UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549








FORM
10-Q





þQuarterly Report Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934




For
the quarterly period ended March 31, 2008


or


£Transition Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934




For
the transition period from __________ to ______________





Commission
File Number: 000-50808








WCA Waste
Corporation


(Exact
name of registrant as specified in its charter)





Delaware
            20-0829917(State
      or other jurisdiction
              of
      incorporation or organization)
            (I.R.S.
      Employer
              Identification
      No.)





One
      Riverway, Suite 1400
            77056Houston,
      Texas 77056
            (Zip
      Code)(Address
      of principal executive offices)





(713)
292-2400


(Registrant’s
telephone number, including area code)





N/A


(Former
name, former address and former fiscal year,


if
changed since last report)








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   þ    NO    ̈





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





Large
      accelerated filer £
            Accelerated
      filer þ
            Non-accelerated
      filer £
              (Do
      not check if a smaller reporting company)
            Smaller
      reporting company £





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    YES    ̈    NO   þ





As of May
7, 2008, there were 17,353,951 shares of WCA Waste Corporation’s common
stock, par value $0.01 per share, outstanding, net of 17,943 shares of treasury
stock.
















TABLE OF CONTENTS








PART I – FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISKITEM 4.  CONTROLS AND
  PROCEDURESPART II – OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDSITEM 3. DEFAULTS UPON SENIOR
SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXStatement re: Computation of Ratio of Earnings to
      Fixed ChargesCertification of CEO Pursuant to Section
      302Certification of CFO Pursuant to Section
      302Certification of CEO Pursuant to Section
      906Certification of CFO Pursuant to Section
      906


Table of Contents




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,” “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 and any expected benefits from any acquisitions or 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,
      which may harm our prospects;




·
            we
      compete for acquisition candidates with other purchasers, some of which
      have greater financial resources and may be able to offer more favorable
      terms, thus limiting our ability to grow through
    acquisitions;




·
            in
      connection with financing acquisitions, we may incur additional
      indebtedness, or may issue additional equity including common stock or
      preferred stock which would dilute the ownership percentage of existing
      stockholders;




·
            businesses
      that we acquire may have unknown liabilities and require unforeseen
      capital expenditures, which would adversely affect our financial
      results;




·
            rapid
      growth may strain our management, operational, financial and other
      resources, which would adversely affect our financial
    results;




·
            our
      acquisition strategy has resulted and is expected to continue to result in
      significant goodwill and other intangible assets, which may need to be
      written down if performance is not as expected;
  and




·
            we
      may incur charges related to acquisitions, which could lower our
      earnings.




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:




·
            increases
      in the costs of fuel may reduce our operating
  margins;




·
            changes
      in interest rates may affect our
profitability;




·
            we
      may not be successful in expanding the permitted capacity of our current
      or future landfills, which could restrict our growth, increase our
      disposal costs, and reduce our operating
  margins;




·
            we
      are subject to environmental and safety laws, which restrict our
      operations and increase our costs;




·
            we
      may become subject to environmental clean-up costs or litigation that
      could curtail our business operations and materially decrease our
      earnings;




1
 Table of Contents





·
            our
      accruals for landfill closure and post-closure costs may be inadequate,
      and our earnings would be lower if we are required to pay or accrue
      additional amounts;




·
            a
      general downturn in U.S. economic conditions may reduce our business
      prospects and decrease our revenue and cash
  flows;




·
            we
      may be unable to obtain financial assurances necessary for our operations,
      which could result in the closure of landfills or the termination of
      collection contracts;




·
            our
      business is capital intensive, requiring ongoing cash outlays that may
      strain or consume our available capital and force us to sell assets, incur
      debt, or sell equity on unfavorable
terms;




·
            increases
      in the costs of disposal, labor and insurance could reduce our operating
      margins;




·
            we
      may not be able to maintain sufficient insurance coverage to cover the
      risks associated with our operations, which could result in uninsured
      losses that would adversely affect our financial
  condition;




·
            our
      failure to remain competitive with our numerous competitors, some of which
      have greater resources, could adversely affect our ability to retain
      existing customers and obtain future
business;




·
            we
      may lose contracts through competitive bidding, early termination or
      governmental action, or we may have to substantially lower prices in order
      to retain certain contracts, any of which would cause our revenue to
      decline;




·
            comprehensive
      waste planning programs and initiatives required by state and local
      governments may reduce demand for our services, which could adversely
      affect our waste volumes and the price of our landfill disposal
      services;




·
            efforts
      by labor unions to organize our employees could divert management
      attention and increase our operating
expenses;




·
            current
      and proposed laws may restrict our ability to operate across local borders
      which could affect our manner, cost and feasibility of doing
      business;




·
            poor
      decisions by our regional and local managers could result in the loss of
      customers or an increase in costs, or adversely affect our ability to
      obtain future business;




·
            we
      are vulnerable to factors affecting our local markets, which could
      adversely affect our stock price relative to our
    competitors;




·
            seasonal
      fluctuations will cause our business and results of operations to vary
      among quarters, which could adversely affect our stock
    price;




·
            failure
      to maintain effective internal controls in accordance with Section 404 of
      the Sarbanes-Oxley Act could have a material adverse effect on our
      business and stock price;




·
            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;




·
            a
      controlling interest in our voting stock is held by one fund and a small
      number of individuals (including management), which when combined with
      various agreements and rights of the fund, may discourage a change of
      control transaction and may exert control over our strategic
      direction;




·
            provisions
      in our amended and restated certificate of incorporation, our amended and
      restated bylaws and Delaware law could prohibit a change of control that
      our stockholders may favor and which could negatively affect our stock
      price;




·
            we
      do not anticipate paying cash dividends on our common stock in the
      foreseeable future, so you can only realize a return on your investment by
      selling your shares of our common
stock;




·
            we
      may issue preferred stock that has a liquidation or other preference over
      our common stock without the approval of the holders of our common stock,
      which may affect those holders rights or the market price of our common
      stock;




·
            we
      have a substantial amount of debt which could adversely affect our
      operations and financial performance;
and




2
 Table of Contents





·
            the
      provisions in our debt instruments impose restrictions on us that may
      limit the discretion of management in operating our
    business.




We describe these and other risks in
greater detail in the section entitled “Business—Risk Factors” in our annual
report on Form 10-K for the year ended December 31, 2007 (sometimes referred to
in this report, including the notes to our financial statements, as the “10-K”)
and in Part II, Item 1A, “Risk Factors,” in this quarterly report.




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.




3
 Table of Contents




PART I—FINANCIAL
INFORMATION





ITEM 1. FINANCIAL STATEMENTS.





WCA
WASTE CORPORATION


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, except per share data)





March
      31,
            
            
            December
      31,2008
            
            
            2007(Unaudited)AssetsCurrent
      assets:Cash
      and cash equivalents
            
            $
            485
            
            
            $
            1,138Restricted
      cash
            
            
            368
            
            
            
            351Accounts
      receivable, net of allowance for doubtful accounts of $1,430 (unaudited)
      and $1,498, respectively
            
            
            21,687
            
            
            
            22,946Deferred
      tax assets
            
            
            3,627
            
            
            
            3,627Prepaid
      expenses and other
            
            
            5,999
            
            
            
            6,937Total
      current assets
            
            
            32,166
            
            
            
            34,999Property
      and equipment, net of accumulated depreciation and amortization
      of $92,233 (unaudited) and $86,122, respectively
            
            
            270,064
            
            
            
            270,384Goodwill,
      net
            
            
            102,490
            
            
            
            102,112Intangible
      assets, net
            
            
            7,154
            
            
            
            7,271Deferred
      financing costs, net
            
            
            4,402
            
            
            
            4,610Restricted
      cash — debt service reserve fund
            
            
            998
            
            
            
            988Long-term
      note receivable, less current maturities
            
            
            5,898
            
            
            
            6,101Other
      assets
            
            
            232
            
            
            
            258Total
      assets
            
            $
            423,404
            
            
            $
            426,723Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable
            
            $
            8,025
            
            
            $
            9,856Accrued
      liabilities and other
            
            
            21,366
            
            
            
            18,269Note
      payable
            
            
            2,638
            
            
            
            4,716Current
      maturities of long-term debt
            
            
            632
            
            
            
            699Total
      current liabilities
            
            
            32,661
            
            
            
            33,540Long-term
      debt, less current maturities and discount
            
            
            196,610
            
            
            
            198,149Interest
      rate swap
            
            
            7,067
            
            
            
            4,677Accrued
      closure and post-closure liabilities
            
            
            6,821
            
            
            
            6,560Deferred
      tax liabilities
            
            
            9,894
            
            
            
            11,620Other
      long-term liabilities
            
            
            1,813
            
            
            
            1,813Total
      liabilities
            
            
            254,866
            
            
            
            256,359Commitments
      and contingenciesStockholders’
      equity:Series
      A convertible preferred stock, $0.01 par value per share. Authorized 808
      shares; issued and outstanding 808 shares and 805 shares, respectively
      (liquidation preference $96,006)
            
            
            8
            
            
            
            8Common
      stock, $0.01 par value per share. Authorized 50,000 shares; issued and
      outstanding 17,305 shares and 17,083 shares
            
            
            173
            
            
            
            171Treasury
      stock
            
            
            (174
            )
            
            
            (174
            )Additional
      paid-in capital
            
            
            168,194
            
            
            
            166,665Retained
      earnings
            
            
            337
            
            
            
            3,694Total
      stockholders’ equity
            
            
            168,538
            
            
            
            170,364Total
      liabilities and stockholders’ equity
            
            $
            423,404
            
            
            $
            426,723




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




4
 Table of Contents




WCA
WASTE CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)


(In
thousands, except per share data)





Three
      Months EndedMarch
      31,2008
            
            
            2007Revenue
            
            $
            48,837
            
            
            $
            40,627Expenses:Cost
      of services
            
            
            34,053
            
            
            
            25,755Depreciation
      and amortization
            
            
            6,491
            
            
            
            5,189General
      and administrative (including stock-based compensation of $599 and $353,
      respectively)
            
            
            3,238
            
            
            
            3,14043,782
            
            
            
            34,084Operating
      income
            
            
            5,055
            
            
            
            6,543Other
      income (expense):Interest
      expense, net
            
            
            (4,841
            )
            
            
            (3,881
            )Unrealized
      loss on interest rate swap
            
            
            (4,293
            )
            
            
            (528
            )Other
      income, net
            
            
            1
            
            
            
            150(9,133
            )
            
            
            (4,259
            )Income
      (loss) before income taxes
            
            
            (4,078
            )
            
            
            2,284Income
      tax (provision) benefit
            
            
            1,726
            
            
            
            (962
            )Net
      income (loss)
            
            
            (2,352
            )
            
            
            1,322Accrued
      payment-in-kind dividend on preferred stock
            
            
            (1,005
            )
            
            
            (954
            )Net
      income (loss) available to common stockholders
            
            $
            (3,357
            )
            
            $
            368Net
      income (loss) available to common stockholders:Earnings
      per share – basic
            
            $
            (0.20
            )
            
            $
            0.02Earnings
      per share – diluted
            
            $
            (0.20
            )
            
            $
            0.02Weighted
      average shares outstanding — basic
            
            
            16,551
            
            
            
            16,413Weighted
      average shares outstanding — diluted
            
            
            16,551
            
            
            
            16,446




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




5
 Table of Contents




WCA
WASTE CORPORATION


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)


(In
thousands)





Three
      Months EndedMarch
      31,2008
            
            
            2007Cash
      flows from operating activities:Net
      income (loss)
            
            $
            (2,352
            )
            
            $
            1,322Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization
            
            
            6,491
            
            
            
            5,189Non-cash
      compensation charge
            
            
            599
            
            
            
            353Amortization
      of deferred financing costs and debt discount
            
            
            225
            
            
            
            221Deferred
      tax provision (benefit)
            
            
            (1,726
            )
            
            
            962Accretion
      expense for closure and post-closure obligations
            
            
            139
            
            
            
            120Gain
      on sale of assets
            
            
            (1
            )
            
            
            (150
            )Unrealized
      loss on interest rate swap
            
            
            4,293
            
            
            
            528Prepaid
      disposal usage
            
            
            —
            
            
            
            712Changes
      in assets and liabilities, net of effects of acquisitions:Accounts
      receivable, net
            
            
            1,073
            
            
            
            (1,086
            )Prepaid
      expenses and other
            
            
            (387
            )
            
            
            (2,467
            )Accounts
      payable and other liabilities
            
            
            (589
            )
            
            
            3,375Net
      cash provided by operating activities
            
            
            7,765
            
            
            
            9,079Cash
      flows from investing activities:Acquisitions
      of businesses, net of cash acquired
            
            
            (236
            )
            
            
            (45,720
            )Proceeds
      from sale of fixed assets
            
            
            1
            
            
            
            188Cost
      incurred on possible acquisitions
            
            
            —
            
            
            
            (14
            )Capital
      expenditures
            
            
            (6,536
            )
            
            
            (5,992
            )Net
      cash used in investing activities
            
            
            (6,771
            )
            
            
            (51,538
            )Cash
      flows from financing activities:Principal
      payments on long-term debt
            
            
            (107
            )
            
            
            (191
            )Net
      change in revolving line of credit
            
            
            (1,513
            )
            
            
            —Increase
      in restricted cash
            
            
            (27
            )
            
            
            (15
            )Equity
      transaction costs
            
            
            —
            
            
            
            (5
            )Deferred
      financing costs
            
            
            —
            
            
            
            (4
            )Net
      cash used in financing activities
            
            
            (1,647
            )
            
            
            (215
            )Net
      change in cash and cash equivalents
            
            
            (653
            )
            
            
            (42,674
            )Cash
      and cash equivalents at beginning of period
            
            
            1,138
            
            
            
            52,207Cash
      and cash equivalents at end of period
            
            $
            485
            
            
            $
            9,533




Supplemental
      cash flow information:Interest
      paid
            
            $
            1,317
            
            
            $
            756Income
      taxes paid
            
            
            —
            
            
            
            —Note
      payable
            
            
            —
            
            
            
            3,038




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





6
 Table of Contents




WCA
WASTE CORPORATION


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)


(All
tables in thousands, except per share data)





1.  BASIS OF
PRESENTATION AND NEW ACCOUNTING PRONOUNCEMENTS




Basis
of Presentation





WCA Waste
Corporation (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 pursuant to such
rules and regulations.  The Company believes that the presentations
and disclosures herein are adequate to make the information presented herein not
misleading when read in conjunction with its annual report on Form 10-K filed
with the SEC on March 5, 2008 which contains the Company’s audited consolidated
financial statements as of and for the year ended December 31,
2007.  The unaudited condensed consolidated financial statements as of
March 31, 2008 and for the three months ended March 31, 2008 and 2007 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
the Form 10-K.





In
preparing its financial statements, the Company makes numerous estimates and
assumptions affecting the accounting for, and recognition and disclosure of,
assets, liabilities, stockholders’ equity, revenues and expenses.  The
most difficult, uncertain and subjective estimates and assumptions that the
Company makes relate to accounting for landfills, asset impairments, and
self-insurance reserves and recoveries.  The Company makes estimates
and assumptions because some of the information that it uses in accounting,
recognition and disclosure depends upon future events, other information cannot
be precisely determined based on available data or based on generally accepted
methodologies.  Actual results could differ materially from the
estimates and assumptions that the Company uses in the preparation of its
financial statements.





The
accompanying unaudited condensed consolidated financial statements include the
accounts of WCA Waste Corporation and its majority-owned and controlled
subsidiaries after elimination of all material intercompany balances and
transactions.





New
Accounting Pronouncements





In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No.
157).  SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements.  It applies under
other accounting pronouncements that require or permit fair value measurements,
and does not require any new fair value measurements.  The application
of SFAS No. 157, however, may change current practice within an
organization.  SFAS No. 157 is effective January 1, 2008, applied
prospectively.  In February 2008, the FASB issued FASB Staff Position
No. 157-2, “Effective Date of FASB Statement No. 157”, which provided a one
year deferral for the implementation of SFAS No. 157 for certain nonfinancial
assets and liabilities.  The Company adopted SFAS No. 157 for
financial assets and liabilities as of January 1, 2008.  Please read
note 7 below for the disclosures required by SFAS No. 157.  The
Company is currently evaluating the impact of SFAS No. 157 for nonfinancial
assets and liabilities on the Company’s financial position, results of
operations or cash flows.




7
 Table of Contents





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities—Including an amendment of FASB
Statement No. 115”, which permits an entity to choose to measure financial
instruments and certain other items similar to financial instruments at fair
value.  All subsequent changes in fair value for the financial
instrument would be reported in earnings.   SFAS No. 159 is
effective January 1, 2008.  The Company did not adopt the fair value
option permitted under this statement.





In
December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations”.  SFAS No. 141(R) establishes principles and
requirements on how the acquirer in a business combination recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed and any noncontrolling interest in the entity
acquired.  In addition, SFAS No. 141(R) provides guidance on the
recognition and measurement of goodwill acquired in the business combination or
a gain from a bargain purchase as well as what information to disclose to enable
users of the financial statements to evaluate the nature and financial impact of
the business combination.  SFAS No. 141(R) requires contingent
consideration to be recognized at its fair value on the acquisition date and,
for certain arrangements, changes in fair value to be recognized in earnings
until settled.  SFAS No. 141(R) also requires acquisition-related
transaction and restructuring costs to be expensed rather than treated as part
of the cost of the acquisition.  The provisions of SFAS 141(R) apply
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008.  The Company is currently evaluating the impact
SFAS No. 141(R) will have on the Company’s financial position, results of
operations or cash flows.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an Amendment of ARB No. 51”.  SFAS
No. 160 establishes principles and requirements on how to treat the portion of
equity in a subsidiary that is not attributable directly or indirectly to a
parent.  This is commonly known as a minority interest.  The
objective of SFAS No. 160 is to improve relevance, comparability, and
transparency concerning ownership interests in subsidiaries held by parties
other than the parent by providing disclosures that clearly identify between
interests of the parent and interest of the noncontrolling owners and the
related impacts on the consolidated statement of income and the consolidated
statement of financial position.  SFAS No. 160 also provides guidance
on disclosures related to changes in the parent’s ownership interest and
deconsolidation of a subsidiary.  SFAS No. 160 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008.  The Company is currently evaluating the impact of
SFAS No. 160 on the Company’s financial position, results of operations or cash
flows.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities”.  The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial statements issued for fiscal years and interim
periods beginning after November 15, 2008.  The Company is currently
evaluating the impact of SFAS No. 161 on the Company’s financial position,
results of operations or cash flows.





2.  ACQUISITIONS




On
January 2, 2008, the Company acquired certain collection routes in Oklahoma
City, Oklahoma from Maguire Disposal, Inc., for approximately $0.3 million in
cash.





The
purchase price for this transaction has been allocated to the identifiable
intangible assets acquired based on their estimated fair values at the time of
acquisition.  The purchase price allocations are considered
preliminary until the Company is no longer waiting for information that it has
arranged to obtain and that is known to be available or
obtainable.  The time required to obtain the necessary information
will vary with specific acquisitions, however, the final purchase price
allocation will not exceed one year from the consummation of the
acquisition.





The
Company’s condensed consolidated financial statements include the results of
operations of the acquired business from its acquisition date.  The
acquisition was not significant (within the meaning of Regulation S-X) to the
Company as a whole.





Based on
the preliminary assessments of values for this acquisition, the Company
reflected intangible assets of $0.1 million and goodwill of $0.2
million.





8
 Table of Contents




3.  STOCK-BASED
COMPENSATION




The
Company established the Second Amended and Restated 2004 WCA Waste Corporation
Incentive Plan.  The plan authorizes the issuance of up to 2,250,000
shares.  As of March 31, 2008, there were approximately 665,000
remaining shares authorized for issuance.





During
the three months ended March 31, 2008, a total of 277,156 restricted shares of
the Company’s common stock were granted to certain officers with an aggregate
market value of $1.9 million on the grant dates.  The value of the
restricted shares, net of unearned compensation, was included as additional
paid-in capital within the stockholders’ equity section of the accompanying
consolidated balance sheet.  The unearned compensation is being
amortized to expense on a straight-line basis over the required employment
period, or the vesting period, as the restrictions lapse at the end of each
anniversary after the date of grant.





The
following table reflects the Company’s restricted share activity for the three
months ended March 31, 2008:





Shares
            
            
            Weighted
      Average Grant-Date Fair Value
            
            Weighted
      Average Remaining Contractual Term (years)Unvested
      at December 31, 2007
            
            
            594
            
            
            $
            7.85Granted
            
            
            277
            
            
            
            6.89Vested
            
            
            (144
            )
            
            
            8.27Forfeited
            
            
            (14
            )
            
            
            7.63Unvested
      at March 31, 2008
            
            
            713
            
            
            $
            7.40
            
            3.24





The
Company has not granted any stock options since February 2005.  The
following table reflects the Company’s option activity for the three months
ended March 31, 2008:





Shares
            
            
            Weighted
      Average Exercise Price
            
            Weighted
      Average Remaining Contractual Term (years)Outstanding
      at December 31, 2007
            
            
            621
            
            
            $
            9.51Grants
            
            
            —
            
            
            
            —Forfeitures
            
            
            (26
            )
            
            
            9.50Outstanding
      at March 31, 2008
            
            
            595
            
            
            $
            9.52
            
            6.25





As the
exercise prices of all outstanding options were greater than the Company’s
common stock share price as of March 31, 2008, there was no intrinsic value as
of March 31, 2008.





4.  EARNINGS
PER SHARE




Basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the
period.  Diluted earnings (loss) per share is computed using the
treasury stock method for options and restricted shares and the if-converted
method for convertible preferred stock and convertible debt.  The
detail of the earnings (loss) per share calculations for net income (loss)
available to common stockholders for the three months ended March 31, 2008 and
2007 is as follows:





9
 Table of Contents




Three
      Months EndedMarch
      31,2008
            
            
            2007Numerator:Net
      income (loss)
            
            $
            (2,352
            )
            
            $
            1,322Accrued
      payment-in-kind dividend on preferred stock
            
            
            (1,005
            )
            
            
            (954
            )Net
      income (loss) available to common stockholders
            
            $
            (3,357
            )
            
            $
            368Denominator:Weighted
      average basic shares outstanding
            
            
            16,551
            
            
            
            16,413Dilutive
      effect of restricted share issuances
            
            
            —
            
            
            
            33Weighted
      average diluted shares outstanding
            
            
            16,551
            
            
            
            16,446Earnings
      (loss) per Share:Basic
            
            $
            (0.20
            )
            
            $
            0.02Diluted
            
            $
            (0.20
            )
            
            $
            0.02





Due to
their antidilutive effect, the following potential common shares have been
excluded from the computation of diluted earnings (loss) per share:





Three
      Months EndedMarch
      31,2008
            
            
            2007Stock
      options
            
            
            595
            
            
            
            634Restricted
      shares
            
            
            713
            
            
            
            299Convertible
      preferred stock
            
            
            8,466
            
            
            
            8,065Convertible
      debt
            
            
            789
            
            
            
            63610,563
            
            
            
            9,634





5.  LONG-TERM
DEBT




Long-term
debt consists of the following:





March
      31,
            
            
            December
      31,2008
            
            
            2007Senior
      Notes, with interest rate of 9.25%, due in June 2014
            
            $
            150,000
            
            
            $
            150,000Revolving
      note payable with financial institutions, variable interest rate based on
      LIBOR plus a margin (4.30% and 6.55% at March 31, 2008 and December 31,
      2007, respectively)
            
            
            29,764
            
            
            
            31,277Environmental
      Facilities Revenue Bonds, principal payable in varying annual
      installments, maturing in 2020, interest rate ranging from 8.5% to 9%
      (8.91% and 8.91% weighted average rate at March 31, 2008 and December 31,
      2007, respectively)
            
            
            8,815
            
            
            
            8,815Notes
      payable to banks and financial institutions, payable monthly through
      August 2010, weighted average interest rate of 6.84% and 6.69% at March
      31, 2008 and December 31, 2007, respectively
            
            
            352
            
            
            
            459Note
      payable, with interest rate of 5%, due in January 2010
            
            
            128
            
            
            
            128Seller
      convertible note, with interest rate of 5%, due in December
      2009
            
            
            3,000
            
            
            
            3,000Seller
      convertible notes, with interest rate of 8%, due in January
      2010
            
            
            4,000
            
            
            
            4,000Seller
      convertible notes, with interest rate of 5.5%, due in October
      2012
            
            
            1,575
            
            
            
            1,575197,634
            
            
            
            199,254Less
      debt discount
            
            
            392
            
            
            
            406Less
      current maturities
            
            
            632
            
            
            
            699$
            196,610
            
            
            $
            198,149




10
 Table of Contents





The
Company has a $175 million revolving credit facility.  As of March 31,
2008, there was $29.8 million outstanding under the revolving line of credit and
$11.3 million in letters of credit secured by the credit facility, leaving
$133.9 million in available capacity under the revolving credit
facility.





Subsequent
to March 31, 2008, the Company repaid $4.0 million of the seller convertible
notes with interest rate of 8% from cash and availability under the credit
facility.





The 9.25%
Senior Notes due 2014 are guaranteed by all of the Company’s current and future
subsidiaries as of March 31, 2008.  These guarantees are full,
unconditional and joint and several.  In addition, the Company has no
non-guarantor subsidiaries and no independent assets or operations outside of
its ownership of the subsidiaries.  There are no restrictions on the
subsidiaries to transfer funds through dividends or otherwise.





6.  INTEREST
RATE SWAP




On July
7, 2006, the Company entered into an interest rate swap agreement effective July
11, 2006, where it agreed to pay a fixed-rate of 5.64% in exchange for
three-month floating rate LIBOR which was 5.51% at the time the swap was
entered.  The Company did not enter into the interest rate swap
agreements for trading purposes.  The swap agreement was intended to
limit the Company’s exposure to a rising interest rate
environment.  At the time the swap was entered, there was no
offsetting floating rate LIBOR debt and no such floating rate interest payments
were probable of being incurred in the near future.  As a result, the
swap transaction could not be designated as a hedging transaction and any
changes in the unrealized fair value of the new swap will be recognized in the
statement of operations as a non-cash gain or loss.  During the three
months ended March 31, 2008 and 2007, the Company recorded $4.3 million and $0.5
million of unrealized loss, respectively,  related to the interest
rate swap in the accompanying condensed consolidated statements of
operations.





7.  FAIR
VALUE MEASUREMENTS




The
following table sets forth by level within the fair value hierarchy, the
Company’s financial assets and liabilities that were accounted for at fair value
on a recurring basis as of March 31, 2008 (dollars in
thousands).  For assets and liabilities that are measured using quoted
prices in active markets, the total fair value is the published market price per
unit multiplied by the number of units held without consideration of transaction
costs.  Assets and liabilities that are measured using significant
other observable inputs are primarily valued by reference to quoted prices of
similar assets or liabilities in active markets, adjusted for any terms specific
to that asset or liability.  For all other assets and liabilities for
which observable inputs are used, fair value is derived through the use of fair
value models, such as a discounted cash flow model or other standard pricing
models.





Recurring
      fair value measurements
            
            Quoted Prices
      in Active
              Markets for
              Identical Items
              (Level 1)
            
            
            Significant
      Other
              Observable
              Inputs
              (Level 2)
            
            
            Significant
      Unobservable
              Inputs
              (Level 3)
            
            
            TotalLiabilities:Interest
      rate swap
            
            $
            —
            
            
            $
            11,634
            
            
            $
            —
            
            
            $
            11,634Total
      liabilities
            
            $
            —
            
            
            $
            11,634
            
            
            $
            —
            
            
            $
            11,634





8.  LANDFILL
ACCOUNTING




Capitalized
Landfill Costs





At March
31, 2008, the Company owned 24 landfills.  Two of these landfills are
fully permitted but not constructed and have not yet commenced operations as of
March 31, 2008.





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 March 31, 2008, 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, outside engineers, management and
financial personnel.





11
 Table of Contents




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 probable.  If unsuccessful in obtaining these permits,
certain previously capitalized costs will be charged to expense.





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 30 years depending on type and location.





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 assets and closure and
post-closure liabilities from December 31, 2007 to March 31, 2008:





Landfill
      Assets, Net
            
            
            Closure
      and Post-closure LiabilitiesDecember
      31, 2007
            
            $
            177,699
            
            
            $
            6,560Capital
      expenditures
            
            
            3,151
            
            
            
            —Acquisition
      of landfill and other adjustments
            
            
            10
            
            
            
            —Amortization
      expense
            
            
            (2,675
            )
            
            
            —Obligations
      incurred and capitalized
            
            
            122
            
            
            
            122Interest
      accretion
            
            
            —
            
            
            
            139March
      31, 2008
            
            $
            178,307
            
            
            $
            6,821





The
Company’s liabilities for closure and post-closure costs are as
follows:





March
      31,
            
            
            December
      31,2008
            
            
            2007Recorded
      amounts:Current
      portion
            
            $
            —
            
            
            $
            —Noncurrent
      portion
            
            
            6,821
            
            
            
            6,560Total
      recorded
            
            $
            6,821
            
            
            $
            6,560





The
Company’s total anticipated cost for future closure and post-closure activities
is $161.3 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 the Company’s
credit adjusted risk-free rate, which is estimated to be
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
based on the amount of landfill airspace utilized to date, the closure and
post-closure liability recorded would have been $27.5 million and $26.9 million
at March 31, 2008 and December 31, 2007, respectively.





12
 Table of Contents




9.  INCOME
TAXES




The
Company accounts for income taxes under the asset and liability method, where
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 March 31, 2008 based upon
the Company’s anticipated 2008 annual effective income tax rate of 42.3% as
compared to 42.1% for the three months ended March 31, 2007.  Such
rate differs from the statutory rate of 35% due to state income taxes, valuation
allowance and estimates of non-deductible expenses.  The 2008 rate
reflects the impact of certain non-deductible expenses and state taxes to the
projected current year pre-tax earnings.





The
Company is subject to federal income tax in the United States and to state
taxes in the various states in which it operates within the United
States.  With few exceptions, the Company remains subject to both U.S
federal income tax and to state and local income tax examinations by taxing
authorities for tax years through 1998.  Currently, the Company is not
involved in any income tax examinations for any year.





The
Company adopted the provision of FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes” (FIN 48) on January 1, 2007.  As
a result of the implementation of FIN 48, the Company recorded approximately
$1.8 million in other long-term liabilities for unrecognized tax benefits, which
was accounted for as a reduction to the January 1, 2007 balance of retained
earnings.  As of January 1, 2008, the Company had unrecognized tax
benefits of $1.8 million, all of which would have an impact on the annual
effective tax rate upon recognition.  The Company does not anticipate
a significant change in the balance of unrecognized tax benefits within the next
12 months.





The
Company recognizes interest and penalties accrued related to unrecognized tax
benefits in income tax expense.  This is an accounting policy election
made by the Company that is a continuation of the Company’s historical policy
and will continue to be consistently applied in the future.  During
the three months ended March 31, 2008, the Company accrued approximately $1,000
of interest and penalties.





10.  STOCKHOLDERS’
EQUITY





During
the three months ended March 31, 2008, the Company issued 263,207 restricted
shares, net of forfeitures, under the Second Amended and Restated 2004 WCA Waste
Corporation Incentive Plan.  These shares vest over three years from
the issue date.  The following table reflects the changes in
stockholders’ equity from December 31, 2007 to March 31, 2008:





Preferred
      Stock
            
            
            Common
      Stock
            
            
            Treasury
      Stock
            
            
            Additional
      Paid-in Capital
            
            
            Retained
      Earnings
            
            
            TotalDecember
      31, 2007
            
            $
            8
            
            
            $
            171
            
            
            $
            (174
            )
            
            $
            166,665
            
            
            $
            3,694
            
            
            $
            170,364Net
      income (loss)
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (2,352
            )
            
            
            (2,352
            )Accrued
      payment-in-kind dividend on preferred stock
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            1,005
            
            
            
            (1,005
            )
            
            
            —Issuance
      of restricted shares to employees
            
            
            —
            
            
            
            3
            
            
            
            —
            
            
            
            (3
            )
            
            
            —
            
            
            
            —Accretion
      of unearned compensation
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            797
            
            
            
            —
            
            
            
            797Repurchase
      of common shares
            
            
            —
            
            
            
            (1
            )
            
            
            —
            
            
            
            (270
            )
            
            
            —
            
            
            
            (271
            )March
      31, 2008
            
            $
            8
            
            
            $
            173
            
            
            $
            (174
            )
            
            $
            168,194
            
            
            $
            337
            
            
            $
            168,538




13
 Table of Contents





Preferred
Stock





On July
13, 2006, the Company’s shareholders approved the issuance of 750,000 shares of
convertible preferred stock at $100.00 per share in the private placement with
Ares Corporate Opportunities Fund II L.P. (Ares).  The shares were
issued on July 27, 2006 and a portion of the net proceeds were used to
completely repay the amounts outstanding under the credit
facility.  Issuance costs, including a 1% discount to Ares and other
transaction costs, totaled approximately $3.1 million.  The preferred
stock is convertible into shares of the Company’s common stock at a price of
$9.60 per share and carries a 5% payment-in-kind (PIK) dividend payable
semi-annually.





The
preferred shares were convertible into 7,812,500 shares of the Company’s common
stock on the issuance date and with the effect of the cumulative PIK dividends
at the end of five years would be convertible into 10,000,661 shares of common
stock.  Under the terms of the preferred agreement, under certain
circumstances, all five years’ worth of cumulative PIK dividends would
accelerate and become payable to the preferred holder.  The preferred
shareholder holds certain preferential rights, including the appointment of two
directors.  The Company can force a conversion into its common stock
following either (i) the average of the closing price of the common stock for
each of 20 consecutive trading days exceeding $14.40 per share or (ii) a
fundamental transaction that Ares does not treat as a
liquidation.  After the fifth anniversary of issuance, the Company
can, at its discretion, redeem for cash equal to the liquidation preference
which is approximately $96.0 million.  After the fifth anniversary of
issuance, the Company can pay dividend in cash at its discretion.  The
original issuance date for the preferred stock is the commitment date for both
the preferred stock and the initial five years worth of dividends as the payment
of the dividends through in-kind payments is non-discretionary for that initial
five-year period.  Based on the fair value of the Company’s underlying
common stock on the issuance date and the stated conversion date, there is no
beneficial conversion feature associated with the issuance of the preferred
stock.





11.  SEGMENT
INFORMATION





The
Company’s operations consist of the collection, transfer, processing and
disposal of non-hazardous 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 months ended March 31, 2008
and 2007:





Three
      Months EndedMarch
      31,2008
            
            
            2007Collection:Residential
            
            $
            11,917
            
            
            $
            8,881Commercial
            
            
            4,871
            
            
            
            4,387Roll-off
            
            
            14,211
            
            
            
            11,801Total
      collection
            
            
            30,999
            
            
            
            25,069Disposal
            
            
            18,369
            
            
            
            15,071Less
      intercompany
            
            
            7,462
            
            
            
            5,581Disposal,
      net
            
            
            10,907
            
            
            
            9,490Transfer
      and other
            
            
            10,225
            
            
            
            9,587Less
      intercompany
            
            
            3,294
            
            
            
            3,519Transfer
      and other, net
            
            
            6,931
            
            
            
            6,068Total
      revenue
            
            $
            48,837
            
            
            $
            40,627




14
 Table of Contents





The table
below reflects major operating segments (Region I: Kansas, Missouri; Region II:
Arkansas, Texas; Region III: Alabama, Florida; Region IV: North Carolina, South
Carolina, Tennessee; Region V: Colorado, New Mexico, Oklahoma) for the three
months ended March 31, 2008 and 2007:





Region
      I
            
            
            Region
      II
            
            
            Region
      III
            
            
            Region
      IV
            
            
            Region
      V
            
            
            Corporate
            
            
            TotalThree
      months ended March 31, 2008:Revenue
            
            $
            12,570
            
            
            $
            19,962
            
            
            $
            5,183
            
            
            $
            5,399
            
            
            $
            5,723
            
            
            $
            —
            
            
            $
            48,837Depreciation
      and amortization
            
            
            1,254
            
            
            
            2,099
            
            
            
            1,026
            
            
            
            1,072
            
            
            
            914
            
            
            
            126
            
            
            
            6,491Operating
      income (loss)
            
            
            1,393
            
            
            
            3,438
            
            
            
            (52
            )
            
            
            257
            
            
            
            (230
            )
            
            
            249
            
            
            
            5,055Capital
      expenditures
            
            
            596
            
            
            
            2,721
            
            
            
            1,073
            
            
            
            789
            
            
            
            700
            
            
            
            83
            
            
            
            5,962Capital
      expenditures
              (Acquisitions, net of divestitures)
            
            
            —
            
            
            
            10
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            10Three
      months ended March 31, 2007:Revenue
            
            $
            11,916
            
            
            $
            12,794
            
            
            $
            8,138
            
            
            $
            5,044
            
            
            $
            2,735
            
            
            $
            —
            
            
            $
            40,627Depreciation
      and amortization
            
            
            1,206
            
            
            
            1,318
            
            
            
            1,218
            
            
            
            927
            
            
            
            401
            
            
            
            119
            
            
            
            5,189Operating
      income (loss)
            
            
            1,635
            
            
            
            2,716
            
            
            
            1,469
            
            
            
            835
            
            
            
            108
            
            
            
            (220
            )
            
            
            6,543Capital
      expenditures
            
            
            2,592
            
            
            
            2,099
            
            
            
            609
            
            
            
            451
            
            
            
            171
            
            
            
            70
            
            
            
            5,992Capital
      expenditures (Acquisitions, net of divestitures)
            
            
            152
            
            
            
            —
            
            
            
            654
            
            
            
            —
            
            
            
            24,343
            
            
            
            —
            
            
            
            25,149Total
      assets:March
      31, 2008
            
            $
            74,040
            
            
            $
            110,156
            
            
            $
            79,626
            
            
            $
            76,474
            
            
            $
            51,906
            
            
            $
            31,202
            
            
            $
            423,404December
      31, 2007
            
            
            75,799
            
            
            
            109,400
            
            
            
            79,847
            
            
            
            76,857
            
            
            
            51,639
            
            
            
            33,181
            
            
            
            426,723





Total
assets for Corporate include cash, certain permitted but unopened landfills and
corporate airplane.





12.  COMMITMENTS
AND CONTINGENCIES




Legal
Proceedings





The
Company is a party to various legal proceedings that 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 period in which they are resolved.





Except as
described above, and other than routine litigation incidental to the Company’s
business, which is not currently expected to have a material adverse effect upon
its financial condition, results of operations or prospects, there are no
pending material legal proceedings to which the Company is a party or to which
any of its property is subject.  While management believes a majority
of the Company’s present litigation matters are covered by insurance, subject to
deductibles and the self-insured portion (as described below), 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 would be
adequate to cover all liability, costs and expenses associated with such
litigation matters.




15
 Table of Contents





Other
Potential Proceedings





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
it holds.  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.  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.





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.  The Company is self-insured for
a portion of its general liability, workers’ compensation and automobile
liability.  The Company’s excess loss limits related to its
self-insured portion of general liability, workers’ compensation and automobile
liability are $100,000, $250,000 and $250,000, respectively.  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 its
costs of services.  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 or other
liabilities could have a material adverse effect on the Company’s financial
condition, results of operations and prospects.





16
 Table of Contents





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





The following discussion should be read
in conjunction with the unaudited condensed consolidated financial statements
and notes thereto included elsewhere in this quarterly report on Form 10-Q. In
addition, reference should be made to our audited consolidated financial
statements and notes thereto and related “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” included in our annual report
on Form 10-K  for the year ended December 31, 2007 as filed with the
SEC on March 5, 2008. The discussion below contains forward-looking statements
that involve risks and uncertainties.  For additional information
regarding some of these risks and uncertainties, please read “Risk Factors and
Cautionary Statement About Forward-Looking Statements” included elsewhere in
this quarterly report on Form 10-Q.  Unless the context requires
otherwise, references in this quarterly report on Form 10-Q to “WCA Waste,”
“we,” “us” or “our” refer to WCA Waste Corporation on a consolidated
basis.





Overview





We are a
vertically integrated, non-hazardous solid waste management company providing
non-hazardous solid waste collection, transfer, processing, and disposal
services in the south and central regions of the United States.  As of
March 31, 2008, we served approximately 329,000 commercial, industrial and
residential collection customers and 5,000 landfill and transfer station
customers in Alabama, Arkansas, Colorado, Florida, Kansas, Missouri, New Mexico,
North Carolina, Oklahoma, South Carolina, Tennessee and Texas.  We
currently own and/or operate 24 landfills, 27 collection operations and 23
transfer stations/materials recovery facilities (MRFs).  Of these
facilities, two transfer stations and two landfills are fully permitted but not
yet opened, and one transfer station is idle.  Additionally, we
currently operate but do not own two of the transfer stations.





Acquisition
Strategy





Our
future growth 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 companies that also operate in that
market or in adjacent markets (“tuck–in” acquisitions).  Tuck-in
acquisitions should allow growth in revenue and increase market share and enable
disposal internalization 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 in
that market.  Upon acquiring a landfill in a new market, we then
intend to expand our operations by acquiring collection and/or transfer
operations and internalizing waste into the landfill.





We intend
to pursue our acquisition strategy primarily with cash on hand and available
capacity under our $175 million revolving credit facility.  We may
also issue additional debt, and/or additional equity, including common stock or
preferred stock, in connection with acquisitions.  Our 2008 goals
include the investment of $60 million in combined newly acquired companies and
similar expansion and growth expenditures.  As of March 31, 2008, we
had approximately $133.9 million available under our existing credit
facility.  We believe that our available capacity will enable us to
accomplish our investment goals in 2008.





Since
completing our initial public offering in June 2004 through the three months
ended March 31, 2008, we have completed 32 acquisitions.  The purchase
price for these acquisitions consisted of approximately $225.7 million of cash,
$1.3 million of prepaid airspace, $6.1 million of convertible debt, $11.9
million of assumed debt (net of $0.5 million of debt discount), $4.4 million of
assumed deferred tax liabilities and 1,726,336 shares of our common stock, less
a note receivable valued at $7.2 million.  The note receivable was a
$10.5 million non-interest bearing promissory note with payments to us in the
amount of $125,000 per month for 84 months through June 2014.  During
the three months ended March 31, 2008, we acquired certain collection routes
from Maguire Disposal, Inc.  The purchase price for this acquisition
was approximately $0.3 million of cash.  Information concerning our
acquisitions may be found in our previously filed periodic and current reports
and in note 2 to the condensed consolidated financial statements included in
Item 1 of this report.




17
 Table of Contents





The
following sets forth additional information regarding our acquisitions since our
initial public offering:





Company
            
            Location
            
            Region
            
            Completion
      Date
            
            OperationsTexas
      Environmental Waste
            
            Houston,
      TX
            
            II
            
            July
      13, 2004
            
            CollectionAshley
      Trash Service
            
            Springfield,
      MO
            
            I
            
            August
      17, 2004
            
            CollectionPower
      Waste
            
            Birmingham,
      AL
            
            III
            
            August
      31, 2004
            
            CollectionBlount
      Recycling
            
            Birmingham,
      AL
            
            III
            
            September
      3, 2004
            
            Collection,
      Landfill & Transfer StationTranslift,
      Inc.
            
            Little
      Rock, AR
            
            II
            
            September
      17, 2004
            
            CollectionRural
      Disposal, Inc.
            
            Willow
      Springs, MO
            
            I
            
            November
      12, 2004
            
            CollectionTrash
      Away, Inc.
            
            Piedmont,
      SC
            
            IV
            
            November
      30, 2004
            
            Collection
      & Transfer StationGecko
      Investments (Eagle Ridge)
            
            St.
      Louis, MO
            
            I
            
            January
      11, 2005
            
            Collection
      & LandfillMRR
      Southern, LLC
            
            High
      Point/Raleigh, NC
            
            IV
            
            April
      1, 2005
            
            Landfill,
      Transfer Station & MRFTriangle
      Environmental
            
            Raleigh,
      NC
            
            IV
            
            May
      16, 2005
            
            CollectionFoster
      Ferguson
            
            El
      Dorado Springs, MO
            
            I
            
            May
      16, 2005
            
            CollectionTriad
      Waste
            
            High
      Point, NC
            
            IV
            
            May
      31, 2005
            
            CollectionProper
      Disposal
            
            Chanute,
      KS
            
            I
            
            May
      31, 2005
            
            CollectionFort
      Meade Landfill
            
            Fort
      Meade, FL
            
            III
            
            October
      3, 2005
            
            LandfillMeyer
      & Gabbert
            
            Sarasota/Arcadia,
      FL
            
            III
            
            October
      3, 2005
            
            Collection,
      Landfill & Transfer StationPendergrass
      Refuse
            
            Springfield,
      MO
            
            I
            
            October
      4, 2005
            
            CollectionAndy’s
      Hauling
            
            Sarasota,
      FL
            
            III
            
            October
      21, 2005
            
            CollectionTransit
      Waste
            
            Durango,
      CO/Bloomfield, NM
            
            V
            
            February
      10, 2006
            
            Collection
      & LandfillFort
      Myers Transfer Station (*)
            
            Fort
      Myers, FL
            
            III
            
            August
      10, 2006
            
            Transfer
      StationWCA
      of St. Lucie, LLC
            
            St.
      Lucie, FL
            
            III
            
            October
      2, 2006
            
            Transfer
      StationSunrise
      Disposal, LLC
            
            Springfield,
      MO
            
            I
            
            December
      28, 2006
            
            CollectionSouthwest
      Dumpster, Inc. (*)
            
            Fort
      Myers, FL
            
            III
            
            January
      3, 2007
            
            CollectionAmerican
      Waste, Inc.
            
            Oklahoma
      City, OK
            
            V
            
            February
      21, 2007
            
            Collection
      & LandfillKlean
      Way Disposal, Inc.
            
            Springfield,
      MO
            
            I
            
            March
      30, 2007
            
            CollectionCarpenter
      Waste Systems, LLC
            
            Oklahoma
      City, OK
            
            V
            
            May
      31, 2007
            
            CollectionFort
      Bend Regional Landfill
            
            Houston,
      TX
            
            II
            
            June
      29, 2007
            
            Collection,
      Landfill & Transfer StationBig
      Red Containers, Inc.
            
            Ardmore,
      OK
            
            V
            
            August
      14, 2007
            
            CollectionRoll-Off
      Rentals
            
            Huntsville,
      AL
            
            III
            
            September
      4, 2007
            
            CollectionWaste
      Pro Services, LLC
            
            Houston,
      TX
            
            II
            
            October
      1, 2007
            
            CollectionDH
      Griffin Container Services, LLC
            
            Greensboro,
      NC
            
            IV
            
            October
      1, 2007
            
            CollectionDH
      Griffin Container of Raleigh, LLC
            
            Raleigh,
      NC
            
            IV
            
            October
      1, 2007
            
            CollectionMaguire
      Disposal, Inc.
            
            Oklahoma
      City, OK
            
            V
            
            January 2,
      2008
            
            Collection




(*) These
assets were exchanged as part of the consideration for the acquisition of Fort
Bend Regional Landfill.





After an
acquisition is completed, we incur integration expenses related to (i)
incorporating newly-acquired truck fleets into our preventative maintenance
program, (ii) testing new employees to comply with Department of Transportation
regulations, (iii) implementing our safety program, (iv) re-routing trucks and
equipment to assure maximization of routing efficiencies and disposal
internalization, and (v) converting customers to our billing
system.  We generally expect that the costs of acquiring and
integrating an acquired business will be incurred primarily during the first 12
months after acquisition.  Synergies from tuck-in acquisitions can
also take as long as 12 months to be realized.





General
Review of Results for the Three Months Ended March 31, 2008





Our
operations consist of the collection, transfer, processing and disposal of
non-hazardous solid waste.  Our revenue is generated primarily from
our landfill disposal services and our collection operations provided to
residential, commercial and roll-off customers.  Internalization
refers to the disposal of collected waste into the landfills we
own.  Our internalization for the three months ended March 31, 2008
was 74.7%.




18
 Table of Contents





The
following table reflects our revenue segmentation (before elimination of
intercompany revenue) for the three months ended March 31, 2008 and
2007:





Three
      Months EndedMarch
      31,2008
            
            
            2007Collection
            
            
            52.0
            %
            
            
            50.4
            %Disposal
            
            
            30.8
            %
            
            
            30.3
            %Transfer
      and other
            
            
            17.2
            %
            
            
            19.3
            %Total
      uneliminated revenue
            
            
            100.0
            %
            
            
            100.0
            %





The
following table reflects our total revenue by source for the three months ended
March 31, 2008 and 2007 (dollars in thousands):





Three
      Months EndedMarch
      31,2008
            
            
            2007Collection:Residential
            
            $
            11,917
            
            
            $
            8,881Commercial
            
            
            4,871
            
            
            
            4,387Roll-off
            
            
            14,211
            
            
            
            11,801Total
      collection
            
            
            30,999
            
            
            
            25,069Disposal
            
            
            18,369
            
            
            
            15,071Less
      intercompany
            
            
            7,462
            
            
            
            5,581Disposal,
      net
            
            
            10,907
            
            
            
            9,490Transfer
      and other
            
            
            10,225
            
            
            
            9,587Less
      intercompany
            
            
            3,294
            
            
            
            3,519Transfer
      and other, net
            
            
            6,931
            
            
            
            6,068Total
      revenue
            
            $
            48,837
            
            
            $
            40,627





Please
read note 11 to our condensed consolidated financial statements included in Item
1 of this report for certain geographic information related to our
operations.





Costs of
services include, but are not limited to, labor, fuel and other 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 and local waste taxes.  We are
self-insured for a portion of our 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 expenses include the salaries and benefits of our corporate
management, certain centralized reporting, information technology and cash
management costs and other overhead costs associated with our corporate
office.





Depreciation
and amortization expense includes depreciation of fixed assets over their
estimated useful lives using the straight-line method and amortization of
landfill costs and asset retirement costs based on the consumption of
airspace.





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, commissions 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
 Table of Contents





Forward-Looking
Statements and Non-GAAP Measures





As
indicated in “Risk Factors and Cautionary Statement About Forward-Looking
Statements” this report contains forward-looking statements, all of which are
qualified by the risk factors and other statements set forth in that
section.





Our
management evaluates our performance based on non-GAAP measures, of which the
primary performance measure is EBITDA.  EBITDA consists of earnings
(net income or loss) available to common stockholders before preferred stock
dividend, interest expense (including gains (losses) on interest rate swap
agreements as well as write-off of deferred financing costs and debt discount),
income tax expense, depreciation and amortization.  We also compute
EBITDA before the cumulative effect of change in accounting principle and before
considering the effect of discontinued operations as the effect of these items
is not relevant to our ongoing operations.  We also use these same
measures when evaluating potential acquisition candidates.





We
believe EBITDA is useful to an investor in evaluating our operating performance
because:





·
            it
      is widely used by investors in our industry to measure a company’s
      operating performance without regard to items such as interest expense,
      depreciation and amortization, which can vary substantially from company
      to company depending upon accounting methods and book value of assets,
      financing methods, capital structure and the method by which assets were
      acquired;





·
            it
      helps investors more meaningfully evaluate and compare the results of our
      operations from period to period by removing the impact of our capital
      structure (primarily interest charges from our outstanding debt and the
      impact of our interest rate swap agreements and payment-in-kind (PIK)
      dividend) and asset base (primarily depreciation and amortization of our
      landfills and vehicles) from our operating results;
  and





·
            it
      helps investors identify items that are within our operational
      control.  Depreciation charges, while a component of operating
      income, are fixed at the time of the asset purchase in accordance with the
      depreciable lives of the related asset and as such are not a directly
      controllable period operating
charge.





Our
management uses EBITDA:





·
            as
      a measure of operating performance because it assists us in comparing our
      performance on a consistent basis as it removes the impact of our capital
      structure and asset base from our operating
  results;





·
            as
      one method to estimate a purchase price (often expressed as a multiple of
      EBITDA) for solid waste companies we intend to acquire.  The
      appropriate EBITDA multiple will vary from acquisition to acquisition
      depending on factors such as the size of the operation, the type of
      operation, the anticipated growth in the market, the strategic location of
      the operation in its market as well as other
    considerations;





·
            in
      presentations to our board of directors to enable them to have the same
      consistent measurement basis of operating performance used by
      management;





·
            as
      a measure for planning and forecasting overall expectations and for
      evaluating actual results against such
  expectations;





·
            in
      evaluations of field operations since it represents operational
      performance and takes into account financial measures within the control
      of the field operating units;





·
            as
      a component of incentive cash bonuses paid to our executive officers and
      other employees;





·
            to
      assess compliance with financial ratios and covenants included in our
      credit agreements; and


·
              in communications
      with investors, lenders, and others, concerning our financial
      performance.
 20
 Table of Contents


The
following presents a reconciliation of our total EBITDA to net income (loss)
available to common stockholders (dollars in thousands):





Three
      Months EndedMarch
      31,2008
            
            
            2007Total
      EBITDA
            
            $
            11,547
            
            
            $
            11,882Depreciation
      and amortization
            
            
            (6,491
            )
            
            
            (5,189
            )Interest
      expense, net
            
            
            (4,841
            )
            
            
            (3,881
            )Unrealized
      loss on interest rate swap
            
            
            (4,293
            )
            
            
            (528
            )Income
      tax (provision) benefit
            
            
            1,726
            
            
            
            (962
            )Accrued
      payment-in-kind dividend on preferred stock
            
            
            (1,005
            )
            
            
            (954
            )Net
      income (loss) available to common stockholders
            
            $
            (3,357
            )
            
            $
            368





Our
EBITDA, as we define it, may not be comparable to similarly titled measures
employed by other companies and is not a measure of performance calculated in
accordance with GAAP.  EBITDA should not be considered in isolation or
as substitutes for operating income, net income or loss, cash flows provided by
operating, investing and financing activities, or other income or cash flow
statement data prepared in accordance with GAAP.





Results
of Operations





Three
Months Ended March 31, 2008 Compared to Three Months Ended March 31,
2007





The
following table sets forth the components of operating income (loss) by major
operating segments (Region I: Kansas, Missouri; Region II: Arkansas, Texas;
Region III: Alabama, Florida; Region IV: North Carolina, South Carolina,
Tennessee; Region V: Colorado, New Mexico, Oklahoma) for the three months ended
March 31, 2008 and 2007 and the changes between the segments for each category
(dollars in thousands):





Region
      I
            
            
            Region
      II
            
            
            Region
      III
            
            
            Region
      IV
            
            
            Region
      V
            
            
            Corporate
            
            
            Total
            
            
            %
      of RevenueThree
      months ended March 31, 2008:Revenue
            
            $
            12,570
            
            
            $
            19,962
            
            
            $
            5,183
            
            
            $
            5,399
            
            
            $
            5,723
            
            
            $
            —
            
            
            $
            48,837
            
            
            
            100.0Cost
      of services
            
            
            9,079
            
            
            
            13,019
            
            
            
            3,730
            
            
            
            3,637
            
            
            
            4,588
            
            
            
            —
            
            
            
            34,053
            
            
            
            69.7Depreciation
      and amortization
            
            
            1,254
            
            
            
            2,099
            
            
            
            1,026
            
            
            
            1,072
            
            
            
            914
            
            
            
            126
            
            
            
            6,491
            
            
            
            13.3General
      and administrative
            
            
            844
            
            
            
            1,406
            
            
            
            479
            
            
            
            433
            
            
            
            451
            
            
            
            (375
            )
            
            
            3,238
            
            
            
            6.6Operating
      income (loss)
            
            $
            1,393
            
            
            $
            3,438
            
            
            $
            (52
            )
            
            $
            257
            
            
            $
            (230
            )
            
            $
            249
            
            
            $
            5,055
            
            
            
            10.4Three
      months ended March 31, 2007:Revenue
            
            $
            11,916
            
            
            $
            12,794
            
            
            $
            8,138
            
            
            $
            5,044
            
            
            $
            2,735
            
            
            $
            —
            
            
            $
            40,627
            
            
            
            100.0Cost
      of services
            
            
            8,089
            
            
            
            7,850
            
            
            
            4,803
            
            
            
            2,882
            
            
            
            2,131
            
            
            
            —
            
            
            
            25,755
            
            
            
            63.4Depreciation
      and amortization
            
            
            1,206
            
            
            
            1,318
            
            
            
            1,218
            
            
            
            927
            
            
            
            401
            
            
            
            119
            
            
            
            5,189
            
            
            
            12.8General
      and administrative
            
            
            986
            
            
            
            910
            
            
            
            648
            
            
            
            400
            
            
            
            95
            
            
            
            101
            
            
            
            3,140
            
            
            
            7.7Operating
      income (loss)
            
            $
            1,635
            
            
            $
            2,716
            
            
            $
            1,469
            
            
            $
            835
            
            
            $
            108
            
            
            $
            (220
            )
            
            $
            6,543
            
            
            
            16.1Increase/(decrease)
      in 2008 compared to 2007:Revenue
            
            $
            654
            
            
            $
            7,168
            
            
            $
            (2,955
            )
            
            $
            355
            
            
            $
            2,988
            
            
            $
            —
            
            
            $
            8,210Cost
      of services
            
            
            990
            
            
            
            5,169
            
            
            
            (1,073
            )
            
            
            755
            
            
            
            2,457
            
            
            
            —
            
            
            
            8,298Depreciation
      and amortization
            
            
            48
            
            
            
            781
            
            
            
            (192
            )
            
            
            145
            
            
            
            513
            
            
            
            7
            
            
            
            1,302General
      and administrative
            
            
            (142
            )
            
            
            496
            
            
            
            (169
            )
            
            
            33
            
            
            
            356
            
            
            
            (476
            )
            
            
            98Operating
      income (loss)
            
            $
            (242
            )
            
            $
            722
            
            
            $
            (1,521
            )
            
            $
            (578
            )
            
            $
            (338
            )
            
            $
            469
            
            
            $
            (1,488
            )




21
 Table of Contents





Revenue. Total revenue for
the three months ended March 31, 2008 increased $8.2 million, or 20.2%, to $48.8
million from $40.6 million for the three months ended March 31,
2007.  Our growth in revenue between the periods has been primarily
driven by acquisitions.  We estimated that acquisitions contributed
$6.5 million of the increase while internal volume decreased $1.2 million,
operational price increases contributed $2.2 million, and pricing from fuel
surcharges contributed $0.7 million.  The above table reflects the
total increase in revenue in each operating region.  The financial
results of completed acquisitions are generally blended with existing operations
and do not have separate financial information available with the exception of
new regions acquired which can be analyzed individually.  The revenue
increase of $7.2 million in Region II was primarily attributed to the volume and
price increases associated with new collection and hauling contracts in our
Texas residential operations as well as the acquisition of a landfill and a
transfer station during the second quarter of 2007.  We acquired a
majority of our Oklahoma operations in Region V in February
2007.  Those operations were not fully integrated until the second
quarter of 2007.  We estimated that the Oklahoma acquisition
contributed $3.2 million of the increase in revenue.  Revenue in
Region III decreased $3.0 million primarily as a result of general market
conditions in Florida and the divestitures of a transfer station and collection
operations in Fort Myers, Florida.  For more information on the
factors affecting our estimates, please see “—Acquisition Strategy”
above.





Cost of services. Total cost
of services for the three months ended March 31, 2008 increased $8.3 million, or
32.2%, to $34.1 million from $25.8 million for the three months ended March 31,
2007.  We believe that our acquisition program accounted for most of
the increase in cost of services.  Fuel prices, which increased 38.3%
nationally from the three months ended March 31, 2007 to the three months ended
March 31, 2008, contributed to the largest non-acquisition related increase in
cost of services.  Other factors of the increase included labor and
disposal costs.  For acquisitions within our existing markets, the
acquired entities are merged into our existing operations and those results are
indistinguishable from the remainder of the operations.  As indicated
above, Region II and Region V experienced growth through either acquisition or
expanded volumes and they each reflected a corresponding increase in their cost
of services.  Region II had an estimated $5.2 million increase in cost
of services due to the rapid growth of Texas residential collection operations
and the acquisition of Fort Bend Regional Landfill at the end of June
2007.  More employees and vehicles were added, which caused the
increase in labor, insurance, fuel and vehicle-related costs.  In
addition, third party disposal and hauling costs increased sharply as we
disposed of more residential waste to a third party landfill and contracted
third party hauling operations to transport waste from our transfer station to
the landfill acquired in 2007.  The estimated $2.5 million increase in
cost of services in Region V was primarily attributed to the acquisition of
Oklahoma operations during 2007.  Cost of services in Region III
decreased $1.1 million as a result of the decrease in revenue in
Florida.  For more information on the factors affecting our estimates,
please see “—Acquisition Strategy” above.





Overall
cost of services increased to 69.7% of revenue for the three months ended March
31, 2008 from 63.4% during the same period last year.  Increases in
operating costs as a percentage of revenue were primarily attributable to higher
payroll-related costs, fuel, outside repairs, landfill site maintenance and
disposal costs.  Diesel fuel costs as a percentage of revenue
increased from 6.1% for the three months ended March 31, 2007 to 8.9% for the
three months ended March 31, 2008.  Since a majority of our fuel
increase was experienced in March 2008, there is a lag between the actual
increase in fuel costs and the recovery through fuel
surcharges.  Other than periodic volatility in fuel prices, inflation
has not materially affected our operations.





Depreciation and
amortization. Depreciation and amortization expense for the three months
ended March 31, 2008 increased $1.3 million, or 25.1%, to $6.5 million from $5.2
million for the three months ended March 31, 2007.  These increases
can be attributed to acquisitions, capital expenditures, and increased
amortization corresponding with increased landfill volume usage.





General and administrative.Total general and administrative expense for the three months ended March
31, 2008 increased $0.1 million, or 3.1%, to $3.2 million from $3.1 million for
the three months ended March 31, 2007.  The general and administrative
expense included a $0.2 million increase in stock-based compensation expense
related to the stock portion of the executive bonus plan and earned compensation
from restricted stock grants under the Second Amended and Restated 2004 WCA
Waste Corporation Incentive Plan.  The increase in general and
administrative expense was also attributable to increases in professional
fees.  The increase was partially offset by the decrease in
payroll-related expenses.  Such decrease also resulted in the decrease
of overall general and administrative expenses from 7.7% of revenue
during the three months ended March 31, 2007 to 6.6% of revenue during the three
months ended March 31, 2008.





22
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The
following table sets forth items below operating income in our condensed
consolidated statement of operations and as a percentage of revenue for the
three months ended March 31, 2008 and 2007 (dollars in thousands):





Three
      Months Ended March 31,2008
            
            
            2007Operating
      income
            
            $
            5,055
            
            
            
            10.4
            %
            
            $
            6,543
            
            
            
            16.1
            %Interest
      expense, net
            
            
            (4,841
            )
            
            
            (9.9
            )
            
            
            (3,881
            )
            
            
            (9.6
            )Unrealized
      loss on interest rate swap
            
            
            (4,293
            )
            
            
            (8.8
            )
            
            
            (528
            )
            
            
            (1.3
            )Other
      income, net
            
            
            1
            
            
            
            0.0
            
            
            
            150
            
            
            
            0.4Income
      tax (provision) benefit
            
            
            1,726
            
            
            
            3.5
            
            
            
            (962
            )
            
            
            (2.4
            )Accrued
      payment-in-kind dividend on preferred stock
            
            
            (1,005
            )
            
            
            (2.1
            )
            
            
            (954
            )
            
            
            (2.3
            )Net
      income (loss) available to common stockholders
            
            $
            (3,357
            )
            
            
            (6.9
            )%
            
            $
            368
            
            
            
            0.9
            %





Interest expense, net.Interest expense, net for the three months ended March 31, 2008 increased
by 24.7% to $4.8 million from $3.9 million for the three months ended March 31,
2007.  The increase was mainly caused by higher debt balances due to
borrowings to finance acquisitions.  The increase was also attributed
to $0.2 million decrease in interest income.





Unrealized loss on interest rate
swap. The $4.3 million and $0.5 million losses were attributable to the
recognition of the unrealized loss as of March 31, 2008 and 2007, respectively,
of the interest rate swap agreement we entered into in July
2006.  This reflects the mark to market of our interest rate
swap.  The $4.3 million unrealized loss was related to the 2.0% rate
cuts during the three months ended March 31, 2008 as well as future rate cut
expectations.  Subsequently in April 2008, the expectations of future
rate cuts moderated and the swap liability reduced from $11.6 million as of
March 31, 2008 to $8.5 million as of April 25, 2008, resulting in an unrealized
gain of $3.1 million.  At the time we entered into the swap, we had no
floating rate debt and no such floating rate interest payments were probable of
being incurred in the near future.  As a result, the swap transaction
can not be designated as a hedging transaction and any changes in the unrealized
fair value of the new swap will be recognized in the statement of
operations.  For more information regarding the interest rate swap
agreement, please see note 6 to our condensed consolidated financial statements
included in Item 1 above and Item 3 “Quantitative and Qualitative Disclosures
About Market Risk” below.





Income tax (provision)
benefit. Income tax benefit for the three months ended March 31, 2008 as
a percentage of pre-tax income was 42.3% as compared to income tax provision of
42.1% for the three months ended March 31, 2007.  The rate in the
current year period reflects a combination of the projected full year tax rate
and certain discrete items during the first quarter of 2008.  The
increase in the projected full year rate primarily relates to the impact of
certain non-deductible permanent items in the current period.





Accrued payment-in-kind dividend on
preferred stock. The $1.0 million and $1.0 million in accrued PIK
dividend on preferred stock relate to the accretion of the 5% PIK dividend on
our Series A Convertible Preferred Stock during the three months ended March 31,
2008 and 2007, respectively.





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 also
requires significant capital.  We plan to meet our future capital
needs primarily through cash on hand, cash flow from operations and borrowing
capacity under our credit facility.  Additionally, our acquisitions
may use seller notes, equity issuances and debt financings.  We expect
these sources will be adequate to fund our future capital needs and acquisition
strategy for the foreseeable future.





As of
March 31, 2008, we had total outstanding long-term debt of approximately $197.6
million, consisting of $150 million of senior notes, $29.8 million outstanding
under our credit facilities, approximately $8.7 million of various seller notes,
approximately $8.8 million of assumed tax-exempt Environmental Facilities
Revenue Bonds associated with acquisitions, and approximately $0.3 million
of





23
 Table of Contents





equipment
notes.  This represented a decrease of $1.6 million over our total
debt outstanding as of December 31, 2007.  The decrease in outstanding
debt since December 31, 2007 was primarily due to the net repayment of
approximately $1.5 million for the swing-line feature of the credit facility and
repayments of equipment notes.  As of March 31, 2008, we had $29.7
million outstanding under the revolving credit facility, approximately $0.1
million in the swing-line feature under our credit facility and approximately
$11.3 million in letters of credit secured by the credit facility, leaving
$133.9 million in available capacity under the facility.  With $0.5
million cash on hand at March 31, 2008, our total capacity for potential
acquisitions was approximately $134.4 million.





Subsequent
to March 31, 2008, we repaid $4.0 million of the seller convertible notes with
interest rate of 8% from cash and availability under the credit
facility.





Preferred
Stock





On June
12, 2006, we entered into a privately negotiated Preferred Stock Purchase
Agreement with Ares Corporate Opportunities Fund II L.P., which provided for us
to issue and sell 750,000 shares of Series A Convertible Preferred Stock, par
value $0.01 per share, to Ares. The purchase price per preferred share was
$100.00, for an aggregate purchase price of $75 million.  The
preferred stock is convertible into our common stock, par value $0.01 per share,
at a price of $9.60 per share and carries a 5% PIK dividend payable
semi-annually.  The closing of the sale and issuance of the full amount of
preferred shares pursuant to the purchase agreement was completed on July 27,
2006.  The original issuance date for the preferred stock is the
commitment date for both the preferred stock and the initial five years worth of
dividends as the payment of the dividends through in-kind payments is
non-discretionary for that initial five-year period.  Based on the
fair value of our underlying common stock on the issuance date and the stated
conversion date, there is no beneficial conversion feature associated with the
issuance of the preferred stock.





The
preferred shares are immediately convertible at Ares’ discretion into 8,487,940
shares of our common stock, which would represent approximately 32.8% of our
outstanding common stock on a post-conversion basis as of March 31,
2008.  Dividends are solely PIK for the first five years — that is,
they are payable solely by adding the amount of dividends to the stated value of
each share.  At the end of five years, the preferred shares would be
convertible into approximately 10,000,661 shares of common stock, which, based
on the currently outstanding shares, would represent approximately 36.5% of the
post-conversion shares outstanding.





Other
material terms of the preferred stock are as follows:





·
            all
      dividends that would otherwise be payable through the fifth anniversary of
      issuance shall automatically be accelerated and paid in kind immediately
      prior to the occurrence of any of the following acceleration
      events:





·
            liquidation





·
            bankruptcy





·
            closing
      of a public offering of common stock pursuant to an effective registration
      statement (except for Form S-4, solely for sales by third parties, or
      pursuant to Ares’ own registration rights
  agreement)





·
            the
      average of the closing price of our common stock for each of 20
      consecutive trading days exceeds $14.40 per
  share





·
            upon
      a “fundamental transaction”, including a “group” (defined in the
      Securities Exchange Act of 1934, as amended) acquiring more than 35% of
      outstanding voting rights; replacement of more than one-half of the
      directors without approval of the existing board of directors; a merger,
      consolidation, sale of substantially all assets, going-private
      transaction, tender offer, reclassification, or other transaction that
      results in the transfer of a majority of voting
  rights;




24
 Table of Contents





·
            Ares
      can convert the preferred stock into common stock at any time at a
      conversion price of $9.60 per share, with conversion being calculated by
      taking the stated value (initially $100.00 per share) plus any amount
      added to stated value by way of dividends, then dividing by $9.60 to
      produce the number of shares of common stock
  issuable;





·
            We
      can force a conversion into common stock following either (i) the average
      of the closing price of our common stock for each of 20 consecutive
      trading days exceeding $14.40 per share or (ii) a fundamental transaction
      that Ares does not treat as a
liquidation;





·
            after
      the fifth anniversary of issuance, we can redeem for cash equal to the
      liquidation preference;





·
            after
      the fifth anniversary of issuance, we can pay dividend in cash at our
      discretion;





·
            upon
      our liquidation, prior to any holder of common stock or other junior
      securities, Ares shall receive in cash the greater of (i) the stated value
      plus any amount added by way of dividends (accelerated to include a full
      five years) or (ii) the amount it would receive if all shares of preferred
      stock were converted into common stock (calculated to include dividends
      accelerated to include a full five
years);





·
            Ares
      can elect to treat any fundamental transaction as a liquidation event,
      which will entitle Ares to their liquidation
      preferences.  Following such election, in the event that we
      elect to make any payment such as a dividend or stock repurchase payment
      to a common shareholder, we will be required to repay Ares the full amount
      of the liquidation preference associated with the preferred
      stock.  However, if securities of another company are issued as
      consideration in a fundamental transaction, we have the option of
      requiring Ares to accept such common shares to satisfy the liquidation
      preference if shares are then quoted on the Nasdaq Global Market or listed
      on the New York Stock Exchange.  The value of such shares is
      determined at 98% of the closing price on the trading day preceding the
      transaction and the shares are freely transferable without legal or
      contractual restrictions;





·
            the
      preferred stock voting as a separate class elects (i) two directors to our
      board of directors for so long as Ares continues to hold preferred stock
      representing at least 20% of our “post-conversion equity” (outstanding
      common stock assuming conversions into common shares of all securities,
      including the preferred stock and assuming preferred stock dividends
      accelerated to include a full five years), (ii) one director for so long
      as it continues to hold at least 10% of post-conversion equity, and (iii)
      no directors below 10%;





·
            the
      preferred stock voting as a separate class must approve (i) any alteration
      in its powers, preferences or rights, or in the certificate of
      designation, (ii) creation of any class of stock senior or pari passu with
      it, (iii) any increase in the authorized shares of preferred stock, and
      (iv) any dividends or distribution to common stock or any junior
      securities, except for pro rata dividends on common stock paid in common
      stock. These protective rights terminate on the first date on which there
      are outstanding less than 20% of the number of shares of preferred stock
      outstanding on the date the preferred stock was first issued;
      and





·
            except
      for the election of directors and special approvals described above, the
      preferred stock votes on all matters and with the common stock on an
      as-converted basis.





In
connection with the issuance and sale of the preferred shares, we also entered
into other agreements as contemplated by the purchase agreement, including a
stockholder’s agreement, a registration rights agreement, and a management
rights letter.  The purchase agreement, the stockholder’s agreement,
the registration rights agreement, the management rights letter and the
certificate of designation pursuant to which the preferred shares were created,
are described in our current report on Form 8-K filed on June 16,
2006.





Tax-Exempt
Bonds





As of
March 31, 2008, we had $8.8 million of tax-exempt bonds
outstanding.





25
 Table of Contents





Contractual
Obligations





There
were no material changes outside of the ordinary course of our business during
the three months ended March 31, 2008 to the other items listed in the
Contractual Obligations table included in our annual report on Form 10-K filed
with the SEC on March 5, 2008.





Cash
Flows





Net cash
provided by operating activities for the three months ended March 31, 2008 and
2007 was $7.8 million and $9.1 million, respectively.  The decrease in
cash flows from operating activities was primarily due to the changes in net
income (loss), deferred taxes and unrealized loss on interest rate swap as well
as changes in the components of working capital from period to
period.  Other items impacting operating cash flows included
depreciation and amortization, prepaid disposal usage and stock-based
compensation, all of which were non-cash expenses.





Net cash
used in investing activities consists primarily of cash used for capital
expenditures and the acquisition of businesses.  Cash used for capital
expenditures, including acquisitions, was $6.8 million and $51.7 million for the
three months ended March 31, 2008 and 2007,
respectively.  Acquisitions of businesses accounted for $45.5 million
of the decrease over the prior year period, partially offset by $0.6 million of
increased capital expenditures for normal operations.





Net cash
used in financing activities for the three months ended March 31, 2008 and 2007
was $1.6 million and $0.2 million, respectively.  Net cash used in
financing activities mainly includes repayments of debt in all
periods.





Critical
Accounting Estimates and Assumptions





We make
several estimates and assumptions during the course of preparing our financial
statements. Since some of the information that we must present depends on future
events, it cannot be readily computed based on generally accepted methodologies,
or may not be appropriately calculated from available data.  Some
estimates require us to exercise substantial judgment in making complex
estimates and the assumptions and, therefore, have the greatest degree of
uncertainty.  This is especially true with respect to estimates made
in accounting for landfills, environmental remediation liabilities and asset
impairments.  We describe the process of making such estimates in note
8 to the financial statements included in Item 1 of this report and in note 1
(f) to our financial statements in our annual report on Form 10-K for the year
ended December 31, 2007.  For a description of other significant
accounting policies, see note 1 to the financial statements included in Item 1
of this report and in note 1 to our financial statements in our annual report on
Form 10-K for the year ended December 31, 2007.





In
summary, our landfill accounting policies include the following:





Capitalized
Landfill Costs





At March
31, 2008, we owned 24 landfills.  Two of these landfills are fully
permitted but not constructed and have not yet commenced operations as of March
31, 2008.





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 March 31, 2008, no capitalized interest was
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 prepare 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/or
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:





26
 Table of Contents




·
            we
      believe that the project has fatal
flaws;




·
            the
      land is owned or controlled by us, or under option
    agreement;




·
            we
      have committed to the expansion;




·
            financial
      analysis has been completed, and the results indicate that the expansion
      has the prospect of a positive financial and operational
      impact;




·
            personnel
      are actively working to obtain land use, local and state approvals for an
      expansion of an existing landfill;




·
            we
      believe the permit is likely to be received;
and




·
            we
      believe that the timeframe to complete the permitting is
      reasonable.





We may be
unsuccessful in obtaining expansion permits for airspace that has been
considered probable.  If unsuccessful in obtaining these permits, the
previously capitalized costs will be charged to expense.  As of March
31, 2008, we have included 156 million cubic yards of expansion airspace with
estimated development costs of approximately $105.1 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
depending on type and location.





On
January 1, 2003, we adopted SFAS No. 143, “Accounting for Asset Retirement
Obligations” (SFAS No. 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 and 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 and discounting the
      inflated total to its present value using a discount rate.  The
      discount rate represents our credit-adjusted risk-free
      rate.  The resulting closure and post-closure obligation is
      recorded as an increase in this liability as airspace is
      consumed.




·
            Accretion
      expense is calculated based on the discount rate and is charged to cost of
      services and increases the related closure and post-closure
      obligation.  This expense will generally be less during the
      early portion of a landfill’s operating life and increase
      thereafter.




27
 Table of Contents





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 the three months
ended March 31, 2008 and the year ended December 31, 2007:





Three
      Months Ended
            
            
            Year
      EndedMarch
      31,
            
            
            December
      31,2008
            
            
            2007Number
      of landfills owned
            
            
            24
            
            
            
            24Landfill
      depletion and amortization expense (in thousands)
            
            $
            2,675
            
            
            $
            10,483Accretion
      expense (in thousands)
            
            
            139
            
            
            
            483Closure
      and post-closure cost (in thousands)
            
            
            —
            
            
            
            513$
            2,814
            
            
            $
            11,479Airspace
      consumed (in thousands of cubic yards)
            
            
            1,368
            
            
            
            5,456Depletion,
      amortization, accretion, closure and post-closure costs per cubic yard of
      airspace consumed
            
            $
            2.06
            
            
            $
            2.10





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.




28
 Table of Contents





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





In the
normal course of business, we are exposed to market risk, including changes in
interest rates.  We use interest rate swap agreements to manage a
portion of our risks related to interest rates.  We entered into a
swap agreement effective July 11, 2006, where we agreed to pay a fixed-rate of
5.64% in exchange for three-month floating rate LIBOR which was 5.51% at the
time the swap was entered.  At March 31, 2008, the related floating
rate was 2.91%.  The intention of this swap agreement is to limit our
exposure to a rising rate interest environment.  For the three months
ended March 31, 2008, the net difference between the fixed amount we paid and
the floating amount we received was $0.3 million.  Based on the
three-month LIBOR rates in effect at March 31, 2008 and throughout 2008, we
anticipate that the interest rate swap will have a greater impact on our
financial results for the rest of 2008.  Considering the rates in
effect at March 31, 2008, the impact of the swap agreement is estimated to
result in a pre-tax cash cost of $2.9 million for the remaining nine months of
2008.  At the time we entered into the swap, we had no floating rate
LIBOR debt and no such floating rate interest payments were probable of being
incurred in the near future.  As a result, the swap transaction can
not be designated as a hedging transaction.  Accordingly, any changes
in the unrealized fair value of the new swap will be recognized in the statement
of operations.  We did not enter into the interest rate swap
agreements for trading purposes.





As of
March 31, 2008 and December 31, 2007, we had no debt outstanding that bears
interest at variable or floating rates.  With the placement of the
swap agreement, we bear exposure to, and are primarily affected by, changes in
LIBOR rates on $120.2 million.  A 100 basis point increase in LIBOR
interest rates would result in interest income on the swap agreement of
approximately $1.2 million annually while a 100 basis point decrease in interest
rates would result in $1.2 million in swap expense, in addition to any
mark-to-market effect on the fair value of the swap.





Our
financial instruments that are potentially sensitive to changes in interest
rates also include our 9.25% senior notes.  As of March 31, 2008, the
fair value of these notes, based on quoted market prices, was approximately $150
million, which is the same as the carrying amount.





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 the design and operation of our disclosure
controls and procedures as of December 31, 2007.  Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of December 31,
2007 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; and is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required
disclosure.





Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, a report of management’s
assessment of the design and effectiveness of internal control over financial
reporting was included as part of our annual report on Form 10-K for the fiscal
year ended December 31, 2007 as filed with the SEC on March 5,
2008.  KPMG LLP, our independent registered public accountants, also
attested to, and reported on, management’s assessment of the effectiveness of
internal control over financial reporting.  Management’s report and
the independent registered public accounting firm’s attestation report were
included in Part II, Item 8 “Financial Statements and Supplementary Data” of the
annual report on Form 10-K.





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 that
occurred during our last fiscal quarter, that has materially affected, or that
is reasonably likely to materially affect, our internal control over financial
reporting.




29
 Table of Contents





PART II—OTHER
INFORMATION





ITEM 1. LEGAL PROCEEDINGS.





Please
read note 12 to our unaudited condensed consolidated financial statements
included elsewhere in this quarterly report on Form 10-Q for information
regarding our legal proceedings.





ITEM 1A. RISK FACTORS.





In
general, there have been no significant changes in our risk factors since
December 31, 2007.  For a detailed discussion of our risk factors,
please read Item 1A “Risk Factors,”in our annual report on
Form 10-K for the year ended December 31, 2007.





ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.





(a)
            None.





(b)           Not
applicable.





(c)





Period
            
            (a)
              Total
      number of shares (or units) purchased
            
            
            (b)
              Average
      price paid per share (or unit)
            
            
            (c)
              Total
      number of shares (or units) purchased as part of publicly announced plans
      or programs
            
            
            (d)
              Maximum
      number (or approximate dollar value) of shares (or units) that may yet be
      purchased under the plans or programsJanuary
      1 – January 31, 2008
            
            
            27,262
            (1)
            
            $
            6.56
            
            
            
            —
            
            
            
            —February
      1 – February 29, 2008
            
            
            3,712
            (1)
            
            $
            6.45
            
            
            
            —
            
            
            
            —March
      1 – March 31, 2008
            
            
            10,915
            (1)
            
            $
            6.20
            
            
            
            —
            
            
            
            —Total
            
            
            41,889
            (1)
            
            $
            6.45
            
            
            
            —
            
            
            
            —





(1)
            Represents
      shares of WCA Waste Corporation’s common stock surrendered to satisfy tax
      withholding obligations on the vesting of restricted
  stock.





ITEM 3. DEFAULTS UPON SENIOR SECURITIES.





None.





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.





None.





ITEM 5. OTHER INFORMATION.





None.




30
 Table of Contents





ITEM 6. EXHIBITS.


12.1*
            Statement
      regarding computation of ratio of earnings to fixed charges for the three
      months ended March 31, 2008.31.1*
            Rule 13a-14(a)/15d-14(a)
      Certification of Chief Executive Officer.31.2*
            Rule 13a-14(a)/15d-14(a)
      Certification of Chief Financial Officer.32.1*
            Section 1350
      Certification of Chief Executive Officer.32.2*
            Section 1350
      Certification of Chief Financial
Officer.





*
            Filed
      herewith.





The
registrant hereby undertakes, pursuant to Regulation S-K, Item 601(b), paragraph
(4)(iii)(A), to furnish to the Securities and Exchange Commission upon request
all constituent instruments defining the rights of holders of long-term debt of
the registrant and its consolidated subsidiaries not filed herewith for the
reason that the total amount of securities authorized under any of such
instruments does not exceed 10% of the registrant’s total consolidated
assets.




31
 Table of Contents




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/ KevinD. MitchellKevin
      D. MitchellVice
      President and Controller(Principal
      Accounting Officer)








Date: May
8, 2008





Table of Contents





EXHIBIT
INDEX





12.1*
            Statement
      regarding computation of ratio of earnings to fixed charges for the three
      months ended March 31, 2008.31.1*
            Rule 13a-14(a)/15d-14(a)
      Certification of Chief Executive Officer.31.2*
            Rule 13a-14(a)/15d-14(a)
      Certification of Chief Financial Officer.32.1*
            Section 1350
      Certification of Chief Executive Officer.32.2*
            Section 1350
      Certification of Chief Financial
Officer.





*
            Filed
      herewith.





The
registrant hereby undertakes, pursuant to Regulation S-K, Item 601(b), paragraph
(4)(iii)(A), to furnish to the Securities and Exchange Commission upon request
all constituent instruments defining the rights of holders of long-term debt of
the registrant and its consolidated subsidiaries not filed herewith for the
reason that the total amount of securities authorized under any of such
instruments does not exceed 10% of the registrant’s total consolidated
assets.