##### 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, 2006
 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 o
 o þ




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RISK FACTORS AND
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
    
    
    we may be unable to identify, complete or integrate future acquisitions, which may harm
our prospects;
    
    we compete for acquisition candidates with other purchasers, some of which have greater
financial resources and may be able to offer more favorable terms, thus limiting our
ability to grow through acquisitions;
    
    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;
    
    businesses that we acquire may have unknown liabilities and require unforeseen capital
expenditures, which would adversely affect our financial results;
    
    rapid growth may strain our management, operational, financial and other resources,
which would adversely affect our financial results; and
    
    we may incur charges related to acquisitions, which could lower our earnings.
  
    
    changes in interest rates may affect our profitability;
    
    we are subject to environmental and safety laws, which restrict our operations and
increase our costs;
    
    we may become subject to environmental clean-up costs or litigation that could curtail
our business operations and materially decrease our earnings;
    
    our accruals for landfill closure and post-closure costs may be inadequate, and our
earnings would be lower if we are required to pay or accrue additional amounts;
    
    we may be unable to obtain financial assurances necessary for our operations, which
could result in the closure of landfills or the termination of collection contracts;
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
    
    our business is capital intensive, requiring ongoing cash outlays that may strain or
consume our available capital and force us to sell assets, incur debt, or sell equity on
unfavorable terms;
    
    increases in the costs of disposal, labor, fuel and insurance could reduce operating
margins;
    
    we may not be able to maintain sufficient insurance coverage to cover the risks
associated with our operations, which could result in uninsured losses that would
adversely affect our financial condition;
    
    our failure to remain competitive with our numerous competitors, some of which have
greater resources, could adversely affect our ability to retain existing customers and
obtain future business;
    
    we may lose contracts through competitive bidding, early termination or governmental
action, or we may have to substantially lower prices in order to retain certain contracts,
any of which would cause our revenues to decline;
    
    comprehensive waste planning programs and initiatives required by state and local
governments may reduce demand for our services, which could adversely affect our waste
volumes and the price of our landfill disposal services;
    
    covenants in our credit facilities and the instruments governing our other indebtedness
may limit our ability to grow our business and make capital expenditures;
    
    efforts by labor unions to organize our employees could divert management attention and
increase our operating expenses;
    
    a general downturn in U.S. economic conditions may reduce our business prospects and
decrease our revenues and cash flows;
    
    current and proposed laws may restrict our ability to operate across local borders
which could affect our manner, cost and feasibility of doing business;
    
    we may not be successful in expanding the permitted capacity of our current or future
landfills, which could restrict our growth, increase our disposal costs, and reduce our
operating margins;
    
    poor decisions by our regional and local managers could result in the loss of customers
or an increase in costs, or adversely affect our ability to obtain future business;
    
    we are vulnerable to factors affecting our local markets, which could adversely affect
our stock price relative to our competitors;
    
    seasonal fluctuations will cause our business and results of operations to vary among
quarters, which could adversely affect our stock price;
    
    failure to 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.
   2




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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 1A. RISK FACTORSITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXCertificate of Designation of Series A Convertible Pay-in-Kind Preferred StockSpecimen of Series A Convertible Pay-in-Kind Preferred Stock CertificateInterest Rate Swap AgreementStockholder's AgreementRegistration Rights AgreementManagement Rights LetterRule 13a-14(a)/15d-14(a) Certification of CEORule 13a-14(a)/15d-14(a) Certification of CFOSection 1350 Certification of CEOSection 1350 Certification of CFO    Table of Contents  
 PART I FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS.
 WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands)
 June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,572
    
    
    $
    678Restricted cash
    
    
    416
    
    
    
    270Accounts receivable, net of allowance for doubtful accounts of $608
(unaudited) and $1,190, respectively
    
    
    17,841
    
    
    
    16,127Deferred tax assets
    
    
    763
    
    
    
    763Prepaid expenses and other
    
    
    7,104
    
    
    
    4,728Total current assets
    
    
    27,696
    
    
    
    22,566Property and equipment, net of accumulated depreciation and amortization
of $55,616 (unaudited) and $46,691, respectively
    
    
    196,949
    
    
    
    186,299Goodwill, net
    
    
    72,438
    
    
    
    72,455Intangible assets, net
    
    
    4,884
    
    
    
    5,041Deferred financing costs, net
    
    
    3,316
    
    
    
    3,374Restricted cash  debt service reserve fund
    
    
    996
    
    
    
    675Interest rate swap
    
    
    3,704
    
    
    
    Other assets
    
    
    984
    
    
    
    1,128Total assets
    
    $
    310,967
    
    
    $
    291,538LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    9,324
    
    
    $
    6,284Accrued liabilities and other
    
    
    8,995
    
    
    
    7,265Accrued closure and post-closure liabilities
    
    
    143
    
    
    
    286Note payable
    
    
    1,111
    
    
    
    73Current maturities of long-term debt
    
    
    1,943
    
    
    
    1,910Total current liabilities
    
    
    21,516
    
    
    
    15,818Long-term debt, less current maturities and discount
    
    
    180,317
    
    
    
    174,352Interest rate swap
    
    
    
    
    
    
    711Accrued closure and post-closure liabilities
    
    
    3,693
    
    
    
    3,332Deferred tax liabilities
    
    
    8,851
    
    
    
    5,618Total liabilities
    
    
    214,377
    
    
    
    199,831COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock, $0.01 par value per share. Authorized 50,000 shares; issued
and outstanding 16,814 and 16,532 shares, respectively
    
    
    168
    
    
    
    165Treasury stock
    
    
    (174
    )
    
    
    Additional paid-in capital
    
    
    87,102
    
    
    
    86,930Retained earnings
    
    
    9,494
    
    
    
    5,043Accumulated other comprehensive loss
    
    
    
    
    
    
    (431
    )Total stockholders equity
    
    
    96,590
    
    
    
    91,707Total liabilities and stockholders equity
    
    $
    310,967
    
    
    $
    291,538
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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 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenue
    
    $
    38,216
    
    
    $
    29,052
    
    
    $
    72,896
    
    
    $
    51,937Expenses:Cost of services
    
    
    24,186
    
    
    
    17,904
    
    
    
    46,470
    
    
    
    33,688Depreciation and amortization
    
    
    4,769
    
    
    
    3,613
    
    
    
    9,337
    
    
    
    6,451General and administrative:Stock-based compensation
    
    
    308
    
    
    
    137
    
    
    
    561
    
    
    
    137Other general and administrative
    
    
    2,128
    
    
    
    2,145
    
    
    
    4,585
    
    
    
    3,89131,391
    
    
    
    23,799
    
    
    
    60,953
    
    
    
    44,167Operating income
    
    
    6,825
    
    
    
    5,253
    
    
    
    11,943
    
    
    
    7,770Other income (expense):Interest expense, net
    
    
    (4,173
    )
    
    
    (2,527
    )
    
    
    (8,280
    )
    
    
    (3,879
    )Write-off of deferred financing costs and
debt discount
    
    
    
    
    
    
    (1,294
    )
    
    
    
    
    
    
    (1,294
    )Unrealized gain on interest rate swap
    
    
    3,704
    
    
    
    
    
    
    
    3,704
    
    
    
    Other
    
    
    64
    
    
    
    9
    
    
    
    73
    
    
    
    13(405
    )
    
    
    (3,812
    )
    
    
    (4,503
    )
    
    
    (5,160
    )Income before income taxes
    
    
    6,420
    
    
    
    1,441
    
    
    
    7,440
    
    
    
    2,610Income tax provision
    
    
    (2,581
    )
    
    
    (559
    )
    
    
    (2,989
    )
    
    
    (1,020
    )Net income
    
    $
    3,839
    
    
    $
    882
    
    
    $
    4,451
    
    
    $
    1,590Earnings per share  basic
    
    $
    0.23
    
    
    $
    0.06
    
    
    $
    0.27
    
    
    $
    0.10Earnings per
share  diluted (a)
    
    $
    0.23
    
    
    $
    0.06
    
    
    $
    0.27
    
    
    $
    0.10Weighted average shares outstanding  basic
    
    
    16,360
    
    
    
    15,362
    
    
    
    16,340
    
    
    
    15,334Weighted
average shares outstanding 
diluted (a)
    
    
    17,021
    
    
    
    15,372
    
    
    
    17,005
    
    
    
    15,362
 
 (a)
    
    The diluted earnings per share and the diluted weighted average shares outstanding for the
three and six months ended June 30, 2006 assume conversion of $7 million of convertible seller
notes. The interest expense related to these notes, net of tax, for the three and six months ended
June 30, 2006 was $72 and $143, respectively. The assumed conversion of the convertible notes added
635,728 additional shares to the diluted weighted average shares outstanding.  4




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WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)  (In thousands)
 Six Months EndedJune 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    4,451
    
    
    $
    1,590Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    9,337
    
    
    
    6,451Stock-based compensation
    
    
    561
    
    
    
    137Amortization of deferred financing costs and debt discount
    
    
    364
    
    
    
    255Write-off of deferred financing costs and debt discount
    
    
    
    
    
    
    1,294Unrealized gain on interest rate swap
    
    
    (3,704
    )
    
    
    Deferred tax provision
    
    
    2,989
    
    
    
    1,020Accretion expense for closure and post-closure obligations
    
    
    142
    
    
    
    76Gain on sale of assets
    
    
    (73
    )
    
    
    (13
    )Prepaid disposal usage
    
    
    1,090
    
    
    
    717Change in operating assets and liabilities:Accounts receivable
    
    
    (1,506
    )
    
    
    (3,797
    )Prepaid expenses and other
    
    
    537
    
    
    
    118Accounts payable and other liabilities
    
    
    4,153
    
    
    
    1,559Net cash provided by operating activities
    
    
    18,341
    
    
    
    9,407CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of businesses, net of cash acquired
    
    
    (338
    )
    
    
    (53,354
    )Proceeds from sale of fixed assets
    
    
    73
    
    
    
    20Capital expenditures
    
    
    (14,354
    )
    
    
    (7,685
    )Cost incurred on possible acquisitions
    
    
    (27
    )
    
    
    (47
    )Net cash used in investing activities
    
    
    (14,646
    )
    
    
    (61,066
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of long-term debt
    
    
    
    
    
    
    127,500Principal payments on long-term debt
    
    
    (2,670
    )
    
    
    (22,927
    )Principal payments of note payable
    
    
    (2,889
    )
    
    
    (1,480
    )Net change in revolving line of credit
    
    
    3,414
    
    
    
    (46,900
    )Increase in restricted cash
    
    
    (50
    )
    
    
    Equity transaction costs
    
    
    (314
    )
    
    
    Deferred financing costs
    
    
    (292
    )
    
    
    (2,107
    )Net cash provided by (used in) financing activities
    
    
    (2,801
    )
    
    
    54,086NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    894
    
    
    
    2,427CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
    
    
    678
    
    
    
    272CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
    
    $
    1,572
    
    
    $
    2,699SUPPLEMENTAL CASH FLOW INFORMATION:Interest paid
    
    $
    7,989
    
    
    $
    2,537Income taxes paid
    
    
    130
    
    
    
    
  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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Three Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2005Revenue
    
    $
    32,789
    
    
    $
    60,394Net income
    
    
    983
    
    
    
    1,812Per share data:Net income  basic
    
    $
    0.06
    
    
    $
    0.12Net income  diluted
    
    $
    0.06
    
    
    $
    0.12
 3. STOCK-BASED COMPENSATION
    Three Months Ended June 30, 2006
    
    
    Six Months Ended June 30, 2006Weighted
    
    
    
    
    
    
    
    
    
    WeightedWeighted
    
    
    Average
    
    
    
    
    
    
    Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    
    
    
    
    Average
    
    
    RemainingGrant-Date
    
    
    Contractual Term
    
    
    
    
    
    
    Grant-Date
    
    
    Contractual TermShares
    
    
    Fair Value
    
    
    (years)
    
    
    Shares
    
    
    Fair Value
    
    
    (years)Unvested at beginning of period
    
    
    449
    
    
    $
    8.12
    
    
    
    
    
    
    
    204
    
    
    $
    9.50Granted
    
    
    25
    
    
    
    6.79
    
    
    
    
    
    
    
    311
    
    
    
    7.33Vested
    
    
    (37
    )
    
    
    9.03
    
    
    
    
    
    
    
    (77
    )
    
    
    9.41Forfeited
    
    
    (1
    )
    
    
    7.82
    
    
    
    
    
    
    
    (2
    )
    
    
    8.46Unvested at June 30, 2006
    
    
    436
    
    
    $
    7.97
    
    
    
    5.19
    
    
    
    436
    
    
    $
    7.97
    
    
    
    5.19
  Three Months Ended
    
    
    Six Months EndedJune 30, 2005
    
    
    June 30, 2005Net income, as reported
    
    $
    882
    
    
    $
    1,590Stock-based compensation expense on
granted options
pursuant to SFAS 123, net of tax
    
    
    (107
    )
    
    
    (213
    )Net income, pro forma
    
    $
    775
    
    
    $
    1,377Earnings per share  basic and diluted:As reported
    
    $
    0.06
    
    
    $
    0.10Pro forma
    
    $
    0.05
    
    
    $
    0.09
 7




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2005Risk-free interest rate
    
    
    3.44
    %Volatility factor of stock price
    
    
    0.35Dividends
    
    
    Option life
    
    4 yearsCalculated fair value per share
    
    $
    3.35
   Three Months Ended June 30, 2006
    
    
    Six Months Ended June 30, 2006Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    AverageWeighted
    
    
    Remaining
    
    
    
    
    
    
    Weighted
    
    
    RemainingAverage
    
    
    Contractual Term
    
    
    
    
    
    
    Average
    
    
    Contractual TermShares
    
    
    Exercise Price
    
    
    (years)
    
    
    Shares
    
    
    Exercise Price
    
    
    (years)Outstanding at
beginning of period
    
    
    643
    
    
    $
    9.52
    
    
    
    
    
    
    
    644
    
    
    $
    9.52Forfeitures
    
    
    (3
    )
    
    
    9.50
    
    
    
    
    
    
    
    (4
    )
    
    
    9.50Outstanding at June 30, 2006
    
    
    640
    
    
    $
    9.52
    
    
    
    8.00
    
    
    
    640
    
    
    $
    9.52
    
    
    
    8.00
 4. EARNINGS PER SHARE
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Net income
    
    $
    3,839
    
    
    $
    882
    
    
    $
    4,451
    
    
    $
    1,590Interest expense on convertible debt, net of
tax
    
    
    72
    
    
    
    
    
    
    
    143
    
    
    
    Net income for diluted earnings per share
    
    $
    3,911
    
    
    $
    882
    
    
    $
    4,594
    
    
    $
    1,590Denominator:Weighted average basic shares outstanding
    
    
    16,360
    
    
    
    15,362
    
    
    
    16,340
    
    
    
    15,334Dilutive effect of options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Dilutive effect of restricted share issuances
    
    
    25
    
    
    
    10
    
    
    
    29
    
    
    
    18Dilutive effect of convertible debt
    
    
    636
    
    
    
    
    
    
    
    636
    
    
    
    Weighted average diluted shares outstanding
    
    
    17,021
    
    
    
    15,372
    
    
    
    17,005
    
    
    
    15,362Earnings per share:Basic
    
    $
    0.23
    
    
    $
    0.06
    
    
    $
    0.27
    
    
    $
    0.10Diluted
    
    $
    0.23
    
    
    $
    0.06
    
    
    $
    0.27
    
    
    $
    0.10
  8




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5. LONG-TERM DEBT AND NOTES PAYABLE
  June 30,
    
    
    December 31,2006
    
    
    2005Term B Loan, principal payable $250,000 per quarter, maturing in
April 2011, variable interest rate based on LIBOR plus a margin
(7.89% and 7.72% at June 30, 2006 and December 31, 2005,
respectively)
    
    $
    98,750
    
    
    $
    99,250Second Lien Credit Agreement, maturing in October 2011, variable
interest rate based on LIBOR plus a margin (10.89% and 10.72%
at June 30, 2006 and December 31, 2005, respectively)
    
    
    25,000
    
    
    
    25,000Revolving note payable with a financial institution, maturing in April
2010, variable interest rate based on LIBOR plus a margin (7.89%
and 7.72% at June 30, 2006 and December 31, 2005,
respectively)
    
    
    41,137
    
    
    
    37,723Environmental Facilities Revenue Bonds, principal payable in varying
annual installments, maturing in 2020, interest rate ranging from 8.5%
to 9% (8.88% and 8.94% weighted average rate at June 30, 2006
and December 31, 2005, respectively)
    
    
    9,385
    
    
    
    6,480Notes payable to banks and financial institutions, interest ranging from
2.9% to 9.2%, payable monthly through August 2010
    
    
    1,307
    
    
    
    506Note payable, with interest rate of 5%, due in January 2010
    
    
    160
    
    
    
    200Seller note, with interest rate of 6%, due in May 2006
    
    
    
    
    
    
    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
    
    
    
    4,000182,739
    
    
    
    176,603Less: Debt discount
    
    
    (479
    )
    
    
    (341
    )Less: Current portion
    
    
    (1,943
    )
    
    
    (1,910
    )$
    180,317
    
    
    $
    174,352
  9.25% Senior Notes Due 2014
  
    
    At any time before June 15, 2009, the Company may redeem up to 35% of the notes with net cash proceeds of certain equity offerings, as long as it redeems the notes within 180 days of the offering and at least 65% of the aggregate principal amount of the notes issued pursuant to the indenture remains outstanding after the redemption;
    
    Prior to June 15, 2010, the Company may redeem all or part of the notes by paying a make-whole premium, plus accrued and unpaid interest, and, if any, liquidated damages; and
    
    The notes may be callable beginning on June 15 of 2010, 2011, and 2012 and thereafter at redemption prices of 104.625%, 102.313% and 100% of the principal amount plus accrued interest.
  9




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Bank Credit Facility
  LIBOR
    
    Prime
    
    CommitmentLeverage Ratio
    
    Margin
    
    Margin
    
    FeeLess than 3.0x
    
    
    1.500
    
    
    
    
    
    
    
    0.250Equal to or greater than 3.0 and
less than 3.5x
    
    
    1.750
    
    
    
    0.250
    
    
    
    0.250Equal to or greater than 3.5 and
less than 4.0x
    
    
    2.000
    
    
    
    0.500
    
    
    
    0.250Equal to or greater than 4.0 and
less than 4.5x
    
    
    2.250
    
    
    
    0.750
    
    
    
    0.375Equal to or greater than 4.5x
    
    
    2.500
    
    
    
    1.000
    
    
    
    0.500
   6. INTEREST RATE SWAP / COMPREHENSIVE INCOME (LOSS)
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    3,839
    
    
    $
    882
    
    
    $
    4,451
    
    
    $
    1,590Change in accumulated income (loss) in interest
rate
swap, net of tax of $(745) and $280, respectively
    
    
    (1,119
    )
    
    
    
    
    
    
    431
    
    
    
    Comprehensive income
    
    $
    2,720
    
    
    $
    882
    
    
    $
    4,882
    
    
    $
    1,590
   10




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##### Table of Contents



7. LANDFILL ACCOUNTING
 Capitalized Landfill Costs
     Closure and Post-Closure Obligations
    Landfill
    
    
    Closure and Post-Assets, net
    
    
    closure LiabilitiesDecember 31, 2005
    
    $
    127,758
    
    
    $
    3,618Capital expenditures
    
    
    6,629
    
    
    
    Amortization expense
    
    
    (4,389
    )
    
    
    Obligations incurred and capitalized
    
    
    220
    
    
    
    220Interest accretion
    
    
    
    
    
    
    142Acquisitions and other adjustments
    
    
    2,624
    
    
    
    (144
    )June 30, 2006
    
    $
    132,842
    
    
    $
    3,836
 11




---



##### Table of Contents



June 30,
    
    
    December 31,2006
    
    
    2005Recorded amounts:Current portion
    
    $
    143
    
    
    $
    286Noncurrent portion
    
    
    3,693
    
    
    
    3,332Total recorded
    
    $
    3,836
    
    
    $
    3,618
  8. INCOME TAXES
  9. STOCKHOLDERS EQUITY
  AccumulatedAddition
    
    
    
    
    
    OtherCommon
    
    
    Treasury
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    TotalDecember 31, 2005
    
    $
    165
    
    
    $
    
    
    
    $
    86,930
    
    
    $
    5,043
    
    
    $
    (431
    )
    
    $
    91,707Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,451
    
    
    
    
    
    
    
    4,451Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Gecko holdback settlement
    
    
    
    
    
    
    (174
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (174
    )Issuance of restricted
shares to employees
    
    
    3
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    Accretion of unearned
compensation
    
    
    
    
    
    
    
    
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    561Repurchase of common
shares
    
    
    
    
    
    
    
    
    
    
    (124
    )
    
    
    
    
    
    
    
    
    
    
    (124
    )Equity transaction costs
    
    
    
    
    
    
    
    
    
    
    (314
    )
    
    
    
    
    
    
    
    
    
    
    (314
    )Change in accumulated
income (loss) in interest
rate swap, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    431
    
    
    
    431June 30, 2006
    
    $
    168
    
    
    $
    (174
    )
    
    $
    87,102
    
    
    $
    9,494
    
    
    $
    
    
    
    $
    96,590
 12




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##### Table of Contents



Convertible Preferred Stock Issuance
   10. SEGMENT INFORMATION
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Collection:Residential
    
    $
    6,121
    
    
    $
    4,530
    
    
    $
    11,921
    
    
    $
    8,900Commercial
    
    
    3,985
    
    
    
    3,441
    
    
    
    7,707
    
    
    
    6,711Roll-off
    
    
    11,812
    
    
    
    9,350
    
    
    
    22,134
    
    
    
    17,220Total Collection
    
    
    21,918
    
    
    
    17,321
    
    
    
    41,762
    
    
    
    32,831Disposal
    
    
    15,748
    
    
    
    13,133
    
    
    
    29,957
    
    
    
    22,526Less: Intercompany
    
    
    (5,677
    )
    
    
    (4,826
    )
    
    
    (10,845
    )
    
    
    (8,409
    )Disposal, net
    
    
    10,071
    
    
    
    8,307
    
    
    
    19,112
    
    
    
    14,117Transfer and other
    
    
    9,688
    
    
    
    6,084
    
    
    
    18,480
    
    
    
    9,751Less: Intercompany
    
    
    (3,461
    )
    
    
    (2,660
    )
    
    
    (6,458
    )
    
    
    (4,762
    )Transfer and
other, net
    
    
    6,227
    
    
    
    3,424
    
    
    
    12,022
    
    
    
    4,989Total Revenue
    
    $
    38,216
    
    
    $
    29,052
    
    
    $
    72,896
    
    
    $
    51,937
  Kansas/
    
    
    
    
    
    
    
    
    
    NorthMissouri
    
    Texas
    
    Arkansas
    
    Carolina
    
    Florida
    
    Other
    
    Corporate
    
    TotalThree months ended June 30, 2006:Revenue
    
    $
    12,907
    
    
    
    7,409
    
    
    
    3,413
    
    
    
    2,909
    
    
    
    5,017
    
    
    
    6,561
    
    
    
    
    
    
    
    38,216Depreciation and amortization
    
    
    1,253
    
    
    
    773
    
    
    
    428
    
    
    
    435
    
    
    
    646
    
    
    
    1,151
    
    
    
    83
    
    
    
    4,769Capital expenditures
    
    
    2,110
    
    
    
    975
    
    
    
    683
    
    
    
    725
    
    
    
    1,437
    
    
    
    2,504
    
    
    
    172
    
    
    
    8,606Capital expenditures (Acquisitions)
    
    
    (174
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    (123
    )Three 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,840
 13




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##### Table of Contents



Kansas/
    
    
    
    
    
    
    
    
    
    NorthMissouri
    
    Texas
    
    Arkansas
    
    Carolina
    
    Florida
    
    Other
    
    Corporate
    
    TotalSix months ended June 30, 2006:Revenue
    
    $
    24,439
    
    
    
    14,581
    
    
    
    6,688
    
    
    
    5,642
    
    
    
    9,789
    
    
    
    11,757
    
    
    
    
    
    
    
    72,896Depreciation and amortization
    
    
    2,413
    
    
    
    1,538
    
    
    
    850
    
    
    
    861
    
    
    
    1,341
    
    
    
    2,169
    
    
    
    165
    
    
    
    9,337Capital expenditures
    
    
    2,818
    
    
    
    1,383
    
    
    
    756
    
    
    
    1,111
    
    
    
    2,637
    
    
    
    2,973
    
    
    
    2,676
    
    
    
    14,354Capital expenditures (Acquisitions)
    
    
    (173
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    5,392
    
    
    
    
    
    
    
    5,300Six 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,089Total assets:June 30, 2006
    
    $
    66,855
    
    
    
    31,611
    
    
    
    27,899
    
    
    
    46,080
    
    
    
    62,676
    
    
    
    48,177
    
    
    
    27,669
    
    
    
    310,967December 31, 2005
    
    
    64,623
    
    
    
    32,222
    
    
    
    27,867
    
    
    
    45,784
    
    
    
    62,048
    
    
    
    40,842
    
    
    
    18,152
    
    
    
    291,538
 11. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Other Potential Proceedings
   14




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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, 2005 as
filed with the SEC on March 16, 2006. 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
included elsewhere in this quarterly report. 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
    15




---



##### 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
    
    CollectionFort Meade Landfill
    
    Ft. Meade, FL
    
    October 3, 2005
    
    LandfillMeyer & Gabbert
    
    Sarasota/Arcadia, FL
    
    October 3, 2005
    
    Collection, Landfill & Transfer StationPendergrass Refuse
    
    Springfield, MO
    
    October 4, 2005
    
    CollectionAndys Hauling
    
    Sarasota, FL
    
    October 21, 2005
    
    CollectionTransit Waste
    
    Durango, CO/Bloomfield, NM
    
    February 10, 2006
    
    Collection & Landfill
   Recent Events
  
    
    Senior notes The private placement of $150 million of 9.25% senior unsecured notes
due 2014, which closed on July 5, 2006. The proceeds from this offering were utilized to
retire or pay down our existing borrowings;
    
    Senior secured credit facility A new $175 million senior secured credit facility led
by Comerica Bank, $150 million of which is subject to fixed-rate swap at 5.64% (plus the
applicable margins), which closed on July 5, 2006. In connection with entering into the
new facility, we paid our obligations under and terminated first and second lien credit
arrangements with Wells Fargo Bank and other lenders; and
    
    Preferred Stock The purchase by Ares of $75 million in convertible preferred stock.
The preferred stock is convertible into our common stock at $9.60 per share and carries a
5% PIK dividend. This transaction closed on July 27, 2006.
  16




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##### Table of Contents



General Review of Results for the Three and Six Months Ended June 30, 2006
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Collection:Residential
    
    $
    6,121
    
    
    $
    4,530
    
    
    $
    11,921
    
    
    $
    8,900Commercial
    
    
    3,985
    
    
    
    3,441
    
    
    
    7,707
    
    
    
    6,711Roll-off
    
    
    11,812
    
    
    
    9,350
    
    
    
    22,134
    
    
    
    17,220Total Collection
    
    
    21,918
    
    
    
    17,321
    
    
    
    41,762
    
    
    
    32,831Disposal
    
    
    15,748
    
    
    
    13,133
    
    
    
    29,957
    
    
    
    22,526Less: Intercompany
    
    
    (5,677
    )
    
    
    (4,826
    )
    
    
    (10,845
    )
    
    
    (8,409
    )Disposal, net
    
    
    10,071
    
    
    
    8,307
    
    
    
    19,112
    
    
    
    14,117Transfer and other
    
    
    9,688
    
    
    
    6,084
    
    
    
    18,480
    
    
    
    9,751Less: Intercompany
    
    
    (3,461
    )
    
    
    (2,660
    )
    
    
    (6,458
    )
    
    
    (4,762
    )Transfer and other,
net
    
    
    6,227
    
    
    
    3,424
    
    
    
    12,022
    
    
    
    4,989Total Revenue
    
    $
    38,216
    
    
    $
    29,052
    
    
    $
    72,896
    
    
    $
    51,937
      17




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##### Table of Contents



Forward-Looking Statements and 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.
  18




---



##### Table of Contents




    
    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 component of incentive cash bonuses paid to our executive officers and other employees;
    
    to assess compliance with financial ratios and covenants included in our credit agreements; and
    
    in communications with investors, lenders, and others, concerning our financial performance.
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Total EBITDA
    
    $
    11,658
    
    
    $
    8,875
    
    
    $
    21,353
    
    
    $
    14,234Depreciation and amortization
    
    
    (4,769
    )
    
    
    (3,613
    )
    
    
    (9,337
    )
    
    
    (6,451
    )Interest expense, net
    
    
    (4,173
    )
    
    
    (2,527
    )
    
    
    (8,280
    )
    
    
    (3,879
    )Write-off of deferred financing
costs and debt discount
    
    
    
    
    
    
    (1,294
    )
    
    
    
    
    
    
    (1,294
    )Unrealized gain on interest rate swap
    
    
    3,704
    
    
    
    
    
    
    
    3,704
    
    
    
    Income tax provision
    
    
    (2,581
    )
    
    
    (559
    )
    
    
    (2,989
    )
    
    
    (1,020
    )Net income
    
    $
    3,839
    
    
    $
    882
    
    
    $
    4,451
    
    
    $
    1,590
  Results of Operations
 Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005
  Three Months Ended June 30,2006
    
    
    2005Revenue
    
    $
    38,216
    
    
    
    100.0
    %
    
    $
    29,052
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    24,186
    
    
    
    63.3
    
    
    
    17,904
    
    
    
    61.6Depreciation and amortization
    
    
    4,769
    
    
    
    12.5
    
    
    
    3,613
    
    
    
    12.4Stock-based compensation
    
    
    308
    
    
    
    0.8
    
    
    
    137
    
    
    
    0.5Other general and administrative
    
    
    2,128
    
    
    
    5.6
    
    
    
    2,145
    
    
    
    7.4Operating income
    
    
    6,825
    
    
    
    17.8
    
    
    
    5,253
    
    
    
    18.1
 19




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##### Table of Contents



Three Months Ended June 30,2006
    
    
    2005Interest expense, net
    
    
    (4,173
    )
    
    
    (10.9
    )
    
    
    (2,527
    )
    
    
    (8.7
    )Write-off of deferred financing costs
and debt discount
    
    
    
    
    
    
    
    
    
    
    (1,294
    )
    
    
    (4.5
    )Unrealized gain on interest rate swap
    
    
    3,704
    
    
    
    9.7
    
    
    
    
    
    
    
    Other income, net
    
    
    64
    
    
    
    0.2
    
    
    
    9
    
    
    
    0.0Income tax provision
    
    
    (2,581
    )
    
    
    (6.8
    )
    
    
    (559
    )
    
    
    (1.9
    )Net income
    
    $
    3,839
    
    
    
    10.0
    %
    
    $
    882
    
    
    
    3.0
    %
 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.
 Unrealized gain on interest rate swap.
 Income tax provision.
 20




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##### Table of Contents



Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005
  Six Months Ended June 30,2006
    
    
    2005Revenue
    
    $
    72,896
    
    
    
    100.0
    %
    
    $
    51,937
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    46,470
    
    
    
    63.7
    
    
    
    33,688
    
    
    
    64.8Depreciation and amortization
    
    
    9,337
    
    
    
    12.8
    
    
    
    6,451
    
    
    
    12.4Stock-based compensation
    
    
    561
    
    
    
    0.8
    
    
    
    137
    
    
    
    0.3Other general and administrative
    
    
    4,585
    
    
    
    6.3
    
    
    
    3,891
    
    
    
    7.5Operating income
    
    
    11,943
    
    
    
    16.4
    
    
    
    7,770
    
    
    
    15.0Interest expense, net
    
    
    (8,280
    )
    
    
    (11.4
    )
    
    
    (3,879
    )
    
    
    (7.5
    )Write-off of deferred financing costs
and debt discount
    
    
    
    
    
    
    
    
    
    
    (1,294
    )
    
    
    (2.5
    )Unrealized gain on interest rate swap
    
    
    3,704
    
    
    
    5.1
    
    
    
    
    
    
    
    Other income, net
    
    
    73
    
    
    
    0.1
    
    
    
    13
    
    
    
    0.0Income tax provision
    
    
    (2,989
    )
    
    
    (4.1
    )
    
    
    (1,020
    )
    
    
    (1.9
    )Net income
    
    $
    4,451
    
    
    
    6.1
    %
    
    $
    1,590
    
    
    
    3.1
    %
 Revenue.
 Cost of services.
 Depreciation and amortization.
 Stock-based compensation.
 Other general and administrative.
 Interest expense, net.
 21




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##### Table of Contents



Write-off of deferred financing costs and debt discount.
 Unrealized gain on interest rate swap.
 Income tax provision.
 Liquidity and Capital Resources
    9.25% Senior Notes Due 2014
  
    
    At any time before June 15, 2009, we may redeem up to 35% of the notes with net cash
proceeds of certain equity offerings at a redemption price of 109.25% of the par value of
the notes redeemed, plus accrued and unpaid interest and liquidated damages, if any, to
the redemption date, as long as we redeem the notes within 180 days of the offering and at
least 65% of the aggregate principal amount of the notes issued pursuant to the indenture
remains outstanding after the redemption;
    
    Prior to June 15, 2010, we may redeem all or part of the notes by paying a make-whole
premium, plus accrued and unpaid interest, and, if any, liquidated damages; and
    
    The notes may be callable beginning on June 15, 2010, 2011, and 2012 and thereafter at
redemption prices of 104.625%, 102.313% and 100% of the principal amount plus accrued
interest.
 22




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##### Table of Contents



Bank Credit Facility
  LIBOR
    
    Prime
    
    CommitmentLeverage Ratio
    
    Margin
    
    Margin
    
    FeeLess than 3.0x
    
    
    1.500
    
    
    
    
    
    
    
    0.250Equal to or greater than 3.0
and less than 3.5x
    
    
    1.750
    
    
    
    0.250
    
    
    
    0.250Equal to or greater than 3.5
and less than 4.0x
    
    
    2.000
    
    
    
    0.500
    
    
    
    0.250Equal to or greater than 4.0
and less than 4.5x
    
    
    2.250
    
    
    
    0.750
    
    
    
    0.375Equal to or greater than 4.5x
    
    
    2.500
    
    
    
    1.000
    
    
    
    0.500
    23




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##### Table of Contents



Private Placement of Preferred Stock
    
    
    cumulative dividends of 5.00% per annum, payable semi-annually;
    
    all dividends that would otherwise be payable through the fifth anniversary of issuance
shall automatically be accelerated and paid in kind immediately prior to the occurrence of
any of the following acceleration events:
 
    
    liquidation
    
    bankruptcy
    
    closing of a public offering of Common Stock pursuant to an effective registration
statement (except for Form S-4, solely for sales by third parties, or pursuant to Ares
own registration rights agreement)
    
    the average of the closing price of the Common Stock for each of 20 consecutive
trading days exceeds $14.40 per share
    
    fundamental transaction, including a group (defined in the Securities Exchange Act
of 1934, as amended (the Exchange Act)) acquiring more than 35% of outstanding voting
rights;
replacement of more than one-half of the directors without approval of the existing board
of directors; a merger, consolidation, sale of substantially all assets, going-private
transaction, tender offer, reclassification, or other transaction that results in the
transfer of a majority of voting rights;
 
    
    Ares can convert the Preferred Stock into Common Stock at any time at a conversion
price of $9.60 per share, with conversion being calculated by taking the stated value
(initially $100.00 per share) plus any amount added to stated value by way of dividends,
then dividing by $9.60 to produce the number of shares of Common Stock issuable;
    
    We can force a conversion into Common Stock following either (i) the average of the
closing price of the Common Stock for each of 20 consecutive trading days exceeding $14.40
per share or (ii) a fundamental transaction that Ares does not treat as a liquidation;
    
    after the fifth anniversary of issuance, we can redeem for cash equal to the
liquidation preference;
    
    upon a liquidation of WCA Waste, prior to any holder of Common Stock or other junior
securities, Ares shall receive in cash the greater of (i) the stated value plus any amount
added by way of dividends (accelerated to include a full five years) or (ii) the amount it
would receive if all shares of Preferred Stock were converted into Common Stock
(calculated to include dividends accelerated to include a full five years);
    
    Ares can elect to treat any fundamental transaction (defined above) as a liquidation
and receive its liquidation preference as described in the preceding bullet point.
However, if common shares of
 24




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##### Table of Contents



another company are issued as consideration in a fundamental
transaction, WCA Waste has the option of requiring Ares to accept such common shares to
satisfy the liquidation preference if shares are then quoted on the Nasdaq Stock Market or
listed on the New York Stock Exchange, the value of such shares is determined at 98% of
the closing price on the trading day preceding the transaction and the shares are freely
transferable without legal or contractual restrictions;
    
    The Preferred Stock voting as a separate class elects (i) two directors to our board of
directors for so long as Ares continues to hold Preferred Stock representing at least 20%
of our post-conversion equity (outstanding Common Stock assuming conversions into common
shares of all securities, including the Preferred Stock and assuming Preferred Stock
dividends accelerated to include a full five years), (ii) one director for so long as it
continues to hold at least 10% of post-conversion equity, and (iii) no directors below
10%;
    
    The Preferred Stock voting as a separate class must approve (i) any alteration in its
powers, preferences or rights, or in the certificate of designation, (ii) creation of any
class of stock senior or pari passu with it, (iii) any increase in the authorized shares
of Preferred Stock, and (iv) any dividends or distribution to Common Stock or any junior
securities, except for pro rata dividends on Common Stock paid in Common Stock. These
protective rights terminate on the first date on which there are outstanding less than 20%
of the number of shares of Preferred Stock outstanding on the date the Preferred Stock is
first issued; and
    
    except for the election of directors and special approvals described above, the
Preferred Stock votes on all matters and with the Common Stock on an as-converted basis.
  Tax-Exempt Bonds
  Contractual Obligations
  Cash Flows
    25




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##### Table of Contents



Critical Accounting Estimates and Assumptions
   Capitalized Landfill Costs
    
    
    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.
 26




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##### Table of Contents



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.
  Six Months Ended
    
    
    Year EndedJune 30,
    
    
    December 31,2006
    
    
    2005Number of landfills owned
    
    
    20
    
    
    
    19Landfill depletion and amortization expense
(in thousands)
    
    $
    4,389
    
    
    $
    6,956Accretion expense (in thousands)
    
    
    142
    
    
    
    159Closure and post-closure expense (in thousands)
    
    
    150
    
    
    
    4,681
    
    
    
    7,115Airspace consumed (in thousands of cubic yards)
    
    
    2,365
    
    
    
    3,854Depletion, amortization, accretion, closure
and post-closure
expense per cubic yard of airspace consumed
    
    $
    1.98
    
    
    $
    1.85
  27




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   
 ITEM 4. CONTROLS AND PROCEDURES.
    28




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##### Table of Contents



PART II-OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 1A. RISK FACTORS.
  Risks Related to Our Acquisition Program
 Our acquisition strategy has resulted and is expected to continue to result in significant goodwill
and other intangible assets, which may need to be written down if performance is not as expected.
  Risks Related to Our Operations and Corporate Organization
 Our indebtedness could impair our financial condition and our ability to fulfill our debt
obligations.
  
    
    make it more difficult for us to satisfy our obligations with respect to our
indebtedness, which could in turn result in an event of default on such indebtedness;
    
    impair our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes;
    
    diminish our ability to withstand a downturn in our business or the economy generally;
    
    require us to dedicate a substantial portion of our cash flow from operations to debt
service payments, thereby reducing the availability of cash for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes;
    
    limit our flexibility in planning for, or reacting to, changes in our business and the
industry in which we operate; and
    
    place us at a competitive disadvantage compared to our competitors that have
proportionately less debt.
  29




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##### Table of Contents



Provisions in our amended and restated certificate of incorporation, our amended and restated
bylaws and Delaware law could prohibit a change of control that our stockholders may favor and
which could negatively affect our stock price.
  
    
    authorize the issuance of blank check preferred stock that could be issued by our board
of directors to thwart a takeover attempt;
    
    prohibit cumulative voting in the election of directors, which would otherwise allow
holders of less than a majority of stock to elect some directors;
    
    require super-majority voting to effect amendments by stockholders to provisions of our
amended and restated bylaws;
    
    limit who may call special meetings;
    
    prohibit stockholder action by written consent, requiring all actions to be taken at a
meeting of the stockholders;
    
    establish advance notice requirements for nominating candidates for election to the
board of directors or for proposing matters that can be acted upon by stockholders at
stockholders meeting; and
    
    require that vacancies on the board of directors, including newly-created
directorships, be filled only by a majority vote of directors then in office.
   
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 (a)
    
    Not applicable.
 (b)
    
    Not applicable.
 30




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##### Table of Contents



(c)
    
    Issuer Purchases of Equity Securities
 (c)
    
    (d)(a)
    
    
    
    
    
    Total number of
    
    Maximum number (orTotal number
    
    (b)
    
    shares (or units)
    
    approximate dollar value) ofof shares
    
    Average price paid
    
    purchased as part of
    
    shares (or units) that may(or units)
    
    per share
    
    publicly announced plans
    
    yet be purchased under thePeriod
    
    purchased
    
    (or unit)
    
    or programs
    
    plans or programsApril 1  April 30, 2006
    
    
    4,955
    (1)
    
    $
    6.79
    
    
    
    
    
    
    
    May 1  May 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1  June 30, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    4,955
    (1)
    
    $
    6.79
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents shares of WCA Waste Corporations common stock surrendered to satisfy tax
withholding obligations on the vesting of restricted stock. 
 ITEM 5. OTHER INFORMATION.
 Special Meeting of Stockholders
    Votes
For
    
    Votes Against
    
    Votes Withheld
    
    Abstentions
    
    Broker Non-Votes12,056,366
    
    
    38,330
    
    
    
    
    
    
    
    
    
    
    
    
 2006 Annual Meeting of Stockholders
    31




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##### Table of Contents



ITEM 6. EXHIBITS.
 2.1**
    
    Reorganization Agreement, dated May 10, 2004, between WCA Waste Corporation and
Waste Corporation of America, Inc. (incorporated by reference to Exhibit 2.1 to
Amendment No. 2 to the registrants Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on May 14, 2004).2.2
    
    Agreement and Plan of Merger, dated May 10, 2004, between WCA Waste
Corporation, Waste Corporation of America and WCA Merger Corporation
(incorporated by reference to Exhibit 2.2 to Amendment No. 2 to the
registrants Registration Statement on Form S-1 (File No. 333-113416) filed
with the SEC on May 14, 2004).2.3
    
    Agreement and Plan of Merger, dated as of May 20, 2004, between WCA Waste
Corporation and WCA Merger II Corporation (incorporated by reference to Exhibit
2.3 to Amendment No. 5 to the registrants Registration Statement on Form S-4
(File No. 333-114901) filed with the SEC on June 21, 2004).2.4**
    
    Membership Interest Purchase Agreement, dated effective January 14, 2005,
between WCA of North Carolina, L.P., MRR Southern, LLC, Material Recovery, LLC,
Material Reclamation, LLC, MRR of High Point, LLC, MRR Wake Transfer Station,
LLC, WCA Waste Corporation, F. Norbert Hector, Jr., D.H. Griffin, Paul M.
Givens, Edward I. Weisiger, Jr. and David Griffin, Jr. (incorporated by
reference to Exhibit 2.4 to the registrants Form 10-K (File No. 000-50808)
filed with the SEC on March 24, 2004).2.5
    
    Closing and Asset Purchase Agreement, dated as of October 2, 2005, by and among
WCA of Florida, Inc., Meyer & Gabbert Excavating Contractors, Inc., Leonard G.
Meyer, Jr. and James F. Gabbert (incorporated by reference to Exhibit 2.1 to
the registrants Form 8-K (File No. 000-50808) filed with the SEC on September
30, 2005).2.6
    
    Agreement and Plan of Merger, dated as of September 30, 2005, by and among WCA
Waste Corporation, WCA of Central Florida, Inc., WCA Management Company, L.P.,
Waste Corporation of America, LLC and Waste Corporation of Central Florida,
Inc. (incorporated by reference to Exhibit 2.2 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on September 30, 2005).2.7
    
    First Amendment to Membership Interest Purchase Agreement, dated as of March
30, 2005, by and among WCA of North Carolina, L.P., MRR Southern, LLC, WCA
Waste Corporation and WCA of Wake County, L.P. (incorporated by reference to
Exhibit 2.2 to the registrants Form 10-Q (File No. 000-50808) filed with the
SEC on May 13, 2005).3.1
    
    Second Amended and Restated Certificate of Incorporation of WCA Waste
Corporation (incorporated by reference to Exhibit 3.1 to the registrants Form
8-K (File No. 000-50808) filed with the SEC on December 22, 2005).
 32




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##### Table of Contents



3.2
    
    Amended and Restated Bylaws of WCA Waste Corporation (incorporated by reference
to Exhibit 3.2 to Amendment No. 6 to the registrants Registration Statement on
Form S-1 (File No. 333-113416) filed with the SEC on June 21, 2004).4.1
    
    Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1
to Amendment No. 2 to the registrants Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on May 14, 2004).4.2
    
    Trust Indenture between Gulf Coast Waste Disposal Authority and U.S. Bank
National Association, as Trustee, dated as of August 1, 2002 (incorporated by
reference to Exhibit 4.2 to Amendment No. 4 to the registrants Registration
Statement on Form S-1 (File No. 333-113416) filed with the SEC on June 17,
2004).4.3
    
    Form of Environmental Facilities Revenue Bond (included in Exhibit 4.2).4.4
    
    Indenture, dated as of July 5, 2006, by and among WCA Waste Corporation, the
guarantors named therein and The Bank of New York Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.1 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on July 5, 2006).4.5
    
    Form of 9.25% Senior Note due 2014 (included as Exhibit A to Exhibit 4.2 above).4.6
    
    Registration Rights Agreement, dated as of July 5, 2006, by and among WCA Waste
Corporation, the guarantors named therein and Credit Suisse Securities (USA)
LLC incorporated by reference to Exhibit 10.3 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on July 5, 2006).4.7*
    
    Certificate of Designation of Series A Convertible Pay-in-Kind Preferred Stock.4.8*
    
    Specimen of Series A Convertible Pay-in-Kind Preferred Stock Certificate.10.1
    
    Revolving Credit Agreement, dated as of July 5, 2006, by and among WCA Waste
Corporation, Comerica Bank, as administrative agent, and the parties named
therein as lenders (incorporated by reference to Exhibit 10.1 to the
registrants Form 8-K (File No. 000-50808) filed with the SEC on July 5, 2006).10.2
    
    Purchase Agreement, dated as of June 28, 2006, by and among WCA Waste
Corporation, the guarantors named therein and Credit Suisse Securities (USA)
LLC (incorporated by reference to Exhibit 10.2 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on July 5, 2006).10.3*
    
    Interest Rate Swap Agreement, dated July 11, 2006, between WCA Waste
Corporation and Comerica Bank.10.4
    
    Preferred Stock Purchase Agreement dated as of June 12, 2006 by and between WCA
Waste Corporation and Ares Corporate Opportunities Fund II, L.P. (incorporated
by reference to Exhibit 10.1 to the registrants Form 8-K (File No. 000-50808)
filed with the SEC on June 16, 2006).10.5*
    
    Stockholders Agreement, dated July 27, 2006, by and between WCA Waste
Corporation and Ares Corporate Opportunities Fund II, L.P.10.6*
    
    Registration Rights Agreement, dated July 27, 2006, among WCA Waste Corporation
and Ares Corporate Opportunities Fund II, L.P.10.7*
    
    Management Rights Letter, dated July 27, 2006, between WCA Waste Corporation
and Ares Corporate Opportunities Fund II, L.P.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.
    
    Confidential treatment has been granted with respect to certain information contained in
this agreement.**
    
    Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish supplementally a
copy of any omitted exhibit or schedule to the Commission upon request.  33




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##### Table of Contents



SIGNATURES
  WCA WASTE CORPORATIONBy:
    
    /S/ Charles A. Casalinova

Charles A. CasalinovaSenior Vice President and Chief FinancialOfficer (Principal Financial Officer)By:
    
    /S/ Kevin D. Mitchell

Kevin D. MitchellVice President and Controller(Principal Accounting Officer)




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##### Table of Contents



EXHIBIT INDEX
 2.1**
    
    Reorganization Agreement, dated May 10, 2004, between WCA Waste Corporation and
Waste Corporation of America, Inc. (incorporated by reference to Exhibit 2.1 to
Amendment No. 2 to the registrants Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on May 14, 2004).2.2
    
    Agreement and Plan of Merger, dated May 10, 2004, between WCA Waste
Corporation, Waste Corporation of America and WCA Merger Corporation
(incorporated by reference to Exhibit 2.2 to Amendment No. 2 to the
registrants Registration Statement on Form S-1 (File No. 333-113416) filed
with the SEC on May 14, 2004).2.3
    
    Agreement and Plan of Merger, dated as of May 20, 2004, between WCA Waste
Corporation and WCA Merger II Corporation (incorporated by reference to Exhibit
2.3 to Amendment No. 5 to the registrants Registration Statement on Form S-4
(File No. 333-114901) filed with the SEC on June 21, 2004).2.4**
    
    Membership Interest Purchase Agreement, dated effective January 14, 2005,
between WCA of North Carolina, L.P., MRR Southern, LLC, Material Recovery, LLC,
Material Reclamation, LLC, MRR of High Point, LLC, MRR Wake Transfer Station,
LLC, WCA Waste Corporation, F. Norbert Hector, Jr., D.H. Griffin, Paul M.
Givens, Edward I. Weisiger, Jr. and David Griffin, Jr. (incorporated by
reference to Exhibit 2.4 to the registrants Form 10-K (File No. 000-50808)
filed with the SEC on March 24, 2004).2.5
    
    Closing and Asset Purchase Agreement, dated as of October 2, 2005, by and among
WCA of Florida, Inc., Meyer & Gabbert Excavating Contractors, Inc., Leonard G.
Meyer, Jr. and James F. Gabbert (incorporated by reference to Exhibit 2.1 to
the registrants Form 8-K (File No. 000-50808) filed with the SEC on September
30, 2005).2.6
    
    Agreement and Plan of Merger, dated as of September 30, 2005, by and among WCA
Waste Corporation, WCA of Central Florida, Inc., WCA Management Company, L.P.,
Waste Corporation of America, LLC and Waste Corporation of Central Florida,
Inc. (incorporated by reference to Exhibit 2.2 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on September 30, 2005).2.7
    
    First Amendment to Membership Interest Purchase Agreement, dated as of March
30, 2005, by and among WCA of North Carolina, L.P., MRR Southern, LLC, WCA
Waste Corporation and WCA of Wake County, L.P. (incorporated by reference to
Exhibit 2.2 to the registrants Form 10-Q (File No. 000-50808) filed with the
SEC on May 13, 2005).3.1
    
    Second Amended and Restated Certificate of Incorporation of WCA Waste
Corporation (incorporated by reference to Exhibit 3.1 to the registrants Form
8-K (File No. 000-50808) filed with the SEC on December 22, 2005).3.2
    
    Amended and Restated Bylaws of WCA Waste Corporation (incorporated by reference
to Exhibit 3.2 to Amendment No. 6 to the registrants Registration Statement on
Form S-1 (File No. 333-113416) filed with the SEC on June 21, 2004).4.1
    
    Specimen of Common Stock Certificate (incorporated by reference to Exhibit 4.1
to Amendment No. 2 to the registrants Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on May 14, 2004).4.2
    
    Trust Indenture between Gulf Coast Waste Disposal Authority and U.S. Bank
National Association, as Trustee, dated as of August 1, 2002 (incorporated by
reference to Exhibit 4.2 to Amendment No. 4 to the registrants Registration
Statement on Form S-1 (File No. 333-113416) filed with the SEC on June 17,
2004).4.3
    
    Form of Environmental Facilities Revenue Bond (included in Exhibit 4.2).4.4
    
    Indenture, dated as of July 5, 2006, by and among WCA Waste Corporation, the
guarantors named therein and The Bank of New York Trust Company, N.A., as
trustee (incorporated by reference to Exhibit 4.1 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on July 5, 2006).4.5
    
    Form of 9.25% Senior Note due 2014 (included as Exhibit A to Exhibit 4.2 above).4.6
    
    Registration Rights Agreement, dated as of July 5, 2006, by and among WCA Waste
Corporation, the guarantors named therein and Credit Suisse Securities (USA)
LLC incorporated by reference to Exhibit 10.3 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on July 5, 2006).4.7*
    
    Certificate of Designation of Series A Convertible Pay-in-Kind Preferred Stock.4.8*
    
    Specimen of Series A Convertible Pay-in-Kind Preferred Stock Certificate.




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##### Table of Contents



10.1
    
    Revolving Credit Agreement, dated as of July 5, 2006, by and among WCA Waste
Corporation, Comerica Bank, as administrative agent, and the parties named
therein as lenders (incorporated by reference to Exhibit 10.1 to the
registrants Form 8-K (File No. 000-50808) filed with the SEC on July 5, 2006).10.2
    
    Purchase Agreement, dated as of June 28, 2006, by and among WCA Waste
Corporation, the guarantors named therein and Credit Suisse Securities (USA)
LLC (incorporated by reference to Exhibit 10.2 to the registrants Form 8-K
(File No. 000-50808) filed with the SEC on July 5, 2006).10.3*
    
    Interest Rate Swap Agreement, dated July 11, 2006, between WCA Waste
Corporation and Comerica Bank.10.4
    
    Preferred Stock Purchase Agreement dated as of June 12, 2006 by and between WCA
Waste Corporation and Ares Corporate Opportunities Fund II, L.P. (incorporated
by reference to Exhibit 10.1 to the registrants Form 8-K (File No. 000-50808)
filed with the SEC on June 16, 2006).10.5*
    
    Stockholders Agreement, dated July 27, 2006, by and between WCA Waste
Corporation and Ares Corporate Opportunities Fund II, L.P.10.6*
    
    Registration Rights Agreement, dated July 27, 2006, among WCA Waste Corporation
and Ares Corporate Opportunities Fund II, L.P.10.7*
    
    Management Rights Letter, dated July 27, 2006, between WCA Waste Corporation
and Ares Corporate Opportunities Fund II, L.P.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.
    
    Confidential treatment has been granted with respect to certain information contained in
this agreement.**
    
    Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish supplementally a
copy of any omitted exhibit or schedule to the Commission upon request.