Attached files

file filename
EX-32.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 906 - WCA WASTE CORPexhibi32-2.htm
EX-31.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 302 - WCA WASTE CORPexhibit31-2.htm
EX-32.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 906 - WCA WASTE CORPexhibit32-1.htm
EX-31.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 302 - WCA WASTE CORPexhibit31-1.htm
EX-12.1 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - WCA WASTE CORPexhibit12-1.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

þ  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended March 31, 2011
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: 000-50808


WCA Waste Corporation
(Exact name of registrant as specified in its charter)

Delaware
20-0829917
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)

One Riverway, Suite 1400
77056
Houston, Texas 77056
(Zip Code)
(Address of principal executive offices)
 

(713) 292-2400
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year,
if changed since last report)


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   þ    NO   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨    NO   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £
Accelerated filer £
Non-accelerated filer £
(Do not check if a smaller reporting company)
Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES   ¨    NO   þ

As of April 25, 2011, there were 23,735,930 shares of WCA Waste Corporation’s common stock, par value $0.01 per share, outstanding, excluding 1,073,957 shares of treasury stock.

 


 
 

 
 



 
RISK FACTORS AND
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

Some of the statements contained in this report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  From time to time, our public filings, press releases and other communications (such as conference calls and presentations) will contain forward-looking statements.  These forward-looking statements can generally be identified as such because the context of the statement will include words such as “may,” “should,” “outlook,” “project,” “intend,” “seek,” “plan,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “continue,” or “opportunity,” the negatives of these words, or similar words or expressions.  Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements.

We caution that forward-looking statements are not guarantees and are subject to known and unknown risks and uncertainties.  Since our business, operations and strategies are subject to a number of risks, uncertainties and other factors, actual results may differ materially from those described in the forward-looking statements.

Our business is subject to a number of operational risks and uncertainties that could cause our actual results of operations or our financial condition to differ from any forward-looking statements.  These include, but are not limited to, the following:
 
·  
prevailing U.S. economic conditions over the last two years and the related decline in construction activity, as well as any future downturns, has reduced and may continue to reduce our volume and/or pricing on our services, resulting in decreases in our revenue, profitability and cash flows;
 
·  
increases in the costs of fuel may reduce our operating margins;
 
·  
our failure to remain competitive with our competitors, some of whom have substantially greater resources, could adversely affect our ability to retain existing customers and obtain future business;
 
·  
we may lose contracts through competitive bidding, early termination or governmental action, or we may have to substantially lower our prices in order to retain certain contracts, any of which would cause our revenue to decline;
 
·  
we may not be able to maintain sufficient insurance coverage to cover the risks associated with our operations, which could result in uninsured losses that would adversely affect our financial condition;
 
·  
increases in costs of insurance would reduce our operating margins;
 
·  
our business is capital intensive, requiring ongoing cash outlays that may strain or consume our available capital and force us to sell assets, incur debt, or sell equity on unfavorable terms;
 
·  
changes in interest rates may affect our profitability;
 
·  
increases in the costs of disposal in landfills owned by third parties may reduce our operating margins;
 
·  
increases in the costs of labor may reduce our operating margins;
 
·  
we may not be successful in expanding the permitted capacity of our current or future landfills, which could restrict our growth, increase our disposal costs, and reduce our operating margins;
 
·  
we are subject to environmental and safety laws, which restrict our operations and increase our costs;
 
 
·  
we may become subject to environmental clean-up costs or litigation that could curtail our business operations and materially decrease our earnings;
 
·  
governmental authorities may enact climate change regulations that could increase our costs to operate;
 
·  
our accruals for landfill closure and post-closure costs may be inadequate, and our earnings would be lower if we are required to pay or accrue additional amounts;
 
·  
we may be unable to obtain financial assurances necessary for our operations, which could result in the closure of landfills or the termination of collection contracts;
 
·  
comprehensive waste planning programs and initiatives required by state and local governments may reduce demand for our services, which could adversely affect our waste volumes and the price of our landfill disposal services;
 
·  
efforts by labor unions to organize our employees could divert management attention and increase our operating expenses;
 
·  
current and proposed laws may restrict our ability to operate across local borders which could affect our manner, cost and feasibility of doing business;
 
·  
poor decisions by our regional and local managers could result in the loss of customers or an increase in costs, or adversely affect our ability to obtain future business;
 
·  
we are vulnerable to factors affecting our local markets, which could adversely affect our stock price relative to our competitors; and
 
·  
seasonal fluctuations will cause our business and results of operations to vary among quarters, which could adversely affect our stock price.
 
Our business is capital intensive and depends on our ability to generate sufficient cash flow from operations and, from time to time, to access our credit facility or other capital sources, each of which are subject to various risks and uncertainties including, but not limited to, the following:
 
·  
we have a substantial amount of debt which could adversely affect our operations and financial performance;
 
·  
the provisions in our debt instruments impose restrictions on us that may limit the discretion of management in operating our business;
 
·  
the inability or failure of any syndicate bank to meet its obligations under our senior credit facility could adversely impact our short-term and/or long-term capital or cash needs by limiting our access to swing-line loans, increasing the cost of issuing letters of credit, or reducing the total capacity available under the revolving credit facility; and
 
·  
adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, access to capital and cost of capital.
 
Our future financial performance may also depend on our ability to execute our acquisition strategy, which will be subject to many risks and uncertainties including, but not limited to, the following:
 
·  
on February 28, 2011, we completed the acquisition of certain assets of Emerald Waste Services, including one transfer station and three collection operations in Central Florida with cash and issuance of our common stock and the successful integration of these operations is subject to various risks;
 
 
·  
we may be unable to identify, complete or integrate future acquisitions, which may harm our prospects;
 
·  
we compete for acquisition candidates with other purchasers, some of which have greater financial resources and may be able to offer more favorable terms, thus limiting our ability to grow through acquisitions;
 
·  
in connection with financing acquisitions, we may incur additional indebtedness or issue additional equity, including common stock or preferred stock, which would dilute the ownership percentage of existing stockholders;
 
·  
businesses that we acquire may have unknown liabilities and require unforeseen capital expenditures, which would adversely affect our financial results;
 
·  
rapid growth may strain our management, operational, financial and other resources, which would adversely affect our financial results;
 
·  
our acquisitions have resulted, and future acquisitions we make may continue to result, in significant goodwill and other intangible assets, which may need to be written down if performance is not as expected; and
 
·  
we may incur charges and other unforeseen expenses related to acquisitions, which could lower our earnings.
 
Our business and the performance of our stock price are subject to risks related to our management, governance and capital structure.  They include, but are not limited to, the following:
 
·  
our success depends on key members of our senior management, the loss of any of whom could disrupt our customer and business relationships and our operations;
 
·  
a controlling interest in our voting stock is held by one fund and a small number of individuals (including management), which when combined with various agreements and rights of the fund, may discourage a change of control transaction and may exert control over our strategic direction;
 
·  
provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law could preclude a change of control that our stockholders may favor and which could negatively affect our stock price;
 
·  
we do not anticipate paying cash dividends on our common stock in the foreseeable future, so you can only realize a return on your investment by selling your shares of our common stock; and
 
·  
we may issue preferred stock that has a liquidation or other preference over our common stock without the approval of the holders of our common stock, which may affect those holders rights or the market price of our common stock.
 
We describe these and other risks in greater detail in the section entitled “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2010 (sometimes referred to in this report, including the notes to our financial statements, as the “10-K”).
 
The forward-looking statements included in this report are only made as of the date of this report and we undertake no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances.

 
PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

WCA WASTE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(Unaudited)
       
Assets
           
Current assets:
           
Cash and cash equivalents
 
$
3,820
   
$
2,763
 
Accounts receivable, net of allowance for doubtful accounts of $441 (unaudited) and $482, respectively
   
28,909
     
26,113
 
Deferred tax assets
   
3,436
     
3,436
 
Prepaid expenses and other
   
5,493
     
3,962
 
Total current assets
   
41,658
     
36,274
 
                 
Property and equipment, net of accumulated depreciation and amortization of $166,058 (unaudited) and $159,146, respectively
   
331,093
     
320,564
 
Goodwill, net
   
101,329
     
71,578
 
Intangible assets, net
   
16,817
     
7,891
 
Deferred financing costs, net
   
2,990
     
3,210
 
Other assets
   
218
     
345
 
Total assets
 
$
494,105
   
$
439,862
 
                 
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable
 
$
12,601
   
$
13,131
 
Accrued liabilities and other
   
19,612
     
13,921
 
Note payable
   
840
     
1,251
 
Current maturities of long-term debt
   
     
500
 
Total current liabilities
   
33,053
     
28,803
 
                 
Long-term debt, less current maturities and discount
   
268,575
     
232,571
 
Accrued closure and post-closure liabilities
   
12,034
     
11,571
 
Deferred tax liabilities
   
604
     
1,399
 
Other long-term liabilities
   
1,789
     
1,789
 
Total liabilities
   
316,055
     
276,133
 
                 
Commitments and contingencies
               
                 
Stockholders’ equity:
               
Series A convertible preferred stock, $0.01 par value per share. Authorized 8,000 shares; issued and outstanding 937 shares and 914 shares, respectively (liquidation preference $96,006)
   
9
     
9
 
Common stock, $0.01 par value per share. Authorized 50,000 shares; issued 24,734 shares and 21,684 shares
   
247
     
217
 
Treasury stock
   
(5,322
)
   
(5,322
)
Additional paid-in capital
   
215,590
     
199,627
 
Contingent considerations
   
3,225
     
3,225
 
Retained earnings (deficit)
   
(35,699
)
   
(34,027
)
Total stockholders’ equity
   
178,050
     
163,729
 
Total liabilities and stockholders’ equity
 
$
494,105
   
$
439,862
 


The accompanying notes are an integral part of these condensed consolidated financial statements.


WCA WASTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
             
Revenue
 
$
57,988
   
$
52,307
 
Expenses:
               
Cost of services
   
43,215
     
38,139
 
Depreciation and amortization
   
7,368
     
7,288
 
General and administrative (including stock-based compensation of $518 and $396, respectively)
   
3,773
     
3,232
 
Gain on sale of assets
   
(27
)
   
(9
)
     
54,329
     
48,650
 
Operating income
   
3,659
     
3,657
 
                 
Other income (expense):
               
Interest expense, net
   
(4,964
)
   
(4,692
)
Impact of interest rate swap
   
 
   
(252
)
     
(4,964
)
   
(4,944
)
                 
Loss before income taxes
   
(1,305
)
   
(1,287
)
Income tax benefit
   
794
     
539
 
Net loss
   
(511
)
   
(748
)
Accrued payment-in-kind dividend on preferred stock
   
(1,161
)
   
(1,108
)
Net loss available to common stockholders
 
$
(1,672
)
 
$
(1,856
)
                 
Net loss available to common stockholders:
               
Earnings per share — basic
 
$
(0.08
)
 
$
(0.10
)
                 
Earnings per share — diluted
 
$
(0.08
)
 
$
(0.10
)
                 
Weighted average shares outstanding — basic
   
20,841
     
19,523
 
                 
Weighted average shares outstanding — diluted
   
20,841
     
19,523
 


The accompanying notes are an integral part of these condensed consolidated financial statements.


WCA WASTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
             
Cash flows from operating activities:
           
Net loss
 
$
(511
)
 
$
(748
)
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Depreciation and amortization
   
7,368
     
7,288
 
Non-cash compensation charge
   
518
     
396
 
Amortization of deferred financing costs and debt discount
   
356
     
322
 
Deferred tax benefit
   
(794
)
   
(539
)
Accretion expense for closure and post-closure obligations
   
247
     
294
 
Gain on sale of assets
   
(27
)
   
(9
)
Unrealized gain on interest rate swap
   
     
(1,769
)
Changes in assets and liabilities, net of effects of acquisitions:
               
Accounts receivable, net
   
(2,796
)
   
610
 
Prepaid expenses and other
   
(1,819
)
   
(788
)
Accounts payable and other liabilities
   
4,129
     
(715
)
Net cash provided by operating activities
   
6,671
     
4,342
 
                 
Cash flows from investing activities:
               
Acquisitions of businesses, net of cash acquired
   
(37,985
)
   
 
Proceeds from sale of fixed assets
   
40
     
9
 
Capital expenditures
   
(3,034
)
   
(3,080
)
Net cash used in investing activities
   
(40,979
)
   
(3,071
)
                 
Cash flows from financing activities:
               
Principal payments on long-term debt
   
(500
)
   
(500
)
Net change in revolving line of credit
   
36,000
     
 
Deferred financing costs
   
(135
)
   
(100
)
Net cash provided by (used in) financing activities
   
35,365
     
(600
)
                 
Net change in cash and cash equivalents
   
1,057
     
671
 
Cash and cash equivalents at beginning of period
   
2,763
     
4,329
 
Cash and cash equivalents at end of period
 
$
3,820
   
$
5,000
 
 
                 
Supplemental cash flow information:
               
Interest paid
 
$
1,064
   
$
873
 
Income taxes paid
   
     
 
Income tax refund received
   
335
     
 
Note payable
   
     
 


The accompanying notes are an integral part of these condensed consolidated financial statements.

 
WCA WASTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(All tables in thousands, except per share data)

1. BASIS OF PRESENTATION AND NEW ACCOUNTING PRONOUNCEMENTS
 
Basis of Presentation

WCA Waste Corporation (WCA or the Company) is a vertically integrated, non-hazardous solid waste collection and disposal company.

The unaudited condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for quarterly reports on Form 10-Q.  Certain information relating to the Company’s organization and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (GAAP) has been condensed or omitted pursuant to such rules and regulations.  The Company believes that the presentations and disclosures herein are adequate to make the information presented herein not misleading when read in conjunction with its annual report on Form 10-K filed with the SEC on March 10, 2011 which contains the Company’s audited consolidated financial statements as of and for the year ended December 31, 2010.  The unaudited condensed consolidated financial statements as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 reflect, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position and results of operations for such periods.  Certain reclassifications have been made to the prior period financial statements to conform to the current presentation.  Please note, however, operating results for interim periods are not necessarily indicative of the results for full years.  For the description of the Company’s significant accounting policies, see note 1 to Notes to Consolidated Financial Statements included in the annual report on Form 10-K.

In preparing its financial statements, the Company makes numerous estimates and assumptions affecting the accounting for, and recognition and disclosure of, assets, liabilities, stockholders’ equity, revenues and expenses.  The most difficult, uncertain and subjective estimates and assumptions that the Company makes relate to accounting for landfills, asset impairments, and self-insurance reserves and recoveries.  The Company makes estimates and assumptions because some of the information that it uses in accounting, recognition and disclosure depends upon future events and other information cannot be precisely determined based on available data or based on generally accepted methodologies.  Actual results could differ materially from the estimates and assumptions that the Company uses in the preparation of its financial statements.

The accompanying unaudited condensed consolidated financial statements include the accounts of WCA Waste Corporation and its majority-owned and controlled subsidiaries after elimination of all material intercompany balances and transactions.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date.  Unless otherwise discussed, the Company does not expect that the impact of these recently issued accounting standards that are not yet effective will have a material impact on the Company’s financial condition, results of operations or cash flows upon adoption.

 
In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements.”  This update requires an entity to disclose separately the amounts of significant transfers in and out of Level 1 and 2 fair value measurements and to describe the reasons for the transfers.  It also requires additional disclosure regarding purchases, sales, issuances and settlements of Level 3 measurements.  ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the additional disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 15, 2010.  The Company adopted ASU 2010-06 on January 1, 2011.  The adoption of this standard did not have any impact on its financial position, results of operations or cash flows.

In February 2010, the FASB issued ASU 2010-09, “Amendments to Certain Recognition and Disclosure Requirements.”  ASU 2010-09 updates ASC Topic 855, Subsequent Events.  ASU 2010-09 requires an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement to disclose the date through which an entity has evaluated subsequent events.  The Company adopted the provisions of this pronouncement upon issuance with no material impact to its financial position, results of operations or cash flows.

In December 2010, the FASB issued ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.”  ASU 2010-28 updates ASC Topic 350, Intangibles—Goodwill and Other, to amend the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists.  This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010.  The Company adopted ASU 2010-28 on January 1, 2011.  The adoption did not have any material impact on its financial position, results of operations or cash flows.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations: Disclosure of Supplementary Pro Forma Information for Business Combinations.”  ASU 2010-29 amends ASC Topic 805, Business Combinations.  This update addresses diversity in the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations.  If a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  The Company adopted ASU 2010-29 on January 1, 2011.  The adoption of this update did not have any material impact on its financial position, results of operations or cash flows.

There were various other updates recently issued, many of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to have a material impact on the Company’s financial position, results of operations or cash flows.

2. ACQUISITIONS
 
Effective January 1, 2011, the Company acquired all of the outstanding capital stock of IESI OK Corporation, which is now known as WCA of Chickasha, LLC.  The Company paid cash consideration of approximately $1.9 million to IESI Corporation for all of the capital stock of IESI OK Corporation.  On February 11, 2011, the Company entered into an operating agreement and an option to purchase Stoughton Recycling Technologies, LLC (SRT) in Stoughton, Massachusetts.  The consideration for this transaction included $3.0 million of cash and 406,669 shares of the Company’s common stock valued at $2.0 million.  On February 28, 2011, the Company acquired certain assets of Emerald Waste Services located in Central Florida pursuant to an amended equity interest purchase agreement.  The total consideration for this acquisition included approximately $33.1 million of cash and 2,409,639 shares of the Company’s common stock valued at $12.7 million.
 
 
The purchase price for these transactions has been allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the time of acquisitions, with any residual amounts allocated to goodwill.  The purchase price allocations are considered preliminary until the Company is no longer waiting for information that it has arranged to obtain and that is known to be available or obtainable.  The time required to obtain the necessary information will vary with specific acquisitions, however, the final purchase price allocation will not exceed one year from the consummation of the acquisition.

Based on the preliminary assessments of values for these acquisitions, the Company recorded fixed assets of $14.6 million, intangible assets of $9.0 million, goodwill of $29.7 million and net working capital of $(0.7) million.

The Company’s condensed consolidated financial statements include the results of operations of the acquired businesses from their acquisition dates.  Only the acquisition from Emerald Waste was significant (within the meaning of Regulation S-X) to the Company as a whole.  The following unaudited pro forma comparison has been prepared assuming that the Emerald Waste acquisition had occurred as of the beginning of the prior comparable period.  This pro forma information is not necessarily indicative of the results of operations that would have occurred had the acquisition been made on that date or of results which may occur in the future.  The historical results of operations do not reflect the level of activity that was in effect at the time of the acquisition nor have any pro forma adjustments been made to reflect such current or anticipated future volume levels.  No material, nonrecurring pro forma adjustments directly attributable to the Emerald Waste acquisition are included in the reported pro forma revenue and earnings.

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
             
Revenue
 
$
63,128
   
$
60,016
 
Net loss available to common stockholders
 
$
(1,280
)
 
$
(1,269
)
                 
Earnings (loss) per share:
               
Basic
 
$
(0.06
)
 
$
(0.06
)
Diluted
 
$
(0.06
)
 
$
(0.06
)

3. STOCK-BASED COMPENSATION
 
The Company established the 2004 WCA Waste Corporation Incentive Plan which has been amended and restated from time to time.  On September 28, 2010, the stockholders of the Company approved the Fourth Amended and Restated 2004 WCA Waste Corporation Incentive Plan.  This amendment (1) increased the Company’s common stock authorized for issuance under the plan from 2,250,000 shares to 2,900,000 shares, (2) established an “evergreen” provision to increase the number of shares available for awards and grants on January 1 of each year by the lesser of (i) 500,000 additional shares or (ii) a number of shares such that the total authorized shares under the plan following such increase would be equal to 9% of the fully-diluted common shares issued and outstanding as of December 31 of the preceding year, and (3) made the shares surrendered by participants to satisfy tax withholding obligations available for future issuance.  As of March 31, 2011, there were approximately 400,000 remaining shares of the Company’s common stock authorized for issuance under the Incentive Plan.

During the three months ended March 31, 2011, a total of 299,422 restricted shares of the Company’s common stock were granted to certain officers with an aggregate market value of $1.5 million on the grant dates.  The unearned compensation is being amortized to expense on a straight-line basis over the required employment period, or the vesting period, as the restrictions lapse at the end of each anniversary after the date of grant.

 
The following table reflects the Company’s restricted share activity for the three months ended March 31, 2011:

   
Shares
   
Weighted Average Grant-Date Fair Value
 
Weighted Average Remaining Contractual Term (years)
Unvested at December 31, 2010
   
959
   
$
4.62
   
Granted
   
299
     
5.00
   
Vested
   
(238
)
   
4.87
   
Forfeited
   
     
   
Unvested at March 31, 2011
   
1,020
   
$
4.68
 
2.24

The Company has not granted any stock options since February 2005.  The following table reflects the Company’s option activity for the three months ended March 31, 2011:

   
Shares
   
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Term (years)
Outstanding at December 31, 2010
   
491
   
$
9.52
   
Grants
   
     
   
Forfeitures
   
     
   
Outstanding at March 31, 2011
   
491
   
$
9.52
 
3.25

As the exercise prices of all outstanding options were greater than the Company’s common stock share price as of March 31, 2011, there was no intrinsic value as of March 31, 2011.  In addition, no compensation expense remains to be recognized as all stock options outstanding are vested.

4. EARNINGS PER SHARE
 
Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings (loss) per share is computed using the treasury stock method for options and restricted shares and the if-converted method for convertible preferred stock and convertible debt.  The detail of the earnings (loss) per share calculations for net loss available to common stockholders for the three months ended March 31, 2011 and 2010 is as follows:

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
Numerator:
           
Net loss
 
$
(511
)
 
$
(748
)
Accrued payment-in-kind dividend on preferred stock
   
(1,161
)
   
(1,108
)
Net loss available to common stockholders
 
$
(1,672
)
 
$
(1,856
)
                 
Denominator:
               
Weighted average basic shares outstanding
   
20,841
     
19,523
 
Dilutive effect of restricted share issuances
   
     
 
Weighted average diluted shares outstanding
   
20,841
     
19,523
 
                 
Earnings (loss) per share:
               
Basic
 
$
(0.08
)
 
$
(0.10
)
Diluted
 
$
(0.08
)
 
$
(0.10
)

 
Due to their antidilutive effect, the following potential common shares have been excluded from the computation of diluted earnings (loss) per share:

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
Stock options
   
491
     
515
 
Restricted shares
   
1,020
     
648
 
Convertible preferred stock
   
9,817
     
9,344
 
Convertible debt
   
154
     
154
 
     
11,482
     
10,661
 

5. LONG-TERM DEBT
 
Long-term debt consists of the following:

   
March 31,
   
December 31,
 
   
2011
   
2010
 
Senior Notes, with interest rate of 9.25%, due in June 2014
 
$
150,000
   
$
150,000
 
Revolving note payable with financial institutions, variable interest rate based on LIBOR plus a margin (2.89% at March 31, 2011 and December 31, 2010)
   
117,000
     
81,000
 
Seller note, with two installments of $500 due on January 15, 2010 and 2011
   
     
496
 
Seller convertible notes, with interest rate of 5.5%, due in October 2012
   
1,575
     
1,575
 
     
268,575
     
233,071
 
Less current maturities
   
     
500
 
   
$
268,575
   
$
232,571
 

The 9.25% Senior Notes due 2014 are guaranteed by all of the Company’s current and future subsidiaries.  These guarantees are full, unconditional and joint and several.  In addition, the Company has no non-guarantor subsidiaries and no independent assets or operations outside of its ownership of the subsidiaries.  There are no restrictions on the subsidiaries to transfer funds through dividends or otherwise.  As of March 31, 2011, the fair value of these notes, based on quoted market prices, was approximately $154.5 million compared to a carrying amount of $150 million.

On June 30, 2010, the Company and Comerica Bank, in its capacity as Administrative Agent, together with BBVA Compass Bank as Documentation Agent, and in each of those bank’s capacities as Co-Lead Arrangers, along with Regions Bank, in its capacity as Syndication Agent, and certain other lenders, entered into the Twelfth Amendment to Revolving Credit Agreement (the “Amendment”) to amend the Credit Agreement.  Regions Bank, Branch Banking and Trust Company, and CoBank have become new participating lenders under the Credit Agreement.

The Amendment extended the term of the Credit Agreement and the revolving credit facility, which would have expired on July 5, 2011, to January 31, 2014.  The Amendment also increased the total revolving credit commitments available to the Company from the participating lenders under the Credit Agreement to $200 million from $175 million.  The Company incurred $1.0 million of financing costs associated with the Amendment.  In addition, the Company wrote off $0.2 million of deferred financing costs in proportion to reduced commitments from the original participating lenders.

The Amendment modified some of the pricing terms and conditions of the Credit Agreement; however, such modifications will not significantly increase the Company’s borrowing costs at current borrowing levels.  The Company is required to pay, quarterly in arrears, an annual facility fee in an amount ranging from 0.375% to 0.875% of the total revolving credit commitments of $200 million available under the Credit Agreement (the “Facility Fee”).   The Company is also obligated to pay an annual letter of credit fee in an amount ranging from 2.125% to 2.625% of the letter of credit obligations outstanding under the Credit Agreement (the “L/C Fee”).  Any borrowings under the Credit Agreement will bear interest at either (x) the Eurodollar London Interbank Offered Rate (“LIBOR”) for the applicable interest period, plus a spread ranging from 2.125% to 2.625% per annum (a “LIBOR Loan”) or (y) a base rate equal to the greater
 
 
of (1) the Federal Funds Rate plus 1%, (2) the Prime Rate as published by Comerica Bank from time to time, or (3) one-month LIBOR plus 1.00%, plus a spread ranging  from 1.625% to 2.125% (a “Base Rate Loan”).  The Facility Fee, the L/C Fee and the applicable spread on a LIBOR Loan and a Base Rate Loan depends on the Company’s Leverage Ratio (as such term is defined in the Credit Agreement as previously amended).  The Amendment did not result in any material modifications to the representations and warranties, covenants or other terms and provisions of the Credit Agreement.

The following table highlights the revised margins included in the Amendment:

Basis for
Leverage
 
Facility
   
LIBOR
   
All-In
   
Letter of Credit
   
Base Rate
 
Pricing
Ratio
 
Fee
   
Margin
   
Spread
   
Fees
   
Margin
 
Level I
< 3.00:1.0
    0.375       2.125       2.500       2.125       1.625  
Level II
≥3.00:1.0 but <3.50:1.0
    0.375       2.375       2.750       2.375       1.875  
Level III
≥3.50:1.0 but <4.00:1.0
    0.375       2.625       3.000       2.625       2.125  
Level IV
≥4.00:1.0 but <4.50:1.0
    0.625       2.625       3.250       2.625       2.125  
Level V
≥4.50:1.0
    0.875       2.625       3.500       2.625       2.125  

On February 28, 2011, the Company and Comerica Bank, in its capacity as Administrative Agent, together with BBVA Compass Bank as Documentation Agent, and in each of those bank’s capacities as Co-Lead Arrangers, along with Regions Bank, in its capacity as Syndication Agent, and certain other lenders, entered into the Thirteenth Amendment to Revolving Credit Agreement (the “Thirteenth Amendment”) to amend the Credit Agreement.

The Thirteenth Amendment provided lender consent to the acquisition of certain assets in Florida collectively referred to as the “Emerald Waste Central Florida (EWS) Acquisition”, and the acquired entities were added to the list of Subsidiaries and Guarantors.  The definition of Maintenance Capital Expenditures was modified for the year ending December 31, 2011 to exclude Maintenance Capital Expenditures incurred in connection with the EWS Acquisition in excess of $3 million but not exceeding $14 million for the purposes of determining covenant compliance.

As of March 31, 2011, there were $117.0 million outstanding under the Credit Agreement and approximately $12.1 million in letters of credit that serve as collateral for insurance claims and bonding, leaving $70.9 million in available capacity.  With $3.8 million cash on hand at March 31, 2011, the total capacity was approximately $74.7 million.  The carrying amount of our revolving credit facility approximates its fair value based on estimated future cash flows discounted at rates currently quoted.  The fair value of our debt is determined as of our balance sheet date and is subject to change.

6. INTEREST RATE SWAP
 
On July 7, 2006, the Company entered into an interest rate swap agreement effective July 11, 2006, where it agreed to pay a fixed-rate of 5.64% in exchange for three-month floating rate LIBOR that was 5.51% at the time the swap was entered.  The Company did not enter into the interest rate swap agreements for trading purposes.  The swap agreement was intended to limit the Company’s exposure to a rising interest rate environment.  This interest rate swap expired on November 1, 2010.  At the time the swap was entered, there was no offsetting floating rate LIBOR debt and therefore no floating rate interest payments were anticipated.  As a result, the swap transaction was not designated as a hedging transaction and any changes in the unrealized fair value of the swap are recognized in the statement of operations as a non-cash gain or loss.  During the three months ended March 31, 2010, the Company reflected ­­­­­approximately $0.2 million net loss related to the impact of interest rate swap, respectively, in the accompanying condensed consolidated statements of operations.  The realized loss portion of this swap was $2.0 million and the unrealized gain in the mark to market of the swap was $1.8 million for the three months ended March 31, 2010.

 
7. FAIR VALUE MEASUREMENTS
 
The following disclosure of the estimated fair value of financial instruments is made in accordance with ASC Topic 825.  The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value.  For assets and liabilities that are measured using quoted prices in active markets, the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs.  Assets and liabilities that are measured using significant other observable inputs are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability.  For all other assets and liabilities for which observable inputs are used, fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models.

As of March 31, 2011, the fair value of the Company’s 9.25% senior notes, based on quoted market prices (Level 1), was approximately $154.5 million compared to a carrying amount of $150 million.  Since the interest rate swap agreement expired on November 1, 2010, the Company had no financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2011.

8. LANDFILL ACCOUNTING
 
Capitalized Landfill Costs

At March 31, 2011, the Company owned 25 landfills.  Two of these landfills are fully permitted but not constructed and have not yet commenced operations as of March 31, 2011.

Capitalized landfill costs include expenditures for the acquisition of land and related airspace, engineering and permitting costs, cell construction costs and direct site improvement costs.  At March 31, 2011, no capitalized interest had been included in capitalized landfill costs, however, in the future interest could be capitalized on landfill construction projects but only during the period the assets are undergoing activities to ready them for their intended use.  Capitalized landfill costs are amortized ratably using the units-of-production method over the estimated useful life of the site as airspace of the landfill is consumed.  Landfill amortization rates are determined periodically (not less than annually) based on aerial and ground surveys and other density measures and estimates made by the Company’s engineers, outside engineers, management and financial personnel.

Total available airspace includes the total of estimated permitted airspace plus an estimate of probable expansion airspace that the Company believes is likely to be permitted.  Where the Company believes permit expansions are probable, the expansion airspace, and the projected costs related to developing the expansion airspace are included in the airspace amortization rate calculation.  The criteria the Company uses to determine if permit expansion is probable include but are not limited to whether: (i) the Company believes the project has fatal flaws; (ii) the land is owned or controlled by the Company, or under option agreement; (iii) the Company has committed to the expansion; (iv) financial analysis has been completed and the results indicate that the expansion has the prospect of a positive financial and operational impact; (v) personnel are actively working to obtain land use, local and state approvals for an expansion; (vi) the Company believes that the permit is likely to be received; and (vii) the Company believes that the timeframe to complete the permitting is reasonable.

The Company may be unsuccessful in obtaining expansion permits for airspace that has been considered probable.  If the Company is unsuccessful in obtaining these permits, certain previously capitalized costs will be charged to expense.

Closure and Post-Closure Obligations

The Company has material financial commitments for the costs associated with its future obligations for final closure, which is the closure of the landfill, the capping of the final uncapped areas of a landfill and post-closure maintenance of those facilities, which is generally expected to be for a period between 5 and 30 years depending on type and location.

The impact of changes determined to be changes in estimates, based on an annual update, is accounted for on a prospective basis.  The Company’s ultimate liability for such costs may increase in the future as a result of changes in estimates, legislation, or regulations.
 
 
The following table rolls forward the net landfill assets and closure and post-closure liabilities from December 31, 2010 to March 31, 2011:

   
Landfill Assets, Net
   
Closure and Post-closure Liabilities
 
December 31, 2010
 
$
218,373
   
$
11,571
 
Capital expenditures
   
716
     
 
Amortization expense
   
(2,652
)
   
 
Obligations incurred and capitalized
   
184
     
184
 
Revisions to estimates of closure and post-closure activities
   
32
     
32
 
Interest accretion
   
     
247
 
March 31, 2011
 
$
216,653
   
$
12,034
 

The Company’s liabilities for closure and post-closure costs are as follows:

   
March 31,
   
December 31,
 
   
2011
   
2010
 
Recorded amounts:
           
Current portion
 
$
   
$
 
Noncurrent portion
   
12,034
     
11,571
 
Total recorded
 
$
12,034
   
$
11,571
 

The Company’s total anticipated cost for future closure and post-closure activities is $199.5 million, as measured in current dollars.  The Company believes that the amount and timing of these activities are reasonably estimable.   Where the Company believes that both the amount of a particular closure and post-closure liability and the timing of the payments are reliably determinable, the cost, in current dollars, is inflated 2.5% until expected time of payment and then discounted to present value at the Company’s credit-adjusted risk-free rate, which is estimated to be 8.5%.  Accretion expense is applied to the closure and post-closure liability based on the effective interest method and is included in cost of services.  Had the Company not discounted any portion of its liability based on the amount of landfill airspace utilized to date, the closure and post-closure liability recorded would have been $43.9 million and $43.1 million at March 31, 2011 and December 31, 2010, respectively.

9. INCOME TAXES
 
The Company accounts for income taxes under the asset and liability method, where deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases based on enacted tax rates.  The Company provides a valuation allowance when, based on management’s estimates, it is more likely than not that a deferred tax asset will not be realized in future periods.  Income tax benefit for the three months ended March 31, 2011 as a percentage of pre-tax loss was 60.8% as compared to 41.9% for the three months ended March 31, 2010.  The rate in the current period is based on the Company’s anticipated 2011 annual effective income tax rate of 60.0% as compared to 52.2% for the three months ended March 31, 2010.  Such rate differs from the federal statutory rate of 35% due to state income taxes, valuation allowances associated with state net operating loss carryforwards and estimates of non-deductible expenses.  In addition to the anticipated 2011 annual effective income tax rate of 60.0%, the Company reflected an additional 0.8% of income taxes in the three months ended March 31, 2011 for discrete items within the period related to stock-based compensation expense.

 
The Company is subject to federal income tax in the United States and to state taxes in the various states in which it operates within the United States.  With few exceptions, the Company remains subject to both U.S federal income tax and to state and local income tax examinations by taxing authorities for tax years through 2001.  Currently, the Company is not involved in any income tax examinations for any year.

Under the provision of ASC Subtopic 740-10-25, the Company recorded approximately $1.8 million in other long-term liabilities for unrecognized tax benefits, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings.  As of January 1, 2011, the Company had unrecognized tax benefits of approximately $1.8 million, all of which would have an impact on the annual effective tax rate upon recognition.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.  This is an accounting policy election made by the Company that is a continuation of the Company’s historical policy and will continue to be consistently applied in the future.  During the three months ended March 31, 2011, the Company accrued approximately $500 of interest and penalties.

Within the next 12 months, the Company anticipates a reduction of approximately $21,000 in the balance of unrecognized tax benefits for a tax position related to prior years.

10. STOCKHOLDERS’ EQUITY

During the three months ended March 31, 2011, the Company issued 299,422 restricted shares under the Fourth Amended and Restated 2004 WCA Waste Corporation Incentive Plan.  These shares vest over three years from the grant date.  The following table reflects the changes in stockholders’ equity from December 31, 2010 to March 31, 2011:

   
Preferred Stock
   
Common Stock
   
Treasury Stock
   
Additional Paid-in Capital
   
Contingent Considerations
   
Retained Earnings (Deficit)
   
Total
 
December 31, 2010
 
$
9
   
$
217
   
$
(5,322
)
 
$
199,627
   
$
3,225
   
$
(34,027
)
 
$
163,729
 
Net loss
   
     
     
     
     
     
(511
)
   
(511
)
Accrued payment-in-kind dividend on preferred stock
   
     
     
     
1,161
     
     
(1,161
)
   
 
Issuance of common shares
   
     
28
     
     
14,623
     
     
     
14,651
 
Issuance of restricted shares to employees
   
     
3
     
     
(3
)
   
     
     
 
Accretion of unearned compensation
   
     
     
     
514
     
     
     
514
 
Restricted shares withheld
   
     
(1
)
   
     
(332
)
   
     
     
(333
)
March 31, 2011
 
$
9
   
$
247
   
$
(5,322
)
 
$
215,590
   
$
3,225
   
$
(35,699
)
 
$
178,050
 

 
Preferred Stock

On July 13, 2006, the Company’s stockholders approved the issuance of 750,000 shares of convertible preferred stock at $100.00 per share in the private placement with Ares Corporate Opportunities Fund II L.P. (Ares).  The shares were issued on July 27, 2006 and a portion of the net proceeds were used to completely repay the amounts outstanding under the credit facility.  Issuance costs, including a 1% discount to Ares and other transaction costs, totaled approximately $3.1 million.  The preferred stock is convertible into shares of the Company’s common stock at a price of $9.60 per share and carries a 5% payment-in-kind (PIK) dividend payable semi-annually.

The preferred shares were convertible into 7,812,500 shares of the Company’s common stock on the issuance date and with the effect of the cumulative PIK dividends at the end of five years would be convertible into 10,000,661 shares of common stock.  Under the terms of the preferred agreement, under certain circumstances, all five years’ worth of cumulative PIK dividends would accelerate and become payable to the preferred holder.  The preferred shareholder holds certain preferential rights, including the right to appoint two directors.  The Company can force a conversion into its common stock following either (i) the average of the closing price of the common stock for each of 20 consecutive trading days exceeding $14.40 per share or (ii) a fundamental transaction that Ares does not treat as a liquidation.  After the fifth anniversary of issuance, the Company can, at its discretion, redeem for cash equal to the liquidation preference which is approximately $96.0 million.  After the fifth anniversary of issuance, the Company has the option to PIK or pay a cash dividend at the rate of 5% per annum.  The preferred shares have no stated maturity and no mandatory redemption requirements.  The original issuance date for the preferred stock is the commitment date for both the preferred stock and the initial five years worth of dividends as the payment of the dividends through in-kind payments is non-discretionary for that initial five-year period.  Based on the fair value of the Company’s underlying common stock on the issuance date and the stated conversion date, there is no beneficial conversion feature associated with the issuance of the preferred stock.

11. SEGMENT INFORMATION

The Company’s operations consist of the collection, transfer, processing and disposal of non-hazardous solid waste.  Revenues are generated primarily from the Company’s collection operations to residential, commercial and roll-off customers and landfill disposal services.  The following table reflects total revenue by source for the three months ended March 31, 2011 and 2010:

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
Collection:
           
Residential
 
$
15,202
   
$
13,304
 
Commercial
   
8,335
     
6,421
 
Roll-off
   
10,417
     
9,985
 
Total collection
   
33,954
     
29,710
 
Disposal
   
21,567
     
21,072
 
Less intercompany
   
6,632
     
6,130
 
Disposal, net
   
14,935
     
14,942
 
Transfer and other
   
12,297
     
10,230
 
Less intercompany
   
3,198
     
2,575
 
Transfer and other, net
   
9,099
     
7,655
 
Total revenue
 
$
57,988
   
$
52,307
 

On February 28, 2011 the Company acquired certain assets of Emerald Waste Services.  In conjunction with this acquisition the Company reorganized its regional structure and created Region V by combining these newly acquired assets with its existing Florida assets which were previously included in Region II.  Results for Region II and Region V for the three months ended March 31, 2010 have been restated to reflect this change.
 
 
The table below reflects major operating segments (Region I: Kansas, Missouri; Region II: Colorado, New Mexico, Oklahoma, Texas; Region III: Alabama, Arkansas, North Carolina, South Carolina, Tennessee; Region IV: Massachusetts, Ohio; Region V: Florida) for the three months ended March 31, 2011 and 2010:

   
Region I
   
Region II
   
Region III
   
Region IV
   
Region V
   
Corporate
   
Total
 
Three months ended March 31, 2011:
                                                       
Revenue
 
$
11,923
   
$
23,204
   
$
11,007
   
$
7,613
   
$
4,241
   
$
   
$
57,988
 
Depreciation and amortization
   
1,291
     
2,829
     
1,539
     
916
     
704
     
89
     
7,368
 
Operating income (loss)
   
1,149
     
1,644
 
   
1,693
 
   
(502
)
   
(233
)
   
(92
)
   
3,659
 
Capital expenditures
   
836
     
1,356
     
253
     
410
     
135
     
44
     
3,034
 
Capital expenditures (Included in acquisitions)
   
     
     
1,367
     
67
     
13,198
     
     
14,632
 
Three months ended March 31, 2010:
                                                       
Revenue
 
$
12,158
   
$
21,490
   
$
9,790
   
$
7,391
   
$
1,478
   
$
   
$
52,307
 
Depreciation and amortization
   
1,307
     
2,789
     
1,660
     
1,012
     
414
     
106
     
7,288
 
Operating income (loss)
   
1,501
     
2,037
 
   
727
 
   
(357
)
   
(159
)
   
(92
)
   
3,657
 
Capital expenditures
   
283
     
2,187
     
80
     
418
     
109
     
3
     
3,080
 
                                                         
Total assets:
                                                       
March 31, 2011
 
$
79,727
   
$
141,786
   
$
99,118
   
$
52,545
   
$
95,971
   
$
24,958
   
$
494,105
 
December 31, 2010
   
80,261
     
142,047
     
100,575
     
47,223
     
46,948
     
22,808
     
439,862
 

Total assets for Corporate include cash, certain permitted but unopened landfills and corporate airplane.

12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is a party to various legal proceedings that have arisen in the ordinary course of business.  While the results of these matters cannot be predicted with certainty, the Company believes that losses, if any, resulting from the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.  However, unfavorable resolution could affect the consolidated financial position, results of operations or cash flows for the quarterly period in which they are resolved.

Other than routine litigation incidental to the Company’s business, which is not currently expected to have a material adverse effect upon its financial condition, results of operations or prospects, there are no pending material legal proceedings to which the Company is a party or to which any of its property is subject.

Other Potential Proceedings

In the normal course of business and as a result of the extensive governmental regulation of the solid waste industry, the Company may periodically become subject to various judicial and administrative proceedings involving federal, state or local agencies.  In these proceedings, an agency may seek to impose fines on the Company or to revoke or deny renewal of an operating permit it holds.  From time to time, the Company may also be subject to actions brought by citizens’ groups or adjacent landowners or residents in connection with the permitting and licensing of landfills and transfer stations the Company owns or operates or alleging environmental damage or violations of the permits and licenses pursuant to which the Company operates.  Moreover, the Company may become party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of a waste management business.
 
 
No assurance can be given with respect to the outcome of any such proceedings or the effect such outcomes may have on the Company, or that the Company’s insurance coverage would be adequate.  The Company is self-insured for a portion of its general liability, workers’ compensation and automobile liability.  The Company’s excess loss limits related to its self-insured portion of general liability, workers’ compensation and automobile liability are $100,000, $250,000 and $250,000, respectively.  The frequency and amount of claims or incidents could vary significantly from quarter-to-quarter and/or year-to-year, resulting in increased volatility of its costs of services.

13. SUBSEQUENT EVENTS
 
The Company has evaluated subsequent events through the date the financial statements were issued.
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10-Q. In addition, reference should be made to our audited consolidated financial statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K  for the year ended December 31, 2010 as filed with the SEC on March 10, 2011. The discussion below contains forward-looking statements that involve risks and uncertainties.  For additional information regarding some of these risks and uncertainties, please read “Risk Factors and Cautionary Statement About Forward-Looking Statements” included elsewhere in this quarterly report on Form 10-Q.  Unless the context requires otherwise, references in this quarterly report on Form 10-Q to “WCA Waste,” “we,” “us” or “our” refer to WCA Waste Corporation on a consolidated basis.

Overview

We are a vertically integrated, non-hazardous solid waste management company providing non-hazardous solid waste collection, transfer, processing, and disposal services in the United States.  As of March 31, 2011, we served approximately 450,000 commercial, industrial and residential collection customers and 6,000 landfill and transfer station customers in Alabama, Arkansas, Colorado, Florida, Kansas, Massachusetts, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee and Texas.  As of March 31, 2011, we owned and/or operated 25 landfills, 29 collection operations and 27 transfer stations/materials recovery facilities (MRFs).  Of these facilities, two transfer stations and two landfills are fully permitted but not yet opened, and two transfer stations are idle.  Additionally, we operate but do not own four of the transfer stations.

General Review of Results for the Three Months Ended March 31, 2011

During the three months ended March 31, 2011, our revenue was $58.0 million, which represents a 10.9% increase over the same period in 2010.  Our operating income was $3.7 million for the three months ended March 31, 2011, which remained flat as compared to the same period in 2010.  Net loss available to common stockholders was $1.7 million, or $0.08 per share, compared to $1.9 million, or $0.10 per share, for the three months ended March 31, 2010.  Adjusted EBITDA for the first three months of 2011 was $11.4 million, an increase of 3.7% over $11.0 million during the same period last year.  During the three months ended March 31, 2011, we recorded $0.1 million (net of tax) related to merger and acquisition related expenses.  Our net loss for the same period in 2010 included charges of $0.1 million (net of tax) due to the impact of interest rate swap agreements and $0.1 million due to the tax impact of vested restricted shares.

Factors that impacted our 2011 performance include, but are not limited to, the following:

·  
rising fuel costs during the first quarter of 2011 which reduced operating margins;

·  
severe winter weather conditions in several markets causing site closures, interruption of normal operations and as a result lost revenue;

·  
integration costs associated with the Emerald Waste acquisition and the Stoughton transaction;

·  
higher legal and accounting fees related to the acquisition activities during the first quarter of 2011; and

·  
higher cost of services as a percentage of revenue, primarily due to integration costs as well as higher fuel costs and labor cost increases in Texas associated with acquisitions, which significantly lowered operating margins;

 
Our operations consist of the collection, transfer, processing and disposal of non-hazardous solid waste.  Our revenue is generated primarily from our landfill disposal services and our collection operations provided to residential, commercial and roll-off customers.  Internalization refers to the disposal of collected waste into the landfills we own.  All collected waste must ultimately be processed or disposed of, with landfills being the main depository for such waste.  Generally, the most cost efficient collection services occur within a 35-mile operating radius from the disposal site (up to 100 miles if a transfer station is used).  Collection companies that do not own a landfill within such range from their collection routes will usually have to dispose of the waste they collect in landfills owned by third parties.  Thus, owning a landfill in a market area provides substantial leverage in the waste management business.  Our internalization for the three months ended March 31, 2011 was 69.6%.

The following table reflects our revenue segmentation (before elimination of intercompany revenue) for the three months ended March 31, 2011 and 2010:

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
Collection
   
50.1
%
   
48.7
%
Disposal
   
31.8
%
   
34.5
%
Transfer and other
   
18.1
%
   
16.8
%
Total revenue before intercompany elimination
   
100.0
%
   
100.0
%

The following table reflects our total revenue by source for the three months ended March 31, 2011 and 2010 (dollars in thousands):

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
Collection:
           
Residential
 
$
15,202
   
$
13,304
 
Commercial
   
8,335
     
6,421
 
Roll-off
   
10,417
     
9,985
 
Total collection
   
33,954
     
29,710
 
Disposal
   
21,567
     
21,072
 
Less intercompany
   
6,632
     
6,130
 
Disposal, net
   
14,935
     
14,942
 
Transfer and other
   
12,297
     
10,230
 
Less intercompany
   
3,198
     
2,575
 
Transfer and other, net
   
9,099
     
7,655
 
Total revenue
 
$
57,988
   
$
52,307
 

Please read note 11 to our condensed consolidated financial statements included in Item 1 of this report for certain geographic information related to our operations.

Costs of services include, but are not limited to, labor, fuel and other operating expenses, equipment maintenance, disposal fees paid to third-party disposal facilities, insurance premiums and claims expense, selling expenses, wages and salaries of field personnel located at operating facilities, third-party transportation expense and state and local waste taxes.  We are self-insured for up to $100,000, $250,000 and $250,000 of our general liability, workers’ compensation and automobile liability per claim, respectively.  The frequency and amount of claims or incidents could vary significantly from quarter-to-quarter and/or year-to-year, resulting in increased volatility of our costs of services.

General and administrative expenses include the salaries and benefits of our corporate management, certain centralized reporting, information technology and cash management costs and other overhead costs associated with our corporate office.
 
 
Depreciation and amortization expense includes depreciation of fixed assets over their estimated useful lives using the straight-line method and amortization of landfill costs and asset retirement costs based on the consumption of airspace.

All acquisition-related transaction and restructuring costs are expensed as incurred.  Acquisition-related costs that were previously capitalized include third-party expenditures related to acquisitions, such as legal, engineering, and accounting expenses, and direct expenditures such as travel costs.  Acquisition-related costs also include indirect expenditures, such as salaries, commissions and other corporate services.

After an acquisition is completed, we incur integration expenses related to (i) incorporating newly-acquired truck fleets into our preventative maintenance program, (ii) testing new employees to comply with Department of Transportation regulations, (iii) implementing our safety program, (iv) re-routing trucks and equipment to assure maximization of routing efficiencies and disposal internalization, and (v) converting customers to our billing system.  We generally expect that the costs of acquiring and integrating an acquired business will be incurred primarily during the first 12 months after acquisition.  Synergies from tuck-in acquisitions can also take as long as 12 months to be realized.

Goodwill represents the excess of the purchase price over the fair value of the net assets of the acquired operations.  In allocating the purchase price of an acquired company among its assets, we first assign value to the tangible assets, followed by intangible assets such as covenants not-to-compete and any remaining amounts are then allocated to goodwill.

Forward-Looking Statements and Non-GAAP Measures

As indicated in “Risk Factors and Cautionary Statement About Forward-Looking Statements” above, this report contains forward-looking statements, all of which are qualified by the risk factors and other statements set forth in that section.

Our management evaluates our performance based on non-GAAP measures, of which the primary performance measure is adjusted EBITDA.  EBITDA, as commonly defined, refers to earnings before interest, taxes, depreciation and amortization.  Our adjusted EBITDA consists of earnings (net income or loss) available to common stockholders before preferred stock dividend, interest expense (including write-off of deferred financing costs and debt discount), impact of interest rate swap agreements, income tax expense, depreciation and amortization, impairment of goodwill, net loss on early disposition of notes receivable/payable, and merger and acquisition related expenses.  We also use these same measures when evaluating potential acquisition candidates.

We believe adjusted EBITDA is useful to an investor in evaluating our operating performance because:

·  
it is widely used by investors in our industry to measure a company’s operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, financing methods, capital structure and the method by which assets were acquired;

·  
it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swap agreements and payment-in-kind (PIK) dividend) and asset base (primarily depreciation and amortization of our landfills and vehicles) from our operating results; and

·  
it helps investors identify items that are within our operational control.  Depreciation charges, while a component of operating income, are fixed at the time of the asset purchase in accordance with the depreciable lives of the related asset and as such are not a directly controllable period operating charge.

 
Our management uses adjusted EBITDA:

·  
as a measure of operating performance because it assists us in comparing our performance on a consistent basis as it removes the impact of our capital structure and asset base from our operating results;

·  
as one method to estimate a purchase price (often expressed as a multiple of EBITDA or adjusted EBITDA) for solid waste companies we intend to acquire.  The appropriate EBITDA or adjusted EBITDA multiple will vary from acquisition to acquisition depending on factors such as the size of the operation, the type of operation, the anticipated growth in the market, the strategic location of the operation in its market as well as other considerations;

·  
in presentations to our board of directors to enable them to have the same consistent measurement basis of operating performance used by management;

·  
as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations;

·  
in evaluations of field operations since it represents operational performance and takes into account financial measures within the control of the field operating units;

·  
as a component of incentive cash and stock bonuses paid to our executive officers and other employees;

·  
to assess compliance with financial ratios and covenants included in our credit agreements; and

·  
in communications with investors, lenders, and others, concerning our financial performance.

The following presents a reconciliation of our adjusted EBITDA to net loss available to common stockholders (dollars in thousands):

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
Adjusted EBITDA
 
$
11,447
   
$
11,043
 
Depreciation and amortization
   
(7,368
)
   
(7,288
)
Merger and acquisition related expenses
   
(420
)
   
(98
)
Interest expense, net
   
(4,964
)
   
(4,692
)
Impact of interest rate swap
   
     
(252
)
Income tax benefit
   
794
     
539
 
Accrued payment-in-kind dividend on preferred stock
   
(1,161
)
   
(1,108
)
Net loss available to common stockholders
 
$
(1,672
)
 
$
(1,856
)

Our adjusted EBITDA, as we define it, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP.  Adjusted EBITDA should not be considered in isolation or as substitutes for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.

 
Acquisitions

We target acquisition opportunities that enable us to internalize waste into our existing landfills and that offer new markets where: (i) we are able to acquire disposal facilities; (ii) we can secure long-term disposal contracts; or (iii) the landfills are municipally owned.  In markets where we already own a landfill, we intend to focus on expanding our presence by acquiring companies that also operate in that market or in adjacent markets (“tuck–in” acquisitions).  Tuck-in acquisitions are sought to provide growth in revenue and increase in market share, to enable disposal internalization and consolidation of duplicative facilities and functions to improve efficiencies and economies of scale.  If we find an attractive new market, we seek to enter that market by acquiring a permitted landfill, followed by acquiring collection and/or transfer operations and internalizing waste into the landfill.

Any acquisition we make would be financed by cash on hand and available capacity under our revolving credit facility, and through additional debt, and/or additional equity, including common stock or preferred stock.

We completed the IESI Chickasha acquisition, the Stoughton transaction and the Emerald Waste acquisition during the three months ended March 31, 2011.  On December 15, 2010, we entered into an equity interest purchase agreement to acquire certain assets of Emerald Waste Services, including two landfills in Mississippi, one transfer station and three collection operations in Central Florida.  On February 28, 2011, we closed the acquisition pursuant to an amended equity interest purchase agreement to acquire one transfer station and three collection operations located in Central Florida.  The acquired operations 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.  Effective January 1, 2011, we acquired all of the outstanding capital stock of IESI OK Corporation, which is now known as WCA of Chickasha, LLC.  The acquired operations include nine commercial and residential routes around Chickasha, Oklahoma, which is approximately 40 miles southwest of Oklahoma City, and a transfer station, which is approximately 50 miles from our Pauls Valley Landfill.  The transfer station is fully permitted but is not currently in operation.  On February 11, 2011, we entered into an operating agreement with an option to purchase Stoughton Recycling Technologies, LLC (SRT).  SRT is a commercial and demolition recycling facility and transfer station in Stoughton, Massachusetts.  This facility is located three miles from the WCA-owned Champion City Recovery transfer station and approximately 25 miles south of Boston, Massachusetts.  Total consideration for these three transactions included $38.0 million of cash and 2,816,308 shares of our common stock valued at $14.7 million.  Information concerning our acquisitions may be found in our previously filed periodic and current reports and in note 2 to the condensed consolidated financial statements included in Item 1 of this report.

The following sets forth additional information regarding our acquisitions from January 1, 2008 through March 31, 2011:

Company
 
Location
 
Region
 
Completion Date
 
Operations
Maguire Disposal, Inc.
 
Oklahoma City, OK
 
II
 
January 2, 2008
 
Collection
Advantage Waste Services
 
Springfield/Verona, MO
 
I
 
October 1, 2008
 
Collection & Transfer Station
Advanced Waste Services
 
Houston, TX
 
II
 
October 31, 2008
 
Collection
MRR Southern, LLC
 
Greensboro, NC
 
III
 
January 15, 2009
 
Transfer Station
Disposal Doctor, Inc.
 
Houston, TX
 
II
 
August 21, 2009
 
Collection
Live Earth, LLC
 
Fostoria, OH/Brockton, MA
 
IV
 
December 31, 2009
 
Landfill & Transfer Station
Washita Disposal
 
Oklahoma City, OK
 
II
 
August 1, 2010
 
Collection
Five JAB Environmental Services, LLC
 
Houston, TX
 
II
 
September 1, 2010
 
Collection
Sprint Waste Services, L.P.
 
Houston, TX
 
II
 
October 1, 2010
 
Collection
DINA Industries, Inc.
 
Houston, TX
 
II
 
October 1, 2010
 
Collection
IESI OK Corporation
 
Chickasha, OK
 
II
 
January 1, 2011
 
Collection & Transfer Station
Stoughton Recycling Technologies, LLC
 
Stoughton, MA
 
IV
 
February 11, 2011
 
Transfer Station
Emerald Waste Services
 
Central Florida, FL
 
V
 
February 28, 2011
 
Collection & Transfer Station

We continue to seek acquisition opportunities that enable us to effectively leverage our existing infrastructure and maximize the internalization of waste.  We are also evaluating opportunistic potential acquisitions both within and outside our existing footprint.
 
 
Results of Operations

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

The following table sets forth the components of operating income (loss) by major operating segments (Region I: Kansas, Missouri; Region II: Colorado, New Mexico, Oklahoma, Texas; Region III: Alabama, Arkansas, North Carolina, South Carolina, Tennessee; Region IV: Massachusetts, Ohio; Region V: Florida) for the three months ended March 31, 2011 and 2010 and the changes between the segments for each category (dollars in thousands):

   
Region I
   
Region II
   
Region III
   
Region IV
   
Region V
   
Corporate
   
Total
   
% of Revenue
 
Three months ended March 31, 2011:
                                                               
Revenue
 
$
11,923
   
$
23,204
   
$
11,007
   
$
7,613
   
$
4,241
   
$
   
$
57,988
     
100.0
 
Cost of services
   
8,518
     
16,888
     
6,976
     
7,199
     
3,634
     
     
43,215
     
74.5
 
Depreciation and amortization
   
1,291
     
2,829
     
1,539
     
916
     
704
     
89
     
7,368
     
12.7
 
General and administrative
   
969
     
1,830
     
835
     
     
136
     
3
     
3,773
     
6.5
 
(Gain) loss on sale of assets
   
(4
)
   
13
     
(36
)
   
     
     
     
(27
)
   
(0.0
)
Operating income (loss)
 
$
1,149
   
$
1,644
   
$
1,693
   
$
(502
)
 
$
(233
)
 
$
(92
)
 
$
3,659
     
6.3
 
Three months ended March 31, 2010:
                                                               
Revenue
 
$
12,158
   
$
21,490
   
$
9,790
   
$
7,391
   
$
1,478
   
$
   
$
52,307
     
100.0
 
Cost of services
   
8,476
     
15,062
     
6,745
     
6,736
     
1,120
     
     
38,139
     
72.9
 
Depreciation and amortization
   
1,307
     
2,789
     
1,660
     
1,012
     
414
     
106
     
7,288
     
13.9
 
General and administrative
   
874
     
1,602
     
658
     
     
112
     
(14
)
   
3,232
     
6.2
 
Gain on sale of assets
   
     
     
     
     
(9
)
   
     
(9
)
   
(0.0
)
Operating income (loss)
 
$
1,501
   
$
2,037
   
$
727
   
$
(357
)
 
$
(159
)
 
$
(92
)
 
$
3,657
     
7.0
 
Increase/(decrease) in 2011 compared to 2010:
                                                               
Revenue
 
$
(235
)
 
$
1,714
   
$
1,217
   
$
222
     
2,763
   
$
   
$
5,681
         
Cost of services
   
42
     
1,826
     
231
     
463
     
2,514
     
     
5,076
         
Depreciation and amortization
   
(16
)
   
40
     
(121
)
   
(96
)
   
290
     
(17
)
   
80
         
General and administrative
   
95
     
228
     
177
     
     
24
     
17
     
541
         
(Gain) loss on sale of assets
   
(4
)
   
13
     
(36
)
   
     
9
     
     
(18
)
       
Operating income (loss)
 
$
(352
)
 
$
(393
)
 
$
966
   
$
(145
)
   
(74
)
 
$
   
$
2
         

Revenue. Total revenue for the three months ended March 31, 2011 increased $5.7 million, or 10.9%, to $58.0 million from $52.3 million for the three months ended March 31, 2010.  Our revenue growth was primarily driven by acquisitions.  Acquisitions contributed $4.8 million of the revenue growth while internal volume decreased $1.3 million, operational price increases contributed $2.0 million, and pricing from fuel surcharges increased $0.9 million.  In addition, our revenue was negatively impacted by $0.7 million due to the asset sale of our Jonesboro operations in April 2010.  These factors affected our collection and disposal revenues in several markets.

The above table reflects the change in revenue in each operating region.  The financial results of completed acquisitions are generally blended with existing operations and do not have separate financial information available, with the exception of newly acquired regions which can be analyzed individually.  The Emerald Waste acquisition contributed to $2.6 million of the revenue increase in Region V.  The revenue increase of $1.7 million in Region II was primarily attributed to acquisition growth of $1.5 million, volume increases of $0.3 million and increases in fuel surcharges of $0.3 million, partially offset by price decreases of $0.4 million.  The revenue increase of $1.2 million in Region III was primarily attributed to price increases of $0.8 million, volume increases of $0.9 million and increases in fuel surcharges of $0.2
 
 
million, partially offset by Jonesboro divestiture of $0.7 million.  The revenue in Region III was largely boosted by $1.0 million of additional special waste volumes in Arkansas.  The slight revenue decrease in Region I was primarily due to volume decreases of $0.8 million as a result of severe winter conditions experienced during the first quarter of 2011.  Revenues in our other locations have stayed relatively flat or are moderately improving.

Cost of services. Total cost of services for the three months ended March 31, 2011 increased $5.1 million, or 13.3%, to $43.2 million from $38.1 million for the three months ended March 31, 2010.  The increase in cost of services was primarily a result of acquisitions.  Another factor that led to the increase was higher fuel costs.  For acquisitions within our existing markets, the acquired entities are merged into our existing operations, and those results are indistinguishable from the remainder of the operations.  The Emerald Waste acquisition in Region V accounted for $2.3 million of the increase in cost of services.  Cost of services in Region II increased primarily as a result of increases in revenue, rising fuel costs, and increases in labor costs associated with acquisitions, the addition of several recycling contracts and wage adjustments in the region.

Overall cost of services increased to 74.5% of revenue for the three months ended March 31, 2011 from 72.9% during the same period last year.  Increases in operating costs as a percentage of revenue were primarily attributable to Region IV and Region V.  Cost of services in Region IV accounted for 94.6% of its revenue due to higher transportation and disposal costs.  Cost of services in Region V accounted for 85.7% of its revenue due to initial integration costs for assets acquired from Emerald Waste.  Other than the impact of Region IV and Region V, higher fuel and disposal costs resulted in the increase in cost of services as a percentage of revenue.  Diesel fuel costs as a percentage of revenue increased from 6.2% for the three months ended March 31, 2010 to 8.2% for the three months ended March 31, 2011.  Other than periodic volatility in fuel prices, inflation has not materially affected our operations.

General and administrative. Total general and administrative expense for the three months ended March 31, 2011 increased by 16.7% to $3.8 million from $3.2 million for the three months ended March 31, 2010.  The increase in general and administrative expense was mainly attributable to increases in merger and acquisition related transaction expenses and stock based compensation expenses.  Such increase also resulted in the increase of overall general and administrative expenses from 6.2% of revenue during the three months ended March 31, 2010 to 6.5% of revenue during the three months ended March 31, 2011.

The following table sets forth items below operating income in our condensed consolidated statement of operations and as a percentage of revenue for the three months ended March 31, 2011 and 2010 (dollars in thousands):

   
Three Months Ended March 31,
 
   
2011
   
2010
 
Operating income
 
$
3,659
     
6.3
%
 
$
3,657
     
7.0
%
Interest expense, net
   
(4,964
)
   
(8.6
)
   
(4,692
)
   
(9.0
)
Impact of interest rate swap
   
     
     
(252
)
   
(0.5
)
Income tax benefit
   
794
     
1.4
     
539
     
1.0
 
Accrued payment-in-kind dividend on preferred stock
   
(1,161
)
   
(2.0
)
   
(1,108
)
   
(2.1
)%
Net loss available to common stockholders
 
$
(1,672
)
   
(2.9
)%
 
$
(1,856
)
   
(3.6
)%

Interest expense, net. Interest expense, net for the three months ended March 31, 2011 increased $0.3 million, or 5.8%, to $5.0 million from $4.7 million for the three months ended March 31, 2010.  The increase in interest expense was mainly caused by higher debt balances due to borrowings to finance acquisitions.

Impact of interest rate swap. The impact of interest rate swap for the three months ended March 31, 2010 was attributable to a $2.0 million loss related to the realized portion of the interest rate swap we entered into in July 2006 and a $1.8 million gain related to the unrealized portion in the mark to market of the swap.  At the time we entered into the swap, we had no floating rate debt, and therefore no floating rate interest payments were anticipated.  As a result, the swap transaction was not designated as a hedging transaction and any changes in the unrealized fair value of the swap were recognized in the statement of operations.  There was no impact of interest rate swap during the three months ended March 31, 2011 as the swap expired on November 1, 2010.  For more information regarding the interest rate swap agreement, please see note 6 to our condensed consolidated financial statements included in Item 1 above.
 
 
Income tax benefit. Income tax benefit for the three months ended March 31, 2011 as a percentage of pre-tax loss was 60.8% as compared to 41.9% for the three months ended March 31, 2010.  The rate in the current year period is based on our anticipated 2011 annual effective income tax rate of 60.0% as compared to 52.2% for the three months ended March 31, 2010.  Such rate differs from the federal statutory rate of 35% due to state income taxes, valuation allowances associated with state net operating loss carryforwards and estimates of non-deductible expenses.  In addition to the anticipated 2011 annual effective income tax rate of 60.0%, income taxes during the three months ended March 31, 2011 reflected an additional 0.8% for discrete items related to stock-based compensation expense.

Accrued payment-in-kind dividend on preferred stock. The $1.2 million and $1.1 million in accrued PIK dividend on preferred stock relate to the accretion of the 5% PIK dividend on our Series A Convertible Preferred Stock during the three months ended March 31, 2011 and 2010, respectively.

Liquidity and Capital Resources

Our business is capital intensive, requiring capital for equipment purchases, landfill construction and development, and landfill closure activities in the future.  Any acquisitions that we make will also require significant capital.  We plan to meet our future capital needs primarily through cash on hand, cash flow from operations and borrowing capacity under our credit facility.  Additionally, our acquisitions may use seller notes, equity issuances and debt financings.  The availability and level of our financing sources cannot be assured, while conditions appear to have stabilized, recent disruptions in the credit markets have resulted in greater volatility, less liquidity, widening of credit spreads and more limited availability of financing.  In addition, the availability under our credit facility is limited by compliance with certain covenants and ratios.  Our inability to obtain funding necessary for our business on acceptable terms would have a material adverse impact on us.

To address potential credit and liquidity issues, we consider several items.  Despite the rising fuel costs, additional acquisition related costs and integration costs as well as severe weather that impacted our collection and disposal revenues in several markets, our adjusted EBITDA has remained consistent period over period.  We are actively seeking growth opportunities through acquisitions and we expect our existing operations to remain relatively stable or slightly improve in 2011, mostly through pricing increases and MSW volume increases.  In addition, we are conducting a strategic asset review with an eye on supporting targeted growth while managing leverage down.  Our customer base is broad and diverse with no single customer making up any significant portion of our business.  We are not dependent on individual vendors to meet the needs of our operations.  Furthermore, we had approximately $70.9 million in available capacity under our current revolving credit agreement as of March 31, 2011, subject to customary covenant compliance.

We amended our revolving credit agreement on June 30, 2010 to extend the term from July 5, 2011 to January 31, 2014 and increase our borrowing capacity from $175 million to $200 million.  We routinely evaluate the financial stability of the syndicate banks making up the credit facility.  For further information about credit risks, please see “Risk Factors and Cautionary Statement About Forward-Looking Statements” in this report and Part II, Item 1A “Risk Factors” below.

 A portion of our capital expenditures is discretionary, giving us the ability to modify the timing of such expenditures to preserve cash if appropriate in the future.  In addition, we have evaluated our insurance carriers and bond providers and have not seen any indication that such providers would be unable to continue to meet their obligations to us or provide coverage to us in the future.

As of March 31, 2011, we had total outstanding long-term debt of approximately $268.6 million, consisting of $150 million of senior notes, $117.0 million outstanding under our credit facilities, and approximately $1.6 million of various seller notes.  This represented an increase of approximately $35.5 million over our total debt outstanding as of December 31, 2010.  The increase in outstanding debt since December 31, 2010 was primarily due to $36.0 million in additional borrowings under the credit facility to finance acquisitions, partially offset by the repayment of $0.5 million on a seller note.  As of March 31, 2011, we had $117.0 million outstanding under the revolving credit facility and approximately $12.1 million in letters of credit that serve as collateral for insurance claims and bonding, leaving $70.9 million in available capacity under the facility.  With $3.8 million cash on hand at March 31, 2011, our total capacity was approximately $74.7 million.
 
 
9.25% Senior Notes Due 2014

The senior notes were issued under an indenture between WCA Waste and The Bank of New York Trust Company, N.A., as Trustee.  The indenture contains covenants that, among other things, limit our ability to incur additional indebtedness, make capital expenditures, create liens, sell assets and make dividend and other payments.  In addition, the indenture includes financial covenants including a covenant allowing us to incur indebtedness or issue disqualified stock or preferred stock only if the Fixed Charge Coverage Ratio (as defined in the indenture) for the four full fiscal quarters most recently ended prior to issuance would have been at least 2.0 to 1, determined on a pro forma basis, as if the additional indebtedness had been incurred or the disqualified stock or preferred stock had been issued at the beginning of such four-quarter period. The defined terms are set forth in the indenture.  As of March 31, 2011, we were in compliance with all covenants under the senior notes indenture.

Bank Credit Facility

On June 30, 2010, we and Comerica Bank, in its capacity as Administrative Agent, together with BBVA Compass Bank as Documentation Agent, and in each of those bank’s capacities as Co-Lead Arrangers, along with Regions Bank, in its capacity as Syndication Agent, and certain other lenders, entered into the Twelfth Amendment to Revolving Credit Agreement (the “Amendment”) to amend the Credit Agreement.  Regions Bank, Branch Banking and Trust Company, and CoBank have become new participating lenders under the Credit Agreement.

The Amendment extended the term of the Credit Agreement and the revolving credit facility, which would have expired on July 5, 2011, to January 31, 2014.  The Amendment also increased the total revolving credit commitments available to us from the participating lenders under the Credit Agreement to $200 million from $175 million.  We incurred $1.0 million of financing costs associated with the Amendment.  In addition, we wrote off $0.2 million of deferred financing costs in proportion to reduced commitments from the original participating lenders.

The Amendment modified some of the pricing terms and conditions of the Credit Agreement; however, such modifications will not significantly increase our borrowing costs at current borrowing levels.  We are required to pay, quarterly in arrears, an annual facility fee in an amount ranging from 0.375% to 0.875% of the total revolving credit commitments of $200 million available under the Credit Agreement (the “Facility Fee”).   We are also obligated to pay an annual letter of credit fee in an amount ranging from 2.125% to 2.625% of the letter of credit obligations outstanding under the Credit Agreement (the “L/C Fee”).  Any borrowings under the Credit Agreement will bear interest at either (x) the Eurodollar London Interbank Offered Rate (“LIBOR”) for the applicable interest period, plus a spread ranging from 2.125% to 2.625% per annum (a “LIBOR Loan”) or (y) a base rate equal to the greater of (1) the Federal Funds Rate plus 1%, (2) the Prime Rate as published by Comerica Bank from time to time, or (3) one-month LIBOR plus 1.00%, plus a spread ranging  from 1.625% to 2.125% (a “Base Rate Loan”).  The Facility Fee, the L/C Fee and the applicable spread on a LIBOR Loan and a Base Rate Loan depends on our Leverage Ratio (as such term is defined in the Credit Agreement as previously amended).  The Amendment did not result in any material modifications to the representations and warranties, covenants or other terms and provisions of the Credit Agreement.

The following table highlights the revised margins included in the Amendment:

Basis for
Leverage
 
Facility
   
LIBOR
   
All-In
   
Letter of Credit
   
Base Rate
 
Pricing
Ratio
 
Fee
   
Margin
   
Spread
   
Fees
   
Margin
 
Level I
< 3.00:1.0
    0.375       2.125       2.500       2.125       1.625  
Level II
≥3.00:1.0 but <3.50:1.0
    0.375       2.375       2.750       2.375       1.875  
Level III
≥3.50:1.0 but <4.00:1.0
    0.375       2.625       3.000       2.625       2.125  
Level IV
≥4.00:1.0 but <4.50:1.0
    0.625       2.625       3.250       2.625       2.125  
Level V
≥4.50:1.0
    0.875       2.625       3.500       2.625       2.125  
 
 
Our credit facility is subject to various financial and other covenants, including, but not limited to, limitations on debt, consolidations, mergers, and sales of assets.  The credit facility also contains financial covenants requiring us to limit leverage (both in terms of senior secured debt and total leverage), to maintain specified debt service ratios, to limit capital expenditures, and to maintain a minimum tangible net worth.  Each of the financial covenants incorporates specially defined terms that would not correspond to GAAP or Non-GAAP measures disclosed in this report and that in certain instances are based on determinations and information not derived from or included in our financial statements.  The financial covenants include the following:

·  
our maximum “Leverage Ratio” (as defined in the Credit Agreement) for the trailing 12-month reporting period on each quarterly reporting date is 4.75 to 1.00;

·  
we maintain a Pro Forma Adjusted EBITDA Debt Service Ratio (as defined in the Credit Agreement) for the trailing 12-month period of not less than 2.25 to 1.00 until maturity;

·  
our maximum Senior Secured Funded Debt Leverage Ratio (as defined in the Credit Agreement) is 2.50 to 1.00;

·  
we cannot make any Maintenance Capital Expenditures (as defined in the Credit Agreement) exceeding 15% of our consolidated total revenue as calculated at the end of a fiscal year; and

·  
we maintain minimum Tangible Net Worth (as defined in the Credit Agreement) of not less than $30.0 million as of December 31, 2008, plus, as of the end of each fiscal quarter thereafter, 50% of our after-tax consolidated net income (but excluding any quarterly losses), plus 100% of any increase in our net worth resulting from the net cash proceeds of any future equity offerings.

In February 2010, the definitions of “Pro Forma Adjusted EBITDA” and “Pro Forma Adjusted EBITDA Debt Service Ratio” were amended and “Consolidated Net Interest Expense” was added as a further defined term to the Credit Agreement.  The purpose of such definitional modifications and addition are as follows:

·  
to exclude cash and non-cash income or expense attributable to any interest rate hedging agreement, now existing or which we enter into in the future, from the determination of our compliance with the Leverage Ratio under the terms of the Credit Agreement; and

·  
to include cash income or expense (but not non-cash items) attributable to any interest rate hedging agreement that we enter into in the future from the determination of our compliance with the Pro Form Adjusted EBITDA Debt Service Ratio under the terms of the Credit Agreement.

On February 28, 2011, we and Comerica Bank, in its capacity as Administrative Agent, together with BBVA Compass Bank as Documentation Agent, and in each of those bank’s capacities as Co-Lead Arrangers, along with Regions Bank, in its capacity as Syndication Agent, and certain other lenders, entered into the Thirteenth Amendment to Revolving Credit Agreement (the “Thirteenth Amendment”) to amend the Credit Agreement.

The Thirteenth Amendment provided lender consent to the acquisition of certain assets in Florida collectively referred to as the “Emerald Waste Central Florida (EWS) Acquisition”, and the acquired entities were added to the list of Subsidiaries and Guarantors.  The definition of Maintenance Capital Expenditures was modified for the year ending December 31, 2011 to exclude Maintenance Capital Expenditures incurred in connection with the EWS Acquisition in excess of $3 million but not exceeding $14 million for the purposes of determining covenant compliance.

As of March 31, 2011, we were in compliance with all covenants under the credit facility.


Preferred Stock

On June 12, 2006, we entered into a privately negotiated Preferred Stock Purchase Agreement with Ares Corporate Opportunities Fund II L.P., which provided for us to issue and sell 750,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share, to Ares. The purchase price per preferred share was $100.00, for an aggregate purchase price of $75 million.  The preferred stock is convertible into our common stock, par value $0.01 per share, at a price of $9.60 per share and carries a 5% PIK dividend payable semi-annually.  The closing of the sale and issuance of the full amount of preferred shares pursuant to the purchase agreement was completed on July 27, 2006.  The original issuance date for the preferred stock is the commitment date for both the preferred stock and the initial five years’ worth of dividends as the payment of the dividends through in-kind payments is non-discretionary for that initial five-year period.  Based on the fair value of our underlying common stock on the issuance date and the stated conversion date, there is no beneficial conversion feature associated with the issuance of the preferred stock.

The preferred shares are immediately convertible at Ares’ discretion into 9,843,237 shares of our common stock, which would represent approximately 29.4% of our outstanding common stock on a post-conversion basis as of March 31, 2011.  Dividends are solely PIK through July 2011 — that is, they are payable solely by adding the amount of dividends to the stated value of each share.  After July 2011, the preferred shares would be convertible into approximately 10,000,661 shares of common stock, which, based on the currently outstanding shares, would represent approximately 29.7% of the post-conversion shares outstanding.  If the preferred shares are not converted after five years, we have the option to PIK or pay a cash dividend at the rate of 5% per annum.  The preferred shares have no stated maturity and no mandatory redemption requirements.

Other material terms of the preferred stock are as follows:

·  
all dividends that would otherwise be payable through the fifth anniversary of issuance shall automatically be accelerated and paid in kind immediately prior to the occurrence of any of the following acceleration events:

·  
liquidation;

·  
bankruptcy;

·  
closing of a public offering of common stock pursuant to an effective registration statement (except for Form S-4, solely for sales by third parties, or pursuant to Ares’ own registration rights agreement);

·  
the average of the closing price of our common stock for each of 20 consecutive trading days exceeds $14.40 per share; and

·  
upon a “fundamental transaction,” including a “group” (defined in the Securities Exchange Act of 1934, as amended) acquiring more than 35% of outstanding voting rights; replacement of more than one-half of the directors without approval of the existing board of directors; a merger, consolidation, sale of substantially all assets, going-private transaction, tender offer, reclassification, or other transaction that results in the transfer of a majority of voting rights;

·  
Ares can convert the preferred stock into common stock at any time at a conversion price of $9.60 per share, with conversion being calculated by taking the stated value (initially $100.00 per share) plus any amount added to stated value by way of dividends, then dividing by $9.60 to produce the number of shares of common stock issuable;

·  
we can force a conversion into common stock following either (i) the average of the closing price of our common stock for each of 20 consecutive trading days exceeding $14.40 per share or (ii) a fundamental transaction that Ares does not treat as a liquidation;

·  
after the fifth anniversary of issuance, we can redeem for cash equal to the liquidation preference;
 
 
·  
after the fifth anniversary of issuance, we can pay dividend in cash at our discretion;

·  
upon our liquidation, prior to any holder of common stock or other junior securities, Ares shall receive in cash the greater of (i) the stated value plus any amount added by way of dividends (accelerated to include a full five years) or (ii) the amount it would receive if all shares of preferred stock were converted into common stock (calculated to include dividends accelerated to include a full five years);

·  
Ares can elect to treat any fundamental transaction as a liquidation event, which will entitle Ares to its liquidation preferences.  Following such election, in the event that we elect to make any payment such as a dividend or stock repurchase payment to a common shareholder, we will be required to repay Ares the full amount of the liquidation preference associated with the preferred stock.  However, if securities of another company are issued as consideration in a fundamental transaction, we have the option of requiring Ares to accept such common shares to satisfy the liquidation preference if shares are then quoted on the Nasdaq Stock Market or listed on the New York Stock Exchange.  The value of such shares is determined at 98% of the closing price on the trading day preceding the transaction and the shares are freely transferable without legal or contractual restrictions;

·  
the preferred stock voting as a separate class elects (i) two directors to our board of directors for so long as Ares continues to hold preferred stock representing at least 20% of our “post-conversion equity” (outstanding common stock assuming conversions into common shares of all securities, including the preferred stock and assuming preferred stock dividends accelerated to include a full five years), (ii) one director for so long as it continues to hold at least 10% of post-conversion equity, and (iii) no directors below 10%;

·  
the preferred stock voting as a separate class must approve (i) any alteration in its powers, preferences or rights, or in the certificate of designation, (ii) creation of any class of stock senior or pari passu with it, (iii) any increase in the authorized shares of preferred stock, and (iv) any dividends or distribution to common stock or any junior securities, except for pro rata dividends on common stock paid in common stock. These protective rights terminate on the first date on which there are outstanding less than 20% of the number of shares of preferred stock outstanding on the date the preferred stock was first issued; and

·  
except for the election of directors and special approvals described above, the preferred stock votes on all matters and with the common stock on an as-converted basis.

In connection with the issuance and sale of the preferred shares, we also entered into other agreements as contemplated by the purchase agreement, including a stockholder’s agreement, a registration rights agreement, and a management rights letter.  The purchase agreement, the stockholder’s agreement, the registration rights agreement, the management rights letter and the certificate of designation pursuant to which the preferred shares were created, are described in our current report on Form 8-K filed on June 16, 2006.

Contractual Obligations

There were no material changes outside of the ordinary course of our business during the three months ended March 31, 2011 to the other items listed in the Contractual Obligations table included in our annual report on Form 10-K filed with the SEC on March 10, 2011.


Cash Flows

Net cash provided by operating activities for the three months ended March 31, 2011 and 2010 was $6.7 million and $4.3 million, respectively.  The changes in cash flows from operating activities period over period were due to net loss adjusted for non-cash charges and changes in components of working capital.  Non-cash charges primarily consist of depreciation and amortization, deferred taxes, unrealized gain or loss on interest rate swap, amortization of deferred financing costs and debt discount, stock-based compensation, gain or loss on sale of assets and landfill accretion expense.  While these non-cash charges affect our earnings comparison, they have no impact on net cash provided by operating activities.  Adjusted for the non-cash charges, net income increased $1.9 million in 2011 over 2010.  It primarily reflected cash savings due to the expiration of interest rate swap on November 1, 2010.  Working capital changes are typically driven by changes in accounts receivable, which are affected by both revenue changes and timing of payments received, and changes in accounts payable, which are affected by both cost changes and timing of payments.  Changes in our working capital accounts had no significant impact on our cash flows from operating activities during the three months ended March 31, 2011 as compared to the same period in 2010.

Net cash used in investing activities consists primarily of cash used for capital expenditures and the acquisition of businesses.  Cash used for capital expenditures, including acquisitions, was $41.0 million and $3.1 million for the three months ended March 31, 2011 and 2010, respectively.  The fluctuation is mainly caused by $38.0 spent on acquisitions during the first quarter of 2011.  Capital expenditures related to our existing operations remained steady period over period.

Net cash provided by (used in) financing activities for the three months ended March 31, 2011 and 2010 was $35.4 million and $(0.6) million, respectively.  Net cash provided by (used in) financing activities during the three months ended March 31, 2011 and 2010 mainly includes a combination of borrowings under our revolving credit facilities, repayments of debt and financing costs incurred.

Critical Accounting Estimates and Assumptions

We make several estimates and assumptions during the course of preparing our financial statements.  Since some of the information that we must present depends on future events, it cannot be readily computed based on generally accepted methodologies, or may not be appropriately calculated from available data.  Some estimates require us to exercise substantial judgment in making complex estimates and assumptions and, therefore, have the greatest degree of uncertainty.  This is especially true with respect to estimates made in accounting for landfills, environmental remediation liabilities and asset impairments.  We describe the process of making such estimates in note 8 to the financial statements included in Item 1 of this report and in note 1 (f) to our financial statements in our annual report on Form 10-K for the year ended December 31, 2010.  For a description of other significant accounting policies, see note 1 to the financial statements included in Item 1 of this report and in note 1 to our financial statements in our annual report on Form 10-K for the year ended December 31, 2010.

In summary, our landfill accounting policies include the following:

Capitalized Landfill Costs

At March 31, 2011, we owned 25 landfills.  Two of these landfills are fully permitted but not constructed and have not yet commenced operations as of March 31, 2011.

Capitalized landfill costs include expenditures for the acquisition of land and related airspace, engineering and permitting costs, cell construction costs and direct site improvement costs.  At March 31, 2011, no capitalized interest had been included in capitalized landfill costs, however, in the future interest could be capitalized on landfill construction projects but only during the period the assets are undergoing activities to ready them for their intended use.  Capitalized landfill costs are amortized ratably using the units-of-production method over the estimated useful life of the site as airspace of the landfill is consumed.  Landfill amortization rates are determined periodically (not less than annually) based on aerial and ground surveys and other density measures and estimates made by our engineers, outside engineers, management and financial personnel.


Total available airspace includes the total of estimated permitted airspace plus an estimate of probable expansion airspace that we believe is likely to be permitted.  Where we believe permit expansions are probable, the expansion airspace, and the projected costs related to developing the expansion airspace are included in the airspace amortization rate calculation.  The criteria we use to determine if permit expansion is probable include but, are not limited to, whether:

·  
we believe that the project has fatal flaws;
 
·  
the land is owned or controlled by us, or under option agreement;
 
·  
we have committed to the expansion;
 
·  
financial analysis has been completed, and the results indicate that the expansion has the prospect of a positive financial and operational impact;
 
·  
personnel are actively working to obtain land use, local and state approvals for an expansion of an existing landfill;
 
·  
we believe the permit is likely to be received; and
 
·  
we believe that the timeframe to complete the permitting is reasonable.

We may be unsuccessful in obtaining expansion permits for airspace that has been considered probable.  If we are unsuccessful in obtaining these permits, the previously capitalized costs will be charged to expense.  As of March 31, 2011, we have included 140 million cubic yards of expansion airspace with estimated development costs of approximately $94.2 million in our calculation of the rates used for the amortization of landfill costs.

Closure and Post-Closure Obligations

We have material financial commitments for the costs associated with our future obligations for final closure, which is the closure of the landfill, the capping of the final uncapped areas of a landfill and post-closure maintenance of those facilities, which is generally expected to be for a period between 5 and 30 years depending on type and location.

Standards related to accounting for obligations associated with the retirement of long-lived assets and the associated asset retirement costs require that we record closure and post-closure obligations as follows:

·  
Landfill closure and post-closure liabilities are calculated by estimating the total obligation in current dollars.  Cost estimates equate the costs of third parties performing the work.  Any portion of the estimates which are based on activities being performed internally are increased to reflect a profit margin a third party would receive to perform the same activity.  This profit margin will be taken to income once the work is performed internally.
 
·  
The total obligation is carried at the net present value of future cash flows, which is calculated by inflating the obligation based upon the expected date of the expenditure using an inflation rate and discounting the inflated total to its present value using a discount rate.  The discount rate represents our credit-adjusted risk-free rate.  The resulting closure and post-closure obligation is recorded as an increase in this liability as airspace is consumed.
 
·  
Accretion expense is calculated based on the discount rate and is charged to cost of services and increases the related closure and post-closure obligation.  This expense will generally be less during the early portion of a landfill’s operating life and increase thereafter.


The following table sets forth the rates we used for the amortization of landfill costs and the accrual of closure and post-closure costs for the three months ended March 31, 2011 and the year ended December 31, 2010:

   
Three Months Ended
   
Year Ended
 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
Number of landfills owned
   
25
     
25
 
Landfill depletion and amortization expense (in thousands)
 
$
2,652
   
$
12,598
 
Accretion expense (in thousands)
   
247
     
1,095
 
   
$
2,899
   
$
13,693
 
Airspace consumed (in thousands of cubic yards)
   
1,317
     
6,186
 
Depletion, amortization, accretion, closure and post-closure costs per cubic yard of airspace consumed
 
$
2.20
   
$
2.21
 

The impact of changes determined to be changes in estimates, based on an annual update, is accounted for on a prospective basis.  Our ultimate liability for such costs may increase in the future as a result of changes in estimates, legislation, or regulations.

Off-Balance Sheet Arrangements

During the three months ended March 31, 2011 and 2010, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

In the normal course of business, we are exposed to market risk, including changes in interest rates.  As of March 31, 2011, we had $117.0 million in borrowings under our revolving credit facility which bears interest at variable or floating rates.  A 100 basis point increase in LIBOR interest rates would increase our annual interest expense by approximately $1.2 million

Our financial instruments that are potentially sensitive to changes in interest rates also include our 9.25% senior notes.  As of March 31, 2011, the fair value of these notes, based on quoted market prices, was approximately $154.5 million compared to a carrying amount of $150 million.

ITEM 4. CONTROLS AND PROCEDURES.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2011.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2011 in ensuring that the information required to be disclosed by us (including our consolidated subsidiaries) in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms; and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, there has been no change in our internal control over financial reporting that occurred during our last fiscal quarter, that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.



ITEM 1. LEGAL PROCEEDINGS.

Please read note 12 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q for information regarding our legal proceedings.


There have been no material changes in our risk factors since December 31, 2010.  For a detailed discussion of our risk factors, please read Item 1A “Risk Factors,” in our annual report on Form 10-K for the year ended December 31, 2010.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a)
On February 11, 2011, we issued 406,669 shares of our common stock to Stoughton Recycling Technologies LLC (“Stoughton”) in connection with our entering into an Option Agreement with Stoughton pursuant to which we will operate certain landfill assets of Stoughton pursuant to an Operating Agreement and we have an option to purchase those assets.  The issuance and sale of the shares pursuant to the Option Agreement was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) of the Securities Act of 1933 and Regulation D promulgated under the Securities Act of 1933.

(b)
Not applicable.

(c)

Period
 
(a)
Total number of shares (or units) purchased
   
(b)
Average price paid per share (or unit)
   
(c)
Total number of shares (or units) purchased as part of publicly announced plans or programs
   
(d)
Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
 
January 1 – January 31, 2011
    42,102 (1)   $ 5.02              
February 1 – February 28, 2011
    24,501 (1)   $ 4.94              
March 1 – March 31, 2011
                       
Total
    66,603 (1)   $ 4.99              

(1)
Represents shares of our common stock surrendered to satisfy minimum tax withholding obligations on the vesting of restricted stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.


ITEM 5. OTHER INFORMATION.

None.


   
2.1
Amended and Restated Equity Interest Purchase Agreement dated February 28, 2011 by and among WCA Waste Corporation, WCA Waste Systems, Inc., WCA of Mississippi, LLC, EWS Holdings, LLC, WRH Gainesville, LLC, WRH Gainesville Holdings, LLC, WRH Orange City, LLC, EWS Central Florida Hauling, LLC, MacLand Holdings, Inc., MacLand Disposal Center, Inc., MacLand Disposal Inc. II and Emerald Waste Services, LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K (File No. 000-50808) filed with the SEC on March 3, 2011).
10.1
Registration Rights Agreement dated February 28, 2011 among WCA Waste Corporation and EWS Holdings, LLC (incorporated by reference to Exhibit 10.2 to the registrant’s Form 8-K (File No. 000-50808) filed with the SEC on March 3, 2011).
10.2
Stockholders’ Agreement dated February 28, 2011 among WCA Waste Corporation and EWS Holdings, LLC (incorporated by reference to Exhibit 10.3 to the registrant’s Form 8-K (File No. 000-50808) filed with the SEC on March 3, 2011).
12.1*
Statement regarding computation of ratio of earnings to fixed charges for the three months ended March 31, 2011.
31.1*
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1*
Section 1350 Certification of Chief Executive Officer.
32.2*
Section 1350 Certification of Chief Financial Officer.

*
Filed herewith.

The registrant hereby undertakes, pursuant to Regulation S-K, Item 601(b), paragraph (4)(iii)(A), to furnish to the Securities and Exchange Commission upon request all constituent instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries not filed herewith for the reason that the total amount of securities authorized under any of such instruments does not exceed 10% of the registrant’s total consolidated assets.


 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.

 
WCA WASTE CORPORATION
     
 
By:
/s/ Charles A. Casalinova
 
   
Charles A. Casalinova
   
Senior Vice President and Chief Financial Officer
   
(Principal Financial Officer)
     
 
By:
/s/ Joseph J. Scarano, Jr.
 
   
Joseph J. Scarano, Jr.
   
Vice President and Controller
   
(Principal Accounting Officer)


Date: April 29, 2011

 

2.1
Amended and Restated Equity Interest Purchase Agreement dated February 28, 2011 by and among WCA Waste Corporation, WCA Waste Systems, Inc., WCA of Mississippi, LLC, EWS Holdings, LLC, WRH Gainesville, LLC, WRH Gainesville Holdings, LLC, WRH Orange City, LLC, EWS Central Florida Hauling, LLC, MacLand Holdings, Inc., MacLand Disposal Center, Inc., MacLand Disposal Inc. II and Emerald Waste Services, LLC (incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K (File No. 000-50808) filed with the SEC on March 3, 2011).
10.1
Registration Rights Agreement dated February 28, 2011 among WCA Waste Corporation and EWS Holdings, LLC (incorporated by reference to Exhibit 10.2 to the registrant’s Form 8-K (File No. 000-50808) filed with the SEC on March 3, 2011).
10.2
Stockholders’ Agreement dated February 28, 2011 among WCA Waste Corporation and EWS Holdings, LLC (incorporated by reference to Exhibit 10.3 to the registrant’s Form 8-K (File No. 000-50808) filed with the SEC on March 3, 2011).
12.1*
Statement regarding computation of ratio of earnings to fixed charges for the three months ended March 31, 2011.
31.1*
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1*
Section 1350 Certification of Chief Executive Officer.
32.2*
Section 1350 Certification of Chief Financial Officer.

*
Filed herewith.

The registrant hereby undertakes, pursuant to Regulation S-K, Item 601(b), paragraph (4)(iii)(A), to furnish to the Securities and Exchange Commission upon request all constituent instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries not filed herewith for the reason that the total amount of securities authorized under any of such instruments does not exceed 10% of the registrant’s total consolidated assets.