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.

For the quarterly period ended June 30, 2010

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 July 22, 2010, the registrant had outstanding 383,000,147 shares of Common Stock, par value $.01 per share (excluding treasury shares of 14,983,408).

 

 

REPUBLIC SERVICES, INC.

INDEX

PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements
		Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and December 31, 2009			1
		Unaudited Consolidated Statements of Income for the Three and Six Months Ended June 30, 2010 and 2009			2
		Unaudited Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2010			3
		Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009			4
		Notes to Unaudited Consolidated Financial Statements			5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			51
Item 4.		Controls and Procedures			52
PART II — OTHER INFORMATION
Item 1.		Legal Proceedings			53
Item 1A.		Risk Factors			53
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			53
Item 3.		Defaults upon Senior Securities			53
Item 4.		(Removed and Reserved)			53
Item 5.		Other Information			54
Item 6.		Exhibits			54
		Signatures			55

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

REPUBLIC SERVICES, INC.

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

		June 30,				December 31,
		2010				2009
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	56.0			$	48.0
Accounts receivable, less allowance for doubtful accounts of $52.5 and $55.2, respectively			898.4				865.1
Prepaid expenses and other current assets			138.8				156.5
Deferred tax assets			195.5				195.3
Total current assets			1,288.7				1,264.9
Restricted cash and marketable securities			315.2				240.5
Property and equipment, net			6,603.7				6,657.7
Goodwill, net			10,661.4				10,667.1
Other intangible assets, net			465.7				500.0
Other assets			236.7				210.1
Total assets		$	19,571.4			$	19,540.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	470.5			$	592.8
Notes payable and current maturities of long-term debt			692.5				543.0
Deferred revenue			331.3				331.1
Accrued landfill and environmental costs, current portion			225.9				245.4
Accrued interest			99.7				96.2
Other accrued liabilities			646.1				740.2
Total current liabilities			2,466.0				2,548.7
Long-term debt, net of current maturities			6,425.0				6,419.6
Accrued landfill and environmental costs, net of current portion			1,417.6				1,383.2
Deferred income taxes and other long-term liabilities			977.0				1,040.5
Self-insurance reserves, net of current portion			301.6				302.0
Other long-term liabilities			298.3				279.2
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 50 shares authorized; none issued			—				—
Common stock, par value $0.01 per share; 750 shares authorized; 397.6 and 395.7 issued including shares held in treasury, respectively			4.0				4.0
Additional paid-in capital			6,364.4				6,316.1
Retained earnings			1,762.3				1,683.1
Treasury stock, at cost (15.0 and 14.9 shares, respectively)			(459.1	)			(457.7	)
Accumulated other comprehensive loss, net of tax			12.0				19.0
Total Republic Services, Inc. stockholders’ equity			7,683.6				7,564.5
Noncontrolling interests			2.3				2.6
Total stockholders’ equity			7,685.9				7,567.1
Total liabilities and stockholders’ equity		$	19,571.4			$	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 June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Revenue		$	2,066.4			$	2,066.1			$	4,024.1			$	4,126.6
Expenses:
Cost of operations			1,218.3				1,226.9				2,355.1				2,435.6
Depreciation, amortization and depletion			213.8				218.6				416.8				440.5
Accretion			20.2				21.9				40.4				45.2
Selling, general and administrative			210.8				215.8				421.1				433.3
Loss (gain) on disposition of assets and impairments, net			1.1				(150.1	)			1.6				(145.2	)
Restructuring charges			1.4				12.3				7.0				43.6
Operating income			400.8				520.7				782.1				873.6
Interest expense			(130.5	)			(150.5	)			(265.0	)			(304.1	)
Loss on extinguishment of debt			—				—				(132.3	)			—
Interest income			0.1				0.5				0.1				1.3
Other (expense) income, net			(0.1	)			1.3				1.6				1.6
Income before income taxes			270.3				372.0				386.5				572.4
Provision for income taxes			110.4				145.8				161.4				232.9
Net income			159.9				226.2				225.1				339.5
Less: Net income attributable to noncontrolling interests			(0.2	)			(0.3	)			(0.4	)			(0.6	)
Net income attributable to Republic Services, Inc.		$	159.7			$	225.9			$	224.7			$	338.9
Basic earnings per share attributable to Republic Services, Inc. stockholders:
Basic earnings per share		$	0.42			$	0.60			$	0.59			$	0.89
Weighted average common shares outstanding			382.5				379.2				382.0				379.1
Diluted earnings per share attributable to Republic Services, Inc. stockholders:
Diluted earnings per share		$	0.42			$	0.59			$	0.59			$	0.89
Weighted average common and common equivalent shares outstanding			384.7				379.9				384.0				379.9
Cash dividends per common share		$	0.19			$	0.19			$	0.38			$	0.38

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
														Additional								Comprehensive
						Common Stock								Paid-In				Retained				Income (Loss),				Treasury Stock								Noncontrolling
		Total				Shares				Amount				Capital				Earnings				Net of Tax				Shares				Amount				Interests
Balance as of December 31, 2009		$	7,567.1				395.7			$	4.0			$	6,316.1			$	1,683.1			$	19.0				(14.9	)		$	(457.7	)		$	2.6
Net income			225.1				—				—				—				224.7				—				—				—				0.4
Other comprehensive loss			(7.0	)			—				—				—				—				(7.0	)			—				—				—
Cash dividends declared			(145.3	)			—				—				—				(145.3	)			—				—				—				—
Issuances of common stock			36.1				1.9				—				36.1				—				—				—				—				—
Stock-based compensation			12.0				—				—				12.2				(0.2	)			—				—				—				—
Purchase of common stock for treasury			(1.4	)			—				—				—				—				—				(0.1	)			(1.4	)			—
Distributions paid to noncontrolling interests			(0.7	)			—				—				—				—				—				—				—				(0.7	)
Balance as of June 30, 2010		$	7,685.9				397.6			$	4.0			$	6,364.4			$	1,762.3			$	12.0				(15.0	)		$	(459.1	)		$	2.3

The accompanying notes are an integral part of these statements.

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

		Six Months Ended June 30,
		2010				2009
Cash provided by operating activities:
Net income		$	225.1			$	339.5
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization of property and equipment			255.9				260.2
Landfill depletion and amortization			125.7				145.3
Amortization of intangible and other assets			35.2				35.0
Accretion			40.4				45.2
Non-cash interest expense — debt			28.6				50.6
Non-cash interest expense — other			24.2				23.3
Restructuring related charges			—				26.4
Stock-based compensation			12.0				8.0
Deferred tax (benefit) provision			(58.3	)			6.0
Provision for doubtful accounts, net of adjustments			10.3				9.4
Excess income tax benefit from stock option exercises			(1.8	)			0.5
Asset impairments			0.5				1.8
Loss on extinguishment of debt			132.3				—
Gain on disposition of assets, net			(6.5	)			(147.8	)
Other non-cash items			0.8				(0.1	)
Change in assets and liabilities, net of effects from business acquisitions and divestitures:
Accounts receivable			(43.9	)			24.6
Prepaid expenses and other assets			(1.8	)			22.5
Accounts payable			(62.8	)			(67.5	)
Restructuring and synergy related expenditures			(13.0	)			(33.2	)
Capping, closure and post-closure expenditures			(28.0	)			(33.2	)
Remediation expenditures			(23.4	)			(26.8	)
Other liabilities			(56.7	)			(2.1	)
Cash provided by operating activities			594.8				687.6
Cash (used in) provided by investing activities:
Purchases of property and equipment			(385.4	)			(355.1	)
Proceeds from sales of property and equipment			12.6				16.7
Cash used in acquisitions, net of cash acquired			(0.8	)			(0.1	)
Cash proceeds from divestitures, net of cash divested			—				418.3
Change in restricted cash and marketable securities			(76.0	)			22.7
Other			0.1				—
Cash (used in) provided by investing activities			(449.5	)			102.5
Cash used in financing activities:
Proceeds from notes payable and long-term debt			1,020.2				679.5
Proceeds from issuance of senior notes, net of discount			1,499.4				—
Payments of notes payable and long-term debt			(2,494.8	)			(1,333.5	)
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			34.3				6.8
Excess income tax benefit from stock option exercises			1.8				0.5
Purchases of common stock for treasury			(1.4	)			(0.5	)
Cash dividends paid			(144.9	)			(144.0	)
Distributions paid to noncontrolling interests			(0.7	)			—
Cash used in financing activities			(137.3	)			(791.2	)
Increase (decrease) in cash and cash equivalents			8.0				(1.1	)
Cash and cash equivalents at beginning of period			48.0				68.7
Cash and cash equivalents at end of period		$	56.0			$	67.6

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.

We have prepared these unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). All significant intercompany accounts and transactions have been eliminated. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. 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. You should read these interim financial statements 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 except as 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 Waste Industries, Inc. (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 Financial Accounting Standards Board (FASB) issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs) that requires an enterprise to perform an analysis to determine whether its 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, 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 June 30, 2010 and 2009, we incurred $1.4 million and $12.3 million, respectively, of restructuring and integration charges related to our integration of Allied, which consisted of charges and adjustments for severance, other employee termination and relocation benefits and professional fees.

During the six months ended June 30, 2010 and 2009, we incurred $7.0 million, net of adjustments, and $43.6 million, respectively, of restructuring and integration charges related to our integration of Allied. These charges and adjustments related to severance and other employee termination and relocation benefits as well as consulting and professional fees. Substantially all the charges are recorded in our corporate segment. We expect to incur additional charges approximating $4.7 million to complete our plan. We expect these charges will be paid during the remainder of 2010 and into 2011.

The following tables reflect the activity during the six months ended June 30, 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,																June 30,
		2009				Additions				Payments				Adjustments				2010
Severance and other termination benefits		$	19.6			$	3.2			$	(11.2	)		$	(1.3	)		$	10.3
Relocation			5.2				—				(1.0	)			(1.9	)			2.3
Total		$	24.8			$	3.2			$	(12.2	)		$	(3.2	)		$	12.6

		Balance at																Balance at
		December 31,																June 30,
		2008				Additions				Payments				Adjustments				2009
Severance and other termination benefits		$	12.5			$	24.3			$	(8.7	)		$	—			$	28.1
Relocation			17.9				2.1				(7.2	)			—				12.8
Total		$	30.4			$	26.4			$	(15.9	)		$	—			$	40.9

Accrued Liabilities Related to Allied

The following tables reflect the activity during the six months ended June 30, 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,																June 30,
		2009				Additions				Payments				Adjustments				2010
Severance and other termination benefits		$	2.4			$	—			$	(0.8	)		$	(0.1	)		$	1.5

		Balance at																Balance at
		December 31,																June 30,
		2008				Additions				Payments				Adjustments				2009
Severance and other termination benefits		$	22.6			$	6.5			$	(17.3	)		$	—			$	$11.8

We evaluated our operating contracts and leases acquired from Allied and recorded liabilities for unfavorable contract and lease exit costs. The underlying lease agreements and contracts have remaining non-cancellable terms ranging from 1 to 21 years. The following tables reflect activity during the six months ended June 30, 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 /				June 30,
		2009				Additions				Amortization				2010
Unfavorable contracts		$	49.0			$	—			$	(5.4	)		$	43.6
Lease exit costs			6.4				—				(1.0	)			5.4
Total		$	55.4			$	—			$	(6.4	)		$	49.0

		Balance at												Balance at
		December 31,								Payments /				June 30,
		2008				Additions				Amortization				2009
Unfavorable contracts		$	33.3			$	15.4			$	(3.1	)		$	45.6
Lease exit costs			—				5.9				(1.1	)			4.8
Total		$	33.3			$	21.3			$	(4.2	)		$	50.4

3. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

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

		Balance at												Adjustments to				Balance at
		December 31,				Adjustments to								Assets				June 30,
		2009				Acquisitions				Divestitures				Held for Sale				2010
Eastern		$	2,818.5			$	(1.4	)		$	—			$	—			$	2,817.1
Midwestern			2,118.2				(1.1	)			—				—				2,117.1
Southern			2,724.7				(1.5	)			—				—				2,723.2
Western			3,005.7				(1.7	)			—				—				3,004.0
Total		$	10,667.1			$	(5.7	)		$	—			$	—			$	10,661.4

		Balance at												Adjustments to				Balance at
		December 31,				Adjustments to								Assets				June 30,
		2008				Acquisitions				Divestitures				Held for Sale				2009
Eastern		$	2,772.5			$	5.8			$	(14.3	)		$	9.3			$	2,773.3
Midwestern			2,083.8				5.5				—				(0.3	)			2,089.0
Southern			2,715.6				7.5				(28.9	)			22.3				2,716.5
Western			2,949.6				11.1				—				—				2,960.7
Total		$	10,521.5			$	29.9			$	(43.2	)		$	31.3			$	10,539.5

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:

		Gross Intangible Assets												Accumulated Amortization												Net
		Balance at								Balance at				Balance at				Additions				Balance at				Intangibles
		December 31,								June 30,				December 31,				Charged				June 30,				at June 30,
		2009				Acquisitions				2010				2009				to Expense				2010				2010
Customer relationships, franchise and other municipal agreements		$	521.1			$	0.5			$	521.6			$	(70.5	)		$	(29.8	)		$	(100.3	)		$	421.3
Trade names			30.0				—				30.0				(6.5	)			(3.0	)			(9.5	)			20.5
Non-compete agreements			7.4				0.1				7.5				(6.5	)			(0.4	)			(6.9	)			0.6
Other intangible assets			62.9				—				62.9				(37.9	)			(1.7	)			(39.6	)			23.3
Total		$	621.4			$	0.6			$	622.0			$	(121.4	)		$	(34.9	)		$	(156.3	)		$	465.7

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,								June 30,				December 31,				Charged				June 30,				at June 30,
		2008				Acquisitions				2009				2008				to Expense				2009				2009
Customer relationships, franchise and other municipal agreements		$	520.8			$	0.2			$	521.0			$	(10.9	)		$	(29.8	)		$	(40.7	)		$	480.3
Trade names			30.0				—				30.0				(0.5	)			(3.0	)			(3.5	)			26.5
Non-compete agreements			7.4				—				7.4				(5.6	)			(0.4	)			(6.0	)			1.4
Other intangibles assets			57.2				—				57.2				(34.3	)			(1.4	)			(35.7	)			21.5
Total		$	615.4			$	0.2			$	615.6			$	(51.3	)		$	(34.6	)		$	(85.9	)		$	529.7

4. OTHER ASSETS

Prepaid Expenses and Other Current Assets

A summary of prepaid expenses and other current assets as of June 30, 2010 and December 31, 2009 is as follows:

		June 30,				December 31,
		2010				2009
Inventories		$	31.9			$	33.7
Prepaid expenses			57.2				59.3
Other non-trade receivables			47.2				57.1
Other current assets			2.5				6.4
Total		$	138.8			$	156.5

Other current assets include the fair value of fuel and commodity hedges of $1.4 million and $5.0 million at June 30, 2010 and December 31, 2009, respectively.

Other Assets

A summary of other assets as of June 30, 2010 and December 31, 2009 is as follows:

		June 30,				December 31,
		2010				2009
Deferred financing costs		$	43.9			$	32.4
Deferred compensation plan			24.6				15.2
Notes and other receivables			44.9				45.1
Other			123.3				117.4
Total		$	236.7			$	210.1

Notes and other receivables include the fair value of interest rate swaps of $8.3 million and $9.9 million at June 30, 2010 and December 31, 2009, respectively.

5. OTHER LIABILITIES

Other Accrued Liabilities

A summary of other accrued liabilities as of June 30, 2010 and December 31, 2009 is as follows:

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		June 30,				December 31,
		2010				2009
Accrued payroll and benefits		$	153.0			$	169.6
Accrued fees and taxes			117.4				114.4
Self-insurance reserves, current portion			119.5				110.9
Accrued dividends			72.8				72.4
Current tax liabilities			—				70.0
Restructuring liabilities			12.6				24.8
Accrued professional fees and legal settlement reserves			63.6				59.0
Other			107.2				119.1
Total		$	646.1			$	740.2

Other accrued liabilities include the fair value of fuel and commodity hedges of $8.3 million and $5.7 million at June 30, 2010 and December 31, 2009, respectively.

Other Long-Term Liabilities

A summary of other long-term liabilities as of June 30, 2010 and December 31, 2009 is as follows:

		June 30,				December 31,
		2010				2009
Deferred compensation liability		$	24.9			$	15.7
Pension and other postretirement liabilities			36.8				38.1
Contingent legal liablilities			104.8				112.0
Other			131.8				113.4
Total		$	298.3			$	279.2

6. LANDFILL AND ENVIRONMENTAL COSTS

As of June 30, 2010, we owned or operated 191 active solid waste landfills with total available disposal capacity of approximately 4.6 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 June 30, 2010 and December 31, 2009 is as follows:

		June 30,				December 31,
		2010				2009
Landfill final capping, closure and post-closure liabilities		$	1,094.2			$	1,074.5
Remediation			549.3				554.1
			1,643.5				1,628.6
Less: Current portion			(225.9	)			(245.4	)
Long-term portion		$	1,417.6			$	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 six months ended June 30, 2010 and 2009:

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		Six Months Ended June 30,
		2010				2009
Asset retirement obligation liabilities, beginning of year		$	1,074.5			$	1,040.6
Non-cash additions			15.6				17.1
Acquisitions and other adjustments			(0.7	)			6.5
Asset retirement obligation adjustments			(7.6	)			—
Payments			(28.0	)			(33.2	)
Accretion expense			40.4				45.2
Adjustments to liabilities related to assets held for sale			—				(2.9	)
Asset retirement obligation liabilities, end of period			1,094.2				1,073.3
Less: Current portion			(123.7	)			(99.8	)
Long-term portion		$	970.5			$	973.5

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 $60.7 million at June 30, 2010 and $62.4 million as of December 31, 2009, and are 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 June 30, 2010 would be approximately $191 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 six months ended June 30, 2010 and 2009:

		Six Months Ended June 30,
		2010				2009
Remediation liabilities, beginning of year		$	554.1			$	389.9
Acquisitions and other adjustments			1.5				0.9
Additions charged to expense			2.6				—
Payments			(23.4	)			(26.8	)
Accretion expense			14.5				10.0
Remediation liabilities, end of period			549.3				374.0
Less: Current portion			(102.2	)			(65.4	)
Long-term portion		$	447.1			$	308.6

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

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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 June 30, 2010 is $71.1 million, of which approximately $2.4 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 June 30, 2010 is $45.7 million, of which approximately $1.5 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 June 30, 2010 is $34.8 million, of which approximately $9.3 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 June 30, 2010 is $81.4 million, of which approximately $16.9 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 a cost of operations in the period in which they are incurred.

7. DEBT

Our notes payable, capital leases and long-term debt at June 30, 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 assumed as part of our acquisition of Allied was recorded at fair value as of the acquisition date.

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		Debt Balance at
		June 30, 2010				December 31, 2009
$1.0 billion Revolver due 2012		$	—			$	—
$1.75 billion Revolver due 2013, Eurodollar and Base Rate borrowings			196.0				315.4
Receivables secured loans			—				300.0
Senior notes, fixed interest rate of 6.500%, due 2010			219.4				216.5
Senior notes, fixed interest rate of 5.750%, due 2011			257.0				252.5
Senior notes, fixed interest rate of 6.375%, due 2011			212.0				209.1
Senior notes, fixed interest rate of 6.750%, due 2011			394.9				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			531.1				526.7
Senior notes, fixed interest rate of 6.875%, due 2017			659.1				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			93.3				93.1
Senior notes, fixed interest rate of 6.086%, due 2035			249.6				249.4
Debentures, fixed interest rate of 7.400%, due 2035			267.2				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 0.14% to 8.25%; maturities ranging from 2012 to 2037			1,201.3				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			91.6				93.6
Total debt			7,117.5				6,962.6
Less: Current portion			(692.5	)			(543.0	)
Long-term portion		$	6,425.0			$	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 June 30, 2010 and December 31, 2009, the interest rate for our borrowings under our Credit Facilities was 2.22% 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. Availability 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 $150.0 million and $300.0 million of Eurodollar Rate borrowings, $46.0 million and $15.4 million of Base Rate borrowings and $1,619.8 million and $1,634.0 million of letters of credit utilizing availability under our Credit Facilities, leaving $934.2 million and $800.6 million of availability under our Credit Facilities at June 30, 2010 and December 31, 2009, respectively. At June 30, 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 first quarter of 2010, we recorded a loss on extinguishment of debt of $0.2 million related to the write-off of unamortized deferred issuance costs associated with 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 guarantees 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

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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 launched the exchange offer for the Notes, as well as certain other senior notes in June 2010 and expect the exchange offer to be consummated in August 2010.

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. During the first quarter of 2010, we incurred a loss of $132.1 million for premiums paid to repurchase debt, the write-off of unamortized debt discounts and professional fees paid to effectuate the repurchase of the senior notes.

As of June 30, 2010 and December 31, 2009, our senior notes and debentures totaled $5,628.6 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 $303.2 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 $8.3 million and $9.9 million, respectively.

Tax-Exempt Financings

As of June 30, 2010 and December 31, 2009, we had $1,201.3 million and $1,223.7 million, respectively, of fixed and variable rate tax-exempt financings outstanding with maturities ranging from 2012 to 2037. At June 30, 2010 and December 31, 2009, the unamortized adjustment to fair value recorded in purchase accounting for these tax-exempt financings assumed from Allied was $47.2 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 June 30, 2010, we had $315.2 million of restricted cash, of which $80.1 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 June 30, 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 was $6.2 billion and $5.7 billion at June 30, 2010 and December 31, 2009, respectively. The carrying value of our fixed rate senior notes was $5.6 billion and $5.0 billion at June 30, 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.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

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 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 June 30, 2010 and December 31, 2009, interest rate swap agreements are reflected at their fair value of $8.3 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.

The following table summarizes the reduction to interest expense due to periodic settlements of active swap agreements for the three and six months ended June 30, 2010 and 2009:

Consolidated Statement of Income Classification		Three Months Ended June 30,
		2010				2009
Interest expense		$	2.1			$	2.0

Consolidated Statement of Income Classification		Six Months Ended June 30,
		2010				2009
Interest expense		$	4.3			$	4.4

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 first quarter of 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 to the 2020 and 2040 Notes. This transaction was accounted for as a cash flow hedge. As of June 30, 2010, no treasury or interest rate lock cash flow hedges were outstanding.

8. INCOME TAXES

Our effective tax rate, exclusive of minority interest income, for the three and six months ended June 30, 2010 was 40.9% and 41.8%, respectively. For the three and six months ended June 30, 2009 our effective tax rate was 39.2% and 40.7%, respectively. Income taxes are recorded based upon our anticipated full year effective income tax rate. Income taxes paid (net of refunds received) were $284.4 million and $219.0 million for the six months ended June 30, 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.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

We recognize interest and penalties as incurred within the provision for income taxes in the consolidated statements of income. As of June 30, 2010, we have accrued a liability for penalties of $1.5 million and interest (including interest on penalties) of $97.8 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 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 the BFI risk management companies, we paid approximately $110 million during the first six months of 2010.

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 June 30, 2010 of approximately $65 million. In addition, the IRS has asserted a penalty of 20% of the additional income tax due. At June 30, 2010, the amount of the asserted penalty and penalty-related interest was approximately $47 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. STOCK-BASED COMPENSATION

Available Shares

We currently have 3.8 million and 15.3 million shares reserved under our 2007 Stock Incentive Plan (2007 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 six months ended June 30, 2010 and 2009 were $5.25 and $3.47 per option, respectively, which were calculated using the following weighted-average assumptions:

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Six Months Ended June 30,
		2010				2009
Expected volatility			28.6	%			28.7	%
Risk-free interest rate			2.4	%			1.4	%
Dividend yield			2.9	%			3.7	%
Expected life (in years)			4.3				4.2
Contractual life (in years)			7				7
Expected forfeiture rate			3.0	%			3.0	%

The following table summarizes the stock option activity for the six months ended June 30, 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			3.0				27.31
Exercised			(1.7	)			20.32							$	16.5
Forfeited or expired			(0.5	)			27.73
Outstanding at June 30, 2010			15.9			$	24.62				4.9			$	83.1
Exercisable at June 30, 2010			10.1			$	24.13				4.3			$	58.2

During the six months ended June 30, 2010 and 2009, compensation expense for stock options was $6.2 million and $3.9 million, respectively.

As of June 30, 2010, total unrecognized compensation expense related to outstanding stock options was $15.5 million, which will be recognized over a weighted average period of 2.0 years.

Other Stock Awards

The following table summarizes the restricted stock unit and restricted stock activity for the six months ended June 30, 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			360.1				29.11
Vested and Issued			(120.8	)			22.26
Forfeited			—				—
Unissued at June 30, 2010			892.5			$	26.19				1.2			$	26.5
Vested and unissued at June 30, 2010			241.7			$	26.17

During the six months ended June 30, 2010, we awarded 87,707 restricted stock units to our non-employee directors under our 2007 Plan, of which 85,584 vested immediately. The remaining restricted stock units awarded during the six months ended June 30, 2010 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 six months ended June 30, 2010, we awarded 207,791 restricted stock units to executives 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.

Additionally, during the six months ended June 30, 2010, we awarded 64,579 shares of restricted stock to an executive which vest in four equal annual installments beginning on the anniversary date of the original grant. During the vesting period, the participant has

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

voting rights and receives 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 units and restricted stock 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.

During the six months ended June 30, 2010 and 2009, compensation expense related to restricted stock units and restricted stock totaled $5.8 million and $2.9 million, respectively.

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. In July 2010, the board of directors approved an increase in the quarterly dividend to $0.20 per share. Dividends declared were $145.3 million and $144.1 million during the six months ended June 30, 2010 and 2009, respectively. As of June 30, 2010, we recorded a quarterly dividend payable of approximately $72.8 million to stockholders of record at the close of business on July 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 and six months ended June 30, 2010 and 2009 are calculated as follows (in thousands, except per share amounts):

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Basic earnings per share:
Net income attributable to Republic Services, Inc.		$	159,700			$	225,900			$	224,700			$	338,900
Weighted average common shares outstanding			382,509				379,169				381,968				379,095
Basic earnings per share		$	0.42			$	0.60			$	0.59			$	0.89
Diluted earnings per share:
Net income attributable to Republic Services, Inc.		$	159,700			$	225,900			$	224,700			$	338,900
Weighted average common shares outstanding			382,509				379,169				381,968				379,095
Effect of dilutive securities:
Options to purchase common stock			2,112				759				1,918				792
Unvested restricted stock awards			89				4				110				3
Weighted average common and common equivalent shares outstanding			384,710				379,932				383,996				379,890
Diluted earnings per share		$	0.42			$	0.59			$	0.59			$	0.89
Antidilutive securities not included in the diluted earnings per share calculations:
Senior subordinated convertible debentures			—				5,207				—				5,207
Options to purchase common stock			3,940				11,592				4,492				12,114

11. OTHER COMPREHENSIVE INCOME AND FINANCIAL INSTRUMENTS

A summary of comprehensive income for the three and six months ended June 30, 2010 and 2009 is as follows:

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Net Income		$	159.9			$	226.2			$	225.1			$	339.5
Settlement and amortization of interest rate lock hedges, net of tax			0.1				—				(3.6	)			—
Change in value of commodity hedges, net of tax			1.1				(1.1	)			(2.1	)			(2.4	)
Change in value of fuel hedges, net of tax			(1.4	)			5.2				(1.4	)			4.1
Employee benefit plan liability adjustments, net of tax			—				—				0.1				—
Comprehensive income			159.7				230.3				218.1				341.2
Less: comprehensive income attributable to noncontrolling interests			(0.2	)			(0.3	)			(0.4	)			(0.6	)
Comprehensive income attributable to Republic Services, Inc.		$	159.5			$	230.0			$	217.7			$	340.6

The tax effect of the above described transactions was calculated at a 42.0% and 43.5% rate for 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).

The following table summarizes our outstanding fuel hedges at June 30, 2010 and 2009:

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Notional Amount

(in Gallons

Contract Price

Inception Date

Commencement Date

Termination Date

per Month)

per Gallon

January 26, 2007

January 5, 2009

December 28, 2009

500,000

$

2.83

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