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Document and Company Information - USD ($) $ in Billions	12 Months Ended
Dec. 31, 2009	Feb. 16, 2010	Jun. 30, 2009
Document and Company Information [Abstract]
Entity Registrant Name	REPUBLIC SERVICES, INC.
Entity Central Index Key	0001060391
Document Type	10-K
Document Period End Date	Dec. 31, 2009
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 9.3
Entity Common Stock, Shares Outstanding		380,983,615

Consolidated Balance Sheets - USD ($) $ in Millions	12 Months Ended
Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$ 48.0	$ 68.7
Accounts receivable, net of allowance for doubtful accounts of $55.2 and $65.7, respectively	865.1	945.5
Prepaid expenses and other current assets	156.5	174.7
Deferred tax assets	195.3	136.8
Total current assets	1,264.9	1,325.7
Restricted cash and marketable securities	240.5	281.9
Property and equipment, net	6,657.7	6,738.2
Goodwill, net	10,667.1	10,521.5
Other intangible assets, net	500.0	564.1
Other assets	210.1	490.0
Total assets	19,540.3	19,921.4
Current liabilities:
Accounts payable	592.8	564.0
Notes payable and current maturities of long-term debt	543.0	504.0
Deferred revenue	331.1	359.9
Accrued landfill and environmental costs, current portion	245.4	233.4
Accrued interest	96.2	107.7
Other accrued liabilities	740.2	796.8
Total current liabilities	2,548.7	2,565.8
Long-term debt, net of current maturities	6,419.6	7,198.5
Accrued landfill and environmental costs, net of current portion	1,383.2	1,197.1
Deferred income taxes and other long-term tax liabilities	1,040.5	1,239.9
Self-insurance reserves, net of current portion	302.0	234.5
Other long-term liabilities	$ 279.2	$ 203.1
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.01 per share; 50.0 shares authorized; none issued	$ 0.0	$ 0.0
Common stock, par value $0.01 per share; 750.0 shares authorized; 395.7 and 393.4 issued including shares held in treasury, respectively	4.0	3.9
Additional paid-in capital	6,316.1	6,260.1
Retained earnings	1,683.1	1,477.2
Treasury stock, at cost (14.9 shares)	(457.7)	(456.7)
Accumulated other comprehensive income (loss), net of tax	19.0	(3.1)
Total Republic Services, Inc. stockholders' equity	7,564.5	7,281.4
Noncontrolling interests	2.6	1.1
Total stockholders' equity	7,567.1	7,282.5
Total liabilities and stockholders' equity	$ 19,540.3	$ 19,921.4

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Cash Provided by Operating Activities:
Net income	$ 496.5	$ 73.9	$ 290.2
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of property and equipment	520.6	222.6	188.9
Landfill depletion and amortization	278.5	119.7	110.1
Amortization of intangible and other assets	70.6	11.8	6.5
Accretion	88.8	23.9	17.1
Non-cash interest expense - debt	92.1	10.1	0.5
Non-cash interest expense - other	58.1	0.5	0.0
Restructuring related charges	34.0	0.0	0.0
Stock-based compensation	15.0	24.0	10.9
Deferred tax (benefit) provision	(24.6)	(30.4)	27.8
Provision for doubtful accounts, net of adjustments	27.3	36.5	3.9
Excess income tax benefit from stock option exercises	(2.5)	2.8	7.9
Asset impairments	7.1	89.8	0.0
Loss on extinguishment of debt	134.1	0.0	0.0
Gain on disposition of assets, net	(147.1)	(1.4)	(13.8)
Other non-cash items	(0.1)	7.3	1.2
Change in assets and liabilities, net of effects from business acquisitions and divestitures:
Accounts receivable	53.1	21.1	(13.6)
Prepaid expenses and other assets	(11.9)	15.8	(17.3)
Accounts payable and accrued liabilities	(121.0)	(198.2)	2.9
Restructuring related expenditures	(66.5)	0.0	0.0
Capping, closure and post-closure expenditures	(100.9)	(27.9)	(14.7)
Remediation expenditures	(56.2)	(43.3)	(29.0)
Other liabilities	51.5	153.6	81.8
Cash Provided by Operating Activities	1,396.5	512.2	661.3
Cash Used in Investing Activities:
Purchases of property and equipment	(826.3)	(386.9)	(292.5)
Proceeds from sales of property and equipment	31.8	8.2	6.1
Cash used in acquisitions, net of cash acquired	(0.1)	(553.8)	(4.4)
Cash proceeds from divestitures, net of cash divested	511.1	3.3	42.1
Change in restricted cash and marketable securities	41.6	(5.3)	(11.6)
Other	(0.6)	(0.2)	0.0
Cash Used in Investing Activities	(242.5)	(934.7)	(260.3)
Cash (Used in) Provided by Financing Activities:
Proceeds from notes payable and long-term debt	1,472.6	1,453.4	313.5
Proceeds from issuance of senior notes, net of discount	1,245.4	0.0	0.0
Payments of notes payable and long-term debt	(3,583.9)	(740.6)	(302.4)
Premiums paid on extinguishment of debt	(47.3)	0.0	0.0
Fees paid to issue and retire senior notes and certain hedging relationships	(14.3)	0.0	0.0
Issuances of common stock	39.6	24.6	31.3
Excess income tax benefit from stock option exercises	2.5	4.5	6.0
Payment for deferred stock units	0.0	(4.0)	0.0
Equity issuance cost	0.0	(1.8)	0.0
Purchases of common stock for treasury	(1.0)	(138.4)	(362.8)
Cash dividends paid	(288.3)	(128.3)	(93.9)
Cash (Used in) Provided by Financing Activities	(1,174.7)	469.4	(408.3)
(Decrease) Increase in Cash and Cash Equivalents	(20.7)	46.9	(7.3)
Cash and Cash Equivalents at Beginning of Period	68.7	21.8	29.1
Cash and Cash Equivalents at End of Period	$ 48.0	$ 68.7	$ 21.8

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2009

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management’s Estimates and Assumptions

In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting, 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. In preparing our financial statements, 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, 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, deferred taxes, uncertain tax positions and self-insurance, and our estimates of the fair values of the assets and liabilities acquired in our acquisition of Allied. Each of these items is discussed in more detail in the following discussion. Our actual results may differ significantly from our estimates.

Cash and Cash Equivalents

We consider liquid investments with an original maturity of three months or less to be cash equivalents.

We may have net book credit balances in our primary disbursement accounts at the end of a reporting period. We classify such credit balances as accounts payable in our consolidated balance sheets as checks presented for payment to these accounts are not payable by our banks under overdraft arrangements, and, as such, do not represent short-term borrowings. As of December 31, 2008, there were no net book credit balances in our primary disbursement accounts. As of December 31, 2009, there were net book credit balances of $89.9 million in our primary disbursement accounts which were reclassified as accounts payable and other accrued liabilities on our consolidated balance sheet.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents, trade accounts receivable and derivative instruments. We place our cash and cash equivalents with high quality financial institutions. Such balances may be in excess of FDIC insured limits. In order to manage the related credit exposure, we continually monitor the credit worthiness of the financial institutions where we have deposits. Concentrations of credit risk with respect to trade accounts receivable are limited due to the wide variety of customers and markets in which we provide services, as well as the dispersion of our operations across many geographic areas. We provide services to commercial, industrial, municipal and residential customers in the United States and Puerto Rico. We perform ongoing credit evaluations of our customers, but do not require collateral to support customer receivables. We establish an allowance for doubtful accounts based on various factors including the credit risk of specific customers, age of receivables outstanding, historical trends, economic conditions and other information. No customer exceeded 5% of our outstanding accounts receivable balance at December 31, 2009 or 2008.

Accounts Receivable, Net of Allowance for Doubtful Accounts

Accounts receivable represent receivables from customers for collection, transfer, recycling, disposal and other services. Our receivables are recorded when billed or when the related revenue is earned, if earlier, and represent claims against third parties that will be settled in cash. The carrying value of our receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. Provisions for doubtful accounts are evaluated on a monthly basis and are recorded based on our historical collection experience, the age of the receivables, specific customer information and economic conditions. We also review outstanding balances on an account-specific basis. In general, reserves are provided for accounts receivable in excess of ninety days old. Past due receivable balances are written-off when our collection efforts have been unsuccessful in collecting amounts due.

The following table reflects the activity in our allowance for doubtful accounts for the years ended December 31, 2009, 2008 and 2007:


	2009			2008			2007

Balance at beginning of year	$	65.7		$	14.7		$	18.8
Additions charged to expense		27.3			36.5			3.9
Accounts written-off		(37.8	)		(12.7	)		(7.8	)
Acquisitions		-			27.2			(0.2	)

Balance at end of year	$	55.2		$	65.7		$	14.7

Subsequent to our acquisition of Allied, we recorded a provision for doubtful accounts of $14.2 million to adjust the allowance acquired from Allied to conform to Republic’s accounting policies. We also recorded $5.4 million to provide for specific bankruptcy exposures in 2008.

In 2007, we recorded a $4.3 million reduction in our allowance for doubtful accounts as a result of refining our estimate of the allowance based on our historical collection experience.

Restricted Cash

As of December 31, 2009, we had $236.6 million of restricted cash, of which $93.1 million was 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 applicable agreements. Restricted cash also includes amounts held in trust as a guarantee of performance.

We obtain funds through the issuance of tax-exempt bonds for the purpose of financing qualifying expenditures at our landfills, transfer stations, and collection and recycling facilities. The funds are deposited directly into trust accounts by the bonding authorities at the time of issuance. As we do not have the ability to use these funds for general operating purposes, they are classified as restricted cash in our consolidated balance sheets.

In the normal course of business, we may be required to provide financial assurance to governmental agencies and a variety of other entities in connection with municipal residential collection contracts, the operation, closure or post-closure of landfills, environmental remediation, environmental permits, and business licenses and permits as a financial guarantee of our performance. At several of our landfills, we satisfy financial assurance requirements by depositing cash into restricted trust funds or escrow accounts.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major additions and improvements to facilities are capitalized, while maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of income.

We revise the estimated useful lives of property and equipment acquired through business acquisitions to conform with our policies regarding property and equipment. Depreciation is provided over the estimated useful lives of the assets involved using the straight-line method. We assume no salvage value for our depreciable property and equipment. The estimated useful lives of our property and equipment are as follows:


		Estimated
		Useful
		Lives

Buildings and improvements		7 - 40 years
Vehicles		5 - 12 years
Landfill equipment		7 - 10 years
Other equipment		3 - 15 years
Furniture and fixtures		5 - 12 years

Landfill development costs are also included in property and equipment. Landfill development costs include direct costs incurred to obtain landfill permits and direct costs incurred to acquire, construct and develop sites as well as final capping, closure and post-closure assets. These costs are amortized or depleted based on consumed airspace. All indirect landfill development costs are expensed as incurred. (For additional information, see Landfill and Environmental Costs.)

Capitalized Interest

We capitalize interest on landfill cell construction and other construction projects if they meet the following criteria:

1. Total construction costs are $50,000 or greater,

2. The construction phase is one month or longer, and

3. The assets have a useful life of one year or longer.

Interest is capitalized on qualified assets while they undergo activities to ready them for their intended use. Capitalization of interest ceases once an asset is placed into service or if construction activity is suspended for more than a brief period of time. Our interest capitalization rate is based on our weighted average cost of indebtedness. Interest capitalized was $7.8 million, $2.6 million and $3.0 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, restricted cash and marketable securities, accounts receivable, accounts payable, accrued liabilities, long-term debt and the assets in our defined benefit plan. The fair value hierarchy under U.S. GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:


	•	Level one – Quoted market prices in active markets for identical assets or liabilities;
	•	Level two – Inputs other than level one inputs that are either directly or indirectly observable; and
	•	Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

We have determined the estimated fair values of our financial instruments using available market information and commonly accepted valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, our estimates are not necessarily indicative of the amounts that we, or holders of the instruments, could realize in a current market exchange. The use of different assumptions or valuation methodologies could have a material effect on the estimated fair value amounts. The fair value estimates are based on information available as of December 31, 2009 and 2008. These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented.

The carrying value of cash and cash equivalents, restricted cash and marketable securities, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values due to the short-term maturities of these instruments. See Note 9, Debt, for the fair value disclosures related to our long-term debt.

Derivative Financial Instruments

We use derivative financial instruments to manage our risk associated with changing interest rates and changing prices for commodities we frequently purchase or sell by creating offsetting market exposures. We use interest rate swap agreements to manage risk associated with fluctuations in interest rates. We have entered into multiple agreements designated as cash flow hedges to mitigate some of our exposure to changes in diesel fuel prices and prices of certain commodities.

All derivatives are measured at fair value and recognized in the balance sheet as assets or liabilities, as appropriate. For derivatives designated as cash flow hedges, changes in fair value of the effective portions of derivative instruments are reported in stockholders’ equity as components of other comprehensive income until the forecasted transaction occurs or is not probable of occurring. When the forecasted transaction occurs or is not probable of occurring, the realized net gain or loss is then recognized in the consolidated statements of income. Changes in fair value of the ineffective portions of derivative instruments are recognized currently in earnings.

The fair values of our interest rate swap agreements and the fair values of our diesel fuel and other commodity hedges are obtained from third-party counter-parties and are determined using standard valuation models with assumptions about prices and other relevant information based on those observed in the underlying markets (Level 2 in the fair value hierarchy). The estimated fair values of derivatives used to hedge risks fluctuate over time and should be viewed in relation to the underlying hedged transactions.

Goodwill and Other Intangible Assets

We annually test goodwill at December 31 for impairment using the two-step process. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. The first step of the goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill.

We have defined our reporting units to be consistent with our operating segments: Eastern, Midwest, Southern, and Western. In determining fair value, we primarily utilize discounted future cash flows and operating results based on a comparative multiple of earnings or revenues.

Significant estimates used in our fair value calculation utilizing discounted future cash flows include, but are not limited to: (i) estimates of future revenue and expense growth by reporting unit, which we estimate to range from 3% to 5%; (ii) future estimated effective tax rates, which we estimate to be 40%; (iii) future estimated capital expenditures as well as future required investments in working capital; (iv) estimated discount rates, which we estimate to range between 8% and 10%; and (v) the future terminal value of the reporting unit, which is based on its ability to exist into perpetuity. Significant estimates used in the fair value calculation utilizing market value multiples include but are not limited to: (i) estimated future growth potential of the reporting unit; (ii) estimated multiples of revenue or earnings a willing buyer is likely to pay; and (iii) estimated control premium a willing buyer is likely to pay.

In addition, we evaluate a reporting unit for impairment if events or circumstances change between annual tests, indicating a possible impairment. Examples of such events or circumstances include: (i) a significant adverse change in legal factors or in the business climate; (ii) an adverse action or assessment by a regulator; (iii) a more likely than not expectation that a reporting unit or a significant portion thereof will be sold; (iv) continued or sustained losses at a reporting unit; (v) a significant decline in our market capitalization as compared to our book value or (vi) the testing for recoverability of a significant asset group within the reporting unit.

We assign assets and liabilities from our corporate reporting segment to our four operating segments to the extent that such assets or liabilities relate to the cash flows of the reporting unit and would be included in determining the reporting unit’s fair value.

In preparing our annual test for impairment as of December 31, 2009, we determined that the aggregate sum of our reporting unit fair values exceeded our market capitalization. We determined market capitalization as the fair value of our common shares outstanding at the closing market price on December 31, 2009. We believe one of the primary reconciling differences between fair value and our market capitalization is due to a control premium. We believe the control premium represents the value a market participant could extract as savings and / or synergies by obtaining control, and thereby eliminating duplicative overhead and operating costs resulting from the consolidation of routes and internalization of waste streams.

As of December 31, 2009, we determined that the indicated fair value of our reporting units exceeded the carrying value of our reporting units by a range of 125% to 150% and, as such, we noted no indicators of impairment at our reporting units.

We will continuously monitor market trends in our business, the related expected cash flows and our calculation of market capitalization for purposes of identifying possible indicators of impairment. If our book value per share exceeds our market price per share or if we have other indicators of impairment, we will be required to perform an interim step one impairment analysis, which may lead to a step two analysis and possible impairment of our goodwill. Additionally, we would then be required to review our remaining long-lived assets for impairment.

Our operating segments, which also represent our reporting units, are comprised of several vertically integrated businesses. When an individual business within an integrated operating segment is divested, goodwill is allocated to that business based on its fair value relative to the fair value of its operating segment.

Other intangible assets include values assigned to customer relationships, long-term contracts, covenants not to compete and trade names, and are amortized generally on a straight-line basis over periods ranging from 2 to 23 years.

Landfill and Environmental Costs

Life Cycle Accounting

We use life-cycle accounting and the units-of-consumption method to recognize certain landfill costs over the life of the site. In life cycle accounting, all costs to acquire and construct a site are capitalized, and charged to expense based on the consumption of cubic yards of available airspace.

Costs and airspace estimates are developed at least annually by engineers. We use these estimates to adjust the rates we use to deplete capitalized costs. Changes in these estimates primarily relate to changes in available airspace, inflation and applicable regulations. Changes in available airspace include but are not limited to changes due to the addition of airspace lying in probable expansion areas, airspace consumed and changes in engineering estimates.

Total Available Disposal Capacity

As of December 31, 2009, we owned or operated 192 active solid waste landfills with total available disposal capacity of approximately 4.6 billion in-place cubic yards. Total available disposal capacity represents the sum of estimated permitted airspace plus our estimate of expansion airspace that has a probable likelihood of being permitted.

Probable Expansion Airspace

We classify landfill disposal capacity as either permitted (having received the final permit from the applicable regulatory agency) or as probable expansion airspace. Before airspace included in an expansion area is determined to be probable expansion airspace and, therefore, is included in our calculation of total available disposal capacity, the following criteria must be met:


	•	We own the land associated with the expansion airspace or control it pursuant to an option agreement,
	•	We are committed to supporting the expansion project financially and with appropriate resources,
	•	There are no identified fatal flaws or impediments associated with the project, including political impediments,
	•	Progress is being made on the project,
	•	The expansion is attainable within a reasonable time frame, and
	•	We believe it is likely the expansion permit will be received.

Upon meeting our expansion criteria, the rates used at each applicable landfill to expense costs to acquire, construct, cap, close and maintain a site during the post-closure period are adjusted to include both the probable expansion airspace and the additional costs to be capitalized or accrued associated with that expansion airspace.

We have identified three steps that landfills generally follow to obtain expansion permits. These steps are as follows:

1. Obtaining approval from local authorities,

2. Submitting a permit application to state authorities, and

3. Obtaining permit approval from state authorities.

We continually monitor our progress toward obtaining permits for each of our sites with probable airspace. If at any point it is determined that a landfill expansion area no longer meets our criteria, the probable expansion airspace is removed from the landfill’s total available capacity and the rates used at the landfill to deplete costs to acquire, construct, cap, close and maintain a site during the post-closure period are adjusted accordingly. In addition, any amounts capitalized for the probable expansion airspace are charged to expense in the period in which it is determined that the criteria are no longer met.

Capitalized Landfill Costs

Capitalized landfill costs include expenditures for land, permitting, cell construction and environmental structures. Capitalized permitting and cell construction costs are limited to direct costs relating to these activities, including legal, engineering and construction costs associated with excavation, natural and synthetic liners, construction of leachate collection systems, installation of methane gas collection and monitoring systems, installation of groundwater monitoring wells and other costs associated with the development of the site. Interest is capitalized on landfill construction projects while the assets are undergoing activities to ready them for their intended use. Capitalized landfill costs also include final capping, closure and post-closure assets and are depleted as airspace is consumed using the units-of-consumption method.

Costs related to acquiring land, excluding the estimated residual value of unpermitted, non-buffer land, and costs related to permitting and cell construction are depleted as airspace is consumed using the units-of-consumption method.

Capitalized landfill costs may also include an allocation of purchase price paid for landfills. For landfills purchased as part of a group of assets, the purchase price assigned to the landfill is determined based on the estimated fair value of the landfill relative to the fair value of other assets within the acquired group. If the landfill meets our expansion criteria, the purchase price is further allocated between permitted airspace and expansion airspace based on the ratio of permitted versus probable expansion airspace to total available airspace. Landfill purchase price is amortized using the units-of-consumption method over the total available airspace including probable expansion airspace where appropriate.

Final Capping, Closure and Post-Closure Costs

We have future obligations for final capping, closure and post-closure costs with respect to the landfills we own or operate as set forth in applicable landfill permits. Final capping, closure and post-closure costs include estimated costs to be incurred for final capping and closure of landfills and estimated costs for providing required post-closure monitoring and maintenance of landfills. The permit requirements are based on the Subtitle C and Subtitle D regulations of the Resource Conservation and Recovery Act (RCRA), as implemented and applied on a state-by-state basis. Obligations associated with monitoring and controlling methane gas migration and emissions are set forth in applicable landfill permits and these requirements are based on the provisions of the Clean Air Act of 1970, as amended. Final capping typically includes installing flexible membrane and geosynthetic clay liners, drainage and compact soil layers, and topsoil, and is constructed over an area of the landfill where total airspace capacity has been consumed and waste disposal operations have ceased. These final capping activities occur as needed throughout the operating life of a landfill. Other closure activities and post-closure activities occur after the entire landfill ceases to accept waste and closes. These activities involve methane gas control, leachate management and groundwater monitoring, surface water monitoring and control, and other operational and maintenance activities that occur after the site ceases to accept waste. The post-closure period generally runs for up to 30 years after final site closure for municipal solid waste landfills and a shorter period for construction and demolition landfills and inert landfills.

Estimates of future expenditures for final capping, closure and post-closure are developed at least annually by engineers. These estimates are reviewed by management and are used by our operating and accounting personnel to adjust the rates used to capitalize and amortize these costs. These estimates involve projections of costs that will be incurred during the remaining life of the landfill for final capping activities, after the landfill ceases operations and during the legally required post-closure monitoring period. We currently retain post-closure responsibility for 132 closed landfills.

A liability for an asset retirement obligation must be recognized in the period in which it is incurred and should be initially measured at fair value. Absent quoted market prices, the estimate of fair value is based on the best available information, including the results of present value techniques. The offset to the liability is capitalized as part of the carrying amount of the related long-lived asset. Changes in the liabilities due to the passage of time are recognized as operating expenses in the consolidated statement of income and are referred to as accretion expense. Changes in the liabilities due to revisions to estimated future cash flows are recognized by increasing or decreasing the liabilities with the offsets adjusting the carrying amounts of the related long-lived assets, and may also require immediate adjustments to amortization expense in the consolidated statement of income.

Landfill asset retirement obligations include estimates of all costs related to final capping, closure and post-closure. Costs associated with daily maintenance activities during the operating life of the landfill, such as leachate disposal, groundwater and gas monitoring, and other pollution control activities, are charged to expense as incurred. In addition, costs historically accounted for as capital expenditures during the operating life of a landfill, such as cell development costs, are capitalized when incurred, and charged to expense using life cycle accounting and the units-of-consumption method based on the consumption of cubic yards of available airspace.

We define final capping as activities required to permanently cover a portion of a landfill that has been completely filled with waste. Final capping occurs in phases as needed throughout the operating life of a landfill as specific areas are filled to capacity and the final elevation for that specific area is reached in accordance with the provisions of the operating permit. We consider final capping events to be discrete activities that are recognized as asset retirement obligations separately from other closure and post-closure obligations. These capping events generally occur during the operating life of a landfill and can be associated with waste placed in an area to be capped. As a result, we use a separate rate per ton for recognizing the principal amount of the liability and related asset associated with each capping event. We amortize the asset recorded pursuant to this approach as waste volume related to the capacity covered by the capping event is placed into the landfill based on the consumption of cubic yards of available airspace.

In connection with the 2008 annual review of our calculations with respect to landfill asset retirement obligations, we made a change in estimate, which is considered to be a change in accounting estimate that is effected by a change in accounting principle. This change, which we believe is preferable, was made to better align the estimated amount of waste to be placed in an area to be capped (which is used to calculate our capping rates) with the physical operation of our landfills. The expected costs related to our capping events did not change and we will continue to use separate rates for each capping event. This change resulted in a $32.6 million decrease in our capping asset retirement obligations and related assets. These assets will be amortized to expense prospectively as a change in estimate. This change in estimate did not have a material impact on our consolidated financial position, results of operations or cash flows.

We recognize asset retirement obligations and the related amortization expense for closure and post-closure (excluding obligations for final capping) using the units-of-consumption method over the total remaining capacity of the landfill. The total remaining capacity includes probable expansion airspace.

In general, we engage third parties to perform most of our final capping, closure and post-closure activities. Accordingly, the fair market value of these obligations is based on quoted and actual prices paid for similar work. We also perform some of our final capping, closure and post-closure activities using internal resources. Where internal resources are expected to be used to fulfill an asset retirement obligation, we have added a profit margin to the estimated cost of such services to better reflect their fair market value. If we perform these services internally, the added profit margin would be recognized as a component of operating income in the period the obligation is settled.

An estimate of fair value should include the price that marketplace participants are able to receive for bearing the uncertainties in cash flows. However, when utilizing discounted cash flow techniques, reliable estimates of market premiums may not be obtainable. In this situation, it is not necessary to consider a market risk premium in the determination of expected cash flows. While the cost of asset retirement obligations associated with final capping, closure and post-closure can be quantified and estimated, there is not an active market that can be utilized to determine the fair value of these activities. In the waste industry, there generally is not a market for selling the responsibility for final capping, closure and post-closure independent of selling the landfill in its entirety. Accordingly, we believe that it is not possible to develop a methodology to reliably estimate a market risk premium and have excluded a market risk premium from our determination of expected cash flow for landfill asset retirement obligations.

Our estimates of costs to discharge asset retirement obligations for landfills are developed in today’s dollars. These costs are inflated each year to reflect a normal escalation of prices up to the year they are expected to be paid. We use a 2.5% inflation rate, which is based on the ten-year historical moving average increase of the U.S. Consumer Price Index, and is the rate used by most waste industry participants.

These estimated costs are then discounted to their present value using a credit-adjusted, risk-free rate. In general, the credit-adjusted, risk-free rate we used for liability recognition was 7.5% and 6.6% for the years ended December 31, 2009 and 2008, respectively, which was based on the estimated all-in yield we would have needed to offer to sell thirty-year debt in the public market. However, our capping, closure and post-closure obligations acquired from Allied were recorded at their fair values as of the acquisition date, and were discounted using a rate of 9.75% due to market conditions in effect at the time of the acquisition.

Changes in asset retirement obligations due to the passage of time are measured by recognizing accretion expense in a manner that results in a constant effective interest rate being applied to the average carrying amount of the liability. The effective interest rate used to calculate accretion expense is our credit-adjusted, risk-free rate in effect at the time the liabilities were recorded.

Changes due to revisions of the estimates of the amount or timing of the original undiscounted cash flows used to record a liability are recognized by increasing or decreasing the carrying amount of the asset retirement obligation liability and the carrying amount of the related asset. Upward revisions in the amount of undiscounted estimated cash flows used to record a liability are discounted using the credit-adjusted, risk-free rate in effect at the time of the change. Downward revisions in the amount of undiscounted estimated cash flows used to record a liability are discounted using the credit-adjusted, risk-free rate that existed when the original liability was recognized.

We review our calculations with respect to landfill asset retirement obligations at least annually. If there is a significant change in the facts and circumstances related to a landfill during the year, we will review our calculations for the landfill as soon as practical after the change has occurred.

Environmental Operating Costs

In the normal course of business, we expense currently as incurred 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.

Environmental Liabilities

We are subject to an array of laws and regulations relating to the protection of the environment, and we remediate sites in the ordinary course of our business. Under current laws and regulations, we may be responsible for environmental remediation at sites that we either own or operate, including sites that we have acquired, or sites where we have (or a company that we have acquired has) delivered waste. Our environmental remediation liabilities primarily include costs associated with remediating groundwater, surface water and soil contamination, as well as controlling and containing methane gas migration and the related legal costs. To estimate our ultimate liability at these sites, we evaluate several factors, including the nature and extent of contamination at each identified site, the required remediation methods, the apportionment of responsibility among the potentially responsible parties and the financial viability of those parties. We accrue for costs associated with environmental remediation obligations when such costs are probable and reasonably estimable in accordance with accounting for loss contingencies. We periodically review the status of all environmental matters and update our estimates of the likelihood of and future expenditures for remediation as necessary. Changes in the liabilities resulting from these reviews are recognized currently in earnings in the period in which the adjustment is known. Adjustments to estimates are reasonably possible in the near term and may result in changes to recorded amounts. We have not reduced the liabilities we have recorded for recoveries from other potentially responsible parties or insurance companies.

The environmental liabilities assumed from Allied relate to impacts at both owned and unowned sites. In the case of owned sites, we are actively working with the appropriate regulatory entity under the applicable regulations (typically RCRA or Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA)) to characterize and remediate potential issues. At unowned sites, we are working within the regulatory and procedural framework established by CERCLA to characterize and remediate potential issues, in conjunction with other potentially liable parties at each location. Pursuant to the purchase method of accounting, we have recorded the environmental remediation liabilities assumed from Allied based upon estimates of their fair value, using an estimate of future cash flows or settlement. Previously, and consistent with our method of accounting, Allied recorded remediation liabilities based upon accounting for loss contingencies, however, amounts recorded under this method are generally not at fair value.

Since the date of acquisition, our process for deriving fair value for the environmental liabilities assumed from Allied included first identifying the population of remediation sites where we are either fully or partially responsible for remediation or potential remediation. The population of remediation sites was then stratified into categories based on (i) the maturity of the issue relative to recognized stages in the applicable regulation (typically CERCLA or RCRA) and (ii) the extent of our participation in the remediation activity. Using these categories, we applied one of the following multiple estimation processes to quantify fair value:


	•	For sites with established responsibility but a high level of uncertainty with the outcome of the remedial process, we developed multiple remediation scenarios. We then probability weighted the remediation scenarios to develop a fair value estimate.
	•	For sites where the level of responsibility was less defined, we developed a fair value estimate of the settlement costs based upon market participant assessments from external legal counsel.
	•	For sites which we own and are in the earliest stages of the remedial process, we identified the most applicable standard remedial techniques and then probability weighted the use of each technique to develop a fair value estimate.
	•	For the remaining sites with low levels of uncertainty, we developed a primary remedial strategy and cost estimate to determine the fair value of the liability.

The initial liabilities recorded as part of our acquisition of Allied were recorded using provisional amounts based upon information available at that time. During 2009, we gathered and assessed new information obtained about the facts and circumstances surrounding Allied’s remediation sites. In certain situations, we used external engineers and attorneys to assist in the development of our fair value estimates. As a result of the process, we increased the fair value of our remediation reserves by $181.9 million. Any further adjustments to our remediation reserves resulting in changes in estimate or reserve settlements will be reflected currently in earnings in the periods in which such adjustments become known.

Asset Impairments

We continually evaluate whether events or changes in circumstances have occurred that may warrant revision of the estimated useful lives of our long-lived assets or whether the remaining balances of those assets should be evaluated for possible impairment. Long-lived assets include, for example, capitalized landfill costs, other property and equipment, and identifiable intangible assets. Events or changes in circumstances that may indicate that an asset may be impaired include the following:


	•	A significant decrease in the market price of an asset or asset group,
	•	A significant adverse change in the extent or manner in which an asset or asset group is being used or in its physical condition,
	•	A significant adverse change in legal factors or in the business climate that could affect the value of an asset or asset group, including an adverse action or assessment by a regulator,
	•	An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset,
	•	A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group,
	•	A current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life, or
	•	An impairment of goodwill at a reporting unit.

There are certain indicators listed above that require significant judgment and understanding of the waste industry when applied to landfill development or expansion. For example, a regulator may initially deny a landfill expansion permit application though the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace. Therefore, certain events could occur in the ordinary course of business and not necessarily be considered indicators of impairment due to the unique nature of the waste industry.

If indicators of impairment exist, the asset or asset group is reviewed to determine whether its recoverability is impaired. We assess the recoverability of the asset or asset group by comparing its carrying value to an estimate (or estimates) of its undiscounted future cash flows over its remaining life. If the estimated undiscounted cash flows are not sufficient to recover the carrying value of the asset or asset group, we measure an impairment loss as the amount by which the carrying amount of the asset exceeds its fair value. The loss is recorded in the consolidated statement of income in the current period. Estimating future cash flows requires significant judgment, and our projections of future cash flows and remaining useful lives may vary materially from actual results.

Self-Insurance Reserves

Our insurance programs for workers’ compensation, general liability, vehicle liability and employee-related health care benefits are effectively self-insured. Accruals for self-insurance reserves are based on claims filed and estimates of claims incurred but not reported. We consider our past claims experience, including both frequency and settlement amount of claims, in determining these estimates. 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 the consolidated statements of income in the periods in which such adjustments are known. 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 based on our estimate of the timing of the related cash flows.

As we are the primary obligor for payment of all claims, we report our insurance claim liabilities on a gross basis in other current and long-term liabilities and any associated recoveries from our insurers are recorded in other assets.

Business Combinations

We acquire businesses in the waste industry, including non-hazardous waste collection, transfer and disposal operations, as part of our growth strategy. For all acquisitions completed prior to December 31, 2008 (prior to the effective date of the new business combinations pronouncement as discussed in Recently Issued Accounting Pronouncements), businesses are included in the consolidated financial statements from the date of acquisition. The cost of the acquired businesses is allocated to the assets acquired and the liabilities assumed based on estimates of fair values thereof. These estimates are revised during the allocation period as necessary if, and when, information regarding contingencies becomes available to further define and quantify assets acquired and liabilities assumed. The allocation period generally does not exceed one year. To the extent contingencies such as pre-acquisition environmental matters, litigation and related legal fees are resolved or settled during the allocation period, such items are included in the revised allocation of the purchase price. After the allocation period, the effect of changes in such contingencies is included in results of operations in the periods in which the adjustments are determined.

For all acquisitions completed under the new business combinations pronouncement, as of the respective acquisition dates, we recognize, separately from goodwill, the identifiable assets acquired and liabilities assumed at their estimated acquisition-date fair values. We measure and recognize goodwill as of the acquisition date as the excess of: (i) the aggregate of the fair value of consideration transferred, the fair value of any noncontrolling interest in the acquiree (if any) and the acquisition-date fair value of the our previously held equity interest in the acquiree (if any), over (ii) the fair value of assets acquired and liabilities assumed. If information about facts and circumstances existing as of the acquisition date is incomplete by the end of the reporting period in which a business combination occurs, we will report provisional amounts for the items for which the accounting is incomplete. The measurement or allocation period ends once we receive the information we were seeking; however, this period will not exceed one year from the acquisition date. Any material adjustments recognized during the measurement period will be reflected retrospectively in the consolidated financial statements of the subsequent period. We will recognize third-party transaction related costs as expense currently in the period in which they are incurred.

Discontinued Operations

We analyze our operations that have been divested or classified as held-for-sale in order to determine if they qualify for discontinued operations accounting. Only operations that qualify as a component of an entity under U.S. GAAP can be included in discontinued operations. In addition, only components where we do not have significant continuing involvement with the divested operations would qualify for discontinued operations accounting. For our purposes, continuing involvement would include continuing to receive waste at our landfill or recycling facility from a divested hauling operation or transfer station or continuing to dispose of waste at a divested landfill or transfer station.

Costs Associated with Exit Activities

We record costs associated with exit activities such as for employee termination benefits that represent a one-time benefit when management approves and commits to a plan of termination, and communicates the termination arrangement to the employees, or over the future service period, if any. Other costs associated with exit activities may include contract termination costs, including costs related to leased facilities to be abandoned or subleased, and facility and employee relocation costs.

In addition, we account for costs to exit an activity of an acquired company and involuntary employee termination benefits associated with acquired businesses in the purchase price allocation of the acquired business if a plan to exit an activity of an acquired company exists, and 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 approves and commits to a plan of termination, and communicates the termination arrangement to the employees, if the future service period for these employees is less than sixty days from their date of notification.

Contingent Liabilities

We are subject to various legal proceedings, claims and regulatory matters, the outcomes of which are subject to significant uncertainty. In general, we determine whether to disclose or accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable and whether it can be reasonably estimated. We assess our potential liability relating to litigation and regulatory matters based on information available to us. Management’s assessment is developed based on an analysis of possible outcomes under various strategies. We accrue for loss contingencies when such amounts are probable and reasonably estimable. If a contingent liability is only reasonably possible, we will disclose the potential range of the loss, if estimable.

Contingent liabilities recorded in purchase accounting are recorded at their fair values. These fair values may be different from the values we would have otherwise recorded, had the contingent liability not been assumed as part of an acquisition of a business.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income is a component of stockholders’ equity and includes the effective portion of the net changes in fair value of our cash flow hedges which consist of prices for diesel fuel and other commodities, net of tax, and certain adjustments to liabilities associated with our employee benefit plan liabilities, net of tax.

Revenue Recognition

We generally provide services under contracts with municipalities or individual customers. Municipal and commercial contracts are generally long-term and often have renewal options. Advance billings are recorded as deferred revenue, and revenue is recognized over the period services are provided. No one customer has individually accounted for more than 5% of our consolidated revenue or of our reportable segment revenue in any of the past three years.

We recognize revenue when all four of the following criteria are met:


	•	Persuasive evidence of an arrangement exists such as a service agreement with a municipality, a hauling customer or a disposal customer,
	•	Services have been performed such as the collection and hauling of waste or the disposal of waste at a disposal facility owned or operated by us,
	•	The price of the services provided to the customer is fixed or determinable, and
	•	Collectibility is reasonably assured.

Income Taxes

We are subject to income taxes in the United States and Puerto Rico. We record deferred income taxes to reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases using enacted tax rates that we expect to be in effect when the taxes are actually paid or recovered.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making these determinations, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income and recent financial operating results. In the event we determine that we would be able to realize a deferred income tax asset in the future in excess of its net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

Effective January 1, 2007, we adopted new guidance which clarifies the accounting for uncertainty in income taxes recognized in the financial statements. This new guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized. This interpretation also provides guidance on measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

We recognize interest and penalties related to uncertain tax positions in the provision for income taxes in the accompanying consolidated statements of income. Accrued interest and penalties are included in other accrued liabilities, and deferred income taxes and other long-term tax liabilities, in the consolidated balance sheets.

Defined Benefit Pension Plan

We currently have one qualified defined pension plan, the BFI Retirement Plan (the Plan). The Plan covers certain current and former employees of Allied in the United States, including some employees subject to collective bargaining agreements. The Plan’s benefit formula is based on a percentage of compensation as defined in the Plan document. However, the benefits of approximately 97% of the current plan participants were frozen upon Allied’s acquisition of BFI in 1999.

Our pension contributions are made in accordance with funding standards established by the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (IRC), as amended by the Pension Protection Act of 2006. The Plan’s assets have been invested as determined by our Retirement Benefits Committee. We annually review and adjust the Plan’s asset allocation as deemed necessary.

The benefit obligation and associated income or expense related to the Plan are determined using annually established assumptions for discount rates, expected rates of return and average rates for compensation increases. We determine the discount rate based on a model that matches the timing and amount of expected benefit payments to maturities of high quality bonds priced as of the pension plan measurement date. When that timing does not correspond to a published high-quality bond rate, our model uses an expected yield curve to determine an appropriate current discount rate. The yields on the bonds are used to derive a discount rate for the liability. In developing our expected rate of return assumption, we evaluate long-term expected and historical actual returns on the plan assets, giving consideration to our asset mix and the anticipated duration of our plan obligations. The average rate of compensation increase reflects our expectations of average pay increases over the periods benefits are earned. Our assumptions are reviewed annually and adjusted as deemed necessary.

Equity-Based Compensation Plans

We recognize equity-based compensation expense on the estimated fair value of stock options and similar equity instruments issued as compensation to employees over the requisite service periods.

Cash flows resulting from tax benefits related to tax deductions in excess of those recorded for compensation expense, resulting from the exercise of stock options, are classified as cash flows from financing activities. All other tax benefits related to stock options have been presented as a component of cash flows from operating activities.

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 date, if earlier.

The fair value of each option on the date of grant is estimated using a lattice binomial option-pricing model based on certain valuation assumptions. Expected volatilities are based on our historical stock prices over the contractual terms of the options and other factors. The risk-free interest rates are based on the published U.S. Treasury yield curve in effect at the time of the grant for instruments with a similar life. The dividend yield reflects our dividend yield at the date of grant. The expected life represents the period that the stock options are expected to be outstanding, taking into consideration the contractual terms of the options and our employees’ historical exercise and post-vesting employment termination behavior, weighted to reflect the job level demographic profile of the employees receiving the option grants. The estimated forfeiture rate used to record compensation expense is based on historical forfeitures and is adjusted periodically based on actual results.

Leases

We lease property and equipment in the ordinary course of our business. Our most significant lease obligations are for property and equipment specific to our industry, including real property operated as a landfill or transfer station and operating equipment. Our leases have varying terms. Some may include renewal or purchase options, escalation clauses, restrictions, penalties or other obligations that we consider in determining minimum lease payments. The leases are classified as either operating leases or capital leases, as appropriate.

Operating Leases

Many of our leases are operating leases. This classification generally can be attributed to either (i) relatively low fixed minimum lease payments (including, for example, real property lease payments that are not fixed and vary based on the volume of waste we receive or process), or (ii) minimum lease terms that are much shorter than the assets’ economic useful lives. Management expects that, in the normal course of business, our operating leases will be renewed, replaced by other leases, or replaced with fixed asset expenditures.

Capital Leases

Assets acquired under capital leases are capitalized at the inception of each lease and are amortized to depreciation expense over the lesser of the useful life of the asset or the lease term on either a straight-line or a units-of-consumption basis, depending on the asset leased. The present value of the related lease payments is recorded as a debt obligation.

Related Party Transactions

It is our policy that transactions with related parties must be on terms that, on the whole, are no less favorable than those that would be available from unaffiliated parties.

Recently Issued Accounting Pronouncements

Convertible Debt Instruments

In May 2008, the Financial Accounting Standards Board (FASB) issued new accounting guidance for 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. The guidance 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 this guidance on January 1, 2009, and adoption did not have a material effect on our consolidated financial position or results of operations.

Business Combinations

In December 2007, the FASB issued new guidance for business combinations applicable to all transactions and other events in which one entity obtains control over one or more other businesses. Under this new guidance all transaction and restructuring charges are required to be recognized as expenses as incurred. The new guidance 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 recorded in the income statement. The impact of the adoption of this new guidance on our consolidated financial statements is dependent on the nature and volume of future acquisitions, and, therefore, can not be determined at this time.

This new guidance 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 guidance applies to the accounting for all business acquisitions, whether the acquisition occurred before or after adoption.

Determination of the Useful Life of Intangible Assets

In April 2008, the FASB directed the FASB Staff to issue an amendment to 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 previously existing guidance. The amendment is intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under GAAP. We adopted the amendment on January 1, 2009 and adoption of this amendment did not have a material effect on our consolidated financial position or results of operations.

Fair Value Measurements

In September 2006, the FASB issued new guidance that defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. The new guidance was effective for us on January 1, 2008. However, in February 2008, the FASB issued an amendment to this new guidance which delayed the effective date 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 the guidance 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 the amendment. The impact of adopting this guidance and related amendment did not have a material effect on our consolidated financial position or results of operations.

Noncontrolling Interests

In December 2007, the FASB issued new guidance requiring noncontrolling interests or minority interests to be treated as a separate 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 the new guidance, 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 this new guidance on January 1, 2009, and the implementation did not have a material impact on our consolidated financial position or results of operations.

Determining Whether an Instrument is Indexed to an Entity’s Own Stock

In June 2008, the FASB issued 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. 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. This new guidance 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 this new guidance on January 1, 2009 and the adoption did not have a material effect on our consolidated financial position or results of operations.

Consolidation of Variable Interest Entities

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs) 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 this new guidance, 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 absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. An enterprise is required 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. It 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. This new guidance is effect for annual reporting periods beginning after November 15, 2009. We do not believe the impact of adopting this guidance will have a material effect on our consolidated financial position or results of operations.

Business Acquisitions and Divestitures, Assets Held for Sale and Restructuring Charges

12 Months Ended

Dec. 31, 2009

Business Acquisitions and Divestitures, Assets Held for Sale and Restructuring Charges [Abstract]

BUSINESS ACQUISITIONS AND DIVESTITURES, ASSETS HELD FOR SALE AND RESTRUCTURING CHARGES


3.	BUSINESS ACQUISITIONS AND DIVESTITURES, ASSETS HELD FOR SALE AND RESTRUCTURING CHARGES

Merger with Allied Waste Industries, Inc.

Rationale for the Merger

We believe that our merger with Allied results in a combined company that has greater financial strength, operational efficiencies, earning power and growth potential than either we or Allied would have on our own. We believe that there is a substantial strategic fit between the markets serviced by Republic, which are located predominantly in high-growth Sunbelt markets, and those served by Allied, which has a national footprint. Since our collection markets are highly complementary, the combined company is diversified across geographic markets, customer segments and service offerings. This balance will allow our combined company to capitalize on attractive business opportunities, mitigate geographic risk, and results in greater stability and predictability of revenue and free cash flow. We also believe that the merger will result in a number of important synergies, primarily from achieving greater operating efficiencies, capturing inherent economies of scale and leveraging corporate resources. Therefore, we believe that the premium we paid to effectuate the merger was reasonable.

Purchase Price

The purchase price paid for Allied, which was acquired on December 5, 2008, includes the value of Republic’s common stock issued in exchange for Allied’s outstanding common stock, the conversion of Allied’s outstanding stock options and unvested restricted stock awards into Republic’s equity-based awards, cash paid to retire Allied’s revolving credit facility, the fair value of Allied’s debt less cash assumed at closing and Republic’s transaction costs.

In summary, the purchase price paid for the acquisition of Allied and the allocation of the purchase price is as follows:


	December 5,						December 31,						December 31,
	2008			Adjustments			2008			Adjustments			2009

Purchase price:
Value of Republic common stock issued in exchange for Allied common stock outstanding	$	6,113.7		$	-		$	6,113.7		$	(0.8	)	$	6,112.9
Value of Republic stock options issued to replace Allied stock options		61.2			-			61.2			-			61.2
Cash paid to retire Allied’s credit facility		671.8			-			671.8			-			671.8
Debt, fair value		5,402.0			-			5,402.0			(45.8	)		5,356.2
Less: cash acquired		(131.3	)		-			(131.3	)		-			(131.3	)
Transaction costs		57.4			-			57.4			1.5			58.9

Total purchase price		12,174.8			-			12,174.8			(45.1	)		12,129.7

Allocated as follows:
Current assets		910.8			(0.9	)		909.9			-			909.9
Landfill development costs		2,600.0			-			2,600.0			-			2,600.0
Other property and equipment		2,256.8			1.9			2,258.7			3.6			2,262.3
Other assets		226.6			(1.1	)		225.5			(36.7	)		188.8
Current liabilities		(1,336.3	)		-			(1,336.3	)		(97.0	)		(1,433.3	)
Capping, closure and post-closure liabilities		(813.1	)		-			(813.1	)		(72.3	)		(885.4	)
Environmental liabilities		(208.1	)		-			(208.1	)		(181.9	)		(390.0	)
Deferred income taxes and other long-term tax liabilities		(774.1	)		0.9			(773.2	)		136.0			(637.2	)
Other long-term liabilities		(235.1	)		-			(235.1	)		3.3			(231.8	)

Net book value of assets acquired and liabilities assumed		2,627.5			0.8			2,628.3			(245.0	)		2,383.3

Excess purchase price to be allocated	$	9,547.3		$	(0.8	)	$	9,546.5		$	199.9		$	9,746.4

Allocated as follows:
Goodwill	$	9,006.3		$	(0.8	)	$	9,005.5		$	194.1		$	9,199.6
Other intangible assets
Customer relationships		420.0			-			420.0			-			420.0
Franchise agreements		60.0			-			60.0			-			60.0
Other municipal agreements		30.0			-			30.0			-			30.0
Tradenames		30.0			-			30.0			-			30.0
Favorable lease agreements		-			-			-			5.8			5.8
Non-compete agreements		1.0			-			1.0			-			1.0

Total allocated	$	9,547.3		$	(0.8	)	$	9,546.5		$	199.9		$	9,746.4

Adjustments in future periods, if any, made to assets acquired and liabilities assumed will be recorded in our consolidated statement of income.

The intangible assets identified that were determined to have value as a result of our analysis of Allied’s projected revenue streams and their related profits include customer relationships, franchise agreements, other municipal agreements, non-compete agreements and trade names. The fair values for these intangible assets are reflected in the previous table. Other intangible assets were identified that are considered to be components of either property and equipment or goodwill under U.S. GAAP, including the value of the permitted and probable airspace at Allied’s landfills (property and equipment), the going concern element of Allied’s business (goodwill) and its assembled workforce (goodwill). The going concern element represents the ability of an established business to earn a higher rate of return on an assembled collection of net assets than would be expected if those assets had to be acquired separately. A substantial portion of this going concern element acquired is represented by Allied’s infrastructure of market-based collection routes and its related integrated waste transfer and disposal channels, whose value has been included in goodwill.

All of the goodwill and other intangible assets resulting from the acquisition of Allied will not be deductible for income tax purposes.

Pro Forma Information

The consolidated financial statements presented for Republic include the operating results of Allied from the date of the acquisition. The following pro forma information is presented assuming the merger had been completed as of January 1, 2007. The unaudited pro forma information presented has been prepared for illustrative purposes and is not intended to be indicative of the results of operations that would have actually occurred had the acquisition been consummated at the beginning of the periods presented or of future results of the combined operations. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs that occur as a result of the integration and consolidation of the acquisition (in millions, except share and per share amounts).


	Year Ended		Year Ended
	December 31,		December 31,
	2008		2007
	(unaudited)		(unaudited)

Revenue	$	9,362.2	$	9,244.9
Net income		285.7		423.2
Basic earnings per share		0.76		1.10
Diluted earnings per share		0.75		1.09

The unaudited pro forma financial information includes adjustments for amortization of identifiable intangible assets, accretion of discounts to fair value associated with debt, environmental, self-insurance and other liabilities, accretion of capping, closure and post-closure obligations and amortization of the related assets, and provision for income taxes.

Assets Held For Sale

As a condition of the merger with Allied, the Department of Justice (DOJ) required us to divest of certain assets and related liabilities. As such, we classified these assets and liabilities as assets held for sale in our consolidated balance sheet at December 31, 2008. Certain of the legacy Republic assets classified as held for sale were adjusted to their estimated fair values less costs to sell and resulted in the recognition of an asset impairment loss of $1.8 million and $6.1 million in our consolidated statements of income for the years ended December 31, 2009 and 2008, respectively. The assets held for sale related to operations that were Allied’s were recorded at their estimated fair values in our consolidated balance sheet as of December 31, 2008 in accordance with the purchase method of accounting. During 2009 we completed our required divestitures. Assets held for sale in our consolidated balance sheet at December 31, 2008 are as follows:


Prepaid expenses and other current assets	$	17.5
Other assets		285.1

Total assets	$	302.6

Accrued liabilities	$	3.1
Other long-term liabilities		31.0

Total liabilities	$	34.1

Restructuring Charges

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 year ended December 31, 2009, we incurred $63.2 million of restructuring and integration charges related to our integration of Allied, of which $34.0 million consists of charges for severance and other employee termination and relocation benefits. The remainder of the charges primarily related to consulting and professional fees. Substantially, all the charges are recorded in our corporate segment. During 2010, we expect to incur additional charges approximating $12 million to complete our plan. We expect that the majority of these charges will be paid during 2010 and will extend into 2011.


	Balance at							Balance at
	December 31,							December 31,
	2008		Additions		Payments			2009

Severance and other termination benefits	$	12.5	$	31.4	$	(24.3	)	$	19.6
Relocation		17.9		2.6		(15.3	)		5.2

Total	$	30.4	$	34.0	$	(39.6	)	$	24.8

Accrued Liabilities Related to Allied

The following table reflects the activity during the year ended December 31, 2009 associated with the liabilities (included in other accrued liabilities) incurred in connection with termination benefits for employees who were employed by Allied at the date of the acquisition and notified that their employment was terminated:


	Balance at							Balance at
	December 31,							December 31,
	2008		Additions		Payments			2009

Severance and other termination benefits	$	22.6	$	6.7	$	(26.9	)	$	2.4

The initial legal contingencies recorded as part of our acquisition of Allied were estimated using provisional amounts based upon information available at that time. During 2009, we gathered and assessed new information obtained about the facts and circumstances surrounding various Allied legal matters, and as a result increased the legal reserves by $53.9 million. Any further adjustments to our Allied legal matter reserves resulting from changes in estimates or reserve settlements will be reflected in our consolidated statement of income in the periods in which such adjustments become known. As of December 31, 2009 and 2008, we recorded $85.4 million and $31.5 million, respectively, of accrued liabilities in purchase accounting for the estimated liabilities related to various Allied legal matters.

During 2009, we recorded additional liabilities for unfavorable contract and lease exit costs of $22.6 million and $7.7 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 year ended December 31, 2009 associated with unfavorable contracts and lease exit liabilities:


	Balance at							Balance at
	December 31,				Payments /			December 31,
	2008		Additions		Amortization			2009

Lease exit costs	$	-	$	7.7	$	(1.3	)	$	6.4
Unfavorable contracts		33.3		22.6		(6.9	)		49.0

Total	$	33.3	$	30.3	$	(8.2	)	$	55.4

Other Acquisitions

In addition to our acquisition of Allied, we acquired various other solid waste businesses during the years ended December 31, 2008 and 2007. The aggregate purchase price paid for these transactions was $13.4 million and $4.4 million, respectively. In summary, the purchase price paid for these acquisitions (excluding Allied) and the allocation of the purchase price as of December 31 is as follows:


	2008			2007

Cash used in acquisitions, net of cash acquired	$	13.4		$	4.4

Allocated as follows:
Working capital surplus (deficit)		0.4			(0.8	)
Property and equipment		5.7			3.6
Other liabilities, net		(1.3	)		-

Net book value of assets acquired and liabilities assumed		4.8			2.8

Excess purchase price to be allocated	$	8.6		$	1.6

Allocated as follows:
Goodwill	$	1.7		$	1.0
Other intangible assets		6.9			0.6

Total allocated	$	8.6		$	1.6

Substantially all of the intangible assets recorded for these acquisitions are deductible for tax purposes.

Other Divestitures

In October 2009, we divested a hauling operation in Miami-Dade County, Florida and received proceeds of $32.7 million and recognized a loss of $10.2 million. In November 2007, we divested our Texas-based compost, mulch and soil business and received proceeds of $36.5 million. A gain of $12.5 million was recorded in 2007 on this divesture.

Debt

12 Months Ended

Dec. 31, 2009

Debt [Abstract]

DEBT


9.	DEBT

Our notes payable, capital leases and long-term debt at December 31, 2009 and 2008 are listed in the following table, and are presented net of unamortized discounts and premiums, adjustments to fair 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.


	Debt Balance at
	December 31, 2009			December 31, 2008

$1.0 billion Revolver due 2012	$	-		$	-
$1.75 billion Revolver due 2013, Eurodollar and Base Rate borrowings		315.4			665.0
Receivables secured loans		300.0			400.0
Senior notes, fixed interest rate of 7.125%, due 2009		-			99.3
Senior notes, fixed interest rate of 6.500%, due 2010		216.5			333.2
Senior notes, fixed interest rate of 5.750%, due 2011		252.5			371.1
Senior notes, fixed interest rate of 6.375%, due 2011		209.1			257.7
Senior notes, fixed interest rate of 6.750%, due 2011		396.4			464.2
Senior notes, fixed interest rate of 7.875%, due 2013		-			422.4
Senior notes, fixed interest rate of 6.125%, due 2014		379.3			370.5
Senior notes, fixed interest rate of 7.375%, due 2014		-			363.5
Senior notes, fixed interest rate of 7.250%, due 2015		540.2			531.7
Senior notes, fixed interest rate of 7.125%, due 2016		526.7			518.7
Senior notes, fixed interest rate of 6.875%, due 2017		654.4			645.7
Senior notes, fixed interest rate of 5.500%, due 2019		645.5			-
Senior notes, fixed interest rate of 5.250%, due 2021		600.0			-
Debentures, fixed interest rate of 9.250%, due 2021		93.1			92.8
Senior notes, fixed interest rate of 6.086%, due 2035		249.4			249.1
Debentures, fixed interest rate of 7.400%, due 2035		266.8			266.0
Senior subordinated debentures, fixed interest rate of 4.250%, due 2034		-			201.3
Tax-exempt bonds and other tax-exempt financings; fixed and floating interest rates ranging from 0.20% to 8.25%; maturities ranging from 2010 to 2037		1,223.7			1,308.2
Other debt unsecured and secured by real property, equipment and other assets; interest rates ranging from 5.99% to 11.90% maturing through 2042		93.6			142.1

Total debt		6,962.6			7,702.5
Less: Current portion		(543.0	)		(504.0	)

Long-term portion	$	6,419.6		$	7,198.5

Impact of Allied Merger on Supplemental Indentures for Certain Debt

On December 10, 2008, we received the requisite consents to amend the supplemental indentures governing certain outstanding debt securities of Allied Waste North America, Inc. (AWNA). The amendment to each supplemental indenture modified the ongoing reporting obligations required of Allied. Under the amended supplemental indentures, the ongoing reporting obligations may be satisfied by Republic.

The collateral that had secured the AWNA senior notes and the BFI Debentures (as defined below) equally and ratably with the Allied bank credit facility was released upon the completion of our merger with Allied and the repayment of that facility.

Credit Facilities

In April 2007, we increased our unsecured revolving credit facility from $750.0 million to $1.0 billion and extended the term from 2010 to 2012. In conjunction with the merger with Allied, in September 2008, we entered into an additional $1.75 billion revolving credit facility with a group of banks. This credit facility was used initially at the time of the merger to refinance extensions of credit under Allied’s senior credit facility, to pay fees and expenses in connection therewith, and to pay fees and expenses incurred in connection with the merger. We also amended our existing $1.0 billion credit facility to conform certain terms of the facility to be consistent with the new $1.75 billion credit facility. We did not change the maturity date of the $1.0 billion credit facility.

The $1.0 billion revolving credit facility due April 2012 and the $1.75 billion revolving credit facility due September 2013 (collectively, Credit Facilities) bear interest at a Base Rate, or a Eurodollar Rate, both terms defined in the agreements, plus an applicable margin based on our Debt Ratings, also a term defined in the agreements. As of December 31, 2009 and 2008, the interest rate for our borrowings under our Credit Facilities was 1.82% and 3.43%, respectively. Our Credit Facilities are also subject to facility fees based on applicable rates defined in the agreements and the aggregate commitments, regardless of usage. Borrowings under our Credit Facilities can be used for working capital, capital expenditures, letters of credit and other general corporate purposes. The agreements governing our 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. We had $0.3 billion and $0.6 billion of Eurodollar Rate borrowings, and $1.6 billion and $1.7 billion of letters of credit utilizing availability under our Credit Facilities, leaving $0.8 billion and $0.4 billion of availability under our Credit Facilities at December 31, 2009 and 2008, respectively. At December 31, 2009, we were in compliance with the covenants under our Credit Facilities.

Receivables Secured Loans

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. As of December 31, 2009, receivables secured loans totaled $300.0 million. In May 2009, we renewed the facility for 364 days and reduced the borrowing capacity from $400.0 million to $300.0 million. We expect to repay the facility from free cash flow, draws on our Credit Facilities or proceeds from other note offerings on or before the May 2010 maturity.

The receivables securitizing this facility 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 December 31, 2009, the total amount of accounts receivable (gross) serving as collateral securing the borrowing was $442.4 million. This facility is accounted for as a secured borrowing with a pledge of collateral. The receivables and debt obligation remain on our consolidated balance sheet. At December 31, 2009, we had outstanding borrowings under this program of $300.0 million. The borrowings under this program bear interest at the financial institutions’ commercial paper rate plus an applicable spread and interest is payable monthly. As of December 31, 2009 and 2008 the interest rate for our borrowings under this facility was 1.57% and 2.95%, respectively.

Senior Notes and Debentures

In December 2009 we used cash on hand and incremental borrowings under our Credit Facilities to redeem $400.0 million of our 7.375% Senior Notes due 2014. The Senior Notes were redeemed at a price equal to 103.688% of the principal amount of the notes, plus accrued and unpaid interest. We incurred a loss of $46.0 million for premiums paid to repurchase debt, charges for unamortized debt discounts and professional fees paid to effectuate the repurchase.

In November 2009, we issued $600.0 million of senior notes with a fixed interest rate of 5.250% due 2021 in a private placement transaction. The notes are general senior unsecured obligations and mature on November 15, 2021. Interest is payable semi-annually on May 15 and November 15, beginning May 15, 2010. These senior notes are guaranteed by each of our subsidiaries that also guarantee our Credit Facilities. These guarantees are general senior unsecured obligations of the subsidiary guarantors. In addition, we entered into Registration Rights Agreements with the initial purchasers of the notes. Under the Registration Rights Agreements, we agreed to use our reasonable best efforts to cause to become effective a registration statement to exchange the notes for freely tradable notes issued by us. If we are unable to effect the exchange offer within 365 days, we agreed to pay additional interest on the notes. We used the net proceeds from the notes, cash on hand or incremental borrowings under our Credit Facilities as follows: (i) to redeem $450.0 million of our 7.875% Senior Notes due 2013 at 102.625%, and (ii) to redeem $230.0 million of our 4.250% Senior Convertible Debentures due 2034 at par. We incurred a loss of $51.9 million for premiums paid to repurchase debt, charges for unamortized debt discounts and professional fees paid to effectuate the repurchase.

In September 2009, we issued $650.0 million of 5.500% senior notes due 2019 with an unamortized discount of $4.5 million at December 31, 2009. The notes are general senior unsecured obligations and mature on September 15, 2019. Interest is payable semi-annually on March 15 and September 15, beginning March 15, 2010. The notes are guaranteed by each of our subsidiaries that also guarantee our Credit Facilities. These guarantees are general senior unsecured obligations of subsidiary guarantors. In addition, in September 2009, we entered into a Registration Rights Agreement with the representatives of the initial purchasers of the notes. Under the Registration Rights Agreement, we agreed to use our reasonable best efforts to cause to become effective a registration statement to exchange the notes for freely tradable notes issued by us. If we are unable to effect the exchange offer within 365 days, we agreed to pay additional interest on the notes. We used the net proceeds from the notes, cash on hand or incremental borrowings under our Credit Facilities as follows: (i) to tender for $325.5 million of certain outstanding senior notes maturing in 2010 and 2011 that were issued by us or one of our subsidiaries; (ii) approximately $250 million to reduce amounts outstanding under our Credit Facility, and (iii) approximately $105 million to remit estimated tax payments related to our divestiture of assets in connection with our merger with Allied. We incurred a loss of $31.8 million for premiums paid to repurchase debt, charges for unamortized debt discounts and professional fees paid to effectuate the repurchase.

During 2009 we repurchased a portion of our senior notes maturing in 2010 and 2011 in the secondary market. As a result, we incurred additional losses on extinguishment of debt of $4.4 million related to premiums paid to repurchase debt, charges for unamortized debt discounts and professional fees paid to effectuate the repurchase. Also during 2009, we completed the required divestitures under the consent decree with the DOJ. Proceeds from the sales of the divested assets were primarily used to reduce amounts outstanding under our Credit Facilities. Additionally, our senior unsecured notes bearing interest at a fixed rate of 7.125% matured during 2009. We repaid the remaining principal balance of $99.3 million in May 2009.

As of December 31, 2009 and 2008, the following are our other senior notes and debentures:


	•	Senior notes totaling $216.5 million and $333.2 million, respectively, net of unamortized adjustment to fair value of $5.1 million and $16.8 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2010 and bear interest at a fixed rate of 6.500% which is payable semi-annually in February and August. These senior notes have a make-whole call provision that is exercisable at any time at a stated redemption price.

	•	Senior notes totaling $252.5 million and $371.1 million, respectively, net of unamortized adjustment to fair value of $10.3 million and $28.9 million, respectively. These notes mature in 2011 and bear interest at a fixed rate of 5.750% which is payable semi-annually in February and August. These senior notes have a make-whole call provision that is exercisable at any time at a stated redemption price.

	•	Senior notes totaling $209.1 million and $257.7 million, respectively, net of unamortized adjustment to fair value of $7.9 million and $17.3 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2011 and bear interest at a fixed rate of 6.375% which is payable semi-annually in April and October. These senior notes have a make-whole call provision that is exercisable at any time at a stated redemption price.

	•	Senior notes totaling $396.4 million and $464.2 million, respectively, net of unamortized discount of $0.5 million and $0.9 million, respectively, and net of adjustment to fair market value of $9.9 million and $15.1 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2011 and bear interest at a fixed rate of 6.750% which is payable semi-annually in February and August.

	•	Senior notes totaling $379.3 million and $370.5 million, respectively, net of unamortized adjustment to fair value of $45.7 million and $54.5 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2014 and bear interest at a fixed rate of 6.125% which is payable semi-annually in February and August. These senior notes have a make-whole call provision that is exercisable at any time at a stated redemption price.

	•	Senior notes totaling $540.2 million and $531.7 million, respectively, net of unamortized adjustment to fair value of $59.8 million and $68.3 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2015 and bear interest at a fixed rate of 7.250% which is payable semi-annually in March and September. These senior notes have a make-whole call provision that is exercisable at any time prior to March 15, 2010 at the stated redemption price. These notes may also be redeemed on or after March 15, 2010 at the stated redemption price.

	•	Senior notes totaling $526.7 million and $518.7 million, respectively, net of unamortized adjustment to fair value of $73.3 million and $81.3 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2016 and bear interest at a fixed rate of 7.125% which is payable semi-annually in May and November. These senior notes have a make-whole call provision that is exercisable at any time prior to May 15, 2011 at the stated redemption price. These notes may also be redeemed on or after May 15, 2011 at the stated redemption price.

	•	Senior notes totaling $654.4 million and $645.7 million, respectively, net of unamortized adjustment to fair value of $95.6 million and $104.3 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2017 and bear interest at a fixed rate of 6.875% which is payable semi-annually in June and December. These senior notes have a make-whole call provision that is exercisable at any time prior to June 1, 2012 at a stated redemption price. These notes may also be redeemed on or after June 1, 2012 at the stated redemption price.


	•	Debentures totaling $93.1 million and $92.8 million, respectively, net of unamortized adjustment to fair value of $6.4 million and $6.7 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2021 and bear interest at a fixed rate of 9.250% which is payable semi-annually in May and November. These debentures are not redeemable prior to maturity and are not subject to any sinking fund requirements.

	•	Senior notes totaling $249.4 million and $249.1 million, respectively, net of unamortized discount of $26.3 million and $26.6 million, respectively. During March 2005, we exchanged $275.7 million of our outstanding 7.125% notes due in 2009 for these 6.086% senior notes due in 2035. We paid $27.6 million in connection with the exchange, which is being amortized over the remaining term of the notes.

	•	Debentures totaling $266.8 million and $266.0 million, respectively, net of unamortized adjustment to fair value of $93.2 million and $94.0 million, respectively, which is being amortized over the remaining term of the notes. These notes mature in 2035 and bear interest at a fixed rate of 7.400% which is payable semi-annually in March and September. These debentures are not subject to any sinking fund requirements and may be redeemed in whole or in part, at our option at any time. The redemption price is equal to the greater of the principal amount of the debentures and the present value of the future principal and interest payments discounted at a rate specified under the terms of the indenture.

Tax-Exempt Financings

As of December 31, 2009 and 2008, we had $1,223.7 million and $1,308.2 million, respectively, of fixed and variable rate tax-exempt financings outstanding with maturities ranging from 2010 to 2037. During 2008, we assumed $527.0 million of tax-exempt bonds and other tax-exempt financings as part of our acquisition of Allied. At December 31, 2009 and 2008, the total of the unamortized adjustment to fair value recorded in purchase accounting for the assumed tax-exempt financings was $49.0 million and $52.9 million, respectively, which is being amortized to interest expense over the remaining terms of the debt.

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 AA or better. The holders of the bonds can put them back to the remarketing agent at the end of each interest period. To date, the remarketing agents have been able to remarket our variable rate unsecured tax-exempt bonds.

As of December 31, 2009, we had $236.6 million of restricted cash, of which $93.1 million represented 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.

Other Debt

Other debt primarily includes capital lease liabilities of $91.9 million and $139.5 million as of December 31, 2009 and 2008, respectively, with maturities ranging from 2010 to 2042.

Future Maturities of Debt

Aggregate maturities of notes payable, capital leases and other long-term debt as of December 31, 2009, excluding non-cash discounts, premiums, adjustments to fair value related to hedging transactions and adjustments to fair value recorded in purchase accounting totaling $467.5 million, are as follows:


2010	$	550.3
2011		871.6
2012		29.9
2013		330.7
2014		440.7
Thereafter		5,206.9

	$	7,430.1

Included in 2010 maturities is the receivables secured loan, which is a 364-day liquidity facility maturing in May 2010 and has a balance of $300.0 million at December 31, 2009. We expect to repay the facility on or before the May 2010 maturity.

Fair Value of Debt

The fair value of our fixed rate senior notes using quoted market rates is $5.7 billion and $5.2 billion at December 31, 2009 and 2008, respectively. The carrying value of these fixed rate unsecured notes is $5.0 billion at December 31, 2009 and 2008. The carrying amounts of our remaining notes payable and tax-exempt financing 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.

Guarantees

Substantially all of our subsidiaries have guaranteed our obligations under the Credit Facilities.

Substantially all of our subsidiaries guarantee each series of senior notes issued by our parent company, Republic Services, Inc. Our parent company and substantially all of our subsidiaries guarantee each series of senior notes issued by our subsidiary Allied Waste North America, Inc. (AWNA notes) and each series of senior notes issued by our subsidiary Browning-Ferris Industries, LLC (successor to Browning-Ferris Industries, Inc.) (BFI notes). All of these guarantees would be automatically released upon the release of our subsidiaries from their guarantee obligations under the Credit Facilities, except the guarantee of Allied in the case of the AWNA notes, and the guarantees of Allied and Allied Waste North America, Inc. in the case of the BFI notes.

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.

Interest Paid

Interest paid was $471.6 million, $93.7 million and $95.2 million for the years ended December 31, 2009, 2008 and 2007, respectively. The components of interest expense are as follows:


	2009			2008			2007

Interest expense on debt and capital lease obligations	$	453.5		$	123.9		$	97.8
Accretion of debt discounts		92.1			10.1			-
Accretion of remediation and risk reserves		58.1			0.5			-
Less: capitalized interest		(7.8	)		(2.6	)		(3.0	)

Total interest expense	$	595.9		$	131.9		$	94.8

Interest Rate Swap Agreements

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 unsecured 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 of changes in the fair value of our fixed-rate debt. We have determined that these agreements qualify for the short-cut method 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.

As of December 31, 2009 and 2008, interest rate swap agreements are reflected at their fair value of $9.9 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. During the years ended December 31, 2009, 2008 and 2007, we recorded net interest income of $8.7 million and $3.8 million and net interest expense of $2.3 million, respectively, related to our interest rate swap agreements, which is included in interest expense in our consolidated statements of income.

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 years ended December 31, 2009 and 2008:


	Gain (Loss) on Swap				Gain (Loss) on Fixed-Rate Debt
Consolidated Statement of Income Classification	2009		2008		2009			2008

Interest expense	$	8.7	$	3.8	$	(8.7	)	$	(3.8	)

From time to time, we enter into treasury locks and other instruments for the purpose of managing exposure to fluctuations in interest rates in anticipation of future debt issuances. In September 2009, we entered into treasury lock agreements having an aggregate notional amount of $500.0 million to hedge interest rates on 10 year U.S. Treasury Notes in connection with the issuance of our $650.0 million 5.500% Senior Notes. Upon issuance of the notes we terminated the treasury locks and paid approximately $2.5 million to the counterparties. This amount, net of tax, was recorded as a component of accumulated other comprehensive income and is being amortized as an increase to interest expense over the life of the issued debt. This transaction was recorded as a cash flow hedge. As of December 31, 2009, there were no treasury lock cash flow hedges outstanding.

Income Taxes

12 Months Ended

Dec. 31, 2009

Income Taxes [Abstract]

INCOME TAXES


10.	INCOME TAXES

The components of the provision for income taxes for the years ended December 31, are as follows:


	2009			2008			2007

Current:
Federal	$	337.3		$	98.1		$	136.8
State		49.1			11.1			12.1
Federal and state deferred (benefit) provision		(24.6	)		(30.4	)		27.8
Non-current tax provision		6.7			6.6			1.2

Provision for income taxes	$	368.5		$	85.4		$	177.9

The reconciliations of the statutory federal income tax rate to our effective tax rate for the years ended December 31, are shown below:


	2009		2008			2007

Earnings before taxes		35.0%		35.0%			35.0%
State income taxes, net of federal benefit		3.4		3.5			1.8
Non-deductible expenses		2.6		3.9			1.4
Non-deductible merger related compensation		-		7.7			-
Uncertain tax position taxes and interest		0.8		4.2			0.5
Other, net		0.8		(0.7	)		(0.7	)

Effective income tax rate		42.6%		53.6%			38.0%

Our effective income tax rate is adversely impacted by expenses incurred which are non-deductible for tax, disposition of assets that have little or no basis for tax and accruals for penalties and interest on uncertain tax positions. During the year ended December 31, 2008, we incurred expenses that were not tax deductible as a result of the merger with Allied. In addition, lower pre-tax earnings contributed to the increase in our effective tax rate.

The components of the net deferred income tax asset and liability at December 31, 2009 and 2008 are as follows:


	2009			2008

Deferred tax liabilities relating to:
Differences between book and tax basis of property	$	(616.6	)	$	(738.1	)
Difference between book and tax basis of intangible assets		(704.3	)		(630.7	)

Total liabilities		(1,320.9	)		(1,368.8	)

Deferred tax assets relating to:
Difference between book and tax basis of other assets		68.5			105.8
Accruals not currently deductible		309.9			267.7
Environmental reserves		298.4			236.3
Deferred taxes on uncertain tax positions		83.2			186.0
State net operating loss carryforwards		135.3			157.8
Other		21.8			44.6

Total assets		917.1			998.2
Valuation allowance		(126.5	)		(156.4	)

Net deferred tax asset		790.6			841.8

Net deferred tax liabilities	$	(530.3	)	$	(527.0	)

Changes in the deferred tax valuation allowance for the years ended December 31, 2009 and 2008 are as follows:


	2009			2008

Valuation allowance, beginning of year	$	156.4		$	27.5
Additions charged to income		5.2			0.7
Acquisitions		(2.5	)		139.7
Usage		(9.3	)		(11.5	)
Expirations of state net operating losses		(17.8	)		-
Other, net		(5.5	)		-

Valuation allowance, end of year	$	126.5		$	156.4

We have state net operating loss carryforwards, with an estimated tax effect of $135.3 million, available at December 31, 2009. These state net operating loss carryforwards expire at various times between 2010 and 2023. We believe that it is more likely than not that the benefit from certain state net operating loss carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $122.9 million on deferred tax assets relating to these state net operating loss carryforwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized after the initial recognition of the deferred tax asset. We provide valuation allowances, as needed, to offset portions of deferred tax assets due to uncertainty surrounding the future realization of such deferred tax assets. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.

We have recorded $98.2 million of deferred tax assets and $637.2 million of deferred income taxes and other long-term tax liabilities as part of our purchase price allocation for our acquisition of Allied.

During the year ended December 31, 2009, we recorded a tax charge of $13.5 million related to non-deductible goodwill expensed as a result of various divestitures. During the year ended December 31, 2008, we recorded a tax charge of $12.3 million related to non-deductible compensation payouts as a result of the merger with Allied. During the year ended December 31, 2007, we recorded a net tax benefit of $4.8 million in our provision for income taxes related to the resolution of various tax matters, including the effective completion of the Internal Revenue Service (IRS) audits of our consolidated tax returns for fiscal years 2001 through 2004.

We made income tax payments (net of refunds received) of approximately $444 million, $128 million and $152 million for the years ended December 31, 2009, 2008 and 2007, respectively. During 2008, approximately $32 million of federal tax payments were deferred and paid in 2009 as a result of the merger with Allied.

The following table summarizes the activity in our gross unrecognized tax benefits for the years ended December 31:


	2009			2008			2007

Balance at beginning of year	$	611.9		$	23.2		$	56.4
Additions due to the acquisition of Allied		13.3			582.9			-
Additions based on tax positions related to current year		3.9			10.6			16.3
Reductions for tax positions related to the current year		-			(5.1	)		(17.2	)
Additions for tax positions of prior years		5.6			2.0			2.0
Reductions for tax positions of prior years		(24.1	)		(1.3	)		(12.3	)
Reductions for tax positions resulting from lapse of statute of limitations		(0.5	)		(0.4	)		(0.4	)
Settlements		(367.9	)		-			(21.6	)

Balance at end of year	$	242.2		$	611.9		$	23.2

New accounting guidance for business combinations is effective for our 2009 financial statements. This new guidance significantly changes the treatment of acquired uncertain tax liabilities. Under previous guidance, changes in acquired uncertain tax liabilities were recognized through goodwill. Under this new guidance, subsequent changes in acquired unrecognized tax liabilities are recognized through the income tax provision. As of December 31, 2009, $211.9 million of the $242.2 million of unrecognized tax benefits related to tax positions taken by Allied prior to the merger.

Included in the balance at December 31, 2009 are approximately $217.6 million of unrecognized tax benefits (net of the federal benefit on state issues) that, if recognized, would affect the effective income tax rate in future periods.

During 2009, we settled our outstanding tax dispute related to Allied’s risk management companies (see — Risk Management Companies) with both the DOJ and the IRS. This settlement reduced our gross unrecognized tax benefits by approximately $299.6 million. During 2009, we also settled with the IRS, through an accounting method change, our outstanding tax dispute related to intercompany insurance premiums paid to Allied’s captive insurance company. This settlement reduced our gross unrecognized tax benefits by approximately $62.6 million. In addition to these federal matters, we also resolved various state matters that, in the aggregate, reduced our gross unrecognized tax benefits during 2009 by approximately $5.8 million.

We recognize interest and penalties as incurred within the provision for income taxes in our consolidated statements of income. Related to the unrecognized tax benefits previously noted, we accrued interest of $24.5 million during 2009 and, in total as of December 31, 2009, have recognized a liability for penalties of $1.5 million and interest of $92.3 million. During 2008, we accrued penalties of $0.2 million and interest of $5.2 million and, in total at December 31, 2008, had recognized a liability for penalties of $88.1 million and interest of $180.0 million. During 2007, we accrued interest of $0.9 million and, in total at December 31, 2007, had recognized a liability for penalties and interest of $5.5 million.

The decrease in accrued interest and penalties between 2009 and 2008 was driven mainly by the settlements discussed previously. However, the current year interest expense increased due to the accrual of a full twelve months of interest expense on Allied’s acquired uncertain tax positions versus only one month of accrued interest expense recorded in 2008.

Gross unrecognized tax benefits that we expect to settle in the following twelve months are in the range of $10.0 million to $20.0 million. It is reasonably possible that the amount of unrecognized tax benefits will increase or decrease in the next twelve months.

We and our subsidiaries are subject to income tax in the U.S. and Puerto Rico, as well as income tax in multiple state jurisdictions. We have acquired Allied’s open tax periods as part of the acquisition. Allied is 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.

Prior to the merger, the IRS had commenced an examination of our 2005 through 2007 tax years and this exam is currently ongoing. In 2009, the IRS opened an examination of our 2008 tax year. We are also under state examination in various jurisdictions for various tax years. These audits are ongoing.

We are subject to numerous federal, foreign, 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.

We believe that the liabilities 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.

Risk Management Companies

Prior to Allied’s acquisition of Browning Ferris Industries (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 $902 million for tax purposes, calculated as the excess of the tax basis of the stock over the cash proceeds received.

On January 18, 2001, the 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. In April 2005, the Appeals Office of the IRS upheld the disallowance of the capital loss deduction with respect to BFI tax years prior to the acquisition. In July 2005, Allied filed a suit for refund in the United States Court of Federal Claims (CFC) relating to the BFI tax years. In January 2009, we paid all tax, interest and penalty asserted by the IRS with respect to the BFI tax years and withdrew our suit for refund in the CFC.

In August 2008, Allied received from the IRS a Statutory Notice of Deficiency related to its utilization of BFI’s capital loss carryforward on Allied’s 1999 tax return. In October 2008, Allied filed a suit for refund in federal district court in Arizona with respect to Allied’s 1999 tax year. In December 2009, we reached a settlement with both the DOJ and IRS for Allied’s 1999 tax year and all subsequent tax years. Under the settlement, the company resolved all remaining liability for this matter (including federal and state tax, penalty and interest) for approximately $125 million. We paid approximately $58 million in the first quarter of 2010 and expect to pay the remainder, approximately $67 million, later in 2010. While the final settlement amount is less than the amount previously accrued for this matter, the accrual and the adjustment thereto are reflected in our allocation of purchase price associated with the acquisition of Allied and had no impact on our consolidated statement of income.

Exchange of Partnership Interests

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. We believe our position is supported by relevant technical authorities and strong business purpose and we intend to vigorously defend our position on this matter. 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 December 31, 2009 of approximately $59 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 December 31, 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.

Methane Gas

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.

We have protested this matter to 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.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2009

Employee Benefit Plans [Abstract]

EMPLOYEE BENEFIT PLANS


11.	EMPLOYEE BENEFIT PLANS

Stock-Based Compensation

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. There were 6.8 million shares reserved for future grants under the 2007 Plan as of December 31, 2009.

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.

In December 2008, the Board of Directors adopted the Republic Services, Inc. 2006 Incentive Stock Plan (formerly known as 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. At December 31, 2009, there were approximately 15.3 million shares of common stock reserved for future grants under the 2006 Plan.

Stock Options

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 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. 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. 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 weighted-average estimated fair values of stock options granted during the years ended December 31, 2009, 2008 and 2007 were $3.79, $4.36 and $6.49 per option, respectively, which were calculated using the following weighted-average assumptions:


	2009	2008	2007

Expected volatility	28.7%	27.3%	23.5%
Risk-free interest rate	1.4%	1.7%	4.8%
Dividend yield	3.1%	2.9%	1.5%
Expected life (in years)	4.2	4.2	4.0
Contractual life (in years)	7	7	7
Expected forfeiture rate	3.0%	3.0%	5.0%

The following table summarizes the stock option activity for the years ended December 31, 2007, 2008 and 2009:


						Weighted Average
				Weighted Average		Remaining		Aggregate
	Number			Exercise		Contractual Term		Intrinsic
	of Shares			Price per Share		(Years)		Value

Outstanding at December 31, 2006		8.6		$	16.76
Granted		1.4			29.34
Exercised		(2.2	)		13.58			$	36.6

Cancelled		(0.1	)		23.39

Outstanding at December 31, 2007		7.7			19.84
Granted:
Granted as replacement options for Allied’s outstanding stock options		7.6			25.77
Granted other		5.2			25.46
Exercised		(1.4	)		15.93			$	19.9

Cancelled		(0.4	)		42.07

Outstanding at December 31, 2008		18.7			23.57
Granted		0.3			21.03
Exercised		(2.1	)		18.12			$	17.8

Cancelled		(1.8	)		28.59

Outstanding at December 31, 2009		15.1		$	23.69		5.0	$	75.0

Exercisable at December 31, 2009		12.0		$	23.73		4.8	$	60.3

Stock options granted in 2008 primarily include stock options granted as part of our annual grant to employees in February 2008, as part of our new annual grant program in December 2008 and as grants of replacement options for Allied’s outstanding stock options as of the effective date of the merger, in accordance with the terms of the merger agreement. In December 2008, we replaced Allied’s outstanding, vested and unvested stock options with Republic stock options with similar terms and conditions, and recorded a credit to additional-paid-in-capital of $61.2 million as part of the purchase price paid for the acquisition.

Additionally, as of the effective date of the merger with Allied, all of Republic’s unvested stock options outstanding were vested in accordance with the change in control provisions of the 1998 and 2007 Plans. We recorded compensation expense of $6.5 million in December 2008 to recognize the immediate vesting of the stock options.

During the years ended December 31, 2009, 2008 and 2007, compensation expense for stock options was $7.8 million, $14.0 million and $6.3 million, respectively.

As of December 31, 2009, total unrecognized compensation expense related to outstanding stock options was $7.4 million, which will be recognized over a weighted average period of 2.1 years. The total fair value of stock options that vested in 2009, 2008 and 2007 was $3.9 million, $21.5 million and $2.3 million, respectively.

We classified excess tax benefits of $2.5 million, $4.5 million and $6.0 million as cash flows from financing activities for the years ended December 31, 2009, 2008 and 2007, respectively. All other tax benefits related to stock options have been presented as a component of cash flows from operating activities.

Other Stock Awards

The following table summarizes the deferred stock unit and restricted stock activity for the years ended December 31, 2007, 2008 and 2009:


	Number of Deferred			Weighted-Average		Weighted-Average
	Stock Units and			Grant Date		Remaining		Aggregate
	Restricted Stock			Fair Value per		Contractual		Intrinsic
	(In Thousands)			Share		Term (Years)		Value

Unissued at December 31, 2006		289.0		$	23.42
Granted		237.7			29.33
Vested and issued		(127.5	)		23.71

Unissued at December 31, 2007		399.2			26.84
Granted		467.1			27.21
Vested and issued		(443.8	)		29.67
Cancelled		(186.3	)		25.27

Unissued at December 31, 2008		236.2			23.50
Granted		516.0			23.92
Vested and Issued		(67.0	)		23.28
Cancelled		(32.0	)		23.50

Unissued at December 31, 2009		653.2		$	23.85		1.1	$	18.5

Vested and unissued at December 31, 2009		78.7		$	24.80

During the year ended December 31, 2009 we awarded 320,354 deferred stock units and during each of the years ended December 31, 2008 and 2007, we awarded 36,000 deferred stock units to our non-employee directors under our 1998 Plan. These stock units vest immediately, but the directors receive the underlying shares only after their board service ends or a change in control occurs, as defined by the 1998 Plan. The stock units do not carry any voting or dividend rights, except the right to receive additional stock units in lieu of dividends.

During the year ended December 31, 2009, we awarded 195,611 shares of restricted stock to executives and other officers and directors, of which 110,669 of the shares vest effective May 14, 2010 and 38,670 of the shares awarded vest effective January 31, 2012. Additionally, 26,914 shares awarded vest in four equal annual installments beginning on the anniversary date of the original grant. The remaining 15,904 shares awarded vested during 2009 and 3,454 shares will vest February 19, 2010. 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.

During the years ended December 31, 2008 and 2007, we awarded 426,670 and 185,820 shares of restricted stock to our executive officers, of which 236,170 granted during 2008 were granted as part of our 2007 Stock Incentive Plan. As of the effective date of the acquisition of Allied, all of Republic’s remaining unvested restricted stock outstanding was vested in accordance with the change in control provisions of the 1998 Plan.

The fair value of stock units and restricted shares is based on the closing market price on the date of grant. The compensation expense related to these stock units and restricted shares is amortized ratably over the vesting period, or the accelerated vesting period if certain performance targets are achieved.

As of the effective date of the merger with Allied, all of Republic’s outstanding and unvested restricted stock was vested in accordance with the change in control provisions of the 1998 and 2007 Plans. We recorded compensation expense of $5.3 million in December 2008 to recognize the immediate vesting of the restricted stock. In addition, the deferred stock units were vested and a cash payment was made totaling $4.0 million based on the fair value of the deferred stock units as of the date of vesting.

During the years ended December 31, 2009, 2008 and 2007, compensation expense related to stock units and restricted shares totaled $7.2 million, $10.0 million and $4.6 million, respectively.

Defined Benefit Pension Plan

We currently have one qualified defined benefit pension plan, the BFI Retirement Plan (the Plan). The Plan covers certain employees in the United States, including some employees subject to collective bargaining agreements.

The Plan benefits are frozen. Interest credits continue to be earned by participants in the Plan, and participants whose collective bargaining agreements provide for additional benefit accruals under the Plan continue to receive those credits in accordance with the terms of their bargaining agreements. The Plan was converted from a traditional defined benefit plan to a cash balance plan in 1993.

During 2002, the Plan and the Pension Plan of San Mateo County Scavenger Company and Affiliated Divisions of Browning-Ferris Industries of California, Inc. (San Mateo Pension Plan) were merged into one plan. However, benefits continue to be determined under two separate benefit structures.

Prior to the conversion of the cash balance design, benefits payable as a single life annuity under the Plan were based on the participant’s highest five years of earnings out of the last ten years of service. Upon conversion to the cash balance plan, the existing accrued benefits were converted to a lump-sum value using the actuarial assumptions in effect at the time. Participants’ cash balance accounts are increased until retirement by certain benefit and interest credits under the terms of their bargaining agreements. Participants may elect early retirement with the attainment of age 55 and completion of 10 years of credited service at reduced benefits. Participants with 35 years of service may retire at age 62 without any reduction in benefits.

The San Mateo Pension Plan covers certain employees at the San Mateo location excluding employees who are covered under collective bargaining agreements under which benefits had been the subject of good faith bargaining unless the collective bargaining agreement otherwise provides for such coverage. Benefits are based on the participant’s highest five years of average earnings out of the last fifteen years of service. Effective January 1, 2004, participants who have attained the age of 55 and completed 30 years of credited service may elect early retirement without any reduction in benefits. Effective January 1, 2006, the San Mateo Pension Plan was amended to modify the definition of eligible employees to exclude highly compensated employees. In addition, no new employees hired or rehired after December 31, 2005 are eligible to participate in or accrue a benefit under the San Mateo Pension Plan.

BFI Post Retirement Healthcare Plan

The BFI Post Retirement Healthcare Plan provides continued medical coverage for certain current and former employees following their retirement, including some employees subject to collective bargaining agreements. Eligibility for this plan is limited to certain employees who had ten or more years of service and were age 55 or older as of December 31, 1998, and certain employees in California who were hired on or before December 31, 2005 and who retire on or after age 55 with at least thirty years of service.

Multi-Employer Pension Plans

We contribute to 25 multi-employer pension plans under collective bargaining agreements covering union-represented employees. Approximately 17% of our total current employees are participants in such 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.

Based on the information available to us, we believe that some of the multi-employer plans to which we contribute are either “critical” or “endangered” as those terms are defined in the Pension Protection Act enacted in 2006 (the PPA). The PPA 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 PPA, 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 PPA may have on our consolidated financial position, results of operations or cash flows.

Furthermore, under current law regarding multi-employer benefit plans, a plan’s termination, our voluntary withdrawal (which we consider from time to time), 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.

Our pension expense for multi-employer plans was $43.0 million, $21.8 million and $18.9 million for the years ended December 31, 2009, 2008 and 2007, respectively.

Supplemental Executive Retirement Plan

Our Supplemental Executive Retirement Plan (SERP) provides retirement benefits to certain of Allied’s employees and former employees. SERP participants whose employment with us has been severed as a result of the merger received cash settlements six months following their respective separation dates. Benefits for SERP participants who remain with Republic were frozen as of the effective date of the merger. However, these active participants will continue to accrue interest credits at the annual rate of 6.0% until they are eligible for retirement. SERP participants who retired prior to the acquisition will continue to receive their benefits in accordance with the original plan provisions which allow for a maximum of ten years of retirement benefits equal to 60% of each participant’s respective average base salary during the three consecutive full calendar years of employment immediately preceding their date of retirement. At December 31, 2009, there were one retired and two active participants in the plan. As the SERP is frozen, no assumptions are made about future compensation levels, and as such, there is no difference between the projected benefit and the accumulated benefit obligation.

We also assumed post-retirement medical obligations associated with the SERP totaling $1.8 million as of the acquisition date. Medical liabilities were $1.4 million and $2.0 million at December 31, 2009 and 2008 and are included in the post retirement healthcare amounts in the table below.

We are required to separately recognize the overfunded or underfunded status of our pension and other post retirement employee benefit plans as an asset or liability. The funded status represents the difference between the projected benefit obligation (PBO) and the fair value of the plan assets. The PBO is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases, if any. The PBO is equal to the accumulated benefit obligation as the present value of these liabilities is not affected by assumed future salary increases. We use a measurement date that coincides with our year end of December 31.

The following table presents the accumulated benefit obligation and reconciliations of the changes in the projected benefit obligations, the plan assets and the accounting funded status of our defined benefit pension plan, SERP and post retirement healthcare plans for the years ended December 31, 2009 and 2008.


	Defined Benefit						Postretirement						Supplemental Executive
	Pension Plan						Healthcare Plans						Retirement Plan
	2009			2008			2009			2008			2009			2008

Accumulated Benefit Obligation	$	364.7		$	360.6		$	-		$	-		$	4.7		$	12.7


Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	361.2		$	-		$	3.2		$	-		$	12.7		$	-
Acquisitions		-			335.9			-			3.0			-			13.6
Service cost		0.2			-			-			-			-			-
Interest cost		20.2			1.8			0.2			-			0.5			0.1
Actuarial loss (gain)		(1.8	)		25.2			(0.5	)		0.2			0.1			-
Benefits paid		(15.1	)		(1.7	)		(0.3	)		-			(10.6	)		(1.1	)
Curtailment loss (gain)		-			-			(0.2	)		-			2.0			0.1

Projected benefit obligation at end of year	$	364.7		$	361.2		$	2.4		$	3.2		$	4.7		$	12.7

Change in Plan Assets:
Fair value of plan assets at beginning of year	$	293.9		$	-		$	-		$	-		$	-		$	-
Acquisitions		-			274.2			-			-			-			-
Actual return on plan assets		54.5			21.4			-			-			-			-
Employer contributions		-			-			0.3			-			10.6			1.1
Benefits paid		(15.1	)		(1.7	)		(0.3	)		-			(10.6	)		(1.1	)

Fair value of plan assets at end of year	$	333.3		$	293.9		$	-		$	-		$	-		$	-

Unfunded status	$	31.4		$	67.3		$	2.4		$	3.2		$	4.7		$	12.7

Amounts recognized in the statement of financial position consist of:
Current liabilities	$	-		$	-		$	0.2		$	0.2		$	0.2		$	8.2
Noncurrent liabilities		31.4			67.3			2.2			3.0			4.5			4.5

Net amount recognized	$	31.4		$	67.3		$	2.4		$	3.2		$	4.7		$	12.7

Weighted average assumptions used to determine benefit obligations:
Discount rate		5.75	%		5.75	%		5.75	%		5.75	%		5.75	%		5.75	%
Rate of compensation increase		N/A			N/A			N/A			N/A			N/A			N/A

The amounts included in accumulated other comprehensive income on the consolidated statement of financial position that have not yet been recognized as components of net periodic benefit cost at December 31, 2009 are as follows:


				Postretirement			Supplemental
	Defined Benefit			Healthcare			Executive
	Pension Plan			Plan			Retirement Plan

Accumulated other comprehensive loss (income):
Net actuarial (gain) loss	$	(29.4	)	$	(0.4	)	$	0.1

The components of the net periodic benefit cost are summarized below:


	Defined Benefit						Postretirement						Supplemental Executive
	Pension Plan						Healthcare Plans						Retirement Plan
	2009			2008			2009			2008			2009			2008

Components of net periodic benefit cost:
Service cost	$	0.2		$	-		$	-		$	-		$	-		$	-
Interest cost		20.2			1.8			0.2			-			0.5			0.1
Expected return on plan assets		(21.4	)		(1.7	)		-			-			-			-
Curtailment recognition		-			-			(0.2	)		-			2.0			0.1

Net periodic benefit cost	$	(1.0	)	$	0.1		$	-		$	-		$	2.5		$	0.2


Weighted average assumptions used to determine net periodic benefit cost:

Discount rate		5.75	%		6.50	%		5.75	%		6.50	%		5.75	%		6.50	%
Expected return on plan assets		7.25	%		7.50	%		N/A			N/A			N/A			N/A
Rate of compensation increase		4.00	%		4.00	%		N/A			N/A			N/A			N/A

We determine the discount rate used in the measurement of our obligations based on a model which matches the timing and amount of expected benefit payments to maturities of high quality bonds priced as of the pension plan measurement date. Where that timing does not correspond to a published high-quality bond rate, our model uses an expected yield curve to determine an appropriate current discount rate. The yields on the bonds are used to derive a discount rate for the liability. The term of our obligation, based on the expected retirement dates of our workforce, is approximately ten years.

In developing our expected rate of return assumption, we have evaluated the actual historical performance and long-term return projections of the Plan assets, which give consideration to the asset mix and the anticipated timing of the pension plan outflows. We employ a total return investment approach whereby a mix of equity and fixed income investments are used to maximize the long-term return of plan assets for what we consider a prudent level of risk. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and our financial condition. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks as well as growth, value, and small and large capitalizations. Derivatives may be used to gain market exposure in an efficient and timely manner. However, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset and liability studies, and quarterly investment portfolio reviews.

A one percentage point increase in the assumed health care cost trend rate would not have a material impact on the service and interest costs and would increase our postretirement benefit obligation by $0.1 million at December 31, 2009. A one percentage point decrease in the assumed health care cost trend rate would decrease the service and interest costs by less than $0.1 million and would decrease our postretirement benefit obligation by $0.1 million at December 31, 2009.

Our pension contributions are made in accordance with funding standards established by Employee Retirement Income Security Act of 1974 and the Internal Revenue Code, as amended by the PPA. We have not made contributions to the defined benefit pension plan in 2009, 2008 or 2007 and we are not required to make any contributions in 2010.

Estimated future benefit payments for the next ten years under the Plan, the postretirement healthcare plan and the SERP are as follows:


					Supplemental
	Defined Benefit		Postretirement		Executive
	Pension Plan		Healthcare Plans		Retirement Plan

2010	$	15.6	$	0.3	$	0.3
2011		15.9		0.2		0.3
2012		17.9		0.2		0.3
2013		18.5		0.2		0.3
2014		25.4		0.2		0.3
2015 through 2019		145.8		1.3		5.4

The following table summarizes our target asset allocation for 2010 and actual asset allocation at December 31, 2009 and 2008 for our defined benefit pension plan:


				2009			2008
	Target			Actual			Actual
	Asset			Asset			Asset
	Allocation			Allocation			Allocation

Debt securities		50	%		48	%		51	%
Equity securities		50			51			48
Cash		-			1			1

Total		100	%		100	%		100	%

The investment strategy for pension plan assets is to maintain a broadly diversified portfolio designed to achieve our target of an average long-term rate of return of 7.25%. While we believe we can achieve a long-term average return of 7.25%, we cannot be certain that the portfolio will perform to our expectations. Assets are strategically allocated among debt and equity portfolios in order to achieve a diversification level that dampens fluctuations in investment returns. Asset allocation target ranges and strategies are reviewed periodically with the assistance of an independent external consulting firm.

The pension assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.


	•	Money market accounts are valued at the net asset value of shares held by the Plan at year end. These investments are classified as Level 2 investments.

	•	Registered Investment Companies are mutual funds and other commingled funds registered with the Securities and Exchange Commission. Mutual funds are traded actively on public exchanges. The share prices for mutual funds are published at the close of each business day. Holdings of mutual funds are classified as Level 1 investments. Other registered commingled funds are not publicly traded, but underlying assets (stocks and bonds) held in these funds are traded on active markets and the prices for these assets are readily observable. Holdings in other registered commingled funds are classified as Level 2 investments.


	•	Limited partnerships invest in privately-held companies or privately held real estate assets. Due to the private nature of the partnership investments, pricing inputs are not readily observable. Asset valuations are developed by the general partners that manage the partnerships. These valuations are based on property appraisals, application of public market multiples to private company cash flows, utilization of market transactions that provide valuation information for comparable companies and other methods. Holdings of limited partnership interests are classified as Level 3 investments.

The following table summarizes, by level, within the fair value hierarchy, the investments of the Plan at fair value as of December 31, 2009:


			Fair Value Measurements Using
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

Money market account	$	1.8	$	-	$	1.8	$	-
Registered Investment Companies		330.9		215.8		115.1		-
Limited partnerships		0.6		-		-		0.6

Total assets	$	333.3	$	215.8	$	116.9	$	0.6

The following table summarizes the changes in the fair value of the Plan’s investment in Level 3 assets for the year ended December 31, 2009:


	Limited
	Partnerships
	(Level 3)

Balance, beginning of the year	$	0.9
Unrealized loss relating to instruments held at the reporting date		(0.1	)
Purchases, sales, issuances and settlements, net		(0.2	)

Balance, end of the year	$	0.6

Defined Contribution Plans

We maintain the Republic Services 401(k) Plan (401(k) Plan), which is a defined contribution plan covering all eligible employees. Under the provisions of the Plan, participants may direct us to defer a portion of their compensation to the Plan, subject to Internal Revenue Code limitations. We provide for an employer matching contribution equal to 100% of the first 3% of eligible compensation and 50% of the next 2% of eligible compensation contributed by each employee, which is funded in cash. All contributions vest immediately.

In conjunction with the merger with Allied, we acquired the Allied 401(k) Plan. Participants in the Allied 401(k) Plan are eligible for the same employer matching contribution as those under the 401(k) Plan effective January 1, 2009. Effective July 1, 2009, the 401(k) Plan and the Allied 401(k) Plan were merged to form the Republic Services, Inc. 401(k) Plan.

Total expense recorded for matching 401(k) contributions in 2009, 2008 and 2007 was $30.5 million, $16.8 million and $10.9 million, respectively.

Employee Stock Purchase Plan

Employees of Republic are eligible to participate in an employee stock purchase plan. The plan allows participants to purchase the Company’s common stock for 95% of its quoted market price on the last day of each calendar quarter. For the years ended December 31, 2009, 2008 and 2007, issuances under this plan totaled 49,918 shares, 84,918 shares and 66,078 shares, respectively. At December 31, 2009, shares reserved for issuance to employees under this plan totaled 699,609 and Republic held employee contributions of approximately $0.7 million for the purchase of common stock. Compensation expense for plan participants in 2009, 2008 and 2007 was not material.

Incentive Compensation Plans

Our compensation program includes a management incentive plan, which 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 merger with Allied, our Board of Directors has approved a synergy incentive plan that provides compensation that depends on our achieving targeted synergies of approximately $150 million by the end of 2010. Incentive awards are payable in cash.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2009

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES


16.	COMMITMENTS AND CONTINGENCIES

Litigation

We are subject to extensive and evolving laws and regulations and have implemented our own safeguards to respond to regulatory requirements. In the normal course of conducting our operations, we may become involved in certain legal and administrative proceedings. Some of these actions may result in fines, penalties or judgments against us, which may impact earnings and cash flows for a particular period. We accrue for legal matters and regulatory compliance contingencies when such costs are probable and can be reasonably estimated. Although the ultimate outcome of any legal matter cannot be predicted with certainty, except as described below or in Note 10, Income Taxes, in the discussion of our outstanding tax dispute with the IRS, 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.

Litigation, Environmental and Other Administrative Matters

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, we do not believe that the outcome of our pending litigation, environmental and other administrative proceedings will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

Countywide Matters

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 related 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, included, 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. Republic-Ohio subsequently received additional orders from the OEPA requiring certain actions to be taken by Republic-Ohio, in addition to or in lieu of requirements contained in prior orders, including additional air quality monitoring and the installation and continued maintenance of gas well dewatering systems.

On September 30, 2009, Republic-Ohio entered into two legally binding agreements with the State of Ohio designed to further refine the activities necessary to resolve alleged compliance and licensing issues at the Countywide facility.

The first agreement is a Consent Order that resolves ongoing allegations of noncompliance at the facility and reflects agreements regarding the status of facility licensing. The allegations of noncompliance were summarized in a complaint that was filed by the Ohio Attorney General in the Stark County Court of Common Pleas and resolved the same day in accordance with terms of an agreed upon Consent Order entered into between Republic-Ohio and the State of Ohio. The Consent Order with Ohio requires Republic-Ohio to pay civil penalties and financial relief of $10.0 million, submit updated permit documents, and assess, evaluate, and determine the appropriate time to address certain compliance issues at the facility. All civil penalties and financial relief required by the Consent Order have been satisfied. Compliance with the terms of the Consent Order and other applicable rules will result in Countywide being considered to be in substantial compliance or on a legally enforceable schedule to return to compliance for annual licensing purposes.

The second agreement is a set of F&Os that were agreed to and entered into with the Ohio EPA. The F&Os require the implementation of a comprehensive operation and maintenance program that contains specific requirements for managing the remediation area. The operation and maintenance program is ultimately designed to result in the final capping and closure of the 88-acre remediation area at Countywide. The September 30, 2009 F&Os supersede all previous F&Os (discussed above) that were issued to Republic-Ohio regarding the reaction in the remediation area of the landfill. The operation and maintenance program requires Countywide to, among other things, maintain the temporary cap and other engineering controls designed to prevent odors and isolate and contain the reaction. The operation and maintenance program also contains provisions that require the installation of a composite cap in the remediation area when conditions become conducive to such installation.

Republic-Ohio has also 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 (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 EPA and reimbursed the EPA for certain costs associated with the EPA’s involvement in overseeing implementation of the AOC. On November 20, 2009, the EPA issued a Notification of Completion and Determination of Compliance to Countywide memorializing Countywide’s completion of the work required under the AOC.

The Commissioner of the Stark County Health Department (Commissioner) previously recommended that the Stark County Board of Health (Board of Health) suspend Countywide’s 2007 annual operating license. The Commissioner also 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 has been concluded pursuant to a Consent Order entered into between Republic-Ohio and the Board of Health in the Stark County Court of Common Pleas. The Consent Order requires the Board of Health to issue conditional and/or final operating licenses to Countywide and requires Republic-Ohio to reimburse the Board of Health for certain expenses not to exceed $300,000 incurred related to monitoring and investigation of complaints regarding Countywide. Countywide’s 2009 operating license has been challenged by Tuscarawas County, and the Board of Health issued Countywide its 2010 operating license on December 30, 2009, which also has been challenged by a local citizens’ group, Club 3000.

We believe that we have performed or are diligently performing all actions required under the F&Os, the AOC, and any applicable Consent Orders 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.

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 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. A second almost identical lawsuit was filed on October 13, 2009 in the Tuscarawas County Ohio Court of Common Pleas with approximately 82 plaintiffs. These plaintiffs named Republic Services, Inc., Republic-Ohio, Waste Management, Inc., and Waste Management Ohio, Inc. as defendants. The relief requested on behalf of each plaintiff in both actions 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 anticipate that the two cases will be consolidated. Answers have been filed in both cases and discovery is ongoing. 164 plaintiffs in the first case and 41 plaintiffs in the second case have been dismissed or are in the process of being dismissed for failing to comply with discovery. We intend to vigorously defend against the plaintiffs’ allegations in both actions.

Luri Matter

On August 17, 2007, a lawsuit was filed 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 $0.3 million and attorney fees and litigation costs of $1.1 million. Post-judgment interest accrued at a rate of 8% for 2008 and 5% for 2009, and is accruing at a rate of 4% for 2010. Management anticipates that post-judgment interest could accrue through the middle of 2011 for a total of $7.7 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. The parties submitted their appeal briefs and oral argument was scheduled for October 27, 2009. On October 23, 2009, the Court of Appeals dismissed the appeal holding that the trial court had not entered a final, appealable order. The case has been returned to the trial court for additional proceedings which may include entry of additional order(s) by the trial court followed by another appeal. It is reasonably possible that following all appeals a final 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.

Forward Matters

The District Attorney for San Joaquin County filed a civil action against Forward, Inc. and Allied Waste Industries, Inc. on February 14, 2008 in the Superior Court of California, County of San Joaquin. Forward and Allied each filed answers in November 2008, denying all material allegations of the complaint. The complaint seeks civil penalties of $2,500 for each alleged violation, but no less than $10.0 million, 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.

On February 5, 2010, the U.S. Environmental Protection Agency (EPA) Region IX delivered a Finding and Notice of Violation to the Forward Landfill as a result of alleged violations of the Title V permit issued under the Clean Air Act. The facility is jointly regulated by the EPA and the San Joaquin Valley Air Pollution Control District. The alleged violations include operating gas collection wellheads at greater than 15% oxygen, experiencing a subsurface oxidation event on multiple occasions, and submitting inaccurate compliance certifications. We have requested a conference with the agencies and intend to vigorously defend against the allegations.

Carbon Limestone Matter

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 acceptance of hazardous waste from two customers and issues regarding the site’s leachate management collection system and groundwater monitoring program, and seek corrective actions and a civil penalty of $155,311. After negotiations with OEPA, on December 15, 2009, Carbon Limestone Landfill, LLC and the OEPA agreed to a Director’s Findings and Final Order (DFFO) specifying a schedule of corrective actions and a civil penalty of $73,846, comprised of a single payment of $59,077, and funding of a supplemental environmental project costing $14,769. We have commenced payment and instituting the corrective actions as required by the DFFO.

Litigation Related to Fuel and Environmental Fees

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/Maevers complaint, which the plaintiffs amended on August 31, 2009, 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 filed motions to dismiss in both actions. On January 13, 2010, the court in the CLN/Maevers case granted our motion to dismiss in part and denied it in part. Plaintiff in the Klingler’s case voluntarily dismissed the action without prejudice on October 23, 2009 and subsequently re-filed a virtually identical complaint against a different subsidiary of the company on November 20, 2009. We recently moved to dismiss this new complaint. We will continue to vigorously defend the claims in both lawsuits.

Imperial Landfill Matter

On May 18, 2009, the Pennsylvania Department of Environmental Protection (PADEP) and the Allegheny County Health Department issued to the Imperial Landfill a proposed consent order and agreement for a series of alleged violations related to landfill gas, leachate control, cover management, and resulting nuisance odor complaints in late 2008 and 2009. PADEP subsequently issued additional notices of violation for similar alleged violations. The combined penalties proposed by the agencies total approximately $1 million. We are engaging in ongoing discussions with the agencies to reach a negotiated settlement, and have been aggressively working to correct any issues alleged in the order.

Litigation Related to the Merger with Allied

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 which were completed by September 30, 2009. However, the final judgment can only be approved by the court after the DOJ publishes a notice in the Federal Register 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.

Proxy Disclosure Matter

In late 2009, a Republic stockholder brought a lawsuit in Federal court in Delaware challenging our disclosures in our 2009 proxy statement with respect to the Executive Incentive Plan (“EIP”) that was approved by our stockholders at the 2009 annual meeting. The lawsuit is styled as a combined proxy disclosure claim and derivative action. We are a defendant only with respect to the proxy disclosure claim, which seeks only to require us to make additional disclosures regarding the EIP and to hold a new stockholder vote prior to making any payments under the EIP. The derivative claim is purportedly brought on behalf of our company against all of our directors and the individuals who were executive officers at the time of the 2009 annual meeting and alleges, among other things, breach of fiduciary duty. That claim also seeks injunctive relief and seeks to recoup on behalf of our company an unspecified amount of the incentive compensation that may be paid to our executives under the EIP, as well as the amount of any tax deductions that may be lost if the EIP does not comply with Section 162(m) of the Internal Revenue Code. We believe the lawsuit is without merit and is not material and intend to vigorously defend against the plaintiff’s allegations.

Contracting Matter

We recently discovered actions of non-compliance by one of our subsidiaries with the subcontracting provisions of certain government contracts in one of our markets. We reported the discovery to, and expect further discussions with, law enforcement authorities. Such non-compliance could result in payments by us in the form of restitution, damages, or penalties, or the loss of future business. Based on the information currently available to us, including our expectation that our self-disclosure will be viewed favorably by the applicable authorities, we presently believe that the resolution of the matter, while it may have a material impact on our results of operations or cash flows in the period in which it is recognized or paid, will not have a material adverse effect on our consolidated financial position.

Congress Development Landfill Matters

Congress Development Co. (CDC) is a general partnership that owns and operates the Congress Landfill. The general partners in CDC are our subsidiary, Allied Waste Transportation, Inc. (Allied Transportation), and an unaffiliated entity, John Sexton Sand & Gravel Corporation (Sexton). Sexton was the operator of the landfill through early 2007, when Allied Transportation took over as the operator. The general partners likely will be jointly and severally liable for the costs associated with the following matters relating to the Congress Landfill.

In January 2006, CDC was issued an Agreed Preliminary Injunction and Order by the Circuit Court of Illinois, Cook County. Subsequently, the court issued two additional Supplemental Orders that required CDC to implement certain remedial actions at the Congress Landfill, which remedial actions are underway.

In a suit originally filed on December 23, 2009 in the Circuit Court of Cook County, Illinois and subsequently amended to add additional plaintiffs, approximately 1,000 plaintiffs sued our subsidiaries Allied Transportation and Allied Waste Industries, Inc., CDC and Sexton. The plaintiffs allege bodily injury, property damage and inability to have normal use and enjoyment of property arising from, among other things, odors and other damages arising from landfill gas leaking, and they base their claims on negligence, trespass, and nuisance. The plaintiffs have requested actual damages in excess of $50 million and punitive damages of $50 million. We intend to vigorously defend against the plaintiffs’ allegations in this action. We cannot at this time predict the ultimate outcome of this matter or the reasonably probable loss, if any.

Livingston Matter

On October 13, 2009, the Twenty-First Judicial District Court, Parish of Livingston, State of Louisiana, issued its Post Class Certification Findings of Fact and Conclusions of Law in a lawsuit alleging nuisance from the activities of the CECOS hazardous waste facility located in Livingston Parish, Louisiana. The court granted class certification for all those living within a six mile radius of the CECOS site between the years 1977 and 1990. The site last accepted waste in June 1990. The class certification order remains subject to appeal, and we intend to continue to defend this lawsuit vigorously.

Sunshine Canyon Matter

On November 17, 2009, the South Coast Air Quality Management District (District) issued an Order for Abatement as a result of a series of odor complaints alleged to be associated with the operations at the Sunshine Canyon Landfill located in Sylmar, California. The Order describes eight notices of violation beginning in November 2008 and continuing to November 2009. The District Hearing Board held a compliance hearing on December 17, 2009, at which we described the measures to mitigate the odors. A final order and settlement document has not been issued.

Lease Commitments

We and our subsidiaries lease real property, equipment and software under various operating leases with terms from one month to twenty years. Rent expense during the years ended December 31, 2009, 2008 and 2007 was $60.1 million, $19.3 million and $11.5 million, respectively.

Future minimum lease obligations under non-cancelable real property, equipment and software operating leases with initial terms in excess of one year at December 31, 2009 are as follows:


2010	$	38.0
2011		29.7
2012		22.1
2013		18.8
2014		15.4
Thereafter		77.4

Total	$	201.4

Unconditional Purchase Commitments

Royalties

We have entered into agreements to pay royalties to prior landowners, lessors or host communities where landfills are located, based on waste tonnage disposed at specified landfills. The payments are generally payable quarterly and amounts incurred, but not paid, are accrued in our consolidated balance sheets. Royalties are accrued as tonnage is disposed of in the landfills.

Disposal Agreements

We have several agreements expiring at various dates through 2025 that require us to dispose of a minimum number of tons at third-party disposal facilities. Under these put-or-pay agreements, we are required to pay for agreed-upon minimum volumes regardless of the actual number of tons placed at the facilities.

Future minimum payments under unconditional purchase commitments, consisting primarily of (i) disposal related agreements which include fixed or minimum royalty payments, host agreements and take-or-pay and put-or-pay agreements and (ii) other obligations including committed capital expenditures and consulting service agreements at December 31, 2009 are as follows:


2010	$	213.4
2011		108.4
2012		85.1
2013		65.2
2014		54.7
Thereafter		234.5

Total	$	761.3

Restricted Cash and Other Financial Guarantees

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.

We had the following financial instruments and collateral in place to secure our financial assurances at December 31:


	2009		2008

Letters of credit	$	1,673.5	$	1,753.1
Surety bonds		2,211.0		2,119.2

The letters of credit include $1,634.0 million and $1,686.5 million as of December 31, 2009 and 2008, respectively, of utilized availability under our Credit Facilities. Surety bonds expire on various dates through 2038.

These financial instruments are issued in the normal course of business and are not debt. Since 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.

Our restricted cash deposits include, among other things, restricted cash held for capital expenditures under certain debt facilities, and restricted cash 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 at December 31, as follows:


	2009		2008

Financing proceeds	$	93.1	$	133.5
Capping, closure and post-closure obligations		58.5		63.2
Other		88.9		85.2

Total restricted cash and marketable securities	$	240.5	$	281.9

We own a 19.9% interest in a company that, among other activities, issues financial surety bonds to secure final capping, landfill closure and post-closure obligations for companies operating in the solid waste industry. We account for this investment under the cost method of accounting. There have been no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. This investee company and the parent company of the investee had written surety bonds for us relating to our landfill operations for capping, closure and post-closure, of which $775.2 million and $753.8 million were outstanding as of December 31, 2009 and 2008, respectively. Our reimbursement obligations under these bonds are secured by an indemnity agreement with the investee and letters of credit totaling $67.4 million and $41.3 million as of December 31, 2009 and 2008, respectively.

Off-Balance Sheet Arrangements

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.

Guarantees

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.

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. We do not believe that these contingent obligations will have a material effect on our consolidated financial position, results of operations or cash flows.

Other Matters

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.

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 10, Income Taxes.

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.

Condensed Consolidating Financial Statements

12 Months Ended

Dec. 31, 2009

Condensed Consolidating Financial Statements [Abstract]

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS


18.	CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

We are the primary obligor under certain of the Senior Notes issued by us. However, we have no independent assets or operations, and therefore substantially all of our subsidiaries have jointly and severally guaranteed these notes. Each of the subsidiary guarantors are 100% wholly owned subsidiaries of the parent, and all guarantees are full, unconditional and joint and several with respect to principal, interest and liquidated damages, if any. As such, we present condensed consolidating balance sheets as of December 31, 2009 and 2008, and condensed consolidating statements of income and cash flows for the years ended December 31, 2009, 2008 and 2007 for each of Republic Services, Inc. (Parent), guarantor subsidiaries and the other non-guarantor subsidiaries with any consolidating adjustments.

Condensed Consolidating Balance Sheets


	December 31, 2009
	Parent		Guarantors			Non-Guarantors			Eliminations			Consolidated

ASSETS
Current assets:
Cash and cash equivalents	$	101.8	$	(62.6	)	$	8.8		$	-		$	48.0
Accounts receivable, net		-		391.6			473.5			-			865.1
Prepaid expenses and other current assets		23.7		15.8			117.0			-			156.5
Deferred tax assets		93.1		92.0			10.2			-			195.3

Total current assets		218.6		436.8			609.5			-			1,264.9
Restricted cash and marketable securities		67.6		85.5			87.4			-			240.5
Property and equipment, net		45.6		6,270.1			342.0			-			6,657.7
Goodwill, net		-		10,667.1			-			-			10,667.1
Other intangible assets, net		28.9		471.1			-			-			500.0
Investment and net advances to affiliate		10,877.3		212.6			145.7			(11,235.6	)		-
Other assets		58.3		102.1			49.7			-			210.1

Total assets	$	11,296.3	$	18,245.3		$	1,234.3		$	(11,235.6	)	$	19,540.3


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	114.0	$	441.4		$	37.4		$	-		$	592.8
Notes payable and current maturities of long-term debt		-		243.0			300.0			-			543.0
Deferred revenue		-		326.7			4.4			-			331.1
Accrued landfill and environmental costs, current portion		-		245.4			-			-			245.4
Accrued interest		33.5		62.3			0.4			-			96.2
Other accrued liabilities		273.5		231.1			235.6			-			740.2

Total current liabilities		421.0		1,549.9			577.8			-			2,548.7
Long-term debt, net of current maturities		2,902.2		3,502.4			15.0			-			6,419.6
Accrued landfill and environmental costs, net of current portion		0.5		306.2			1,076.5			-			1,383.2
Deferred income taxes and other long-term tax liabilities		280.6		765.8			(5.9	)		-			1,040.5
Self-insurance reserves, net of current portion		-		129.3			172.7			-			302.0
Other long-term liabilities		127.5		102.0			49.7			-			279.2
Commitments and contingencies
Stockholders’ equity:
Common stock		4.0		-			-			-			4.0
Other equity		7,560.5		11,887.1			(651.5	)		(11,235.6	)		7,560.5

Total Republic Services, Inc. stockholders’ equity		7,564.5		11,887.1			(651.5	)		(11,235.6	)		7,564.5
Noncontrolling interests		-		2.6			-			-			2.6

Total stockholders’ equity		7,564.5		11,889.7			(651.5	)		(11,235.6	)		7,567.1

Total liabilities and stockholders’ equity	$	11,296.3	$	18,245.3		$	1,234.3		$	(11,235.6	)	$	19,540.3

Condensed Consolidating Balance Sheets


	December 31, 2008
	Parent		Guarantors			Non-Guarantors			Eliminations			Consolidated

ASSETS
Current assets:
Cash and cash equivalents	$	67.2	$	(10.8	)	$	12.3		$	-		$	68.7
Accounts receivable, net		-		387.1			558.4			-			945.5
Prepaid expenses and other current assets		33.3		121.7			19.7			-			174.7
Deferred tax assets		34.6		92.0			10.2			-			136.8

Total current assets		135.1		590.0			600.6			-			1,325.7
Restricted cash and marketable securities		96.1		102.8			83.0			-			281.9
Property and equipment, net		28.6		6,586.1			123.5			-			6,738.2
Goodwill, net		-		10,510.1			11.4			-			10,521.5
Other intangible assets, net		-		564.1			-			-			564.1
Investment and net advances to affiliate		9,940.1		148.3			139.7			(10,228.1	)		-
Other assets		127.8		333.3			28.9			-			490.0

Total assets	$	10,327.7	$	18,834.7		$	987.1		$	(10,228.1	)	$	19,921.4


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30.9	$	502.5		$	30.6		$	-		$	564.0
Notes payable and current maturities of long-term debt		99.3		4.7			400.0			-			504.0
Deferred revenue		-		348.6			11.3			-			359.9
Accrued landfill and environmental costs, current portion		-		233.3			0.1			-			233.4
Accrued interest		22.5		84.2			1.0			-			107.7
Other accrued liabilities		199.3		306.8			290.7			-			796.8

Total current liabilities		352.0		1,480.1			733.7			-			2,565.8
Long-term debt, net of current maturities		2,152.5		5,046.0			-			-			7,198.5
Accrued landfill and environmental costs, net of current portion		0.5		287.6			909.0			-			1,197.1
Deferred income taxes and other long-term tax liabilities		480.0		765.7			(5.8	)		-			1,239.9
Self-insurance reserves, net of current portion		43.8		162.8			27.9			-			234.5
Other long-term liabilities		17.5		111.9			73.7			-			203.1
Commitments and contingencies
Stockholders’ equity:
Common stock		3.9		-			-			-			3.9
Other equity		7,277.5		10,979.5			(751.4	)		(10,228.1	)		7,277.5

Total Republic Services, Inc. stockholders’ equity		7,281.4		10,979.5			(751.4	)		(10,228.1	)		7,281.4
Noncontrolling interests		-		1.1			-			-			1.1

Total stockholders’ equity		7,281.4		10,980.6			(751.4	)		(10,228.1	)		7,282.5

Total liabilities and stockholders’ equity	$	10,327.7	$	18,834.7		$	987.1		$	(10,228.1	)	$	19,921.4

Condensed Consolidating Statements of Income


	Year Ended December 31, 2009
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated

Revenue	$	-		$	7,932.6		$	340.1		$	(73.6	)	$	8,199.1
Expenses:
Cost of operations		3.8			4,689.9			224.1			(73.6	)		4,844.2
Depreciation, amortization and depletion		14.6			834.8			20.3			-			869.7
Accretion		0.1			30.1			58.6			-			88.8
Selling, general and administrative		184.9			681.5			14.0			-			880.4
(Gain) loss on disposition of assets and impairments, net		12.0			(149.0	)		-			-			(137.0	)
Restructuring charges		-			63.2			-			-			63.2

Operating income		(215.4	)		1,782.1			23.1			-			1,589.8
Interest expense		(99.7	)		(493.8	)		(2.4	)		-			(595.9	)
Loss on extinguishment of debt		(7.0	)		(127.1	)		-			-			(134.1	)
Interest income		(2.4	)		(2.1	)		6.5			-			2.0
Other (expense) income, net		(0.7	)		1.9			2.0			-			3.2
Equity in earnings of subsidiaries		453.4			56.4			6.0			(515.8	)		-
Intercompany interest income (expense)		514.0			(588.3	)		74.3			-			-

Income before income taxes		642.2			629.1			109.5			(515.8	)		865.0
Provision for income taxes		147.2			183.0			38.3			-			368.5

Net income		495.0			446.1			71.2			(515.8	)		496.5
Less: net income attributable to noncontrolling interests		-			(1.5	)		-			-			(1.5	)

Net income attributable to Republic Services, Inc.	$	495.0		$	444.6		$	71.2		$	(515.8	)	$	495.0

Condensed Consolidating Statements of Income


	Year Ended December 31, 2008
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated

Revenue	$	-		$	3,590.7		$	99.9		$	(5.5	)	$	3,685.1
Expenses:
Cost of operations		7.6			2,332.5			82.1			(5.5	)		2,416.7
Depreciation, amortization and depletion		7.4			342.3			4.4			-			354.1
Accretion		-			19.7			4.2			-			23.9
Selling, general and administrative		135.2			294.8			4.7			-			434.7
(Gain) loss on disposition of assets and impairments, net		5.7			84.1			-			-			89.8
Restructuring charges		-			82.7			-			-			82.7

Operating income		(155.9	)		434.6			4.5			-			283.2
Interest expense		(93.2	)		(42.8	)		4.1			-			(131.9	)
Interest income		4.0			4.3			1.3			-			9.6
Other (expense) income, net		(0.6	)		(1.0	)		-			-			(1.6	)
Equity in earnings of subsidiaries		258.5			3.0			(2.5	)		(259.0	)		-
Intercompany interest income (expense)		-			(7.4	)		7.4			-			-

Income before income taxes		12.8			390.7			14.8			(259.0	)		159.3
Provision for income taxes		(61.0	)		140.1			6.3			-			85.4

Net income		73.8			250.6			8.5			(259.0	)		73.9
Less: net income attributable to noncontrolling interests		-			(0.1	)		-			-			(0.1	)

Net income attributable to Republic Services, Inc.	$	73.8		$	250.5		$	8.5		$	(259.0	)	$	73.8

Condensed Consolidating Statements of Income


	Year Ended December 31, 2007
	Parent			Guarantors		Non-Guarantors			Eliminations			Consolidated

Revenue	$	-		$	3,049.8	$	127.3		$	(0.9	)	$	3,176.2
Expenses:
Cost of operations		1.5			1,902.4		100.9			(0.9	)		2,003.9
Depreciation, amortization and depletion		6.1			295.3		4.1			-			305.5
Accretion		-			17.0		0.1			-			17.1
Selling, general and administrative		54.5			251.4		7.8			-			313.7

Operating income		(62.1	)		583.7		14.4			-			536.0
Interest expense		(95.0	)		0.2		-			-			(94.8	)
Interest income		6.1			4.3		2.4			-			12.8
Other (expense) income, net		(0.1	)		1.2		13.0			-			14.1
Equity in earnings of subsidiaries		380.6			0.8		(1.4	)		(380.0	)		-
Intercompany interest income (expense)		-			0.9		(0.9	)		-			-

Income before income taxes		229.5			591.1		27.5			(380.0	)		468.1
Provision for income taxes		(60.7	)		227.6		11.0			-			177.9

Net income		290.2			363.5		16.5			(380.0	)		290.2
Less: net income attributable to non controlling interests		-			-		-			-			-

Net income attributable to Republic Services, Inc.	$	290.2		$	363.5	$	16.5		$	(380.0	)	$	290.2

Condensed Consolidating Statements of Cash Flows


	Year Ended December 31, 2009
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated

Cash Provided by Operating Activities:
Net income	$	495.0		$	446.1		$	71.2		$	(515.8	)	$	496.5
Equity in earnings of subsidiaries, net of taxes		(453.4	)		(56.4	)		(6.0	)		515.8			-
Other adjustments		72.2			779.7			48.1			-			900.0

Cash Provided by Operating Activities		113.8			1,169.4			113.3			-			1,396.5

Cash Used in Investing Activities:
Purchases of property and equipment		(15.0	)		(790.7	)		(20.6	)		-			(826.3	)
Proceeds from sales of property and equipment		-			31.8			-			-			31.8
Cash used in acquisitions, net of cash acquired		-			(0.1	)		-			-			(0.1	)
Cash proceeds from divestitures, net of cash divested		-			511.1			-			-			511.1
Change in restricted cash and marketable securities		28.4			17.4			(4.2	)		-			41.6
Other		-			(0.6	)		-			-			(0.6	)
Change in investment and net advances to affiliate		(483.8	)		(8.0	)		-			491.8			-

Cash Used in Investing Activities		(470.4	)		(239.1	)		(24.8	)		491.8			(242.5	)

Cash Provided by (Used in) Financing Activities:
Proceeds from notes payable and long-term debt		1,378.6			-			94.0			-			1,472.6
Proceeds from issuance of senior notes, net of discount		1,245.4			-			-			-			1,245.4
Payments of notes payable and long-term debt		(1,969.3	)		(1,420.6	)		(194.0	)		-			(3,583.9	)
Premiums paid on extinguishment of debt		(4.4	)		(42.9	)		-			-			(47.3	)
Fees paid to issue and retire senior notes and certain hedging relationships		(11.9	)		(2.4	)		-			-			(14.3	)
Issuances of common stock		39.6			-			-			-			39.6
Excess income tax benefit from stock option exercises		2.5			-			-			-			2.5
Purchases of common stock for treasury		(1.0	)		-			-			-			(1.0	)
Cash dividends paid		(288.3	)		-			-			-			(288.3	)
Change in investment and net advances from parent		-			483.8			8.0			(491.8	)		-

Cash Provided by (Used in) Financing Activities		391.2			(982.1	)		(92.0	)		(491.8	)		(1,174.7	)

Increase (Decrease) in Cash and Cash Equivalents		34.6			(51.8	)		(3.5	)		-			(20.7	)
Cash and Cash Equivalents at Beginning of Period		67.2			(10.8	)		12.3			-			68.7

Cash and Cash Equivalents at End of Period	$	101.8		$	(62.6	)	$	8.8		$	-		$	48.0

Condensed Consolidating Statements of Cash Flows


	Year Ended December 31, 2008
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated

Cash (Used in) Provided by Operating Activities:
Net income	$	73.8		$	250.6		$	8.5		$	(259.0	)	$	73.9
Equity in earnings of subsidiaries, net of taxes		(258.5	)		(3.0	)		2.5			259.0			-
Other adjustments		(18.9	)		589.6			(132.4	)		-			438.3

Cash (Used in) Provided by Operating Activities		(203.6	)		837.2			(121.4	)		-			512.2

Cash Used in Investing Activities:
Purchases of property and equipment		(4.0	)		(379.1	)		(3.8	)		-			(386.9	)
Proceeds from sales of property and equipment		-			8.2			-			-			8.2
Cash used in acquisitions, net of cash acquired		-			(553.8	)		-			-			(553.8	)
Cash proceeds from divestitures, net of cash divested		-			3.3			-			-			3.3
Change in restricted cash and marketable securities		(0.2	)		3.7			(8.8	)		-			(5.3	)
Other		-			(0.2	)		-			-			(0.2	)
Change in investment and net advances to affiliate		(213.0	)		(146.5	)		-			359.5			-

Cash Used in Investing Activities		(217.2	)		(1,064.4	)		(12.6	)		359.5			(934.7	)

Cash Provided by Financing Activities:
Proceeds from notes payable and long-term debt		1,453.4			-			-			-			1,453.4
Payments of notes payable and long-term debt		(740.6	)		-			-			-			(740.6	)
Issuances of common stock		24.6			-			-			-			24.6
Excess income tax benefit from stock option exercises		4.5			-			-			-			4.5
Payment for deferred stock units		(4.0	)		-			-			-			(4.0	)
Equity issuance cost		(1.8	)		-			-			-			(1.8	)
Purchases of common stock for treasury		(138.4	)		-			-			-			(138.4	)
Cash dividends paid		(128.3	)		-			-			-			(128.3	)
Change in investment and net advances from parent		-			213.0			146.5			(359.5	)		-

Cash Provided by Financing Activities		469.4			213.0			146.5			(359.5	)		469.4

Increase (Decrease) in Cash and Cash Equivalents		48.6			(14.2	)		12.5			-			46.9
Cash and Cash Equivalents at Beginning of Period		18.6			3.4			(0.2	)		-			21.8

Cash and Cash Equivalents at End of Period	$	67.2		$	(10.8	)	$	12.3		$	-		$	68.7

Condensed Consolidating Statements of Cash Flows


	Year Ended December 31, 2007
	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated

Cash (Used in) Provided by Operating Activities:
Net income	$	290.2		$	363.5		$	16.5		$	(380.0	)	$	290.2
Equity in earnings of subsidiaries, net of taxes		(380.6	)		(0.8	)		1.4			380.0			-
Other adjustments		5.2			378.3			(12.4	)		-			371.1

Cash (Used in) Provided by Operating Activities		(85.2	)		741.0			5.5			-			661.3

Cash Used in Investing Activities:
Purchases of property and equipment		-			(288.1	)		(4.4	)		-			(292.5	)
Proceeds from sales of property and equipment		-			6.1			-			-			6.1
Cash used in acquisitions, net of cash acquired		-			(4.4	)		-			-			(4.4	)
Cash proceeds from divestitures, net of cash divested		-			42.1			-			-			42.1
Change in restricted cash and marketable securities		(8.2	)		(3.1	)		(0.3	)		-			(11.6	)

Cash Used in Investing Activities		(8.2	)		(247.4	)		(4.7	)		-			(260.3	)

Cash Provided by (Used in) Financing Activities:
Proceeds from notes payable and long-term debt		313.5			-			-			-			313.5
Payments of notes payable and long-term debt		(300.0	)		(2.4	)		-			-			(302.4	)
Issuances of common stock		31.3			-			-			-			31.3
Excess income tax benefit from stock option exercises		6.0			-			-			-			6.0
Purchases of common stock for treasury		(362.8	)		-			-			-			(362.8	)
Cash dividends paid		(93.9	)		-			-			-			(93.9	)
Change in investment and net advances from parent		490.4			(490.4	)		-			-			-

Cash Provided by (Used in) Financing Activities		84.5			(492.8	)		-			-			(408.3	)

(Decrease) Increase in Cash and Cash Equivalents		(8.9	)		0.8			0.8			-			(7.3	)
Cash and Cash Equivalents at Beginning of Period		27.5			2.6			(1.0	)		-			29.1

Cash and Cash Equivalents at End of Period	$	18.6		$	3.4		$	(0.2	)	$	-		$	21.8

Consolidated Statements of Stockholders Equity and Comprehensive Income - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Statement [Line Items]
Beginning Balance	$ 7,282.5	$ 1,303.8	$ 1,422.1
Comprehensive Income:
Net income	496.5	73.9	290.2
Other comprehensive income (loss), net of tax:
Change in value of derivative instruments, net of tax of $5.1, $5.4 and $0.2 for the year 2007, 2008 and 2009 respectively	(0.1)	(8.6)	8.2
Employee benefit plan liability adjustments, net of tax of $1.9 and $12.8 for the year 2008 and 2009 respectively	22.2	(3.6)
Other comprehensive income (loss)	22.1	(12.2)	8.2
Comprehensive income	518.6	61.7	298.4
Cumulative effect of change in accounting principle			(5.6)
Cash dividends declared	(288.7)	(168.9)	(104.6)
Issuances of common stock	40.7	27.7	45.4
Issuances of common stock due to acquisition of Allied		6,113.7
Equity issuance costs due to acquisition of Allied		(1.8)
Acquisition of noncontrolling interest		1.0
Value of stock options issued to replace Allied stock options		61.2
Stock-based compensation	15.0	24.0	10.9
Adjustment to deferred tax benefits for deferred stock units		(1.5)
Purchases of common stock for treasury, value	(1.0)	(138.4)	(362.8)
Ending Balance	7,567.1	7,282.5	1,303.8
Common Stock
Statement [Line Items]
Beginning Balance	$ 3.9	$ 2.0	$ 1.9
Beginning Balance, shares	378.5	185.4	194.5
Other comprehensive income (loss), net of tax:
Issuances of common stock	$ 0.1		$ 0.1
Issuances of common stock, shares	2.4	1.5	1.9
Issuances of common stock due to acquisition of Allied		$ 1.9
Issuances of common stock due to acquisition of Allied, Shares		195.8
Issuances of restricted stock and deferred stock units		0.4	0.1
Purchases of common stock for treasury, shares	(0.1)	(4.6)	(11.1)
Ending Balance	$ 4.0	$ 3.9	$ 2.0
Ending Balance, shares	380.8	378.5	185.4
Additional Paid-In Capital
Statement [Line Items]
Beginning Balance	$ 6,260.1	$ 38.7	$ 1,617.5
Other comprehensive income (loss), net of tax:
Stock split			(1,635.0)
Issuances of common stock	40.6	27.7	45.3
Issuances of common stock due to acquisition of Allied		6,111.8
Equity issuance costs due to acquisition of Allied		(1.8)
Value of stock options issued to replace Allied stock options		61.2
Stock-based compensation	15.4	24.0	10.9
Adjustment to deferred tax benefits for deferred stock units		(1.5)
Ending Balance	6,316.1	6,260.1	38.7
Retained Earnings
Statement [Line Items]
Beginning Balance	1,477.2	1,572.3	1,602.6
Comprehensive Income:
Net income	495.0	73.8	290.2
Other comprehensive income (loss), net of tax:
Cumulative effect of change in accounting principle			(5.6)
Stock split			(210.3)
Cash dividends declared	(288.7)	(168.9)	(104.6)
Stock-based compensation	(0.4)
Ending Balance	1,683.1	1,477.2	1,572.3
Treasury Stock
Statement [Line Items]
Beginning Balance	(456.7)	(318.3)	(1,800.8)
Other comprehensive income (loss), net of tax:
Stock split			1,845.3
Purchases of common stock for treasury, value	(1.0)	(138.4)	(362.8)
Ending Balance	(457.7)	(456.7)	(318.3)
Other Comprehensive Income (Loss), Net of Tax
Statement [Line Items]
Beginning Balance	(3.1)	9.1	0.9
Other comprehensive income (loss), net of tax:
Change in value of derivative instruments, net of tax of $5.1, $5.4 and $0.2 for the year 2007, 2008 and 2009 respectively	(0.1)	(8.6)	8.2
Employee benefit plan liability adjustments, net of tax of $1.9 and $12.8 for the year 2008 and 2009 respectively	22.2	(3.6)
Ending Balance	19.0	(3.1)	9.1
Comprehensive Income
Comprehensive Income:
Net income	496.5	73.9	290.2
Other comprehensive income (loss), net of tax:
Change in value of derivative instruments, net of tax of $5.1, $5.4 and $0.2 for the year 2007, 2008 and 2009 respectively	(0.1)	(8.6)	8.2
Employee benefit plan liability adjustments, net of tax of $1.9 and $12.8 for the year 2008 and 2009 respectively	22.2	(3.6)
Other comprehensive income (loss)	22.1	(12.2)	8.2
Comprehensive income	518.6	61.7	$ 298.4
Noncontrolling Interests
Statement [Line Items]
Beginning Balance	1.1
Comprehensive Income:
Net income	1.5	0.1
Other comprehensive income (loss), net of tax:
Acquisition of noncontrolling interest		1.0
Ending Balance	$ 2.6	$ 1.1

Consolidated Statements of Stockholders Equity and Comprehensive Income (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007
Other comprehensive income (loss), net of tax:
Tax effect on derivative instruments	$ 0.2	$ 5.4	$ 5.1
Tax effect on Employee benefit plan liability	12.8	1.9
Other Comprehensive Income (Loss), Net of Tax
Other comprehensive income (loss), net of tax:
Tax effect on derivative instruments	0.2	5.4	5.1
Tax effect on Employee benefit plan liability	12.8	1.9
Comprehensive Income
Other comprehensive income (loss), net of tax:
Tax effect on derivative instruments	0.2	5.4	$ 5.1
Tax effect on Employee benefit plan liability	$ 12.8	$ 1.9

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Millions	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Allowance for doubtful accounts	$ 55,200,000	$ 65,700,000
Stockholders' equity:
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50.0	50.0
Preferred stock, shares issued	0.0	0.0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	750.0	750.0
Common stock, shares issued	395.7	393.4
Treasury stock, shares at cost	14.9	14.9