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Home My WebLink About820383.tiff FINANCIAL STATEMENTS AND AUDITORS' REPORT COLORADO LANDFILL, INC . November 30 , 1981 and 1980 Kosmieki -Premer- Kurtz Cerr;ffo,1 Puhflr A rrountantS �"�I ,7 820383 FINANCIAL STATEMENTS AND AUDITORS' REPORT COLORADO LANDFILL, INC. November 30, 1981 and 1980 !EU COUNTY CilififfSSIONfr •11 �› t tiD Li-717-.I . c.17.:3L--;,:iv,F7::-eii,7_1 I. EIRE COLO. J CONTENTS Page AUDITORS ' REPORT 3 FINANCIAL STATEMENTS BALANCE SHEETS 4 STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT 5 STATEMENTS OF CHANGES IN FINANCIAL POSITION 6 NOTES TO FINANCIAL STATEMENTS 7 SUPPLEMENTAL INFORMATION AUDITORS ' REPORT ON SUPPLEMENTAL INFORMATION 12 OPERATING EXPENSES 13 Kosmicki-Premer- Kurtz Certified Public Accountants Stockholders Colorado Landfill , Inc. We have examined the balance sheets of Colorado Landfill, Inc. (a Colorado corporation) as of November 30 , 1981 and 1980, and the related statements of operations and accumu- lated deficit and changes in financial position for the years then ended. Our examination was made in accordance with gener- ally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing proce- dures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Colorado Landfill , Inc. at November 30, 1981 and 1980 , and the results of its opera- tions and changes in its financial position for the years then ended, in conformity with generally accepted accounting prin- ciples applied on a consistent basis . /6,423 December 15, 1981 505 Greeley National Plaza Greeley, Colorado 80631 303-356-3300 w o o a> to o rm r I col 'O 0l c' I O 7— N O I c' I 10 N or I O u i O co . . ` 01 01 m N 111 <P O a) a) O •- M ,-a) m c, u'1 M M .- c O c,O1 1O O1 CO V, O.- r- 0 CO c'IP M- N N I O)- CO O O m Ill 01 01 W I a 111 a) op . . . . . . O1 a —t11 r al M Ill O N ` m" c' .- N M al r O1 to m O1 N C 01- co- a) U) CP 7 W a) 0 —I to 1 --I ro w a) ro'O > H 1) .C C E 0 U) IO 11 H 0 J-) ro • a CD N 0. 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STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT Year ended November 30, 1981 1980 Landfill fees $915,336 $ 565, 945 Costs and expenses (note A) Operating expenses 747 ,074 564 ,935 Interest and financing expenses 136,727 134 ,679 Other (income) ( 13 ,685 ) ( 18 ,530 ) 870 , 116 681 ,084 Earnings ( loss) before income taxes 45 ,220 ( 115 , 139 ) Income taxes (note F) -- NET EARNINGS (LOSS) 45 ,220 ( 115 , 139 ) Accumulated deficit at beginning of year ( 138 ,887 ) ( 23 ,748 ) Accumulated deficit at end of year $ ( 93 .667 ) $ ( 138 .887 ) The accompanying notes are an integral part of these statements . 5 to l0 V'P-1m01 r0 NmlO to O 0)O.-m m V' r 01 I 01 N to O co to r m O Or N V' I -01 CO 0) r a'N .-r 0)00 N to l0 IN en -CVO Om Hr I-- ,-- •- C C '.4)- 04)0040) 0 0)01 10 01 0 0\ NNto V' 001 V'crmm r Q>H V'0)•--01 Otnm0lr to Or - 0) d'N to m O.-t 0)r CI .- d'In -- N r N- d' in- .1 a E H a a In 0 4) H --, w 0) al m +) -0 2 H •., V 0 Q,N 4) x O ro IV 1,-0 3 -.i 41 al C C I ICI H •H a) +) 0-0, X )4 4) 0 a ^ )4 )4 4) 4) a) 0 0 W O 7 C 4) 1-i H O to 3 O +) 1+ •-I a I m 7 4)+I W W C 7 I)) O O ro a O O on 0 - O I 44- i C 0)-H . a) CO m^ .O H -,-, 4)H -. 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'o to rd 0) C 01 0,C 01 N -.I Sa 44 Ll 4) C N O 0•H 04 0 (CI 0 0 0) X 4) )4 I m -- A (1) w H C a) O 0•.I -.I m )4 P,a) ma) 0 C) — )4'D-.I w 3 al 0 0.0 0•.I W 1, 44 0 1 0 in ro ro •.c-I c m a) . 0 c`S4 41 4-I 3 44 .4,04 O H-,..i a 0) X 0 0, O N -.-1 4) )4 0 w 1+ W H H C 1,--I0 00•-+ X a 0 0 00II-17 Iz ro al -H 0w•.Iw-., w 41 0 -0 0 4444 04, 0 4-) N >' • it C 4, 1, 0 0 m as 2 .H -H' C u 1r m a) 0 $ E-H 0 (1 (104) H fa, at ro 4-I a) 10 a)H E 1+4.1 0 0 a 0 ( N 04 O 04a) 0040 a "-I -.I00..+w 0 0 O a) 0 la .4) m w•.I•.I+I 0 0 LO 44 ICI A 1 0 ro +I w 0 4) C) Q1 0 ✓ e a).C CT P, O•H-.-I 7 1+ 0 0 C O 0 2 O 0 0) ....I'0'O'O 1, -H .•+ 14 1-, 0-.I H'O'O a) 7 X X N C. .1 Ll a,a s a U 0 0 -C in ,C 3 3 E Colorado Landfill, Inc. NOTES TO FINANCIAL STATEMENTS November 30, 1981 and 1980 NOTE A - OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES 1 . Operations The company was incorporated in June 1979. It is a wholly owned subsidiary of Keirnes Corporation (note B) , and is engaged in the disposal of solid waste through landfill operations . A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial state- ments follows. 2 . Inventory - supplies Supplies consist primarily of fuel oil which is stated at the lower of cost or market; cost is determined using the first-in, first-out method. 3 . Depletion , depreciation and amortization Depreciation and amortization are provided for in amounts suf- ficient to relate the cost of depreciable assets to operations over their estimated service lives, utilizing straight-line methods. Leased property under capital lease is amortized over the life of the respective lease . Landfill site airspace , which consists of land cost and improvements less estimated land salvage value, is depleted as consumed during the land- fill ' s useful life. Costs relating to the issuance of industrial development bonds of $ 152, 876 and organization costs of $ 1 , 750 are being amor- tized over 20 years and 5 years , respectively, utilizing the straight-line method. Amounts charged to operations consist of the following: 1981 1980 Depletion of landfill site airspace $ 12, 130 $ 24 , 016 Depreciation and amortization of property and equipment 150, 105 116, 507 Amortization of organization costs and industrial development bond issue costs 7 ,994 6 ,083 $ 170 ,229 $ 146 ,606 7 Colorado Landfill, Inc. NOTES TO FINANCIAL STATEMENTS - CONTINUED November 30, 1981 and 1980 NOTE A - OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - Continued 4 . Income taxes - investment credit The company follows the practice of providing for deferred income taxes in instances where accounting methods differ for financial reporting and income tax purposes (note E) . Investment tax credits are accounted for by the flow-through method which recognizes the credits as reductions of income tax expense in the year utilized. NOTE B - RELATED PARTY TRANSACTIONS On November 30, 1981 , the stockholders of Colorado Landfill, Inc. exchanged their stock for stock of Keirnes Corporation in a tax free reorganization. NOTE C - NOTE PAYABLE - BANK The note payable to a bank is due in December 1981 plus interest at 18% per year and is unsecured. NOTE D - LONG-TERM DEBT Long-term debt consists of : 1981 1980 Industrial development bonds $ 1 ,270,000 $ 1 ,300,000 Installment notes payable 206 ,908 34 ,633 Notes payable to related parties 130,000 150 , 000 1 ,606 ,908 1 ,484 ,633 Less current maturities 111 , 084 39 , 488 $ 1 ,495,824 $1 ,445, 145 The industrial development bonds with interest at rates of 7 .25% and 7. 50% per year will be serially retired through 2000. Machinery and equipment, water rights and real estate are pledged as collateral. The bonds are also guaranteed by the Small Business Administration and certain related parties . Bond retirement is funded through monthly payments to a trustee of approximately $ 10 ,800 plus investment earnings primarily from treasury notes. 8 Colorado Landfill , Inc. NOTES TO FINANCIAL STATEMENTS - CONTINUED November 30, 1981 and 1980 NOTE D - LONG-TERM DEBT - Continued The installment notes are due through 1991 , payable in minimum monthly installments of approximately $8 ,800 including interest at 13.5% to 19.5% per year. The notes are secured by certain equipment or co-signed by certain related parties. The notes payable to related parties are due on demand (repay- ment subject to management approval) or through May, 1982. The notes bear interest at rates of 9% to 20% per year and are unsecured. NOTE E - CAPITAL LEASE OBLIGATIONS The company conducts a portion of its operations using a leased vehicle. For financial reporting purposes , minimum lease ren- tals relating to the vehicle have been capitalized. The re- lated asset and obligation have been recorded using the com- pany' s incremental borrowing rate at the inception of the lease. The lease expires in 1982. The following is a schedule of the leased equipment under capi- tal leases: Vehicle $9,000 Less: accumulated amortization ( 1 , 250 ) $7 ,750 The following is a schedule by years of future minimum lease payments under the capital lease together with the present value of the net minimum lease payments as of November 30 , 1981 : Year ended November 30 1982 $5 ,605 Less : amounts representing interest 256 Present value of net minimum lease payments (current portion) $5 ,349 9 Colorado Landfill, Inc. NOTES TO FINANCIAL STATEMENTS - CONTINUED November 30, 1981 and 1980 NOTE F - INCOME TAXES Income tax expense does not bear a normal relationship to expected income taxes computed at statutory rates due to the following: - 1981 Expected income taxes at statutory rates $ 8 ,000 State income taxes 2,300 Investment credits - net (note A4) ( 10 ,3q0 ) Income taxes $ -0- Certain equipment is depreciated using accelerated, short life methods for tax purposes and straight-line, extended life methods for financial reporting purposes . Income for financial reporting purposes exceeded taxable income by approximately $38,000 for the year ended November 30, 1981 . In 1980 income taxes on net earnings were payable personally by the stockholders pursuant to an election under Subchapter S of the Internal Revenue Code . This election was terminated by the stockholders effective for years ending after November 30, 1980. For income tax reporting the company has additional investment tax credit carryforward available at November 30, 1981 , to offset future income tax liability. The investment tax credit carryforward will expire $8 ,000 in 1988 and $32 ,000 in 1996 . In addition, the company has contribution carryforwards of approximately $8 ,000 available to offset future taxable in- come. The contribution carryforward will expire in 1986. NOTE G - CONTINGENCIES The company and a county governmental agency were named as defendants in a complaint filed in the District Court of Weld County, Colorado. The plaintiffs are seeking a declaratory judgment asking that the exclusive landfill contract granted by the agency to the company be declared null and void. Further , plaintiffs have requested that the court enter a judgment finding the designation of the landfill site as an illegal designation that constituted an inverse condemnation by the county agency which would entitle the plaintiffs to just com- pensation from the company and the county. Both defendants have filed answers denying the substance of the plaintiffs com- plaint and asserting numerous affirmative defenses . Company management and legal counsel are of the opinion that the asser- tion regarding the inverse condemnation involves a claim for relief only against Weld County, and that the possibility of the exclusive contract being declared null and void is un- likely. Company management and counsel are not in a position to predict the effect, if any, on the company' s financial posi- tion in this matter. 10 SUPPLEMENTAL INFORMATION Stockholders Colorado Landfill, Inc . Our examinations were made for the purpose of forming -an opinion on the basic financial statements taken as a whole of Colorado Landfill, Inc. for the years ended November 30, 1981 and 1980, which are presented in the preceding section of this report . The supplemental information presented hereinafter is presented for the purpose of additional analysis and is not a required part of the basic financial statements . Such infor- mation has been subjected to the auditing procedures applied in the examinations of the basic financial statements, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole . December 15, 1981 Colorado Landfill, Inc. OPERATING EXPENSES Years ended November 30, 1981 180 Salaries and wages $246, 111 -$ 160 ,369 Advertising 361 3 ,366 Amortization 7, 994 6,083 Auto expense -4 , 148 3 ,078 Contract labor 2, 135 1 ,766 Depletion 12 , 130 24 ,016 Depreciation 150, 105 116,507 Donations 8 ,308 373 Fuel -and oil 59, 554 56,995 Insurance 19 ,764 18 ,369 Legal and accounting 27,836 12,604 Office expense 3 ,399 3 ,020 Operating supplies 17, 990 18,064 Payroll taxes 20 , 143 16 ,254 -Repairs and maintenance 30, 834 36,069 Rent 8 ,523 14 ,797 Surcharge 86, 014 30,461 Taxes and licenses 19 ,920 13 , 178 Telephone 4 ,984 4 ,437 -Tire expense 2 ,849 12 ,658 -`ravel and entertainment 5,356 3, 584 Unclassified 4 ,246 4 ,309 Utilities -4 ,370 4 ,578 $747 ,074 $564 , 935 The accompanying notes are an integral part of this statement . 13 Hello