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EX-2.1 - EX-2.1 - CASELLA WASTE SYSTEMS INCa11-5937_1ex2d1.htm
EX-32.2 - EX-32.2 - CASELLA WASTE SYSTEMS INCa11-5937_1ex32d2.htm
EX-32.1 - EX-32.1 - CASELLA WASTE SYSTEMS INCa11-5937_1ex32d1.htm
EX-31.2 - EX-31.2 - CASELLA WASTE SYSTEMS INCa11-5937_1ex31d2.htm
EX-31.1 - EX-31.1 - CASELLA WASTE SYSTEMS INCa11-5937_1ex31d1.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended January 31, 2011

 

 

 

OR

 

 

 

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission file number 000-23211

 

CASELLA WASTE SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

03-0338873

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

25 Greens Hill Lane, Rutland, Vermont

 

05701

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (802) 775-0325

 

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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o

 

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

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated filer o

 

Smaller reporting companyo

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of February 28, 2011:

 

Class A Common Stock, $0.01 par value per share:

 

25,330,494

 

Class B Common Stock, $0.01 par value per share:

 

988,200

 

 

 

 



 

PART I.      FINANCIAL INFORMATION

 

ITEM 1.      FINANCIAL STATEMENTS

 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

 

 

 

January 31,

 

April 30,

 

 

 

2011

 

2010

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

5,531

 

$

2,035

 

Restricted cash

 

76

 

76

 

Accounts receivable - trade, net of allowance for doubtful accounts of $1,530 and $1,602

 

47,603

 

51,370

 

Notes receivable - officer/employees

 

141

 

139

 

Refundable income taxes

 

1,304

 

1,316

 

Prepaid expenses

 

6,346

 

5,414

 

Inventory

 

3,538

 

2,928

 

Deferred income taxes

 

4,627

 

5,461

 

Other current assets

 

1,269

 

2,001

 

Current assets of discontinued operations

 

12,773

 

11,324

 

 

 

 

 

 

 

Total current assets

 

83,208

 

82,064

 

 

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and amortization of $610,089 and $570,079

 

455,265

 

457,670

 

Goodwill

 

100,430

 

100,430

 

Intangible assets, net

 

2,221

 

2,404

 

Restricted assets

 

317

 

228

 

Notes receivable - officer/employees

 

1,150

 

1,149

 

Deferred income taxes

 

548

 

553

 

Investments in unconsolidated entities

 

39,228

 

40,965

 

Other non-current assets

 

15,352

 

17,025

 

Non-current assets held for sale

 

 

3,708

 

Non-current assets of discontinued operations

 

47,440

 

48,618

 

 

 

 

 

 

 

 

 

661,951

 

672,750

 

 

 

 

 

 

 

$

745,159

 

$

754,814

 

 

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

 

2



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)

(in thousands, except for share and per share data)

 

 

 

January 31,

 

April 30,

 

 

 

2011

 

2010

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Current maturities of long-term debt and capital leases

 

$

2,411

 

$

1,929

 

Current maturities of financing lease obligations

 

311

 

1,045

 

Accounts payable

 

34,859

 

35,056

 

Accrued payroll and related expenses

 

3,388

 

3,890

 

Accrued interest

 

11,570

 

11,769

 

Current accrued capping, closure and post-closure costs

 

3,256

 

7,765

 

Other accrued liabilities

 

22,408

 

21,727

 

Current liabilities of discontinued operations

 

8,641

 

6,899

 

 

 

 

 

 

 

Total current liabilities

 

86,844

 

90,080

 

 

 

 

 

 

 

Long-term debt and capital leases, less current maturities

 

562,998

 

556,130

 

Financing lease obligations, less current maturities

 

2,236

 

7,902

 

Accrued capping, closure and post-closure costs, less current portion

 

34,058

 

32,237

 

Deferred income taxes

 

6,615

 

6,277

 

Other long-term liabilities

 

8,992

 

8,962

 

Non-current liabilities of discontinued operations

 

 

2,930

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Class A common stock -

 

 

 

 

 

Authorized - 100,000,000 shares, $0.01 par value per share, issued and outstanding - 25,317,000 and 24,944,000 shares as of January 31, 2011 and April 30, 2010, respectively

 

253

 

249

 

Class B common stock -

 

 

 

 

 

Authorized - 1,000,000 shares, $0.01 par value per share, 10 votes per share, issued and outstanding - 988,000 shares

 

10

 

10

 

Accumulated other comprehensive loss

 

(74

)

(785

)

Additional paid-in capital

 

284,725

 

281,899

 

Accumulated deficit

 

(241,498

)

(231,077

)

Total stockholders’ equity

 

43,416

 

50,296

 

 

 

 

 

 

 

 

 

$

745,159

 

$

754,814

 

 

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

 

3



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands)

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

111,627

 

$

109,884

 

$

356,515

 

$

344,947

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of operations

 

76,933

 

73,724

 

237,584

 

226,986

 

General and administration

 

14,832

 

14,900

 

46,446

 

43,554

 

Depreciation and amortization

 

13,573

 

13,850

 

44,776

 

49,327

 

Gain on sale of assets

 

 

 

(3,502

)

 

 

 

105,338

 

102,474

 

325,304

 

319,867

 

Operating income

 

6,289

 

7,410

 

31,211

 

25,080

 

Other expense/(income), net:

 

 

 

 

 

 

 

 

 

Interest income

 

(15

)

(25

)

(41

)

(86

)

Interest expense

 

12,189

 

12,545

 

36,644

 

33,743

 

(Gain) loss from equity method investment

 

(102

)

(73

)

2,536

 

1,305

 

Loss on debt modification

 

115

 

 

115

 

511

 

Other income

 

(78

)

(195

)

(490

)

(487

)

Other expense, net

 

12,109

 

12,252

 

38,764

 

34,986

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes and discontinued operations

 

(5,820

)

(4,842

)

(7,553

)

(9,906

)

Provision for income taxes

 

1,079

 

572

 

2,139

 

941

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before discontinued operations

 

(6,899

)

(5,414

)

(9,692

)

(10,847

)

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income from discontinued operations (net of income tax (benefit) provision of ($7), $598, ($7) and $1,401)

 

1,902

 

799

 

1,255

 

1,814

 

(Loss) gain on disposal of discontinued operations (net of income tax provision of $0, $162, $0, and $221)

 

(1,368

)

239

 

(1,984

)

328

 

 

 

 

 

 

 

 

 

 

 

Net loss applicable to common stockholders

 

$

(6,365

)

$

(4,376

)

$

(10,421

)

$

(8,705

)

 

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

 

4



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Unaudited)

(in thousands, except for per share data)

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted:

 

 

 

 

 

 

 

 

 

Loss from continuing operations before discontinued operations applicable to common stockholders

 

$

(0.26

)

$

(0.21

)

$

(0.37

)

$

(0.42

)

Income from discontinued operations, net

 

0.07

 

0.03

 

0.05

 

0.07

 

(Loss) gain on disposal of discontinued operations, net

 

(0.05

)

0.01

 

(0.08

)

0.01

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share applicable to common stockholders

 

$

(0.24

)

$

(0.17

)

$

(0.40

)

$

(0.34

)

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

26,115

 

25,748

 

26,026

 

25,705

 

 

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

 

5



 

 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

 (in thousands)

 

 

 

Nine Months Ended
January 31,

 

 

 

2011

 

2010

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net loss

 

$

(10,421

)

$

(8,705

)

Income from discontinued operations, net

 

(1,255

)

(1,814

)

Loss (gain) on disposal of discontinued operations, net

 

1,984

 

(328

)

Adjustments to reconcile net loss to net cash provided by operating activities -

 

 

 

 

 

Gain on sale of assets

 

(3,502

)

 

Gain on sale of equipment

 

(399

)

(1,099

)

Depreciation and amortization

 

44,776

 

49,327

 

Depletion of landfill operating lease obligations

 

6,013

 

4,936

 

Interest accretion on landfill and environmental remediation liabilities

 

2,487

 

2,668

 

Amortization of premium on senior subordinated notes

 

(584

)

(540

)

Amortization of discount on term loan and second lien notes

 

1,650

 

1,141

 

Loss from equity method investment

 

2,536

 

1,305

 

Loss on debt modification

 

115

 

511

 

Stock-based compensation

 

2,052

 

1,598

 

Excess tax benefit on the vesting of restricted stock

 

(122

)

 

Deferred income taxes

 

1,827

 

2,016

 

Changes in assets and liabilities, net of effects of acquisitions and divestitures -

 

 

 

 

 

Accounts receivable

 

3,767

 

(3,575

)

Accounts payable

 

(197

)

(2,701

)

Prepaid expenses, inventories and other assets

 

483

 

(575

)

Accrued expenses and other liabilities

 

(5,956

)

(463

)

 

 

54,946

 

54,549

 

Net Cash Provided by Operating Activities

 

45,254

 

43,702

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Additions to property, plant and equipment

— growth

 

(1,175

)

(2,914

)

 

— maintenance

 

(40,268

)

(35,532

)

Payments on landfill operating lease contracts

 

(4,977

)

(7,803

)

Proceeds from sale of assets

 

7,533

 

 

Proceeds from sale of equipment

 

631

 

2,782

 

Investment in unconsolidated entities

 

 

(20

)

Net Cash Used In Investing Activities

 

(38,256

)

(43,487

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from long-term borrowings

 

134,100

 

450,644

 

Principal payments on long-term debt

 

(136,349

)

(440,033

)

Payment of financing costs

 

(340

)

(14,072

)

Proceeds from exercise of stock options

 

412

 

260

 

Excess tax benefit on the vesting of restricted stock

 

122

 

 

Net Cash Used In Financing Activities

 

(2,055

)

(3,201

)

 

 

 

 

 

 

Discontinued Operations:

 

 

 

 

 

Net cash provided by operating activities

 

3,850

 

3,416

 

Net cash (used in) provided by investing activities

 

(1,905

)

314

 

Net cash used in financing activities

 

(3,392

)

(411

)

Net Cash (Used In) Provided By Discontinued Operations

 

(1,447

)

3,319

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

3,496

 

333

 

Cash and cash equivalents, beginning of period

 

2,035

 

1,838

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

5,531

 

$

2,171

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

Cash paid during the period for -

 

 

 

 

 

Interest

 

$

32,381

 

$

25,746

 

Income taxes, net of refunds

 

$

142

 

$

345

 

 

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

 

6



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except for per share data)

 

1.             BASIS OF PRESENTATION

 

The accompanying unaudited financial statements include the accounts of Casella Waste Systems, Inc. (the “Parent”) and its subsidiaries (collectively, “we”, “us” or “our”).  We are a regional, integrated solid waste services company, which provides a full range of solid waste services, including collection, disposal, power generation and processing and recycling.  We also market recyclable paper, metals, aluminum, plastics and glass, which have been processed at our facilities or purchased from third parties.

 

The consolidated balance sheet as of January 31, 2011, the consolidated statements of operations for the three and nine months ended January 31, 2011 and 2010 and the consolidated statements of cash flows for the nine months ended January 31, 2011 and 2010 are unaudited.  In the opinion of management, such financial statements, together with the consolidated balance sheet as of April 30, 2010, include all adjustments (which include normal recurring and nonrecurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented.

 

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Our significant accounting policies are more fully discussed in Item 7 of our Annual Report on Form 10-K for the year ended April 30, 2010 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on June 11, 2010.  The consolidated financial statements presented herein should be read in conjunction with our audited consolidated financial statements as of and for the twelve months ended April 30, 2010 included in the Annual Report.  The results for the three and nine month periods ended January 31, 2011 may not be indicative of the results that may be expected for any other interim period or the fiscal year ending April 30, 2011.

 

On January 23, 2011 we entered into a purchase and sale agreement and related agreements to sell select non-integrated FCR recycling assets and select intellectual property assets to a new company formed by Pegasus Capital Advisors, L.P. and Intersection, LLC (the “Purchaser”) for $130,400 in gross proceeds (the “FCR Divestiture”).  Pursuant to these agreements, we will divest FCR Recycling assets located outside our core operating region of New York, Massachusetts, Vermont, New Hampshire, Maine and northern Pennsylvania, including 17 Material Recycling Facilities (“MRF’s), one transfer station and certain related intellectual property assets.  The results of these operations have been reported as discontinued operations for the three and nine months ended January 31, 2011 and 2010, respectively.  Following the transaction, we will retain four integrated MRFs located in our core operating regions.  For additional information see Note 11.

 

We completed the transaction on March 1, 2011 for $134,100 in gross cash proceeds, including an estimated $3,700 working capital adjustment.

 

We consider events or transactions that have occurred after the balance sheet date of January 31, 2011, but prior to the filing of the financial statements with the SEC on this Form 10-Q to provide additional  evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of this filing.

 

Adoption of New Accounting Pronouncements

 

Variable Interest Entities

 

In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance for determining whether an entity is a variable interest entity (“VIE”) and requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a VIE. Under this guidance, an enterprise has a controlling financial interest when it has (i) the power to

 

7



 

direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. This guidance requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance. This guidance also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures, and eliminates the scope exclusion for qualifying special-purpose entities.  We adopted this guidance effective May 1, 2010 with no effect on our consolidated financial position or results of operations.

 

Fair Value Measurements and Disclosures

 

In January 2010, FASB issued additional guidance on fair value disclosures. This guidance clarifies two existing disclosure requirements and requires two new disclosures as follows: (1) a “gross” presentation of activities (purchases, sales, and settlements) within the Level 3 rollforward reconciliation, and (2) detailed disclosures about the transfers in and out of Level 1 and 2 measurements. This guidance was effective for the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 rollforward information, which was required for annual reporting periods beginning after December 15, 2010, and for interim reporting periods within those years.  We adopted this guidance with no effect on our consolidated financial position or results of operations.

 

2.             GOODWILL AND INTANGIBLE ASSETS

 

The following table shows the balances related to goodwill at both January 31, 2011 and April 30, 2010:

 

Eastern
Region

 

Central
Region

 

Western
Region

 

Recycling

 

Total

 

$

 38

 

$

32,996

 

$

55,302

 

$

12,094

 

$

100,430

 

 

Intangible assets at January 31, 2011 and April 30, 2010 consist of the following:

 

 

 

Covenants
Not to
Compete

 

Client Lists

 

Licensing
Agreements

 

Patents

 

Total

 

Balance, January 31, 2011

 

 

 

 

 

 

 

 

 

 

 

Intangible assets

 

$

14,931

 

$

2,177

 

$

250

 

$

250

 

$

17,608

 

Less accumulated amortization

 

(13,880

)

(1,077

)

(188

)

(242

)

(15,387

)

 

 

$

1,051

 

$

1,100

 

$

62

 

$

8

 

$

2,221

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, April 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Intangible assets

 

$

14,488

 

$

2,177

 

$

250

 

$

250

 

$

17,165

 

Less accumulated amortization

 

(13,666

)

(922

)

 

(173

)

(14,761

)

 

 

$

822

 

$

1,255

 

$

250

 

$

77

 

$

2,404

 

 

8



 

Intangible amortization expense for the three and nine months ended January 31, 2011 and 2010 was $204, $169, $636 and $387, respectively.  The intangible amortization expense estimated for the five fiscal years following fiscal year 2010 and thereafter is as follows:

 

2011

 

2012

 

2013

 

2014

 

2015

 

Thereafter

 

$

744

 

$

444

 

$

382

 

$

334

 

$

283

 

$

217

 

 

3.             ACCRUED CAPPING, CLOSURE AND POST CLOSURE

 

Accrued capping, closure and post-closure costs include the current and non-current portion of costs associated with obligations for closure and post-closure of our landfills. We estimate our future capping, closure and post-closure costs in order to determine the capping, closure and post-closure expense per ton of waste placed into each landfill. The anticipated timeframe for paying these costs varies based on the remaining useful life of each landfill, as well as the duration of the post-closure monitoring period. The changes to accrued capping, closure and post-closure liabilities are as follows:

 

 

 

January 31,

 

April 30,

 

 

 

2011

 

2010

 

Beginning Balance

 

$

40,002

 

$

41,890

 

Obligations incurred

 

2,188

 

4,016

 

Revisions in estimates

 

(1,120

)

(2,438

)

Accretion expense

 

2,384

 

3,281

 

Payments

 

(6,140

)

(6,747

)

Ending Balance

 

$

37,314

 

$

40,002

 

 

4.             LONG-TERM DEBT

 

On July 9, 2009, we completed the refinancing of our then existing senior credit facility with a senior secured first lien credit facility (the “Senior Secured Credit Facility”), consisting of a $177,500 revolving credit facility (the “New Revolver”) and a $130,000 aggregate principal term loan (the “New Term Loan”). In connection with the Senior Secured Credit Facility, we simultaneously completed the offering of $180,000 aggregate principal amount of 11% senior second lien notes due 2014 (the “Second Lien Notes”).  The net proceeds from the Senior Secured Credit Facility and from the Second Lien Notes offering were used to refinance the borrowings under our previous $525,000 senior credit facility.

 

For the first two fiscal quarters after July 9, 2009, the interest rate for borrowings under the New Revolver was LIBOR plus a margin of 4.50% per annum, and thereafter the applicable margin was and will be determined in accordance with the pricing grid as set forth in the Senior Secured Credit Facility Agreement dated July 9, 2009. The interest rate for the New Term Loan is LIBOR plus a margin of 5.00% per annum, provided that LIBOR shall not be less than 2.00% per annum. The New Term Loan was issued at an original issue price of 94.5% of the principal amount of the loan.

 

The Senior Secured Credit Facility is subject to customary affirmative, negative, and financial covenants, generally consistent with our prior credit agreement. The New Revolver is due December 31, 2012 and the New Term Loan is due April 9, 2014. We have the right to request an increase in the amount of the Senior Secured Credit Facility by an aggregate amount of $42,500, at our discretion, subject to certain conditions of the Senior Secured Credit Facility Agreement.

 

9



 

Further advances were available under the New Revolver in the amount of $86,452 as of January 31, 2011.  The available amount is net of outstanding irrevocable letters of credit totaling $49,748 as of January 31, 2011, at which date no amount had been drawn.

 

The Second Lien Notes were issued at an original issue price of 97.2% of the principal amount.  The Second Lien Notes pay interest on a semi-annual basis and are due on July 15, 2014.  The Second Lien Notes were sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States under Regulation S under the Securities Act.

 

We recorded a charge of $511 as a loss on debt modification in the quarter ended July 31, 2009 relating to the non-cash write off of unamortized deferred financing costs associated with the refinancing of our previous senior credit facility.  We recorded a charge of $115 as a loss on debt modification in the quarter ended January 31, 2011 relating to the non-cash write off of unamortized deferred financing costs associated with the repayment of certain financing lease obligations to facilitate the FCR Divestiture.

 

On May 27, 2010, we entered into an amendment to the Senior Secured Credit Facility to create additional capital structure flexibility.  As amended, the Senior Secured Credit Facility permits us to use net proceeds of up to $150,000 from equity offerings to repurchase our outstanding Second Lien Notes.  We are also permitted to use up to $50,000 of borrowings under the Senior Secured Credit Facility to repurchase Senior Subordinated Debt.

 

On February 7, 2011, we completed the offering of $200,000 of 7.75% senior subordinated notes due 2019 (the “2019 Notes”).  The net proceeds from the 2019 Notes, together with other available funds, were used to refinance our 9.75% senior subordinated notes due February 2013 (the “Senior Subordinated Notes”) and to pay related transaction costs.

 

The 2019 Notes will mature on February 15, 2019, and interest will accrue at the rate of 7.75% per annum. Interest is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2011.

 

The indenture governing the 2019 Notes contains certain negative covenants which restrict among other things, our ability to sell assets, pay dividends, repurchase stock, incur debt, grant liens and issue preferred stock.  The 2019 Notes are fully and unconditionally guaranteed on a senior subordinated basis by substantially all of our existing and future domestic restricted subsidiaries that guarantee our Senior Secured Credit Facility and Second Lien Notes.

 

10



 

5.             COMMITMENTS AND CONTINGENCIES

 

(a)           Legal Proceedings

 

In the normal course of our business and as a result of the extensive governmental regulation of the solid waste industry, we are subject to various judicial and administrative proceedings involving state or local agencies.  In these proceedings, an agency may seek to impose fines or to revoke or deny renewal of an operating permit held by us.  From time to time, we may also be subject to actions brought by special interest or other groups, adjacent landowners or residents in connection with the permitting and licensing of landfills and transfer stations, or alleging environmental damage or violations of the permits and licenses pursuant to which we operate.  In addition, we are party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the waste management business. 

 

In accordance with ASC 450-20, we accrue for legal proceedings when losses become probable and reasonably estimable.  As of the end of each applicable reporting period, we review each of our legal proceedings to determine whether it is probable, reasonably possible or remote that a liability has been incurred and, if it is at least reasonably possible, whether a range of loss can be reasonably estimated under the provisions of ASC 450-20-25-2.  In instances where we determine that a loss is probable and we can reasonably estimate a range of losses we may incur with respect to such a matter, we record an accrual for the amount within the range that constitutes our best estimate of the possible loss.  If we are able to reasonably estimate a range but no amount within the range appears to be a better estimate than any other, we record an accrual in the amount that is the low end of such range.  When a loss is reasonably possible but not probable we will not record an accrual but we will disclose our estimate of the possible range of loss where such estimate can be made in accordance with ASC 450-20-25-3.  As of January 31, 2011, there were no accruals established related to our outstanding legal proceedings.

 

We offer no prediction of the outcome of any of the proceedings or negotiations described below.  We are vigorously defending each of these lawsuits and claims.  However, there can be no guarantee we will prevail or that any judgments against us, if sustained on appeal, will not have a material adverse effect on our business, financial condition, results of operations or cash flows.

 

CRMC Bethlehem, LLC Litigation

 

CRMC Bethlehem, LLC and Commonwealth Bethlehem Energy, LLC (collectively, “CRMC”), have filed claims in the US District Court for the District of New Hampshire against NCES.  CRMC seeks declaratory and injunctive relief and damages in the amount of approximately $1,500.  CRMC alleges that NCES has breached the terms of a Gas Lease and Easement Agreement by and between CRMC and NCES, entered into on September 10, 1998, as amended on March 1, 2000 (the “Gas Lease”).  CRMC alleges that NCES has inappropriately interfered with CRMC rights pursuant to the Gas Lease to develop a landfill gas-to-energy project to be sited on the Landfill.

 

11



 

CRMC also alleges that NCES has violated the terms of an Operations and Maintenance Agreement in operating the landfill gas management system.  NCES denies these allegations, and intends to vigorously defend against these claims.  We believe that a loss in the range of zero to $250 is reasonably possible but not probable.

 

(b)           Tax Matters

 

During the quarter, we received an income tax assessment for years ending April 30, 2004 through April 30, 2006 of $3,852, which includes $1,632 in interest and penalties, from the State of New York related to the filing of combined returns in the state.  We do not believe that a loss is reasonably possible and no amounts have been accrued for this claim.

 

(c)           Environmental Liability

 

We are subject to liability for environmental damage, including personal injury and property damage, that our solid waste, recycling and power generation facilities may cause to neighboring property owners, particularly as a result of the contamination of drinking water sources or soil, possibly including damage resulting from conditions existing before we acquired the facilities. We may also be subject to liability for similar claims arising from off-site environmental contamination caused by pollutants or hazardous substances if we or our predecessors arrange or arranged to transport, treat or dispose of those materials.

 

On December 20, 2000, the State of New York Department of Environmental Conservation (“DEC”) issued an Order on Consent (“Order”) which named Waste-Stream, Inc. (“WSI”), a Casella subsidiary, General Motors Corporation (“GM”) and Niagara Mohawk Power Corporation (“NiMo”) as Respondents.  The Order required that the Respondents undertake certain work on a 25-acre scrap yard and solid waste

 

12



 

transfer station owned by WSI, including the drafting of a Remedial Investigation and Feasibility Study (the “Study”).  A draft of the Study was submitted to DEC in January 2009 (followed by a final report in May 2009).  The Study estimates that the undiscounted costs associated with implementing the preferred remedies will be approximately $10,219 and it is unlikely that any costs relating to onsite remediation will be incurred until fiscal year 2012.  On February 28, 2011, the DEC issued their Proposed Remedial Action Plan (the “PRAP”) and will accept public comments through March 29, 2011.  We anticipate submitting extensive technical comments to the PRAP.  WSI is jointly and severally liable for the total cost to remediate and we initially expected to be responsible for approximately 30% upon implementation of a cost-sharing agreement with NiMo and GM. Based on these estimates, we recorded an environmental remediation charge of $2,823 in third quarter of fiscal year 2009.  In the fourth quarter of fiscal year 2009, we recognized an additional charge of $1,532, representing an additional 15% of the estimated costs, in recognition of the deteriorating financial condition and eventual bankruptcy filing of GM.  In the fourth quarter of fiscal year 2010, we recognized an additional charge of $335 based on changes in the expected timing of cash outflows.  Such charges could be significantly higher if costs exceed estimates.  We inflate these estimated costs in current dollars until the expected time of payment and discount the cost to present value using an appropriate discount rate (3.12%).  At January 31, 2011 and April 30, 2010, we have recorded $4,600 and $4,551, respectively, related to this liability including the recognition of $34, $57, $103 and $168 of accretion expense in the three and nine months ended January 31, 2011 and 2010.

 

6.             STOCK-BASED COMPENSATION

 

In June, 2010, we granted a combination of restricted stock units and performance stock units under the 2006 Stock Incentive Plan (the “2006 Plan”) to certain employees.  The vesting of half of the stock units is based on the attainment of a targeted annual return on net assets in fiscal year 2013 (performance stock units) and the vesting of the other half is based on continued employment over a three year period starting on the first anniversary of the grant (restricted stock units).  As of January 31, 2011, the performance stock units included in the June, 2010 grant could result in the issuance of up to 575 shares of Class A Common Stock based on the attainment of a targeted annual return on net assets in fiscal year 2013 and the restricted stock units could result in the issuance of up to 460 shares of Class A Common Stock based on vesting over a three year period starting on the first anniversary of the date of the grant.  The performance stock units were granted at a grant date fair value of $4.20 per share and the restricted stock units were granted at a grant date fair value of $3.46 per share.

 

As of January 31, 2011 there were 450 Class A Common Stock equivalents available for future grant under the 2006 Plan inclusive of additional Class A Common Stock equivalents which were previously issued under our terminated plans but which have become available for grant because such awards expired or otherwise resulted in shares not being issued.

 

Stock options granted generally vest over a one to four year period from the date of grant and are granted at prices at least equal to the prevailing fair market value at the issue date. In general, options are issued with a life not to exceed ten years. Shares issued by us upon exercise of stock options are issued from the pool of authorized shares of Class A Common Stock.

 

A summary of stock option activity for the nine months ended January 31, 2011 is as follows:

 

13



 

 

 

Stock Options

 

Weighted
Average
Exercise
Price

 

Outstanding, April 30, 2010

 

2,639

 

$

11.28

 

Granted

 

280

 

$

3.86

 

Exercised

 

(14

)

$

7.06

 

Forfeited

 

(641

)

$

9.61

 

Outstanding, January 31, 2011

 

2,264

 

$

10.86

 

Exercisable, January 31, 2011

 

1,998

 

$

11.79

 

 

A summary of restricted stock, restricted stock unit and performance stock unit activity for the nine months ended January 31, 2011 is as follows:

 

 

 

Restricted Stock /
Restricted Stock
Units

 

Performance
Stock Units (1)

 

Outstanding, April 30, 2010

 

695

 

775

 

Granted

 

561

 

469

 

Class A Common Stock Vested

 

(242

)

 

Forfeited

 

(33

)

(44

)

Outstanding, January 31, 2011

 

981

 

1,200

 

 


(1) Performance stock units are included at the 100% attainment level.  Attainment of performance metrics at maximum levels could result in the issuance of an additional 753 shares of Class A Common Stock.

 

We recorded $656, $548, $1,956 and $1,421 of stock-based compensation expense related to stock options, performance stock units, restricted stock units and restricted stock during the three and nine months ended January 31, 2011 and 2010.  We also recorded $49, $90, $96 and $177 of stock-based compensation expense for our Employee Stock Purchase Plan during the three and nine months ended January 31, 2011 and 2010.

 

Stock-based compensation expense is included in general and administration expenses in the consolidated statement of operations.  The unrecognized stock-based compensation expense at January 31, 2011 related to unvested stock options and restricted stock units was $2,487, to be recognized over a weighted average period of 2.0 years.  We expect to recognize $1,728 of expense related to outstanding performance stock units over the weighted average period based on expected metrics at January 31, 2011.  Maximum unrecognized stock-based compensation expense at January 31, 2011 related to outstanding performance stock units was $4,404, to be recognized over a weighted average period of 1.4 years subject to the attainment of performance metrics.

 

Our calculations of stock-based compensation expense associated with stock options and our Employee Stock Purchase Plan for the three and nine months ended January 31, 2011 and 2010 were made using the Black-Scholes valuation model. The fair value of our stock option grants was estimated assuming no expected dividend yield and the following weighted average assumptions were used for the three and nine months ended January 31, 2011 and 2010:

 

14



 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Stock Options:

 

 

 

 

 

 

 

 

 

Expected life

 

 

 

6.53 years

 

 

Risk-free interest rate

 

 

 

1.80%

 

 

Expected volatility

 

 

 

85.59%

 

 

Stock Purchase Plan:

 

 

 

 

 

 

 

 

 

Expected life

 

0.5 years

 

0.5 years

 

0.5 years

 

0.5 years

 

Risk-free interest rate

 

0.19%

 

0.18%

 

0.21%

 

0.18%

 

Expected volatility

 

44.24%

 

242.50%

 

47.15%

 

242.50%

 

 

The grant date fair value of the options granted in the nine months ended January 31, 2011 was $2.85 per option.

 

Expected life is calculated based on the weighted average historical life of the vested stock options, giving consideration to vesting schedules and historical exercise patterns. Risk-free interest rate is based on the U.S. treasury yield curve for the period of the expected life of the stock option. For shares issued under our Employee Stock Purchase Plan and stock options granted during the nine months ended January 31, 2011, expected volatility is calculated using the average of weekly historical volatility of our Class A Common Stock over the expected life.

 

The Black-Scholes valuation model requires extensive use of accounting judgment and financial estimation, including estimates of the expected term option holders will retain their vested stock options before exercising them, the estimated volatility of our Class A Common Stock price over the expected term, and the number of options that will be forfeited prior to the completion of their vesting requirements. Application of alternative assumptions could produce significantly different estimates of the fair value of stock-based compensation and consequently, the related amounts recognized in the consolidated statements of operations.

 

7.             EARNINGS PER SHARE

 

The following table sets forth the numerator and denominator used in the computation of basic and diluted earnings per share (“EPS”):

 

 

 

Three Months
Ended January 31,

 

Nine Months
Ended January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Numerator:

 

 

 

 

 

 

 

 

 

Net loss applicable to common stockholders

 

$

(6,365

)

$

(4,376

)

$

(10,421

)

$

(8,705

)

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Number of shares outstanding, end of period:

 

 

 

 

 

 

 

 

 

Class A common stock

 

25,317

 

24,944

 

25,317

 

24,944

 

Class B common stock

 

988

 

988

 

988

 

988

 

Unvested restricted stock

 

(141

)

(122

)

(141

)

(122

)

Effect of weighted average shares outstanding during period

 

(49

)

(62

)

(138

)

(105

)

Weighted average number of common shares used in basic EPS

 

26,115

 

25,748

 

26,026

 

25,705

 

Impact of potentially dilutive securities:

 

 

 

 

 

 

 

 

 

Dilutive effect of options and restricted / performance stock units

 

 

 

 

 

Weighted average number of common shares used in diluted EPS

 

26,115

 

25,748

 

26,026

 

25,705

 

 

For the three and nine months ended January 31, 2011, the impact of up to 4,259 shares and 4,304 shares, respectively, of Class A common stock related to options and restricted / performance stock units were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive.

 

15



 

For the three and nine months ended January 31, 2010, the impact of up to 3,977 shares of  Class A common Stock related to options and restricted / performance stock units were excluded from the calculation of dilutive shares since the inclusion of such shares would be anti-dilutive.

 

8.             COMPREHENSIVE LOSS

 

Comprehensive loss is defined as the change in net assets of a business enterprise during a period from transactions generated from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Accumulated other comprehensive loss included in the accompanying balance sheets consists of changes in the fair value of our commodity hedge agreements.  Also included in accumulated other comprehensive loss is the change in fair value of certain securities classified as available for sale as well as our portion of the change in the fair value of commodity hedge agreements of our equity method investment, US GreenFiber, LLC (“GreenFiber”).

 

Comprehensive loss for the three and nine months ended January 31, 2011 and 2010 is as follows:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

January 31,

 

January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Net loss applicable to common stockholders

 

$

(6,365

)

$

(4,376

)

$

(10,421

)

$

(8,705

)

Other comprehensive income (loss)

 

269

 

(2,056

)

711

 

(4,786

)

Comprehensive loss

 

$

(6,096

)

$

(6,432

)

$

(9,710

)

$

(13,491

)

 

The components of other comprehensive income (loss) for the three and nine months ended January 31, 2011 and 2010 are shown as follows:

 

 

 

Three Months Ended January 31,

 

 

 

2011

 

2010

 

 

 

Gross

 

Tax effect

 

Net of Tax

 

Gross

 

Tax effect

 

Net of Tax

 

Change in fair value of marketable securities during the period

 

$

(1

)

$

 

$

(1

)

$

7

 

$

 

$

7

 

Change in fair value of commodity hedges during the period

 

56

 

(251

)

307

 

(1,801

)

 

(1,801

)

Reclassification to earnings for commodity hedge contracts

 

10

 

47

 

(37

)

(439

)

(177

)

(262

)

 

 

$

65

 

$

(204

)

$

269

 

$

(2,233

)

$

(177

)

$

(2,056

)

 

 

 

Nine Months Ended January 31,

 

 

 

2011

 

2010

 

 

 

Gross

 

Tax effect

 

Net of Tax

 

Gross

 

Tax effect

 

Net of Tax

 

Change in fair value of marketable securities during the period

 

$

(21

)

$

 

$

(21

)

$

25

 

$

 

$

25

 

Change in fair value of interest rate derivatives and commodity hedges during period

 

182

 

(832

)

1,014

 

(3,391

)

 

(3,391

)

Reclassification to earnings for interest rate derivatives and commodity hedge contracts

 

(141

)

141

 

(282

)

(2,377

)

(957

)

(1,420

)

 

 

$

20

 

$

(691

)

$

711

 

$

(5,743

)

$

(957

)

$

(4,786

)

 

Our strategy to hedge against fluctuations in the commodity prices of recycled paper is to enter into hedges

 

16



 

to mitigate the variability in cash flows generated from the sales of recycled paper at floating prices, resulting in a fixed price being received from these sales.  We have evaluated these hedges and believe that these instruments qualify for hedge accounting pursuant to derivative and hedging guidance.  Designated as effective cash flow hedges, the changes in the fair value of these derivatives are recognized in other comprehensive loss until the hedged item is settled and recognized as part of commodity revenue.  We recognize all derivatives on the balance sheet at fair value.

 

At January 31, 2011, we were party to four commodity hedge contracts for old corrugated cardboard (“OCC”) and eight commodity hedge contracts for old newsprint (“ONP”) as follows:

 

Inception Date Range

 

Commodity
Type

 

Contract Date Range

 

Monthly Notional
Ton Range

 

Fixed Price
Per Ton
Received
Range

 

February 2008 - March 2010

 

OCC

 

April 2008 - June 2011

 

75 - 500

 

$102 - $120

 

June 2007 - March 2010

 

ONP

 

June 2007 - December 2011

 

350 - 1500

 

$86 - $127

 

 

If the price per short ton of the underlying commodity as reported on the Official Board Market is less than the contract price per short ton, we receive the difference between the average price and the contract price (multiplied by the notional tons) from the respective counter-party.  If the price of the commodity exceeds the contract price per short ton, we pay the calculated difference to the counter-party.

 

The fair values of the commodity hedges are obtained or derived from third-party counter-parties and are determined using valuation models with assumptions about market prices for commodities being based on those in underlying active markets.  The gross carrying value of our commodity hedges was $159 at January 31, 2011 with $159 recorded in other current assets and $0 recorded in other non-current assets in our Consolidated Balance Sheets.  In accordance with derivative and hedging guidance, the offset to this, net of taxes of $646, is recorded to accumulated other comprehensive loss.

 

9.             FAIR VALUE OF FINANCIAL INSTRUMENTS

 

We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, and Level 3, defined as unobservable inputs that are not corroborated by market data.

 

Our financial assets and liabilities recorded at fair value on a recurring basis include restricted assets and derivative instruments.  Our derivative instruments include commodity hedges.  As of January 31, 2011, we had no interest rate derivatives.  We use commodity hedges to hedge against fluctuations in commodity pricing.  The fair value of these hedges is based on futures pricing in the underlying commodities.

 

We use valuation techniques that maximize the use of market prices and observable inputs and minimize the use of unobservable inputs. In measuring the fair value of our financial assets and liabilities, we rely on market data or assumptions which we believe market participants would use in pricing an asset or liability. As of January 31, 2011, our assets that are measured at fair value on a recurring basis included the following:

 

17



 

 

 

Fair Value Measurement at January 31, 2011 Using:

 

 

 

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

 

Significant Other
Observable Inputs
(Level 2)

 

Significant
Unobservable Inputs

(Level 3)

 

Assets:

 

 

 

 

 

 

 

Restricted assets

 

$

317

 

$

 

$

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Commodity derivatives

 

$

 

$

379

 

$

 

 

During the three and nine months ended January 31, 2011 and 2010 there were no nonrecurring fair value measurements of assets and liabilities measured at fair value on a nonrecurring basis subsequent to initial measurement.

 

Our financial instruments include cash and cash equivalents, trade receivables, investments in closure trust funds and trade payables.  The carrying values of these financial instruments approximate their respective fair values.  At January 31, 2011, the fair value of our fixed rate debt including the Second Lien Notes and the Senior Subordinated Notes was approximately $399,481 and the carrying value was $372,973.  At January 31, 2011, the fair value approximates the carrying value of our Senior Secured Credit Facility which includes the New Revolver and New Term Loan of $164,258.

 

10.          ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

 

Assets held for sale:

 

In the quarter ended July 31, 2010, we completed the sale of certain assets in Southeastern Massachusetts.   Total consideration amounted to $7,750 with cash proceeds of $7,533.  We recorded a gain on sale of assets of $3,502.  Assets of these operations were deemed as held for sale in the quarter ended April 30, 2010.  Non-current assets held for sale at April 30, 2010 were related to property, plant and equipment and amounted to $3,708.

 

Discontinued operations:

 

On January 23, 2011 we entered into a purchase and sale agreement and related agreements to sell select non-integrated FCR recycling assets and select intellectual property assets to the Purchaser for $130,400 in gross proceeds.  Pursuant to these agreements, we will divest FCR Recycling assets located outside our core operating region of New York, Massachusetts, Vermont, New Hampshire, Maine and northern Pennsylvania, including 17 MRF, one transfer station and certain related intellectual property assets.  Following the transaction, we will retain four integrated MRFs located in our core operating regions.  As a part of the disposition, we also entered into a ten year commodities marketing agreement with the Purchaser to market 100% of the tonnage from three of our remaining integrated MRFs.

 

We completed the transaction on March 1, 2011 for $134,100 in gross cash proceeds, including an estimated $3,700 working capital adjustment.  After netting transaction costs and cash taxes payable in conjunction with the divestitures, we expect the net cash proceeds to amount to approximately $120,000. We intend to use the net cash proceeds from the divestiture and borrowings under our Senior Secured Revolving Credit Facility to repay the New Term Loan in full.

 

18



 

During the third quarter of fiscal year 2011, we completed the sale of the assets of the Trilogy Glass business for cash proceeds of $1,840.  A gain amounting to $36 (net of tax) was recorded to (loss) gain on disposal of discontinued operations in the third quarter of fiscal year 2011.

 

The assets and liabilities of total discontinued operations are comprised of the following at January 31, 2011 and April 30, 2010, respectively:

 

 

 

January 31,
2011

 

April 30,
2010

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable - trade, net

 

$

11,645

 

$

10,352

 

Prepaid expenses

 

344

 

296

 

Inventory

 

745

 

676

 

Other current assets

 

39

 

 

Total current assets

 

12,773

 

11,324

 

 

 

 

 

 

 

Property, plant and equipment, net

 

21,745

 

22,383

 

Goodwill

 

24,990

 

25,362

 

Intangible assets, net

 

606

 

681

 

Other non-current assets

 

99

 

192

 

 

 

47,440

 

48,618

 

Total assets

 

60,213

 

59,942

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt and capital leases

 

13

 

475

 

Accounts payable

 

6,789

 

5,083

 

Accrued payroll and related expenses

 

841

 

706

 

Other accrued liabilites

 

998

 

635

 

Total current liabilities

 

8,641

 

6,899

 

 

 

 

 

 

 

Long-term debt and capital leases, less current maturities

 

 

2,930

 

Total liabilities

 

$

8,641

 

$

9,829

 

 

In fiscal year 2010 we completed divestitures and closed operations resulting in a gain on disposal of discontinued operations (net of tax) amounting to $239 and $328 in the three and nine months ended January 31, 2010, respectively. We received cash proceeds of $1,750 related to these divestiture transactions.

 

The operating results of these operations, including those related to prior years, have been reclassified from continuing to discontinued operations in the accompanying consolidated financial statements. Revenues and income before income tax (benefit) provision attributable to discontinued operations for the three and nine months ended January 31, 2011 and 2010 are as follows:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

January 31,

 

January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Revenues

 

$

20,159

 

$

16,446

 

$

56,122

 

$

48,217

 

Income before income taxes

 

$

1,895

 

$

1,397

 

$

1,248

 

$

3,215

 

 

19



 

We have recorded liabilities associated with previous divestitures amounting to approximately $336 at January 31, 2011.

 

We allocate interest expense to discontinued operations.  We have also eliminated certain immaterial inter-company activity associated with discontinued operations.

 

11.          SEGMENT REPORTING

 

We manage and evaluate our solid waste operations on a geographic basis through three regions, designated as the Eastern, Central and Western regions, which include a full range of solid waste services including collection, disposal, power generation and processing and recycling.  Our revenues in our recycling segment represent activity from the four retained integrated MRFs located in our core operating regions and are derived primarily from the processing and recycling and sale of paper, metals, aluminum, plastics and glass.  Ancillary operations, major customer accounts, assets of discontinued operations and earnings from equity method investment are included in Other.

 

Three Months Ended January 31, 2011

 

Segment 

 

Outside
revenues

 

Inter-company
revenue

 

Depreciation and
amortization

 

Operating
income (loss)

 

Total assets

 

Eastern

 

$

41,598

 

$

9,116

 

$

5,560

 

$

(186

)

$

221,778

 

Central

 

26,128

 

10,222

 

3,408

 

1,989

 

158,279

 

Western

 

25,084

 

5,576

 

3,303

 

3,925

 

180,109

 

Recycling

 

8,911

 

(44

)

859

 

1,010

 

108,511

 

Other

 

9,906

 

 

443

 

(449

)

76,482

 

Eliminations

 

 

(24,870

)

 

 

 

Total

 

$

111,627

 

$

 

$

13,573

 

$

6,289

 

$

745,159

 

 

Three Months Ended January 31, 2010

 

Segment 

 

Outside
revenues

 

Inter-company
revenue

 

Depreciation and
amortization

 

Operating
income (loss)

 

Total assets

 

Eastern

 

$

43,600

 

$

10,807

 

$

5,269

 

$

1,738

 

$

227,107

 

Central

 

25,532

 

9,488

 

3,270

 

2,700

 

157,940

 

Western

 

23,903

 

5,794

 

3,827

 

3,737

 

181,368

 

Recycling

 

7,435

 

(76

)

791

 

23

 

106,207

 

Other

 

9,414

 

 

693

 

(788

)

82,192

 

Eliminations

 

 

(26,013

)

 

 

 

Total

 

$

109,884

 

$

 

$

13,850

 

$

7,410

 

$

754,814

 

 

Nine Months Ended January 31, 2011

 

Segment 

 

Outside
revenues

 

Inter-company
revenue

 

Depreciation and
amortization

 

Operating
income (loss)

 

Total assets

 

Eastern

 

$

130,400

 

$

29,792

 

$

17,936

 

$

2,568

 

$

221,778

 

Central

 

84,419

 

33,377

 

11,335

 

10,151

 

158,279

 

Western

 

84,629

 

18,249

 

11,239

 

17,993

 

180,108

 

Recycling

 

26,620

 

(120

)

2,540

 

2,227

 

108,511

 

Other

 

30,447

 

 

1,726

 

(1,728

)

76,482

 

Eliminations

 

 

(81,298

)

 

 

 

Total

 

$

356,515

 

$

 

$

44,776

 

$

31,211

 

$

745,159

 

 

20



 

Nine Months Ended January 31, 2010

 

Segment 

 

Outside
revenues

 

Inter-company
revenue

 

Depreciation and
amortization

 

Operating
income (loss)

 

Total assets

 

Eastern

 

$

136,845

 

$

32,829

 

$

23,682

 

$

945

 

$

227,107

 

Central

 

84,154

 

32,365

 

10,434

 

12,064

 

157,940

 

Western

 

74,176

 

17,941

 

11,350

 

13,098

 

181,368

 

Recycling

 

20,871

 

11

 

2,328

 

636

 

106,207

 

Other

 

28,901

 

 

1,533

 

(1,663

)

82,192

 

Eliminations

 

 

(83,146

)

 

 

 

Total

 

$

344,947

 

$

 

$

49,327

 

$

25,080

 

$

754,814

 

 

Sources of our total revenue are as follows:

 

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Collection

 

$

48,068

 

$

49,127

 

$

152,628

 

$

155,587

 

Disposal

 

23,610

 

23,992

 

84,240

 

82,367

 

Power generation

 

7,170

 

7,314

 

19,156

 

20,842

 

Processing and recycling

 

13,962

 

12,602

 

43,424

 

36,379

 

Solid waste operations

 

92,810

 

93,035

 

299,448

 

295,175

 

Major accounts

 

9,906

 

9,414

 

30,447

 

28,901

 

Recycling

 

8,911

 

7,435

 

26,620

 

20,871

 

Total revenues

 

$

111,627

 

$

109,884

 

$

356,515

 

$

344,947

 

 

We have revised our table of revenue by source to more closely align the types of revenue generated by our operating segments.  Amounts for the three and nine months ended January 31, 2010 have been revised to conform to this presentation.

 

12.          INVESTMENTS IN UNCONSOLIDATED ENTITIES

 

Effective August 1, 2000, we entered into a joint venture agreement with Louisiana-Pacific Corporation to combine our respective cellulose insulation businesses into a single operating entity, GreenFiber.  Our investment in GreenFiber amounted to $24,101 and $25,840 at January 31, 2011 and April 30, 2010, respectively.  We account for our 50% ownership in GreenFiber using the equity method of accounting.

 

Summarized financial information for GreenFiber is as follows:

 

21



 

 

 

January 31,
2011

 

April 30,
2010

 

 

 

 

 

Current assets

 

$

21,136

 

$

16,969

 

 

 

 

 

Noncurrent assets

 

$

52,868

 

$

56,770

 

 

 

 

 

Current liabilities

 

$

13,740

 

$

11,553

 

 

 

 

 

Noncurrent liabilities

 

$

11,605

 

$

9,625

 

 

 

 

 

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Revenues

 

$

28,470

 

$

32,528

 

$

66,488

 

$

82,545

 

Gross profit

 

$

6,594

 

$

8,056

 

$

12,172

 

$

19,747

 

Net income (loss)

 

$

205

 

$

146

 

$

(5,071

)

$

(2,610

)

 

We also have a 10.6% interest in RecycleRewards, Inc., a company that markets an incentive based recycling service, and a 19.9% interest in Evergreen National Indemnity Company, a surety company which provides surety bonds to secure contractual performance for municipal solid waste collection contracts and landfill closure and post-closure obligations.  Our investment in these interests amounted to $15,123 at January 31, 2011 and April 30, 2010.  We account for these investments under the cost method of accounting.

 

13.          SUBSIDIARY GUARANTORS

 

Our Senior Subordinated Notes and Second Lien 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 Senior Subordinated Notes and Second Lien Notes and the Parent has no independent assets or operations.  Non-guarantor subsidiaries of the parent are considered minor as each represents less than 3% of total assets, stockholders’ equity, revenues, loss from continuing operations before income taxes and discontinued operations and cash flow from operating activities.  There are no significant restrictions on the ability of the Parent and the guarantor subsidiaries to obtain funds from subsidiaries by dividend or loan.

 

22



 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and Notes thereto included under Item 1.  In addition, reference should be made to our audited Consolidated Financial Statements and Notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended April 30, 2010.

 

This Quarterly Report on Form 10-Q and, in particular, this Management’s Discussion and Analysis may contain or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”), including:

 

·                  expected liquidity and financing plans;

·                  expected future revenues, operations, expenditures and cash needs;

·                  fluctuations in the commodity pricing of our recyclables, increases in landfill tipping fees and fuel costs and general economic and weather conditions;

·                  projected future obligations related to capping, closure and post-closure costs of our existing landfills and any disposal facilities which we may own or operate in the future;

·                  our ability to use our net operating losses and tax positions;

·                  the projected development of additional disposal capacity or expectations regarding permits of existing capacity;

·                  the recoverability or impairment of any of our assets or goodwill;

·                  estimates of the potential markets for our products and services, including the anticipated drivers for future growth;

·                  sales and marketing plans or price and volume assumptions;

·                  the outcome of any legal or regulatory matter;

·                  potential business combinations or divestitures; and

·                  projected improvements to our infrastructure and impact of such improvements on our business and operations.

 

In addition, any statements contained in or incorporated by reference into this report that are not statements of historical fact should be considered forward-looking statements. You can identify these forward-looking statements by the use of the words “believes”, “expects”, “anticipates”, “plans”, “may”, “will”, “would”, “intends”, “estimates” and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate as well as management’s beliefs and assumptions, and should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included in this report. We cannot guarantee that we actually will achieve the plans, intentions or expectations disclosed in the forward-looking statements made. The occurrence of the events described and the achievement of the expected results depends on many events, some or all of which are not predictable or within our control. Actual results may differ materially from those set forth in forward-looking statements.

 

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements.  These risks and uncertainties include, without limitation, those detailed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended April 30, 2010.  We explicitly disclaim any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by law.

 

23



 

Recent Developments

 

On January 23, 2011 we entered into a purchase and sale agreement and related agreements to sell select non-integrated FCR recycling assets and select intellectual property assets to a new company formed by Pegasus Capital Advisors, L.P. and Intersection, LLC (the “Purchaser”) for $130.4 million in gross proceeds (the “FCR Divestiture”).  Pursuant to these agreements, we will divest FCR Recycling assets located outside our core operating region of New York, Massachusetts, Vermont, New Hampshire, Maine and northern Pennsylvania, including 17 Material Recycling Facilities (“MRF’s), one transfer station and certain related intellectual property assets.  Following the transaction, we will retain four integrated MRFs located in our core operating regions.  As a part of the disposition, we also entered into a ten year commodities marketing agreement with the Purchaser to market 100% of the tonnage from three of our remaining integrated MRFs that were previously part of the FCR region.

 

We completed the transaction on March 1, 2011 for $134.1 million in gross cash proceeds, including an estimated $3.7 million working capital adjustment.  After netting transaction costs and cash taxes payable in conjunction with the divestitures, we expect the net cash proceeds to amount to approximately $120.0 million.  We intend to use the cash proceeds from the divestiture and borrowings under our Senior Secured Revolving Credit Facility to repay the aggregate principal term loan (the “New Term Loan”) in full upon the completion of the disposition.  In addition, at the closing of the transaction, Jim Bohlig, an officer and Board Member of the Company, will join the Purchaser as CEO.

 

On February 7, 2011, we completed the offering of $200.0 million of 7.75% senior subordinated notes due 2019 (the “2019 Notes”).  The 2019 Notes are fully and unconditionally guaranteed on a senior subordinated basis by substantially all of our existing and future domestic restricted subsidiaries that guarantee our Senior Secured Credit Facility and Second Lien Notes.  Interest is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2011.  We used the net proceeds from the offering of the 2019 Notes, together with other available funds, to refinance our 9.75% senior subordinated notes due February 2013 (the “Senior Subordinated Notes”) and to pay related transaction costs.

 

Company Overview

 

Founded in 1975 with a single truck, Casella Waste Systems, Inc. is a vertically-integrated company. We provide resource management expertise and services to residential, commercial, municipal, and industrial customers, primarily in the areas of solid waste collection, transfer, disposal and recycling services. We operate in 14 states— including vertically integrated solid waste operations in Vermont, New Hampshire, New York, Massachusetts and Maine; and stand-alone materials processing facilities in Connecticut, Pennsylvania, New Jersey, North Carolina, Tennessee, Georgia, Florida, Michigan and Wisconsin.

 

Upon completion of the FCR Divestiture, we owned and/or operated 31 solid waste collection operations, 29 transfer stations, 17 recycling facilities, eight Subtitle D landfills, one landfill permitted to accept construction and demolition materials, and one waste-to-energy facility.  In addition, we hold a 50% interest in US Green Fiber, LLC (“GreenFiber”), a joint venture that manufactures, markets and sells cellulose insulation made from recycled fiber.  We also hold a 10.6% interest in RecycleRewards, Inc. (“RecycleRewards”), a company that markets an incentive based recycling service, and a 19.9% interest in Evergreen National Indemnity Company (“Evergreen”), a surety company which provides surety bonds to secure contractual performance for municipal solid waste collection contracts and landfill closure and post-closure obligations.

 

24



 

Operating Results

 

Revenues and operating income (loss) based on our segments for the three and nine months ended January 31, 2011 and 2010 are as follows (in millions):

 

 

 

Revenues

 

Operating Income (Loss)

 

 

 

Three Months Ended January 31,

 

Segment 

 

2011

 

2010

 

2011

 

2010

 

Eastern

 

$

41.6

 

$

43.6

 

$

(0.2

)

$

1.7

 

Central

 

26.1

 

25.5

 

2.0

 

2.7

 

Western

 

25.1

 

23.9

 

3.9

 

3.7

 

Total solid waste operations

 

92.8

 

93.0

 

5.7

 

8.1

 

Recycling

 

8.9

 

7.5

 

1.0

 

0.0

 

Other

 

9.9

 

9.4

 

(0.4

)

(0.7

)

Total

 

$

111.6

 

$

109.9

 

$

6.3

 

$

7.4

 

 

 

 

Revenues

 

Operating Income (Loss)

 

 

 

Nine Months Ended January 31,

 

Segment 

 

2011

 

2010

 

2011

 

2010

 

Eastern

 

$

130.4

 

$

136.8

 

$

2.6

 

$

0.9

 

Central

 

84.4

 

84.1

 

10.1

 

12.1

 

Western

 

84.6

 

74.2

 

18.0

 

13.1

 

Total solid waste operations

 

299.4

 

295.1

 

30.7

 

26.1

 

Recycling

 

26.6

 

20.9

 

2.2

 

0.7

 

Other

 

30.5

 

28.9

 

(1.7

)

(1.7

)

Total

 

$

356.5

 

$

344.9

 

$

31.2

 

$

25.1

 

 

For the quarter ended January 31, 2011, we reported revenues of $111.6 million, an increase of $1.7 million, or 1.5%, from $109.9 million for the quarter ended January 31, 2010.  Solid waste revenues decreased 0.2%, with decreases in collection volumes accounting for 1.3%, and further resulting from 0.3% price decline in  power generation, 0.1% from commodity price decrease, 1.9% related to a divestiture in the Eastern region, and 1.4% from the closure of a landfill.  These decreases were partially offset by an increase of 3.6% in disposal, power generation, processing and recycling volumes, 0.5% of the increase resulting from positive collection and disposal prices, 0.1% from fuel surcharges, 0.3% from higher commodity volumes, along with a 0.3% increase from an acquisition in the Eastern region.  As a percentage of total Recycling revenues, revenues increased 19.9%, with 27.9% resulting from higher commodity prices offset by a 8.0% decline in volumes during the quarter.

 

Operating income for the three months ended January 31, 2011 was $6.3 million compared to $7.4 million in the prior year comparable period and decreased year over year as a percentage of revenue to 5.6% from 6.7%.  Eastern region operating income decreased $1.9 million compared to the prior year comparable period primarily due to lower power revenue at Maine Energy associated with lower market rates for power.  Central region operating income decreased by $0.7 million compared to the prior year comparable period primarily due to increased labor, fuel, maintenance, and hauling costs that more than offset increased revenues. Recycling operating income increased by $1.0 million compared to the prior year comparable period due primarily to increased commodity pricing.

 

Operating income for the nine months ended January 31, 2011 was $31.2 million compared to $25.1 million in the prior year comparable period and increased between years as a percentage of revenue

 

25



 

to 8.8% from 7.3%.  Eastern region operating income increased $1.7 million compared to the prior year period primarily due to decreased amortization related to a volume shift within the region.  Central region operating income decreased by $2.0 million compared to the prior year period primarily due to increased labor, fuel, maintenance, and hauling costs.  Western region operating income increased $4.9 million compared to the prior year period primarily due to higher disposal revenues associated with higher volume.  Recycling operating income increased by $1.5 million compared to the prior year period due primarily to increased commodity pricing.

 

Divestitures

 

During the third quarter of fiscal year 2011, we completed the sale of the Trilogy Glass business for cash proceeds of $1.8 million.  A gain amounting to $0.04 million (net of tax) was recorded to (loss) gain on disposal of discontinued operations in the third quarter of fiscal year 2011.

 

In the quarter ended July 31, 2010, we completed the sale of certain assets in Southeastern Massachusetts.   Total consideration amounted to $7.8 million with cash proceeds of $7.5 million.  We recorded a gain on sale of assets of $3.5 million.

 

In fiscal year 2010 we completed divestitures and closed operations resulting in a gain on disposal of discontinued operations (net of tax) amounting to $0.2 million and $0.3 million in the three and nine months ended January 31, 2010, respectively.

 

The operating results of these operations, including those related to prior years, have been reclassified from continuing to discontinued operations in the accompanying consolidated financial statements.  Revenues attributable to discontinued operations for the three and nine months ended January 31, 2011 and 2010 amounted to $20.2 million, $15.9 million, $56.1 million and $45.1 million, respectively.  Income (loss) before income tax benefit attributable to discontinued operations for the three and nine months ended January 31, 2011 and 2010 amounted to $0.5 million, $1.4 million, ($0.8) million and $3.2 million, respectively.

 

Critical Accounting Policies and Estimates

 

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  On an on-going basis, management evaluates its estimates and assumptions which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances.  The results of its evaluation form the basis for making judgments about the carrying values of assets and liabilities.  Actual results may differ from these estimates under different assumptions and circumstances.  Our significant accounting policies are more fully discussed in Item 7 of our Annual Report on Form 10-K for the year ended April 30, 2010.

 

Adoption of New Accounting Pronouncements

 

For a description of the new accounting standards adopted that may affect us, see Note 1 to our Consolidated Financial Statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

 

General

 

Revenues

 

Our revenues in the Eastern, Central and Western regions are attributable primarily to fees charged to customers for solid waste collection, disposal, power generation and processing and recycling. We derive a substantial portion of our collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities. The majority of

 

26



 

our residential collection services are performed on a subscription basis with individual households. Landfill, waste-to-energy facility and transfer customers are charged a tipping fee on a per ton basis for disposing their solid waste at our facilities. Recycling revenues, which are included in our Recycling, Central and Western regions, consist of revenues from the sale of recyclable commodities and operations and maintenance contracts of recycling facilities for municipal customers.  We also generate and sell electricity under contract at our waste-to-energy facility and at certain of our landfill facilities.

 

GreenFiber’s business is conducted through a 50/50 joint venture with Louisiana-Pacific Corporation, and accordingly, we recognize half of the joint venture’s net income or loss on the equity method in our results of operations.  Our investments in RecycleRewards and Evergreen are accounted for under the cost method of accounting.  Also, in the “Other” segment, we have ancillary revenues, including major customer accounts.

 

Our revenues are shown net of inter-company eliminations.  We typically establish our inter-company transfer pricing based upon prevailing market rates.  The table below shows, for the periods indicated, the percentages and dollars (in millions) of revenue attributable to services provided.

 

 

 

Three Months Ended January 31,

 

Nine Months Ended January 31,

 

 

 

2011

 

2010

 

2011

 

2010

 

Collection

 

$

48.1

 

43.1%

 

$

49.1

 

44.7%

 

$

152.6

 

42.8%

 

$

155.6

 

45.1%

 

Disposal

 

23.6

 

21.1%

 

24.0

 

21.8%

 

84.2

 

23.6%

 

82.3

 

23.9%

 

Power generation

 

7.2

 

6.5%

 

7.3

 

6.6%

 

19.2

 

5.4%

 

20.8

 

6.0%

 

Processing and recycling

 

13.9

 

12.4%

 

12.6

 

11.5%

 

43.4

 

12.2%

 

36.4

 

10.6%

 

Total solid waste operations

 

92.8

 

83.1%

 

93.0

 

84.6%

 

299.4

 

84.0%

 

295.1

 

85.6%

 

Major accounts

 

9.9

 

8.9%

 

9.4

 

8.6%

 

30.5

 

8.6%

 

28.9

 

8.4%

 

Recycling

 

8.9

 

8.0%

 

7.5

 

6.8%

 

26.6

 

7.4%

 

20.9

 

6.0%

 

Total revenues

 

$

111.6

 

100.0%

 

$

109.9

 

100.0%

 

$

356.5

 

100.0%

 

$

344.9

 

100.0%

 

 

Solid waste operations revenues decreased as a percentage of total revenues in the three and nine months ended January 31, 2011 compared to the same periods in the prior year due primarily to increased total revenues associated with increases in processing and recycling, major accounts, and recycling revenues combined with a decrease in collection and power generation revenues.  Volume decline and a divestiture in the Eastern region drove collection revenues to a lower percentage in these periods.  Disposal revenues increased in the nine months ended January 31, 2011 with improved volumes.  However, this was partially offset by disposal price decline and the divestiture and closure of a landfill.  Disposal revenues benefitted from price and volume improvements in the three months ended January 31, 2011 but were negatively impacted by the closure of a landfill.  Higher power generation volumes were negatively impacted by price decline.  Processing and recycling revenues were higher as a result of volume, commodity price and commodity volume.  The dollar increase in major accounts revenues in the three and nine months ended January 31, 2011 compared to the prior year comparable period is primarily due to higher volumes.  Recycling revenues were higher in the three and nine months ended January 31, 2011 primarily due to commodity price increases.  Recycling commodity volumes increased for the nine months ended January 31, 2011 but declined in the current quarter.

 

Operating Expenses

 

Cost of operations includes labor, tipping fees paid to third-party disposal facilities, fuel, maintenance and repair of vehicles and equipment, worker’s compensation and vehicle insurance, the cost of purchasing materials to be recycled, third party transportation expense, district and state taxes, host community fees and royalties. Cost of operations also includes accretion expense related to landfill capping, closure and post closure, leachate treatment and disposal costs and depletion of landfill operating lease obligations.

 

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General and administration expenses include management, clerical and administrative compensation and overhead, professional services and costs associated with marketing, sales force and community relations efforts.

 

Depreciation and amortization expense includes depreciation of fixed assets over the estimated useful life of the assets using the straight-line method, amortization of landfill airspace assets under the units-of-consumption method, and the amortization of intangible assets (other than goodwill) using the straight-line method.

 

The following table sets forth for the periods indicated the percentage relationship that certain items from our consolidated financial statements bear to revenues.

 

 

 

Three Months Ended
January 31,

 

Nine Months Ended
January 31,