SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
Commission File Number 0-22417
Waste Industries, Inc.
(exact name of Registrant as specified in its charter)
North Carolina 56-0954929
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3301 Benson Drive, Suite 601
Raleigh, North Carolina
(Address of principal executive offices)
27609
(Zip Code)
(919) 325-3000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, No Par Value 13,863,495 shares
(Class) (Outstanding at May 10, 2000)
PART 1 - Financial Information
Item 1. Financial Statements
WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
DECEMBER 31, MARCH 31,
1999 2000
Assets (UNAUDITED)
---------------- ----------------
Current assets:
Cash and cash equivalents $3,176 $2,898
Accounts receivable - trade, less allowance for
uncollectible accounts (1999 --$921; 2000 -- $918) 26,756 24,341
Inventories 1,624 1,772
Prepaid expenses and other current assets 3,017 3,542
Deferred income taxes 910 910
---------------- ----------------
Total current assets 35,483 33,463
---------------- ----------------
Property and equipment, net 138,523 145,127
Intangible assets, net 71,458 71,058
Other noncurrent assets 3,740 5,401
---------------- ----------------
Total assets $249,204 $255,049
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $5,826 $7,021
Capital lease obligations 1,042 995
Accounts payable - trade 13,355 10,117
Federal and state income taxes payable 1,487 1,671
Accrued expenses and other liabilities 4,083 4,789
Deferred revenue 1,875 2,361
---------------- ----------------
Total current liabilities 27,668 26,954
---------------- ----------------
Long-term debt, net of current maturities 137,363 140,593
Capital lease obligations 2,337 2,124
Noncurrent deferred income taxes 10,105 11,184
Disposal site closure and long-term care obligations (Note 4) 1,590 1,701
Commitments and contingencies
Shareholders' equity: (Note 3)
Common stock, no par value, shares authorized --- 80,000,000;
shares issued and outstanding:
1999 -- 13,854,355; 2000 -- 13,854,591 46,700 46,702
Paid-in capital 7,245 7,245
Retained earnings 28,620 30,970
Note receivable -- Liberty Waste (11,538) (11,538)
Stockholders' loans (886) (886)
---------------- ----------------
Total shareholders' equity 70,141 72,493
---------------- ----------------
Total liabilities and shareholders' equity $249,204 $255,049
================ ================
See Notes to Unaudited Condensed Consolidated Financial Statements.
2
WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
------------------------------------------------
1999 2000
--------------------- --------------------
REVENUES:
Service $47,291 $56,914
Equipment 246 369
--------------------- --------------------
Total revenues 47,537 57,283
--------------------- --------------------
OPERATING COSTS AND EXPENSES:
Operations 29,232 35,510
Equipment sales 105 221
Selling, general and administrative 7,092 9,013
Depreciation and amortization 5,057 6,203
--------------------- --------------------
Total operating costs and expenses 41,486 50,947
--------------------- --------------------
Operating income 6,051 6,336
--------------------- --------------------
Interest expense 1,812 2,815
Interest income (194) (344)
Other (94) (53)
--------------------- --------------------
Total other expense, net 1,524 2,418
--------------------- --------------------
Income before income taxes 4,527 3,918
Income tax expense 1,675 1,568
--------------------- --------------------
Net income $2,852 $2,350
===================== ====================
Earnings per share: (Note 2)
Basic 0.21 0.17
Diluted 0.21 0.17
Weighted average common shares outstanding:
Basic 13,502 13,854
Diluted 13,860 14,132
See Notes to Unaudited Condensed Consolidated Financial Statements.
3
WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
-----------------------------------------
1999 2000
------------------ -------------------
OPERATING ACTIVITIES
Net income $2,852 $2,350
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,057 6,203
Gain on sale of property and equipment (53) (47)
Provision for deferred income taxes 375 1,079
Disposal site closure and long-term care obligations 293 111
Changes in assets and liabilities, net of effects from acquisitions of related
businesses:
Accounts receivable - trade (1,322) 2,415
Inventories (105) (148)
Prepaid and other current assets (517) (525)
Accounts payable - trade (1,209) (3,238)
Federal and state income taxes payable 872 184
Accrued expenses and other liabilities 343 706
Deferred revenue 346 486
------------------ -------------------
Net cash provided by operating activities 6,932 9,576
------------------ -------------------
INVESTING ACTIVITIES
Dispositions (acquisitions) of other non-current assets 2 (1,663)
Acquisitions of related business, net of cash acquired (13,224) (3,477)
Proceeds from sale of property and equipment 88 163
Purchases of property and equipment (8,747) (9,044)
------------------ -------------------
Net cash used in investing activities (21,881) (14,021)
------------------ -------------------
FINANCING ACTIVITIES
Proceeds from issuance of long term debt 48,142 5,745
Principal payments of long-term debt (27,298) (1,320)
Principal payments of capital lease obligations (260)
Repayments of loans and receivables from shareholders 91
Net proceeds from common stock issuance 3,250 2
Net proceeds from exercised options 44
Loan to Liberty Waste (11,538)
Other (6)
------------------ -------------------
Net cash provided by financing activities 12,685 4,167
------------------ -------------------
Decrease in cash and cash equivalents (2,264) (278)
Cash and cash equivalents, beginning of period 3,665 3,176
------------------ -------------------
Cash and cash equivalents, end of period 1,401 2,898
================== ===================
See Notes to Unaudited Condensed Consolidated Financial Statements.
4
WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. As applicable under such regulations,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The Company believes that the presentations and
disclosures in the financial statements included herein are adequate to make the
information not misleading. The financial statements reflect normal adjustments
which are necessary for a fair statement of the results for the interim periods
presented. Operating results for interim periods are not necessarily indicative
of the results for full years or the interim periods.
The condensed consolidated financial statements included herein should be read
in conjunction with the consolidated financial statements and the related notes
thereto included in the Company's Annual report on Form 10-K for the year ended
December 31, 1999.
RECENT DEVELOPMENTS
Purchase Acquisitions:
During the three months ended March 31, 2000, the Company made the following
acquisitions accounted for as purchases:
o On March 1, 2000, the Company acquired of Trashbusters, LLC for
$861,000 in cash. This tuck-in acquisition further expands the
Company's existing operations in our Easley, South Carolina facility,
which serves the Greenville/Spartanburg area.
o On March 23, 2000, the Company acquired a C & D landfill in the
Greenville/Spartanburg South Carolina area from South Eastern
Associates, Inc. known as Loveless & Loveless, for $1.8 million in
cash. This acquisition provides the Company with its seventh landfill.
o On March 23, 2000, the Company acquired J&B Partnership, LLC for
$510,000 in cash. This tuck-in to our Easley, South Carolina facility
provides transfer operations for the Greenville/Spartanburg area.
Components of cash used for the purchase acquisitions reflected in the unaudited
condensed consolidated statement of cash flows for the three months ended March
31, 2000 are as follows (in thousands):
Fair value of tangible assets acquired $ 3,126
Goodwill 351
---------
Net acquisition costs $ 3,477
=========
Property and equipment are stated at cost. Depreciation expense is calculated on
the straight-line method over 5-30 years. Goodwill is amortized using the
straight-line method over 25-40 years. These estimated useful lives assigned to
goodwill are based on the period over which management believes that such
goodwill can be recovered through undiscounted future operating cash flows of
the acquired operations.
5
1. ORGANIZATION AND BASIS OF PRESENTATION - (CONTINUED)
In accordance with the purchase method of accounting, the purchase price has
been allocated to the underlying assets and liabilities based on their
respective fair values at the dates of acquisition. This allocation has been
based on preliminary estimates which might be revised at a later date.
Certain 1999 financial statement amounts have been reclassified to conform with
the 2000 presentation.
The proforma effects of acquisitions are not considered material to the
consolidated statement of income.
2. EARNINGS PER SHARE
Basic and diluted earnings per share computations are based on the
weighted-average common stock outstanding and include the dilutive effect of
stock options using the treasury stock method.
3. SHAREHOLDERS' EQUITY
On February 29, 2000, the Company issued 236 shares of Company common stock with
a fair value of approximately $2,500.
4. CONTINGENCIES
Claims and lawsuits arising in the ordinary course of business have been filed
or are pending against the Company. In the opinion of management, all these
matters have been adequately provided for, are adequately covered by insurance,
or are of such kind that if disposed of unfavorably, would not have a material
adverse effect on the Company's financial position or results of operations.
The Company will have material financial obligations relating to disposal site
closure and long-term care obligations of landfill facilities which it has
acquired through the three-month period ended March 31, 2000. The Company
provides accruals for future obligations (generally for a term of 30 to 40 years
after final closure of the landfill) based on engineering estimates of
consumption of permitted landfill airspace over the useful life of the landfill.
The Company's ultimate financial obligations for actual closing or post-closing
costs might exceed the amount accrued and reserved or amounts otherwise
receivable pursuant to insurance policies or trust funds. Such a circumstance
could have a material adverse effect on the Company's financial condition and
results of operations.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN THE ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1999. SOME MATTERS DISCUSSED IN THIS
MANAGEMENT'S DISCUSSION AND ANALYSIS ARE "FORWARD-LOOKING STATEMENTS" INTENDED
TO QUALIFY FOR THE SAFE HARBORS FROM LIABILITY ESTABLISHED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS CAN
GENERALLY BE IDENTIFIED AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT WILL
INCLUDE WORDS SUCH AS THE COMPANY "BELIEVES," "ANTICIPATES," "EXPECTS" OR WORDS
OF SIMILAR IMPORT. SIMILARLY, STATEMENTS THAT DESCRIBE THE COMPANY'S FUTURE
PLANS, OBJECTIVES OR GOALS ARE ALSO FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED. THESE
RISKS AND UNCERTAINTIES INCLUDE THOSE RELATED TO THE ABILITY TO MANAGE GROWTH,
THE AVAILABILITY AND INTEGRATION OF ACQUISITION TARGETS, COMPETITION, GEOGRAPHIC
CONCENTRATION, GOVERNMENT REGULATION AND OTHERS SET FORTH IN THE COMPANY'S FORM
10-K. YOU SHOULD CONSIDER THESE FACTORS CAREFULLY IN EVALUATING THE
FORWARD-LOOKING STATEMENTS AND ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS MADE HEREIN ARE ONLY
MADE AS OF THE DATE OF THIS REPORT AND THE COMPANY UNDERTAKES NO OBLIGATION TO
PUBLICLY UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR
CIRCUMSTANCES.
OVERVIEW
Waste Industries is a regional, vertically integrated provider of solid waste
services. The Company operates primarily in North Carolina, South Carolina,
Virginia, Tennessee, Mississippi, Alabama, Georgia and Florida, providing solid
waste collection, transfer, recycling, processing and disposal services for
commercial, industrial, municipal and residential customers. We operate 43
collection operations, 23 transfer stations, approximately 100 county
convenience drop-off centers, eight recycling facilities and seven landfills in
the southeastern U.S. The Company had revenues of $214.7 million and operating
income of $26.0 million in the year ended December 31, 1999, and revenues of
$57.3 million and operating income of $6.3 million in the three months ended
March 31, 2000.
The Company's presence in high-growth markets in the southeastern U.S.,
including North Carolina, Georgia and Virginia, has supported its internal
growth. In addition, from 1990 through the three months ended March 31, 2000,
the Company acquired 54 solid waste collection or disposal operations. Current
levels of population growth and economic development in the southeastern U.S.
and the Company's strong market presence in the region should provide the
Company an opportunity to increase its revenues and market share. As the Company
adds customers in existing markets, its density should improve, which the
Company expects will increase its collection efficiencies and profitability.
RESULTS OF OPERATIONS
GENERAL
The Company's branch waste collection operations generate revenues from fees
collected from commercial, industrial and residential collection and transfer
station customers. The Company derives a substantial portion of its collection
revenues from commercial and industrial services that are performed under
one-year to five-year service agreements. The Company's residential collection
services are performed either on a subscription basis with individual
households, or under contracts with municipalities, apartment owners, homeowners
associations or mobile home park operators. Residential customers on a
subscription basis are billed quarterly in advance and provide the Company with
a stable source of revenues. A liability for future service is recorded upon
billing and revenues are recognized at the end of each month in which services
are actually provided. Municipal contracts in the Company's existing markets are
typically awarded, at least initially, on a competitive bid basis and thereafter
on a bid or negotiated basis and usually range in duration from one to five
years. Municipal contracts generally provide consistent cash flow during the
term of the contracts.
The Company's prices for its solid waste services are typically determined by
the collection frequency and level of service, route density, volume, weight and
type of waste collected, type of equipment and containers furnished, the
distance to the disposal or processing facility, the cost of disposal or
processing, and prices charged in its markets for similar services.
The Company's ability to pass on price increases is sometimes limited by the
terms of its contracts. Long-term solid waste collection contracts typically
contain a formula, generally based on a predetermined published price index, for
automatic adjustment of fees to cover increases in some, but not all, operating
costs.
7
The Company currently operates approximately 100 convenience sites under
contract with 14 counties in order to consolidate waste in rural areas. These
contracts, which are usually competitively bid, generally have terms of one to
five years and provide consistent cash flow during the term of the contract
since the Company is paid regularly by the local government. The Company also
operates eight recycling processing facilities as part of its collection and
transfer operations where it collects, processes, sorts and recycles paper
products, aluminum and steel cans, pallets, plastics, glass and other items. The
Company's recycling facilities generate revenues from the collection, processing
and resale of recycled commodities, particularly recycled wastepaper. Through a
centralized effort, the Company resells recycled commodities using commercially
reasonable practices and seeks to manage commodity pricing risk by spreading the
risk among its customers. The Company also operates curbside residential
recycling programs in connection with its residential collection operations in
most of the communities it serves.
Operating expenses for the Company's collection operations include labor, fuel,
equipment maintenance and tipping fees paid to landfills. The Company owns,
operates or transfers from 23 transfer stations that reduce the Company's costs
by improving its utilization of collection personnel and equipment and by
consolidating the waste stream to gain more favorable disposal rates. The
Company owns and operates seven landfills. Operating expenses for these landfill
operations include labor, equipment, legal and administrative, ongoing
environmental compliance, host community fees, site maintenance and accruals for
closure and post-closure maintenance. Cost of equipment sales primarily consists
of the Company's cost to purchase the equipment that it resells.
The Company capitalizes certain expenditures related to pending acquisitions or
development projects. Indirect acquisition and project development costs, such
as executive and corporate overhead, public relations and other corporate
services, are expensed as incurred. The Company's policy is to charge against
net income any unamortized capitalized expenditures and advances (net of any
portion thereof that the Company estimates to be recoverable, through sale or
otherwise) relating to any operation that is permanently shut down, any pending
acquisition that is not consummated and any landfill development project that is
not expected to be successfully completed. Engineering, legal, permitting,
construction and other costs directly associated with the acquisition or
development of a landfill, together with associated interest, are capitalized.
Selling, general and administrative ("SG&A") expenses include management
salaries, clerical and administrative overhead, professional services, costs
associated with the Company's marketing and sales force and community relations
expense.
Property and equipment is depreciated over the estimated useful life of the
assets using the straight line method.
Other income and expense, which is comprised primarily of interest income has
not historically been material to the Company's results of operations.
To date, inflation has not had a significant impact on the Company's operations.
8
The following table sets forth for the periods indicated the percentage of
revenues represented by the individual line items reflected in the Company's
unaudited condensed statements of operations:
Three Months Ended
March 31,
-------------------------
1999 2000
--------- ---------
Total revenues 100.0% 100.0%
Service 99.5% 99.4%
Equipment 0.5% 0.6%
--------- ---------
Total cost of operations 61.6% 62.0%
Cost of equipment sales 0.2% 0.4%
Selling, general and administrative 14.9% 15.7%
Depreciation and amortization 10.6% 10.8%
--------- ---------
Operating income 12.7% 11.1%
--------- ---------
Interest expense 3.4% 4.3%
Other income -0.2% -
--------- ---------
Income before income taxes 9.5% 6.8%
Income taxes 3.5% 2.7%
--------- ---------
Net income 6.0% 4.1%
--------- ---------
THREE MONTHS ENDED MARCH 31, 2000 VS. THREE MONTHS ENDED MARCH 31, 1999
REVENUES. Total revenues increased approximately $9.7 million, or 21.0%, for the
three-month period ended March 31, 2000, as compared with the same period in
1999. This increase was attributable primarily to the following factors: (1) the
effect of 17 businesses acquired during the year ended December 31, 1999; and
(2) to a lesser extent, increased collection volumes resulting from new
municipal and commercial contracts and residential subscriptions.
COST OF OPERATIONS. Cost of operations increased $6.3 million, or 21.5%, for the
three-month period ended March 31, 2000, compared to the same period in 1999.
This increase was attributable primarily to the following factors: (1) the
effect of 17 businesses acquired during the year ended December 31, 1999; (2)
higher diesel fuel costs, and (3) to a lesser extent, increased collection
volumes resulting from new municipal and commercial contracts and residential
subscriptions.
SG&A. SG&A increased $1.9 million or 27.1%, for the three-month period ended
March 31, 2000 as compared with the same period in 1999. As a percentage of
revenues, SG&A increased from 14.9% to 15.7% in the first quarter of 2000
compared to the first quarter of 1999, due primarily to 1999 stand-alone
acquisitions requiring higher costs to operate.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased $1.1
million, or 22.7%, for the three-month period ended March 31, 2000, compared to
the same period in 1999. Depreciation and amortization, as a percentage of
revenues, has increased to 10.8% from 10.6% for the three-month period ended
March 31, 2000, compared to the same period in 1999. The principal reasons for
these increases were depreciation of additional property and equipment acquired
and put into service due to higher collection volumes, depreciation of the
additional assets of businesses acquired, and increased amortization related to
newly acquired landfills.
INTEREST EXPENSE. Interest expense increased $1.0 million, or 55.4%, for the
three-month period ended March 31, 2000, compared to the same period in 1999.
This increase was primarily due to the higher level of the average outstanding
indebtedness as well as a higher interest rate related to the Company's
purchases of assets of businesses acquired.
9
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 2000 was $6.5 million compared to
$7.8 million at December 31, 1999. The Company's strategy in managing its
working capital has been to apply the cash generated from operations that
remains available after satisfying its working capital and capital expenditure
requirements to reduce indebtedness under its bank revolving credit facility and
to minimize its cash balances. The Company generally finances its working
capital requirements from internally generated funds and bank borrowings. In
addition to internally generated funds, the Company has in place financing
arrangements to satisfy its currently anticipated working capital needs in 2000.
As of March 31, 2000, the Company had fully drawn down its three Prudential
Insurance Company of America term facilities, leaving the Company with an
uncommitted shelf facility of $25 million. The Prudential credit facility
requires the Company to maintain financial ratios, such as minimum net worth,
net income, and limits on capital expenditures and indebtedness. Interest on the
Prudential term facilities is paid quarterly, based on a fixed rate of 7.28%,
6.96% and 6.84%, respectively. Of the Company's committed Prudential facilities,
$25 million mature in April 2006, $25 million mature in June 2008 and $25
million mature in February 2009, subject to renewal.
In November 1999, the Company entered into a revolving credit agreement with a
syndicate of lending institutions for which BankBoston, N.A. acts as agent. This
credit facility provides up to $200 million through November 2004. The Company
has drawn approximately $55.0 million on this facility to terminate and paid off
its Branch Banking & Trust ("BB&T") facility in November 1999. Virtually all of
the assets of the Company and its subsidiaries, including the Company's interest
in the equity securities of its subsidiaries, secure the Company's obligations
under the BankBoston credit facility. Pursuant to an intercreditor agreement
with BankBoston, Prudential shares in the collateral pledged under the
BankBoston credit facility. In addition, the Company's subsidiaries have
guaranteed the Company's obligations under the Prudential term loan facilities.
The BankBoston credit facility bears interest at a rate per annum equal to, at
the Company's option, either a BankBoston base rate or at the Eurodollar rate
(based on Eurodollar interbank market rates) plus, in each case, a percentage
rate that fluctuates, based on the ratio of our funded debt to EBITDA, from 0%
to 0.5% for base rate borrowings and 0.2% to 0.4% for Eurodollar rate
borrowings. The BankBoston facility requires the Company to maintain financial
ratios and satisfy other requirements, such as minimum net worth, net income,
and limits on capital expenditures and indebtedness. It also requires the
lenders' approval of acquisitions in some circumstances. As of March 31, 2000 an
aggregate of approximately $65.0 million was outstanding under the BankBoston
credit facility, and the average interest rate on outstanding borrowings was
approximately 8.44%.
Net cash provided by operating activities totaled $9.6 million for the three
months ended March 31, 2000, compared to $6.9 million for the three months ended
March 31, 1999. This increase was caused principally by increases in
depreciation and cash generated from changes in operating assets and
liabilities.
Net cash used in investing activities totaled $14.0 million for the three-months
ended March 31, 2000, compared to $21.9 million for the three-months ended March
31, 1999. This decrease was caused principally by a lower level of acquisitions
of related businesses.
We currently expect capital expenditures for 2000 to be approximately $31.0
million, compared to $35.0 million in 1999. In 2000, we expect to use
approximately $22.0 million for vehicle and equipment additions and
replacements, approximately $2.3 for landfill site and cell development,
approximately $1.1 million for support equipment and approximately $5.6 million
for facilities, additions and improvements. The Company intends to fund its
planned 2000 capital expenditures principally through internally generated funds
and borrowings under existing credit facilities. In addition, the Company
anticipates that it might require substantial additional capital expenditures to
facilitate its growth strategy of acquiring solid waste collection and disposal
businesses. As an owner of and potential acquirer of additional new landfill
disposal facilities, the Company also be required to make significant
expenditures to bring newly acquired disposal facilities into compliance with
applicable regulatory requirements, obtain permits for newly acquired disposal
facilities or expand the available disposal capacity at any such newly acquired
disposal facilities. The amount of these expenditures cannot be currently
determined, because they will depend on the nature and extent of any acquired
landfill disposal facilities, the condition of any facilities acquired and the
permitting status of any acquired sites.
Net cash provided by financing activities totaled $4.2 million for the three
months ended March 31, 2000, compared to $12.7 million for the three months
ended March 31, 1999. The decrease was primarily attributable to net decreases
in long-term debt used to fund acquisitions.
At March 31, 2000, the Company had approximately $150.7 million of long-term and
short-term borrowings outstanding (including capital leases) and approximately
$2.5 million in letters of credit. At March 31, 2000, the ratio of the Company's
total debt (including capital leases) to total capitalization was 67.5%,
compared to 67.6% at December 31, 1999.
10
SEASONALITY
The Company's results of operations tend to vary seasonally, with the first
quarter typically generating the least amount of revenues, higher revenues in
the second and third quarters, and a decline in the fourth quarter. This
seasonality reflects the lower volume of waste during the fall and winter
months. Also, operating and fixed costs remain relatively constant throughout
the calendar year, which, when offset by these revenues, results in a similar
seasonality of operating income.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk exposure has not changed materially from the exposure
as disclosed in the Company's 1999 Annual Report on Form 10-K.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See exhibit index
(b) None
11
SIGNATURE
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.
Dated: May 11, 2000 Waste Industries, Inc.
(Registrant)
By: /s/ Stephen C. Shaw
--- ---------------
Stephen C. Shaw
Chief Financial Officer
(Principal Financial Officer)
12
WASTE INDUSTRIES, INC.
EXHIBIT INDEX
First Quarter 2000
Exhibit Number Exhibit Description
-------------- -------------------
11 Computations of Earnings Per Share
27 Financial Data Schedule
The schedule contains summary financial information extracted from the condensed
financial statements of Waste Industries, Inc. as of and for the three months
ended March 31, 2000 and is qualified in its entirety by reference to such
financial statements.
13
Exhibit 11
WASTE INDUSTRIES, INC.
COMPUTATION RE: EARNINGS PER SHARE
THREE MONTHS ENDED
MARCH 31,
1999 2000
Net income $ 2,852 $ 2,350
========= =========
Weighted average number of common shares
issued and outstanding - Basic 13,502 13,854
Common stock equivalents
Options for common stock 523 515
-------- --------
Weighted average common stock equivalents 14,025 14,369
Less treasury shares to be repurchased (165) (237)
--------- --------
Weighted average shares outstanding - Diluted 13,860 14,132
Basic earnings per share $0.21 $0.17
===== =====
Diluted earnings per share $0.21 $0.17
===== =====
14