Subsidiary Guarantors | 12. SUBSIDIARY GUARANTORS Our 2019 Notes are guaranteed jointly and severally, fully and unconditionally, by our significant wholly-owned subsidiaries. The Parent is the issuer and a non-guarantor of the 2019 Notes and the Parent has no independent assets or operations. The information which follows presents the condensed consolidating financial position as of September 30, 2015 and December 31, 2014, the consolidating results of operations and comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014, and the condensed consolidating statements of cash flows for the nine months ended September 30, 2015 and 2014 of (a) the Parent company only, (b) the combined guarantors (“Guarantors”), each of which is 100% wholly-owned by the Parent, (c) the combined non-guarantors (“Non-Guarantors”), (d) eliminating entries and (e) the consolidated total. CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2015 (in thousands) ASSETS Parent Guarantors Non - Guarantors Elimination Consolidated CURRENT ASSETS: Cash and cash equivalents $ 1,586 $ 256 $ 177 $ — $ 2,019 Accounts receivable - trade, net 376 63,459 — — 63,835 Refundable income taxes 653 — — — 653 Prepaid expenses 3,303 5,678 — — 8,981 Inventory — 4,586 — — 4,586 Deferred income taxes 1,839 — — — 1,839 Other current assets 481 3,362 — — 3,843 Total current assets 8,238 77,341 177 — 85,756 Property, plant and equipment, net 5,791 391,587 — — 397,378 Goodwill — 118,976 — — 118,976 Intangible assets, net 30 9,812 — — 9,842 Restricted assets 4,500 783 — — 5,283 Cost method investments 14,115 1,932 — (1,932 ) 14,115 Investments in subsidiaries 17,625 — — (17,625 ) — Other non-current assets 18,797 10,518 — — 29,315 60,858 533,608 — (19,557 ) 574,909 Intercompany receivable 495,276 (458,225 ) (38,983 ) 1,932 — $ 564,372 $ 152,724 $ (38,806 ) $ (17,625 ) $ 660,665 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Parent Guarantors Non - Guarantors Elimination Consolidated CURRENT LIABILITIES: Current maturities of long-term debt and capital leases $ 94 $ 1,212 $ — $ — $ 1,306 Accounts payable 19,787 30,056 263 — 50,106 Accrued payroll and related expenses 1,233 5,422 — — 6,655 Accrued interest 5,139 12 — — 5,151 Current accrued capping, closure and post-closure costs — 792 3 — 795 Other accrued liabilities 8,090 8,794 — — 16,884 Total current liabilities 34,343 46,288 266 — 80,897 Long-term debt and capital leases, less current maturities 529,551 888 — — 530,439 Accrued capping, closure and post-closure costs, less current portion — 41,275 34 — 41,309 Deferred income taxes 7,272 — — — 7,272 Other long-term liabilities 8,689 7,615 — — 16,304 — STOCKHOLDERS’ (DEFICIT) EQUITY: Casella Waste Systems, Inc. stockholders (deficit)’ equity (15,483 ) 56,658 (39,033 ) (17,625 ) (15,483 ) Noncontrolling interests — — (73 ) — (73 ) Total stockholders’ (deficit) equity (15,483 ) 56,658 (39,106 ) (17,625 ) (15,556 ) $ 564,372 $ 152,724 $ (38,806 ) $ (17,625 ) $ 660,665 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2014 (in thousands) ASSETS Parent Guarantors Non- Guarantors Elimination Consolidated CURRENT ASSETS: Cash and cash equivalents $ 1,596 $ 253 $ 356 $ — $ 2,205 Restricted cash — 76 — — 76 Accounts receivable - trade, net 597 55,053 100 — 55,750 Refundable income taxes 554 — — — 554 Prepaid expenses 3,622 5,136 5 — 8,763 Inventory — 4,345 29 — 4,374 Deferred income taxes 2,095 — — — 2,095 Other current assets 296 4,549 7 — 4,852 Total current assets 8,760 69,412 497 — 78,669 Property, plant and equipment, net 5,049 408,843 650 — 414,542 Goodwill — 119,170 — — 119,170 Intangible assets, net 98 11,710 — — 11,808 Restricted assets 5,819 813 — — 6,632 Cost method investments 14,432 1,932 — (1,932 ) 14,432 Investments in subsidiaries (9,888 ) — — 9,888 — Other non-current assets 14,611 9,931 — — 24,542 30,121 552,399 650 7,956 591,126 Intercompany receivable 537,228 (500,267 ) (38,893 ) 1,932 — $ 576,109 $ 121,544 $ (37,746 ) $ 9,888 $ 669,795 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Parent Guarantors Non - Guarantors Elimination Consolidated CURRENT LIABILITIES: Current maturities of long-term debt and capital leases $ 89 $ 1,567 $ — $ — $ 1,656 Accounts payable 17,953 30,040 525 — 48,518 Accrued payroll and related expenses 1,536 4,751 2 — 6,289 Accrued interest 11,083 11 — — 11,094 Current accrued capping, closure and post-closure costs — 2,205 3 — 2,208 Other accrued liabilities 8,618 7,957 92 — 16,667 Total current liabilities 39,279 46,531 622 — 86,432 Long-term debt and capital leases, less current maturities 532,889 1,166 — — 534,055 Accrued capping, closure and post-closure costs, less current portion — 37,589 32 — 37,621 Deferred income taxes 7,080 — — — 7,080 Other long-term liabilities 9,114 7,433 80 — 16,627 STOCKHOLDERS’ (DEFICIT) EQUITY: Casella Waste Systems, Inc. stockholders (deficit)’ equity (12,253 ) 28,825 (38,713 ) 9,888 (12,253 ) Noncontrolling interests — — 233 — 233 Total stockholders’ (deficit) equity (12,253 ) 28,825 (38,480 ) 9,888 (12,020 ) $ 576,109 $ 121,544 $ (37,746 ) $ 9,888 $ 669,795 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) Parent Guarantors Non - Elimination Consolidated Revenues $ — $ 146,185 $ — $ — $ 146,185 Operating expenses: Cost of operations 6 99,582 68 — 99,656 General and administration 2,054 15,385 9 — 17,448 Depreciation and amortization 267 16,118 — — 16,385 2,327 131,085 77 — 133,489 Operating income (loss) (2,327 ) 15,100 (77 ) — 12,696 Other expense (income), net: Interest income — (56 ) — — (56 ) Interest expense 10,053 34 — — 10,087 (Income) loss on derivative instruments 41 — — — 41 Loss on debt extinguishment 345 — — — 345 (Income) loss from consolidated entities (15,247 ) — — 15,247 — Other income (13 ) (165 ) — — (178 ) Other expense (income), net (4,821 ) (187 ) — 15,247 10,239 Income (loss) before income taxes 2,494 15,287 (77 ) (15,247 ) 2,457 Provision (benefit) for income taxes 198 — — — 198 Net income (loss) 2,296 15,287 (77 ) (15,247 ) 2,259 Less: Net income (loss) attributable to noncontrolling interests — — (37 ) — (37 ) Net income (loss) attributable to common stockholders $ 2,296 $ 15,287 $ (40 ) $ (15,247 ) $ 2,296 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2014 (in thousands) Parent Guarantors Non - Elimination Consolidated Revenues $ — $ 141,591 $ 333 $ — $ 141,924 Operating expenses: Cost of operations 11 98,199 18 — 98,228 General and administration 1,226 15,996 (11 ) — 17,211 Depreciation and amortization 187 15,600 — — 15,787 Environmental remediation charge — 75 — — 75 1,424 129,870 7 — 131,301 Operating income (loss) (1,424 ) 11,721 326 — 10,623 Other expense (income), net: Interest income — (84 ) — — (84 ) Interest expense 9,621 (97 ) — — 9,524 (Income) loss on derivative instruments (82 ) — — — (82 ) (Income) loss from consolidated entities (12,245 ) — — 12,245 — Other income (27 ) (177 ) — — (204 ) Other expense (income), net (2,733 ) (358 ) — 12,245 9,154 Income (loss) before income taxes 1,309 12,079 326 (12,245 ) 1,469 Provision (benefit) for income taxes 229 — — — 229 Net income (loss) 1,080 12,079 326 (12,245 ) 1,240 Less: Net income (loss) attributable to noncontrolling interests — — 160 — 160 Net income (loss) attributable to common stockholders $ 1,080 $ 12,079 $ 166 $ (12,245 ) $ 1,080 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) Parent Guarantors Non - Guarantors Elimination Consolidated Revenues $ — $ 406,352 $ 124 $ — $ 406,476 Operating expenses: Cost of operations (43 ) 285,816 452 — 286,225 General and administration 1,858 50,452 14 — 52,324 Depreciation and amortization 767 45,607 — — 46,374 Divestiture transactions — (2,761 ) (2,850 ) — (5,611 ) 2,582 379,114 (2,384 ) — 379,312 Operating income (loss) (2,582 ) 27,238 2,508 — 27,164 Other expense (income), net: Interest income (47 ) (220 ) — — (267 ) Interest expense 30,137 142 84 — 30,363 Loss on debt extinguishment 866 — — — 866 (Income) loss on derivative instruments 239 — — — 239 (Income) loss from consolidated entities (28,942 ) — — 28,942 — Other income 4 (391 ) — — (387 ) Other expense (income), net 2,257 (469 ) 84 28,942 30,814 Income (loss) before income taxes (4,839 ) 27,707 2,424 (28,942 ) (3,650 ) Provision (benefit) for income taxes 1,112 — — — 1,112 Net income (loss) (5,951 ) 27,707 2,424 (28,942 ) (4,762 ) Less: Net income (loss) attributable to noncontrolling interests — — 1,189 — 1,189 Net income (loss) attributable to common stockholders $ (5,951 ) $ 27,707 $ 1,235 $ (28,942 ) $ (5,951 ) CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2014 (in thousands) Parent Guarantors Non - Guarantors Elimination Consolidated Revenues $ — $ 391,386 $ 1,014 $ — $ 392,400 Operating expenses: Cost of operations (11 ) 280,918 943 — 281,850 General and administration 2,366 46,814 12 — 49,192 Depreciation and amortization 675 45,631 256 — 46,562 Divestiture transactions — — 7,455 — 7,455 Development project charge — 1,394 — — 1,394 Severance and reorganization costs — 430 — — 430 Environmental remediation charge — 75 — — 75 Expense from divestiture, acquisition and financing costs — 24 — — 24 Gain on settlement of acquisition related contingent consideration — (1,058 ) — — (1,058 ) 3,030 374,228 8,666 — 385,924 Operating income (loss) (3,030 ) 17,158 (7,652 ) — 6,476 Other expense (income), net: Interest income (2 ) (277 ) — — (279 ) Interest expense 28,769 (51 ) — — 28,718 (Income) loss on derivative instruments 366 — — — 366 (Income) loss from equity method investments — (90 ) — — (90 ) (Gain) loss on sale of equity method investment — — 221 — 221 (Income) loss from consolidated entities (13,925 ) — — 13,925 — Other income (300 ) (472 ) — — (772 ) Other expense (income), net 14,908 (890 ) 221 13,925 28,164 Income (loss) before income taxes (17,938 ) 18,048 (7,873 ) (13,925 ) (21,688 ) Provision (benefit) for income taxes 1,060 — — — 1,060 Net income (loss) (18,998 ) 18,048 (7,873 ) (13,925 ) (22,748 ) Less: Net income (loss) attributable to noncontrolling interests — — (3,750 ) — (3,750 ) Net income (loss) attributable to common stockholders $ (18,998 ) $ 18,048 $ (4,123 ) $ (13,925 ) $ (18,998 ) CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) THREE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) Parent Guarantors Non - Elimination Consolidated Net income (loss) $ 2,296 $ 15,287 $ (77 ) $ (15,247 ) $ 2,259 Other comprehensive income (loss), net of tax: Unrealized gain (loss) resulting from changes in fair value of marketable securities — (44 ) — — (44 ) Other comprehensive income (loss), net of tax — (44 ) — — (44 ) Comprehensive income (loss) 2,296 15,243 (77 ) (15,247 ) 2,215 Less: Comprehensive income (loss) attributable to noncontrolling interests — — (37 ) — (37 ) Comprehensive income (loss) attributable to common stockholders $ 2,296 $ 15,243 $ (40 ) $ (15,247 ) $ 2,252 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) THREE MONTHS ENDED SEPTEMBER 30, 2014 (in thousands) Parent Guarantors Non - Elimination Consolidated Net income (loss) $ 1,080 $ 12,079 $ 326 $ (12,245 ) $ 1,240 Other comprehensive income (loss), net of tax: Unrealized gain (loss) resulting from changes in fair value of marketable securities, net of tax — 6 — — 6 Other comprehensive income (loss), net of tax — 6 — — 6 Comprehensive income (loss) 1,080 12,085 326 (12,245 ) 1,246 Less: Comprehensive income (loss) attributable to noncontrolling interests — — 160 — 160 Comprehensive income (loss) attributable to common stockholders $ 1,080 $ 12,085 $ 166 $ (12,245 ) $ 1,086 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) NINE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) Parent Guarantors Non - Elimination Consolidated Net income (loss) $ (5,951 ) $ 27,707 $ 2,424 $ (28,942 ) $ (4,762 ) Other comprehensive income (loss), net of tax: Unrealized gain (loss) resulting from changes in fair value of marketable securities — (75 ) — — (75 ) Other comprehensive income (loss), net of tax — (75 ) — — (75 ) Comprehensive income (loss) (5,951 ) 27,632 2,424 (28,942 ) (4,837 ) Less: Comprehensive income (loss) attributable to noncontrolling interests — — 1,189 — 1,189 Comprehensive income (loss) attributable to common stockholders $ (5,951 ) $ 27,632 $ 1,235 $ (28,942 ) $ (6,026 ) CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) NINE MONTHS ENDED SEPTEMBER 30, 2014 (in thousands) Parent Guarantors Non - Elimination Consolidated Net income (loss) $ (18,998 ) $ 18,048 $ (7,873 ) $ (13,925 ) $ (22,748 ) Other comprehensive income (loss), net of tax: Unrealized gain (loss) resulting from changes in fair value of marketable securities, net of tax — 9 — — 9 Other comprehensive income (loss), net of tax — 9 — — 9 Comprehensive income (loss) (18,998 ) 18,057 (7,873 ) (13,925 ) (22,739 ) Less: Comprehensive income (loss) attributable to noncontrolling interests — — (3,750 ) — (3,750 ) Comprehensive income (loss) attributable to common stockholders $ (18,998 ) $ 18,057 $ (4,123 ) $ (13,925 ) $ (18,989 ) CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) Parent Guarantors Non - Elimination Consolidated Net cash provided by (used in) operating activities $ 3,736 $ 37,423 $ (629 ) $ — $ 40,530 Cash Flows from Investing Activities: Additions to property, plant and equipment (1,441 ) (29,597 ) — — (31,038 ) Payments on landfill operating lease contracts — (2,956 ) — — (2,956 ) Payments related to investments — 1,555 (1,555 ) — — Proceeds from divestiture transactions — 1,835 3,500 — 5,335 Proceeds from sale of property and equipment — 636 — — 636 Proceeds from property insurance settlement — 546 — — 546 Net cash provided by (used in) investing activities (1,441 ) (27,981 ) 1,945 — (27,477 ) Cash Flows from Financing Activities: Proceeds from long-term borrowings 296,911 18 — — 296,929 Principal payments on long-term debt (300,568 ) (652 ) — — (301,220 ) Change in restricted cash 1,319 — — — 1,319 Payments of financing costs (8,991 ) — — — (8,991 ) Payment of redemption premium on long-term debt (121 ) — — — (121 ) Proceeds from the exercise of share based awards 161 — — — 161 Excess tax benefit on the vesting of share based awards 179 — — — 179 Distributions to noncontrolling interest holder — — (1,495 ) — (1,495 ) Intercompany borrowings 8,805 (8,805 ) — — — Net cash provided by (used in) financing activities (2,305 ) (9,439 ) (1,495 ) — (13,239 ) Net increase (decrease) in cash and cash equivalents (10 ) 3 (179 ) — (186 ) Cash and cash equivalents, beginning of period 1,596 253 356 — 2,205 Cash and cash equivalents, end of period $ 1,586 $ 256 $ 177 $ — $ 2,019 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2014 (in thousands) Parent Guarantors Non-Guarantors Elimination Consolidated Net cash provided by (used in) operating activities $ (4,295 ) $ 41,623 $ (64 ) $ — $ 37,264 Cash Flows from Investing Activities: Acquisitions, net of cash acquired — (62 ) — — (62 ) Acquisition related additions to property, plant and equipment — (266 ) — — (266 ) Additions to property, plant and equipment (689 ) (42,325 ) — — (43,014 ) Payments on landfill operating lease contracts — (3,017 ) — — (3,017 ) Proceeds from sale of property and equipment — 559 — — 559 Proceeds from sale of equity method investment 597 — — — 597 Payments related to investments (84 ) (310 ) 310 — (84 ) Net cash provided by (used in) investing activities (176 ) (45,421 ) 310 — (45,287 ) Cash Flows from Financing Activities: Proceeds from long-term borrowings 134,560 — — — 134,560 Principal payments on long-term debt (126,121 ) (592 ) — — (126,713 ) Payments of financing costs (24 ) — — — (24 ) Proceeds from the exercise of share based awards 286 — — — 286 Excess tax benefit on the vesting of share based awards 14 — — — 14 Intercompany borrowings (4,139 ) 4,139 — — — Net cash provided by (used in) financing activities 4,576 3,547 — — 8,123 Net cash provided by (used in) discontinued operations — 263 — — 263 Net increase (decrease) in cash and cash equivalents 105 12 246 — 363 Cash and cash equivalents, beginning of period 2,312 243 140 — 2,695 Cash and cash equivalents, end of period $ 2,417 $ 255 $ 386 $ — $ 3,058 |