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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, 2004
 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
(State or other jurisdiction
of incorporation or organization)
    
    20-0829917
(I.R.S. Employer
Identification No.)
 One Riverway, Suite 1400
Houston, Texas 77056
(Address of principal executive offices)
    
    77056
(Zip Code)
 (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) Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.      YES o      NO þ Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).      YES o      NO þ Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date. Common Stock, $0.01 Par Value
(Class)
    
    14,853,421 shares
(Outstanding at August 3, 2004)




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RISK FACTORS AND
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS Some of the statements contained in this report are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. From time to time, our
public filings, press releases and other communications (such as conference
calls and presentations) will contain forward-looking statements. These
forward-looking statements can generally be identified as such because the
context of the statement will include words such as may, will, should,
outlook, project, intend, seek, plan, believe, anticipate,
expect, estimate, potential, continue, or opportunity, the negatives
of these words, or similar words or expressions. Similarly, statements that
describe our future plans, objectives or goals are also forward-looking
statements. This is true of our description of our acquisition strategy for
example. We caution that forward-looking statements are not guarantees and are
subject to known and unknown risks and uncertainties. Since our business,
operations and strategies are subject to a number of risks, uncertainties and
other factors, actual results may differ materially from those described in the
forward-looking statements. Thus, for example, our future financial performance will depend
significantly on our ability to execute our acquisition strategy, which will be
subject to many risks and uncertainties including (but not limited to) the
following:  
    
    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. Our business is also subject to a number of operational risks and
uncertainties that could cause our actual results of operations, or our
financial condition, to differ from any forward-looking statements. These
include, but are not limited to, the following:  
    
    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; 1




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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; 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. In our registration statement on Form S-1 filed in connection with our
initial public offering, we described these and other risks in greater detail
(including in the section entitled Risk Factors ). We refer you to that
filing for additional information. The forward-looking statements included in this report are only made as of
the date of this report and we undertake no obligation to publicly update
forward-looking statements to reflect subsequent events or circumstances. 2




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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 31,2004
    
    2003(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,991
    
    
    $
    105Accounts receivable, net of allowance for doubtful accounts of $179
(unaudited) and $177, respectively
    
    
    6,058
    
    
    
    5,170Prepaid expenses and other
    
    
    4,307
    
    
    
    5,246Total current assets
    
    
    13,356
    
    
    
    10,521Property and equipment, net of accumulated depreciation and amortization
of $27,421 and $23,473, respectively
    
    
    72,313
    
    
    
    70,726Goodwill, net
    
    
    29,843
    
    
    
    29,843Deferred financing costs, net
    
    
    3,115
    
    
    
    1,860Other assets
    
    
    3,601
    
    
    
    3,735Total assets
    
    $
    122,228
    
    
    $
    116,685LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    5,021
    
    
    $
    3,635Accrued liabilities
    
    
    5,771
    
    
    
    4,574Interest rate swap
    
    
    4
    
    
    
    14Note payable
    
    
    341
    
    
    
    903Accrued closure and post-closure liabilities, current
    
    
    1,223
    
    
    
    Current maturities of long-term debt
    
    
    1,605
    
    
    
    4,004Total current liabilities
    
    
    13,965
    
    
    
    13,130Long-term debt, less current maturities and discount
    
    
    38,097
    
    
    
    78,696Accrued closure and post-closure liabilities
    
    
    2,076
    
    
    
    3,005Deferred tax liabilities
    
    
    320
    
    
    
    3,287COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock, $0.01 par value per share. Authorized 25,000 shares; issued
and outstanding 14,590 and 8,000 shares, respectively
    
    
    146
    
    
    
    80Additional paid-in capital
    
    
    67,889
    
    
    
    12,548Retained earnings (accumulated deficit)
    
    
    (265
    )
    
    
    5,939Total stockholders equity
    
    
    67,770
    
    
    
    18,567Total liabilities and stockholders equity
    
    $
    122,228
    
    
    $
    116,685
 The accompanying notes are an integral part of these condensed consolidated financial statements. 3




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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 30,2004
    
    2003
    
    2004
    
    2003Revenue
    
    $
    17,114
    
    
    $
    16,759
    
    
    $
    33,005
    
    
    $
    31,558Expenses:Cost of services
    
    
    11,365
    
    
    
    10,451
    
    
    
    21,927
    
    
    
    20,444Depreciation and amortization
    
    
    2,078
    
    
    
    1,958
    
    
    
    4,011
    
    
    
    3,720Accretion expense
    
    
    60
    
    
    
    52
    
    
    
    128
    
    
    
    104General and administrative:Stock-based compensation
    
    
    11,502
    
    
    
    120
    
    
    
    11,532
    
    
    
    204Other general and administrative
    
    
    1,114
    
    
    
    1,032
    
    
    
    2,366
    
    
    
    2,09426,119
    
    
    
    13,613
    
    
    
    39,694
    
    
    
    26,566Operating income (loss)
    
    
    (9,005
    )
    
    
    3,146
    
    
    
    (6,959
    )
    
    
    4,992Other income (expense):Interest expense, net
    
    
    (1,261
    )
    
    
    (1,338
    )
    
    
    (2,528
    )
    
    
    (2,600
    )Other
    
    
    97
    
    
    
    9
    
    
    
    98
    
    
    
    29(1,164
    )
    
    
    (1,329
    )
    
    
    (2,430
    )
    
    
    (2,571
    )Income (loss) from continuing operations before income taxes and
cumulative effect of change in accounting principle
    
    
    (10,169
    )
    
    
    1,817
    
    
    
    (9,389
    )
    
    
    2,421Income tax (provision) benefit
    
    
    3,496
    
    
    
    (719
    )
    
    
    3,185
    
    
    
    (960
    )Income (loss) from continuing operations before cumulative effect of
change in accounting principle
    
    
    (6,673
    )
    
    
    1,098
    
    
    
    (6,204
    )
    
    
    1,461Loss from discontinued operations
    
    
    
    
    
    
    (104
    )
    
    
    
    
    
    
    (186
    )Income (loss) before cumulative effect of change in accounting
principle
    
    
    (6,673
    )
    
    
    994
    
    
    
    (6,204
    )
    
    
    1,275Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,324Net income (loss)
    
    $
    (6,673
    )
    
    $
    994
    
    
    $
    (6,204
    )
    
    $
    3,599Earnings per share-basic and diluted:Income (loss) from continuing operations before cumulative
effect of change in accounting principle
    
    $
    (0.77
    )
    
    $
    0.14
    
    
    $
    (0.75
    )
    
    $
    0.18Loss from discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Income before cumulative effect of change in accounting
principle
    
    
    (0.77
    )
    
    
    0.12
    
    
    
    (0.75
    )
    
    
    0.16Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.29Net income (loss)
    
    $
    (0.77
    )
    
    $
    0.12
    
    
    $
    (0.75
    )
    
    $
    0.45Weighted average shares outstanding  basic and diluted
    
    
    8,652
    
    
    
    8,000
    
    
    
    8,326
    
    
    
    8,000
 The accompanying notes are an integral part of these condensed consolidated financial statements. 4




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WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(In thousands) Six Months EndedJune 30,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (6,204
    )
    
    $
    3,599Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    4,011
    
    
    
    3,720Non-cash portion of stock-based compensation expense
    
    
    6,849
    
    
    
    204Amortization of debt discount and deferred financing costs
    
    
    289
    
    
    
    459Deferred tax provision (benefit)
    
    
    (3,185
    )
    
    
    1,346Accretion expense for closure and post-closure obligations
    
    
    128
    
    
    
    104Gain on sale of assets
    
    
    (98
    )
    
    
    (30
    )Interest rate swap
    
    
    (10
    )
    
    
    (882
    )Prepaid disposal usage
    
    
    138
    
    
    
    98Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (3,749
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (888
    )
    
    
    (811
    )Prepaid expenses and other
    
    
    949
    
    
    
    (269
    )Accounts payable and other liabilities
    
    
    428
    
    
    
    230Non-cash expenses related to discontinued operations
    
    
    
    
    
    
    1,336Net cash provided by operating activities
    
    
    2,407
    
    
    
    5,355CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    (33
    )Proceeds from sale of fixed assets
    
    
    113
    
    
    
    62Capital expenditures
    
    
    (5,447
    )
    
    
    (2,356
    )Cost incurred on possible acquisitions
    
    
    (14
    )
    
    
    (46
    )Net cash used in investing activities
    
    
    (5,348
    )
    
    
    (2,373
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from new credit facility
    
    
    15,500
    
    
    
    Payments on long-term debt
    
    
    (12,476
    )
    
    
    (4,659
    )Net change in old revolving line of credit
    
    
    (33,263
    )
    
    
    6,469Repayment of Waste Management, Inc. note
    
    
    (13,343
    )
    
    
    Distribution to former parent
    
    
    (6,340
    )
    
    
    (4,863
    )Proceeds from issuance of common stock
    
    
    57,271
    
    
    
    Deferred financing costs
    
    
    (1,522
    )
    
    
    (189
    )Decrease in restricted cash
    
    
    
    
    
    
    677Net cash provided by (used in) financing activities
    
    
    5,827
    
    
    
    (2,565
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    2,886
    
    
    
    417CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
    
    
    105
    
    
    
    CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
    
    $
    2,991
    
    
    $
    417SUPPLEMENTAL CASH FLOW INFORMATION:Interest paid
    
    $
    2,509
    
    
    $
    2,031Income taxes paid
    
    
    
    
    
    
    Property and equipment financed by direct debt
    
    
    
    
    
    
    124Debt and liabilities issued or assumed
    
    
    
    
    
    
    (152
    )Goodwill
    
    
    
    
    
    
    (119
    )
 The accompanying notes are an integral part of these condensed consolidated financial statements. 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 WCA Waste Corporation (together with its subsidiaries, WCA or the Company) is a
vertically integrated, non-hazardous solid waste collection and disposal
company. The unaudited condensed consolidated financial statements included herein have
been prepared in accordance with generally accepted accounting principles in
the United States and pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC) for quarterly reports on Form 10-Q. Certain
information relating to the Companys organization and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles has been condensed or omitted. The Company believes that
the presentations and disclosures herein are adequate when read in conjunction
with its Prospectus filed with the SEC on June 23, 2004. The unaudited
condensed consolidated financial statements as of June 30, 2004, and for the
three and six months ended June 30, 2004 and 2003 reflect, in the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly state the financial position and results of operations for
such periods. Certain reclassifications have been made to the prior period
financial statements to conform to the current presentation. Please note,
however, operating results for interim periods are not necessarily indicative
of the results for full years. For the description of the Companys significant
accounting policies, see Note 1 to Notes to Consolidated Financial Statements
included in such Prospectus. In preparing the Companys financial statements, several estimates and
assumptions are made that affect the accounting for, and recognition of,
assets, liabilities, revenues and expenses. These estimates and assumptions
must be made because some information used in the preparation of the Companys
financial statements is dependent on future events, cannot be calculated with a
high degree of precision from data available or is simply not capable of being
readily calculated based on generally accepted methodologies. Actual results
could differ from estimated amounts. In some cases, these estimates are
particularly difficult to determine and the Company must exercise significant
judgment. Significant items subject to such estimates and assumptions include
the depletion and amortization of landfill development costs, liabilities for
final capping, closure and post-closure costs, valuation allowances for
accounts receivable, liabilities for potential litigation, claims and
assessments, and liabilities for environmental remediation, deferred taxes and
self-insurance. The most difficult, subjective and complex estimates and the
assumptions that deal with the greatest amount of uncertainty are related to
the Companys accounting landfills, asset impairments, and insurance claims. WCA Waste Corporation was formed in February 2004 as a subsidiary of Waste
Corporation of America, Inc. (Waste Corporation of America). In June 2004,
Waste Corporation of America completed an internal reorganization among Waste
Corporation of America, WCA and WCA Waste Systems, Inc. (WSI), which was also a
wholly-owned subsidiary of Waste Corporation of America. Through the internal
reorganization, WCA briefly became the parent of Waste Corporation of America.
Waste Corporation of America and certain other operating subsidiaries of Waste
Corporation of America were then spun off from the operations of WCA and WSI.
This resulted in Waste Corporation of America and WCA being separate entities,
each owned by the former shareholders of Waste Corporation of America, and WSI
being a wholly-owned subsidiary of WCA. Also as part of the reorganization,
WCA assumed the obligations to issue stock upon exercise of Waste Corporation
of Americas outstanding options and warrants. Approximately 90% of these
options and warrants were cancelled by WCAs issuance of 1,330,056 shares,
resulting in a one-time compensation charge of $11.5 million. After giving
effect to the reorganization and subsequent stock split, WCA had 8,000,316
shares of common stock outstanding. All prior period share and per share
amounts have been adjusted to reflect the reorganization and stock split. Following this reorganization, WCA issued an additional 6,587,947 shares to
effect an initial public offering of its common stock. The Company has also
established the 2004 WCA Waste Corporation Incentive Plan to issue options to
employees and directors. A total of 1,000,000 shares are authorized for
issuance under the plan. In connection with its initial public offering, the
Company issued options to 6




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acquire 644,000 shares of common stock at an exercise price equal to the
initial public offering price and issued 2,000 restricted shares. The formation of WCA and the reorganization pursuant to which WSI became the
subsidiary of WCA represent a combination of entities under common control.
Accordingly, the accompanying unaudited condensed consolidated financial
statements reflect the operations of WSI as if such reorganization had occurred
as of the beginning of all periods presented. The accompanying unaudited condensed consolidated financial statements include
the accounts of the Company and its subsidiaries after elimination of all
material intercompany balances and transactions. Prior to the reorganization,
the Company was a wholly-owned subsidiary of Waste Corporation of America, and
the accompanying unaudited condensed consolidated financial statements have
been prepared on a carve-out basis to represent the net assets and related
historical results of the Company as if it were a stand-alone entity. General,
administrative and overhead expenses have been allocated between the Company
and Waste Corporation of America to reflect each entitys portion of these
expenses. 2. RECENT DEVELOPMENTS In July 2004, the Company purchased the hauling operations of Texas
Environmental Waste Services (TEW), a municipal solid waste collection company
located in Houston, Texas. Total consideration was $6.4 million in cash and
263,158 shares of restricted common stock. These restrictions lapse in July
2007. TEW serves approximately 45,000 accounts in the Houston area. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Landfill Accounting Capitalized Landfill Costs At June 30, 2004, the Company owned six municipal solid waste (MSW) landfills
and seven construction and demolition debris (C&D) landfills. One MSW landfill
and one C&D landfill are fully permitted but not constructed and have not yet
commenced operations as of June 30, 2004. Capitalized landfill costs include expenditures for the acquisition of land and
related airspace, engineering and permitting costs, cell construction costs and
direct site improvement costs. At June 30, 2004, no capitalized interest had
been included in capitalized landfill costs, however, in the future interest
could be capitalized on landfill construction projects but only during the
period the assets are undergoing activities to ready them for their intended
use. Capitalized landfill costs are amortized ratably using the
units-of-production method over the estimated useful life of the site as
airspace of the landfill is consumed. Landfill amortization rates are
determined periodically (not less than annually) based on ground surveys and
other density measures and estimates made by the Companys engineers,
management and financial personnel. Total available airspace includes the total of estimated permitted airspace
plus an estimate of probable expansion airspace that the Company believes is
likely to be permitted. Where the Company believes permit expansions are
probable, the expansion airspace, and the projected costs related to developing
the expansion airspace are included in the airspace amortization rate
calculation. The criteria the Company uses to determine if permit expansion is
probable include but are not limited to whether: (i) the Company believes the
project has fatal flaws; (ii) the land is owned or controlled by the Company,
or under option agreement; (iii) the Company has committed to the expansion;
(iv) financial analysis has been completed and the results indicate that the
expansion has the prospect of a positive financial and operational impact; (v)
personnel are actively working to obtain land use, local and state approvals
for an expansion; (vi) the Company believes that the permit is likely to be
received; and (vii) the Company believes that the timeframe to complete the
permitting is reasonable. The Company may be unsuccessful in obtaining expansion permits for airspace
that has been considered permitted. If unsuccessful in obtaining these permits,
the previously capitalized costs will be charged to expense. 7




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Closure and Post-Closure Obligations The Company has material financial commitments for the costs associated with
its future obligations for final closure, which is the closure of the landfill
and the capping of the final uncapped areas of a landfill and post-closure
maintenance of those facilities, which is generally expected to be for a period
of up to thirty years for MSW facilities and up to five years for C&D
facilities after final site closure. On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations, which
provides standards for accounting for obligations associated with the
retirement of long-lived assets and the associated asset retirement costs.
SFAS 143 outlines standards for accounting for the Companys landfill
retirement obligations that have historically been referred to as closure and
post-closure liabilities. The adoption of the standard has no impact on the
Companys cash requirements. In conjunction with the change in accounting
principle, the Company reflected a $2.3 million cumulative effect of the change
net of tax of $1.4 million in the first quarter of 2003. SFAS 143 results in a change in the mechanics of calculating landfill
retirement obligations and the classification of where amounts are recorded in
the financial statements. Landfill retirement obligations are no longer accrued
through a provision to cost of services, but rather by an increase to
capitalized landfill costs and amortized to depreciation and amortization as
landfill airspace is consumed. Generally, the requirements for recording
closure and post-closure obligations under SFAS 143 are as follows:  
    
    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
should the work ultimately be performed internally.
    
    The total obligation is carried at the net present value of future
cash expenditures, which is calculated by inflating the obligation
based upon the expected date of the expenditure using an inflation rate
of 2.5% and discounting the inflated total to its present value using
an 8.5% discount rate. The 8.5% discount rate represents the Companys
credit-adjusted risk-free rate. The resulting closure and post-closure
obligation is recorded on the balance sheet as airspace is consumed.
    
    Accretion expense is calculated by multiplying the discounted
closure and post-closure obligation at the beginning of the period by
the 8.5% credit-adjusted risk-free rate (discount rate). Accretion
expense is a non-cash charge 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. The impact of changes determined to be changes in estimates, based on an annual
update, is accounted for on a prospective basis. The Companys ultimate
liability for such costs may increase in the future as a result of changes in
estimates, legislation, or regulations. The following table rolls forward the net landfill and closure and post-closure
liabilities from December 31, 2003 to June 30, 2004. Closure andLandfill
    
    Post-closureAssets, net
    
    LiabilitiesDecember 31, 2003
    
    $
    50,671
    
    
    $
    3,005Capital expenditures (unaudited)
    
    
    1,443
    
    
    
    Amortization expense (unaudited)
    
    
    (2,054
    )
    
    
    Obligations incurred and
capitalized (unaudited)
    
    
    166
    
    
    
    166Interest accretion (unaudited)
    
    
    
    
    
    
    128June 30, 2004 (unaudited)
    
    $
    50,226
    
    
    $
    3,299
 8




---



##### 



The Companys liabilities for closure and post-closure costs are as follows: June 30,
    
    December 31,2004
    
    2003(unaudited)Recorded amounts:Current portion
    
    $
    1,223
    
    
    $
    Noncurrent portion
    
    
    2,076
    
    
    
    3,005Total recorded
    
    $
    3,299
    
    
    $
    3,005
 The Companys total anticipated cost for closure and post-closure activities is
$40.6 million, as measured in current dollars. The Company believes the amount
and timing of these activities are reasonably estimable. Where the Company
believes that both the amount of a particular closure and post-closure
liability and the timing of the payments are reliably determinable, the cost in
current dollars is inflated 2.5% until expected time of payment and then
discounted to present value at 8.5%. Accretion expense is applied to the
closure and post-closure liability based on the effective interest method and
is included in cost of services. Had the Company not discounted any portion of
its liability, the amount recorded would have been $10.5 million and $9.9
million at June 30, 2004, and, December 31, 2003 respectively. (b) Accounting for Acquisitions Allocation of Acquisition Purchase Price A summary of the Companys policy for accounting for acquisitions is as
follows: Acquisition purchase price is allocated to identified intangible and tangible
assets acquired and liabilities assumed based on their estimated fair values at
the dates of acquisition, with any residual amounts allocated to goodwill. The Company deems the total remaining airspace of an acquired landfill to be a
tangible asset. Therefore, for acquired landfills, it initially allocates the
purchase price to identified intangible and tangible assets acquired, including
landfill airspace, and liabilities assumed based on their estimated fair values
at the date of acquisition. The Company may consummate single acquisitions that include a combination of
collection operations and landfills. For each separately identified collection
operation and landfill acquired in a single acquisition, the Company performs
an initial allocation of total purchase price to the identified collection
operations and landfills based on their relative fair values. Following this
initial allocation of total purchase price to the identified collection
operations and landfills, the Company further allocates the identified
intangible assets and tangible assets acquired and liabilities assumed for each
collection operation and landfill based on their estimated fair values at the
dates of acquisition, with any residual amounts allocated to either goodwill or
landfill site costs, as discussed above. The Company accrues the payment of contingent purchase price if the events
surrounding the contingency are deemed probable. Contingent purchase price
related to landfills is allocated to landfill site costs and contingent
purchase price for acquisitions other than landfills is allocated to goodwill.
There are currently no pending contingent amounts due relating to any prior
acquisitions. Costs Incurred on Possible Acquisitions Costs incurred on possible acquisitions are capitalized as incurred and consist
primarily of third-party accounting, legal, and other consulting fees incurred
in the negotiation and due diligence process, and non-refundable down payments.
Upon consummation of an acquisition accounted for as a purchase, deferred costs
are capitalized as part of the purchase price. Capitalized costs are reviewed
for reasonableness on a periodic basis, and costs that management believes
relate to transactions that will not be consummated are charged to expense. 9




---



##### 



(c) Impairment of Long-Lived Assets The Company adopted SFAS No. 144, Accounting for Impairment or Disposal of
Long-Lived Assets, on January 1, 2002. In accordance with SFAS 144, long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated future cash flows, an impairment charge is recognized by
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. (d) Deferred Financing Costs Deferred financing costs consist primarily of direct legal, lender and other
consulting fees incurred in the negotiation of new debt agreements. Costs are
amortized as a component of interest expense using the effective interest
method. (e) Insurance The Company has retained a portion of the risks related to its general
liability, automobile and workers compensation insurance programs. The
exposure for unpaid claims and associated expenses, including incurred but not
reported losses, is based on estimates of ultimate losses on claims and
actuarially-determined development factors. (f) Revenue Recognition The Company recognizes revenue upon the receipt and acceptance of non-hazardous
industrial and municipal waste at its landfills. Revenue for collection
services is recognized as the services are performed. Revenue for container
rental is recognized over the rental period. (g) Stock-Based Compensation Prior to the Companys initial public offering, the Companys corporate
structure was reorganized. In conjunction with the reorganization, WCA
assumed the obligation to issue stock upon the exercise of options and warrants
that Waste Corporation of America had previously issued. Thereafter,
approximately 90% of the outstanding options and warrants were cancelled by the
issuance of 1,330,056 shares of the Company. The restructuring led to a
compensation charge based on the estimated fair value of the stock issued in
cancellation of the options and warrants. Total stock-based compensation
expense during the quarter ended June 30, 2004 was $11.5 million ($7.5 million
net of tax benefit, or $0.86 per share). Of this amount, $6.8 million was
non-cash with the balance withheld and remitted for withholding of payroll
taxes. Additionally, the Company granted options to purchase 644,000 shares of WCA
common stock at the initial public offering price. SFAS 123, Accounting for
Stock-Based Compensation, established accounting and disclosure requirements
using a fair-valued-based method of accounting for stock-based employee
compensation plans. Because the methods prescribed by SFAS 123 to determine
the fair value of options were not developed for use in valuing employee stock
options and do not consider factors such as vesting periods or other selling
limitations, the Company applied the intrinsic-value-based method of accounting
and only adopted the disclosure requirements of SFAS 123. Under this method,
the Company typically would record no compensation expense for stock options
granted to employees when the exercise price of the options is equal to or
greater than the fair market value of common stock on the date of grant.
Certain features of the Waste Corporation of America options required the
Company to recognize a periodic charge for the difference between the exercise
price of the options and the fair value of the Waste Corporation of America
common stock. For the three and six months ended June 30, 2003 the Company
recorded stock-based compensation expense of $0.1 million and $0.2 million,
respectively, associated with these Waste Corporation of America options. Had compensation expense for options granted by Waste Corporation of
America and stock option grants under the Companys Stock Incentive Plan been
determined based on the fair value of the options at the grant date as
prescribed by SFAS 123, the Companys net income (loss) and earnings per share
would have been the following: 10




---



##### 



Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2004
    
    2003
    
    2004
    
    2003Net income (loss), as reported
    
    $
    (6,673
    )
    
    $
    994
    
    
    $
    (6,204
    )
    
    $
    3,599Plus: Stock-based compensation expense
included in reported net income, net
of tax
    
    
    7,476
    
    
    
    78
    
    
    
    7,496
    
    
    
    133Less: 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
    
    
    (29
    )
    
    
    (39
    )
    
    
    (52
    )
    
    
    (79
    )Net income, pro forma
    
    $
    (6,777
    )
    
    $
    1,033
    
    
    $
    (6,311
    )
    
    $
    3,653Earnings per share  basic and dilutedAs reported
    
    $
    (0.77
    )
    
    $
    0.12
    
    
    $
    (0.75
    )
    
    $
    0.45Pro forma
    
    $
    (0.78
    )
    
    $
    0.13
    
    
    $
    (0.76
    )
    
    $
    0.46
 For purposes of calculating the fair value of options issued during 2004 and
2003, the following assumptions were used applying the Black-Scholes option
pricing method as prescribed by SFAS 123: 2004
    
    2003Risk-free interest rate
    
    
    2.75
    %
    
    
    3.93
    %Estimated average life of options
    
    4 years
    
    10 yearsEstimated volatility
    
    
    37.4
    %
    
    
    0
    %
 As the Companys common stock only began trading in June 2004, for the options
granted in 2004 the Company has estimated the volatility of its common stock by
averaging the volatility of other publicly traded solid waste companies over a
historical period of four years. (h) Earnings per Share Basic and diluted earnings per share have been calculated by dividing net
income (loss) by the weighted average number of common shares outstanding
during the respective periods. There were options to purchase 644,000 shares
of common stock outstanding as of June 30, 2004 and none outstanding as of June
30, 2003. All outstanding options were anti-dilutive, accordingly, there is no
difference in basic and diluted earnings per share. (i) Allocation of Expenses Prior to the reorganization discussed in Note 1, the Company was a wholly
owned-subsidiary of Waste Corporation of America and shared common management,
general and administrative and overhead costs. The cost for these services
were incurred by the Company and allocated to Waste Corporation of America and
Waste Corporation of Americas other subsidiaries. Prior to the
reorganization, the Company allocated these costs based upon an average of each
entitys respective proportion of total headcount and total revenues, both of
which produce comparable allocation percentages. Management believes that the
bases of allocation of expenses provides the most relevant and reasonable
method of allocating these costs to the respective operations. WCAs senior
management will continue to serve as officers of Waste Corporation of America.
During 2004, the Company entered into an administrative services agreement with
Waste Corporation of America where Waste Corporation of America will pay a
monthly fee of approximately $40,000 for administrative services, including
executive officers, other employees, administrative systems, service and
facilities. It is impracticable to estimate the amount of expenses that would
have been had the Company been an unaffiliated entity of Waste Corporation of
America. There has been no allocation of debt or interest expense between the Company
and Waste Corporation of America as both entities have incurred their debt in
order to finance their operations. There is no inter-company debt between the Company and 11




---



##### 



Waste Corporation of America, and the
Company does not receive proceeds from any debt incurred by Waste Corporation
of America. 4. LONG TERM DEBT AND NOTES PAYABLE Long-term debt and notes payable are as follows: June 30,
    
    December 31,2004
    
    2003$150 million revolving credit facility with financial institutions,
variable interest rate based on LIBOR plus 2.0% (3.375% at
June 30, 2004) due in 2008
    
    $
    15,500
    
    
    $
    Revolving note payable with a financial institution, variable interest
rate based on LIBOR plus 3.0% Refinanced in June 2004 in
connection with the facility amendment
    
    
    
    
    
    
    33,263Environmental Facilities Revenue Bonds, principal payable in
varying quarterly installments, maturing in 2004-2022, variable
interest rate (3.3% and 3.1% at December 31, 2003 and
June 30, 2004, respectively)
    
    
    23,200
    
    
    
    23,800Term loan payable to financial institution. Fully repaid in
June 2004 from the IPO proceeds
    
    
    
    
    
    
    11,115Seller note, with interest rate of 6%, due in May 2006
    
    
    444
    
    
    
    444Term loan payable to Waste Management, Inc. (WMI), with
interest rate of 8.5%. Fully repaid in June 2004 from the IPO proceeds
    
    
    
    
    
    
    13,343Notes payable to banks and financial institutions, interest ranging
from 5.8% to 10.0%, payable monthly through August 2008
    
    
    657
    
    
    
    85639,801
    
    
    
    82,821Less: Debt discount
    
    
    (99
    )
    
    
    (121
    )Less: Current portion
    
    
    (1,605
    )
    
    
    (4,004
    )$
    38,097
    
    
    $
    78,696
 In conjunction with the initial public offering, the Companys operating
subsidiary, WCA Waste Systems, Inc., entered into an amended and restated
$150.0 million senior secured credit facility with a syndicate of lenders.
The credit facility is secured by liens on all of the Companys and its
subsidiaries assets. Under the new facility, indebtedness under any base rate loans (as defined
in the new credit facility) bears interest at the higher of (i) the federal
funds effective rate plus 1/2 of 1% or (ii) the rate of interest from time to
time announced publicly by Wells Fargo Bank, N.A., in San Francisco, California, as its
prime rate plus the applicable margin for base rate loans (all as defined in
the new credit facility). Indebtedness under any LIBOR loans (as defined in the
new credit facility) bears interest at a rate per year (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined by the administrative agent to
be equal to the quotient of (a) LIBOR divided by (b) one minus the reserve
requirement (as defined in the new credit facility) plus the applicable margin
for LIBOR loans. The new credit facility includes the following:  
    
    a subfacility for standby letters of credit in the aggregate principal amount of $30.0 million;
    
    a swing line feature for up to $10.0 million for same day advances; and
    
    a direct pay letter of credit in the aggregate principal amount of approximately $23.2 million. After applying proceeds of the offering, as of June 30, 2004, the Company had,
$15.5 million outstanding under the revolving line of credit, $23.2 in direct
pay letter of credit and $3.7 million in other letters of credit issued,
leaving $107.6 million in availability. The direct pay letter of credit will continue to be used to secure the debt
associated with the Companys tax-exempt environmental facilities revenue
bonds. The remainder of the new credit facility will be used for repayment of
prior debt, acquisitions, equipment purchases, landfill construction and
development, 12




---



##### 



standby letters of credit that the Company must provide in the normal course of its
business, and general corporate purposes. The revolving credit facility requires the Company to maintain certain
financial ratios and comply with certain financial covenants. These covenants
include a maximum leverage ratio, as defined, of 4.25 and a fixed charge ratio
of 1.5 as well as minimum net worth amounts, as adjusted. At June 30, 2004,
the Company was in compliance with the financial covenants under these
agreements. 5. INCOME TAXES The company accounts for income taxes under the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying values of existing assets and liabilities and
their respective tax bases based on enacted tax rates. The Company provides a
valuation allowance when, based on managements estimates, it is more likely
than not that a deferred tax asset will not be realized in future periods.
Income taxes have been provided for the three months ended June 30, 2004 based
upon the Companys anticipated 2004 effective income tax rate of 33.9%. The
current year rate is lower than the statutory rate because of the tax benefit
on stock-based compensation. The 2003 rates also includes the effect of
discontinued operations as well as the cumulative effect of the change in
accounting principle. 6. STOCK OPTION AWARDS The Company adopted the 2004 WCA Waste Corporation Incentive Plan (Stock
Incentive Plan) to provide for grants of options to purchase shares of common
stock, restricted stock and other equity-based compensation to employees,
consultants and non-employee directors of the Company and its affiliates who
are eligible to participate in the Stock Incentive Plan. During the three
months ended June 30, 2004, the Company awarded options to purchase 80,000
shares to its non-employee directors and options to purchase 564,000 shares to
its officers and employees under its Stock Incentive Plan with an exercise
price equal to the IPO price of $9.50 per share. These options vest ratably
over a three year period. Additionally, the Company granted 2,000 shares of
restricted stock to an officer. The restrictions related to this grant lapse over a two year
period of continuous employment. As of June 30, 2004, 354,000 shares remain
available under the Stock Incentive Plan for future grants. The Company accounts for stock-based compensation in accordance with APB 25 and
related interpretations. Stock options are granted at prices equal to the fair
market value of the Companys common stock on the date of grant and the Stock
Incentive Plan contains no provisions that require variable plan accounting for
the stock options granted; therefore, no compensation expense is recognized.
Compensation expense resulting from grants of restricted stock or stock units
is recognized during the vesting period. Options granted under the Stock Incentive Plan are granted at a price equal to
the fair market value of the Companys Common Stock at the date of grant.
Generally, options granted have a term of ten years from the date of grant, and
vest in 1/3 increments per year over a three-year period beginning on the first
anniversary date of the grant. 7. STOCKHOLDERS EQUITY On June 28, 2004, the Company completed its initial public offering and issued
6,587,647 new shares to the public at an aggregate price of $9.50 per share
before a 7% underwriting discount. Net proceeds of the offering after
deducting underwriting discounts and offering expenses were $55.1 million.
The following table reflects the changes in stockholders equity from December
31, 2003, to June 30, 2004: 13




---



##### 



RetainedAdditional
    
    EarningsCommon
    
    Paid in
    
    (AccumulatedStock
    
    Capital
    
    deficit)
    
    TotalDecember 31, 2003
    
    $
    80
    
    
    $
    12,548
    
    
    $
    5,939
    
    
    $
    18,567Net loss
    
    
    
    
    
    
    
    
    
    
    (6,204
    )
    
    
    (6,204
    )Proceeds from IPO
    
    
    66
    
    
    
    55,050
    
    
    
    
    
    
    
    55,116Settlement of Waste Corporation of
America options through issuance of
WCA common stock
    
    
    
    
    
    
    6,849
    
    
    
    
    
    
    
    6,849Distributions to Waste Corporation
of America
    
    
    
    
    
    
    (6,558
    )
    
    
    
    
    
    
    (6,558
    )June 30, 2004
    
    $
    146
    
    
    $
    67,889
    
    
    $
    (265
    )
    
    $
    67,770
 In conjunction with the completion of the IPO, the Company transferred a total
of $20.0 million to Waste Corporation of America. This amount was to be used
in part to repay the term note with WMI which was a legal obligation of Waste
Corporation of America but was included in the historical financial statements
of the Company because a portion of the proceeds of the IPO were to be used to
satisfy the obligation (See Note 4). The remaining portion of the amount
transferred to Waste Corporation of America represents a distribution of equity
and is reflected as a reduction of additional paid in capital. 8. SEGMENT INFORMATION The Companys operations consist of the collection, transfer and disposal of
non-hazardous construction and demolition debris and industrial and municipal
solid waste. Revenues are generated primarily from the Companys collection
operations to residential, commercial and roll-off customers and landfill
disposal services. The following table reflects total revenue by source for the
three and six months ended June 30, 2004 and 2003: Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2004
    
    2003
    
    2004
    
    2003Collection:Residential
    
    $
    2,424
    
    
    $
    2,843
    
    
    $
    5,006
    
    
    $
    5,609Commercial
    
    
    2,994
    
    
    
    3,047
    
    
    
    5,924
    
    
    
    6,021Roll-off
    
    
    5,144
    
    
    
    4,700
    
    
    
    9,856
    
    
    
    8,811Other
    
    
    120
    
    
    
    86
    
    
    
    188
    
    
    
    146Total Collection
    
    
    10,682
    
    
    
    10,676
    
    
    
    20,974
    
    
    
    20,587Disposal
    
    
    8,382
    
    
    
    7,955
    
    
    
    15,578
    
    
    
    14,529Less: Intercompany
    
    
    (3,131
    )
    
    
    (2,311
    )
    
    
    (5,442
    )
    
    
    (4,269
    )Disposal, net
    
    
    5,251
    
    
    
    5,644
    
    
    
    10,136
    
    
    
    10,260Transfer and other
    
    
    2,767
    
    
    
    2,219
    
    
    
    5,262
    
    
    
    3,998Less: Intercompany
    
    
    (1,586
    )
    
    
    (1,780
    )
    
    
    (3,367
    )
    
    
    (3,287
    )Transfer and
other , net
    
    
    1,181
    
    
    
    439
    
    
    
    1,895
    
    
    
    711Total Revenue
    
    $
    17,114
    
    
    $
    16,759
    
    
    $
    33,005
    
    
    $
    31,558
 The Company evaluates performance based on various factors, of which the
primary performance measure is EBITDA and is generally defined as earnings
before interest, taxes, depreciation and amortization. The Companys
calculation of EBITDA is income from continuing operations before cumulative
effect of changes in accounting principles and before net interest, taxes,
depreciation and amortization. EBITDA is not a measure of operating income,
operating performance or liquidity under GAAP and may not be comparable to
similarly titled measures reported by other companies. The Company uses EBITDA
in the evaluation of field operating performance as it represents operational
cash flows and is a profit measure of components that are within the control of
the operating units. The table reflects certain geographic information relating
to the Companys operations. The state of Kansas includes one MSW landfill
which is 14




---



##### 



a part of the vertically integrated Missouri operations and is combined with
Missouri to form a geographic segment. The states of Alabama, South Carolina
and Tennessee have been aggregated in Other due to their size. Kansas/Missouri
    
    Texas
    
    Arkansas
    
    Other
    
    Corporate
    
    TotalThree months ended June 30, 2004:Revenue
    
    $
    9,351
    
    
    
    4,081
    
    
    
    2,126
    
    
    
    1,556
    
    
    
    
    
    
    
    17,114Depreciation and amortization
    
    
    881
    
    
    
    512
    
    
    
    247
    
    
    
    415
    
    
    
    23
    
    
    
    2,078EBITDA
    
    
    1,567
    
    
    
    1,854
    
    
    
    287
    
    
    
    472
    
    
    
    (11,010
    )
    
    
    (6,830
    )Total assets
    
    
    46,072
    
    
    
    19,020
    
    
    
    21,589
    
    
    
    14,371
    
    
    
    21,176
    
    
    
    122,228Capital expenditures
    
    
    1,443
    
    
    
    663
    
    
    
    642
    
    
    
    770
    
    
    
    7
    
    
    
    3,525Three months ended June 30, 2003:Revenue
    
    $
    9,114
    
    
    
    4,429
    
    
    
    2,045
    
    
    
    1,171
    
    
    
    
    
    
    
    16,759Depreciation and amortization
    
    
    882
    
    
    
    473
    
    
    
    293
    
    
    
    288
    
    
    
    22
    
    
    
    1,958EBITDA
    
    
    1,909
    
    
    
    2,449
    
    
    
    306
    
    
    
    504
    
    
    
    (55
    )
    
    
    5,113Total assets
    
    
    46,746
    
    
    
    28,920
    
    
    
    20,166
    
    
    
    12,562
    
    
    
    12,145
    
    
    
    120,539Capital expenditures
    
    
    551
    
    
    
    799
    
    
    
    68
    
    
    
    24
    
    
    
    4
    
    
    
    1,446Six 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
    
    
    
    4,011EBITDA
    
    
    3,957
    
    
    
    3,855
    
    
    
    720
    
    
    
    910
    
    
    
    (12,292
    )
    
    
    (2,850
    )Total assets
    
    
    46,072
    
    
    
    19,020
    
    
    
    21,589
    
    
    
    14,371
    
    
    
    21,176
    
    
    
    122,228Capital expenditures
    
    
    2,212
    
    
    
    1,059
    
    
    
    1,207
    
    
    
    959
    
    
    
    10
    
    
    
    5,447Six months ended June 30, 2003:Revenue
    
    $
    17,364
    
    
    
    8,100
    
    
    
    3,919
    
    
    
    2,175
    
    
    
    
    
    
    
    31,558Depreciation and amortization
    
    
    1,689
    
    
    
    881
    
    
    
    559
    
    
    
    548
    
    
    
    43
    
    
    
    3,720EBITDA
    
    
    3,989
    
    
    
    4,664
    
    
    
    673
    
    
    
    830
    
    
    
    (1,415
    )
    
    
    8,741Total assets
    
    
    46,746
    
    
    
    28,920
    
    
    
    20,166
    
    
    
    12,562
    
    
    
    12,145
    
    
    
    120,539Capital expenditures
    
    
    751
    
    
    
    1,299
    
    
    
    78
    
    
    
    344
    
    
    
    8
    
    
    
    2,480
 The following presents a reconciliation of the geographical segments
aggregate EBITDA to income from continuing operations before cumulative
effect of change in accounting principle. Three months ended
    
    Six months endedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Total EBITDA for reportable segments
    
    $
    (6,830
    )
    
    $
    5,113
    
    
    $
    (2,850
    )
    
    $
    8,741Depreciation and amortization
    
    
    (2,078
    )
    
    
    (1,958
    )
    
    
    (4,011
    )
    
    
    (3,720
    )Interest expense, net
    
    
    (1,261
    )
    
    
    (1,338
    )
    
    
    (2,528
    )
    
    
    (2,600
    )Income tax expense
    
    
    3,496
    
    
    
    (719
    )
    
    
    3,185
    
    
    
    (960
    )Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle
    
    $
    (6,673
    )
    
    $
    1,098
    
    
    $
    (6,204
    )
    
    $
    1,461
 9. COMMITMENTS AND CONTINGENCIES Legal Proceedings On June 7, 2002, Fines Recycling, Inc., Harry Donaldson, Jr., Gerry Hamby, Hal
Isbell and Donald G. Wilson filed suit in the Circuit Court of Talladega
County, Alabama, against Waste Corporation of America, WCA of Alabama, LLC (one
of the Companys subsidiaries), Tom J. Fatjo, Jr. (Chairman and Chief Executive
Officer and Manager of Waste Corporation of America, and the Companys Chairman
and Chief Executive Officer and a Director), Jerome M. Kruszka (President and
Chief Operating Officer and Manager of Waste Corporation of America, and the
Companys President and Chief Operating Officer and a Director), and Chuck
Green, one of the Companys managers. The suit alleges that, while WCA Alabama
was a subsidiary of Waste Corporation of America, these defendants failed to
abide by certain terms of an Agreement and Plan of Merger among the plaintiffs,
Waste Corporation of America, and WCA of Alabama, and further alleges fraud and
conspiracy claims against Waste Corporation of America and certain of the
individual defendants with respect to the negotiation of the Agreement and Plan
of Merger. While the plaintiffs have not specified an amount of damages, the
suit also alleges that the individual plaintiffs have been damaged by the
alleged failure of Waste Corporation of America to honor a put option on
their Waste Corporation of America capital stock, which they obtained as
partial consideration in the Agreement and Plan of Merger, and which is now the
Companys capital stock pursuant to the 15




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Companys internal reorganization. The Company is unable to estimate any
possible loss but believes that the claims of the plaintiffs are without merit,
and is vigorously defending this suit. The Company is a party to various general legal proceedings which have arisen
in the ordinary course of business. While the results of these matters cannot
be predicted with certainty, the Company believes that losses, if any,
resulting from the ultimate resolution of these matters will not have a
material adverse effect on the Companys consolidated financial position,
results of operations or cash flows. However, unfavorable resolution could
affect the consolidated financial position, results of operations or cash flows
for the quarterly periods in which they are resolved. Additionally, in the normal course of business and as a result of the extensive
governmental regulation of the solid waste industry, the Company may
periodically become subject to various judicial and administrative proceedings
involving federal, state or local agencies. In these proceedings, an agency may
seek to impose fines on the Company or to revoke or deny renewal of an
operating permit of the Company. From time to time, the Company may also be
subject to actions brought by citizens groups or adjacent landowners or
residents in connection with the permitting and licensing of landfills and
transfer stations the Company owns or operates or alleging environmental damage
or violations of the permits and licenses pursuant to which the Company
operates. No assurance can be given with respect to the outcome of any such
proceedings or the effect such outcomes may have on the Company. Although the
Company is unable to estimate any possible losses, a significant judgment
against the Company, the loss of significant permits or licenses or the
imposition of a significant fine could have a material adverse effect on the
Companys financial condition, results of operations and prospects. Moreover, the Company may become party to various claims and suits pending for
alleged damages to persons and property, alleged violations of certain laws and
alleged liabilities arising out of matters occurring during the normal
operation of a waste management business. Except for routine litigation
incidental to its business, there are no pending material legal proceedings to
which the Company is a party or to which any of its property is subject.
Although the Company is unable to estimate any possible losses, management
believes that the outcome of the proceedings to which the Company is currently
a party will not have a material adverse effect upon its financial condition,
results of operations or prospects. However, unfavorable resolution of any such
proceedings could affect the consolidated results of operations or cash flows
for the quarterly period in which they are resolved. While management believes
a majority of the Companys present routine litigation is covered by insurance,
subject to deductibles, no assurance can be given with respect to the outcome
of any such proceedings or the effect such outcomes may have on the Company or
that the Companys insurance coverage would be adequate. Financial Instruments Letters of credit, performance bonds, and other guarantees have been provided
by WCA to support tax-exempt bonds, performance of landfill final closure and
post-closure requirements, insurance contracts, and other contracts. Total
letters of credit, performance bonds, insurance policies and other guarantees
outstanding at June 30, 2004 aggregated approximately $22.4 million.
Additionally, direct pay letters of credit totaling $23.2 million were
outstanding at June 30, 2004. The Company is required to provide financial assurances to governmental
agencies under applicable environmental regulations relating to landfill
closure and post-closure obligations. The Company satisfies these financial
assurances requirements by providing performance bonds, letters of credit,
insurance policies or trust deposits. During the past three years the costs
associated with bonding and insurance have risen dramatically, the financial
capacity and other requirements imposed by bonding and insurance companies have
become more difficult to comply with than in prior years and the number of such
bonding and insurance companies has decreased. To obtain closure and
post-closure bonds and certain performance bonds, Mr. Tom Fatjo, Jr. (the Companys
chairman of the board and chief executive officer), Mr. Jerome Kruszka (a
director and the Companys president and chief operating officer) and Mr. William Esping
(a principal of the Companys largest stockholder) were required to provide personal
guarantees to the Companys bonding company with respect to the Companys obligations. The Company
currently pays each of them a fee of $10,000 per month for these guarantees and
may in the future have to continue these payments to compensate these or other
executive officers or directors for providing these types of personal
guarantees. 16




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##### 



Environmental Matters The Company is subject to liability for any environmental damages that its
solid waste facilities may cause to neighboring landowners or residents,
particularly as a result of the contamination of soil, groundwater, surface
water, and drinking water, including damage resulting from conditions existing
prior to the acquisition of such facilities by the Company. The company may
also be subject to liability for any off-site environmental contaminations
caused by pollutants or hazardous substances whose transportation, treatment,
or disposal was arranged by the Company or its predecessors. Any substantial
liability for environmental damage incurred by the Company could have a
material adverse effect on the Companys financial condition, results of
operations, or cash flows. As of June 30, 2004, the Company is not aware of
any significant environmental liabilities. 17




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##### 



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 for the year ended December 31, 2003 appearing in our Prospectus as
filed with the SEC on June 23, 2004. 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 Corporation, we, us or our refer to WCA Waste
Corporation and its direct and indirect subsidiaries on a consolidated basis. Overview We are a vertically integrated, non-hazardous solid waste management
company providing non-hazardous construction/demolition, industrial and
municipal solid waste collection, transfer, and disposal services in the south
and central regions of the United States. We serve approximately 130,000
commercial, industrial and residential customers in Alabama, Arkansas, Kansas,
Missouri, South Carolina, Tennessee and Texas. We serve our customers through
sixteen collection operations, eight transfer stations, six municipal solid
waste (MSW) landfills and seven construction and demolition debris (C&D)
landfills. One of our transfer stations and two of our landfills, one MSW
landfill and one C&D landfill, are fully permitted but have not yet commenced
operations. Additionally, we currently operate but do not own two additional
transfer stations, and we hold certain prepaid disposal rights at landfills in
Texas, Oklahoma and Arkansas owned and operated by one of our competitors. In September 2000, we were formed and acquired assets constituting 32
separate solid waste management operations from Waste Management, Inc. These
assets and operations became the core of our operations. Since our formation,
we have acquired and successfully integrated over 43 separate operating
locations acquired in a total of nine transactions (including the transaction
with Waste Management, Inc. in 2000). We intend to increase both our revenue and our operating margins by: (i)
vertically integrating our operations and internalizing the disposal of waste
we collect; (ii) using acquisitions to increase our internalization of waste in
our existing markets and to expand our operations into new markets; (iii)
utilizing a decentralized management structure for overseeing day-to-day
operations; (iv) focusing on local markets; and (v) improving operating margins
through economies-of-scale, cost efficiencies and asset utilization. Acquisition Strategy Our future financial performance will significantly depend on successful
implementation of our strategy of acquisitions in our existing markets and
selected additional markets. In markets where we already own a landfill, we
intend to focus on expanding our presence by acquiring smaller companies that
also operate in that market or in adjacent markets (tuck -in acquisitions).
Tuck-in acquisitions will allow growth in revenue and increase market share and
enable integration and consolidation of duplicative facilities and functions to
maximize cost efficiencies and economies-of-scale. We will typically seek to
enter a new market by acquiring a permitted landfill operation in that market.
Upon acquiring a landfill in a new market, we then expand our operations to
collection services by acquiring collection operations in the new market and
internalizing the waste into our landfill. We intend to pursue our acquisition strategy with the new borrowing
capacity under a $150 million credit facility entered into in connection with
the closing of our initial public offering. We expect that our acquisition
strategy will result in an annual revenue run rate of $200 million and a
tripling or more of our annual EBITDA rates over the next 3 to 4 years. Run
rate determinations are made based on estimations from information provided to
us. Management determines the period over which to calculate a run rate based
on factors they deem to be reasonable. Actual revenues may or may not equal
the estimated run rate. We intend to pay for our acquisitions primarily with
cash, including borrowings under our credit facilities. 18




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##### 



We have identified over 100 private waste companies within 50 miles of our
13 landfills. In July 2004, we completed the acquisition of Texas Environmental
Waste Services, a residential collection company located in Houston, Texas,
with 45,000 customers and a current annual revenue run rate of $5.6 million.
We believe that this acquisition eventually will enable us to open and
internalize this waste into our Houston area municipal solid waste landfill
through a network of transfer stations that are under development. Before that
network is developed, we intend to use capacity under a pre-paid disposal
contract. We are also in serious discussions with other waste companies concerning
potential acquisitions and have entered into letters of intent with three
separate companies that collectively have an annualized revenue of
approximately $7 million. General Our operations consist of the collection, transfer and disposal of
non-hazardous construction and demolition debris and industrial and municipal
solid waste. Our revenues are generated primarily from our collection
operations to residential, commercial and roll-off customers and landfill
disposal services. Roll-off service is the hauling and disposal of large waste
containers (typically between 10 and 50 cubic yards) that are loaded on to and
off of the collection vehicle. The following table reflects our total revenue
by source for the three and six months ended June 30, 2004 and 2003 (in
thousands). Three Months
    
    Six MonthsEnded June 30,
    
    Ended June 30,2004
    
    2003
    
    2004
    
    2003Collection:Residential
    
    $
    2,424
    
    
    $
    2,843
    
    
    $
    5,006
    
    
    $
    5,609Commercial
    
    
    2,994
    
    
    
    3,047
    
    
    
    5,924
    
    
    
    6,021Roll-off
    
    
    5,144
    
    
    
    4,700
    
    
    
    9,856
    
    
    
    8,811Other
    
    
    120
    
    
    
    86
    
    
    
    188
    
    
    
    146Total Collection
    
    
    10,682
    
    
    
    10,676
    
    
    
    20,974
    
    
    
    20,587Disposal
    
    
    8,382
    
    
    
    7,955
    
    
    
    15,578
    
    
    
    14,529Less: Intercompany
    
    
    (3,131
    )
    
    
    (2,311
    )
    
    
    (5,442
    )
    
    
    (4,269
    )Disposal, net
    
    
    5,251
    
    
    
    5,644
    
    
    
    10,136
    
    
    
    10,260Transfer and other
    
    
    2,767
    
    
    
    2,219
    
    
    
    5,262
    
    
    
    3,998Less: Intercompany
    
    
    (1,586
    )
    
    
    (1,780
    )
    
    
    (3,367
    )
    
    
    (3,287
    )Transfer and
other , net
    
    
    1,181
    
    
    
    439
    
    
    
    1,895
    
    
    
    711Total Revenue
    
    $
    17,114
    
    
    $
    16,759
    
    
    $
    33,005
    
    
    $
    31,558
 Costs of services include, but are not limited to, labor, fuel and other
vehicle operating expenses, equipment maintenance, disposal fees paid to
third-party disposal facilities, insurance premiums and claims expense, selling
expenses, wages and salaries of field personnel located at operating
facilities, third-party transportation expense and state waste taxes. On
December 1, 2001, we converted to a $250,000 deductible insurance policy for
general liability, workers compensation and automobile liability. The
frequency and amount of claims or incidents could vary significantly from
quarter to quarter and/or year-to-year, resulting in increased volatility of
our costs of services. General and administrative expense includes the salaries and benefits of
our corporate employees, certain centralized reporting and cash management
costs and other overhead costs associated with our corporate office. Depreciation expense includes depreciation of fixed assets over their
useful lives using the straight-line method. We capitalize third-party expenditures related to pending acquisitions,
such as legal, engineering, and accounting expenses, and certain direct
expenditures such as travel costs. We expense indirect acquisition costs, such
as salaries and other corporate services, as we incur them. We routinely
evaluate all capitalized costs, and expense those related to projects that we
believe are not likely to succeed. 19




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##### 



Goodwill represents the excess of the purchase price over the fair value
of the net assets of the acquired entities. In allocating the purchase price
of an acquired company among its assets, we first assign value to the tangible
assets, followed by intangible assets such as covenants not to compete and any
remaining amounts are then allocated to goodwill. Results of Operations Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003 The following table sets forth items in our consolidated statement of
operations in thousands and as a percentage of revenues for the three months
ended June 30, 2004 and 2003 (dollars in thousands). Three Months Ended June 30,2004
    
    2003Revenue
    
    $
    17,114
    
    
    
    100.0
    %
    
    $
    16,759
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    11,365
    
    
    
    66.4
    
    
    
    10,451
    
    
    
    62.4Depreciation and amortization
    
    
    2,078
    
    
    
    12.1
    
    
    
    1,958
    
    
    
    11.7Accretion expense
    
    
    60
    
    
    
    0.4
    
    
    
    52
    
    
    
    0.3Stock-based compensation
    
    
    11,502
    
    
    
    67.2
    
    
    
    120
    
    
    
    0.7Other general and administrative
    
    
    1,114
    
    
    
    6.5
    
    
    
    1,032
    
    
    
    6.2Operating income (loss)
    
    
    (9,005
    )
    
    
    (52.6
    )
    
    
    3,146
    
    
    
    18.8Interest expense, net
    
    
    (1,261
    )
    
    
    (7.4
    )
    
    
    (1,338
    )
    
    
    (8.0
    )Other income (expense), net
    
    
    97
    
    
    
    0.6
    
    
    
    9
    
    
    
    0.1Income tax expense
    
    
    3,496
    
    
    
    20.4
    
    
    
    (719
    )
    
    
    (4.3
    )Income (loss) from continuing
operations before cumulative effect
of change in accounting principle
    
    $
    (6,673
    )
    
    
    (39.0
    )%
    
    $
    1,098
    
    
    
    6.6
    %
 Revenue.Total revenue for the three months ended June 30, 2004 increased
$0.3 million, or 2%, to $17.1 million from $16.8 million for the three months
ended June 30, 2003. The increase is due in part to the opening of two new
transfer stations in 2004 and increases in disposal volumes over the same
period in the prior year. Cost of services.Total cost of services for the three months ended June
30, 2004 increased $0.9 million, or 9%, to $11.4 million from $10.5 million for
the three months ended June 30, 2003. The increase is primarily due to a $0.3
million increase in insurance expense associated with the development of prior
claims, and $0.5 of additional sales and management expense associated with our
growth and management incentive programs. Depreciation and amortization.Depreciation and amortization expense for
the three months ended June 30, 2004 increased $0.1 million, or 6%, to $2.1
million from $2.0 million for the three months ended June 30, 2003. The
increase was primarily associated with increased site amortization expense
associated with increased volumes. Stock-based compensation.Prior to our internal reorganization described
in Note 1 to our unaudited condensed consolidated financial statements, Waste
Corporation of America had options and warrants outstanding. As part of the
internal reorganization, we assumed the obligation to issue shares upon the
exercise of such options and warrants. Subsequently, we extinguished
approximately 90% of such outstanding stock options and warrants by issuing
1,330,056 shares of our common stock. This restructuring led to a one-time
stock-based compensation charge of $11.5 million prior to the IPO that occurred
in June 2004 based on the estimated fair value of the stock issued in
cancellation of the options and warrants. Other general and administrative.Total other general and administrative
expense for the three months ended June 30, 2004 increased $0.1 million, or 8%,
to $1.1 million from $1.0 million for the three months ended June 30, 2003.
The increase is primarily attributable to increased administrative costs
associated with preparing to be a public company. 20




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##### 



Operating income.Operating income for the three months ended June 30,
2004 decreased $12.1 million, or 386%, to a loss of $9.0 million from income of
$3.1 million for the three months ended June 30, 2003. The decrease is
primarily associated with the one-time stock-based compensation expense
described above. Excluding stock-based compensation charges, operating income
was $2.5 million for the three months ended June 30, 2004, compared with $3.3
million for the same period in 2003. Income from continuing operations.Income from continuing operations for
the three months ended June 30, 2004 decreased $7.8 million, or 708%, to a loss
of $6.7 million from income of $1.1 million for the three months ended June 30,
2003. The decrease was primarily attributable to the tax adjusted impact of
the one-time stock-based compensation charge described above. Excluding the
effects of the stock-based compensation charges, income from continuing
operations for the three month period ending June 30, 2004 was $0.8 million, or
$0.09 per share compared with $1.2 million, or $0.15 per share for the same
period in 2003. Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003 The following table sets forth items in our consolidated statement of
operations in thousands and as a percentage of revenues for the six months
ended June 30, 2004 and 2003 (dollars in thousands). Six Months Ended June 30,2004
    
    2003Revenue
    
    $
    33,005
    
    
    
    100.0
    %
    
    $
    31,558
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    21,927
    
    
    
    66.4
    
    
    
    20,444
    
    
    
    64.8Depreciation and amortization
    
    
    4,011
    
    
    
    12.2
    
    
    
    3,720
    
    
    
    11.8Accretion expense
    
    
    128
    
    
    
    0.4
    
    
    
    104
    
    
    
    0.3Stock-based compensation
    
    
    11,532
    
    
    
    34.9
    
    
    
    204
    
    
    
    0.6Other general and administrative
    
    
    2,366
    
    
    
    7.2
    
    
    
    2,094
    
    
    
    6.6Operating income (loss)
    
    
    (6,959
    )
    
    
    (21.1
    )
    
    
    4,992
    
    
    
    15.8Interest expense, net
    
    
    (2,528
    )
    
    
    (7.7
    )
    
    
    (2,600
    )
    
    
    (8.2
    )Other income (expense), net
    
    
    98
    
    
    
    0.3
    
    
    
    29
    
    
    
    0.1Income tax expense
    
    
    3,185
    
    
    
    9.7
    
    
    
    (960
    )
    
    
    (3.0
    )Income (loss) from continuing
operations before cumulative effect
of change in accounting principle
    
    $
    (6,204
    )
    
    
    (18.8
    )%
    
    $
    1,461
    
    
    
    4.6
    %
 Revenue.Total revenue for the six months ended June 30, 2004 increased
$1.4 million, or 5%, to $33.0 million from $31.6 million for the six months
ended June 30, 2003. Of this increase, $1.2 million is due to the commencement
of two transfer station operating contracts in February 2004. The remaining
increase is primarily due to collection volume increases from internal growth. Cost of services.Total cost of services for the six months ended June 30,
2004 increased $1.5 million, or 7%, to $21.9 million from $20.4 million for the
six months ended June 30, 2003. In addition to increases associated with the
increase in revenues from year to year, operating expenses were up $0.4 million
as a result of increased sales and management expense associated with our
growth and management incentive programs. Additionally, insurance expense is
up approximately $0.1 million resulting from the development of reserves
associated with prior claims. Depreciation and amortization.Depreciation and amortization expense for
the six months ended June 30, 2004 increased $0.3 million, or 8%, to $4.0
million from $3.7 million for the six months ended June 30, 2003. The increase
was primarily associated with the commencement of the new transfer station
operations during the first quarter of 2004. Stock-based compensation.Prior to our internal reorganization described
in Note 1 to our unaudited condensed consolidated financial statements, Waste
Corporation of America had options and warrants outstanding. As part of the
internal reorganization, we assumed the obligation to issue shares upon the
exercise of such options and warrants. Subsequently, we extinguished
approximately 90% of such outstanding stock options and warrants by issuing
1,330,056 shares of our common stock. This 21




---



##### 



restructuring led to a compensation charge of $11.5 million prior to the
IPO that occurred in June 2004 based on the estimated fair value of the stock
issued in cancellation of the options and warrants. Other general and administrative.Total other general and administrative
expense for the six months ended June 30, 2004 increased $0.3 million, or 13%,
to $2.4 million from $2.1 million for the six months ended June 30, 2003. The
increase is primarily attributable to $0.3 million of increased accruals for
incentive compensation as compared to the same period in 2003. Operating income.Operating income for the six months ended June 30, 2004
decreased $12.0 million, or 239%, to a loss of $7.0 million from income of $5.0
million for the six months ended June 30, 2003. The decrease is associated
with the one-time stock-based compensation expense described above. Excluding
stock-based compensation charges, operating income was $4.6 million for the six
months ended June 30, 2004, compared with $5.2 million for the same period in
2003. Income from continuing operations.Income from continuing operations for
the six months ended June 30, 2004 decreased $7.7 million to a loss of $6.2
million from income of $1.5 million for the six months ended June 30, 2003.
The decrease was primarily attributable to the tax adjusted impact of the
one-time stock-based compensation charge described above. Excluding the
effects of the stock-based compensation charge, income from continuing
operations for the six month period ending June 30, 2004 was $1.3 million, or
$0.16 per share, compared with $1.6 million, or $0.20 per share, for the same
period in 2003. Cumulative effect of change in accounting principle.The cumulative
effect of change in accounting principle for the period ended June 30, 2003 is
due to the adoption of SFAS 143, effective January 1, 2003, which resulted in a
$2.3 million benefit, net of a $1.4 million tax expense. Liquidity and Capital Resources Our business and industry is capital intensive requiring capital for
equipment purchases, landfill construction and development, and landfill
closure activities in the future. Our planned acquisition strategy will also
require significant capital. We plan to meet our capital needs primarily
through cash flow from operations and availability under our new credit
facility. We have not currently hedged any market risk related to interest
rates. We are currently evaluating whether to enter into an interest rate swap
agreement. As of June 30, 2004, we had total outstanding borrowings of long-term debt
of $39.8 million, consisting primarily of approximately $23.2 million of
tax-exempt environmental facilities revenue bonds and $15.5 million outstanding
under our new credit facility. As of June 30, 2004, we had a working capital deficit of $0.6 million
which had improved $2.0 million from a working capital deficit of $2.6 million
as of December 31, 2003. Our new credit facility includes a swing-line
feature, which monitors cash requirements or excesses on a daily basis. After
meeting current working capital and capital expenditure requirements, our cash
strategy is to use the swing-line feature of our new credit facility to
maintain a minimum cash and cash equivalents balance and use excess cash to
reduce our indebtedness under the new credit facility. New Credit Facility In June 2004, WCA Waste Systems, Inc., as the borrower, entered into an
amended and restated $150.0 million senior secured credit facility with Wells
Fargo Bank, National Association, as the administrative agent. As of June 30,
2004, we had $15.5 million outstanding under the revolving facility, $23.2 in
direct pay letter of credit and $3.7 million in other letters of credit issued,
leaving us with $107.6 million in availability. Indebtedness under any base rate loans (as defined in the new credit
facility) carries interest at the higher of (i) the federal funds effective
rate plus 1/2 of 1% or (ii) the rate of interest from time to time announced
publicly by Wells Fargo, in San Francisco, California, as its prime rate plus
the applicable margin for base rate loans (all as defined in the new credit
facility). Indebtedness under any LIBOR loans (as defined in the new credit
facility) carries interest at a rate per year (rounded upwards, if necessary,
to the nearest 1/16 of 1%) determined by the administrative agent to be equal
to the quotient of (a) LIBOR 22




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##### 



divided by (b) one minus the reserve requirement (as defined in the new credit
facility) plus the applicable margin for LIBOR loans. The new credit facility
includes the following:  
    
    a subfacility for standby letters of credit in the aggregate principal amount of $30.0 million;
    
    a swing line feature for up to $10.0 million for same day advances; and
    
    a direct pay letter of credit in the aggregate principal amount of approximately $23.2 million. The direct pay letter of credit is used to secure the debt associated with
our tax-exempt environmental facilities revenue bonds. The remainder of the new
credit facility will be used for repayment of prior debt, acquisitions,
equipment purchases, landfill construction and development, standby letters of
credit that we must provide in the normal course of our business, and general
corporate purposes. Significant terms of the new credit facility are detailed in the following
table. Each of the capitalized terms included in the table below have the
meanings assigned to them in the new credit facility. Security:
    
    Capital stock of our subsidiaries and all tangible
(including real estate) and intangible assets
belonging to us and our subsidiaries.Maturity:
    
    Four years from closing.Financial Covenants:
    
    Maximum Leverage Ratio. 4.25x (Funded Debt/Pro Forma
Adjusted EBITDA).Maximum Senior Funded Debt Leverage Ratio. 3.50x
until June 30, 2006, and 3.25x thereafter (Senior
Funded Debt/Pro Forma Adjusted EBITDA).Minimum Fixed Charge Coverage Ratio. 1.50x (Pro
Forma Adjusted EBITDA less Capital Expenditures and
cash income taxes/ Aggregate of cash interest
payments, capital lease payments and scheduled
principal payments of Debt).Minimum Net Worth. 85% of Net Worth at Closing, plus
50% of positive net income, plus 100% of the increase
to Net Worth from equity offerings after associated
costs of the offerings.Other Covenants:
    
    Acquisition and Expansion Capital Expenditures
Basket. No limit provided Leverage Ratio remains
below 3.00x and $10 million is available on the
Revolving Credit after the acquisition; if Leverage
Ratio exceeds 3.00x, limited to $20 million per year.Additional Indebtedness. Limited to $10 million per
year for purchase money financing and capital leases.
Borrower may issue subordinated debt so long as the
terms and conditions are satisfactory to
Administrative Agent and Lenders and Borrower
demonstrates pro forma compliance.
 The covenants in the new credit facility limit our ability and certain of
our subsidiaries to, among other things: (i) create, incur, assume or permit to
exist certain liens; (ii) make certain investments, loans, and advances; (iii)
enter into any sale-leaseback transactions; (iv) materially change the nature
of our business; (v) create, incur, assume or permit to exist certain leases;
(vi) merge into or with or consolidate with any other person; (vii) sell, lease
or otherwise dispose of all or substantially all of our property or assets;
(viii) discount or sell any of our notes receivable or accounts receivable;
(ix) transact business with affiliates unless in the ordinary course of
business and on an arms length basis; (x) make certain negative pledges; (xi)
amend, supplement or otherwise modify the terms of any subordinated debt or
prepay, redeem or repurchase any subordinated debt; (xii) pay any dividends.
Further, we must make mandatory prepayments of outstanding indebtedness under
the new credit facility upon the issuance of debt or equity securities by us or
our subsidiaries. The amount of the prepayment shall be equal to 100% of the
net cash proceeds of any such offering. 23




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Our new credit facility prohibits the payment of cash dividends by our
primary operating subsidiary to us (or any intermediary) under all
circumstances, meaning we have very limited sources of cash. Our only source
of cash to pay dividends is distributions from our subsidiaries and, therefore,
our ability to declare or pay future cash dividends on our common stock would
be subject to, among other factors, a relaxation of this prohibition. If we are unable to incur additional indebtedness under our new credit
facility, our acquisition strategy will be negatively impacted. Contractual Obligations In connection with our initial public offering in June 2004, we repaid
outstanding indebtedness and entered into a new credit facility. During the
period, we used a portion of the proceeds of the IPO to repay the outstanding
balance on term loans with a bank and with Waste Management as well as a
portion of the revolving credit facility. There were no other material changes outside of the ordinary course of our
business during the three months ended June 30, 2004 to the other items listed
in the Contractual Obligations table included in our Prospectus dated June 22,
2004 (and filed with the SEC on June 23, 2004). Cash Flows The following is a summary of our cash balances and cash flows for the six
months ended June 30, 2004 and 2003 (in thousands): Six MonthsEnded June 30,2004
    
    2003Cash and cash equivalents at the end of the period
    
    $
    2,991
    
    
    $
    417Cash provided by operating activities
    
    $
    2,407
    
    
    $
    5,355Cash used in investing activities
    
    $
    (5,348
    )
    
    $
    (2,373
    )Cash provided by (used in) financing activities
    
    $
    5,827
    
    
    $
    (2,565
    )
 The changes in cash flows from operating activities are primarily due to
changes in the components of working capital from period to period. The changes
in working capital components were impacted by the continued expansion of our
business. Other items impacting operating cash flows include the depreciation
and amortization as well as a portion of the stock-based compensation which are
non cash expenses. Excluding the cash portion of the stock-based compensation,
cash provided by operating activities for the six months ended June 30, 2004,
was $7.1 million. Cash used in investing activities consist primarily of cash used for
capital expenditures and the acquisition of businesses. Cash used for capital
expenditures was $5.4 million and $2.4 million for the six months ended June
30, 2004 and 2003, respectively. We expect capital expenditures for 2004 to approximate $10.0 million. We
intend to fund these expenditures principally through cash flow from operations
and borrowings under our new credit facility. In addition, if successful in our
acquisition strategy, we may make substantial additional expenditures in
acquiring solid waste collection and disposal businesses. We believe that the
funds available from our cash flow from operations and borrowings under our new
credit facility will provide adequate cash to fund our acquisition strategy and
other cash needs for the foreseeable future. Included in our capital expenditures are expenditures incurred to
construct and to maintain our landfills and related facilities to comply with
applicable environmental laws and regulations. Some of those expenditures
include the acquisition of land and airspace, engineering and permitting costs,
cell construction costs and direct site improvement costs. Moreover, in
addition to the $10 million in capital expenditures described above, we may
incur additional expenditures in connection with the expansion of our Central
Missouri landfill. We reduced the volume of waste accepted into this site in
2004 through the use of a transfer station for disposal at one of our other
landfills in order to preserve the airspace of the landfill until the currently
pending expansion application receives final approval and the cell is
constructed. We believe once the final expansion permit is received (which we
anticipate during the fall of 2004) the 24




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expansion airspace can be constructed (anticipated to be during or before
the first quarter of 2005). However, the expansion area for this site includes
lands that are subject to litigation over a mining lease, which we filed in
July 2004. The suit alleges breach of the lease by a lessee, and seeks
termination of the lease. If we are unsuccessful, our expansion could be
adversely affected by our inability to utilize all or part of the land and
associated airspace affected by this lease. But even if we are successful, we
may incur substantially higher capital costs than previously expected to
utilize this airspace, as we will be required to conduct our own excavation on
these lands, which we believe to be the obligation of the lessee. Cash used in financing activities during the six months ended June 30,
2004 and 2003 include borrowings under our former credit facility, repayments
of debt in all periods, distributions to our former parent and financing costs
associated with amendments to our credit facility in all periods. Proceeds
from financing includes the net proceeds from our initial public offering
funded on June 28, 2004. These proceeds were used in part to repay outstanding
debt including the term loans with both a bank and Waste Management, Inc., a
portion of the outstanding revolving credit facility and distributions to our
former parent. Landfill Accounting Policy Capitalized Landfill Costs At June 30, 2004, the Company owned six municipal solid waste (MSW)
landfills and seven construction and demolition debris (C&D) landfills. One
MSW landfill and one C&D landfill are fully permitted but not constructed and
have not yet commenced operations as of June 30, 2004. Capitalized landfill costs include expenditures for the acquisition of
land and airspace, engineering and permitting costs, cell construction costs
and direct site improvement costs. As of June 30, 2004, no capitalized
interest had been included in capitalized landfill costs. However, in the
future, interest could be capitalized on landfill construction projects, but
only during the period the assets are undergoing activities to ready them for
their intended use. Capitalized landfill costs are amortized ratably using the
units-of-production method over the estimated useful life of the site as
airspace of the landfill is consumed. Landfill amortization rates are
determined periodically (not less than annually) based on aerial and ground
surveys and other density measures and estimates made by our internal and
third-party engineers. Total available airspace includes the total of estimated permitted
airspace plus an estimate of probable expansion airspace that we believe is
likely to be permitted. Where we believe permit expansions are probable, the
expansion airspace, and the projected costs related to developing the expansion
airspace are included in the airspace amortization rate calculation. The
criteria we use to determine if permit expansion is probable include, but are
not limited to, whether:  
    
    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. We may be unsuccessful in obtaining expansion permits for airspace that
has been considered probable. If we are unsuccessful in obtaining these
permits, the previously capitalized costs will be charged to expense. As of
June 30, 3004, we have included 12.2 million cubic yards of expansion airspace 25




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with estimated development costs of approximately $7.0 million in our
calculation of the rates used for the amortization of landfill costs. Closure and Post-Closure Obligations We have material financial commitments for the costs associated with our
future obligations for final closure, which is the closure of the landfill, the
capping of the final uncapped areas of a landfill and post-closure maintenance
of those facilities, which is generally expected to be for a period of up to 30
years for MSW facilities and up to five years for C&D facilities. On January 1, 2003, we adopted SFAS 143, Accounting for Asset Retirement
Obligations (SFAS 143), which provides standards for accounting for
obligations associated with the retirement of long-lived assets and the
associated asset retirement costs. Generally, the requirements for recording
closure post-closure obligations under SFAS No. 143 are as follows:  
    
    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 of 2.5% and discounting the inflated total to its present value
using an 8.5% discount rate. The 8.5% 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 8.5% discount
rate and is charged to cost of services and increases and related
closure and post-closure obligation. This expense will generally
be less during the early portion of the landfills operating life
and increase thereafter. The following table sets forth the rates we used for the amortization of
landfill costs and the accrual of closure and post-closure costs for 2003 and
for the six months ended June 30, 2004. Year ended
    
    Six Months EndedDecember 31,
    
    June 30,2003
    
    2004Number of landfills owned
    
    
    13
    
    
    
    13Landfill depletion and amortization expense
(in thousands)
    
    $
    4,066
    
    
    $
    2,054Accretion expense (in thousands)
    
    
    207
    
    
    
    128Closure and post-closure expense
(in thousands)
    
    
    
    
    
    
    4,273
    
    
    
    2,182Airspace consumed (in thousands of
cubic yards)
    
    
    2,301
    
    
    
    1,189Depletion, amortization, accretion,
closure and post-closure expense per
cubic yard of airspace consumed
    
    $
    1.86
    
    
    $
    1.84
 26




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The impact of changes determined to be changes in estimates, based on an
annual update, is accounted for on a prospective basis. Our ultimate liability
for such costs may increase in the future as a result of changes in estimates,
legislation, or regulations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We
do not currently have any arrangements in place to reduce market
exposure with respect to interest rates under our $38.7 million in debt bearing
interest at variable or floating rates. Therefore, we would bear exposure to
increases in interest rates and our major market risk exposure is changing
interest rates and fluctuations in LIBOR. We are currently evaluating whether
to enter into interest rate hedging arrangements. We have not entered into
interest rate swap agreements for trading purposes. In October 2003, we entered into a six-month interest rate swap agreement
with a notional amount of $19.0 million. The interest rate swap agreement
expired on April 30, 2004. Under the agreement, we received a floating rate
equal to the LIBOR base on the outstanding debt and paid a fixed interest rate
of 1.38% on the notional amount outstanding. As of June 30, 2004, we were exposed to cash flow risk due to changes in
interest rates with respect to $15.5 million in outstanding floating rate-based
loans under our new credit facility. Please read Managements Discussion and
Analysis of Financial Condition and Results of Operations-New Credit Facility
included elsewhere in the quarterly report on Form 10-Q for a discussion of our
new credit facility. ITEM 4. CONTROLS AND PROCEDURES. We carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this quarterly report. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in ensuring
that the information required to be disclosed by us (including our consolidated
subsidiaries) in the reports that we file or submit under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commissions rules and forms. Based on an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, there has been no change in our internal control over financial
reporting during our last fiscal quarter, identified in connection with that
evaluation, that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. 27




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PART II-OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Please read Note 9 to our unaudited condensed consolidated financial
statements included elsewhere in this quarterly report on Form 10-Q for
information regarding our legal proceedings. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. (a) Not applicable. (b) Please read Managements Discussion and Analysis of Financial
Condition and Results of Operations-New Credit Facility included elsewhere in
the quarterly report on Form 10-Q for a discussion of restrictions imposed by
our new credit facility, including a prohibition on the payment of cash
dividends by our primary operating subsidiary to us (or any intermediary) under
all circumstances and restrictions related to our payment of dividends. (c) On May 19, 2004, in connection with a merger associated with our
internal corporate reorganization, we issued 2,575,090 shares of our common
stock, 991,612 shares of our Series A preferred stock and 3,103,558 shares of
our Series B preferred stock to stockholders of our former parent, Waste
Corporation of America. The issuance of common and preferred stock was made in
connection with a merger pursuant to Section 251(g) of the Delaware General
Corporation Law where no vote of stockholders was required. Accordingly, the
merger did not constitute a sale. The shares of preferred stock were
subsequently converted into shares of common stock prior to our initial public
offering in a merger with one of our wholly-owned subsidiaries. On June 9, 2004, in connection with the cancellation of options and
warrants assumed in connection with a merger of Waste Corporation of America,
we issued 989,730 shares of our common stock to warrant and option holders of
our former parent, Waste Corporation of America. This transaction was
undertaken in reliance upon the exemption from the registration requirements of
the Securities Act of 1933 afforded by Section 4(2). We believe that exemptions
other than the foregoing exemption may exist for these transactions. On June 21, 2004, in connection with the exercise of warrants assumed in
connection with a merger of Waste Corporation of America, we issued 340,326
shares of our common stock to a warrant holder of our former parent, Waste
Corporation of America. This transaction was undertaken in reliance upon the
exemption from the registration requirements of the Securities Act of 1933
afforded by Section 4(2). We believe that exemptions other than the foregoing
exemption may exist for this transaction. On June 24, 2004, we issued 2,000 shares of our common stock to one of our
officers under the 2004 WCA Waste Corporation Incentive Plan. This transaction
was undertaken in reliance upon the exemption from the registration
requirements of the Securities Act of 1933 afforded by Section 4(2). We believe
that exemptions other than the foregoing exemption may exist for this
transaction. (d) In connection with our initial public offering, we issued and sold
6,587,947 shares of our common stock, par value $0.01 per share, at $9.50 per
share, generating aggregate offering proceeds of $62.6 million. Further,
selling stockholders issued and sold 2,412,053 shares of our common stock at
$9.50 per share, generating aggregate offering proceeds of $22.9 million. The
shares were issued pursuant to a registration statement on Form S-1 (File No.
333-113416) which was declared effective, as amended, on June 22, 2004. The
registration statement registered an aggregate of 10,350,000 shares of common
stock at an aggregate offering price of $103.5 million. Of these shares,
2,412,053 shares (representing $24.1 million of the dollar amount registered)
were registered on behalf of selling stockholders and 7,937,947 shares
(representing $79.4 million of the dollar amount registered) were registered on
our behalf (including 1,350,000 shares subject to an option granted to the
underwriters to cover over-allotments, if any). The over-allotment option was
not exercised. The offering of the common stock commenced on June 23, 2004, and 9,000,000
of the registered shares were sold. The underwriters were led by Friedman,
Billings, Ramsey & Co., Inc. and Stifel, Nicolaus & Company, Incorporated. The
net cash proceeds to us from the sale of these shares was $55.1 28




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##### 



million, after deducting underwriting discounts and commissions of $4.4 million
and total estimated other offering costs and expenses of $3.1 million, (for a
total of $7.5 million in offering expenses). We have used our net proceeds from the initial public offering to: (i)
repay $10.5 million under an outstanding term loan; (ii) repay $24.6 million of
indebtedness outstanding under our revolving credit facility; and (iii) pay
$20.0 million to satisfy a contingent contribution obligation to our former
parent, Waste Corporation of America. (e) Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Prior to our initial public offering completed in June 2004, holders of
our common stock, Convertible Preferred Stock Series A (which were subsequently
converted into common stock in connection with our internal reorganization) and
Convertible Preferred Stock Series B (which were subsequently converted into
common stock in connection with our internal reorganization) approved the
amendment to the certificate of incorporation of Waste Corporation of America
(WCA), our former parent, to eliminate paragraph Fifteenth of the certificate
of incorporation to require only our approval or consent, as the sole
stockholder of WCA, and not the additional approval or consent of our
stockholders. This approval was in the form of a written consent in lieu of a
meeting, effective as of May 19, 2004. The number of shares voted in favor of
this matter was as follows (not taking into account the reverse stock split
effected in June 2004): 2,348,167 shares of common stock, 1,428,572 shares of
Convertible Preferred Stock Series A and 5,048,077 shares of Convertible
Preferred Stock Series B, which represents a majority of each class of the
then-outstanding shares. The remaining shares of our capital stock were not
voted on these matters, and no shares were voted against this matter. Further, prior to our initial public offering, holders of our common
stock, Convertible Preferred Stock Series A and Convertible Preferred Stock
Series B approved an agreement and plan of merger whereby another related
entity was merged into us and we survived. As part of the merger, the shares
of Convertible Preferred Stock Series A and Convertible Preferred Stock Series
B were converted into shares of our common stock. This approval was in the form
of a written consent in lieu of a meeting, effective as of June 21, 2004. The
number of shares voted in favor of each of these matters was as follows (not
taking into account the reverse stock split effected in June 2004): 3,569,931
shares of common stock, 1,428,572 shares of Convertible Preferred Stock Series
A and 5,048,077 shares of Convertible Preferred Stock Series B, which
represents a majority of each class of the then-outstanding shares. The
remaining shares of our capital stock were not voted on these matters, and no
shares were voted against this matter. Finally, prior to our initial public offering, holders of our common
stock, Convertible Preferred Stock Series A and Convertible Preferred Stock
Series B approved the 2004 WCA Waste Corporation Incentive Plan. This approval
was in the form of a written consent in lieu of a meeting, effective as of June
21, 2004. The number of shares voted in favor of each of these matters was as
follows (not taking into account the reverse stock split effected in June
2004): 3,569,931 shares of common stock,1,428,572 shares of Convertible
Preferred Stock Series A and 5,048,077 shares of Convertible Preferred Stock
Series B, which represents a majority of each class of the then-outstanding
shares. The remaining shares of our capital stock were not voted on these
matters, and no shares were voted against this matter. ITEM 5. OTHER INFORMATION. (a) Not applicable. (b) We do not currently have a nominating committee of our board of
directors. However, pursuant to our director nominations policy adopted in
connection with our initial public offering, the independent members of our
board of directors (the Independent Directors) will consider director
candidates recommended by stockholders entitled to vote generally in the
election for directors (Stockholders) for inclusion in the directors slate
at annual meetings of stockholders. Generally, in order for a Stockholder to
make a nomination, he or she must comply with the notice, information and
consent provisions contained in our Amended and Restated Bylaws, as such may be
amended from time to time (the Bylaws). In order for the director nomination
to be timely, a Stockholder must give written notice to the Independent 29




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Directors so that is received not less than 90 days nor more than 120 days in
advance of the first anniversary of the date of our proxy statement released to
stockholders in connection with the previous years annual meeting of
stockholders. If no annual meeting was held in the previous year or the date
of the annual meeting of stockholders has been changed by more than 30 calendar
days from the date contemplated at the time of the previous years proxy
statement, the notice must be received by the Independent Directors not more
than 10 days following the first date that we publicly announce (as such term
is defined in the Bylaws) the date of such meeting. The address for the
written notice is WCA Waste Corporation, c/o Corporate Secretary, One Riverway,
Suite 1400, Houston, Texas 77056. The Stockholders notice must set forth as to each nominee: (1) the exact
name of such person, (2) such persons age, principal occupation, business
address and telephone number and residence address and telephone number, (3)
the number of shares (if any) of each class of our stock owned directly or
indirectly by such person and (4) all other information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended, or any successor regulation thereto (including such persons
notarized written acceptance of such nomination, consent to being named in the
proxy statement as a nominee and statement of intention to serve as a director
if elected). The Stockholders notice must also set forth as to the
Stockholder giving notice (w) his or her name and address, as they appear on
our books, (x) his or her principal occupation, business address and telephone
number and residence address and telephone number, (y) the class and number of
our shares of which are held of record or beneficially owned by him or her and
(z) the dates upon which he or she acquired such shares of stock and
documentary support for any claims of beneficial ownership. The notice must
also include the other information required by the Bylaws. If the information supplied by the Stockholder is deficient in any
material aspect or if the foregoing procedures, or the other procedures set
forth in the Bylaws, are not followed, the Chairperson of the annual meeting of
stockholders may determine that the Stockholders nomination should not be
brought before the meeting and that the nominee is ineligible for election as
one of our directors. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) 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 WCA Waste
Corporation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 2.1 to Amendment
No. 2 to WCA Waste Corporation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. 2 to WCA Waste
Corporations Registration Statement on Form S-4 (File No.
333-114901) filed with the SEC on June 1, 2004).*3.1
    
    Amended and Restated Certificate of Incorporation of WCA Waste
Corporation (incorporated by reference to Exhibit 3.1 to Amendment
No. 6 to WCA Waste Corporations Registration Statement on Form S-1
(File No. 333-113416) filed with the SEC on June 21, 2004).*3.2
    
    Amended and Restated Bylaws of WCA Waste Incorporation
(incorporated by reference to Exhibit 3.2 to Amendment No. 6 to WCA
Waste Corporation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 WCA Waste Corporations
Registration Statement on Form S-1 (File No. 333-113416) filed with
the SEC on May 14, 2004).+10.1
    
    Third Amended and Restated Credit Agreement, dated as of June 23,
2004, among WCA Waste Systems, Inc., Wells Fargo Bank, National
Association and the lenders party thereto.*10.2
    
    Administrative Services Agreement, dated May 20, 2004, between WCA
Waste Corporation and Waste Corporation of America, Inc.
(incorporated by reference to Exhibit 10.2 to Amendment No. 3 to
WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on June 1, 2004).
 30




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*10.3
    
    Third Amendment to Employment Agreement of Tom J. Fatjo, Jr., dated
April 13, 2004 (incorporated by reference to Exhibit 10.3 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.4
    
    Third Amendment to Employment Agreement of Jerome Kruszka, dated
April 13, 2004 (incorporated by reference to Exhibit 10.4 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.5
    
    Third Amendment to Employment Agreement of Charles Casalinova,
dated April 13, 2004 (incorporated by reference to Exhibit 10.5 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.6
    
    Third Amendment to Employment Agreement of Tom J. Fatjo, III, dated
April 13, 2004 (incorporated by reference to Exhibit 10.6 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.7
    
    2004 WCA Waste Corporation Incentive Plan (incorporated by
reference to Exhibit 10.11 to Amendment No. 3 to WCA Waste
Corporations Registration Statement on Form S-1 (File No.
333-113416) filed with the SEC on June 1, 2004).*10.8
    
    Capital Contribution Commitment Agreement, dated May 10, 2004,
between WCA Waste Corporation and Waste Corporation of America
(incorporated by reference to Exhibit 10.12 to Amendment No. 2 to
WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on May 14, 2004).*10.9
    
    Tax Disaffiliation Agreement, dated as of May 20, 2004, by and
between WCA Waste Corporation and Waste Corporation of America LLC
(incorporated by reference to Exhibit 10.13 to Amendment No. 3 to
WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on June 1, 2004).*10.10
    
    Registration Rights Agreement, dated June 15, 2004, by and among
WCA Waste Corporation, EFO Co-Investment Partners and WCA Partners,
L.P. (incorporated by reference to Exhibit 10.14 to Amendment No. 4
to WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on June 17, 2004).+31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.+31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.+32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.+32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
   +
    
    Filed herewith.*
    
    Incorporated by reference. (b) Reports on Form 8-K. None. 31




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##### 



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. WCA WASTE CORPORATIONBy:
    /s/ CHARLES A. CASALINOVACharles A. CasalinovaSenior Vice President and Chief
Financial
Officer (Principal Financial
Officer) By:
    /s/ KEVIN D. MITCHELLKevin D. MitchellVice President and Controller
(Principal Accounting Officer) Date: August 11, 2004 32




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##### 



EXHIBIT INDEX ExhibitNumber
    
    Description*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 WCA Waste
Corporation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 2.1 to Amendment
No. 2 to WCA Waste Corporation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. 2 to WCA Waste
Corporations Registration Statement on Form S-4 (File No.
333-114901) filed with the SEC on June 1, 2004).*3.1
    
    Amended and Restated Certificate of Incorporation of WCA Waste
Corporation (incorporated by reference to Exhibit 3.1 to Amendment
No. 6 to WCA Waste Corporations Registration Statement on Form S-1
(File No. 333-113416) filed with the SEC on June 21, 2004).*3.2
    
    Amended and Restated Bylaws of WCA Waste Incorporation
(incorporated by reference to Exhibit 3.2 to Amendment No. 6 to WCA
Waste Corporation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 WCA Waste Corporations
Registration Statement on Form S-1 (File No. 333-113416) filed with
the SEC on May 14, 2004).+10.1
    
    Third Amended and Restated Credit Agreement, dated as of June 23,
2004, among WCA Waste Systems, Inc., Wells Fargo Bank, National
Association and the lenders party thereto.*10.2
    
    Administrative Services Agreement, dated May 20, 2004, between WCA
Waste Corporation and Waste Corporation of America, Inc.
(incorporated by reference to Exhibit 10.2 to Amendment No. 3 to
WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on June 1, 2004).*10.3
    
    Third Amendment to Employment Agreement of Tom J. Fatjo, Jr., dated
April 13, 2004 (incorporated by reference to Exhibit 10.3 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.4
    
    Third Amendment to Employment Agreement of Jerome Kruszka, dated
April 13, 2004 (incorporated by reference to Exhibit 10.4 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.5
    
    Third Amendment to Employment Agreement of Charles Casalinova,
dated April 13, 2004 (incorporated by reference to Exhibit 10.5 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.6
    
    Third Amendment to Employment Agreement of Tom J. Fatjo, III, dated
April 13, 2004 (incorporated by reference to Exhibit 10.6 to
Amendment No. 3 to WCA Waste Corporations Registration Statement
on Form S-1 (File No. 333-113416) filed with the SEC on June 1,
2004).*10.7
    
    2004 WCA Waste Corporation Incentive Plan (incorporated by
reference to Exhibit 10.11 to Amendment No. 3 to WCA Waste
Corporations Registration Statement on Form S-1 (File No.
333-113416) filed with the SEC on June 1, 2004).*10.8
    
    Capital Contribution Commitment Agreement, dated May 10, 2004,
between WCA Waste Corporation and Waste Corporation of America
(incorporated by reference to Exhibit 10.12 to Amendment No. 2 to
WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on May 14, 2004).*10.9
    
    Tax Disaffiliation Agreement, dated as of May 20, 2004, by and
between WCA Waste Corporation and Waste Corporation of America LLC
(incorporated by reference to Exhibit 10.13 to Amendment No. 3 to
WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on June 1, 2004).*10.10
    
    Registration Rights Agreement, dated June 15, 2004, by and among
WCA Waste Corporation, EFO Co-Investment Partners and WCA Partners,
L.P. (incorporated by reference to Exhibit 10.14 to Amendment No. 4
to WCA Waste Corporations Registration Statement on Form S-1 (File
No. 333-113416) filed with the SEC on June 17, 2004).




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##### 



ExhibitNumber
    
    Description+31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.+31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.+32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.+32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
   +
    
    Filed herewith.*
    
    Incorporated by reference.