10-K 1 form10-k.htm FORM 10-K ANNUAL REPORT form10-k.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2011

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
(I.R.S. Employer
incorporation or organization)
Identification Number)

1330 Post Oak Boulevard, 30th Floor
 
Houston, Texas
77056
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (713) 292-2400

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of Each Exchange On Which Registered
Common Stock
 
The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None

Common stock, par value $0.01 per share

Indicate by check mark whether the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes £ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes £ No þ

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 the definitions 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 £
Non-accelerated filer £
Smaller reporting company þ

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2011 based on the closing sales price as reported on The Nasdaq Stock Market on such date was approximately $69.2 million.  For purposes of this disclosure, shares of common stock held by persons who hold more than 5% of the outstanding shares of common stock and shares held by officers and directors of the registrant as of June 30, 2011 have been excluded in that such persons may be deemed to be affiliates. This determination is not necessarily conclusive.

Number of shares of common stock outstanding as of March 9, 2012: 23,915,045 (excluding 1,073,957 shares of treasury stock).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement to be filed for the 2012 Annual Meeting of Stockholders are incorporated by reference into Part III of this annual report on Form 10-K (“Form 10-K”).  Except with respect to the information specifically incorporated by reference in this Form 10-K, the Proxy Statement to be filed for the 2012 Annual Meeting of Stockholders is not deemed to be filed as part hereof.




 
 

 
 

 
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Signatures  103
Power of Attorney  104
Exhibit Index  
Statement Re: Computation of Ratio of Earnings to Fixed Charges  
List of Subsidiaries  
Consent of KPMG LLP  
Rule 13a-14(a)/15d-14(a) Certification of CEO  
Rule 13a-14(a)/15d-14(a) Certification of CFO  
Section 1350 Certification of CEO  
Section 1350 Certification of CFO  
   
 
 


Introduction

We are a vertically integrated, non-hazardous solid waste management company providing non-hazardous solid waste collection, transfer, processing, and disposal services in the United States.  As of December 31, 2011, we served approximately 441,000 commercial, industrial and residential collection customers and 7,000 landfill and transfer station customers in Alabama, Arkansas, Colorado, Florida, Kansas, Massachusetts, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee and Texas.  As of December 31, 2011, we owned and/or operated 25 landfills, 29 collection operations and 29 transfer stations/materials recovery facilities (MRFs).  Of these facilities, three transfer stations and two landfills are fully permitted but not yet opened, and three transfer stations are idle.  Additionally, we operate but do not own four of the transfer stations.

WCA Waste Corporation was incorporated as a Delaware corporation in 2004 and is the parent of WCA Waste Systems, Inc., its principal operating subsidiary.  WCA Waste Corporation is a holding company and all of our operations are conducted through our subsidiaries. Accordingly, unless the context requires otherwise, references in this annual report on Form 10-K to “WCA,” “we,” “us,” or “our” refer to WCA Waste Corporation and our direct and indirect subsidiaries on a consolidated basis.

Proposed Acquisition by a Subsidiary of Macquarie Infrastructure Partners

Agreement and Plan of Merger

On December 21, 2011, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cod Intermediate, LLC, a Delaware limited liability company (“Parent”), and Cod Merger Company, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”).  Parent is owned by Macquarie Infrastructure Partners II U.S., L.P. and Macquarie Infrastructure Partners II International, L.P.

Upon the terms and subject to the conditions set forth in the Merger Agreement, which has been unanimously approved by our board of directors, at the closing of the merger (the “Effective Time”), Merger Sub will merge with and into WCA (the “Merger”) and the separate corporate existence of Merger Sub will cease.  WCA will be the Surviving Corporation in the Merger and will be a wholly-owned subsidiary of Parent.  Each share of common stock of WCA issued and outstanding immediately prior to the Effective Time (other than shares held by dissenting stockholders) shall thereupon be converted automatically into the right to receive $6.50 in cash.  Each share of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than any shares held by dissenting stockholders) shall thereupon be converted automatically into the right to receive an amount in cash equal to the preferred stock liquidation preference as of the date of closing.  Each share of Common Stock and Series A Preferred Stock owned, directly or indirectly, by Merger Sub immediately prior to the Effective Time or held by WCA or any of its subsidiaries immediately prior to the Effective Time shall be cancelled and cease to exist and no consideration shall be delivered in exchange for such cancellation and retirement.  All shares of restricted Common Stock shall vest in full at the Effective Time and the holders shall be entitled to receive $6.50 in cash for each share of restricted Common Stock.
 
 
Each party’s obligation to complete the Merger is subject to various customary conditions, including, among others, (a) approval of the Merger Agreement by the stockholders of WCA, which occurred on March 8, 2012, (b) there being no law or injunction prohibiting consummation of the Merger, (c) expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which occurred on February 6, 2012, (d) subject to specified materiality standards, the accuracy of the representations and warranties of the other party and (e) compliance by the other party in all material respects with its covenants. Parent’s obligation to complete the Merger is additionally subject to (a) no material adverse effect on WCA having occurred since December 21, 2011, (b) holders of no more than 10% of the outstanding common stock of WCA and holders of no more than 10% of the outstanding preferred stock of WCA shall have exercised their dissenters’ rights, (c) no event of default under the WCA’s credit agreement shall have occurred and have caused the debt financing not to be available in full, and (d) certain regulatory approvals having been obtained by WCA, all of which have been obtained.

We anticipate that the Merger will close in March 2012.  As of December 31, 2011, we incurred approximately $1.1 million associated with the transaction.

Industry Overview

The non-hazardous solid waste industry can be divided among collection, transfer and disposal services.  The collection and transfer operations of solid waste companies typically have lower margins than disposal service operations.  By vertically integrating collection, transfer and disposal operations, operators seek to capture significant waste volumes and improve operating margins.

During the past four decades, our industry has experienced periods of substantial consolidation activity, though we believe it remains extremely fragmented.  We believe that there are two primary factors that lead to consolidation:

·  
Stringent industry regulations have caused operating and capital costs to rise.  Many local industry participants have found these costs difficult to bear and have decided to either close their operations or sell them to larger operators.

·  
Larger operators are increasingly pursuing economies of scale by vertically integrating their operations or by utilizing their facility, asset and management infrastructure over larger volumes.  Larger solid waste collection and disposal companies have become more cost-effective and competitive by controlling a larger waste stream and by gaining access to significant financial resources to make acquisitions.

Integration and Acquisitions

Vertical Integration and Internalization

Vertical integration is a core element of our operating strategy because it allows us to manage the waste stream from the point of collection through disposal, thereby maximizing the rate of waste internalization, increasing our operating margins and improving our operating cash flows.  Internalization refers to the disposal of collected waste into the landfills we own.  All collected waste must ultimately be processed or disposed of, with landfills being the main depository for such waste.  Generally, the most cost efficient collection services occur within a 35-mile operating radius from the disposal site (up to 100 miles if a transfer station is used).  Collection companies that do not own a landfill within such range from their collection routes will usually have to dispose of the waste they collect in landfills owned by third parties.  Thus, owning a landfill in a market area provides substantial leverage in the waste management business.

As of December 31, 2011, we owned 25 landfills throughout the regions we serve, two of which, though fully permitted, have not yet commenced operations.  We believe that our number of landfills coupled with the geographic locations of those landfills in the regions we serve positions us to maintain high levels of internalization within our existing markets.  As a result of our vertical integration, for the years ended December 31, 2011 and 2010, we internalized approximately 68% and 72% of the total waste we collected, respectively.
 
 
Acquisition History and Outlook

Acquisitions have played a key role in our revenue growth and operating history.  Our acquisition history has included both strategic acquisitions of landfill assets that have enabled us to enter new markets and “tuck-in” acquisitions of collection operations and transfer stations that have expanded our operations in those markets which we already serve.  Collectively, the numerous acquisitions which we have completed have contributed significantly to our overall growth and continue to have a material effect on our operating results.  We strive to integrate all of our completed acquisitions into our existing operations as soon as feasible; however, it may take up to a year to fully realize operating synergies for the acquisitions that we completed in 2011.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview—Acquisitions” to this Form 10-K for more information regarding our completed acquisitions.  For a summary of the impact of the acquisitions during 2011, 2010 and 2009 on our reported financial results for such periods, please read note 3 to our consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplemental Data” to this Form 10-K.

On December 31, 2009 we consummated the acquisition of the operating subsidiaries of Live Earth, LLC (collectively, the “Live Earth Companies”), which included certain assets and related liabilities held by Live Earth, LLC that relate to the Live Earth Companies.  The acquisition of the Live Earth Companies represented our largest acquisition to date and included the Sunny Farms Landfill, a 457-acre site permitted to accept municipal solid waste, industrial waste and construction and demolition debris located in Seneca County, Ohio; Champion City Recovery, a transfer station permitted to accept 1,000 tons a day located south of Boston, Massachusetts; and a rail haul operation over a Class 1 rail line transporting waste from the east coast to Sunny Farms Landfill.  In 2010, we acquired Washita Disposal, Five JAB Environmental Services, Sprint Waste Services and DINA Industries, all of which are tuck-in acquisitions.  Effective January 1, 2011, we acquired all of the outstanding capital stock of IESI OK Corporation, which is now known as WCA of Chickasha.  The acquired operations include nine commercial and residential routes around Chickasha, Oklahoma, which is approximately 40 miles southwest of Oklahoma City, and a transfer station, which is approximately 50 miles from our Pauls Valley Landfill.  The transfer station is fully permitted but is not currently in operation.  On February 15, 2011, we entered into an operating agreement with and an option to purchase Stoughton Recycling Technologies, LLC (“SRT”).  SRT is a commercial and demolition recycling facility and transfer station in Stoughton, Massachusetts.  This facility is located three miles from the WCA-owned Champion City Recovery transfer station and approximately 25 miles south of Boston, Massachusetts.  On February 28, 2011, we completed the acquisition of certain assets of Emerald Waste Services (“Emerald Waste”), including one transfer station and three collection operations located in Central Florida.  The acquired operations consist of 117 residential, commercial and roll-off routes servicing seven counties and 113,500 customers in the Gainesville, Orange City and Daytona Beach market areas.  In 2012, we intend to continue seeking and pursuing attractive acquisition opportunities that enable us to internalize waste into our existing landfills and that offer new markets where: (i) we are able to acquire disposal facilities; (ii) we can secure long-term disposal contracts; or (iii) the landfills are municipally owned.  We have sufficient capacity under our credit agreement and through available authorized shares of our capital stock to pursue and consummate opportunistic acquisitions that enable us to effectively leverage our existing infrastructure and maximize the internalization of waste.
 
 
Our Operations and Customers

Our operations consist of the collection, transfer, processing and disposal of solid waste.  Our revenue mix for the years ended December 31, 2011, 2010 and 2009 is shown in the table below (dollars in thousands):

   
2011
   
2010
   
2009
 
   
$
   
%
   
$
   
%
   
$
   
%
 
Collection
 
$
153,380
     
56.0
%
 
$
123,070
     
53.6
%
 
$
125,931
     
64.9
%
Disposal
   
73,217
     
26.7
     
70,503
     
30.7
     
43,722
     
22.5
 
Transfer and other, net
   
47,217
     
17.3
     
35,911
     
15.7
     
24,485
     
12.6
 
Total revenue
 
$
273,814
     
100.0
%
 
$
229,484
     
100.0
%
 
$
194,138
     
100.0
%

Customers

We have a broad and diverse customer base.  No single customer accounted for more than 2.5% of our revenue for the years ended December 31, 2011, 2010 or 2009.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8 “Financial Statements and Supplemental Data,” note 12 to our consolidated financial statements included in this Form 10-K for certain geographic information relating to our operations.

Collection Services

As of December 31, 2011, we provided solid waste collection services to approximately 441,000 industrial, commercial and residential customers in 12 states through 29 collection operations.  In 2011, our collection revenue consisted of approximately 29% from services provided to industrial customers, 26% from services provided to commercial customers and 45% from services provided to residential customers.

In our commercial collection operations, we supply our customers with waste containers of various types and sizes.  These containers are designed so that they can be lifted mechanically and emptied into a collection truck to be transported to a disposal facility.  By using these containers, we can service most of our commercial customers with trucks operated by a single employee.  Commercial collection services are generally performed under service agreements with a duration of one to five years with possible renewal options.  Fees are generally determined by such considerations as individual market factors, collection frequency, the type of equipment we furnish, the type and volume or weight of the waste to be collected, the distance to the disposal facility and the cost of disposal.

Residential solid waste collection services often are performed under contracts with municipalities, which we generally secure by competitive bid and which give us exclusive rights to service all or a portion of the homes in these municipalities.  These contracts usually range in duration from one to five years with possible renewal options.  Residential solid waste collection services may also be performed on a subscription basis, in which individual households or homeowners’ or similar associations contract directly with us.  The fees received for residential collection are based primarily on market factors, frequency and type of service, the distance to the disposal facility and the cost of disposal.

Additionally, we rent waste containers and provide collection services to construction, demolition and industrial sites.  We load the containers onto our vehicles and transport them with the waste to either a landfill or a transfer station for disposal.  We refer to this as “roll-off” collection.  Roll-off collection services are generally performed on a contractual basis.  Contract terms tend to be shorter in length and may vary according to the customers’ underlying projects.
 

Transfer and Disposal Services

Landfills are the main depository for solid waste in the United States.  Solid waste landfills are built, operated, and tied to a state permit under stringent federal, state and local regulations.  Currently, solid waste landfills in the United States must be designed, permitted, operated, closed and maintained after closure in compliance with federal, state and local regulations pursuant to Subtitle D of the Resource Conservation and Recovery Act of 1976, as amended.  We do not operate hazardous waste landfills, which are subject to even greater regulations.  Operating a solid waste landfill includes excavating, constructing liners, continually spreading and compacting waste and covering waste with earth or other inert material as required, final capping, closure and post-closure monitoring.  The objectives of these operations are to maintain sanitary conditions, to ensure the best possible use of the airspace and to prepare the site so that it can ultimately be used for other end use purposes.

Access to a disposal facility is a necessity for all solid waste management companies.  While access to disposal facilities owned or operated by third parties can be obtained, we believe that it is preferable to internalize the waste streams.

In areas where we conduct collection operations remote from one of our landfills, we often pursue the acquisition or development of transfer stations.  Transfer stations allow us to consolidate waste for subsequent transfer in larger loads, thereby making disposal in our otherwise remote landfills economically feasible.  A transfer station is a facility located near residential and commercial collection routes where collection trucks take the solid waste that has been collected.  The waste is unloaded from the collection trucks and reloaded onto larger transfer trucks for transportation to a landfill for final disposal.  In addition to increasing our ability to internalize the waste that our collection operations collect, using transfer stations reduces the costs associated with transporting waste to final disposal sites because the trucks we use for transfer have a larger capacity than collection trucks, thus allowing more waste to be transported to the disposal facility on each trip.  It also increases the efficiency of our collection personnel and equipment because it allows them to focus more on collection.  The following table reflects the number of transfer stations/MRFs we owned and operated by state as of December 31, 2011, 2010 and 2009.

 
2011
   
2010
   
2009
 
Alabama
3
(1)
 
3
(1)
 
3
(1)
Arkansas
2
(1)
 
2
(1)
 
2
(1)
Florida
5
   
4
   
4
 
Kansas
1
(1)
 
1
(1)
 
1
(1)
Massachusetts
2
(1)
 
1
   
1
 
Missouri
7
   
7
   
7
 
North Carolina
4
   
3
   
3
 
Oklahoma
1
   
 —
   
 —
 
South Carolina
1
   
1
   
1
 
Texas
3
   
2
   
2
 
Total
      29
   
      24
   
      24
 

(1)
Indicates a transfer station that we operated but did not own as of December 31 of the year presented.

The fees charged at disposal facilities are based on market factors, as well as the type and weight or volume of solid waste deposited and the type and size of the vehicles used in the transportation of the waste.  The fees charged to third parties who deposit waste at our transfer stations are generally based on the type and volume or weight of the waste transferred and the distance to the disposal site.
 
 
Landfills

As of December 31, 2011, we owned 25 non-hazardous solid waste landfills in 12 states, two of which, though fully permitted, have not yet commenced operations.  The following table sets forth certain information as of December 31, 2011 for each of our landfills.  For information concerning accounting principles we use for landfill accounting and a description of our use of estimates, please refer to Part II, Item 8 “Financial Statements and Supplemental Data,”  notes 1(f) and 2 to our consolidated financial statements included in this Form 10-K.

Landfill
 
Location
 
Permitted Waste
 
Permitted
Capacity (1)
(Cu. Yds)
 
Probable Expansion Capacity (2)
(Cu. Yds)
 
Total
Capacity (3)
(Cu. Yds)
 
Remaining Permitted Life (4) (Years)
   
Total Remaining Life (3)(4)
(Years)
 
Oak Grove
 
Arcadia, KS
 
MSW
   
6,336,315
   
13,547,305
   
19,883,620
   
29.8
     
93.6
 
Black Oak
 
Hartville, MO
 
MSW
   
5,557,458
   
7,018,000
   
12,575,458
   
20.6
     
46.5
 
Central Missouri
 
Sedalia, MO
 
MSW
   
7,719,462
   
7,500,000
   
15,219,462
   
32.3
     
63.7
 
Eagle Ridge
 
Bowling Green, MO
 
MSW
   
2,240,958
   
16,633,000
   
18,873,958
   
12.9
     
108.9
 
Rolling Meadows
 
Hazen, AR
 
MSW
   
3,241,126
   
20,000,000
   
23,241,126
   
8.9
     
63.9
 
Union County
 
El Dorado, AR
 
MSW
   
2,976,196
   
738,800
   
3,714,996
   
14.1
     
17.6
 
Darrell Dickey(5)
 
Houston, TX
 
MSW
   
5,239,003
   
   
5,239,003
   
N/A
(5)
   
N/A
(5)
Fort Bend
 
Houston, TX
 
MSW
   
42,212,459
   
15,545,149
   
57,757,608
   
46.9
     
64.2
 
Pauls Valley
 
Oklahoma City, OK
 
MSW
   
6,782,310
   
   
6,782,310
   
104.3
     
104.3
 
Sooner
 
Oklahoma City, OK
 
MSW
   
2,192,358
   
4,012,190
   
6,204,548
   
33.5
     
94.8
 
Bondad
 
Durango, CO
 
MSW
   
2,299,431
   
   
2,299,431
   
43.7
     
43.7
 
Sunny Farms
 
Fostoria, OH
 
MSW
   
2,798,440
   
33,647,326
   
36,445,766
   
2.1
     
27.3
 
Hardy Road
 
Houston, TX
 
C&D
   
4,296,882
   
4,450,155
   
8,747,037
   
10.5
     
21.4
 
Greenbelt
 
Houston, TX
 
C&D
   
4,178,454
   
4,304,365
   
8,482,819
   
16.5
     
33.6
 
Ralston Road
 
Houston, TX
 
C&D
   
1,282,454
   
   
1,282,454
   
11.0
     
11.0
 
Applerock(5)
 
Houston, TX
 
C&D
   
8,750,000
   
   
8,750,000
   
N/A
(5)
   
N/A
(5)
Shiloh
 
Travelers Rest, SC
 
C&D
   
3,015,809
   
   
3,015,809
   
37.1
     
37.1
 
Yarnell
 
Knoxville, TN
 
C&D
   
1,078,225
   
   
1,078,225
   
16.9
     
16.9
 
Blount
 
Trafford, AL
 
C&D
   
14,698,246
   
11,180,143
   
25,878,389
   
117.4
     
206.8
 
Fines
 
Alpine, AL
 
C&D/Industrial
   
7,543,284
   
   
7,543,284
   
153.8
     
153.8
 
High Point
 
High Point, NC
 
C&D
   
3,813,617
   
   
3,813,617
   
46.5
     
46.5
 
Raleigh
 
Raleigh, NC
 
C&D
   
6,851,421
   
6,612,722
   
13,464,143
   
41.7
     
82.0
 
DeSoto
 
Arcadia, FL
 
C&D
   
6,078,357
   
1,894,068
   
7,972,425
   
33.0
     
43.3
 
Fort Meade
 
Ft Meade, FL
 
C&D
   
4,080,267
   
3,635,910
   
7,716,177
   
40.8
     
77.2
 
Northeast
 
Oklahoma City, OK
 
C&D
   
4,141,645
   
3,347,911
   
7,489,556
   
23.8
     
43.0
 
Total
           
159,404,177
   
154,067,044
   
313,471,221
   
39.1
     
65.3
 

(1)
Permitted capacity includes the total available airspace approved by state and, if required, local regulatory agencies for our use.  Additional approvals may be required for construction and use of specific cells within the permitted area.  At any given time, certain landfills may be nearing the full capacity of existing approved cells.  The failure to obtain a consent or approval for construction or use of additional cells could have a material effect on our operations.  If the consent or approval is not obtained, we will evaluate alternative actions, such as diverting waste streams and pursuing legal recourse to challenge adverse regulatory rulings.  See Part I, Item 1A “Risk Factors—Risks Relating to Our Business—We may not be successful in expanding the permitted capacity of our current or future landfills, which could restrict our growth, increase our disposal costs, and reduce our operating margins” to this Form 10-K.

(2)
Probable expansion capacity includes possible expansion capacity that we believe, based on industry practice and our experience, is likely to be permitted.  The criteria we use to determine if permit expansion is probable include, but are not limited to, whether: (i) we believe that the project has fatal flaws; (ii) the land is owned or controlled by us, or under option agreement; (iii) we have 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 of an existing landfill; (vi) we believe the permit is likely to be received; and (vii) we believe that the timeframe to complete the permitting is reasonable.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8 “Financial Statements and Supplemental Data,” notes 1 and 2 to our consolidated financial statements included in this Form 10-K for information regarding our landfill accounting and use of estimates.

(3)
Includes expansions that we classify as “probable.”  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8 “Financial Statements and Supplemental Data,” notes 1 and 2 to our consolidated financial statements included in this Form 10-K for information regarding our landfill accounting and use of estimates.

(4)
Based on current and estimated future disposal volumes.

(5)
Fully permitted but has not yet commenced operations, and therefore remaining permitted life and total remaining life cannot be calculated.
 
 
As indicated in the table above, as of December 31, 2011, 12 of our landfills were permitted to accept municipal solid waste.  The remaining 13 landfills were permitted to accept non-hazardous dry construction and demolition debris, which generally includes bricks, boards, metal, concrete, wall board and similar materials.  All of our landfills accept waste from municipalities, private sector waste collection companies and the general public.

Based on remaining permitted capacity (including probable expansions) as of December 31, 2011 and projected annual disposal volumes, the average remaining landfill life of our 23 operating landfills at December 31, 2011 was approximately 65.3 years.  Some of our landfills have the potential for expanded disposal capacity beyond their currently permitted limits.  We monitor the availability of permitted disposal capacity at each of our landfills on an ongoing basis and evaluate whether to pursue an expansion at a given landfill.  In making this determination with respect to a particular landfill, we consider a number of factors, including the estimated future volume of waste to be disposed of at the landfill, the estimated future prices for disposal of waste at the landfill, the amount of unpermitted acreage included in the landfill, the likelihood that we will be able to obtain the required approvals and permits for expansion and the costs of developing the additional capacity.  Please read Part II, Item 8 “Financial Statements and Supplemental Data,” notes 1(f) and 2 to our consolidated financial statements included in this Form 10-K for information regarding our landfill accounting and use of estimates.  We also regularly consider whether it is advisable, in light of changing market conditions and/or regulatory requirements, to seek to expand or change the permitted waste streams or to seek other permit modifications.

We are currently seeking to expand permitted capacity at several of our landfills.  The table above includes a column reflecting expansions that we believe to be “probable” based on various estimates and assumptions.  For a description of how we make determinations whether permit expansion is probable, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates and Assumptions—Landfill Accounting” and Part II, Item 8 “Financial Statements and Supplemental Data,” note 1(f) to our consolidated financial statements to this Form 10-K.  However, we note that we may not be able to obtain permits for expansions, including expansions that we considered to be probable.  Therefore, the average remaining landfill life of our 23 operating landfills as of December 31, 2011 may not be 65.3 years when considering remaining permitted capacity, probable expansion capacity and projected annual disposal volume.  Please read Part I, Item 1A “Risk Factors—Risks Relating to Our Business—We may not be successful in expanding the permitted capacity of our current or future landfills, which could restrict our growth, increase our disposal costs, and reduce our operating margins” included in this Form 10-K.

Available Airspace

The following table reflects airspace activity for landfills owned or operated by us for the years ended December 31, 2011, 2010 and 2009.

   
Balance as of
December 31, 2010
   
New Expansions Undertaken
   
Landfills Acquired,
Net of Divestiture
   
Permits Granted
   
Airspace Consumed
   
Changes in Engineering Estimates and Design
   
Balance as of
December 31, 2011
 
Permitted airspace:
                                         
Cubic yards (in thousands)
   
159,480
     
     
     
3,025
     
(5,972
)
   
2,871
     
159,404
 
Number of sites
   
25
     
     
     
     
     
     
25
 
Expansion airspace:
                                                       
Cubic yards (in thousands)
   
143,801
     
7,500
     
     
(4,507
)
   
     
7,273
 
   
154,067
 
Number of sites
   
17
     
1
     
     
(2
)
   
     
     
16
 
Total available airspace:
                                                       
Cubic yards (in thousands)
   
303,281
     
7,500
     
     
(1,482
)
   
(5,972
)
   
10,144
     
313,471
 
Number of sites
   
25
             
                             
25
 
 
 
   
Balance as of
December 31, 2009
   
New Expansions Undertaken
   
Landfills Acquired,
Net of Divestiture
   
Permits Granted
   
Airspace Consumed
   
Changes in Engineering Estimates and Design
   
Balance as of
December 31, 2010
 
Permitted airspace:
                                         
Cubic yards (in thousands)
   
164,885
     
     
     
3,625
     
(6,186
)
   
(2,844
)
   
159,480
 
Number of sites
   
25
     
     
     
     
     
     
25
 
Expansion airspace:
                                                       
Cubic yards (in thousands)
   
134,707
     
14,356
     
     
(3,625
)
   
     
(1,637
)
   
143,801
 
Number of sites
   
15
     
3
     
     
(1
)
   
     
     
17
 
Total available airspace:
                                                       
Cubic yards (in thousands)
   
299,592
     
14,356
     
     
     
(6,186
)
   
(4,481
)
   
303,281
 
Number of sites
   
25
             
                             
25
 

   
Balance as of
December 31, 2008
   
New Expansions Undertaken
   
Landfills Acquired,
Net of Divestiture
   
Permits Granted
   
Airspace Consumed
   
Changes in Engineering Estimates and Design
   
Balance as of
December 31, 2009
 
Permitted airspace:
                                         
Cubic yards (in thousands)
   
144,057
     
     
6,200
     
18,668
     
(4,933
)
   
893
     
164,885
 
Number of sites
   
24
     
     
1
     
     
     
     
25
 
Expansion airspace:
                                                       
Cubic yards (in thousands)
   
139,124
     
     
31,200
     
(18,668
)
   
     
(16,949
)
   
134,707
 
Number of sites
   
15
     
     
1
     
(1
)
   
     
     
15
 
Total available airspace:
                                                       
Cubic yards (in thousands)
   
283,181
     
     
37,400
     
     
(4,933
)
   
(16,056
)
   
299,592
 
Number of sites
   
24
             
1
                             
25
 

We perform periodic engineering reviews of our landfill capacity.  Based on these reviews, there may be changes in the estimated available remaining capacity of a landfill or changes in the utilization of such landfill capacity, affecting the amount of waste that can be placed in the future. Estimates of the amount of waste that can be placed in the future are reviewed annually and are based on a number of factors, including site-specific factors such as current and projected mix of waste type; initial and projected waste density; estimated number of years of life remaining; and depth of underlying waste.  We continually focus on improving the utilization of airspace through efforts that include recirculating landfill leachate where allowed by permit; optimizing the placement and utilization of alternative daily cover; and increasing initial compaction through improved landfill equipment, operations and training.

Risk Management, Insurance and Financial Assurances

Our environmental risk management program includes evaluating existing facilities and potential acquisitions for environmental compliance.  We do not presently expect environmental compliance costs to increase materially above current levels, but we cannot predict whether recent and future acquisitions will cause such costs to increase.  We also maintain a worker safety program that encourages safe practices in the workplace.  Operating practices at all of our facilities emphasize minimizing the possibility of environmental contamination and liability.
 
 
The nature of our business exposes us to the risk of liabilities arising out of our operations, including possible damage to the environment.  Such potential liabilities could involve, for example: (i) claims for remediation costs, personal injury, property damage and damage to the environment in cases where we may be held responsible for the escape of harmful materials; (ii) claims of employees, customers or third parties for personal injury or property damage occurring in the course of our operations; or (iii) claims alleging negligence in the planning or performance of our work.  We could also be subject to fines and civil and criminal penalties in connection with alleged violations of regulatory requirements.  Because of the nature and scope of the possible environmental damages, liabilities imposed in environmental litigation can be significant.  Our solid waste operations have third party environmental liability insurance with limits in excess of those required by permit regulations, subject to certain limitations and exclusions, which we believe are customary in the industry.  However, the limits of such environmental liability insurance may be inadequate in the event of a major loss.  Further, we may be unable to continue to carry excess environmental liability insurance should market conditions in the insurance industry make such coverage prohibitively expensive or otherwise unavailable.  Please read Part I, Item 1A “Risk Factors—Risks Relating To Our Business—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” included in this Form 10-K.

We have property insurance, general liability, automobile physical damage and liability, employment practices liability, pollution liability, directors and officers liability, fiduciary liability, workers’ compensation and employer’s liability coverage, as well as umbrella liability policies to provide excess coverage over the underlying limits contained in our primary general liability, automobile liability and employer’s liability policies.  Each of our insurance policies contains a per occurrence or per loss deductible for which we are responsible.  Our deductibles range from $1,000 per loss under our employee practices to $100,000 for general liability and $250,000 per occurrence or loss under our automobile liability and workers’ compensation and employer’s liability coverages.  In addition, we have a $500,000 per loss deductible under our pollution liability coverage.  Accordingly, we are effectively self-insured for these amounts with respect to claims covered by our insurance policies, as well as with respect to amounts that exceed our policy limits (including our umbrella policy limits, where applicable).  In the future, we may be exposed to uninsured liabilities which could have a material adverse effect on our financial condition, results of operations or cash flows.  For more information on our insurance coverage, please read Part II, Item 8 “Financial Statements and Supplemental Data,” note 13(e) to our consolidated financial statements included in this Form 10-K.

In the normal course of business, we are required to post performance bonds, insurance policies, letters of credit and/or cash deposits in connection with the performance of municipal residential collection contracts, the operation, closure or post-closure of landfills, certain environmental permits and certain business licenses and permits.  Bonds issued by surety companies operate as a financial guarantee of our performance.  We have satisfied our financial responsibility requirements by obtaining bank letters of credit, insurance policies, performance bonds or making cash deposits.

As of December 31, 2011, we obtained performance bonds in an aggregate amount of approximately $95.8 million.  We had letters of credit in an aggregate amount of approximately $12.1 million, supporting performance of landfill closure and post-closure requirements, insurance contracts, municipal contracts and other financial assurance obligations.  For a description of the surety bonds and letter of credit commitments we had in place as of December 31, 2011, please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Other Commitments” included in this Form 10-K.  If in the future we are unable to obtain such instruments in sufficient amounts or at acceptable rates, we could be precluded from retaining existing municipal solid waste collection contracts, entering into additional municipal contracts, or obtaining or retaining landfill or transfer station operating permits.  Please read Part I, Item 1A “Risk Factors—Risks Relating To Our Business—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” included in this Form 10-K.
 
 
Competition

The solid waste collection and disposal industry is highly competitive and fragmented and requires substantial labor and capital resources.  The industry presently includes large, publicly-held, national waste companies such as Republic Services, Inc. and Waste Management, Inc., as well as numerous other public and privately-held waste companies.  Certain of the markets in which we compete or will likely compete are served by one or more of these companies, as well as by numerous privately-held regional and local solid waste companies of varying sizes and resources, some of which have accumulated substantial goodwill in their markets.  We also compete with operators of alternative disposal facilities and with counties, municipalities and solid waste districts that maintain their own waste collection and disposal operations.  Public sector operations may have financial advantages over us because of their access to user fees and similar charges, tax revenues and tax-exempt financing.

We compete for collection, transfer and disposal volume based primarily on geographic location and the price and quality of our services.  From time to time, our competitors may reduce the price of their services in an effort to expand their market share or service areas or to win competitively bid municipal contracts.  These practices may cause us to reduce the price of our services or, if we elect not to do so, to lose business.

The solid waste collection and disposal industry has undergone significant consolidation, and, as a result of this consolidation, we encounter competition in our efforts to acquire landfills, transfer stations and collection operations.  Competition exists not only for collection, transfer and disposal volume but also for acquisition candidates.  We generally compete for acquisition candidates with large, publicly-held waste management companies, private equity backed firms as well as numerous privately-held regional and local solid waste companies of varying sizes and resources.  Competition in the disposal industry may also be affected by the increasing national emphasis on recycling and other waste reduction programs, which may reduce the volume of waste deposited in landfills.  Accordingly, it may become uneconomical for us to make further acquisitions or we may be unable to locate or acquire suitable acquisition candidates at price levels and on terms and conditions that we consider appropriate, particularly in markets we do not already serve.

Sales and Marketing

We focus our marketing efforts on increasing and extending business with existing customers, as well as increasing our new customer base.  Our sales and marketing strategy is to provide prompt, high quality, comprehensive solid waste collection, transfer and disposal services to our customers at competitive prices.  We target potential customers of all sizes, from small quantity generators to large companies and municipalities.  Because the waste collection and disposal business is a very localized business, most of our marketing activity is local in nature.  However, we do have a vice president of sales who is responsible for overseeing and formulating our sales and marketing efforts on a company-wide basis, including assisting in hiring and setting compensation programs for our field operations.

Government Contracts

We are parties to contracts with municipalities and other associations and agencies.  Many of these contracts are or will be subject to competitive bidding.  We may not be the successful bidder, or we may have to substantially lower prices in order to be the successful bidder.  In addition, some of our customers may have the right to terminate their contracts with us before the end of the contract term.

Municipalities may annex unincorporated areas within counties where we provide collection services, and as a result, our customers in annexed areas may be required to obtain service from competitors who have been franchised or contracted by the annexing municipalities to provide those services.  Some of the local jurisdictions in which we currently operate grant exclusive franchises to collection and disposal companies, others may do so in the future, and we may enter markets where franchises are granted by certain municipalities, thereby reducing the potential market opportunity for us.

 
Regulation

Our business is subject to extensive and evolving federal, state and local environmental, health, safety and transportation laws and regulations.  These laws and regulations are administered by the U.S. Environmental Protection Agency, or EPA, and various other federal, state and local environmental, zoning, air, water, transportation, land use, health and safety agencies.  Many of these agencies regularly inspect our operations to monitor compliance with these laws and regulations.  Governmental agencies have the authority to enforce compliance with these laws and regulations and to obtain injunctions or impose civil or criminal penalties in cases of violations.  We believe that regulation of the waste industry will continue to evolve, and we will adapt to future legal and regulatory requirements to ensure compliance.

Our operation of landfills subjects us to certain operational, monitoring, site maintenance, closure, post-closure and other obligations which could give rise to increased costs for compliance and corrective measures.  In connection with our acquisition of landfills and continued operation or expansion of our landfills, we must often spend considerable time to increase the capacity of these landfills.  We may be unable to obtain or maintain necessary governmental approvals.  Once obtained, operating permits are subject to modification and revocation by the issuing agency.  Compliance with these and any future regulatory requirements could require us to make significant capital and operating expenditures.  However, most of these expenditures are made in the normal course of business and do not place us at any competitive disadvantage.

Our operations are subject to extensive regulation, principally under the federal statutes described below.

The Resource Conservation and Recovery Act of 1976, as amended, or RCRA.  RCRA regulates the handling, transportation and disposal of hazardous and non-hazardous wastes and delegates authority to states to develop programs to ensure the safe disposal of solid wastes.  On October 9, 1991, the EPA promulgated Solid Waste Disposal Facility Criteria for non-hazardous solid waste landfills under Subtitle D of RCRA.  Subtitle D includes location standards, facility design and operating criteria, closure and post-closure requirements, financial assurance standards and groundwater monitoring, as well as corrective action standards, many of which had not commonly been in place or enforced at landfills.  Subtitle D applies to all solid waste landfill cells that received waste after October 9, 1991, and, with limited exceptions, required all landfills to meet these requirements by October 9, 1993. All states in which we operate have EPA-approved programs which implemented at least the minimum requirements of Subtitle D and in some states even more stringent requirements.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or CERCLA.  CERCLA, which is also known as Superfund, addresses problems created by the release or threatened release of hazardous substances (as defined in CERCLA) into the environment.  CERCLA’s primary mechanism for achieving remediation of such problems is to impose strict joint and several liability for cleanup of disposal sites on current owners and operators of the site, former site owners and operators at the time of disposal and parties who arranged for disposal at the facility (i.e., generators of the waste and transporters who select the disposal site).  The costs of a CERCLA cleanup can be substantial.  Liability under CERCLA is not dependent on the existence or intentional disposal of “hazardous wastes” (as defined under RCRA), but can also be based upon the release or threatened release, even as a result of lawful, unintentional and non-negligent action, of any one of the more than 700 “hazardous substances” listed by the EPA, even in minute amounts.

The Federal Water Pollution Control Act of 1972, as amended, or the Clean Water Act.  This act establishes rules regulating the discharge of pollutants into streams and other waters of the United States (as defined in the Clean Water Act) from a variety of sources, including solid waste disposal sites.  If runoff from our landfills or transfer stations may be discharged into surface waters, the Clean Water Act requires us to apply for and obtain discharge permits, conduct sampling and monitoring and, under certain circumstances, reduce the quantity of pollutants in those discharges.  In 1990, the EPA issued additional rules under the Clean Water Act, which establish standards for management of storm water runoff from landfills and which require landfills that receive, or in the past received, industrial waste to obtain storm water discharge permits.  In addition, if a landfill or transfer station discharges wastewater through a sewage system to a publicly-owned treatment works, the facility must comply with discharge limits imposed by the treatment works.  Also, if development of a landfill may alter or affect “wetlands,” the owner may have to obtain a permit and undertake certain mitigation measures before development may begin.  This requirement is likely to affect the construction or expansion of many solid waste disposal sites.

 
The Clean Air Act of 1970, as amended, or the Clean Air Act.  The Clean Air Act provides for increased federal, state and local regulation of the emission of air pollutants.  The EPA has applied the Clean Air Act to solid waste landfills and vehicles with heavy duty engines, such as waste collection vehicles.  Additionally, in March 1996, the EPA adopted New Source Performance Standards and Emission Guidelines (the “Emission Guidelines”) for municipal solid waste landfills to control emissions of landfill gases.  These regulations impose limits on air emissions from solid waste landfills.  The Emission Guidelines impose two sets of emissions standards, one of which is applicable to all solid waste landfills for which construction, reconstruction or modification was commenced before May 30, 1991.  The other applies to all municipal solid waste landfills for which construction, reconstruction or modification was commenced on or after May 30, 1991.  The Emission Guidelines are being implemented by the states after the EPA approves the individual state’s program.  These guidelines, combined with the new permitting programs established under the Clean Air Act, subject solid waste landfills to significant permitting requirements and, in some instances, require installation of gas recovery systems to reduce emissions to allowable limits.  The EPA also regulates the emission of hazardous air pollutants from municipal landfills and has promulgated regulations that require measures to monitor and reduce such emissions.

Climate Change.  A variety of regulatory developments, proposals or requirements have been introduced that are focused on restricting the emission of carbon dioxide, methane and other gases known as greenhouse gases.  Congress has considered legislation directed at reducing greenhouse gas emissions.  There has been support in various regions of the country for legislation that requires reductions in greenhouse gas emissions, and some states have already adopted legislation addressing greenhouse gas emissions from various sources.  In 2007, the U.S. Supreme Court held in Massachusetts, et al. v. EPA that greenhouse gases are an “air pollutant” under the federal Clean Air Act and, thus, subject to future regulation.  In a move toward regulating greenhouse gases, on December 15, 2009, the EPA published its findings that emission of carbon dioxide, methane and other greenhouse gases present an endangerment to human health and the environment because greenhouse gases are, according to EPA, contributing to climate change.  On October 30, 2009, the EPA published the  greenhouse gas reporting final rule, effective December 29, 2009, which establishes a new comprehensive scheme requiring certain specified industries as well as operators of stationary sources emitting more than established annual thresholds of carbon dioxide-equivalent greenhouse gases to inventory and report their greenhouse gas emissions annually.  Municipal solid waste landfills are subject to the rule.  EPA proposed regulations that would require a reduction in emissions of greenhouse gases from motor vehicles.  Finally, according to the EPA, the final motor vehicle greenhouse gas standards will trigger construction and operating permit requirements for stationary sources.  As a result, the EPA has proposed to tailor these programs such that only large stationary sources will be required to have air permits that authorize greenhouse gas emissions.

The Occupational Safety and Health Act of 1970, as amended, or OSHA.  OSHA establishes certain employer responsibilities, including maintenance of a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards promulgated by the Occupational Safety and Health Administration and various record keeping, disclosure and procedural requirements.  Various standards, including standards for notices of hazards, safety in excavation and demolition work and the handling of asbestos, may apply to our operations.

Flow Control/Interstate Waste Restrictions.  Certain permits and approvals, as well as certain state and local regulations, may limit a landfill or transfer station to accepting waste that originates from specified geographic areas, restrict the importation of out-of-state waste or wastes originating outside the local jurisdiction or otherwise discriminate against non-local waste.  These restrictions, generally known as flow control restrictions, are controversial, and some courts have held that some flow control schemes violate constitutional limits on state or local regulation of interstate commerce.  From time to time, federal legislation is proposed that would allow some local flow control restrictions.  Although no such federal legislation has been enacted to date, if such federal legislation should be enacted in the future, states in which we own landfills could limit or prohibit the importation of out-of-state waste or direct that wastes be handled at specified facilities.  Such state actions could adversely affect our landfills.  These restrictions could also result in higher disposal costs for our collection operations.  If we were unable to pass such higher costs through to our customers, our business, financial condition and operating results could be adversely affected.

 
Certain state and local jurisdictions may also seek to enforce flow control restrictions through local legislation or contractually.  In certain cases, we may elect not to challenge such restrictions.  These restrictions could reduce the volume of waste going to landfills in certain areas, which may adversely affect our ability to operate our landfills at their full capacity and/or reduce the prices that we can charge for landfill disposal services.  These restrictions may also result in higher disposal costs for our collection operations.  If we were unable to pass such higher costs through to our customers, our business, financial condition and operating results could be adversely affected.

State and Local Regulation.  Each state in which we now operate or may operate in the future has laws and regulations governing the generation, storage, treatment, handling, transportation and disposal of solid waste, occupational safety and health, water and air pollution and, in most cases, the siting, design, operation, maintenance, closure and post-closure maintenance of landfills and transfer stations.  State and local permits and approval for these operations may be required and may be subject to periodic renewal, modification or revocation by the issuing agencies.  In addition, many states have adopted statutes comparable to, and in some cases more stringent than, CERCLA.  These statutes impose requirements for investigation and cleanup of contaminated sites and liability for costs and damages associated with such sites, and some provide for the imposition of liens on property owned by responsible parties.  Furthermore, many municipalities also have ordinances, local laws and regulations affecting our operations.  These include zoning and health measures that limit solid waste management activities to specified sites or activities, flow control provisions that direct or restrict the delivery of solid wastes to specific facilities, laws that grant the right to establish franchises for collection services and then put such franchises out for bid and bans or other restrictions on the movement of solid wastes into a municipality.

Permits or other land use approvals with respect to a landfill, as well as state or local laws and regulations, may specify the quantity of waste that may be accepted at the landfill during a given time period and/or specify the types of waste that may be accepted at the landfill.  Once an operating permit for a landfill is obtained, it must generally be renewed periodically.

There has been an increasing trend at the state and local level to mandate and encourage waste reduction and recycling and to prohibit or restrict the disposal in landfills of certain types of solid wastes, such as yard wastes, beverage containers, unshredded tires, lead-acid batteries, paper, cardboard and household appliances.  The enactment of regulations reducing the volume and types of wastes available for transport to and disposal in landfills could prevent us from operating our facilities at their full capacity.

Many states and local jurisdictions have enacted “bad boy” laws that allow the agencies that have jurisdiction over waste services contracts or permits to deny or revoke these contracts or permits based on the applicant’s or permit holder’s compliance history.  Some states and local jurisdictions go further and consider the compliance history of the parent, subsidiaries or affiliated companies, in addition to that of the applicant or permit holder. These laws authorize the agencies to make determinations of an applicant’s or permit holder’s fitness to be awarded a contract to operate and to deny or revoke a contract or permit because of unfitness unless there is a showing that the applicant or permit holder has been rehabilitated through the adoption of various operating policies and procedures put in place to assure future compliance with applicable laws and regulations.

Some state and local authorities enforce certain federal laws in addition to state and local laws and regulations. For example, in some states, RCRA, OSHA, parts of the Clean Air Act and parts of the Clean Water Act are enforced by local or state authorities instead of the EPA, and in some states those laws are enforced jointly by state or local and federal authorities.

Public Utility Regulation.  In many states, public authorities regulate the rates that landfill operators may charge.  The adoption of rate regulation or the reduction of current rates in states in which we own landfills could adversely affect our business, financial condition and operating results.

 
Seasonality

Based on our industry and our historic trends, we expect our operations to vary seasonally.  Typically, revenue will be highest in the second and third calendar quarters and lowest in the first and fourth calendar quarters.  These seasonal variations result in fluctuations in waste volumes due to weather conditions and general economic activity.  We also expect that our operating expenses may be higher during the winter months due to periodic adverse weather conditions that can slow the collection of waste, resulting in higher labor and operational costs.  Please read Part I, Item 1A “Risk Factors—Risks Relating To Our Business—Seasonal fluctuations will cause our business and results of operations to vary among quarters, which could adversely affect our stock price” included in this Form 10-K.

Employees

As of December 31, 2011, we had approximately 1,211 full-time employees.  A group of 16 employees at one of our locations is represented by a union.  In 2011, we negotiated with the union for a new collective bargaining agreement which has a term extending until March 2016.  We have not experienced any work stoppages and we believe that our relations with our employees are good.

Available Information

We electronically file certain documents with the Securities and Exchange Commission (the “SEC”).  We file annual reports on Form 10-K; quarterly reports on Form 10-Q; and current reports on Form 8-K (as appropriate); along with any related amendments and supplements thereto.  From time to time, we may also file registration statements and related documents in connection with equity or debt offerings.  You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.  You may obtain information regarding the Public Reference Room by calling the SEC at 1-800-SEC-0330.  In addition, the SEC maintains an internet website at www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC.

Our internet website is www.wcawaste.com.  We make available free of charge through the “Investor Relations-SEC Filings” section of our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

 

Our business, financial condition, and financial results are subject to various risks, including the following:

Risks Relating to Our Merger Agreement

On December 21, 2011, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cod Intermediate, LLC, a Delaware limited liability company (“Parent”), and Cod Merger Company, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). Parent is owned by Macquarie Infrastructure Partners II U.S., L.P. and Macquarie Infrastructure Partners II International, L.P.

Failure to complete the merger or delays in completing the merger could negatively affect our stock price and future businesses and operations.

There is no assurance that we will be able to consummate the merger.  If the merger is not completed for any reason, we may be subject to a number of risks, including the following:

·  
we will not realize the benefits expected from the merger, including a potentially enhanced financial and competitive position;
 
·  
the current market price of our common stock may reflect a market assumption that the merger will occur and a failure to complete the merger could result in a negative perception of us by the stock market and cause a decline in the market price of our common stock;
 
·  
certain costs relating to the merger, including certain investment banking, financing, legal and accounting fees and expenses, must be paid even if the merger is not completed, and we may be required to pay substantial fees to Parent if the merger agreement is terminated under specified circumstances; and
 
·  
we would continue to face the risks that we currently face as an independent company.
 
Delays in completing the merger could exacerbate uncertainties concerning the effect of the merger, which may have an adverse effect on our business following the merger and could defer or detract from the realization of the benefits expected to result from the merger.

There may be substantial disruption to our business and distraction of our management and employees as a result of the merger.

There may be substantial disruption to our business and distraction of our management and employees from day-to-day operations because matters related to the merger may require substantial commitments of time and resources, which could otherwise have been devoted to other opportunities that could have been beneficial to us.

Business uncertainties and contractual restrictions while the merger is pending may have an adverse effect on us.

Uncertainty about the effect of the merger on employees, suppliers, partners, regulators, and customers may have an adverse effect on us.  These uncertainties may impair our ability to attract, retain, and motivate key personnel until the merger is consummated and could cause suppliers, customers and others that deal with us to defer purchases or other decisions concerning us or seek to change existing business relationships with us.  In addition, the merger agreement restricts us from making certain acquisitions and taking other specified actions without Parent’s approval.  These restrictions could prevent us from pursuing attractive business opportunities that may arise prior to the completion of the merger.

 
The merger agreement restricts our ability to pursue alternatives to the merger.

The merger agreement contains “no shop” provisions that, subject to limited fiduciary exceptions, restrict our ability to initiate, solicit, encourage or facilitate, discuss, negotiate or accept a competing third party proposal to acquire all or a significant part of us.  Further, there are only a limited number of exceptions that would allow our board of directors to withdraw or change its recommendation to holders of our common stock that they vote in favor of the adoption of the Merger Agreement.  If our board of directors were to take such actions as permitted by the Merger Agreement, doing so in specified situations could entitle Parent to terminate the Merger Agreement and to be paid a termination fee of either $11 million or $16.5 million depending on the circumstances of such termination.  These restrictions could deter a potential acquirer from proposing an alternative transaction.

Risks Relating To Our Business

Prevailing U.S. economic conditions over the last three years and the related decline in construction activity, as well as any future downturns, have reduced and may continue to reduce our volume and/or pricing on our services, resulting in decreases in our revenue, profitability and cash flows.

Our business is affected by changes in national and general economic factors that are outside of our control, including economic activity, consumer confidence, interest rates and access to capital markets.  Although our services are of an essential nature, a weak economy generally results in decreases in volumes of waste generated, particularly construction related waste, which decreases our revenues.  In 2011, we believe that weakened economic conditions negatively impacted the volume of waste we have collected and disposed of.

Additionally, consumer uncertainty and the loss of consumer confidence may limit the number or amount of services requested by customers and our ability to increase customers’ pricing.  During weak economic periods we may also be adversely impacted by customers’ inability to pay us in a timely manner, if at all, due to their financial difficulties, which could include bankruptcies.

Increases in the costs of fuel may reduce our operating margins.

The price and supply of fuel needed to run our collection and transfer trucks and our landfill equipment is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries, regional production patterns and environmental concerns.  Any significant price escalations or reductions in the supply could increase our operating expenses or interrupt or curtail our operations.  Failure to offset all or a portion of any increased fuel costs through increased fees or charges would reduce our operating margins.

Our failure to remain competitive with our competitors, some of whom have substantially greater resources, could adversely affect our ability to retain existing customers and obtain future business.

Our industry is highly competitive.  We compete with large companies and municipalities, many of which have greater financial and operational resources.  The non-hazardous solid waste collection and disposal industry includes large national, publicly-traded waste management companies; regional, publicly-held and privately-owned companies; and numerous small, local, privately-owned companies.  Additionally, many counties and municipalities operate their own waste collection and disposal facilities and have competitive advantages not available to private enterprises. We also encounter competition from alternatives to landfill disposal, such as recycling and incineration, that benefit from state requirements to reduce landfill disposal.  If we are unable to successfully compete against our competitors, our ability to retain existing customers and obtain future business could be adversely affected.

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

We are parties to contracts with municipalities and other associations and agencies.  Many of these contracts are or will be subject to competitive bidding.  We may not be the successful bidder, or we may have to substantially lower prices in order to be the successful bidder.  In addition, some of our customers may terminate their contracts with us before the end of the contract term.  If we were not able to replace revenue from contracts lost through competitive bidding or early termination or from lowering prices or from the renegotiation of existing contracts with other revenue within a reasonable time period, our revenue could decline.

Municipalities may annex unincorporated areas within counties where we provide collection services, and as a result, our customers in annexed areas may be required to obtain service from competitors who have been franchised or contracted by the annexing municipalities to provide those services.  Some of the local jurisdictions in which we currently operate grant exclusive franchises to collection and disposal companies, others may do so in the future, and we may enter markets where franchises are granted by certain municipalities.  Unless we are awarded a franchise by these municipalities, we will lose customers, which will cause our revenue to decline.

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.

Integrated non-hazardous waste companies are exposed to a variety of risks that are typically covered by insurance arrangements.  However, we may not be able to maintain sufficient insurance coverage to cover the broad range of risks associated with our operations for a variety of reasons.  Increases in insurance costs and changes in the insurance markets may, given our resources, limit the coverage that we are able to maintain or prevent us from insuring against certain risks.  Large or unexpected losses may exceed our policy limits, adversely affecting our results of operations, and may result in the termination or limitation of coverage, exposing us to uninsured losses, thereby adversely affecting our financial condition.

Increases in costs of insurance would reduce our operating margins.

One of our largest operating costs is for insurance coverage, including general liability, automobile physical damage and liability, property, employment practices, pollution, directors and officers, fiduciary, workers’ compensation and employer’s liability coverage, as well as umbrella liability policies to provide excess coverage over the underlying limits contained in our primary general liability, automobile liability and employer’s liability policies.  Changes in our operating experience, such as an increase in accidents or lawsuits or a catastrophic loss, could cause our insurance costs to increase significantly or could cause us to be unable to obtain certain insurance. Increases in insurance costs would reduce our operating margins.  Changes in our industry and perceived risks in our business could have a similar effect.

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.

Our ability to remain competitive, grow and maintain operations largely depends on our cash flow from operations and access to capital.  Maintaining our existing operations and expanding them through internal growth or acquisitions requires large capital expenditures.  As we undertake more acquisitions and further expand our operations, the amount we expend on capital, closure and post-closure and remediation expenditures will increase. These increases in expenditures may result in lower levels of working capital or require us to finance working capital deficits.  We intend to continue to fund our cash needs through cash flow from operations and, if necessary, borrowings under our credit facility.  However, we may require additional equity or debt financing to fund our growth.

We do not have complete control over our future performance because it is subject to general economic, political, financial, competitive, legislative, regulatory and other factors.  It is possible that our business may not generate sufficient cash flow from operations, and we may not otherwise have the capital resources, to allow us to make necessary capital expenditures.  If this occurs, we may have to sell assets, restructure our debt or obtain additional equity capital, which could be dilutive to our stockholders.  We may not be able to take any of the foregoing actions, and we may not be able to do so on terms favorable to us or our stockholders.

 
Changes in interest rates may affect our profitability.

Our acquisitions could require us to incur substantial additional indebtedness in the future, which will increase our interest expense.  Further, to the extent that these borrowings are subject to variable rates of interest, increases in interest rates will increase our interest expense, which will affect our profitability.  Borrowings under our revolving credit agreement became subject to changes in LIBOR rates.  As of December 31, 2011, we had $99.0 million outstanding under the credit facility.  A 100 basis point increase in LIBOR interest rates would increase our annual interest expense by approximately $1.0 million annually.

Increases in the costs of disposal in landfills owned by third parties may reduce our operating margins.

We dispose of approximately one-third of the waste that we collect in landfills operated by others.  We may incur increases in disposal fees paid to third parties or in the costs of operating our own landfills.  If we are unable to pass these costs on to our customers, our operating margins may be reduced.

Increases in the costs of labor may reduce our operating margins.

We compete with other businesses in our markets for qualified employees.  A shortage of qualified employees would require us to enhance our wage and benefits packages to compete more effectively for employees or to hire more expensive temporary employees.  Labor is our second largest operating cost, and even relatively small increases in labor costs per employee could materially affect our cost structure.  Failure to attract and retain qualified employees, to control our labor costs, or to recover any increased labor costs through increased prices we charge for our services or otherwise offset such increases with cost savings in other areas may reduce our operating margins.

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.

Our ability to meet our growth objectives depends in part on our ability to expand landfill capacity, whether by acquisition or expansion.  Exhausting permitted capacity at a landfill would restrict our growth and reduce our financial performance in the market served by the landfill, since we would be forced to dispose of collected waste at more distant landfills or at landfills operated by our competitors, thereby increasing our waste disposal expenses.  Although we have received final permits on expansions at our existing landfills, there may be challenges, comments, or delays regarding the construction of specific cells that could have an adverse effect on our operations in these markets.  Obtaining required permits and approvals to expand landfills has become increasingly difficult and expensive, requiring numerous hearings and compliance with various zoning, environmental and regulatory laws and drawing resistance from citizens, environmental or other groups.  Even if permits are granted, they may contain burdensome terms and conditions or the timing required may be extensive and could affect the remaining permitted capacity at the landfill.  We may choose to delay or forego tuck-in acquisitions in markets where the remaining lives of our landfills are relatively short because increased volumes would further shorten the lives of these landfills.

 
We are subject to environmental and safety laws, which restrict our operations and increase our costs.

We are subject to extensive federal, state and local laws and regulations relating to environmental protection and occupational safety and health.  These include, among other things, laws and regulations governing the use, treatment, storage and disposal of wastes and materials, air quality, water quality and the remediation of contamination associated with the release of hazardous substances.  Our compliance with existing regulatory requirements is costly, and continued changes in these regulations could increase our compliance costs. Government laws and regulations often require us to enhance or replace our equipment and to modify landfill operations and may, in the future, require us to initiate final closure of a landfill.  We are required to obtain and maintain permits that are subject to strict regulatory requirements and that are difficult and costly to obtain and maintain.  We may be unable to implement price increases sufficient to offset the cost of complying with these laws and regulations.  In addition, regulatory changes could accelerate or increase expenditures for closure and post-closure monitoring at solid waste facilities and obligate us to spend sums over the amounts that we have accrued.

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

CERCLA and analogous state laws provide for the remediation of contaminated facilities and impose strict joint and several liability for remediation costs on current and former owners or operators of a facility at which there has been a release or a threatened release of a hazardous substance.  This liability is also imposed on persons who arrange for the disposal of and who transport such substances to the facility.  Hundreds of substances are defined as hazardous under CERCLA and their presence, even in small amounts, can result in substantial liability.  The expense of conducting a cleanup can be significant.  Notwithstanding our efforts to comply with applicable regulations and to avoid transporting and receiving hazardous substances, we may have liability because these substances may be present in waste collected by us or disposed of in our landfills, or in waste collected, transported or disposed of in the past by companies that we acquire even if we did not collect or dispose of the waste while we owned the landfill.  The actual costs for these liabilities could be significantly greater than the amounts that we might be required to accrue on our financial statements from time to time.

In addition to the costs of complying with environmental regulations, we may incur costs to defend against litigation brought by government agencies and private parties.  As a result, we may be required to pay fines or our permits and licenses may be modified or revoked.  We may in the future be a defendant in lawsuits brought by governmental agencies and private parties who assert claims alleging environmental damage, personal injury, property damage and/or violations of permits and licenses by us.  A significant judgment against us, the loss of a significant permit or license or the imposition of a significant fine could curtail our business operations and may decrease our earnings.

Governmental authorities may enact climate change regulations that could increase our costs to operate.
 
Environmental advocacy groups and regulatory agencies in the United States have been focusing considerable attention on the emissions of greenhouse gases and their potential role in climate change.  Congress has considered proposed legislation directed at reducing greenhouse gas emissions.  EPA has proposed rules to regulate greenhouse gases, regional initiatives have formed to control greenhouse gases and certain of the states in which we operate are contemplating air pollution control regulations that are more stringent than existing and proposed federal regulations, in particular the regulation of emissions of greenhouse gases.  The adoption of laws and regulations to implement controls of greenhouse gases, including the imposition of fees or taxes, could adversely affect our collection and disposal operations.  Changing environmental regulations could require us to take any number of actions, including the purchase of emission allowances or installation of additional pollution control technology, and could make some operations less profitable, which could adversely affect our results of operations.

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

We are required to pay closure and post-closure costs of any disposal facilities that we own or operate.  We accrue for future closure and post-closure costs of our owned landfills, generally for a term of up to 30 years, based on engineering estimates of future requirements associated with the final landfill design and closure and post-closure process.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates and Assumptions” included in this Form 10-K.  Our obligations to pay closure and post-closure costs, including for monitoring, may exceed the amount we accrued, which would adversely affect our earnings.  Expenditures for these costs may increase as a result of any federal, state or local government regulatory action, including changes in closing or monitoring activities, types and quantities of materials used or the period of required post-closure monitoring.  These factors could substantially increase our operating costs and therefore impair our ability to invest in our existing facilities or new facilities.  The amount of our accruals is based upon estimates by management, engineers and accountants. We review at least annually our estimates for closure and post-closure costs, and any change in our estimates could require us to accrue additional amounts.

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

We are required to provide financial assurances to governmental agencies under applicable environmental regulations relating to landfill closure and post-closure obligations, our landfill operations, and other collection and disposal contracts.  We satisfy these financial assurances requirements by providing performance bonds, letters of credit, insurance policies or trust deposits.

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.

Many of the states in which we operate landfills require counties and municipalities to formulate comprehensive plans to reduce the volume of solid waste disposed of in landfills through waste planning, recycling, composting or other programs.  Some state and local governments mandate waste reduction at the source and prohibit the disposal of certain types of wastes, such as yard wastes, at landfills.  These actions may reduce the volume of waste going to landfills in certain areas, and therefore our landfills may not continue to operate at currently estimated volumes or they may be unable to charge current prices for landfill disposal services.

Efforts by labor unions to organize our employees could divert management attention and increase our operating expenses.

In June 2011, effective as of March 6, 2011, we entered into a new collective bargaining agreement with the union representation at our transfer station in Rolla, Missouri (the “Rolla Contract”).  The Rolla Contract is for a term of five years, expiring in March 2016.  As of December 31, 2011, there were 16 employees in the group covered by the Rolla Contract.  Additional groups of employees may seek union representation in the future, and the negotiation of collective bargaining agreements could divert management attention and result in increased operating expenses and lower net income.  If we are unable to negotiate acceptable collective bargaining agreements, we might have to wait through “cooling off” periods, which are often followed by union-initiated work stoppages, including strikes.  Depending on the type and duration of these work stoppages, our operating expenses could increase significantly.

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

For the year ended December 31, 2011, approximately $3.8 million, or 1.6%, of our revenue was earned from the disposal of waste that is generated in a state other than the state where it is disposed.  This excludes our Ohio and Massachusetts operations, where 74.3% of revenue was earned from a rail haul operation over a Class 1 rail line transporting waste from the east coast to our Sunny Farms Landfill in Ohio.  Some states have imposed restrictions on collection routes and disposal locations.  Other states, like Ohio, impose certain fees on out-of-state waste that is disposed of in Ohio, which may reduce operating margins to the extent such fees cannot be passed on to our customers.  Furthermore, our collection, transfer and landfill operations may also be affected in the future by proposed “flow control” legislation that would allow state and local governments to direct waste generated within their jurisdictions to a specific facility for disposal or processing. Moreover, in the future, our operations may be affected by proposed federal legislation authorizing states to regulate, limit or perhaps even prohibit interstate shipments of waste.  If this or similar legislation is enacted, state or local governments with jurisdiction over our landfills could act to limit or prohibit disposal or processing of out-of-state waste in our landfills, whether collected by us or by third parties 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 manage our operations on a decentralized basis.  Therefore, regional and local managers have the authority to make many decisions concerning their operations without obtaining prior approval from executive officers.  Poor decisions by regional or 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.

The non-hazardous waste business is local in nature.  Accordingly, our business in one or more regions or local markets may be adversely affected by events and economic conditions relating to those regions or markets even if the other regions of the country are not affected.  As a result, our financial performance may not compare favorably to our competitors with operations in other regions, and our stock price could be adversely affected by our inability to compete effectively with our competitors.

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

Based on historic trends, we expect our operating results to vary seasonally, with revenue typically lowest in the first quarter, higher in the second and third quarters, and again lower in the fourth quarter.  This seasonality generally reflects the lower volume of waste during the winter months.  Adverse weather conditions negatively affect general economic activity, particularly in the construction industry, as well as waste collection productivity, resulting in higher labor and operational costs.  The general increase in precipitation during the winter months increases the weight of collected waste, resulting in higher disposal costs, as costs are often calculated on a per ton basis.  Because of these factors, operating income is generally lower in the winter months.  As a result, our operating results may be negatively affected by these variations.  Additionally, severe weather during any time of the year can negatively affect the costs of collection and disposal and may cause temporary suspensions of our collection and disposal services.  Long periods of inclement weather may interfere with collection and landfill operations, delay the construction of landfill capacity and reduce the volume of waste generated by our customers.  Any of these conditions can adversely affect our business and results of operations, which could negatively affect our stock price.

 
Risks Associated with Our Indebtedness

We have a substantial amount of debt which could adversely affect our operations and financial performance.

As of March 1, 2012, we had approximately $276.6 million of consolidated total indebtedness outstanding and approximately $87.9 million of additional borrowing capacity available under our credit facility.
 
Our substantial debt could have important consequences.  For example, it could:
 
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make it more difficult for us to satisfy our obligations with respect to our debt;
 
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increase our vulnerability to general adverse economic and industry conditions;
 
·  
limit our ability to obtain additional financing for future working capital, capital expenditures, acquisitions and other general corporate purposes;
 
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require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for operations and other purposes;
 
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
 
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make us more vulnerable to increases in interest rates; and
 
·  
place us at a competitive disadvantage compared to our competitors with less debt.
 
In addition, we may incur substantial additional debt in the future.  If new debt is added to our current debt levels, these related risks could increase.  We may not maintain sufficient revenue and cash flow to meet our capital expenditure requirements and our financial obligations, including our debt service obligations.

Our ability to make scheduled payments or to refinance our obligations with respect to our debt will depend on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and to certain financial, business, and other factors beyond our control.  If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay scheduled expansion and capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt on less than favorable terms.

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

Our credit facility and the indenture governing our senior notes contain various restrictive covenants that limit management’s discretion in operating our business.  In particular, these covenants limit our ability to, among other things:
 
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incur additional debt or issue additional preferred stock;
 
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make certain investments or pay dividends or distributions on our capital stock or subordinated indebtedness or purchase or redeem or retire capital stock;
 
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sell or transfer assets, including capital stock of our restricted subsidiaries;
 
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restrict dividends or other payments by our restricted subsidiaries;
 
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incur liens;
 
 
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enter into transactions with our affiliates; and
 
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consolidate, merge, sell or lease all or substantially all of our assets.
 
The credit agreement also requires us to maintain specified financial ratios and satisfy certain financial tests.  Our ability to maintain or meet such financial ratios and tests may be affected by events beyond our control, including changes in general economic and business conditions, and we cannot assure you that we will maintain or meet such ratios and tests or that the lenders under the credit facility will waive any failure to meet such ratios or tests.

These covenants could materially and adversely affect our ability to finance our future operations or capital needs.  Furthermore, they may restrict our ability to expand, to pursue our business strategies and otherwise to conduct our business.  Our ability to comply with these covenants may be affected by circumstances and events beyond our control, such as prevailing economic conditions and changes in regulations.  A breach of these covenants could result in a default under the indenture governing the senior notes and/or the credit facility.  If there were an event of default under the indenture governing the senior notes and/or our credit facility, the affected creditors could cause all amounts borrowed under these instruments to be due and payable immediately.  Additionally, if we fail to repay indebtedness under our credit agreement when it becomes due, the lenders under the credit agreement could proceed against substantially all of our assets, which we have pledged to them as security.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Bank Credit Facility” included in this Form 10-K.

We are a holding company and do not directly conduct any business operations of our own.  Our principal assets are the equity interests we own in our operating subsidiaries, either directly or indirectly.  As a result, we are dependent upon cash dividends, distributions or other transfers we receive from our subsidiaries in order to repay any debt we may incur, to meet our other obligations, or to make any future distributions.  The ability of our subsidiaries to pay dividends and make payments to us will depend on their operating results and may be restricted by, among other things, applicable corporate, tax and other laws and regulations and agreements of those subsidiaries, as well as by the terms of our credit agreement and the indenture governing our senior notes.

The inability or failure of any syndicate bank to meet its obligations under our credit facility could adversely impact our short-term and/or long-term capital or cash needs by limiting our access to swing-line loans, increasing the cost of issuing letters of credit, or reducing the total capacity available under the revolving credit facility.

While we are not aware of any issues affecting the participant banks under our credit facility, if a participant bank were to fail or otherwise become unable to fund its lending commitment to us, and we were unable to replace any lending commitments, we may not be able to access funds from our credit facility as needed to fully fund our operations and/or our cost of obtaining working capital, letters of credit and other forms of funding could increase significantly and materially impact our operations and earnings.

Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, access to capital and cost of capital.

Although market conditions appear to be more stabilized, the capital and credit markets experienced extreme disruption in recent years.  If similar conditions arise in the future, it is likely to exert downward pressure on availability of liquidity and credit capacity for certain issuers.

We need liquidity to pay our operating expenses and interest on our debt and to fund our acquisitions.  The lack of sufficient liquidity may have a materially adverse effect on our operations and financial results.  The principal sources of our liquidity are cash on hand, cash flow from our operations, and access to borrowings under our credit facility.  Sources of liquidity in normal markets also include a variety of short- and long-term instruments, including repurchase agreements, commercial paper, medium- and long-term debt, junior subordinated debt securities, capital securities and stockholders’ equity.
 
 
In the event current resources do not satisfy our needs, we may have to seek additional financing.  The availability of additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the volume of trading activities, our credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a negative perception of our long- or short-term financial prospects if the level of our business activity decreased due to a market downturn.  Similarly, our access to funds may be impaired if regulatory authorities or rating agencies take negative actions against us.  Our internal sources of liquidity may prove to be insufficient, and in such case, we may not be able to successfully obtain additional financing on favorable terms, or at all.

Risks Relating to Our Acquisitions

On February 28, 2011, we completed the acquisition of certain assets of Emerald Waste Services (“Emerald Waste”), including one transfer station and three collection operations in Central Florida.  The consideration for the acquisition consisted of $33.0 million in cash and 2,409,639 shares of our common stock pursuant to an amended equity interest purchase agreement.  This acquisition is subject to various risks, including the following:

·  
At March 1, 2012, EWS Holdings, LLC (“EWS Holdings”) beneficially own approximately 10.1% of our common stock.  Accordingly, subject to certain contractual voting restrictions EWS Holdings has significant voting power and potential influence and control over our company.  This concentration of ownership and the potential ability to significantly influence our management and affairs may have the effect of preventing or discouraging transactions involving a potential change of control or may otherwise adversely affect us.
 
·  
Cash expenditures and capital commitments associated with our acquisition of Emerald Waste may create significant liquidity and cash flow risks for us, and we may incur substantial debt in order to satisfy our obligations.
 
·  
The integration of WCA and Emerald Waste may not be completed successfully, cost-effectively or on a timely basis.
 
·  
If we are unable to identify and successfully acquire and integrate additional waste collection operations in Florida markets we acquired from Emerald Waste that enable us to leverage the acquisition of the collection operations and the transfer station, the long-term benefits of the acquisition could be diminished.
 
·  
As shares of our common stock issued in the acquisition of Emerald Waste become eligible for resale (which  is generally not earlier than six months from the closing date), our stock price may suffer a significant decline as a result of the dilution caused by the increase in the number of our shares sold in the public market or market perception that the increased number of our shares available for sale will exceed the demand for our common stock.
 
On December 31, 2009, we consummated the acquisition of the Live Earth Companies, which included certain assets and related liabilities held by Live Earth, LLC that relate to the Live Earth Companies.  The consideration for the Live Earth Companies consisted of $19.7 million in cash and 5,555,556 shares of our common stock, which includes 3,555,556 shares that were issued at closing and up to 2,000,000 shares of our common stock that may be issued pursuant to certain earn-out provisions (the “Earn-Out Shares”).  The acquisition of the Live Earth Companies is subject to various risks, including the following:

·  
At March 1, 2012, individuals affiliated with Live Earth beneficially own approximately 10.2% of our common stock and could beneficially own up to 13.5% of our common stock if the Earn-out Shares are issued.  In addition, Dan Clark, an affiliate of Live Earth, serves on our board of directors.  Accordingly, subject to certain contractual voting restrictions these individuals have significant voting power and potential influence and control over our company.  This concentration of ownership and the potential ability to significantly influence our management and affairs may have the effect of preventing or discouraging transactions involving a potential change of control or may otherwise adversely affect us.
 
 
·  
Cash expenditures and capital commitments associated with the operations we acquired from Live Earth may create significant liquidity and cash flow risks for us, and we may incur substantial debt in order to satisfy our obligations.
 
·  
If railway access to the Sunny Farms Landfill were limited or prohibited due to the termination of the current contract with a Class 1 railroad operator or otherwise disrupted for any significant period of time, the operations of the landfill would suffer.
 
·  
If material disposed of at the Sunny Farms Landfill, one of the Live Earth Companies, is reclassified by the Ohio Attorney General or another regulatory authority, we could face higher fees or civil money penalties that could negatively affect the profitability of our operations at the Sunny Farms Landfill.
 
·  
If we are unable to identify and successfully acquire and integrate additional waste collection operations in the eastern United States that permit us to leverage the acquisition of the Live Earth Companies, the long-term benefits of the acquisition could be diminished.
 
·  
As shares of our common stock issued in the acquisition of the Live Earth Companies become eligible for resale (which in most instances is not earlier than 18 months from the closing date), our stock price may suffer a significant decline as a result of the dilution caused by the increase in the number of our shares sold in the public market or market perception that the increased number of our shares available for sale will exceed the demand for our common stock.
 
We may be unable to identify, complete or integrate future acquisitions, which may harm our prospects.

We may be unable to identify appropriate acquisition candidates.  If we do identify an appropriate acquisition candidate, we may not be able to negotiate acceptable terms or finance the acquisition or, if the acquisition occurs, effectively integrate the acquired business into our existing business.  Negotiations of potential acquisitions and the integration of acquired business operations require a disproportionate amount of management’s attention and our resources.  Even if we complete additional acquisitions, continued financing may not be available or available on reasonable terms, any new businesses may not generate revenues comparable to our existing businesses, the anticipated cost efficiencies or synergies may not be realized and these businesses may not be integrated successfully or operated profitably or accretive to our earnings.

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.

Other companies in the solid waste services industry also have a strategy of acquiring and consolidating regional and local businesses.  We expect that as the consolidation trend in our industry continues, the competition for acquisitions will increase.  Competition for acquisition candidates may make fewer acquisition opportunities available to us or make those opportunities more expensive.

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

We intend to finance acquisitions with available cash, borrowings under our credit facility, our equity including common stock or preferred stock, or a combination of these means.  As a result, we may incur additional indebtedness or issue additional equity which would dilute the ownership percentage of existing stockholders.  Our credit facility contains covenants restricting, among other things, the amount of additional indebtedness.  We may offer equity as some or all of the consideration for certain acquisitions.  Our ability to do so will depend in part on the attractiveness of our equity.  This attractiveness may depend largely on the capital appreciation prospects of our equity compared to the equity of our competitors.

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

We may acquire businesses with liabilities that we fail to discover or accurately quantify, including liabilities arising from non-compliance with environmental laws by prior owners for which we may be responsible as the successor owner.  Moreover, as we integrate a new business, we may discover that required expenses and capital expenditures are greater than anticipated, 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.

Pursuing acquisitions requires significant time from our senior management.  We may also be required to expand our operational and financial systems and controls and our management information systems capabilities.  We may also need to attract and train additional senior managers, technical professionals and other employees.  Failure to do any of these could restrict our ability to maintain and improve our profitability while continuing to grow.

Our acquisitions have resulted, and future acquisitions we make may continue to result, in significant goodwill and other intangible assets, which may need to be written down if performance is not as expected.

As of December 31, 2011, we had approximately $116.7 million of goodwill and other intangible assets, representing approximately 23.5% of our total assets.  If we complete acquisitions at prices greater than the fair value of the assets acquired, we would generate additional goodwill.  We are required to test our goodwill at least annually for impairment, which would require us to incur a charge if we determine there is a reduction in value.  Any such charge would reduce our assets and earnings.

We may incur charges and other unforeseen expenses related to mergers and acquisitions, which could lower our earnings.

All merger and acquisition related transaction and restructuring costs are expensed as incurred rather than capitalized as part of the merger and acquisition costs.  During the year ended December 31, 2011, we expensed $1.8 million of such costs.  We may incur more charges related to mergers and acquisitions in future periods, which could lower our earnings.

Risks Relating to Our Operations and Corporate Organization

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.

We believe that our continued success depends in large part on the sustained contributions of our chairman of the board and chief executive officer, Mr. Tom J. Fatjo, Jr., our president and chief operating officer, Mr. Jerome M. Kruszka, and other members of our senior management.  We rely on them to identify and pursue new business opportunities and acquisitions and to execute operational strategies.  The loss of services of Messrs. Fatjo, Jr. or Kruszka or any other senior management member could significantly impair our ability to identify and secure new contracts and acquisitions and otherwise disrupt our operations.  We do not maintain key person life insurance on any of our senior executives.  We have entered into employment agreements with our executive officers that contain non-compete and confidentiality covenants.  Despite these agreements, we may not be able to retain these officers and may not be able to enforce the non-compete and confidentiality covenants in their employment agreements if any of them chose to join one of our competitors.

 
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.

As of March 1, 2012,
 
·  
Joseph E. LoConti, Daniel J. Clark and certain of their affiliates beneficially owned approximately 10.2% of the outstanding shares of our common stock.
 
·  
Ares Corporate Opportunities Fund II L.P. (“Ares”) held preferred shares convertible into our common stock at a price of $9.60 per share.  The preferred shares were issued on July 27, 2006 and carry a 5% payment-in-kind (“PIK”) dividend payable semi-annually.  As of March 1, 2012, the preferred shares were immediately convertible into 10,298,896 shares of our common stock (representing approximately 30.1% of the outstanding common stock on a post-conversion basis).  Dividends are solely PIK through July 2011 — that is, they are payable solely by adding the amount of dividends to the stated value of each share.  Because the preferred shares have not been converted within five years of issuance, we have the option to PIK or pay a cash dividend at the rate of 5% per annum.  The preferred shares have no stated maturity and no mandatory redemption requirements.  Ares is entitled to vote its preferred shares as if converted (subject to contractual restrictions with us), is entitled to elect two directors, and is entitled to other contractual rights.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Preferred Stock” included in this Form 10-K for a description of the various arrangements with Ares.
 
·  
EWS Holdings owned approximately 10.1% of the outstanding shares of our common stock.
 
·  
Our executive officers, directors and their related entities owned or controlled approximately 13.9% of the outstanding shares of our common stock.
 
Accordingly, these parties collectively hold a controlling vote and will have the ability to significantly influence our management and affairs.  This concentration of ownership and the potential ability to significantly influence our management and affairs may have the effect of preventing or discouraging transactions involving a potential change of control or otherwise adversely affect us.
 
Provisions in our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law could preclude a change of control that our stockholders may favor and which could negatively affect our stock price.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws and applicable provisions of the Delaware General Corporation Law may make it more difficult and expensive for a third party to acquire control of us even if a change of control would be beneficial to the interests of our stockholders.  These provisions could discourage potential takeover attempts and could adversely affect the market price of our common stock.  Our amended and restated certificate of incorporation and our amended and restated bylaws:
 
·  
authorize the issuance of blank check preferred stock that could be issued by our board of directors to thwart a takeover attempt;
 
·  
prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors;
 
·  
require super-majority voting to effect amendments to provisions of our amended and restated bylaws concerning the number of directors;
 
·  
limit who may call special meetings;
 
 
·  
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders;
 
·  
establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholders meeting; and
 
·  
require that vacancies on the board of directors, including newly-created directorships, be filled only by a majority vote of directors then in office.
 
In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder.
 
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 do not anticipate paying cash dividends on our common stock in the foreseeable future.  Any payment of cash dividends will depend upon our financial condition, capital requirements, earnings and other factors and are prohibited by the terms of our credit facility.  Please read Part II, Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy” included in this Form 10-K.  Accordingly, for the foreseeable future 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.

Our board of directors is authorized to issue series of shares of preferred stock without any action on the part of our stockholders.  Our board of directors also has the power, without stockholder approval, to set the terms of any such series of shares of preferred stock that may be issued, including voting rights, dividend rights, preferences over our common stock with respect to dividends or if we liquidate, dissolve or wind up our business and other terms.  If we issue preferred stock in the future that has preference over our common stock with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of holders of our common stock or the market price of our common stock could be adversely affected.
 
On July 13, 2006, our stockholders approved the issuance of 750,000 shares of convertible preferred stock at $100.00 per share in the private placement with Ares.  The shares were issued on July 27, 2006.  The preferred stock is convertible into shares of our common stock at a price of $9.60 per share and carries a 5% PIK dividend payable semi-annually.  Because the preferred shares have not been converted within five years of issuance, we have the option to PIK or pay a cash dividend at the rate of 5% per annum.  The preferred shares have no stated maturity and no mandatory redemption requirements.
 
The preferred shares were convertible into 7,812,500 shares of our common stock on the issuance date and with the effect of the cumulative PIK dividends would be convertible into 10,298,896 shares of common stock as of March 1, 2012.  Ares holds certain preferential rights, including the right to appoint two directors.  We can force a conversion into our 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.  We can, at our discretion, redeem for cash equal to the liquidation preference.  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 were non-discretionary for the initial five-year period that expired on July 27, 2011.  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.
 
 
If we are unable to comply with the requirements for listing on The Nasdaq Stock Market (“Nasdaq”), we may be delisted from Nasdaq, which could negatively affect our stock price.

Our common stock is listed on Nasdaq.  To meet the continued listing requirements of Nasdaq, we must meet specific corporate governance standards, including soliciting proxies and holding our annual meeting of stockholders within the time frame allowed under Listing Rules 5620(a) and 5620(b).  On January 3, 2012, we received a Nasdaq Staff Determination Letter informing us that the Staff had concluded that we, by not holding our 2011 annual meeting by December 31, 2011, had not solicited proxies for, or held, our annual meeting within the time frame allowed under Listing Rules 5620(a) and 5620(b) and accordingly, determined to initiate procedures to delist the our common stock from Nasdaq.
 
In accordance with the procedures set forth in the Nasdaq Listing Rules, we timely appealed the staff determination, and requested a hearing before a NASDAQ Hearings Panel (the “Panel”).  The hearing was held on February 9, 2012.  On February 21, 2012, we received a letter notifying us that the Panel had granted our request for continued listing, subject to our holding our annual meeting on or before May 31, 2012.
 
While we will not be required to hold an annual meeting in the event that our acquisition pursuant to the Merger Agreement is consummated by the end of the first quarter of 2012 and we believe that, in the event the merger is not completed in the anticipated time frame, that we will be able to comply with the Nasdaq requirements in the applicable time period, no assurances can be made that we will in fact be able to comply and that our common stock will remain listed on Nasdaq.  If we are unable to comply with the Nasdaq requirements in the applicable time period, our common stock will be delisted from Nasdaq.  A delisting of our common stock could negatively impact us by reducing the liquidity and market price of our common stock and the number of investors willing to hold or acquire our stock, which could negatively impact our stock price, our ability to raise equity financing and our ability to consummate the merger pursuant to the Merger Agreement.
 

None.


Our principal executive offices are located at 1330 Post Oak Boulevard, 30th Floor, Houston, Texas 77056, where we lease 16,515 square feet of office space.  We also own or lease field-based administrative offices in Alabama, Arkansas, Colorado, Florida, Kansas, Massachusetts, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee and Texas.

Our principal property and equipment consist of land (primarily landfills, transfer stations and bases for collection operations), buildings, and vehicles and equipment, including waste collection and transportation vehicles, related support vehicles, carts, containers and heavy equipment used in landfill operations, all of which are encumbered by liens in favor of our lenders.  As of December 31, 2011, we owned and/or operated 25 landfills, 29 collection operations and 29 transfer stations/MRFs.  Of these facilities, three transfer stations and two landfills are fully permitted but not yet opened, and three transfer stations are idle.  We also operated but did not own four of the transfer stations as of December 31, 2011.   For a description of our landfills, please read “Business—Our Operations—Landfills.”  We believe that our office space, operating properties, vehicles and equipment are adequately maintained and sufficient for our current operations.  However, we expect to continue to make investments in additional equipment and property for expansion, for replacement of assets, and in connection with future acquisitions.

Item 3.  Legal Proceedings.

Information regarding our legal proceedings can be found in Part II, Item 8 “Financial Statements and Supplemental Data,” note 13(d) to our consolidated financial statements included in this Form 10-K.

Item 4.  Mine Safety Disclosures.

None.

 

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Stock
 
Our common stock is traded on the NASDAQ Stock Market under the symbol “WCAA.”  As of March 1, 2012, there were approximately 95 holders of record of our common stock.  This number does not include any beneficial owners for whom shares of common stock may be held in “nominee” or “street” name.  The following table sets forth the range of high and low closing prices per share for our common stock as reported by NASDAQ for the periods indicated.

   
High
   
Low
 
2012
               
First Quarter (through March 9, 2012)
 
$
6.51
   
$
6.45
 
                 
2011
               
First Quarter
 
$
6.00
   
$
4.79
 
Second Quarter
 
$
6.27
   
$
5.19
 
Third Quarter
 
$
6.13
   
$
3.82
 
Fourth Quarter
 
$
6.62
   
$
3.41
 
                 
2010
           
First Quarter
 
$
5.09
   
$
4.01
 
Second Quarter
 
$
5.10
   
$
3.95
 
Third Quarter
 
$
5.05
   
$
4.09
 
Fourth Quarter
 
$
5.77
   
$
4.54
 

On March 9, 2012, the closing sales price of our common stock was $6.49.

Performance Graph
 
The following performance graph compares the performance of our common stock to the S&P 500 Index and the Dow Jones Waste & Disposal Services Index.  The graph covers the five-year period ended December 31, 2011 and assumes that a $100 investment was made on December 31, 2006 and that all dividends were reinvested.

PERFORMANCE GRAPH
   
December 31,
 
   
2006
   
2007
   
2008
   
2009
   
2010
   
2011
 
WCA Waste Corporation
 
$
100.00
   
$
80.45
   
$
31.26
   
$
53.55
   
$
60.15
   
$
81.07
 
S&P 500 Index
 
$
100.00
   
$
103.53
   
$
63.69
   
$
78.62
   
$
88.67
   
$
88.67
 
Dow Jones Waste & Disposal Services Index
 
$
100.00
   
$
102.89
   
$
94.80
   
$
105.29
   
$
122.44
   
$
120.16
 

Our stock performance may not continue into the future with the same or similar trends depicted in the performance graph above.  We will not make or endorse any predictions as to future stock performance.

Dividend Policy
 
We have never declared or paid any cash dividends on our common stock and do not intend to declare or pay any cash dividends on our common stock in the foreseeable future.  We currently intend to retain our earnings, if any, to finance the development and expansion of our business and for general corporate purposes.  Furthermore, our debt agreements prohibit payment of cash dividends or other payments or advances by our primary operating subsidiary to us (or any intermediary) under all circumstances, meaning we have very limited sources of cash.  Our only source of cash to pay dividends to our stockholders would be distributions or other payments or advances from our subsidiaries, which, as discussed above, is prohibited by the terms of our debt agreements.  Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Bank Credit Facility” included in this Form 10-K.  Any future dividends declared would be subject to a relaxation of this prohibition, would be at the discretion of our board of directors and would depend on our financial condition, results of operations, capital requirements, contractual obligations, the other terms of our credit facility and other financing agreements at the time a dividend is considered, and other relevant factors.  For a discussion of the PIK dividends accrued under our preferred stock, please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Preferred Stock” included in this Form 10-K.

Purchases of Equity Securities by Company
 
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 programs
 
October 1 - October 31, 2011
    408 (1)   $ 3.55              
November 1 - November 30, 2011
    8,363 (1)   $ 3.94              
December 1 - December 31, 2011
                       
Total
    8,771 (1)   $ 3.92              

(1)
Represents shares of our common stock surrendered to satisfy minimum tax withholding obligations on the vesting of restricted stock.
 
 
Item 6.  Selected Financial Data.

The following tables set forth certain selected historical consolidated financial data derived from our consolidated financial statements included elsewhere in this Form 10-K, except for the information for 2007 and 2008 (in thousands except per share data).  The information set forth below should be read in connection with Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included in Part II, Item 8 “Financial Statements and Supplemental Data” to this Form 10-K.  The following information may not be indicative of our future operating results.

   
Year Ended December 31,
 
   
2011
   
2010
   
2009
   
2008
   
2007
 
Consolidated Statements of Operations Data:
                             
Revenue
 
$
273,814
   
$
229,484
   
$
194,138
   
$
208,009
   
$
184,940
 
Expenses:
                                       
Cost of services (1),(2)
   
200,736
     
165,110
     
130,287
     
142,129
     
121,853
 
Depreciation and amortization
   
33,489
     
30,058
     
26,357
     
27,151
     
24,234
 
Impairment of goodwill
   
     
     
     
41,725
     
 
General and administrative (3)
   
15,713
     
11,999
     
13,496
     
12,335
     
12,768
 
Gain on sale of assets
   
(349
)
   
(938
)
   
(86
)
   
(178
)
   
(387
)
Total expenses
   
249,589
     
206,229
     
170,054
     
223,162
     
158,468
 
Operating income (loss)
   
24,225
     
23,255
     
24,084
     
(15,153
)
   
26,472
 
Other income (expense):
                                       
Interest expense, net
   
(20,203
)
   
(19,028
)
   
(18,052
)
   
(18,560
)
   
(16,765
)
Write-off of deferred financing costs (4)
   
(157
)
   
(184
)
   
     
     
 
Loss on early extinguishment of debt (5)
   
(5,797
)
   
     
     
     
 
Impact of interest rate swap
   
     
(236
)
   
(2,063
)
   
(7,547
)
   
(4,442
)
Other expense, net
   
(4
)
   
(3
)
   
(3
)
   
(240
)
   
 
Total other income (expense)
   
(26,161
)
   
(19,451
)
   
(20,118
)
   
(26,347
)
   
(21,207
)
Income (loss) before income taxes
   
(1,936
)
   
3,804
     
3,966
     
(41,500
)
   
5,265
 
Income tax (provision) benefit
   
(461
)
   
(1,915
)
   
(2,958
)
   
13,737
     
(2,343
)
Net income (loss)
   
(2,397
)
   
1,889
     
1,008
     
(27,763
)
   
2,922
 
Accrued payment-in-kind dividend on preferred stock
   
(4,724
)
   
(4,501
)
   
(4,278
)
   
(4,076
)
   
(3,876
)
Net income (loss) available to common stockholders
 
$
(7,121
)
 
$
(2,612
)
 
$
(3,270
)
 
$
(31,839
)
 
$
(954
)
Per Share Data — basic and diluted:
                                       
Net income (loss)
   
(0.11
)
   
0.10
     
0.06
     
(1.71
)
   
0.18
 
Accrued payment-in-kind dividend on preferred stock
   
(0.21
)
   
(0.23
)
   
(0.27
)
   
(0.25
)
   
(0.24
)
Net income (loss) available to common stockholders
 
$
(0.32
)
 
$
(0.13
)
 
$
(0.21
)
 
$
(1.96
)
 
$
(0.06
)
                                         
Weighted average shares outstanding — basic
   
22,254
     
19,598
     
15,824
     
16,460
     
16,460
 
Weighted average shares outstanding — diluted
   
22,254
     
19,598
     
15,824
     
16,460
     
16,460
 
Other Financial Data:
                                       
Capital expenditures
 
$
31,763
   
$
31,282
   
$
23,827
   
$
29,158
   
$
29,158
 

   
As of December 31,
 
   
2011
   
2010
   
2009
   
2008
   
2007
 
Consolidated Balance Sheet Data:
                             
Property and equipment, net (6)
 
$
334,121
   
$
320,564
   
$
320,923
   
$
276,483
   
$
270,384
 
Total assets (6)
   
496,206
     
439,862
     
431,573
     
387,958
     
426,723
 
Current maturities of long-term debt
   
1,575
     
500
     
500
     
64
     
699
 
Long-term debt, less current maturities and discount
   
274,000
     
232,571
     
219,516
     
200,295
     
198,149
 
Total stockholders’ equity
   
177,499
     
163,729
     
160,529
     
139,503
     
170,364
 
 
 
(1)
We acquired prepaid disposal rights in connection with our acquisition of assets from Waste Management, Inc. (WMI) in 2000. All remaining prepaid disposal rights with WMI were fully utilized in 2007. Additionally in 2007, we paid $1,000 to acquire prepaid disposal rights at a Texas landfill from Waste Services, Inc. (WSI). At the time we acquired the landfill from WSI in 2007, the remaining prepaid disposal rights of $1,270 were utilized as part of the consideration given. During the year ended December 31, 2007, we recorded $1,037 for the use of such disposal rights as a component of cost of services.

(2)
We have material financial commitments for the costs associated with our future obligations for final closure and post-closure maintenance of the landfills we own and operate. During the years ended December 31, 2011, 2010, 2009, 2008 and 2007, we recorded $986, $1,095, $628, $558 and $483, respectively, as a non-cash component of cost of services for the provision and accretion expense relating to these future obligations. Although these are non-cash expenses for the periods presented, the ultimate liability will be settled in cash. Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates and Assumptions—Landfill Accounting” for further discussion of landfill accounting.

 (3)
General and administrative expenses include stock-based compensation expense of $2,155, $1,564, $1,737, $2,212 and $1,977 during the years ended December 31, 2011, 2010, 2009, 2008 and 2007. The stock-based compensation expense during these years includes earned compensation of $2,021, $1,543, $1,653, $2,182 and $1,765, respectively, under the 2004 WCA Waste Corporation Incentive Plan, as amended and restated. In addition, the compensation expense of $134, $21, $84, $30 and $212 during the years ended December 31, 2011, 2010, 2009, 2008 and 2007, respectively, relates to the stock portion of the executive bonus plan.

(4)
The $157 write-off of deferred financing costs reflects the partial write-off of deferred financing costs associated with our revolving credit facility as a result of amendments on May 25, 2011. The $184 write-off of deferred financing costs reflects the partial write-off of deferred financing costs associated with our revolving credit facility as a result of an amendment on June 30, 2010, which extended the term of the credit agreement from July 5, 2011 to January 31, 2014 and increased our borrowing capacity from $175 million to $200 million under the agreement. The $3,240 write-off of deferred financing costs and debt discount in 2006 reflects the write-off of costs associated with our first and second lien credit agreements that were repaid and retired in connection with our financing transactions in July 2006.

(5)
The $5,797 loss on early extinguishment of debt in 2011 resulted from the tender and redemption to extinguish $150 million aggregate principal amount of our 9.25% senior notes due 2014 in June and July of 2011.  The loss was recognized for the write-off of unamortized deferred financing costs and the transaction costs associated with the tendered and redeemed senior notes.

(6)
Property and equipment, net and total assets as of December 31, 2009 have been increased by $199 due to an additional purchase price adjustment on December 31, 2009, the date of the Live Earth acquisition. This adjustment retrospectively increased the fair value of Sunny Farms Landfill to reflect new information obtained during 2010 about certain contingency that existed as of the acquisition date.
 
 
Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements contained herein regarding our future financial performance or operations (including, without limitation, statements to the effect that we “believe,” “expect,” “plan,” “may,” “will,” “project,” “continue,” or “estimate” or other variations thereof or comparable terminology or the negative thereof) should be considered forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors including those set forth under Part I, Item 1A “Risk Factors” beginning on page 15, and elsewhere in this Form 10-K. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements. We disclaim any obligation to update information contained in any forward-looking statement.

Executive Overview

General Overview of Our Business

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.  Roll-off service is the hauling and disposal of large waste containers (typically between 10 and 50 cubic yards) that are loaded on to and off of the collection vehicle.  The following table reflects our total revenue by source for the previous three years (dollars in thousands):

   
2011
   
2010
   
2009
 
   
$
   
%
   
$
   
%
   
$
   
%
 
Collection:
                                   
Residential
 
$
68,515
     
25.0
%
 
$
53,619
     
23.3
%
 
$
55,086
     
28.4
%
Commercial
   
40,048
     
14.6
     
25,917
     
11.3
     
25,082
     
12.9
 
Roll-off
   
44,817
     
16.4
     
43,534
     
19.0
     
45,763
     
23.6
 
Total collection
   
153,380
     
56.0
     
123,070
     
53.6
     
125,931
     
64.9
 
Disposal
   
102,902
             
98,841
             
68,831
         
Less intercompany
   
29,685
             
28,338
             
25,109
         
Disposal, net
   
73,217
     
26.7
     
70,503
     
30.7
     
43,722
     
22.5
 
Transfer and other
   
60,612
             
47,493
             
35,924
         
Less intercompany
   
13,395
             
11,582
             
11,439
         
Transfer and other, net
   
47,217
     
17.3
     
35,911
     
15.7
     
24,485
     
12.6
 
Total revenue
 
$
273,814
     
100.0
%
 
$
229,484
     
100.0
%
 
$
194,138
     
100.0
%

Proposed Acquisition by a Subsidiary of Macquarie Infrastructure Partners

Agreement and Plan of Merger

On December 21, 2011, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cod Intermediate, LLC, a Delaware limited liability company (“Parent”), and Cod Merger Company, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”).  Parent is owned by Macquarie Infrastructure Partners II U.S., L.P. and Macquarie Infrastructure Partners II International, L.P.

 
Upon the terms and subject to the conditions set forth in the Merger Agreement, which has been unanimously approved by our board of directors, at the closing of the merger (the “Effective Time”), Merger Sub will merge with and into WCA (the “Merger”) and the separate corporate existence of Merger Sub will cease.  WCA will be the Surviving Corporation in the Merger and will be a wholly-owned subsidiary of Parent.  Each share of common stock of WCA issued and outstanding immediately prior to the Effective Time (other than shares held by dissenting stockholders) shall thereupon be converted automatically into the right to receive $6.50 in cash.  Each share of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than any shares held by dissenting stockholders) shall thereupon be converted automatically into the right to receive an amount in cash equal to the preferred stock liquidation preference as of the date of closing.  Each share of Common Stock and Series A Preferred Stock owned, directly or indirectly, by Merger Sub immediately prior to the Effective Time or held by WCA or any of its subsidiaries immediately prior to the Effective Time shall be cancelled and cease to exist and no consideration shall be delivered in exchange for such cancellation and retirement.  All shares of restricted Common Stock shall vest in full at the Effective Time and the holders shall be entitled to receive $6.50 in cash for each share of restricted Common Stock.

Each party’s obligation to complete the Merger is subject to various customary conditions, including, among others, (a) approval of the Merger Agreement by the stockholders of WCA, which occurred on March 8, 2012, (b) there being no law or injunction prohibiting consummation of the Merger, (c) expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which occurred on February 6, 2012, (d) subject to specified materiality standards, the accuracy of the representations and warranties of the other party and (e) compliance by the other party in all material respects with its covenants. Parent’s obligation to complete the Merger is additionally subject to (a) no material adverse effect on WCA having occurred since December 21, 2011, (b) holders of no more than 10% of the outstanding common stock of WCA and holders of no more than 10% of the outstanding preferred stock of WCA shall have exercised their dissenters’ rights, (c) no event of default under the WCA’s credit agreement shall have occurred and have caused the debt financing not to be available in full, and (d) certain regulatory approvals having been obtained by WCA, all of which have been obtained.

We anticipate that the Merger will close in March 2012.  As of December 31, 2011, we incurred approximately $1.1 million associated with the transaction.

2012 Financial Objectives

Prior to taking into account the impact of potential acquisitions and costs associated with the Merger, we anticipate 2012 to be a year with improving operating results, which includes moderate increases in revenue resulting from a balance of price increases and stabilized volume in our construction and demolition (C&D) business.  We believe that our available capacity under our revolving credit facility should enable us to remain opportunistic in pursuing potential acquisitions, including acquisitions that would enable us to internalize waste into our existing landfills and that offer new markets where: (i) we are able to acquire disposal facilities; (ii) we can secure long-term disposal contracts; or (iii) the landfills are municipally owned.  Although we have identified potential acquisition targets, these opportunities may or may not materialize.

2011 Business Performance

During 2011, our revenue was $273.8 million, which represents an 19.3% increase over 2010.  Our operating income was $24.2 million in 2011, a 4.2% increase as compared to $23.3 million in 2010.  Net loss available to common stockholders for 2011 was $7.1 million, or $0.32 per share, compared to $2.6 million, or $0.13 per share, for 2010.  Adjusted EBITDA for 2011 was $59.5 million, an increase of 10.7% over $53.8 million in 2010.  During 2011, we recorded charges of $3.8 million (net of tax) related to loss on early extinguishment of our 9.25% senior notes due 2014 (the “2014 Notes”), $0.1 million (net of tax) related to the write-off of deferred financing costs associated with an amendment of our revolving credit facility, and $1.2 million (net of tax) related to merger and acquisition related expenses.  Our net loss for 2010 included charges of $0.2 million (net of tax) due to the impact of interest rate swap agreements, $0.1 million (net of tax) related to the write-off of deferred financing costs associated with an amendment of our revolving credit facility, $0.3 million (net of tax) related to merger and acquisition related expenses, and $0.1 million due to the tax impact of vested restricted shares.

 
Factors that impacted our 2011 performance include, but are not limited to, the following:

·  
increases in revenue and cost of services mainly due to acquisitions, including the Emerald Waste acquisition and the Stoughton transaction;

·  
rising fuel costs during 2011 resulted in reduced operating margins;

·  
severe weather conditions in several markets causing interruption of normal operations and, as a result, lost revenue during the first and second quarters of 2011;

·  
higher cost of services as a percentage of revenue, primarily due to higher fuel costs across all regions, higher disposal and hauling costs primarily due to higher rail hauling costs associated with increased volumes, integration costs, a change in our mix of business due to adding more residential collection with the Emerald Waste acquisition, and labor cost increases in Texas associated with acquisitions, produced lower operating margins;

·  
increase in merger and acquisition related expenses, primarily due to the Merger; and

·  
increases in interest expense as a result of carrying larger debt balances due to acquisitions and debt financing, loss on early extinguishment of debt due to the tender and redemption of the 2014 Notes, and the write-off of deferred financing costs associated with an amendment of our revolving credit facility.

Except for the reduction in C&D revenue in Texas and the increase in special waste revenue in Arkansas, revenues in our other locations have stayed relatively flat or are slightly improving.  We are actively seeking growth opportunities through acquisitions and we expect that our existing operations in 2011 will remain stable, with slight improvements due to pricing increases.  Significant improvement in general economic activity and/or construction activity would be likely to have a significant favorable/positive impact on our operations.

In 2011, we invested approximately $53.1 million on a combination of newly acquired companies and similar expansion and growth expenditures, including $38.4 million of cash, 2,816,308 shares of our common stock valued at $14.7 million.  As of December 31, 2011, we had approximately $88.9 million available under our existing credit facility.

During 2011, the total PIK dividend on preferred stock was $4.7 million.  In 2012, the PIK preferred dividend will be $5.0 million.  For more information regarding the PIK dividend associated with the outstanding shares of our preferred stock, please read “—Liquidity and Capital Resources—Preferred Stock” below.

Non-GAAP Measures

Our management evaluates our performance based on non-GAAP measures, of which the primary performance measure is adjusted EBITDA.  EBITDA, as commonly defined, refers to earnings before interest, taxes, depreciation and amortization.  Our adjusted EBITDA consists of earnings (net income or loss) available to common stockholders before preferred stock dividend, interest expense (including write-off of deferred financing costs and debt discount), (gain) loss on early extinguishment of debt, impact of interest rate swap agreements, income tax expense, depreciation and amortization, impairment of goodwill, net (gain) loss on early disposition of notes receivable/payable, and merger and acquisition related expenses.  We also use these same measures when evaluating potential acquisition candidates.

We believe that adjusted 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 adjusted 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 or adjusted EBITDA) for solid waste companies we intend to acquire.  The appropriate EBITDA or adjusted 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 and restricted stock bonuses paid to our executive officers and other employees;

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

·  
in communications with investors, lenders, and others, concerning our financial performance.

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

   
2011
   
2010
   
2009
 
Adjusted EBITDA
 
$
59,538
   
$
53,767
   
$
51,468
 
Depreciation and amortization
   
(33,489
)
   
(30,058
)
   
(26,357
)
Merger and acquisition related expenses
   
(1,828
)
   
(457
)
   
(1,030
)
Interest expense, net
   
(20,203
)
   
(19,028
)
   
(18,052
)
Write-off of deferred financing costs
   
(157
)
   
(184
)
   
 
Loss on early extinguishment of debt
   
(5,797
)
   
     
 
Impact of interest rate swap
   
     
(236
)
   
(2,063
)
Income tax provision
   
(461
)
   
(1,915
)
   
(2,958
)
Accrued payment-in-kind dividend on preferred stock
   
(4,724
)
   
(4,501
)
   
(4,278
)
Net loss available to common stockholders
 
$
(7,121
)
 
$
(2,612
)
 
$
(3,270
)

 
Our adjusted 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.  Adjusted 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.

Other Considerations

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 up to $100,000, $250,000 and $250,000 of our general liability, workers’ compensation and automobile liability per claim, 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 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.

All merger and acquisition related transaction and restructuring costs are expensed as incurred.  Merger and acquisition related costs that were previously capitalized include third party expenditures related to mergers and acquisitions, such as legal, engineering, and accounting expenses, and direct expenditures such as travel costs.  Merger and acquisition related costs also include indirect expenditures, such as salaries, commissions and other corporate services.

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.

Goodwill represents the excess of the purchase price over the fair value of the net assets of the acquired operations.  In allocating the purchase price of an acquired company among its assets, we first assign value to the tangible assets, followed by intangible assets such as covenants not-to-compete and any remaining amounts are then allocated to goodwill.

Acquisitions

As disclosed in Part I, Item 1 “Business—Integration and Acquisitions,” we may target acquisition opportunities that enable us to internalize waste into our existing landfills and that offer new markets where: (i) we are able to acquire disposal facilities; (ii) we can secure long-term disposal contracts; or (iii) the landfills are municipally owned.  In markets where we already own a landfill, we intend to focus on expanding our presence through tuck-in acquisitions.  Tuck-in acquisitions are sought to provide growth in revenue and increase in market share, to enable disposal internalization and consolidation of duplicative facilities and functions to improve efficiencies and economies of scale.  If we find an attractive new market, we seek to enter that market by acquiring a permitted landfill, followed by acquiring collection and/or transfer operations and internalizing waste into the landfill.

Any acquisition we make would be financed by cash on hand and available capacity under our revolving credit facility, and through additional debt, and/or additional equity, including common stock or preferred stock.

 
We completed the IESI Oklahoma acquisition, the Stoughton transaction and the Emerald Waste acquisition during the year ended December 31, 2011.  Effective January 1, 2011, we acquired all of the outstanding capital stock of IESI OK Corporation, which is now known as WCA of Chickasha, Inc.  The acquired operations include nine commercial and residential routes around Chickasha, Oklahoma, which is approximately 40 miles southwest of Oklahoma City, and a transfer station, which is approximately 50 miles from our Pauls Valley Landfill.  The transfer station is fully permitted but is not currently in operation.  On February 11, 2011, we entered into an operating agreement with an option to purchase Stoughton Recycling Technologies, LLC (“SRT”).  SRT is a commercial and demolition recycling facility and transfer station in Stoughton, Massachusetts.  This facility is located three miles from the WCA-owned Champion City Recovery transfer station and approximately 25 miles south of Boston, Massachusetts.  On February 28, 2011, we closed the Emerald Waste acquisition pursuant to an amended equity interest purchase agreement to acquire one transfer station and three collection operations located in Central Florida.  The acquired Emerald Waste operations consist of 117 residential, commercial and roll-off routes servicing seven counties and 113,500 customers in the Gainesville, Orange City and Daytona Beach market areas.  Total consideration for these three transactions included $38.0 million of cash and 2,816,308 shares of our common stock valued at $14.7 million.  Information concerning our acquisitions may be found in the table below and in our previously filed periodic and current reports on Form 8-K and amendments thereto and in Part II, Item 8 “Financial Statements and Supplemental Data,” note 3 to our consolidated financial statements included in this Form 10-K.

The following sets forth additional information regarding the acquisitions from January 1, 2009 to December 31, 2011:

Company
 
Location
 
Region
 
Completion Date
 
Operations
MRR Southern, LLC
 
Greensboro, NC
 
III
 
January 15, 2009
 
Transfer Station
Disposal Doctor, Inc.
 
Houston, TX
 
II
 
August 21, 2009
 
Collection
Live Earth, LLC
 
Fostoria, OH/Brockton, MA
 
IV
 
December 31, 2009
 
Landfill & Transfer Station
Washita Disposal
 
Oklahoma City, OK
 
II
 
August 1, 2010
 
Collection
Five JAB Environmental Services, LLC
 
Houston, TX
 
II
 
September 1, 2010
 
Collection
Sprint Waste Services, L.P.
 
Houston, TX
 
II
 
October 1, 2010
 
Collection
DINA Industries, Inc.
 
Houston, TX
 
II
 
October 1, 2010
 
Collection
IESI OK Corporation
 
Chickasha, OK
 
II
 
January 1, 2011
 
Collection & Transfer Station
Stoughton Recycling Technologies, LLC
 
Stoughton, MA
 
IV
 
February 11, 2011
 
Transfer Station
Emerald Waste Services
 
Central Florida, FL
 
V
 
February 28, 2011
 
Collection & Transfer Station

At December 31, 2011, we owned and/or operated a total of 25 landfills, 29 collection operations and 29 transfer stations/MRFs, had approximately 486 routes and handled approximately 16,000 landfill tons per day at our landfills.

We continue to seek acquisition opportunities that enable us to effectively leverage our existing infrastructure and maximize the internalization of waste.  We are also evaluating opportunistic potential acquisitions both within and outside our existing footprint.

For a description of our accounting for acquisitions and acquisition related expenses, please read “—Executive Overview—Other Considerations” above and Part II, Item 8 “Financial Statements and Supplemental Data,” notes 1 and 3 to the consolidated financial statements included in this Form 10-K.
 
 
Results of Operations

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

The following table sets forth the components of operating income (loss) by major operating segments (Region I: Kansas, Missouri; Region II: Colorado, New Mexico, Oklahoma, Texas; Region III: Alabama, Arkansas, North Carolina, South Carolina, Tennessee; Region IV: Massachusetts, Ohio; Region V: Florida) for the years ended December 31, 2011 and 2010 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 Revenue
 
Year ended December 31, 2011:
                                                               
Revenue
 
$
53,671
   
$
96,890
   
$
46,347
   
$
43,865
   
$
33,041
   
$
   
$
273,814
     
100.0
 
Cost of services
   
37,376
     
70,542
     
29,507
     
37,093
     
26,218
     
     
200,736
     
73.3
 
Depreciation and amortization
   
5,635
     
11,553
     
6,528
     
4,907
     
4,491
     
375
     
33,489
     
12.2
 
General and administrative
   
3,876
     
7,318
     
3,342
     
     
545
     
632
 
   
15,713
     
5.7
 
(Gain) loss on sale of assets
   
(79
)
   
1
     
(105
)
   
     
(166
)
   
     
(349
)
   
(0.1
)
Operating income (loss)
 
$
6,863
   
$
7,476
   
$
7,075
   
$
1,865
   
$
1,953
   
$
(1,007
)
 
$
24,225
     
8.9
 
Year ended December 31, 2010:
                                                               
Revenue
 
$
50,316
   
$
90,414
   
$
44,369
   
$
38,049
   
$
6,336
   
$
   
$
229,484
     
100.0
 
Cost of services
   
34,999
     
63,600
     
28,263
     
33,426
     
4,822
     
     
165,110
     
72.0
 
Depreciation and amortization
   
5,357
     
11,430
     
6,586
     
4,540
     
1,703
     
442
     
30,058
     
13.1
 
General and administrative
   
3,496
     
6,407
     
2,512
     
     
448
     
(864
)
   
11,999
     
5.2
 
(Gain) loss on sale of assets
   
133
     
(7
)
   
(1,049
)
   
     
(16
)
   
1
     
(938
)
   
(0.4
)
Operating income (loss)
 
$
6,331
   
$
8,984
   
$
8,057
 
 
$
83
   
$
(621
)
 
$
421
   
$
23,255
     
10.1
 
Increase/(decrease) in 2011 compared to 2010:
                                                               
Revenue
 
$
3,355
   
$
6,476
   
$
1,978
   
$
5,816
     
26,705
   
$
   
$
44,330
         
Cost of services
   
2,377
     
6,942
     
1,244
     
3,667
     
21,396
     
     
35,626
         
Depreciation and amortization
   
278