AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 21, 2002.
REGISTRATION NO. 333-76722
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WASTE CONNECTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3283464
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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620 COOLIDGE DRIVE, SUITE 350
FOLSOM, CALIFORNIA 95630
(916) 608-8200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RONALD J. MITTELSTAEDT
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
WASTE CONNECTIONS, INC.
620 COOLIDGE DRIVE, SUITE 350
FOLSOM, CALIFORNIA 95630
(916) 608-8200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES OF ALL COMMUNICATIONS TO:
ROBERT D. EVANS, ESQ.
SHARTSIS, FRIESE & GINSBURG LLP
ONE MARITIME PLAZA, 18TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
(415) 421-6500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
THE PROSPECTUS CONTAINED HEREIN IS A COMBINED PROSPECTUS PURSUANT TO RULE
429 AND ALSO RELATES TO THE REGISTRATION STATEMENT FILED BY REGISTRANT ON FORM
S-3, FILE NO. 333-87703, UNDER THE SECURITIES ACT OF 1933 ON SEPTEMBER 24, 1999.
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER UNIT(1)(2) PRICE(1)(2)(3) FEE(4)
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debt securities..............
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preferred stock, $0.01 par
value(5)...................
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common stock, $0.01 par
value(6)...................
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Total................... $87,433,125 $20,897(7)
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(1) There are being registered under this registration statement such
indeterminate number of shares of common stock and preferred stock of the
registrant, and such indeterminate principal amount of debt securities of
the registrant, as shall have an aggregate initial offering price not to
exceed $87,433,125. If any debt securities are issued at an original issue
discount, then the securities registered shall include such additional debt
securities as may be necessary such that the aggregate initial public
offering price of all securities issued pursuant to this registration
statement will equal $87,433,125. Any securities registered under this
registration statement may be sold separately or as units with other
securities registered under this registration statement. The proposed
maximum initial offering price per unit will be determined from time to time
by the registrant in connection with the issuance by the registrant of the
securities registered under this registration statement.
(2) Not specified with respect to each class of securities to be registered
pursuant to General Instruction II.D of Form S-3 under the Securities Act of
1933.
(3) Estimated solely for the purpose of calculating the registration fee. Any
offering of debt securities denominated in any foreign currency or currency
unit will be treated as the equivalent in U.S. dollars based on the exchange
rate applicable to the purchase of such debt securities from the registrant.
No separate consideration will be received for common stock, preferred stock
or debt securities that are issued upon conversion or exchange of debt
securities or preferred stock registered hereunder.
(4) Calculated pursuant to Rule 457. Pursuant to Rule 429 under the Securities
Act of 1933 the prospectus included herein also relates to $200,000,000 of
securities registered under Registration Statement No. 333-87703, for which
a registration fee of $55,600 was previously paid to the Commission. The
amount of securities being registered, together with the remaining
securities registered under Registration Statement No. 333-87703
($112,566,875), represents the maximum amount of securities that are
expected to be offered for sale.
(5) Including such indeterminate number of shares of preferred stock as may from
time to time be issued (i) at indeterminate prices, or (ii) upon conversion
or exchange of debt securities registered hereunder, to the extent any such
debt securities are, by their terms, convertible into preferred stock.
(6) Including such indeterminate number of shares of common stock as may from
time to time be issued (i) at indeterminate prices or (ii) upon conversion
or exchange of debt securities or preferred stock registered hereunder, to
the extent any of such debt securities or shares of preferred stock are, by
their terms, convertible into common stock.
(7)Previously paid.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED MARCH 21, 2002
[LOGO]
$200,000,000
Waste Connections, Inc. is a regional, integrated solid waste services
company that provides solid waste collection, transfer, disposal and recycling
services in secondary markets primarily in the Western U.S.
From time to time, we may issue any of the following securities:
- debt securities
- preferred stock
- common stock
We will provide the specific terms of these securities in one or more
supplements to this prospectus. You should read this prospectus and any
prospectus supplement carefully before you invest.
Our common stock is traded on the Nasdaq National Market under the symbol
"WCNX." The applicable prospectus supplement will contain information, where
applicable, as to any other listing on the Nasdaq National Market or any
securities exchange of the securities covered by the prospectus supplement.
We may sell the securities directly to investors, through agents designated
from time to time or to or through underwriters or dealers. See "Plan of
Distribution." If any underwriters are involved in the sale of any securities in
respect of which this prospectus is being delivered, the names of such
underwriters and any applicable commissions or discounts will be set forth in a
prospectus supplement. The net proceeds we expect to receive from such sale also
will be set forth in a prospectus supplement.
This prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement.
INVESTING IN THE SECURITIES OFFERED UNDER THIS PROSPECTUS INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated .
OUR BUSINESS
Our company is a regional, integrated solid waste services company that
provides solid waste collection, transfer, disposal and recycling services in
secondary markets primarily in the Western U.S.
Our executive offices are located at 620 Coolidge Drive, Suite 350, Folsom,
California 95630. Our telephone number is (916) 608-8200.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC"), which registers the distribution
of the securities offered under this prospectus. The registration statement,
including the attached exhibits and schedules, contains additional information
about our company and the securities. The registration statement can be read at
the SEC's web site or at the offices mentioned under the heading "Where You Can
Find More Information."
The registration statement uses a "shelf" registration process. Under the
shelf process, we may, from time to time over approximately the next two years,
sell debt securities, preferred stock and common stock, either separately or in
units, in one or more offerings, up to a total dollar amount of $200,000,000 or
the equivalent of this amount in foreign currencies or foreign currency units.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement, together with additional information described under the
heading "Where You Can Find More Information."
You should rely only on the information in this prospectus and in any
prospectus supplement, including any information incorporated by reference. We
have not authorized anyone to provide you with different information. We may
only use this prospectus to sell securities if it is accompanied by a prospectus
supplement. We are only offering the securities in states where offers are
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate at any date other than the date on the cover
page of these documents.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We make "forward-looking statements" throughout this prospectus. These
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," or "anticipates" or the negative
thereof or comparable terminology, or by discussions of strategy. Our business
and operations are subject to a variety of risks and uncertainties and,
consequently, actual results may materially differ from those projected by any
forward-looking statements. Factors that could cause actual results to differ
from those projected include, but are not limited to, the following:
- competition or unfavorable economic or industry conditions could lead to
a decrease in demand for our services and to a decline in prices we
realize for our services;
- we may be required to pay increased prices for acquisitions, and we may
experience difficulty in integrating and deriving synergies from
acquisitions;
- we cannot be certain that we will always have access to the additional
capital that we may require for our growth strategy or that our cost of
capital will not increase;
- governmental regulations may require increased capital expenditures or
otherwise affect our business;
- companies that we acquire could have undiscovered liabilities; and
- we are highly dependent on the services of senior management.
1
These risks and uncertainties, as well as others, are discussed in greater
detail in our filings with the SEC, including our most recent annual report on
Form 10-K and quarterly reports on Form 10-Q. You should read carefully the
section of this prospectus under the heading "Risk Factors" beginning below. We
make no commitment to revise or update any forward-looking statements in this
prospectus to reflect events or circumstances after the date of this prospectus.
This prospectus contains registered service marks, trademarks and trade
names of Waste Connections, including the Waste Connections, Inc. name and logo.
2
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.
Any or all of the following risks could materially and adversely affect our
business, financial condition and results of operations. As a result, the
trading price of our common stock could decline, and you may lose all or part of
your investment.
RISKS RELATED TO OUR BUSINESS
DIFFICULTIES IN MAKING ACQUISITIONS, ACQUIRING EXCLUSIVE CONTRACTS AND
GENERATING INTERNAL GROWTH MAY CAUSE OUR GROWTH TO BE SLOWER THAN EXPECTED.
Our growth strategy includes expanding through acquisitions, acquiring
additional exclusive arrangements and generating internal growth. Since
inception, most of our growth has been through acquisitions. Internally
generated growth for the industry and Waste Connections has been less than 8%
per year. Although we have identified numerous acquisition candidates that we
believe are suitable, we may not be able to acquire them at prices or on terms
and conditions favorable to us. Our ability to grow also depends on several
other factors, including
- the availability of capital to support our growth,
- our ability to compete with existing and emerging companies,
- our ability to maintain profit margins in the face of competitive
pressures,
- our ability to continue to recruit, train and retain qualified employees,
and
- continued strong demand for our services.
Difficulties in any of these areas could hinder our growth.
OUR ACQUISITIONS MAY NOT BE SUCCESSFUL, RESULTING IN CHANGES IN STRATEGY,
OPERATING LOSSES OR A LOSS ON SALE OF THE BUSINESS ACQUIRED.
Even if we are able to make acquisitions on advantageous terms and are able
successfully to integrate them into our operations and organization, some may
not successfully fulfill our strategy in a given market due to factors that we
cannot control, such as market position or customer base. As a result, operating
margins could be less than we originally anticipated when we made the
acquisition. We then may change our strategy with respect to the market or
businesses acquired in the market and decide to sell the operation at a loss.
RAPID GROWTH MAY STRAIN OUR MANAGEMENT, OPERATIONAL, FINANCIAL AND OTHER
RESOURCES.
From inception through December 31, 2001, we acquired 134 solid waste
services related businesses. To maintain and manage our growth, we will need to
expand our management information systems capabilities and our operational and
financial systems and controls. We will also need to attract, train, motivate,
retain and manage additional senior managers, technical professionals and other
employees. Failure to do any of these things would restrict our ability to
maintain and improve our profitability while continuing to grow.
OUR GROWTH AND FUTURE FINANCIAL PERFORMANCE DEPEND SIGNIFICANTLY ON OUR ABILITY
TO INTEGRATE ACQUIRED BUSINESSES INTO OUR ORGANIZATION AND OPERATIONS.
Part of our strategy is to achieve economies of scale and operating
efficiencies by growing through acquisitions. We may not achieve these goals
unless we effectively combine the operations of acquired businesses with our
existing operations. Our senior management team may not be able to integrate our
3
completed and future acquisitions. Any difficulties we encounter in the
integration process could interfere with our operations and reduce our operating
margins.
WE COMPETE FOR ACQUISITION CANDIDATES WITH OTHER PURCHASERS, SOME OF WHICH HAVE
GREATER FINANCIAL RESOURCES THAN WASTE CONNECTIONS. THESE COMPETITORS MAY BE
ABLE TO OFFER MORE FAVORABLE ACQUISITION TERMS, THUS LIMITING OUR ABILITY TO
GROW THROUGH ACQUISITION.
Other companies have adopted or will probably adopt our strategy of
acquiring and consolidating regional and local businesses. We expect that
increased consolidation in the solid waste services industry will increase
competitive pressures. Increased competition for acquisition candidates may make
fewer acquisition opportunities available to us, and may cause us to make
acquisitions on less attractive terms, such as higher purchase prices.
Acquisition costs may increase to levels beyond our financial capability or to
levels that would adversely affect our operating results and financial
condition. Our ongoing ability to make acquisitions will depend in part on the
relative attractiveness of our common stock as consideration for potential
acquisition candidates. This attractiveness may depend largely on the relative
market price and capital appreciation prospects of our common stock compared to
the stock of our competitors. If the market price of our common stock were to
decline materially over a prolonged period of time, we may find it difficult to
make acquisitions on attractive terms.
TIMING OF ACQUISITIONS MAY CAUSE FLUCTUATIONS IN OUR QUARTERLY RESULTS, WHICH
MAY CAUSE OUR STOCK PRICE TO DECLINE.
We are not always able to control the timing of our acquisitions. Obtaining
third party consents and regulatory approvals, completing due diligence on the
acquired businesses, and finalizing transaction terms and documents are not
entirely within our control and may take longer than we anticipate, causing
certain transactions to be delayed. As a result, some transactions may be
delayed. Our inability to complete acquisitions in the time frames that we
expect may cause our operating results to be less favorable than expected, which
could cause our stock price to decline.
WE MAY BE UNABLE TO COMPETE EFFECTIVELY WITH GOVERNMENTAL SERVICE PROVIDERS AND
LARGER AND BETTER CAPITALIZED COMPANIES, WHICH MAY RESULT IN REDUCED REVENUES
AND LOWER PROFITS.
Our industry is highly competitive, fragmented and requires substantial
labor and capital resources. Some of the markets in which we compete or will
likely compete are served by one or more large, national solid waste companies,
as well as by numerous 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 counties, municipalities and solid waste districts
that maintain their own waste collection and disposal operations. These
operators may have financial advantages over Waste Connections because of their
access to user fees and similar charges, tax revenues and tax-exempt financing.
Some of our competitors may also be better capitalized, have greater name
recognition or be able to provide services at a lower cost than Waste
Connections.
WE MAY LOSE CONTRACTS THROUGH COMPETITIVE BIDDING, EARLY TERMINATION OR
GOVERNMENTAL ACTION, WHICH WOULD CAUSE OUR REVENUES TO DECLINE.
We derive a substantial portion of our revenue from services provided under
exclusive municipal contracts, franchise agreements and governmental
certificates. Many of these will be subject to competitive bidding at some time
in the future. We also intend to bid on additional municipal contracts and
franchise agreements. We may not be the successful bidder. In addition, some of
our customers may terminate their contracts with us before the end of the
contract term. Municipalities in Washington may by law annex unincorporated
territory, which would likely remove such territory from the area covered by
governmental certificates issued to us by the Washington Utilities and
Transportation Commission ("WUTC"). Annexation would reduce the areas covered by
our governmental certificates and subject more of our Washington operations to
competitive bidding in the future. Moreover, legislative action could amend or
repeal the laws governing WUTC regulation, which could harm our competitive
position by subjecting more areas to
4
competitive bidding. If we were not able to replace revenues from contracts lost
through competitive bidding or early termination or from the renegotiation of
existing contracts with other revenues within a reasonable time period, our
revenues could decline.
WE MAY NOT HAVE ENOUGH CAPITAL OR BE ABLE TO RAISE ENOUGH ADDITIONAL CAPITAL ON
SATISFACTORY TERMS TO MEET OUR CAPITAL REQUIREMENTS, WHICH WOULD LIMIT OUR
GROWTH THROUGH ACQUISITIONS.
Continued growth will require additional capital. We expect to finance
future acquisitions through cash from operations, borrowings under our credit
facility, issuing additional equity or debt securities and/or seller financing.
If acquisition candidates are unwilling to accept, or we are unwilling to issue,
shares of our common stock as part of the consideration for acquisitions or if
our common stock does not maintain a sufficient market value, we may have to use
more of our cash or borrowings under our credit facility to fund acquisitions.
Using cash for acquisitions limits our financial flexibility and makes us more
likely to seek additional capital through future debt or equity financings. If
available cash from operations and borrowings under the credit facility are not
sufficient to fund acquisitions, we will need additional equity and/or debt
financing. If we seek more debt, our interest expense would increase and we may
have to agree to financial covenants that limit our operational and financial
flexibility. We have pledged all of our assets as collateral for our credit
facility, which could restrict our ability to obtain additional debt on
attractive terms. If we seek more equity, we may dilute the ownership interests
of our then-existing stockholders. If we are unable to obtain additional equity
and/or debt financing on attractive terms, our rate of growth through
acquisitions may decline. We will also need to make substantial capital
expenditures to develop or acquire new landfills, transfer stations and other
facilities and to maintain such properties.
WE DEPEND SIGNIFICANTLY ON THE SERVICES OF THE MEMBERS OF OUR MANAGEMENT TEAM,
AND THE DEPARTURE OF ANY OF THOSE PERSONS COULD CAUSE OUR OPERATING RESULTS TO
SUFFER.
Our success depends significantly on the continued individual and
collective contributions of our senior and district management team. Key members
of our management have entered into employment agreements, but we may not be
able to enforce these agreements. The loss of the services of any member of our
senior or district management or the inability to hire and retain experienced
management personnel could harm our operating results.
OUR DECENTRALIZED DECISION MAKING STRUCTURE COULD ALLOW LOCAL MANAGERS TO MAKE
DECISIONS THAT ADVERSELY AFFECT OUR OPERATING RESULTS.
We manage our operations on a decentralized basis. Local managers have the
authority to make many decisions concerning their operations without obtaining
prior approval from executive officers, subject to compliance with general
company-wide policies. Poor decisions by local managers could result in loss of
customers or increases in costs, in each case reducing operating results.
THE GEOGRAPHIC CONCENTRATION OF OUR BUSINESS MAKES OUR RESULTS VULNERABLE TO
FACTORS AFFECTING THE WESTERN U.S., AND SEASONAL FLUCTUATIONS MAY CAUSE OUR
BUSINESS AND FINANCIAL RESULTS TO VARY AMONG QUARTERS, WHICH COULD NEGATIVELY
AFFECT OUR STOCK PRICE.
Our business and financial results would be harmed by downturns in the
general economy of the western U.S. and other factors affecting the region, such
as state regulations affecting the solid waste services industry and severe
weather conditions. Based on historic trends experienced by the businesses we
have acquired, we expect our operating results to vary seasonally, with revenues
typically lowest in the first quarter, higher in the second and third quarters,
and lower in the fourth quarter than in the second and third quarters. This
seasonality reflects the lower volume of solid waste generated during the late
fall, winter and early spring months because of decreased construction and
demolition activities during the winter months in the western U.S. In addition,
some of our operating costs should be generally higher in the winter months.
Adverse winter weather conditions slow waste collection activities, resulting in
higher labor and operational costs. Greater precipitation in the winter
increases the weight of collected waste, resulting in higher disposal costs,
which are
5
calculated on a per ton basis. Because of these factors, we expect operating
income to be generally lower in the winter months, and our stock price may be
negatively affected by these variations.
UNUSUALLY ADVERSE WEATHER CONDITIONS MAY INTERFERE WITH OUR OPERATIONS, HARMING
OUR OPERATING RESULTS.
Our collection and landfill operations could be adversely affected, beyond
the normal seasonal variations described above, by unusually long periods of
inclement weather, which could interfere with collection and landfill
operations, reduce the volume of waste generated by our customers and delay the
development of landfill capacity. Periods of particularly harsh weather may
force us to temporarily suspend certain of our operations.
INCREASES IN THE COSTS OF LABOR, FUEL OR ENERGY COULD REDUCE OUR OPERATING
MARGINS.
Our continued success will depend on our ability to attract and retain
qualified personnel. We compete with other businesses in our markets for
qualified employees. The labor market is currently tight in many of our markets.
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 cost, and even
relatively small increases in labor costs per employee could materially affect
our cost structure. If we fail 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, our operating margins could suffer.
Although fuel and energy costs account for a relatively small portion of
our total operating expenses, the price of fuel and energy is volatile, and
shortages sometimes occur. Although the recent energy crisis affecting
California and other western states in which we operate did not materially
affect our operations or profitability in those regions, further significant
increases in the cost of fuel or energy, or shortages of fuel or energy, could
interrupt or curtail our operations and lower our operating margins.
EACH BUSINESS THAT WE ACQUIRE OR HAVE ACQUIRED MAY HAVE LIABILITIES THAT WE FAIL
OR ARE UNABLE TO DISCOVER, INCLUDING LIABILITIES THAT ARISE FROM PRIOR OWNERS'
FAILURE TO COMPLY WITH ENVIRONMENTAL LAWS, WHICH MAY HARM OUR FINANCIAL
CONDITION.
As a successor owner, we may be legally responsible for these liabilities.
Even if we obtain legally enforceable representations, warranties and
indemnities from the sellers of such businesses, they may not cover the
liabilities fully. Some environmental liabilities, even if we do not expressly
assume them, may be imposed on Waste Connections under various legal theories.
Our insurance program does not cover liabilities associated with any
environmental cleanup or remediation of our own sites. A successful uninsured
claim against Waste Connections could harm our financial condition.
OUR GROWTH MAY BE LIMITED BY THE INABILITY TO OBTAIN NEW LANDFILLS AND EXPAND
EXISTING ONES.
We currently own and operate a number of landfills. Based on current waste
flows, the estimated remaining lives of our landfills range from approximately
10 to 313 years, with an average remaining life of approximately 82 years. Our
ability to meet our growth objectives may depend in part on our ability to
acquire, lease and expand landfills and develop new landfill sites. We may not
be able to obtain new landfill sites or expand the permitted capacity of our
landfills when necessary. Obtaining new landfill sites is important to our
expansion into new non-exclusive markets; if we do not believe that we can
obtain a landfill site in a non-exclusive market, we may choose not to enter
into that market. Expanding existing landfill sites is important in those
markets where the remaining life of our landfills is relatively short. We may
choose to forego acquisitions and internal growth in these markets because
increased volumes would further shorten the life of these landfills. Either of
these circumstances could result in slower growth.
6
IN SOME AREAS IN WHICH WE OPERATE, SUITABLE LAND FOR NEW SITES OR EXPANSION OF
EXISTING LANDFILL SITES MAY BE UNAVAILABLE WHICH COULD INCREASE OUR DISPOSAL
COSTS AND REDUCE OUR OPERATING MARGINS.
Operating permits for landfills in states where we operate must generally
be renewed at least every five years. It has become increasingly difficult and
expensive to obtain required permits and approvals to build, operate and expand
solid waste management facilities, including landfills and transfer stations.
The process often takes several years, requires numerous hearings and compliance
with zoning, environmental and other requirements and is resisted by citizen,
public interest or other groups. We may not be able to obtain or maintain the
permits we require to expand, and such permits may contain burdensome terms and
conditions. Even when granted, final permits to expand are often not approved
until the remaining permitted disposal capacity of a landfill is very low. Local
laws and ordinances also may affect our ability to obtain permits to expand
landfills. If we were to exhaust our permitted capacity at a landfill, our
ability to expand internally would be limited, and we could be required to cap
and close that landfill and forced to dispose of collected waste at more distant
landfills or at landfills operated by our competitors. The resulting increased
costs would reduce our operating margins.
OUR ACCRUALS FOR OUR LANDFILL CLOSURE AND POST-CLOSURE COSTS MAY BE INADEQUATE,
AND OUR EARNINGS WOULD BE LOWERED IF WE ARE REQUIRED TO PAY ADDITIONAL AMOUNTS.
We may be required to pay closure and post-closure costs of landfills and
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 30 years
after final closure of a landfill, based on engineering estimates of future
requirements associated with the landfill design and closure and post-closure
process. Our obligations to pay closure or post-closure costs may exceed the
amount we accrued and reserved and other amounts available from funds or
reserves established to pay such costs. Paying additional amounts would lower
our earnings and could cause our stock price to decline.
WE MAY INCUR ADDITIONAL CHARGES RELATED TO CAPITALIZED EXPENDITURES, WHICH WOULD
LOWER OUR EARNINGS.
In accordance with accounting principles generally accepted in the United
States, we capitalize some expenditures and advances relating to acquisitions,
pending acquisitions and landfill development projects. We expense indirect
acquisition costs such as executive salaries, general corporate overhead, public
affairs and other corporate services as we incur those costs. We charge against
earnings any unamortized capitalized expenditures and advances (net of any
amount that we estimate we will recover, through sale or otherwise) that relate
to any operation that is permanently shut down, any pending acquisition that is
not consummated and any landfill development project that we do not expect to
complete. Waste Connections, therefore, may incur charges against earnings in
future periods, which could lower our stock price.
RECENT ACCOUNTING PRONOUNCEMENTS MAY REQUIRE A WRITE-DOWN OF OUR GOODWILL, WHICH
COULD MATERIALLY IMPAIR OUR NET WORTH.
In July 2001, the Financial Accounting Standards Board issued Statement No.
142, Goodwill and Other Intangible Assets. ("FAS 142"). FAS 142 primarily
addresses the accounting for goodwill and intangible assets subsequent to their
acquisition and supercedes APB 17, Intangible Assets. The most significant
changes made by FAS 142 are: (1) goodwill and indefinite-lived intangible assets
will no longer be amortized; (2) goodwill will be tested for impairment at least
annually at the reporting unit level; and (3) intangible assets deemed to have
an indefinite life will be tested for impairment at least annually.
As a result of our acquisition strategy, we have a material amount of
goodwill recorded on our financial statements. Under FAS 142, effective January
1, 2002, we no longer amortize our existing goodwill. In addition, we will test
goodwill for impairment using the two-step process prescribed in Statement 142.
The first step is a screen for potential impairment, while the second step
measures the amount of the impairment, if any. Prior to June 30, 2002, we expect
to perform the first of the required impairment tests of goodwill and indefinite
lived intangible assets based on the carrying values as of January 1, 2002. If,
as a result of the implementation of FAS 142, we are required to write-down any
of our goodwill, our net worth will be reduced.
7
Our credit agreement contains a covenant requiring us to maintain a minimum
funded debt to capitalization ratio, and net worth is one of the components of
capitalization. A reduction in net worth, therefore, if substantial, could limit
the amount that we can borrow under our credit agreement and any failure to
comply with the agreement could result in an event of default under the credit
agreement. We will not be able to determine if a reduction in our goodwill will
be required until completion of the impairment tests upon adoption of FAS 142.
IF WE FAIL TO COMPLY WITH COVENANTS AND CONDITIONS OF OUR CREDIT FACILITY, WE
MAY BE UNABLE TO MAKE ACQUISITIONS AND MAY BE REQUIRED TO REPAY OUR DEBT EARLY,
WHICH COULD HARM OUR FINANCIAL RESULTS.
Our credit facility requires us to obtain the consent of the lending banks
before acquiring any other business for more than $25 million in cash and
assumed debt. If we are not able to obtain our banks' consent to acquisitions of
this size, we may not be able to complete such acquisitions, which could inhibit
our growth. Our credit facility also contains financial covenants based on our
current and projected financial condition after completing an acquisition. If we
cannot satisfy these financial covenants on a pro forma basis after completing
an acquisition, we would not be able to complete the acquisition without a
waiver from our lending banks. Whether or not a waiver is needed, if the results
of our future operations differ materially from what we expect, we may no longer
be able to comply with the covenants in the credit facility. Our failure to
comply with these covenants may result in a default under the credit facility,
which would allow our lending banks to accelerate the date for repayment of debt
incurred under the credit facility and could harm our business and financial
results.
PROVISIONS IN OUR CHARTER AND BYLAWS MAY DETER CHANGES IN CONTROL THAT COULD
BENEFIT OUR STOCKHOLDERS.
Provisions in our amended and restated certificate of incorporation and
by-laws, and in the Delaware General Corporation Law, may deter tender offers
and hostile takeovers and delay or prevent changes in control or management of
Waste Connections, including transactions in which stockholders might be paid
more than current market prices for their shares. These provisions may also
limit our stockholders' ability to approve transactions that they believe are in
their best interests.
WE DO NOT INTEND TO PAY CASH DIVIDENDS ON OUR COMMON STOCK.
We have never paid cash dividends on our common stock. We do not currently
anticipate paying any cash dividends on the common stock. We intend to retain
all earnings to fund the operation and expansion of our business. In addition,
our existing credit facility restricts the payment of cash dividends.
PURCHASERS OF OUR COMMON STOCK AND PURCHASERS OF SECURITIES CONVERTIBLE INTO OUR
COMMON STOCK WILL SUFFER IMMEDIATE DILUTION IN NET TANGIBLE BOOK VALUE ON
PURCHASE OF OUR COMMON STOCK OR CONVERSION OF SECURITIES INTO OUR COMMON STOCK.
Net tangible book value represents the amount of our total tangible assets
less total liabilities. Upon purchase of our common stock, purchasers will
suffer immediate substantial dilution in the net tangible book value per share
of common stock purchased. Similarly, upon conversion of securities convertible
into our common stock, the holders of such convertible securities will suffer
immediate substantial dilution in the net tangible book value per share of
common stock issued on conversion.
RISKS RELATED TO OUR INDUSTRY
EXTENSIVE AND EVOLVING ENVIRONMENTAL LAWS AND REGULATIONS MAY RESTRICT OUR
OPERATIONS AND GROWTH AND INCREASE OUR COSTS.
Environmental laws and regulations have been enforced more and more
stringently in recent years because of greater public interest in protecting the
environment. These laws and regulations impose substantial costs on us and
affect our business in many ways, including as described below. In addition,
federal, state and
8
local governments may change the rights they grant to and the restrictions they
impose on solid waste services companies, and those changes could restrict our
operations and growth.
WE MAY BE UNABLE TO OBTAIN AND MAINTAIN LICENSES OR PERMITS AND ZONING,
ENVIRONMENTAL AND/OR OTHER LAND USE APPROVALS THAT WE NEED TO OWN AND OPERATE
OUR LANDFILLS.
These licenses or permits and approvals are difficult and time-consuming to
obtain and renew, and elected officials and citizens' groups frequently oppose
them. Failure to obtain and maintain the permits and approvals we need to own or
operate landfills (including increasing their capacity) could increase our
disposal costs and reduce our operating margins.
EXTENSIVE REGULATIONS THAT GOVERN THE DESIGN, OPERATION AND CLOSURE OF LANDFILLS
MAY RESTRICT OUR LANDFILL OPERATIONS OR INCREASE OUR COSTS OF OPERATING
LANDFILLS.
These regulations include the regulations that establish minimum federal
requirements adopted by the U.S. Environmental Protection Agency in October 1991
under Subtitle D of the Resource Conservation and Recovery Act of 1976. If we
fail to comply with these regulations, we could be required to undertake
investigatory or remedial activities, curtail operations or close a landfill
temporarily or permanently. Future changes to these regulations may require us
to modify, supplement or replace equipment or facilities at substantial costs.
If regulatory agencies fail to enforce these regulations vigorously or
consistently, our competitors whose facilities do not comply with the Subtitle D
regulations or their state counterparts may obtain an advantage over us. Our
financial obligations arising from any failure to comply with these regulations
could harm our business and earnings.
WE MAY BE SUBJECT IN THE NORMAL COURSE OF BUSINESS TO JUDICIAL AND
ADMINISTRATIVE PROCEEDINGS INVOLVING FEDERAL, STATE OR LOCAL AGENCIES OR
CITIZENS' GROUPS, WHICH COULD INTERRUPT OUR OPERATIONS, REQUIRE EXPENSIVE
REMEDIATION, AND CREATE NEGATIVE PUBLICITY.
Governmental agencies may impose fines or penalties on us. They may also
attempt to revoke or deny renewal of our operating permits, franchises or
licenses for violations or alleged violations of environmental laws or
regulations, or to require us to remediate potential environmental problems
relating to waste that we or our predecessors collected, transported, disposed
of or stored. Individuals or community groups might also bring actions against
us in connection with our operations. Any adverse outcome in these proceedings
could harm our operations and financial results and create adverse publicity
about Waste Connections, which could damage our competitive position and stock
price.
LIABILITIES FOR ENVIRONMENTAL DAMAGE MAY ADVERSELY AFFECT OUR BUSINESS AND
EARNINGS.
We are liable for any environmental damage that our solid waste facilities
cause, including damage to neighboring landowners or residents, particularly as
a result of the contamination of soil, groundwater or surface water, and
especially drinking water. We may be liable for damage resulting from conditions
existing before we acquired these facilities. We may also be liable for any
off-site environmental contamination caused by pollutants or hazardous
substances whose transportation, treatment or disposal we or our predecessors
arranged. Any substantial liability for environmental damage could harm our
business and earnings.
FLUCTUATIONS IN PRICES FOR RECYCLED COMMODITIES THAT WE SELL MAY CAUSE OUR
REVENUES AND OPERATING RESULTS TO DECLINE.
We provide recycling services to some of our customers. The sale prices of
and demand for recyclable waste products, particularly wastepaper, are
frequently volatile and when they decline our revenues and operating results may
decline.
9
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to combined fixed charges and preferred stock
dividends for Waste Connections are set forth below for the periods indicated.
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- -----
Ratio of earnings to combined fixed charges and preferred
stock dividends......................................... N/A(1) 2.2 2.7 2.6 2.6
Pro forma ratio of earnings to combined fixed charges and
preferred stock dividends(2)............................ -- -- -- -- --
---------------
(1) For the year ended December 31, 1997, the Company's earnings were inadequate
to cover combined fixed charges and preferred stock dividends. The coverage
deficiency was $3,433,000.
(2) Unable to be determined at this time.
For purposes of calculating the ratios, fixed charges consist of interest
on debt, amortization of discount on debt and the interest portion of rental
expense on operating leases.
The ratio of earnings to fixed charges is calculated as follows:
(income before extraordinary charges and income taxes) + (fixed
charges) - (capitalized interest)
(fixed charges)
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, we intend to
use the net proceeds from the sale of the offered securities to reduce our
outstanding indebtedness under our credit facility, to finance acquisitions, for
capital expenditures and for working capital. We intend to invest unused net
proceeds in short-term interest-bearing securities until we apply them to these
specific purposes. We continually evaluate potential acquisition candidates and
intend to continue to pursue acquisition opportunities.
PLAN OF DISTRIBUTION
Our securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed from time to
time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each prospectus
supplement will describe the method of distribution of the securities offered
therein.
We may sell securities directly, through agents designated from time to
time, through underwriting syndicates led by one or more managing underwriters
or through one or more underwriters acting alone. Each prospectus supplement
will describe the terms of the securities to which that prospectus supplement
relates, the name or names of any underwriters or agents with whom we have
entered into arrangements with respect to the sale of such securities, the
public offering or purchase price of such securities and the net proceeds we
will receive from such sale. In addition, each prospectus supplement will
describe any underwriting discounts and other items constituting underwriters'
compensation, any discounts and commissions allowed or paid to dealers, if any,
any commissions allowed or paid to agents, and the securities exchange or
exchanges, if any, on which such securities will be listed. Dealer trading may
take place in certain of the securities, including securities not listed on any
securities exchange.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters or agents to solicit offers by certain institutions to purchase
securities from us pursuant to delayed delivery contracts providing for
10
payment and delivery at a future date. Institutions with which such contracts
may be made include, among others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
In all cases, we must approve these institutions. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of any purchaser
under any such contract will not be subject to any conditions except that (i)
the purchase of the securities will not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject, and (ii)
if the securities are also being sold to underwriters acting as principals for
their own account, the underwriters will have purchased the securities not sold
for delayed delivery. The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of these contracts.
Any underwriter or agent participating in the distribution of the
securities may be deemed to be an underwriter, as that term is defined in the
Securities Act of 1933, of the securities so offered and sold and any discounts
or commissions they receive, and any profit they realize on the sale or resale
of the securities may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933.
Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for our common
stock, which is listed on the Nasdaq National Market, and any underwriters or
dealers will not be obligated to make a market in securities. We cannot predict
the activity or liquidity of any trading in any securities.
DESCRIPTION OF DEBT SECURITIES
We may from time to time offer and sell debt securities, consisting of
debentures, notes and/or other unsecured evidences of indebtedness. Debt
securities will be either our unsecured senior debt securities or our unsecured
subordinated debt securities. The senior debt securities will be issued under a
senior indenture between us and a trustee. The senior debt securities will be
our direct, unsecured obligations and will rank equally with all of our
outstanding unsecured senior indebtedness. The subordinated debt securities will
be issued under a second, subordinated indenture between us and a trustee, which
may be the same as the trustee under the senior indenture. The subordinated debt
securities will be our direct, unsecured obligations and, unless otherwise
specified in the prospectus supplement relating to a particular series of
subordinated securities, will be subject to the subordination provisions. The
senior indenture and the subordinated indenture are together called the
"indentures," and the trustees under those indentures are together called the
"trustee."
The following summary of certain provisions of the indentures is not
complete. You should refer to the form of each indenture, copies of which are
exhibits to the registration statement. Section references below are to the
section in the applicable indenture. Capitalized terms have the meanings
assigned to them in the applicable indenture. The referenced sections of the
indentures and the definitions of capitalized terms are incorporated by
reference.
The following section describes certain general terms and provisions of any
debt securities. The particular terms of the debt securities offered by any
prospectus supplement will be described in the prospectus supplement.
Other than as may be indicated in the applicable prospectus supplement, no
provisions of the indentures afford holders of the debt securities protection in
the event of a highly leveraged transaction involving Waste Connections.
11
GENERAL
The indentures do not limit the aggregate principal amount of debt
securities that we may issue. Each indenture provides that debt securities of
any series may be issued under it up to the aggregate principal amount we
authorize from time to time and may be denominated in any currency or currency
unit that we designate. Neither the indentures nor the debt securities will
limit or otherwise restrict the amount of other indebtedness that we may incur
or the other securities that we or any of our subsidiaries may issue (section
3.01).
Debt securities of a series may be issuable in registered form without
coupons, in bearer form with or without coupons attached or in the form or one
or more global securities in registered or bearer form. Bearer securities, if
any, will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
The prospectus supplement relating to each series of debt securities being
offered will specify the particular terms of those debt securities. The terms
may include:
- the title and type of the debt securities;
- any limit on the aggregate principal amount of the debt securities or
aggregate initial public offering price;
- the priority of payment of the debt securities;
- the price or prices (which may be expressed as a percentage of the
aggregate principal amount thereof) at which the debt securities will be
issued;
- the date or dates on which the principal and premium, if any, of the debt
securities are payable;
- the interest rate or rates (which may be fixed or variable) of the debt
securities, if any;
- the interest payment date or dates, if any, or the method or methods by
which such dates may be determined, if any, the date or dates on which
payment of interest, if any, will commence, and the regular record dates
for such interest payment dates;
- the extent to which any of the debt securities will be issuable in
temporary or permanent global form, or the manner in which any interest
payable on a temporary or permanent global debt security will be paid;
- each office or agency where, subject to the terms of the applicable
indenture, the debt securities may be presented for registration or
transfer or exchange;
- the place or places where, subject to the terms of the applicable
indenture, the principal (and premium, if any) and interest, if any, on
the debt securities will be payable;
- the date or dates, if any, after which the debt securities may be
redeemed or purchased in whole or in part, at our option or mandatorily
pursuant to any sinking, purchase or analogous fund or may be required to
be purchased or redeemed at the option of the holder, and the redemption
or repayment price or prices;
- the denomination or denominations in which the debt securities will be
issuable;
- the currency, currencies or units based on or related to currencies for
which the debt securities may be purchased and the currency, currencies
or currency units in which the principal of, premium, if any, and any
interest on such debt securities may be payable;
- whether the debt securities will be convertible into shares of common or
preferred stock and if so, the terms of such conversion;
- any index used to determine the amount of payments of principal of,
premium, if any, and interest on the debt securities;
12
- whether any of the debt securities are to be issuable as bearer
securities and/or registered securities, and if issuable as bearer
securities, any limitations on issuance of such bearer securities and any
provisions regarding the transfer or exchange of such bearer securities
(including exchange for registered debt securities of the same series);
- the payment of any additional amounts with respect to the debt
securities;
- whether any of the debt securities will be issued subject to original
issue discount securities;
- information with respect to book-entry procedures, if any;
- any additional covenants or events of default not currently set forth in
the applicable indenture; and
- any other terms of the debt securities not inconsistent with the
provisions of the applicable indenture.
If any of the debt securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or interest
on any series of debt securities is payable in one or more foreign currencies or
foreign currency units, the restrictions, elections, tax consequences, specific
terms and other information with respect to such issue of debt securities and
such currencies or currency units will be set forth in the applicable prospectus
supplement (section 3.01).
Debt securities may be issued as original issue discount securities
(bearing no interest or interest at a rate that at the time of issuance is below
market rates), to be sold at a substantial discount below their stated principal
amount. There may not be any periodic payments of interest on original issue
discount securities. In the event of an acceleration of the maturity of any
original issue discount security, the amount payable to the holder of such
original issue discount security upon such acceleration will be determined in
accordance with the prospectus supplement, the terms of such security and the
indenture, but will be an amount less than the amount payable at the maturity of
the principal of such original issue discount security (section 7.02). The
federal income tax considerations with respect to original issue discount
securities will be explained in the prospectus supplement we prepare for the
original issue discount securities.
CONSOLIDATION, MERGER OR SALE OF ASSETS
Each indenture provides that we may, without the consent of the holders of
any of the debt securities outstanding under the applicable indenture,
consolidate with, merge into or transfer our assets substantially as an entirety
to any person, provided that:
- any successor assumes our obligations on the applicable debt securities
and under the applicable indenture;
- after giving effect to the transaction, there is no default or event of
default that is continuing; and
- certain other conditions under the applicable indenture are met (section
10.1).
Accordingly, a consolidation, merger or transfer of assets substantially as
an entirety, which meets the conditions described above, would not create any
event of default which would entitle holders of the debt securities, or the
trustee on their behalf, to take any of the actions described below under "Event
of Default, Waivers, Etc."
LEVERAGED AND OTHER TRANSACTIONS
The indentures and the debt securities do not contain, among other things,
provisions that would protect holders of the debt securities in the event of a
highly leveraged or other transaction involving Waste Connections that could
adversely affect the holders of debt securities.
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
Each indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding debt securities
of each affected series, modifications and alterations of the indenture may be
made that affect the rights of the holders of the debt securities. No such
modification or
13
alteration, however, may be made without the consent of the holder of each debt
security so affected which would, among other things:
- Change the maturity of the principal of, or of any installment of
interest (or premium, if any) on, the debt security;
- Change the principal amount, premium, if any, or interest on any debt
security;
- Change the method of calculation of interest or the currency of payment
of principal or interest (or premium, if any) on the debt security;
- Reduce the minimum rate of interest on the debt security;
- Impair the right to bring suit for the enforcement of any payment on or
with respect to the debt security;
- Reduce the amount of principal of an original issue discount security
that would be due and payable upon an acceleration of the maturity
thereof;
- Reduce the above-stated percentage in principal amount of outstanding
debt securities required to modify or alter the indenture (section 9.02);
or
- Change our obligation to maintain an office or agency as required by the
applicable indenture.
GLOBAL SECURITIES
The debt securities of a series may be issued in the form of one or more
global securities that will be deposited with a depositary or its nominee
identified in the applicable prospectus supplement. In such a case, one or more
global securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding debt
securities of the series to be represented by the global security or securities.
Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a global security may not be registered for transfer
or exchange except as a whole by the depositary for the global security to a
nominee for the depositary (section 3.05) and except in the circumstances
described in the applicable prospectus supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of debt securities and certain limitations and restrictions
relating to a series of bearer securities in the form of one or more global
securities will be described in the applicable prospectus supplement.
EVENT OF DEFAULT, WAIVERS, ETC.
An event of default with respect to the senior debt securities of any
series, and a default with respect to the subordinated debt securities of any
series, is defined in the applicable indentures as:
(i) Default in the payment of principal of or premium, if any, on any
debt security of that series when due;
(ii) Default in the payment of interest on any debt security of that
series when due, which continues for 30 days;
(iii) Default in our performance of any of our other covenants in the
applicable indenture with respect to the debt securities of such series,
which continues for 90 days after written notice;
(iv) Certain events of bankruptcy, insolvency or reorganization of our
company; and
(v) Any other event that may be specified in a prospectus supplement
with respect to any series of debt securities (section 7.01 of the senior
indenture; section 7.07 of the subordinated indenture).
If an event of default with respect to any series of senior debt securities
or a default specified in clauses (iv) and (v) of this section with respect to
the subordinated debt securities occurs and is continuing, either the trustee or
the holders of not less than 25% in aggregate principal amount of the debt
securities of such series
14
outstanding may declare the principal amount (or if such debt securities are
original issue discount securities, such portion of the principal amount as may
be specified in the terms of that series) of all debt securities of that series
to be immediately due and payable. The holders of a majority in aggregate
principal amount of the debt securities of any series may waive such event of
default or default, as applicable, resulting in acceleration of such debt
securities, but only if all events of default or default, as applicable, with
respect to the debt securities of such series have been remedied and all
payments due (other than those due as a result of acceleration) have been made
(sections 7.02 and 7.13).
If an event of default with respect to the senior debt securities or a
default with respect to the subordinated debt securities occurs and is
continuing, the trustee may, in its discretion, and at the written request of
holders of not less than a majority in aggregate principal amount of the debt
securities of any series, and upon reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request and
subject to certain other conditions set forth in the applicable indenture will,
proceed to protect the rights of the holders of all the debt securities of such
series (sections 7.03 and 7.07). Prior to acceleration of maturity of the debt
securities of any series outstanding under the applicable indenture, the holders
of a majority in aggregate principal amount of such debt securities may waive
any past default under the applicable indenture except a default in the payment
of principal of, premium, if any, or interest on the debt securities of such
series (section 7.02).
The indentures provide that upon the occurrence of an event of default with
respect to the senior debt securities specified in clauses (i) or (ii) of this
section or a default with respect to the subordinated debt securities specified
in clauses (i) or (ii) of this section, we will, upon demand of the trustee, pay
to it, for the benefit of the holder of any such debt security, the whole amount
then due and payable on such debt securities for principal, premium, if any, and
interest. The indentures further provide that that if we fail to pay such amount
upon such demand, the trustee may, among other things, institute a judicial
proceeding for the collection of the amount due (section 7.03).
The indentures also provide that notwithstanding any other provision of the
applicable indenture, the holder of any debt security of any series will have
the right to institute suit for the enforcement of any payment of principal of,
premium, if any, and interest on such debt securities when due and that such
right will not be impaired without the consent of such holder (section 7.08).
We are required to file annually with the applicable trustee a written
statement as to the existence or non-existence of defaults under the indentures
or the debt securities (section 5.05).
SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be our direct, unsecured obligations
and, unless otherwise specified in the prospectus supplement relating to a
particular series of subordinated debt securities offered by such prospectus
supplement, will be subject to the subordination provisions described in this
section. Upon any distribution of our assets due to any dissolution, winding up,
liquidation or reorganization, the payment of the principal of, premium, if any,
and interest on the subordinated debt securities is to be subordinated in right
of payment to all senior indebtedness. In certain events of bankruptcy or
insolvency, the payment of the principal of and interest on the subordinated
debt securities will, to the extent provided in the subordinated indenture, also
be effectively subordinated in right of payment to all of our general
obligations.
Upon any distribution of our assets due to any dissolution, winding up,
liquidation or reorganization, the holders of senior indebtedness will first be
entitled to receive payment in full of all amounts due or to become due before
the holders of the subordinated debt securities will be entitled to receive any
payment in respect of the subordinated debt securities. If upon any such payment
or distribution of assets, after giving effect to such subordination provisions
in favor of the holders of senior indebtedness, (i) there remain any amounts of
cash, property or securities available for payment or distribution in respect of
the subordinated debt securities and (ii) if, at such time, any creditors in
respect of our general obligations have not received payment in full of all
amounts due or to become due on or in respect of our general obligations, then
such remaining cash, property or securities will first be applied to pay or
provide for the payment in full of our general obligations before any
15
payment or distribution may be made in respect of the subordinated debt
securities (sections 14.02 and 14.09).
In addition, no payment may be made on the subordinated debt securities, or
in respect of any redemption, retirement, purchase or other acquisition of any
of the subordinated debt securities, at any time in the event:
- there is a default in the payment of the principal of, premium, if any,
interest on or otherwise in respect of any senior indebtedness; or
- any event of default with respect to any senior indebtedness has occurred
and is continuing or would occur as a result of a payment on the
subordinated debt securities or any redemption, retirement, purchase or
other acquisition of any of the subordinated debt securities, permitting
the holders of the senior indebtedness to accelerate the maturity of the
senior indebtedness (section 14.03).
Except as described above, our obligation to make payments of the principal
of, premium, if any, or interest on the subordinated debt securities will not be
affected (section 14.04).
By reason of the subordination in favor of the holders of senior
indebtedness, in the event of a distribution of assets upon any dissolution,
winding up, liquidation or reorganization, our creditors who are not holders of
senior indebtedness or the subordinated debt securities may recover less,
proportionately, than holders of senior indebtedness and may recover more,
proportionately, than holders of the subordinated debt securities.
Subject to payment in full of all senior indebtedness, the holders of
subordinated debt securities will be subrogated to the rights of the holders of
senior indebtedness to receive payments or distributions of cash, property or
securities of our company applicable to senior indebtedness. Subject to payment
in full of our general obligations, the holders of the subordinated debt
securities will be subrogated to the rights of the creditors in respect of
general obligations to receive payments or distributions of cash, property or
securities of our company applicable to such creditors in respect of general
obligations (sections 14.02 and 14.09).
"Senior indebtedness" for purposes of the subordinated indenture is the
principal of, premium, if any, and interest on:
- all of our indebtedness for money borrowed (other than (i) the
subordinated debt securities and (ii) the junior subordinated
indebtedness) whether outstanding on the date of execution of the
subordinated indenture or created, assumed or incurred after that date,
except such indebtedness as is by its terms expressly stated to be not
superior in right of payment to the subordinated debt securities or to
rank equally with the subordinated debt securities; and
- any deferrals, renewals or extensions of any such senior indebtedness.
The term "indebtedness for money borrowed" as used in this prospectus
includes, without limitation, any obligation of ours, or any obligation
guaranteed by us, for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, and any deferred
obligation for the payment of the purchase price of property or assets. The
subordinated indenture does not limit our issuance of additional senior
indebtedness.
The subordinated debt securities will rank senior in right of payment to
our junior subordinated indebtedness upon any distribution of our assets due to
any dissolution, winding up, liquidation or reorganization, to the extent
provided in the instruments creating our junior subordinated indebtedness.
"Junior subordinated indebtedness" is the principal of, premium, if any, and
interest on:
- all of our indebtedness for money borrowed whether outstanding on the
date of the execution of the subordinated indenture or created, assumed
or incurred after that date that is by its terms subordinated to the
subordinated debt securities; and
- any deferrals, renewals or extensions of any of such junior subordinated
indebtedness.
Unless otherwise specified in the prospectus supplement relating to a
particular series of subordinated debt securities offered thereby, the term
"general obligations" means all obligations to make payment on
16
account of claims in respect of derivative products such as interest and foreign
exchange rate contracts, commodity contracts and similar arrangements, other
than:
(i) obligations on account of senior indebtedness;
(ii) obligations on account of indebtedness for money borrowed ranking
equal with or subordinate to the subordinated debt securities; and
(iii) obligations which by their terms are expressly stated not to be
senior in right of payment to the subordinated debt securities or to rank
equally with the subordinated debt securities.
Unless otherwise specified in the prospectus supplement relating to any
series of subordinated debt securities, payment of principal of the subordinated
debt securities may be accelerated only in case of the bankruptcy, insolvency or
reorganization of our company.
Concerning the trustee, we and certain of our affiliates may maintain a
banking relationship with the trustee and its affiliates.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $0.01 per share, and 7,500,000 shares of preferred stock, par value
$0.01 per share.
DESCRIPTION OF PREFERRED STOCK
The following summary describes the general terms of the preferred stock,
$0.01 par value, to which any prospectus supplement may relate. Certain terms of
any series of the preferred stock offered by any prospectus supplement will be
described in such prospectus supplement. If so indicated in the prospectus
supplement, the terms of that series may differ from the terms described below.
The provisions of the preferred stock described below are not complete. You
should refer to our amended and restated certificate of incorporation and any
certificate of amendment to our amended and restated certificate of
incorporation or certificate of designations filed with the SEC in connection
with the offering of preferred stock.
GENERAL
Under our amended and restated certificate of incorporation, our board of
directors has the authority, without further stockholder action, to issue from
time to time preferred stock in one or more series and for such consideration as
may be fixed from time to time by our board of directors. Our board also has the
authority to fix and determine, in the manner provided by law, the relative
rights and preferences of the shares of any series so established, such as
dividend and voting rights. Our amended and restated certificate of
incorporation authorizes 7,500,000 shares of preferred stock. Prior to the
issuance of each series of preferred stock, our board will adopt resolutions
creating and designating the series as a series of preferred stock.
The preferred stock will have the dividend, liquidation, redemption, voting
and conversion rights set forth below unless otherwise specified in the
applicable prospectus supplement. You should read the prospectus supplement
relating to the particular series of preferred stock offered thereby for
specific terms, including:
- the designation, stated value and liquidation preference of such
preferred stock and the number of shares offered;
- the initial public offering price at which such shares will be issued;
- the dividend rate or rates (or method of calculation), the dividend
periods, the date on which dividends will be payable and whether such
dividends will be cumulative or noncumulative and, if cumulative, the
dates from which dividends will begin to cumulate;
- any redemption or sinking fund provisions;
- any conversion provisions; and
17
- any additional voting, dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions
on such preferred stock.
No shares of preferred stock are currently outstanding. The preferred stock
will, when issued, be fully paid and nonassessable and have no preemptive
rights. Unless otherwise specified in the applicable prospectus supplement, the
shares of each series of preferred stock will upon issuance rank equally in all
respects with each other then outstanding series of preferred stock. Unless
otherwise specified in the applicable prospectus supplement, EquiServe, L.P.,
will be the transfer agent and registrar for the preferred stock.
RANK
Any series of the preferred stock will, with respect to dividend rights and
rights on liquidation, winding up or dissolution, rank:
- senior to all classes of common stock and to all equity securities issued
by us, the terms of which specifically provide that the equity securities
will rank junior to the preferred stock;
- equally with all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank equally with
the preferred stock; and
- junior to all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank senior to the
preferred stock.
DIVIDENDS
The holders of the preferred stock will be entitled to receive, when, as
and if declared by our board, dividends at such rates and on such dates as will
be specified in the applicable prospectus supplement. Such rates may be fixed or
variable or both. If variable, the formula used for determining the dividend
rate for each dividend period will be specified in the applicable prospectus
supplement. Dividends will be payable to the holders of record as they appear on
our stock books on such record dates as will be fixed by our board. Dividends
may be paid in the form of cash, preferred stock (of the same or a different
series) or common stock, in each case as specified in the applicable prospectus
supplement.
Dividends on any series of the preferred stock may be cumulative or
noncumulative, as specified in the applicable prospectus supplement. If the
dividends on a series of the preferred stock are noncumulative, and our board
fails to declare a dividend payable on a dividend payment date, then the holders
of that preferred stock will have no right to receive a dividend in respect to
the dividend period relating to that dividend payment date, and we will not be
obligated to pay the dividend accrued for that period, whether or not dividends
on that preferred stock are declared or paid on any future dividend payment
dates.
We will not declare or pay or set apart for payment any dividends on any
series of the preferred stock that rank, as to dividends, on a parity with or
junior to the outstanding preferred stock of any series unless (i) if such
outstanding preferred stock has a cumulative dividend, full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on that preferred
stock for all dividend periods terminating on or prior to the date of payment of
any such dividends on such other series of the preferred stock or (ii) if such
outstanding preferred stock is noncumulative preferred stock, full dividends for
the then-current dividend period on that preferred stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment.
Until full dividends are paid (or declared and payment is set aside) on the
preferred stock ranking equal as to dividends, then:
- we will declare any dividends pro rata among the preferred stock of each
series and any preferred stock ranking equal to such preferred stock as
to dividends (i.e., the dividends we declare per share on each series of
such preferred stock will bear the same relationship to each other that
the full accrued dividends per share on each such series of the preferred
stock (which will not, if that preferred stock is
18
noncumulative preferred stock, include any accumulation in respect to
unpaid dividends for prior dividend periods) bear to each other);
- other than such pro rata dividends, we will not declare or pay any
dividends or declare or make any distributions upon any security ranking
junior to or equal with the preferred stock as to dividends or upon
liquidation (except dividends on common stock payable in common stock,
dividends or distributions paid for with securities ranking junior to the
preferred stock as to dividends and upon liquidation and cash in lieu of
fractional shares in connection with such dividends); and
- we will not redeem, purchase or otherwise acquire (or set aside money for
a sinking fund for) common stock or any other securities ranking junior
to or equal with the preferred stock as to dividends or upon liquidation
(except by conversion into or exchange for stock junior to the preferred
stock as to dividends and upon liquidation).
We will not owe any interest, or any money in lieu of interest, on any
dividend payment on any series of the preferred stock that may be past due.
REDEMPTION
A series of the preferred stock may be redeemable, in whole or in part, at
our option, and may be subject to mandatory redemption pursuant to a sinking
fund or otherwise, in each case upon terms, at the times and at the redemption
prices specified in the applicable prospectus supplement. Redeemed shares of the
preferred stock will become authorized but unissued shares of preferred stock
that we may issue in the future.
The prospectus supplement relating to a series of preferred stock that is
subject to mandatory redemption will specify the number of shares that we will
redeem each year and the redemption price per share. If shares of preferred
stock are redeemed, we will pay all accrued and unpaid dividends on the shares
redeemed (which will not, if that preferred stock is noncumulative preferred
stock, include any accumulation in respect of unpaid dividends for prior
dividend periods) up to but excluding the date of redemption. The redemption
price may be payable in cash or other property, as specified in the applicable
prospectus supplement. If the redemption price for the preferred stock of any
series is payable only from the net proceeds of the issuance of our capital
stock, the terms of that preferred stock may provide that, if no such capital
stock will have been issued or to the extent the net proceeds from any issuance
are insufficient to pay in full the aggregate redemption price then due, that
preferred stock will automatically and mandatorily be converted into shares of
our applicable capital stock pursuant to conversion provisions specified in the
applicable prospectus supplement.
If fewer than all the outstanding shares of preferred stock of any series
are to be redeemed, our board will determine the number of shares to be
redeemed. We will redeem the shares pro rata from the holders of record of such
shares in proportion to the number of such shares held by such holders (with
adjustments to avoid redemption of fractional shares) or by lot or by any other
method as may be determined by our board.
Even though the terms of a series of the cumulative preferred stock may
permit redemption in whole or in part, if any dividends, including accumulated
dividends, on that series are past due:
- we will not redeem any preferred stock of that series unless we
simultaneously redeem all outstanding preferred stock of that series; and
- we will not purchase or otherwise acquire any preferred stock of that
series.
The prohibition discussed in the preceding sentence will not prohibit us
from purchasing or acquiring preferred stock of that series pursuant to a
purchase or exchange offer if we make the offer on the same terms to all holders
of that series.
CONVERSION RIGHTS
The prospectus supplement relating to a series of convertible preferred
stock will describe the terms on which shares of such series are convertible
into our common stock, or another series of preferred stock.
19
RIGHTS UPON LIQUIDATION
Unless the applicable prospectus supplement states otherwise, if we
voluntarily or involuntarily liquidate, dissolve or wind up our business, the
holders of the preferred stock will be entitled to receive out of our assets
available for distribution to stockholders, before any distribution of assets is
made to holders of our common stock or any other class or series of shares
ranking junior to such preferred stock upon liquidation, liquidating
distributions in the amount of the liquidation preference of such preferred
stock plus accrued and unpaid dividends (which will not, if that preferred stock
is noncumulative preferred stock, include any accumulation in respect of unpaid
dividends for prior dividend periods). If we voluntarily or involuntarily
liquidate, dissolve or wind up our business, the amounts payable with respect to
the preferred stock of any series and any of our other securities ranking equal
as to any such distribution are not paid in full, the holders of that preferred
stock and of the other securities will share ratably in the distribution of our
assets in proportion to the full respective preferential amounts to which they
are entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of the preferred stock of any series
will not be entitled to any further participation in any distribution of our
assets.
VOTING RIGHTS
Except as described in this section or in the applicable prospectus
supplement, or except as expressly required by applicable law, the holders of
the preferred stock will not be entitled to vote. If the holders of a series of
preferred stock are entitled to vote and the applicable prospectus supplement
does not state otherwise, each share will be entitled to one vote on matters on
which holders of that series of the preferred stock are entitled to vote. For
any series of preferred stock having one vote per share, the voting power of
that series, on matters on which holders of that series and holders of other
series of preferred stock are entitled to vote as a single class, will depend on
the number of shares in that series, not the aggregate stated value, liquidation
preference or initial offering price of the shares of such series of preferred
stock.
Unless we receive the consent of the holders of an outstanding series of
preferred stock and the outstanding shares of all other series of preferred
stock which (i) rank equal with that series either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up of our
business and (ii) have voting rights that are exercisable and that are similar
to those of such series, we will not:
- authorize, create or issue, or increase the authorized or issued amount
of, any class or series of stock ranking prior to such outstanding
preferred stock with respect to payment of dividends or the distribution
of assets upon liquidation, dissolution or winding up of our business; or
- amend, alter or repeal, whether by merger, consolidation or otherwise,
the provisions of our amended and restated certificate of incorporation
or of the resolutions contained in any certificate of designations
creating such series of preferred stock so as to materially and adversely
affect any right, preference privilege or voting power of such
outstanding preferred stock.
This consent must be given by the holders of a majority of all such
outstanding preferred stock described in the preceding sentence, voting together
as a single class. We will not be required to obtain this consent with respect
to the actions listed in the second bullet point above, however, if we only (i)
increase the amount of the authorized preferred stock, (ii) create and issue
another series of preferred stock, or (iii) increase the amount of authorized
shares of any series of preferred stock, if such preferred stock in each case
ranks equal with or junior to the preferred stock with respect to the payment of
dividends and the distribution of assets upon liquidation, dissolution or
winding up of our business.
DESCRIPTION OF COMMON STOCK
This section describes the general terms and provisions of the shares of
our common stock, par value $0.01 per share. The summary is not complete and is
qualified in its entirety by reference to the description of the common stock
incorporated by reference in this prospectus. See "Incorporation by Reference."
We have also filed our amended and restated certificate of incorporation and our
bylaws as exhibits to the registration
20
statement. You should read our amended and restated certificate of incorporation
and our bylaws for additional information before you buy any common stock. See
"Where You Can Find More Information."
GENERAL
As of December 31, 2001, our authorized common stock was 50,000,000 shares,
of which 27,423,863 shares were issued and outstanding.
DIVIDENDS
Holders of common stock are entitled to receive pro rata dividends when, as
and if declared by our board of directors out of any funds that we can legally
use to pay dividends. We may pay dividends in cash, stock or other property. In
certain cases, holders of common stock may not receive dividends until we have
satisfied our obligations to any holders of outstanding preferred stock. If we
liquidate, dissolve or wind up our business, the holders of preferred stock will
receive an amount per share equal to the amount fixed and determined by our
board of directors, plus any amount equal to all the dividends accrued on the
preferred stock, before any distribution will be made on the common stock.
VOTING RIGHTS
Each share of common stock is entitled to one vote on each matter submitted
to a vote of stockholders. The holders of the common stock have noncumulative
voting rights, which means that, subject to the rights of the holders of a
series of preferred stock, if any, to elect one or more directors, as set forth
in our amended and restated certificate of incorporation or the certificate of
designations creating such series, the holders of more than 50% of the shares of
common stock voting for the election of directors can elect 100% of the
directors standing for election at any meeting if they choose to do so. In such
event, the holders of the remaining shares of common stock voting for the
election of directors will not be able to elect anyone to our board of
directors.
OTHER RIGHTS
The common stock has no conversion rights and is not redeemable. Holders of
our common stock do not have any preemptive rights to subscribe for additional
shares of our stock or other securities of ours except as may be granted by our
board of directors. There is no restriction on our purchase of shares of common
stock except for certain regulatory limits.
FULLY PAID
The issued and outstanding shares of common stock are fully paid and
nonassessable (i.e., the full purchase price for the outstanding shares of
common stock has been paid and the holders of such shares will not be assessed
any additional monies for such shares).
LISTING
The common stock is listed on the Nasdaq National Market under the symbol
"WCNX." EquiServe, L.P. is the transfer agent, registrar and dividend
reimbursing agent for the common stock.
CERTAIN STATUTORY, CHARTER AND BY-LAW PROVISIONS
Classified Board of Directors. Our amended and restated certificate of
incorporation provides that our board will be divided into three classes serving
staggered terms, and that the number of directors in each class will be as
nearly equal as is possible based on the number of directors constituting the
entire board. At each annual meeting of stockholders, successors to directors of
the class whose term expires at such meeting will be elected to serve for
three-year terms.
This classification of directors makes it more difficult for stockholders
to change the composition of the board. At least two annual meetings of
stockholders, instead of one, will generally be required to change the majority
of the board. This delay helps ensure that our directors, if confronted by a
third party attempting to
21
force a proxy contest, a tender or exchange offer or other extraordinary
corporate transaction, would have sufficient time to review the proposal and
available alternatives and to act in what they believe to be the best interests
of the stockholders. Classification, however, could also discourage a third
party from initiating a proxy contest, making a tender offer or otherwise
attempting to gain control of Waste Connections, even though that attempt might
benefit Waste Connections and our stockholders. The classification of the board
could thus make it more likely that incumbent directors will retain their
positions.
Number of Directors; Removal; Filling Vacancies. Our amended and restated
certificate of incorporation provides that the number of directors will be fixed
from time by a majority of the directors then in office, and may not be less
than three nor more than nine unless approved by at least two-thirds of the
directors then in office. In addition, newly created directorships resulting
from an increase in the authorized number of directors, vacancies on the board
resulting from death, resignation, retirement, disqualification or removal of
directors or any other cause may be filled only by the board (and not by the
stockholders unless there are no directors in office), if a quorum is then in
office and present, or by a majority of the directors then in office, if less
than a quorum is then in office, or by the sole remaining director. Accordingly,
the board could prevent any stockholder from enlarging the board and filling the
new directorships with that stockholder's own nominees.
Our amended and restated certificate of incorporation allows directors to
be removed only for cause and only on the affirmative vote of at least
two-thirds of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors, voting together as a
single class.
The provisions in the amended and restated certificate of incorporation
governing the number of directors, their removal and the filling of vacancies
may discourage a third party from initiating a proxy contest, making a tender
offer or otherwise attempting to gain control of Waste Connections, or
attempting to change the composition or policies of the board, even though those
attempts might benefit Waste Connections or our stockholders. These provisions
could thus increase the likelihood that incumbent directors retain their
positions.
Limitations on Special Meetings; No Stockholder Action by Written
Consent. Our amended and restated certificate of incorporation and by-laws
provide that only a majority of the board of directors or the President or
Chairman of the Board may call a special meeting of stockholders, only matters
stated in the notice of meeting or properly brought before the meeting by or at
the direction of the board may be transacted at the meeting, and stockholder
action may be taken only at a duly called and convened meeting and may not be
taken by written consent. These provisions, taken together, prevent stockholders
from forcing consideration of stockholder proposals over the opposition of the
board, except at an annual meeting.
Advance Notice Provisions for Stockholder Nominations and Stockholder
Proposals. Our by-laws establish an advance notice procedure for stockholders
to make nominations of candidates for election as a director, or to bring other
business before an annual meeting of stockholders. In general, only individuals
nominated by or at the direction of the board, any committee appointed by the
board, or a stockholder who has given timely written notice to the Secretary of
Waste Connections, may be elected as directors. At an annual meeting, only
business that has been brought before the meeting by, or at the direction of,
the board, any committee appointed by the board, or a stockholder who has given
timely written notice to the Secretary of Waste Connections, may be conducted.
To be timely, notice of stockholder nominations or proposals to be made at an
annual or special meeting must be received by Waste Connections not less than 60
days nor more than 90 days before the scheduled date of the meeting (or, if less
than 70 days' notice or prior public disclosure of the date of the meeting is
given, then the 15th day following the earlier of the day the notice was mailed
or the day the public disclosure was made).
By requiring advance notice of nominations by stockholders, the stockholder
notice procedure gives the board an opportunity to consider the qualifications
of the proposed nominees and inform stockholders about those qualifications. By
requiring advance notice of other proposed business, the stockholder notice
procedure provides a more orderly procedure for conducting annual meetings of
stockholders. It also gives the board an opportunity to inform stockholders in
advance of any business proposed to be conducted at meetings, together with the
board's recommendations regarding action to be taken with respect to that
business, so that
22
stockholders can better decide whether to attend such a meeting or to grant a
proxy regarding the disposition of any business.
Although the by-laws do not give the board any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, the stockholder notice procedure may preclude a contest for the
election of directors or the consideration of stockholder proposals. It may also
discourage or deter a third party from soliciting proxies to elect its own slate
of directors or to approve its own proposal, even though consideration of those
nominees or proposals might benefit Waste Connections and our stockholders.
Certain Provisions Relating to Potential Change of Control. Our amended
and restated certificate of incorporation authorizes the board and any board
committee to take action it determines to be reasonably necessary or desirable
to encourage any person or entity to enter into negotiations with the board and
management about transactions that may result in a change of control of Waste
Connections. The board and its committees may also contest or oppose any such
transaction that the board determines to be unfair, abusive or otherwise
undesirable to Waste Connections, our business, assets, properties or
stockholders. The board or any board committee may adopt plans to issue our
securities, and to determine the terms and conditions on which those securities
may be exchangeable or convertible into cash or other securities. In addition,
the board or any board committee may treat any holder or class of holders of
those designated securities differently than all other security holders in
respect of the terms, conditions, provisions and rights of those securities.
This authority is intended to give the board flexibility to act in the best
interests of stockholders in the event of a potential change of control. These
provisions may, however, deter potential acquirors from proposing unsolicited
transactions not approved by the board and might enable the board to hinder or
frustrate such a transaction if proposed.
Amendment of the Amended and Restated Certificate of Incorporation and
By-Laws. Our amended and restated certificate of incorporation contains
provisions requiring the affirmative vote of the holders of at least two-thirds
of the voting power of the voting stock to amend some of its provisions
(including the provisions discussed above relating to the size and
classification of the board, replacement and/or removal of board members, action
by written consent, special stockholder meetings, the authorization by the board
to take steps to encourage or oppose transactions that may result in a change of
control of Waste Connections, and limitation of the liability of directors) or
to amend any provision of the by-laws by action of stockholders. These
provisions make it more difficult for stockholders to make changes in the
amended and restated certificate of incorporation and the by-laws, including
changes designed to facilitate the exercise of control over Waste Connections.
Waste Connections is a Delaware corporation and is subject to section 203
of the Delaware General Corporation Law. Section 203 generally prevents a person
who, together with affiliates and associates, owns, or within the past three
years did own, 15% or more of the outstanding voting stock of a corporation from
engaging in some types of business combinations with the corporation for three
years after the date that person became a 15% stockholder, subject to some
exceptions. Business combinations covered by section 203 include a wide variety
of transactions with or caused by a 15% stockholder, including mergers, asset
sales and other transactions in which that stockholder receives or could receive
a benefit on other than a pro rata basis with other stockholders.
LEGAL MATTERS
Shartsis, Friese & Ginsburg LLP, San Francisco, California, has issued an
opinion on the validity of the securities we are offering. Certain partners and
associate attorneys of Shartsis, Friese & Ginsburg LLP own an aggregate of 1,225
shares of our common stock. Certain statements pertaining to our Washington
governmental certificates awarded by the WUTC that appear in this prospectus
will be passed upon for us by Williams, Kastner & Gibbs PLLC, Seattle,
Washington.
23
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 2001, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any materials we file with the
SEC at the SEC's public reference room at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C., as well as at the SEC's regional offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. You can request copies of these
documents by writing to the SEC and paying a fee for the copying cost. Please
call the SEC at 1-800-SEC-0330 for more information about the operation of the
public reference rooms. Our SEC filings are also available at the SEC's website
at "http://www.sec.gov." In addition, you can read and copy our SEC filings at
the office of the National Association of Securities Dealers, Inc. at 1735 K
Street, Washington, D.C. 20006.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 prior to the termination of this offering:
A. Annual Report on Form 10-K for the year ended December 31, 2001.
B. The description of our common stock contained in our registration
statement on Form 8-A, File No. 0-23981, filed under the Securities
Exchange Act of 1934.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Waste Connections, Inc.
620 Coolidge Drive, Suite 350
Folsom, CA 95630
(916) 608-8200
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information incorporated by reference or provided in
this prospectus, any prospectus supplement and the registration statement. We
have not authorized anyone to provide you with different information. You should
assume that the information in this prospectus and any prospectus supplement is
accurate only as of the date on the front of the document. Our business,
financial condition, results of operations and prospects may have changed since
that date. Any material changes that we do not disclose in a supplement to this
prospectus will be incorporated by reference to future filings with the SEC.
24
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YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS PROSPECTUS. WASTE CONNECTIONS
HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL, AND IT
DOES NOT SEEK AN OFFER TO BUY, THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS CURRENT
ONLY AS OF THE DATE OF THIS PROSPECTUS. ANY MATERIAL CHANGES THAT WE DO NOT
DISCLOSE IN A SUPPLEMENT TO THIS PROSPECTUS WILL BE INCORPORATED BY REFERENCE TO
FUTURE FILINGS WITH THE SEC.
TABLE OF CONTENTS
PAGE
----
Waste Connections.................... 1
About this Prospectus................ 1
Disclosure Regarding Forward-Looking
Statements......................... 1
Risk Factors......................... 3
Ratio of Earnings to Fixed Charges... 10
Use of Proceeds...................... 10
Plan of Distribution................. 10
Description of Debt Securities....... 11
Description of Preferred Stock....... 17
Description of Common Stock.......... 20
Legal Matters........................ 23
Experts.............................. 24
Where You Can Find More
Information........................ 24
Incorporation by Reference........... 24
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[LOGO]
$200,000,000
PROSPECTUS
, 2002
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration Fee........................................ $ 20,897
NASDAQ Listing Fee*......................................... $ 17,500
Trustees' Fees and Expenses*................................ $ 15,000
Accounting Fees and Expenses*............................... $ 20,000
Legal Fees and Expenses*.................................... $ 25,000
Miscellaneous Expenses*..................................... $ 20,000
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Total*...................................................... $118,397
========
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* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our amended and restated certificate of incorporation provides that a
director will not be personally liable to Waste Connections or our stockholders
for monetary damages for a breach of fiduciary duty as a director, except for
liability:
- for any breach of the director's duty of loyalty to the company or our
stockholders;
- for acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law;
- for unlawful payments of dividends, stock purchases or redemptions
prohibited by Delaware corporate law; or
- for any transaction from which the director derived an improper personal
benefit.
If the Delaware General Corporation Law is amended in the future to permit
further limitation of the personal liability of directors, the liability of a
director of Waste Connections will be eliminated or limited to the fullest
extent permitted by that amended law.
Section 145(a) of the Delaware Law provides that a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
Section 145(b) of the Delaware Law states that a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise
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against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145(c) of the Delaware Law provides that to the extent that a
present or former director or officer of a corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith.
Section 145(d) of the Delaware Law states that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the present or former director, officer, employee or
agent is proper in the circumstances because the person has met the applicable
standard of conduct set forth in subsections (a) and (b) of Section 145. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority of the directors
who were not parties to such action, suit or proceeding, even though less than a
quorum, or (ii) by a committee of such directors designated by majority vote of
such directors, even though less than a quorum, or (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iv) by the stockholders.
Section 145(e) of the Delaware Law provides that expenses (including
attorneys' fees) incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be paid
by the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in
Section 145. Such expenses (including attorneys' fees) incurred by former
officers and directors or other employees and agents may be so paid upon such
terms and conditions, if any, as the corporation deems appropriate.
Section 145(f) of the Delaware Law states that the indemnification and
advancement of expenses provided by, or granted pursuant to, the other
subsections of Section 145 shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office.
Section 145(g) of the Delaware Law provides that a corporation shall have
the power to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by such
person in any such capacity, or arising out of such person's status as such,
whether or not the corporation would have the power to indemnify such person
against such liability under the provisions of Section 145.
Section 145(j) of the Delaware Law states that the indemnification and
advancement of expenses provided by, or granted pursuant to, Section 145 shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Pursuant to Section 145 of the Delaware Law, Waste Connections has
purchased insurance on behalf of its present and former directors and officers
against any liability asserted against or incurred by them in such
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capacity or arising out of their status as such. Waste Connections has entered
into indemnification agreements with each of its directors and officers
providing for mandatory indemnification and advancement of expenses to the
maximum extent permitted by the Delaware Law.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
3.1 Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit No. 3.1 to the
Registration Statement on Form S-1 Commission File No.
333-48029)
3.2 Amended and Restated Bylaws, effective March 18, 1998
(incorporated by reference to Exhibit No. 3.2 to the
Registration Statement on Form S-1 Commission File No.
333-48029)
4.1 Form of Senior Indenture (incorporated by reference to
Exhibit No. 4.3 to the Registration Statement on Form S-3
Commission File No. 333-87703)
4.2 Form of Subordinated Indenture (incorporated by reference to
Exhibit 4.4 to the Registration Statement on Form S-3
Commission File No. 333-87703)
5.1 Opinion of Shartsis, Friese & Ginsburg LLP
12.1 Statement regarding computation of ratio of earnings to
fixed charges
23.1 Consent of Shartsis, Friese & Ginsburg LLP (included in
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
*23.3 Consent of Williams, Kastner & Gibbs PLLC
*24.1 Power of Attorney (included in Part II of the Registration
Statement under the caption "Signatures").
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that provisions (i) and (ii) do
not apply if the information required to be included in a post-effective
amendment by those provisions is contained in periodic reports filed by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
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(5) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(6) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of the issue.
(7) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of
the Trust indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Trust indenture
Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Folsom, State of California, on March 21, 2002.
WASTE CONNECTIONS, INC.
By: /s/ RONALD J. MITTELSTAEDT*
------------------------------------
Ronald J. Mittelstaedt
President, Chief Executive Officer
and Chairman
Such person whose signature appears below hereby appoints Ronald J.
Mittelstaedt and Steven F. Bouck, and each of them, each of whom may act without
joinder of the other, as his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to execute in the name and
on behalf of such person any amendment or any post-effective amendment to this
registration statement, and any registration statement relating to any offering
made in connection with the offering covered by this registration statement that
is to be effective on filing pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing appropriate or necessary to be done, as fully and for all
intents and purposes as he or she might or could to in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on January 15, 2002.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ RONALD J. MITTELSTAEDT* President, Chief Executive Officer March 21, 2002
------------------------------------- and Chairman
Ronald J. Mittelstaedt
/s/ EUGENE V. DUPREAU* Director and Vice President -- March 21, 2002
------------------------------------- Western Division
Eugene V. Dupreau
/s/ MICHAEL W. HARLAN* Director March 21, 2002
-------------------------------------
Michael W. Harlan
/s/ WILLIAM J. RAZZOUK* Director March 21, 2002
-------------------------------------
William J. Razzouk
/s/ ROBERT H. DAVIS* Director March 21, 2002
-------------------------------------
Robert H. Davis
II-5
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STEVEN F. BOUCK Executive Vice President and Chief March 21, 2002
------------------------------------- Financial Officer
Steven F. Bouck
/s/ MICHAEL R. FOOS* Chief Accounting Officer and March 21, 2002
------------------------------------- Vice-President Finance
Michael R. Foos
* Attorney-in-Fact
II-6
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBITS NUMBER
------- ----------------------- ------
3.1 Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit No. 3.1 to the
Registration Statement on Form S-1 Commission File No.
333-48029)..................................................
3.2 Amended and Restated Bylaws, effective March 18, 1998
(incorporated by reference to Exhibit No. 3.2 to the
Registration Statement on Form S-1 Commission File No.
333-48029)..................................................
4.1 Form of Senior Indenture (incorporated by reference to
Exhibit 4.3 to the Registration Statement on Form S-3
Commission File No. 333-87703)..............................
4.2 Form of Subordinated Indenture (incorporated by reference to
Exhibit 4.4 to the Registration Statement on Form S-3
Commission File No. 333-87703)..............................
5.1 Opinion of Shartsis, Friese & Ginsburg LLP..................
12.1 Statement regarding computation of ratio of earnings to
fixed charges...............................................
23.1 Consent of Shartsis, Friese & Ginsburg LLP (included in
Exhibit 5.1)................................................
23.2 Consent of Ernst & Young LLP, Independent Auditors..........
*23.3 Consent of Williams, Kastner & Gibbs PLLC...................
*24.1 Power of Attorney (included in Part II of the Registration
Statement under the caption "Signatures")...................
* Previously filed.