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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Republic Services, Inc. (a Delaware corporation) and its subsidiaries (also referred to
collectively as Republic, we, us, our, or the company in this report) is the second largest
provider of non-hazardous solid waste collection, transfer, recycling and disposal services in the
United States, as measured by revenue. We manage and evaluate our operations through four
geographic regions — Eastern, Midwest, Southern, and Western, which we have identified as our
reportable segments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of December 5, 2008 we acquired 100% of the issued and outstanding shares of Allied Waste
Industries, Inc. (Allied) in a stock for stock transaction. The accompanying financial statements
include the operating results of Allied from the date of the acquisition, and have not been
retroactively restated to include Allied’s historical financial position, results of operations or
cash flows. In accordance with the purchase method of accounting, the purchase price paid has
been allocated to assets and liabilities acquired based upon their estimated fair values as of the
effective date of the merger, with the excess of the purchase price over the net assets acquired
being recorded as goodwill. We are in the process of valuing all of the assets and liabilities
acquired in the merger, and, until we have completed our valuation process, there may be
adjustments to our estimates of fair values and the resulting preliminary purchase price
allocation. See Note 2, <i>Business Acquisitions and Divestiture of Assets, Assets Held for Sale and
Restructuring Charges, </i>for additional information.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited consolidated financial statements include the accounts of Republic, its
wholly owned and majority owned subsidiaries, and certain variable interest entities for which we
have determined that we are the primary beneficiary in accordance with Financial Accounting
Standards Board (FASB) Interpretation No. 46, <i>Consolidation of Variable Interest Entities — an
interpretation of ARB No. 51 </i>(revised December 2003). Our investments in variable interest
entities are not material to our consolidated financial statements. We account for investments in
entities in which we do not have a controlling financial interest under either the equity method
or the cost method of accounting, as appropriate.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">These unaudited consolidated financial statements have been prepared by us pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). All significant intercompany
accounts and transactions have been eliminated. Certain information related to our organization,
significant accounting policies and footnote disclosures normally included in financial statements
prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been
condensed or omitted. In the opinion of management, these unaudited consolidated financial
statements reflect all material adjustments (which include only normal recurring adjustments)
necessary to fairly state the financial position and the results of operations for the periods
presented, and the disclosures herein are adequate to make the information presented not
misleading. Operating results for interim periods are not necessarily indicative of the results
that can be expected for a full year. These interim financial statements should be read in
conjunction with our audited consolidated financial statements and notes thereto appearing in our
Annual Report on Form 10-K for the year ended December 31, 2008 and in our Current Report on Form
8-K, filed June 5, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Management’s Estimates and Assumptions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">These unaudited consolidated financial statements have been prepared in accordance with GAAP and
include numerous estimates and assumptions made by management that affect the accounting for and
recognition and disclosure of assets, liabilities, stockholders’ equity, revenue and expenses. We
must make these estimates and assumptions because certain information that we use is dependent on
future events, cannot be calculated with a high degree of precision from data available or simply
cannot be readily calculated based on generally accepted methodologies. In some cases, these
estimates are particularly difficult to determine and we must exercise significant judgment. The
most difficult, subjective and complex estimates and assumptions that deal with the greatest
amount of uncertainty relate to our accounting for our long-lived assets, landfill development
costs, goodwill, and final capping, closure and post-closure costs, our valuation allowances for
accounts receivable and deferred tax assets, our liabilities for potential litigation, claims and
assessments, our liabilities for environmental remediation, employee benefit plans, stock-based
compensation, deferred taxes, uncertain tax positions and self-insurance, our estimates of the
fair values of the assets and liabilities acquired in our acquisition of Allied, and our estimates
of the fair values of assets and liabilities to be divested. Each of these items is discussed in
more detail in our description of our significant accounting policies, in Note 2, <i>Summary of
Significant Accounting Policies</i>, of Notes to Consolidated Financial Statements in our Annual
Report on Form 10-K for the year ended December 31, 2008 and in our Current Report on Form 8-K,
filed June 5, 2009. Our actual results may differ significantly from our estimates.
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>New Accounting Pronouncements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>FSP APB 14-1 — Convertible Debt Instruments</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1, <i>Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)</i>
(FSP APB 14-1). FSP APB 14-1 applies to convertible debt instruments that, by their stated terms,
may be settled in cash (or other assets) upon conversion, including partial cash settlement of the
conversion option. FSP APB 14-1 requires bifurcation of the instrument into a debt component that
is initially recorded at fair value and an equity component. The difference between the fair
value of the debt component and the initial proceeds from issuance of the instrument is recorded
as a component of equity. The liability component of the debt instrument is accreted to par using
the effective yield method; accretion is reported as a component of interest expense. The equity
component is not subsequently re-valued as long as it continues to qualify for equity treatment.
We adopted FSP APB 14-1 on January 1, 2009, and adoption of this pronouncement did not have a
material effect on our financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 141(R) — Business Combinations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2007, the FASB issued Statement of Accounting Financial Standard (SFAS) No.141(R),
<i>Business Combinations (revised) </i>(SFAS 141(R)), which replaces SFAS No. 141, <i>Business
Combinations </i>(SFAS 141). SFAS 141(R) applies to all transactions and other events in which one
entity obtains control over one or more other businesses. Under SFAS 141(R), all transaction and
restructuring charges are required to be recognized as expenses as incurred. The statement
requires the fair value of the purchase consideration, including the issuance of equity
securities, to be determined as of the acquisition date. It also requires the acquirer to
recognize assets acquired, liabilities assumed, consideration paid and any noncontrolling
interests acquired at their acquisition-date fair values. Changes in deferred tax asset valuation
allowances and liabilities for tax uncertainties subsequent to the acquisition date that do not
meet certain remeasurement criteria are also recorded in the income statement. The impact of the
adoption of this statement on our consolidated financial statements is dependent on the nature and
volume of future acquisitions, and, therefore, can not be determined at this time.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 141(R) is required to be applied prospectively, and, in general, will be effective for
businesses we acquire on or after January 1, 2009. However, in the case of deferred tax asset
valuation allowances and uncertain tax position liabilities, the provisions of SFAS 141(R) as of
its effective date will apply to the accounting for all business acquisitions, whether the
acquisition occurred before or after adoption.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>FSP FAS 142-3 — Determination of the Useful Life of Intangible Assets</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2008, the FASB directed the FASB Staff to issue FSP SFAS 142-3, <i>Determination of the
Useful Life of Intangible Assets </i>(FSP SFAS 142-3). FSP SFAS 142-3 amends the factors that should
be considered in developing renewal or extension assumptions used for purposes of determining the
useful life of a recognized intangible asset under SFAS No. 142, <i>Goodwill and Other Intangible
Assets</i>. FSP SFAS 142-3 is intended to improve the consistency between the useful life of a
recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure
the fair value of the asset under SFAS 141(R) and other GAAP. We adopted FSP SFAS 142-3 on January
1, 2009 and adoption of this pronouncement did not have a material effect on our financial
position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 157 — Fair Value Measurements</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In September 2006, the FASB issued SFAS No. 157, <i>Fair Value Measurements </i>(SFAS 157). SFAS 157
defines fair value, establishes a framework for measuring fair value in accordance with GAAP and
expands disclosures about fair value measurements. SFAS 157 applies to other accounting
pronouncements that require or permit fair value measurements. Accordingly, SFAS 157 does not
require any new fair value measurements, but, for some entities, the application of SFAS 157 will
change current practice. SFAS 157 was effective for us on January 1, 2008. However, in February
2008, the FASB issued FSP SFAS 157-2, <i>“Effective Date of FASB Statement No. 157,” </i>which delayed
the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for
items that are recognized or disclosed at fair value in the financial statements on a recurring
basis, for one year. We adopted SFAS 157 with respect to financial assets and liabilities
beginning January 1, 2008 and with respect to our non-financial assets and liabilities effective
January 1, 2009 pursuant to the requirements of FSP SFAS 157-2. The impact of adopting SFAS 157
and FSP SFAS 157-2 did not have a material effect on our financial position or results of
operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 160 — Noncontrolling Interests</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2007, the FASB issued SFAS No. 160, <i>Noncontrolling Interests in Consolidated Financial
Statements — an amendment of ARB No. 51 </i>(SFAS 160). SFAS 160 requires noncontrolling interests or
minority interests to be treated as a separate
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component of equity, not as a liability or other item outside of permanent equity. Upon a loss of
control, the interests sold, as well as any interest retained, are required to be measured at fair
value, with any gain or loss recognized in earnings. Additionally, when control is obtained and a
previous equity interest was held, a gain or loss will be recognized in earnings for the
difference between the fair value of the previously held equity interest and its carrying value.
Based on SFAS 160, assets and liabilities will not change for subsequent purchase or sale
transactions with noncontrolling interests as long as control is maintained. Differences between
the fair value of consideration paid or received and the carrying value of noncontrolling
interests are to be recognized as an adjustment to the parent interest’s equity. We adopted SFAS
160 on January 1, 2009, and the implementation of this pronouncement did not have a material
impact on our financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 161 — Disclosures about Derivative Instruments and Hedging Activities</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In March 2008, the FASB issued SFAS No. 161, <i>Disclosures about Derivative Instruments and Hedging
Activities — an amendment of FASB Statement No. 133 </i>(SFAS 161), which requires companies to
provide enhanced disclosures regarding derivative instruments and hedging activities. It requires
companies to better convey the purpose of derivative use in terms of the risks that they are
intending to manage. Disclosures about (a) how and why an entity uses derivative instruments, (b)
how derivative instruments and related hedged items are accounted for under SFAS 133, <i>Accounting
for Derivative Instruments</i>, (SFAS 133) and its related interpretations, and (c) how derivative
instruments and related hedged items affect a company’s financial position, results of operations
or cash flows are required. This statement retains the same scope as SFAS 133 and was effective
for us beginning January 1, 2009. As SFAS 161 relates specifically to disclosures, the adoption
of this statement had no impact on our consolidated financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>EITF 07- 5 — Determining Whether an Instrument is Indexed to an Entity’s Own Stock</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2008, the FASB issued EITF No. 07-5, <i>“Determining Whether an Instrument (or Embedded
Feature) is Indexed to an Entity’s Own Stock</i>” (EITF 07-5). EITF 07-5 provides guidance for
determining whether an instrument (or an embedded feature) is indexed to an entity’s own stock
when evaluating the instrument as a derivative under SFAS 133. An instrument that is both indexed
to an entity’s own stock and classified in stockholder’s equity in the entity’s statement of
financial position is not considered a derivative for the purposes of applying the guidance in
SFAS 133. EITF 07-5 provides a two-step process to determine whether an equity-linked instrument
(or embedded feature) is indexed to its own stock first by evaluating the instrument’s contingent
exercise provisions, if any, and second, by evaluating the instrument’s settlement provisions. We
adopted EITF 07-5 on January 1, 2009 and the adoption did not have a material effect on our
financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>FSP FAS 107-1 and APB 28-1-Interim Disclosures about Fair Value of Financial Instruments</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, <i>Interim Disclosures about Fair Value of
Financial Instruments</i>, (FSP 107-1). FSP 107-1 requires that the fair value disclosures required
for all financial instruments within the scope of SFAS No. 107, <i>Disclosures about Fair Value of
Financial Instruments</i>, be included in interim financial statements. In addition, FSP 107-1
requires public companies to disclose the method and significant assumptions used to estimate the
fair value of those financial instruments and to discuss any changes of method or assumptions, if
any, during the reporting period. FSP 107-1 was effective for our quarter ended June 30, 2009.
As FSP 107-1 relates specifically to disclosures, the adoption of this statement had no impact on
our consolidated financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 165 — Subsequent Events</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In May 2009, the FASB issued SFAS 165, <i>Subsequent Events</i>, (SFAS 165). SFAS 165 establishes
general standards of accounting for and disclosures of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued. Among other
things, SFAS 165 requires the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date. SFAS 165 was effective for our quarter ended June
30, 2009. As SFAS 165 relates specifically to disclosures, the adoption of this statement had no
impact on our consolidated financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 167 — Consolidation of Variable Interest Entities</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2009, the FASB issued SFAS No. 167, “<i>Amendments to FASB Interpretation No. 46(R)” (SFAS
167). SFAS 167 amends FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities</i>”
for determining whether an entity is a variable interest entity (VIE) and requires an enterprise
to perform an analysis to determine whether the enterprise’s variable interest or interests give
it a controlling financial interest in a VIE. Under SFAS 167, an enterprise has a controlling
financial interest when it has (i) the power to direct the activities of a VIE that most
significantly impact the entity’s economic performance and (ii) the obligation to
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absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. SFAS 167 requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance. SFAS 167 also requires ongoing assessments of
whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. SFAS 167 is effective for annual reporting periods beginning after November 15, 2009. We do not believe the impact of adopting SFAS 167 will have a material effect on our consolidated financial position or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>SFAS 168 — Codification</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2009, the FASB issued SFAS No. 168, <i>The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162</i>
(SFAS 168). SFAS 168 establishes the FASB Accounting Standards Codification as the source of
authoritative accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with GAAP. SFAS 168 is
effective for interim and annual periods ending after September 15, 2009. SFAS 168 does not
change GAAP and will not have a material impact on our consolidated financial statements.
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<div style="margin-left:20px; text-indent:-20px"><b>2. BUSINESS ACQUISITIONS AND DIVESTITURE OF ASSETS, ASSETS HELD FOR SALE AND RESTRUCTURING
CHARGES</b>
</div>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Allocation of Purchase Price for the Acquisition of Allied</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On December 5, 2008 we acquired all the issued and outstanding shares of Allied in a
stock-for-stock transaction for an aggregate purchase price of $11.5 billion which includes
approximately $5.4 billion of debt, at fair value. The allocation of purchase price to the fair
value of the assets and liabilities acquired in the acquisition of Allied is preliminary and
subject to revision. Due to the volume and complexity of the information required to assess these
assets and liabilities, our valuation of certain significant balances, including landfill
development costs, property and equipment, intangible assets, goodwill, accrued landfill and
environmental costs (which includes landfill asset retirement obligations and environmental
remediation liabilities), deferred taxes and other long-term tax liabilities, and, included in
other long-term liabilities, liabilities for litigation, claims and assessments, and
self-insurance, is not completed. Our purchase price allocation includes values we finalized to
date and estimates of the values not yet finalized. We expect our purchase price allocation
for the acquisition of Allied to be completed during 2009. Any further adjustments after the
allocation period made to assets and liabilities acquired, once finalized, will be
recorded in the consolidated statement of income in the period in which such adjustments become
known. Of the approximate $9.0 billion of goodwill generated in the transaction, we expect
substantially all of it will be non-deductible for income tax purposes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our allocation of purchase price is as follows:
</div>
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<td nowrap="nowrap" align="center" colspan="2">December </td>
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<td nowrap="nowrap" align="center" colspan="2">December </td>
<td> </td>
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<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">5, 2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Adjustments</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">31, 2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Adjustments</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">30, 2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">910.8</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">909.9</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7.2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">917.1</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Landfill development costs
</div></td>
<td> </td>
<td> </td>
<td align="right">2,600.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,600.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,600.0</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other property and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">2,256.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,258.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,269.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Goodwill
</div></td>
<td> </td>
<td> </td>
<td align="right">9,006.3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">9,005.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">39.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,045.1</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other intangible assets
</div></td>
<td> </td>
<td> </td>
<td align="right">541.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">541.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">541.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other assets
</div></td>
<td> </td>
<td> </td>
<td align="right">226.6</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">225.5</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(6.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">218.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,336.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,336.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(42.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,378.8</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capping, closure and post-closure liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(813.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(813.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(6.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(819.5</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Environmental liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(208.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(208.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(209.2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Deferred income taxes and other long-term tax liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(774.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">0.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(773.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(773.8</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other long-term liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(906.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(906.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">.5</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(906.4</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total purchase price
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">11,503.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11,503.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11,503.7</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<!-- Folio -->
<!-- /Folio -->
</div>
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the components of other intangible assets acquired in the Allied
acquisition:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Other</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intangible</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Useful Life</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Assets</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(in years)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Customer relationships
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">420.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Franchise agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">60.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other municipal agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">30.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-compete agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">1.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Tradenames
</div></td>
<td> </td>
<td> </td>
<td align="right">30.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">541.0</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Assets Held For Sale</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As a condition of the merger with Allied in December 2008, we reached a settlement with the U.S.
Department of Justice (DOJ) requiring us to divest of certain assets and related liabilities which
included 87 commercial waste collection routes, nine landfills and ten transfer stations. We
classified the assets and liabilities we expect to divest as assets held for sale in our
consolidated balance sheets at June 30, 2009 and December 31, 2008. Certain of the Republic
assets classified as held for sale were adjusted to their estimated fair values less costs to
sell, resulting in the recognition of an asset impairment loss of $1.8 million and $6.1 million in
our consolidated statements of income for the quarter ended March 31, 2009 and for the year ended
December 31, 2008, respectively. There were no subsequent impairment charges in the quarter ended
June 30, 2009. Certain of the Allied assets classified as held for sale were adjusted to their
estimated net proceeds with any changes in estimated proceeds recognized as part of the allocation
of purchase price. During the three and six months ended June 30, 2009, we recognized a net gain
on disposition of assets of $150.1 million and $145.2 million, respectively. Proceeds of $424.2
million related to these divestitures were used to repay amounts borrowed under our Credit
Facilities. As of the date of this filing we entered into agreements to divest of the remaining
assets and related liabilities required by DOJ. We have closed or expect to close on these divestitures
during the third quarter of 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Assets held for sale and related liabilities are as follows:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Prepaid expenses and other current assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other assets
</div></td>
<td> </td>
<td> </td>
<td align="right">54.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">285.1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">58.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">302.6</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accrued liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3.1</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other long-term liabilities
</div></td>
<td> </td>
<td> </td>
<td align="right">2.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">31.0</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Total liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">34.1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Restructuring Charges</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As a result of our acquisition of Allied, we committed to a restructuring plan related to our
corporate overhead and other administrative and operating functions. The plan included closing
our corporate office in Florida, consolidating administrative functions to Arizona, the former
headquarters of Allied, and reducing staffing levels. The plan also included closing and
consolidating certain operating locations and terminating certain leases. During the three and
six months ended June 30, 2009, we incurred $12.3 million and $43.6 million of restructuring and
integration charges related to our integration of Allied of which, $26.4 million for the six
months ended June 30, 2009 consists of charges for severance and other employee termination and
relocation benefits. The remainder of the charges primarily related to consulting and
professional fees. We expect to be substantially complete with our plan by the fourth quarter of
2009. We expect to incur additional charges approximating $22.7 million to complete our plan.
Substantially all the charges are recorded in our “Corporate” segment. We expect the majority of
these payments will be during the remainder of 2009.
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<!-- Folio -->
<!-- /Folio -->
</div>
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table reflects the activity during the six months ended June 30, 2009 associated
with the liabilities (included in other accrued liabilities) incurred in connection with the
restructuring charges:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Additions/</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Restructuring Charges</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Adjustments</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Payments</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Severance & other termination benefits
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">12.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">24.3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(8.7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">28.1</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Relocation
</div></td>
<td> </td>
<td> </td>
<td align="right">17.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2.1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">12.8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">30.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26.4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(15.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">40.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Accrued Liabilities Related to Allied</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We account for costs to exit an activity of an acquired company and involuntary employee
termination benefits associated with acquired businesses in accordance with EITF Issue No. 95-3,
<i>Recognition of Liabilities in Connection with a Purchase Business Combination </i>(EITF 95-3). We
include exit costs in the purchase price allocation of the acquired business if a plan to exit an
activity of an acquired company exists, in accordance with EITF 95-3 criteria, as those costs have
no future economic benefit to us and will be incurred as a direct result of the exit plan, or the
exit costs represent amounts to be incurred by us under a contractual obligation of the acquired
entity that existed prior to the acquisition date. We recognize employee termination benefits as
liabilities assumed as of the acquisition date when management approved and committed to the plan
and communicated the termination arrangements to the employees.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table reflects the activity during the six months ended June 30, 2009 associated
with the liabilities (included in other accrued liabilities) incurred in connection with the
termination benefits for employees who were employed by Allied at the date of the acquisition and
notified that their employment was terminated:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Additions/</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Accrued Liabilities Related to Allied</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Adjustments</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Payments</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Severance & other termination benefits
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">22.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6.5</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(17.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">11.8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, we recorded $25.9 million and $31.5 million,
respectively, of accrued liabilities in purchase accounting for the
estimated liabilities related
to various Allied legal matters.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are in the process of evaluating certain operating contracts and leases acquired from Allied.
During the six months ended June 30, 2009, we recorded additional liabilities for unfavorable
contract and lease exit costs of $15.4 million and $5.9 million, respectively. The underlying
lease agreements and contracts have remaining non-cancellable terms ranging from 1 to 21 years.
The following table reflects activity during the six months ended June 30, 2009 associated with
unfavorable contracts and lease exit liabilities:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Payments /</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Additions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Lease exit costs
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">4.8</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unfavorable contracts
</div></td>
<td> </td>
<td> </td>
<td align="right">33.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15.4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">45.6</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">33.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">21.3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">50.4</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<!-- Folio -->
<!-- /Folio -->
</div>
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 3 - us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock-->
<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>3. PROPERTY AND EQUIPMENT, NET</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Cash paid for purchases of property and equipment for the six months ended June 30, 2009 and 2008
were $355.1 million and $165.4 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of property and equipment, net is as follows:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009 <sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008 <sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 2pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other land
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">439.2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">464.4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-depletable landfill land
</div></td>
<td> </td>
<td> </td>
<td align="right">157.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">169.3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Landfill development costs
</div></td>
<td> </td>
<td> </td>
<td align="right">4,146.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,126.3</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Vehicles and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">3,593.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,432.3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Buildings and improvements
</div></td>
<td> </td>
<td> </td>
<td align="right">717.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">706.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Construction-in-progress — landfill
</div></td>
<td> </td>
<td> </td>
<td align="right">170.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">76.2</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Construction-in-progress — other
</div></td>
<td> </td>
<td> </td>
<td align="right">19.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26.3</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">9,243.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,000.8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Less:
Accumulated depreciation, depletion and amortization —
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Landfill development costs
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,144.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,004.2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Vehicles and equipment
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,361.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,147.3</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Buildings and improvements
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(124.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(111.1</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,630.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,262.6</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Property and equipment, net
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">6,612.9</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6,738.2</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>Property and equipment, net excludes assets classified as
held for sale of $21.8 million and $214.1 million as of
June 30, 2009 and December 31, 2008, respectively.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As a result of our acquisition of Allied, we recorded $4.9 billion for property and equipment at
its estimated fair value in December 2008. Our estimates have not been finalized and are subject
to change. We expect to complete our valuations during 2009.
</div>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 4 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Goodwill</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the activity and balances in goodwill by operating segment is as follows:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Adjustments to</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Adjustments to</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Assets</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Regions</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Acquisitions <sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Divestitures</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Held for Sale</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Eastern
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,772.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5.8</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(14.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">9.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,773.3</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Midwest
</div></td>
<td> </td>
<td> </td>
<td align="right">2,083.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">2,089.0</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Southern
</div></td>
<td> </td>
<td> </td>
<td align="right">2,715.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7.5</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(28.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">22.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,716.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Western
</div></td>
<td> </td>
<td> </td>
<td align="right">2,949.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,960.7</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">10,521.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(43.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">31.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10,539.5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>Adjustments to acquisitions include a $9.7 million adjustment for deferred taxes pertaining to prior years’ acquisitions in accordance with SFAS 109.</td>
</tr>
</table>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Adjustments to</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Regions</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Acquisitions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Eastern
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">510.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">510.3</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Midwest
</div></td>
<td> </td>
<td> </td>
<td align="right">374.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">374.5</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Southern
</div></td>
<td> </td>
<td> </td>
<td align="right">340.7</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">340.2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Western
</div></td>
<td> </td>
<td> </td>
<td align="right">330.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">330.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,555.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,555.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<!-- Folio -->
<!-- /Folio -->
</div>
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2009 we realigned our regional operations, as such, we have
retrospectively adjusted the goodwill balances associated with each operating region to conform
with the current presentation. We allocated goodwill from the Allied acquisition to our regions,
based on the relative fair value of Allied’s contribution to each individual region to the total
fair value of the business acquired. As a result of the realignment of our regions, we performed
an interim impairment test of our goodwill during the first quarter of 2009 and we concluded that
goodwill was not impaired. We will continue to monitor our market capitalization and expectations
of future cash flows and will perform interim impairment testing if deemed necessary.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other Intangible Assets</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Other intangible assets include values assigned to customer relationships, long-term contracts,
covenants not to compete and trade names, and are amortized over periods ranging from 2 to
10 years.
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="17%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">   </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">   </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="7%" nowrap="nowrap">   </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">   </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="7%" nowrap="nowrap">    </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">Gross Intangible Assets</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">Accumulated Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Net</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intangibles</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">at June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Acquisitions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Expense</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Eastern
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">139.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">139.3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(5.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(7.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(12.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">126.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Midwest
</div></td>
<td> </td>
<td> </td>
<td align="right">97.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">97.7</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">86.8</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Southern
</div></td>
<td> </td>
<td> </td>
<td align="right">126.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">126.8</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(11.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">115.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Western
</div></td>
<td> </td>
<td> </td>
<td align="right">220.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">220.8</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(35.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(11.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(46.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">174.2</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Corporate
</div></td>
<td> </td>
<td> </td>
<td align="right">31.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">31.0</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">27.2</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">615.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">615.6</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(51.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(34.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(85.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">529.7</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="18%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">    </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">    </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">    </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">    </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%" nowrap="nowrap">    </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">Gross Intangible Assets</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">Accumulated Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 0px solid #000000">Net</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Balance at</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intangibles</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Other</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amortization</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">at June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Acquisitions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Additions</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2007</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Expense</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Eastern
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">6.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6.3</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(3.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">2.2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Midwest
</div></td>
<td> </td>
<td> </td>
<td align="right">6.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6.8</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">2.5</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Southern
</div></td>
<td> </td>
<td> </td>
<td align="right">4.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.6</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(0.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1.4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Western
</div></td>
<td> </td>
<td> </td>
<td align="right">49.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">0.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">56.5</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(30.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(31.7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">24.8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">67.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">6.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">74.2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(40.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(2.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(43.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">30.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2009 we realigned our regional operations. As such, we have
retrospectively adjusted the intangible balances associated with each operating region to conform
with the current presentation.
</div>
</div>
</div>
</body>
</html>
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<head></head>
<body>
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<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>5. LANDFILL AND ENVIRONMENTAL COSTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Accrued Landfill and Environmental Costs</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">A summary of landfill and environmental liabilities is as follows:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Landfill final capping, closure and post-closure liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,073.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,040.6</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Remediation
</div></td>
<td> </td>
<td> </td>
<td align="right">374.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">389.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">1,447.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,430.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Less: Current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(165.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(233.4</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-term portion
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,282.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,197.1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>Total Available Disposal Capacity</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, we owned or operated 203 active solid waste landfills with total available
disposal capacity of approximately 4.8 billion in-place cubic yards. Additionally, we currently
have post-closure responsibility for 127 closed landfills.
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
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</div>
</div>
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<div style="margin-left: 0%">
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Final Capping, Closure and Post-Closure Costs</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the activity in our asset retirement obligation liabilities, which
include liabilities for final capping, closure and post-closure:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Six Months Ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement obligation liabilities, beginning of year
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,040.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">277.7</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-cash asset additions
</div></td>
<td> </td>
<td> </td>
<td align="right">17.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9.3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Increase due to acquisition
</div></td>
<td> </td>
<td> </td>
<td align="right">5.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">SFAS 143 adjustments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(.1</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Payments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(33.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4.0</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Accretion expense
</div></td>
<td> </td>
<td> </td>
<td align="right">45.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8.9</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other adjustments
</div></td>
<td> </td>
<td> </td>
<td align="right">1.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Adjustments to liabilities related to assets held for sale
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement obligation liabilities, end of period
</div></td>
<td> </td>
<td> </td>
<td align="right">1,073.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">291.9</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Less: Current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(99.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(19.9</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Long-term portion
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">973.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">272.0</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Annually, we review our calculations for asset retirement obligations. However, if there are
significant changes in the facts and circumstances related to a site during the year, we will
update our assumptions prospectively in the period that all the relevant facts and circumstances
are known.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of assets that are legally restricted for purposes of collateralizing certain of
our final capping, closure and post-closure obligations was approximately $63.6 million at June
30, 2009, and is included in restricted cash and marketable securities in our consolidated balance
sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Remediation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We accrue for remediation costs when they become probable and can be reasonably estimated. We
believe that the amounts accrued for remediation costs are adequate. However, it is reasonably
possible that we will need to adjust the liabilities recorded for remediation to reflect the
effects of new or additional information, to the extent that such information impacts the costs,
timing or duration of the required actions. Future changes in our estimates of the cost, timing
or duration of the required actions could have a material adverse effect on our consolidated
financial position, results of operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the activity in our environmental remediation liabilities:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Six Months Ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Remediation liabilities, beginning of year
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">389.9</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">67.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Increase due to acquisition
</div></td>
<td> </td>
<td> </td>
<td align="right">.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other additions charged to expense
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">68.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Payments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(26.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(18.1</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Accretion expense
</div></td>
<td> </td>
<td> </td>
<td align="right">10.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Remediation liabilities, end of period
</div></td>
<td> </td>
<td> </td>
<td align="right">374.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">117.4</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Less: Current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(65.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(21.5</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Long-term portion
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">308.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">95.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a discussion of certain of our significant remediation matters:
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Countywide Landfill. </i>In 2007, we were issued Final Findings and Orders (F&Os) by the Ohio
Environmental Protection Agency (OEPA) related to environmental conditions at our Countywide
Recycling and Disposal Facility (Countywide) in East Sparta, Ohio and we agreed to undertake
certain other remedial actions with the OEPA as well. During 2008, Republic Services of Ohio II,
LLC (Republic-Ohio), an Ohio limited liability company and wholly owned subsidiary of ours and
parent of Countywide, entered into an Agreed Order on Consent (AOC) with the EPA requiring the
reimbursement of costs incurred by the EPA and requiring Republic-Ohio to perform certain
remediation activities at Countywide. Republic-Ohio also has completed construction of an isolation break under the authority and supervision of the U.S. EPA. The remediation liability remaining for Countywide recorded
as of June 30, 2009 is $83.0 million, of which approximately $17.0 million is expected to be paid
out during the remainder of 2009.
</div>
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</div>
</div>
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<div style="margin-left: 0%">
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
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<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>West Contra Costa County Landfill. </i>In 2006, we were issued an Enforcement Order by the California
Department of Toxic Substance Control (DTSC) for the Class 1 Hazardous waste cell at the West
Contra Costa County Landfill (West County). Subsequently, we entered into a Consent Agreement with
DTSC in 2007 at which time we agreed to undertake certain remedial actions. The remediation
liability remaining for West County recorded as of June 30, 2009 is $44.8 million, of which
approximately $4.8 million is expected to be paid out during the remainder of 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Sunrise Landfill. </i>On August 1, 2008, Republic Services of Southern Nevada (RSSN), our wholly owned
subsidiary, signed a Consent Decree with the EPA, the Bureau of Land Management and Clark County,
Nevada related to the Sunrise Landfill. Under the Consent Decree, RSSN has agreed to perform
certain remedial actions at the Sunrise Landfill for which RSSN and Clark County were otherwise
jointly and severally liable. We also paid $1.0 million in sanctions related to the Consent
Decree. RSSN is currently working with the Clark County Staff and Board of Commissioners to develop
a mechanism to fund the costs to comply with the Consent Decree. However, we have not recorded any
potential recoveries. The remediation liability remaining for Sunrise recorded as of June 30, 2009
is $37.8 million, of which approximately $2.2 million is expected to be paid out during the
remainder of 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Environmental Operating Costs</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In the normal course of business, we incur various operating costs associated with environmental
compliance. These costs include, among other things, leachate treatment and disposal, methane
gas and groundwater monitoring and systems maintenance, interim cap maintenance, costs
associated with the application of daily cover materials, and the legal and administrative
costs of ongoing environmental compliance. These costs are expensed as cost of operations in
the period in which they are incurred.
</div>
</div>
</div>
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<html>
<head></head>
<body>
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<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>6. DEBT</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our notes payable, capital leases and long-term debt at June 30, 2009 and December 31, 2008 are
listed in the following table, and are presented net of unamortized discounts and premiums,
adjustments to fair market value related to hedging transactions and the unamortized portion
of adjustments to fair value recorded in purchase accounting. The debt we acquired as part of
the acquisition of Allied was recorded at fair value as of the acquisition date.
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Debt Balance at</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">June 30, 2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">December 31, 2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 2pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">$1.0 billion Revolver due 2012
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">$1.75 billion Revolver due 2013, Eurodollar and Base Rate borrowings
</div></td>
<td> </td>
<td> </td>
<td align="right">388.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">665.0</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Receivables secured loans
</div></td>
<td> </td>
<td> </td>
<td align="right">300.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">400.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">7.125% senior notes due 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">99.3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">6.50% senior notes due 2010
</div></td>
<td> </td>
<td> </td>
<td align="right">335.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">333.2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">5.75% senior notes due 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">374.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">371.1</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">6.375% senior notes due 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">261.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">257.7</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">6.75% senior notes due 2011
</div></td>
<td> </td>
<td> </td>
<td align="right">461.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">464.2</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">7.875% senior notes due 2013
</div></td>
<td> </td>
<td> </td>
<td align="right">425.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">422.4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">6.125% senior notes due 2014
</div></td>
<td> </td>
<td> </td>
<td align="right">374.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">370.5</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">7.375% senior notes due 2014
</div></td>
<td> </td>
<td> </td>
<td align="right">365.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">363.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">7.25% senior notes due 2015
</div></td>
<td> </td>
<td> </td>
<td align="right">536.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">531.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">7.125% senior notes due 2016
</div></td>
<td> </td>
<td> </td>
<td align="right">522.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">518.7</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">6.875% senior notes due 2017
</div></td>
<td> </td>
<td> </td>
<td align="right">650.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">645.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">9.25% debentures due 2021
</div></td>
<td> </td>
<td> </td>
<td align="right">93.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">92.8</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">6.086% senior notes due 2035
</div></td>
<td> </td>
<td> </td>
<td align="right">249.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">249.1</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">7.40% debentures due 2035
</div></td>
<td> </td>
<td> </td>
<td align="right">266.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">266.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">4.25% senior subordinated convertible debentures due 2034
</div></td>
<td> </td>
<td> </td>
<td align="right">207.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">201.3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Tax-exempt bonds and other tax-exempt financings; fixed and
floating interest rates ranging from .30% to 8.25% maturities
ranging from 2010 to 2037
</div></td>
<td> </td>
<td> </td>
<td align="right">1,142.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,308.2</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Other debt unsecured and secured by real property, equipment and
other assets; interest rates ranging from 5.90% to 11.90% maturing
through 2042
</div></td>
<td> </td>
<td> </td>
<td align="right">142.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">142.1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total debt
</div></td>
<td> </td>
<td> </td>
<td align="right">7,095.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,702.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Less: Current portion
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(327.3</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(504.0</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Long-term portion
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">6,768.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,198.5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
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</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Revolving Credit Facilities</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our $1.0 billion revolving credit facility due April 2012 and the $1.75 billion revolving credit
facility due September 2013 (collectively, the Credit Facilities) bear interest at a Base Rate, or
a Eurodollar Rate, both terms defined in the agreements, plus an
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<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 0pt">
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applicable margin based on our Debt Ratings, also a term defined in the agreements. As of June
30, 2009 and December 31, 2008, the interest rate for our borrowings under our Credit Facilities
was 1.98% and 3.43%, respectively. The Credit Facilities are also subject to facility fees based
on applicable rates defined in the agreements and the aggregate commitments, regardless of usage.
At June 30, 2009, we had $350.0 million of Eurodollar Rate borrowings, $38.0 million of Base Rate
borrowings and $1,631.8 million of revolver capacity which was used to support outstanding of
letters of credit, leaving $730.1 million of available liquidity under the Credit Facilities. The
agreements governing the Credit Facilities require us to maintain certain financial and other
covenants. We have the ability to pay dividends and to repurchase common stock provided that we
are in compliance with these covenants. At June 30, 2009, we were in compliance with the
covenants of the Credit Facilities. Proceeds from borrowings under our Credit Facilities are
being used for working capital, capital expenditures, and other general corporate purposes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Receivables Secured Loans</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have an accounts receivable securitization program with two financial institutions that allows
us to borrow up to $300.0 million on a revolving basis under loan agreements secured by
receivables. On May 28, 2009, we renewed the facility and reduced the borrowing capacity from
$400.0 million to $300.0 million. The agreements include a 364-day liquidity facility secured by
receivables that matures on May 28, 2010. If we are unable to renew the liquidity facility when
it matures on May 28, 2010, we will refinance any amounts outstanding with our Credit Facilities
or with other long-term borrowings. Although we intend to renew the liquidity facility no later
than May 28, 2010 and do not expect to repay the amounts within the next twelve months, the loan
is classified as current because it has a contractual maturity of less than one year.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The borrowings are secured by our accounts receivable. These receivables are held in and owned by
a wholly owned and fully consolidated subsidiary. This subsidiary is a separate corporate entity
whose assets, or collateral securing the borrowings, are available first to satisfy the claims of
the subsidiary’s creditors. At June 30, 2009, the total amount of accounts receivable (gross)
serving as collateral securing the borrowing was $449.1 million. Under SFAS No. 140, <i>Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a Replacement
of FASB Statement 125</i>, the securitization program is accounted for as a secured borrowing with a
pledge of collateral. The receivables and debt obligation remain on our consolidated balance
sheet. The borrowings under this program bear interest at the financial institutions’ commercial
paper rate plus an applicable spread and interest is payable monthly.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Senior Notes and Debentures</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, our senior notes and debentures totaled $4,914.7
million and $4,985.9 million, net of unamortized discounts and premiums of $27.2 million and $27.5
million, remaining unamortized adjustments to fair value recorded in purchase accounting for the
acquisition of Allied of $759.5 million and $809.8 million, and adjustments to fair value related
to our interest rate swap agreements of $11.8 million and $15.1 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Senior Subordinated Convertible Debentures</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our $230.0 million of 4.25% unsecured senior subordinated convertible debentures due 2034 are
convertible into 5.2 million shares of our common stock at a conversion price of $44.17 per share.
These debentures are convertible at the option of the holder anytime if certain conditions occur,
as outlined in the agreement. We can elect to settle the conversion in stock, cash or a
combination of stock and cash. We can elect to call the debentures at any time after April 15,
2009 at par for cash only. The holders can require us to redeem some or all of the debentures on
April 15th of 2011, 2014, 2019, 2024 and 2029 at par for stock, cash or a combination of stock and
cash at our option. If the debentures are redeemed in stock, the number of shares issued will be
determined at the par value of the debentures divided by the average trading stock price of the
preceding five-day period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At June 30, 2009 and December 31, 2008, the unamortized adjustment to fair value recorded in
purchase accounting for these debentures was $22.2 million and $28.7 million, respectively, which
is being amortized to interest expense through April 15, 2011, the first date that the holders can
require us to redeem the debentures.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Tax-Exempt Financings</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, we had $1,142.8 million and $1,308.2 million,
respectively, of fixed and variable rate tax-exempt financings outstanding with maturities ranging
from 2010 to 2037.
</div>
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<b>
</b>
</div>
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<div align="left" style="font-size: 10pt; margin-top: 6pt">Approximately two-thirds of our tax-exempt financings are remarketed weekly or daily, by a
remarketing agent to effectively maintain a variable yield. These variable rate tax-exempt
financings are credit enhanced with letters of credit having terms in excess of one year
issued by banks with credit ratings of A or better. The holders of the bonds can put them
back to the remarketing agent at the end of each interest period.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, we had $259.3 million of restricted cash and marketable securities, of which
$117.8 million were proceeds from the issuance of tax-exempt bonds and other tax-exempt financings,
and will be used to fund capital expenditures under the terms of the agreements. Restricted cash
also includes amounts held in trust as a financial guarantee of our performance.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other Debt</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Other debt primarily includes capital lease liabilities of $140.8 million and $139.5 million as of
June 30, 2009 and December 31, 2008, respectively, with maturities ranging from 2009 to 2042.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fair Value of Debt</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of our fixed rate senior notes using quoted market rates is $5.4 billion and $5.2
billion at June 30, 2009 and December 31, 2008, respectively. The carrying value of our fixed rate
senior notes is $4.9 billion and $5.0 billion at June 30, 2009 and December 31, 2008,
respectively. The carrying amounts of our remaining notes payable and tax-exempt financings
approximate fair value because interest rates are variable and, accordingly, approximate current
market rates for instruments with similar risk and maturities. The fair value of our debt is
determined as of the balance sheet date and is subject to change. For active hedge arrangements,
the fair value of the derivatives is included in the consolidated balance sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Guarantees</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Substantially all of our subsidiaries have guaranteed our obligations under the Credit Facilities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We and substantially all of our subsidiaries (including substantially all of the subsidiaries of
Allied) guarantee nine series of senior notes issued by Allied Waste North America, Inc. (AWNA), a
subsidiary of Allied (the AWNA Senior Notes). The guarantees of the AWNA Senior Notes by our
subsidiaries (other than the guarantee by Allied) would be automatically released upon the release
of such subsidiaries from their guarantee obligations under the Credit Facilities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We and substantially all our subsidiaries (including substantially all of the subsidiaries of
Allied) also guarantee the 9.25% debentures due 2021 and the 7.40% debentures due 2035 issued by
Browning-Ferris Industries, LLC (successor to Browning-Ferris Industries, Inc.) (BFI), another
subsidiary of Allied (the BFI Debentures). The guarantees of the BFI Debentures by our
subsidiaries (other than the guarantees by Allied and AWNA) would be automatically released upon
the release of such subsidiaries from their guarantee obligations under the Credit Facilities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Substantially all of our subsidiaries (including Allied and substantially all of its subsidiaries)
have guaranteed our 6.75% senior notes due 2011 and our 6.086% senior notes due 2035 (the Republic
Senior Notes). The guarantees of the Republic Senior Notes by our subsidiaries would be
automatically released upon the release of such subsidiaries from their guarantee obligations under
the Credit Facilities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have guaranteed some of the tax-exempt bonds of our subsidiaries. If a subsidiary fails to meet
its obligations associated with tax-exempt bonds as they come due, we will be required to perform
under the related guarantee agreement. No additional liability has been recorded for these
guarantees because the underlying obligations are reflected in our consolidated balance sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Interest Paid</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Interest paid was $234.4 million and $43.7 million (net of capitalized interest of $1.8 million and
$1.0 million) for the six months ended June 30, 2009 and 2008, respectively. Interest expense for
the six months ended June 30, 2009 includes $73.9 million of accretion expense of which, $50.6
million is non-cash interest expense on debt primarily related to amortizing the discount to fair
value recorded for the debt we acquired from Allied. This accretion expense for the six months
ended June 30, 2009 also includes $23.3 million of accretion expense associated with discounts
recorded on the environmental and self-insurance reserves we acquired from Allied.
</div>
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<b>
</b>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Interest Rate Swap Agreements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our ability to obtain financing through the capital markets is a key component of our financial
strategy. Historically, we have managed risk associated with executing this strategy, particularly
as it relates to fluctuations in interest rates, by using a combination of fixed and floating rate
debt. We also entered into interest rate swap agreements to manage risk associated with
fluctuations in interest rates. The swap agreements have a total notional value of $210.0 million
and mature in August 2011. This maturity is identical to our senior notes that also mature in
2011. Under the swap agreements, we pay interest at floating rates based on changes in LIBOR and
receive interest at fixed rates of 6.75%. We have designated these agreements as hedges in changes
in the fair value of our fixed-rate debt and account for them in accordance with SFAS 133. We have
determined that these agreements qualify for the short-cut method under SFAS 133 and, therefore,
changes in the fair value of the agreements are assumed to be perfectly effective in hedging
changes in the fair value of our fixed rate debt due to changes in interest rates.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009 and December 31, 2008, interest rate swap agreements are reflected at their
fair value of $11.8 million and $15.1 million, respectively, and are included in other assets and
as an adjustment to long-term debt in our consolidated balance sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the impact of changes in the fair value of our derivatives and the
underlying hedged items on our results of operations for the six months ended June, 2009 and 2008
(in millions):
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="20%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Consolidated Statement of</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 0px solid #000000">Gain (Loss) on Swap</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Gain (Loss) on Fixed-Rate Debt</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Income Classification</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">Three and Six Months Ended June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000">Three and Six Months Ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
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<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Expense
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(2.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(4.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(2.2</td>
<td nowrap="nowrap">)</td>
</tr>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>7. INCOME TAXES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Income taxes have been provided for the six months ended June 30, 2009 and 2008 based on our
anticipated annual effective income tax rate. Income taxes paid (net of refunds received) were
$219.0 million and $68.4 million for the six months ended June 30, 2009 and 2008, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the three months ended June 30, 2009, we reduced both our unrecognized tax benefits and
accrued interest by approximately $66.0 million and $18.0 million, respectively, primarily as a
result of receiving approval from the IRS national office regarding our tax method of deducting
pre-merger intercompany premiums paid to Allied’s captive insurance company.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We recognize interest and penalties as incurred within the provision for income taxes in the
consolidated statements of income. Related to the unrecognized tax benefits noted above, as of June
30, 2009, we have accrued a liability for penalties of $87.9 million and interest (including
interest on penalties) of $166.4 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Gross unrecognized tax benefits that we expect to settle in the following twelve months are in the
range of $5 million to $15 million. It is reasonably possible that the amount of unrecognized tax
benefits will increase or decrease in the next twelve months.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We and our subsidiaries are subject to income tax in the U.S. and Puerto Rico, as well as income
tax in multiple state and local jurisdictions. These authorities may challenge the positions taken
in our tax filings. As such, to provide for certain potential tax exposures, we maintain
liabilities for uncertain tax positions for our estimate of the final outcome of the examinations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have acquired Allied’s open tax periods as part of the acquisition. We are currently under
examination or administrative review by various state and federal taxing authorities for certain
tax years, including federal income tax audits for calendar years 2000 through 2007. We are also
engaged in tax litigation related to our risk management companies which are subsidiaries of
Allied. These matters are further discussed below.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We believe that the liabilities for uncertain tax positions recorded are appropriate. However, a
significant assessment against us in excess of the liabilities recorded could have a material
adverse effect on our consolidated financial position, results of operations or cash flows.
</div>
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<b>
</b>
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<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Risk Management Companies</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Prior to Allied’s acquisition of BFI in July 1999, certain BFI operating companies, as part of a
risk management initiative to manage and reduce costs associated with certain liabilities,
contributed assets and existing environmental and self-insurance liabilities to six fully
consolidated BFI risk management companies (RMCs) in exchange for stock representing a minority
ownership interest in the RMCs. Subsequently, the BFI operating companies sold that stock in the
RMCs to third parties at fair market value which resulted in a capital loss of approximately
$900 million for tax purposes, calculated as the excess of the tax basis of the stock over the
cash proceeds received.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On January 18, 2001, the Internal Revenue Service (IRS) designated this type of transaction and
other similar transactions as a “potentially abusive tax shelter” under IRS regulations. During
2002, the IRS proposed the disallowance of all of this capital loss. At the time of the
disallowance, the primary argument advanced by the IRS for disallowing the capital loss was that
the tax basis of the stock of the RMCs received by the BFI operating companies was required to be
reduced by the amount of liabilities acquired by the RMCs even though such liabilities were
contingent and, therefore, not liabilities recognized for tax purposes. Under the IRS
interpretation, there was no capital loss on the sale of the stock since the tax basis of the
stock should have approximated the proceeds received. Allied protested the disallowance to the
Appeals Office of the IRS in August 2002.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2005, the Appeals Office of the IRS upheld the disallowance of the capital loss
deduction. As a result, in late April 2005, Allied paid a deficiency to the IRS of $22.6 million
for BFI tax years prior to the acquisition. Allied also received a notification from the IRS
assessing a penalty of $5.4 million and interest of $12.8 million relating to the asserted
$22.6 million deficiency. In July 2005, Allied filed a suit for refund in the United States Court
of Federal Claims (CFC). The Department of Justice (DOJ) thereafter filed a counterclaim in the
case for the $5.4 million penalty and $12.8 million of interest claimed by the IRS. In
December 2005, the IRS agreed to suspend the collection of this penalty and interest until a
decision was rendered on Allied’s suit for refund.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">
Another refund suit related to this same issue is currently pending in the United States District
Court for the District of Arizona. In August 2008, Allied received from the IRS a Statutory Notice
of Deficiency (Notice) related to its utilization of BFI’s capital loss carryforward on Allied’s
1999 tax return. Because of the high rate of interest associated with this matter, Allied
previously paid all tax and interest related to this tax year. Consequently, the Notice related
only to the IRS’ asserted penalty for Allied’s 1999 tax year. On October 30, 2008, Allied filed a
suit for refund in the Arizona District Court. Similar to the BFI action in the CFC, the DOJ has
filed a counterclaim for the asserted penalty and related penalty interest. As a consequence, we
expect the IRS will suspend collection of the penalty, as occurred in connection with the BFI
action. However, there can be no assurance that the IRS will suspend its collection efforts.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2008, subsequent to our acquisition of Allied, a hearing was held in the CFC. At this
hearing, we informed the judge of our intention to withdraw our suit from the CFC in order to
continue to litigate the merits of our position exclusively in the Arizona District Court. We
believe the decisional law applicable to this matter is more favorable to taxpayers there than in
the CFC.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">To accomplish the withdrawal from the CFC, in January 2009, we paid the government’s counterclaim
for penalty and penalty interest of approximately $11.0 million. Prior to December 31, 2008,
Allied had already paid $51.0 million in tax and interest relating to the 1997 through 1999 BFI
tax years. As a result, all tax, interest and penalties related to the 1997 through 1999 BFI tax
years have been paid. On April 28, 2009, the judge in the CFC issued an order dismissing our case
with prejudice. As a consequence, the tax, interest and penalty amounts paid by us for the BFI
tax years will not be recoverable in any subsequent action.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">If the capital loss deduction is fully disallowed for all applicable years, we estimate that it
would have a total cash impact (including amounts already paid to the IRS as described below) of
approximately $451 million related to federal taxes, state taxes and interest, and, approximately
$168 million related to penalty and penalty-related interest. These amounts have been fully
accrued in our consolidated balance sheet, and therefore, disallowance would not materially affect
our consolidated results of operations. However, a payment beyond the amounts already paid would
adversely impact our cash flow in the period such payment was made. The accrual of additional
interest charges through the time these matters are resolved will affect our consolidated results
of operations. Due to the high rate of interest associated with this matter, we or Allied have
previously paid the IRS and various state tax authorities $394 million related to capital loss
deductions taken on BFI’s 1997 through 1999 and Allied’s 1999 through 2002 tax returns. In
addition, we or Allied have paid approximately $11 million of penalty and penalty-related interest
for the BFI 1997 — 1999 tax years. Although we have fully accrued all tax, interest, penalty, and
penalty-related interest relating to this matter, we intend to vigorously prosecute our suit for
refund of the tax and interest and defend against the IRS’ claims for penalties and
penalty-related interest in the Arizona District Court. While there can be no assurances, we
anticipate that the final resolution of the dispute, through adjudication or settlement, may be
more favorable than the full amount currently accrued for tax, interest, penalty and
penalty-related interest.
</div>
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<b>
</b>
</div>
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<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Exchange of Partnership Interests</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In April 2002, Allied exchanged minority partnership interests in four waste-to-energy facilities
for majority partnership interests in equipment purchasing businesses, which are now wholly owned
subsidiaries. In November 2008, the IRS issued a formal disallowance to Allied contending that
the exchange was instead a sale on which a corresponding gain should have been recognized.
Although we intend to vigorously defend our position on this matter, if the exchange is treated as
a sale, we estimate it could have a potential federal and state cash tax impact of approximately
$156 million plus accrued interest through June 30, 2009 of approximately $54 million. In
addition, the IRS has asserted a penalty of 20% of the additional income tax due. The potential
tax and interest (but not penalty or penalty-related interest) of a full adjustment for this
matter have been fully reserved in our consolidated balance sheet at June 30, 2009. The
successful assertion by the IRS of penalty and penalty-related interest in connection with this
matter could have a material adverse impact on our consolidated results of operations and cash
flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Methane Gas</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As part of its examination of Allied’s 2000 through 2006 federal income tax returns, the IRS
reviewed Allied’s treatment of costs associated with its landfill operations. As a result of this
review, the IRS has proposed that certain landfill costs be allocated to the collection and
control of methane gas that is naturally produced within the landfill. The IRS’ position is that
the methane gas produced by a landfill is a joint product resulting from operation of the landfill
and, therefore, these costs should not be expensed until the methane gas is sold or otherwise
disposed.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We plan to contest this issue at the Appeals Office of the IRS. We believe we have several
meritorious defenses, including the fact that methane gas is not actively produced for sale by us
but rather arises naturally in the context of providing disposal services. Therefore, we believe
that the subsequent resolution of this issue will not have a material adverse impact on our
consolidated financial position, results of operations or cash flows.
</div>
</div>
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>8. EMPLOYEE BENEFIT PLANS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Stock-Based Compensation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In July 1998, we adopted the 1998 Stock Incentive Plan (1998 Plan) to provide for grants of
options to purchase shares of common stock, restricted stock and other equity-based compensation
to our employees and non-employee directors who are eligible to participate in the 1998 Plan. The
1998 Plan expired on June 30, 2008. In February 2007, our Board of Directors approved the 2007
Stock Incentive Plan (2007 Plan) to replace the 1998 Plan when it expired. The 2007 Plan was
approved by our stockholders in May 2007. We believe that such awards better align the interests
of our employees with those of our stockholders. As of June 30, 2009, shares reserved for future
grants under the 2007 Plan are 6.5 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Options granted under the 1998 Plan and the 2007 Plan are non-qualified and are granted at a price
equal to the fair market value of our common stock at the date of grant. Generally, options
granted have a term of seven to ten years from the date of grant, and vest in increments of 25%
per year over a four year period beginning on the first anniversary date of the grant. Options
granted to non-employee directors have a term of ten years and are fully vested at the grant date.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In December 2008, the Board of Directors adopted the Republic Services, Inc. 2006 Incentive Stock
Plan (previously the Allied Waste Industries, Inc. 2006 Incentive Stock Plan (the 2006 Plan)) as
amended and restated effective December 5, 2008. Allied’s stockholders approved the 2006 Plan in
May 2006. The 2006 Plan was amended and restated effective December 5, 2008 to reflect that
Republic Services, Inc. is the new sponsor of the Plan, that any references to shares of common
stock is to shares of common stock of Republic Services, Inc., and to adjust outstanding awards
and the number of shares available under the Plan to reflect the merger. The 2006 Plan, as
amended and restated, provides for the grant of non-qualified stock options, incentive stock
options, shares of restricted stock, shares of phantom stock, stock bonuses, restricted stock
units, stock appreciation rights, performance awards, dividend equivalents, cash awards, or other
stock-based awards. Awards granted under the 2006 Plan prior to December 5, 2008 became fully
vested and nonforfeitable upon the closing of the merger. Awards may be granted under the 2006
Plan, as amended and restated, after December 5, 2008 only to employees and consultants of Allied
Waste Industries, Inc. and its subsidiaries who were not employed by Republic Services, Inc. prior
to such date. As of June 30, 2009, shares reserved for future grants under the 2006 Plan are 15.0
million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Stock Options</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We use a lattice binomial option-pricing model to value our stock option grants. We recognize
compensation expense on a straight-line basis over the requisite service period for each
separately vesting portion of the award, or to the employee’s retirement eligible
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<b>
</b>
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<div align="left" style="font-size: 10pt; margin-top: 0pt">
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date, if earlier. Expected volatility is based on the weighted average of the most recent
one-year volatility and a historical rolling average volatility of our stock over the expected
life of the option. We use historical data to estimate future option exercises, forfeitures and
expected life of the options. When appropriate, separate groups of employees that have similar
historical exercise behavior are considered separately for valuation purposes. The risk-free
interest rate is based on Federal Reserve rates in effect for bonds with maturity dates equal to
the expected term of the option. The weighted-average estimated fair values of stock options
granted during the six months ended June 30, 2009 and 2008 were $3.47 and $5.26 per option,
respectively, which were calculated using the following weighted-average assumptions:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Six Months Ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="line-height: 2pt"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected volatility
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">28.7</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">23.2</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Risk-free interest rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">1.4</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">2.4</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Dividend yield
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">3.7</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">2.2</td>
<td nowrap="nowrap">%</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected life (in years)
</div></td>
<td> </td>
<td> </td>
<td align="right">4.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.1</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Contractual life (in years)
</div></td>
<td> </td>
<td> </td>
<td align="right">7.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expected forfeiture rate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">3.0</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">3.0</td>
<td nowrap="nowrap">%</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the stock option activity for the six months ended June 30,
2009:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Remaining</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Aggregate</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Exercise</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Contractual Term</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intrinsic</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">of Shares</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Price</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(Years)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Value</td>
<td> </td>
</tr>
<!-- End Table Head -->
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<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">18.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23.57</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17.13</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">15.84</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Cancelled
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">26.79</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at June 30, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">17.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23.38</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">44.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercisable at June 30, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">13.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23.35</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">41.5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the six months ended June 30, 2009 and 2008, compensation expense for stock options
was $3.9 million and $3.8 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of the effective date of the acquisition of Allied in December 2008, all of Republic’s unvested
stock options outstanding were vested in accordance with the change in control provisions of the
1998 and 2007 Plans.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, total unrecognized compensation expense related to outstanding stock options
was $10.6 million, which will be recognized over a weighted average period of 2.2 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We classified excess tax benefits of $.5 million and $2.8 million as cash flows from financing
activities for the six months ended June 30, 2009 and 2008, respectively. All other tax benefits
related to stock options have been presented as a component of cash flows from operating
activities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other Stock Awards</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the restricted and deferred stock unit and restricted stock
activity for the six months ended June 30, 2009:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Number of Deferred</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Weighted-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Stock Units and</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Average</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Aggregate</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Restricted</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Grant Date</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Remaining</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intrinsic</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Stock</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value per</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Contractual</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Value</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(In Thousands)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Share</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Term (Years)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(In Millions)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unissued at December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">255.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23.43</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">481.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23.89</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Vested and Issued
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(15.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">22.60</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Cancelled
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(31.9</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">23.50</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Unissued at June 30, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">689.2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23.77</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16.8</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Vested and unissued at June 30, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">76.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">25.87</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 0px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
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<div style="margin-left: 0%">
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<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the six months ended June 30, 2009 and 2008, we awarded 305,162 and 190,500 restricted
and deferred stock units to our non-employee directors under our 1998 Plan. 76,290 and 160,500,
respectively, of the stock units awarded vested immediately. The remaining shares awarded during
2009 vest in three equal annual installments beginning on the anniversary date of the original
grant. The directors receive the underlying shares only after their board service ends or a
change in control occurs, as defined by the 1998 and 2007 Plans. The stock units do not carry any
voting or dividend rights, except the right to receive additional restricted stock units in lieu
of dividends.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Also during the six months ended June 30, 2009, we awarded 176,253 shares of restricted stock to
executive and other officers, of which 110,669 of the shares vest effective May 14, 2010 and
38,670 of the shares awarded vest effective January 31, 2012. The remaining 26,914 shares awarded
vest in four equal annual installments beginning on the anniversary date of the original grant
except that vesting may be accelerated if certain performance targets are achieved or under
certain other conditions. During the vesting period, the participants have voting rights and
receive dividends declared and paid on the shares, but the shares may not be sold, assigned,
transferred or otherwise encumbered. Additionally, granted but unvested shares are forfeited in
the event the participant resigns employment with us for other than good reason.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">During the six months ended June 30, 2008, we awarded 190,500 shares of restricted stock to our
executive officers, of which 160,500 of the shares awarded were to vest in four equal annual
installments beginning on the anniversary date of the original grant except that vesting may be
accelerated if certain performance targets are achieved or under certain other conditions and the
remaining 30,000 shares awarded had an original vesting date of December 31, 2008. As of the
effective date of the acquisition of Allied in December 2008, all of Republic’s unvested
restricted stock outstanding were vested in accordance with the change in control provisions of
the 1998 and 2007 Plans.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our executive officers received an annual grant of 236,170 shares of restricted stock in December
2008 after the acquisition of Allied under our new annual grant program initiated in
December 2008, which would have been previously granted during the three months ended March 31,
2009. During the six months ended June 30, 2009, 31,915 of these shares were cancelled. The
remaining shares vest in four equal annual installments beginning on the anniversary date of the
original grant except that vesting may be accelerated if certain performance targets are achieved
or under certain other conditions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of restricted and deferred stock units and restricted stock on the date of grant is
amortized ratably over the vesting period, or the accelerated vesting period if certain
performance targets are achieved. During the six months ended June 30, 2009 and 2008,
compensation expense related to restricted and deferred stock units and restricted stock totaled
$2.9 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Multi-Employer Pension Plans</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We contribute to 25 multi-employer pension plans under collective bargaining agreements covering
union-represented employees. We acquired responsibility for contributions for a portion of these
plans as part of our acquisition of Allied.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Approximately 22% of our total current employees are participants in these multi-employer plans.
These plans generally provide retirement benefits to participants based on their service to
contributing employers. We do not administer these multi-employer plans. In general, these plans
are managed by a board of trustees with the unions appointing certain trustees and other
contributing employers of the plan appointing certain members. We generally are not represented
on the board of trustees.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We do not have current plan financial information from the plans’ administrators, but based on the
information available to us, we believe that some of the multi-employer plans to which we
contribute are underfunded. The Pension Protection Act, enacted in August 2006, requires underfunded pension
plans to improve their funding ratios within prescribed intervals based on the level of their
underfunding. Until the plan trustees develop the funding improvement plans or rehabilitation
plans as required by the Pension Protection Act, we are unable to determine the amount of
assessments we may be subject to, if any. Accordingly, we cannot determine at this time the
impact that the Pension Protection Act may have on our consolidated financial position, results of
operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Furthermore, under current law regarding multi-employer benefit plans, a plan’s termination, our
voluntary withdrawal, or the mass withdrawal of all contributing employers from any under-funded,
multi-employer pension plan would require us to make payments to the plan for our proportionate
share of the multi-employer plan’s unfunded vested liabilities. It is possible that there may be
a mass withdrawal of employers contributing to these plans or plans may terminate in the near
future. We could have adjustments to our estimates for these matters in the near term that could
have a material effect on our consolidated financial condition, results of operations or cash
flows.
</div>
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</div>
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<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Incentive Compensation Plans</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our compensation program includes a management incentive plan, which has been approved by our
stockholders and uses certain performance metrics such as free cash flow, targeted earnings and
return on invested capital to measure performance. In addition, in connection with our
acquisition of Allied, our Board of Directors approved an integration bonus plan , which has also
been approved by our stockholders and provides compensation that depends on our achieving
targeted annual synergies of approximately $150.0 million by the end of 2010 and is payable in the
first quarter of 2012. Incentive awards are payable in cash.
</div>
</div>
</div>
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<head></head>
<body>
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<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>9. STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">From 2000 through June 30, 2009, our Board of Directors has authorized the repurchase of up to
$2.6 billion of our common stock. Through June 30, 2009, we have paid $2.3 billion to repurchase
82.6 million shares of our common stock. During the second quarter of 2008, we suspended our
share repurchase program as a result of the pending merger with Allied. We expect that our share
repurchase program will continue to be suspended until approximately 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We initiated a quarterly cash dividend in July 2003. The dividend has been increased each year
thereafter, with the latest increase occurring in the third quarter of 2008. Our current
quarterly dividend per share is $.19. Dividends declared were $144.1 million and $62.2 million for
the six months ended June 30, 2009 and 2008, respectively. As of June 30, 2009, we recorded a
dividend payable of approximately $72.1 million to stockholders of record at the close of business
on July 1, 2009. In July 2009, our board of directors declared a regular quarterly dividend of
$.19 per share payable to stockholders of record as of October 1, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Basic earnings per share is computed by dividing net income attributable to Republic Services,
Inc. by the weighted average number of common shares (including restricted stock and vested but
unissued restricted and deferred stock units) outstanding during the period. Diluted earnings per
share is based on the combined weighted average number of common shares and common share
equivalents outstanding which include, where appropriate, the assumed exercise of employee stock
options and unvested restricted stock awards utilizing the treasury stock method. The dilutive
effect on earnings per share from our senior subordinated convertible debentures is calculated
using the if-converted method.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP)
Emerging Issues Task Force (EITF) 03-6-1, <i>Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities </i>(FSP EITF 03-6-1). FSP EITF 03-6-1 clarified
that all outstanding unvested share-based payment awards that contain rights to nonforfeitable
dividends participate in undistributed earnings with common shareholders. Awards of this nature
are considered participating securities and the two-class method of computing basic and diluted
earnings per share must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008. Our executive officers received an annual grant of 236,170 shares of restricted
stock in December 2008 under our new annual grant program initiated in December 2008. In
addition, during the six months ended June 30, 2009, our executive and other officers received
144,338 shares of restricted stock, net of cancellations. The shares of restricted stock are
entitled to receive nonforfeitable cash dividends, and these shares vest in four equal annual
installments beginning on the anniversary date of the original grant except that vesting may be
accelerated under certain conditions. Under FSP EITF 03-6-1, shares of restricted stock issued to
our executive and other officers are considered participating securities. We performed our
calculations of basic and diluted earnings per share using the treasury and two-step methods as
required by FSP EITF 03-6-1, and determined that adoption of this FSP did not have any impact on
basic or diluted earnings per share for the three and six months ended June 30, 2009.
</div>
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<div style="font-family: Helvetica,Arial,sans-serif">
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<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 6pt">Earnings per share for the three and six months ended June 30, 2009 and 2008 are calculated as
follows (in thousands, except per share amounts):
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%">             </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Three Months Ended June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Six Months Ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Basic earnings per share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Net income attributable to Republic Services, Inc.
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">225,900</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">40,700</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">338,900</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">116,800</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Weighted average common shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">379,169</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">182,006</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">379,095</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">182,708</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Basic earnings per share
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">.60</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.22</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.89</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.64</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Diluted earnings per share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Net income attributable to Republic Services, Inc.
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">225,900</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">40,700</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">338,900</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">116,800</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Weighted average common shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">379,169</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">182,006</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">379,095</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">182,708</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Effect of dilutive securities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Options to purchase common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">759</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,862</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">792</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,765</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Unvested restricted stock awards
</div></td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Weighted average common and common equivalent shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">379,932</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">183,871</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">379,890</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">184,475</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Diluted earnings per share
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">.59</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.22</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.89</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">.63</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Antidilutive securities not included in the diluted earnings per share calculations:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Senior subordinated convertible debentures
</div></td>
<td> </td>
<td> </td>
<td align="right">5,207</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,207</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Options to purchase common stock
</div></td>
<td> </td>
<td> </td>
<td align="right">11,592</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,764</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,114</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,811</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 10 - us-gaap:ComprehensiveIncomeNoteTextBlock-->
<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>10. OTHER COMPREHENSIVE INCOME</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Fuel Hedges</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have entered into multiple option agreements designated as cash flow hedges to mitigate some of
the exposure related to changes in diesel fuel prices. Under SFAS 133, the options qualified for,
and were designated as, effective hedges of changes in the prices of forecasted diesel fuel
purchases (fuel hedges).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes our outstanding fuel hedges at June 30, 2009 and 2008:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="20%"> </td>
<td width="8%"> </td>
<td width="2%"> </td>
<td width="15%"> </td>
<td width="5%"> </td>
<td width="18%"> </td>
<td width="5%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Notional Amount</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="2">
<font style="border-bottom: 1px solid #000000; width: 20%">Inception
Date</font></td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Commencement Date</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Termination Date</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">(in Gallons<br /> per Month)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Contract Price<br />
per Gallon</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">September 22, 2008
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2011
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">150,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top">$</td>
<td align="right" valign="top" nowrap="nowrap">4.1600 - 4.1700</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">March 17, 2008
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 5, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2012
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">50,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">3.7200</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">March 17, 2008
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 5, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2012
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">50,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">3.7400</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">November 5, 2007
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 5, 2009
</td>
<td> </td>
<td align="center" valign="top">December 30, 2013
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">60,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">3.2815</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">January 26, 2007
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 7, 2008
</td>
<td> </td>
<td align="center" valign="top">December 29, 2008
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">500,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">2.8285</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">January 26, 2007
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 5, 2009
</td>
<td> </td>
<td align="center" valign="top">December 28, 2009
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">500,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">2.8270</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">January 26, 2007
</div></td>
<td> </td>
<td> </td>
<td align="center" valign="top">January 4, 2010
</td>
<td> </td>
<td align="center" valign="top">December 27, 2010
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">500,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">2.8100</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">If the national U.S. on-highway average price for a gallon of diesel fuel (average price) as
published by the Department of Energy exceeds the contract price per gallon, we receive the
difference between the average price and the contract price (multiplied by the notional gallons)
from the counter-party. If the national U.S. on-highway average price for a gallon of diesel fuel
is less than the contract price per gallon, we pay the difference to the counter-party.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair values of the fuel hedges are obtained from third-party counter-parties and are
determined using standard option valuation models with assumptions about commodity prices being
based on those observed in underlying markets (Level 2 in the fair value hierarchy). The
aggregated fair value of the outstanding fuel hedges at June 30, 2009 and December 31, 2008 is a
net liability of $5.0 million and $11.7 million, respectively, and are recorded in other accrued
liabilities in our consolidated balance sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with SFAS 133, the effective portions of the changes in fair value as of June 30,
2009 and December 31, 2008, are recorded in stockholders’ equity as components of accumulated
other comprehensive income. The ineffective portions of the changes in fair value are recorded in
other income, net in our consolidated statements of income. Realized gains or losses related to
<!-- Keep Ignore Comment, per XBRLMARK -->
</div>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<!-- Keep Ignore Comment, per XBRLMARK -->
these fuel hedges are included in cost of operations in our consolidated statements of income.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the impact of our fuel hedges on our results of operations and
comprehensive income for the three and six months ended June 30, 2009 and 2008:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="16%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="25%"> </td>
<td width="3%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="25%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount of Gain or</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Loss)</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Location of Gain</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Recognized in</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">(Loss) Recognized</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Income on</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">in Income on</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Derivative</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount of Gain</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Derivative</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Ineffective</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Derivatives in</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">or (Loss)</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">(Ineffective Portion</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Portion and</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">SFAS No. 133</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Recognized in</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">and Amount</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount Excluded</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Cash Flow</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">OCI on</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Statement of</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Excluded from</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">from</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Hedging</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Derivatives</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Income</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Realized Gain or</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Effectiveness</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Effectiveness</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Relationships</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">(Effective Portion)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Classification</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">(Loss)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Testing)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Testing)</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Six months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Six months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Six months</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom:1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Fuel hedges
</div></td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">4.1</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">16.7</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td align="left" valign="top">Cost of operations</td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">(4.7</td>
<td nowrap="nowrap" valign="top">)</td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">3.4</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td align="left" valign="top">
<div style="margin-left:15px; text-indent:-15px">Other
income net
</div></td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">.1</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">.6</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three months</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom:1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">Fuel hedges
</div></td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">5.2</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">14.9</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td align="left" valign="top">Cost of operations</td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">(2.2</td>
<td nowrap="nowrap" valign="top">)</td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">2.4</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td align="left" valign="top">
<div style="margin-left:15px; text-indent:-15px">Other
income net
</div></td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">.2</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">.5</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Recycling Commodity Hedges</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our source of revenue from sales of recycling commodities is primarily from sales of old
corrugated cardboard (OCC) and old newspaper (ONP). We have entered into multiple option
agreements related to certain forecasted recycling commodity sales designated as cash flow hedges
to mitigate some of our exposure related to changes in commodity prices. Under SFAS 133, the
options qualified for, and were designated as, effective hedges of changes in the prices of
certain forecasted recycling commodity sales (commodity hedges).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes our outstanding commodity hedges at June 30, 2009 and 2008:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="18%"> </td>
<td width="5%"> </td>
<td width="18%"> </td>
<td width="5%"> </td>
<td width="18%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="5%"> </td>
<td width="4%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Notional Amount</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Contract <br />Price</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">(in Short Tons</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> Per Short</td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><font style="border-bottom: 1px solid #000000; width: 10%">Inception
Date</font></td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Commencement Date</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Termination Date</td>
<td> </td>
<td nowrap="nowrap" align="center" style="border-bottom: 1px solid #000000">Transaction Hedged</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">per Month)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"> Ton</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">May 16, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">OCC
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="left" valign="top">$</td>
<td align="right" valign="top">105.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">May 16, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">ONP
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">102.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">May 16, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">ONP
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">106.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">May 16, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">OCC
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">103.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">April 28, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">OCC
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">106.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">April 28, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">ONP
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">106.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">April 28, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">OCC
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">110.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="bottom">
<td valign="top">
<div style="margin-left:0px; text-indent:-0px">April 28, 2008
</div></td>
<td> </td>
<td align="center" valign="top">January 1, 2009
</td>
<td> </td>
<td align="center" valign="top">December 31, 2010
</td>
<td> </td>
<td align="center" valign="top">ONP
</td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">1,000</td>
<td nowrap="nowrap" valign="top"> </td>
<td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top">103.00</td>
<td nowrap="nowrap" valign="top"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">If the price per short ton of the hedging instrument(average price) as reported on the
Official Board Market is less than the contract price per short ton, we receive the difference
between the average price and the contract price (multiplied by the notional short tons) from the
counter-party. If the price of the commodity exceeds the contract price per short ton, we pay the
difference to the counter-party.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The fair values of the commodity hedges are obtained from third-party counter-parties and are
determined using standard option
<!-- Keep Ignore Comment, per XBRLMARK -->
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<!-- Keep Ignore Comment, per XBRLMARK -->
valuation models with assumptions about commodity prices being based on those observed in
underlying markets (Level 2 in the fair value hierarchy). The aggregated fair value of the
outstanding commodity hedges at June 30, 2009 and December 31, 2008 is an asset of $5.1 million
and $8.8 million, respectively, and are recorded in other current assets in our consolidated
balance sheets.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with SFAS 133, the effective portion of the change in fair value are recorded in
stockholders’ equity as a component of accumulated other comprehensive income. The ineffective
portions of the change in fair value is recorded in other income, net in our consolidated
statements of income. Realized gains or losses related to these commodity hedges are included in
revenue in our consolidated statements of income.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the impact of our commodity hedges on our results of operations and
comprehensive income for the three and six months ended June 30, 2009 and 2008:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="16%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount of Gain or</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Loss)</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Location of Gain</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Recognized in</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Loss) Recognized</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Income on</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">in Income on</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Derivative</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"> Amount of Gain </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Derivative</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">(Ineffective</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"> Derivatives in </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">or (Loss) </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">(Ineffective Portion</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Portion and</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">SFAS No. 133 </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Recognized in </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">and Amount</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount Excluded</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Cash Flow</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">OCI on</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Statement of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Amount of</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Excluded from</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">from</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left">Hedging </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Derivatives </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Income</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Realized Gain or</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Effectiveness</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Effectiveness</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">Relationships</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">(Effective Portion)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Classification</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">(Loss)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Testing)</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Testing)</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Six months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Six months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Six months</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Recycling commodity <br />
hedges
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(2.4)</td>
<td nowrap="nowrap"></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(.8)</td>
<td nowrap="nowrap"></td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="center">Revenue</td>
<td> </td>
<td align="left">$</td>
<td align="center">3.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="center">—</td>
<td> </td>
<td> </td>
<td colspan="3" align="center" nowrap="nowrap">Other income, net</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(.1)</td>
<td nowrap="nowrap"></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(.1)</td>
<td nowrap="nowrap"></td>
</tr>
<tr valign="bottom">
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three months</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three months</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">ended June 30,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Recycling commodity <br />
hedges
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(1.1)</td>
<td nowrap="nowrap"></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(.8)</td>
<td nowrap="nowrap"></td>
<td> </td>
<td colspan="3" nowrap="nowrap" align="center">Revenue</td>
<td> </td>
<td align="left">$</td>
<td align="center">1.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="center">—</td>
<td> </td>
<td> </td>
<td colspan="3" align="center" nowrap="nowrap">Other income, net</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(.1)</td>
<td nowrap="nowrap"></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="center">(.1)</td>
<td nowrap="nowrap"></td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fair Value Measurements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 157 provides a framework for measuring fair value and establishes a fair value hierarchy that
prioritizes the inputs used to measure fair value, giving the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the
lowest priority to unobservable inputs (Level 3 inputs).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We use valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs. In measuring the fair value of our assets and liabilities, we use market data
or assumptions that we believe market participants would use in pricing an asset or liability,
including assumptions about risk when appropriate.
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<!-- Folio -->
<!-- /Folio -->
</div>
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of June 30, 2009, our assets and liabilities that are measured at fair value on a recurring
basis include the following:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="46%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000">Fair Value Measurements Using</td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Quoted</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Significant</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Prices in</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Other</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Significant</td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Active</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Observable</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Unobservable</td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Markets</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Inputs</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Inputs</td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(Level 1)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(Level 2)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(Level 3)</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Assets:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Restricted cash and marketable securities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">259.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">259.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Commodity hedges — other current assets
</div></td>
<td> </td>
<td> </td>
<td align="right">5.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Interest rate swaps — other assets
</div></td>
<td> </td>
<td> </td>
<td align="right">11.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Total assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">276.2</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">259.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16.9</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Liabilities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Fuel hedges — other accrued liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
</div>
</body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<html>
<head></head>
<body>
<!-- Begin Block Tagged Note 11 - us-gaap:SegmentReportingDisclosureTextBlock-->
<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. SEGMENT INFORMATION</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our operations are managed and evaluated through four regions: Eastern, Midwest, Southern and
Western. These four regions are presented below as our reportable segments. These reportable
segments provide integrated waste management services consisting of collection, transfer and
disposal of domestic non-hazardous solid waste.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We completed the reorganization of our operating segments as a result of our acquisition of Allied
in the first quarter of 2009, and are providing internal and external reporting in accordance with
our reorganized structure.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Summarized financial information concerning our reportable segments for the six months ended June
30, 2009 and 2008 is shown in the following tables:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="23%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Depreciation,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Amortization,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Operating</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Intercompany</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Net</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Depletion and</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Income</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Capital</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 7pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Revenue</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Revenue<sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Revenue</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Accretion</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">(Loss)</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Expenditures</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">Total Assets</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 2pt">
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>2009:</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Eastern
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,254.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">190.9</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,063.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">109.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">228.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">78.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,492.9</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Midwest
</div></td>
<td> </td>
<td> </td>
<td align="right">1,088.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">208.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">879.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">113.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">187.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">72.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,467.4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Southern
</div></td>
<td> </td>
<td> </td>
<td align="right">1,212.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">167.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,045.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">123.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">283.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">73.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,883.3</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Western
</div></td>
<td> </td>
<td> </td>
<td align="right">1,333.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">242.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,090.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">114.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">338.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">92.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,451.1</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Corporate entities<sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">64.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">46.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">24.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(164.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">37.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,151.7</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">4,953.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">826.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,126.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">485.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">873.6</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">355.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19,446.4</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>2008</b> <sup style="font-size: 85%; vertical-align: text-top">(3)</sup>:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Eastern
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">503.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">65.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">438.0</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">38.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">62.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">34.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,172.0</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Midwest
</div></td>
<td> </td>
<td> </td>
<td align="right">422.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">87.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">335.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">42.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">59.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">30.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,117.4</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Southern
</div></td>
<td> </td>
<td> </td>
<td align="right">473.3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">53.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">420.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">79.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">993.8</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Western
</div></td>
<td> </td>
<td> </td>
<td align="right">512.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">99.5</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">412.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">35.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">62.2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26.8</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">927.6</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Corporate entities<sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(36.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">40.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">336.7</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,912.1</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">305.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,606.7</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">158.5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">227.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">165.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,547.5</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>Intercompany operating revenue reflects transactions within
and between segments that are generally made on a basis
intended to reflect the market value of such services.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td>
<td> </td>
<td>Corporate functions include legal, tax, treasury,
information technology, risk management, human resources,
corporate accounts and other typical administrative
functions. Capital expenditures for Corporate Entities
primarily include vehicle inventory acquired but not yet
assigned to operating locations and facilities. National
accounts revenue included in the corporate entities
represents the portion of revenue generated from nationwide
contracts in markets outside our operating areas, and, as
such, the associated waste handling services are
subcontracted to local operators. Consequently,
substantially all of this revenue is offset with related
subcontract costs, which are recorded in cost of
operations.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(3)</sup></td>
<td> </td>
<td>Amounts by region for 2008 have been reclassified to
conform to the current year’s presentation. The changes
are due to the realignment of our regions in 2009.</td>
</tr>
</table>
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<b>
</b>
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<div style="margin-left: 0%">
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>12. COMMITMENTS AND CONTINGENCIES</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Litigation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are involved in routine judicial and administrative proceedings that arise in the ordinary
course of business and that relate to, among other things, personal injury or property damage
claims, employment matters and commercial and contractual disputes. We are subject to federal,
state and local environmental laws and regulations. Due to the nature of our business, we are
also often routinely a party to judicial or administrative proceedings involving governmental
authorities and other interested parties related to environmental regulations or liabilities.
From time to time, we may also be subject to actions brought by citizens’ groups, adjacent
landowners or others in connection with the permitting and licensing of our landfills or transfer
stations, or alleging personal injury, environmental damage, or violations of the permits and
licenses pursuant to which we operate.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a discussion of certain proceedings against us. Although the ultimate outcome of
any legal matter cannot be predicted with certainty, except as otherwise described below or in
Note 7, <i>Income Taxes</i>, we do not believe that the outcome of our pending legal and administrative
proceedings will have a material adverse impact on our consolidated financial position, results of
operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Countywide Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On March 26, 2007, the Ohio Environmental Protection Agency (OEPA) issued Final Findings and
Orders (F&Os) to Republic Services of Ohio II, LLC (Republic-Ohio), an Ohio limited liability
company and our wholly owned subsidiary. The F&Os relate to environmental conditions attributed
to a chemical reaction resulting from the disposal of certain aluminum production waste at the
Countywide Recycling and Disposal facility (Countywide) in East Sparta, Ohio. The F&Os, and
certain other remedial actions Republic-Ohio agreed with the OEPA to undertake to address the
environmental conditions, include, without limitation, the following actions: (a) prohibiting
leachate recirculation, (b) refraining from the disposal of solid waste in certain portions of the
site, (c) updating engineering plans and specifications and providing further information
regarding the integrity of various engineered components at the site, (d) performing additional
data collection, (e) taking additional measures to address emissions, (f) expanding the gas
collection and control system, (g) installing an isolation break, (h) removing liquids from gas
extraction wells, and (i) submitting a plan to the OEPA to suppress the chemical reaction and,
following approval by the OEPA, implementing such plan. Republic-Ohio has performed certain
interim remedial actions required by the OEPA, but the OEPA has not approved Republic-Ohio’s plan
to suppress the chemical reaction.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Republic-Ohio received additional orders from the OEPA requiring certain actions to be taken by
Republic-Ohio, including additional air quality monitoring and the installation and continued
maintenance of gas well dewatering systems. Republic-Ohio has also entered into an Agreed Order
on Consent (AOC) with the U.S. EPA requiring the reimbursement of costs incurred by the U.S. EPA
and requiring Republic-Ohio to (a) design and install a temperature and gas monitoring system, (b)
design and install a composite cap or cover, and (c) develop and implement an air monitoring
program. The AOC became effective on April 17, 2008 and Republic-Ohio has complied with the terms
of the AOC. Republic-Ohio also has completed construction of an isolation break under the authority and supervision of the U.S. EPA.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We had learned that the Commissioner of the Stark County Health Department (Commission)
recommended that the Stark County Board of Health (Board of Health) suspend Countywide’s 2007
annual operating license. We had also learned that the Commissioner intended to recommend that
the Board of Health deny Countywide’s license application for 2008. Republic-Ohio obtained a
preliminary injunction on November 28, 2007 prohibiting the Board of Health from suspending its
2007 operating
license. Republic-Ohio also obtained a preliminary injunction on February 15, 2008 prohibiting
the Board of Health from denying its 2008 operating license application. The litigation with the
Board of Health is pending in the Stark County Court of Common Pleas. We and the Board of Health
have been participating in discussions regarding facility licensing that have resulted in an
agreement whereby Republic-Ohio will secure its operating license and pay $10.3 million to resolve
the issues at Countywide. The specific terms of the agreement are being finalized. Despite the
settlement, Countywide’s 2009 operating license has been challenged by Tuscarawas County.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We believe that we have performed or are diligently performing all actions required under the F&Os
and the AOC and that Countywide does not pose a threat to the environment. Additionally, we
believe that we satisfy the rules and regulations that govern the operating license at Countywide.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are vigorously pursuing financial contributions from third parties for our costs to comply with
the F&Os and the other required remedial actions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In a suit filed on October 8, 2008 in the Tuscarawas County Ohio Court of Common Pleas,
approximately 700 plaintiffs have named Republic Services, Inc. and Republic-Ohio as defendants.
The claims alleged are negligence and nuisance and arise from the
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operation of Countywide. Republic-Ohio has owned and operated Countywide since February 1, 1999.
Waste Management, Inc. and Waste Management Ohio, Inc., previous owners and operators of
Countywide, have been named as defendants as well. Plaintiffs are individuals and businesses
located in the geographic area around Countywide. They claim that due to the acceptance of a
specific waste stream and operational issues and conditions, the landfill has generated odors and
other unsafe emissions which have allegedly impaired the use and value of their property. There
are also allegations that the emissions from the landfill may have adverse health effects. The
relief requested on behalf of each plaintiff is: (1) an award of compensatory damages according to
proof in an amount in excess of $25,000 for each of the three counts of the amended complaint; (2)
an award of punitive damages in the amount of two times compensatory damages, pursuant to
applicable statute, or in such amount as may be awarded at trial for each of the three counts of
the amended complaint, (3) costs for medical screening and monitoring of each plaintiff; (4)
interest on the damages according to law; (5) costs and disbursements of the lawsuit; (6)
reasonable fees for attorneys and expert witnesses; and (7) any other and further relief as the
court deems just, proper and equitable. We intend to vigorously defend against the plaintiffs’
allegations. We cannot at this time predict the ultimate outcome of this matter or the reasonably
possible loss, if any.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Sunrise Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On August 1, 2008, Republic Services of Southern Nevada (RSSN), our wholly owned subsidiary,
signed a Consent Decree with the EPA, the Bureau of Land Management and Clark County, Nevada
related to the Sunrise Landfill. Under the Consent Decree, RSSN has agreed to perform certain
remedial actions at the Sunrise Landfill for which RSSN and Clark County were otherwise jointly
and severally liable. We also paid $1.0 million in sanctions related to the Consent Decree. RSSN
is currently working with the Clark County Staff and Board of Commissioners to develop a mechanism
to fund the costs to comply with the Consent Decree. However, we have not recorded any potential
recoveries.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">It is reasonably possible that we will need to adjust the environmental remediation liabilities
recorded to reflect the effects of new or additional information, to the extent that such
information impacts the costs, timing or duration of the required actions. Future changes in our
estimates of the costs, timing or duration of the required actions could have a material adverse
effect on our consolidated financial position, results of operations or cash flows. At this time,
we cannot estimate the reasonably possible range of loss we may incur in connection with any
future changes in our estimates of the costs, timing or duration of the required actions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Luri Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On August 17, 2007, a lawsuit was filed against us and certain of our subsidiaries relating to an
alleged retaliation claim by a former employee, Ronald Luri v. Republic Services, Inc., Republic
Services of Ohio Hauling LLC, Republic Services of Ohio I LLC, Jim Bowen and Ron Krall in the
Cuyahoga County Common Pleas Court in Ohio. On July 3, 2008, a jury verdict was awarded against us
in the amount of $46.6 million, including $43.1 million in punitive damages. On September 24,
2008, the Court awarded pre-judgment interest of $.3 million and attorney fees and litigation
costs of $1.1 million. Post-judgment interest is presently accruing at a rate of 8% for 2008 and
5% for 2009. Management anticipates that post-judgment interest could accrue through the middle
of 2010 for a total of $5.4 million. Post-judgment motions filed on our behalf and certain of our
subsidiaries were denied, and on October 1, 2008, we filed a notice of appeal, and the appeal is
now fully briefed. It is reasonably possible that a final, non-appealable judgment of liability
for compensatory and punitive damages may be assessed against us related to this matter. Although
it is not possible to predict the ultimate outcome, management believes that the amount of any
final, non-appealable judgment will not be material.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Forward Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The District Attorney for San Joaquin County filed a civil action against Forward, Inc. and Allied
Waste Industries, Inc. on February 14, 2008. Forward and Allied accepted service of the complaint
in October 2008, and in November 2008, each filed answers denying all material allegations of the
complaint. The complaint seeks civil penalties of $2,500 for each alleged violation, but no less
than $10,000,000, and an injunction against Forward and Allied for alleged permit and regulatory
violations at the Forward Landfill. The District Attorney contends that the alleged violations
constitute unfair business practices under the California Business and Professions Code section
17200, et seq., by virtue of violations of Public Resources Code Division 30, Part 4, Chapter 3,
Article 1, sections 44004 and 44014(b); California Code of Regulations Title 27, Chapter 3,
Subchapter 4, Article 6, sections 20690(11) and 20919.5; and Health and Safety Code sections
25200, 25100, et seq., and 25500, et seq. Although the complaint is worded very broadly and does
not identify specific permit or regulatory violations, the District Attorney has articulated three
primary concerns in past communications, alleging that the landfill: (1) used green waste
containing food as alternative daily cover, (2) exceeded its daily solid waste tonnage receipt
limitations under its solid waste facility permit, and (3) received hazardous waste in violation
of its permit (i.e., auto shredder waste). Additionally, it is alleged that the landfill allowed
a concentration of methane gas in excess of five percent. Discovery is currently underway. We are
vigorously defending against the allegations.
</div>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Sycamore Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 10, 2008, the State of West Virginia Department of Environmental Protection filed suit
against Allied’s subsidiary Allied Waste Sycamore Landfill, LLC (Sycamore Landfill) in Putnam
County Circuit Court alleging thirty-eight violations of the Solid Waste Management Act, W. Va.
Code sec. 22-15-1 et seq, the Water Pollution Control Act, W. Va. Code Sec. 22-11-1 et seq, and
the Groundwater Protection Act, W. Va. Code sec. 22-12-1 et seq (collectively, the Applicable
Statues) between January 2007 and August 2007. The State of West Virginia sought injunctive
relief requiring the Sycamore Landfill to comply with the Applicable Statutes as well to eliminate
all common law public nuisances, and sought monetary sanctions of up to $25,000 per day for each
violation. Pursuant to a Consent Judgment entered by the court on March 18, 2009, the parties
agreed that we had complied with all Applicable Statutes and eliminated all common law public
nuisances. We also agreed to a remedy that is estimated to cost $154,625, comprised of
approximately $93,000 in six quarterly payments and a supplemental environmental project estimated
to cost approximately $61,000. We have commenced the payments and the project is underway.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Carter Valley Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On April 12, 2006, federal agents executed a search warrant at BFI Waste Systems of Tennessee;
LLC’s Carter Valley Landfill (the Landfill) and seized information regarding the Landfill’s
receipt of special waste from one of its commercial customers. On the same date, the U.S.
Attorney’s Office for the Eastern District of Tennessee served a grand jury subpoena on Allied
seeking related documents (the 2006 Subpoena). Shortly thereafter, the government agreed to an
indefinite extension of the time to respond to the subpoena, and there were no further
communications between Allied and the federal government until 2008. In 2007, while the federal
investigation was pending, the Tennessee Department of Environment and Conservation investigated
the Landfill’s receipt of the same special waste, determined that there was not a sufficient basis
to conclude that the Landfill had disposed of hazardous waste, and took no enforcement action. On
April 2, 2008, the US Attorney’s Office issued a new grand jury subpoena seeking the same
categories of documents requested in the 2006 Subpoena. We are currently producing documents in
response to the 2008 subpoena. On January 21, 2009, the DOJ sent a letter to us stating that it
believed, based on its initial investigation, that certain unnamed employees at the Landfill had
violated the RCRA and that we were liable for these criminal violations under the theory of
<i>respondeat superior</i>. The DOJ has stated that it has not made a decision whether to seek to
prosecute the Company. If convicted, pursuant to applicable law, we could be subject to a wide
range of criminal or civil penalties. Criminal penalties are limited to the greater of a maximum
of $50,000 for each day of violation, a calculation of twice the gross pecuniary gain from the
offense or a maximum of $500,000. We could also be subject to civil penalties of $32,500 per day
per violation. We are engaged in on-going discussions with the DOJ and are in the process of
providing additional support to the DOJ for our position that we should not be held criminally
liable for the acts of our employees at the Carter Valley Landfill.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Carbon Limestone Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On May 4, 2009, the Ohio Environmental Protection Agency (OEPA) issued Proposed Findings and
Orders (F&Os) to Carbon Limestone Landfill, LLC, our wholly owned subsidiary. The proposed F&Os
allege violations regarding the alleged acceptance of hazardous waste from two customers and
allege issues regarding the site’s leachate management collection system and groundwater
monitoring program. The proposed F&Os would require the site to undertake various corrective
actions and pay a civil penalty of $155,311. We intend to vigorously defend the claims.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Litigation Related to Fuel and Environmental Fees</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 8, 2009, CLN Properties, Inc. and Maevers Management Company, Inc., filed a complaint
against the Company and one of its subsidiaries in the United States District Court in Arizona, in
which plaintiffs complain about fuel recovery fees and environmental recovery fees charged by the
Company or one of its subsidiaries. On July 23, 2009, Klingler’s European Bake Shop & Deli, Inc.,
filed a complaint against the Company and one of its subsidiaries in the Circuit Court of
Jefferson County, Alabama, in which plaintiff complains about fuel/environmental recovery fees and
administrative fees charged by the Company or one of its subsidiaries. The CLN Properties
complaint purports to be filed on behalf of a nationwide class of similarly-situated plaintiffs,
while the Klingler’s complaint purports to be filed on behalf of a class of similarly situated
plaintiffs in Alabama. Each complaint asserts various legal and equitable theories of recovery
and alleges in essence that the fees were not properly disclosed, were unfair, and were contrary
to contract. We intend to vigorously defend the claims in both lawsuits.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Imperial Landfill Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On May 18, 2009, the Pennsylvania Department of Environmental Protection (PADEP) and the Allegheny
County Health Department (ACHD) issued to the Imperial Landfill a proposed consent order and
agreement for a series of alleged violations related
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to landfill gas, leachate control, cover
management, and resulting nuisance odor complaints. The agencies proposed separate penalties of
$658,000 (PADEP) and $370,330 (ACHD) for a combined penalty of $1,028,330. We are engaged in
on-going discussions with the agencies to reach a negotiated settlement, and have been
aggressively working to correct any issues alleged in
the order.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Colorado Landfills Matter</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Colorado Department of Public Health and Environment (CDPHE) submitted to the Company a
proposed combined Compliance Order on Consent (Proposed Consent Order) in June 2009 in connection
with notices of violation it had previously issued to Tower Road Landfill, Foothills Landfill, and
Denver Regional North Landfill, located in Commerce City, Golden, and Denver, Colorado,
respectively. The Proposed Consent Order includes the CDPHE’s allegations that the facilities
were in violation of certain provisions of the Clean Air Act and the landfills’ operating permits.
While the Proposed Consent Order as proposed by the CDPHE includes a total penalty of $186,550,
we are actively participating in settlement discussions with CDPHE regarding the terms of any
final Consent Order, including the amount of any penalty included therein.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Litigation Related to the Merger with Allied</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On July 25, 2008, a putative class action was filed, and on August 15, 2008 was amended, in the
Court of Chancery of the State of Delaware by the New Jersey Carpenters Pension and the New Jersey
Carpenters Annuity Funds against us and the members of our Board of Directors, individually.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On August 21, 2008, a second putative class action was filed in the Court of Chancery of the State
of Delaware by David Shade against us, the members of Republic’s Board of Directors, individually,
and Allied. On September 22, 2008, the New Jersey Carpenters and the Shade cases were consolidated
by the Court of Chancery, and on September 24, 2008, the plaintiffs in the Delaware case, now known
as In Re: Republic Services Inc. Shareholders Litigation, filed a verified consolidated amended
class action complaint in the Court of Chancery of the State of Delaware.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On September 5, 2008, a putative class action was filed in the Circuit Court in and for Broward
County, Florida, by the Teamsters Local 456 Annuity Fund against us and the members of Republic’s
Board of Directors, individually.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Both the Delaware consolidated action and the Florida action were brought on behalf of a purported
class of our stockholders and primarily sought, among other things, to enjoin the proposed
transaction between Republic and Allied, as well as damages and attorneys’ fees. The actions also
sought to compel us to accept the unsolicited proposals made by Waste Management, Inc. (Waste), or
at least compel our Board of Directors to further consider and evaluate the Waste proposals, which
proposals were subsequently withdrawn.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On September 24, 2008, the defendants in the Florida litigation filed a motion to stay or to
dismiss the lawsuit in light of the consolidated Delaware class action.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On October 17, 2008, plaintiffs in the consolidated Delaware action filed a motion for a
preliminary injunction seeking to require the defendants to make certain additional disclosures
prior to the shareholder vote on the merger.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On October 29, 2008, the defendants entered into a memorandum of understanding with plaintiffs
regarding the settlement of the Delaware and Florida actions. As part of this memorandum of
understanding, we agreed to make certain additional disclosures to our stockholders and such
disclosures were made by us in our Current Report on Form 8-K filed with the SEC on October 30,
2008. As of January 16, 2009, following completion of certain confirmatory discovery by counsel to
plaintiffs, the parties executed a stipulation of settlement. The stipulation of settlement
received court approval at a fairness hearing on May 19, 2009. The stipulation of settlement
resolved all of the claims that were or could have been brought in the actions being settled,
including all claims relating to the merger transaction, the merger agreement, our rejections of
the unsolicited Waste proposals, and any disclosures made in connection therewith. The time for
appeal of the settlement has now expired with no party filing a notice of appeal. After the
fairness hearing in May we paid an amount for plaintiffs’ attorney’s fees in accordance with the
stipulation of settlement.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On December 3, 2008, the DOJ and seven state attorneys general filed a complaint, Hold Separate
Stipulation and Order, and competitive impact statement, together with a proposed final judgment,
in the United States District Court for the District of Columbia, in connection with approval under
the HSR Act of our merger with Allied. The court entered the Hold Separate Stipulation and Order
on December 4, 2008, which terminated the waiting period under the HSR Act and allowed the parties
to close the transaction subject to the conditions described in the Hold Separate Stipulation and
Order. These conditions include the divestiture of certain assets. However, the final judgment
can only be approved by the court after the DOJ publishes a notice in the Federal Register
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and
considers comments it receives. During this period, if the DOJ believes that the final judgment is
no longer in the public interest, the DOJ may withdraw its support of the final judgment and seek
to prevent the final judgment from becoming final in its present form. Likewise, the court may, in
its discretion, modify the divestitures or other relief sought by the DOJ if the court believes
that such modification is in the public interest. On July 16, 2009, the DOJ and the seven state
attorneys general filed a motion seeking entry of the proposed final judgment. The precise timing
for the confirmation of the final judgment is not known. Management believes that the court will
enter the final judgment and that modifications to the final judgment, if any, will not be
material.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Lease Commitments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We lease real property, equipment and software under various operating leases with terms from one
month to twenty years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Unconditional Purchase Commitments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have various unconditional purchase commitments, consisting primarily of long-term disposal
agreements that require us to dispose of a minimum number of tons at certain third-party
facilities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Restricted Cash and Other Financial Guarantees</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are required to provide financial assurance to governmental agencies and a variety of other
entities under applicable environmental regulations relating to our landfill operations for
capping, closure and post-closure costs, and our performance under certain collection, landfill and
transfer station contracts. We satisfy the financial assurance requirements by providing surety
bonds, letters of credit, insurance policies or trust deposits. The amount of the financial
assurance requirements for capping, closure and post-closure costs is determined by applicable
state environmental regulations, which vary by state. The financial assurance requirements for
capping, closure and post-closure costs can either be for costs associated with a portion of the
landfill or the entire landfill. .Generally, states will require a third-party engineering
specialist to determine the estimated capping, closure and post-closure costs that are used to
determine the required amount of financial assurance for a landfill. The amount of financial
assurance required can, and generally will, differ from the obligation determined and recorded
under GAAP. The amount of the financial assurance requirements related to contract performance
varies by contract. Additionally, we are required to provide financial assurance for our
self-insurance program and collateral for certain performance obligations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We had the following financial instruments and collateral in place to secure our financial
assurances:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<tr style="font-size: 2pt">
<td> </td>
</tr>
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<td>
<div style="margin-left:15px; text-indent:-15px">Letters of credit<sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,671.4</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,753.1</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Surety bonds<sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">2,252.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,119.2</td>
<td> </td>
</tr>
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</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>The letters of credit include $1,631.8 million
and $1,686.5 million as of June 30, 2009 and
December 31, 2008, respectively, of utilized
availability under our Credit Facilities.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td>
<td> </td>
<td>Surety bonds expire on various dates through 2038.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">These financial instruments are issued in the normal course of business and are not debt. As
we currently have no liability for this financial assurance, it is not reflected in our
consolidated balance sheets. However, we have recorded capping, closure and post-closure
obligations and self-insurance reserves as they are incurred. The underlying financial assurance
obligations, in excess of those already reflected in our consolidated balance sheets, would be
recorded if it is probable that we would be unable to fulfill our related obligations. We do not
expect this to occur.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our restricted cash deposits and marketable securities include, among other things, restricted
cash held for capital expenditures under certain debt facilities, and restricted cash and
marketable securities pledged to regulatory agencies and governmental entities as financial
guarantees of our performance related to our final capping, closure and post-closure obligations
at our landfills, as follows:
</div>
<div align="center">
<table style="font-size: 8pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
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<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">June 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">December 31,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2008</td>
<td> </td>
</tr>
<tr style="font-size: 2pt">
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Financing proceeds
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">117.8</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">133.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capping, closure and post-closure obligations
</div></td>
<td> </td>
<td> </td>
<td align="right">63.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">63.2</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other
</div></td>
<td> </td>
<td> </td>
<td align="right">77.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">85.2</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total restricted cash and marketable securities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">259.3</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">281.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
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<b>
</b>
</div>
<!-- Keep Ignore Comment, per XBRLMARK -->
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Off-Balance Sheet Arrangements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have no off-balance sheet debt or similar obligations, other than operating leases and the
financial assurances discussed above, which are not classified as debt. We have no transactions or
obligations with related parties that are not disclosed, consolidated into or reflected in our
reported financial position or results of operations. We have not guaranteed any third-party debt.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Guarantees</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We enter into contracts in the normal course of business that include indemnification clauses.
Indemnifications relating to known liabilities are recorded in the consolidated financial
statements based on our best estimate of required future payments. Certain of these
indemnifications relate to contingent events or occurrences, such as the imposition of additional
taxes due to a change in the tax law or adverse interpretation of the tax law, and
indemnifications made in divestiture agreements where we indemnify the buyer for liabilities that
relate to our activities prior to the divestiture and that may become known in the future. We do
not believe that these contingent obligations will have a material effect on our consolidated
financial position, results of operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We have entered into agreements with property owners to guarantee the value of certain property
that is adjacent to certain of our landfills. These agreements have varying terms. These
agreements are accounted for in accordance with FIN 45, <i>Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. </i>We do not
believe that these contingent obligations will have a material effect on our consolidated
financial position, results of operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other Matters</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our business activities are conducted in the context of a developing and changing statutory and
regulatory framework. Governmental regulation of the waste management industry requires us to
obtain and retain numerous governmental permits to conduct various aspects of our operations.
These permits are subject to revocation, modification or denial. The costs and other capital
expenditures which may be required to obtain or retain the applicable permits or comply with
applicable regulations could be significant. Any revocation, modification or denial of permits
could have a material adverse effect on us.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We are subject to various federal, state and local tax rules and regulations. Our compliance with
such rules and regulations is periodically audited by tax authorities. These authorities may
challenge the positions taken in our tax filings. As such, to provide for certain potential tax
exposures, we maintain liabilities for uncertain tax positions for our estimate of the final
outcome of the examinations. For further information related to our liabilities for uncertain tax
positions, see Note 7, <i>Income Taxes</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">We believe that the liabilities we have for uncertain tax positions recorded are adequate.
However, a significant assessment against us in excess of the liabilities recorded could have a
material adverse effect on our consolidated financial position, results of operations or cash
flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Self-Insurance Reserves</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our insurance programs for workers’ compensation, general liability, vehicle liability and
employee-related health care benefits are effectively self-insured. We carry general liability,
vehicle liability, employment practices liability, pollution liability, directors and officers
liability, workers’ compensation and employer’s liability coverage, as well as umbrella liability
policies to provide excess coverage over the underlying limits contained in these primary
policies. We also carry property insurance. Claims in excess of self-insurance levels are fully
insured subject to policy limits.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">In general, our self-insurance reserves are recorded on an undiscounted basis. However, our
estimate of the self-insurance liabilities we acquired in the acquisition of Allied have been
recorded at fair value, and, therefore, have been discounted to present value using a rate of
9.75%. Discounted reserves are accreted to interest expense through the period that they are paid.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Our liabilities for unpaid and incurred but not reported claims at June 30, 2009 (which includes
claims for workers’ compensation, general liability, vehicle liability and employee health care
benefits) were $426.9 million under our current risk management program and are included in other
current liabilities and other liabilities in our consolidated balance sheets. While the ultimate
amount of claims incurred is dependent on future developments, in our opinion, recorded reserves
are adequate to cover the future payment of claims. However, it is possible that recorded
reserves may not be adequate to cover the future payment of claims. Adjustments, if any, to
estimates recorded resulting from ultimate claim payments will be reflected in our consolidated
statements of income in the periods in which such adjustments are known.
</div>
</div>
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<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>13. SUBSEQUENT EVENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Management performed an evaluation of our activity through August 6, 2009,
the date these
financial statements were issued.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"> 
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--12-31
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