casella
waste systems, inc.
We are directing investors to the
daily record of our growth,
activities, thoughts, and
performance — www.casella.com.
C O M P L E T I N G T H E P I C T U R E
In our letter to shareholders, we stress that the investor only
completes the picture of a company if he or she can combine
past performance with an understanding of what lies ahead.
As we did last year, we are directing investors to the daily
record of our growth, activities, thoughts, and performance —
www.casella.com.
You will note that in various places throughout this report and
10-K, we provide contextual "links," or guideposts, to online
resources, where the investor can learn more about a
particular company region, facility or financial data, for
example.
Once at our website, an investor will be able to customize
individual pages and resources to meet his or her particular
needs, revisit it as often as necessary, or even have it
e-mailed directly to them.
While it is not a crystal ball, these day-to-day information
resources at the very least help the information contained in
this report age a little better.
Because each of our efforts undertaken in the past was
driven by our own understanding and vision of what lies in the
future.
In short, a more complete picture.
1
“Safe Harbor” Statement
Under the private securities litigation reform act of 1995
This Annual Report to Stockholders contains forward-
looking statements. For this purpose, any statements
contained herein that are not statements of historical
fact may be deemed forward-looking statements.
Without limiting the foregoing, the words “believes”,
“anticipates”, “plans”, and similar expressions are
intended to identify forward-looking statements.
There are a number of important factors that could
cause the Company’s actual results to differ
materially from those indicated by such forward-
looking statements. These factors include, without
limitation, those set forth herein under the caption
“Certain Factors That May Affect Future Results” in
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” found in the
printed Form 10-K.
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T O O U R F E L L O W S H A R E H O L D E R S :
Annual reports, as we’ve said in previous years, aren’t all
Yet, each challenge we faced, and each of our efforts
that helpful to investors when they talk exclusively about
undertaken over the last year, were driven almost
the past, even though that is what their name implies
exclusively by our own understanding and vision of what
they ought to do.
lies ahead.
Surely, all the information in the printed 10-K that follows
Please understand — as shareholders and managers it is
gives you a picture of the company over our fiscal year
not easy or comfortable to watch value evaporate in the
ended April 30, 2000 and, for many, that is a useful tool
short term. But, the question for us is, and always has
and a necessary accounting of a company’s immediate
been: are we creating long-term value?
past performance.
But, at best, it is an incomplete tool.
We believe we are, and will continue to be able to do so.
Our faith in that statement is based on the answers to a
What completes the picture for the investor is an
number of important questions.
understanding of what lies ahead. Or, perhaps more
accurately, what management believes lies ahead—what
• Are we building a company uniquely positioned to
the market will look like, what customers are expecting
solve problems for our markets and our customers?
and demanding, what opportunities for growth are
emerging, and how a company has configured its
• Do we have a platform of assets in our market
resources to meet those challenges.
that would be difficult for competitors to duplicate?
We don’t entirely dismiss the past, either. Without a
• Do we enjoy a position of leadership in the vast
doubt, our fiscal year 2000 was a challenge.
majority of local markets we serve?
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• Have we invested in and placed a solid, disciplined
"the curb." That is, companies who want to be able to tell
management and systems foundation under our
stories of long-term value creation must configure
businesses?
themselves to meet the demands of the marketplace.
• Do we enjoy fertile and numerous growth and
We have built a collection of assets — from disposal to
market development opportunities in our markets?
collection to recycling — in our core markets that has
• Are the economic factors that drive our business
solution for a broad range of customers, particularly public
fundamentally sound and sustainable?
policymakers.
made us the premiere integrated waste management
• Are our businesses positioned to generate strong,
This platform, we which believe cannot be duplicated easily
growing cash flows?
by competitors, can now be fully utilized in our core
Those answers — no surprise — are yes.
challenges, giving us a long-term, unbeatable competitive
markets to address some of our customers most difficult
These criteria are as true for us today as they were six,
twelve or eighteen months ago. They are very nearly
"…A POSITION OF LEADERSHIP"
permanent characteristics of our franchise and, as such,
edge.
are reliable, sustainable indicators of the opportunity we
We have concentrated on local markets where we can
have to create — again, no surprise — long term growth.
build, and have built, significant leadership positions. The
We believe this very strongly.
benefits are obvious.
"…SOLVE PROBLEMS FOR OUR CUSTOMERS"
In fact, in over 90 percent of our markets, we are either
the number one or two provider of services.
More and more, our conversations with customers,
particularly municipal governments, center around their
"…A SOLID FOUNDATION"
desire to address their more and diverse waste
management challenges, and do it comprehensively.
We have put skilled people and the systems — from
Successful companies in this industry will be defined by
information to financial controls — in place to manage a
their ability to solve waste management problems beyond
disciplined, growing company over the long-term.
“We have built a collection of
assets — from disposal to
collection to recycling — in our
core markets that has made us
the premiere integrated waste
management solution for a broad
range of customers, particularly
public policymakers.“
“We are blessed with a broad
variety of outstanding opportunities
in a number of our markets,
particularly in eastern
Massachusetts, where we can
enhance and fully leverage the
investments we’ve made in solid
waste management infrastructure.”
"…NUMEROUS OPPORTUNITIES IN OUR MARKETS"
Quite frankly, we don’t think investors are interested in
"stories." We think investors are interested in
We are blessed with a broad variety of outstanding
performance.
opportunities in a number of our markets, particularly in
eastern Massachusetts, where we can enhance and fully
That’s our plan. And we thank you for your support.
leverage the investments we’ve made in solid waste
management infrastructure.
"…POSITIONED TO GENERATE STRONG, GROWING
CASH FLOWS"
We believe the best measure of performance in our
industry remains cash flow. We continue to focus on
earnings before interest, taxes, depreciation and
amortization (EBITDA) as our performance yardstick.
The vast majority of our cash flow is generated by
traditional solid waste management assets and
businesses, which grew significantly last year.
In short, all of the factors that serve as a solid foundation
necessary for a company to deliver performance and the
creation of value well into the future are in place. In the
pursuit of meaningful, long-term value, our goals are
simple: take advantage of the many opportunities to build
a market-focused business; make that business stable
and predictable; and make it perform to expectations.
We are sometimes asked, "what’s your plan to get
investors interested in the Casella Waste Systems ‘story’?"
JOHN W. CASELLA
President & CEO
JIM BOHLIG
Sr. Vice President & COO
JERRY CIFOR
Sr. Vice President & CFO
September 11, 2000
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F I N A N C I A L H I G H L I G H T S ( i n t h o u s a n d s )
Year Ended April 30,
1998
1999
2000
Revenues
Operating Income
EBITDA
Net Income Loss
Earnings (Loss) per Share
Total Assets
Shareholders Equity (Deficit)
$143,711
$182,557
$337,347
11,383
32,913
1,835
(0.41)
205,509
83,764
19,391
45,116
6,615
0.44
282,129
147,978
42,800
83,011
11,050
0.59
872,177
274,718
E B I T D A * , a n d a s a p e r c e n t o f r e v e n u e ( i n t h o u s a n d s )
Year Ended April 30,
1998
1999
2000
$83,011
24.6%
*Earnings Before Interest,
Taxes, Depreciation, and
Amortization
$45,116
24.7%
$32,913
22.9%
S H A R E H O L D E R I N F O R M AT I O N
COMPANY OFFICES
25 Greens Hill Lane
Rutland, Vermont 05701
(802) 775-0325
AUDITORS
Arthur Anderson, LLP
225 Franklin Street
Boston, MA 02110
TRANSFER AGENT & REGISTER
Boston EquiServe
150 Royal Street
Boston, MA 02021
www.equiserve.com
DIRECT INQUIRIES TO:
Joseph Fusco, Vice-President
(802) 775-0325, (802) 775-6198 Fax
E-mail: joe.fusco@casella.com
LEGAL COUNSEL
Hale & Dorr LLP
60 State Street
Boston, MA 02110
STOCK EXCHANGE
Casella Waste Systems, Inc. is traded on
the NASDAQ National Market under the
ticker symbol CWST, and is listed on the
Russell 3000 Index.
www.casella.com
COMPANY OFFICERS
JOHN W. CASELLA
President, Chief Executive Officer, Secretary
JOSEPH S. FUSCO
Vice President, Communications
DOUGLAS R. CASELLA
Vice Chairman of the Board of Directors, Vice President
JAMES W. BOHLIG
Senior Vice President & Chief Operating Officer
JAMES M. HILTNER
Regional Vice President
MICHAEL HOLMES
Regional Vice President
JERRY S. CIFOR
Senior Vice President & Chief Financial Officer, Treasurer
LARRY B. LACKEY
Vice President, Permits, Compliance & Engineering
MARTIN J. SERGI
Executive Vice President, Business Development
MICHAEL BRENNAN
Vice President, General Counsel
CHRISTOPHER M. DESROCHES
Vice President, Sales & Marketing
SEAN DUFFY
Regional Vice President
BOARD OF DIRECTORS
ROSS PIRASTEH
Chairman of the Board of Directors
JOHN W. CASELLA
President & Chief Executive Officer, Director
JAMES W. BOHLIG
Senior Vice President & Chief Operating Officer, Director
DOUGLAS R. CASELLA
Director
JOHN F. CHAPPLE III
Director
President, Marlin Management Services
RICHARD NORRIS
Vice President, Controller
ALAN N. SABINO
Regional Vice President
GARY SIMMONS
Vice President, Fleet Management
GREGORY B. PETERS
Director
Managing General Partner,
Vermont Venture Capital Partners, L.P.
MARTIN J. SERGI
Director, Executive Vice President
WILBUR L. ROSS
Director
Chairman & CEO W.L. Ross & Co. LLC
GEORGE MITCHELL
Director
Special Counsel, Verner Liipfert Bernhard McPherson &
Hand
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U N I T E D S T AT E S S E C U R I T I E S
A N D E X C H A N G E C O M M I S S I O N
FORM 10-K WASHINGTON, D.C. 20549
[ X ] Annual Report Pursuant To Section 13 or 15(d) Of The Securities Exchange Act Of 1934
For The Fiscal Year Ended April 30, 1999
OR
[ ] Transition Report Pursuant To Section 13 or 15(D) Of The Securities Exchange Act of 1934 For The Transition Period
From To
Commission file number
0 0 0 - 2 3 2 1 1
casella
waste systems, inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
D E L A W A R E
(I.R.S. Employer Identification No.)
0 3 - 0 3 3 8 8 7 3
(Address of principal executive offices)
2 5 G R E E N S H I L L L A N E , R U T L A N D , V T
(Zip Code)
0 5 7 0 1
Registrant's telephone number, including area code:
( 8 0 2 ) 7 7 5 - 0 3 2 5
Securities registered pursuant to Section 12(b) of the Act:
N O N E .
Securities registered pursuant to Section 12(g) of the Act:
C L A S S A C O M M O N S T O C K , $ . 0 1 P E R S H A R E P A R V A L U E
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K
9
On the internet
Maine Energy is a crucial
regional waste disposal
resource and a key
component of our ability to
build market leadership in
eastern New England.
Learn more, including a
“tour” of this facility at:
www.casella.com/main
energy
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The aggregate value of the voting stock held by non-affiliates
United States and parts of Canada. The Company also
of the registrant, based on the last sale price of the
markets recyclable metals, aluminum, plastics, paper and
registrant's Class A Common Stock at the close of business
corrugated cardboard all processed at its facilities and
on July 21, 2000 was $273,751,210 (reference is made to
recyclables purchased from third parties. The Company also
Part II, Item 5 herein for a statement of assumptions upon
generates electricity under its contracts with its two majority
which this calculation is based).
owned subsidiaries, Maine Energy Recovery Company LP
There were 22,232,698 shares of Class A Common Stock,
("Maine Energy") and Penobscot Energy Recovery Company
$.01 per share par value, of the registrant outstanding as of July
LP ("PERC"), and through its wholly owned subsidiary, Timber
21, 2000. There were 988,200 shares of Class B Common
Energy Recovery, Inc. ("TERI"). As of July 21, 2000, the
Stock of the registrant outstanding as of July 21, 2000.
Company owned and/or operated five Subtitle D landfills, two
DOCUMENTS INCORPORATED BY REFERENCE
landfills permitted to accept construction and demolition
materials, 39 transfer stations, 40 recycling processing
Items 10, 11, 12 and 13 of Part III (except for information
facilities, 39 solid and liquid waste collection divisions, 12
required with respect to executive officers of the Company,
power generation facilities, three finished products
which is set forth under Part I -Business - "Executive Officers
processing facilities and an interest in its cellulose insulation
of the Company") have been omitted from this report, since
joint venture with Louisiana Pacific.
the Company expects to file with the Securities and
Exchange Commission, not later than 120 days after the
RECENT DEVELOPMENTS
close of its fiscal year, a definitive proxy statement. The
On December 14, 1999, the Company consummated its
information required by Items 10, 11, 12 and 13 of Part III of
acquisition of KTI, Inc. ("KTI"), a publicly traded solid waste
this report, which will appear in the definitive proxy statement,
handling company. KTI specialized in solid waste disposal and
is incorporated by reference into this report.
recycling, and operated waste-to-energy facilities and
PART 1
Item 1. Business
10
THE COMPANY
Casella Waste Systems, Inc. ("the Company") is a regional,
integrated solid waste services company that provides
manufacturing facilities utilizing recycled materials. All of KTI's
common stock was acquired in exchange for 7,152,157
shares of Class A Common Stock. The acquisition of KTI
essentially more than doubled the revenues of the Company.
The acquisition was accounted for as a purchase, and
accordingly, results are included in the Consolidated
Statements of Operations from December 15, 1999 forward.
During the fiscal year ended April 30, 2000, the
Company also acquired 35 solid and liquid waste
collection, transfer, disposal and recycling services, generates
management businesses with approximately $82.9 million in
steam and manufactures finished products utilizing recyclable
annualized revenues, including the following:
materials primarily throughout the eastern portion of the
On the internet
To learn more about the
company’s growth and
performance visit us at
casella.com. To review
recent press releases, go
to Value and choose
Recent Releases.
In July 1999, the Company completed a merger with
the Company expects to use to pay down debt and continue
Resource Waste Systems, Inc. and related entities, which
its strategic plan.
process recyclable materials and market commodities.
Resource Waste Systems and its affiliates are in the Eastern
SERVICES
Massachusetts market.
The Company's waste collection, landfill, transfer,
In October 1999, the Company acquired Eirco, Inc., a
certain of the Company's recycling services operations and
disposal outlet for processed construction and demolition
two of its waste-to-energy facilities, which incinerate non-
debris in Eastern Massachusetts.
hazardous solid waste to generate electricity, are managed on
In February 2000, the Company completed the
a geographic basis and are divided into three geographic
acquisition of Alternate Energy, Inc. and Rochester
regions: the Central, Eastern and Western regions. These
Environmental Park LLC (together, "AEI"), a bulk hauling
three regions are further divided into divisions organized
operation and construction and demolition debris processing
around smaller market areas, known as "waste sheds", each
facility in Eastern Massachusetts.
of which contains the complete cycle of activities in the solid
In spring 2000 the Company acquired certain assets from
waste service process, from collection to transfer operations
Allied Waste Industries, Inc. The assets included of two transfer
and recycling to disposal in either landfills or waste-to-energy
stations, one recycling facility and various hauling operations in
facilities. Each is managed separately and provides distinct
Eastern Massachusetts and Northern Rhode Island.
products or services using different production facilities. The
The Company has entered into an agreement with
Company's other operations, comprising its waste-to-energy
Louisiana-Pacific Corp. to combine their respective cellulose
facilities exclusive of the two managed in the Eastern region
insulation businesses into a single operating entity under a
and its residential recycling operations, exclusive of the
joint venture agreement effective August 1, 2000. The new
recycling facilities which operate within the waste sheds,
Company, to be known as U.S. Green Fiber LLC, is an
commercial recycling operations and the finished products
equally-owned joint venture formed through the combination
operations are managed on a line-of-business basis
of Louisiana-Pacific's GreenStone Industries, Inc. and
independently of the three geographic regions. The waste-to-
Casella Waste Systems' U.S. Fibers, Inc.'s operations. The
energy segment is managed out of Saco, Maine, the
new entity will supply cellulose insulation to existing
commercial recycling segment is managed out of Passaic,
residential construction, retail and manufactured housing
New Jersey and the residential recycling and finished
supply channels.
products segments are managed out of Charlotte, North
11
In June 2000, the Company agreed to issue redeemable
Carolina. The following are the Company's three geographic
convertible preferred stock to Berkshire Partners of Boston,
regions and four line-of-business segments that comprise the
Massachusetts. The preferred stock will be convertible into
Company's operations:
Class A Common Stock at $14.00 per share. The Company
expects to raise approximately $55.8 million in capital, which
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CENTRAL REGION
approximately 3.5 million tires per year and generates tire
The Central Region consists of Vermont, New Hampshire and
derived fuel, which the Company sells to paper mills for
eastern upstate New York. The portion of upstate New York
consumption as a supplemental energy source for boiler fuel.
within the Company's Central Region as of July 21, 2000
The Eastern Region also includes two majority-owned
includes Clinton, Franklin, Essex, Warren, Washington,
subsidiaries, which generate electricity from non-hazardous
Saratoga, Rennselaer and Albany counties. The Company
solid waste. The first facility is an 83.75% owned subsidiary,
owns and operates Subtitle D landfills in Bethlehem, New
Maine Energy Recovery Company LP ("Maine Energy"), a
Hampshire (See Part I, Item 3, `Legal Proceedings') and
Maine limited partnership, which is located in Biddeford,
Coventry, Vermont, and, through a 25-year capital lease,
Maine. The other facility is a 66.59% owned subsidiary,
operates the Clinton County landfill located in Schuyler Falls,
Penobscot Energy Recovery Company LP ("PERC"), a Maine
New York. In addition, as of July 21, 2000, the Company
limited partnership, located in Orrington, Maine.
operated 16 solid waste collection operations, of which 7 are
leased and 9 are owned, 2 liquid waste collection operations,
one of which is leased and one of which is owned, 11
transfer stations, 4 of which are leased and 7 of which are
owned, four recycling facilities, three of which are leased and
one of which is owned and 1 leased transportation operation
in the Central Region. The Central Region also had two
transfer stations under development as of July 21, 2000.
WESTERN REGION
The Western Region is comprised of upstate New York and
northern Pennsylvania (including Ithaca, Elmira, Oneonta,
Lowville, Potsdam, Geneva, Auburn, Buffalo, Jamestown,
Olean, and Wellsboro, PA). At July 21, 2000 the Company
operated 11 transfer stations, all of which are owned, 12
collection operations, all of which are owned and 5 recycling
On the internet
Casella Waste Systems
serves communities
throughout the eastern
United States. See how
and where at Places.
operations, all of which are owned and collected solid waste
Maine Energy Recovery provides
EASTERN REGION
from commercial, industrial and residential customers in the
safe, secure waste disposal to
The Company's Eastern Region consists of Maine,
southeastern New Hampshire, eastern Massachusetts and
northern Rhode Island. The Company owns the SERF landfill
located in Hampden, Maine, which disposes of ash,
Western Region. The Company owns a Subtitle D permitted
communities in coastal
landfill, the Hyland facility, in Angelica, New York, which
New England – and electricity to
serves the western upstate portion of our New York waste
more than 35,000 homes and
shed (See Part I, Item 3, `Legal Proceedings'). The Company
businesses.
construction and demolition debris, special waste and front
also owns two landfills permitted to accept construction and
end processing residue primarily from the State of Maine. In
demolition materials, the Hakes and Portland facilities.
12
addition, at July 21, 2000 the Company operated 10
collection operations, 4 of which are leased and 6 of which
OPERATIONS
are owned and 15 transfer stations, 10 of which are leased
The following is a description of the Company's operations.
and 5 of which are owned and collected solid waste from
commercial, industrial and residential customers in the
LANDFILLS
EasternRegion. The Company's waste tire processing facility,
The Company currently owns four Subtitle D landfill
located in Eliot, Maine, has the capacity to process
operations and operates a fifth Subtitle D landfill under a 25-
On the internet
A virtual tour of our Clinton
County landfill is available
on the web in Skills and
includes information about
landfill construction as well
as what we’re doing to
extend the life of this
resource.
year lease arrangement with a county. All of the Company's
(2) Represents capacity for which the Company has begun
operating Subtitle D landfills include leachate collection
the permitting process. Does not include additional
systems, groundwater monitoring systems and, where
available capacity at the site for which permits have not
required, active methane gas extraction and recovery
yet been sought.
systems. In addition to these landfills, the Company owns two
(3) Operated pursuant to a capital lease expiring in 2021.
landfills permitted to accept only construction and demolition
(4) The 3,100,000 of additional in-process tonnage has
materials. These C&D landfills, depending on the state in
received all required permits from the State of Maine;
which they are located, are typically constructed in
however the town of Hampden, Maine, where the site is
accordance with lower environmental standards than Subtitle
located, has not issued the required construction permits
L A N D F I L L
L O C AT I O N
( T O N S ) ( 1 )
( T O N S ) ( 1 ) ( 2 )
Approximate Estimated
Total Remaining
Permitted Capacity
Estimated
in Permitting
Process Capacity
Clinton County (3)
Schuyler Falls, NY
Waste USA
SERF (4)
NCES
Hyland
Hakes (C&D)
Portland (C&D)
Coventry, VT
Hampden, ME
Bethlehem, NH
Angelica, NY
Campbell, NY
Portland, NY
710,000
1,690,000
120,000
6,000
1,620,000
941,000
20,250
990,000
- 0 -
3,100,000
544,000
- 0 -
- 0 -
- 0 -
D landfills, reflecting the inert nature of the materials
for work to begin on the expansion (See Part I, Item 3
deposited in them.
"Legal Proceedings").
During the year ended April 30, 2000, approximately
(5) Facility currently under construction.
67% of the waste volumes received by the Company's
The Company also owns and/or operates five unlined
landfills were from the Company's hauling divisions or transfer
landfills, which are not currently in operation. All of these
stations. The following table provides certain information
landfills have been closed and environmentally capped by the
regarding the landfills that the Company operates. All of such
Company. One of the unlined landfills, a municipal landfill
13
information is provided as of July 21, 2000.
which is adjacent to the Subtitle D Clinton County landfill
(1) The Company converts estimated remaining permitted and
being operated by the Company, was operated by the
permittable capacity calculated in cubic yards to tons by
Company from July 1996 through July 1997. The Company
assuming a compaction factor equal to the historic average
completed the closure and capping activities at this landfill in
compaction factor applicable to the respective landfill.
September 1997, and is indemnified by Clinton County for
On the internet
Profiles of each of our
regions, their companies,
and the services we offer
are located in Places. You
will need to have an
appropriate browser and
common plug-ins to take
full advantage of this area’s
features - all available in
Internet Tools.
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environmentalliabilities arising from such landfill prior to the
transfer stations benefit the Company by: (i) increasing the
Company's operation. Once the permitted capacity of a
size of the waste shed which has access to the Company's
particular landfill is reached, the landfill must be closed and
landfills; (ii) reducing costs by improving utilization of
capped, and post-closure care started, if additional capacity is
collection personnel and equipment; and (iii) building
not authorized. The Company establishes reserves for the
relationships with municipalities that may lead to future
estimated costs associated with such closure and post-
business opportunities, including privatization of the
closure costs over the anticipated useful life of such landfill.
municipality's waste management services.
SOLID WASTE COLLECTION
RECYCLING SERVICES
The Company's 39 solid and liquid waste collection
The Company has sought to position itself to provide
operations served over 500,000 commercial, industrial and
recycling services to customers who are willing to pay for the
residential customers at July 21, 2000. During 2000,
cost of the recycling service. Depending on the terms of the
approximately 49% of the solid waste collected by the
individual customer contracts and the level of recovered
Company was delivered for disposal at its landfills. The
material commodity prices, the proceeds generated from
Company's collection operations are generally conducted
reselling the recycled materials are usually shared between
within a 125-mile radius of its landfills. A majority of the
the Company and its customers. In addition, the Company
Company's commercial and industrial collection services are
has adopted a pricing strategy of charging collection and
performed under one to three year service agreements, and
processing fees for recycling volume collected from its
fees are determined by such factors as collection frequency,
customers.
type of equipment and containers furnished, the type, volume
As of July 21, 2000 the Company operated 15 recycling
and weight of the solid waste collected, the distance to the
processing facilities throughout the three geographic regions.
disposal or processing facility and the cost of disposal or
The Company processes more than 20 classes of recyclable
processing. The Company's residential collection and disposal
materials originating from the municipal solid waste stream,
services are performed either on a subscription basis (i.e.,
including cardboard, office paper, containers and bottles. The
with no underlying contract) with individuals, or under
Company's regional recycling operations, as they relate to the
contracts with municipalities, homeowners associations,
three geographic regions, are concentrated principally in the
apartment owners or mobile home park operators.
Vermont, which is in the Central Region, as the public sector
14
TRANSFER STATION SERVICES
The Company operated 39 transfer stations as of
in other states in the Company's service area has generally
taken primary responsibility for recycling efforts.
July 21, 2000. The transfer stations receive, compact and
WASTE TIRE PROCESSING AND OTHER SERVICES
transfer solid waste collected primarily from the Company's
The Company's waste tire processing facility, located in Eliot,
various collection operations to larger Company-owned
Maine, has the capacity to process approximately 3.5 million
vehicles for transport to landfills. The Company believes that
tires per year and generates tire derived fuel, which the
On the internet
You can read more about
the company’s recent
activities by visiting Value
and selecting Press
Releases.
Company sells to paper mills for consumption as a
these crumb rubber systems. Oakhurst also agreed to
supplemental energy source for boiler fuel. The Company's
engage a subsidiary of the Company to be the operating
other services include a septic/liquid waste operation, located
manager of New Heights and to pay the subsidiary of the
in the Company's Central Region.
Company management fees for each facility operated.
WASTE-TO-ENERGY
The Company owns a 60% limited partnership interest
in American Ash Recycling of Tennessee Ltd., a limited
In addition to its interests in Maine Energy and PERC, the
partnership that operates a permitted municipal waste
Company has the following interests in waste-to-energy facilities:
combustor ash recycling facility in Nashville, Tennessee.
Timber Energy Resources, located in Telogia, Florida,
This facility, which commenced operations in 1993, is the first
uses biomass waste as its source of fuel to be combusted
commercially operational municipal waste combustor ash
for the production of electricity for sale to the local electric
recycling facility in the United States.
utility. The Company also operates two wood processing
The waste-to-energy segment also engages in other
facilities, BioFuels in Lewiston, Maine and Timber Chip, also a
waste management and processing activities, including
part of Timber Energy Resources, in Cairo, Georgia.
commercial hauling and non-hazardous waste management.
The Company operates three waste-to-energy facilities,
These activities are complementary extensions of the waste-
two of which are owned and one of which is leased, in
to-energy facilities that enable the Company to provide a
Martinsville, Virginia. These facilities use biomass and coal to
wider range of services to customers and provide strategic
produce steam for sale to industrial users under long-term
opportunities for future growth through vertical integration.
contracts. One of the plants was closed in December 1999
pursuant to that plant's only customer going out of business.
RESIDENTIAL RECYCLING
KTI Recycling of Canada, which includes three tire
The residential recycling segment is comprised of 20
processing facilities, two of which are owned and one of
recycling facilities, 19 of which are leased and one of which is
which is leased, produce crumb rubber from waste tires
owned, that process and market recyclable materials under
using a proprietary cryogenic technology. KTI Recycling of
long-term contracts with municipalities and commercial
Canada has two additional facilities under construction,
customers. Additionally, the residential recycling segment
located in Canada.
operates one leased transfer station. The recyclable materials
The Company holds a 35% stake in Oakhurst Company
consist principally of old newspapers, old corrugated
Inc., which owns two distributors in the automotive
containers, mixed paper and commingled bottles and cans
15
aftermarket. The Company has assigned the Company's
consisting of steel, aluminum, plastic and glass. This line of
proprietary cryogenic rubber technology to Oakhurst, for use
business segment provides residential recycling, commercial
at the New Heights facility. In return, Oakhurst agreed to
recycling, processing and marketing services.
purchase an unspecified number of crumb rubber systems
A significant portion of the material provided to the
and entered into a royalty agreement with the Company to
residential recycling segment is delivered pursuant to long-
pay $0.0075 cents per tire processed by Oakhurst using
term contracts with municipal customers. The contracts
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generally have a term of five to ten years and expire at various
COMMERCIAL RECYCLING
times between 2000 and 2018. The terms of each of the
The commercial recycling segment consists of five leased
contracts vary, but all the contracts provide that the
recycling facilities, which process and market paper fibers
municipality or a third party deliver materials to the Company's
obtained from municipalities, commercial customers and
facility. In approximately one-third of the contracts, the
commercial waste generators and brokers paper fibers,
municipalities agree to deliver a guaranteed tonnage and the
processed at facilities operated by the residential and
municipality pays a fee for the amount of any shortfall from the
commercial recycling segments, to the Company's
guaranteed tonnage. Under the terms of the individual
processing facilities and external customers.
contracts, the Company pays the municipality a fee per ton of
material delivered or in the event of a shortfall, charges the
FINISHED PRODUCTS
Commercial and residential
recycling removes material from
the waste stream and reclaims it
for reuse and manufacture –
helping to extend our natural
municipality a fee for each ton of material shortfall below the
The finished products segment consists primarily of plastic
resources.
municipality's guaranteed tonnage amount. Some contracts
reprocessing plants and the Company's interest in a joint
contain revenue sharing arrangements under which the
venture with Louisiana-Pacific for the manufacture and sale of
Company pays the municipality a specified percentage of the
cellulose insulation.
revenue from the sale of the recovered materials.
The joint venture with Louisiana-Pacific manufactures
The residential recycling segment derives a significant
cellulose insulation, which is primarily used in the construction
portion of its revenues from the sale of recyclable materials.
of manufactured housing and single-family residential homes.
The resale and purchase prices of the recyclable materials,
The Company believes that the joint venture is the largest
particularly newspaper, corrugated containers, plastic, ferrous
producer of cellulose insulation in the United States and
and aluminum, can fluctuate based upon market conditions.
operates six manufacturing facilities located in Ronda, North
The Company uses long-term supply contracts with
Carolina; Tampa, Florida; Phoenix, Arizona; Clackamas,
customers with floor price arrangements to reduce the
Oregon; Delphos, Ohio; and Waco, Texas. The joint venture
commodity risk for certain recyclables, particularly newspaper
primarily sells the insulation to the makers of manufactured
and aluminum metals. Under such contracts, the Company
housing and insulation contractors throughout the country.
obtains a guaranteed minimum price for the recyclable
The plastics division is a reprocessor of high density
materials along with a commitment to receive additional
polyethylene ("HDPE") plastics collected primarily from
amounts if the current market price rises above the floor
residential recycling programs and industrial suppliers. The
16
price. The contracts are generally with large domestic
plastics division obtains a majority of its raw materials from
companies that use the recyclable materials in their
the residential recycling segment. The plastics division
manufacturing process. In fiscal 2000, 18.7% of the revenues
operates three manufacturing facilities located in Reidsville,
from the sale of recyclable materials of the residential
North Carolina and Hamlet, North Carolina.
recycling segment were derived from sales under these long-
term contracts.
On the internet
Take a closer look at our
services and the people
who provide them in Skills
– from collection and
transfer to recycling and
disposal.
COMPETITION
experience to bid on municipal contracts. Competition is both
The solid waste services industry is highly competitive, and
national and regional in nature. Some of the markets in which
has undergone a long period of consolidation, and requires
the Company competes are served by one or more of the
substantial labor and capital resources. The Company
large national solid waste companies including Waste
competes with numerous solid waste management
Management, Allied Waste and Republic Services, as well as
companies, several of which are significantly larger and have
numerous regional and local competitors that offer
greater access to capital and greater financial, marketing or
competitive prices and quality service.
technical resources than the Company. Certain of the
The Company's waste paper brokerage business and
Company's competitors are large national companies that
waste paper processing plants face extensive competition.
may be able to achieve greater economies of scale than the
Principal attributes of these markets contributing to such
Company. The Company also competes with a number of
competition are industry-wide overcapacity and continual
regional and local companies. In addition, the Company
price pressures.
competes with operators of alternative disposal facilities,
The insulation industry is highly competitive and requires
including incinerators, and with certain municipalities, counties
substantial capital and labor resources. In its insulation
and districts that operate their own solid waste collection and
manufacturing activities, the Company's joint venture with
disposal facilities. Public sector facilities may have certain
Louisiana-Pacific primarily competes with manufacturers of
advantages over the Company due to the availability of user
fiberglass insulation such as Owens Corning, Certainteed and
fees, charges or tax revenues and tax-exempt financing. In
Schuller International. The fiberglass insulation manufacturers
addition, recycling and other waste reduction programs may
currently have a significant market share and are substantially
reduce the volume of waste deposited in landfills.
better capitalized than the Company. The Company believes
The Company competes for collection and disposal
that the joint venture will compete with fiberglass insulation
volume primarily on the basis of the price and quality of its
manufacturers by charging competitive prices and offering a
services. From time to time, competitors may reduce the price
quality product and excellent customer service support.
of their services in an effort to expand market share or to win
The plastics industry is highly competitive and requires
a competitively bid municipal contract. These practices may
substantial capital investment in equipment. The plastics
also lead to reduced pricing for the Company's services or the
division's primary competition comes from other reprocessors
loss of business. In addition, competition exists within the
of recycled plastics, as well as suppliers of virgin HDPE resin.
industry not only for collection, transportation and disposal
These competitors have significantly greater financial and
17
volume, but also for acquisition candidates. The Company
other resources than the Company. The Company believes
generally competes for acquisition candidates with publicly-
that it offers competitive pricing because the cost to
owned regional and national waste management companies.
reprocess plastics generally requires a lower amount of
The residential recycling industry is highly competitive
investment in capital than the manufacturing of virgin plastic
and requires substantial capital resources and prior
resin. The Company also competes with several other
Well-trained and highly
resourced, Casella people are
working hard to make a lot of
places, better places.
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recycled plastic brokers and direct marketing from plastic
new customers. These sales representatives receive a
recycling plants for post-industrial plastic scrap, and with
significant portion of their compensation based upon meeting
materials recovery facilities for post-consumer plastics. The
certain incentive targets. The Company emphasizes providing
Company believes that it will continue to be competitive
quality services and customer satisfaction and retention, and
because of its knowledge of the plastic recycling market and
believes that its focus on quality service will help retain
its reputation and relationship with its customers.
existing and attract additional customers.
MARKETING AND SALES
EMPLOYEES
The Company has a coordinated marketing and sales strategy,
The Company employs approximately 3,700 persons. Certain
which is formulated at the corporate level and implemented at
of the Company's employees are covered by collective
the divisional level. The Company markets its services locally
bargaining agreements. The Company believes relations with
through division managers and direct sales representatives
its employees to be satisfactory.
who focus on commercial, industrial, municipal and residential
customers. The Company also obtains new customers from
referral sources, its general reputation and local market print
RISK MANAGEMENT, INSURANCE AND
PERFORMANCE OR SURETY BONDS
advertising. Leads are also developed from new building
The Company actively maintains environmental and other risk
permits, business licenses and other public records.
management programs, which it believes are appropriate for
Additionally, each division generally advertises in the yellow
its business. The Company's environmental risk management
pages and other local business print media that cover its
program includes evaluating existing facilities, as well as
service area.
potential acquisitions, for environmental law compliance and
Maintenance of a local presence and identity is an
operating procedures. The Company also maintains a worker
important aspect of the Company's marketing plan, and many
safety program, which encourages safe practices in the
of the Company's managers are involved in local
workplace. Operating practices at all Company operations are
governmental, civic and business organizations. The
intended to reduce the possibility of environmental
Company's name and logo, or, where appropriate, that of the
contamination and litigation.
Company's divisional operations, are displayed on all
The Company carries a range of insurance intended to
Company containers and trucks. Additionally, the Company
protect its assets and operations, including a commercial
18
attends and makes presentations at municipal and state
general liability policy and a property damage policy. A partially
conferences and advertises in governmental associations'
or completely uninsured claim against the Company (including
membership publications.
liabilities associated with cleanup or remediation at its own
The Company markets its commercial, industrial and
facilities) if successful and of sufficient magnitude, could have
municipal services through its sales representatives who visit
a material adverse effect on the Company's business, financial
customers on a regular basis and make sales calls to potential
condition and results of operations. Any future difficulty in
On the internet
In CustomerFirst, you
can learn more about our
local businesses, the
services they offer, and
what’s going on in the
communities they serve.
obtaining insurance could also impair the Company's ability
and commercial recycling segments, principally to paper and
to secure future contracts, which may be conditioned upon
box board manufacturers in the United States, Canada,
the availability of adequate insurance coverage.
Pacific Rim countries, Europe and South America.
Effective July 1, 1999, the Company established a
The Company's cellulose insulation joint venture sells
captive insurance company, `Casella Insurance Company',
its products to manufacturers of manufactured homes,
through which it is self-insured for Workman's Compensation
insulation contractors, and retail home improvement stores
and Automobile coverage. The Company's maximum
throughout the United States. The plastics division sells the
exposure under this plan is $250,000 per individual event
majority of its products under long-term contracts with two
with no aggregate limit, after which reinsurance takes effect
customers located adjacent to the Company's facility.
and limits the Company's exposure.
Municipal solid waste collection contracts and landfill
RAW MATERIALS
closure obligations may require performance or surety
The raw material demands of the PERC's facility currently
bonds, letters of credit or other means of financial assurance
are met mainly by PERC long-term waste handling
to secure contractual performance. The Company has not
agreements with approximately 200 municipalities in Maine.
experienced difficulty in obtaining performance or surety
PERC received approximately 75% of its raw materials in
bonds or letters of credit. If the Company were unable to
fiscal 2000 from these municipalities. Maine Energy received
obtain performance or surety bonds or letters of credit in
28% of its raw materials in fiscal 2000 from 18 Maine
sufficient amounts or at acceptable rates, it may be
municipalities under long term waste handling agreements.
precluded from entering into additional municipal solid waste
Maine Energy also receives raw materials from commercial
collection contracts or obtaining or retaining landfill operating
and private waste haulers and municipalities with short-term
permits.
CUSTOMERS
contracts. The Telogia facility uses biomass fuels that are a
by-product of the paper pulp woodchip industry as its raw
material.
Under the terms of their contracts, Maine Energy must sell
The residential recycling segment received 38.1% of its
all of the electricity generated at its facilities to Central
material under long-term agreements with municipalities.
Maine, Timber Energy Resources must sell all of its
These contracts generally provide that all recyclables
electricity to Florida Power and PERC must sell all of its
collected from the municipal recycling programs be delivered
electricity to Bangor Hydro.
to a facility that is owned or operated by the Company. The
19
The commercial recycling segment processing facilities
quantity of material delivered by these communities is
provide recycling services to municipalities, commercial
dependent on the participation of individual households in the
haulers and commercial waste generators within the
recycling program.
geographic proximity of the processing facilities. The
The raw materials for the Company's commercial
Company acts as a broker of products, including recyclable
recycling segment generally come from printers and
material processed at facilities operated by the residential
publishing houses and other recyclers and haulers.
More information
A complete guide to our
on-line resources is located
at the end of this 10K.
You may also request
information or join our
e-mail list by filling out and
returning the pre-paid
mailer.
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The waste paper brokered by the Company is generated
costs remain constant throughout the fiscal year, operating
principally from the commercial recycling segment, from
income results are therefore impacted by a similar
waste generators, and from third party processors.
seasonality. In addition, particularly harsh weather conditions
The primary raw material for the Company's insulation
could result in increased operating costs to certain of the
joint venture is newspaper collected from residential recycling
Company's operations.
programs, including those operated by the Company's
The residential recycling segment experiences increased
residential recycling segment. In 2000, the insulation division
volumes of newspaper in November and December due to
received 10.8% of the newspaper used by it from the
increased newspaper advertising and retail activity during the
residential recycling segment. It purchased the remaining
holiday season. Additionally, the facilities located in Florida
newspaper from municipalities, commercial haulers, and paper
experience increased volumes of recyclable materials during
brokers. The chemicals used to make the newspaper fire
the winter months, followed by decreases in the summer
retardant are purchased from industrial chemical manufacturers
months in connection with seasonal changes in population.
located in the United States and South America.
The commercial recycling segment experiences
The plastics division's primary raw materials are baled
increased quantities of newspaper and corrugated containers
plastic containers collected from residential recycling
in November and December, followed by reduced quantities
programs, such as those operated by the Company's
in January and decreased quantities of newspaper and
residential recycling segment, and ground material from
corrugated containers in July and August, followed by
industrial customers. In 2000, the plastics division received
increased quantities in September, due to increased
57.2% of its raw material from the Company's residential
newspaper advertising and retail activity during the holiday
recycling facilities.
SEASONALITY
season.
The insulation business experiences lower sales in
November and December because of lower production of
The Company's transfer and disposal revenues have
manufactured housing due to holiday plant shut downs.
historically been lower during the months of November
through March. This seasonality reflects the lower volume of
REGULATION
waste during the late fall, winter and early spring months
primarily because: (i) the volume of waste relating to
INTRODUCTION
20
construction and demolition activities decreases substantially
The Company is subject to extensive and evolving Federal,
during the winter months in the northeastern United States;
state and local environmental laws and regulations which have
and (ii) decreased tourism in Vermont, Maine and eastern
become increasingly stringent in recent years. The
New York during the winter months tends to lower the
environmental regulations affecting the Company are
volume of waste generated by commercial and restaurant
administered by the EPA and other Federal, state and local
customers, which is partially offset by the winter ski
environmental, zoning, health and safety agencies. The
industry.Since certain of the Company's operating and fixed
Company believes that it is currently in substantial
By operating one of the
industry’s most modern fleet of
trucks and equipment,
maintenance costs are
managed and we assure that
our services are provided
reliably and safely.
compliance with applicable Federal, state and local
businesses that deal with hazardous waste are subject to
environmental laws, permits, orders and regulations, and it
regulatory obligations in addition to those imposed on handlers
does not currently anticipate any material environmental costs
of non-hazardous waste.
to bring its operations into compliance (although there can be
Among the wastes that are specifically designated as
no assurance in this regard in the future). The Company
non-hazardous are household waste and "special" waste,
expects that its operations in the solid waste services industry
including items such as petroleum contaminated soils,
will be subject to continued and increased regulation,
asbestos, foundry sand, shredder fluff and most non-
legislation and regulatory enforcement actions. The Company
hazardous industrial waste products.
attempts to anticipate future legal and regulatory requirements
The EPA regulations issued under Subtitle C of RCRA
and to carry out plans intended to keep its operations
incompliance with those requirements.
In order to transport process, incinerate, or dispose of
solid waste, it is necessary for the Company to possess and
comply with one or more permits from Federal, state and/or
local agencies. The Company must review these permits
periodically, and the permits may be modified or revoked by
the issuing agency.
The principal Federal, state and local statutes and
regulations applicable to the Company's various operations
are as follows:
THE RESOURCE CONSERVATION AND RECOVERY
ACT OF 1976 ("RCRA")
RCRA regulates the generation, treatment, storage,
handling, transportation and disposal of solid waste and
requires states to develop programs to ensure the safe
disposal of solid waste. RCRA divides solid waste into two
groups, hazardous and non-hazardous. Wastes are generally
classified as hazardous if they (i) either (a) are specifically
included on a list of hazardous wastes, or (b) exhibit certain
characteristics defined as hazardous; and (ii) are not
impose a comprehensive "cradle to grave" system for tracking
the generation, transportation, treatment, storage and disposal
of hazardous wastes. The Subtitle C Regulations impose
obligations on generators, transporters and disposers of
hazardous wastes, and require permits that are costly to
obtain and maintain for sites where those businesses treat,
store or dispose of such material. Subtitle C requirements
include detailed operating, inspection, training and emergency
preparedness and response standards, as well as
requirements for manifesting, record keeping and reporting,
corrective action, facility closure, post-closure and
financialresponsibility. Most states have promulgated
regulations modeled on some or all of the Subtitle C
provisions issued by the EPA, and in many instances EPA has
delegated to those states the principal role in regulating
industries which are subject to those requirements. Some
state regulations impose different, additional obligations.
The Company currently does not accept for
transportation or disposal of hazardous substances (as
defined in CERCLA, discussed below) in concentrations or
21
volumes that would classify those materials as hazardous
wastes. However, the Company has transported hazardous
substances in the past and very likely will transport and
specifically designated as non-hazardous. Wastes classified as
dispose of hazardous substance in the future, to the extent
hazardous under RCRA are subject to more extensive
that materials defined as hazardous substances under
regulation than wastes classified as non-hazardous, and
CERCLA are present in consumer goods and in the
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non-hazardous waste streams of its customers. The Company
disposal. Regulations generally require the Company to install
does not accept hazardous wastes for incineration at its waste-
groundwater monitoring wells at virtually all landfills it
to-energy facilities. The Company typically tests ash produced
operates, to monitor groundwater quality and, indirectly, the
at those facilities on a regular basis; that ash generally does
effectiveness of the leachate collection systems. The Subtitle
not contain hazardous substances in sufficient concentrations
D Regulations also require facility owners or operators to
or volumes to result in the ash being classified as hazardous
control emissions of methane gas generated at landfills where
Throughout the communities we
waste. However, it is possible that future waste streams
certain regulatory thresholds are exceeded. Each state must
serve, we work to provide safe,
accepted for incineration could contain elevated volumes or
revise its landfill regulations to meet these requirements or
concentrations of hazardous substances or that legal
the EPA will automatically impose such requirements upon
environmentally responsible
waste management solutions –
requirements will change, and that theresulting incineration
landfill owners and operators in that state. Each state also
today and tomorrow.
ash would be classified as hazardous waste.
must adopt and implement a permit program or other
Leachate generated at the Company's landfills and
appropriate system to ensure that landfills within the state
transfer stations is tested on a regular basis, and generally is
comply with the Subtitle D regulatory criteria. Various states
not regulated as a hazardous waste under Federal or state
in which the Company operates or in which it may operate in
law. In the past, however, leachate generated from certain of
the future have adopted regulations or programs as stringent
the Company's landfills has been classified as hazardous
as, or more stringent than, the Subtitle D Regulations.
waste under state law, and there is no guarantee that
leachate generated from the Company's facilities in the future
THE FEDERAL WATER POLLUTION
will not be classified under Federal or state law as hazardous
CONTROL ACT OF 1972
waste.
The Federal Water Pollution Control Act of 1972, as amended
In October 1991, the EPA adopted the Subtitle D
("Clean Water Act"), regulates the discharge of pollutants into
Regulations governing solid waste landfills. The Subtitle D
the "waters of the United States" from a variety of sources,
Regulations, which generally became effective in October
including solid waste disposal sites and transfer stations,
1993, include location restrictions, facility design standards,
processing facilities, and waste-to-energy facilities
operating criteria, closure and post-closure requirements,
(collectively, "solid waste management facilities"). If run-off or
financial assurance requirements, groundwater monitoring
collected leachate from the Company's solid waste
requirements, groundwater remediation standards and
management facilities, or process or cooling waters
22
corrective action requirements. In addition, the Subtitle D
generated at one of the Company's waste-to-energy facilities,
Regulations require that new landfill sites meet more stringent
is discharged into streams, rivers or other surface waters, the
liner design criteria (typically, composite soil and synthetic
Clean Water Act would require the Company to apply for and
liners or two or more synthetic liners) intended to keep
obtain a discharge permit, conduct sampling and monitoring
leachate out of groundwater and have extensive collection
and, under certain circumstances, reduce the quantity of
systems to carry away leachate for treatment prior to
pollutants in such discharge. A permit also may be required if
On the internet
You can find out more
about waste management
and other environmental
web resources in the
Library under Transfer
Station.
that run-off, leachate, or process or cooling water is
Act and Toxic Substances Control Act. If the Company were
discharged to a treatment facility that is owned by a local
found to be a responsible party for a CERCLA cleanup, the
municipality. Numerous states have enacted regulations,
enforcing agency could hold the Company, or any other
which are equivalent to the Clean Water Act, and which also
generator, transporter or the owner or operator of the
regulate the discharge of pollutants to groundwater. Finally,
contaminated facility, responsible for all investigative and
virtually all solid waste management facilities must comply with
remedial costs even if others also were liable. CERCLA also
the EPA's storm water regulations, which are designed to
authorizes EPA to impose a lien in favor of the United States
prevent contaminated storm water runoff from flowing into
upon all real property subject to, or affected by, a remedial
surface waters.
action for all costs for which a party is liable. CERCLA provides
a responsible party with the right to bring a contribution action
THE COMPREHENSIVE ENVIRONMENTAL
against other responsible parties for their allocable shares of
RESPONSE, COMPENSATION, AND LIABILITY ACT
investigative and remedial costs. The Company's ability to get
OF 1980 ("CERCLA")
others to reimburse it for their allocable shares of such costs
CERCLA established a regulatory and remedial program
would be limited by the Company's ability to identify and locate
intended to provide for the investigation and cleanup of facilities
other responsible parties and prove the extent of their
where or from which a release of any hazardous substance into
responsibility and by the financial resources of such other
the environment has occurred or is threatened. CERCLA's
parties.
primary mechanism for remedying such problems is to impose
strict joint and several liability for cleanup of facilities on current
THE CLEAN AIR ACT
owners and operators of the site, former owners and operators
The Clean Air Act, generally through state implementation of
of the site at the time of the disposal of the hazardous
Federal requirements, regulates emissions of air pollutants from
substances, as well as the generators of the hazardous
certain landfills based upon the date of the landfill was
substances and the transporters who arranged for disposal or
constructed and the annual volume of emissions. The EPA has
transportation of the hazardous substances. In addition,
promulgated new source performance standards regulating air
CERCLA also imposes liability for the costs of evaluating and
emissions of certain regulated pollutants (methane and non-
addressing damage done to natural resources. The costs of
methane organic compounds) from municipal solid waste
CERCLA investigation and cleanup can be very substantial.
landfills. Landfills located in areas where levels of regulated
Liability under CERCLA does not depend upon the existence or
pollutants exceed certain requirements of the Clean Air Act may
disposal of "hazardous waste" as defined by RCRA, but can be
be subject to even more extensive air pollution controls and
based on the existence of any of more than 700 "hazardous
emission limitations. In addition, the EPA has issued standards
23
substances" listed by the EPA, many of which can be found in
regulating the disposal of asbestos-containing materials.
household waste. In addition, the definition of "hazardous
The Clean Air Act also regulates emissions of air
substances" in CERCLA incorporates substances designated as
pollutants from the Company's waste-to-energy facilities and
hazardous or toxic under the Federal Clean Water Act, Clear Air
certain of its processing facilities. The EPA has enacted
State-of-the-art landfills, using
the latest technology and
developments, serve regional
waste-sheds.
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standards that apply to those emissions. It is possible that the
maintenance of solid waste management facilities. In addition,
EPA, or a state where the Company operates, will enact
many states have adopted statutes comparable to, and in
additional or different emission standards in the future.
some cases more stringent than, CERCLA. These statutes
All of the Federal statutes described above authorize
impose requirements for investigation and cleanup of
lawsuits by private citizens to enforce certain provisions of
contaminated sites and liability for costs anddamages
the statutes. In addition to a penalty award to the
associated with such sites, and some authorize liens on
United States, some of those statutes authorize an award of
property owned by responsible parties. Some of those liens
attorney's fees to parties successfully advancing
may take priority over previously filed instruments.
such an action.
Furthermore, many municipalities also have local ordinances,
laws and regulations affecting Company operations. These
THE OCCUPATIONAL SAFETY AND HEALTH ACT
include zoning and health measures that limit solid waste
OF 1970 ("OSHA")
management activities to specified sites or conduct, flow
OSHA establishes employer responsibilities and authorizes
control provisions that direct the delivery of solid wastes to
the promulgation by the Occupational Safety and Health
specific facilities or to facilities in specific areas, laws that
Administration to promulgate occupational health and safety
grant the right to establish franchises for collection services
standards, including the obligation to maintain a workplace
and then put out for bid the right to provide collection
free of recognized hazards likely to cause death or serious
services, and bans or other restrictions on the movement of
injury, to comply with adopted worker protection standards, to
solid wastes into a municipality.
maintain certain records, to provide workers with required
Certain permits and approvals may limit the types of
disclosures and to implement certain health and safety
waste that may be accepted at a landfill or the quantity of
training programs. Various of those promulgated standards
waste that may be accepted at a landfill during a given time
may apply to the Company's operations, including those
period. In addition, certain permits and approvals, as well as
standards concerning notices of hazards, safety in excavation
certain state and local regulations, may limit a landfill to
and demolition work, the handling of asbestos and asbestos-
accepting waste that originates from specified geographic
containing materials, and worker training and emergency
areas or seek to restrict the importation of out-of-state waste
response programs.
STATE AND LOCAL REGULATIONS
24
or otherwise discriminate against out-of-state waste.
Generally, restrictions on importing out-of-state waste have
not withstood judicial challenge. However, from time to time
Each state in which the Company now operates or may
Federal legislation is proposed which would allow individual
operate in the future has laws and regulations governing the
states to prohibit the disposal of out-of-state waste or to limit
generation, storage, treatment, handling, processing,
the amount of out-of-state waste that could be imported for
transportation, incineration and disposal of solid waste, water
disposal and would require states, under certain
and air pollution and, in most cases, the siting, design,
circumstances, to reduce the amounts of waste exported to
operation, maintenance, closure and post-closure
other states. Although such legislation has not been passed
On the internet
Maine Energy, with a
sophisticated front-end
process, recycles a
significant amount of waste
before converting it to
electricity. Learn how this
unique WTE plant works
and what it does at:
casella.com/mainenergy.
by Congress, if this or similar legislation is enacted, states in
transport to and disposal in landfills could affect the
which the Company operates landfills could limit or prohibit
Company's ability to operate its landfill facilities.
the importation of out-of-state waste. Such actions could
materially and adversely affect the business, financial
ENERGY AND UTILITY REGULATION
condition and results of operations of any landfills within
Each of the Company's waste-to-energy facilities has been
those states that receive a significant portion of waste
certified by the Federal Energy Regulatory Commission as a
originating from out-of-state.
"qualifying small power production facility" under the Public
In addition, certain states and localities may for
Utility Regulatory Policies Act of 1978, as amended
economic or other reasons restrict the export of waste from
("PURPA"). PURPA exempts qualifying facilities from most
their jurisdiction or require that a specified amount of waste
Federal and state laws governing electric utility rates and
be disposed of at facilities within their jurisdiction. In 1994,
financial organization, and generally requires electric utilities
the U.S. Supreme Court rejected as unconstitutional, and
to purchase electricity generated by qualifying facilities at a
therefore invalid, a local ordinance that sought to impose flow
price equal to the utility's full "avoid cost".
controls on taking waste out of the locality. However, certain
The Company's waste-to-energy business is dependent
state and local jurisdictions continue to seek to enforce such
upon its ability to sell the electricity generated by each of its
restrictions and, in certain cases, the Company may elect not
facilities to an electric utility (or, in certain instances, a third-
to challenge such restrictions. In addition, some proposed
party such as an energy marketer). Those purchases
Federal legislation would allow states and localities to impose
generally occur under long-term power purchase agreements,
flow restrictions. Those restrictions could reduce the volume
some of which will expire in the near future. There is no
of waste going to landfills in certain areas, which may
guarantee that new agreements will replace those that expire,
materially adversely affect the Company's ability to operate
or that any new agreement will contain a purchase price,
its landfills and/or affect the prices the Company can charge
which is as favorable as the one in the expiring agreement.
for landfill disposal services. Those restrictions also may
Additionally, in the event that the electric utility industry in a
result in higher disposal costs for the Company's collection
state where the Company generates electricity is deregulated
operations. If the Company were unable to pass such higher
in the future, it is possible that the applicable regulatory
costs through to its customers, the Company's business,
agency will require that an existing agreement be
financial condition and results of operations could be
renegotiated (the resulting agreement may be less favorable
materially adversely affected.
to the Company) or transferred to a third-party.
25
There has been an increasing trend at the Federal, state
and local levels to mandate or encourage both waste
reduction at the source and waste recycling, and to prohibit
or restrict the disposal in landfills of certain types of solid
wastes, such as yard wastes, leaves and tires. Regulations
reducing the volume and types of wastes available for
More information
You can learn more about
the company’s leadership
by going to People on our
web site or by filling out the
pre-paid mailer at the back
of this 10K and requesting
the Management
Brochure.
E X E C U T I V E O F F I C E R S A N D O T H E R K E Y E M P L O Y E E S O F T H E C O M P A N Y
The Executive Officers and other key employees of the Company, their positions, and their ages as of July 21, 2000 are as follows:
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N A M E
A G E
P O S I T I O N
E X E C U T I V E O F F I C E R S
John W. Casella
Douglas R. Casella
James W. Bohlig
Jerry S. Cifor
Martin J. Sergi
O T H E R K E Y E M P L O Y E E S
Michael Brennan
Christopher M. DesRoches
Sean Duffy
Joseph S. Fusco
James M. Hiltner
Michael Holmes
Larry B. Lackey
Richard Norris
Alan N. Sabino
Gary Simmons
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54
39
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36
36
45
39
57
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President, Chief Executive Officer, Secretary, Director
Vice Chairman of the Board of Directors, Vice President
Senior Vice President and Chief Operating Officer, Director
Senior Vice President and Chief Financial Officer, Treasurer
Executive Vice President - Business Development, Director
Vice President & General Counsel
Vice President, Sales and Marketing
Regional Vice President
Vice President, Communications
Regional Vice President
Regional Vice President
Vice President, Permits, Compliance and Engineering
Vice President & Corporate Controller
Regional Vice President
Vice President, Fleet Management
John W. Casella has served as President and Chief
related state and local boards and commissions including the
Executive Officer of the Company since 1993, and has been
Board of Directors of the Associated Industries of Vermont,
Chairman of the Board of Directors of Casella Waste
The Association of Vermont Recyclers, Vermont State
Management, Inc. since 1977. From 1993 until 1999, Mr.
Chamber of Commerce and the Rutland Industrial
Casella was also the Chairman of the Board of Directors of
Development Corporation. Mr. Casella has also served on
the Company. Mr. Casella has actively supervised all aspects
various state task forces, serving in an advisory capacity to
26
of Company operations since 1976, sets overall corporate
the Governor of Vermont on solid waste issues. Mr. Casella
policies, and serves as chief strategic planner of corporate
holds an Associate of Science in Business Management from
development. Mr. Casella is also an executive officer and
Bryant & Stratton University and a Bachelor of Science in
director of Casella Construction, a company owned by Mr.
Business Education from Castleton State College. Mr.
Casella and Douglas R. Casella. Mr. Casella has been a
Casella is the brother of Douglas R. Casella.
member of numerous industry-related and community service-
Douglas R. Casella founded Casella Waste Management,
1983 until 1986. Mr. Cifor is a graduate of Hillsdale College
Inc. in 1975, and has been a director of that company since
with a Bachelor of Arts in Accounting.
that time. He has served as Vice Chairman of the Board of
Martin J. Sergi has served as Executive Vice President-
Directors of the Company since 1993 and has been President
Business Development of the Company since December
of Casella Waste Management, Inc. since 1975. Since 1989,
1999. From November 1997 to December 1999, Mr. Sergi
Mr. Casella has been President of Casella Construction, a
served as President of KTI, Inc., prior to its acquisition by the
company owned by Mr. Casella and John W. Casella which
Company. From October 1985 to August 1998, Mr. Sergi
specializes in general contracting, soil excavation and related
served as Chief Financial Officer of KTI, Inc. and from 1985 to
heavy equipment work. Mr. Casella attended the University of
December 1999 as Vice Chairman of the Board of Directors.
Wisconsin's College of Engineering continuing education
Michael Brennan joined the company in July 2000 as Vice
programs in sanitary landfill design, ground water remediation,
President and General Counsel. From July 1998 to July 2000,
landfill gas and leachate management and geosynthetics. Mr.
he served as Associate General Counsel for Waste
Casella is the brother of John W. Casella.
Management, Inc., a waste management company. From
James W. Bohlig joined the Company as Senior Vice
January 1996 to July 1998 he served as Senior Counsel and
President and Chief Operating Officer in 1993 with primary
from March 1993 to January 1996 he served as Environmental
responsibility for business development, acquisitions and
Counsel for Waste Management, Inc.
operations. Mr. Bohlig has served as a director of the
Christopher M. DesRoches has served as Vice
Company since 1993. From 1989 until he joined the Company,
President, Sales and Marketing of the Company since
Mr. Bohlig was Executive Vice President and Chief Operating
November 1996. From January 1989 to November 1996, he
Officer of Russell Corporation, a general contractor and
was a regional vice president of sales of Waste Management,
developer based in Rutland, Vermont. Mr. Bohlig is a licensed
Inc., a solid waste management company. Mr. DesRoches is a
professional engineer. Mr. Bohlig holds a Bachelor of Science
graduate of Arizona State University.
in Engineering and Chemistry from the U.S. Naval Academy,
Sean Duffy has served as Regional Vice President of the
and is a graduate of the Columbia University Management
Company since December 1999. He began in May of 1983 at
Program in Business Administration.
FCR, Inc. as one of the founders of the FCR, Inc. In 1996, he
Jerry S. Cifor joined the Company as Chief Financial
became the Chief Operating Officer of FCR, Inc. In 1997, he
Officer in January 1994. From 1992 to 1993, Mr. Cifor was
became an executive vice president of FCR. In 1998, he also
Vice President and Chief Financial Officer of Earthwatch
became the President of FCR Plastics, Inc. In 1999 he
27
Waste Systems, a waste management company based in
became the president of FCR Recycling and was promoted to
Buffalo, New York. From 1986 to 1991, Mr. Cifor was
President of FCR, Inc., where he remained until the
employed by Waste Management of North America, Inc., a
Company's acquisition of KTI, Inc. in December 1999, when
waste management company, in a number of financial and
he became a Regional Vice President of the Company and
operational management positions. Mr. Cifor is a certified
remains President of FCR Plastics, Inc. and FCR, Inc. Mr.
public accountant and was with KPMG Peat Marwick from
Duffy is a graduate of Central Connecticut State University.
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Joseph S. Fusco has served as Vice President,
Richard Norris joined the Company in July 2000 as Vice
Communications of the Company since January 1995. From
President and Corporate Controller. From 1997 to July 2000,
January 1991 through January 1995, Mr. Fusco was self-
Mr. Norris served as Vice President and Chief Financial
employed as a corporate and political communications
Officer for Nexcycle, Inc., a processor of secondary
consultant. Mr. Fusco is a graduate of the State University of
materials. From 1986 to 1997, he served as Vice President of
New York at Albany.
Finance, US Operations for Laidlaw Waste Systems, Inc., a
James M. Hiltner has served as Regional Vice President
waste management company.
of the Company since March 1998. From 1990 to March
Alan N. Sabino has served as Regional Vice President of
1998, Mr. Hiltner was employed by Waste Management, Inc.
the Company since July 1996. From 1995 to July 1996,
as a region president (July 1996 through March 1998), where
Mr. Sabino served as a Division President for Waste
his responsibilities included overseeing that company's waste
Management, Inc. From 1989 to 1994, he served as Region
management operations in upstate New York and
Operations Manager for Chambers Development Company,
northwestern Pennsylvania, a division president (from April
Inc., a waste management company. Mr. Sabino is a graduate
1992 through July 1996) and a general manager (from
of Pennsylvania State University.
November 1990 through April 1992.)
Gary Simmons joined the Company in May 1997 as Vice
Michael Holmes has served as a Regional Vice President
President, Fleet Management.From 1995 to May 1997,
of the Company since January 1997. From November 1995
Mr. Simmons served as National and Regional Fleet Service
to January 1997, Mr. Holmes was Vice President of Superior
Manager for USA Waste Services, Inc., a waste management
Disposal Services, Inc., which was acquired by the Company
company. From 1977 to 1995, Mr. Simmons served in various
in January 1997. From November 1993 to November 1995,
fleet maintenance and management positions for Chambers
he was Superintendent of Recycling and Solid Waste for the
Development Company, Inc.
Town of Weston, Massachusetts Solid Waste epartment
where he managed all aspects of the town's recycling and
Item 2. Properties
solid waste services. From June 1983 to October 1992, he
At July 21, 2000: (A) the Company operated seven landfills,
served as the Division Manager of all divisions in the
including one operated under a lease expiring in 2021; (B) 39
Binghamton, N.Y. area and the Boston, Massachusetts area
transfer stations, 24 of which are owned and 15 of which are
for Laidlaw Waste Services, Inc. Mr. Holmes is a graduate of
leased; (C) 39 hauling operations, 27 of which are owned
28
Broome Community College.
and 12 of which are leased; (D) 40 recyclable operations, 10
Larry B. Lackey joined the Company in 1993 and has
of which are owned and 30 of which are leased; (E) 12
served as Vice President, Permits, Compliance and
power generation facilities, six of which are owned, three of
Engineering since 1995. From 1984 to 1993, Mr. Lackey was
which are leased and three of which are partnership interests;
an Associate Engineer for Dufresne-Henry, Inc., an
(F) three manufacturing of finished goods operations, two of
engineering consulting firm. Mr. Lackey is a graduate of
which are owned and one of which is leased and one
Vermont Technical College.
cellulose insulation joint venture and (G) utilized 14 corporate
office and other administrative facilities, two of which are
landfill and the operator thereof to receive an additional
owned and 12 of which are leased. The Company's landfill
permit from the Town of Angelica to continue to operate,
operations are described in Item 1.
would prevent the disposal of yard waste, may preclude the
Other than the foregoing, at July 21, 2000 the principal
disposal of certain types of industrial waste and would
fixed assets used by the Company in its solid waste
impose certain other restrictions on the landfill. A temporary
collection and landfill operations included approximately 2,650
restraining order was granted by the court on May 14, 1998
collection vehicles, 450 pieces of heavy equipment and 350
in favor of the Company, and by a decision dated July 13,
support vehicles.
Item 3. Legal Proceedings
On or about October 30, 1997, Mr. Matthew M. Freeman
commenced a civil lawsuit against the Company and two of
its officers and directors in Vermont Superior Court.
Mr. Freeman claims to have performed services for the
1998, the court granted the Company's motion for a
preliminary injunction. On September 9, 1998, the Town of
Angelica filed a Notice of Appeal but has not yet perfected
that appeal. If the Company is not successful in its lawsuit,
and if the Town of Angelica seeks to enforce the law by its
terms, then the Company would be required to obtain an
additional permit from the Town of Angelica to operate the
Company prior to 1995 and in his lawsuit is seeking a three-
Hyland landfill, the expansion of the landfill beyond the current
percent equity interest in the Company or the monetary
equivalent thereof, as well as punitive damages. The
permitted capacity would be prohibited, and the Company
would be unable to dispose of yard waste and may be
Company and the officers and directors have answered the
precluded from disposing of certain industrial wastes at the
Complaint, denied Mr. Freeman's allegations of wrongdoing,
landfill. There can be no assurance that such limitations would
and asserted various defenses. In order to facilitate the
not have a material adverse effect on the Company's
completion of the initial public offering of the Company's
business, financial condition and results of operations. The
Class A Common Stock in November 1997, certain
Company and the Town have signed an amendment to the
stockholders of the Company agreed to indemnify the
Host Community Agreement and both sides have terminated
Company for any settlement by the Company or any award
the action with prejudice.
against the Company in excess of $350,000 (but not for legal
The Company's wholly owned subsidiary, North Country
fees paid by or on behalf of the Company or any other third
Environmental Services, Inc. ("NCES"), is a party to an appeal
party). The Company accrued a $215,000 reserve for this
against the Town of Bethlehem, New Hampshire ("Town")
claim during the year ended April 30, 1998.
before the New Hampshire Supreme Court. The appeal arises
29
On May 12, 1998, the Company filed suit in New York
from cross actions for declaratory and injunctive relief filed by
Supreme Court, Allegany County against the Town of
NCES and the Town to determine the permitted extent of
Angelica, New York seeking a temporary restraining order
NCES's landfill in the Town. The Grafton Superior Court ruled
and preliminary injunctive relief against the Town's
on February 1, 1999 that the Town could not enforce an
enforcement of a recently-enacted local law which would
ordinance purportedly prohibiting expansion of the landfill, at
prohibit the expansion of the Hyland landfill, would require the
least within 51 acres of NCES's 87 -acre parcel, based upon
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certain existing land-use approvals. As a result, NCES was
servicing of portable chemical toilets during the Woodstock
able to construct and operate "Stage II, Phase II" of the
Concert held in Rome, N.Y. in late July 1999. Woodstock '99,
landfill. If the Town were to prevail on appeal, the range of
LLC is seeking damages of up to $2,000,000. The Company
possible outcomes includes, without limitation, a new trial,
intends to vigorously defend the lawsuit and has filed its Answer
closure of the landfill, or remediation (i.e., removal) of Stage
and Counterclaim, along with extensive discovery requests.
II, Phase II. A separate appeal by two citizens groups of the
On May 11, 1994, Maine Energy filed a suit in a Maine
construction and operating approvals issued by the New
state court against United Steel Structures, Inc. under a
Hampshire Department of Environmental Services to NCES
warranty to recover the costs which were, or will be incurred
for Stage II, Phase II has been stayed by the New Hampshire
to replace the roof and walls of the Maine Energy tipping and
Waste Management Council pending the resolution of the
processing building. The judge in the case entered an order
appeal before the Supreme Court.
awarding Maine Energy approximately $3.3 million plus
On or about December 7, 1999, Earth Waste Systems,
interest from May 10, 1994, to the date of the filing of the
Inc., Kevin Elnicki and Frank Elnicki filed a civil lawsuit against
lawsuit, and court costs. The defendant filed an appeal on
the Company, two of the Company's officers and directors,
December 19, 1997. In February 1999, the appellate court
and a former employee in Vermont State Court, Rutland
reversed the trial court's verdict in favor of Maine Energy and
County. The plaintiffs allege that the Company and the
returned the case to the trial court, which ordered a new trial.
individual defendants breached contractual obligations and
The case has been settled in principle by a proposed payment
engaged in other wrongdoing related to, among other things,
of $800,000 to Maine Energy. Settlement documents are
a now-terminated scrap metal agreement. Plaintiffs are
being prepared.
seeking monetary damages, including punitive damages, in an
On April 1, 1999, William F. Kaiser, a former Executive
unspecified amount. On May 12, 2000, the Company filed a
Vice President and Treasurer of KTI, filed a lawsuit against
motion to dismiss the case on jurisdictional grounds, onwhich
KTI in the U.S. District Court for the District of New Jersey.
the Court has not yet ruled. The Company believes it has
The suit alleges breach of contract, wrongful termination,
meritorious defenses to this lawsuit.
breach of the implied covenant of good faith and fair dealing,
The Company has brought an action against the Town of
misrepresentation of employment terms and failure to pay
Hampden, Maine to setaside the Town's efforts to block the
wages, all arising out of Mr. Kaiser's employment agreement
Company's construction of approximately 3,100,000 tons of
with KTI. The suit also alleges that KTIinaccurately reported
30
capacity, for which the Company has been granted a permit
its financial results for the first quarter of 1998 and failed to
by the State of Maine. The action is pending in the Penobscot
properly disclose the change of control provision in Mr.
County Superior Court in Bangor, Maine.
Kaiser's employment agreement. Mr. Kaiser is seeking a
The Company is a defendant in a lawsuit brought by
declaratory judgment that, upon closing of the merger, the
Woodstock '99, LLC seeking damages for breach of two
change of control provision entitles him to receive a
service contracts entered into by the Company for the
severance payment of two years' salary, in the amount of
$320,000, and to exercise 132,000 unvested options for KTI
defend this suit and has filed an action to stay the arbitration
common stock. Mr. Kaiser is also seeking damages in the
in Mecklenburg County Superior Court in North Carolina. On
amount of $40,000 for an additional severance payment, as
October 11, 1999, the Superior Court denied KTI's request to
well as undisclosed damages for outstanding salary, bonus
stay the arbitration. The matter was subsequently settled by
and other payments and from his sale of approximately
the payment to Mr. Kuruc of approximately $190,000.
20,000 shares of KTI common stock resulting from KTI's
On April 6, 1999, Dennis McDonnell filed a lawsuit in a
allegedly inaccurate financial reports.
Florida state court against U.S. Fiber, Inc., a subsidiary of the
On April 15, 1999, C.H. Lee, a former employee of FCR
Company. Mr. McDonnell, a former employee of U.S. Fiber, is
and a former majority shareholder of Resource Recycling,
seeking a declaratory judgment regarding his rights and
Inc., commenced arbitration proceedings with the American
obligations under an employment non-competition agreement
Arbitration Association in Charlotte, North Carolina against
and an employment agreement that he previously had signed
KTI, FCR and FCR Plastics, Inc. in connection with the
with two corporations that subsequently were merged with
acquisition of Resource Recycling by FCR. Mr. Lee alleges
and into U.S. Fiber. The case was settled in 1999 by the
that FCR and FCR Plastics acted to frustrate the "earn-out"
payment of $30,000 to McDonnell.
provisions of the acquisition agreement and thereby
On or about April 26, 1999, Salvatore Russo filed an
precluded Mr. Lee from receiving, or alternatively, reduced,
action in the U.S. District Court, District of New Jersey
the sums to which he was entitled to under the agreement.
against KTI and two of its principal officers, Ross Pirasteh
He also alleges that FCR and FCR Plastics wrongfully
and Martin J. Sergi, purportedly on behalf of all shareholders
terminated his employment agreement. The claim for
who purchased KTI common stock from May 4, 1998 through
arbitration alleges direct charges in excess of $5.0 million and
August 14, 1998. Melanie Miller filed an identical complaint
requests punitive damages, treble damages and attorneys
on May 14, 1999. The complaints allege that the defendants
fees. KTI, FCR and FCR Plastics responded to the demand,
made material misrepresentations in KTI's quarterly report on
denying liability and filed a counterclaim for $1.0 million for
form 10-Q for the period ended March 31, 1998 in violation
misrepresentations. The arbitration proceeding was held. On
of Sections 10(b) and 20(a) of the Securities Exchange Act of
June 19, 2000, the arbitration panel determined that FCR
1934, as amended, concerning KTI's allowance for doubtful
was entitled to recover $7,000 from Mr. Lee.
accounts and net income. The Plaintiffs are seeking
On July 1, 1999, Michael P. Kuruc filed a demand for
undisclosed damages. The Company believes it has
arbitration with the American Arbitration Association in
meritorious defenses to these complaints. On June 15, 1999,
31
Charlotte, North Carolina, seeking approximately $1.0 million
Mr. Russo and Ms. Miller, together with Fransisco Munero,
for compensation due under an employment agreement that
Timothy Ryan and Steve Storch, moved to consolidate the
he alleges he has with KTI and losses allegedly suffered in
two complaints. This motion is currently pending in the
connection with his sale of KTI common stock. KTI believes
District Court of New Jersey.
that it has meritorious defenses, has retained counsel to
More information
Copies of prior annual
reports are available at
casella.com or by filling
out the pre-paid mailer at
the back of this 10K and
requesting them.
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On October 22, 1999, Kyle Trayner filed an action in
contract, breach of fiduciary duties and fraud and also claims
Putnam Superior Court in Connecticut against K-C
treble damages of $100 million based on alleged fraudulent
International seeking approximately $400,000 allegedly due
transfer of Maine Energy's assets. The notice also reserves
for compensation under an employment agreement and for
the right to seek punitive damages. Although the City of
payment on a promissory note issued by K-C International to
Biddeford, Maine has not filed a notice of claims, it has given
Mr. Trayner. The Company believes that it has meritorious
noticed that it will be initiating a suit to receive the residual
defenses to these claims. This suit was settled in July 2000
cancellation payments. Under the agreement, the aggregate
for $100,000.
amount to be paid upon the exercise of the put right is 18%
On May 11, 2000, The Company was granted a permit
of the fair market value of the equity of the partners in Maine
modification by the New Hampshire Department of
Energy, and such amount is required to be paid within 120
Environmental Services to increase the volume of solid waste
days after the exercise of the put by the respective parties
processed and stored at its GDS transfer station in Newport,
entitled thereto. The Companybelieves it has meritorious
New Hampshire. On or about June 12, 2000, a local
defenses to these claims.
environmental activist appealed the permit modification to the
On or about March 24, 2000, a complaint was filed in
New Hampshire Waste Management Council. The appeal
the United States DistrictCourt, District of New Jersey
claims that the modification will lead to adverse environmental
against the Company, KTI, and three of KTI's principal
impacts through higher waste flows and increased levels of
officers, Ross Pirasteh, Martin J. Sergi, and Paul A. Garrett.
incineration at a nearby waste-to-energy facility, that the
The complaint purported to be behalf of all shareholders who
Company has been the subject of "complaints" arising from
purchased KTI common stock from January 1, 1998 through
its New England and New York operations, and that the
April 14, 1999. The Complaint alleged that the defendants
Company has failed to demonstrate that the modification is
made unspecified misrepresentations regarding KTI's financial
consistent with the waste management plan of the local
condition during the class period in violation of Sections 10(b)
waste management district. The Company expects to seek a
and 20(a) of the Securities Exchange Act of 1934, as
dismissal of the appeal for the appellant's lack of standing.
amended. The plaintiffs seek undiscloseddamages. On or
On January 7, 2000, the City of Saco, Maine filed a
about April 6, 2000, the plaintiffs filed an amended class
notice of claims with the Company and Maine Energy
action complaint, which changes the class period covered by
claiming entitlement to certain "residual cancellation"
the complaint on behalf of all the defendants on July 21,
32
payments from Maine Energy under the waste handling
2000.
agreement dated June 7, 1991 among the Biddeford-Saco
The Company is a defendant in certain other lawsuits
Waste Handling Committee, Biddeford, Saco and Maine
alleging various claims incurred in the ordinary course of
Energy on the basis of the satisfaction of certain conditions,
business. The Company believes that none of the above
including the acquisition of KTI by the Company. The notice of
lawsuits, either individually or in the aggregate, will be settled
claims alleges that the payments due to Saco exceed $33
in a manner that will have a material impact toits financial
million, and claims damages in such amounts for breach of
condition, results of operations or cash flows.
On the internet
Current financial data,
stock quotes, and other
investment tools are
available by going to
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select just the information
you want to know and save
it for future reference.
Item 4. Submission of Matters to a
Vote of Security Holders
There were no matters submitted to a vote of the security
holders during the fiscal quarter ended April 30, 2000.
PART II
Item 5. Market for Registrant’s
Common Equity and
Related Shareholder
Matters
approximately 470 holders of record of the Company's Class
A Common Stock and two holders of record of the
Company'sClass B Common Stock.
The closing price for the Class A Common Stock on
July 21, 2000 was $12.313. For purposes of calculating the
aggregate market value of the shares of common stock of
the Company held by nonaffiliates, as shown on the cover
page of this report, it has been assumed that all the
outstanding shares were held by nonaffiliates except for the
shares held by directors and executive officers of the
Company. However, this should not be deemed to constitute
The Company's Class A Common Stock trades on the
an admission that all such persons are, in fact, affiliates of the
Nasdaq National Market under the symbol "CWST". The
Company, or that there are not other persons who may be
following table sets forth the high and low sale prices of the
deemed to be affiliates of the Company.
Company's Class A Common Stock for the periods indicated
No dividends have ever been declared or paid on the
as quoted on the Nasdaq National Market.
Company's capital stock and the Company does not
P E R I O D
Fiscal 1999
First quarter
Second quarter
Third quarter
Fourth quarter
Fiscal 2000
First quarter
Second quarter
Third quarter
Fourth quarter
H I G H
L O W
$31.50
$34.00
$39.00
$27.00
$27.250
$26.625
$19.313
$15.438
$24.375
$24.00
$25.00
$17.25
$19.063
$12.75
$13.125
$5.563
On July 21, 2000, the high and low sale prices per
anticipate paying any cash dividends on the Common Stock
share of the Company's Class A Common Stock as quoted
in the foreseeable future. The Company's credit facility
on the Nasdaq National Market were $12.313 and
restricts the payment of dividends.
$12.125,respectively. As of July 21, 2000 there were
33
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SALES OF UNREGISTERED SECURITIES
The following selected consolidated financial and operating
No unregistered securities of the Company were sold
data set forth below with respect to the Company's
by the Company during the fiscal year ended April 30, 2000
consolidated statements of operations and cash flows for the
that were not previously reported by the Company in its
fiscal years ended April 30, 1998, 1999 and 2000, and the
quarterly reports on Form 10-Q.
consolidated balance sheets as of April 30, 1999 and 2000
are derived from the Company's consolidated financial
Item 6. Selected Consoldated
Financing and Operating Data
statements included elsewhere in this Form 10-K, and the
consolidated statements of operations and cash flows data
C A S E L L A W A S T E S Y S T E M S , I N C .
Selected Consolidated Financial and Operating Data (In thousands, except share and per share data
F I S C A L Y E A R E N D E D A P R I L 3 0 , ( 1 )
Statement of Operations Data:
2000
1999
1998
1997
1996
$143,711
$103,520
$58,932
Revenues
Cost of operations
General and administrative
Depreciation and amortization
Merger-related costs
Loss on impairment of long-lived assets
Operating income
Interest expense, net
Other expense (income), net
Income before provision for income taxes, discontinued
$337,347
210,730
$182,557
108,874
42,116
40,211
1,490
-
42,800
15,034
2,165
26,616
25,725
1,951
-
19,391
5,564
(352)
89,582
20,926
19,959
290
1,571
11,383
7,373
(337)
operations and extraordinary items
25,601
14,179
4,347
Provision for income taxes
Discontinued operations
Extraordinary items, net
Net income (loss)
Accretion of preferred stock and put warrants
12,258
(1,662)
(631)
$11,050
-
7,531
(33)
-
$6,615
-
2,512
-
-
$1,835
(5,738)
34
Net income (loss) applicable to common stockholders
$11,050
$6,615
$(3,903)
Basic net income (loss) per common share
Basic weighted average common shares outstanding (2)
Diluted net income (loss) per common share
Diluted weighted average common shares outstanding (2)
$0.59
18,731
$0.57
19,272
$0.44
15,145
$0.41
16,019
$(0.41)
9,547
$0.41
9,547
65,460
16,139
15,371
-
-
35,878
10,416
9,206
-
-
6,550
3,432
4,940
846
764
681
-
-
$83
(8,530)
$(8,447)
$(1.52)
5,548
$(1.52)
5,548
-
3,168
264
148
-
326
$(210)
(2,967)
$(3,177)
$(0.71)
4,504
$(0.71)
4,504
C A S E L L A W A S T E S Y S T E M S , I N C .
Selected Consolidated Financial and Operating Data (In thousands, except share and per share data)
F I S C A L Y E A R E N D E D A P R I L 3 0 , ( 1 )
Statement of Operations Data:
2000
1999
1998
1997
1996
Other Operating Data:
Capital Expenditure
Other Data:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Adjusted EBITDA (3)
Balance Sheet Data:
Cash and cash equivalents
Working capital (deficit)
Property and equipment, net
Total assets
Long-term obligations, less current maturities
Redeemable preferred stock
Redeemable put warrants (4)
Total stockholders’ equity
$(69,455)
$(54,118)
$(29,416)
$(20,825)
$(12,293)
$41,585
$(156,343)
$119,390
$83,011
$8,864
$84,302
$379,086
$872,177
$440,804
-
-
$37,727
$(95,976)
$59,154
$45,116
$4,232
$6,117
$131,076
$282,129
$86,739
-
-
$21,079
$(61,263)
$40,673
$32,913
$3,327
$4,210
$91,451
$205,509
$83,681
-
-
$274,718
$147,978
$83,764
$17,280
$(56,495)
$40,116
$21,921
$2,838
$(4,554)
$75,626
$153,366
$82,187
$31,426
$ 400
$35,449
$ 9,840
$(29,547)
$19,164
$12,638
$1,938
(716)
$43,528
$74,650
$28,165
$22,896
$400
$25,451
for the fiscal years ended April 30, 1996 and 1997 and the
Company's Consolidated Financial Statements and Notes
consolidated balance sheet data as of April 30, 1996, 1997
thereto included elsewhere in this Form 10-K.
and 1998 are derived from the Company's consolidated
(1) The Company has restated its consolidated
financial statements, all of which have been audited by Arthur
statements of operations and consolidated statements of
Andersen LLP. During the year ended April 30, 2000, the
cash flows to reflect the mergers with Resource Waste
Company completed two mergers, which were accounted for
Systems, Inc. and Corning Community Disposal, Inc.
as poolings of interests. Accordingly, the Company's financial
consummated during the year ended April 30, 2000,
and operating data for all periods presented have been
accounted for using the pooling of interests method of
35
restated to reflect the financial position, results of operations
accounting. See Note 2 of the Notes to Consolidated
and cash flows of the merged entities as if they had been one
Financial Statements.
company. The data set forth below should be read in
(2) Computed on the basis described in Note 1 of
conjunction with the "Management's Discussion and Analysis
Notes to Consolidated Financial Statements.
of Financial Condition and Results of Operations" and the
On the internet
The Library contains
copies of recent press
releases, past and current
financial data, and links to
other waste and
environmental sites as well
as news, information, and
opinion.
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(3) Adjusted EBITDA is defined as operating income
1997, warrants to purchase 25,000 shares were exercised by
plus depreciation and amortization and loss on impairment of
the holder at $6.00 per share, and warrants to purchase 75,000
long-lived assets. Adjusted EBITDA does not represent, and
shares were called by the Company at $7.00 per share.
should not be considered as, an alternative to net income or
cash flows from operating activities, each as determined in
accordance with GAAP. Moreover, Adjusted EBITDA does
not necessarily indicate whether cash flow will be sufficient
Item 7. Managements Discussion and
Analysis of Financial Condition
and Results of Operations
for such items as working capital or capital expenditures, or
The following discussion of the Company's financial condition
to react to changes in the Company's industry or to the
and results of operations should be read in conjunction with
economy generally. The Company believes that adjusted
the Company's Consolidated Financial Statements and Notes
EBITDA is a measure commonly used by lenders and certain
thereto, and other financial Information included elsewhere in
investors to evaluate a company's performance in the solid
this Form 10-K.
waste industry. The Company also believes that adjusted
Casella Waste Systems, Inc. ("the Company") is a
EBITDA data may help to understand the Company's
regional, integrated solid waste services company that
performance because such data may reflect the Company's
provides collection, transfer, disposal and recycling services,
ability to generate cash flows, which is an indicator of its
generates steam and manufactures finished products utilizing
ability to satisfy its debt service, capital expenditure and
recyclable materials primarily throughout the eastern portion
working capital requirements. Because adjusted EBITDA is
of the United States and parts of Canada. The Company also
not calculated by all companies and analysts in the same
markets recyclable metals, aluminum, plastics, paper and
fashion, the adjusted EBITDA measures presented by the
corrugated cardboard all processed at its facilities and
Company may not be comparable to similarly titled measures
recyclables purchased from third parties. The Company also
reported by other companies. Therefore, in evaluating
generates electricity under its contracts with its two majority
adjusted EBITDA data, investors should consider, among
owned subsidiaries, Maine Energy Recovery Company LP
other factors: the non-GAAP nature of adjusted EBITDA data;
("Maine Energy") and Penobscot Energy Recovery Company
actual cash flows; the actual availability of funds for debt
LP ("PERC"), and through its wholly owned subsidiary, Timber
service; capital expenditures and working capital; and the
Energy Resource, Inc. ("TERI"). As of July 21, 2000, the
comparability of the Company's adjusted EBITDA data to
Company owned and/or operated five Subtitle D landfills, two
36
similarly-titled measures reported by other companies. For
landfills permitted to accept construction and demolition
more information about the Company's cash flows, see the
materials, 39 transfer stations, 40 recycling processing
Consolidated Statements of Cash Flows in the Company's
facilities, 39 solid and liquid waste collection divisions, 12
Consolidated Financial Statements.
power generation facilities, 3 finished products processing
(4) Represents warrants to purchase 100,000
facilities and its cellulose insulation joint venture.
shares of Class A Common Stock exercisable at $6.00 per
The Company's revenues have increased from $38.6
share. Pursuant to the terms of these warrants, in September
million for the fiscal year ended April 30, 1995, to $337.3
More information
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thinking, fill out and return
the pre-paid information
request mailer at the back
of this 10K.
million for the fiscal year ended April 30, 2000. From May 1,
factors include, without limitation, those outlined below in the
1994 through April 30, 2000, the Company acquired 167 solid
section entitled "Certain Factors That May Affect Future
waste collection, transfer and disposal operations, as well as
Results". The Company's failure to successfully address any
KTI, Inc. ("KTI") in December 1999. Under the rules of
of these factors could have a material adverse effect on the
purchase accounting the acquired companies' revenues and
Company's results of operations.
results of operations have been included together with those
of the Company from the actual dates of the acquisitions and
GENERAL
materially affect the period-to-period comparisons of the
The Company's revenues are attributable primarily to
Company's historical results of operations. During the year
fees charged to customers for solid and disposal waste
ended April 30, 2000, the Company acquired two waste
collection, landfill, waste-to-energy, transfer and recycling
collection, transfer and disposal operations in transactions
services. The Company derives a substantial portion of its
accounted for as poolings of interests. Under the rules
collection revenues from commercial, industrial and municipal
governing poolings of interests, the prior period and year to
services that are generally performed under service
date financial statements of the Company have been restated
agreements or pursuant to contracts with municipalities.
for all prior years to reflect the financial position, results of
The majority of the Company's residential collection
operations and cash flows of the merged entities as if they
services are performed on a subscription basis with individual
had been one company for all periods presented in the
households. Landfill, waste-to-energy facility and transfer
accompanying financial statements. This Form 10-K and other
customers are charged a tipping fee on a per ton basis for
reports, proxy statements, and other communications to
disposing of their solid waste at the Company's disposal
stockholders, as well as oral statements by the Company's
facilities and transfer stations. The majority of the Company's
officers or its agents, may contain forward-looking statements
disposal and transfer customers are under one to ten-year
within the meaning of Section 27A of the Securities Act and
disposal contracts, with most having clauses for annual cost
section 21E of the Securities Exchange Act, with respect to,
of living increases. Recycling revenues consist of revenues
among other things, the Company's future revenues, operating
from the sale of recyclable commodities, operations and
income, or earnings per share. Without limiting the foregoing,
maintenance contracts of recycling facilities for municipal
any statements contained in this Form 10-K that are not
customers, recyclable brokering operations and from the sale
statements of historical fact may be deemed to be forward-
of tire derived fuel. The Company, as a result of the KTI
looking statements, and the words "believes", "anticipates",
acquisition, provides integrated waste handling services,
37
"plans", "expects", and similar expressions are intended to
including processing and recycling of wood, paper, metals,
identify forward-looking statements. There are a number of
aluminum, plastics and glass, municipal solid waste
factors of which the Company is aware that may cause the
processing and disposal, specialty waste disposal, ash
Company's actual results to vary materially from those
residue recycling, brokerage of recycled materials and the
forecasted or projected in any such forward-looking statement,
manufacturing of finished products, primarily consisting of
certain of which are beyond the Company's control. These
cellulose insulation manufacturing, using recyclable materials.
The company is poised to
address a broad range of waste
management challenges on
behalf of public policymakers.
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38
Effective August 1, 2000, the Company contributed its
revenues as a percentage of revenues in fiscal 1999 is
cellulose insulation assets to a joint venture with Louisiana-
primarily attributable to the impact of the Company's
Pacific, and accordingly, will recognize half of the joint
acquisition of collection businesses during these periods, as
venture's net income/(loss). The Company emphasizes the
well as to internal growth through price and business volume
use of low-cost processing to add value to the waste
increases. The decrease in the Company's collection
products delivered and, in some cases, the generation of
revenues as a percentage of revenues in fiscal 2000 is
electric power and steam. The Company operates these non-
primarily attributable to the effects of the KTI acquisition.
core businesses under four reportable line of business
Significant recycling, finished products and brokerage
segments: Waste-to-Energy, Residential Recycling,
revenues were added through that acquisition. The decrease
Commercial Recycling and Finished Products. These line of
in the Company's landfill revenues and in the Company's
business segments are reflected in the Company's revenues
transfer revenues as a percentage of revenues in fiscal 1999
as follows: Waste-to-Energy is reflected under "disposal",
is mainly due to a proportionately greater increase in
Residential Recycling is reflected under "recycling",
collection and other revenues occurring as the result of
Commercial Recycling is reflected under "recycling" and
acquisitions in those areas; also, as the Company acquires
"brokerage", and Finished Products is reflected under its own
collection businesses from which it previously had derived
line. The Company's revenues are shown net of
transfer or disposal revenues, the acquired revenues are
intercompany eliminations. The Company typically establishes
recorded by the Company as collection revenues. The
its intercompany transfer pricing based upon prevailing
increase in the Company's landfill/disposal facilities revenues
market rates.
and the Company's transfer revenues as a percentage of
The table below shows, for the periods indicated, the
revenue in fiscal 2000 is primarily attributable to the effects
percentage of the Company's revenues attributable to
of the KTI acquisition.
services provided. The increase in the Company's collection
% O F R E V E N U E S
Y E A R E N D E D A P R I L 3 0 ,
1 9 9 8
Collection
Landfill/Disposal Facilities
Transfer
Recycling
Finished Products
Brokerage
Other
77.7%
10.3
4.9
5.5
0.0
0.0
1.6
1 9 9 9
80.5%
8.4
4.6
5.9
0.0
0.0
0.6
2 0 0 0
49.1%
15.1
6.4
7.5
4.2
15.1
2.6
Total Revenues
100.0%
100.0%
100.0%
On the internet
You can reveiw
consolidated statements of
operations for the current
and previous quarters as
well as other selected
financial data in Value.
Cost of operations includes labor, tipping fees paid to
which it may own or operate in the future. The Company has
third party disposal facilities, fuel, maintenance and repair of
provided and will in the future provide accruals for future
vehicles and equipment, worker's compensation and vehicle
financial obligations relating to closure and post-closure costs
insurance, the cost of purchasing materials to be recycled,
of its landfills (generally for a term of 30 years after final
third party transportation expense, district and state taxes,
closure of a landfill) based on engineering estimates of
host community fees and royalties. Landfill operating
consumption of permitted landfill airspace over the useful life
expenses also include a provision for closure and post-
of any such landfill. There can be no assurance that the
closure expenditures anticipated to be incurred in the future,
Company's financial obligations for closure or post-closure
and leachate treatment and disposal costs.
costs will not exceed the amount accrued and reserved or
General and administrative expenses include
amounts otherwise receivable pursuant to trust funds. The
management, clerical and administrative compensation and
Company routinely evaluates all such capitalized costs, and
overhead, professional services and costs associated with
expenses those costs related to projects not likely to be
the Company's marketing and sales force and community
successful. Internal and indirect landfill development and
relations expense.
acquisition costs, such as executive and corporate overhead,
Depreciation and amortization expense includes
public relations and other corporate services, are expensed
depreciation of fixed assets over the estimated useful life of
as incurred.
the assets using the straight-line method, amortization of landfill
airspace assets under the units-of-production method, and the
RESULTS OF OPERATIONS
amortization of goodwill and other intangible assets using the
The following table sets forth for the periods indicated the
straight line method. The amount of landfill amortization
percentage relationship that certain items from the
expense related to airspace consumption can vary materially
Company's Consolidated Financial Statements bear in relation
from landfill to landfill depending upon the purchase price and
to revenues.
landfill site and cell development costs. The Company
depreciates all fixed and intangible assets, excluding non-
REVENUES:
depreciable land, down to a zero net book value, and does not
Revenues increased approximately $154.7 million, or 84.7%
apply a salvage value to any of its fixed assets.
to $337.3 million in fiscal 2000 from $182.6 million in fiscal
Certain direct landfill development costs, such as
1999. Approximately $138.7 million of the increase was
engineering, permitting, legal, construction and other costs
attributable to the impact of businesses acquired throughout
39
directly associated with expansion of existing landfills, are
fiscal 1999 and fiscal 2000, including KTI, which was acquired
capitalized by the Company. Additionally, the Company also
in December 1999. In addition, the balance of the increase of
capitalizes certain third party expenditures related to pending
approximately $16.0 million was attributable to internal
acquisitions, such as legal and engineering. The Company will
volume and price growth, including the positive impact of
have material financial obligations relating to closure and post-
higher average recyclable commodity prices in fiscal 2000
closure costs of its existing landfills and any disposal facilities
compared to fiscal 1999.
Casella Class A common stock
is traded on the NASDAQ
market under the symbol CWST.
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% O F R E V E N U E S
Y E A R E N D E D A P R I L 3 0 ,
Revenues
Cost of operations
General and administrative
Merger related costs
Depreciation and amortization
Loss on impairment of long-lived assets
Operating income
Interest expense, net
Other (income) expenses, net
Provision for income taxes
Net income before discontinued operations
and extraordinary item
Adjusted EBITDA*
1 9 9 8
1 9 9 9
2 0 0 0
100.0%
100.0%
100.0%
62.3
14.6
0.2
13.9
1.1
7.9
5.1
(0.2)
1.7
1.3
22.9%
59.6
14.6
1.1
14.1
0.0
10.6
3.1
(0.2)
4.1
3.6
24.7%
62.5
12.5
0.4
11.9
0.0
12.7
4.5
0.6
3.6
4.0
24.6%
*See discussion and computation of adjusted EBITDA below
Fiscal Year Ended Arril 30, 2000 versus April 30, 1999
COST OF OPERATIONS:
GENERAL AND ADMINISTRATIVE:
Cost of operations increased approximately $101.8 million or
General and administrative expenses increased approximately
93.5% to $210.7 million in fiscal 2000 from $108.9 million in
$15.5 million, or 58.2% to $42.1 million in fiscal 2000 from
fiscal 1999. Cost of operations as a percentage of revenues
$26.6 million in fiscal 1999. General and administrative
increased to 62.5% in fiscal 2000 from 59.6% in fiscal 1999.
expenses as a percentage of revenues decreased to 12.5%
The increase in cost of operations as a percentage of
in 2000 from 14.6% in fiscal 1999. The decrease in general
revenues was primarily the result of acquiring KTI's recyclable
and administrative expenses as a percentage of revenues
brokerage operations, which carry high cost of operations as a
was primarily the result of acquiring KTI's recyclable
40
percentage of revenues (approximately 90%). Brokerage
brokerage operations, which carry low general and
comprised approximately 15% of the Company's revenues in
administrative costs as a percentage of revenues
fiscal 2000, versus 0% in fiscal 1999. Additionally, the finished
(approximately 6%). The general and administrative cost
products line of business carries a lower operating margin
savings from acquiring KTI also contributed to the lower
than the Company's core solid waste business operations.
general and administrative expenses as a percentage of
revenues in fiscal 2000.
MERGER-RELATED COSTS:
Merger-related costs consist of legal, engineering, accounting
and other costs associated with the various poolings of
interests consummated during fiscal 1999 and fiscal 2000.
Four such transactions occurred during fiscal 1999 and two
occurred in fiscal 2000, resulting in a decrease of $0.5 million
or 23.6%. Merger related costs as a percentage of revenues
decreased to 0.4% in fiscal 2000 from 1.1% in fiscal 1999.
DEPRECIATION AND AMORTIZATION:
Depreciation and amortization expenses increased $14.5
million, or 56.4%, to $40.2 million in fiscal 2000 from $25.7
million in fiscal 1999. Depreciation and amortization expenses
as a percentage of revenue decreased to 11.9% in fiscal 2000
from 14.1% in fiscal 1999. The decrease in depreciation and
amortization expenses as a percentage of revenues was the
result of the Company's acquisition of KTI. KTI carried lower
depreciation expense as a percentage of revenues
(approximately 7%) than the Company (approximately 14.5%).
INTEREST EXPENSE, NET:
Net interest expense increased approximately $9.4 million, or
167.9% to $15.0 million in fiscal 2000 from $5.6 million in
OTHER (INCOME)/EXPENSE (INCLUDING
MINORITY INTEREST AND EQUITY IN LOSS ON
UNCONSOLIDATED SUBSIDIARY):
Other (income)/expense increased $2.6 million, or 650%, to
$2.2 million in fiscal 2000 from $(0.4) million in fiscal 1999.
Other (income)/expense, as a percentage of revenues,
increased to 0.6% in fiscal 2000 from (0.2%) in fiscal 1999.
The other (income)/expense in fiscal 2000 is primarily
attributable to the loss on sale of certain assets in the fourth
quarter of fiscal 2000, and the equity loss on KTI's investment
in Oakhurst.
PROVISION FOR INCOME TAXES:
Provision for income taxes increased $4.8 million, or 64.0%,
to $12.3 million in fiscal 2000 from $7.5 million in fiscal 1999.
Provision for income taxes, as a percentage of revenues,
decreased to 3.6% in fiscal 2000 from 4.1% in fiscal 1999.
The increase is primarily due to the Company's increase in
profitability in fiscal 2000 compared to fiscal 1999. An
additional factor causing provision for income taxes, as a
percentage of pre-tax net income to vary was poolings of
interest resulting in prior period restatements of entities not
liable for federal income tax due to Subchapter S Status.
fiscal 1999. Interest expense, net, as a percentage of
FISCAL YEAR ENDED APRIL 30, 1999 VERSUS
revenues, increased to 4.5% in 2000 from 3.1% in fiscal
1999. The increase in net interest expense as a percentage of
revenues is primarily attributable to two factors. They are as
follows: (i) higher average debt balance in fiscal 2000, versus
fiscal 1999 and (ii) the Company closed on a new $450 million
senior credit facility in December 1999 that raised the
Company's borrowing cost by approximately 200 basis points
over the Company's previous senior credit facility.
APRIL 30, 1998
REVENUES:
Revenues increased $38.9 million, or 27.1%, to $182.6
million in fiscal 1999 from $143.7 million in fiscal 1998.
41
Approximately $29.2 million of the increase was attributable
to the impact of businesses acquired throughout fiscal 1998
and fiscal 1999. In addition, approximately $9.6 million of the
increase was attributable to internal volume and price growth
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(net of the negative impact of lower average recycled
interests consummated during fiscal 1998 and 1999. One
commodity prices in fiscal 1999 compared to fiscal 1998).
such transaction occurred during fiscal 1998 and four occurred
COST OF OPERATIONS:
during fiscal 1999, resulting in an increase of $1.7 million or
573%. Merger-related costs as a percentage of revenue
Cost of operations increased approximately $19.3 million, or
increased from 0.2% in fiscal 1998 to 1.1% in fiscal 1999.
21.5%, to $108.9 million in fiscal 1999 from $89.6 million in
fiscal 1998, an increase corresponding primarily to the
DEPRECIATION AND AMORTIZATION:
Company's revenue growth described above. Cost of
operations as a percentage of revenues decreased to 59.6% in
fiscal 1999 from 62.3% in fiscal 1998. The decrease was
primarily the result of: (i) productivity improvements in the
Company's collection operations as a result of better route
density from acquisitions, routing efficiencies through route
audits and front-end loader vehicle conversions completed
throughout fiscal 1998 and 1999; (ii) margin improvements
because of price increases in fiscal 1998 and 1999 and (iii)
higher landfill internalization due to the Hyland landfill becoming
operational in July 1998.
GENERAL AND ADMINISTRATIVE:
General and administrative expenses increased approximately
$5.7 million, or 27.3%, to $26.6 million in fiscal 1999 from
$20.9 million in fiscal 1998. General and administrative
expenses as a percentage of revenues remained constant at
14.6% from fiscal 1998 to fiscal 1999 due primarily to an
increase in management information systems spending and
public company expenditures for a full year in fiscal 1999
compared to a partial year in fiscal 1998. This increase was
Depreciation and amortization expense increased $5.7 million,
or 28.5%, to $25.7 million in fiscal 1999 from $20.0 million in
fiscal 1998. As a percentage of revenues, depreciation and
amortization expense increased to 14.1% in fiscal 1999 from
13.9% in fiscal 1998. The increase in depreciation and
amortization expense as a percentage of revenues was
primarily the result of: (i) higher rates of disposal internalization
due to the opening of the Hyland landfill, (ii) higher landfill
volumes in fiscal 1999 compared to fiscal 1998, resulting in
higher landfill amortization expense, and (iii) front-end loader
conversions resulting in double container depreciation charges
at certain locations.
LOSS ON IMPAIRMENT OF LONG-LIVED ASSETS:
The Company recognized losses on impairment of long-lived
assets in the fourth quarter of fiscal 1998 in the amount of
$1.6 million. The impairment charges were non-cash charges to
write down the assets of the Company's waste tire processing
facility in Eliot, Maine and the Grasslands composting facility in
Malone, New York to their fair market values as of April 30,
42
substantially offset by two acquisitions accounted for using the
1998.
pooling of interest method. These acquisitions had relatively low
general and administrative costs as a percentage of revenue.
INTEREST EXPENSE, NET:
MERGER-RELATED COSTS:
24.3%, to $5.6 million in fiscal 1999 from $7.4 million in fiscal
Merger-related costs consists of legal, engineering, accounting
1998. This decrease primarily reflects decreased average
and other costs associated with the various poolings of
indebtedness in fiscal 1999, resulting from debt payoffs
Net interest expense decreased approximately $1.8 million, or
following the public stock offerings in October 1997 and July
The Company has a $450 million revolving line of credit
1998, from the increased use of the Company's Class A
with a group of banks for which BankBoston, N.A. is acting
Common Stock in effecting acquisitions, and from improved
as agent. This line of credit consists of a $300 million Senior
collections efforts. Days sales in accounts receivable was
Secured Revolving Credit Facility ("Revolver") and a $150
45.3 at April 30, 1999 compared to 50.3 at April 30, 1998.
million Senior Secured Delayed Draw Term "B" Loan ("Term
The Company capitalized a total of $0.5 million in interest
Loan"). This line of credit is secured by all assets of the
expense in fiscal 1999, compared to a total of $.1 million in
Company, including the Company's interest in the equity
fiscal 1998.
OTHER (INCOME) EXPENSE, NET:
Net other (income) expense was not material to the
Company's results of operations in fiscal 1998 and 1999.
PROVISION FOR INCOME TAXES:
Provision for income taxes increased approximately $5.0
million, or 200.0%, to $7.5 million in fiscal 1999 from $2.5
million in fiscal 1998. This increase reflects the Company's
increase in profitability in fiscal 1999 compared to fiscal 1998.
The other primary factors causing income tax expense as a
percentage of pre-tax net income to vary were: (i) the recording
of a fixed asset impairment charge in fiscal 1998 which was
non-deductible for income tax purposes and (ii) poolings of
interests resulting in prior period restatements of entities not
liable for federal income tax due to Subchapter S status.
securities of its subsidiaries. The Revolver matures in
December 2004 and the Term Loan matures in December
2006. Funds available to the Company under the line of credit
were $71.1 million at April 30, 2000.
On June 28, 2000, the Company entered into an
agreement with Berkshire Partners pursuant to which it
agreed to sell Berkshire redeemable convertible preferred
stock, which is convertible into the Company's Class A
Common Stock at $14.00 per share. The Company expects
to raise approximately $55.8 million in the transaction, which
is expected to close in August 2000.
The Company believes that its cash provided internally
from operations together with the Company's available credit
facilities and the preferred stock financing should enable it to
meet its needs for working capital for the next twelve months.
Net cash provided by operations for the fiscal years
ended April 30, 2000 and April 30, 1999 was $41.6 million
LIQUIDITY AND CAPITAL RESOURCES
and $37.7 million, respectively. The increase was primarily
The Company's business is capital intensive. The Company's
due to the increase in the Company's net income for the
capital requirements include acquisitions, fixed asset
fiscal year 2000, net of non-cash depreciation and
purchases and capital expenditures for landfill development,
amortization expense, which was partially offset by an
43
cell construction, and site and cell closure. Because of these
increase in net working capital.
needs the Company has in the past had working capital
Net cash provided by operations in fiscal 1999
deficits. The Company had positive net working capital of
increased to $37.7 million from $21.1 million in fiscal 1998
$84.3 million at April 30, 2000 compared to $6.1 million
primarily due to increases in net income, net of non-cash
positive net working capital at April 30, 1999.
depreciation and amortization expense.
Our residential collection and
recycling operations provide an
important and necessary
community service – helping
communities meet their public
responsibility to provide safe
and environmentally sound
waste management.
For fiscal 2000 and fiscal 1999, cash used in investing
general economy in this geographic region and other factors
activities was $156.3 million and $96.0 million, respectively. The
affecting the region such as state regulations and severe
increase in investing activities reflects the Company's capital
weather conditions. The Company is unable to forecast or
expenditure and capital needs for acquisitions which have
determine the timing and/or the future impact of a sustained
increased significantly, reflecting the Company's rapid growth by
economic slowdown.
acquisition and development of revenue producing assets. The
Company's cash needs to fund investing activities are expected
to increase further as the Company continues to complete
YEAR 2000 ISSUES
As of the date of this filing, the Company has not incurred any
acquisitions. For fiscal 1998, cash used in investing activities was
significant business disruptions as a result of Year 2000 issues.
$61.3 million.
For fiscal 2000 and fiscal 1999, the Company's financing
NEW ACCOUNTING PRONOUNCEMENTS
activities provided cash of $119.4 million and $59.2 million,
In June 1999, the Financial Accounting Standards Board
respectively. Net cash provided by financing activities was $40.7
("FASB") issued Statement of Financial Accounting Standards
million in the fiscal year ended April 30, 1998. The net cash
No. 137, "Accounting for Derivative Instruments and Hedging
provided by financing activities in the fiscal years ended April 30,
Activities-Deferral of the Effective Date of FASB Statement No.
2000 and 1999 primarily reflects the net proceeds of the
133". SFAS No. 137 amends FASB Statement of Financial
Company's secondary public stock offering and borrowings on
Accounting Standards No. 133, "Accounting for Derivative
the Company's credit facility, offset by repayments. Net cash
Instruments and Hedging Activities", by deferring the effective
provided by financing activities in fiscal 1998 reflects primarily
date of SFAS No. 133 to fiscal years beginning after June 15,
bank borrowings and seller subordinated notes, less principal
2000. SFAS No. 133 establishes accounting and reporting
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payments on debt.
INFLATION AND PREVAILING ECONOMIC
CONDITIONS
To date, inflation has not had a significant impact on the
Company's operations. Consistent with industry practice, most
of the Company's contracts provide for a pass through of certain
costs, including increases in landfill tipping fees and, in some
44
cases, fuel costs. The Company therefore believes it should be
able to implement price increases sufficient to offset most cost
increases resulting from inflation. However, competitive factors
may require the Company to absorb at least a portion of these
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes
in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. The Company
will adopt SFAS No. 133 beginning May 1, 2001. The Company
has yet to quantify the impacts of adopting SFAS No. 133 on its
financial statements and has not determined the timing or
method of adoption. However, SFAS No. 133 could increase
volatility in earnings and other comprehensive income.
cost increases, particularly during periods of high inflation.
ADJUSTED EBITDA
The Company's business is located in the eastern United
Adjusted EBITDA represents operating income (earnings before
States. Therefore, the Company's business, financial condition
interest and taxes, or "EBIT") plus depreciation and amortization
and results of operations are susceptible to downturns in the
expense and loss on impairment of long-lived assets.
On the internet
Links to past and future
SEC filings can and will be
found in Value under
Financial Tools and in
the Library.
Adjusted EBITDA is not a measure of financial performance
the KTI acquisition we assume certain obligations to finance
under generally accepted accounting principles, but is
and support a tire recycling joint venture. We cannot assure
provided because the Company understands that certain
you that the joint venture will achieve projected financial
investors use this information when analyzing the financial
results or not divert management resources.
position and performance of the Company.
CERTAIN FACTORS THAT MAY AFFECT
FUTURE RESULTS
The following important factors, among others, could cause
OUR INCREASED LEVERAGE MAY IMPACT OUR
ABILITY TO MAKE FUTURE ACQUISITIONS.
actual results to differ materially from those indicated by
As a result of the acquisition of KTI and the increase in our
forward-looking statements made in this Form 10-K and
credit facility, our indebtedness has increased substantially.
presented elsewhere by management from time to time.
This increased indebtedness has resulted in increased
WE MAY EXPERIENCE DIFFICULTIES INTEGRATING
results. In addition, the aggregate amount of indebtedness has
KTI'S OPERATIONS AND ASSETS.
limited and may continue to limit the Company's ability to incur
We acquired KTI on December 14, 1999. Since that time, we
additional indebtedness, and thereby may limit the Company's
have experienced difficulties in integrating the operations of
ongoing acquisition program.
borrowing costs, which have adversely impacted our operating
KTI and these difficulties have caused us to revise our
publicly disclosed projections. There can be no assurance
that we will not continue to experience difficulties in
WE MAY NOT BE SUCCESSFUL IN MAKING
ACQUISITIONS, WHICH COULD AFFECT OUR
integrating KTI's operations effectively and that the acquisition
FUTURE GROWTH.
will result in the synergies and other benefits anticipated by
Our strategy envisions that a substantial part of our future
the two companies. Among other matters, in connection with
growth will come from making acquisitions consistent with our
F I S C A L Y E A R E N D E D A P R I L 3 0 ( R E S T AT E D )
Operating income
Depreciation and amortization
Loss on impairment of long-lived assets (1)
1998
$11,383
19,959
1,571
1999
$19,391
25,725
0
2000
$42,800
40,211
0
45
Adjusted EBITDA
$32,913
$45,116
$83,011
EBITDA as a percentage of revenues
22.9%
24.7%
24.6%
(1) See Note 1 of Notes to Consolidated Financial Statements. Analysis of the factors contributing to the change in EBITDA
is included in the discussions above.
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strategy. There can be no assurance that we will be able to
additional capital resources on terms satisfactory to us, if at
identify suitable acquisition candidates and, once identified, to
all, in order to meet our capital requirements. We also believe
negotiate successfully their acquisition at a price or on terms
that a significant factor in our ability to close acquisitions will
and conditions favorable to us, or to integrate the operations
be the attractiveness of our Class A Common Stock as
of such acquired businesses with our operations. Certain of
consideration for potential acquisition candidates. This
these acquisitions may be of significant size and may include
attractiveness may, in large part, be dependent upon the
assets that are outside our geographic territories or are
relative market price and capital appreciation prospects of our
ancillary to our core business strategy. In addition, due to the
Class Common Stock compared to the equity securities of
increased consolidation of the solid waste industry and our
our competitors. The recent declines in the market price of our
current size, we cannot assure you that we will be able to
Class A Common Stock could materially adversely affect our
make acquisitions in the future at a rate consistent with our
acquisition program.
historical growth rate.
WE ARE DEPENDENT ON THE MEMBERS OF OUR
SUBJECT US TO FINES, PENALTIES AND
SENIOR MANAGEMENT TEAM.
LIMITATIONS ON OUR ABILITY TO EXPAND
ENVIRONMENTAL REGULATIONS COULD
We are highly dependent upon the services of the members
We are subject to potential liability and restrictions under
of our senior management team, the loss of any of whom
environmental laws. Our waste-to-energy and manufacturing
may have a material adverse effect on our business, financial
facilities are subject to regulations limiting discharges of
condition and results of operations. In addition, our future
pollution into the air and water, and the solid waste operations
success depends on our continuing ability to identify, hire,
are subject to a wide range of Federal, state and, in some
train, motivate and retain highly trained personnel. We may be
cases, local environmental and land use restrictions. If we are
in default under our credit facility if either John Casella or
not able to comply with the requirements that apply to a
James Bohlig ceases to be employed by us.
particular facility, we could be subject to fines and penalties,
and we may be required to spend large amounts to bring an
OUR ABILITY TO MAKE ACQUISITIONS IS DEPENDENT
operation into compliance or to temporarily or permanently
ON THE AVAILABILITY OF ADEQUATE CASH AND
THE ATTRACTIVENESS OF OUR STOCK PRICE.
stop an operation that is not permitted under the law. Those
costs or actions could have a material adverse effect upon
We anticipate that any future business acquisitions will be
our business, financial condition and results of operations.
financed through cash from operations, borrowings under our
Environmental and land use laws also can have an
bank line of credit, the issuance of shares of our Class A
impact on whether our operations can expand and, in the
Common Stock and/or seller financing. There can be no
case of our solid waste operations, may dictate those
assurance that we will have sufficient existing capital
geographic areas from which we must, or, from which we may
resources, that our stock price will be sufficiently attractive for
not, accept waste. The waste management industry has been
use in an acquisition or that we will be able to raise sufficient
and likely will continue to be subject to regulation, as well as
to attempts to regulate the industry through new legislation.
sites or expanding the permitted capacity of any of our current
Those regulations and laws also may limit the overall size and
landfills once their remaining disposal capacity has been
daily waste volume that may be accepted by a solid waste
consumed.
operation. If we are not able to expand or otherwise operate
one or more of our facilities profitably because of limits
OUR RESULTS OF OPERATIONS COULD BE
imposed under environmental laws, we may be required to
ADVERSELY AFFECTED BY CHANGING PRICES OR
increase our utilization of disposal facilities owned by third
MARKET REQUIREMENTS FOR RECYCLABLE
parties, and if so, our business, financial condition and results
MATERIALS
of operation could suffer a material adverse effect.
Our results of operations may be materially adversely affected
We have grown through acquisitions, and we have tried
by changing purchase or resale prices or market requirements
to evaluate and address environmental risks and liabilities
for recyclable materials. Our recycling business involves the
presented by newly acquired businesses as we have identified
purchase and sale of recyclable materials, some of which are
them. It is possible that some liabilities, including ones that
priced on a commodity basis. The resale and purchase prices
may exist only because of the past operations of an acquired
of, and market demand for, recyclable materials, particularly
business, may prove to be more difficult or costly to address
wastepaper, plastic and ferrous and aluminum metals, can be
than we anticipate. It is also possible that government officials
volatile due to numerous factors beyond our control. These
responsible for enforcing environmental laws may believe an
changes have in the past contributed, and may continue to
issue is more serious than we would expect, or that we will fail
contribute, to significant variability in our period-to-period
to identify or fully appreciate a historic liability before we
results of operations.
become legally responsible to address it. Some of the legal
Some of our subsidiaries involved in the recycling
sanctions to which we could become subject could cause us
business use long-term supply contracts with customers with
to lose a needed permit, or prevent us from or delay us in
floor price arrangements to minimize the commodity risk for
obtaining or renewing permits to operate our facilities. The
recyclable materials, particularly wastepaper and aluminum
number, size and nature of those liabilities could have a
metals. Under these contracts, our subsidiaries obtain a
material adverse effect on our business, financial conditions
guaranteed minimum floor price for the recyclable materials
and results of operations.
along with a commitment to receive additional amounts if the
Our operating program depends on our ability to operate
current market price rises above the minimum price. These
and expand the landfills we own and lease and to develop new
contracts are generally with large domestic companies, which
47
landfill sites. Several of our landfills are subject to local laws
use the recyclable materials in their manufacturing processes.
purporting to regulate their expansion and other aspects of
Any failure to continue to secure long-term supply contracts
their operations. There can be no assurance that the laws
with minimum price arrangements, or a breach by customers
adopted by municipalities in which our landfills are located will
of one or more of these contracts could reduce our recycling
not have a material adverse effect on our utilization of our
revenues and have a material adverse effect on our business,
landfills or that we will be successful in obtaining new landfill
financial condition and results of operations.
In an activity where the capital
and skill requirements are high,
not every company is willing or
able to make the necessary
investments to respond to
competition in the marketplace.
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THE SEASONALITY OF OUR REVENUES COULD
vertically in these markets. We cannot assure you that we will
ADVERSELY IMPACT OUR FINANCIAL CONDITION
complete enough acquisitions in other markets to lessen our
Future seasonal fluctuations in our revenues could have a
regional geographic concentration.
material adverse effect on our business, financial condition
and results of operations. Our revenues have historically been
lower during the months of November through March. This
seasonality reflects the lower volume of solid waste during
WE MAY NOT BE ABLE TO EFFECTIVELY COMPETE
IN THE HIGHLY COMPETITIVE SOLID WASTE
SERVICES INDUSTRY
the late fall, winter and early spring months resulting primarily
The solid waste services industry is highly competitive, is
from the volume of solid waste relating to construction and
undergoing a period of increasingly rapid consolidation, and
demolition activities decreasing substantially during the winter
requires substantial labor and capital resources. Some of the
months in the northeastern United States; and decreased
markets in which we compete or will likely compete are
tourism in Vermont, Maine, New Hampshire and eastern New
served by one or more of the large national or multinational
York during the winter months, which tends to lower the
volume of solid waste generated by commercial and
restaurant customers, which is only partially offset by the
winter ski industry.
solid waste companies, as well as numerous regional and
local solid waste companies. Intense competition exists not
only to provide services to customers, but also to acquire
other businesses within each market. Some of our
Since some of our operating and fixed costs remain
competitors have significantly greater financial and other
constant throughout the fiscal year, our operating income is
seasonally impacted. In addition, particularly harsh weather
resources than us. From time to time, competitors may
reduce the price of their services in an effort to expand
conditions could result in increased operating costs for some
market share or to win a competitively bid municipal contract.
of our operations.
These practices may either require us to reduce the pricing of
our services or result in our loss of business. As is generally
OUR BUSINESS IS GEOGRAPHICALLY
the case in the industry, municipal contracts are subject to
CONCENTRATED AND IS THEREFORE SUBJECT TO
periodic competitive bidding. There can be no assurance that
REGIONAL ECONOMIC DOWNTURNS
we will be the successful bidder to obtain or retain these
Our operations and customers are principally located in the
contracts. If we are unable to compete with larger and better
eastern United States. Therefore, our business, financial
capitalized companies, or to replace municipal contracts lost
48
condition and results of operations are susceptible to regional
through the competitive bidding process with comparable
economic downturns and other regional factors, including
contracts or other revenue sources within a reasonable time
state regulations and severe weather conditions. In addition,
period, our business, financial condition and results of
as we expand in our existing markets, opportunities for
operations could be materially adversely affected.
growth within these regions will become more limited. The
In our solid waste disposal markets, we also compete
costs and time involved in permitting and the scarcity of
with operators of alternative disposal and recycling facilities
available landfills will make it difficult for us to expand
and with counties, municipalities and solid waste districts that
More information
A complete, convenient,
tear-out guide to our
internet resources is
located at the end of this
10K.
maintain their own waste collection, recycling and disposal
necessary to respond to peak demands, is expected to be
operations. These entities may have financial advantages
approximately $1.2 million. We have closed the third steam
because user fees or similar charges, tax revenues and tax-
generating plant, which sold all of its output to a customer
exempt financing may be more available to them than to us.
which has filed for bankruptcy. The termination of the contract
Our finished products divisions and our insulation
with du Pont or any of the significant customers who
manufacturing joint venture with Louisiana-Pacific compete
purchase steam from our subsidiary or its subsidiary could
with other parties, some of which have substantially greater
have a material adverse effect on our business, financial
resources than we do, which they could use for product
condition and results of operations.
development, marketing or other purposes to our detriment.
OUR RESULTS OF OPERATIONS AND FINANCIAL
ONE OF OUR SUBSIDIARIES SELLS ITS ENTIRE
CONDITION MAY BE NEGATIVELY AFFECTED IF
OUTPUT TO A FEW CUSTOMERS AND LACKS THE
WE INADEQUATELY ACCRUE FOR CLOSURE AND
CAPACITY TO MEET ALL OF ITS COMMITMENTS
POST-CLOSURE COSTS
One of our subsidiaries operates three steam generating
We have material financial obligations relating to closure and
plants, one of which produces steam for a facility owned by
post-closure costs of our existing landfills and will have
E. I. du Pont de Nemours and Company under a five-year
material financial obligations with respect to any disposal
contract expiring on May 30, 2003. Du Pont has significantly
facilities which we may own or operate in the future. In
reduced operations at this facility, and has the option to
addition to the landfills we currently operate, we own four
terminate the contract upon payment of a termination fee.
unlined landfills which are not currently in operation. We have
The second plant produces steam for an industrial park.
provided and will in the future provide accruals for financial
Approximately 85% of the steam produced by the plant is
obligations relating to closure and post-closure costs of our
purchased by one customer under a contract that may not be
owned or operated landfills, generally for a term of 30 years
terminated by the customer except for cause, and the
after final closure of a landfill. We cannot assure you that our
balance is sold to ten customers under contracts which
financial obligations for closure or post-closure costs will not
provide that our subsidiary may elect not to supply steam.
exceed the amount accrued and reserved or amounts
Currently, maximum contracted capacity for all customers for
otherwise receivable pursuant to trust funds established for
steam exceeds the maximum rated capacity that may be
this purpose. Such a circumstance could result in
produced by this plant. Actual demand, however, has not
unanticipated charges and have a material adverse effect on
49
exceeded the maximum rated capacity. If actual demand
our business, financial condition and results of operations.
grows, the plant may need to install equipment to respond to
peak demands, as well as equipment which may be
necessary to allow the plant to meet stricter air quality
standards, which may be adopted in the near future. The cost
of this air quality equipment, not including the equipment
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WE COULD BE PRECLUDED FROM ENTERING
expenditures and advances, net of any portion thereof that
INTO CONTRACTS OR OBTAINING PERMITS IF WE
we estimate will be recoverable, through sale or otherwise,
ARE UNABLE TO OBTAIN THIRD PARTY FINANCIAL
relating to (a) any operation that is permanently shut down or
ASSURANCE TO SECURE OUR CONTRACTUAL
OBLIGATIONS
has not generated or is not expected to generate sufficient
cash flow, (b) any pending acquisition that is not
Municipal solid waste collection and recycling contracts,
consummated and (c) any landfill or development project that
obligations associated with landfill closure and the operation
is not expected to be successfully completed. We have
and closure of waste-to-energy facilities may require
incurred such charges in the past.
performance or surety bonds, letters of credit or other means
of financial assurance to secure our contractual performance.
OUR CLASS B COMMON STOCK HAS TEN VOTES
If we are unable to obtain the necessary financial assurance in
PER SHARE AND IS HELD EXCLUSIVELY BY JOHN
sufficient amounts or at acceptable rates, we could be
W. CASELLA AND DOUGLAS R. CASELLA
precluded from entering into additional municipal solid waste
The holders of our Class B Common Stock are entitled to ten
collection contracts or from obtaining or retaining landfill
votes per share and the holders of our Class A Common
operating permits. Any future difficulty in obtaining insurance
Stock are entitled to one vote per share. At July 21, 2000, an
could also impair our ability to secure future contracts
aggregate of 988,200 shares of our Class B Common Stock,
conditioned upon the contractor having adequate insurance
representing 9,882,000 votes, were outstanding, all of which
coverage. Accordingly, our failure to obtain financial
were beneficially owned by John W. Casella, our President
assurance bonds, letters of credit or other means of financial
and Chief Executive Officer, or by his brother, Douglas R.
assurance or to maintain adequate insurance could have a
material adverse effect on our business, financial condition
and results of operations.
Casella, a Director. Based on the number of shares of
common stock outstanding at July 21, 2000, the shares of
our Class A Common Stock and Class B Common Stock
held by John W. Casella and Douglas R. Casella represent
WE MAY BE REQUIRED TO WRITE-OFF
approximately 34.7% of the aggregate voting power of our
CAPITALIZED CHARGES IN THE FUTURE, WHICH
stockholders. Consequently, John W. Casella and Douglas R.
COULD ADVERSELY AFFECT OUR EARNINGS
Casella will be able to substantially influence all matters for
Any charge against earnings could have a material adverse
stockholder consideration.
50
effect on our earnings and the market price of our Class A
Common Stock. In accordance with generally accepted
accounting principles, we capitalize certain expenditures and
advances relating to our acquisitions, pending acquisitions,
Item 7a. Quantitative and
Qualitative Discloser
About Market Risk
landfills and development projects. From time to time in future
The Company is subject to interest rate fluctuation risk with
periods, we may be required to incur a charge against
regards to its variable rate revolving credit facility. To modify the
earnings in an amount equal to any unamortized capitalized
risk from these possible interest-rate fluctuations, the
Throughout our service areas,
we are helping to build the
infrastructure that will support
communities, industries, and
business’ efforts to meet their
waste management challenges.
Company enters into hedging transactions that have been
consolidated balance sheets of Casella Waste Systems, Inc.
authorized pursuant to the Company's policies and procedures.
(a Delaware corporation) and subsidiaries as of April 30, 1999
The Company does not use financial instruments for trading
and 2000, and the related consolidated statements of
purposes and is not a party to any leveraged derivatives.
operations, redeemable preferred stock, redeemable put
In April 2000, the Company entered into two three-year
warrants and stockholders' equity and cash flows for each of
interest rate swap agreements (the "Swap Agreements") with
the three years ended April 30, 2000. These financial
two banks. The purpose was to effectively convert a portion
statements are the responsibility of the Company's
of the Company's interest rate exposure on advances under
management. Our responsibility is to express an opinion on
its revolving credit facility from a floating rate to a fixed rate.
these financial statements based on our audits.
The Swap Agreements effectively fix the Company's interest
We conducted our audits in accordance with auditing
rate on the notional amount of $100 million, $50 million is
standards generally accepted in the United States. Those
fixed at 6.875% and $50 million is swapped in a collar
standards require that we plan and perform the audit to obtain
arrangement with interest between 6.28% and 9.0%. Net
reasonable assurance about whether the financial statements
monthly payments or monthly receipts under the Swap
are free of material misstatement. An audit includes
Agreements are recorded as adjustments to interest
examining, on a test basis, evidence supporting the amounts
expense. The Company also has an existing, five year Swap
and disclosures in the financial statements. An audit also
Agreement which fixes the Company's interest rate on the
includes assessing the accounting principles used and
notional amount $45 million. The rate is fixed at 5.2% and
significant estimates made by management, as well as
expires in January 2001. In addition, in the event of
evaluating the overall financial statement presentation. We
nonperformance by the counterparty, the Company would be
believe that our audits provide a reasonable basis for our
exposed to interest rate risk on the entire balance in the
opinion.
event the variable interest rate paid was to exceed the fixed
In our opinion, the financial statements referred to above
rate paid under the terms of the Swap Agreements. If interest
present fairly, in all material respects, the financial position of
rates changed by 100 basis points, the impact on the
Casella Waste Systems, Inc. and subsidiaries as of April 30,
Company would be an increase or decrease in annual interest
1999 and 2000, and the results of their operations and their
expense of approximately $1.5 million.
cash flows for each of the three years ended April 30, 2000,
in conformity with accounting principles generally accepted in
Item 8. Financial Statements and
Supplementary Data
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS
To the Stockholders and Board of Directors of Casella Waste
Systems, Inc.: We have audited the accompanying
the United States.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Boston, Massachusetts
June 30, 2000
51
0
0
0
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52
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Balance Sheets (in thousands)
A S S E T S
A P R I L 3 0 , 1 9 9 9
A P R I L 3 0 , 2 0 0 0
CURRENT ASSETS:
Cash and Cash Equivalents
Restricted Cash
Accounts Receivable - trade, net of allowance
for doubtful accounts of $1,430 and $6,247
Accounts Receivable - Other
Notes Receivable - Officers/Employees
Prepaid Expenses
Inventory
Investments
Deferred Income Taxes
Other Current Assets
Total Current Assets
PROPERTY AND EQUIPMENT, at Cost:
Land and Land Held for Investment
Landfills
Landfill Development
Buildings and Improvements
Machinery and Equipment
Rolling Stock
Containers
Less - Accumulated Depreciation and Amortization
Property, Plant and Equipment, net
OTHER ASSETS:
Intangible Assets, net
Restricted Cash
Investment in OCI/New Heights
Other Non-Curent Assets
$4,232
626
22,815
-
-
3,528
889
-
1,016
3,188
36,294
7,258
50,736
7,559
24,727
23,653
57,487
26,679
198,099
(67,023)
131,076
104,199
4,834
-
5,726
114,759
$282,129
The accompanying notes are an integral part of these consolidated financial statements.
$8,864
17,609
80,720
14,429
2,095
5,929
10,986
5,156
12,730
10,299
168,817
11,784
64,254
10,353
45,494
230,852
78,740
34,761
476,238
(97,152)
379,086
294,283
10,881
14,695
4,415
324,274
$872,177
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Balance Sheets (in thousands except for per share data)
L I A B I L I T I E S A N D S T O C K H O L D E R ’ S E Q U I T Y
A P R I L 3 0 , 1 9 9 9
A P R I L 3 0 , 2 0 0 0
CURRENT LIABILITIES:
Current Maturities of Long-Term Debt
Current Maturities of Capital Lease Obligations
Accounts Payable
Accrued Payroll and Related Expenses
Accured Intrest
Accured Income Taxes
Accrued Closure and Postclosure Costs, Current Portion
Deferred Revenue
Other Current Liabilities
Total Current Liabilities
Long-Term Debt, Less Current Maturities
Capital Lease Obligations, Less Current Maturities
Deferred Income Taxes
Accured Closure and Post-Closure Costs, Less Current Maturities
Minority Interests
Other Long-Term Liabilities
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Class A Common Stock -
Authorized - 100,000,000 Shares, $0.01 par value Issued and Outstanding -
14,869,000 and 22,215,000 Shares as of April 30, 1999 and 2000, respectively
Class B Common Stock -
Authorized - 1,000,000 Shares, $.01 par value 10 Votes per Share
Issued and Outstanding -988,000 Shares as of April 30, 1999 and 2000
Accumulated Other Comprehensive Loss
Additional Paid-In Capital
Retained Earnings/(Accumulated Deficit)
Total Stockholders’ Equity
$5,344
402
17,883
857
167
-
330
2,648
2,546
30,177
86,739
1,454
5,710
9,677
-
394
149
10
-
154,733
(6,914)
147,978
$8,367
788
43,335
5,536
3,994
3,766
259
3,317
15,153
84,515
440,804
3,748
30,948
12,017
16,378
9,049
222
10
(305)
270,655
4,136
274,718
53
The accompanying notes are an integral part of these consolidated financial statements.
$282,129
$872,177
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statement of Operations (in thousands)
F I S C A L Y E A R E N D E D A P R I L 3 0 ,
1 9 9 8
1 9 9 9
2 0 0 0
0
0
0
2
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-
0
1
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Revenues
Operating Expenses:
Cost of Operations
General and Administration
Depreciation and Amortization
Merger-Related Costs
Loss on Impairment of Long-Lived Assets
Operating Income
Other (Income)/Expense:
Interest Income
Interest Expense
Minority Interest
Equity in Loss of OCI/New Heights
Other Expense/(Income)
Other Expenses, net
Income from Continuing Operations Before Income Taxes,
Discontinued Operations and Extraordinary Item
Provision for Income Taxes
Income from Continuing Operations Before
Discontinued Operations and Extraordinary Item
Discontinued Operations:
Loss from Discontinued Operations, net of Income Taxes
Estimated Loss on Disposal of Discontinued Operations,
net of Income Taxes
$143,711
$182,557
$337,347
89,582
20,926
19,959
290
1,571
132,328
11,383
(265)
7,638
-
-
(337)
7,036
4,347
2,512
1,835
-
-
-
1,835
(5,738)
108,874
26,616
25,725
1,951
-
163,166
19,391
(77)
5,641
-
-
(352)
5,212
14,179
7,531
210,730
42,116
40,211
1,490
-
294,547
42,800
(1,307)
16,341
502
1,062
(601)
17,199
25,601
12,258
6,648
13,343
(33)
-
-
6,615
-
(269)
(1,393)
(631)
11,050
-
54
Extraordinary Item - Early Extinguishment of Debt, net of Income Taxes
Net Income
Accretion of Preferred Stock and Put Warrants
Net Income/(Loss) Applicable to Common Stockholders
$(3,903)
$(6,615)
$11,050
The accompanying notes are an integral part of these consolidated financial statements.
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statements of Operations (in thousands except for share and per share data)
F I S C A L Y E A R E N D E D A P R I L 3 0 ,
1 9 9 8
1 9 9 9
2 0 0 0
Earnings Per Common Share:
Basic:
Income/(Loss) from Continuing Operations
Before Discontinued Operations and Extraordinary Item
$(0.41)
Loss on/from Discontinued Operations
Extraordinary Item
Net Income/(Loss) per Common Share
Basic Weighted Average Common Shares Outstanding
-
-
$(0.41)
9,547
Diluted:
Income/(Loss) from Continuing Operations
Before Discontinued Operations and Extraordinary Item
$(0.41)
Loss on/from Discontinued Operations
Extraordinary Item
Net Income/(Loss) per Common Share
Diluted Weighted Average Common Shares Outstanding
-
-
$(0.41)
9,547
The accompanying notes are an integral part of these consolidated financial statements.
$0.44
-
-
$0.44
15,145
$0.41
-
-
$0.41
16,019
$0.71
$(0.09)
$(0.03)
$0.59
18,731
$0.69
$(0.09)
$(0.03)
$0.57
19,272
55
0
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0
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C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statement of Redeemable Preferred Stock, Redeemable Put Warrants and Stockholders Equity (deficit) (in thousands)
R E D E E M A B L E P R E F E R R E D S T O C K
SERIES A
SERIES B
SERIES C
SERIES D
Number
of Shares
Liquidation
Value
Number
of Shares
Liquidation
Value
Number
of Shares
Liquidation
Value
Number
of Shares
Liquidation
Value
Balance, April 30, 1997
517
$3,638
1,295
$9,118
424
$2,221
1,922
$16,449
Issuance of Class A Common Stock-Net of Issuance Costs
Issuance of Class A Common Stock in Various Acquistions-
Net of Retirements
Issuance of Class A Common Stock in Connection
with Exercise of Warrants/Options
Exercise and Call of Redeemable Put Warrants
Accretion of Preferred Stock and Issuance Costs
707
1,770
749
2,287
Conversion of Convertible Preferred Stock
(517)
(4,345)
(1,295)
(10,888)
(1,922)
(18,736)
Redemption of Manditorily Redeemable Preferred Stock
(424)
(2,970)
Conversion of Class B Common into Class A
Equity Transactions/Adjustments to Poolings
Net Income
Balance, April 30, 1998
Issuance of Class A Common Stock-Net of Issuance Costs
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Tax Benefit of Stock Options Exercised
Equity Transactions/Adjustments to Poolings
Net Income
Balance, April 30, 1999
Issuance of Class A Common Stock and Stock Options -
KTI Acquisition
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Equity transactions of Majority- Owned Subsidiary
-
$ -
-
$ -
-
$ -
-
$ --
-
$ -
-
$ -
-
$ -
-
$ -
56
Comprehensive Income
Net Income
Unrealized Loss on Securites
Total Comprehensive Income
Balance, April 30, 2000 -
-
$ -
-
$ -
-
$ -
-
$ -
The accompanying notes are an integral part of these consolidated financial statements.
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statement of Redeemable Preferred Stock, Redeemable Put Warrants and Stockholder’s Equity (in thousands)
S T O C K H O L D E R S ’ E Q U I T Y
CLASS A COMMON STOCK
CLASS B COMMON STOCK
Redeemable Put Warrants
# of Shares
Par Value
# of Shares
Par Value
Balance, April 30, 1997
$400
5,093
Issuance of Class A CommonStock-Net of Issuance Costs
Issuance of Class A Common Stock in Various Acquistions-
Net of Retirements
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Exercise and Call of Redeemable Put Warrants
(400)
3,000
103
192
25
$51
30
1
2
1,000
$10
Accretion of Preferred Stock and Issuance Costs
Conversion of Convertible Preferred Stock
Redemption of Manditorily Redeemable Preferred Stock
Conversion of Class B Common into Class A
Equity Transactions/ Adjustments to Poolings
Net Income
3,733
38
12
(12)
Balance, April 30, 1998
$ --
12,158
$122
988
$10
Issuance of Class A Common Stock-Net of Issuance Costs
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Tax Benefit of Stock Options Exercised
Equity Transactions/Adjustments to Poolings
Net Income
2,061
582
68
20
6
1
Balance, April 30, 1999
$ --
14,869
$149
988
$10
Issuance of Class A Common Stock and Stock Options -
KTI Acquisition
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Equity transactions of Majority- Owned Subsidiary
Comprehensive Income
Net Income
Unrealized Loss on Securites
Total Comprehensive Income
7,152
194
72
1
57
Balance, April 30, 2000
$ --
22,215
$222
988
$10
0
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C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statement of Redeemable Preferred Stock, Redeemable Put Warrants and Stockholder’s Equity (in thousands)
S T O C K H O L D E R S ’ E Q U I T Y
Balance, April 30, 1997
$11,661
$(8,099)
$ -
$3,623
Additional
Paid-in Capital
Retained Earnings
(Accumulated Deficit)
Accumulated Other
Comprehensive (Loss)-
Total Stock
Holders' Equity
Issuance of Class A Common Stock-Net of Issuance Costs
48,428
Issuance of Class A Common Stock in Various Acquistions-
Net of Retirements
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Exercise and Call of Redeemable Put Warrants
Accretion of Preferred Stock and Issuance Costs
1,599
716
250
Conversion of Convertible Preferred Stock
33,932
Redemption of Manditorily Redeemable Preferred Stock
Conversion of Class B Common into Class A
Equity Transactions/Adjustments to Poolings
(188)
Net Income
(225)
(5,513)
(764)
1,835
48,458
1,600
718
25
(5,513)
33,970
-
-
(952)
1,835
Balance, April 30, 1998
$96,398
$(12,766)
$ -
$83,764
Issuance of Class A Common Stock-Net of Issuance Costs
52,211
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
Tax Benefit of Stock Options Exercised
Equity Transactions/Adjustments to Poolings
Net Income
3,805
2,220
99
(763)
6,615
52,231
3,811
2,220
(663)
6,615
Balance, April 30, 1999
$154,733
$(6,914)
$ -
$147,978
Issuance of Class A Common Stock and Stock Options -
KTI Acquisition
Issuance of Class A Common Stock in Connection with
Exercise of Warrants/Options
58
Equity transactions of Majority- - Owned Subsidiary
113,788
859
1,275
Comprehensive Income
Net Income
Unrealized Loss on Securites
Total Comprehensive Income
11,050
(305)
113,860
860
1,275
-
-
10,745
Balance, April 30, 2000
$270,655
$ 4,136
$(305)
$274,718
The accompanying notes are an integral part of these consolidated financial statements.
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statements of Cash Flows (in thousands)
S T O C K H O L D E R S ’ E Q U I T Y
Cash Flows from Operating Activities:
Net Income
$1,835
$6,615
$11,050
FISCAL YEAR ENDED APRIL 30,
1998
1999
2000
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities -
Depreciation and Amortization
Loss on/from Discontinued Operations -
Extraordinary Item
Loss on Impairment of Long-Lived Assets
(Gain)/Loss on Sale of Fixed Assets
Provision for Deferred Income Taxes
Minority Interest
Non-Cash Employee Compensation
Changes in Assets and Liabilities, net of Effects of Acquisitions -
Accounts Receivable
Deferred Income Taxes
Accounts Payable
Accrued Closure and Post-Closure Costs
Other Current Assets and Liabilities
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Acquisitions, Net of Cash Acquired
Additions to Property and Equipment
Proceeds from Sale of Equipment
Restricted Funds
Advances to Unconsolidated Subsidiary
Other
19,959
-
1,571
(335)
2,237
-
60
(1,819)
(474)
1,486
(1,763)
(1,678)
19,244
21,079
(35,793)
(29,416)
1,182
698
-
2,066
25,725
33
-
-
3
1,647
-
-
(1,754)
(1,089)
4,349
2,099
99
31,112
37,727
(33,336)
(54,118)
587
(1,291)
-
(7,818)
40,211
1,662
631
-
840
4,094
502
-
(14,186)
7,845
(2,498)
2,269
(10,385)
30,535
41,585
(81,838)
(69,455)
1,317
(375)
(5,580)
(412)
59
Net Cash Used in Investing Activities
(61,263)
(95,976)
(156,343)
CONTINUED
C A S E L L A W A S T E S Y S T E M S , I N C . A N D S U B S I D I A R I E S
Consolidated Statements of Cash Flows (in thousands)
S T O C K H O L D E R S ’ E Q U I T Y
CONTINUED
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock
Proceeds from Equity Transactions of Majority- Owned Subsidiary
Proceeds from Exercise of Stock Warrants/Options
Equity Transactions of Pooled Entities
Call of Redeemable Put Warrants
Redemption of Series C Preferred Stock
Proceeds from Long-Term Borrowings
Principal Payments on Long-Term Debt
1998
48,455
-
869
(887)
(525)
(2,970)
162,356
(166,625)
FISCAL YEAR ENDED APRIL 30,
1999
52,231
-
3,811
193
-
-
73,728
(70,809)
2000
-
1,275
860
-
-
-
423,955
(306,700)
Net Cash Provided by Financing Activities
40,673
59,154
119,390
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
489
2,838
905
3,327
4,632
4,232
Cash and Cash Equivalents, End of Year
$3,327
$4,232
$8,864
The accompanying notes are an integral part of these consolidated financial statements.
0
0
0
2
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Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for -
Interest
Income Taxes
Supplemental Disclosures of Non-Cash Investing
and Financing Activities:
Summary of Entities Acquired in Purchase Business Combinations
$7,988
$672
$6,288
$6,952
$12,514
$1,876
60
Fair Market Value of Assets Acquired
Common Stock and Stock Options Issued
Cash Paid, net
$42,554
(1,603)
(35,793)
$36,210
-
(33,336)
$519,054
(113,860)
(81,838)
Liabilities Assumed and Notes Payable to Sellers
$5,158
$2,874
$323,356
The accompanying notes are an integral part of these consolidated financial statements.
1. ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Casella Waste Systems, Inc. ("the Company") is a regional,
integrated solid waste services company that provides
collection, transfer, disposal and recycling services, generates
steam and manufactures finished products utilizing recyclable
materials primarily throughout the eastern portion of the
United States and parts of Canada. The Company also
markets recyclable metals, aluminum, plastics, paper and
corrugated cardboard all processed at its facilities and
recyclables purchased from third parties. The Company also
generates electricity under its contracts with its two majority
owned subsidiaries, Maine Energy Recovery Company LP
("Maine Energy") and Penobscot Energy Recovery Company
LP ("PERC"), and through its wholly owned subsidiary, Timber
reclassifications have been made to the prior period financial
statements to conform to the current presentation.
(b) use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the amounts reported in the financial statements and
accompanying notes and the disclosure of contingent assets
and liabilities. Actual results could differ from those
estimates.
(c) Revenue Recognition
The Company recognizes collection, transfer, recycle and
disposal revenues as the services are provided. Certain
customers are billed in advance and, accordingly, recognition
Energy Recovery, Inc. ("TERI"). As of April 30, 2000, the
of the related revenues is deferred until the services are
Company owned and/or operated five Subtitle D landfills, two
provided.
landfills permitted to accept construction and demolition
materials, 39 transfer stations, 40 recycling processing
Revenues from the sale of electricity to local utilities by
the Company's majority owned waste-to-energy facilities (see
facilities, 39 solid and liquid waste collection divisions, 12
Note 3) are recorded at the contract rate specified in each
power generation facilities, three finished products
entity's power purchase agreement as it is delivered.
processing facilities and an interest in its cellulose insulation
Revenues from the sale of recycled materials and
joint venture with Louisiana Pacific.
finished products are recognized upon shipment. Rebates to
A SUMMARY OF THE COMPANY'S SIGNIFICANT
are recorded upon the sale of such recyclables to third
ACCOUNTING POLICIES FOLLOWS:
parties and are included in revenues. Revenues for
certain municipalities based on sales of recyclable materials
(a) Principles of Consolidation
processing of recyclable materials are recognized when the
The consolidated financial statements include the accounts of
related service is provided.
the Company and its wholly owned and majority owned
Revenues from brokerage are recognized when the
61
subsidiaries. All significant intercompany transactions and
goods are shipped to their end market.
balances have been eliminated in consolidation. The
(d) Fair Value of Financial Instruments
consolidated financial statements and accompanying notes
The Company's financial instruments consist primarily of cash
have also been restated to reflect material acquisitions
and cash equivalents, trade receivables, investments in
accounted for as poolings-of-interests. Certain
closure trust funds, trade payables and debt instruments.
0
0
0
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62
The book values of cash and cash equivalents, trade
(g) Inventory
receivables, investments in closure trust funds and trade
Inventory consists primarily of secondary fibers, recyclables
payables approximate their respective fair values. The
ready for sale and certain finished products and is stated at
Company's debt instruments that are outstanding as of April
the lower of cost (first-in, first-out) or market. Inventory
30, 2000 have carrying values that approximate their
consisted of finished goods of approximately $889 and $9,003
respective fair values. See Note 4 for the terms and carrying
at April 30, 1999 and 2000 respectively, and raw materials of
As a company, we’re committed
to providing leadership in
addressing the increasingly
complex local challenges of
waste management.
values of the Company's various debt instruments.
$1,983 at April 30, 2000.
(e) Cash and Cash Equivalents
(h) Investments
The Company considers all highly liquid investments
The Company owns warrants to purchase 542,786 shares of
purchased with maturities of three months or less to be cash
common stock in Bangor-Hydro Electric, PERC's sole
equivalents.
(f) Restricted Cash
customer for electricity. In accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Restricted cash consists of cash held in trust on deposit with
Securities," the Company classifies these securities as
various banks that support the Company's financial assurance
"available for sale," and records them at their fair value. The
obligations for its facilities' closure and post-closure costs and
change in the fair value of the securities is adjusted through
cash held in trust, all of which are available, under certain
other comprehensive income/(loss).
circumstances, for current operating expenses, debt service,
(i) Property, Plant and Equipment
capital improvements and repairs and maintenance in
Property and equipment are recorded at cost, less
accordance with certain contractual obligations. Restricted
accumulated depreciation and amortization. The Company
cash available for current operating and debt service purposes
provides for depreciation and amortization using the straight-
is classified as a current asset. A summary of restricted cash
line method by charges to operations in amounts that allocate
is as follows:
the cost of the assets over their estimated useful lives as
follows:
A P R I L 3 0 ,
1 9 9 9
2 0 0 0
Short Term
Long Term
Total
Short Term
Long Term
Total
Debt Service
Landfill Closure
Other Facilities Closure
Facility Maintenance and
Operations
Other
Total
$0
626
0
0
0
$0
4,834
$0
5,460
0
0
0
0
0
0
$4,478
154
0
$5,677
3,566
410
$10,155
3,720
410
12,612
1,228
365
0
13,840
365
$626
$4,834
$5,460
$17,609
$10,881
$28,490
A S S E T C L A S S I F I C AT I O N
E S T I M AT E D U S E F U L L I F E
Buildings and improvements
Machinery and equipment
Rolling stock
Containers
10-35 years
2-15 years
1-12 years
2-12 years
The cost of maintenance and repairs is charged to
landfills' permitted and probable to be permitted capacity.
operations as incurred. Depreciation expense for the years
Units-of-production amortization rates are determined
ended April 30, 1998, 1999 and 2000 was $10,776, $14,151
annually for each of the Company's operating landfills. The
and $25,046 respectively.
rates are based on estimates provided by the Company's
Capitalized landfill costs include expenditures for land
engineers and accounting personnel and consider the
and related airspace, permitting costs and preparation costs.
information provided by surveys, which are performed at
Landfill permitting and preparation costs represent only direct
least annually.
costs related to these activities, including legal, engineering
(j) Investment in OCI/New Heights
and construction. Landfill preparation costs include the costs
As part of its acquisition of KTI (see Note 2), the Company
of construction associated with excavation, liners, site berms
obtained a 35% ownership in Oakhurst Company, Inc.
and the installation of leak detection and leachate collection
("OCI"), which it accounts for on the equity basis of
systems. Interest is capitalized on landfill permitting and
accounting. OCI reported revenues of $20.5 million and net
construction projects and other projects under development
loss of $5.5 million for its fiscal year ended February 29,
while the assets are undergoing activities to ready them for
2000. At April 30, 2000, among other businesses, OCI has a
their intended use. The interest capitalization rate is based on
50% ownership in New Heights Recovery and Power LLC
the Company's weighted average cost of indebtedness.
("New Heights"), a fully integrated waste tire and glass
Interest capitalized for the years ended April 30, 1998, 1999
recycling and power generation facility in Ford Heights, IL.
and 2000 was $136, $530 and $640 respectively.
In addition to its ownership of OCI, the Company had a
Management routinely reviews its investment in operating
commitment to loan up to $17 million in the form of a note
landfills, transfer stations and other significant facilities to
receivable to OCI for the purpose of allowing OCI to fund its
determine whether the costs of these investments are
equity commitment and investment ($17 million) in New
realizable.
Heights. The Company had loaned $14.7 million to OCI
63
Landfill permitting, acquisition and preparation costs,
through April 30, 2000, including $5,580 loaned by the
excluding the estimated residual value of land, are amortized
Company since the date of the KTI acquisition. These funds
as landfill airspace is consumed. In determining the
were used by New Heights for capital improvements
amortization rate for these landfills, preparation costs include
necessary to upgrade the facility into a fully integrated
the total estimated costs to complete construction of the
recycling and power generation facility, to fund certain
On the internet
You can find links to other
waste management and
environmental sites in the
Library under Transfer
Station.
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acquisitions of waste tire collection companies and to fund
closed landfills. The Company, based on input from its
operating costs and working capital needs of the facility.
engineers, accounting personnel and consultants, estimates
The New Heights facility has been in development and
its future cost requirements for closure and post-closure
start-up for over one year, as of April 30, 2000, and has
monitoring and maintenance for solid waste landfills based on
sustained substantial operating losses. OCI's ability to repay
its interpretation of the technical standards of the U.S.
its note to the Company is predicated upon the success of
Environmental Protection Agency's Subtitle D regulations and
the New Heights facility.
the air emissions standards under the Clean Air Act as they
In addition, the Company has directly loaned $1.5 million
are being applied on a state-by-state basis. Closure and post-
to New Heights, which is secured by a First Mortgage on the
closure monitoring and maintenance costs represent the
facility, and has an operations and management service
costs related to cash expenditures yet to be incurred when a
agreement for the operations and management of the New
landfill facility ceases to accept waste and closes.
Heights facility.
Accruals for closure and post-closure monitoring and
The equity investment in OCI, the notes receivable from
maintenance requirements in the U.S. consider final capping
OCI and the note receivable from New Heights are together
of the site, site inspection, groundwater monitoring, leachate
reflected as an investment in unconsolidated subsidiary on
management, methane gas control and recovery, and
the accompanying Consolidated Balance Sheets. During May
operation and maintenance costs to be incurred during the
2000, OCI agreed to transfer 12.5% direct ownership interest
period after the facility closes. Certain of these environmental
in New Heights to the Company, in return for the Company
costs, principally capping and methane gas control costs, are
agreeing to complete OCI's remaining funding commitment to
also incurred during the operating life of the site in
New Heights.
accordance with the landfill operation requirements of Subtitle
(k) Accrued Closure and Post-closure Costs
D and the air emissions standards. Reviews of the future cost
Accrued closure and post-closure costs include the current
requirements for closure and post-closure monitoring and
and noncurrent portion of accruals associated with obligations
maintenance for the Company's operating landfills by the
for closure and post-closure of the Company's operating and
Company's engineers, accounting personnel and consultants
A P R I L 3 0 ,
64
Goodwill
Covenants not to compete
Customer lists
Deferred debt acquisition costs and other
Less--accumulated amortization
1 9 9 9
$98,827
13,956
594
2,125
115,502
11,303
$104,199
2 0 0 0
$289,574
14,291
562
8,359
312,786
18,503
$294,283
The value of a diverse team of
companies and talents is our
ability to use our collective
resources to create local
solutions.
are performed at least annually and are the basis upon which
impairment whenever events or changes in circumstances
the Company's estimates of these future costs and the
indicate that the remaining estimated useful life of goodwill or
related accrual rates are revised. The Company provides
other intangible assets might warrant revision or that the
accruals for these estimated costs as the remaining permitted
balance may not be recoverable. The Company evaluates
airspace of such facilities is consumed.
possible impairment by comparing estimated future cash
The states in which the Company operates require a
flows, before interest expense and on an undiscounted basis,
certain portion of these accrued closure and post-closure
and the net book value of assets including goodwill and other
obligations to be funded at any point in time. Accordingly, the
intangible assets. If undiscounted cash flows are insufficient
Company has placed $5,640 and $3,720 at April 30, 1999
and 2000, respectively, in restricted investment accounts to
fund these future obligations.
In addition, the Company has been required to post a
surety bond or bank letter of credit to secure its obligations
to close its landfills in accordance with environmental
regulations. At April 30, 2000, the Company had provided
one letter of credit totaling $10,436, expiring on April 15,
2001, to secure the Company's landfill closure obligations.
(l) Intangible Assets
Intangible assets at April 30, 1999 and 2000 consist of the
following:
Goodwill is the cost in excess of fair value of identifiable
assets of acquired businesses and is amortized using the
straight-line method over periods not exceeding 40 years.
Covenants not to compete and customer lists are amortized
using the straight-line method over their estimated useful lives,
typically no more than 10 years. Deferred debt acquisition
costs are capitalized and amortized over the life of the related
debt using the effective interest method. Amortization Expense
for the years ended April 30, 1998, 1999 and 2000 was
$9,182, $11,574 and $15,165, respectively.
to recover assets, further analysis is performed in order to
determine the amount of the impairment. An impairment loss
would then be recorded equal to the amount by which, the
carrying amount of the assets exceeds their fair market value.
Fair market value is usually determined based on the present
value of estimated expected future cash flows using a
discount rate commensurate with the risks involved. In
instances where goodwill is identified with assets that are
subject to an impairment loss, the carrying amount of the
identified goodwill is reduced before making any reduction to
the carrying amounts of other impaired long-lived assets.
During 1998, the Company recorded a charge of $1,571
to reduce certain assets (including goodwill), to their
estimated fair value. There were no such impairments in 1999
and 2000.
(m) Income Taxes
The Company records income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes". Under SFAS No.
109, deferred income taxes are recognized based on the
expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and
liabilities, calculated using currently enacted tax rates.
65
In accordance with SFAS No. 121,"Accounting for the
(n) Earnings Per Share
Impairment of Long-Lived Assets and for Long-Lived Assets to
Basic earnings per share is computed by dividing net income
Be Disposed Of", the Company continually reviews for
by the weighted average number of common shares
As a group of skilled
professionals, we have the
resources and vision to operate
within a strict regulatory
framework.
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Y E A R E N D E D A P R I L 3 0 ,
1 9 9 8
1 9 9 9
2 0 0 0
Number of Shares Outstanding, End of Period:
Class A Common Stock
Class B Common Stock
Effect of Weighting the Average Shares Outstanding
12,158
988
14,869
988
22,215
988
During the Period
(3,599)
(712)
(4,472)
Basic Shares Outstanding
Potentially Dilutive Shares
9,547
0
15,145
874
18,731
541
Diluted Shares Outstanding
9,547
16,019
19,272
outstanding during the period. Diluted earnings per share is
("FASB") issued Statement of Financial Accounting Standards
based on the combined weighted average number of common
No. 137, "Accounting for Derivative Instruments and Hedging
shares and potentially dilutive common shares which include,
Activities-Deferral of the Effective Date of FASB Statement
where appropriate, the assumed exercise of employee stock
No. 133". SFAS No. 137 amends FASB Statement of
options and exercise of convertible debt. In computing diluted
Financial Accounting Standards No. 133, "Accounting for
earnings per share, the Company utilizes the treasury stock
Derivative Instruments and Hedging Activities", by deferring
method with regard to employee stock options and the
the effective date of SFAS No. 133 to fiscal years beginning
"if converted" method with regard to its convertible debt.
after June 15, 2000. SFAS No. 133 establishes accounting
The following is a reconciliation of the ending number of
and reporting standards requiring that every derivative
shares outstanding with the number of shares used in the
instrument (including certain derivative instruments embedded
calculation of basic and diluted earnings per share.
in other contracts) be recorded in the balance sheet as either
Potentially dilutive shares are excluded from diluted
an asset or liability measured at its fair value. SFAS No. 133
shares outstanding for the year ended April 30, 1998 due to
requires that changes in the derivative's fair value be
their impact being anti-dilutive. The number of potentially
recognized currently in earnings unless specific hedge
dilutive shares excluded from the earnings per share
accounting criteria are met. The Company will adopt SFAS
66
calculation was 3,045,000 for the year ended April 30, 1998.
No. 133 beginning May 1, 2001. The Company has yet to
Additionally, for the years ended April 30, 1999 and 2000,
quantify the impacts of adopting SFAS No. 133 on its
options to purchase 211,000 and 2,033,000 common share
financial statements and has not determined the timing or
were excluded from the calculation of potentially dilutive
method of adoption. However, SFAS No. 133 could increase
shares because their impact was anti-dilutive.
volatility in earnings and other comprehensive income.
(o) New Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board
2. BUSINESS COMBINATIONS
Operations from the dates of acquisition, and the purchase
(a) Transactions Recorded as Purchases
On December 14, 1999, the Company consummated its
acquisition of KTI, a publicly traded solid waste handling
company. KTI specializes in solid waste disposal and
On the internet
recycling, and operates manufacturing facilities utilizing
A complete set of
customizable financial tools
is available in Value.
recycled materials. All of KTI's common stock was acquired in
exchange for 7,152,157 shares of the Company's Class A
Common Stock.
prices have been allocated to the net assets acquired based
on fair values at the dates of acquisition, with the residual
amounts allocated to goodwill. Management does not believe
the final purchase price allocation will produce materially
different results than those reflected herein.
The purchase prices allocated to those net assets
acquired were as follows:
The following unaudited pro forma combined information
Y E A R E N D E D A P R I L 3 0 ,
1 9 9 8
1 9 9 9
2 0 0 0
Current Assets
Property and Equipment
Intangible Assets (including goodwill)
Other Non-Current Assets
Current Liabilities
Other Non-Current Liabilities
$2,923
9,105
30,526
0
(75)
$613
10,768
24,829
0
0
$107,457
220,830
190,178
589
(41,647)
(5,083)
(2,874)
(281,709)
Total Consideration
$37,396
$33,336
$195,698
In addition to above, the Company also acquired 33, 50
and 38 solid waste hauling operations in 1998, 1999 and
2000. All of these transactions were accounted for as
shows the results of the Company's operations for the years
ended April 30, 1999 and 2000 as though each of the
completed acquisitions had occurred as of May 1, 1998:
purchases. Accordingly, the operating results of these
The pro forma results have been prepared for
businesses are included in the Consolidated Statements of
comparative purposes only and are not necessarily indicative
Y E A R E N D E D A P R I L 3 0 ,
1 9 9 9
2 0 0 0
67
Revenues
Operating Income
Net Income
Diluted Pro forma net income per common share
Weighted average diluted shares outstanding
$578,100
$584,976
20,732
6,569
$0.41
16,019
57,031
11,345
$0.59
19,272
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of the actual results of operations had the acquisitions taken
30, 1998, 1999 and 2000 to amounts adjusted for poolings-
place as of May 1, 1998 or the results of future operations of
of-interests that took place in 2000.
the Company. Furthermore, the pro forma results do not give
effect to all cost savings or incremental costs that may occur
as a result of the integration and consolidation of the
completed acquisitions.
3. INVESTMENT IN MAJORITY OWNED WASTE-TO-
ENERGY FACILITIES
The Company owns majority interests in two limited
partnerships, Maine Energy (83.75% interest) and PERC
(b) Transactions Recorded as Poolings of Interests
(66.59% interest). These facilities utilize non-hazardous solid
The Company has completed several mergers in business
waste as the fuel for the generation of electricity.
acquisitions accounted for as poolings-of-interests. For the
Maine Energy sells the electricity it produces to Central
years ended April 30, 1998, 1999 and 2000, the Company
Maine Power ("Central Maine") pursuant to a long-term power
merged with 1, 4 and 2 businesses, respectively, and issued
purchase agreement. Under this agreement, Maine Energy
common stock of 603,347, 1,271,559 and 362,973 shares,
has agreed to sell energy to Central Maine through May 31,
respectively. The accompanying consolidated financial
2007 at an initial rate of 7.18 cents per kilowatt-hour ("kWh"),
statements have been restated to reflect all material
as determined in 1996, which escalates annually by 2% (7.92
A P R I L 3 0 ,
Revenues:
1 9 9 8
1 9 9 9
2 0 0 0
Casella, before Fiscal 2000 Poolings
Fiscal 2000 Poolings
$140,191
3,520
$171,728
10,829
$335,303
2,044
Casella, as restated
$143,711
$182,557
$337,347
Net Income:
Casella, before Fiscal 2000 Poolings
Fiscal 2000 Poolings
$1,925
(90)
$9,099
(2,484)
$11,257
(207)
Casella, as restated
$1,835
$6,615
$11,050
acquisitions (including the 2 in 2000) for all periods
cents per kWh as of April 30, 2000). From June 1, 2007 until
presented.
December 31, 2012, Maine Energy is to be paid at the then
Following is a reconciliation of the amounts of revenues
current market value for both its energy and capacity by
and net income previously reported for the years ended April
Central Maine.
Under the terms of the agreement, a $45.0 million letter
4. LONG-TERM DEBT
of credit was issued to Central Maine by ING (US) Capital
Corporation. If, in any year, Maine Energy fails to produce
100,000,000 kWh of electricity and Maine Energy does not
have a force majeure defense, such as physical damage to
the plant and other similar events, Maine Energy must pay
approximately $3.8 million to Central Maine as liquidated
damages. This payment obligation is secured by the ING
letter of credit. In each year in which 100,000,000 kWh is
produced, the balance of the ING letter of credit is to be
reduced by approximately $3.8 million. Additionally, if, in any
year, Maine Energy fails to produce 15,000,000 kWh of
electricity and Maine Energy does not have a force majeure
defense, Maine Energy must pay the balance of the ING
letter of credit to Central Maine as liquidated damages. The
balance of the letter of credit was approximately $30 million
at April 30, 2000.
PERC sells the electricity it produces to Bangor Hydro, a
local utility, under a power purchase agreement. Under the
terms of the agreement, Bangor Hydro agrees to purchase all
the electricity generated by PERC through 2018. Under the
agreement, PERC is required to deliver at least 105,000,000
kWh to Bangor Hydro in any calendar year. If PERC fails to
deliver this output, PERC must pay Bangor Hydro $4 for each
1,000,000 kWh that the deliveries fall below 105,000,000 kWh.
As of April 30, 2000, the Company has met all of its
kWh requirements under both power purchase agreements.
Additionally, the Company owns 100% of TERI. TERI
uses biomass waste as its source of fuel to be combusted
for the generation of electricity. TERI also operates two wood
processing facilities. TERI sells the electricity that it generates
to Florida Power Corporation ("Florida Power"), a local
electric utility, under a power purchase agreement. Under the
Long-term debt as of April 30, 1999 and 2000 consists of the following:
April 30,
1999
2000
Advances on revolving credit facility, which provides for advances of up to $150,000, due January 12,
2003. Interest on outstanding advances accrues at the election of the Company at either the bank's
base rate (7.75% at April 30, 1999), or LIBOR plus a percentage (6.03% at April 30, 1999), based on
a pricing grid, payable monthly in arrears. The debt is collateralized by all assets of the Company,
whether now owned or hereafter acquired.
$ 72,365
$ 0
Advances on Senior Secured Revolving Credit Facility ( the "Revolver") which provides for advances of
up to $300,000, due December 14, 2004, bearing interest at LIBOR plus 2.75%, (8.95% at April 30,
2000), with the availability decreasing by $25,000 in years 3 and 4. The debt is collateralized by a
pledge of all of the Company's subsidiaries stock and by certain assets of the Company.
Advances on Senior Secured Delayed Draw Term "B" Loan ( the "Term Loan") which provides for up to
$150,000, due December 14, 2006, bearing interest at LIBOR plus 3.5% (9.7% at April 30, 2000), and
calling for principal payments of $1,500 per year, beginning in Fiscal 2001 with the remaining principal
balance due at maturity. The debt is collateralized by a pledge of all of the Company's subsidiaries
stock and by certain assets of the Company.
Notes Payable in connection with businesses acquired, bearing interest at rates of 6% to 10%, due in
monthly installments varying to $22, expiring May 2000 through April 2009.
Subordinated, Convertible Notes payable in connection with business acquired, bearing interest at
7.5%, due in monthly installments varying to $50, expiring on March 15, 2003. Convertible to Class A
Common Stock of the Company, at the note holders election, at the rate of one share of common
stock for each $15.375 of the principal amount surrendered for conversion.
Payments due to Clinton County, discounted at 4.74%, due in quarterly installments of $375 through
March 2003.
0
228,890
0
150,000
13,534
9,459
0
6,144
69
5,438
4,173
0
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April 30,
1999
2000
PERC Bonds Payable - Issued by the Finance Authority of Maine ("FAME"), Electric Rate Stabilization Revenue Refunding Bonds, Series 1998 A and Series B,
subject to mandatory redemption in annual installments of varying amounts through July 1, 2018. Beginning July 1, 2008 the Bonds are subject to redemption at the
option of the Company at a price equal to 102%, through June 30, 2009, 101% for the period July 1, 2009 through June 30, 2010 and 100% thereafter of the
principal and accrued interest. Various covenants restrict the ability of PERC to incur additional indebtedness and the ability of general partners to sell, assign or
transfer their partnership interest. Interest is based on rates for certain tax-exempt obligations, as determined weekly by the remarketing agent, with a weighted
average interest rate of 5.0% at April 30, 2000. The bonds are collateralized by substantially all of PERC's assets.
Timber Energy Revenue Bonds Payable - Industrial Development Revenue Bonds, Series A, interest at 7%, annual sinking fund requirements of $2,320, $2,665 and
$4,620, due December 2000 through 2002. The Bond Agreements require, among other things, maintenance of various insurance coverages and restrict the
borrowers ability to incur additional indebtedness. The bonds are collateralized by liens on TERI's electric generating facility located in Telogia, Florida.
Notes Payable, secured by assets purchased
0
40,900
0
746
9,605
0
92,083
449,171
Less - Current Portion
5,344
8,367
$86,739
$440,804
In April 2000, the Company entered into two three-year interest rate swap agreements (the "Swap Agreements") with two banks. The purpose was to effectively
convert a portion of the Company's interest rate exposure on advances under its revolving credit facility from a floating rate to a fixed rate.
The Swap Agreements effectively fix the Company's interest rate on the notional amount of $100 million, $50 million is fixed at 6.875% and $50 million is swapped in
a collar arrangement with interest between 6.28% and 9.0%. Net monthly payments or monthly receipts under the Swap Agreements are recorded as adjustments
to interest expense. The Company also has an existing, five year Swap Agreement which fixes the Company's interest rate on the notional amount $45 million. The
rate is fixed at 5.2% and expires in January 2001. In addition, in the event of nonperformance by the counterparty, the Company would be exposed to interest rate
risk on the entire balance in the event the variable interest rate paid was to exceed the fixed rate paid under the terms of the Swap Agreements.
The Revolver and the Term Loan contain certain covenants that, among other things, restrict dividends or stock repurchases, limit capital expenditures and annual
operating lease payments, and set minimum fixed charges, interest coverage and leverage ratios and minimum consolidated adjusted net worth requirements. As of
April 30, 2000, the Company was in compliance with all covenants.
As of April 30, 2000, debt matures as follows: Year Ending April 30,
2001
2002
2003
2004
2005
$ 8,367
7,816
12,479
2,098
151,982
Thereafter
266,429
$449,171
terms of the power purchase agreement, Florida Power has
The Company leases operating facilities and equipment
agreed to purchase all of the electricity generated by TERI.
under operating leases with monthly payments varying to $11.
The ownership interest of minority owners in the equity and
Total rent expense under operating leases charged to
earnings of the Company's less than 100 percent-owned
operations was $1,500, $1,873 and $2,968 for each of the
consolidated subsidiaries is recorded as minority interest.
three years ended April 30, 1998, 1999 and 2000,
5. COMMITMENTS AND CONTINGENCIES
(a) Leases
respectively.
(b) Legal Proceedings
The following is a schedule of future minimum lease
In the normal course of its business and as a result of the
payments, together with the present value of the net minimum
extensive governmental regulation of the waste industry, the
lease payments under capital leases, as of April 30, 2000.
Company may periodically become subject to various judicial
The Company leases real estate, compactors and hauling
and administrative proceedings involving Federal, state or
vehicles under leasesthat qualify for treatment as capital
local agencies. In these proceedings, an agency may seek to
leases. The assets related to these leases have been
impose fines on the Company or to revoke, or to deny
capitalized and are included in property and equipment at April
renewal of, an operating permit held by the Company. In
30, 1999 and 2000.
addition, the Company may become party to various claims
Y E A R E N D I N G A P R I L 3 0
Operating Leases
Capital Leases
$ 4,660
4,866
3,614
3,236
2,095
4,640
$23,111
2001
2002
2003
2004
2005
Thereafter
Total minimum lease payments
Less - amount representing interest
Current maturities of capital lease obligations
Present value of long term capital lease obligations
$ 1,095
1,004
986
672
494
1,564
5,815
1,279
4,536
788
$ 3,748
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and suits pending for alleged damages to persons and
transfer of Maine Energy's assets. The notice also reserves
property, alleged violation of certain laws and for alleged
the right to seek punitive damages. Although the City of
liabilities arising out of matters occurring during the normal
Biddeford, Maine has not filed a notice of claims, it has given
operation of the waste management business.
notice that it will be initiating a suit to receive the residual
On or about October 30, 1997, Mr. Matthew M.
cancellation payments. Under the agreement, the aggregate
Freeman commenced a civil lawsuit against the Company and
amount to be paid upon the exercise of the put right is 18%
two of its officers and directors in Vermont Superior Court.
of the fair market value of the equity of the partners in Maine
Mr. Freeman claims to have performed services for the
Energy, and such amount is required to be paid within 120
Company prior to 1995 and in his lawsuit is seeking a three-
days after the exercise of the put by the respective parties
percent equity interest in the Company or the monetary
entitled thereto. The Company believes it has meritorious
equivalent thereof, as well as punitive damages. The
defenses to these claims.
Company and the officers and directors have answered the
On or about April 26, 1999, Salvatore Russo filed an
Complaint, denied Mr. Freeman's allegations of wrongdoing,
action in the U.S. District Court, District of New Jersey
and asserted various defenses. In order to facilitate the
against KTI and two of its principal officers, Ross Pirasteh and
completion of the initial public offering of the Company's
Martin J. Sergi, purportedly on behalf of all shareholders who
Class A Common Stock in November 1997, certain
purchased KTI common stock from May 4, 1998 through
stockholders of the Company agreed to indemnify the
August 14, 1998. Melanie Miller filed an identical complaint on
Company for any settlement by the Company or any award
May 14, 1999. The complaints allege that the defendants
against the Company in excess of $350,000 (but not for legal
made material misrepresentations in KTI's quarterly report on
fees paid by or on behalf of Casella or any other third party).
form 10-Q for the period ended March 31, 1998 in violation of
The Company accrued a $215,000 reserve for this claim
Sections 10(b) and 20(a) of the Securities Exchange Act of
during the year ended April 30, 1998.
1934, as amended, concerning KTI's allowance for doubtful
On January 7, 2000, the City of Saco, Maine filed a
accounts and net income. The Plaintiffs are seeking
notice of claims with the Company and Maine Energy
undisclosed damages. The Company believes it has
claiming entitlement to certain "residual cancellation"
meritorious defenses to these complaints. On June 15, 1999,
payments from Maine Energy under the waste handling
Mr. Russo and Ms. Miller, together with Fransisco Munero,
agreement dated June 7, 1991 among the Biddeford-Saco
Timothy Ryan and Steve Storch, moved to consolidate the
72
Waste Handling Committee, Biddeford, Saco and Maine
two complaints. This motion is currently pending in the District
Energy on the basis of the satisfaction of certain conditions,
Court of New Jersey. The Company is a defendant in certain
including the acquisition of KTI by the Company. The notice of
other lawsuits alleging various claims incurred in the ordinary
claims alleges that the payments due to Saco exceed $33
course of business. The Company believes that none of the
million, and claims damages in such amounts for breach of
above lawsuits, either individually or in the aggregate, will be
contract, breach of fiduciary duties and fraud and also claims
settled in a manner that will have a material impact to its
treble damages of $100 million based on alleged fraudulent
financial condition, results of operations or cash flows.
(c) Environmental Liability
the 200,000 tons of undisputed additional permitted capacity.
The Company is subject to liability for any environmental
The seller elected to be paid this royalty in cash.
damage, including personal injury and property damage, that
(e) Employment Contracts
its solid waste, recycling and power generation facilities may
The Company has entered into five employment contracts
cause to neighboring property owners, particularly as a result
with its senior officers and Chairman of the Board. The
of the contamination of drinking water sources or soil,
contracts, dated December 8, 1999, have a three-year term
possibly including damage resulting from conditions existing
and a two-year covenant not to compete from the date of any
before the Company acquired the facilities. The Company
termination. Total annual commitments for salaries under
may also be subject to liability for similar claims arising from
these contracts are $1.2 million. In the event of a change in
off-site environmental contamination caused by pollutants or
control of the Company, or in the event of involuntary
hazardous substances if the Company or its predecessors
termination without cause, the employment contracts provide
arrange to transport, treat or dispose of those materials. Any
for the payment of three years of salary and bonuses.
substantial liability incurred by the Company arising from
environmental damage could have a material adverse effect
on the Company's business, financial condition and results of
operations. The Company is not presently aware of any
situations that may have a material adverse impact.
(d) Sawyer Landfill Royalty Payments
(f) Maine Energy Waste Handling Agreement Liability
Under the terms of a Waste Handling Agreement between
certain municipalities and the Company's majority owned
subsidiary, Maine Energy, Maine Energy is obligated to make
a payment at the point in time that Maine Energy pays off its
debt (as defined) obligations, currently estimated to occur
In connection with an acquisition, the Company agreed to pay
between 2003 and 2005, or upon the consummation of an
to the seller a royalty for certain additional permitted landfill
outright sale of Maine Energy, individually. The estimated
capacity. The royalty due is equal to $2.50 per ton for the first
obligation has been recorded in other long-term liabilities as
400,000 tons of such additional capacity and $3.50 per ton
of April 30, 2000.
thereafter. The payments are generally due as the landfill is
utilized, except that at the time of the successful permitting,
6. DISCONTINUED OPERATIONS AND
the first $1 million of royalties becomes immediately due and
EXTRAORDINARY ITEM
payable. This amount may be taken in cash or common stock
on an equivalent per share price of $6.55. This option is at the
DISCONTINUED OPERATIONS:
election of the seller and is only available for the first royalty
During the third quarter, the Company adopted a formal plan
73
payment. The Company received permits from the State of
to dispose of its construction and emergency response
Maine for a 3.3 million ton expansion on the Sawyer Landfill.
business ("discontinued business"). The Company has
The host community for the Sawyer Landfill, the Town of
accounted for this planned disposition in accordance with
Hampden, Maine, is disputing 3.1 million tons of the 3.3 million
APB Opinion No. 30, and accordingly, the results of
ton expansion. The Company paid the royalty due the seller on
operations of the discontinued business have been
On the internet
Casella’s symbol on the
NASDAQ market is CWST.
Stock updates and other
financial information are
available in Value.
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segregated from continuing operations and reported as a
more series. As of April 30, 1999 and 2000, respectively, no
separate line in its Consolidated Statements of Operations.
shares of Preferred Stock are outstanding.
Additionally, the estimated loss on the disposal of the
(b) Common Stock
discontinued operations of $1,393 (net of income tax benefit
Y E A R E N D E D A P R I L 3 0 ,
Revenues
Operating Expenses
General and Administrative
Depreciation and Amortization
Operating (Loss)
Other (Expense)
Benefit from Income Taxes
Net (Loss)
1 9 9 9
$ 1,690
1,133
426
175
(44)
(10)
21
$ (33)
2 0 0 0
$ 795
795
321
113
(434)
(7)
172
$ (269)
of $891), represents the estimated loss on the disposal of
The holders of the Class A Common Stock are entitled to
the assets of the discontinued segment.
one vote for each share held. The holders of the Class B
A summary of the operating results of the discontinued
Common Stock are entitled to ten votes for each share held,
business is as follows:
except for the election of one director, who is elected by the
EXTRAORDINARY ITEM:
holders of the Class A Common Stock exclusively. The Class
B Common Stock is convertible into Class A Common Stock
During the third quarter of its fiscal year 2000, the Company paid
on a share-for-share basis at the option of the shareholder.
off its existing revolving credit facility with a bank and incurred an
(c) Stock Warrants
extraordinary loss of $631 (net of tax benefit of $448), resulting
At April 30, 2000, the Company had outstanding warrants to
74
from the write-off of related debt acquisition costs.
purchase 315,943 shares of the Company's Class A
7. STOCKHOLDERS' EQUITY
(a) Preferred Stock
Common Stock at exercise prices between $0.01 and $43.63
per share, based on the fair market value of the underlying
common stock at the time of the warrants' issuance. The
The Company is authorized, with stockholder approval, to
warrants are exercisable and expire at varying times through
issue up to 1,000,000 shares of preferred stock in one or
November 2008.
(d) Stock Option Plans
of 918,135 shares of Class A Common Stock pursuant to
During 1993, the Company adopted an incentive stock option
the grant of either incentive stock options or nonstatutory
plan for officers and other key employees. The 1993
options. As of April 30, 1999, a total of 392,443 options to
Incentive Stock Option Plan (the "1993 Option Plan")
purchase Class A Common Stock were outstanding at an
provided for the issuance of a maximum of 300,000 shares of
average exercise price of $12.23. As of April 30, 2000, a
Class A Common Stock. As of April 30, 1999, options to
total of 372,707 options to purchase Class A Common Stock
purchase 169,500 shares of Class A Common Stock at an
were outstanding at an average exercise price of $12.08. No
average exercise price of $1.18 were outstanding under the
further options may be granted under this plan.
1993 Option Plan. As of April 30, 2000, options to purchase
On July 31, 1997, the Company adopted a stock option
17,000 shares of Class A Common Stock at an average
plan for employees, officers and directors of, and consultants
exercise price of $4.61 were outstanding under the 1993
and advisors to the Company. The Board of Directors has the
Option Plan. No further options may be granted under this
authority to select the optionees and determine the terms of
plan.
the options granted. The 1997 Stock Option Plan (the "1997
During 1994, the Company adopted a nonstatutory
Option Plan") provides for the issuance of 5,328,135 shares
stock option plan for officers and other key employees. The
of Class A Common Stock pursuant to the grant of either
1994 Stock Option Plan (the "1994 Option Plan") provided
incentive stock options or nonstatutory options. Under the
for the issuance of a maximum of 150,000 shares of Class A
terms of the 1997 Option Plan, all authorized but unissued
Common Stock. Options to purchase 15,000 shares of Class
options under previous plans are added to the shares
A Common Stock at an average exercise price of $0.60 were
available under this plan. A total of 321,501 authorized but
outstanding under the 1994 Option Plan as of April 30, 1999
unissued shares under the 1996 Option Plan have been
and 2000. No further options may be granted under this plan
transferred to the 1997 Option Plan under this provision. As
In connection with the May 1994 Senior Note and
of April 30, 1999, options to purchase 1,081,960 shares of
Warrant Purchase Agreement (the "Purchase Agreement"),
Class A Common Stock at an average exercise price of
the Company also established a nonqualified stock option
$26.72 were outstanding under the 1997 Option Plan. As of
pool for certain key employees. The purchase agreement
April 30, 2000, options to purchase 3,190,377 shares of
established 338,000 stock options to purchase Class A
Class A Common Stock at an average exercise price of
Common Stock. Options to purchase 302,656 shares of
$22.37 were outstanding under the 1997 Option Plan.
Class A Common Stock at an average exercise price of
On July 31, 1997, the Company adopted a stock option
75
$2.00 were outstanding as of April 30, 1999 and 2000. No
plan for non-employee directors of the Company. The 1997
further options may be granted from this pool.
Non-Employee Director Stock Option Plan provides for the
During 1996, the Company adopted a stock option plan
issuance of a maximum of 100,000 shares of Class A
for employees, officers and directors of, and consultants and
Common Stock pursuant to the grant of nonstatutory
advisors to the Company. The 1996 Stock Option Plan (the
options. As of April 30, 1999 and 2000, options to purchase
"1996 Option Plan") provided for the issuance of a maximum
8,000 shares of Class A Common Stock at an average
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exercise price of $31.25 and 19,000 shares of Class A
During fiscal 1996, the FASB issued SFAS No. 123,
Common Stock at an average exercise price of $6.58,
"Accounting for Stock-Based Compensation", which defines a
Outstanding, April 30, 1997
Granted
Terminated
Exercised
Outstanding, April 30, 1998
Granted
Terminated
Exercised
Outstanding, April 30, 1999
Granted
Issued in Connection with the Acquisition of KTI
Terminated
Exercised
Number
of shares
1,251,135
419,500
(31,000)
(44,333)
1,595,302
870,000
(9,033)
(486,710)
1,969,559
1,402,000
930,417
(216,335)
(168,901)
Weighted Average
exercise price
$ 4.92
19.90
(15.19)
(1.49)
8.75
27.68
(11.17)
(6.43)
17.65
16.27
26.59
(20.56)
(2.05)
Outstanding, April 30, 2000
3,916,740
$ 19.78
Exercisable, April 30, 1999
1,346,557
$ 13.67
Exercisable, April 30, 2000
2,321,432
$ 18.35
respectively, were outstanding under the Non-Employee
fair value based method of accounting for stock-based
Director Stock Option Plan.
employee compensation and encourages all entities to adopt
76
Options generally vest over a two year period from the
that method of accounting for all of their employee stock
date of grant, and are granted at prices at least equal to the
compensation plans. However, it also allows an entity to
prevailing fair market value at the issue date.
continue to measure compensation costs for those plans
Stock option activity for each of the three years ended
using the intrinsic method of accounting prescribed by APB
April 30, 1998, 1999 and 2000 is as follows:
Opinion No. 25. Entities electing to remain with the
Set forth is a summary of options outstanding and
accounting in APB Opinion No. 25 must make pro forma
exercisable as of April 30, 2000:
disclosures of net income and earnings per share as if the fair
A P R I L 3 0 , 2 0 0 0
Range of
Exercise
Number of
Outstanding
Shares
$60-$2.00
$4.61-$8.00
317,656
152,002
$10.00-$18.00
1,566,211
$18.00-$27.00
467,028
Over $27.00
1,413,843
ALL
3,916,740
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Contractual
Life (Years)
0.83
7.42
7.00
8.70
7.45
6.88
Weighted
Average
Exercise
Price
$1.93
5.42
15.28
20.95
29.94
Number of
Exercisable
Options
317,656
108,002
850,118
226,484
819,172
Weighted
Average
Exercise
Price
$1.93
4.90
14.86
21.65
29.20
$19.78
2,321,432
$18.35
A P R I L 3 0 ,
Risk-free interest rate
Expected dividend yield
Expected life
Expected volatility
1 9 9 8
1 9 9 9
2 0 0 0
5.78%-6.49%
4.6%-5.68%
5.81%-6.69%
0%
9 Years
40.39%
0%
5 years
52.40%
0%
5 years
67.37%
value based method of accounting defined in SFAS No. 123
No. 123, using the following weighted average assumptions
had been applied.
for grants in the years ended April 30, 1998, 1999 and 2000
The Company has elected to account for its stock-
The total value of options granted during the years
based compensation plans under APB Opinion No. 25.
ended April 30, 1998, 1999 and 2000 would be amortized on
However, the Company has computed, for pro forma
a pro forma basis over the vesting period of the options.
disclosure purposes, the value of all options granted during
Because the method of accounting prescribed by SFAS No.
the years ended April 30, 1998, 1999 and 2000 using the
123 has not been applied to options granted prior to May 1,
77
Black-Scholes option pricing model as prescribed by SFAS
1995, the resulting pro forma compensation costs may not be
representative of that to be expected in future years. If the
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A P R I L 3 0 ,
Net income (loss)
As reported
Pro forma
Diluted Net income (loss) per share of common stock
As reported
Pro forma
1 9 9 8
1 9 9 9
2 0 0 0
$(3,903)
$(4,674)
$(0.41)
$(0.49)
$6,615
$2,534
$0.41
$0.16
$11,050
$4,379
$0.57
$0.23
The weighted-average grant-date fair value of options granted during the years ended April 30, 1998, 1999 and 2000 is
$1.54, $6.43 and $3.30, respectively.
Company had accounted for these plans in accordance with
8. INCOME TAXES
SFAS No. 123, the Company's net loss and net loss per
The provision for income taxes for the years ended April 30,
share would have increased as reflected in the following pro
1998, 1999 and 2000 consists of the following:
forma amounts: April 30,
A P R I L 3 0 ,
Federal-
Current
Deferred
State-
Current
Deferred
1 9 9 8
1 9 9 9
2 0 0 0
$234
1,901
$4,996
1,400
$6,089
3,216
2,135
6,396
9,305
41
336
377
888
247
1,135
2,075
878
2,953
Total
$2,512
$7,531
$12,258
The weighted-average grant-date fair value of options granted
The differences in the provisions for income taxes and the
during the years ended April 30, 1998, 1999 and 2000 is
amounts determined by applying the Federal statutory rate to
$1.54, $6.43 and $3.30, respectively.
income before provision for income taxes for the years ended
April 30, 1998, 1999 and 2000 are as follows:
F I S C A L Y E A R E N D E D A P R I L 3 0 ,
1 9 9 8
1 9 9 9
2 0 0 0
Federal Statutory Rate
Tax at Statutory Rate
State Income Taxes, net of Federal Benefit
Meal and Entertainment Disallowance
Nondeductible Goodwill
Equity in Loss of Oakhurst
Other, net
34%
$1,478
248
23
114
0
649
34%
$4,821
749
29
201
0
1,731
35%
$8,960
1,919
77
245
295
762
$2,512
$7,531
$12,258
F I S C A L Y E A R E N D E D A P R I L 3 0 ,
1 9 9 9
2 0 0 0
Deferred Tax Assets:
Allowance for Doubtful Accounts
Treatment of Lease Obligations
Accrued Expenses
Basis Difference in Partnership Interests
Net Operating Loss Carryforwards
Alternative Minimum Tax Credit Carryforwards
Other Tax Carryforwards
Other
Total Deferred Tax Assets
Less: Valuation Allowance
Total Deferred Tax Assets After Valuation Allowance
Deferred Tax Liabilities:
Accelerated Depreciation of Property and Equipment
Amortization of Intangibles
Other
Total Deferred Tax Liabilities
Net Deferred Tax Liability
$ 703
59
964
0
367
510
0
575
3,178
0
3,178
(5,014)
(1,165)
(1,693)
(7,872)
(4,694)
$ 2,818
52
10,645
14,091
30,794
1,795
530
880
61,605
(24,778)
36,827
(49,546)
(3,407)
(2,092)
(55,045)
(18,218)
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Deferred income taxes reflect the impact of temporary
realized. The Company adjusts the valuation allowance in the
differences between the amounts of assets and liabilities
period management determines it is more likely than not that
recognized for financial reporting purposes and such amounts
deferred tax assets will or will not be realized.
recognized for income tax purposes.
Deferred tax assets and liabilities consist of the
9. EMPLOYEE BENEFIT PLANS
following at April 30, 1999 and 2000:
The Company offers its eligible employees the opportunity to
contribute to a 401(k) plan. Pending board approval, the
Company may contribute up to $500 dollars per individual per
calendar year. Participants vest in employer contributions
At April 30, 2000, the Company has for income tax
ratably over a three-year period. Employer contributions for
purposes federal net operating loss carryforwards of
the years ended April 30, 1998, 1999 and 2000 amounted to
approximately $70,507 that expire in years 2003 through
$176, $275 and $387, respectively.
2019, state net operating loss carryforwards of approximately
In January 1998, the Company implemented its
$83,304 that expire in years 2001 through 2019, and
Employee Stock Purchase Plan. Under this plan, qualified
business tax credit carryforwards of approximately $530 that
employees may purchase shares of Class A Common Stock
expire in years 2001 through 2006. The federal net operating
by payroll deduction at a 15% discount from the market price.
loss carryforwards, certain state net operating loss
600,000 shares of Class A Common Stock have been
carryforwards and the business tax credit carryforwards are
reserved for this purpose. At April 30, 1998, no shares of
subject to substantial limitations. In addition, the Company
Class A Common Stock have been issued under this plan.
has approximately $1,795 minimum tax credit carryforward
During the years ended April 30, 1999 and 2000, 5,812 and
available that is not subject to limitation. Due to uncertainty of
6,616 shares, respectively, of Class A Common Stock were
the utilization of the carryforwards, the Company has
issued under this plan.
recorded a valuation allowance against approximately $51,805
of the federal net operating loss carryforwards, all of the state
10. RELATED PARTY TRANSACTIONS
net operating loss carryforwards and all of the business tax
(a) Services
credit carryforwards. Since the Company's carryforwards
During 1998, 1999 and 2000, the Company retained the
were primarily acquired through acquisitions, to the extent
services of a related party, a company wholly owned by two
80
that future realization of such carryforwards exceeds the
of the Company's major stockholders and members of the
Company's current estimates, additional amounts received
Board of Directors, as a contractor in closing certain landfills
will be recorded as a reduction of goodwill. In assessing the
owned by the Company. Total purchased services charged to
realizability of carryforwards and other deferred tax assets,
operations for each of the three years ended April 30, 1998,
management considers whether it is more likely than not that
1999 and 2000 were $4,202, $5,198 and $5,338
some portion or all of the deferred tax assets will not be
respectively, of which $50 and $450 were outstanding and
included in accounts payable at April 30, 1999 and 2000,
(d) Employee Loans
respectively. In 1998, the Company entered into agreements
The Company has made loans to officers and employees in
with this company, totaling approximately $3,000, to
the amount of $2,095 during the year ended April 30, 2000.
construct a portion of a landfill. In 1999, the Company
The notes have required quarterly interest payments but no
entered into agreements with this company, totaling
fixed repayment terms. Interest is at the Wall Street Journal
approximately $4,808, to construct improvements or
Prime Rate (9% at April 30, 2000). Notes from officers
expansions at three of its landfills. In 2000, the Company
consisted of $2,000 at April 30, 2000, with the remainder
entered into an agreement with this company, totaling
being from employees of the Company.
approximately $4,500 to construct a new cell at Clinton
(e) Other Relationships
County Landfill.
(b) Leases
On August 1, 1993, the Company entered into two leases for
operating facilities with a partnership in which two of the
Company's major stockholders and members of the Board of
Directors are the general partners. The leases are classified
as capital leases in the accompanying Consolidated Balance
Sheets. The leases call for monthly payments of
approximately $18 and expire in April 2003. Total interest and
amortization expense charged to operations for the years
ended April 30, 1998, 1999 and 2000 under these
agreements was, $245, $237 and $179, respectively.
(c) Post-Closure Landfill
Two of the Company's stockholders and members of its
Board of Directors are also direct stockholders and members
of the Board of Directors of OCI, an investee of the
Company. These individuals own aggregate shares and
options to purchase shares for up to 4% of OCI.
11. SEGMENT REPORTING
SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information" establishes standards for reporting
information about operating segments in financial statements.
In general, SFAS No. 131 requires that business entities report
selected information about operating segments in a manner
consistent with that used for internal management reporting.
The Company classifies its operations into Eastern
The Company has agreed to pay the cost of post-closure on a
(which includes Maine Energy and PERC), Central and
landfill owned by certain principal shareholders. The Company
Western, Power Generation, Residential Recycling, Finished
paid the cost of closing this landfill in 1992, and the post-
Products and Commercial Recycling. The Company's
closure maintenance obligations are expected to last until
revenues in the Eastern, Central and Western segments are
2012. In each of the three years ended April 30, 1998, 1999
derived mainly from one industry segment, which includes the
81
and 2000, the Company paid $3, $3 and $5 respectively,
collection, transfer, recycling and disposal of non-hazardous
pursuant to this agreement. As of April 30, 1999 and 2000,
solid waste. The Company's revenues in the Power
the Company has accrued $102 and $96, respectively, for
Generation, Residential Recycling, Finished Products and
costs associated with its post-closure obligations.
Commercial Recycling segments are derived from integrated
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Year Ended April 30, 1998:
Outside Revenue
Inter-Segment Revenue
Net Income/(Loss)
Depreciation & Amortization
Merger Costs
Impairment Charge
Interest Expense (Net)
Capital Expenditures
Total Assets
Year Ended April 30, 1999:
Outside Revenue
Inter-Segment Revenue
Net Income/(Loss)
Depreciation & Amortization
Merger Costs
Interest Expense (Net)
Capital Expenditures
Total Assets
Year Ended April 30, 2000:
Outside Revenue
Inter-Segment Revenue
Net Income/(Loss)
Depreciation & Amortization
Merger Costs
Interest Expense (Net)
Capital Expenditures
Total Assets
Waste Handling and Disposal
Eastern
Regions
Central
Regions
Western
Regions
Power
Generation
Residential
Recycling
$26,242
$2,241
$(1,830)
$3,871
$-
$971
$1,418
$6,805
$6,002
$39,240
$2,218
$(895)
$5,722
$-
$2,067
$17,107
$17,072
$82,310
$15,965
$1,815
$11,917
$1,101
$4,085
$18,092
$390,559
$70,045
$22,410
$4,148
$11,850
$290
$
$3,472
$14,184
$34,387
$79,710
$28,397
$8,368
$12,255
$332
$3,922
$15,328
$34,622
$106,262
$35,572
$15,008
$14,223
$-
$3,815
$15,806
$128,416
$47,707
$2,765
$697
$3,774
$-
$600
$3,100
$7,326
$18,347
$62,920
$6,711
$2,387
$6,917
$546
$4,051
$19,079
$12,284
$60,671
$12,776
$5,227
$7,847
$389
$2,925
$17,422
$112,237
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$-
$8,606
$(68)
$(485)
$925
$-
$653
$2,176
$51,429
$13,767
$9,242
$3,297
$1,147
$-
$1,539
$4,566
$61,509
Finished
Products
Commercial
Recycling
Corporate
Eliminations
Total
Year Ended April 30, 1998:
Outside Revenue
Inter-Segment Revenue
Net Income/(Loss)
Depreciation & Amortization
Merger Costs
Impairment Charge
Interest Expense (Net)
Capital Expenditures
Total Assets
Year Ended April 30, 1999:
Outside Revenue
Inter-Segment Revenue
Net Income/(Loss)
Depreciation & Amortization
Merger Costs
Interest Expense (Net)
Capital Expenditures
Total Assets
Year Ended April 30, 2000:
Outside Revenue
Inter-Segment Revenue
Net Income/(Loss)
Depreciation & Amortization
Merger Costs
Interest Expense (Net)
Capital Expenditures
Total Assets
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ 23,214
$ -
$ (1,874)
$ 1,221
$ -
$ 1,634
$ 5,920
$ 44,614
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ -
$ 50,429
$ 13,906
$ 2,745
$ 1,288
$ -
$ 937
$ 4,603
$ 55,568
$ 238
$ (14)
$ (1,180)
$ 464
$ -
$ -
$ (617)
$ 1,101
$ 148,706
$ 687
$ (1)
$ (3,245)
$ 831
$ 1,073
$ (4,476)
$ 2,604
$ 220,084
$ 740
$ 225
$ (15,078)
$ 1,963
$ -
$ (443)
$ 870
$ 39,497
$ (521)
$ 143,711
$ (27,402)
$ -
$ -
$ -
$ -
$ -
$ -
$ (1,933)
$ -
$ 1,835
$ 19,959
$ 290
$ 1,571
$ 7,373
$ 29,416
$ 205,509
$ -
$ 182,557
$ (37,325)
$ -
$ -
$ -
$ -
$ -
$ (1,933)
$ (8,652)
$ (87,618)
$ 395
$ (320)
$ -
$ (111)
$ -
$ -
$ 6,615
$ 25,725
$ 1,951
$ 5,564
$ 54,118
$ 282,129
$ 337,347
$ -
$ 11,050
$ 40,211
$ 1,490
$ 15,034
$ 69,455
$ (11,652)
$ 872,177
83
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2 0 0 0
Revenues
As Reported
As Restated
Operating Income
As Reported
As Restated
Income Before Income Taxes,
Discontinued Operations and Extraordinary Item
As Reported
As Restated
Net Income
As Reported
As Restated
Basic Earnings per Share
As Reported
As Restated
Diluted Earnings per Share
As Reported
As Restated
First
Quarter (1)
Second
Quarter (1)
Third
Quarter
Fourth
Quarter
55,036
54,676
7,180
7,333
5,632
5,787
3,041
3,041
0.19
0.19
0.18
0.18
56,120
55,748
9,620
9,925
8,459
8,618
4,872
4,872
0.30
0.30
0.30
0.30
93,004
93,004
9,946
9,946
5,291
5,291
755
755
0.04
0.04
0.04
0.04
133,919
133,919
15,596
15,596
5,905
5,905
2,382
2,382
0.10
0.10
0.10
0.10
waste handling services, including processing and recycling of
(1) The first two quarters of fiscal 2000 were restated to
wood, paper, metals, plastics and glass, municipal solid waste
present the effects of discontinued operations (see Note 6).
processing and disposal, specialty waste disposal, ash
residue recycling, brokerage of recycled materials and the
13. SUBSEQUENT EVENTS
manufacturing of finished products using recycled materials.
The Company has entered into an agreement, in June 2000
Any other activities in which the Company is engaged are not
with Louisiana-Pacific Corporation to combine their respective
material to the total results of operations of the Company;
cellulose insulation businesses into a single operating entity
these activities are reflected within the reporting structure
under a joint venture agreement effective August 1, 2000.
84
outlined above. The accounting policies of the business
The Company will contribute the operating assets of its
segments are the same as those described in Note 1.
cellulose insulation manufacturing business together with
12. QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
The following is an analysis of certain items in the
$2,500 in cash. The new Company, to be known as U.S.
Green Fiber LLC, is an equally owned joint venture formed
through the combination of Louisiana-Pacific's GreenStone
Consolidated Statements of Operations by quarter for 2000
Industries, Inc. and the Company's U.S. Fiber, Inc. operations.
and 1999.
The new entity will supply cellulose insulation to existing
1 9 9 9
Revenues
As Reported
As Restated
Operating Income
As Reported
As Restated
Income Before Income Taxes,
Discontinued Operations and Extraordinary Item
As Reported
As Restated
Net Income
As Reported
As Restated
Basic Earnings per Share
As Reported
As Restated
Diluted Earnings per Share
As Reported
As Restated
First
Quarter (1)
Second
Quarter (1)
Third
Quarter
Fourth
Quarter
45,084
44,673
5,435
5,390
3,796
3,753
2,121
2,121
0.16
0.16
0.15
0.15
47,813
47,422
5,185
5,185
4,126
4,130
2,208
2,208
0.14
0.14
0.13
0.13
44,109
44,109
3,749
3,749
2,529
2,529
879
879
0.06
0.06
0.05
0.05
46,353
46,353
5,067
5,067
3,767
3,767
1,407
1,407
0.09
0.09
0.08
0.08
(1) The first two quarters of fiscal 2000 were restated to present the effects of discontinued operations (see Note 6).
residential construction, retail and manufactured housing
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
supply channels.
ACCOUNTANTS ON ACCOUNTING AND
On June 28, 2000, the Company has entered into an
FINANCIAL DISCLOSURE
agreement with Berkshire Partners of Boston, Massachusetts
None.
to issue $55.8 million worth of redeemable convertible
preferred stock, which may convert into Class A Common
Stock at $14.00 per share. Proceeds will be used to pay
down debt and continue the Company's strategic plan.
Although there are no assurances, it is anticipated that the
agreement will close in August 2000.
PART III
Items 10, 11, 12 and 13 of Part III (except for information
required with respect to executive officers of the Company
which is set forth under "Executive Officers of the Company"
in Item 1 of Part I of this report) have been omitted from this
report, since the Company expects to file with the Securities
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and Exchange Commission, not later than 120 days after the
thereto, among Casella Waste Systems, Inc. ("Casella"), KTI, Inc.
close of its fiscal year, a definitive proxy statement. The
("KTI") and Rutland Acquisition Sub, Inc. (incorporated herein by
information required by Items 10, 11, 12 and 13 of this
reference to Annex A to the registration statement on Form S-4
report, which will appear in the definitive proxy statement, is
as filed November 12, 1999(file no,.333-90913)).
incorporated by reference into Part III of this report.
3.1
Amended and Restated Certificate of Incorporation of
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
Casella (incorporated herein by reference to Exhibit 4.1 to the
registration statement on Form S-8 of Casella as filed November
18, 1998(file no. 333-67487)).
3.3
Second Amended and Restated By-Laws of Casella
(incorporated herein by reference to Exhibit 3.4 to the registration
statement on Form S-1 of Casella as filed September 24, 1997
(file no. 333-33135)).
Item 14(a)(1) Consolidated Financial Statements included
4.1
Form of stock certificate of Casella Class A Common
under Item 8:
Stock (incorporated herein by reference to Exhibit 4 to
Report of Independent Public Accountants
Amendment No. 2 to the registration statement on Form S-1 of
Consolidated Balance Sheets as of April 30, 1999 and 2000
Casella as filed October 9, 1997 (file no. 333-33135)).
Consolidated Statements of Operations for the Years Ended
10.1
1993 Incentive Stock Option Plan (incorporated herein
April 30, 1998, 1999 and 2000.
by reference to Exhibit 10.1 to the registration statement on Form
Consolidated Statements of Redeemable Preferred Stock,
S-1 of Casella as filed August 7, 1997 (file no. 333-33135)).
Redeemable Put Warrants and Stockholders' Equity for the
10.2
1994 Nonstatutory Stock Option Plan (incorporated
Years Ended April 30, 1998, 1999 and 2000.
herein by reference to Exhibit 10.2 to the registration statement on
Consolidated Statements of Cash Flow for the Years Ended
Form S-1 of Casella as filed August 7, 1997 (file no. 333-33135)).
April 30, 1998, 1999 and 2000.
10.3
1996 Stock Option Plan (incorporated herein by
Notes to Consolidated Financial Statements
reference to Exhibit 10.3 to the registration statement on Form S-
Item 14(a)(2) Schedule II - Valuation and Qualifying
1 of Casella as filed August 7, 1997 (file no. 333-33135)).
Accounts
10.4
1997 Non-Employee Director Stock Option Plan
Schedule II - Allowance for Doubtful Accounts
(incorporated herein by reference to Exhibit 10.5 to Amendment
Item 14(a)(3) Exhibits:
86
No. 1 to the registration statement on Form S-1 of Casella as
filed September 24, 1997 (file no. 333-33135)).
The following Exhibits are filed as part of this report under
10.5
Amended and Restated 1997 Stock Incentive Plan
Item 14(c):
ExhibitNo. Description
(incorporated herein by reference to the Definitive Proxy Statement
on Schedule 14A of Casella as filed September 21, 1998).
10.6
Registration Rights Agreement between Casella and
2.1(1)
Agreement and Plan of Merger dated as of January
Susan Olivieri and Robert MacNeil, dated January 3, 1996
12, 1999 and as amended by Amendments No. 1, 2 and 3
(incorporated herein by reference to Exhibit 10.6 to Amendment
No. 1 to the registration statement on Form S-1 of Casella as
dated as of January 17, 1997 (incorporated herein by reference
filed September 24, 1997 (file no. 333-33135)).
to Exhibit 10.13 to the registration statement on Form S-1 of
10.7
1995 Stockholders Agreement between Casella and
Casella as filed August 7, 1997 (file no. 333-33135)).
the stockholders who are a party thereto, dated as of December
10.14
Reorganization Agreement by and among Kenneth H.
22, 1995 (incorporated herein by reference to Exhibit 10.7 to the
Mead, Superior Disposal Services, Inc., Kensue, Inc., S.D.S. at
registration statement on Form S-1 of Casella as filed August 7,
PA, Inc. and Claws Refuse, Inc., dated as of January 17, 1997
1997 (file no. 333-33135)).
(incorporated herein by reference to Exhibit 10.14 to the
10.8
1995 Registration Rights Agreement between Casella
registration statement on Form S-1 of Casella as filed August 7,
and the stockholders who are a party thereto, dated as of
1997 (file no. 333-33135)).
December 22, 1995 (incorporated herein by reference to Exhibit
10.15
Termination of Lease Agreement by and between
10.8 to the registration statement on Form S-1 of Casella as filed
Casella Associates and Casella Waste Management, Inc. dated
August 7, 1997 (file no.333-33135)).
September 25, 1996 (incorporated herein by reference to Exhibit
10.9
1995 Repurchase Agreement between Casella and
10.15 to the registration statement on Form S-1 of Casella as
the stockholders who are a party thereto, dated as of December
filed August 7, 1997 (file no. 333-33135)).
22, 1995 (incorporated herein by reference to Exhibit 10.9 to the
10.16
Amended and Restated Revolving Credit and Term
registration statement on Form S-1 of Casella as filed August 7,
Loan Agreement between the Registrant and BankBoston, dated
1997 (file no. 333-33135)).
as of January 12, 1998 (incorporated herein by reference to
10.10 Management Services Agreement between Casella,
Exhibit 10.13 to the registration statement on Form S-1 of Casella
BCI Growth III, L.P., North Atlantic Venture Fund, L.P., and
as filed June 3, 1998 (file no. 333-55879)).
Vermont Venture Capital Fund, L.P., dated as of December 22,
10.17
Lease Agreement, as Amended, between Casella
1995 (incorporated herein by reference to Exhibit 10.10 to the
Associates and Casella Waste Management, Inc., dated
registration statement on Form S-1 of Casella as filed August 7,
December 9, 1994 (Rutland lease) (incorporated herein by
1997 (file no. 333-33135)).
reference to Exhibit 10.17 to the registration statement on Form
10.11 Warrant to Purchase Common Stock of Casella
S-1 of Casella as filed August 7, 1997 (file no. 333-33135)).
granted to John W. Casella, dated as of July 26, 1993
10.18
Lease Agreement, as Amended, between Casella
(incorporated herein by reference to Exhibit 10.11 to Amendment
Associates and Casella Waste Management, Inc., dated
No. 1 to the registration statement on Form S-1 of Casella as
December 9, 1994 (Montpelier lease) (incorporated herein by
filed September 24, 1997 (file no. 333-33135)).
reference to Exhibit 10.18 to the registration statement on Form
10.12 Warrant to Purchase Common Stock of Casella
S-1 of Casella as filed August 7, 1997 (file no. 333-33135)).
87
granted to Douglas R. Casella, dated as of July 26, 1993
10.19
Furniture and Fixtures Lease Renewal Agreement
(incorporated herein by reference to Exhibit 10.12 to Amendment
between Casella Associates and Casella Waste Management,
No. 1 to the registration statement on Form S-1 of Casella as
Inc., dated May 1, 1994 (incorporated herein by reference to
filed September 24, 1997 (file no. 333-33135)).
Exhibit 10.19 to the registration statement on Form S-1 of Casella
10.13 Asset Purchase Agreement by and among Kenneth H.
as filed August 7, 1997 (file no. 333-33135)).
Mead, Kerkim, Inc. and Casella Waste Management of N.Y.,
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10.20
Lease, Operations and Maintenance Agreement
10.27 Amendment No. 1 to Registration Rights Agreement by
between CV Landfill, Inc and the Registrant dated June 30, 1994
and among the Registrant, the All Cycle Stockholders, Winters
(incorporated herein by reference to Exhibit 10.20 to the
Family Partnership and Goldman, Sachs & Co., dated as of June 3,
registration statement on Form S-1 of Casella as filed August 7,
1998. (incorporated herein by reference to Exhibit 10.24 to the
1997 (file no. 333-33135)).
registration statement on Form S-1 of Casella as filed June 3,
10.21 Restated Operation and Management Agreement by
1998 (file no. 333-55879)).
and between Clinton County (N.Y.) and the Registrant dated
10.28
Amendment No. 2 to Lease Agreement, by and
September 9, 1996 (incorporated herein by reference to Exhibit
between Casella Associates and Casella Waste Management, Inc.,
10.21 to the registration statement on Form S-1 of Casella as filed
dated as of November 20, 1997 (Rutland lease). (incorporated
August 7, 1997 (file no. 333-33135)).
herein by reference to Exhibit 10.25 to the registration statement
10.22
Labor Utilization Agreement by and between Clinton
on Form S-1 of Casella as filed on June 25, 1998 (file no. 333-
County (N.Y.) and the Registrant dated August 7, 1996
57745)).
(incorporated herein by reference to Exhibit 10.22 to the
10.29 Amendment No. 1 to Stock Option Agreement
registration statement on Form S-1 of Casella as filed August 7,
(incorporated herein by reference to the Current Report on Form
1997 (file no. 333-33135)).
8-K of Casella as filed May 13, 1999).
10.23
Lease and Option Agreement by and between Waste
10.30 Agreement between Penobscot Energy Recovery
U.S.A., Inc. and New England Waste Services of Vermont, Inc.,
Company and Bangor Hydro-Electric Company dated June 21,
dated December 14, 1995 (incorporated herein by reference to
1984, as amended (incorporated herein by reference to Exhibit
Exhibit 10.23 to the registration statement on Form S-1 of Casella
10.2 to the registration statement on Form S-4 of KTI as filed
as filed August 7, 1997 (file no. 333-33135)).
October 18, 1994 (file no. 33-85234)).
10.24 Consulting and Non-Competition Agreement between
10.31 Agreement between Timber Energy Resources, Inc. and
Casella and Kenneth H. Mead, dated January 23, 1997
Florida Power Corporation dated December 31,
(incorporated herein by reference to Exhibit 10.24 to the
1984.(incorporated herein by reference to exhibit 10.31 to the
registration statement on Form S-1 of Casella as filed August 7,
registration statement on Form S-4 as filed November 12,
1997 (file no. 333-33135)).
1999(file no. 333-90913)).
10.25
Issuance of Shares by Casella to National Waste
10.32 Steam Agreement between Multitrade Group, Inc. and
Industries, Inc., dated October 19, 1994 (incorporated herein by
Tultex Corporation dated August 11, 1987, as
reference to Exhibit 10.25 to the registration statement on Form S-
amended.(incorporated herein by reference to Exhibit 10.32 to the
88
1 of Casella as filed August 7, 1997 (file no. 333-33135)).
registration statement on Form S-4 as filed November 12,
10.26 Registration Rights Agreement by and among Casella,
1999(file no. 333-90913)).
Joseph M. Winters, Andrew B. Winters, Brigid Winters, Sean
10.33
Form of Penobscot Energy Recovery Company Waste
Winters and Maureen Winters (the "All Cycle Stockholders"),
Disposal Agreement (City of Bangor) dated April 1, 1991 and
dated as of December 19, 1997. (incorporated herein by reference
Schedule of Substantially Identical Waste Disposal Agreements
Exhibit 10.23 to the registration statement filed on Form S-1 of
(incorporated herein by reference to Exhibit 10.3 to the registration
Casella as filed June 3, 1998 (file no. 333-55879)).
statement on Form S-4 of KTI as filed October 18, 1994 (file no. 33-
reference to Exhibit 4.1 to the Current Report on Form 8-K of KTI as
85234)).
filed July 8, 1998).
10.34
Steam Agreement between Multitrade Group, Inc. and
10.41
Second Amended and Restated Waste Disposal
Bassett-Walker, Inc. dated March 1, 1993, as amended.(incorporated
Agreements between Penobscot Energy Recovery Company and the
herein by reference to Exhibit 10.34 to the registration statement on
Municipal Review Committee, Inc. dated June 26, 1998 (incorporated
Form S-4 as filed
November 12, 1999(file no. 333-90913)). 10.35
herein by reference to Exhibit 4.2 to the Current Report on Form 8-K
Power Purchase Agreement between Maine Energy Recovery
of KTI as filed July 8, 1998).
Company and Central Maine Power Company dated January 12, 1984,
10.42 Non-Exclusive License to Use Technology between KTI
as amended (incorporated herein by reference to Exhibit 10.8 to the
and Oakhurst Technology, Inc. dated December 29, 1998
registration statement on Form S-4 of KTI as filed October 18, 1994
(incorporated herein by reference to Exhibit 4.5 to the Current Report
(file no. 33-85234)).
on Form 8-K of KTI as filed January 15, 1999)
10.36
Host Municipalities' Waste Handling Agreement among
10.43*
Employment Agreement between Casella Waste
Biddeford-Saco Solid Waste Committee, City of Biddeford, City of Saco
Systems, Inc. and John W. Casella dated December 8, 1999.
and Maine Energy Recovery Company dated June 7, 1991 (incorporated
10.44*
Employment Agreement between Casella Waste
herein by reference to Exhibit 10.10 to the registration statement on Form
Systems, Inc. and James W. Bohlig dated December 8, 1999.
S-4 of KTI as filed October 18, 1994 (file no. 33-85234)).
10.45*
Employment Agreement between Casella Waste
10.37
Form of Maine Energy Recovery Company Waste Handling
Systems, Inc. and Jerry S. Cifor dated December 8, 1999.
Agreement (Town of North Berwick) dated June 7, 1991 and Schedule of
10.46* Employment Agreement between Casella Waste
Substantially Identical Waste Disposal Agreements (incorporated herein by
Systems, Inc. and Martin J. Sergi dated December 8, 1999.
reference to Exhibit 10.11 to the registration statement on Form S-4 of KTI
10.47* Employment Agreement between Casella Waste
as filed October 18, 1994 (file no. 33-85234)).
Systems, Inc. and Ross Pirasteh dated December 8, 1999.
10.38
Third Amendment to Power Purchase Agreement between
Maine Energy Recovery Company, L.P. and Central Maine Power
Company dated November 6, 1995.(incorporated herein by reference
to Exhibit 10.38 to the registration statement on Form S-4 as filed
November 12, 1999(file no. 333-90913)).
21.1
23.1
27.1
2000.
27.2
Subsidiaries of Casella Waste Systems, Inc.
Consent of Arthur Andersen LLP.
Financial Data Schedule - for the year ended April 30,
Financial Data Schedule - for the year ended April 30,
10.39
Steam Supply and Operating Agreement between
1999 - as restated.
Multitrade Group, Inc. and E.I. DuPont De Nemours & Co. dated
27.3
Financial Data Schedule - for the year ended April 30,
February 11, 1998, as amended.(incorporated herein by reference to
1998 - as restated.
89
Exhibit 10.39 to the registration statement on Form S-4 as filed
* - Management Compensation Agreements
November 12, 1999(file no. 333-90913)).
10.40
Amendment No. 2 to Power Purchase Agreement
Item 14(b) Reports on Form 8-K
between Penobscot Energy Recovery Company, L.P. and Bangor-
During the quarter ended April 30, 2000 the Company filed no
Hydro Electric Company dated June 26, 1998 (incorporated herein by
reports on Form 8-K:
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90
S I G N AT U R E S
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
CASELLA WASTE SYSTEMS, INC.
By: /s/ John W. Casella
------------
John W. Casella
President and Chief
Executive Officer
Date: August 4, 2000
/s/ JOHN W. CASELLA
John W. Casella
/s/ JAMES W. BOHLIG
James W. Bohlig
/s/ JERRY S. CIFOR
Jerry S. Cifor
Douglas R. Casella
/s/ JOHN F. CHAPPLE III
John F. Chapple III
/s/ GREGORY B. PETERS
Gregory B. Peters
President and Chief Executive Officer,
Director
Senior Vice President and Chief
Operating Officer, Director
Senior Vice President and Chief Financial
Officer (Principal Accounting and Financial Officer)
Director
Director
Director
August 4, 2000
August 4, 2000
August 4, 2000
August 4, 2000
August 4, 2000
August 4, 2000
Pursuant to the requirements of the Securities Exchange Act
Ross Pirasteh
/s/ ROSS PIRASTEH
Chairman of the Board of Directors
August 4, 2000
of 1934, this Report has been signed below by the following
persons on behalf of the registrant and in the capacities and
on the date indicated.
/s/ MARTIN J. SERGI
Martin J. Sergi
George Mitchell
Wilbur L. Ross Jr.
Director
Director
Director
August 4, 2000
August 4, 2000
August 4, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
state in all material respects the financial data required to be set
ON SCHEDULE
forth therein in relation to the basic financial statements taken as
a whole.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Valuation
Accounts Schedule (Schedule II), is presented for purposes of
complying with the Securities and Exchange Commission's rules
Arthur Andersen LLP
/s/ Arthur Andersen LLP
Boston Massachusetts
and are not part of the basic financial statements. This Schedule
June 30, 2000
has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly
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casella
waste systems, inc.
casella
waste systems, inc.
25 Greens Hill Lane
Rutland, Vermont 05701
(802) 775-0325
(802) 775-6198 Fax
www.casella.com