<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2000 COMMISSION FILE NO. 0-23981
WASTE CONNECTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
94-3283464
(I.R.S. Employer Identification No.)
620 COOLIDGE DRIVE, SUITE 350, FOLSOM, CA 95630
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (916) 608-8200
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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock:
As of May 1, 2000: 21,509,040 Shares of Common Stock
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets - December 31, 1999 and March 31,
2000
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1999 and 2000
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and 2000
Notes to Condensed Consolidated Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Item 6 - Exhibits and Reports on Form 8-K
Signatures
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1999 MARCH 31, 2000
----------------- --------------
(RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 2,393 $ 2,657
Accounts receivable, less allowance for doubtful
accounts of $1,460 at December 31, 1999 and
$1,424 at March 31, 2000 28,600 30,892
Prepaid expenses and other current assets 3,529 3,872
--------- ---------
Total current assets 34,522 37,421
Property and equipment, net 335,260 339,570
Intangible assets 237,402 260,562
Other assets 10,774 10,618
--------- ---------
$ 617,958 $ 648,171
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and notes payable $ 2,669 $ 2,729
Accounts payable 20,282 19,857
Deferred revenue 5,342 6,074
Accrued liabilities 15,648 13,194
Other current liabilities 355 355
--------- ---------
Total current liabilities 44,296 42,209
Long-term debt and notes payable, net 275,520 303,010
Other long term liabilities 5,201 3,698
Deferred income taxes 74,438 74,609
Commitments and contingencies
Stockholders' equity:
Preferred stock $.01 par value; 10,000,000 shares
authorized; none issued and outstanding -- --
Common stock: $.01 par value; 50,000,000 shares
authorized; 21,207,614 shares issued and
outstanding at December 31, 1999, 21,338,269
shares issued and outstanding at March 31, 2000 212 213
Additional paid-in capital 209,157 209,554
Deferred stock compensation (163) (109)
Retained earnings 9,297 14,987
--------- ---------
Total stockholders' equity 218,503 224,645
--------- ---------
$ 617,958 $ 648,171
========= =========
</TABLE>
See accompanying notes.
2
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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 2000
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1999 2000
------------ ------------
(RESTATED)
<S> <C> <C>
Revenues $ 33,178 $ 64,011
Operating Expenses:
Cost of operations 21,636 36,804
Selling, general and administrative 2,928 5,391
Depreciation and amortization 2,563 5,986
Stock compensation 70 54
Acquisition related expenses 7,800 150
------------ ------------
Income (loss) from operations (1,819) 15,626
Interest expense (1,057) (5,894)
Other income (expense), net (36) (6)
------------ ------------
Income (loss) before income tax provision (2,912) 9,738
Income tax provision (1,367) (4,048)
------------ ------------
Net income (loss) $ (4,279) $ 5,690
============ ============
Basic income (loss) per common share: $ (0.27) $ 0.27
============ ============
Diluted income (loss) per common share: $ (0.27) $ 0.26
============ ============
Shares used in calculating basic income (loss)
per share 15,980,164 21,322,110
============ ============
Shares used in calculating diluted income (loss)
per share 15,980,164 21,976,094
============ ============
</TABLE>
See accompanying notes.
3
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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------
1999 2000
--------- --------
(RESTATED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (4,279) $ 5,690
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Gain on sale of assets (37) --
Depreciation 1,804 4,258
Amortization of intangibles 759 1,728
Amortization of debt issuance costs, debt guarantee fees and
accretion of discount on long term debt 9 135
Stock issued for compensation and services 714 54
Net change in operating assets and liabilities, net of acquisitions 2,373 (5,227)
-------- --------
Net cash provided by operating activities 1,343 6,638
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 145 1
Payments for acquisitions, net of cash acquired (73,137) (28,282)
Capital expenditures for property and equipment (2,332) (4,992)
(Increase) decrease in other assets (61) 73
-------- --------
Net cash used in investing activities (74,189) (33,200)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 85,600 33,500
Principal payments on long-term debt (75,636) (6,949)
Proceeds from sale of common stock 65,041 --
Payment of dividends (340) --
Proceeds from options and warrants 97 328
Debt issuance costs (573) (53)
-------- --------
Net cash provided by financing activities 74,189 26,826
-------- --------
Net increase in cash and equivalents 147 264
Cash and equivalents at beginning of period 3,351 2,393
-------- --------
Cash and equivalents at end of period $ 3,498 $ 2,657
======== ========
</TABLE>
See accompanying notes.
4
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WASTE CONNECTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except share and per share amounts)
1. BASIS OF PRESENTATION AND SUMMARY
The accompanying statements of operations and cash flows relate to Waste
Connections, Inc. and its subsidiaries (the "Company") for the three month
periods ended March 31, 1999 and 2000. The consolidated financial statements of
the Company include the accounts of Waste Connections, Inc. and its wholly owned
subsidiaries. All significant intercompany transactions and balances have been
eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. Operating results for the three month period ended March
31, 2000 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2000.
The Company's consolidated balance sheet as of March 31, 2000, the consolidated
statements of operations for the three months ended March 31, 2000 and 1999, and
the consolidated statements of cash flows for the three months ended March 31,
2000 and 1999 are unaudited. In the opinion of management, such financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the Company's financial
position, results of operations, and cash flows for the periods presented. The
consolidated financial statements presented herein should be read in conjunction
with the Company's annual report on Form 10-K.
The Company has also restated its previously issued financial statements as of
December 31, 1999 and for the three months ended March 31, 1999 to reflect the
acquisition of Waste Wranglers, Inc. (Note 3) consummated during the three
months ended March 31, 2000 and accounted for using the pooling-of -interests
method of accounting.
2. ACQUISITIONS
For the three months ended March 31, 2000, the Company acquired 7 solid waste
collection businesses that were accounted for using the purchase method of
accounting. The aggregate consideration for these acquisitions was approximately
$28,282. The purchase prices have been allocated to the identified intangible
assets and tangible assets acquired based on fair values at the dates of
acquisition, with any residual amounts allocated to goodwill.
During the three months ended March 31, 2000, the Company merged with Waste
Wranglers, Inc. This transaction was accounted for as a pooling-of-interests,
whereby the Company issued an aggregate of 101,264 shares of its common stock
for all of the outstanding shares of Waste Wranglers, Inc. In connection with
the merger, the Company incurred transaction-related costs of approximately
$150, which were charged to operations in the first quarter of 2000.
5
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WASTE CONNECTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except share and per share amounts)
3. EARNINGS PER SHARE CALCULATION
The following table sets forth the numerator and denominator used in the
computation of earnings per common share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1999 2000
------------ -----------
<S> <C> <C>
Numerator:
Net income (loss) $ (4,279) $ 5,690
============ ===========
Denominator:
Basic shares outstanding 15,980,164 21,322,110
Dilutive effect of options & warrants -- 653,984
------------ -----------
Diluted shares outstanding 15,980,164 21,976,094
============ ===========
</TABLE>
For the three months ended March 31, 1999, outstanding options to purchase
1,439,447 shares of common stock (with exercise prices ranging from $2.80 to
$23.88) and outstanding warrants to purchase 1,291,135 shares of common stock
(with exercise prices ranging from $2.80 to $22.13) could potentially dilute
basic earnings per share in the future and have not been included in the
computation of diluted net loss per share because to do so would have been
antidilutive for the periods presented.
6
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WASTE CONNECTIONS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included elsewhere herein.
FORWARD-LOOKING STATEMENTS
Certain statements included in this Quarterly Report on Form 10-Q, including,
without limitation, information appearing under Part I, Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," are
forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange
Act of 1934) that involve risks and uncertainties. Factors set forth under the
caption "Risk Factors" in the Company's Registration Statement could affect our
actual results and could cause our actual results to differ materially from
those expressed in any forward-looking statements made by, or on behalf of,
Waste Connections in this Quarterly Report on Form 10-Q.
OVERVIEW
Waste Connections, Inc. is a regional, integrated solid waste services company
that provides solid waste collection, transfer, disposal and recycling services
in secondary markets of the Western U.S. As of March 31, 2000, we served more
than 515,000 commercial, industrial and residential customers in California,
Idaho, Kansas, Minnesota, Nebraska, Oklahoma, Oregon, South Dakota, Utah,
Washington, Wyoming, Iowa, Texas, New Mexico, and Colorado. We currently own 60
collection operations and operate or own 22 transfer stations, 16 Subtitle D
landfills and 17 recycling facilities.
We generally intend to pursue an acquisition-based growth strategy and as of
March 31, 2000 had acquired 97 businesses since our inception in September 1997.
The results of operations of these acquired businesses have been included in our
financial statements only from the respective dates of acquisition, except eight
acquisitions accounted for under the pooling-of-interests method of accounting,
which are included for all periods presented. We anticipate that a substantial
part of our future growth will come from acquiring additional solid waste
collection, transfer and disposal businesses and, therefore, it is expected that
additional acquisitions could continue to affect period-to-period comparisons of
our operating results.
GENERAL
Our revenues consist mainly of fees we charge customers for solid waste
collection, transfer, disposal and recycling services. A large part of our
collection revenues come from providing commercial, industrial and residential
services. We frequently perform these services under service agreements or
franchise agreements with counties or municipal contracts. County franchise
agreements and municipal contracts generally last from one to ten years. Our
existing franchise agreements and all of our existing municipal contracts give
Waste Connections the exclusive right to provide specified waste services in the
specified territory during the contract term. These exclusive arrangements are
awarded, at least initially, on a competitive bid basis and subsequently on a
bid or negotiated basis. We also provide residential collection services on a
subscription basis with individual households. More than 50% of our revenues for
the three months ended March 31, 2000 were derived from services provided under
exclusive franchise agreements, long term municipal contracts and governmental
certificates. Governmental certificates grant Waste Connections perpetual and
exclusive collection rights in the covered areas. Contracts with counties and
municipalities and governmental certificates provide relatively consistent cash
flow during the terms of the contracts. Because we bill most residential
customers quarterly, subscription agreements also provide a stable source of
revenues for Waste Connections. Our collection business also generates revenues
from the sale of recyclable commodities.
We charge transfer station and landfill customers a tipping fee on a per ton
basis for disposing of their solid waste at the transfer stations and the
landfill facilities we own and operate. Most of our transfer and landfill
customers have entered into one to ten year disposal contracts with us, most of
which provide for annual cost of living increases.
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We typically determine the prices for our solid waste services by the collection
frequency and level of service, route density, volume, weight and type of waste
collected, type of equipment and containers furnished, the distance to the
disposal or processing facility, the cost of disposal or processing, and prices
charged by competitors for similar services. The terms of our contracts
sometimes limit our ability to pass on price increases. Long-term solid waste
collection contracts typically contain a formula, generally based on a published
price index that automatically adjusts fees to cover increases in some, but not
all, operating costs.
Costs of operations include labor, fuel, equipment maintenance and tipping fees
paid to third party disposal facilities, worker's compensation and vehicle
insurance, the cost of materials we purchase for recycling, third party
transportation expense, district and state taxes and host community fees and
royalties. As of March 31, 2000, Waste Connections owned and/or operated 22
transfer stations, which reduce our costs by allowing us to use collection
personnel and equipment more efficiently and by consolidating waste to gain more
favorable disposal rates that may be available for larger quantities of waste.
Selling, general and administrative ("SG&A") expenses include management,
clerical and administrative compensation overhead costs associated with our
marketing and sales force, professional services and community relations
expense.
Depreciation and amortization expense includes depreciation of fixed assets over
their estimated useful lives using the straight-line method and amortization of
goodwill and other intangible assets using the straight-line method.
Waste Connections capitalizes some third-party expenditures related to pending
acquisitions or development projects, such as legal and engineering expenses. We
expense indirect acquisition costs, such as executive and corporate overhead,
public relations and other corporate services, as we incur them. We charge
against net income any unamortized capitalized expenditures and advances (net of
any portion that we believe we may recover, through sale or otherwise) that
relate to any operation that is permanently shut down and any pending
acquisition or landfill development project that is not completed. We routinely
evaluate all capitalized costs, and expense those related to projects that we
believe are not likely to succeed. As of March 31, 2000, Waste Connections had
no capitalized interest relating to landfill development projects and
approximately $186,000 in capitalized expenditures relating to pending
acquisitions.
We accrue for estimated landfill closure and post-closure maintenance costs at
the landfills we own. Under applicable regulations, Waste Connections and Madera
County, as operator and owner, respectively, are jointly liable for closure and
post-closure liabilities with respect to the Fairmead Landfill. We have not
accrued for such liabilities because Madera County, as required by state law,
has established a special fund into which it deposits a portion of tipping fee
surcharges to pay such liabilities. Consequently, we do not believe that Waste
Connections had any financial obligation for closure and post-closure costs for
the Fairmead Landfill as of March 31, 2000. We will have additional material
financial obligations relating to closure and post-closure costs of the other
disposal facilities that we currently own or operate and that we may own or
operate in the future. Waste Connections accrues and will accrue for those
obligations, based on engineering estimates of consumption of permitted landfill
airspace over the useful life of such landfills.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000
The following table sets forth items in Waste Connections' consolidated
statement of operations as a percentage of revenues for the periods indicated.
8
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<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 2000
------ ------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of operations 65.2 57.5
Selling, general and
administrative expenses 8.8 8.4
Depreciation and
amortization expense 7.7 9.4
Stock compensation 0.2 0.1
Acquisition related expenses 23.5 0.2
Operating income (loss) (5.5) 24.4
------ ------
Interest expense, net (3.2) (9.2)
Other income (expense), net (0.1) 0.0
Income tax benefit (expense ) (4.1) (6.3)
------ ------
Net income (loss) (12.9)% 8.9%
====== ======
EBITDA margin(1) 25.9% 34.1%
====== ======
</TABLE>
- ----------
(1) EBITDA margin represents EBITDA expressed as a percentage of revenues.
EBITDA represents earnings presented above before interest, income taxes,
depreciation and amortization expense, acquisition related expenses, and
stock compensation expense. EBITDA is not a measure of cash flow, operating
results or liquidity, as determined in accordance with generally accepted
accounting principles.
Revenues. Total revenues increased $30.8 million, or 92.9%, to $64.0 million for
the three months ended March 31, 2000 from $33.2 million for the three months
ended March 31, 1999. The increase was primarily attributable to the inclusion
of the acquisitions closed throughout the balance of 1999 and the first quarter
of 2000, selected price increases and a nominal contribution from growth in the
existing business.
Cost of Operations. Total cost of operations increased $15.2 million, or 70.1%,
to $36.8 million for the three months ended March 31, 2000 from $21.6 million
for the three months ended March 31, 1999. The increase was primarily
attributable to acquisitions closed over the course of 1999 and during the three
months ended March 31, 2000, offset by greater integration of collection volumes
into landfills we own or operate. Cost of operations as a percentage of revenues
declined 7.7% to 57.5% for the three months ended March 31, 2000 from 65.2% for
the three months ended March 31, 1999. The decrease as a percentage of revenues
was primarily attributable to the effect of tuck-in acquisitions closed during
the course of 1999 and during the three months ended March 31, 2000, economies
of scale from the greater revenue base, greater integration of collection
volumes into landfills we own or operate and selective price increases.
SG&A. SG&A expenses increased $2.5 million, or 84.1%, to $5.4 million for the
three months ended March 31, 2000 from $2.9 million for the three months ended
March 31, 1999. Our SG&A increased as a result of additional personnel from
companies acquired and some additional corporate overhead to accommodate our
growth. SG&A as a percentage of revenues declined 0.4% to 8.4% for the three
months ended March 31, 2000 from 8.8% for the three months ended March 31, 1999.
The decline in SG&A as a percentage of revenues was a result of spreading of
overhead expenses over a larger base of revenue from the acquisitions completed
in the course of 1999 and during the three months ended March 31, 2000, offset
by increases in corporate overhead.
Depreciation and Amortization. Depreciation and amortization expense increased
$3.4 million, or 133.6%, to $6.0 million for the three months ended March 31,
2000 from $2.6 million for the three months ended March 31, 1999. The increase
resulted primarily from the acquisitions and the inclusion of their depreciation
and amortization as well as the amortization of goodwill and other intangible
assets associated with such acquisitions. Depreciation and amortization as a
percentage of revenues increased 1.7% to 9.4% for the three months ended March
31, 2000 from 7.7% for the three months ended March 31, 1999. The increase in
depreciation and amortization as a percentage of
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revenues was primarily a result of amortization of goodwill associated with
acquisitions and a higher proportion of landfill revenues, which have higher
variable depletion costs than collection.
Stock Compensation Expense. Stock compensation expense decreased $16,000, or
22.9%, to $54,000 for the three months ended March 31, 2000 from $70,000 for the
three months ended March 31, 1999. Our stock compensation expense is
attributable to the valuation of common stock options and warrants with exercise
prices less than the estimated fair value of our common stock on the date of the
grant and relates solely to stock options granted prior to the initial public
offering in May 1998. Our stock compensation expense in 2000 consists of
continued amortization of deferred stock compensation recorded in 1998 at the
time of the initial public offering. The decrease in the amortization of
deferred stock compensation for the three months ended March 31, 2000, compared
to the three months ended March 31, 1999, was due to the amortization of the
deferred stock compensation over the vesting periods of the related options.
Acquisition Related Expenses. Acquisition related expenses decreased $7.7
million, or 98.1% to $150,000 for the three months ended March 31, 2000 from
$7.8 million for the three months ended March 31, 1999. The acquisition related
expenses were related to commissions, professional fees and other direct costs
resulting from one acquisition that was accounted for using the
pooling-of-interests method in the quarter ending March 31, 2000. The decrease
was related to a decline in the number, size and complexity of acquisitions
accounted for using the pooling-of-interest method in the three months ended
March 31, 2000 relative to the three acquisitions that were accounted for using
poolings-of-interests method, including the Murrey's Companies acquisition, in
the three months ended March 31, 1999.
Operating Income (Loss). Operating income increased $17.4 million to $15.6
million for the three months ended March 31, 2000 from a loss of $1.8 million
for the three months ended March 31, 1999. The increase was primarily
attributable to the inclusion of acquisitions closed in the last year, economies
of scale from a greater revenue base, greater integration of collection volumes
into landfills we own or operate, selective price increases, and the large
decline in acquisition related expenses. This was offset by higher depreciation
and amortization and SG&A expenses. Operating income as a percentage of revenues
increased 29.9% to 24.4% for the three months ended March 31, 2000 from a loss
of 5.5% for the three months ended March 31, 1999. The increase before
acquisition related expenses is attributable to the improvement in gross margins
coupled with declines in SG&A expenses as a percentage of revenue offset by
increases in depreciation and amortization as a percentage of revenue.
Interest Expense. Interest expense increased $4.8 million, or 457.6%, to $5.9
million for the three months ended March 31, 2000 from $1.1 million for the
three months ended March 31, 1999. The increase was primarily attributable to
higher debt levels incurred to fund certain of our acquisitions and higher
interest rates on our revolving credit facility.
Provision for Income Taxes. Income taxes increased $2.7 million to $4.1 million
for the three months ended March 31, 2000 from $1.4 million for the three months
ended March 31, 1999. The effective income tax rate for the three months ended
March 31, 2000, before acquisition related and stock compensation expenses was
40.7%, which is above the federal statutory of 35.0% rate as the result of state
and local taxes and non-deductible goodwill associated with certain
acquisitions.
Net Income (Loss). Net income increased by $10.0 million to $5.7 million for the
three months ended March 31, 2000, from a net loss of $4.3 million for the three
months ended March 31, 1999. The increase was primarily attributable to the
inclusion of acquisitions closed in the last year, economies of scale from a
greater revenue base, greater integration of collection volumes into landfills
we own or operate, selective price increases and the large decline in
acquisition related expenses. This was offset by higher depreciation and
amortization, SG&A and interest expense.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, we had a working capital deficit of $4.8 million,
including cash and equivalents of $2.7 million. Our strategy in managing our
working capital is generally to apply the cash generated from our operations
that remains available after satisfying our working capital and capital
expenditure requirements to reduce our indebtedness under our bank revolving
credit facility and to minimize our cash balances.
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We have a $315 million revolving credit facility with a syndicate of banks for
which BankBoston, N.A. acts as agent, which is secured by virtually all assets
of Waste Connections, including our interest in the equity securities of our
subsidiaries. The credit facility matures in 2004 and bears interest at a rate
per annum equal to, at our discretion, either: (i) the BankBoston Base Rate; or
(ii) the Eurodollar Rate plus, in each case, applicable margin. The credit
facility requires us to maintain certain financial ratios and satisfy other
predetermined requirements, such as minimum net worth, net income and limits on
capital expenditures. It also requires the lenders' approval of acquisitions in
certain circumstances. As of March 31, 2000, an aggregate of approximately
$275.8 million was outstanding under our credit facility, and the interest rate
on outstanding borrowings under the credit facility was approximately 8.2%. We
expect to incur additional borrowings to fund acquisitions during the remainder
of 2000. We are currently negotiating a new credit facility which, upon closing,
should give us the resources to continue executing our acquisition strategy.
For the three months ended March 31, 2000, net cash provided by operations was
approximately $6.6 million. $5.2 million of net cash provided by operations was
used to fund an increase in working capital (net of acquisitions) for the
period.
For the three months ended March 31, 2000, net cash used by investing activities
was $33.2 million. Of this, $28.3 million was used to fund the cash portion of
acquisitions. Cash used for capital expenditures was $5.0 million, which was
primarily for investments in fixed assets, consisting primarily of trucks,
containers and other equipment.
For the three months ended March 31, 2000, net cash provided by financing
activities was $26.8 million, which was provided by net borrowings under our
various debt arrangements.
Capital expenditures relating to existing businesses for the remainder of 2000
are currently expected to be approximately $20 million. We intend to fund our
remaining planned 2000 capital expenditures principally through internally
generated funds and borrowings under our existing credit facility. We intend to
fund our future acquisitions and capital requirements through additional
borrowings under our credit facility and funds raised from sale of our equity
securities under appropriate market conditions. We believe that the credit
facility and the funds expected to be generated from operations will provide
adequate cash to fund our working capital and other cash needs for the
foreseeable future. However, increased use of debt to fund our capital
requirements will increase our interest expense. It may also raise our
debt-to-equity ratio, which could hinder our ability to obtain additional
credit. If we are unable to obtain additional debt financing or to sell
additional equity securities in the future, we may be unable to fund future
acquisitions, which could cause a decline in the growth rate of our revenues.
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WASTE CONNECTIONS, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is no current proceeding or litigation involving Waste Connections that we
believe will have a material adverse impact on our business, financial
condition, results of operations or cash flows.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
On January 27, 2000, we filed a report on Form 8-K/A amending the report on Form
8-K filed November 24, 1999, to report that financial statements relating to our
acquisitions of Denver Regional Landfill, Inc. and certain assets of Allied
Waste Transportation, Inc. were not required to be filed in connection with the
November 24, 1999, Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
WASTE CONNECTIONS, INC.
BY: /s/ Ronald J. Mittelstaedt Date: May 9, 2000
-------------------------------------
Ron J. Mittelstaedt,
President and Chief Executive Officer
BY: /s/ Steven F. Bouck Date: May 9, 2000
-------------------------------------
Steven F. Bouck,
Vice President and Chief Financial
Officer
12
<PAGE> 14
WASTE CONNECTIONS, INC. AND PREDECESSORS
FORM 10-Q
INDEX TO EXHIBITS
27 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS EXHIBIT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31,
2000, CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2000, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE FOOTNOTES
THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,657
<SECURITIES> 0
<RECEIVABLES> 32,316
<ALLOWANCES> 1,424
<INVENTORY> 0
<CURRENT-ASSETS> 37,421
<PP&E> 375,384
<DEPRECIATION> 35,814
<TOTAL-ASSETS> 648,171
<CURRENT-LIABILITIES> 42,209
<BONDS> 303,010
0
0
<COMMON> 213
<OTHER-SE> 224,432
<TOTAL-LIABILITY-AND-EQUITY> 648,171
<SALES> 0
<TOTAL-REVENUES> 64,011
<CGS> 0
<TOTAL-COSTS> 48,385
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,894
<INCOME-PRETAX> 9,738
<INCOME-TAX> 4,048
<INCOME-CONTINUING> 5,690
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,690
<EPS-BASIC> .27
<EPS-DILUTED> .26
</TABLE>
