<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended April 30, 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, VT 05701
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (802) 775-0325
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Class A common stock, $.01 per share par value
Indicate by checkmark 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 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
<PAGE>
The aggregate value of the voting stock held by non-affiliates of the
registrant, based on the last sale price of the registrant's Class A Common
Stock at the close of business on August 20, 1999 was $333,353,700.
There were 15,039,775 shares of Class A Common Stock, $.01 per share par
value, of the registrant outstanding as of August 20, 1999. There were
988,200 shares of Class B Common Stock of the registrant outstanding as of
August 20, 1999.
This Report on Form 10-K/A filed with the Securities and Exchange Commission
(the "Commission") by Casella Waste Systems, Inc., a Delaware corporation
(together with its subsidiaries, the "Company") is being filed to amend the
Company's Annual Report on Form 10-K as filed with the Commission on July 29,
1999 to include the information required by Part III of Form 10-K in
accordance with General Instruction G-3 of Form 10-K under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
<PAGE>
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES OF THE
REGISTRANT.
The directors, executive officers and other key employees of the Company, their
positions, and their ages as of April 30, 1999 are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Executive Officers
- ------------------
John W. Casella (1) 48 President, Chief Executive Officer, Chairman
of the Board of Directors and Secretary
Douglas R. Casella 43 Vice Chairman of the Board of Directors
James W. Bohlig 53 Senior Vice President and Chief Operating
Officer, Director
Jerry S. Cifor 38 Vice President and Chief Financial Officer,
Treasurer
Other Key Employees
- -------------------
Michael P. Barrett 45 Vice President, Transportation, Liquid Waste
and Recycling
Christopher M. DesRoches 41 Vice President, Sales and Marketing
Joseph S. Fusco 35 Vice President, Communications
James M. Hiltner 35 Regional Vice President
Michael Holmes 44 Regional Vice President
Larry B. Lackey 38 Vice President, Permits, Compliance and
Engineering
Alan N. Sabino 39 Regional Vice President
Gary Simmons 49 Vice President, Fleet Management
Non-employee Directors
- ----------------------
Gregory B. Peters (1)(2)(3) 53 Director
John F. Chapple III (1)(2)(3) 58 Director
</TABLE>
(1) Member of Compensation Committee
(2) Member of Stock Plan Subcommittee
(3) Member of Audit Committee
John W. Casella has served as President, Chief Executive Officer and Chairman of
the Board of Directors of the Company since 1993, and has been Chairman of the
Board of Directors of Casella Waste Management, Inc. since 1977. Mr. Casella has
actively supervised all aspects of Company operations since 1976, sets overall
corporate policies, and serves as chief strategic planner of corporate
development. Mr. Casella is also an executive officer and director of Casella
Construction, a company owned by Mr. Casella and Douglas R. Casella. See
"Certain
<PAGE>
Relationships and Related Transactions". Mr. Casella is the brother of Douglas
R. Casella.
Douglas R. Casella founded the Company in 1975, and has been a director of the
Company since that time. He has served as Vice Chairman of the Board of
Directors of the Company since 1993 and has been President of Casella Waste
Management, Inc. since 1975. Since 1989, Mr. Casella has been President of
Casella Construction, a company owned by Mr. Casella and John W. Casella which
specializes in general contracting, soil excavation and related heavy equipment
work. See "Certain Relationships and Related Transactions". Mr. Casella is the
brother of John W. Casella.
James W. Bohlig joined the Company as Senior Vice President and Chief Operating
Officer in 1993 with primary responsibility for business development,
acquisitions and operations. Mr. Bohlig has served as a director of the Company
since 1993. From 1989 until he joined the Company, Mr. Bohlig was Executive Vice
President and Chief Operating Officer of Russell Corporation, a general
contractor and developer based in Rutland, Vermont. Mr. Bohlig is a director of
Consumat Systems, Inc. a designer and manufacturer of incineration and pollution
control equipment.
Jerry S. Cifor joined the Company as Chief Financial Officer in January 1994.
From 1992 to 1993, Mr. Cifor was Vice President and Chief Financial Officer of
Earthwatch Waste Systems, a waste management company based in Buffalo, New York.
From 1986 to 1991, Mr. Cifor was employed by Waste Management of North America,
Inc., a waste management company, in a number of financial and operational
management positions. Mr. Cifor is a certified public accountant and was with
KPMG Peat Marwick from 1983 until 1986. Mr. Cifor is a graduate of Hillsdale
College with a Bachelor of Arts in Accounting.
Michael P. Barrett has served as Vice President, Transportation and Recycling of
the Company since January 1997. From June 1991 to January 1997, Mr. Barrett
served as the Company's Division Manager for Transfer Stations, Recycling and
Rutland Hauling.
Christopher M. DesRoches has served as Vice President, Sales and Marketing of
the Company since November 1996. From January 1989 to November 1996, he was a
regional vice president of sales of Waste Management, Inc., a solid waste
company. Mr. DesRoches is a graduate of Arizona State University.
Joseph S. Fusco has served as Vice President, Communications of the Company
since January 1995. From January 1991 through January 1995, Mr. Fusco was
self-employed as a corporate and political communications consultant. Mr. Fusco
is a graduate of the State University of New York at Albany.
James M. Hiltner has served as Regional Vice President of the Company since
March 1998. From 1990 to March 1998, Mr. Hiltner was employed by Waste
Management, Inc. as a region president (July 1996 through March 1998), where his
responsibilities included overseeing that company's waste management operations
in upstate New York and northwestern Pennsylvania, a division president (from
April 1992 through July 1996) and a general manager (from November 1990 through
April 1992.)
Michael Holmes has served as a Regional Vice President of the Company since
January 1997. From November 1995 to January 1997, Mr. Holmes was Vice President
of Superior Disposal Services, Inc., which was acquired by the Company in
January 1997. From November 1993 to November 1995, he was Superintendent of
Recycling and Solid Waste for the town of Weston, Massachusetts Solid Waste
Department where he managed all aspects of the town's recycling and solid waste
services. From June 1983 to October 1992, he served as the Division Manager of
all divisions in the Binghamton, N.Y. area and the Boston, Massachusetts area
for Laidlaw Waste Services, Inc. Mr. Holmes is a graduate of Broome Community
College.
Larry B. Lackey joined the Company in 1993 and has served as Vice President,
Permits, Compliance and Engineering since 1995. From 1984 to 1993, Mr. Lackey
was an Associate Engineer for Dufresne-Henry, Inc., an engineering consulting
firm. Mr. Lackey is a graduate of Vermont Technical College.
Alan N. Sabino has served as Regional Vice President of the Company since July
1996. From 1995 to July 1996, Mr. Sabino served as a Division President for
Waste Management, Inc. From 1989 to 1994, he served as Region Operations Manager
for Chambers Development Company, Inc., a waste management company. Mr. Sabino
is a
<PAGE>
graduate of Pennsylvania State University.
Gary Simmons joined the Company in May 1997 as Vice President, Fleet Management.
From 1995 to May 1997, Mr. Simmons served as National and Regional Fleet Service
Manager for USA Waste Services, Inc., a waste management company. From 1977 to
1995, Mr. Simmons served in various fleet maintenance and management positions
for Chambers Development Company, Inc.
Gregory B. Peters has been a general partner of Vermont Venture Capital
Partners, L.P., (a venture capital management company) the General Partner of
The Vermont Venture Capital Fund, L.P.; a general partner of North Atlantic
Capital Partners, L.P. (a venture capital management company), the General
Partner of North Atlantic Venture Fund, L.P.; and a general partner of North
Atlantic Investors (a venture capital management company), the General Partner
of North Atlantic Venture Fund II L.P.
John F. Chapple III was President and owner of Catamount Waste Services, Inc., a
central Vermont hauling and landfill operation from August 1989 to July 1994.
Catamount Waste Services, Inc. was purchased by the Company in May 1994. Mr.
Chapple has been retired since 1995.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors, executive officers and holders of more
than 10% of the Company's Common Stock to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Such persons are required by regulations
promulgated by the Commission to furnish the Company with copies of all Section
16(a) forms filed by such person with respect to the Company.
Based solely on its review of copies of reports filed by reporting persons
pursuant to Section 16(a) of the Exchange Act of 1934, or written
representations from reporting persons that no Form 5 filing was required for
such person, Casella believes that, during fiscal 1999, all filings required
to be made by reporting persons of Casella were timely made in accordance
with the requirements of the Exchange Act other than the filing of a Form 4
by Mr. Robert G. Banfield, a vice president, which reported two late
transactions; the filing of a Form 4 by Mr. Michael P. Barrett, a vice
president, which reported five late transactions; the filing of a Form 4 by
Mr. James W. Bohlig, senior vice president, chief operating officer and a
director, which reported three late transactions; the filing of a Form 5 by
Mr. Douglas R. Casella, a director, which reported two late transactions; the
filing of a Form 4 and a Form 5 by Mr. John W. Casella, president, chief
executive officer and a director, each of which reported two late
transactions; the filing of a Form 4 by Mr. Christopher M. DesRoches, a vice
president, which reported two late transactions; the filing of a Form 4 by
Mr. Joseph S. Fusco, a vice president, which reported two late transactions;
the filing of a Form 4 by Mr. Larry B. Lackey, a vice president, which
reported five late transactions; and the filing of a Form 4 by Mr. Gregory B.
Peters, a director, which reported two late transactions, all of which
reports were filed late.
<PAGE>
ITEM 11: EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for each of the last two fiscal years the cash
compensation paid and the shares underlying options granted to (i) the Company's
Chief Executive Officer, and (ii) each of the other executive officers who
received annual compensation in excess of $100,000 during fiscal 1999
(collectively, the "Named Executive Officers").
LONG-TERM COMPENSATION
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS
------------------------------------ -------------
Other # Securities
Fiscal Annual Underlying All Other
Name & Principal Position Year Salary Bonus Compensation Options/SARs Compensation
- -------------------------------- -------- -------- ---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John W. Casella 1999 $162,157 $ 60,000 $1,638,575(1) 90,000 $500
President, Chief Executive 1998 $156,965 $ 50,000 $ 14,279(2) 0 $500(3)
Officer and Chairman 1997 $136,141 $ 45,000 $ 22,755(2) 20,000 $985(3)
James W. Bohlig 1999 $152,109 $194,900 $ 882,700(1) 150,000 $500(3)
Senior Vice President and 1998 $146,591 $ 50,000 $ 0 0 $ 0
Chief Operating Officer 1997 $126,538 $ 45,000 $ 0 30,000 $ 0
Jerry S. Cifor 1999 $132,430 $ 50,000 $ 413,120(1) 110,000 $500(3)
Vice President and Chief 1998 $126,235 $ 42,000 $ 0 0 $500(3)
Financial Officer 1997 $107,692 $ 38,000 $ 0 16,000 $838(3)
</TABLE>
(1) Consists of the difference between the price paid by the named executive
officer upon exercise of a stock option and the fair market value of the
Class A common stock which he received on the date of exercise.
(2) Consists of life insurance premiums paid by the Company on behalf of the
Named Executive Officer.
(3) Consists of amount paid by the Company to the Named Executive Officer's
account in the Company's 401(k) plan.
STOCK OPTION GRANTS
The following table sets forth information for each of the Casella named
executive officers with respect to the grant of stock options to purchase
shares of Casella Class A common stock during fiscal 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT POTENTIAL REALIZABLE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES IN OR BASE EXPIRATION TERM(3)
NAME GRANTED(1) FISCAL YEAR PRICE(2) DATE 5% 10%
- ---- ----------- ----------- ------ ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
John W. Casella...... 90,000 8.0% $29.70 5/27/03 $266,991 $868,292
James W. Bohlig...... 150,000 13.5 27.00 5/27/08 2,203,792 5,455,477
Jerry S. Cifor....... 110,000 9.8 27.00 5/27/08 1,616,114 4,000,683
</TABLE>
- ------------------------------
(1) Each option is fully exercisable.
(2) Options were granted at the fair market value determined as of the date
of the grant, based upon the last reported sale price of Casella Class A
common stock on the Nasdaq National Market.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value (110% of fair market value in the case of Mr. Casella) of
Casella Class A common stock on the date of the option grant over the term of
the options. These numbers are calculated based on rules promulgated by the
SEC and do not reflect Casella's estimate of future stock price growth.
Actual gains if any, on stock option exercise and Casella Class A common
stock holdings are dependent on the timing of the exercise and the future
performance of Casella Class A common stock. There can be no assurance that
the rates of appreciation assumed in this table can be achieved or that the
amounts reflected will be received by the individuals.
FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each of the Named Executive
Officers concerning options to purchase Class A Common Stock exercised by the
Named Executive Officers during fiscal 1999 and the number and value of options
outstanding as of fiscal year ended 1999.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Value Options at April 30, 1999 (#) at April 30, 1999 ($)(2)
Acquired on Realized -------------------------------- ---------------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ------------------ ---------- -------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John W. Casella 65,000 $1,141,450 135,000 45,000 $2,011,250 $0
President, Chief Executive
Officer and Chairman
James W. Bohlig 35,000 $ 882,700 350,000 75,000 $6,352,350 $0
Senior Vice President and
Chief Operating Officer
Jerry S. Cifor 65,344 $ 318,176 101,656 55,000 $ 989,088 $0
Vice President and Chief
Financial Officer
</TABLE>
(1) Based on the closing price of the Class A Common Stock as reported on the
Nasdaq National Market on the date of exercise less the option exercise price.
(2) These values have been calculated on the basis of the last reported sale
price of the Company's Class A Common Stock on the Nasdaq National Market as
of April 30, 1999 of $25.00 per share, less the aggregate exercise price.
COMPENSATION OF DIRECTORS
The Company reimburses non-employee directors for expenses incurred in
attending Board of Directors meetings. Non-employee directors of the Company
receive stock options under the Company's 1997 Non-Employee Director Stock
Option Plan (the "Directors' Plan"). The Directors' Plan provides that each
non-employee director will receive an automatic grant of a non-statutory
stock option to purchase 5,000 shares of Class A Common Stock upon his or her
initial election to the Board of Directors (vesting in three equal
installments on each of the three anniversaries following the date of grant).
In addition, an option to purchase 2,000 shares of Class A Common Stock will
be granted to each incumbent non-employee director on the date of each annual
meeting of stockholders, vesting in three equal annual installments beginning
on the first anniversary of the date of grant. Options granted under the
Directors' Plan expire ten years from the date of grant. The exercise price
for options granted under the Directors' Plan is equal to the fair market
value of a share of Class A Common Stock as of the date of grant. The Company
has reserved a total of 50,000 shares of Class A Common Stock for issuance
under the Directors' Plan, 46,000 of which were available for future grant as
of August 21, 1999.
The Company has also entered into or engaged in certain transactions with
directors of the Company or affiliates of directors of the Company. See Item 13,
"Certain Relationships and Related Transactions".
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Company's Board of
Directors are Messrs. John W. Casella, Jeffrey Chapple and Gregory B. Peters.
The current members of the Stock Plan Subcommittee of the Company's Board of
Directors are Messrs. Chapple and Peters. Mr. Casella has served as President
and Chief Executive Officer of the Company since 1993. Mr. Chapple was
elected a member of the compensation committee following the end of fiscal
1999.
<PAGE>
The Company has from time to time engaged Casella Construction, Inc., a company
owned by John and Douglas Casella, to provide construction services for the
Company, including construction, closure and capping activities at the Company's
landfills. In fiscal 1999, the Company paid Casella Construction, Inc.
$5,198,000.
The Company is a party to two real estate leases with Casella Associates, a
Vermont partnership owned by John and Douglas Casella, relating to facilities
occupied by the Company. The leases, relating to the Company's corporate
headquarters in Rutland, Vermont and its Montpelier, Vermont facility, call for
aggregate monthly payments of approximately $18,000 and expire in April 2003.
These leases have been classified by the Company as capital leases for financial
reporting purposes. In addition, the Company leases furniture and fixtures from
Casella Associates pursuant to an operating lease which bears rent at $950 per
month and expires in 1999. In fiscal 1999, the Company paid Casella Associates
an aggregate of $237,101 for such leases. In November 1997, the lease relating
to the Company's corporate headquarters in Rutland, Vermont was amended to allow
the Company to upgrade and make capital improvements to the premises at an
estimated cost of $500,000 to be paid by the Company. Casella Associates was
granted the option to purchase such capital improvements by December 31, 2002,
and if it does not elect to exercise such option the Company has the right to
purchase the premises for $324,000, the fair market value of the premises prior
to the capital improvements, at the expiration of the term of the lease.
The Company operated an unlined landfill located in Whitehall, New York owned by
Bola, Inc., a corporation owned by John and Douglas Casella which operated as a
single-purpose real estate holding company. The Company paid the cost of closing
this landfill in 1992, and has agreed to pay all post-closure obligations. In
fiscal 1999, the Company paid $3,161 pursuant to this arrangement.
On or about October 30, 1997, Mr. Matthew M. Freeman commenced a civil lawsuit
against the Company and Messrs. Bohlig and John Casella 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 the Company or the monetary
equivalent thereof, as well as punitive damages. The Company and Messrs. Bohlig
and Casella have answered the complaint, denied Mr. Freeman's allegations of
wrongdoing, and asserted various defenses. In order to facilitate the completion
of the Company's initial public offering, certain stockholders of the Company,
including the two officers named as defendants, agreed to indemnify the Company
for any settlement by the Company or any award against the Company in excess of
$350,000 (but not including legal fees paid by or on behalf of the Company or
any other party). The Company has agreed to indemnify Messrs. Bohlig and Casella
for legal fees incurred by them in connection with the lawsuit, plus settlements
or awards up to $350,000 in the aggregate.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of July 31, 1999,
regarding the beneficial ownership of shares of the Company's Common Stock by
(i) each person or entity known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock ("5% Stockholders"), (ii) each
director
<PAGE>
of the Company, (iii) the Named Executive Officers (as defined in the Summary
Compensation Table above) and (iv) the directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock
-------------------- -------------------- Voting
Name of Beneficial Owner(1) Number % Number % Power
-------------------- -------------------- --------
<S> <C> <C> <C> <C> <C>
John W. Casella (2) 772,150 5.08% 494,100 50.0% 22.78%
Douglas R. Casella (3) 772,150 5.08% 494,100 50.0% 22.78%
James W. Bohlig (4) 550,000 3.60% 2.19%
Jerry S. Cifor (5) 224,656 1.48% 0.90%
Gregory B. Peters 19,684 0.13% 0.08%
John F. Chapple III 190,643 1.25% 0.76%
Weston Presidio
Capital II LP (6) 775,370 5.10% 3.09%
J.W. Seligman & Co.
Incorporated (7) 1,327,783 8.74% 5.29%
Warburg Pincus Asset
Management, Inc. (8) 775,000 5.09% 3.09%
Directors and executive
officers as a group
(6 people) (9) 2,529,283 16.64% 988,200 100.0% 49.48%
</TABLE>
(1) Beneficial ownership is determined in accordance with rules of the
Commission, and includes generally voting power and/or investment power with
respect to securities. Shares of Common Stock subject to options and/or warrants
currently exercisable or exercisable within 60 days of July 31, 1999
("Currently Exercisable Options") are deemed outstanding for computing the
percentage beneficially owned by the person holding such options and/or warrants
but are not deemed outstanding for purposes of computing the percentage
beneficially owned by any other person. Except as indicated by footnote, the
Company believes that the persons named in this table, based on information
provided by such persons, have sole voting and investment power with respect to
the shares of Common Stock indicated.
(2) Includes (a) 193,500 shares issuable on the exercise of options or warrants
within 60 days of July 31, 1999 and (b) 4,800 shares of Class A Common Stock
held in trust for the benefit of Mr. Casella's minor children. Mr. Casella
disclaims beneficial ownership of such shares. Does not include shares of
Class A Common Stock issuable at any time upon the conversion of Casella
Class B Common Stock on a one-for-one basis. The address of Mr. Casella is
c/o Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701.
(3) Includes (a) 193,500 shares issuable on the exercise of options or warrants
within 60 days of July 31, 1999 and (b) 1,600 shares of Class A Common Stock
held in trust for the benefit of Mr. Casella's minor children. Mr. Casella
disclaims beneficial ownership of such shares. Does not include shares of
Class A Common Stock issuable at any time upon the conversion of Casella
Class B Common Stock on a one-for-one basis. The address of Mr. Casella is
c/o Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, Vermont 05701.
(4) Includes (a) 280,000 shares issuable on the exercise of options or warrants
within 60 days of July 31, 1999, and (b) 8,000 shares of Class A Common
Stock held in trust for the benefit of Mr. Bohlig's minor children. Mr. Bohlig
disclaims beneficial ownership of such shares.
(5) Includes 156,656 shares issuable on the exercise of options or warrants
within 60 days of July 31, 1999.
<PAGE>
(6) The address of Weston Presidio Capital II, L.P. is One Federal Street,
Boston, MA 02110.
(7) Based on a Schedule 13G/A filed by J.W. Seligman & Co. with the SEC April
12, 1999. The address of J.W. Seligman & Co. is 100 Park Avenue, New York, NY
10017
(8) Based on a Schedule 13G filed by Warburg Pincus Asset Management, Inc.
with the SEC on January 13, 1999. The address of Warburg Pincus Asset
Management, Inc. is 466 Lexington Avenue, 10th floor, New York, NY 10017.
(9) Includes 823,656 shares issuable on the exercise of options or warrants
within 60 days of July 31, 1999.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has from time to time engaged Casella Construction, Inc., a company
owned by John and Douglas Casella, to provide construction services for the
Company, including construction, closure and capping activities at the Company's
landfills. In fiscal 1999, the Company paid Casella Construction, Inc.
$5,198,000.
The Company is party to two real estate leases with Casella Associates, a
Vermont partnership owned by John and Douglas Casella, relating to facilities
occupied by the Company. The leases, relating to the Company's corporate
headquarters in Rutland, Vermont and its Montpelier, Vermont facility, call
for aggregate monthly payments of approximately $18,000 and expire in April
2003. These leases have been classified by the Company as capital leases for
financial reporting purposes. In addition, the Company leases furniture and
fixtures from Casella Associates pursuant to an operating lease which bears
rent at $950 per month and expires in 1999. In fiscal 1999, the Company paid
Casella Associates an aggregate of $237,101 for such leases. In November
1997, the lease relating to the Company's corporate headquarters in Rutland,
Vermont was amended to allow the Company to upgrade and make capital
improvements to the premises at an estimated cost of $500,000, to be paid by
the Company. Casella Associates was granted the option to purchase such
capital improvements by December 31, 2002, and if it does not elect to
exercise such option the Company has the right to purchase the premises for
$324,000, the fair market value of the premises prior to the capital
improvements, at the expiration of the term of the lease.
The Company operated an unlined landfill located in Whitehall, New York owned by
Bola, Inc., a corporation owned by John and Douglas Casella which operated as a
single-purpose real estate holding company. The Company paid the cost of closing
this landfill in 1992, and has agreed to pay all post-closure obligations. In
fiscal 1999, the Company paid $3,161 pursuant to this arrangement.
In connection with the settlement of certain litigation naming the Company, four
of its subsidiaries, Messrs. James W. Bohlig and John W. and Douglas R. Casella
and one unrelated person as defendants, the Company paid an aggregate of
$450,000 plus approximately $200,000 in legal expenses incurred by the
defendants. The lawsuit was brought derivatively in the name of Meridian, a
Vermont corporation which has been inactive since 1993, of which Messrs. Bohlig
and John Casella were officers, directors and stockholders, as well as
individually in the names of the plaintiffs, who were also stockholders of
Meridian. In response to the lawsuit, in an effort to expedite adjudication, a
majority of Meridian's directors, including Messrs. Bohlig and John Casella,
voted to place Meridian into bankruptcy, and Meridian filed a petition under
Chapter 7. The lawsuit was subsequently removed to the United States Bankruptcy
Court for the District of Vermont. On July 14, 1997, the bankruptcy court
approved the settlement. Messrs. Bohlig and John Casella were officers and
directors of Meridian at the time Meridian filed the petition under Chapter 7.
On or about October 30, 1997, Mr. Matthew M. Freeman commenced a civil lawsuit
against the Company and Messrs. James W. Bohlig and John W. Casella 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.
<PAGE>
Freeman is seeking a three percent equity interest in the Company or the
monetary equivalent thereof, as well as punitive damages. The Company and
Messrs. Bohlig and Casella have answered the complaint, denied Mr. Freeman's
allegations of wrongdoing, and asserted various defenses. In order to facilitate
the completion of the Company's initial public offering, certain stockholders of
the Company, including the two officers named as defendants, agreed to indemnify
the Company for any settlement by the Company or any award against the Company
in excess of $350,000 (but not including legal fees paid by or on behalf of the
Company or any other party). The Company has agreed to indemnify Messrs. Bohlig
and Casella for legal fees incurred by them in connection with the lawsuit, plus
settlements or awards up to $350,000 in the aggregate.
In connection with and at the time of the Company's acquisition of the
business of Catamount Waste Services, Inc., the Company entered into a lease
in June 1994 with CV Landfill, Inc., a Vermont corporation affiliated with
Catamount Waste Services, Inc., pursuant to which the Company agreed to lease
a transfer station for a term of 10 years. CV Landfill, Inc. is owned by John
F. Chapple III, who became a director of the Company at the time of the
acquisition of the business of Catamount Waste Services, Inc. Pursuant to the
lease agreement, the Company pays monthly rent for the first five years at a
rate of $5.00 per ton of waste disposed of at the transfer station, with a
minimum rent of $6,650 per month. Following the fifth anniversary of the
lease agreement, the Company is required to pay monthly rent at a rate of
$2.00 per ton, with a minimum rent of $2,500 per month. In fiscal 1999, the
Company paid CV Landfill, Inc. $116,116.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Exchange Act,
and in accordance therewith files reports, proxy statements, and other
information with the Commission. Such reports, proxy statements, and other
information may be inspected and copied at the offices of the Commission, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
following Regional Offices of the Commission: Northwest Atrium Center, 5000 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials may be obtained
from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a web site that contains reports, proxy statements, and other
information regarding registrants that are filed electronically with the
Commission, and the address of such site is (http://www.sec.gov).
<PAGE>
SIGNATURES
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.
By: /s/ John W. Casella
----------------------------------
John W. Casella
Date: August 30, 1999
