WCA WASTE CORP - FORM 8-K/A - EX-99.5 - EXHIBIT 99.5 - October 21, 2011

Attached files

file filename
8-K/A - FORM 8K/A - WCA WASTE CORPform8ka.htm
EX-23.1 - EXHIBIT 23.1 - WCA WASTE CORPexhibit23-1.htm
EX-99.6 - EXHIBIT 99.6 - WCA WASTE CORPexhibit99-6.htm
Exhibit 99.5

The following unaudited pro forma consolidated financial statements as of December 31, 2010, and for the years ended December 31, 2010 and 2009, illustrate the effect of the acquisition of certain assets of Emerald Waste Services, LLC and certain affiliates (“Emerald Waste”), as described in Note 1 to the unaudited pro forma financial statements.  The unaudited pro forma consolidated balance sheet as of December 31, 2010 has been prepared assuming that the acquisition was consummated as of December 31, 2010.  The unaudited pro forma consolidated statements of operations for the years ended December 31, 2010 and 2009 have been prepared assuming that the transaction was consummated as of January 1, 2010 and 2009, respectively.

The historical results of our operations have been derived from our consolidated financial statements.  The historical results of Emerald Waste have been derived from Emerald Waste’s consolidated financial statements.

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

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

The unaudited pro forma consolidated statements of operations do not include and they do not purport to be indicative of the results of operations that would actually have occurred if the transactions described had occurred at the beginning of the periods presented, in such statements or the results that may be obtained in the future.
 
 
1
 
 
WCA WASTE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of December 31, 2010
(In thousands)

   
WCA
Historical
    
Emerald Waste Historical
      
Combined
    
Pro Forma
Adjustments
      
Total
  
                                             
Assets
                                            
Current assets:
                                            
Cash and cash equivalents
  
$
2,763
    
$
36
      
$
2,799
    
$
(36
)
(A)
  
$
2,115
  
                               
  (648
)
(D)
        
Accounts receivable, net
    
26,113
      
3,146
        
29,259
      
(3,146
)
(A) 
    
26,113
  
Deferred tax assets
    
3,436
      
—
        
3,436
                
3,436
  
Inventories
    
—
      
147
        
147
      
(147
)
(A) 
    
—
  
Prepaid expenses and other
    
3,962
      
827
        
4,789
      
(827
)
(A) 
    
4,073
  
                               
111
  
(C)
        
Total current assets
    
36,274
      
4,156
        
40,430
                
35,737
  
                                             
Property and equipment, net
    
320,564
      
13,716
        
334,280
      
(13,716
)
(A) 
    
333,762
  
                               
13,198
  
(C)
        
Goodwill, net
    
71,578
      
16,247
        
87,825
      
(16,247
)
(A) 
    
101,329
  
                               
29,751
  
(C)
        
Intangible assets, net
    
7,891
      
—
        
7,891
      
  3,513
  
(C) 
    
11,404
  
Deferred financing costs, net
    
3,210
      
—
        
3,210
                
3,210
  
Other assets
    
345
      
—
        
345
      
101 
  
(C)
    
446
  
Total assets
  
$
439,862
    
$
34,119
      
$
473,981
              
$
485,888
  
                                             
Liabilities and Stockholders’ Equity
                                            
Current liabilities:
                                            
Accounts payable
  
$
13,131
    
$
822
      
$
13,953
    
$
(822
)
(A) 
  
$
13,131
  
Accrued liabilities and other
    
13,921
      
2,264
        
16,185
      
(2,264
)
(A) 
    
14,835
  
                               
914
  
(C)
        
Note Payable
    
1,251
      
—
        
1,251
                
1,251
  
Current maturities of long-term debt
    
500
      
—
        
500
                
500
  
Total current liabilities
    
28,803
      
3,086
        
31,889
                
29,717
  
                                             
Long-term debt, less current maturities
    
232,571
      
—
        
232,571
      
 33,110
  
(B) 
    
265,681
  
Accrued closure and post-closure liabilities
    
11,571
      
—
        
11,571
                
11,571
  
Deferred tax liabilities
    
1,399
      
—
        
1,399
      
  (326
)
(D)
    
1,073
  
Intercompany payables
    
—
      
51,316
        
51,316
      
(51,316
)
(A)
    
—
  
Other long-term liabilities
    
1,789
      
—
        
1,789
                
1,789
  
Total liabilities
    
276,133
      
54,402
        
330,535
                
309,831
  
                                             
Commitments and contingencies
                                            
                                             
Stockholders’ equity:
                                            
Series A convertible preferred stock
    
9
      
—
        
9
                
9
  
Common stock
    
217
      
—
        
217
      
24 
  
(B) 
    
241
  
Treasury stock
    
(5,322
)
    
—
        
(5,322
)
              
(5,322
)
Additional paid-in capital
    
199,627
      
—
        
199,627
      
12,626
  
(B)
    
212,253
  
Contingent considerations
    
3,225
      
—
        
3,225
                
3,225
  
Equity
    
—
      
(20,283
)
      
(20,283
)
    
20,283
  
(A) 
    
—
  
Retained earnings (deficit)
    
(34,027
)
    
—
        
(34,027
)
    
(322
) 
(D)
    
(34,349
)
Total stockholders’ equity
    
163,729
      
(20,283
)
      
143,446
                
176,057
  
Total liabilities and stockholders’ equity
  
$
439,862
    
$
34,119
      
$
473,981
              
$
485,888
  


The accompanying notes are an integral part of this financial statement.
 
 
2
 
 
WCA WASTE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended December 31, 2010
(In thousands, except per share amounts)

   
WCA
Historical
    
Emerald Waste Historical
      
Combined
    
Pro Forma
Adjustments
      
Total
  
                                             
Revenue
  
$
229,484
    
$
31,013
      
$
260,497
    
$
—
      
$
260,497
  
Expenses:
                                            
Cost of services
    
165,110
      
23,184
        
188,294
      
2,857
  
(E)
    
188,526
  
                               
(1,466
)
(F)
        
                               
(1,159
)
(G)
        
Depreciation and amortization
    
30,058
      
2,746
        
32,804
      
(82
)
(H)
    
32,722
  
General and administrative
    
11,999
      
2,857
        
14,856
      
(2,857
)
(E)
    
11,999
  
Gain on sale of assets
    
(938
)
    
—
        
(938
)
              
(938
)
  
    
206,229
      
28,787
        
235,016
                
232,309
  
Operating income
    
23,255
      
2,226
        
25,481
                
28,188
  
                                             
Other income (expense):
                                            
Interest expense, net
    
(19,028
)
    
(5,693
)
      
(24,721
)
    
4,725
  
(J)
    
(19,996
)
Write-off of deferred financing costs
    
(184
)
    
—
        
(184
)
              
(184
)
Impact of interest rate swap
    
(236
)
    
—
        
(236
)
              
(236
)
Loss on debt to equity conversion
    
—
      
(1,390
)
      
(1,390
)
    
1,390
  
(K)
    
—
  
Other expense, net
    
(3
)
    
6
        
3
                
3
  
     
(19,451
)
    
(7,077
)
      
(26,528
)
              
(20,413
)
                                             
Income (loss) before income taxes
    
3,804
      
(4,851
)
      
(1,047
)
              
7,775
  
Income tax provision
    
(1,915
)
    
—
        
(1,915
)
    
(1,533
)
(L)
    
(3,448
)
Net income (loss)
    
1,889
      
(4,851
)
      
(2,962
)
              
4,327
  
Accrued payment-in-kind dividend on preferred stock
    
(4,501
)
    
—
        
(4,501
)
              
(4,501
)
Net loss available to common stockholders
  
$
(2,612
)
  
$
(4,851
)
    
$
(7,463
)
            
$
(174
)
                                             
Net loss available to common stockholders:
                                            
Earnings per share — basic
  
$
(0.13
)
                              
$
(0.01
)
                                             
Earnings per share — diluted
  
$
(0.13
)
                              
$
(0.01
)
                                             
Weighted average shares outstanding — basic
    
19,598
                                  
22,007
  
                                             
Weighted average shares outstanding — diluted
    
19,598
                                  
22,007
  


The accompanying notes are an integral part of this financial statement.
 
 
3
 
 
WCA WASTE CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended December 31, 2009
(In thousands, except per share amounts)

   
WCA
Historical
    
Emerald Waste Historical
      
Combined
    
Pro Forma
Adjustments
      
Total
  
                                             
Revenue
  
$
194,138
    
$
29,910
      
$
224,048
    
$
—
      
$
224,048
  
Expenses:
                                            
Cost of services
    
130,287
      
22,755
        
153,042
      
2,153
  
(E)
    
154,123
  
                               
(1,072
)
(F)
        
Depreciation and amortization
    
26,357
      
3,523
        
29,880
      
(859
)
(H)
    
29,021
  
Loss on impairment of goodwill
    
—
      
9,314
        
9,314
      
(9,314
)
(I)
    
—
  
General and administrative
    
13,496
      
2,153
        
15,649
      
(2,153
)
(E)
    
13,496
  
Gain on sale of assets
    
(86
)
    
—
        
(86
)
              
(86
)
  
    
170,054
      
37,745
        
207,799
                
196,554
  
Operating income (loss)
    
24,084
      
(7,835
)
      
16,249
                
27,494
  
                                             
Other income (expense):
                                            
Interest expense, net
    
(18,052
)
    
(5,986
)
      
(24,038
)
    
5,038
  
(J)
    
(19,000
)
Impact of interest rate swap
    
(2,063
)
    
—
        
(2,063
)
              
(2,063
)
Other expense, net
    
(3
)
    
—
        
(3
)
              
(3
)
     
(20,118
)
    
(5,986
)
      
(26,104
)
              
(21,066
)
                                             
Income (loss) before income taxes
    
3,966
      
(13,821
)
      
(9,855
)
              
6,428
  
Income tax provision
    
(2,958
)
    
—
        
(2,958
)
    
(950
)
(L)
    
(3,908
)
Net income (loss)
    
1,008
      
(13,821
)
      
(12,813
)
              
2,520
  
Accrued payment-in-kind dividend on preferred stock
    
(4,278
)
    
—
        
(4,278
)
              
(4,278
)
Net loss available to common stockholders
  
$
(3,270
)
  
$
(13,821
)
    
$
(17,091
)
            
$
(1,758
)
                                             
Net loss available to common stockholders:
                                            
Earnings per share — basic
  
$
(0.21
)
                              
$
(0.10
)
                                             
Earnings per share — diluted
  
$
(0.21
)
                              
$
(0.10
)
                                             
Weighted average shares outstanding — basic
    
15,824
                                  
18,233
  
                                             
Weighted average shares outstanding — diluted
    
15,824
                                  
18,233
  


The accompanying notes are an integral part of this financial statement.

 
4
 
 
WCA WASTE CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

1.    BACKGROUND:

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

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

2.    BASIS OF PRESENTATION:

The accompanying unaudited pro forma balance sheet has been prepared assuming that the acquisition and the related financing transactions occurred as of December 31, 2010. The accompanying unaudited pro forma statements of operations for the years ended December 31, 2010 and 2009 have been prepared assuming that such transactions were consummated as of January 1, 2010 and 2009, respectively.

3.    PRO FORMA ADJUSTMENTS AND MANAGEMENT ASSUMPTIONS:

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

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

(B)  
To record receipt of aggregate proceeds of $33.1 million from our credit facility to pay for the cash consideration and issuance of 2,409,639 shares of WCA’s common stock.
 
 
5
 
 
(C)  
To record purchase price allocation of the total consideration of approximately $45.8 million.  Based on preliminary determinations of the fair values of assets acquired, the preliminary purchase price allocation is as follows (dollars in millions):

Purchase Price:
        
Cash
  
$
33.1
  
Common Stock
    
12.7
  
   
$
45.8
  

Purchase Price Allocation:
        
Step-up in Fair Value of Assets:
        
Property and Equipment
  
$
13.2
  
Intangible Assets
    
3.5
  
Goodwill
    
29.8
  
Working Capital, net
    
(0.7
)
   
$
45.8
  

(D)  
To record estimated transaction costs and their related tax impact for this acquisition.

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

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

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

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

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

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

(K)  
To eliminate loss on debt to equity conversion related to the Florida Companies because such transaction would not have occurred had the acquisition been consummated as of January 1, 2010.

(L)  
To provide for taxes on Emerald Waste’s historical results and for the effects of Emerald Waste pro forma adjustments herein, utilizing WCA’s effective tax rate for each period.
 
 
6
 

WCA WASTE CORP Reports