UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

o		OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 1-14267

REPUBLIC SERVICES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		65-0716904 (IRS Employer Identification No.)
18500 NORTH ALLIED WAY PHOENIX, ARIZONA (Address of principal executive offices)		85054 (Zip code)

Registrant’s telephone number, including area code: (480) 627-2700

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o

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

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

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

     On April 23, 2010, the registrant had outstanding 381,832,028 shares of Common Stock, par value $.01 per share (excluding treasury shares of 14,935,207).

 

 

REPUBLIC SERVICES, INC.

INDEX

PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements
		Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and December 31, 2009			1
		Unaudited Consolidated Statements of Income for the Three Months Ended March 31, 2010 and 2009			2
		Unaudited Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 2010			3
		Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009			4
		Notes to Consolidated Financial Statements			5
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			49
Item 4.		Controls and Procedures			50
PART II — OTHER INFORMATION
Item 1.		Legal Proceedings			51
Item 1A.		Risk Factors			51
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			51
Item 3.		Defaults upon Senior Securities			51
Item 4.		(Removed and Reserved)			51
Item 5.		Other Information			52
Item 6.		Exhibits			52
		Signatures			53
EX-4.5
EX-21.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)

		March 31,				December 31,
		2010				2009
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	81.4			$	48.0
Accounts receivable, net of allowance for doubtful accounts of $52.7 and $55.2, respectively			850.7				865.1
Prepaid expenses and other current assets			135.7				156.5
Deferred tax assets			198.2				195.3
Total current assets			1,266.0				1,264.9
Restricted cash and marketable securities			221.8				240.5
Property and equipment, net			6,599.4				6,657.7
Goodwill, net			10,665.4				10,667.1
Other intangible assets, net			483.2				500.0
Other assets			229.5				210.1
Total assets		$	19,465.3			$	19,540.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	412.2			$	592.8
Notes payable and current maturities of long-term debt			475.7				543.0
Deferred revenue			329.9				331.1
Accrued landfill and environmental costs, current portion			241.0				245.4
Accrued interest			84.2				96.2
Other accrued liabilities			711.9				740.2
Total current liabilities			2,254.9				2,548.7
Long-term debt, net of current maturities			6,638.3				6,419.6
Accrued landfill and environmental costs, net of current portion			1,399.2				1,383.2
Deferred income taxes and other long-term tax liabilities			989.3				1,040.5
Self-insurance reserves, net of current portion			300.3				302.0
Other long-term liabilities			314.6				279.2
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 50.0 shares authorized; none issued			—				—
Common stock, par value $0.01 per share; 750.0 shares authorized; 396.3 and 395.7 issued including shares held in treasury, respectively			4.0				4.0
Additional paid-in capital			6,332.6				6,316.1
Retained earnings			1,675.5				1,683.1
Treasury stock, at cost (14.9 shares)			(457.7	)			(457.7	)
Accumulated other comprehensive income, net of tax			12.2				19.0
Total Republic Services, Inc. stockholders’ equity			7,566.6				7,564.5
Noncontrolling interests			2.1				2.6
Total stockholders’ equity			7,568.7				7,567.1
Total liabilities and stockholders’ equity		$	19,465.3			$	19,540.3

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)

		Three Months Ended March 31,
		2010				2009
Revenue		$	1,957.7			$	2,060.5
Expenses:
Cost of operations			1,136.8				1,208.7
Depreciation, amortization and depletion			203.0				221.8
Accretion			20.2				23.3
Selling, general and administrative			210.3				217.5
Loss on disposition of assets and impairments, net			0.5				4.9
Restructuring charges			5.6				31.3
Operating income			381.3				353.0
Interest expense			(134.5	)			(153.5	)
Loss on extinguishment of debt			(132.3	)			—
Interest income			—				0.7
Other income, net			1.7				0.2
Income before income taxes			116.2				200.4
Provision for income taxes			51.0				87.0
Net income			65.2				113.4
Less: net income attributable to noncontrolling interests			(0.2	)			(0.4	)
Net income attributable to Republic Services, Inc.		$	65.0			$	113.0
Basic earnings per share attributable to Republic Services, Inc. stockholders:
Basic earnings per share		$	0.17			$	0.30
Weighted average common shares outstanding			381.4				378.9
Diluted earnings per share attributable to Republic Services, Inc. stockholders:
Diluted earnings per share		$	0.17			$	0.30
Weighted average common and common equivalent shares outstanding			383.3				379.9
Cash dividends per common share		$	0.19			$	0.19

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(in millions)

						Republic Services, Inc Stockholders’ Equity
																										Accumulated
																										Other
						Common Stock								Additional												Comprehensive
						Shares,				Par				Paid-In				Retained				Treasury				Income (Loss),				Noncontrolling
		Total				Net				Value				Capital				Earnings				Stock				Net of Tax				Interests
Balance as of December 31, 2009		$	7,567.1				380.8			$	4.0			$	6,316.1			$	1,683.1			$	(457.7	)		$	19.0			$	2.6
Net income			65.2				—				—				—				65.0				—				—				0.2
Other comprehensive income (loss)			(6.8	)			—				—				—				—				—				(6.8	)			—
Cash dividends declared			(72.5	)			—				—				—				(72.5	)			—				—				—
Issuances of common stock			10.2				0.6				—				10.2				—				—				—				—
Stock-based compensation			6.2				—				—				6.3				(0.1	)			—				—				—
Distributions paid to noncontrolling interests			(0.7	)			—				—				—				—				—				—				(0.7	)
Balance as of March 31, 2010		$	7,568.7				381.4			$	4.0			$	6,332.6			$	1,675.5			$	(457.7	)		$	12.2			$	2.1

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

		Three Months Ended March 31,
		2010				2009
Cash Provided by Operating Activities:
Net income		$	65.2			$	113.4
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of property and equipment			129.0				132.6
Landfill depletion and amortization			56.4				71.8
Amortization of intangible and other assets			17.6				17.4
Accretion			20.2				23.3
Non-cash interest expense — debt			16.2				25.7
Non-cash interest expense — other			12.2				12.7
Restructuring related charges			0.7				18.8
Stock-based compensation			6.2				4.7
Deferred tax (benefit) provision			(50.8	)			31.8
Provision for doubtful accounts, net of adjustments			2.5				5.8
Excess income tax benefit from stock option exercises			(0.8	)			0.3
Asset impairments			0.1				1.8
Loss on extinguishment of debt			132.3				—
Gain on disposition of assets, net			(4.3	)			—
Other non-cash items			0.6				(0.2	)
Change in assets and liabilities, net of effects from business acquisitions and divestitures:
Accounts receivable			11.9				62.6
Prepaid expenses and other assets			13.2				17.7
Accounts payable			(99.2	)			33.8
Restructuring and synergy related expenditures			(8.2	)			(8.8	)
Capping, closure and post-closure expenditures			(10.5	)			(13.6	)
Remediation expenditures			(11.5	)			(13.4	)
Other liabilities			0.1				(25.8	)
Cash Provided by Operating Activities			299.1				512.4
Cash Used in Investing Activities:
Purchases of property and equipment			(208.4	)			(193.4	)
Proceeds from sales of property and equipment			5.9				4.9
Cash used in acquisitions, net of cash acquired			(0.8	)			(0.1	)
Cash proceeds from divestitures, net of cash divested			—				0.3
Change in restricted cash and marketable securities			18.6				19.2
Other			0.6				—
Cash Used in Investing Activities			(184.1	)			(169.1	)
Cash Used in Financing Activities:
Proceeds from notes payable and long-term debt			731.5				230.9
Proceeds from issuance of senior notes, net of discount			1,499.4				—
Payments of notes payable and long-term debt			(2,198.4	)			(381.1	)
Premiums paid on extinguishment of debt			(30.4	)			—
Fees paid to issue and retire senior notes and certain hedging relationships			(20.8	)			—
Issuances of common stock			9.4				3.7
Excess income tax benefit from stock option exercises			0.8				0.3
Purchases of common stock for treasury			—				(0.3	)
Cash dividends paid			(72.4	)			(72.0	)
Distributions paid to noncontrolling interests			(0.7	)			—
Cash Used in Financing Activities			(81.6	)			(218.5	)
Increase in Cash and Cash Equivalents			33.4				124.8
Cash and Cash Equivalents at Beginning of Period			48.0				68.7
Cash and Cash Equivalents at End of Period		$	81.4			$	193.5

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES INC.

1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Republic Services, Inc. (a Delaware corporation) and its subsidiaries (also referred to collectively as Republic, we, us, our, or the company in this report) is the second largest provider of non-hazardous solid waste collection, transfer, recycling and disposal services in the United States, as measured by revenue. We manage and evaluate our operations through four geographic regions — Eastern, Midwestern, Southern, and Western, which we have identified as our reportable segments.

The accompanying unaudited consolidated financial statements include the accounts of Republic, its wholly owned and majority owned subsidiaries, and certain variable interest entities for which we have determined that consolidation is required under U.S. generally accepted accounting principles (U.S. GAAP). Our investments in variable interest entities are not material to our consolidated financial statements. We account for investments in entities in which we do not have a controlling financial interest under either the equity method or the cost method of accounting, as appropriate.

These unaudited consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. All significant intercompany accounts and transactions have been eliminated. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2009.

For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation. All amounts are in millions, except per share amounts and unless otherwise noted.

Management’s Estimates and Assumptions

These unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP and include numerous estimates and assumptions made by management that affect the accounting for and recognition and disclosure of assets, liabilities, stockholders’ equity, revenue and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. In some cases, these estimates are particularly difficult to determine and we must exercise significant judgment. The most difficult, subjective and complex estimates and assumptions that deal with the greatest amount of uncertainty relate to our accounting for our long-lived assets, landfill development costs, goodwill, and final capping, closure and post-closure costs, our valuation allowances for accounts receivable and deferred tax assets, our liabilities for potential litigation, claims and assessments, our liabilities for environmental remediation, employee benefit plans, stock-based compensation, deferred taxes, uncertain tax positions and self-insurance, 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 our description of our significant accounting policies, in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2009. Our actual results may differ significantly from our estimates.

New Accounting Pronouncements

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. We adopted this new guidance on January 1, 2010. The impact of adopting this guidance did not have a material effect on our consolidated financial position or results of operations.

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

2. RESTRUCTURING CHARGES

As a result of our 2008 acquisition of Allied Waste Industries, Inc. (Allied), we committed to a restructuring plan related to our corporate overhead and other administrative and operating functions. The plan included closing our corporate office in Florida, consolidating administrative functions to Arizona, the former headquarters of Allied, and reducing staffing levels. The plan also included closing and consolidating certain operating locations and terminating certain leases. During the three months ended March 31, 2010 and 2009, we incurred $5.6 million and $31.3 million, respectively, of restructuring and integration charges related to our integration of Allied, of which $0.7 million and $18.8 million, respectively, for the three months ended March 31, 2010 and 2009 consist of charges for severance and other employee termination and relocation benefits. The remainder of the charges in each of the three month periods primarily related to consulting and professional fees. Substantially all the charges are recorded in our corporate segment. We expect to incur additional charges approximating $8 million to complete our plan. We expect that the majority of these charges will be paid during the remainder of 2010 and extend into 2011.

The following table reflects the activity during the three months ended March 31, 2010 and 2009 associated with the liabilities (included in other accrued liabilities) incurred in connection with the restructuring charges:

		Balance at												Balance at
		December 31,												March 31,
		2009				Additions				Payments				2010
Severance and other termination benefits		$	19.6			$	0.7			$	(6.9	)		$	13.4
Relocation			5.2				—				(0.8	)			4.4
Total		$	24.8			$	0.7			$	(7.7	)		$	17.8

		Balance at												Balance at
		December 31,												March 31,
		2008				Additions				Payments				2009
Severance and other termination benefits		$	12.5			$	17.8			$	(2.3	)		$	28.0
Relocation			17.9				1.0				(3.9	)			15.0
Total		$	30.4			$	18.8			$	(6.2	)		$	43.0

Accrued Liabilities Related to Allied

The following table reflects the activity during the three months ended March 31, 2010 and 2009 associated with the liabilities (included in other accrued liabilities) incurred in connection with the termination benefits for employees who were employed by Allied at the date of the acquisition and notified that their employment was terminated:

		Balance at												Balance at
		December 31,												March 31,
		2009				Additions				Payments				2010
Severance and other termination benefits		$	2.4			$	—			$	(0.5	)		$	1.9

		Balance at												Balance at
		December 31,												March 31,
		2008				Additions				Payments				2009
Severance and other termination benefits		$	22.6			$	5.5			$	(2.6	)		$	25.5

We evaluated our operating contracts and leases acquired from Allied and recorded liabilities for unfavorable contract and lease exit costs of $55.9 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 three months ended March 31, 2010 and 2009 associated with unfavorable contracts and lease exit liabilities:

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Balance at												Balance at
		December 31,								Payments /				March 31,
		2009				Additions				Amortization				2010
Unfavorable contracts		$	49.0			$	—			$	(2.5	)		$	46.5
Lease exit costs			6.4				—				(0.5	)			5.9
Total		$	55.4			$	—			$	(3.0	)		$	52.4

		Balance at												Balance at
		December 31,								Payments /				March 31,
		2008				Additions				Amortization				2009
Unfavorable contracts		$	33.3			$	11.7			$	(0.8	)		$	44.2
Lease exit costs			—				5.9				(0.7	)			5.2
Total		$	33.3			$	17.6			$	(1.5	)		$	49.4

3. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

A summary of the activity and balances in goodwill accounts, net, by operating segment is as follows:

		Balance at								Adjustments to				Balance at
		December 31,				Adjustments to				Assets				March 31,
		2009				Acquisitions				Held for Sale				2010
Eastern		$	2,818.5			$	(0.4	)		$	—			$	2,818.1
Midwestern			2,118.2				(0.3	)			—				2,117.9
Southern			2,724.7				(0.5	)			—				2,724.2
Western			3,005.7				(0.5	)			—				3,005.2
Total		$	10,667.1			$	(1.7	)		$	—			$	10,665.4

		Balance at								Adjustments to				Balance at
		December 31,				Adjustments to				Assets				March 31,
		2008				Acquisitions				Held for Sale				2009
Eastern		$	2,772.5			$	(11.1	)		$	(15.4	)		$	2,746.0
Midwestern			2,083.8				(7.2	)			(1.0	)			2,075.6
Southern			2,715.6				(10.3	)			(49.8	)			2,655.5
Western			2,949.6				(8.4	)			—				2,941.2
Total		$	10,521.5			$	(37.0	)		$	(66.2	)		$	10,418.3

Other Intangible Assets

Other intangible assets, net, include values assigned to customer relationships, franchise agreements, other municipal agreements, non-compete agreements and trade names, and are amortized over periods ranging from 2 to 23 years. A summary of the activity and balances by intangible asset type is as follows:

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Gross Intangible Assets												Accumulated Amortization												Net
		Balance at								Balance at				Balance at				Additions				Balance at				Intangibles
		December 31,								March 31,				December 31,				Charged				March 31,				at March 31,
		2009				Acquisitions				2010				2009				to Expense				2010				2010
Customer relationships, franchise and other municipal agreements		$	521.1			$	0.5			$	521.6			$	(70.5	)		$	(14.9	)		$	(85.4	)		$	436.2
Trade names			30.0				—				30.0				(6.5	)			(1.5	)			(8.0	)			22.0
Non-compete agreements			7.4				0.1				7.5				(6.5	)			(0.1	)			(6.6	)			0.9
Other intangible assets			62.9				—				62.9				(37.9	)			(0.9	)			(38.8	)			24.1
Total		$	621.4			$	0.6			$	622.0			$	(121.4	)		$	(17.4	)		$	(138.8	)		$	483.2

		Gross Intangible Assets												Accumulated Amortization												Net
		Balance at								Balance at				Balance at				Additions				Balance at				Intangibles
		December 31,								March 31,				December 31,				Charged				March 31,				at March 31,
		2008				Acquisitions				2009				2008				to Expense				2009				2009
Customer relationships, franchise and other municipal agreements		$	520.8			$	0.2			$	521.0			$	(10.9	)		$	(14.8	)		$	(25.7	)		$	495.3
Trade names			30.0				—				30.0				(0.5	)			(1.5	)			(2.0	)			28.0
Non-compete agreements			7.4				—				7.4				(5.6	)			(0.2	)			(5.8	)			1.6
Other intangibles assets			57.2				—				57.2				(34.3	)			(0.6	)			(34.9	)			22.3
Total		$	615.4			$	0.2			$	615.6			$	(51.3	)		$	(17.1	)		$	(68.4	)		$	547.2

4. OTHER ASSETS

Prepaid Expenses and Other Current Assets

A summary of prepaid expenses and other current assets as of March 31, 2010 and December 31, 2009 is as follows:

		March 31,				December 31,
		2010				2009
Inventories		$	32.8			$	33.7
Prepaid expenses			56.0				59.3
Other non-trade receivables			35.1				57.1
Other current assets			11.8				6.4
Total		$	135.7			$	156.5

Other current assets include the fair value of fuel and commodity hedges of $2.9 million and $5.0 million at March 31, 2010 and December 31, 2009, respectively.

Other Assets

A summary of other assets as of March 31, 2010 and December 31, 2009 is as follows:

		March 31,				December 31,
		2010				2009
Deferred financing costs		$	44.4			$	32.4
Deferred compensation plan			17.6				15.2
Notes and other receivables			45.8				45.1
Other			121.7				117.4
Total		$	229.5			$	210.1

Notes and other receivables include the fair value of interest rate swaps of $9.8 million and $9.9 million at March 31, 2010 and December 31, 2009, respectively.

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

5. OTHER LIABILITIES

Other Accrued Liabilities

A summary of other accrued liabilities as of March 31, 2010 and December 31, 2009 is as follows:

		March 31,				December 31,
		2010				2009
Accrued payroll and benefits		$	133.5			$	169.6
Accrued fees and taxes			115.4				114.4
Self-insurance reserves, current portion			113.5				110.9
Accrued dividends			72.5				72.4
Current tax liabilities			107.8				70.0
Restructuring liabilities			17.8				24.8
Accrued professional fees and legal settlement reserves			43.2				59.0
Other			108.2				119.1
Total		$	711.9			$	740.2

Other accrued liabilities includes the fair value of fuel and commodity hedges of $9.4 million and $5.7 million at March 31, 2010 and December 31, 2009, respectively.

Other Long-Term Liabilities

A summary of other long-term liabilities as of March 31, 2010 and December 31, 2009 is as follows:

		March 31,				December 31,
		2010				2009
Deferred compensation liability		$	24.4			$	15.7
Pension and other postretirment liabilities			37.4				38.1
Legal settlement revenues and other matters			131.5				112.0
Other			121.3				113.4
Total		$	314.6			$	279.2

6. LANDFILL AND ENVIRONMENTAL COSTS

As of March 31, 2010, we owned or operated 190 active solid waste landfills with total available disposal capacity of approximately 4.7 billion in-place cubic yards. Additionally, we currently have post-closure responsibility for 134 closed landfills.

Accrued Landfill and Environmental Costs

A summary of landfill and environmental liabilities as of March 31, 2010 and December 31, 2009 is as follows:

		March 31,				December 31,
		2010				2009
Landfill final capping, closure and post-closure liabilities		$	1,086.5			$	1,074.5
Remediation			553.7				554.1
			1,640.2				1,628.6
Less: Current portion			(241.0	)			(245.4	)
Long-term portion		$	1,399.2			$	1,383.2

Final Capping, Closure and Post-Closure Costs

The following table summarizes the activity in our asset retirement obligation liabilities, which include liabilities for final capping, closure and post-closure, for the three months ended March 31, 2010 and 2009:

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Three Months Ended March 31,
		2010				2009
Asset retirement obligation liabilities, beginning of year		$	1,074.5			$	1,040.6
Non-cash asset additions			7.2				8.7
Additions due to acquisitions and other adjustments			0.5				(0.7	)
Asset retirement obligation adjustments			(5.4	)			(0.7	)
Payments			(10.5	)			(13.6	)
Accretion expense			20.2				23.3
Adjustments to liabilities related to assets held for sale			—				1.8
Asset retirement obligation liabilities, end of period			1,086.5				1,059.4
Less: Current portion			(135.7	)			(117.4	)
Long-term portion		$	950.8			$	942.0

Annually, in the fourth quarter, we review our calculations for asset retirement obligations. However, if there are significant changes in the facts and circumstances related to a site during the year, we will update our assumptions prospectively in the period that all the relevant facts and circumstances are known.

The fair value of assets that are legally restricted for purposes of collateralizing certain of our final capping, closure and post-closure obligations was approximately $57.9 million at March 31, 2010 and $58.5 million as of December 31, 2009, and is included in restricted cash and marketable securities in our consolidated balance sheets.

Environmental Remediation Liabilities

We accrue for remediation costs when they become probable and can be reasonably estimated. We believe that the amounts accrued for remediation costs are adequate. There can sometimes be a range of reasonable estimates of the costs associated with remediation of a site. In these cases, we use the amount within the range that constitutes our best estimate. If no amount within the range appears to be a better estimate than any other, we use the amount that is at the low end of such range. It is reasonably possible that we will need to adjust the liabilities recorded for remediation to reflect the effects of new or additional information, to the extent such information impacts the costs, timing or duration of the required actions. If we used the reasonably possible high ends of our ranges, our aggregate potential remediation liability at March 31, 2010 would be approximately $187 million higher than the amounts recorded. Future changes in our estimates of the cost, timing or duration of the required actions could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

The following table summarizes the activity in our environmental remediation liabilities for the three months ended March 31, 2010 and 2009:

		Three Months Ended March 31,
		2010				2009
Remediation liabilities, beginning of year		$	554.1			$	389.9
Additions due to acquisitions and other adjustments			1.5				0.1
Additions charged to expense			2.3				—
Payments			(11.5	)			(13.4	)
Accretion expense			7.3				5.0
Remediation liabilities, end of period			553.7				381.6
Less: Current portion			(105.3	)			(78.7	)
Long-term portion		$	448.4			$	302.9

The following is a discussion of certain of our significant remediation matters:

Countywide Landfill. In 2007, we were issued Final Findings and Orders (F&Os) by the Ohio Environmental Protection Agency (OEPA) related to environmental conditions at our Countywide Recycling and Disposal Facility (Countywide) in East Sparta, Ohio and we agreed with the OEPA to undertake certain other remedial actions as well. During 2008, Republic Services of Ohio II, LLC (Republic-Ohio), an Ohio limited liability company and wholly owned subsidiary of ours and parent of Countywide, entered into an Agreed Order on Consent (AOC) with the EPA requiring the reimbursement of costs incurred by the EPA and requiring Republic-Ohio to perform certain remediation activities at Countywide. Republic-Ohio also has completed construction of an isolation break under the authority and supervision of the EPA. On September 30, 2009, Republic-Ohio entered into a set of F&Os with the OEPA that supersede previous F&Os mentioned above. The F&Os require the implementation of a comprehensive operation and

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

maintenance program for managing the remediation area. The operation and maintenance program requires Republic-Ohio to maintain the temporary cap and other engineering controls to prevent odors and isolate and contain the reaction. 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 remediation liability for Countywide recorded as of March 31, 2010 is $72.6 million, of which approximately $4.0 million is expected to be paid during the remainder of 2010. The reasonably possible range of loss for remediation costs is $65 million to $86 million.

West Contra Costa County Landfill. In 2006, we were issued an Enforcement Order by the California Department of Toxic Substance Control (DTSC) for the Class 1 Hazardous waste cell at the West Contra Costa County Landfill (West County). Subsequently, we entered into a Consent Agreement with DTSC in 2007 at which time we agreed to undertake certain remedial actions. The remediation liability for West County recorded as of March 31, 2010 is $46.3 million, of which approximately $2.0 million is expected to be paid during the remainder of 2010. The reasonably possible range of loss for remediation costs is $40 million to $66 million.

Sunrise Landfill. On August 1, 2008, Republic Services of Southern Nevada (RSSN), our wholly owned subsidiary, signed a Consent Decree with the EPA, the Bureau of Land Management and Clark County, Nevada related to the Sunrise Landfill. Under the Consent Decree, RSSN has agreed to perform certain remedial actions at the Sunrise Landfill for which RSSN and Clark County were otherwise jointly and severally liable. We also paid $1.0 million in sanctions related to the Consent Decree. RSSN is currently working with the Clark County Staff and Board of Commissioners to develop a mechanism to fund the costs to comply with the Consent Decree. However, we have not recorded any potential recoveries. The remediation liability for Sunrise recorded as of March 31, 2010 is $35.6 million, of which approximately $11.4 million is expected to be paid during the remainder of 2010. The reasonably possible range of loss for remediation costs is $32 million to $47 million.

Congress Development Landfill. In January 2006, Congress Development Co. (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. The remediation liability recorded for CDC as of March 31, 2010 is $82.3 million, of which approximately $18.2 million is expected to be paid during the remainder of 2010. The reasonably possible range of loss for remediation costs is $52 million to $152 million.

Environmental Operating Costs

In the normal course of business, we incur various operating costs associated with environmental compliance. These costs include, among other things, leachate treatment and disposal, methane gas and groundwater monitoring and systems maintenance, interim cap maintenance, costs associated with the application of daily cover materials, and the legal and administrative costs of ongoing environmental compliance. These costs are expensed as cost of operations in the period in which they are incurred.

7. DEBT

Our notes payable, capital leases and long-term debt at March 31, 2010 and December 31, 2009 are listed in the following table, and are presented net of unamortized discounts, adjustments to fair value related to hedging transactions and the unamortized portion of adjustments to fair value recorded in purchase accounting. The debt acquired as part of our acquisition of Allied was recorded at fair value as of the acquisition date.

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Debt Balance at
		March 31, 2010				December 31, 2009
$1.0 billion Revolver due 2012		$	—			$	—
$1.75 billion Revolver due 2013, Eurodollar and Base Rate borrowings			200.0				315.4
Receivables secured loans			—				300.0
Senior notes, fixed interest rate of 6.500%, due 2010			217.9				216.5
Senior notes, fixed interest rate of 5.750%, due 2011			254.7				252.5
Senior notes, fixed interest rate of 6.375%, due 2011			210.5				209.1
Senior notes, fixed interest rate of 6.750%, due 2011			396.4				396.4
Senior notes, fixed interest rate of 6.125%, due 2014			—				379.3
Senior notes, fixed interest rate of 7.250%, due 2015			—				540.2
Senior notes, fixed interest rate of 7.125%, due 2016			528.9				526.7
Senior notes, fixed interest rate of 6.875%, due 2017			656.8				654.4
Senior notes, fixed interest rate of 5.500%, due 2019			645.6				645.5
Senior notes, fixed interest rate of 5.000%, due 2020			849.9				—
Senior notes, fixed interest rate of 5.250%, due 2021			600.0				600.0
Debentures, fixed interest rate of 9.250%, due 2021			93.2				93.1
Senior notes, fixed interest rate of 6.086%, due 2035			249.5				249.4
Debentures, fixed interest rate of 7.400%, due 2035			267.0				266.8
Senior notes, fixed interest rate of 6.200%, due 2040			649.5				—
Tax-exempt bonds and other tax-exempt financings; fixed and floating interest rates ranging from 0.28% to 8.25%; maturities ranging from 2012 to 2037			1,201.7				1,223.7
Other debt unsecured and secured by real property, equipment and other assets; interest rates ranging from 5.99% to 11.90% maturing through 2042			92.4				93.6
Total debt			7,114.0				6,962.6
Less: Current portion			(475.7	)			(543.0	)
Long-term portion		$	6,638.3			$	6,419.6

Revolving Credit Facilities

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, plus an applicable margin based on our Debt Ratings (all as defined in the agreements). As of March 31, 2010 and December 31, 2009, the interest rate for our borrowings under our Credit Facilities was 1.76% and 1.82%, 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 $0.2 billion and $0.3 billion of Eurodollar Rate borrowings, and $1.6 billion of letters of credit utilizing availability under our Credit Facilities, leaving $0.9 billion and $0.8 billion of availability under our Credit Facilities at March 31, 2010 and December 31, 2009, respectively. At March 31, 2010, we were in compliance with the covenants under our Credit Facilities.

Receivables Secured Loans

In March 2010, we repaid all borrowings and terminated our accounts receivable securitization program with two financial institutions that allowed us to borrow up to $300.0 million on a revolving basis under loan agreements secured by receivables. During the three months ended March 31, 2010, we recorded a loss on extinguishment of debt of $0.2 million related to unamortized deferred issuance costs associated with terminating this program.

Senior Notes and Debentures

In March 2010, we issued $850.0 million of 5.00% senior notes due 2020 (the 2020 Notes) and $650.0 million of 6.20% senior notes due 2040 (the 2040 Notes, and, together with the 2020 Notes, the Notes). The Notes are general senior unsecured obligations and mature on March 1, 2020 (in the case of the 2020 Notes) and March 1, 2040 (in the case of the 2040 Notes). Interest is payable semi-annually on March 1 and September 1, beginning September 1, 2010. The Notes are guaranteed by each of our subsidiaries that also guarantee our Credit Facilities. These guarantees are general senior unsecured obligations of our subsidiary guarantors. In addition, in March 2010, we entered into a Registration Rights Agreement with the representatives of the initial purchasers of the Notes. Under the

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

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 by November 2010, we agreed to pay additional interest on the Notes.

We used the net proceeds from the Notes as follows: (i) $433.7 million to redeem the 6.125% senior notes due 2014 at a premium of 102.042% ($425.0 million principal outstanding); (ii) $621.8 million to redeem the 7.250% senior notes due 2015 at a premium of 103.625% ($600.0 million principal outstanding); and (iii) the remainder to reduce amounts outstanding under our Credit Facilities and for general corporate purposes. We incurred a loss of $132.1 million for premiums paid to repurchase debt, charges for unamortized debt discounts and professional fees paid to effectuate the repurchase of the senior notes.

As of March 31, 2010 and December 31, 2009, our senior notes and debentures totaled $5,619.9 million and $5,029.9 million, net of unamortized discounts and adjustments to fair value recorded in purchase accounting for the debt assumed from Allied of $313.5 million and $428.5 million, respectively, which is being amortized over the remaining term of the notes, and adjustments to fair value related to our interest rate swap agreements of $9.8 million and $9.9 million, respectively.

Tax-Exempt Financings

As of March 31, 2010 and December 31, 2009, we had $1,201.7 million and $1,223.7 million, respectively, of fixed and variable rate tax-exempt financings outstanding with maturities ranging from 2012 to 2037. At March 31, 2010 and December 31, 2009, the unamortized adjustment to fair value recorded in purchase accounting for these tax-exempt financings assumed from Allied was $48.1 million and $49.0 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 March 31, 2010, we had $221.8 million of restricted cash, of which $89.0 million represents 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 $91.6 million and $91.9 million as of March 31, 2010 and December 31, 2009, respectively, with maturities ranging from 2010 to 2042.

Fair Value of Debt

The fair value of our fixed rate senior notes using quoted market rates is $6.1 billion and $5.7 billion at March 31, 2010 and December 31, 2009, respectively. The carrying value of our fixed rate senior notes is $5.6 billion and $5.0 billion at March 31, 2010 and December 31, 2009, respectively. The carrying amounts of our remaining notes payable and tax-exempt financings approximate fair value because interest rates are variable and, accordingly, approximate current market rates for instruments with similar risk and maturities. The fair value of our debt is determined as of the balance sheet date and is subject to change.

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.

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

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 March 31, 2010 and December 31, 2009, interest rate swap agreements are reflected at their fair value of $9.8 million and $9.9 million, respectively, and are included in other assets and as an adjustment to long-term debt in our consolidated balance sheets. During the three months ended March 31, 2010 and 2009, we recorded net interest income of $2.2 million and $2.4 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 three months ended March 31, 2010 and 2009:

Consolidated Statement of Income		Gain (Loss) on Swap								Gain (Loss) on Fixed-Rate Debt
Classification		Three Months Ended March 31,								Three Months Ended March 31,
		2010				2009				2010				2009
Interest expense		$	2.2			$	2.4			$	(2.2	)		$	(2.4	)

From time to time, we enter into treasury and interest rate locks for the purpose of managing exposure to fluctuations in interest rates in anticipation of future debt issuances. During the three months ended March 31, 2010, we entered into interest rate lock agreements having an aggregate notional amount of $500.0 million to hedge interest rates in connection with the issuance of our $850.0 million 5.00% senior notes and our $650.0 million 6.20% senior notes. Upon issuance of the notes, we terminated the interest rate locks and paid approximately $7.0 million to the counterparties. The effective portion of the interest rate locks recorded as a component of accumulated other comprehensive income was $2.0 million, net of $1.5 million of tax (related to the 2020 Notes) and $1.7 million, net of tax of $1.2 million (related to the 2040 Notes). The effective portion of the interest rate locks will be amortized as an increase to interest expense over the life of the issued debt, of which $0.3 million is scheduled to be amortized over the next twelve months as a yield adjustment of the 2020 and 2040 Notes. This transaction was accounted for as a cash flow hedge. As of March 31, 2010, no treasury or interest rate lock cash flow hedges were outstanding.

8. INCOME TAXES

Our effective tax rate for the three months ended March 31, 2010 and 2009 was 44.0% and 43.5%, respectively, and was based on our anticipated full year effective income tax rate. Income taxes paid (net of refunds received) were $61.4 million and $70.6 million for the three months ended March 31, 2010 and 2009, respectively.

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. We are currently under examination or administrative review by various state and federal taxing authorities for certain tax years, including federal income tax audits for calendar years 2000 through 2008.

We recognize interest and penalties as incurred within the provision for income taxes in the consolidated statements of income. As of March 31, 2010 we have accrued a liability for penalties of $1.5 million and interest (including interest on penalties) of $96.3 million related to our uncertain tax positions.

We believe that the liabilities for uncertain tax positions recorded are appropriate. However, during the next twelve months we believe it is reasonably possible that the amount of unrecognized tax benefits will likely increase or decrease. We are unable to estimate a range at this time. 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.

With respect to the settlement of certain tax liabilities regarding BFI risk management companies, we paid $60.1 million in the first quarter of 2010 and anticipate paying the remainder, approximately $67 million, later in 2010.

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

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. 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 March 31, 2010 of approximately $63 million. In addition, the IRS has asserted a penalty of 20% of the additional income tax due. At March 31, 2010, the amount of the asserted penalty and penalty-related interest is approximately $46 million. The potential tax and interest (but not penalty or penalty-related interest) for this matter have been fully reserved in our consolidated balance sheets. The successful assertion by the IRS of penalty and penalty-related interest in connection with this matter could have an 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 are contesting this issue at the Appeals Office of the IRS. We believe we have several meritorious defenses, including the fact that methane gas is not actively produced for sale by us but rather arises naturally in the context of providing disposal services. Therefore, we believe that the resolution of this issue will not have a material adverse impact on our consolidated financial position, results of operations or cash flows.

9. COMPENSATION

Available Shares

We currently have 3.8 million and 15.3 million shares reserved under our 2007 Stock Incentive Plan and our 2006 Incentive Stock Plan, respectively.

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 three months ended March 31, 2010 and 2009 were $5.24 and $2.96 per option, respectively, which were calculated using the following weighted-average assumptions:

		Three Months Ended March 31,
		2010				2009
Expected volatility			28.6	%			28.7	%
Risk-free interest rate			2.4	%			1.4	%
Dividend yield			2.9	%			3.2	%
Expected life (in years)			4.3				4.2
Contractual life (in years)			7				7
Expected forfeiture rate			3.0	%			3.0	%

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The following table summarizes the stock option activity for the three months ended March 31, 2010:

										Weighted Average
						Weighted Average				Remaining				Aggregate
		Number				Exercise				Contractual Term				Intrinsic
		of Shares				Price per Share				(Years)				Value
Outstanding at December 31, 2009			15.1			$	23.69
Granted			2.9				27.29
Exercised			(0.5	)			20.00							$	4.6
Cancelled			(0.3	)			29.47
Outstanding at March 31, 2010			17.2			$	24.34				5.2			$	83.3
Exercisable at March 31, 2010			11.3			$	23.78				4.6			$	62.1

During the three months ended March 31, 2010 and 2009, compensation expense for stock options was $2.1 million and $2.0 million, respectively.

As of March 31, 2010, total unrecognized compensation expense related to outstanding stock options was $19.5 million, which will be recognized over a weighted average period of 2.3 years.

Other Stock Awards

The following table summarizes the restricted stock unit and restricted stock activity for the three months ended March 31, 2010:

		Number of Restricted				Weighted-				Weighted-
		Stock Units and				Average				Average
		Restricted				Grant Date				Remaining				Aggregate
		Stock				Fair Value per				Contractual				Intrinsic
		(In Thousands)				Share				Term (Years)				Value
Unissued at December 31, 2009			653.2			$	23.85
Granted			291.7				28.68
Vested and Issued			(10.1	)			18.71
Cancelled			—				—
Unissued at March 31, 2010			934.8			$	25.41				1.1			$	27.1
Vested and unissued at March 31, 2010			240.2			$	26.15

During the three months ended March 31, 2010 and 2009, we awarded 85,193 and 300,000 restricted stock units, respectively, to our non-employee directors under our 2007 Plan, of which 84,095 and 75,000, respectively, of the restricted stock units awarded vested immediately. The remaining restricted stock units awarded during the three months ended March 31, 2009 vest in three equal annual installments beginning on the anniversary date of the original grant. The directors receive the underlying shares only after their board service ends or a change in control occurs. During the three months ended March 31, 2010, we awarded 206,512 restricted stock units to executive and other officers that vest in four equal annual installments beginning on the anniversary date of the original grant. The restricted stock units do not carry any voting or dividend rights, except the right to receive additional restricted stock units in lieu of dividends.

During the three months ended March 31, 2009, we awarded 65,584 shares of restricted stock to executive and other officers, of which 38,670 shares of the restricted stock awarded vest effective January 31, 2012. The remaining 26,914 restricted stock shares vest in four equal annual installments beginning on the anniversary date of the original grant. During the vesting period, the participants have voting rights and receive dividends declared and paid on the restricted stock, but the restricted stock may not be sold, assigned, transferred or otherwise encumbered. Additionally, granted but unvested restricted stock awards are forfeited in the event the participant resigns employment with us for other than good reason.

The fair value of restricted stock and restricted stock units is based on the closing market price on the date of the grant. The compensation expense related to restricted stock units and restricted stock is amortized ratably over the vesting period.

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

During the three months ended March 31, 2010 and 2009, compensation expense related to restricted stock units and restricted stock totaled $4.1 million and $2.7 million, respectively.

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.

10. STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE

We initiated a quarterly cash dividend in July 2003. The dividend has been increased from time to time thereafter, with the latest increase occurring in the third quarter of 2008. Our current quarterly dividend per share is $0.19. Dividends declared were $72.5 million and $72.0 million for the three months ended March 31, 2010 and 2009, respectively. As of March 31, 2010, we recorded a quarterly dividend payable of approximately $72.5 million to stockholders of record at the close of business on April 1, 2010.

Basic earnings per share is computed by dividing net income attributable to Republic Services, Inc. by the weighted average number of common shares (including restricted stock and vested but unissued restricted stock units) outstanding during the period. Diluted earnings per share is based on the combined weighted average number of common shares and common share equivalents outstanding which include, where appropriate, the assumed exercise of employee stock options and unvested restricted stock and unvested restricted stock units. In computing diluted earnings per share, we utilize the treasury stock method.

Earnings per share for the three months ended March 31, 2010 and 2009 are calculated as follows (in thousands, except per share amounts):

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Three Months Ended March 31,
		2010				2009
Basic earnings per share:
Net income attributable to Republic Services, Inc.		$	65,000			$	113,000
Weighted average common shares outstanding			381,428				378,949
Basic earnings per share		$	0.17			$	0.30
Diluted earnings per share:
Net income attributable to Republic Services, Inc.		$	65,000			$	113,000
Weighted average common shares outstanding			381,428				378,949
Effect of dilutive securities:
Options to purchase common stock			1,723				912
Unvested restricted stock awards			130				1
Weighted average common and common equivalent shares outstanding			383,281				379,862
Diluted earnings per share		$	0.17			$	0.30
Antidilutive securities not included in the diluted earnings per share calculations:
Senior subordinated convertible debentures			—				5,108
Options to purchase common stock			5,403				12,634

11. OTHER COMPREHENSIVE INCOME AND FINANCIAL INSTRUMENTS

A summary of comprehensive income for the three months ended March 31, 2010 and 2009 is as follows:

		Three Months Ended March 31,
		2010				2009
Net income		$	65.2			$	113.4
Settlement and amortization of interest rate lock hedges, net of tax			(3.7	)			—
Change in value of commodity hedges, net of tax			(3.2	)			(1.3	)
Change in value of fuel hedges, net of tax			—				(1.1	)
Employee benefit plan liability adjustments, net of tax			0.1				—
Comprehensive income			58.4				111.0
Less: comprehensive income attributable to noncontrolling interests			(0.2	)			(0.4	)
Comprehensive income attributable to Republic Services, Inc.		$	58.2			$	110.6

The tax effect of the above described transactions was calculated at a 42.0% and 43.5% rate for the three months ended March 31, 2010 and 2009, respectively.

Fuel Hedges

We have entered into multiple swap agreements designated as cash flow hedges to mitigate some of our exposure related to changes in diesel fuel prices. The swaps qualified for, and were designated as, effective hedges of changes in the prices of forecasted diesel fuel purchases (fuel hedges).

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The following table summarizes our outstanding fuel hedges at March 31, 2010 and 2009:

Notional Amount

(in Gallons

Contract Price

Inception Date

Commencement Date

Termination Date

per Month)

per Gallon

January 26, 2007

January 4, 2010

December 27, 2010

500,000

$

2.81

November 5, 2007

January 5, 2009

December 30, 2013

60,000

3.28

March 17, 2008

January 5, 2009

December 31, 2012

50,000

3.72

March 17, 2008

January 5, 2009

December 31, 2012

50,000

3.74

September 22, 2008

January 1, 2009

December 31, 2011

150,000

4.16 - 4.17

July 10, 2009

January 1, 2010

December 31, 2010

100,000

2.84

July 10, 2009

January 1, 2011

December 31, 2011

100,000

3.05

July 10, 2009

January 1, 2012

December 31, 2012

100,000

3.20

If the national U.S. on-highway average price for a gallon of diesel fuel (average price) as published by the Department of Energy exceeds the contract price per gallon, we receive the difference between the average price and the contract price (multiplied by the notional gallons) from the counter-party. If the national U.S. on-highway average price for a gallon of diesel fuel is less than the contract price per gallon, we pay the difference to the counter-party.

The fair values of our fuel hedges are obtained from third-party counter-parties and are determined using standard option valuation models with assumptions about commodity prices being based on those observed in underlying markets (Level 2 in the fair value hierarchy). The aggregated fair values of the outstanding fuel hedges at March 31, 2010 and December 31, 2009 were current assets of $2.6 million and $3.2 million, respectively, and current liabilities of $4.3 million and $4.9 million, respectively, and have been recorded in other current assets and other accrued liabilities in our consolidated balance sheets, respectively.

The following table summarizes the impact of our fuel hedges on our results of operations and comprehensive income for the three months ended March 31, 2010 and 2009:

Amount of Gain or

(Loss)

Location of Gain

Recognized in

(Loss) Recognized

Income on

in Income on

Derivative

Amount of Gain

Derivative

(Ineffective

or (Loss)

(Ineffective Portion

Portion and

Derivatives in

Recognized in

and Amount

Amount Excluded

Cash Flow

OCI on

Statement of

Amount of

Excluded from

from

Hedging

Derivatives

Income

Realized Gain or

Effectiveness

Effectiveness

Relationships

(Effective Portion)

Classification

(Loss)

Testing)

Testing)

Three Months

Three Months

Three Months

Ended March 31,

Ended March 31,

Ended March 31,

2010

2009

2010

2009

2010

2009

Fuel hedges

$

—

$

(1.1

)

Cost of operations

$

(0.9

)

$

(2.5

)

Other income, net

$

—

$

(0.1

)

Recycling Commodity Hedges

Our revenue from sales of recycling commodities is primarily from sales of old corrugated cardboard (OCC) and old newspaper (ONP). We have entered into multiple swap agreements related to certain forecasted recycling commodity sales designated as cash flow hedges to mitigate some of our exposure related to changes in commodity prices. The swaps qualified for, and were designated as, effective hedges of changes in the prices of certain forecasted recycling commodity sales (commodity hedges).

REPUBLIC SERVICES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The following table summarizes our outstanding commodity hedges at March 31, 2010 and 2009:

Notional Amount

Contract Price

Transaction

(in Short Tons

Per Short

Inception Date

Commencement Date

Termination Date

Hedged

per Month)

Ton

April 28, 2008

January 1, 2009

December 31, 2010

OCC

1,000

$

106.00

April 28, 2008

January 1, 2009

December 31, 2010

ONP

1,000

106.00

April 28, 2008

January 1, 2009

December 31, 2010

OCC

1,000

110.00

April 28, 2008

January 1, 2009

December 31, 2010

ONP

1,000

103.00

May 16, 2008

January 1, 2009

December 31, 2010

OCC

1,000

105.00

May 16, 2008

January 1, 2009

December 31, 2010

ONP

1,000

102.00

May 16, 2008

January 1, 2009

December 31, 2010

ONP

1,000

106.00

May 16, 2008

January 1, 2009

December 31, 2010

OCC

1,000

103.00

December 8, 2009

January 1, 2010

December 31, 2011

ONP

2,000

76.00

December 10, 2009

January 1, 2010

December 31, 2011

OCC

2,000

82.00

December 11, 2009

January 1, 2010

December 31, 2011

OCC

2,000

82.00

January 5, 2010

January 1, 2010

December 31, 2011

ONP

2,000

84.00

January 6, 2010

January 1, 2010

December 31, 2011

OCC

1,000

90.00

January 27, 2010

February 1, 2010

January 31, 2012

OCC

1,000

90.00

If the price per short ton of the hedging instrument (average price) as reported on the Official Board Market is less than the contract price per short ton, we receive the difference between the average price and the contract price (multiplied by the notional short tons) from the counter-party. If the price of the commodity exceeds the contract price per short ton, we pay the difference to the counter-party. The fair values of our commodity hedges are obtained from third-party counter-parties and are determined using standard option valuation models with assumptions about commodity prices being based on those observed in underlying markets (Level 2 in the fair value hierarchy). The aggregated fair values of the outstanding commodity hedges at March 31, 2010 and December 31, 2009 were current assets of $0.3 million and $1.8 million, respectively, and current liabilities of $5.1 million and $0.8 million, respectively, and have been recorded in other current assets and other accrued liabilities in our consolidated balance sheets, respectively.

The following table summarizes the impact of our commodity hedges on our results of operations and comprehensive income for the three months ended March 31, 2010 and 2009:

Amount of Gain or

(Loss)

Location of Gain

Recognized in

(Loss) Recognized

Income on

in Income on

Derivative

Amount of Gain

Derivative

(Ineffective

or (Loss)

(Ineffective Portion

Portion and

Derivatives in

Recognized in

and Amount

Amount Excluded

Cash Flow

OCI on

Statement of

Amount of

Excluded from

from

Hedging

Derivatives

Income

Realized Gain or

Effectiveness

Effectiveness

Relationships

(Effective Portion)

Classification

(Loss)

Testing)

Testing)

Three Months

Three Months

Three Months

Ended March 31,

Ended March 31,

Ended March 31,

2010

2009

2010

2009

2010

2009

Recycling commodity hedges

$

(3.2

)

$

(1.3

)

Revenue

$

(0.9

)

$

1.8

Other income, net

$

(0.2

)

$

—