##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the quarterly period ended June 30, 2005
 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: 000-50808
 
 WCA Waste Corporation
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-0829917(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)One Riverway, Suite 1400
    
    77056Houston, Texas 77056
    
    (Zip Code)(Address of principal executive offices)
 (713) 292-2400
(Registrants telephone number, including area code)
 N/A
(Former name, former address and former fiscal year,
if changed since last report)
 
 þ o
 o þ




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TABLE OF CONTENTS  PART I - FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II-OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSItem 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXCertification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350    Table of Contents  RISK FACTORS AND
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
    
    
    we may be unable to identify, complete or integrate future acquisitions successfully;
    
    we compete for acquisition candidates with other purchasers, some of which have greater
financial resources and may be able to offer more favorable terms;
    
    revenue and other synergies from acquisitions may not be fully realized or may take
longer to realize than expected;
    
    we may not be able to improve internalization rates by directing waste volumes from
acquired businesses to our landfills for regulatory, business or other reasons;
    
    businesses that we acquire may have unknown liabilities and require unforeseen capital
expenditures;
    
    changes or disruptions associated with making acquisitions may make it more difficult
to maintain relationships with customers of the acquired businesses;
    
    in connection with financing acquisitions, we may incur additional indebtedness, or may
issue additional shares of our common stock which would dilute the ownership percentage of
existing stockholders; and
    
    rapid growth may strain our management, operational, financial and other resources.
  
    
    we may not be able to obtain or maintain the permits necessary for operation and
expansion of our existing landfills or landfills that we might acquire or develop;
    
    our costs may increase for, or we may be unable to provide, necessary financial
assurances to governmental agencies under applicable environmental regulations relating to
our landfills;
    
    governmental regulations may require increased capital expenditures or otherwise affect
our business;
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
    
    our business is capital intensive, requiring ongoing cash outlays that may strain or
consume our available capital and we may not always have access to the additional capital
that we require to execute our growth strategy;
    
    possible changes in our estimates of site remediation requirements, final capping,
closure and post-closure obligations, compliance, regulatory developments and insurance
costs;
    
    the effect of limitations or bans on disposal or transportation of out-of-state waste
or certain categories of waste;
    
    increases in the costs of disposal, labor and fuel could reduce operating margins;
    
    increases in costs of insurance or failure to maintain full coverage could reduce
operating income;
    
    we are subject to environmental and safety laws, which restrict our operations and
increase our costs, and may impose significant unforeseen liabilities;
    
    we compete with large companies and municipalities with greater financial and
operational resources, and we also compete with alternatives to landfill disposal;
    
    covenants in our credit facilities and the instruments governing our other indebtedness
may limit our ability to grow our business and make capital expenditures;
    
    changes in interest rates may affect our results of operations;
    
    a downturn in U.S. economic conditions or the economic conditions in our markets may
have an adverse impact on our business and results of operations;
    
    failure to achieve and maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and
stock price; and
    
    our success depends on key members of our senior management, the loss of any of whom
could disrupt our customer and business relationships and our operations.
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PART I FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS.
 WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands)
 June 30,
    
    December 31,2005
    
    2004(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,699
    
    
    $
    272Accounts receivable, net of allowance for doubtful accounts of $512
(unaudited) and $575, respectively
    
    
    13,927
    
    
    
    9,039Prepaid expenses and other
    
    
    3,900
    
    
    
    4,808Total current assets
    
    
    20,526
    
    
    
    14,119Property and equipment, net of accumulated depreciation and amortization
of $38,434 (unaudited) and $32,157, respectively
    
    
    146,059
    
    
    
    90,521Goodwill, net
    
    
    52,694
    
    
    
    47,510Intangible assets, net
    
    
    4,226
    
    
    
    3,019Costs incurred on possible acquisitions
    
    
    350
    
    
    
    320Deferred financing costs, net
    
    
    3,468
    
    
    
    2,823Deferred tax assets
    
    
    1,537
    
    
    
    2,557Other assets
    
    
    3,115
    
    
    
    2,898Total assets
    
    $
    231,975
    
    
    $
    163,767LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    6,327
    
    
    $
    6,081Accrued liabilities
    
    
    8,323
    
    
    
    5,556Accrued closure and post-closure liabilities
    
    
    446
    
    
    
    443Note payable
    
    
    850
    
    
    
    2,091Current maturities of long-term debt
    
    
    1,561
    
    
    
    1,429Total current liabilities
    
    
    17,507
    
    
    
    15,600Long-term debt, less current maturities and discount
    
    
    130,942
    
    
    
    71,814Accrued closure and post-closure liabilities
    
    
    1,988
    
    
    
    1,780Total liabilities
    
    
    150,437
    
    
    
    89,194COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY:Common stock, $0.01 par value per share. Authorized 25,000 shares; issued
and outstanding 15,559 and 14,853 shares, respectively
    
    
    156
    
    
    
    149Additional paid-in capital
    
    
    79,946
    
    
    
    72,849Unearned compensation
    
    
    (1,729
    )
    
    
    Retained earnings
    
    
    3,165
    
    
    
    1,575Total stockholders equity
    
    
    81,538
    
    
    
    74,573Total liabilities and stockholders equity
    
    $
    231,975
    
    
    $
    163,767
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WCA WASTE CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)  (In thousands, except per share amounts)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Revenue
    
    $
    29,052
    
    
    $
    17,114
    
    
    $
    51,937
    
    
    $
    33,005Expenses:Cost of services
    
    
    17,866

    
    
    
    11,365
    
    
    
    33,612
    
    
    
    21,927Depreciation and amortization
    
    
    3,613
    
    
    
    2,078
    
    
    
    6,451
    
    
    
    4,011Accretion expense
    
    
    38
    
    
    
    60
    
    
    
    76
    
    
    
    128General and administrative:Stock-based compensation
    
    
    137
    
    
    
    11,502
    
    
    
    137
    
    
    
    11,532Other general and administrative
    
    
    2,145
    
    
    
    1,114
    
    
    
    3,891
    
    
    
    2,36623,799
    
    
    
    26,119
    
    
    
    44,167
    
    
    
    39,964Operating income (loss)
    
    
    5,253
    
    
    
    (9,005
    )
    
    
    7,770
    
    
    
    (6,959
    )Other income (expense):Interest expense, net
    
    
    (2,527
    )
    
    
    (1,261
    )
    
    
    (3,879
    )
    
    
    (2,528
    )Write-off of deferred financing costs and
debt discount
    
    
    (1,294
    )
    
    
    
    
    
    
    (1,294
    )
    
    
    Other
    
    
    9
    
    
    
    97
    
    
    
    13
    
    
    
    98(3,812
    )
    
    
    (1,164
    )
    
    
    (5,160
    )
    
    
    (2,430
    )Income (loss) before income taxes
    
    
    1,441
    
    
    
    (10,169
    )
    
    
    2,610
    
    
    
    (9,389
    )Income tax (provision) benefit
    
    
    (559
    )
    
    
    3,496
    
    
    
    (1,020
    )
    
    
    3,185Net income (loss)
    
    $
    882
    
    
    $
    (6,673
    )
    
    $
    1,590
    
    
    $
    (6,204
    )Earnings per share  basic and diluted
    
    $
    0.06
    
    
    $
    (0.77
    )
    
    $
    0.10
    
    
    $
    (0.75
    )Weighted average shares outstanding :Basic
    
    
    15,362
    
    
    
    8,652
    
    
    
    15,334
    
    
    
    8,326Diluted
    
    
    15,372
    
    
    
    8,652
    
    
    
    15,362
    
    
    
    8,326
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WCA WASTE CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)  (In thousands)
 Six Months EndedJune 30,2005
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    1,590
    
    
    $
    (6,204
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    6,451
    
    
    
    4,011Non-cash compensation charge
    
    
    137
    
    
    
    6,849Amortization of deferred financing costs and debt discount
    
    
    255
    
    
    
    289Write-off of deferred financing costs and debt discount
    
    
    1,294
    
    
    
    Deferred tax provision (benefit)
    
    
    1,020
    
    
    
    (3,185
    )Provision and accretion expense for closure and post-closure obligations
    
    
    76
    
    
    
    128Gain on sale of assets
    
    
    (13
    )
    
    
    (98
    )Interest rate swap
    
    
    
    
    
    
    (10
    )Prepaid disposal usage
    
    
    717
    
    
    
    138Costs of terminated acquisitions
    
    
    17
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (3,797
    )
    
    
    (888
    )Prepaid expenses and other
    
    
    101
    
    
    
    949Accounts payable and other liabilities
    
    
    1,559
    
    
    
    428Net cash provided by operating activities
    
    
    9,407
    
    
    
    2,407CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of businesses, net of cash acquired
    
    
    (53,354
    )
    
    
    Proceeds from sale of fixed assets
    
    
    20
    
    
    
    113Capital expenditures
    
    
    (7,685
    )
    
    
    (5,447
    )Cost incurred on possible acquisitions
    
    
    (47
    )
    
    
    (14
    )Net cash used in investing activities
    
    
    (61,066
    )
    
    
    (5,348
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of long-term debt
    
    
    127,500
    
    
    
    15,500Principal payments on long-term debt
    
    
    (22,927
    )
    
    
    (11,914
    )Principal payments of note payable
    
    
    (1,480
    )
    
    
    (562
    )Net change in revolving line of credit
    
    
    (46,900
    )
    
    
    (33,263
    )Repayment of Waste Management, Inc. note
    
    
    
    
    
    
    (13,343
    )Distribution and transfers to former parent, net
    
    
    
    
    
    
    (6,340
    )Proceeds from issuance of common stock
    
    
    
    

    
    
    57,271Deferred financing costs
    
    
    (2,107
    )
    
    
    (1,522
    )Net cash provided by financing activities
    
    
    54,086
    
    
    
    5,827NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    2,427
    
    
    
    2,886CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
    
    
    272
    
    
    
    105CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
    
    $
    2,699
    
    
    $
    2,991SUPPLEMENTAL CASH FLOW INFORMATION:Interest paid
    
    $
    2,537
    
    
    $
    2,509Income taxes paid
    
    
    
    
    
    
    
  5




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WCA WASTE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(All tables in thousands, except per share data)
 1. BASIS OF PRESENTATION
    2. ACQUISITIONS
    6




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Six Months Ended June 30,2005
    
    2004Revenue
    
    $
    53,723
    
    
    $
    35,531Net Income (loss)
    
    $
    1,695
    
    
    $
    (6,364
    )Earnings Per Share:Basic
    
    $
    0.11
    
    
    $
    (0.76
    )Diluted
    
    $
    0.11
    
    
    $
    (0.76
    )
 3. STOCK-BASED COMPENSATION
   2005
    
    2004Risk-free interest rate
    
    
    3.44
    %
    
    
    2.8
    %Volatility factor of stock price
    
    
    0.35
    
    
    
    0.37Dividends
    
    
    
    
    
    
    Option life
    
    4 years
    
    4 yearsCalculated fair value per share
    
    $
    3.35
    
    
    $
    3.14
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Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Net income (loss), as reported
    
    $
    882
    
    
    $
    (6,673
    )
    
    $
    1,590
    
    
    $
    (6,204
    )Plus: Stock-based
compensation expense included
in reported net income
(loss), net of tax
    
    
    
    
    
    
    7,476
    
    
    
    
    
    
    
    7,496Less: Stock-based
compensation expense pursuant
to SFAS 123 on canceled
options and warrants, net of
tax
    
    
    
    
    
    
    (7,551
    )
    
    
    
    
    
    
    (7,551
    )Less: Stock-based
compensation expense on
granted options pursuant to
SFAS 123, net of tax
    
    
    (107
    )
    
    
    (29
    )
    
    
    (213
    )
    
    
    (52
    )Net income (loss), pro forma
    
    $
    775
    
    
    $
    (6,777
    )
    
    $
    1,377
    
    
    $
    (6,311
    )Earnings per share:BasicAs reported
    
    $
    0.06
    
    
    $
    (0.77
    )
    
    $
    0.10
    
    
    $
    (0.75
    )Pro forma
    
    $
    0.05
    
    
    $
    (0.78
    )
    
    $
    0.09
    
    
    $
    (0.76
    )DilutedAs reported
    
    $
    0.06
    
    
    $
    (0.77
    )
    
    $
    0.10
    
    
    $
    (0.75
    )Pro forma
    
    $
    0.05
    
    
    $
    (0.78
    )
    
    $
    0.09
    
    
    $
    (0.76
    )
 4. EARNINGS PER SHARE
  Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Net income (loss)
    
    $
    882
    
    
    $
    (6,673
    )
    
    $
    1,590
    
    
    $
    (6,204
    )Weighted average basic shares outstanding
    
    
    15,362
    
    
    
    8,652
    
    
    
    15,334
    
    
    
    8,326Dilutive effect of options and warrants
    
    
    10
    
    
    
    
    
    
    
    28
    
    
    
    Weighted average diluted shares outstanding
    
    
    15,372
    
    
    
    8,652
    
    
    
    15,362
    
    
    
    8,326Earnings per share:Basic
    
    $
    0.06
    
    
    $
    (0.77
    )
    
    $
    0.10
    
    
    $
    (0.75
    )Diluted
    
    $
    0.06
    
    
    $
    (0.77
    )
    
    $
    0.10
    
    
    $
    (0.75
    )
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5. LONG-TERM DEBT
  June 30,
    
    December 31,2005
    
    2004Term B Loan, principal payable $250,000 per quarter, maturing in April
2011, variable interest rate based on LIBOR plus a margin (6.17% at
June 30, 2005)
    
    $
    99,750
    
    
    $
    Second Lien Credit Agreement, maturing in October 2011, variable
interest rate based on LIBOR plus a margin (9.12% at June 30,
2005)
    
    
    25,000
    
    
    
    Revolving note payable with a financial institution, variable
interest rate
based on LIBOR plus a margin (4.74% at December 31, 2004)
    
    
    
    
    
    
    46,900Environmental Facilities Revenue Bonds, principal payable in varying
quarterly installments, maturing in 2022, variable interest rate
(4.04%
at December 31, 2004)
    
    
    
    
    
    
    22,500Notes payable to banks and financial institutions, interest ranging
from 5.8% to 10.0%, payable monthly through August 2008
    
    
    309
    
    
    
    486Seller note, with interest rate of 6%, due in May 2006
    
    
    444
    
    
    
    444Seller convertible note, with interest rate of 5%, due in December
2009
    
    
    3,000
    
    
    
    3,000Seller convertible notes, with interest rate of 8%, due in January
2010
    
    
    4,000
    
    
    
    132,503
    
    
    
    73,330Less: Debt discount
    
    
    
    
    
    
    (87
    )Less: Current portion
    
    
    (1,561
    )
    
    
    (1,429
    )$
    130,942
    
    
    $
    71,814
 April 2005 Credit Agreements
    9




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Other 2005 Long-term Debt Transactions
   6. LANDFILL ACCOUNTING
 Capitalized Landfill Costs
     Closure and Post-Closure Obligations
   10




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Landfill
    
    Closure and Post-Assets, net
    
    closure LiabilitiesDecember 31, 2004
    
    $
    56,263
    
    
    $
    2,223Capital expenditures
    
    
    3,839
    
    
    
    Acquisition of landfill
    
    
    45,782
    
    
    
    8Amortization expense
    
    
    (3,094
    )
    
    
    Obligations incurred and capitalized
    
    
    127
    
    
    
    127Interest accretion
    
    
    
    
    
    
    76June 30, 2005
    
    $
    102,917
    
    
    $
    2,434
  June 30,
    
    December 31,2005
    
    2004Recorded amounts:Current portion
    
    $
    446
    
    
    $
    443Noncurrent portion
    
    
    1,988
    
    
    
    1,780Total recorded
    
    $
    2,434
    
    
    $
    2,223
  7. INCOME TAXES
  8. STOCKHOLDERS EQUITY
  AdditionalCommon
    
    Paid-in
    
    Unearned
    
    RetainedStock
    
    Capital
    
    Compensation
    
    Earnings
    
    TotalDecember 31, 2004
    
    $
    149
    
    
    $
    72,849
    
    
    $
    
    
    
    $
    1,575
    
    
    $
    74,573Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,590
    
    
    
    1,590Issuance of shares to acquiree
    
    
    5
    
    
    
    5,233
    
    
    
    
    
    
    
    
    
    
    
    5,238Issuance of restricted shares to
employees and directors
    
    
    2
    
    
    
    1,864
    
    
    
    (1,866
    )
    
    
    
    
    
    
    Accretion of unearned compensation
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    137June 30, 2005
    
    $
    156
    
    
    $
    79,946
    
    
    $
    (1,729
    )
    
    $
    3,165
    
    
    $
    81,538
 11




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9. SEGMENT INFORMATION
  Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Collection:Residential
    
    $
    4,530
    
    
    $
    2,424
    
    
    $
    8,900
    
    
    $
    5,006Commercial
    
    
    3,441
    
    
    
    2,995
    
    
    
    6,711
    
    
    
    5,924Roll-off
    
    
    9,350
    
    
    
    5,144
    
    
    
    17,220
    
    
    
    9,856Other
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    188Total Collection
    
    
    17,321
    
    
    
    10,683
    
    
    
    32,831
    
    
    
    20,974Disposal
    
    
    13,133
    
    
    
    8,214
    
    
    
    22,526
    
    
    
    15,578Less: Intercompany
    
    
    (4,826
    )
    
    
    (2,963
    )
    
    
    (8,409
    )
    
    
    (5,442
    )Disposal, net
    
    
    8,307
    
    
    
    5,251
    
    
    
    14,117
    
    
    
    10,136Transfer and other
    
    
    6,084
    
    
    
    2,945
    
    
    
    9,751
    
    
    
    5,262Less: Intercompany
    
    
    (2,660
    )
    
    
    (1,765
    )
    
    
    (4,762
    )
    
    
    (3,367
    )Transfer and other, net
    
    
    3,424
    
    
    
    1,180
    
    
    
    4,989
    
    
    
    1,895Total Revenue
    
    $
    29,052
    
    
    $
    17,114
    
    
    $
    51,937
    
    
    $
    33,005
  Kansas/
    
    
    
    
    
    
    
    
    
    NorthMissouri
    
    Texas
    
    Arkansas
    
    Carolina
    
    Other
    
    Corporate
    
    TotalThree months ended June 30, 2005:Revenue
    
    $
    11,560
    
    
    
    6,681
    
    
    
    3,103
    
    
    
    2,731
    
    
    
    4,977
    
    
    
    
    
    
    
    29,052Depreciation and amortization
    
    
    1,234
    
    
    
    686
    
    
    
    455
    
    
    
    457
    
    
    
    747
    
    
    
    34
    
    
    
    3,613Capital expenditures
    
    
    1,328
    
    
    
    1,085
    
    
    
    785
    
    
    
    372
    
    
    
    1,270
    
    
    
    99
    
    
    
    4,939Capital expenditures (Acquisitions)
    
    
    1,662
    
    
    
    
    
    
    
    
    
    
    
    41,178
    
    
    
    
    
    
    
    
    
    
    
    42,840Three months ended June 30, 2004:Revenue
    
    $
    9,351
    
    
    
    4,081
    
    
    
    2,126
    
    
    
    
    
    
    
    1,556
    
    
    
    
    
    
    
    17,114Depreciation and amortization
    
    
    881
    
    
    
    512
    
    
    
    247
    
    
    
    
    
    
    
    415
    
    
    
    23
    
    
    
    2,078Capital expenditures
    
    
    1,443
    
    
    
    663
    
    
    
    642
    
    
    
    
    
    
    
    770
    
    
    
    7
    
    
    
    3,525Six months ended June 30, 2005:Revenue
    
    $
    21,440
    
    
    
    12,436
    
    
    
    5,983
    
    
    
    2,731
    
    
    
    9,347
    
    
    
    
    
    
    
    51,937Depreciation and amortization
    
    
    2,233
    
    
    
    1,314
    
    
    
    884
    
    
    
    457
    
    
    
    1,502
    
    
    
    61
    
    
    
    6,451Capital expenditures
    
    
    2,875
    
    
    
    1,359
    
    
    
    824
    
    
    
    372
    
    
    
    2,109
    
    
    
    146
    
    
    
    7,685Capital expenditures (Acquisitions)
    
    
    12,911
    
    
    
    
    
    
    
    
    
    
    
    41,178
    
    
    
    
    
    
    
    
    
    
    
    54,089Six months ended June 30, 2004:Revenue
    
    $
    18,110
    
    
    
    7,930
    
    
    
    4,171
    
    
    
    
    
    
    
    2,794
    
    
    
    
    
    
    
    33,005Depreciation and amortization
    
    
    1,687
    
    
    
    1,016
    
    
    
    530
    
    
    
    
    
    
    
    734
    
    
    
    44
    
    
    
    4,011Capital expenditures
    
    
    2,212
    
    
    
    1,059
    
    
    
    1,207
    
    
    
    
    
    
    
    959
    
    
    
    10
    
    
    
    5,447Total assets:June 30, 2005
    
    $
    64,971
    
    
    
    30,023
    
    
    
    27,606
    
    
    
    46,489
    
    
    
    40,320
    
    
    
    22,566
    
    
    
    231,975December 31, 2004
    
    
    47,668
    
    
    
    28,130
    
    
    
    27,696
    
    
    
    
    
    
    
    39,035
    
    
    
    21,238
    
    
    
    163,767
 12




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##### Table of Contents



10. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
 Waste Corporation of Missouri, Inc. v. Lafarge Corporation and
Lafarge North America, Inc.
    13




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##### Table of Contents



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 condensed
consolidated financial statements and notes thereto included elsewhere in this quarterly report. 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 included in our annual report on Form 10-K for the year ended December 31, 2004 as
filed with the SEC on March 24, 2005. The discussion below contains forward-looking statements that
involve risks and uncertainties. For additional information regarding some of these risks and
uncertainties please read Risk Factors and Cautionary Statement About Forward-Looking Statements.
Unless the context requires otherwise, references in this quarterly report on Form 10-Q to WCA
Waste, we, us or our refer to WCA Waste Corporation and its direct and indirect subsidiaries
on a consolidated basis.
 Overview
  Acquisition Strategy
    14




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##### Table of Contents



Company
    
    Location
    
    Completion date
    
    OperationsTexas Environmental Waste
    
    Houston, TX
    
    July 13, 2004
    
    CollectionAshley Trash Service
    
    Springfield, MO
    
    August 17, 2004
    
    CollectionPower Waste
    
    Birmingham, AL
    
    August 31, 2004
    
    CollectionBlount Recycling
    
    Birmingham, AL
    
    September 3, 2004
    
    Collection, Landfill & Transfer StationTranslift, Inc.
    
    Little Rock, AR
    
    September 17, 2004
    
    CollectionRural Disposal, Inc.
    
    Willow Springs, MO
    
    November 12, 2004
    
    CollectionTrash Away, Inc.
    
    Piedmont, SC
    
    November 30, 2004
    
    Collection & Transfer StationGecko Investments (Eagle Ridge)
    
    St. Louis, MO
    
    January 11, 2005
    
    Collection & LandfillMRR Southern, LLC
    
    High Point/Raleigh, NC
    
    April 1, 2005
    
    Landfill, Transfer Station & MRFTriangle Environmental
    
    Raleigh, NC
    
    May 16, 2005
    
    CollectionFoster Ferguson
    
    El Dorado Springs, MO
    
    May 16, 2005
    
    CollectionTriad Waste
    
    High Point, NC
    
    May 31, 2005
    
    CollectionProper Disposal
    
    Chanute, KS
    
    May 31, 2005
    
    Collection
       General
  15




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##### Table of Contents



Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Collection:Residential
    
    $
    4,530
    
    
    $
    2,424
    
    
    $
    8,900
    
    
    $
    5,006Commercial
    
    
    3,441
    
    
    
    2,995
    
    
    
    6,711
    
    
    
    5,924Roll-off
    
    
    9,350
    
    
    
    5,144
    
    
    
    17,220
    
    
    
    9,856Other
    
    
    
    
    
    
    120
    
    
    
    
    
    
    
    188Total Collection
    
    
    17,321
    
    
    
    10,683
    
    
    
    32,831
    
    
    
    20,974Disposal
    
    
    13,133
    
    
    
    8,214
    
    
    
    22,526
    
    
    
    15,578Less: Intercompany
    
    
    (4,826
    )
    
    
    (2,963
    )
    
    
    (8,409
    )
    
    
    (5,442
    )Disposal, net
    
    
    8,307
    
    
    
    5,251
    
    
    
    14,117
    
    
    
    10,136Transfer and other
    
    
    6,084
    
    
    
    2,945
    
    
    
    9,751
    
    
    
    5,262Less: Intercompany
    
    
    (2,660
    )
    
    
    (1,765
    )
    
    
    (4,762
    )
    
    
    (3,367
    )Transfer and other, net
    
    
    3,424
    
    
    
    1,180
    
    
    
    4,989
    
    
    
    1,895Total Revenue
    
    $
    29,052
    
    
    $
    17,114
    
    
    $
    51,937
    
    
    $
    33,005
       16




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##### Table of Contents



Non-GAAP Measures
   
    
    it is widely used by investors in our industry to measure a companys operating
performance without regard to items such as interest expense, depreciation and
amortization, which can vary substantially from company to company depending upon
accounting methods and book value of assets, financing methods, capital structure and the
method by which assets were acquired;
    
    it helps investors more meaningfully evaluate and compare the results of our operations
from period to period by removing the impact of our capital structure (primarily interest
charges from our outstanding debt) and asset base (primarily depreciation and amortization
of our landfills and vehicles) from our operating results; and
    
    it helps investors identify items that are within operational control. Depreciation
charges, while a component of operating income, are fixed at the time of the asset
purchase in accordance with the depreciable lives of the related asset and as such are not
a directly controllable period operating charge.
  
    
    as a measure of operating performance because it assists us in comparing our
performance on a consistent basis as it removes the impact of our capital structure and
asset base from our operating results;
    
    as one method we use to estimate a purchase price (often expressed as a multiple of
EBITDA) for solid waste companies we intend to acquire. The appropriate EBITDA multiple
will vary from acquisition to acquisition depending on factors such as the size of the
operation, the type of operation, the anticipated growth in the market, the strategic
location of the operation in its market as well as other considerations;
    
    in presentations to our board of directors to enable them to have the same consistent
measurement basis of operating performance used by management;
    
    as a measure for planning and forecasting overall expectations and for evaluating
actual results against such expectations;
    
    in evaluations of field operations since it represents operational performance and
takes into account financial measures within the control of the field operating units;
    
    as a basis for incentive cash bonuses paid to our executive officers and other employees;
    
    to assess compliance with financial ratios and covenants included in our credit facility; and
    
    in communications with investors, lenders, and others, concerning our financial performance.
  17




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##### Table of Contents



Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Total EBITDA for reportable segments
    
    $
    8,875
    
    
    $
    (6,830
    )
    
    $
    14,234
    
    
    $
    (2,850
    )Depreciation and amortization
    
    
    (3,613
    )
    
    
    (2,078
    )
    
    
    (6,451
    )
    
    
    (4,011
    )Interest expense, net
    
    
    (2,527
    )
    
    
    (1,261
    )
    
    
    (3,879
    )
    
    
    (2,528
    )Write-off of deferred financing
costs and debt discount
    
    
    (1,294
    )
    
    
    
    
    
    
    (1,294
    )
    
    
    Income tax (provision) benefit
    
    
    (559
    )
    
    
    3,496
    
    
    
    (1,020
    )
    
    
    3,185Net income (loss)
    
    $
    882
    
    
    $
    (6,673
    )
    
    $
    1,590
    
    
    $
    (6,204
    )
  Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2005
    
    2004
    
    2005
    
    2004Total EBITDA, per above
    
    $
    8,875
    
    
    $
    (6,830
    )
    
    $
    14,234
    
    
    $
    (2,850
    )Stock-based compensation charge
    
    
    
    
    
    
    11,502
    
    
    
    
    
    
    
    11,532Adjusted EBITDA
    
    $
    8,875
    
    
    $
    4,672
    
    
    $
    14,234
    
    
    $
    8,682
  Results of Operations
 Three Months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
  Three Months Ended June 30,2005
    
    2004Revenue
    
    $
    29,052
    
    
    
    100.0
    %
    
    $
    17,114
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    17,866
    
    
    
    61.5
    
    
    
    11,365
    
    
    
    66.4Depreciation and amortization
    
    
    3,613
    
    
    
    12.4
    
    
    
    2,078
    
    
    
    12.1Accretion expense
    
    
    38
    
    
    
    0.1
    
    
    
    60
    
    
    
    0.4Stock-based compensation
    
    
    137
    
    
    
    0.5
    
    
    
    11,502
    
    
    
    67.2Other general and administrative
    
    
    2,145
    
    
    
    7.4
    
    
    
    1,114
    
    
    
    6.5Operating income (loss)
    
    
    5,253
    
    
    
    18.1
    
    
    
    (9,005
    )
    
    
    (52.6
    )Interest expense, net
    
    
    (2,527
    )
    
    
    (8.7
    )
    
    
    (1,261
    )
    
    
    (7.4
    )Write-off of deferred financing costs and debt discount
    
    
    (1,294
    )
    
    
    (4.5
    )
    
    
    
    
    
    
    Other income, net
    
    
    9
    
    
    
    0.0
    
    
    
    97
    
    
    
    0.6Income tax (provision) benefit
    
    
    (559
    )
    
    
    (1.9
    )
    
    
    3,496
    
    
    
    20.4Net income (loss)
    
    $
    882
    
    
    
    3.0
    %
    
    $
    (6,673
    )
    
    
    (39.0
    )%
 18




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##### Table of Contents



Revenue.
 Cost of services.
 Depreciation and amortization.
 Stock-based compensation.
 Other general and administrative.
 Interest expense, net.
 Write-off of deferred financing costs and debt discount.
 Income tax (provision) benefit.
 19




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##### Table of Contents



Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
  Six Months Ended June 30,2005
    
    2004Revenue
    
    $
    51,937
    
    
    
    100.0
    %
    
    $
    33,005
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    33,612
    
    
    
    64.7
    
    
    
    21,927
    
    
    
    66.4Depreciation and amortization
    
    
    6,451
    
    
    
    12.4
    
    
    
    4,011
    
    
    
    12.2Accretion expense
    
    
    76
    
    
    
    0.1
    
    
    
    128
    
    
    
    0.4Stock-based compensation
    
    
    137
    
    
    
    0.3
    
    
    
    11,532
    
    
    
    34.9Other general and administrative
    
    
    3,891
    
    
    
    7.5
    
    
    
    2,366
    
    
    
    7.2Operating income (loss)
    
    
    7,770
    
    
    
    15.0
    
    
    
    (6,959
    )
    
    
    (21.1
    )Interest expense, net
    
    
    (3,879
    )
    
    
    (7.5
    )
    
    
    (2,528
    )
    
    
    (7.7
    )Write-off of deferred financing costs and debt discount
    
    
    (1,294
    )
    
    
    (2.5
    )
    
    
    
    
    
    
    Other income, net
    
    
    13
    
    
    
    0.0
    
    
    
    98
    
    
    
    0.3Income tax (provision) benefit
    
    
    (1,020
    )
    
    
    (1.9
    )
    
    
    3,185
    
    
    
    9.7Net income (loss)
    
    $
    1,590
    
    
    
    3.1
    %
    
    $
    (6,204
    )
    
    
    (18.8
    )%
 Revenue.
 Cost of services.
 Depreciation and amortization.
 Stock-based compensation.
 Other general and administrative.
 20




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##### Table of Contents



Interest expense, net.
 Write-off of deferred financing costs and debt discount.
 Income tax (provision) benefit.
 Liquidity and Capital Resources
      Credit Agreements
  21




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##### Table of Contents




    
    a $75 million revolving credit facility under the First Lien Credit Agreement,
including subfacilities for:
 o
    
    standby letters of credit in the aggregate principal amount of up to $30.0 million; ando
    
    a swing-line feature for up to $10.0 million for same day advances;
 
    
    a $100 million Term B loan under the First Lien Credit Agreement (the Term B Loan); and
    
    a $25 million second lien term loan under the Second Lien Credit Agreement (the Second
Lien Term Loan).
           22




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##### Table of Contents



23




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##### Table of Contents



Other
  Contractual Obligations
   Cash Flows
    Landfill Accounting Policy
 Capitalized Landfill Costs
   24




---



##### Table of Contents




    
    we believe that the project has fatal flaws;
    
    the land is owned or controlled by us, or under option agreement;
    
    we have committed to the expansion;
    
    financial analysis has been completed, and the results indicate that the expansion
has the prospect of a positive financial and operational impact;
    
    personnel are actively working to obtain land use, local and state approvals for an
expansion of an existing landfill;
    
    we believe the permit is likely to be received; and
    
    we believe that the timeframe to complete the permitting is reasonable.
  Closure and Post-Closure Obligations
   
    
    Landfill closure and post-closure liabilities are calculated by estimating the total
obligation in current dollars. Cost estimates equate the costs of third parties
performing the work. Any portion of the estimates which are based on activities being
performed internally are increased to reflect a profit margin a third party would receive
to perform the same activity. This profit margin will be taken to income once the work is
performed internally.
    
    The total obligation is carried at the net present value of future cash flows, which is
calculated by inflating the obligation based upon the expected date of the expenditure
using an inflation rate and discounting the inflated total to its present value using a
discount rate. The discount rate represents our credit-adjusted risk-free rate. The
resulting closure and post-closure obligation is recorded as an increase in this liability
as airspace is consumed.
    
    Accretion expense is calculated based on the discount rate and is charged to cost of
services and increases the related closure and post-closure obligation. This expense will
generally be less during the early portion of a landfills operating life and increase
thereafter.
 25




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##### Table of Contents



Six Months Ended
    
    Year EndedJune 30,
    
    December 31,2005
    
    2004Number of landfills owned
    
    
    17
    
    
    
    14Landfill depletion and amortization expense
(in thousands)
    
    $
    3,094
    
    
    $
    4,290Accretion expense (in thousands)
    
    
    76
    
    
    
    257Closure and post-closure expense (in thousands)
    
    
    
    
    
    
    3,170
    
    
    
    4,547Airspace consumed (in thousands of cubic yards)
    
    
    1,732
    
    
    
    2,623Depletion, amortization, accretion, closure
and post-closure
expense per cubic yard of airspace consumed
    
    $
    1.83
    
    
    $
    1.73
  26




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   
 ITEM 4. CONTROLS AND PROCEDURES.
   27




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##### Table of Contents



PART II-OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   Votes For
    
    Votes WithheldTom J. Fatjo, Jr.
    
    
    13,312,158
    
    
    
    476,465Jerome M. Kruszka
    
    
    13,340,358
    
    
    
    448,265Ballard O.
Castleman
    
    
    13,549,198
    
    
    
    239,425Richard E. Bean
    
    
    13,549,198
    
    
    
    239,425Roger A. Ramsey
    
    
    13,549,198
    
    
    
    239,425
  Votes For
    
    Votes Against
    
    Votes Withheld
    
    Abstentions
    
    Broker Non-Votes13,781,373
    
    
    7,250
    
    
    
    
    
    
    
    
    
    
    
    
  Votes For
    
    Votes Against
    
    Votes Withheld
    
    Abstentions
    
    Broker Non-Votes11,187,911
    
    
    351,339
    
    
    
    
    
    
    
    4,470
    
    
    
    2,244,903
 28




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##### Table of Contents



Item 5. OTHER INFORMATION.
  
 ITEM 6. EXHIBITS.
 Exhibit No.
    
    Description10.1
    
    First Amendment to Reimbursement Agreement, dated as of April 28,
2005, by and among WCA Waste Systems, Inc., Waste Corporation of
Texas, L.P., and Wells Fargo Bank, National Association
(incorporated by reference to Exhibit 10.11 to WCA Wastes
quarterly report on Form 10-Q (File No. 000-50808) filed with the
Commission on May 13, 2005).10.2
    
    First Lien Credit Agreement, dated as of April 28, 2005, among
WCA Waste Systems, Inc., Wells Fargo Bank, National Association,
as administrative agent and collateral agent, Comerica Bank, as
syndication agent, and the other lenders party thereto
(incorporated by reference to Exhibit 10.12 to WCA Wastes
quarterly report on Form 10-Q (File No. 000-50808) filed with the
Commission on May 13, 2005).10.3
    
    Second Lien Credit Agreement, dated as of April 28, 2005, among
WCA Waste Systems, Inc., Wells Fargo Bank, National Association,
as administrative agent and collateral agent, and the other
lenders thereto (incorporated by reference to Exhibit 10.13 to
WCA Wastes quarterly report on Form 10-Q (File No. 000-50808)
filed with the Commission on May 13, 2005).10.4
    
    Amended and Restated 2004 WCA Waste Corporation Incentive Plan
(incorporated by reference to Exhibit 10.1 to WCA Wastes current
report on Form 8-K (File No. 000-50808) filed with the Commission
on June 1, 2005).+31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.+31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.+32.1
    
    Section 1350 Certification of Chief Executive Officer.+32.2
    
    Section 1350 Certification of Chief Financial Officer.
 
 +
    
    Filed herewith. 29




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##### Table of Contents



SIGNATURES
  WCA WASTE CORPORATIONBy:
    
    /s/ Charles A. CasalinovaCharles A. CasalinovaSenior Vice President and Chief FinancialOfficer (Principal Financial Officer)By:
    
    /s/ Kevin D. MitchellKevin D. MitchellVice President and Controller(Principal Accounting Officer)




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    First Amendment to Reimbursement Agreement, dated as of April 28,
2005, by and among WCA Waste Systems, Inc., Waste Corporation of
Texas, L.P., and Wells Fargo Bank, National Association
(incorporated by reference to Exhibit 10.11 to WCA Wastes
quarterly report on Form 10-Q (File No. 000-50808) filed with the
Commission on May 13, 2005).10.2
    
    First Lien Credit Agreement, dated as of April 28, 2005, among
WCA Waste Systems, Inc., Wells Fargo Bank, National Association,
as administrative agent and collateral agent, Comerica Bank, as
syndication agent, and the other lenders party thereto
(incorporated by reference to Exhibit 10.12 to WCA Wastes
quarterly report on Form 10-Q (File No. 000-50808) filed with the
Commission on May 13, 2005).10.3
    
    Second Lien Credit Agreement, dated as of April 28, 2005, among
WCA Waste Systems, Inc., Wells Fargo Bank, National Association,
as administrative agent and collateral agent, and the other
lenders thereto (incorporated by reference to Exhibit 10.13 to
WCA Wastes quarterly report on Form 10-Q (File No. 000-50808)
filed with the Commission on May 13, 2005).10.4
    
    Amended and Restated 2004 WCA Waste Corporation Incentive Plan
(incorporated by reference to Exhibit 10.1 to WCA Wastes current
report on Form 8-K (File No. 000-50808) filed with the Commission
on June 1, 2005).+31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.+31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.+32.1
    
    Section 1350 Certification of Chief Executive Officer.+32.2
    
    Section 1350 Certification of Chief Financial Officer.
 
 +
    
    Filed herewith.