<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ x / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1999
OR
/ / 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 (I.R.S. Employer Identification No.)
incorporation or organization)
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 /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 3, 1999:
Class A Common Stock 15,017,105
Class B Common Stock 988,200
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
April 30, July 31,
1999 1999
(Restated) (Unaudited)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 4,232 $ 4,918
Restricted Cash - Closure Fund Escrow 626 629
Accounts Receivable-trade, net of allowance
for doubtful accounts of $1,429 and $1,977 23,078 29,463
Other Current Assets 5,697 4,688
-------- --------
Total Current Assets 33,633 39,698
-------- --------
Property, Plant and Equipment, net of
accumulated depreciation and amortization of
$67,123 and $73,190 131,432 140,581
Intangible Assets, net 106,677 107,443
Restricted Funds - Closure Fund Escrow 4,834 5,015
Other Assets 5,725 7,902
-------- --------
$282,301 $300,639
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES and STOCKHOLDERS EQUITY
(In thousands, except for per share data)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
April 30, July 31,
1999 1999
(Restated) (Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Current Maturities of Long-Term Debt $ 5,489 $ 2,591
Current Maturities of Capital Lease Obligations 402 407
Accounts Payable 17,903 17,944
Other Accrued Liabilities 6,554 9,260
---------- ---------
Total Current Liabilities 30,348 30,202
---------- ---------
Long-Term Debt, Less Current Maturities 86,739 100,652
---------- ---------
Capital Lease Obligations, Less Current Maturities 1,454 1,350
---------- ---------
Other Long-Term Liabilities 15,782 16,768
---------- ---------
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' EQUITY
Class A Common Stock -
Authorized - 100,000,000 Shares, $.01 par value
Issued and Outstanding - 14,868,739 and
15,039,441 shares 148 150
Class B Common Stock - 10 10
Authorized - 1,000,000 Shares, $.01 par value;
10 Votes per Share. Issued and Outstanding - 988,200 shares
Additional Paid-In Capital 154,733 155,379
Accumulated Deficit (6,913) (3,872)
---------- ---------
147,978 151,667
---------- ---------
$ 282,301 $ 300,639
---------- ---------
---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except for share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
July 31, July 31,
1998 1999
(Restated)
--------------------------------------
<S> <C> <C>
Revenues $ 45,084 $ 55,036
-------- --------
Operating Expenses:
Cost of Operations 27,336 30,946
General and Administrative 6,416 7,798
Depreciation and Amortization 5,897 7,622
Merger Costs (Pooling) 0 1,490
-------- --------
39,649 47,856
-------- --------
Operating Income 5,435 7,180
-------- --------
Other (Income) Expenses
Interest Income (41) (73)
Interest Expense 1,937 1,678
Other Expense (Income), net (257) (57)
-------- --------
1,639 1,548
-------- --------
Income Before Provision for Income Taxes 3,796 5,632
Provision for Income Taxes 1,675 2,591
-------- --------
Net Income $ 2,121 $ 3,041
-------- --------
-------- --------
Basic Earnings per Share of Common Stock $ 0.16 $ 0.19
-------- --------
-------- --------
Basic Weighted Average Common Stock
Shares Outstanding 13,287 15,979
-------- --------
-------- --------
Diluted Earnings per Share $ 0.15 $ 0.18
-------- --------
-------- --------
Diluted Weighted Average Common Stock and
Common Stock Equivalent Shares Outstanding 14,410 16,539
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31, 1998 and 1999
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
1998 1999
(Restated)
---------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 2,121 $ 3,041
-------- --------
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities-
Depreciation and Amortization 5,897 7,622
Loss (Gain) on Sale of Equipment 7 (8)
Changes in Assets and Liabilities, net of
Effects of Acquisitions -
Accounts Receivable (2,776) (6,383)
Accounts Payable 4,009 40
Other Current Assets/Liabilities 4,072 4,841
-------- --------
11,209 6,112
-------- --------
Net Cash Provided by Operating Activities 13,330 9,153
-------- --------
Cash Flows from Investing Activities:
Acquisitions, net of Cash Acquired (10,088) (1,611)
Additions to Property and Equipment (10,180) (16,069)
Proceeds from Sale of Equipment 134 21
Other Assets/Liabilities 374 (2,043)
-------- --------
Net Cash Used in Investing Activities (19,760) (19,702)
-------- --------
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock 54,209 0
Proceeds from Long-Term Borrowings 11,565 22,600
Principal Payments on Long-Term Debt (58,580) (11,584)
Proceeds from exercise of stock options 0 219
-------- --------
Net Cash Provided by Financing Activities 7,194 11,235
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 764 686
Cash and Cash Equivalents, Beginning of Period 3,327 4,232
-------- --------
Cash and Cash Equivalents, End of Period $ 4,091 $ 4,918
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31, 1998 and 1999
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
1998 1999
(Restated)
-------------------------------------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period for -
Interest $ 1,734 $ 1,605
-------- --------
-------- --------
Income Taxes $ 59 $ 0
-------- --------
-------- --------
Supplemental Disclosures of Noncash Investing and
Financing Activities:
Summary of Entities Acquired -
Fair Market Value of Assets Acquired $ 10,856 $1,611
Cash Paid (10,088) (1,611)
-------- --------
Liabilities Assumed and Notes Payable to
Sellers $ 768 $ 0
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The condensed consolidated balance sheets of Casella Waste Systems, Inc. and
Subsidiaries (the "Company") as of April 30, 1999 and July 31, 1999, the
consolidated statements of operations for the three months ended July 31, 1998
and 1999, and the consolidated statements of cash flows for the three months
ended July 31, 1998 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 financial position,
results of operations, and cash flows for the periods presented. The Company has
restated the previously issued audited balance sheet dated April 30, 1999 to
reflect the mergers with Resource Waste Systems, Inc. and Corning Community
Disposal Services, Inc. (see note 1) consummated on July 3, 1999 and June 4,
1999, respectively, accounted for using the pooling of interests method of
accounting. The Company has also restated the previously issued consolidated
statements of operations for the three months ended July 31, 1998 and
consolidated statement of cash flows for the three months ended July 31, 1998 to
reflect the mergers with Waste Stream, Northern Sanitation, NEI, Westfield
Disposal, Resource Recovery Systems, Inc.and Corning Community Disposal, Inc.
(see note 1). 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, 1999. These were included as
part of the Company's Annual Report on Form 10-K (the "Annual Report").
1. BUSINESS COMBINATIONS
Transactions Recorded as Poolings of Interests
During fiscal year 1999, and during the first quarter of fiscal year 2000, the
Company completed several mergers in business combinations recorded as poolings
of interests. Accordingly, the accompanying financial statements have been
restated to include these businesses for all periods presented. The Company
issued the following shares of Class A Common Stock in connection with the
mergers:
<TABLE>
<CAPTION>
Merger Date Shares Issued
- -------------- -------------- ------------------
<S> <C> <C>
Waste Stream October 29, 1998 701,461
Northern Sanitation December 23, 1998 220,964
NEI April 30, 1999 105,052(1)
Westfield April 30, 1999 244,082
Corning Community Disposal June 4, 1999 59,375
Resource Waste Systems July 3, 1999 303,598
</TABLE>
- ------------------
(1) Shares issued are exclusive of up to 59,450 shares issuable following an
idemnification period, as defined.
The following is a reconciliation of the amounts (in thousands) of revenues and
net income previously reported for the three months ended July 31, 1998:
<TABLE>
<CAPTION>
Casella Fiscal Year Casella,
Before 1999/2000 As
Poolings Poolings Restated
-------- -------- --------
<S> <C> <C> <C>
Three Months Ended July 31, 1998
Revenues $36,717 $8,367 $45,084
Net income (loss) 2,133 (11) 2,122
Three Months Ended July 31, 1999
Revenues $52,996 $2,040 $55,036
Net income (loss) 3,248 (207) 3,041
</TABLE>
All of the pooled entities had fiscal year ends of December 31 and,
subsequent to the poolings, changed their year ends to conform with that of
the Company. For the calendar quarters ended July 31, 1998 and July 31,
1999, $0 in revenues and $0 in net income were excluded from results of
operations in order to conform the accounting periods of the pooled
companies with that of the Company.
<PAGE>
Transactions Recorded as Purchases
During the three months ended July 31, 1999, the Company acquired 11 solid and
liquid waste hauling operations in transactions accounted for as purchases.
These transactions were in exchange for consideration of approximately $1.7
million in cash to sellers. The operating results of these businesses are
included in the Consolidated Statement of Operations from the dates of
acquisition. The purchase prices have been allocated to the net assets acquired
based on fair values at the dates of acquisition with the residual amounts
allocated to goodwill.
The following unaudited pro forma combined information (rounded to thousands
except for per share data) shows the results of the Company's operations as
though each of the completed acquisitions had occurred as of May 1, 1998:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
July 31, 1998 July 31, 1999
------------------ ------------------
<S> <C> <C>
Revenues $52,971 $55,276
Operating Income 6,204 7,196
Net Income 2,083 3,041
Diluted income per share - $ 0.14 $ 0.18
Weighted average diluted 14,410 16,539
shares outstanding
</TABLE>
The 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, 1998 or the results of future operations
of the Company. Furthermore, the 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.
2. COMMITMENTS AND CONTINGENCIES
In the normal course of 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 the normal course of its business. 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 pending 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. However, there is no current proceeding or litigation involving the
Company that it believes will have a material adverse effect upon the Company's
business, financial condition and results of operations.
3. ENVIRONMENTAL LIABILITIES
The continuing business in which the Company is engaged is intrinsically
connected with the protection of the environment. As such, a significant portion
of the Company's operating costs and capital expenditures could be characterized
as costs of environmental protection. While the Company is faced, in the normal
course of business, with the need to expend funds for environmental protection
and remediation, it does not expect such expenditures to have a material adverse
effect on its financial condition or results of operations because its business
is based upon compliance with environmental laws and regulations and its
services are priced accordingly. In addition, as part of its ongoing operations,
the Company provides for estimated closure and post-closure monitoring costs
over the life of disposal sites as airspace is consumed. While all these costs
may increase in the future as a result of legislation or regulation, the Company
believes that in general it tends to benefit when government regulation
increases, since this may increase the demand for its services. Furthermore, the
Company believes it has the resources and experience to manage environmental
risk.
<PAGE>
4. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" which
supercedes Accounting Principal Board opinion No. 15 and establishes new
accounting standards for the presentation of earnings per share. Primary EPS is
replaced by Basic EPS, which is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Fully Diluted EPS is replaced with Diluted EPS, which gives effect to
all common shares that would have been outstanding if all dilutive potential
common shares (relating to such things as the exercise of stock warrants and
convertible preferred stock) had been issued. The treasury stock method used to
compute the number of potentially-dilutive shares that would be repurchased with
the proceeds of potential stock issuances has been changed. The treasury stock
method now requires use of the average share price for the period instead of the
greater of the ending share price or the average share price.
The following is a reconciliation of the ending number of shares outstanding
with the number of shares used in the calculation of basic and diluted earnings
per share (in thousands):
<TABLE>
<CAPTION>
Three months Three months
ended 7/31/98 ended 7/31/99
<S> <C> <C>
Number of shares outstanding, end of period:
Class A common stock 14,542 15,039
Class B common stock 988 988
Effect of weighting the average shares
outstanding during the period (2,243) (48)
Basic shares outstanding 13,287 15,979
Impact of potentially dilutive 1,123 560
securities
Diluted shares outstanding: 14,410 16,539
</TABLE>
For the three months ended 7/31/99, options to purchase 866,000 common shares
were excluded from the calculation of potential dilutive shares because their
impact was anti-dilutive.
5. Segment Reporting
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("Statement 131"). Statement 131 establishes standards for
reporting information about operating segments in financial statements. In
general, Statement 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 three geographical regions: Eastern,
Central and Western. The Company's revenues are derived mainly from one industry
segment, which includes the collection, transfer, recycling and disposal of
non-hazardous solid waste. Any other activities in which the Company is engaged
are not material to the total results of operations of the Company; these
activities are reflected in with the geographic reporting structure outlined
above.
(In thousands)
<TABLE>
<CAPTION>
Eastern Central Western Corp. Elim Total
------- ------- ------- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
QTR ENDED 7/31/98:
Outside Revenue $ 7,091 $ 22,994 $ 14,950 $ 49 - 0 - $ 45,084
Interco. Revenue 627 7,464 959 - 0 - (9,050) - 0 -
Net Income(Loss) 865 1,878 389 (1,011) - 0 - 2,121
Total Assets 30,250 113,570 78,596 9,322 - 0 - 231,738
<PAGE>
<S> <C> <C> <C> <C> <C> <C>
QTR ENDED 7/31/99:
Outside Revenue $ 9,550 $ 26,574 $ 18,819 $ 93 - 0 - $ 55,036
Interco. Revenue 794 8,854 3,505 - 0 - (13,153) - 0 -
Net Income(Loss) 1,074 2,420 1,251 (1,704) - 0 - 3,041
Total Assets 42,562 132,639 104,751 20,687 - 0 - 300,639
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The Company is a regional, integrated solid waste services company that provides
collection, transfer, disposal and recycling services in Vermont, New Hampshire,
Maine, Massachusetts, upstate New York and northern Pennsylvania. The Company's
objective is to continue to grow by expanding its services in markets where it
can be one of the largest and most profitable fully-integrated solid waste
services companies.
On January 12, 1999 the Company signed a definitive merger agreement with
KTI, a publicly traded solid waste handling company operating in 21 states
throughout the United States. KTI specializes in solid waste disposal and
recycling, and operates manufacturing facilities utilizing recycled
materials. The Company believes the merger will give it additional growth
opportunities in its existing and adjacent markets, and the ability to enter
new markets, as well as achieve operational efficiencies as a result of the
combination. On September 9, 1999, the Company announced that it and KTI had
revised and amended the terms of the merger agreement. Pursuant to the
amended merger agreement, each share of KTI common stock will be exchanged
for 0.51 shares of the Company's class A common stock. The companies
anticipate that the merger should close during the fourth calendar quarter of
1999. Total merger transactional costs deferred on the balance sheet (under
the asset section as a deferred cost) related to the KTI merger were $4.7
million through 7/31/99. Total estimated merger costs are approximately $26
to $28 million dollars. All of these merger costs will be expensed upon the
consummation of the Pooling Transaction.
The Company's revenues have increased from $45.1 million for the three months
ended July 31, 1998 to $55.0 million for the three months ended July 31, 1999.
From May 1, 1998 through April 30, 1999, the Company acquired 55 solid waste
collection, transfer and disposal operations. Between May 1, 1999 and July 31,
1999, the Company acquired an additional 13 such businesses. All but two of
these acquisitions were accounted for under the purchase method of accounting
for business combinations. Under the rules of purchase accounting, the acquired
companies' revenues and results of operations have been included together with
those of Casella Waste Systems, Inc. from the actual dates of the acquisitions
and will materially affect the period-to-period comparisons of the Company's
historical results of operations.
This Quarterly Report and other reports, proxy statements, and other
communications to stockholders, as well as oral statements by the Company's
officers or its agents, may contain forward-looking statements within the
meaning of Section 27A of the Securities Act, with respect to, among other
things, the Company's future revenues, operating income, or earnings per share.
Without limiting the foregoing, any statements contained in this Quarterly
Report that are not statements of historical fact may be deemed to be
forward-looking statements, and the words "believes", "anticipates", "plans",
"expects", and similar expressions are intended to identify forward-looking
statements. There are a number of factors of which the Company is aware that may
cause the Company's actual results to vary materially from those forecast or
projected in any such forward-looking statement, certain of which are beyond the
Company's control. These factors include, without limitation, those outlined
below in the section entitled `Certain Factors That May Affect Future Results'.
The Company's failure to successfully address any of these factors could have a
material adverse effect on the Company's results of operations.
General
The Company's revenues are attributable primarily to fees charged to customers
for solid and liquid waste collection, landfill, transfer and recycling
services. The Company derives a substantial portion of its collection revenues
from commercial, industrial and municipal services that are generally performed
under service agreements or pursuant to contracts with municipalities. The
majority of the Company's residential collection services are performed on a
subscription basis with individual households. Landfill and transfer customers
are charged a tipping fee on a per ton basis for disposing of their solid waste
at the Company's disposal facilities and transfer stations. The majority of the
Company's landfill and transfer customers are under one-year to ten-year
disposal contracts, with most having clauses for annual cost of living
increases. Recycling revenues consist of revenues from the sale of recyclable
commodities and from the sale of tire derived fuel. Other revenues consist
primarily of revenue from septic/liquid waste operations and other sources. The
Company's revenues are shown net of intercompany eliminations. The Company
typically establishes its intercompany transfer pricing based upon prevailing
market rates.
<PAGE>
The table below shows, for the periods indicated, the percentage of the
Company's revenues attributable to services provided. The decrease in the
Company's collection revenues as a percentage of revenues and the increase of
the Company's landfill revenues as a percentage of revenues in the current
fiscal year is primarily attributable to the impact of the Company's acquisition
of Hyland Landfill during the first quarter fiscal 1999 plus the increased
utilization of our North Country Landfill in Bethlehem, New Hampshire during the
first quarter of fiscal 2000. The increase in transfer revenues as a percentage
of revenues in the current fiscal year is mainly due to the acquisition of
transfer station operations in the prior fiscal year. The increase in recycling
revenues is due primarily to increased volumes with additional increased prices
received from the sale of recycled commodities. The increase in liquid waste and
other revenues as a percentage of revenues in the current fiscal year is
primarily due to the impact of acquisitions of septic/liquid waste operations
since the first quarter of fiscal 1999.
<TABLE>
<CAPTION>
% of Revenue
Three Months Ended
------------------
7/31/98 7/31/99
------- -------
<S> <C> <C>
Collection 77.6% 71.2%
Landfill 7.6 9.5
Transfer 6.3 8.7
Recycling 5.3 6.1
Liquid Waste & Other 3.2 4.5
Total Revenue 100.0% 100.0%
</TABLE>
Cost of operations includes labor, tipping fees paid to third party disposal
facilities, fuel, maintenance and repair of vehicles and equipment, worker's
compensation and vehicle insurance, the cost of purchasing materials to be
recycled, third party transportation expense, district and state taxes, host
community fees and royalties. Landfill operating expenses also include a
provision for closure and post-closure expenditures anticipated to be incurred
in the future, and leachate treatment and disposal costs.
General and administrative expenses include management, clerical and
administrative compensation and overhead, professional services and costs
associated with the Company's marketing and sales force and community relations
expense.
Depreciation and amortization expense includes depreciation of fixed assets over
the estimated useful life of the assets using the straight line method,
amortization of landfill airspace assets under the units-of-production method,
and the amortization of goodwill and other intangible assets using the straight
line method. The amount of landfill amortization expense related to airspace
consumption can vary materially from landfill to landfill depending upon the
purchase price and landfill site and cell development costs. The Company
depreciates all fixed and intangible assets, excluding non-depreciable land,
down to a $0 net book value, and does not apply a salvage value to any of its
fixed assets.
Certain direct landfill development costs, such as engineering, permitting,
legal, construction and other costs directly associated with expansion of
existing landfills, are capitalized by the Company. Additionally, the Company
also capitalizes certain third party expenditures related to pending
acquisitions, such as legal and engineering. The Company will have material
financial obligations relating to closure and post-closure costs of its existing
landfills and any disposal facilities which it may own or operate in the future.
The Company has provided and will in the future provide accruals for future
financial obligations relating to closure and post-closure costs of its
landfills (generally for a term of 30 years after final closure of a landfill)
based on engineering estimates of consumption of permitted landfill airspace
over the useful life of any such landfill. There can be no assurance that the
Company's financial obligations for closure or post-closure costs will not
exceed the amount accrued and reserved or amounts otherwise receivable pursuant
to trust funds. The Company routinely evaluates all such capitalized costs, and
expenses those costs related to projects not likely to be successful. Internal
and indirect landfill development and acquisition costs, such as executive and
corporate overhead, public relations and other corporate services, are expensed
as incurred.
<PAGE>
Results of Operations
The following table sets forth for the periods indicated the percentage
relationship that certain items from the Company's Consolidated Financial
Statements bear in relation to revenues.
<TABLE>
<CAPTION>
% of Revenue
Three Months Ended
------------------
7/31/98 7/31/99
------- -------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of operations 60.6 56.2
General and administrative 14.2 14.2
Depreciation and amortization 13.1 13.9
Merger-related costs 0.0 2.7
Operating income 12.1 13.0
Interest expense, net 4.2 2.9
Other (income) expense (0.6) (0.1)
Provision for income taxes 3.7 4.7
Net income 4.8 5.5
EBITDA* 25.1 26.9
</TABLE>
* See discussion and computation of EBITDA below
Revenues. Revenues increased $10.0 million, or 22.1%, to $55.0 million in the
quarter ended July 31, 1999 from $45.1 in the quarter ended July 31, 1998. Of
this increase, $5.7 million of the growth was due to the impact of businesses
acquired during fiscal year 1999 and during the first quarter of the current
fiscal year. The balance of the increase was due to internal volume and price
growth.
Cost of Operations. Cost of operations increased approximately $3.6 million, or
13.2%, to $30.9 million in the quarter ended July 31, 1999 from $27.3 million in
the same quarter of the prior fiscal year. Cost of operations as a percentage of
revenues decreased to 56.2% in the quarter ended July 31, 1999 from 60.6% in the
same quarter of the prior fiscal year. The decrease was primarily the result of:
(i) productivity improvements in the Company's collection operations as a result
of better route density from acquisitions, routing efficiencies through route
audits and front-end loader vehicle conversions completed throughout fiscal
1999; and (ii) margin improvements because of price increases in fiscal 1999 and
the first quarter of fiscal year 2000.
General and Administrative. General and administrative expenses increased
approximately $1.4 million, or 21.9%, to $7.8 million in the quarter ended
January 31, 1999 from $6.4 million in the same quarter of the prior fiscal year.
General and Administrative expenses as a percentage of revenues have remained
approximately level in the periods under discussion.
Depreciation and Amortization. Depreciation and amortization expense increased
$1.7 million, or 29.3%, to $7.6 million in the quarter ended July 31, 1999 from
$5.9 million in the same quarter of the prior fiscal year. Depreciation and
amortization as a percentage of revenues increased to 13.9% in the quarter ended
July 31, 1999 from 13.1% in the same quarter of the prior fiscal year. The
increase in depreciation and amortization is due to the increased concentration
of revenues in landfill activities, which typically have higher depreciation and
amortization charges relative to revenues compared to hauling revenues.
Merger Costs. The merger related costs of $1.5 million recorded in the quarter
ended July 31, 1999 were incurred in association with the Resource Waste
Systems, Inc. and Corning Community Disposal, Inc. mergers accounted for as
poolings of interests. The transactions are discussed above under 'Notes to
Consolidated Financial Statements'.
<PAGE>
Interest expense, net. Net interest expense decreased approximately $0.3
million, or 15.3% to $1.6 million in the quarter ended July 31, 1999 from $1.9
million in the same quarter of the prior fiscal year. This decrease primarily
reflects the reduction of the outstanding balance under the Company's
acquisition line of credit and other notes payable from the proceeds of the
Company's public stock offering in July, 1998.
Other (income) expense, net. Net other (income) expense has not historically
been material to the Company's results of operations.
Provision for income taxes. Provision for income taxes increased approximately
$0.9 million to $2.6 million in the quarter ended July 31, 1999 from $1.7
million in the same quarter of the prior fiscal year. This increase reflects the
Company's increase in profits in the quarter ended July 31, 1999 over the same
quarter in the prior fiscal year. The combined effective tax rate used by the
Company in recording taxes for interim periods has been increased from 44.1% in
the quarter ended July 31, 1998 to 46.0% in the same quarter of the current
fiscal year. This increase reflects the non-deductible merger expenses incurred
during the quarter ended July 31, 1999.
Liquidity and Capital Resources
The Company's business is capital intensive. The Company's capital requirements
include acquisitions, fixed asset purchases and capital expenditures for
landfill development, cell construction, and site and cell closure. The Company
had positive net working capital of $3.3 million at April 30, 1999 and positive
net working capital of $9.5 million at July 31, 1999.
The Company has a $150 million revolving line of credit with a group of banks
for which BankBoston, N.A. is acting as agent. This line of credit is secured by
all assets of the Company, including the Company's interest in the equity
securities of its subsidiaries. This revolving line of credit matures in
January, 2003. Funds available to the Company under this line of credit were
$54.3 million at July 31, 1999. In connection with the proposed merger with KTI,
the Company will be required to replace its existing credit facility. The
Company is currently negotiating a new credit facility with a number of banks.
Net cash provided by operating activities was $9.2 million for the three
months ended July 31, 1999 compared to $13.3 million for the same period of
the prior fiscal year. The decrease was primarily due to the decrease in
accounts payable and the increase in accounts receivable due to the extensive
growth, partially offset by the increase in the Company's net income for the
three months ended July 31, 1999 over the prior fiscal year, increased
depreciation and amortization and increased closure/post closure accruals.
Cash used in investing activities decreased $0.2 million from $19.8 million to
$19.6 million in the three months ended July 31, 1999 over the same period of
the prior fiscal year. The decrease in investing activities reflects fewer
acquisitions for the quarter ended July 31, 1999 accounted for as purchases,
offset by capital expenditures. The Company's cash needs to fund investing
activities are expected to increase further as the Company continues to complete
acquisitions, and continues to expend capital in order to service internal
growth.
Net cash provided by financing activities was $11.3 million in the three months
ended July 31, 1999 compared to $7.2 million for the same period of the prior
year. The net cash provided by financing activities in the current fiscal year
reflects the borrowings on the Company's credit facility, offset by repayments.
Net cash provided by financing activities in the comparable period of the prior
year reflects the net proceeds of the follow-on offering and borrowings on the
Company's credit facility, offset by repayments.
Seasonality
The Company's revenues have historically been lower during the months of
November through March. This seasonality reflects the lower volume of waste
during the late fall, winter and early spring months primarily because: (i) the
volume of waste relating to construction and demolition activities decreases
substantially during the winter months in the northeastern United States; and
(ii) decreased tourism in Vermont, Maine and eastern New York during the winter
months tends to lower the volume of waste generated by commercial and restaurant
customers, which is partially offset by the winter ski industry. Since certain
of the Company's operating and fixed costs remain constant throughout the fiscal
year, operating income results are therefore impacted by a similar seasonality.
In
<PAGE>
addition, particularly harsh weather conditions could result in increased
operating costs to certain of the Company's operations.
The Company's quarterly revenues and operating results have varied significantly
in the past and are likely to vary substantially from quarter to quarter in the
future. The Company establishes its expenditure levels based on its expectations
as to future revenues, and, if revenue levels are below expectations, expenses
can be disproportionately high. Due to a variety of factors including general
economic conditions, governmental regulatory action, acquisitions, capital
expenditures and other costs related to the expansion of operations and services
and pricing changes, it is possible that in some future quarter, the Company's
operating results will be below the expectations of public market analysts and
investors. In such events, the Company's Class A Common Stock price would likely
be materially and adversely affected.
Inflation and Prevailing Economic Conditions
To date, inflation has not had a significant impact on the Company's operations.
Consistent with industry practice, most of the Company's contracts provide for a
pass through of certain costs, including increases in landfill tipping fees and,
in some cases, fuel costs. The Company therefore believes it should be able to
implement price increases sufficient to offset most cost increases resulting
from inflation. However, competitive factors may require the Company to absorb
at least a portion of these cost increases, particularly during periods of high
inflation.
The Company's business is located in the northeastern United States. Therefore,
the Company's business, financial condition and results of operations are
susceptible to downturns in the general economy in this geographic region and
other factors affecting the region such as state regulations and severe weather
conditions. The Company is unable to forecast or determine the timing and/or the
future impact of a sustained economic slowdown.
Year 2000 Issues
The approach of the year 2000 has raised concerns about the ability of
information technology systems and non-information technology systems, primarily
computer software programs, to properly recognize and process date-sensitive
information with respect to the Year 2000.
The Company has undertaken a Year 2000 project, comprised of four phases, to
address these concerns. Phase one, which has been completed, consisted of
awareness, Year 2000 planning, preparing a written plan, management approval
and support. Phase two involved the evaluation of all systems and equipment,
including hardware, software, security and voice mail, with respect to Year
2000 compliance. The completion date for phase two was June 30, 1999. Phase
three involved addressing any deficiencies identified in Phase two. The
completion date for Phase three was July 31, 1999. Phase four involves the
validation and testing of all systems and equipment, and the anticipated
completion date is September 30, 1999. Casella has performed, and continues
to perform routine updates of all software and hardware systems to facilitate
Year 2000 compliance.
The Company has completed numerous acquisitions in recent months, and the
information systems of a limited number of these acquired operations have not
yet been fully integrated with Casella's information systems. This
integration of the completed acquisitions is expected to occur by October 31,
1999. Casella continues to make acquisitions as an integral component of its
growth strategy. There is no assurance that the information systems of all
acquired operations, particularly those acquisitions completed in the latter
portion of calendar 1999, will be Year 2000 compliant by December 31, 1999.
Casella uses well-regarded nationally known software vendors for both its
general accounting applications and industry-specific customer information
and billing systems, and all internal productivity software. Casella has been
informed by the respective vendors that all application software is fully
Year 2000 compliant.
Casella's banking arrangement is with an international banking institution
which has informed Casella that it is taking all necessary steps to insure
its customers uninterrupted service throughout applicable Year 2000 time
frames. Casella's payroll is out-sourced by the largest provider of
third-party payroll services in the country, which has made a commitment of
uninterrupted service to their customers throughout applicable Year 2000 time
frames. <PAGE>
Casella is currently in the process of replacing all older personal computers
and servers. There are two servers and 25 additional personal computers that
will be replaced, 16 of which will be for the weight-measurement systems. The
two servers were replaced during the first quarter of fiscal 2000 (ending
July 31, 1999). Casella has acquired a Year 2000 compliant weight-measurement
system. Currently two beta sites are operational and Casella is in the
process of defining the implementation plan for the remaining sites. During
the implementation, all non Year 2000 compliant hardware will be replaced.
Casella currently plans a final testing of all systems in the second quarter
of fiscal 2000 (ending October 31, 1999) and expects to be fully Year 2000
compliant by the end of that fiscal quarter.
Casella has expended approximately $1.5 million dollars over the last
eighteen months to address hardware and software-related Year 2000 compliance
issues, principally through the implementation of a new frame network system. A
portion of this investment is attributable to integrating information systems of
companies that the Company has acquired. Casella will use funds from current
operations or Casella's line of credit to meet Year 2000 remediation
expenses.
No single customer represents more than one percent of Casella's revenues,
and we do not expect any material adverse effect on Casella's revenues in
the event an individual customer experiences Year 2000 problems.
In addition, Casella does not believe the Year 2000 noncompliance of the
Company's suppliers of goods and services, other than as specifically discussed
above, would have a material adverse effect on Casella's revenues and
results of operations. Accordingly, Casella's has not sought assurances of
Year 2000 compliance from these other vendors.
Casella expects to begin its evaluation of its most reasonably likely worst
case scenarios with respect to the Year 2000 in the third calendar quarter of
1999. Based upon the results of that evaluation Casella may develop an
appropriate contingency plan.
EBITDA
EBITDA represents operating income (earnings before interest and taxes, or
"EBIT") plus depreciation and amortization expense. EBITDA is not a measure of
financial performance under generally accepted accounting principles, but is
provided because the Company understands that certain investors use this
information when analyzing the financial position and performance of the
Company.
Amounts in thousands:
<TABLE>
<CAPTION>
Three Months Ended :
--------------------
7/31/98 7/31/99
------- -------
<S> <C> <C>
Operating income $ 5,435 $ 7,180
Depreciation and amortization 5,897 7,622
EBITDA $11,332 $14,802
EBITDA as a percentage of revenue 25.1% 26.9%
</TABLE>
Analysis of the factors contributing to the change in EBITDA is included in the
discussions above.
Certain Factors That May Affect Future Results
The following important factors, among others, could cause actual results to
differ materially from those indicated by forward-looking statements made in
this Quarterly Report and presented elsewhere by management from time to time.
<PAGE>
The Company is party to an Agreement and Plan of Merger with KTI, Inc. There can
be no assurance that the merger will take place on the anticipated timetable, if
at all, or if it does, that it will result in the synergies and other benefits
anticipated by the two companies. The benefits of the merger could be
impacted by KTI's operating results, which have been below expectations in
recent quarters.
In connection with the merger with KTI, the Company will be required to
replace its existing credit facility. Although the Company is in the process
of negotiating a new credit facility, there can be no assurance that it will
obtain such a credit facility in the amount, or on the timetable, sought by
the Company. In the event that it is unable to obtain a sufficient credit
facility, the Company's acquisition program, results of operations and
financial condition could be materially and adversely affected. If the
Company were unable to obtain a new credit facility, it will be unable to
repay its existing credit facility and will be in default.
The Company's objective is to continue to grow by expanding its services in
markets where it can be one of the largest and most profitable fully-integrated
solid waste services companies. Such growth, if it were to occur, could place a
significant strain on the Company's management and operational, financial and
other resources.
The Company has incurred net losses in the past. There can be no assurance that
the Company will be profitable in the future.
The Company's strategy envisions that a substantial part of the Company's future
growth will come from making acquisitions consistent with its strategy. There
can be no assurance that the Company will be able to identify suitable
acquisition candidates and, once identified, to negotiate successfully their
acquisition at a price or on terms and conditions favorable to the Company, or
to integrate the operations of such acquired businesses with the Company.
Certain of these acquisitions may be of significant size and may include assets
that are outside the Company's geographic territories or are ancillary to the
Company's core business strategy.
The Company is highly dependent upon the services of the members of its senior
management team, the loss of any of whom may have a material adverse effect on
the Company's business, financial condition and results of operations. In
addition, the Company's future success depends on its continuing ability to
identify, hire, train, motivate and retain highly trained personnel.
The Company anticipates that any future business acquisitions will be financed
through cash from operations, borrowings under its bank line of credit, the
issuance of shares of the Company's Class A Common Stock and/or seller
financing. There can be no assurance that the Company will have sufficient
existing capital resources or will be able to raise sufficient additional
capital resources on terms satisfactory to the Company, if at all, in order to
meet its capital requirements.
The Company's operating program depends on its ability to operate and expand the
landfills it owns and leases and to develop new landfill sites. Several of the
Company's landfills are subject to local laws purporting to regulate their
expansion and other aspects of their operations. There can be no assurance that
the laws adopted by municipalities in which the Company's landfills are located
will not have a material adverse effect on the Company's utilization of its
landfills or that the Company will be successful in obtaining new landfill sites
or expanding the permitted capacity of any of its current landfills once its
remaining disposal capacity has been consumed.
The Company may be adversely affected by changes in the commodity pricing of
recycled materials.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On or about October 30, 1997, Mr. Matthew M. Freeman commenced a civil
lawsuit against Casella and two of Casella's officers and directors in the
Rutland Superior Court, Rutland County, State of Vermont. In the Complaint,
Mr. Freeman seeks compensation for services allegedly performed by him prior
to 1995. Mr. Freeman is seeking a three-percent equity interest in Casella or
the monetary equivalent thereof, as well as punitive damages. Casella and the
officers and directors have answered the Complaint, denied Mr. Freeman's
allegations of wrongdoing, and asserted various defenses. In order to
facilitate the completion of the initial public offering of the Company's
Class A Common Stock in November, 1997, certain stockholders of Casella
agreed to indemnify Casella for any settlement by Casella or any award
against Casella in excess of
<PAGE>
$350,000 (but not legal fees paid by or on behalf of Casella or any other
third party). Casella accrued a $215,000 reserve for this claim during the
year ended April 30, 1998.
On May 12, 1998, Casella filed suit in New York Supreme Court, Allegany
County against the Town of Angelica, New York seeking a temporary restraining
order and preliminary injunctive relief against the Town's enforcement of a
recently-enacted local law which would prohibit the expansion of the Hyland
landfill, would require the landfill and the operator thereof to receive an
additional permit from the Town of Angelica to continue to operate, would
prevent the disposal of yard waste, may preclude the disposal of certain
types of industrial waste and would impose certain other restrictions on the
landfill. A temporary restraining order was granted by the court on May 14,
1998 in favor of Casella, and by a decision dated July 13, 1998, the court
granted Casella's motion for a preliminary injunction. On September 9, 1998,
the Town of Angelica filed a Notice of Appeal but has not yet perfected that
appeal. If Casella is not successful in its lawsuit, and if the Town of
Angelica seeks to enforce the law by its terms, then Casella would be
required to obtain an additional permit from the Town of Angelica to operate
the Hyland landfill, the expansion of the landfill beyond the current
permitted capacity would be prohibited, and Casella would be unable to
dispose of yard waste and may be precluded from disposing of certain
industrial wastes at the landfill. There can be no assurance that such
limitations would not have a material adverse effect on Casella's business,
financial condition and results of operations. Casella began accepting waste
at the Hyland facility on July 22, 1998, and is in active settlement
negotiations with the town.
Casella's wholly-owned subsidiary, North Country Environmental Services, Inc.
("NCES"), is a party to consolidated civil actions (Case Nos. 98-E-141 and
98-E-151) against the Town of Bethlehem, New Hampshire (the "Town"), before the
Grafton Superior Court in North Haverhill, New Hampshire. On October 16, 1998,
NCES commenced an action for declaratory relief against the Town seeking, on a
variety of grounds, to invalidate a Town zoning ordinance which purports to
prohibit the expansion of NCES's landfill beyond its currently permitted
capacity. The Town has taken the position that NCES may not expand the landfill
beyond Stage II, Phase I, which has reached capacity. NCES sought a declaration
that it requires no further approvals from the Town to expand the landfill
throughout its 87-acre parcel and that certain financial exactions imposed by a
1986 Town land-use approval are invalid. In the alternative, NCES sought
compensation under state law for the inverse condemnation of its property.
On October 23, 1998, the Town filed a petition for injunctive and declaratory
relief against NCES. The Town's petition sought to enjoin NCES's construction of
Stage II, Phase II of the landfill and to prevent any further expansion as
violative of the above-noted Town zoning ordinance. The construction of Stage
II, Phase II was proceeding at that time pursuant to a construction permit
issued by the New Hampshire Department of Environmental Services (NHDES) on
September 15, 1998. On October 30, 1998, the court entered a preliminary
injunction requiring NCES to suspend construction of Stage II, Phase II. When
the Town failed to post an injunction bond, however, the court permitted NCES to
complete and cover the liner system in Stage II, Phase II, before the onset of
winter.
On November 30, 1998, NCES and the Town proceeded to trial on eight of NCES's
eleven claims for relief and on the Town's claims for permanent injunctive and
declaratory relief. Earlier, the remaining three NCES claims were bifurcated for
later trial, if needed. On the day of trial, the Town filed two counterclaims
seeking to establish the lawfulness of the financial exactions challenged by
NCES's October 16, 1998 petition.
The Grafton Superior Court issued its order on NCES's first eight claims and the
Town's request for a permanent injunction and declaratory relief on February 1,
1999. The court declined to decide whether the Town's zoning ordinance is valid;
rather, the court held that NCES had appropriated a 51-acre tract of land
comprised of a 10-acre and a 41-acre parcel for landfilling purposes. Stage II,
Phase II is within the 51-acre tract. The court also found that NCES had
obtained permission to operate its landfill facility on this 51-acre tract prior
to the enactment of the challenged zoning ordinance and held that the ordinance
did not apply to NCES's operation of its landfill facility on this tract.
Consequently, the court held that the Town lacked authority to enforce the
zoning ordinance against NCES with respect to the 51-acre tract and denied the
Town's petition in its entirety. The court did not decide the validity of the
zoning ordinance as it relates to 36 acres adjoining the 51-acre tract after
finding that NCES had not demonstrated a present intent to develop this property
for landfilling. Consequently, NCES's ability to use this 36 acres for
landfilling remains unresolved.
<PAGE>
On February 10, 1999, the Town moved the Grafton Superior Court to clarify and
reconsider its order. On March 22, 1999, the court denied reconsideration but
offered some clarification which did not result in any substantive change in its
earlier order. On April 20, 1999, the Town filed a notice of appeal with the New
Hampshire Supreme Court seeking review of the superior court's order. NCES filed
a notice of cross-appeal on April 29, 1999.
Concurrently, on March 24, 1999, a special interest group, Environmental Action
for Northern New Hampshire, Inc. ("EANNH") sought to intervene before the
superior court. The reason EANNH gave for seeking intervention was to introduce
evidence which it claimed showed that there were size limitations on the
landfill implicit in the land-use approvals obtained by NCES's predecessors in
1976 and 1986. The superior court denied EANNH intervention on April 22, 1999,
and on May 24, 1999, EANNH appealed the denial of intervention to the New
Hampshire Supreme Court.
The Town's notice of appeal centers on its argument that there were implied
limitations upon the size of the landfill that could be operated by NCES and its
predecessors under the land-use approvals granted by the Town in 1976 and 1986.
NCES's cross-appeal seeks a determination that it has all local approvals
necessary to landfill throughout the entire 87-acre parcel, that the Town's
restrictive zoning ordinance is unlawful for several reasons, and that the
Town's attempted enforcement of the zoning ordinance was in bad faith, entitling
NCES to its attorney's fees.
The New Hampshire Supreme Court has yet to accept any of the appeals. NCES has
filed a motion for summary disposition of EANNH's appeal, but there has yet to
be a ruling on that motion. NCES has also learned that a second special interest
group, AWARE, Inc., intends to seek AMICUS CURIAE status so it may submit briefs
to the Supreme Court in support of the Town's appeal.
The sole issue remaining before the superior court is the lawfulness of the
financial exactions imposed in 1986 by the Town as a condition of land-use
approval. These exactions consist of a discounted tipping fee for Town solid
waste and a per-ton payment to the Town for all solid waste originating from
outside the Town and deposited at the landfill. NCES stopped complying with the
exactions in October of 1998. NCES and the Town have filed cross-motions for
summary judgment respecting the enforceability of the exactions and are awaiting
a ruling. Whatever the court's decision, NCES expects an appeal.
In a separate but related matter, the Waste Management Division of NHDES ("WMD")
issued operating approval to NCES for Stage II, Phase II of the landfill on
March 25, 1999. NCES has been landfilling in Stage II, Phase II since that time.
On April 23, 1999, EANNH appealed the operating approval to the Waste Management
Council, an appellate administrative body with jurisdiction to review certain
decisions of the WMD. EANNH has contended on its appeal that the operating
approval should be suspended because the superior court's order in NCES's favor
is on appeal and hence not final. EANNH has also argued that NCES misled the WMD
into issuing the operating approval by certifying that it had all local
approvals necessary to operate Stage II, Phase II when the order establishing
this proposition was on appeal.
NCES has filed a motion to dismiss EANNH's appeal to the Waste Management
Council on the ground that the Council lacks jurisdiction over the appeal and
that EANNH lacks standing to assert it. The Office of the Attorney General of
the State of New Hampshire has joined in that motion. In the alternative, NCES
has sought a stay of the Council proceedings pending the outcome of the Supreme
Court appeal. EANNH has agreed to a stay provided there is a suspension of the
operating approval during the pendency of the Supreme Court appeal. NCES has
objected to any such suspension.
In 1998, the Company received a State of Maine permit for approximately 3.3
million yds of capacity at its SERF (Hampden) landfill. This permit was
appealed by the Town of Hampden to the state waste appeal board and its
validity was reaffirmed by this appellant body. Subsequent to this
reaffirmation, the Town of Hampden has asserted local zoning prohibitions
against the expansion as granted by the State of Maine. This issue has now
been brought to the State's Superior Court for adjudication related to the
right of the Town to preempt the state's issuance of this permit.
The Company is not aware of any other non-routine or incidental material legal
proceedings.
ITEM 2. CHANGES IN SECURITIES
Changes in Rights and Classes of Stock
None.
Sales of Unregistered Securities
<PAGE>
None
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule for Period Ended July 31, 1999
Restated Financial Data Schedule for Period Ended July 31, 1998
(b) Reports on Form 8-K:
On May 13, 1999, the Company filed a Report on Form 8-K amending the Agreement
and Plan of Merger between the Company and KTI, Inc. and attaching the press
release issued in conjunction with such agreement.
- --------------
On September 9, 1999, the Company filed a Report on 8-K amending the Agreement
and Plan of Merger for the second time between the Company and KTI, Inc. and
attaching the press release issued in conjunction with such agreement.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Casella Waste Systems, Inc.
Date: September 14, 1999 By: /s/ Jerry Cifor
-----------------------------------
Jerry Cifor
Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JULY 30,
1999 CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE-MONTH PERIOD ENDED JULY 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINACIAL STATEMENTS AND THE FOOTNOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JUL-31-1999
<CASH> 4,918
<SECURITIES> 0
<RECEIVABLES> 33,470
<ALLOWANCES> 1,977
<INVENTORY> 646
<CURRENT-ASSETS> 39,698
<PP&E> 213,770
<DEPRECIATION> 73,190
<TOTAL-ASSETS> 300,639
<CURRENT-LIABILITIES> 30,202
<BONDS> 0
0
0
<COMMON> 160
<OTHER-SE> 151,507
<TOTAL-LIABILITY-AND-EQUITY> 300,639
<SALES> 0
<TOTAL-REVENUES> 55,036
<CGS> 0
<TOTAL-COSTS> 30,946
<OTHER-EXPENSES> 16,910
<LOSS-PROVISION> 1,977
<INTEREST-EXPENSE> 1,605
<INCOME-PRETAX> 5,632
<INCOME-TAX> 2,591
<INCOME-CONTINUING> 3,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,041
<EPS-BASIC> 0.19
<EPS-DILUTED> 0.18
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JULY 31,
1998 CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
THREE-MONTH PERIOD ENDED JULY 31, 1998, AS RESTATED TO REFLECT ACQUISITIONS
ACCOUNTED FOR AS POOLINGS OF INTERESTS, 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> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 4,092
<SECURITIES> 0
<RECEIVABLES> 23,276
<ALLOWANCES> 1,429
<INVENTORY> 646
<CURRENT-ASSETS> 33,879
<PP&E> 153,794
<DEPRECIATION> 51,413
<TOTAL-ASSETS> 232,006
<CURRENT-LIABILITIES> 32,221
<BONDS> 0
0
0
<COMMON> 319
<OTHER-SE> 141,335
<TOTAL-LIABILITY-AND-EQUITY> 232,006
<SALES> 0
<TOTAL-REVENUES> 45,084
<CGS> 0
<TOTAL-COSTS> 27,336
<OTHER-EXPENSES> 12,313
<LOSS-PROVISION> 1,431
<INTEREST-EXPENSE> 1,896
<INCOME-PRETAX> 3,796
<INCOME-TAX> 1,675
<INCOME-CONTINUING> 2,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,121
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.15
</TABLE>
