WCA WASTE CORP - FORM 8-K/A - EX-99.2 - EXHIBIT 99.2 - March 9, 2011

Attached files

file filename
8-K/A - FORM 8K/A - WCA WASTE CORPform8ka.htm
EX-23.1 - EXHIBIT 23.1 - WCA WASTE CORPexhibit23-1.htm
EX-99.3 - EXHIBIT 99.3 - WCA WASTE CORPexhibit99-3.htm
EX-99.4 - EXHIBIT 99.4 - WCA WASTE CORPexhibit99-4.htm
Exhibit 99.2
 
The following unaudited pro forma consolidated financial statements as of September 30, 2010, and for the year ended December 31, 2009 and the nine-month period ended September 30, 2010, illustrate the effect of the acquisition of certain assets of Emerald Waste Services, LLC and certain affiliates (“Emerald Waste”), as described in Note 1 to the unaudited pro forma financial statements.  The unaudited pro forma consolidated balance sheet as of September 30, 2010, has been prepared assuming that the acquisition was consummated as of September 30, 2010.  The unaudited pro forma consolidated statements of operations for the year ended December 31, 2009 and the nine-month period ended September 30, 2010, have been prepared assuming that the transaction was consummated as of January 1, 2009 and 2010, respectively.

The historical results of our operations have been derived from our consolidated financial statements.  The historical results of Emerald Waste have been derived from Emerald Waste’s consolidated financial statements.  The audited financial statements of Emerald Waste include the MacLand assets which were not purchased by us as part of this transaction.  As discussed below, pro forma adjustments have been made to disregard the Balance Sheet and Income Statement impact of these assets.

The Emerald Waste’s operations acquired by us include a transfer station and three hauling operations in Central Florida.  These operations were purchased by Emerald Waste on January 2, 2008.

The pro forma adjustments and the resulting unaudited pro forma financial statements are based upon available information and certain assumptions and estimates as described in the Notes to the Unaudited Pro Forma Financial
Statements.  A final determination of the required purchase accounting adjustments, including the allocation of the purchase price to the assets acquired and liabilities assumed based on their respective fair values, has not yet been made.  Accordingly, the purchase accounting adjustments reflected in the pro forma information are preliminary and have been made solely for the purposes of developing such information.  The unaudited pro forma financial statements and the notes thereto should be read in conjunction with our and Emerald Waste’s historical consolidated financial statements.

The unaudited pro forma consolidated statements of operations do not include and they do not purport to be indicative of the results of operations that would actually have occurred if the transactions described had occurred at the beginning of the periods presented, in such statements or the results that may be obtained in the future.
 
 
1
 
 
WCA WASTE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 30, 2010
(In thousands)
 
   
WCA Historical
    
Emerald Waste Historical
    
MacLand Assets Not Acquired (A)
    
Adjusted Combined
    
Pro Forma Adjustments
      
Total
  
                                                   
Assets
                                                  
Current assets:
                                                  
Cash and cash equivalents
  
$
4,105
    
$
146
    
$
(72
) 
  
$
4,179
    
$
(74
)
(B)
  
$
3,532
  
                                     
  (573
)
(E)
        
Accounts receivable, net
    
26,115
      
4,216
      
(756
) 
    
29,575
      
(3,460
)
(B) 
    
26,115
  
Deferred tax assets
    
1,452
      
—
      
—
      
1,452
                
1,452
  
Inventories
    
—
      
127
      
(8
)
    
119
      
(119
)
(B) 
    
—
  
Prepaid expenses and other
    
3,138
      
1,116
      
(155
)
    
4,099
      
(961
)
(B) 
    
3,249
  
                                     
111
  
(D)
        
Total current assets
    
34,810
      
5,605
      
(991
)
    
39,424
                
34,348
  
                                                   
Property and equipment, net
    
317,759
      
24,318
      
(10,316
) 
    
331,761
      
(14,002
)
(B) 
    
331,282
  
                                     
13,523
  
(D)
        
Goodwill, net
    
67,460
      
16,248
      
—
      
83,708
      
(16,248
)
(B) 
    
96,337
  
                                     
28,877
  
(D)
        
Intangible assets, net
    
7,196
      
—
      
—
      
7,196
      
  3,513
  
(D) 
    
10,709
  
Deferred financing costs, net
    
3,566
      
—
      
—
      
3,566
                
3,566
  
Deferred tax assets
    
454
      
—
      
—
      
454
      
313 
  
(E)
    
767
  
Other assets
    
160
      
—
      
—
      
160
                
160
  
Total assets
  
$
431,405
    
$
46,171
    
$
(11,307
) 
  
$
466,269
              
$
477,169
  
                                                   
Liabilities and Stockholders’ Equity
                                                  
Current liabilities:
                                                  
Accounts payable
  
$
13,260
    
$
1,359
    
$
(569
)
  
$
14,050
    
$
(790
)
(B) 
  
$
13,260
  
Accrued liabilities and other
    
19,455
      
1,481
      
(325
)
    
20,611
      
(1,156
)
(B) 
    
20,369
  
                                     
914
  
(D)
        
Deferred revenue
    
—
      
1,134
      
—
      
1,134
      
(1,134
)
(B)
    
—
  
Interest rate swap
    
713
      
—
      
—
      
713
                
713
  
Current maturities of long-term debt
    
500
      
1,000
      
(1,000
)
    
500
                
500
  
Total current liabilities
    
33,928
      
4,974
      
(1,894
)
    
37,008
                
34,842
  
                                                   
Long-term debt, less current maturities
    
219,059
      
—
      
—
      
219,059
      
 33,110
  
(C) 
    
252,169
  
Accrued closure and post-closure liabilities
    
13,921
      
1,728
      
(1,728
)
    
13,921
                
13,921
  
Intercompany payables
    
—
      
81,715
      
(31,640
)
    
50,075
      
(50,075
)
(B)
    
—
  
Other long-term liabilities
    
1,815
      
—
      
—
      
1,815
                
1,815
  
Total liabilities
    
268,723
      
88,417
      
(35,262
)
    
321,878
                
302,747
  
                                                   
Commitments and contingencies
                                                  
                                                   
Stockholders’ equity:
                                                  
Series A convertible preferred stock
    
9
      
—
      
—
      
9
                
9
  
Common stock
    
216
      
—
      
—
      
216
      
24 
  
(C) 
    
240
  
Treasury stock
    
(5,322
)
    
—
      
—
      
(5,322
)
              
(5,322
)
Additional paid-in capital
    
197,970
      
—
      
—
      
197,970
      
  11,976
  
(C)
    
209,946
  
Contingent considerations
    
3,225
      
—
      
—
      
3,225
                
3,225
  
Equity
    
—
      
(42,246
)
    
23,955
      
(18,291
)
    
18,291
  
(B) 
    
—
  
Retained earnings (deficit)
    
(33,416
)
    
—
      
—
      
(33,416
)
    
(260
) 
(E)
    
(33,676
)
Total stockholders’ equity
    
162,682
      
(42,246
)
    
23,955
      
144,391
                
174,422
  
Total liabilities and stockholders’ equity
  
$
431,405
    
$
46,171
    
$
(11,307
) 
  
$
466,269
              
$
477,169
  

 
The accompanying notes are an integral part of this financial statement.
 
 
2
 
 
 WCA WASTE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended December 31, 2009
(In thousands, except per share amounts)
 
   
WCA
Historical
    
Emerald Waste Historical
    
MacLand Assets Not Acquired (A)
    
Adjusted Combined
    
Pro Forma Adjustments
      
Total
  
                                                   
Revenue
  
$
194,138
    
$
35,243
    
$
(5,333
)
  
$
224,048
    
$
—
      
$
224,048
  
Expenses:
                                                  
Cost of services
    
130,287
      
25,431
      
(2,676
)
    
153,042
      
2,152
  
(F)
    
154,122
  
                                     
(1,072
)
(G)
        
Depreciation and amortization
    
26,357
      
5,535
      
(1,416
)
    
30,476
      
(1,612
)
(H)
    
28,864
  
Loss on impairment of goodwill
    
—
      
27,054
      
(17,739
)
    
9,315
      
(9,315
)
(I)
    
—
  
General and administrative
    
13,496
      
3,183
      
(1,031
)
    
15,648
      
(2,152
)
(F)
    
13,496
  
Gain on sale of assets
    
(86
)
    
—
      
—
      
(86
)
              
(86
)
  
    
170,054
      
61,203
      
(22,862
)
    
208,395
                
196,396
  
Operating income (loss)
    
24,084
      
(25,960
)
    
17,529
      
15,653
                
27,652
  
                                                   
Other income (expense):
                                                  
Interest expense, net
    
(18,052
)
    
(8,316
)
    
2,926
      
(23,442
)
    
4,442
  
(J)
    
(19,000
)
Impact of interest rate swap
    
(2,063
)
    
—
      
—
      
(2,063
)
              
(2,063
)
Other expense, net
    
(3
)
    
—
      
—
      
(3
)
              
(3
)
     
(20,118
)
    
(8,316
)
    
2,926
      
(25,508
)
              
(21,066
)
                                                   
Income (loss) before income taxes
    
3,966
      
(34,276
)
    
20,455
      
(9,855
)
              
6,586
  
Income tax (provision) benefit
    
(2,958
)
    
38
      
(38
)
    
(2,958
)
    
(1,011
)
(K)
    
(3,969
)
Net income (loss)
    
1,008
      
(34,238
)
    
20,417
      
(12,813
)
              
2,617
  
Accrued payment-in-kind dividend on preferred stock
    
(4,278
)
    
—
      
—
      
(4,278
)
              
(4,278
)
Net loss available to common stockholders
  
$
(3,270
)
  
$
(34,238
)
  
$
20,417
    
$
(17,091
)
            
$
(1,661
)
                                                   
Net loss available to common stockholders:
                                                  
Earnings per share — basic
  
$
(0.21
)
                                    
$
(0.09
)
                                                   
Earnings per share — diluted
  
$
(0.21
)
                                    
$
(0.09
)
                                                   
Weighted average shares outstanding — basic
    
15,824
                                        
18,233
  
                                                   
Weighted average shares outstanding — diluted
    
15,824
                                        
18,233
  
 
 
The accompanying notes are an integral part of this financial statement.
 
 
3
 
 
WCA WASTE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Nine Months Ended September 30, 2010
(In thousands, except per share amounts)
 
   
WCA
Historical
    
Emerald Waste Historical
    
MacLand Assets Not Acquired (A)
    
Adjusted Combined
    
Pro Forma Adjustments
      
Total
  
                                                   
Revenue
  
$
171,881
    
$
28,619
    
$
(4,127
)
  
$
196,373
    
$
—
      
$
196,373
  
Expenses:
                                                  
Cost of services
    
123,458
      
21,230
      
(2,570
)
    
142,118
      
1,805
  
(F)
    
142,261
  
                                     
(816
)
(G)
        
                                     
(846
)
(L)
        
Depreciation and amortization
    
22,682
      
3,836
      
(1,311
)
    
25,207
      
(645
)
(H)
    
24,562
  
General and administrative
    
8,743
      
2,226
      
(421
)
    
10,548
      
(1,805
)
(F)
    
8,743
  
Gain on sale of assets
    
(896
)
    
—
      
—
      
(896
)
              
(896
)
  
    
153,987
      
27,292
      
(4,302
)
    
176,977
                
174,670
  
Operating income
    
17,894
      
1,327
      
175
      
19,396
                
21,703
  
                                                   
Other income (expense):
                                                  
Interest expense, net
    
(14,190
)
    
(6,997
)
    
2,636
      
(18,551
)
    
3,632
  
(J)
    
(14,919
)
Write-off of deferred financing costs
    
(184
)
    
—
      
—
      
(184
)
              
(184
)
Impact of interest rate swap
    
(231
)
    
—
      
—
      
(231
)
              
(231
)
     
(14,605
)
    
(6,997
)
    
2,636
      
(18,966
)
              
(15,334
)
                                                   
Income (loss) before income taxes
    
3,289
      
(5,670
)
    
2,811
      
430
                
6,369
  
Income tax (provision) benefit
    
(1,932
)
    
—
      
—
      
(1,932
)
    
(1,189
)
(K)
    
(3,121
)
Net income (loss)
    
1,357
      
(5,670
)
    
2,811
      
(1,502
)
              
3,248
  
Accrued payment-in-kind dividend on preferred stock
    
(3,358
)
    
—
      
—
      
(3,358
)
              
(3,358
)
Net loss available to common stockholders
  
$
(2,001
)
  
$
(5,670
)
  
$
2,811
    
$
(4,860
)
            
$
(110
)
                                                   
Net loss available to common stockholders:
                                                  
Earnings per share — basic
  
$
(0.10
)
                                    
$
(0.01
)
                                                   
Earnings per share — diluted
  
$
(0.10
)
                                    
$
(0.01
)
                                                   
Weighted average shares outstanding — basic
    
19,580
                                        
21,989
  
                                                   
Weighted average shares outstanding — diluted
    
19,580
                                        
21,989
  
 
 
The accompanying notes are an integral part of this financial statement.
 
 
4
 
 
WCA WASTE CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

1.    BACKGROUND:

On December 15, 2010, WCA Waste Corporation (the “Company”), WCA Waste Systems, Inc., (“WCA Systems”), WCA of Mississippi, LLC (“WCA Mississippi” and, together with the Company and WCA Systems, the “WCA Parties”), entered into an Equity Interest Purchase Agreement (the “Original Agreement”) with EWS Holdings, LLC, (“EWS Holdings”), WRH Gainesville, LLC (“WRH Gainesville”), WRH Gainesville Holdings, LLC (“WRH Gainesville Holdings”), WRH Orange City, LLC (“WRH Orange City”), EWS Central Florida Hauling, LLC (“EWS CF”), MacLand Holdings, Inc. (“MacLand Holdings”), MacLand Disposal Center, Inc. (“MacLand I”), MacLand Disposal Inc. II (“MacLand II”) and Emerald Waste Services, LLC (“EWS” and, together with WRH Gainesville, WRH Gainesville Holdings, WRH Orange City, EWS CF, MacLand I and MacLand II, the “Acquired Companies”). Pursuant to the Original Agreement, the WCA Parties were to acquire all of the outstanding equity interests of the Acquired Companies, which own and operate the MacLand I commercial and industrial municipal solid waste landfill and the MacLand II construction and demolition landfill located in Mississippi which services five counties in Mississippi and Alabama, and a transfer station and hauling operations located in Central Florida which consist of 117 residential, commercial and roll-off routes servicing seven counties and 113,500 customers in the Gainesville, Orange City and Daytona Beach market areas.

On February 28, 2011, the parties to the Original Agreement entered into an Amended and Restated Equity Purchase Agreement (the “Amended Purchase Agreement”). Pursuant to the Amended Purchase Agreement, the Company agreed to acquire the outstanding equity interests of WRH Gainesville, WRH Gainesville Holdings, WRH Orange City, EWS CF and EWS (the “Florida Companies”), thereby only acquiring the transfer station and hauling operations located in central Florida. In consideration for the Florida Companies, the Company agreed to pay $33,000,000 in cash, a portion of which was used to pay all existing indebtedness of the Florida Companies, and 2,409,639 shares (the “Closing Shares”) of the Company’s common stock, par value $0.01 per share (“Common Stock”). The Closing Shares represent an agreed stock consideration amount of $12.0 million based on the volume weighted average price of the Common Stock for the ten trading days ending on February 24, 2011.  Upon closing, the Company also paid $0.1 million for additional net assets not included in the Amended Purchase Agreement.

2.    BASIS OF PRESENTATION:

The accompanying unaudited pro forma balance sheet has been prepared assuming that the acquisition and the related financing transactions occurred as of September 30, 2010. The accompanying unaudited pro forma statements of income for the year ended December 31, 2009 and the nine-month period ended September 30, 2010, has been prepared assuming that such transactions were consummated as of January 1, 2009 and 2010, respectively.

3.    PRO FORMA ADJUSTMENTS AND MANAGEMENT ASSUMPTIONS:

The unaudited pro forma financial statements reflect the following pro forma adjustments related to the acquisition and the related financing transactions:

(A)  
To disregard amounts on Emerald Waste’s balance sheet and statements of operations related to the MacLand assets which were not acquired by WCA.

(B)  
To eliminate amounts on Emerald Waste’s balance sheet related to the Florida Companies before purchase price allocation.

(C)  
To record receipt of aggregate proceeds of $33.1 million from our credit facility to pay for the cash consideration and issuance of 2,409,639 shares of WCA’s common stock.

 
5
 
 
(D)  
To record purchase price allocation of the total consideration of approximately $45.1 million.  Based on preliminary determinations of the fair values of assets acquired, the preliminary purchase price allocation is as follows (dollars in millions):

Purchase Price:
        
Cash
  
$
33.1
  
Common Stock
    
12.0
  
   
$
45.1
  
 
Purchase Price Allocation:
        
Step-up in Fair Value of Assets:
        
Property and Equipment
  
$
13.5
  
Intangible Assets
    
3.5
  
Goodwill
    
28.9
  
Working Capital, net
    
(0.8
)
   
$
45.1
  
 
(E)  
To record estimated transaction costs and their related tax impact for this acquisition.

(F)  
To record the reclassification of general and administrative costs to be consistent with WCA’s accounting classification. Under WCA’s organizational structure, these costs are considered a cost of operations.

(G)  
To remove costs associated with the adjustment of Emerald Waste corporate expenses allocated to the acquired assets.  WCA does not anticipate incremental costs associated with this acquisition.

(H)  
To record the adjustment of depreciation and amortization expense to reflect the revalued property and equipment and to consistently depreciate the acquired equipment and landfill assets using WCA’s methodologies (see note (D)).

(I)  
To eliminate loss on impairment of goodwill related to the Florida Companies assuming there is no immediate impairment of goodwill as the purchase consideration reflects the fair value of the assets acquired.

(J)  
To record the adjustment of interest expense consistent with the post-acquisition capital structure (see note (C)).

(K)  
To provide for taxes on Emerald Waste’s historical results and for the effects of Emerald Waste pro forma adjustments herein, utilizing WCA’s effective tax rate for each period.

(L)  
To record reduced rental expense associated with leased equipment purchased with acquisition proceeds.
 
 
6
 

WCA WASTE CORP Reports

Also read