost that are other than temporary are
recorded as realized losses through a charge to income.
8. Property and Equipment
Property and equipment are stated at cost. Improvements or betterments
which significantly extend the life of an asset are capitalized. Expenditures
for maintenance and repair costs are charged to operations as incurred. The cost
of assets retired or otherwise disposed of and the related accumulated
depreciation are eliminated from the accounts in the year of disposal. Gains and
losses resulting from property disposals are included in other income or
expense. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, or lease term, whichever is shorter.
The estimated useful lives of property and equipment are as follows:
<TABLE>
<S> <C>
Buildings under capital leases........................... 10 years
Machinery and equipment.................................. 3-10 years
Rolling stock............................................ 5-10 years
Containers............................................... 5-12 years
</TABLE>
9. Goodwill
Goodwill represents the excess of the purchase price over the fair value of
the tangible net assets of entities previously acquired by the Company and is
amortized on a straight-line basis over the period of expected benefit of 40
years.
10. Revenue Recognition
The Company recognizes revenues as services are provided. Certain customers
are billed in advance and, accordingly, recognition of the related revenues is
deferred until the services are provided.
11. Income Taxes
The Company operates under Subchapter "S" of the Internal Revenue Code for
federal and state income tax reporting purposes. Consequently, all of the income
tax attributes and liabilities of the Company's operations flow through to the
individual shareholders.
12. Significant Customer
The Company has one major customer which represents 16% of total revenues
for the year ended September 30, 1997.
NOTE B -- MARKETABLE EQUITY SECURITIES
At September 30, 1996 and 1997, the aggregate market value of marketable
equity securities exceeded their aggregate cost by $42 and $84, respectively.
Gross unrealized gains totaled $44 and $89 and gross unrealized losses totaled
$2 and $5 at September 30, 1996 and 1997, respectively.
9
<PAGE> 10
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE B -- MARKETABLE EQUITY SECURITIES (CONTINUED)
Proceeds from sales of marketable equity securities during the years ended
September 30, 1996 and 1997 were $81 and $215, respectively. Gross gains of $4
and gross losses of $12 were realized on sales during 1996. Gross gains of $37
and gross losses of $14 were realized on sales during 1997.
NOTE C -- PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- JUNE 30,
1996 1997 1998
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Buildings under capital leases....................... $ 376 $1,756 $1,756
Machinery and equipment.............................. 440 455 471
Rolling stock........................................ 3,359 3,656 4,009
Containers........................................... 1,781 2,089 2,328
------ ------ ------
5,956 7,956 8,564
Less accumulated depreciation and amortization....... 2,017 2,761 3,452
------ ------ ------
$3,939 $5,195 $5,112
====== ====== ======
</TABLE>
NOTE D -- GOODWILL
Goodwill is comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- JUNE 30,
1996 1997 1998
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Goodwill............................................. $ 351 $ 351 $ 351
Accumulated amortization............................. 128 137 142
------ ------ ------
$ 223 $ 214 $ 209
====== ====== ======
</TABLE>
NOTE E -- FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------- JUNE 30,
1996 1997 1998
------ ------ -------------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to bank bearing interest at rates
ranging from 7.75% to 9.50%, payable in monthly
installments of principal and interest; maturing
through August 2001................................ $2,244 $1,766 $1,467
Note payable to related party, with interest at 9%
per annum payable quarterly until monthly
installments of principal and interest commence on
November 1997. This note matures July 2003 and is
without collateral................................. 195 195 195
------ ------ ------
2,439 1,961 1,662
Less current portion................................. 763 703 703
------ ------ ------
Long-term debt, net of current portion............... $1,676 $1,258 $ 959
====== ====== ======
</TABLE>
10
<PAGE> 11
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE E -- FINANCING ARRANGEMENTS (CONTINUED)
On July 1, 1998, the Company entered into an $875 credit facility with a
bank maturing December 2001. The credit facility is a line of credit through
January 1, 1999, whereupon all borrowings under the facility will be refinanced
on a note payable due in monthly installments through December 2001. Borrowings
bear interest at 8.0% per annum. During July 1998, the Company utilized all of
the credit facility for equipment purchases.
The notes payable to bank and the credit facility are collateralized by
substantially all of the Company's assets and the personal guarantees of the
stockholders. The Company is subject to certain restrictive covenants with the
bank, which among other things, require that a specified debt service coverage
ratio be maintained and restrict the payment of dividends solely to amounts
sufficient to meet the tax requirements of the stockholders relative to the
Company's status as a Subchapter "S" Corporation. The Company was in compliance
with or received waivers of the covenant requirements for the year ended
September 30, 1997.
As of September 30, 1997, aggregate contractual future principal payments
by fiscal year are due as follows:
<TABLE>
<S> <C>
1998................................................ $ 703
1999................................................ 546
2000................................................ 355
2001................................................ 284
2002................................................ 39
Thereafter.......................................... 34
------
$1,961
======
</TABLE>
In conjunction with the acquisition of the Company by WCI on July 31, 1998,
all of the outstanding long-term debt of the Company was repaid.
NOTE F -- COMMITMENTS AND CONTINGENCIES
COMMITMENTS
Leases
The Company leases three facilities from a related party under two ten-year
leases expiring in 2005 and 2007. For financial reporting purposes, minimum
lease rentals relating to the facilities have been capitalized. The related
assets and obligations have been recorded using the Company's implicit borrowing
rate at the inception of the leases. The following amounts are included in
property and equipment as buildings under capital leases:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------- JUNE 30,
1996 1997 1998
---- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Buildings....................................... $376 $1,756 $1,756
Less accumulated amortization................... 38 121 253
---- ------ ------
$338 $1,635 $1,503
==== ====== ======
</TABLE>
11
<PAGE> 12
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE F -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
The following is a schedule by fiscal years of future minimum lease
payments under capital leases together with the present value of the net minimum
lease payments as of September 30, 1997:
<TABLE>
<S> <C>
1998........................................................ $ 321
1999........................................................ 321
2000........................................................ 321
2001........................................................ 321
2002........................................................ 321
Thereafter.................................................. 1,368
------
Total minimum lease payments................................ 2,973
Less amount representing interest........................... 1,293
------
$1,680
======
Current portion............................................. $ 97
Long-term portion........................................... 1,583
------
$1,680
======
</TABLE>
Prior to entering into the current leases, the Company leased these
facilities on a month-to-month basis from the related party. The Company
recognized rent expense of $171 and $117 in fiscal 1996 and 1997, respectively.
Total rent and minimum lease payments to the related party during fiscal 1996
and 1997 were $249 and $260, respectively.
In conjunction with the acquisition of the Company by WCI on July 31, 1998,
the current leases were terminated, two of the three facilities were acquired
and the remaining facility was leased under a two-year lease with an option to
extend for an additional two years through July 2002.
Noncompete Agreement
The Company has a noncompete agreement with a related party that requires
the Company to pay $4 a month through October 1997 provided the related party
abides by the noncompete agreement. The Company paid the related party $44 in
each of the fiscal years ended September 30, 1996 and 1997.
CONTINGENCIES
Legal Proceedings
In the normal course of its business and as a result of the extensive
governmental regulation of the solid 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 deny renewal of an operating
permit held by the Company. From time to time the Company may also be subject to
actions brought by citizens' groups or adjacent landowners in connection with
the permitting and licensing of landfills and transfer stations, or alleging
environmental damage or violations of the permits and licenses pursuant to which
the Company operates.
In addition, the Company may become party to various claims and suits
pending for alleged damages to persons and property, alleged violations of
certain laws and alleged liabilities arising out of matters occurring
12
<PAGE> 13
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE F -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
during the normal operation of the waste management business. As of September
30, 1997, there is no current proceeding or litigation involving the Company
that the Company believes will have a material adverse impact on the Company's
business, financial condition, results of operations or cash flows.
NOTE G -- PRO FORMA INCOME TAX INFORMATION (UNAUDITED)
Unaudited pro forma information reflects income tax expense as if the
Company had been subject to federal and state income taxes. The pro forma
provisions for income taxes for the years ended September 30, 1996 and 1997 and
the nine month periods ended June 30, 1997 and 1998 differ from the amounts
computed by applying the applicable statutory federal income tax rate (34%) to
income before income taxes due to state income taxes and certain non-deductible
expenses.
The following is a summary of pro forma income taxes for the years ended
September 30, 1996 and 1997:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
--------------
1996 1997
----- -----
<S> <C> <C>
Current:
Federal................................................... $ 47 $ 66
State..................................................... 10 14
Deferred:
Federal................................................... 69 171
State..................................................... 15 39
---- ----
Pro forma income taxes...................................... $141 $290
==== ====
</TABLE>
The Company's pro forma deferred income tax liabilities of approximately
$739 and $949 at September 30, 1996 and 1997, respectively, relate principally
to differences between tax and financial methods of reporting depreciation
expense and the use of the cash method of accounting for income tax purposes
which gives rise to differences between financial statement and tax return
recognition of receivables, prepaid expenses, accounts payable and accrued
liabilities.
NOTE H -- FINANCIAL INSTRUMENTS
The following estimated fair value information pertains to the Company's
financial instruments and does not purport to represent the aggregate net fair
value of the Company.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents: The carrying amount approximates fair value
because of the short maturity of those instruments.
Marketable equity securities: Quoted market prices for the Company's
marketable equity securities are used to estimate fair value.
Long-term debt and capital lease obligations: Current incremental borrowing
rates for similar type borrowings are used to estimate the fair value of the
Company's long-term debt and capital lease obligations.
13
<PAGE> 14
SHRADER REFUSE AND RECYCLING SERVICE COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1997
(DOLLARS IN THOUSANDS)
(INFORMATION RELATING TO JUNE 30, 1998 AND THE NINE
MONTHS ENDED JUNE 30, 1997 AND 1998 IS UNAUDITED.)
NOTE H -- FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amounts and estimated fair values of the Company's financial
instruments are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
--------------------- ---------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Financial Assets:
Cash and cash equivalents......................... $ 287 $ 287 $ 116 $ 116
Marketable equity securities...................... 246 246 403 403
Financial Liabilities:
Long-term debt.................................... 2,439 2,528 1,961 1,970
Capital lease obligations......................... 356 486 1,680 2,038
</TABLE>
14
<PAGE> 15
WASTE CONNECTIONS, INC.
INTRODUCTION TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
1998 assumes the Company's acquisition of Shrader Refuse and Recycling Service
Company ("Shrader") occurred on that date. The Unaudited Pro Forma Consolidated
Statements of Operations for the year ended December 31, 1997 and the six months
ended June 30, 1998, give effect to the business combinations involving Waste
Connections, Inc., (the "Company"), its predecessors, Madera Disposal Systems,
Inc. ("Madera"), Arrow Sanitary Service, Inc. ("Arrow") and Shrader as if such
business combinations occurred on January 1, 1997. Such combinations were
accounted for using the purchase method of accounting.
The Company has preliminarily analyzed the savings that it expects to be
realized by consolidating certain operational and general and administrative
functions. The Company has not and cannot quantify all of these savings due to
the short period of time since the predecessor, Madera, Arrow and Shrader
acquisitions occurred. It is anticipated that these savings will be partially
offset by the costs of being a publicly held company and the incremental
increase in costs related to the Company's corporate management. However, these
costs, like the savings they offset, cannot be quantified accurately. Neither
the anticipated savings nor the anticipated costs have been included in the
Unaudited Pro Forma Consolidated Financial Statements.
The Unaudited Pro Forma Consolidated Financial Statements include certain
adjustments to the historical financial statements, including adjusting
depreciation expense to reflect purchase price allocations, adjusting interest
expense to reflect acquisition-related debt and the related income tax effects
of these adjustments.
The pro forma adjustments are based on preliminary estimates, available
information and certain assumptions and may be revised as additional information
becomes available. The Unaudited Pro Forma Consolidated Financial Statements do
not purport to represent what the Company's financial position or results of
operations would actually have been if such transactions in fact had occurred on
those dates or to project the Company's financial position or results of
operations for any future period. Because the Company, its predecessors, Madera,
Arrow and Shrader were not under common control or management for all periods,
historical combined results may not be comparable to, or indicative of, future
performance. The Unaudited Pro Forma Consolidated Financial Statements should be
read in conjunction with the other financial statements and notes thereto
included in the Company's Prospectus dated September 9, 1998, as well as
information included under the headings "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors" included therein.
15
<PAGE> 16
WASTE CONNECTIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WASTE PRO FORMA
CONNECTIONS, WASTE
INC. CONNECTIONS,
PERIOD FROM PRO FORMA INC. AND MADERA
INCEPTION PREDECESSORS ADJUSTMENTS PREDECESSORS DISPOSAL
(SEPTEMBER 9, COMBINED NINE TO COMBINE WASTE COMBINED SYSTEMS, INC.
1997) TO MONTHS ENDED CONNECTIONS, YEAR ENDED YEAR ENDED
DECEMBER 31, SEPTEMBER 30, INC. AND DECEMBER 31, DECEMBER 31,
1997 1997 PREDECESSORS 1997 1997
------------- ------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 6,237 $18,114 $ -- $24,351 $7,845
Operating expenses:
Cost of operations............. 4,703 14,753 (146)(a) 19,015 5,289
(195)(b)
(100)(c)
Selling, general and
administrative............... 619 3,009 (570)(d) 2,926 1,041
(132)(e)
Depreciation and
amortization................. 354 1,083 81(f) 1,416 627
(102)(g)
Start-up and integration....... 493 -- -- 493 --
Stock compensation............. 4,395 -- -- 4,395 --
--------- ------- ------ ------- ------
Income (loss) from operations... (4,327) (731) 1,164 (3,894) 888
Interest expense................ (1,035) (456) 456(h) (1,253) (280)
(218)(h)
Other income (expense), net..... (36) 14 -- (22) 173
--------- ------- ------ ------- ------
Income (loss) before (provision)
benefit for income taxes....... (5,398) (1,173) 1,402 (5,169) 781
(Provision) benefit for income
taxes.......................... 332 -- (561)(i) 240 --
469(j)
--------- ------- ------ ------- ------
Net income (loss)............... $ (5,066) $(1,173) $1,310 $(4,929) $ 781
========= ======= ====== ======= ======
Redeemable convertible preferred
stock accretion................ $ (531)
---------
Net loss applicable to common
stockholders................... $ (5,597)
=========
Basic net loss per common
share.......................... $ (2.99)
=========
Shares used in the per share
calculation.................... 1,872,567
=========
<CAPTION>
SHRADER
ARROW REFUSE
SANITARY SERVICE
SERVICE, INC. COMPANY
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, PRO FORMA
1997 1997 ADJUSTMENTS PRO FORMA
-------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues........................ $6,209 6,896 -- $ 45,301
Operating expenses:
Cost of operations............. 4,970 4,601 -- 33,875
Selling, general and
administrative............... 776 567 (83)(k) 5,043
(184)(v)
Depreciation and
amortization................. 143 770 (377)(l) 2,984
364(m)
(78)(q)
265(r)
(585)(w)
439(x)
Start-up and integration....... -- -- -- 493
Stock compensation............. -- -- -- 4,395
------ ------- ------- ---------
Income (loss) from operations... 320 958 239 (1,489)
Interest expense................ (72) (292) 280(n) (3,527)
(897)(o)
72(s)
(606)(t)
(771)(z)
292(y)
Other income (expense), net..... (2) 59
-- 208
------ ------- ------- ---------
Income (loss) before (provision)
benefit for income taxes....... 246 725 (1,391) (4,808)
(Provision) benefit for income
taxes.......................... (117) (297)(p) 20
198(i)
226(u)
(290)(aa)
60(ab)
------ ------- ------- ---------
Net income (loss)............... $ 129 725 $(1,494) $ (4,788)
====== ======= ======= =========
Redeemable convertible preferred
stock accretion................ $ (531)
---------
Net loss applicable to common
stockholders................... $ (5,319)
=========
Basic net loss per common
share.......................... $ (2.03)
=========
Shares used in the per share
calculation.................... 2,623,883
=========
</TABLE>
See accompanying notes.
16
<PAGE> 17
WASTE CONNECTIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WASTE
CONNECTIONS, MADERA SHRADER
INC. DISPOSAL ARROW SANITARY REFUSE SERVICE
CONSOLIDATED SYSTEMS, INC. SERVICE, INC. COMPANY
SIX MONTHS ONE MONTH FIVE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED PRO FORMA PRO FORMA
JUNE 30, 1998 JANUARY 31, 1998 MAY 31, 1998 JUNE 30, 1998 ADJUSTMENTS COMBINED
------------- ---------------- -------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................... $ 18,520 $ 611 $2,508 $3,505 $ -- $ 25,144
Operating expenses:
Cost of operations.......... 12,830 412 1,836 2,264 -- 17,342
Selling, general and
administrative............ 1,868 112 385 310 (19)(k) 2,564
(92)(v)
Depreciation and
amortization.............. 1,359 69 67 471 (19)(l)(m) 1,877
90(q)(r)
(160)(w)(x)
Stock compensation.......... 441 -- -- -- -- 441
--------- ----- ------ ------ ----- ---------
Income (loss) from
operations.................. 2,022 18 220 460 200 2,920
Interest expense.............. (731) (289) (14) (191) 14(s) (1,631)
(239)(t)
191(y)
(372)(z)
Other income (expense), net... -- 16 2 11 -- 29
--------- ----- ------ ------ ----- ---------
Income (loss) before
(provision) benefit for
income taxes................ 1,291 (255) 208 280 (206) 1,318
(Provision) benefit for income
taxes....................... (717) -- (89) -- 83(p)(i) (669)
(64)(aa)(ab)
118(u)
--------- ----- ------ ------ ----- ---------
Net income (loss) before
extraordinary item.......... $ 573 $(255) $ 119 $ 280 $ (69) $ 649
========= ===== ====== ====== ===== =========
Extraordinary Item -- early
extinguishment of debt, net
of tax benefit of $165...... (815) (815)
--------- ---------
Net loss...................... $ (242) $ (166)
========= =========
Redeemable convertible
preferred stock accretion... $ (917) $ (917)
--------- ---------
Net loss applicable to common
stockholders................ $ (1,159) $ (1,083)
========= =========
Basic and diluted earnings per
common share
Income (loss) before
extraordinary item.......... $ (0.09) $ (0.06)
Extraordinary item............ (0.20) (0.18)
--------- ---------
Net loss per common share..... $ (0.31) $ (0.24)
========= =========
Shares used in the per share
calculations:
Basic and diluted........... 3,714,027 4,449,905
========= =========
</TABLE>
See accompanying notes.
17
<PAGE> 18
WASTE CONNECTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
ASSUMPTIONS. The unaudited pro forma consolidated statements of operations
for the year ended December 31, 1997, and for the six months ended June 30, 1998
are presented as if the acquisitions of the Company's predecessors, Madera,
Arrow and Shrader had occurred on January 1, 1997.
ACQUISITIONS. The acquisitions are being accounted for under the purchase
method of accounting for business combinations. Certain items affecting the
purchase prices and their allocations are preliminary. The preliminary purchase
prices of Madera, Arrow and Shrader consist of the following:
<TABLE>
<CAPTION>
MADERA ARROW SHRADER
------- ------- -------
<S> <C> <C> <C>
Cash paid to shareholders........................... $6,949 $ 7,537 $ 8,106
Common stock issued................................. 7,500 3,045 9,997
Liabilities assumed................................. 4,256 769 2,102
Sellers note........................................ -- -- 378
Acquisition costs................................... 180 125 225
Common stock warrants issued........................ 954 -- --
------- ------- -------
$19,839 $11,476 $20,808
======= ======= =======
</TABLE>
The Company has preliminarily allocated the purchase prices as follows:
<TABLE>
<CAPTION>
MADERA ARROW SHRADER
------- ------- -------
<S> <C> <C> <C>
Tangible assets purchased........................... $4,534 $ 898 $ 4,378
Goodwill............................................ 14,580 10,528 16,300
Covenant not to compete............................. -- 50 130
Long-term franchise agreements and contracts........ 725 -- --
------- ------- -------
$19,839 $11,476 $20,808
======= ======= =======
</TABLE>
PRO FORMA ADJUSTMENTS. The following adjustments have been made to the
unaudited pro forma consolidated statements of operations:
(a) To eliminate BFI corporate environmental expense allocation related to
BFI landfill closure costs which do not exist for the Company.
(b) To record amortization of the loss contract accrual that was recorded
in connection with the acquisitions of the predecessor operations. The
loss contract accrual is being amortized to operating expenses over
the related terms of the loss contracts which range from 6 to 65
months. The loss contract accrual represents the estimated incremental
losses to the Company related to certain unfavorable contracts the
Company acquired in connection with the acquisition of the predecessor
operations.
(c) To reduce facilities lease expense to the amounts provided for in the
sublease agreement entered into with BFI in connection with the
acquisitions of the predecessor operations. The sublease agreement was
directly attributable to, a required element of, and a condition to
the closing of the acquisition.
(d) To reduce BFI corporate overhead expense allocations to the amount of
corporate overhead currently being incurred by the Company.
(e) To eliminate consulting expenses incurred by BFI related to the
acquisition of The Disposal Group which the Company did not assume in
connection with the acquisitions of the predecessors. The
non-assumption of the consulting agreement was directly attributable
to, a required element of, and a condition to the closing of the
acquisition.
18
<PAGE> 19
WASTE CONNECTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(f) To increase depreciation for the increase in the property and
equipment's carrying value to fair value related to the Madera
acquisition.
(g) To decrease goodwill amortization for the lower goodwill amount
recorded by the Company in connection with its acquisition of the
predecessor operations.
(h) To eliminate the predecessor's interest expense and record interest
expense on the debt obligations incurred by the Company in connection
with the acquisitions of the predecessors.
(i) To record the estimated tax provision associated with the pro forma
adjustments for the Madera acquisition using the Company's estimated
effective tax rate of 40%.
(j) To record an income tax benefit for the net operating loss incurred by
the Company's predecessors for the nine months ended September 30,
1997 using the Company's effective tax rate of 40%.
(k) To adjust officers' salaries to levels provided for in the new
employment agreements which were directly attributable to, required
elements of, and a condition to the closing of the Madera acquisition.
(l) To reduce depreciation for the reduction in the property and
equipment's carrying value to fair value related to the Madera
acquisition.
(m) To increase goodwill amortization for the increase in goodwill
resulting from the Madera acquisition. Goodwill is being amortized
over a term of 40 years.
(n) To eliminate interest expense associated with the outstanding debt
obligations of Madera which were paid-off in connection with the
acquisition.
(o) To record interest expense on the additional long-term debt
obligations incurred by the Company in connection with the Madera
acquisition.
(p) To record income taxes for Madera, which was a subchapter S
corporation for income tax purposes for all periods prior to its
acquisition by the Company. The effective income tax rate used was
38%.
(q) To reduce depreciation for the reduction in property and equipment's
carrying value to fair value related to the Arrow acquisition.
(r) To increase goodwill and covenant not to compete amortization for the
increases resulting from the Arrow acquisition. Goodwill is amortized
over a term of 40 years and the covenant not to compete is amortized
over a term of five years.
(s) To eliminate interest expense associated with the debt obligations of
Arrow which were paid off in connection with the acquisition.
(t) To record interest expense on the additional long-term debt
obligations incurred by the Company in connection with the Arrow
acquisition.
(u) To record the estimated tax provision associated with the pro forma
adjustments for the Arrow acquisition at an estimated effective tax
rate of 38%.
(v) To adjust officers salaries to levels provided for in the new
employment agreements which were directly attributable to, required
elements of, and a condition of closing of the Shrader acquisition.
(w) To reduce depreciation for the reduction in property and equipment's
carrying value to fair value related to the Shrader acquisition.
19
<PAGE> 20
WASTE CONNECTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(x) To increase goodwill and covenant not to compete amortization for the
increases resulting from the Shrader acquisition. Goodwill is
amortized over a term of 40 years and the covenant not to compete is
amortized over a term of five years.
(y) To eliminate interest expense associated with debt obligations of
Shrader which were paid off in connection with the Shrader
acquisition.
(z) To record interest expense on the additional long-term debt
obligations incurred by the Company in connection with the Shrader
acquisition.
(aa) To record income taxes for Shrader, which was a subchapter S
corporation for income tax purposes for all periods prior to its
acquisition by the Company. The effective income tax rate used was
40%.
(ab) To record the estimated tax provisions associated with the pro forma
adjustments for Shrader using the Company's estimated effective tax
rate of 40%.
20
<PAGE> 21
WASTE CONNECTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
PRO FORMA PER SHARE DATA. The shares used in computing the unaudited pro
forma net loss per share for the year ended December 31, 1997, and the six
months ended June 30, 1998 are based upon the pro forma number of common shares
as summarized in the table below. See Note 1 of the Company's Notes to Financial
Statements included elsewhere herein for information concerning the computation
of basic and diluted net income (loss) per share.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------ ------------
<S> <C> <C>
Company weighted average shares outstanding....... 1,872,567 3,714,027
Shares issued in connection with the acquisition
of Arrow........................................ 213,750 198,312(1)
Shares issued in connection with the acquisition
of Shrader...................................... 537,566 537,566
---------- -----------
Shares used in calculating pro forma basic net
loss per share.................................. 2,623,883 4,449,905
========== ===========
</TABLE>
- ---------------
(1) Includes only incremental shares issued for acquisition of Arrow because
15,438 shares are already included in the Company's weighted average shares
outstanding for the six months ended June 30, 1998.
ACQUISITION COSTS. The Company incurred costs of $180 related to the Madera
acquisition, which have been factored into the purchase price. Costs incurred by
Madera were expensed as incurred. The Company incurred costs of $95 related to
the Arrow acquisition, which have been factored into the purchase price. Costs
incurred by Arrow were expensed as incurred. The Company incurred costs of $225
related to the Shrader acquisition, which were factored into the purchase price.
Costs incurred by Shrader were expensed as incurred.
CONTINGENT PAYMENTS. In connection with the Madera and Shrader acquisitions
the Company is required to pay contingent consideration to certain former
shareholders of the respective companies, subject to their involvement in
specified events that give rise to the consideration. No amounts related to
these contingent payments have been included in the pro forma financial
statements as the events which would give rise to such payments have not yet
occurred nor are probable.
OTHER. The Professional Cleaning business of Madera ceased operations in
July 1997. This business had revenues of $193 and an operating loss of $215
during the year ended December 31, 1997.
Shortly before the acquisition of the predecessor operations by the
Company, BFI amended a franchise agreement with a municipality which provided
for a reduction in the franchise fees. Had this amended franchise agreement been
in effect as of January 1, 1997, pro forma cost of operations would have been
approximately $135 lower during the year ended December 31, 1997.
21
<PAGE> 22
WASTE CONNECTIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
SHRADER
WASTE REFUSE
CONNECTIONS, INC. SERVICE PRO FORMA
CONSOLIDATED COMPANY ADJUSTMENTS PRO FORMA
------------------ ------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................................... $ 3,243 $ 342 $(8,331)(1) $ 3,585
(1,662)(4)
9,993(5)
Marketable securities.................. -- 576 -- 576
Accounts receivable, net............... 6,430 808 -- 7,238
Prepaid expenses and other current
assets.............................. 650 79 -- 729
------- ------ ------- --------
Total current assets........... 10,323 1,805 -- 12,128
Property and equipment, net.............. 14,595 5,112 (2,747)(2) 16,960
Goodwill, net............................ 50,970 209 16,091(3) 67,270
Other assets............................. 3,560 208 130(3) 3,898
------- ------ ------- --------
$79,448 $7,334 $13,474 $100,256
======= ====== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................... $ 5,119 $ 323 $ -- $ 5,442
Deferred revenue....................... 1,405 -- -- 1,405
Accrued liabilities.................... 2,129 117 -- 2,246
Current portion of long term debt...... -- 703 (703)(4) --
Current portion of notes payable....... 465 -- 124(8) 589
Current portion of capital leases...... 97 (97)(4) --
Current portion of accrued losses on
acquired contracts.................. 323 -- -- 323
------- ------ ------- --------
Total current liabilities...... 9,441 1,240 (676) 10,005
Accrued losses on acquired contracts..... 1,076 -- 1,076
Long-term debt, net...................... 23,152 959 254(8) 33,399
(959)(4)
9,993(5)
Long-term portion of capital lease
obligations............................ 1,511 (1,511)(4) --
Deferred income taxes.................... 379 -- -- 379
Redeemable convertible preferred stock... -- -- --
Redeemable common stock.................. -- -- --
Stockholders' equity:
Common stock........................... 85 9 (9)(7) 90
5(6)
Additional paid-in capital............. 52,774 9,992(6) 62,766
Stockholder notes receivable........... (82) -- -- (82)
Deferred stock compensation............ (619) -- -- (619)
Unrealized gain on Marketable
Securities.......................... -- 150 (150)(7) --
Retained earnings (deficit)............ (6,758) 3,465 (3,465)(7) (6,758)
------- ------ ------- --------
Total stockholders' equity..... 45,400 3,624 6,373 55,397
------- ------ ------- --------
$79,448 $7,334 $13,474 $100,256
======= ====== ======= ========
</TABLE>
See accompanying notes.
22
<PAGE> 23
WASTE CONNECTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSUMPTIONS. The unaudited pro forma consolidated balance sheet as of June
30, 1998 is presented as if the acquisition of Shrader had occurred on June 30,
1998.
PRO FORMA ADJUSTMENTS. The following adjustments have been made to the
unaudited pro forma consolidated balance sheet to reflect the acquisition of
Shrader.
(1) Cash payments to former shareholders of Shrader ($8,106) and payment of
acquisition costs ($225).
(2) To reduce plant, property and equipment ($2,747) to its estimated fair
value.
(3) To record excess of the purchase price over the net assets acquired
from Shrader for goodwill and intangible assets of $16,300 and $130,
respectively.
(4) Pay off outstanding debt obligations of Shrader ($1,662) and eliminate
related party capital lease ($1,608).
(5) To record additional long term debt associated with the acquisition of
Shrader.
(6) To record the common stock issued in connection with the acquisition of
Shrader.
(7) To eliminate the equity accounts of Shrader.
(8) To record Seller Notes Payable issued in connection with the
acquisition of Shrader.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASTE CONNECTIONS, INC.
(Registrant)
Date: September 10, 1998 By /s/ Ronald J. Mittelstaedt
---------------------------------
Ronald J. Mittelstaedt
President and Chief Executive
Officer
24
