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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
 For the transition period from  to
 Commission File Number 1-14705
 ALLIED WASTE INDUSTRIES, INC.
  Delaware
    
    88-0228636(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification Number)
 18500 North Allied WayPhoenix, Arizona
    
    85054(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (480) 627-2700
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 par value
    
    New York Stock ExchangeSeries D Senior Mandatory Convertible Preferred
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:  None
 þ o
 o þ
 þ o
 o
  þ o o
 o þ




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##### 



TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    9Item 1B.
    
    Unresolved Staff Comments
    
    
    17Item 2.
    
    Properties
    
    
    17Item 3.
    
    Legal Proceedings
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    21Item 6.
    
    Selected Financial Data
    
    
    22Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    57Item 8.
    
    Financial Statements and Supplementary Data
    
    
    58Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    117Item 9A.
    
    Controls and Procedures
    
    
    117Item 9B.
    
    Other Information
    
    
    117PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    118Item 11.
    
    Executive Compensation
    
    
    125Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    155Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    158Item 14.
    
    Principal Accounting Fees and Services
    
    
    160PART IVItem 15.
    
    Exhibits, Financial Statement Schedule
    
    
    160Signatures
    
    
    210EX-10.47EX-10.62EX-10.74EX-10.76EX-10.113EX-12.1EX-14EX-21EX-23.1EX-31.1EX-31.2EX-32




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PART I
 
 Item 1. Business
 Overview
       1




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Business Strategy
  Vertical integration.
  Best practices.
  Focus on customer service excellence
 Market growth and rationalization.
 2




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Maintaining financial capacity and infrastructure for future growth.
  Operations
  Collection
 
    
    Commercial.We provide containerized non-hazardous solid waste disposal services to a
wide variety of commercial and industrial customers. Commercial revenue represents
approximately 35% of our collection revenue. We provide customers with containers that are
designed to be lifted mechanically and emptied into a collection vehicles compaction
hopper. Our commercial containers generally range in size from one to eight cubic yards.
Commercial contract terms generally are for multiple years and commonly have renewal
options.
 3




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
    
    Residential.We perform residential collection services under individual monthly
subscriptions directly to households or under exclusive contracts with municipal
governments that allow us to service all or a portion of the homes in the municipalities at
established rates. Residential revenue represents approximately 28% of our collection
revenue, approximately 40% of which is subscription revenue and approximately 60% of which
is municipal revenue. Municipal contracts generally are for multiple years and commonly
have renewal options. We seek to obtain municipal contracts that enhance the efficiency
and profitability of our operations as a result of the density of collection customers
within a given area. Prior to the end of the term of most municipal contracts, we will
attempt to renegotiate the contract, and if unable to do so, will generally re-bid the
contract on a sealed bid basis. We also make residential collection service arrangements
directly with households. We seek to enter into residential service arrangements where the
route density is high, thereby creating additional economic benefit. Residential collection
fees are either paid by the municipalities out of tax revenues or service charges, or are
paid directly by the residents who receive the service. We generally provide small
containers to our customers that are lifted either mechanically or manually and emptied
into the collection vehicle. The collection vehicle collects the waste from many customers
before traveling to a transfer station or landfill for disposal.
    
    Roll-off.We provide roll-off collection services to a wide variety of commercial and
industrial customers as well as residential customers. Roll-off revenue represents
approximately 32% of our collection revenue. We provide customers with containers that are
designed to be lifted mechanically and loaded onto the collection vehicle. Our roll-off
containers generally range in size from 20 to 40 cubic yards. The collection vehicle
returns to the transfer station or landfill after collecting the container from each
customer. Contracts for roll-off containers may provide for temporary (such as the removal
of waste from a construction site) or ongoing services.
    
    Recycling.Recycling collection services include curbside collection of recyclable
materials for residential customers and commercial and industrial collection of recyclable
materials. Recycling collection revenue represents approximately 5% of our total
collection revenue. We generally charge recycling fees based on the service sought by the
customer. The customer pays for the cost of removing, sorting and transferring recyclable
materials downstream in the recycling process. The collection vehicle collects the waste
from many customers before traveling to a materials recovery facility to deliver the
recyclables.
 Transfer stations
 Landfills.
 4




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Recycling  commodity.
 Organization, Sales and Marketing
     5




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Sales and Customer Service
   Employees
  Competition
  6




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Environmental and Other Regulations
    The Resource Conservation and Recovery Act of 1976, as amended (RCRA).
 The Federal Water Pollution Control Act of 1972, as amended (the Clean Water Act).
 7




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The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
(CERCLA)
 The Clean Air Act of 1970, as amended (the Clean Air Act).
 The Occupational Safety and Health Act of 1970, as amended (OSHA).
 Future federal legislation.
 State regulation.
  8




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Liability Insurance and Bonding
   Corporate Governance
   
 Item 1A. Risk Factors
  We compete with large companies and municipalities that may have greater financial and operational
resources, flexibility to reduce prices and other competitive advantages that could make it
difficult for us to compete effectively.
  9




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Price increases may not be adequate to offset the impact of inflation on our costs and/or may cause
us to lose volume.
  Downturns in the U.S. economy have had and may have an adverse impact on our operating results.
  Our goodwill may become impaired, which could result in a material non-cash charge to our results
of operations.
  We
currently have matters pending with the Internal Revenue Service (IRS), which could
result in large cash expenditures and could have a material adverse effect on our operating
results, liquidity and financial condition.
    Income Taxes,
 10




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Increases in the cost of fuel or oil for any extended period of time will increase our operating
expenses.
   Adverse weather conditions may limit our operations and increase the costs of collection and
disposal.
  Fluctuations in commodity prices could affect our revenues, operating income and cash flows .
  We may be subject to work stoppages, which could increase our operating costs and disrupt our
operations .
  We may not realize all of the expected benefits from our significant investment in the development
and implementation of our best practices program.
  11




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We may not realize all of the expected benefits from our market rationalization plan.
  We may not realize all of the expected benefits from our business development plan.
   We are subject to costly environmental regulations that may affect our operating margins, restrict
our operations and subject us to additional liability.
    12




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We may have potential environmental liabilities that are not covered by our insurance .
  Despite our efforts, we may incur additional hazardous substances liability in excess of amounts
presently known and accrued.
  We cannot assure you that we will continue to operate our landfills at currently estimated volumes
due to the use of alternatives to landfill disposal caused by state requirements or voluntary
initiatives.
 .
 If we are unable to execute our business strategy, our waste disposal expenses could increase
significantly.
  We may be unable to obtain required permits or to expand existing permitted capacity of our
landfills, which could decrease our revenues and increase our costs.
  13




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The solid waste industry is a capital-intensive industry and the amount we spend on capital
expenditures may increase, which could require us to issue additional equity or debt to fund our
operations or impair our ability to grow our business.
    Our leverage may make it difficult for us to service our debt and operate our business.
   
    
    make it more difficult for us to service our debt obligations;
    
    limit cash flow available for working capital, capital expenditures to fund organic
growth or for other general corporate purposes because a substantial portion of our cash
flow from operations must be dedicated to servicing debt;
    
    increase our vulnerability to economic downturns;
    
    increase our vulnerability to interest rate increases to the extent any of our variable
rate debt is not hedged which could result in higher interest expense;
    
    place us at a competitive disadvantage compared to our competitors that have less debt
in relation to cash flow;
    
    limit our flexibility in planning for or reacting to changes in our business and our
industry;
    
    limit, among other things, our ability to borrow additional funds or obtain other
financing capacity in the future for working capital, capital expenditures or
acquisitions; and
 14




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
    
    subject us to a greater risk of noncompliance with financial and other restrictive
covenants in our indebtedness. The failure to comply with these covenants could result in
an event of default, which if not cured or waived, could have a material adverse effect on
us.
  We may not generate a sufficient amount of cash to service our indebtedness and alternatives to
service our indebtedness may not be effective.
  We may be unable to refinance or repay our debt at maturity, which would cause us to default under
our debt instruments.
  Covenants in our debt instruments may limit our ability to operate our business and any failure by
us to comply with such covenants may accelerate our obligation to repay the underlying debt.
   15




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A downgrade in our bond ratings could adversely affect our liquidity by increasing the cost of debt
and financial assurance instruments.
  Changes in interest rates may negatively affect our results of operations.
  If we are unable to obtain necessary financial assurances, it could negatively impact our liquidity
and capital resources.
  There may be undisclosed liabilities associated with our acquisitions .
  16




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The possibility of disposal site developments, expansion projects or pending acquisitions not being
completed or certain other events could result in a material charge against our earnings .
   We are required to make accounting and tax-related estimates and judgments in the ordinary course
of business .
  The introduction of new accounting rules, laws or regulations could adversely impact our results of
operations.
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   17




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Item 3. Legal Proceedings
   Securities 
 th
 Landfill permitting 
  18




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Environmental 
    19




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Tax 
       Coltec v. United States
 Coltec
  20




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Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Price Range of Common Stock
  High
    
    LowYear Ended December 31, 2006:First Quarter
    
    $
    12.24
    
    
    $
    8.53Second Quarter
    
    
    14.26
    
    
    
    10.66Third Quarter
    
    
    11.27
    
    
    
    9.78Fourth Quarter
    
    
    13.50
    
    
    
    11.19Year Ended December 31, 2005:First Quarter
    
    $
    9.09
    
    
    $
    6.95Second Quarter
    
    
    8.24
    
    
    
    6.98Third Quarter
    
    
    9.16
    
    
    
    7.80Fourth Quarter
    
    
    9.21
    
    
    
    7.80
  Dividend Policy
  21




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Purchases of Equity Securities by Our Company and Affiliates
  Recent Sales of Unregistered Securities
  Performance Graph
  
 December 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006Allied WasteIndustries, Inc.
    
    $
    14.06
    
    
    $
    10.00
    
    
    $
    13.88
    
    
    $
    9.28
    
    
    $
    8.74
    
    
    $
    12.29Index
    
    
    100.00
    
    
    
    71.12
    
    
    
    98.72
    
    
    
    66.00
    
    
    
    62.16
    
    
    
    87.41Standard and
Poors 500 Stock
Index
    
    $
    1,148.04
    
    
    $
    879.82
    
    
    $
    1,111.92
    
    
    $
    1,211.92
    
    
    $
    1,248.29
    
    
    $
    1,418.30Index
    
    
    100.00
    
    
    
    76.64
    
    
    
    96.85
    
    
    
    105.56
    
    
    
    108.73
    
    
    
    123.54Dow Jones
Waste & Disposal
Services Index
    
    $
    79.23
    
    
    $
    62.19
    
    
    $
    82.56
    
    
    $
    84.03
    
    
    $
    87.46
    
    
    $
    105.64Index
    
    
    100.00
    
    
    
    78.49
    
    
    
    104.20
    
    
    
    106.06
    
    
    
    110.39
    
    
    
    133.33
 
 Item 6. Selected Financial Data
  22




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Year Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Statement of Operations Data(1):Revenues
    
    $
    6,028.8
    
    
    $
    5,734.8
    
    
    $
    5,514.0
    
    
    $
    5,386.3
    
    
    $
    5,311.3Cost of operations
    
    
    3,874.3
    
    
    
    3,745.7
    
    
    
    3,514.6
    
    
    
    3,325.5
    
    
    
    3,159.6Selling, general and administrative
expenses
    
    
    595.3
    
    
    
    519.2
    
    
    
    553.7
    
    
    
    480.1
    
    
    
    462.7Depreciation and amortization
    
    
    569.3
    
    
    
    554.4
    
    
    
    559.3
    
    
    
    546.0
    
    
    
    478.5Loss from divestiture and
asset impairments(2)
    
    
    22.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.3
    )Operating income
    
    
    967.4
    
    
    
    915.5
    
    
    
    886.4
    
    
    
    1,034.7
    
    
    
    1,219.8Interest expense and other(3)
    
    
    567.9
    
    
    
    588.0
    
    
    
    758.9
    
    
    
    832.9
    
    
    
    854.0Income before income taxes
    
    
    399.5
    
    
    
    327.5
    
    
    
    127.5
    
    
    
    201.8
    
    
    
    365.8Income tax expense
    
    
    238.5
    
    
    
    133.9
    
    
    
    72.2
    
    
    
    88.7
    
    
    
    165.6Minority interest
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    (2.7
    )
    
    
    1.9
    
    
    
    1.9Income from continuing operations
    
    $
    160.9
    
    
    $
    193.8
    
    
    $
    58.0
    
    
    $
    111.2
    
    
    $
    198.3Basic EPS:Continuing operations(4)
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.12
    
    
    $
    (2.36
    )
    
    $
    0.63Weighted average common shares
    
    
    356.7
    
    
    
    326.9
    
    
    
    315.0
    
    
    
    203.8
    
    
    
    190.2Diluted EPS:Continuing operations(4)
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.11
    
    
    $
    (2.36
    )
    
    $
    0.62Weighted average common and
common equivalent shares
    
    
    359.3
    
    
    
    330.1
    
    
    
    319.7
    
    
    
    203.8
    
    
    
    193.5Pro forma amounts, assuming a change in accounting principle is applied retroactively (5):Income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    186.3Basic income per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.57Diluted income per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.56Statement of Cash Flows Data(1):Cash flows from operating activities
    
    $
    921.6
    
    
    $
    712.6
    
    
    $
    650.0
    
    
    $
    783.9
    
    
    $
    976.6Cash flows used for investing activities
(including asset purchases and sales,
and capital expenditures)
    
    
    (608.8
    )
    
    
    (683.0
    )
    
    
    (537.9
    )
    
    
    (248.4
    )
    
    
    (519.5
    )Cash flows used for financing activities
(including debt repayments)
    
    
    (274.8
    )
    
    
    (45.5
    )
    
    
    (489.2
    )
    
    
    (285.7
    )
    
    
    (487.5
    )Cash provided by discontinued
operations
    
    
    
    
    
    
    4.0
    
    
    
    0.4
    
    
    
    15.5
    
    
    
    52.2Balance Sheet Data(1):Cash and cash equivalents
    
    $
    94.1
    
    
    $
    56.1
    
    
    $
    68.0
    
    
    $
    444.7
    
    
    $
    179.4Working capital (deficit)
    
    
    (485.0
    )
    
    
    (655.1
    )
    
    
    (834.1
    )
    
    
    (282.2
    )
    
    
    (377.7
    )Property and equipment, net
    
    
    4,354.0
    
    
    
    4,273.5
    
    
    
    4,129.9
    
    
    
    4,018.9
    
    
    
    4,005.7Goodwill, net
    
    
    8,126.1
    
    
    
    8,184.2
    
    
    
    8,202.0
    
    
    
    8,313.0
    
    
    
    8,530.4Total assets
    
    
    13,811.0
    
    
    
    13,661.3
    
    
    
    13,539.2
    
    
    
    13,860.9
    
    
    
    13,928.9Total debt
    
    
    6,910.6
    
    
    
    7,091.7
    
    
    
    7,757.0
    
    
    
    8,234.1
    
    
    
    8,882.2Series A preferred stock (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,246.9Stockholders equity (4) (6)
    
    
    3,598.9
    
    
    
    3,439.4
    
    
    
    2,604.9
    
    
    
    2,517.7
    
    
    
    689.1Total debt to total capitalization
(including preferred stock)
    
    
    66
    %
    
    
    67
    %
    
    
    75
    %
    
    
    77
    %
    
    
    82
    %
 
 (1)
    
    During 2004 and 2003, we sold or held for sale certain operations that met the
criteria for reporting discontinued operations. The selected financial data for all prior
periods have been reclassified to include these operations as discontinued operations.(2)
    
    The loss from divestitures and asset impairments include asset sales completed as a
result of our market rationalization focus and are not included in discontinued operations
($7.6 million in 2006 and $9.3 million in 2002). The 2006 amount also includes $9.7 million
of landfill asset impairments resulting from managements decision to discontinue development
and operations of the sites and a $5.2 million charge related to the relocation of our
operations support center.(3)
    
    Includes costs incurred to extinguish debt for the years ended December 31, 2006,
2005, 2004 and 2003 of $41.3 million, $62.6 million, $156.2 million and $108.1 million,
respectively.(4)
    
    In 2003, all of our Series A Preferred Stock was exchanged for 110.5 million shares
of common stock. In connection with the exchange, we recorded a reduction to net income
available to common shareholders of $496.6 million for the fair value of the incremental
shares of common stock issued to the holders of the preferred stock over the amount the
holders would have received under the original conversion provisions.(5)
    
    Pro forma amounts give effect to the change in our method of accounting for landfill
retirement obligations upon adoption of SFAS No. 143, Accounting for Asset Retirement
Obligations(SFAS 143) on January 1, 2003, as if the provisions of SFAS 143 had been applied
retroactively.(6)
    
    In 2006, we recorded an after-tax charge of $57.4 million to stockholders equity
relating to the adoption of SFAS No.158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R)(SFAS
158). 23




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with our consolidated financial statements
and the notes thereto, included elsewhere herein. Please note that unless otherwise specifically
indicated, discussion of our results relate to our continuing operations. This discussion may
contain forward-looking statements that anticipate results based upon assumptions as to future
events that may not prove to be accurate.
 Executive Summary
   Property and Equipment
  Results of operations
   24




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Financing activities
      25




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Results of Operations
  Statement of Operations Data:
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Revenues
    
    $
    6,028.8
    
    
    
    100.0
    %
    
    $
    5,734.8
    
    
    
    100.0
    %
    
    $
    5,514.0
    
    
    
    100.0
    %Cost of operations
    
    
    3,874.3
    
    
    
    64.3
    
    
    
    3,745.7
    
    
    
    65.3
    
    
    
    3,514.6
    
    
    
    63.8Selling, general and administrative
expenses
    
    
    595.3
    
    
    
    9.9
    
    
    
    519.2
    
    
    
    9.1
    
    
    
    553.7
    
    
    
    10.0Depreciation and amortization
    
    
    569.3
    
    
    
    9.4
    
    
    
    554.4
    
    
    
    9.6
    
    
    
    559.3
    
    
    
    10.1Loss from divestitures and asset
impairments
    
    
    22.5
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income
    
    
    967.4
    
    
    
    16.0
    
    
    
    915.5
    
    
    
    16.0
    
    
    
    886.4
    
    
    
    16.1Interest expense and other
    
    
    567.9
    
    
    
    9.4
    
    
    
    588.0
    
    
    
    10.3
    
    
    
    758.9
    
    
    
    13.8Income before income taxes
    
    
    399.5
    
    
    
    6.6
    
    
    
    327.5
    
    
    
    5.7
    
    
    
    127.5
    
    
    
    2.3Income tax expense
    
    
    238.5
    
    
    
    3.9
    
    
    
    133.9
    
    
    
    2.3
    
    
    
    72.2
    
    
    
    1.2Minority interest
    
    
    0.1
    
    
    
    0.0
    
    
    
    (0.2
    )
    
    
    (0.0
    )
    
    
    (2.7
    )
    
    
    (0.0
    )Income from continuing operations
    
    
    160.9
    
    
    
    2.7
    
    
    
    193.8
    
    
    
    3.4
    
    
    
    58.0
    
    
    
    1.1Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    10.8
    
    
    
    0.2
    
    
    
    (8.7
    )
    
    
    (0.2
    )Cumulative effect of change in
accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.0
    )
    
    
    
    
    
    
    Net income
    
    
    160.9
    
    
    
    2.7
    
    
    
    203.8
    
    
    
    3.6
    
    
    
    49.3
    
    
    
    0.9Dividends on preferred stock
    
    
    (42.9
    )
    
    
    (0.7
    )
    
    
    (52.0
    )
    
    
    (1.0
    )
    
    
    (21.6
    )
    
    
    (0.4
    )Net income available to
common shareholders
    
    $
    118.0
    
    
    
    2.0
    %
    
    $
    151.8
    
    
    
    2.6
    %
    
    $
    27.7
    
    
    
    0.5
    %
 Revenues.
  Revenues by service line (in millions):
 Year Ended December 31,2006
    
    
    2005(1)
    
    
    2004(1)CollectionResidential
    
    $
    1,205.2
    
    
    $
    1,188.1
    
    
    $
    1,164.5Commercial
    
    
    1,502.0
    
    
    
    1,398.0
    
    
    
    1,349.9Roll-off (2)
    
    
    1,333.3
    
    
    
    1,251.3
    
    
    
    1,190.4Recycling
    
    
    202.4
    
    
    
    198.4
    
    
    
    205.7Total Collection
    
    
    4,242.9
    
    
    
    4,035.8
    
    
    
    3,910.5DisposalLandfill
    
    
    850.7
    
    
    
    812.2
    
    
    
    763.7Transfer
    
    
    424.4
    
    
    
    422.5
    
    
    
    420.0Total Disposal
    
    
    1,275.1
    
    
    
    1,234.7
    
    
    
    1,183.7Recycling  Commodity
    
    
    217.5
    
    
    
    225.6
    
    
    
    235.4Other(3)
    
    
    293.3
    
    
    
    238.7
    
    
    
    184.4Total Revenues
    
    $
    6,028.8
    
    
    $
    5,734.8
    
    
    $
    5,514.0
 
 (1)
    
    The revenue mix for 2005 and 2004 reflects the reclassification of transportation
revenue out of collection, disposal and recycling-commodity revenue to other revenue.(2)
    
    Consists of revenue generated from commercial, industrial and residential customers
from waste collected in roll-off containers that are loaded onto collection vehicles.(3)
    
    Consists primarily of revenue from national accounts where the work has been
subcontracted, revenue generated from transporting waste via railway or truck and revenue from
liquid waste. 26




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##### Table of Contents



Revenues by region (1) (in millions, except percentages):
 Year Ended December 31,2006
    
    
    2005 (3)
    
    
    2004 (3)Midwestern
    
    $
    1,236.4
    
    
    
    20.5
    %
    
    $
    1,201.5
    
    
    
    21.0
    %
    
    $
    1,167.8
    
    
    
    21.2
    %Northeastern
    
    
    1,256.6
    
    
    
    20.8
    
    
    
    1,247.2
    
    
    
    21.7
    
    
    
    1,252.8
    
    
    
    22.7Southeastern
    
    
    1,059.7
    
    
    
    17.6
    
    
    
    997.1
    
    
    
    17.4
    
    
    
    953.4
    
    
    
    17.3Southwestern
    
    
    991.6
    
    
    
    16.5
    
    
    
    939.6
    
    
    
    16.4
    
    
    
    884.6
    
    
    
    16.0Western
    
    
    1,351.2
    
    
    
    22.4
    
    
    
    1,265.4
    
    
    
    22.1
    
    
    
    1,191.6
    
    
    
    21.6Other(2)
    
    
    133.3
    
    
    
    2.2
    
    
    
    84.0
    
    
    
    1.4
    
    
    
    63.8
    
    
    
    1.2Total Revenues
    
    $
    6,028.8
    
    
    
    100.0
    %
    
    $
    5,734.8
    
    
    
    100.0
    %
    
    $
    5,514.0
    
    
    
    100.0
    %
 
 (1)
    
    See discussion in Note 16 to our consolidated financial statements.(2)
    
    Amounts relate primarily to our subsidiaries that provide services throughout the
organization and not on a regional basis.(3)
    
    Revenues in the prior periods have been restated to conform to our current operating
structure. Cost of Operations labor and related benefits transfer and disposal costs maintenance and repairs transportation and subcontractor costs fuel disposal and franchise fees and taxes landfill operating costs risk management cost of goods sold other
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Labor and related benefits
    
    $
    1,115.9
    
    
    
    18.5
    %
    
    $
    1,114.1
    
    
    
    19.4
    %
    
    $
    1,071.2
    
    
    
    19.4
    %Transfer and disposal costs
    
    
    496.3
    
    
    
    8.2
    
    
    
    492.1
    
    
    
    8.6
    
    
    
    499.8
    
    
    
    9.1Maintenance and repairs
    
    
    494.5
    
    
    
    8.2
    
    
    
    490.1
    
    
    
    8.5
    
    
    
    469.5
    
    
    
    8.5Transportation and subcontractor costs
    
    
    513.0
    
    
    
    8.5
    
    
    
    456.5
    
    
    
    8.0
    
    
    
    406.4
    
    
    
    7.4Fuel
    
    
    298.4
    
    
    
    5.0
    
    
    
    241.7
    
    
    
    4.2
    
    
    
    168.5
    
    
    
    3.1Disposal and franchise fees and taxes
    
    
    369.9
    
    
    
    6.2
    
    
    
    353.1
    
    
    
    6.2
    
    
    
    340.2
    
    
    
    6.2Landfill operating costs
    
    
    152.3
    
    
    
    2.5
    
    
    
    150.9
    
    
    
    2.6
    
    
    
    146.1
    
    
    
    2.6Risk management
    
    
    170.4
    
    
    
    2.8
    
    
    
    175.9
    
    
    
    3.1
    
    
    
    168.8
    
    
    
    3.1Cost of goods sold
    
    
    54.9
    
    
    
    0.9
    
    
    
    45.8
    
    
    
    0.8
    
    
    
    49.2
    
    
    
    0.9Other
    
    
    208.7
    
    
    
    3.5
    
    
    
    225.5
    
    
    
    3.9
    
    
    
    194.9
    
    
    
    3.5Total cost of operations
    
    $
    3,874.3
    
    
    
    64.3
    %
    
    $
    3,745.7
    
    
    
    65.3
    %
    
    $
    3,514.6
    
    
    
    63.8
    %
 27




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##### Table of Contents



Selling, general and administrative expenses
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Salaries
    
    $
    363.3
    
    
    
    6.0
    %
    
    $
    324.3
    
    
    
    5.7
    %
    
    $
    318.7
    
    
    
    5.8
    %Rent and office costs
    
    
    40.8
    
    
    
    0.7
    
    
    
    40.8
    
    
    
    0.7
    
    
    
    42.9
    
    
    
    0.8Professional fees
    
    
    57.3
    
    
    
    1.0
    
    
    
    49.8
    
    
    
    0.9
    
    
    
    70.2
    
    
    
    1.3Provision for doubtful accounts
    
    
    18.6
    
    
    
    0.3
    
    
    
    18.8
    
    
    
    0.3
    
    
    
    18.6
    
    
    
    0.3Other
    
    
    115.3
    
    
    
    1.9
    
    
    
    85.5
    
    
    
    1.5
    
    
    
    103.3
    
    
    
    1.8Total selling, general and administrative
expenses
    
    $
    595.3
    
    
    
    9.9%
    
    
    $
    519.2
    
    
    
    9.1
    %
    
    $
    553.7
    
    
    
    10.0
    %
 Depreciation and amortization Critical Accounting Judgments and Estimates
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Depreciation of fixed assets
    
    $
    317.5
    
    
    
    5.2
    %
    
    $
    304.2
    
    
    
    5.3
    %
    
    $
    300.1
    
    
    
    5.4
    %Landfill and other amortization
    
    
    251.8
    
    
    
    4.2
    
    
    
    250.2
    
    
    
    4.3
    
    
    
    259.2
    
    
    
    4.7Total depreciation and amortization
    
    $
    569.3
    
    
    
    9.4
    %
    
    $
    554.4
    
    
    
    9.6
    %
    
    $
    559.3
    
    
    
    10.1
    %
 Landfill disposal capacity and operating lives. Critical Accounting Judgments and Estimates Landfill
Accounting
 28




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##### Table of Contents



ProbablePermitted
    
    
    ExpansionDisposal
    
    
    Disposal
    
    
    Total DisposalCapacity
    
    
    Capacity
    
    
    CapacityBalance as of December 31, 2005
    
    
    2,273.9
    
    
    
    450.7
    
    
    
    2,724.6Acquisitions, divestitures and closures
    
    
    
    
    
    
    
    
    
    
    Additions to probable expansion disposal capacity
    
    
    
    
    
    
    37.0
    
    
    
    37.0Net change to permitted disposal capacity
    
    
    288.8
    
    
    
    (227.0
    )
    
    
    61.8Disposal capacity consumed
    
    
    (78.6
    )
    
    
    
    
    
    
    (78.6
    )Changes in engineering estimates (1)
    
    
    104.5
    
    
    
    17.4
    
    
    
    121.9Balance as of December 31, 2006
    
    
    2,588.6
    
    
    
    278.1
    
    
    
    2,866.7
 
 (1)
    
    Relates primarily to increased density of waste at our landfills resulting from
improved operational procedures, optimization of daily cover materials and improved
utilization of compaction equipment.  At December 31, 2006
    
    
    At December 31, 2005Number of Sites
    
    
    Percent of Total
    
    
    Number of Sites
    
    
    Percent of Total0 to 5 years
    
    
    31
    
    
    
    18
    %
    
    
    32
    
    
    
    19
    %5 to 10 years
    
    
    8
    
    
    
    5
    
    
    
    15
    
    
    
    910 to 20 years
    
    
    47
    
    
    
    28
    
    
    
    36
    
    
    
    2220 to 40 years
    
    
    39
    
    
    
    23
    
    
    
    43
    
    
    
    2540+ years
    
    
    43
    
    
    
    26
    
    
    
    43
    
    
    
    25Total
    
    
    168
    
    
    
    100
    %
    
    
    169
    
    
    
    100
    %
 Interest expense and other
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Interest expense and otherInterest expense, gross
    
    $
    526.6
    
    
    $
    520.2
    
    
    $
    592.7Cash settlement on non-hedge accounting interest rate
swap contracts
    
    
    
    
    
    
    
    
    
    
    8.5Interest income
    
    
    (4.2
    )
    
    
    (3.0
    )
    
    
    (2.6
    )Interest capitalized for development projects
    
    
    (17.6
    )
    
    
    (14.5
    )
    
    
    (13.0
    )Accretion of debt and amortization of debt issuance costs
    
    
    21.8
    
    
    
    22.7
    
    
    
    27.0Non-cash gain on non-hedge accounting interest rate
swap contracts
    
    
    
    
    
    
    
    
    
    
    (16.2
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    6.7Costs incurred to early extinguish debt
    
    
    41.3
    
    
    
    62.6
    
    
    
    156.2Interest expense allocated to discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.4
    )Total interest expense and other from continuing operations
    
    $
    567.9
    
    
    $
    588.0
    
    
    $
    758.9
 Years Ended December 31, 2006 and 2005
 Revenues
  Reported revenues in 2005
    
    $
    5,734.8Core business organic growthIncrease from average base per unit price change
    
    
    207.5Increase from fuel recovery fees
    
    
    103.0Increase from net volume change
    
    
    44.6Net divested revenues and adjustments
    
    
    (58.9
    )Decrease in recycling and other
    
    
    (2.2
    )Reported revenues in 2006
    
    $
    6,028.8
 29




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##### Table of Contents



Cost of operations
   Selling, general and administrative expenses
 30




---



##### Table of Contents



Depreciation and amortization.
 Loss from divestitures and asset impairments
 Interest expense and other
 Income tax expense.
 Dividends on preferred stock.
 Years Ended December 31, 2005 and 2004
 Revenues
  Reported revenues in 2004
    
    $
    5,514.0Core business organic growthIncrease from average base per unit price change
    
    
    23.6Increase from fuel recovery fees
    
    
    86.9Increase from net volume change
    
    
    143.0Net divested revenues and adjustments
    
    
    (18.7
    )Decrease in recycling and other
    
    
    (14.0
    )Reported revenues in 2005
    
    $
    5,734.8
 31




---



##### Table of Contents



.
  Cost of operations
  Selling, general and administrative expenses
 Depreciation and amortization.
 Interest expense and other
 Income tax expense
 32




---



##### Table of Contents



Discontinued operations.
 Dividends on preferred stock.
 Liquidity and Capital Resources
     33




---



##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004Operating Activities:Net income
    
    $
    160.9
    
    
    $
    203.8
    
    
    $
    49.3Discontinued operations, net of tax
    
    
    
    
    
    
    (10.8
    )
    
    
    8.7Non-cash expenses (1)
    
    
    836.8
    
    
    
    720.2
    
    
    
    694.6Gain on sale of fixed assets
    
    
    (9.8
    )
    
    
    (3.5
    )
    
    
    (4.9
    )Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    (16.2
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    6.7Change in working capital
    
    
    (31.0
    )
    
    
    (156.0
    )
    
    
    (45.8
    )Capping, closure, post-closure and environmental expenditures, net of
accretion
    
    
    (35.3
    )
    
    
    (41.1
    )
    
    
    (42.4
    )Cash provided by operating activities from continuing operations
    
    
    921.6
    
    
    
    712.6
    
    
    
    650.0Investing Activities:Proceeds from divestitures less the cost of acquisitions, net of cash
divested/acquired (2)
    
    
    51.1
    
    
    
    0.9
    
    
    
    36.2Proceeds from sale of fixed assets
    
    
    22.4
    
    
    
    20.3
    
    
    
    11.0Capital expenditures, excluding acquisitions
    
    
    (669.3
    )
    
    
    (695.9
    )
    
    
    (582.9
    )Capitalized interest
    
    
    (17.6
    )
    
    
    (14.5
    )
    
    
    (13.0
    )Change in deferred acquisition costs, notes receivable and other
    
    
    4.6
    
    
    
    6.2
    
    
    
    10.8Cash used for investing activities from continuing operations
    
    
    (608.8
    )
    
    
    (683.0
    )
    
    
    (537.9
    )Financing Activities:Net proceeds from sale of Series D preferred stock
    
    
    
    
    
    
    580.8
    
    
    
    Proceeds from long-term debt, net of issuance costs
    
    
    1,239.3
    
    
    
    3,043.5
    
    
    
    3,082.6Payments of long-term debt
    
    
    (1,438.4
    )
    
    
    (3,740.2
    )
    
    
    (3,609.1
    )Payment of preferred stock dividends
    
    
    (48.3
    )
    
    
    (48.9
    )
    
    
    (21.6
    )Change in disbursement account
    
    
    (47.3
    )
    
    
    21.9
    
    
    
    53.8Net proceeds from sale of common stock, exercise of stock options and
other
    
    
    19.9
    
    
    
    97.4
    
    
    
    5.1Cash used for financing activities from continuing operations
    
    
    (274.8
    )
    
    
    (45.5
    )
    
    
    (489.2
    )Cash provided by discontinued operations
    
    
    
    
    
    
    4.0
    
    
    
    0.4Increase (decrease) in cash and cash equivalents
    
    $
    38.0
    
    
    $
    (11.9
    )
    
    $
    (376.7
    )
 
 (1)
    
    Consists principally of provisions for depreciation and amortization, stock-based
compensation expense, allowance for doubtful accounts, accretion of debt and amortization of
debt issuance costs, write-off of deferred debt issuance costs, non-cash reduction in
acquisition accruals, non-cash portion of realignment costs, non-cash asset impairments and
loss on divestitures, deferred income taxes and cumulative effect of change in accounting
principle, net of tax.(2)
    
    During 2006, we acquired solid waste operations representing approximately $8.3
million ($8.2 million, net of intercompany eliminations) in annual revenues and sold
operations representing approximately $116.2 million ($103.6 million, net of intercompany
eliminations) in annual revenues. During 2005, we acquired solid waste operations
representing approximately $19.5 million ($19.5 million, net of intercompany eliminations) in
annual revenues and sold operations representing approximately $16.4 million ($16.4 million,
net of intercompany eliminations) in annual revenues. During 2004, we acquired solid waste
operations representing approximately $16.6 million ($16.6 million, net of intercompany
eliminations) in annual revenues and sold operations representing approximately $62.2 million
($60.8 million, net of intercompany eliminations) in annual revenues.  34




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##### Table of Contents



2006
    
    
    2005
    
    
    2004Sources of cash:Cash provided by continuing operations
    
    $
    921.6
    
    
    $
    712.6
    
    
    $
    650.0Net proceeds from issuance of common stock and exercise of
stock options
    
    
    19.9
    
    
    
    97.4
    
    
    
    5.1Net proceeds from issuance of preferred stock
    
    
    
    
    
    
    580.8
    
    
    
    Decrease in cash balance
    
    
    
    
    
    
    11.9
    
    
    
    376.7Increase in disbursement account
    
    
    
    
    
    
    21.9
    
    
    
    53.8Net proceeds from divestitures, net of acquisitions
    
    
    51.1
    
    
    
    0.9
    
    
    
    36.2Proceeds from the sale of fixed assets
    
    
    22.4
    
    
    
    20.3
    
    
    
    11.0Total
    
    $
    1,015.0
    
    
    $
    1,445.8
    
    
    $
    1,132.8
 2006
    
    
    2005
    
    
    2004Uses of cash:Capital expenditures
    
    $
    669.3
    
    
    $
    695.9
    
    
    $
    582.9Debt repayments, net of debt proceeds
    
    
    187.4
    
    
    
    666.8
    
    
    
    488.2Debt issuance costs
    
    
    11.7
    
    
    
    29.9
    
    
    
    38.3Increase in cash balance
    
    
    38.0
    
    
    
    
    
    
    
    Decrease in disbursement account
    
    
    47.3
    
    
    
    
    
    
    
    Payment of preferred stock cash dividends
    
    
    48.3
    
    
    
    48.9
    
    
    
    21.6Other non-operating net cash outflows
    
    
    13.0
    
    
    
    4.3
    
    
    
    1.8Total
    
    $
    1,015.0
    
    
    $
    1,445.8
    
    
    $
    1,132.8
 Capital expenditures.
  2006
    
    
    2005
    
    
    2004Vehicles, containers and heavy equipment
    
    $
    364.8
    
    
    $
    376.1
    
    
    $
    214.9Landfill development
    
    
    251.7
    
    
    
    267.5
    
    
    
    297.0Other (1)
    
    
    52.8
    
    
    
    52.3
    
    
    
    71.0Total capital expenditures, excluding acquisitions
    
    $
    669.3
    
    
    $
    695.9
    
    
    $
    582.9
 
 (1)
    
    Includes land and improvements, buildings and improvements, and furniture and office
equipment. Financing activities. Debt Covenants
 Significant financing events in 2006.
 35




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##### Table of Contents



Contractual Obligations and Commitments
  December 31, 2006
    
    
    December 31, 2005Ending
    
    
    Effective
    
    
    Annual
    
    
    Ending
    
    
    Effective
    
    
    AnnualDebt
    
    
    Interest
    
    
    Interest
    
    
    Debt
    
    
    Interest
    
    
    InterestDebt Instrument
    
    Balance
    
    
    Rate (1)
    
    
    Expense
    
    
    Balance
    
    
    Rate (1)
    
    
    ExpenseRevolving credit facility (2)
    
    $
    
    
    
    
    8.81
    %
    
    $
    19.6
    
    
    $
    3.7
    
    
    
    9.00
    %
    
    $
    17.42005 Term loans
    
    
    1,105.0
    
    
    
    7.34
    
    
    
    88.3
    
    
    
    1,275.0
    
    
    
    6.33
    
    
    
    79.2Senior secured notes
    
    
    4,644.6
    
    
    
    7.60
    
    
    
    363.1
    
    
    
    4,644.1
    
    
    
    7.83
    
    
    
    368.7Senior unsecured notes
    
    
    400.0
    
    
    
    7.55
    
    
    
    30.2
    
    
    
    400.0
    
    
    
    7.55
    
    
    
    30.2Senior subordinated
convertible debenture
    
    
    230.0
    
    
    
    4.34
    
    
    
    10.0
    
    
    
    230.0
    
    
    
    4.34
    
    
    
    10.0Senior subordinated notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.5Receivables secured loan
    
    
    230.0
    
    
    
    6.02
    
    
    
    13.1
    
    
    
    230.0
    
    
    
    4.90
    
    
    
    8.9Other
    
    
    301.0
    
    
    
    6.95
    
    
    
    22.8
    
    
    
    308.9
    
    
    
    6.89
    
    
    
    22.6Total
    
    $
    6,910.6
    
    
    
    7.37
    
    
    $
    547.1
    
    
    $
    7,091.7
    
    
    
    7.29
    
    
    $
    541.5
 
 (1)
    
    Includes the effect of our interest costs incurred, amortization of deferred debt
issuance costs and premiums or discounts.
 (2)
    
    Reflects weighted average interest rate and excludes fees. There were no borrowings
outstanding at December 31, 2006; the rate presented is the average of the Adjusted LIBOR rate
and the ABR plus applicable margins.
 36




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##### Table of Contents



Debt
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalRevolving 2005 Credit Facility(1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Term loan B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,105.0
    
    
    
    1,105.0Receivables secured loan(2)
    
    
    230.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230.06.375% BFI Senior notes
    
    
    
    
    
    
    161.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161.28.50% Senior notes
    
    
    
    
    
    
    750.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750.06.50% Senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350.0
    
    
    
    
    
    
    
    
    
    
    
    350.05.75% Senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400.0
    
    
    
    
    
    
    
    400.06.375% Senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275.0
    
    
    
    
    
    
    
    275.09.25% Senior notes due 2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250.0
    
    
    
    250.07.875% Senior notes due 2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450.0
    
    
    
    450.06.125% Senior notes due 2014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425.0
    
    
    
    425.07.25% Senior notes due 2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600.0
    
    
    
    600.07.125% Senior notes due 2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600.0
    
    
    
    600.09.25% BFI debentures due 2021
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99.5
    
    
    
    99.57.40% BFI debentures due 2035
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    360.0
    
    
    
    360.04.25% Senior subordinated
convertible debentures due 2034
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230.0
    
    
    
    230.07.375% Senior unsecured notes
due 2014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400.0
    
    
    
    400.0Other debt
    
    
    6.6
    
    
    
    1.9
    
    
    
    2.0
    
    
    
    25.3
    
    
    
    1.3
    
    
    
    266.7
    
    
    
    303.8Total principal due
    
    $
    236.6
    
    
    $
    913.1
    
    
    $
    2.0
    
    
    $
    375.3
    
    
    $
    676.3
    
    
    $
    4,786.2
    
    
    
    6,989.5Discount, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78.9
    )Total debt balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,910.6
 
 (1)
    
    At December 31, 2006, under our 2005 Credit Facility, we had revolving commitments
totaling $1.575 billion with no loans outstanding and $398.7 million of letters of credit
outstanding, providing us remaining availability of approximately $1.176 billion. In
addition, we had an Institutional Letter of Credit Facility of $490 million and an Incremental
Revolving Letter of Credit Facility of $25 million available under the 2005 Credit Facility,
all of which were used for letters of credit outstanding.(2)
    
    The receivables secured loan is a 364-day liquidity facility with a maturity date of
May 29, 2007. Although we intend to renew the liquidity facility on May 29, 2007, the
outstanding balance is classified as a current liability because it has a contractual maturity
of less than one year.  Contractual Obligations
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalRecorded obligations:Long-term debt principal (1)
    
    $
    235.3
    
    
    $
    912.1
    
    
    $
    1.0
    
    
    $
    374.1
    
    
    $
    675.4
    
    
    $
    4,779.2
    
    
    $
    6,977.1Long-term debt interest (1)
    
    
    490.4
    
    
    
    448.0
    
    
    
    416.1
    
    
    
    403.9
    
    
    
    371.2
    
    
    
    1,693.5
    
    
    
    3,823.1Capital lease obligations (2)
    
    
    2.4
    
    
    
    2.0
    
    
    
    1.9
    
    
    
    1.9
    
    
    
    1.6
    
    
    
    9.5
    
    
    
    19.3Capping, closure and post-
closure obligations
    
    
    59.8
    
    
    
    48.4
    
    
    
    80.8
    
    
    
    70.2
    
    
    
    60.1
    
    
    
    3,182.8
    
    
    
    3,502.1Other long-term liabilities (3)
    
    
    
    
    
    
    63.4
    
    
    
    47.9
    
    
    
    34.9
    
    
    
    26.1
    
    
    
    120.9
    
    
    
    293.2Unrecorded obligations:Operating leases
    
    
    35.9
    
    
    
    33.7
    
    
    
    27.8
    
    
    
    21.6
    
    
    
    17.2
    
    
    
    91.8
    
    
    
    228.0Purchase obligations:(4)Disposal related
    
    
    97.6
    
    
    
    75.4
    
    
    
    64.7
    
    
    
    52.0
    
    
    
    49.3
    
    
    
    153.6
    
    
    
    492.6Other
    
    
    36.5
    
    
    
    32.4
    
    
    
    34.0
    
    
    
    20.4
    
    
    
    17.5
    
    
    
    235.7
    
    
    
    376.5Total cash
contractual obligations
    
    $
    957.9
    
    
    $
    1,615.4
    
    
    $
    674.2
    
    
    $
    979.0
    
    
    $
    1,218.4
    
    
    $
    10,267.0
    
    
    $
    15,711.9
 
 (1)
    
    Amount represents scheduled principal and interest due
(excluding discounts) as
well as principal due on capital leases which are shown separately below. Scheduled interest
payment obligations are calculated using stated coupons for fixed debt and interest rates
effective as of December 31, 2006 for variable rate debt.(2)
    
    Amount represents scheduled principal and interest due on capital leases.(3)
    
    The current portion of other long-term obligations is not reflected here, as it is
included in the other accrued liabilities balance.(4)
    
    Purchase obligations consist primarily of (i) disposal related agreements which
include fixed or minimum royalty payments, host agreements, and take-or-pay and put-or-pay
agreements and (ii) other obligations including, committed capital expenditures and consulting
services arrangements. 37




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##### Table of Contents



Debt covenants.
   From the Quarter Ending
    
    Through the Quarter Ending
    
    EBITDA(1)/InterestJanuary 1, 2005
    
    December 31, 2005
    
    1.85xJanuary 1, 2006
    
    June 30, 2006
    
    1.95xJuly 1, 2006
    
    December 31, 2006
    
    2.00xJanuary 1, 2007
    
    March 31, 2007
    
    2.10xApril 1, 2007
    
    June 30, 2007
    
    2.15xJuly 1, 2007
    
    March 31, 2008
    
    2.20xApril 1, 2008
    
    September 30, 2008
    
    2.25xOctober 1, 2008
    
    December 31, 2008
    
    2.30xJanuary 1, 2009
    
    June 30, 2009
    
    2.40xJuly 1, 2009
    
    December 31, 2009
    
    2.55xJanuary 1, 2010
    
    Thereafter
    
    2.75xMaximum
Leverage:From the Quarter Ending
    
    Through the Quarter Ending
    
    Total Debt/EBITDA(1)January 1, 2005
    
    December 31, 2005
    
    6.50xJanuary 1, 2006
    
    June 30, 2006
    
    6.25xJuly 1, 2006
    
    December 31, 2006
    
    6.00xJanuary 1, 2007
    
    June 30, 2007
    
    5.75xJuly 1, 2007
    
    December 31, 2008
    
    5.50xJanuary 1, 2009
    
    June 30, 2009
    
    5.25xJuly 1, 2009
    
    December 31, 2009
    
    5.00xJanuary 1, 2010
    
    Thereafter
    
    4.50x
 (1) (1)
 
 (1)
    
    EBITDA, which is a non-GAAP measure, used for covenants, is calculated in
accordance with the definition in the 2005 Credit Facility agreement. In this context, EBITDA
is used solely to provide information on the extent to which we are in compliance with debt
covenants and is not comparable to EBITDA used by other companies.  Prepayments
 38




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##### Table of Contents



Financial Assurances.
   LandfillClosure/
    
    
    Contract
    
    
    Risk/Casualty
    
    
    Collateral forPost-Closure
    
    
    Performance
    
    
    Insurance
    
    
    Obligations
    
    
    TotalInsurance policies
    
    $
    661.9
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    661.9Surety bonds
    
    
    597.4
    
    
    
    510.0
    
    
    
    
    
    
    
    
    
    
    
    1,107.4Trust deposits
    
    
    83.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83.4Letters of credit (1)
    
    
    456.4
    
    
    
    58.7
    
    
    
    273.5
    
    
    
    125.1
    
    
    
    913.7Total
    
    $
    1,799.1
    
    
    $
    568.7
    
    
    $
    273.5
    
    
    $
    125.1
    
    
    $
    2,766.4
 
 (1)
    
    These amounts were issued under the 2005 Revolver, the Incremental Revolving Letter
of Credit and the Institutional Letter of Credit Facility under our 2005 Credit Facility.  Off-Balance Sheet Financing
  Interest Rate Risk Management
   39




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##### Table of Contents



Contingencies
 Securities litigation 
 th
 Landfill permitting 
   Environmental 
  40




---



##### Table of Contents



Tax 
        41




---



##### Table of Contents



Coltec v. United States
 Coltec
    Indemnification 
  Landfill costs 
  42




---



##### Table of Contents



Related Party Transactions
 Related Party Transactions
 Accounting for Stock Options Granted to Employees
 Stock
Plans
 Critical Accounting Judgments and Estimates
   Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskLandfill AccountingLandfill operating costs are treated as period
expenses and are not discussed further herein.Our landfill assets fall into the following two
categories, each of which require accounting
judgments and estimates:   Landfill development coststhat are
capitalized as an asset as incurred.   Landfill retirement obligationsthat
result in an asset when we record our capping,
closure and post-closure liabilities.We use the life-cycle accounting method for
landfills and the related capping, closure and
post-closure liabilities. In life-cycle
accounting, all capitalizable costs to acquire,
develop and retire a site are recorded to
amortization expense based upon the consumption of
disposal capacity. Estimates of future landfill
disposal capacity are updated periodically (at
least annually) based on third-party aerial
surveys.
 43




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##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskLandfill DevelopmentSite permitIn order to develop, construct and
operate a landfill, we are required
to obtain permits from various
regulatory agencies at the local,
state and federal level. The
permitting process requires an
initial siting study to determine
whether the location is feasible for
landfill operations. The studies are
typically prepared by third-party
consultants and reviewed by our
environmental management group. The
initial studies are submitted to the
regulatory agencies for approval.
During the development stage we
capitalize certain costs prior to
the receipt of all required permits.
    
    Changes in legislative or regulatory
requirements may cause changes in
the landfill site permitting
process. These changes could make it
more difficult and/or costly to
obtain a landfill permit.
Studies performed by third parties
could be inaccurate which could
result in the revocation of a permit
and changes to accounting
assumptions. Conditions could exist
that were not identified in the
study, which make the location not
feasible for a landfill and could
result in the revocation of a
permit. Revocation of a permit
could materially impair the recorded
value of the landfill asset.
Actions by neighboring parties,
private citizen groups or others to
oppose our efforts to obtain permits
could result in revocation or
suspension of a permit, which could
adversely impact the economic
viability of the landfill and could
materially impair the recorded value
of the landfill. As a result of
opposition to our obtaining a
permit, improved technical
information as a project progresses,
or changes in the anticipated
economics associated with a project,
we may decide to reduce the scope or
abandon a project which could result
in a loss or asset impairment.Technical landfill designUpon receipt of initial regulatory
approval, technical landfill designs
are prepared. These designs are
compiled by third-party consultants
and reviewed by our environmental
management group. The technical
designs include the detailed
specifications to develop and
construct all components of the
landfill including the types and
quantities of materials that will be
required. The technical designs are
submitted to the regulatory agencies
for approval. Upon approval of the
technical designs, the regulatory
agencies issue permits to develop and
operate the landfill.
    
    Changes in legislative or
regulatory requirements may
require changes in the landfill
technical design. These changes
could make it more difficult
and/or costly to meet new design
standards.
Technical design requirements, as
approved, may need modifications
at some future point in time.
Third-party designs could be
inaccurate and could result in
increased construction costs or
difficulty in obtaining a permit.
 44




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##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskLandfill disposal capacityIncluded in the technical designs are
factors that determine the ultimate
disposal capacity of the landfill.
These factors include the area over
which the landfill will be developed,
the depth of excavation, the height of
the landfill elevation and the angle of
the side-slope construction. The
disposal capacity of the landfill is
calculated in cubic yards. This
measurement of volume is then converted
to a disposal capacity expressed in
tons based on a site-specific expected
density to be achieved over the
remaining operating life of the
landfill.
    
    Estimates of future disposal
capacity may change as a result
of changes in legislative or
regulatory design requirements.
The density of waste may vary due
to variations in operating
conditions, including waste
compaction practices, site
design, climate and the nature of
the waste.
Capacity is defined in cubic
yards but waste received is
measured in tons. The number of
tons/cubic yard varies by type of
waste.Development costsThe types of costs that are detailed
in the technical design
specifications generally include
excavation, natural and synthetic
liners, construction of leachate
collection systems, installation of
methane gas collection systems and
monitoring probes, installation of
groundwater monitoring wells,
construction of leachate management
facilities and other costs
associated with the development of
the site. We review the adequacy of
our cost estimates used in the
annual update of development costs
by comparing estimated costs with
third-party bids or contractual
arrangements, reviewing the changes
in year over year cost estimates for
reasonableness and comparing our
resulting development cost per acre
with prior period costs. These
development costs, together with any
costs incurred to acquire, design
and permit the landfill, including
capitalized interest, are recorded
to the landfill asset on the balance
sheet as incurred.
    
    Actual future costs of construction
materials and third-party labor
could differ from the costs we have
estimated because of the impact from
general economic conditions on the
availability of the required
materials and labor. Technical
designs could be altered due to
unexpected operating conditions,
regulatory changes or legislative
changes.Landfill development asset amortizationIn order to match the expense related to the
landfill asset with the revenue generated by
the landfill operations, we amortize the
landfill development asset over its operating
life on a per-ton basis as waste is accepted
at the landfill. At the end of a landfills
operating life, the landfill asset is fully
amortized. The per-ton rate is calculated by
dividing the sum of the landfill net book
value plus estimated future development costs
(as described above) for the landfill by the
landfills estimated remaining disposal
capacity. The expected future development
costs are not inflated and discounted, but
rather expressed in nominal dollars. This
rate is applied to each ton accepted at the
landfill and recorded as a charge to
amortization expense.
    
    Increases and decreases in
our future development
cost estimates and changes
in disposal capacity will
normally result in a
change in our amortization rates on a prospective basis. An unexpected significant increase in
estimated costs or reduction in disposal capacity could affect the ongoing economic viability
in an asset impairment.
 45




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##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskAmortization rates are influenced by the
original cost basis of the landfill,
including acquisition costs, which in turn is
determined by geographic location and market
values. We have secured significant landfill
assets through business acquisitions in the
past and valued them at the time of
acquisition based upon market value.
Amortization rates are also influenced by
site-specific engineering and cost factors.Estimate updatesOn at least an annual basis, we
update the estimates of future
development costs and remaining
disposal capacity for each landfill.
These costs and disposal capacity
estimates are reviewed and approved
by senior operation management
annually. Changes in cost estimates
and disposal capacity are reflected
prospectively in the landfill
amortization rates that are updated
annually.Landfill Retirement ObligationWe have two types of retirement
obligations related to landfills: (1) capping and (2) closure and
post-closure monitoring.Landfill cappingAs individual areas within each
landfill reach capacity, we are
required to cap and close the areas
in accordance with the landfill site
permit. These requirements are
detailed in the technical design of
the landfill siting process
described above.
    
    Changes in legislative or regulatory
requirements including changes in
capping, closure activities or
post-closure monitoring activities,
types and quantities of materials
used, or term of post-closure care
could cause changes in our cost
estimates.Closure and post-closure monitoringClosure costs are costs incurred after
a landfill site stops receiving waste,
but prior to being certified as closed.
After the entire landfill site has
reached capacity and is closed, we are
required to maintain and monitor the
site for a post-closure period, which
generally extends for a period of 30
years. Costs associated with closure
and post-closure requirements generally
include maintenance of the site and
monitoring methane gas collection systems
and groundwater systems, and other
activities that occur after the site has
ceased accepting waste. Costs
associated with post-closure
monitoring generally
include groundwater sampling,
analysis and statistical reports,
third-party
labor associated with gas system
operations and maintenance,
transportation and
disposal of leachate and erosion
control costs related to the final cap.
 46




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##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskLandfill retirement obligation liability/assetEstimates of the total future costs required to
cap, close and monitor the landfill as specified
by each landfill permit are updated annually. The
estimates include inflation, the specific timing
of future cash outflows, and the anticipated
waste flow into the capping events. Our cost
estimates are inflated to the period of
performance using an estimate of inflation, which
is updated annually (2.5% in both 2006 and 2005).
The present value of the remaining capping costs
for a specific capping event and the remaining
closure and post-closure costs for the landfill
are recorded as incurred on a per-ton basis.
These liabilities are incurred as disposal
capacity is consumed at the landfill.
Capping, closure and post-closure liabilities are
recorded in layers and discounted using our
credit-adjusted risk-free rate in effect at the
time the obligation is incurred.
The retirement obligation is increased each year
to reflect the passage of time by accreting the
balance at the same credit-adjusted risk-free
rate that was used to calculate each layer of the
recorded liability. This accretion expense is
charged to cost of operations.
Actual cash expenditures reduce the asset
retirement obligation liability as they are made.
A corresponding retirement obligation asset is
recorded for the same value as the additions to
the capping, closure and post-closure
liabilities.
The retirement obligation asset is amortized to
expense on a per-ton basis as disposal capacity
is consumed. The per-ton rate is calculated by
dividing the sum of the recorded retirement
obligation asset net book value and expected
future additions to the retirement obligation
asset by the remaining disposal capacity. A
per-ton rate is determined for each separate
capping event based on the disposal capacity
relating to that event. Closure and
post-closure per-ton rates are based on the total
disposal capacity of the landfill.
    
    Actual timing of
disposal capacity
utilization could
differ from projected
timing, causing
differences in timing
of when amortization
and accretion expense
is recognized for
capping, closure and
post-closure
liabilities.
Changes in inflation
rates could impact our
actual future costs and
our total liabilities.
Changes in our capital
structure or market
conditions could result
in changes to the
credit-adjusted
risk-free rate used to
discount the
liabilities, which
could cause changes in
future recorded
liabilities, assets and
expense.
Changes in the landfill
retirement obligation
due to changes in the
anticipated waste flow,
cost estimates or the
timing of expenditures
for closed landfills
and fully incurred but
unpaid capping events
are recorded in results
of operations as new
information becomes
available. This could
result in unanticipated
increases or decreases
in expense.
Amortization rates
could change in the
future based on the
evaluation of new facts
and circumstances
relating to landfill
capping design,
post-closure monitoring
requirements, or the
inflation or discount
rate.
 47




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##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskEstimate updatesOn an annual basis, we update the
estimate of future capping, closure
and post-closure costs and estimates
of future disposal capacity for each
landfill. Revisions in estimates of
our costs or timing of expenditures
are recognized immediately as
increases or decreases to the
capping, closure and post-closure
liabilities and corresponding
retirement obligation asset.
Changes in the asset resulting in
changes to the amortization rates
are applied prospectively, except
for fully incurred capping events
and closed landfills, where the
changes are recorded immediately in
results of operations since the
associated disposal capacity has
already been consumed.Disposal capacityAs described previously, disposal
capacity is determined by the
specifications detailed in the
landfill permit obtained. We
classify this disposal capacity as
permitted. We also include probable
expansion disposal capacity in our
remaining disposal capacity
estimates, which relate to
additional disposal capacity being
sought through means of a permit
expansion. Probable expansion
disposal capacity has not yet
received final approval from the
regulatory agencies, but we have
determined that certain critical
criteria have been met and the
successful completion of the
expansion is highly probable. Our
internal criteria to classify
disposal capacity as probable
expansion are as follows:1.     We have control of and access to
the land where the expansion permit
is being sought.
    
    We may be unsuccessful in obtaining
permits for probable expansion
disposal capacity because of the
failure to obtain the final local,
state or federal permits or due to
other unknown reasons. If we are
unsuccessful in obtaining permits
for probable expansion disposal
capacity, or the disposal capacity
for which we obtain approvals is
less than what was estimated, both
costs and disposal capacity will
change, which will generally
increase the rates we charge for
landfill amortization and capping,
closure and post-closure accruals.
An unexpected decrease in disposal
capacity could cause an asset
impairment.2.    All geological and other
technical siting criteria for a
landfill have been met or an
exception from such requirements has
been received (or can reasonably be
expected to be achieved).3.    The political process has been
assessed and there are no identified
impediments that cannot be resolved.4.    We are actively pursuing the
expansion permit and have an
expectation that the final local,
state and federal permits will be
received within the next five years.5.    Senior operation management
approval has been obtained.After successfully meeting these
criteria, the disposal capacity that
will result from the planned
expansion is included in our
remaining disposal capacity
estimates. Additionally, for
purposes of calculating landfill
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskamortization and capping, closure
and post-closure rates, we include
the incremental costs to develop,
construct, close and monitor the
related probable expansion disposal
capacity.Environmental LiabilitiesEnvironmental liabilities arise from
contamination existing at our
landfills or at third-party
landfills or other sites that we (or
a predecessor company) have
delivered or transported waste to.
These liabilities are based on our
estimates of future costs that we
will incur for remediation
activities and the related
litigation costs. To determine our
ultimate liability at these sites,
we have used third-party
environmental engineers and legal
counsel to assist in the evaluation
of several factors, including the
extent of contamination at each
identified site, the most
appropriate remedy, the financial
viability of other potentially
responsible parties and the
apportionment of responsibility
among the potentially responsible
parties. We accrue for costs
associated with environmental
remediation obligations when such
costs are probable and reasonably
estimable. The majority of our
environmental liabilities are
obligations that we assumed in
connection with an acquisition. Any
changes in the assumed accruals for
environmental liabilities from the
amounts recorded by the predecessor
are charged or credited to operating
expense after one year. If the
liabilities arise through the normal
course of business, the accruals are
also charged to operating expense.Estimate updates
    
    Actual settlement of these
liabilities could differ from our
estimates due to a number of
uncertainties, such as the extent of
contamination at a particular site,
the final remedy, the financial
viability of other potentially
responsible parties and the final
apportionment of responsibility
among the potentially responsible
parties.
Actual amounts could differ from the
estimated liability as a result of
changes in estimated future
litigation costs to pursue the
matter to ultimate resolution
including both legal and remedial
costs.
An unanticipated environmental
liability that arises could result
in a material charge to operating
expense.We periodically consult with
third-party legal counsel and
environmental engineers to review
the status of all environmental
matters and to assist our
environmental and legal management
in updating our estimates of the
likelihood and amounts of
remediation. As the timing of cash
payments for these liabilities is
uncertain, the liabilities are not
discounted. Changes in the
liabilities resulting from these
reviews are recorded to operating
income in the period in which the
change in estimate is made.SummaryWe have determined that the recorded
liability for environmental matters
as of December 31, 2006 and 2005 of
approximately $217.3 million and
$272.8 million, respectively,
represents the most probable outcome
of these matters. Cash paid for
environmental
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskmatters during 2006
and 2005 was $20.1 million and $31.4
million, respectively.
We do not expect that adjustments to
estimates, which are reasonably
possible in the near term and that
may result in changes to recorded
amounts, will have a material effect
on our consolidated liquidity,
financial position or results of
operations. However, based on our
review of the variability inherent
in these estimates, we believe it is
reasonably possible that the
ultimate outcome of environmental
matters, excluding capping, closure
and post-closure costs, could result
in approximately $24 million of
additional liability. Due to the
nature of these matters, the cash
flow impact would not be immediate
and would most likely occur over a
period greater than five years.Self-insurance Liabilities and Related CostsWe maintain high deductibles for
commercial general liability,
automobile liability and workers
compensation coverages, ranging from
$1 million to $3 million. Our
insurance claim liabilities are
reflected in our consolidated
balance sheet as an accrued
liability. Prior to December 31,
2006, we reported our insurance
claim liabilities net of amounts due
from insurers on claims in excess of
the related deductible. As we are
the primary obligor for payment of
all claims, we determined that we
should report our insurance claim
liabilities on a gross basis along
with a corresponding amount due from
insurers. As a result of this
revision in classification, we have
increased our insurance claims
reserves as of December 31, 2006 and
2005, by $34.5 million and $35.7
million, with a corresponding amount
due from our insurers. This
revision in classification had no
impact on our financial condition or
results of operations.
Our insurance claim liabilities are
determined by a third-party actuary
and are based primarily upon our
past claims experience, which
considers both the frequency and
settlement amount of claims. We use
a third-party administrator to track
and evaluate actual claims
experience used in the annual
actuarial valuation. Our insurance
claim liabilities are recorded on an
undiscounted basis.
As of December 31, 2006 and 2005, we
had approximately $294.6 million and
$294.1 million of insurance claim
liabilities and amounts due from
insurers of $34.5 million and $35.7
million on our balance sheet. Cash
    
    Incident rates, including frequency
and severity, could increase or
decrease during a year causing our
current and future actuarially
determined obligations to increase
or decrease.
The settlement costs to discharge
our obligations, including legal and
health care costs, could increase or
decrease causing current and/or
prior estimates of our
self-insurance liability to change.
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskpaid for insurance claims during
2006 and 2005 was $250.2 million and
$248.4 million, respectively.Loss Contingencies
We are subject to various legal
proceedings and claims, the outcomes
of which are subject to significant
uncertainty. We determine whether
to disclose or accrue for loss
contingencies based on an assessment
of whether the risk of loss is
remote, reasonably possible or
probable and whether it can be
reasonably estimated. We analyze our
litigation and regulatory matters
based on available information to
assess the potential liability.
Managements assessment is developed
in consultation with third-party
legal counsel and other advisors and
is based on an analysis of possible
outcomes under various strategies.
Generally, we record losses related
to contingencies in cost of
operations or selling, general and
administrative expenses, depending
on the nature of the underlying
transaction leading to the loss
contingency.Asset Impairment
    
    Actual costs can vary from estimates
for a variety of reasons. For
example, the costs from settlement
of claims and litigation can vary
from estimates based on differing
interpretations of laws, opinions on
culpability and assessments of the
amount of damages.
Loss contingency assumptions involve
judgments that are inherently
subjective and generally involve
business matters that are by nature
unpredictable. If a loss
contingency results in an adverse
judgment or is settled for
significant amounts, it could have a
material adverse effect on our
results of operations, cash flows
and financial position in the period
or periods in which such judgment or
settlement occurs.Valuation methodology

We evaluate our long-lived assets
for impairment based on projected
cash flows anticipated to be
generated from the ongoing operation
of those assets.
    
    If we have events or changes in
circumstances, including reductions
in anticipated cash flows generated
by our operations or determinations
to divest assets, certain assets
could be impaired
which would
result in a non-cash charge to
earnings.
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskEvaluation
criteriaWe test long-lived assets for
impairment whenever events or
changes in circumstances indicate
that the assets carrying amounts
may not be recoverable. Examples of
such events could include a
significant adverse change in the
extent or manner in which we use a
long-lived asset, a change in its
physical condition, or new
circumstances that would cause an
expectation that it is more likely
than not that we would sell or
otherwise dispose of a long-lived
asset significantly before the end
of its previously estimated useful
life.Recognition criteria
If such circumstances arise, we
recognize an impairment for the
difference between the carrying
amount and fair value of the asset,
if the carrying amount of the asset
exceeds the sum of the undiscounted
cash flows expected to result from
its use and eventual disposition. We
generally use the present value of
the expected cash flows from that
asset to determine fair value.
    
    Our most significant asset
impairment exposure, other than
goodwill (see discussion below) is
our investment in landfills. A
significant reduction in our
estimated disposal capacity as a
result of unanticipated events such
as regulatory developments and
aerial surveys could trigger an
impairment charge.Goodwill ImpairmentValuation methodology

We evaluate goodwill for impairment
based on the estimated fair value of
each reporting unit. We define
reporting units as our five
geographic operating segments. We
estimate fair value based on
projected net cash flows discounted
using a weighted average cost of
capital, which was approximately
7.5% in 2006 and 7.4% in 2005. In
performing this analysis we
periodically engage the services of
third party consultants.Evaluation criteria
    
    The estimated fair value of our
reporting units could
change with
changes in our capital structure,
cost of debt, interest rates,
actual capital expenditure levels,
ability to perform at levels that
were forecasted, or the market
capitalization of the company. For
example, a reduction in long-term
growth assumptions could reduce the
estimated fair value to below
carrying value, which would trigger
an impairment charge. Similarly,
an increase in our weighted average
cost of capital could trigger an
impairment charge.We test goodwill for recoverability
on an annual basis or whenever
events or changes in circumstances
indicate that the carrying amounts
may not be recoverable. Examples of
such events could include a
significant adverse change in legal
factors, our liquidity or in the
business climate, an adverse action
or assessment by a regulator,
unanticipated competition, loss of
key personnel, or new circumstances
that would cause an expectation that
it is more likely than not that we
would sell or otherwise dispose of a
reporting unit or a significant
portion of a reporting unit.
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskRecognition
criteriaWe recognize an impairment if the
net book value of a reporting unit
exceeds the related fair value. At
the time of a divestiture of an
individual business unit within a
reporting unit, goodwill of the
reporting unit is allocated to that
business unit based on the relative
fair value of the unit being
disposed to the total fair value of
the reporting unit and a gain or
loss on disposal is determined.
Subsequently, the remaining goodwill
in the reporting unit from which the
assets were divested is re-evaluated
for impairment, which could result
in an additional loss.Summary
    
    In the past, we have incurred
non-cash losses on sales of
business units driven primarily by
the goodwill allocated to the
business units divested. If
similar divestiture decisions are
made in the future, we could incur
additional non-cash losses.At December 31, 2006 and 2005, we
had recorded goodwill of $8.1
billion and $8.2 billion,
respectively, all of which was
considered to be recoverable from
future operations based on estimated
future discounted cash flows.Tax AccrualsWe account for income taxes using a
balance sheet approach whereby
deferred tax assets and liabilities
are determined based on the
differences in financial reporting
and income tax bases of assets,
other than non-deductible goodwill,
and liabilities. The differences
are measured using the income tax
rate in effect during the year in
which the differences are expected
to reverse. We utilize outside
experts and legal counsel to assist
in the development or review of
significant tax positions used in
establishing our liability.
We provide a valuation allowance for
deferred tax assets (including net
operating loss, capital loss and
minimum tax credit carryforwards)
when it is more likely than not that
we will not be able to realize the
future benefits giving rise to the
deferred tax asset.
We record liabilities for probable
tax adjustments proposed or expected
by tax authorities at the federal
and state level.
The acquisition of BFI in 1999,
which was accounted for as a
purchase business combination,
resulted in approximately $6.8
billion of goodwill, $6.5 billion of
which is non-deductible for tax
purposes. At December 31, 2006,
approximately $5.8 billion of
non-deductible goodwill remains on
our balance sheet.
    
    The balance sheet classification and
amount of the tax accounts
established relating to acquisitions
are based on certain assumptions
that could possibly change based on
the ultimate outcome of certain tax
matters. As these tax accounts were
established in purchase accounting,
any future changes relating to these
amounts will result in an adjustment to goodwill.
Changes in estimated realizability
of deferred tax assets could result
in adjustments to income tax
expense.
We are currently under examination
or administrative review by various
state and federal taxing authorities
for certain tax years. The Internal
Revenue Code (IRC) and Income Tax
Regulations are a complex set of
rules that we are required to
interpret and apply to our
transactions. Positions taken in
tax years under examination or subsequent
 years may be uncertain and
are subject to challenge.
Accordingly, we may have exposure
for additional tax liabilities
arising from these audits if any
positions taken are disallowed by
the taxing authorities.
(See Note
13 of our consolidated financial
statements included herein.)
Actual income tax rates can vary
from period to period as a result of
differences between estimated and
actual earnings, non-deductible
items and net operating loss or tax credit utilization.
An increase or decrease in the tax
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskIncome tax expense is recorded on an
interim basis based on the expected
annual effective tax rate and
discrete period items. The annual
effective tax rate is determined
using estimated full year earnings,
non-deductible items and tax credits
that are anticipated to be utilized.Summary
As of December 31, 2006, we have
federal and state net operating loss
and minimum tax credit carryforwards
with an after tax benefit totaling
$271.6 million most of which will
expire if not used. Valuation
allowances have been established for
the possibility that certain of the
state carryforwards may not be used.
    
    rate could have a material impact on
our results of operations.Defined Benefit Pension PlansRecognition criteriaOur defined benefit retirement plan was assumed in
connection with the acquisition of BFI. The benefits of
approximately 97% of the current plan participants were
frozen upon acquisition.
The benefit obligation and associated income or expense is
determined by an independent third party actuary based on
assumptions we believe are reasonable. We use a third
party to administer the plan and maintain certain data
that is provided to the actuary. The plan assets are
managed by a third party that is not affiliated with our
actuary. Beginning December 31, 2006, we have recognized a
pension asset on our balance sheet for the difference
between the fair value of the plans assets and its
projected benefit obligation.
Our funding policy is to make annual contributions to the
pension plan as determined to be required by the plans
actuary to meet the minimum requirements of the Employee
Retirement Income Security Act (ERISA) and the IRC as
amended by the Pension Protection Act of 2006. No
contributions were required during the last three years
and no contributions are anticipated for 2007.
The pension plans assets are invested as determined by
our Retirement Benefits Committee. At December 31, 2006,
approximately 41% of the total plan assets of $371
million, were invested in fixed income bond funds and
approximately 59% in equity funds.
    
    Changes in the plans investment mix and performance
of the equity and bond markets and of fund managers could
impact the amount of pension income or expense recorded, the
funded status of the plan and the need for future cash contributions.
At December 31, 2006, the plan was over-funded by $11.6 million.
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Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Risk
 Assumptions
 2006
    
    2005Discount rate
    
    
    6.00
    %
    
    
    5.75
    %Expected return on plan assets
    
    
    8.25
    %
    
    
    8.50
    %Average rate
of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
   The assumed discount rate is based on a model which
matches the timing and amount of expected benefit payments
to maturities of high-quality bonds priced as of the
measurement date. Where that timing does not correspond
to a published high-quality bond rate, the model uses an
expected yield curve to determine an appropriate current discount
rate.
    
    Our assumed
discount rate is
sensitive to
changes in market-based interest rates. A decrease in the discount rate will
increase our related benefit plan obligation.
 The expected return on our plan assets represents a
long-term view of returns based on our current asset mix.
In developing our expected rate of return assumption, we
evaluate long-term expected and historical actual returns
on the plan assets from our investment managers, which
give consideration to our asset mix and the anticipated
duration of our plan obligations.
The average rate of compensation increase reflects our
expectations of average pay increases over the period
benefits are earned and applies only to the portion of the
plan that is not frozen. Less than 3% of plan participants
continue to earn service benefits.
We annually review our asset allocation, as well as other
actuarial assumptions and adjust them as deemed necessary.
    
    Our annual pension
expense would be
impacted if the
actual return on
plan assets varies
from the expected
returns.
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New Accounting Standards
 Organization and
Summary of Significant Accounting Policies
 Disclosure Regarding Forward Looking Statements
 .
 
    
    our business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies;
    
    our ability to obtain financing, refinance existing debt, increase liquidity, reduce
interest cost, extend debt maturities and provide adequate financial liquidity;
    
    the adequacy of our operating cash flow and revolving credit facility to make payments
on our indebtedness, support our capital reinvestment needs and fund other liquidity
needs;
    
    our expected interest savings in connection with the refinancing of portions of our
2005 Credit Facility and the tender offer of a portion of our 8.875% senior notes;
    
    our expectation of the amounts we will spend on capital expenditures, closure,
post-closure and remediation expenditures related to landfill operations;
    
    our ability to generate free cash flows from operations;
    
    our ability to achieve credit ratios that would allow us to receive benefits of a
cross-over investment grade company and/or investment grade-like cost of capital;
    
    our ability to achieve price and volume increases and cost reductions in the future;
    
    our estimates of future annual interest costs reductions;
    
    our ability to perform our obligations under financial assurance contracts and our
expectation that financial assurance contracts will not materially increase;
    
    underlying assumptions related to general economic and financial market condition;
    
    our expectation that our casualty, property or environmental claims or other
contingencies will not have a material effect on our operations;
    
    our belief that the costs of settlements or judgments arising from litigation and the
effects of settlements or judgments on our consolidated liquidity, financial position or
results of operation will not be material;
    
    our ability to implement environmental safeguards to comply with governmental
requirements;
    
    the impact of fuel costs and fuel recovery fees on our operations;
    
    our ability to meet our projected capital expenditures spending;
    
    our ability to achieve benefits, including the timing and amount of any benefits,
resulting from the implementation of standards and best practices program;
    
    our estimates of future costs and savings related to the realignment of our operating
organization;
    
    our ability to renew our receivables liquidity facility;
    
    our expectations regarding the utilization of tax loss carryforwards;
    
    our ability to sustain uncertain tax positions;
    
    our ability to maintain sufficient surplus between our covenant ratios;
    
    the amount, timing and sources of additional cash payments to the IRS and other taxing
authorities;
    
    our ability to avoid penalties from the IRS;
    
    the ability to anticipate the impact of changes in federal, state, or local laws or
regulations; and,
    
    the impact or effect of new accounting pronouncements on the company.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Interest rate risk.
  Fuel prices.
   Commodities prices.
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##### 



Item 8. Financial Statements and Supplementary Data
  
 Report of Independent Registered Public Accounting Firm
    
    59Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    61Consolidated Statements of Operations for each of the Three Years in the Period ended
December 31, 2006
    
    62Consolidated Statements of Stockholders Equity for the Three Years ended
December 31, 2006
    
    63Consolidated Statements of Cash Flows for each of the Three Years in the Period ended
December 31, 2006
    
    64Notes to Consolidated Financial Statements
    
    65
  58




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Report of Independent Registered Public Accounting Firm
 
  Consolidated financial statements and financial statement schedule
 
  Internal control over financial reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
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ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
 December 31,2006
    
    
    2005ASSETSCurrent Assets Cash and cash equivalents
    
    $
    94.1
    
    
    $
    56.1Accounts receivable, net of allowance of $19.2 and $17.8
    
    
    701.3
    
    
    
    690.5Prepaid and other current assets
    
    
    79.8
    
    
    
    80.5Deferred income taxes
    
    
    172.5
    
    
    
    93.3Total current assets
    
    
    1,047.7
    
    
    
    920.4Property and equipment, net
    
    
    4,354.0
    
    
    
    4,273.5Goodwill
    
    
    8,126.1
    
    
    
    8,184.2Other assets, net
    
    
    283.2
    
    
    
    283.2Total assets
    
    $
    13,811.0
    
    
    $
    13,661.3LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities Current portion of long-term debt
    
    $
    236.6
    
    
    $
    238.5Accounts payable
    
    
    502.8
    
    
    
    564.8Current portion of accrued capping, closure, post-closure and environmental costs
    
    
    95.8
    
    
    
    95.8Accrued interest
    
    
    106.9
    
    
    
    116.5Other accrued liabilities
    
    
    356.5
    
    
    
    330.5Unearned revenue
    
    
    234.1
    
    
    
    229.4Total current liabilities
    
    
    1,532.7
    
    
    
    1,575.5Long-term debt, less current portion
    
    
    6,674.0
    
    
    
    6,853.2Deferred income taxes
    
    
    357.3
    
    
    
    305.5Accrued capping, closure, post-closure and environmental costs, less current portion
    
    
    769.5
    
    
    
    796.8Other long-term obligations
    
    
    878.6
    
    
    
    690.9Commitments and ContingenciesStockholders Equity Series C senior mandatory convertible preferred stock, $0.10 par value,
6.9 million shares authorized, issued and outstanding, liquidation preference of
$50.00 per share, net of $11.9 million of issuance costs
    
    
    
    
    
    
    333.1Series D senior mandatory convertible preferred stock, $0.10 par value,
2.8 million shares authorized, 2.4 million shares issued and outstanding, liquidation
preference of $250.00 per share, net of $19.2 million of issuance costs
    
    
    580.8
    
    
    
    580.8Common stock; $0.01 par value; 525 million authorized shares; 367.9 million
and 331.2 million shares issued and outstanding
    
    
    3.7
    
    
    
    3.3Additional paid-in capital
    
    
    2,802.0
    
    
    
    2,440.7Accumulated other comprehensive loss
    
    
    (57.4
    )
    
    
    (70.3
    )Retained earnings
    
    
    269.8
    
    
    
    151.8Total stockholders equity
    
    
    3,598.9
    
    
    
    3,439.4Total liabilities and stockholders equity
    
    $
    13,811.0
    
    
    $
    13,661.3
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ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Revenues
    
    $
    6,028.8
    
    
    $
    5,734.8
    
    
    $
    5,514.0Cost of operations (exclusive of depreciation and amortization
shown below)
    
    
    3,874.3
    
    
    
    3,745.7
    
    
    
    3,514.6Selling, general and administrative expenses
    
    
    595.3
    
    
    
    519.2
    
    
    
    553.7Depreciation and amortization
    
    
    569.3
    
    
    
    554.4
    
    
    
    559.3Loss from divestitures and asset impairments
    
    
    22.5
    
    
    
    
    
    
    
    Operating income
    
    
    967.4
    
    
    
    915.5
    
    
    
    886.4Interest expense and other
    
    
    567.9
    
    
    
    588.0
    
    
    
    758.9Income before income taxes
    
    
    399.5
    
    
    
    327.5
    
    
    
    127.5Income tax expense
    
    
    238.5
    
    
    
    133.9
    
    
    
    72.2Minority interest
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    (2.7
    )Income from continuing operations
    
    
    160.9
    
    
    
    193.8
    
    
    
    58.0Income (loss) from discontinued operations, net of tax
    
    
    
    
    
    
    10.8
    
    
    
    (8.7
    )Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    (0.8
    )
    
    
    Net income
    
    
    160.9
    
    
    
    203.8
    
    
    
    49.3Dividends on preferred stock
    
    
    (42.9
    )
    
    
    (52.0
    )
    
    
    (21.6
    )Net income available to common shareholders
    
    $
    118.0
    
    
    $
    151.8
    
    
    $
    27.7Basic EPS:Continuing operations
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.12Discontinued operations
    
    
    
    
    
    
    0.03
    
    
    
    (0.03
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (0.00
    )
    
    
    Net income available to common shareholders
    
    $
    0.33
    
    
    $
    0.46
    
    
    $
    0.09Weighted average common shares
    
    
    356.7
    
    
    
    326.9
    
    
    
    315.0Diluted EPS:Continuing operations
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.11Discontinued operations
    
    
    
    
    
    
    0.03
    
    
    
    (0.02
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (0.00
    )
    
    
    Net income available to common shareholders
    
    $
    0.33
    
    
    $
    0.46
    
    
    $
    0.09Weighted average common and common equivalent shares
    
    
    359.3
    
    
    
    330.1
    
    
    
    319.7
  62




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ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in millions)
 AccumulatedAdditional
    
    
    Other
    
    
    Retained
    
    
    TotalPreferred
    
    
    Common
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Earnings
    
    
    StockholdersStock
    
    
    Stock
    
    
    Capital
    
    
    Loss
    
    
    (Deficit)
    
    
    EquityBalance as of December 31, 2003
    
    $
    333.1
    
    
    $
    3.2
    
    
    $
    2,318.5
    
    
    $
    (94.5
    )
    
    $
    (42.6
    )
    
    $
    2,517.7Common stock issued, net
    
    
    
    
    
    
    
    
    
    
    20.3
    
    
    
    
    
    
    
    
    
    
    
    20.3Stock options
    
    
    
    
    
    
    
    
    
    
    14.1
    
    
    
    
    
    
    
    
    
    
    
    14.1Dividends paid on Series C mandatory
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    (14.9
    )
    
    
    
    
    
    
    (6.7
    )
    
    
    (21.6
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49.3
    
    
    
    49.3Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18.2
    
    
    
    
    
    
    
    18.2Net loss on hedging derivatives
reclassified to earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.3
    
    
    
    
    
    
    
    4.3Employee benefits plan liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.6
    
    
    
    
    
    
    
    2.6Balance as of December 31, 2004
    
    $
    333.1
    
    
    $
    3.2
    
    
    $
    2,338.0
    
    
    $
    (69.4
    )
    
    $
    
    
    
    $
    2,604.9Common stock issued, net
    
    
    
    
    
    
    0.1
    
    
    
    100.5
    
    
    
    
    
    
    
    
    
    
    
    100.6Stock options
    
    
    
    
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    2.2Issuance of Series D mandatory
convertible preferred stock
    
    
    580.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    580.8Dividends paid on Series C mandatory
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.6
    )
    
    
    (21.6
    )Dividends paid on Series D mandatory
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30.4
    )
    
    
    (30.4
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203.8
    
    
    
    203.8Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.3Employee benefits plan liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.2
    )
    
    
    
    
    
    
    (2.2
    )Balance as of December 31, 2005
    
    $
    913.9
    
    
    $
    3.3
    
    
    $
    2,440.7
    
    
    $
    (70.3
    )
    
    $
    151.8
    
    
    $
    3,439.4Common stock issued for stock awards and
other, net
    
    
    
    
    
    
    
    
    
    
    14.4
    
    
    
    
    
    
    
    
    
    
    
    14.4Stock based compensation, net
    
    
    
    
    
    
    
    
    
    
    14.2
    
    
    
    
    
    
    
    
    
    
    
    14.2Conversion of Series C mandatory convertible
preferred stock into common stock
    
    
    (333.1
    )
    
    
    0.4
    
    
    
    332.7
    
    
    
    
    
    
    
    
    
    
    
    Dividends paid on Series C mandatory
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5.4
    )
    
    
    (5.4
    )Dividends paid on Series D mandatory
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37.5
    )
    
    
    (37.5
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160.9
    
    
    
    160.9Other comprehensive income, net of tax:Employee benefits plan liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70.3
    
    
    
    
    
    
    
    70.3Adjustment to initially apply SFAS 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57.4
    )
    
    
    
    
    
    
    (57.4
    )Balance as of December 31, 2006
    
    $
    580.8
    
    
    $
    3.7
    
    
    $
    2,802.0
    
    
    $
    (57.4
    )
    
    $
    269.8
    
    
    $
    3,598.9
 Comprehensive Income 
 Year ended December 31,2006
    
    
    2005
    
    
    2004Net income
    
    $
    160.9
    
    
    $
    203.8
    
    
    $
    49.3Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    1.3
    
    
    
    18.2Net loss on hedging derivatives reclassified to
earnings
    
    
    
    
    
    
    
    
    
    
    4.3Employee benefits plan liability adjustment
    
    
    70.3
    
    
    
    (2.2
    )
    
    
    2.6$
    231.2
    
    
    $
    202.9
    
    
    $
    74.4
  63




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ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Operating activities Net income
    
    $
    160.9
    
    
    $
    203.8
    
    
    $
    49.3Discontinued operations, net of tax
    
    
    
    
    
    
    (10.8
    )
    
    
    8.7Adjustments to reconcile net income to cash provided by operating
activities from continuing operationsProvisions for:Depreciation and amortization
    
    
    569.3
    
    
    
    554.4
    
    
    
    559.3Stock-based compensation expense
    
    
    10.5
    
    
    
    5.6
    
    
    
    10.9Doubtful accounts
    
    
    18.6
    
    
    
    18.8
    
    
    
    18.6Accretion of debt and amortization of debt issuance costs
    
    
    21.8
    
    
    
    22.7
    
    
    
    27.0Deferred income tax expense
    
    
    206.3
    
    
    
    119.9
    
    
    
    46.9Gain on sale of fixed assets
    
    
    (9.8
    )
    
    
    (3.5
    )
    
    
    (4.9
    )Non-cash reduction in acquisition and environmental accruals
    
    
    (16.3
    )
    
    
    (21.6
    )
    
    
    (11.9
    )Loss from divestitures and asset impairments
    
    
    22.5
    
    
    
    5.9
    
    
    
    Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    (16.2
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    6.7Write-off of deferred debt issuance costs
    
    
    4.1
    
    
    
    13.7
    
    
    
    26.4Non-cash portion of realignment and executive departure costs
    
    
    
    
    
    
    
    
    
    
    17.4Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    0.8
    
    
    
    Change in operating assets and liabilities, excluding the effects
of acquisitionsAccounts receivable, prepaid expenses, inventories and other assets
    
    
    (34.6
    )
    
    
    (50.8
    )
    
    
    (36.8
    )Accounts payable, accrued liabilities, unearned income and other
    
    
    3.6
    
    
    
    (105.2
    )
    
    
    (9.0
    )Capping, closure and post-closure accretion
    
    
    49.4
    
    
    
    50.3
    
    
    
    48.0Capping, closure, post-closure and environmental expenditures
    
    
    (84.7
    )
    
    
    (91.4
    )
    
    
    (90.4
    )Cash provided by operating activities from continuing operations
    
    
    921.6
    
    
    
    712.6
    
    
    
    650.0Investing activities Cost of acquisitions, net of cash acquired
    
    
    (10.7
    )
    
    
    (8.0
    )
    
    
    (21.5
    )Proceeds from divestitures, net of cash divested
    
    
    61.8
    
    
    
    8.9
    
    
    
    57.7Proceeds from sale of fixed assets
    
    
    22.4
    
    
    
    20.3
    
    
    
    11.0Capital expenditures, excluding acquisitions
    
    
    (669.3
    )
    
    
    (695.9
    )
    
    
    (582.9
    )Capitalized interest
    
    
    (17.6
    )
    
    
    (14.5
    )
    
    
    (13.0
    )Change in deferred acquisition costs, notes receivable and other
    
    
    4.6
    
    
    
    6.2
    
    
    
    10.8Cash used for investing activities from continuing operations
    
    
    (608.8
    )
    
    
    (683.0
    )
    
    
    (537.9
    )Financing activities Net proceeds from sale of Series D preferred stock
    
    
    
    
    
    
    580.8
    
    
    
    Proceeds from long-term debt, net of issuance costs
    
    
    1,239.3
    
    
    
    3,043.5
    
    
    
    3,082.6Payments of long-term debt
    
    
    (1,438.4
    )
    
    
    (3,740.2
    )
    
    
    (3,609.1
    )Payments of preferred stock dividends
    
    
    (48.3
    )
    
    
    (48.9
    )
    
    
    (21.6
    )Net change in disbursement account
    
    
    (47.3
    )
    
    
    21.9
    
    
    
    53.8Net proceeds from sale of common stock, exercise of stock options
and other
    
    
    19.9
    
    
    
    97.4
    
    
    
    5.1Cash used for financing activities from continuing operations
    
    
    (274.8
    )
    
    
    (45.5
    )
    
    
    (489.2
    )Discontinued operations:Provided by operating activities
    
    
    
    
    
    
    4.0
    
    
    
    0.4Cash provided by discontinued operations
    
    
    
    
    
    
    4.0
    
    
    
    0.4Increase (decrease) in cash and cash equivalents
    
    
    38.0
    
    
    
    (11.9
    )
    
    
    (376.7
    )Cash and cash equivalents, beginning of year
    
    
    56.1
    
    
    
    68.0
    
    
    
    444.7Cash and cash equivalents, end of year
    
    $
    94.1
    
    
    $
    56.1
    
    
    $
    68.0
  64




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Summary of Significant Accounting Policies
  Principles of consolidation and presentation 
 Consolidation of
Variable Interest Entities  an interpretation of ARB No. 51
  Assets held for sale -
 Accounting for Income Taxes
 Discontinued operations 
   2005
    
    
    2004Revenues
    
    $
    
    
    
    $
    13.4Income (loss) before tax
    
    $
    2.7
    
    
    $
    (3.3
    )Gain on divestiture
    
    
    15.3
    
    
    
    4.7Income tax expense
    
    
    7.2
    
    
    
    10.1Discontinued operations, net of
tax
    
    $
    10.8
    
    
    $
    (8.7
    )
  65




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Allocation of Interest to Discontinued Operations
 Business combinations 
   2006
    
    
    2005
    
    
    2004Number of businesses acquired
    
    
    4
    
    
    
    11
    
    
    
    17Total consideration (in millions)
    
    $
    12.6
    
    
    $
    12.4
    
    
    $
    27.7
  Realignment 
  Cash and cash equivalents 
  66




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Concentration of credit risk 
  Receivable realization allowance 
  Other assets 
  2006
    
    
    2005Deferred financing costs
    
    $
    77.0
    
    
    $
    85.1Landfill closure
deposits
    
    
    35.7
    
    
    
    32.8Insurance recoveries
    
    
    34.5
    
    
    
    35.7Notes receivable
    
    
    17.1
    
    
    
    15.0Assets held for sale
    
    
    
    
    
    
    17.1Other
    
    
    118.9
    
    
    
    97.5Total
    
    $
    283.2
    
    
    $
    283.2
  Other accrued liabilities 
  2006
    
    
    2005Accrued payroll
    
    $
    97.5
    
    
    $
    81.3Accrued insurance
    
    
    94.3
    
    
    
    94.6Accrued landfill taxes, hosting fees and royalties
    
    
    35.8
    
    
    
    28.8Accrued franchise and sales taxes
    
    
    34.2
    
    
    
    24.9Accrued property taxes
    
    
    15.3
    
    
    
    11.9Current portion of non-recurring acquisition
accruals
    
    
    12.4
    
    
    
    22.5Other
    
    
    67.0
    
    
    
    66.5Total
    
    $
    356.5
    
    
    $
    330.5
 67




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accrued capping, closure and post-closure costs 
  Environmental costs 
 Environmental
Remediation Liabilities
 Self-Insurance 
    2006
    
    
    2005Gross insurance claim liabilities, beginning of year
    
    $
    294.1
    
    
    $
    294.5Less amount due from insurers
    
    
    35.7
    
    
    
    45.3Net insurance claim liabilities, beginning of year
    
    
    258.4
    
    
    
    249.2Claims payments made during the year
    
    
    (250.2
    )
    
    
    (248.4
    )Provision charged to cost of operations
    
    
    251.9
    
    
    
    257.6Net insurance claim liabilities, end of year
    
    
    260.1
    
    
    
    258.4Plus amount due from insurers
    
    
    34.5
    
    
    
    35.7Gross insurance claim liabilities, end of year
    
    
    294.6
    
    
    
    294.1Less current portion
    
    
    87.6
    
    
    
    89.9Long-term portion
    
    $
    207.0
    
    
    $
    204.2
 68




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Other long-term obligations 
  2006
    
    
    2005Contingencies (1)
    
    $
    559.3
    
    
    $
    350.4Self-insurance claim liabilities
    
    
    207.0
    
    
    
    204.2Non-current portion of non-recurring acquisition
accruals
    
    
    46.6
    
    
    
    73.1Pension liability (2)
    
    
    16.8
    
    
    
    14.8Other
    
    
    48.9
    
    
    
    48.4Total
    
    $
    878.6
    
    
    $
    690.9
 
 (1)
    
    Primarily related to tax matters. See Note 13, Income Taxesfor additional
disclosures.(2)
    
    See Note 8, Employee Benefit Plansfor additional disclosures.
 Contingent liabilities 
 Accounting for
Contingencies Reasonable Estimation of the Amount of a
Loss.
 Revenue 
  Non-recurring acquisition accruals 
   69




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Loss from divestitures and asset impairments
  Interest expense and other
  Interest expense capitalized
   Income taxes 
  Statements of cash flows
  2006
    
    
    2005
    
    
    2004Supplemental disclosures -Interest paid (net of amounts capitalized)
    
    $
    516.5
    
    
    $
    528.5
    
    
    $
    620.2Income taxes paid (net of refunds)
    
    
    30.6
    
    
    
    16.2
    
    
    
    36.6Non-cash transactions -Debt incurred or assumed in acquisitions
    
    $
    0.1
    
    
    $
    3.4
    
    
    $
    Liabilities incurred or assumed in acquisitions
    
    
    0.1
    
    
    
    1.6
    
    
    
    12.6Capital lease obligations incurred
    
    
    
    
    
    
    1.5
    
    
    
    4.6Accrued dividends on preferred stock
    
    
    3.1
    
    
    
    8.5
    
    
    
    5.4Conversion of Series C Preferred Stock
    
    
    345.0
    
    
    
    
    
    
    
    
 70




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Use of estimates
  Fair value of financial instruments 
 Disclosures About Fair Value of Financial
Instruments
  Stock-based compensation plans
 Share-Based
Payment Accounting for Stock
Issued to Employees Accounting for Stock-Based Compensation
 Stock Plans
  Change in accounting principle 
 Accounting for Conditional Asset
Retirement Obligations  an interpretation of FASB Statement No. 143 Accounting for Asset Retirement
 71




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Obligations
 Recently issued accounting pronouncements 
 Fair Value
Measurements
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R) Employee
Benefit Plans
 Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109 .
 2. Property and Equipment
  72




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for
Impairment or Disposal of Long-Lived Assets
 The Treatment of Certain Site Restoration/Environmental Exit Costs When
Testing a Long-Lived Asset for Impairment
   Property and EquipmentBalance at
    
    
    
    
    
    
    
    
    
    
    Acquisitions,
    
    
    Transfers
    
    
    Balance atDecember 31,
    
    
    Capital
    
    
    Sales and
    
    
    Net of
    
    
    and
    
    
    December 31,2005
    
    
    Additions
    
    
    Retirements
    
    
    Divestitures
    
    
    Other (1)
    
    
    2006Land and improvements
    
    $
    472.0
    
    
    $
    18.6
    
    
    $
    (5.6
    )
    
    $
    (2.3
    )
    
    $
    (1.8
    )
    
    $
    480.9Land held for
permitting as landfills
    
    
    114.0
    
    
    
    6.5
    
    
    
    
    
    
    
    (7.1
    )
    
    
    (18.3
    )
    
    
    95.1Landfills
    
    
    3,978.5
    
    
    
    245.2
    
    
    
    (0.2
    )
    
    
    12.2
    
    
    
    32.1
    
    
    
    4,267.8Buildings and improvements
    
    
    506.6
    
    
    
    27.7
    
    
    
    (6.4
    )
    
    
    (13.0
    )
    
    
    (4.7
    )
    
    
    510.2Vehicles and equipment
    
    
    2,039.6
    
    
    
    285.4
    
    
    
    (77.3
    )
    
    
    (21.9
    )
    
    
    2.0
    
    
    
    2,227.8Containers and compactors
    
    
    920.7
    
    
    
    79.4
    
    
    
    (18.4
    )
    
    
    (10.2
    )
    
    
    
    
    
    
    971.5Furniture and office
equipment
    
    
    52.7
    
    
    
    6.5
    
    
    
    (5.3
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    53.5Total
    
    $
    8,084.1
    
    
    $
    669.3
    
    
    $
    (113.2
    )
    
    $
    (42.7
    )
    
    $
    9.3
    
    
    $
    8,606.8
 Accumulated Depreciation and AmortizationDepreciationBalance at
    
    
    and
    
    
    
    
    
    
    Acquisitions,
    
    
    Transfers
    
    
    Balance atDecember 31,
    
    
    Amortization
    
    
    Sales and
    
    
    Net of
    
    
    and
    
    
    December 31,2005
    
    
    Expense
    
    
    Retirements
    
    
    Divestitures
    
    
    Other (1)
    
    
    2006Land and improvements
    
    $
    (31.7
    )
    
    $
    (6.0
    )
    
    $
    0.2
    
    
    $
    0.1
    
    
    $
    (0.1
    )
    
    $
    (37.5
    )Landfills
    
    
    (1,839.9
    )
    
    
    (250.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,090.7
    )Buildings and improvements
    
    
    (150.2
    )
    
    
    (26.4
    )
    
    
    5.0
    
    
    
    3.0
    
    
    
    
    
    
    
    (168.6
    )Vehicles and equipment
    
    
    (1,159.4
    )
    
    
    (198.2
    )
    
    
    73.5
    
    
    
    16.8
    
    
    
    (2.7
    )
    
    
    (1,270.0
    )Containers and compactors
    
    
    (590.0
    )
    
    
    (82.4
    )
    
    
    17.6
    
    
    
    8.0
    
    
    
    
    
    
    
    (646.8
    )Furniture and office
equipment
    
    
    (39.4
    )
    
    
    (4.5
    )
    
    
    4.3
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    (39.2
    )Total
    
    $
    (3,810.6
    )
    
    $
    (568.3
    )
    
    $
    100.6
    
    
    $
    28.2
    
    
    $
    (2.7
    )
    
    $
    (4,252.8
    )Property and equipment, net
    
    $
    4,273.5
    
    
    $
    101.0
    
    
    $
    (12.6
    )
    
    $
    (14.5
    )
    
    $
    6.6
    
    
    $
    4,354.0
 
 (1)
    
    Primarily consists of $17.6 million capitalized interest, $9.7 million landfill
asset impairments, $11.4 million reclassification of landfill cover from land held for
landfills and $9.5 million relating to changes in landfill retirement obligation assets for
recognition of and adjustments to capping, closure and post-closure costs (see Note 7,
Landfill Accounting).
 73




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Property and EquipmentBalance at
    
    
    
    
    
    
    
    
    
    
    Acquisitions,
    
    
    Transfers
    
    
    Balance atDecember 31,
    
    
    Capital
    
    
    Sales and
    
    
    Net of
    
    
    and
    
    
    December 31,2004
    
    
    Additions
    
    
    Retirements
    
    
    Divestitures
    
    
    Other(1)
    
    
    2005Land and improvements
    
    $
    461.7
    
    
    $
    22.7
    
    
    $
    (10.0
    )
    
    $
    (0.5
    )
    
    $
    (1.9
    )
    
    $
    472.0Land held for
permitting as landfills
    
    
    108.9
    
    
    
    14.6
    
    
    
    
    
    
    
    
    
    
    
    (9.5
    )
    
    
    114.0Landfills
    
    
    3,680.9
    
    
    
    252.9
    
    
    
    (0.1
    )
    
    
    5.9
    
    
    
    38.9
    
    
    
    3,978.5Buildings and improvements
    
    
    492.5
    
    
    
    25.9
    
    
    
    (9.5
    )
    
    
    2.0
    
    
    
    (4.3
    )
    
    
    506.6Vehicles and equipment
    
    
    1,826.9
    
    
    
    283.9
    
    
    
    (56.0
    )
    
    
    0.2
    
    
    
    (15.4
    )
    
    
    2,039.6Containers and compactors
    
    
    844.4
    
    
    
    92.2
    
    
    
    (13.6
    )
    
    
    (1.0
    )
    
    
    (1.3
    )
    
    
    920.7Furniture and
office equipment
    
    
    50.1
    
    
    
    3.7
    
    
    
    (0.9
    )
    
    
    
    
    
    
    (0.2
    )
    
    
    52.7Total
    
    $
    7,465.4
    
    
    $
    695.9
    
    
    $
    (90.1
    )
    
    $
    6.6
    
    
    $
    6.3
    
    
    $
    8,084.1
 Accumulated Depreciation and AmortizationDepreciationBalance at
    
    
    and
    
    
    
    
    
    
    Acquisitions,
    
    
    Transfers
    
    
    Balance atDecember 31,
    
    
    Amortization
    
    
    Sales and
    
    
    Net of
    
    
    and
    
    
    December 31,2004
    
    
    Expense
    
    
    Retirements
    
    
    Divestitures
    
    
    Other(1)
    
    
    2005Land and
improvements
    
    $
    (26.0
    )
    
    $
    (5.8
    )
    
    $
    0.2
    
    
    $
    
    
    
    $
    (0.1
    )
    
    $
    (31.7
    )Landfills
    
    
    (1,591.1
    )
    
    
    (248.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,839.9
    )Buildings and improvements
    
    
    (128.1
    )
    
    
    (25.7
    )
    
    
    1.9
    
    
    
    0.4
    
    
    
    1.3
    
    
    
    (150.2
    )Vehicles and equipment
    
    
    (1,032.7
    )
    
    
    (184.1
    )
    
    
    52.2
    
    
    
    0.8
    
    
    
    4.4
    
    
    
    (1,159.4
    )Containers and
compactors
    
    
    (523.1
    )
    
    
    (82.8
    )
    
    
    12.9
    
    
    
    1.2
    
    
    
    1.8
    
    
    
    (590.0
    )Furniture and office
equipment
    
    
    (34.5
    )
    
    
    (5.8
    )
    
    
    0.8
    
    
    
    
    
    
    
    0.1
    
    
    
    (39.4
    )Total
    
    $
    (3,335.5
    )
    
    $
    (553.0
    )
    
    $
    68.0
    
    
    $
    2.4
    
    
    $
    7.5
    
    
    $
    (3,810.6
    )Property and
equipment, net
    
    $
    4,129.9
    
    
    $
    142.9
    
    
    $
    (22.1
    )
    
    $
    9.0
    
    
    $
    13.8
    
    
    $
    4,273.5
 
 (1)
    
    Primarily consists of $14.5 million capitalized interest, $8.2 million
reclassifications to assets held for sale and $10.0 million relating to changes in landfill
retirement obligation asset for recognition of and adjustments to capping, closure and
post-closure costs (see Note 7, Landfill Accounting).
 3. Goodwill and Intangible Assets
    74




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,2005
    
    
    Acquisitions
    
    
    Divestitures
    
    
    Adjustments(1)
    
    
    2006Midwestern
    
    $
    2,169.1
    
    
    $
    
    
    
    $
    (6.2
    )
    
    $
    (6.5
    )
    
    $
    2,156.4Northeastern
    
    
    1,796.5
    
    
    
    
    
    
    
    (25.8
    )
    
    
    (7.8
    )
    
    
    1,762.9Southeastern
    
    
    1,584.0
    
    
    
    
    
    
    
    
    
    
    
    (4.9
    )
    
    
    1,579.1Southwestern
    
    
    1,316.9
    
    
    
    0.8
    
    
    
    
    
    
    
    55.2
    
    
    
    1,372.9Western
    
    
    1,317.7
    
    
    
    
    
    
    
    
    
    
    
    (62.9
    )
    
    
    1,254.8Total
    
    $
    8,184.2
    
    
    $
    0.8
    
    
    $
    (32.0
    )
    
    $
    (26.9
    )
    
    $
    8,126.1
 Balance as of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as ofDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,2004
    
    
    Acquisitions
    
    
    Divestitures
    
    
    Adjustments(2)
    
    
    2005Atlantic
    
    $
    914.9
    
    
    $
    0.3
    
    
    $
    
    
    
    $
    (915.2
    )
    
    $
    Great Lakes
    
    
    1,097.7
    
    
    
    0.1
    
    
    
    
    
    
    
    (1,097.8
    )
    
    
    Midstates
    
    
    959.1
    
    
    
    
    
    
    
    
    
    
    
    (959.1
    )
    
    
    Mountain
    
    
    650.7
    
    
    
    
    
    
    
    
    
    
    
    (650.7
    )
    
    
    North Central
    
    
    1,193.5
    
    
    
    
    
    
    
    
    
    
    
    (1,193.5
    )
    
    
    Northeast (old)
    
    
    725.4
    
    
    
    
    
    
    
    
    
    
    
    (725.4
    )
    
    
    Pacific
    
    
    726.1
    
    
    
    
    
    
    
    
    
    
    
    (726.1
    )
    
    
    Southeast (old)
    
    
    872.4
    
    
    
    1.4
    
    
    
    
    
    
    
    (873.8
    )
    
    
    Southwest (old)
    
    
    1,062.2
    
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    (1,062.1
    )
    
    
    Midwestern
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,169.1
    
    
    
    2,169.1Northeastern
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,796.5
    
    
    
    1,796.5Southeastern
    
    
    
    
    
    
    
    
    
    
    (2.7
    )
    
    
    1,586.7
    
    
    
    1,584.0Southwestern
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,316.9
    
    
    
    1,316.9Western
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,317.7
    
    
    
    1,317.7Total
    
    $
    8,202.0
    
    
    $
    1.9
    
    
    $
    (2.9
    )
    
    $
    (16.8
    )
    
    $
    8,184.2
 
 (1)
    
    Includes income tax related adjustments associated with the acquisition of BFI in
1999 and a reallocation among regions related to refinements to the regional organization
structure.(2)
    
    Primarily relates to reallocation of goodwill in connection with our realignment of
field operations, reclassification of goodwill in connection with assets held for sale and
purchase accounting adjustments.
  Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingValue
    
    
    Amortization
    
    
    ValueNon-compete agreements
    
    $
    6.7
    
    
    $
    5.9
    
    
    $
    0.8Other
    
    
    2.9
    
    
    
    0.7
    
    
    
    2.2Total
    
    $
    9.6
    
    
    $
    6.6
    
    
    $
    3.0
  75




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4. Long-term Debt
  Debt Balance at
    
    
    Effective Interest RateDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revolving credit facility ABR borrowings*
    
    $
    
    
    
    $
    3.7
    
    
    
    9.75
    %
    
    
    9.00
    %Revolving credit facility Adjusted LIBOR
borrowings*
    
    
    
    
    
    
    
    
    
    
    7.86
    
    
    
    7.292005 Term Loan B due 2012
    
    
    1,105.0
    
    
    
    1,275.0
    
    
    
    7.34
    
    
    
    6.33Receivables secured loan
    
    
    230.0
    
    
    
    230.0
    
    
    
    6.02
    
    
    
    4.906.375% senior notes due 2008
    
    
    157.9
    
    
    
    154.7
    
    
    
    8.34
    
    
    
    8.348.875% senior notes due 2008
    
    
    
    
    
    
    600.0
    
    
    
    
    
    
    
    9.158.50% senior notes due 2008
    
    
    750.0
    
    
    
    750.0
    
    
    
    8.78
    
    
    
    8.786.50% senior notes due 2010
    
    
    350.0
    
    
    
    350.0
    
    
    
    6.76
    
    
    
    6.765.75% senior notes due 2011
    
    
    400.0
    
    
    
    400.0
    
    
    
    6.00
    
    
    
    6.006.375% senior notes due 2011
    
    
    275.0
    
    
    
    275.0
    
    
    
    6.63
    
    
    
    6.639.25% senior notes due 2012
    
    
    250.9
    
    
    
    251.1
    
    
    
    9.40
    
    
    
    9.407.875% senior notes due 2013
    
    
    450.0
    
    
    
    450.0
    
    
    
    8.09
    
    
    
    8.096.125% senior notes due 2014
    
    
    425.0
    
    
    
    425.0
    
    
    
    6.30
    
    
    
    6.307.25% senior notes due 2015
    
    
    600.0
    
    
    
    600.0
    
    
    
    7.43
    
    
    
    7.437.125% senior notes due 2016
    
    
    595.1
    
    
    
    
    
    
    
    7.38
    
    
    
    9.25% debentures due 2021
    
    
    96.3
    
    
    
    96.1
    
    
    
    9.47
    
    
    
    9.477.40% debentures due 2035
    
    
    294.4
    
    
    
    292.2
    
    
    
    8.03
    
    
    
    8.034.25% senior subordinated convertible
debentures due 2034
    
    
    230.0
    
    
    
    230.0
    
    
    
    4.34
    
    
    
    4.347.375% senior unsecured notes due 2014
    
    
    400.0
    
    
    
    400.0
    
    
    
    7.55
    
    
    
    7.55Solid waste revenue bond obligations,
principal payable through 2031
    
    
    280.6
    
    
    
    283.9
    
    
    
    6.85
    
    
    
    6.81Notes payable to banks, finance companies,
and individuals, interest rates of 2.37% to
11.25%, and principal payable through 2014,
secured by vehicles, equipment, real
estate or accounts receivable **
    
    
    2.3
    
    
    
    5.1
    
    
    
    6.00
    
    
    
    4.32Obligations under capital leases of
vehicles and equipment **
    
    
    12.4
    
    
    
    13.2
    
    
    
    8.92
    
    
    
    9.08Notes payable to individuals and
commercial company, interest rates of
5.99% to 9.50%, principal payable
through 2010,unsecured **
    
    
    5.7
    
    
    
    6.7
    
    
    
    8.07
    
    
    
    7.93Total debt **
    
    
    6,910.6
    
    
    
    7,091.7
    
    
    
    7.37
    
    
    
    7.29Less: Current portion
    
    
    236.6
    
    
    
    238.5Long-term portion
    
    $
    6,674.0
    
    
    $
    6,853.2
 
 *
    
    Excludes fees**
    
    Reflects weighted average interest rate
 Refinancings 
   76




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
    
    the issuance of 12.75 million shares of common stock for $101 million;
    
    the issuance of 6.25% mandatory convertible preferred stock with a conversion premium
of 25% for $600 million; and
    
    the issuance of 7.25% senior notes due 2015 for $600 million.
  
    
    $195 million of the remaining 10% senior subordinated notes due 2009;
    
    $125 million of the 9.25% senior notes due 2012;
    
    $600 million 7.625% senior notes due 2006;
    
    $206 million of term loans; and
    
    $70 million of the 7.875% senior notes due 2005.
    2005 Credit Facility 
    77




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Senior notes and debentures 
 th th
 th th
 th th
 th th
 th th
 th th
 st st
 st st
 st st
 78




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Valuation of Debt Assumed in a Purchase Business Combination
   Receivables secured loan 
  Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities  a Replacement of FASB Statement 125
 Senior subordinated notes 
   79




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Senior subordinated convertible debentures 
 Accounting for Derivative Instruments and
Hedging Activities
   th
 Future maturities of long-term debt 
  Maturity2007 (1)
    
    $
    236.62008
    
    
    913.12009
    
    
    2.02010
    
    
    375.32011
    
    
    676.3Thereafter
    
    
    4,786.2Gross Principal
    
    
    6,989.5Discount, net
    
    
    (78.9
    )Total Debt
    
    $
    6,910.6
 
 (1)
    
    Includes the receivables secured loan, which is a 364-day liquidity facility with a
maturity date of May 29, 2007 and has a balance of $230.0 million at December 31, 2006.
Although we intend to renew the liquidity facility prior to its maturity date, the outstanding
balance is classified as a current liability because it has a contractual maturity of less
than one year.
 80




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Maturity
    
    Principal
    
    
    Interest
    
    
    Total2007
    
    $
    1.3
    
    
    $
    1.1
    
    
    $
    2.42008
    
    
    1.0
    
    
    
    1.0
    
    
    
    2.02009
    
    
    1.0
    
    
    
    0.9
    
    
    
    1.92010
    
    
    1.2
    
    
    
    0.7
    
    
    
    1.92011
    
    
    0.9
    
    
    
    0.7
    
    
    
    1.6Thereafter
    
    
    7.0
    
    
    
    2.5
    
    
    
    9.5$
    12.4
    
    
    $
    6.9
    
    
    $
    19.3
 Fair value of debt
  Balance at
    
    
    Fair Value at
    
    
    Balance at
    
    
    Fair Value atDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2006
    
    
    2005
    
    
    2005Fixed Rate Debt:Principal amount
    
    $
    5,490.8
    
    
    $
    5,560.6
    
    
    $
    5,498.3
    
    
    $
    5,555.1Weighted average interest rate
    
    
    7.25
    %
    
    
    
    
    
    
    7.44
    %Variable Rate Debt:Principal amount
    
    $
    1,419.8
    
    
    $
    1,423.9
    
    
    $
    1,593.4
    
    
    $
    1,601.4Weighted average interest rate(1)
    
    
    6.76
    %
    
    
    
    
    
    
    5.83
    %
 
 (1)
    
    Reflects the rate in effect as of December 31, 2006 and 2005 and includes all
applicable margins. Actual future rates may vary.
 Debt covenants 
   From the Quarter Ending
    
    Through the Quarter Ending
    
    EBITDA(1)/InterestJanuary 1, 2005
    
    December 31, 2005
    
    1.85xJanuary 1, 2006
    
    June 30, 2006
    
    1.95xJuly 1, 2006
    
    December 31, 2006
    
    2.00xJanuary 1, 2007
    
    March 31, 2007
    
    2.10xApril 1, 2007
    
    June 30, 2007
    
    2.15xJuly 1, 2007
    
    March 31, 2008
    
    2.20xApril 1, 2008
    
    September 30, 2008
    
    2.25xOctober 1, 2008
    
    December 31, 2008
    
    2.30xJanuary 1, 2009
    
    June 30, 2009
    
    2.40xJuly 1, 2009
    
    December 31, 2009
    
    2.55xJanuary 1, 2010
    
    Thereafter
    
    2.75x
  From the Quarter Ending
    
    Through the Quarter Ending
    
    Total Debt/EBITDA(1)January 1, 2005
    
    December 31, 2005
    
    6.50xJanuary 1, 2006
    
    June 30, 2006
    
    6.25xJuly 1, 2006
    
    December 31, 2006
    
    6.00xJanuary 1, 2007
    
    June 30, 2007
    
    5.75xJuly 1, 2007
    
    December 31, 2008
    
    5.50xJanuary 1, 2009
    
    June 30, 2009
    
    5.25xJuly 1, 2009
    
    December 31, 2009
    
    5.00xJanuary 1, 2010
    
    Thereafter
    
    4.50x
 81




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) (1)
 
 (1)
    
    EBITDA, which is a non-GAAP measure, used for covenants is calculated in
accordance with the definition in the 2005 Credit Facility agreement. In this context, EBITDA
is used solely to provide information on the extent to which we are in compliance with debt
covenants and is not comparable to EBITDA used by other companies.
   Guarantees 
 , Condensed Consolidating Financial Statements Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others
 Collateral 
   82




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Other AlliedBFI
    
    
    Collateral
    
    
    CombinedCondensed Balance Sheet (1):Current assets
    
    $
    229.9
    
    
    $
    237.3
    
    
    $
    467.2Property and equipment, net
    
    
    1,037.0
    
    
    
    823.0
    
    
    
    1,860.0Goodwill
    
    
    3,322.3
    
    
    
    3,010.9
    
    
    
    6,333.2Other assets, net
    
    
    131.2
    
    
    
    35.3
    
    
    
    166.5Total assets
    
    $
    4,720.4
    
    
    $
    4,106.5
    
    
    $
    8,826.9Current liabilities
    
    $
    442.3
    
    
    $
    257.2
    
    
    $
    699.5Long-term debt, less current portion
    
    
    5,183.9
    
    
    
    6.0
    
    
    
    5,189.9Other long-term obligations
    
    
    639.2
    
    
    
    66.6
    
    
    
    705.8Due to parent
    
    
    401.6
    
    
    
    1,565.4
    
    
    
    1,967.0Total equity (deficit)
    
    
    (1,946.6
    )
    
    
    2,211.3
    
    
    
    264.7Total liabilities and equity (deficit)
    
    $
    4,720.4
    
    
    $
    4,106.5
    
    
    $
    8,826.9
 
 (1)
    
    All transactions between BFI and the Other Allied collateral have been eliminated. 5. Derivative Instruments and Hedging Activities
   Designated interest rate swap contracts accounted for as hedges 
    Non-hedge accounting interest rate swap contracts 
  83




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  De-designated interest rate swap contracts.
  Fair value interest rate swap contracts.
 6. Accumulated Other Comprehensive Loss
  December 31,
    
    
    December 31,2006
    
    
    2005Employee benefits plan liability adjustment, net of taxes of $46.8
    
    $
    
    
    
    $
    (70.3
    )Adjustment to initially apply SFAS 158, net of taxes of $39.4
    
    
    (57.4
    )
    
    
    Accumulated other comprehensive loss
    
    $
    (57.4
    )
    
    $
    (70.3
    )
 7. Landfill Accounting
    84




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Landfill assets 
  Net Book Value
    
    
    
    
    
    Capping,of Landfills
    
    Landfill
    
    Closure andNet Book Value at
    
    Acquired, net of
    
    Development
    
    Post-Closure
    
    Landfill
    
    
    
    
    
    Net Book Value atDecember 31, 2005
    
    Divestitures
    
    Costs
    
    Accruals
    
    Amortization
    
    Other(1)
    
    December 31, 2006$2,138.6
    
    $
    12.2
    
    
    $
    262.8
    
    
    $
    9.5
    
    
    $
    (250.8
    )
    
    $
    4.8
    
    
    $
    2,177.1
 
 (1)
    
    Relates primarily to capitalized expansion costs transferred to the landfill
amortization base.   1.
    
    We have control of and access to the land where the expansion permit is being sought.2.
    
    All geological and other technical siting criteria for a landfill have been met, or an
exception from such requirements has been received (or can reasonably be expected to be
received).3.
    
    The political process has been assessed and there are no identified impediments that
cannot be resolved.4.
    
    We are actively pursuing the expansion permit and have an expectation that the final
local, state and federal permits will be received within the next five years.5.
    
    Senior operations management approval has been obtained.
  85




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Capping, closure and post-closure
   Discounted Capping, Closure and Post-Closure Liability Recorded:Current Portion
    
    $
    59.8Non-Current Portion
    
    
    588.2Total
    
    $
    648.0Estimated Remaining Capping, Closure and Post-Closure Costs to be Expended:2007
    
    $
    59.82008
    
    
    48.42009
    
    
    80.82010
    
    
    70.22011
    
    
    60.1Thereafter
    
    
    3,182.8Estimated Remaining Undiscounted Capping, Closure and Post-Closure Costs to be Expended
    
    $
    3,502.1Estimated Remaining Discounted Capping, Closure and Post-Closure Costs to be Expended
    
    $
    1,102.9
    86




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      Landfill maintenance costs 
  Financial assurance costs
  Environmental costs -
   87




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Balance at
    
    
    Charges to
    
    
    
    
    
    
    
    
    
    
    Balance at12/31/03
    
    
    Expense
    
    
    Other (1)
    
    
    Payments
    
    
    12/31/04Environmental accruals
    
    $
    337.4
    
    
    $
    
    
    
    $
    (0.8
    )
    
    $
    (31.8
    )
    
    $
    304.8Open landfills capping, closure
and post-closure accruals
    
    
    376.4
    
    
    
    32.6
    
    
    
    31.4
    
    
    
    (29.8
    )
    
    
    410.6Closed landfills capping, closure
and post-closure accruals
    
    
    171.5
    
    
    
    15.4
    
    
    
    60.5
    
    
    
    (28.8
    )
    
    
    218.6Total
    
    $
    885.3
    
    
    $
    48.0
    
    
    $
    91.1
    
    
    $
    (90.4
    )
    
    $
    934.0
 Balance at
    
    
    Charges to
    
    
    
    
    
    
    
    
    
    
    Balance at12/31/04
    
    
    Expense
    
    
    Other (1)
    
    
    Payments
    
    
    12/31/05Environmental accruals
    
    $
    304.8
    
    
    $
    
    
    
    $
    (0.6
    )
    
    $
    (31.4
    )
    
    $
    272.8Open landfills capping, closure
and post-closure accruals
    
    
    410.6
    
    
    
    34.2
    
    
    
    8.1
    
    
    
    (33.1
    )
    
    
    419.8Closed landfills capping, closure and
post-closure accruals
    
    
    218.6
    
    
    
    16.1
    
    
    
    (7.8
    )
    
    
    (26.9
    )
    
    
    200.0Total
    
    $
    934.0
    
    
    $
    50.3
    
    
    $
    (0.3
    )
    
    $
    (91.4
    )
    
    $
    892.6
 Balance at
    
    
    Charges to
    
    
    
    
    
    
    
    
    
    
    Balance at12/31/05
    
    
    Expense
    
    
    Other (1) (2)
    
    
    Payments
    
    
    12/31/06Environmental accruals
    
    $
    272.8
    
    
    $
    
    
    
    $
    (35.4
    )
    
    $
    (20.1
    )
    
    $
    217.3Open landfills capping, closure
and post-closure accruals
    
    
    419.8
    
    
    
    34.1
    
    
    
    11.9
    
    
    
    (36.5
    )
    
    
    429.3Closed landfills capping, closure
and post-closure accruals
    
    
    200.0
    
    
    
    15.3
    
    
    
    31.5
    
    
    
    (28.1
    )
    
    
    218.7Total
    
    $
    892.6
    
    
    $
    49.4
    
    
    $
    8.0
    
    
    $
    (84.7
    )
    
    $
    865.3
 
 (1)
    
    Amounts for open and closed landfills consist primarily of liabilities related to
acquired and divested companies and amounts accrued for capping, closure and post-closure
liabilities and charged to landfill assets during the period.(2)
    
    Includes an environmental adjustment recorded in 2006 due to the selection by a
regulatory agency of a lower cost remediation plan related to a Superfund site, combined with
a reclassification of approximately $27.2 million from environmental to closed site capping,
closure and post-closure. 88




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. Employee Benefit Plans
 Defined benefit pension plan 
    .
  Employers Disclosures about Pensions and Other
Postretirement Benefits
  89




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2006
    
    
    2005Projected benefit obligation at beginning of period
    
    $
    377.4
    
    
    $
    353.0Service cost
    
    
    0.2
    
    
    
    0.6Interest cost
    
    
    21.1
    
    
    
    20.7Curtailment loss
    
    
    (0.7
    )
    
    
    Actuarial (gain) loss
    
    
    (22.7
    )
    
    
    20.9Benefits paid
    
    
    (16.0
    )
    
    
    (17.8
    )Projected benefit obligation at end of period
    
    $
    359.3
    
    
    $
    377.4Fair value of plan assets at beginning of period
    
    $
    361.1
    
    
    $
    339.4Actual return on plan assets
    
    
    25.8
    
    
    
    39.5Benefits paid
    
    
    (16.0
    )
    
    
    (17.8
    )Fair value of plan assets at end of period
    
    $
    370.9
    
    
    $
    361.1
  2006
    
    2005Funded status
    
    $
    11.6
    
    
    $
    (16.3
    )Non-current asset
    
    $
    11.6
    
    
    $
    103.7Non-current liabilities
    
    
    
    
    
    
    (117.8
    )
  12/31/06
    
    
    
    
    
    12/31/06
    
    
    
    
    
    12/31/06Balance
    
    AML
    
    Balance
    
    Adjustment
    
    BalancePrior to AML
    
    Adjustment
    
    Post AML
    
    to Initially
    
    Post AML& SFAS 158
    
    Per
    
    Pre-SFAS 158
    
    Apply
    
    & SFAS 158Adjustment
    
    SFAS 87
    
    Adjustment
    
    SFAS 158
    
    AdjustmentPrepaid pension asset
    
    $
    104.1
    
    
    $
    0.4
    
    
    $
    104.5
    
    
    $
    (104.5
    )
    
    $
    Accrued pension
liability
    
    
    (117.8
    )
    
    
    117.8
    
    
    
    
    
    
    
    
    
    
    
    Intangible asset
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    
    
    
    
    
    
    
    
    Non-current asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.6
    
    
    
    11.6Deferred tax asset
    
    
    46.8
    
    
    
    (46.8
    )
    
    
    
    
    
    
    37.8
    
    
    
    37.8AOCI, net of taxes
    
    
    70.3
    
    
    
    (70.3
    )
    
    
    
    
    
    
    55.1
    
    
    
    55.1
  2006Net actuarial loss
    
    $
    92.3Prior service cost
    
    
    0.6Total AOCI before tax benefit
    
    $
    92.9
  90




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2007
    
    
    2006
    
    
    2005
    
    
    2004Service cost
    
    $
    0.2
    
    
    $
    0.2
    
    
    $
    0.6
    
    
    $
    0.8Interest cost
    
    
    21.1
    
    
    
    21.1
    
    
    
    20.7
    
    
    
    20.6Expected return on plan assets
    
    
    (29.9
    )
    
    
    (29.9
    )
    
    
    (28.2
    )
    
    
    (28.0
    )Recognized net actuarial loss
    
    
    5.0
    
    
    
    6.9
    
    
    
    6.8
    
    
    
    7.2Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Curtailment loss (gain)
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    1.1Net periodic benefit cost
    
    $
    (3.5
    )
    
    $
    (1.5
    )
    
    $
    
    
    
    $
    1.8
  2006
    
    2005
    
    2004Actual return on plan assets
    
    $
    25.8
    
    
    $
    39.5
    
    
    $
    37.8Actual rate of return on plan assets
    
    
    7.2
    %
    
    
    11.7
    %
    
    
    11.9
    %
  2006
    
    2005
    
    2004Discount rate
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    6.00
    %Average rate of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %Expected return on plan assets
    
    
    8.25
    %
    
    
    8.50
    %
    
    
    8.50
    %
    91




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Target
    
    Percentage of plan assets
    
    Weighted average expectedallocation
    
    at September 30,
    
    long-term rate of return for2007
    
    2006
    
    2005
    
    calendar year 2006Equity securities
    
    
    60
    %
    
    
    59
    %
    
    
    63
    %
    
    
    5.86
    %Debt securities
    
    
    40
    %
    
    
    41
    %
    
    
    37
    %
    
    
    2.34
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Estimated future payments:2007
    
    $
    15.52008
    
    
    14.22009
    
    
    15.72010
    
    
    17.42011
    
    
    18.4Thereafter
    
    
    130.3
 BFI Post Retirement Healthcare Plan
  Supplemental executive retirement plan
   92




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2006
    
    
    2005Projected benefit obligation at beginning of period
    
    $
    11.2
    
    
    $
    15.5Service cost
    
    
    0.9
    
    
    
    1.0Interest cost
    
    
    0.7
    
    
    
    0.7Amendments
    
    
    
    
    
    
    0.6Curtailment loss
    
    
    (1.5
    )
    
    
    (2.5
    )Actuarial gain (loss)
    
    
    0.9
    
    
    
    (3.7
    )Benefits paid
    
    
    (0.4
    )
    
    
    (0.4
    )Projected benefit obligation at end of period
    
    $
    11.8
    
    
    $
    11.2Fair value of plan assets at end of period
    
    $
    
    
    
    $
    
  2006
    
    2005Funded status
    
    $
    (11.8
    )
    
    $
    (11.2
    )Non-current asset
    
    $
    
    
    
    $
    3.5Current liabilities
    
    
    (0.7
    )
    
    
    Non-current liabilities
    
    
    (11.1
    )
    
    
    (9.1
    )
  12/31/06
    
    
    
    
    
    12/31/06
    
    
    
    
    
    12/31/06Balance
    
    AML
    
    Balance
    
    Adjustment
    
    BalancePrior to AML
    
    Adjustment
    
    Post AML
    
    to Initially
    
    Post AML && SFAS 158
    
    Per
    
    Pre-SFAS 158
    
    Apply
    
    SFAS 158Adjustment
    
    SFAS 87
    
    Adjustment
    
    SFAS 158
    
    AdjustmentAccrued pension liability
    
    $
    (11.6
    )
    
    $
    1.2
    
    
    $
    (10.4
    )
    
    $
    (1.4
    )
    
    $
    (11.8
    )Intangible asset
    
    
    3.5
    
    
    
    (0.7
    )
    
    
    2.8
    
    
    
    (2.8
    )
    
    
    Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    1.7AOCI, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    2.5
  2006Net actuarial loss
    
    $
    1.1Prior service cost
    
    
    3.1Total AOCI before tax benefit
    
    $
    4.2
  2006
    
    
    2005
    
    
    2004Service cost
    
    $
    0.9
    
    
    $
    1.0
    
    
    $
    0.9Interest cost
    
    
    0.7
    
    
    
    0.7
    
    
    
    0.9Recognized net actuarial loss (gain)
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    Amortization of prior service cost
    
    
    0.8
    
    
    
    1.5
    
    
    
    2.1Curtailment gain (1)
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.7
    )Net periodic benefit cost
    
    $
    2.5
    
    
    $
    2.2
    
    
    $
    3.2
 
 (1)
    
    The curtailment in 2006 includes a $0.9 million gain related to two participants
leaving the plan offset by a net $0.9 million loss related to a participants early retirement. 93




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   2006
    
    2005
    
    2004Discount rate
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    6.00
    %Average rate of compensation increase
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
  Estimated future payments:2007
    
    $
    0.72008
    
    
    0.72009
    
    
    0.72010
    
    
    0.72011
    
    
    1.1Years 2012  2016
    
    
    5.2
 401(k) plan 
  Long-term incentive plan 
   94




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   9. Preferred Stock
  Series D mandatory convertible preferred stock 
  Applicable Market Value of Common Shares
    
    Conversion RateLess than or equal to $7.90
    
    31.6456:1Between $7.90 and $9.88
    
    31.6456:1 to 25.3165:1Equal to or greater than $9.88
    
    25.3165:1
  Series C mandatory convertible preferred stock 
   95




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Stockholders Equity
   2006
    
    2005
    
    2004Balance at beginning of year
    
    
    331.2
    
    
    
    317.5
    
    
    
    320.1Common stock issued, net
    
    
    34.6
    
    
    
    13.4
    
    
    
    (4.1
    )Stock options and warrants exercised
    
    
    2.1
    
    
    
    0.3
    
    
    
    1.5Balance at end of year
    
    
    367.9
    
    
    
    331.2
    
    
    
    317.5
 11. Stock Plans
 Employee Plans 
   th th
 96




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2005 Non-Employee Director Equity Compensation Plan 
  Stock-based Compensation -
   Year Ended December31, 2006Stock-based compensation expense by type of award(1):Stock options
    
    $
    8.6Restricted stock awards  employees
    
    
    0.5Restricted stock awards  non-employees
    
    
    1.4Total stock-based compensation expense
    
    $
    10.5Tax effect on stock-based compensation expense
    
    
    (3.4
    )Net effect on net income available to common shareholders
    
    $
    7.1Effect on earnings per share:Basic
    
    $
    0.02Diluted
    
    
    0.02
 
 (1)
    
    Included in selling, general and administrative expenses.  Year Ended December 31,2005
    
    
    2004Net income available to common shareholders, as reported
    
    $
    151.8
    
    
    $
    27.7Add: Stock-based compensation expense included in reported
net income available to common shareholders, net of tax
    
    
    5.6
    
    
    
    10.9Less: Total stock-based employee compensation expense
determined under fair value based method, net of tax
    
    
    (10.0
    )
    
    
    (17.9
    )Net income available to common shareholders, pro forma
    
    $
    147.4
    
    
    $
    20.7Basic earnings per share:      As reported
    
    $
    0.46
    
    
    $
    0.09Pro forma
    
    
    0.45
    
    
    
    0.07Diluted earnings per share:    As reported
    
    $
    0.46
    
    
    $
    0.09Pro forma
    
    
    0.45
    
    
    
    0.06
 97




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Valuation Assumptions
  Year Ended December 31,2006
    
    2005
    
    2004Risk free interest rate
    
    
    4.1
    %
    
    
    3.4
    %
    
    
    2.9
    %Expected life (in years)
    
    
    6.6
    
    
    
    5.8
    
    
    
    4.1Dividend rate
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    42.1
    %
    
    
    51.4
    %
    
    
    64.1
    %
  Stock Options -
  Weighted
    
    
    Weighted Average
    
    
    AggregateNumber
    
    
    Average
    
    
    Remaining
    
    
    Intrinsicof Shares
    
    
    Exercise
    
    
    Contractual Term
    
    
    Value(in millions)
    
    
    Price
    
    
    (years)
    
    
    (in millions)(1)Outstanding at January 1, 2006
    
    
    19.8
    
    
    $
    11.57
    
    
    
    
    
    
    $
    33.4Granted
    
    
    3.2
    
    
    
    12.02
    
    
    
    
    
    
    
    2.4Exercised
    
    
    (2.2
    )
    
    
    9.69
    
    
    
    
    
    
    
    (5.6
    )Forfeited or expired
    
    
    (0.9
    )
    
    
    11.90
    
    
    
    
    
    
    
    (1.2
    )Outstanding at December 31, 2006
    
    
    19.9
    
    
    
    11.77
    
    
    
    6.0
    
    
    $
    29.0Exercisable at December 31, 2006
    
    
    13.5
    
    
    
    12.52
    
    
    
    4.5
    
    
    $
    15.1
 
 (1)
    
    Based on our closing common stock price of $12.29 at December 29, 2006.   98




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended December 31,2006
    
    2005
    
    2004Weighted average grant-date fair value per share of stock options granted
    
    $
    5.52
    
    
    $
    4.50
    
    
    $
    5.35Weighted average grant-date fair value per share of stock options vested
    
    
    4.88
    
    
    
    5.56
    
    
    
    5.98
   Number
    
    
    Weightedof Shares
    
    
    Average Grant(in millions)
    
    
    Date Fair ValueNon-vested balance at January 1, 2006
    
    
    5.6
    
    
    $
    4.68Granted
    
    
    3.2
    
    
    
    5.52Vested
    
    
    (1.9
    )
    
    
    4.88Forfeited
    
    
    (0.5
    )
    
    
    5.02Non-vested balance at December 31, 2006
    
    
    6.4
    
    
    
    5.02
 Restricted Stock Awards 
  WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Average
    
    
    Remaining
    
    
    Intrinsicof Shares
    
    
    Grant Date
    
    
    Contractual
    
    
    Value(in millions)
    
    
    Fair Value
    
    
    Term (years)
    
    
    (in millions)(1)Outstanding at January 1, 2006
    
    
    4.9
    
    
    $
    7.13
    
    
    
    
    
    
    $
    60.1Granted
    
    
    0.3
    
    
    
    10.64
    
    
    
    
    
    
    
    3.7Vested
    
    
    (1.4
    )
    
    
    7.29
    
    
    
    
    
    
    
    (17.5
    )Forfeited
    
    
    (0.4
    )
    
    
    7.60
    
    
    
    
    
    
    
    (4.1
    )Outstanding at December 31, 2006
    
    
    3.4
    
    
    
    7.32
    
    
    
    3.3
    
    
    $
    42.2
 
 (1)
    
    Based on our closing common stock price of $12.29 at December 29, 2006.    Non-Employee Director Stock Awards
  99




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  12. Net Income Per Common Share
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Basic earnings per share computation:Income from continuing operations
    
    $
    160.9
    
    
    $
    193.8
    
    
    $
    58.0Less: dividends on preferred stock
    
    
    42.9
    
    
    
    52.0
    
    
    
    21.6Income from continuing operations available to
common shareholders
    
    $
    118.0
    
    
    $
    141.8
    
    
    $
    36.4Weighted average common shares outstanding
    
    
    356.7
    
    
    
    326.9
    
    
    
    315.0Basic earnings per share from continuing operations
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.12Diluted earnings per share computation:Income from continuing operations
    
    $
    160.9
    
    
    $
    193.8
    
    
    $
    58.0Less: dividends on preferred stock
    
    
    42.9
    
    
    
    52.0
    
    
    
    21.6Income from continuing operations available to
common shareholders
    
    $
    118.0
    
    
    $
    141.8
    
    
    $
    36.4Weighted average common shares outstanding
    
    
    356.7
    
    
    
    326.9
    
    
    
    315.0Dilutive effect of stock, stock options, warrants
and contingently issuable shares
    
    
    2.6
    
    
    
    3.2
    
    
    
    4.7Weighted average common and common equivalent shares
outstanding
    
    
    359.3
    
    
    
    330.1
    
    
    
    319.7Diluted earnings per share from continuing operations
    
    $
    0.33
    
    
    $
    0.43
    
    
    $
    0.11
  Year Ended December 31,2006
    
    2005
    
    2004Series C preferred stock
    
    
    
    
    
    
    38.6
    
    
    
    38.2Series D preferred stock
    
    
    60.8
    
    
    
    54.6
    
    
    
    Stock options
    
    
    10.7
    
    
    
    18.1
    
    
    
    9.8Senior subordinated convertible debentures
    
    
    11.3
    
    
    
    11.3
    
    
    
    7.8
 13. Income Taxes
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Current federal tax provision
    
    $
    7.8
    
    
    $
    2.7
    
    
    $
    1.4Current state tax provision
    
    
    24.4
    
    
    
    11.3
    
    
    
    23.9Deferred tax provision
    
    
    206.3
    
    
    
    119.9
    
    
    
    46.9Total
    
    $
    238.5
    
    
    $
    133.9
    
    
    $
    72.2
 100




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended December 31,2006
    
    
    2005
    
    
    2004Federal statutory tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Consolidated state taxes, net of federal benefit
    
    
    6.3
    
    
    
    3.3
    
    
    
    10.1Interest on tax contingencies, net of tax benefit
    
    
    9.8
    
    
    
    4.0
    
    
    
    9.6Tax basis in stock of assets held for sale
    
    
    
    
    
    
    (7.8
    )
    
    
    Valuation allowance on state net operating losses
    
    
    2.4
    
    
    
    3.4
    
    
    
    (4.2
    )Prior year state matters
    
    
    3.4
    
    
    
    
    
    
    
    Other
    
    
    2.8
    
    
    
    3.0
    
    
    
    5.0Effective tax rate
    
    
    59.7
    %
    
    
    40.9
    %
    
    
    55.5
    %
   December 31,2006
    
    
    2005Deferred tax liabilities relating to:Goodwill
    
    $
    (418.4
    )
    
    $
    (370.8
    )Property, equipment and other
    
    
    (176.5
    )
    
    
    (352.0
    )Total deferred tax liabilities
    
    
    (594.9
    )
    
    
    (722.8
    )Deferred tax assets relating to:Environmental, capping, closure and post-closure reserves
    
    
    151.8
    
    
    
    186.0Other reserves
    
    
    73.6
    
    
    
    52.7Capital loss carryforward
    
    
    30.5
    
    
    
    Tax effect of capital loss on assets held for sale
    
    
    
    
    
    
    34.2Tax effect of ordinary loss on assets held for sale
    
    
    
    
    
    
    14.7Net operating loss and minimum tax credit carryforwards
    
    
    271.6
    
    
    
    339.5Valuation allowance
    
    
    (117.4
    )
    
    
    (116.5
    )Total deferred tax asset
    
    
    410.1
    
    
    
    510.6Net deferred tax liability
    
    $
    (184.8
    )
    
    $
    (212.2
    )
    101




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         Coltec v. United States
 102




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Coltec
    14. Commitments and Contingencies
 Litigation 
 , Income Taxes
  103




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 th
      104




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Royalties 
  Lease agreements 
  2007
    
    $
    35.92008
    
    
    33.72009
    
    
    27.82010
    
    
    21.62011
    
    
    17.2Thereafter
    
    
    91.8Total
    
    $
    228.0
  Employment agreements 
   105




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Financial assurances 
   LandfillClosure/
    
    
    Contract
    
    
    Risk/Casualty
    
    
    Collateral forPost-Closure
    
    
    Performance
    
    
    Insurance
    
    
    Obligations
    
    
    TotalInsurance policies
    
    $
    661.9
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    661.9Surety bonds
    
    
    597.4
    
    
    
    510.0
    
    
    
    
    
    
    
    
    
    
    
    1,107.4Trust deposits
    
    
    83.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83.4Letters of credit (1)
    
    
    456.4
    
    
    
    58.7
    
    
    
    273.5
    
    
    
    125.1
    
    
    
    913.7Total
    
    $
    1,799.1
    
    
    $
    568.7
    
    
    $
    273.5
    
    
    $
    125.1
    
    
    $
    2,766.4
 
 (1)
    
    These amounts were issued under the 2005 Revolver, the Incremental Revolving Letter
of Credit and the Institutional Letter of Credit Facility under our 2005 Credit Facility.  Off-balance sheet arrangements 
  Guarantees 
  Accounting for Contingencies
 106




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 15. Related Party Transactions
  16. Segment Reporting
  Organization and Summary of Significant
Accounting Policies
  Operating IncomeBeforeDepreciation and
    
    
    Depreciation and
    
    
    CapitalRevenues
    
    
    Amortization (1)
    
    
    Amortization
    
    
    Expenditures
    
    
    Total Assets2006:Midwestern (2)
    
    $
    1,236.4
    
    
    $
    359.7
    
    
    $
    132.1
    
    
    $
    140.3
    
    
    $
    3,375.4Northeastern
    
    
    1,256.6
    
    
    
    337.2
    
    
    
    120.2
    
    
    
    140.2
    
    
    
    2,634.1Southeastern
    
    
    1,059.7
    
    
    
    316.8
    
    
    
    99.4
    
    
    
    107.5
    
    
    
    2,377.0Southwestern
    
    
    991.6
    
    
    
    288.1
    
    
    
    106.4
    
    
    
    110.8
    
    
    
    2,290.9Western
    
    
    1,351.2
    
    
    
    440.9
    
    
    
    104.3
    
    
    
    143.3
    
    
    
    2,484.7Total reportable segments
    
    
    5,895.5
    
    
    
    
    
    
    
    562.4
    
    
    
    642.1
    
    
    
    13,162.1Other (3)
    
    
    133.3
    
    
    
    
    
    
    
    6.9
    
    
    
    27.2
    
    
    
    648.9Total per financial statements
    
    $
    6,028.8
    
    
    
    
    
    
    $
    569.3
    
    
    $
    669.3
    
    
    $
    13,811.02005:Midwestern
    
    $
    1,201.5
    
    
    $
    343.7
    
    
    $
    131.6
    
    
    $
    152.5
    
    
    $
    3,380.5Northeastern
    
    
    1,247.2
    
    
    
    318.9
    
    
    
    116.2
    
    
    
    117.3
    
    
    
    2,633.3Southeastern
    
    
    997.1
    
    
    
    280.4
    
    
    
    97.8
    
    
    
    97.5
    
    
    
    2,362.0Southwestern (2)
    
    
    939.6
    
    
    
    262.7
    
    
    
    100.4
    
    
    
    143.0
    
    
    
    2,287.4Western
    
    
    1,265.4
    
    
    
    413.6
    
    
    
    100.2
    
    
    
    144.8
    
    
    
    2,422.1Total reportable segments
    
    
    5,650.8
    
    
    
    
    
    
    
    546.2
    
    
    
    655.1
    
    
    
    13,085.3Other (3)
    
    
    84.0
    
    
    
    
    
    
    
    8.2
    
    
    
    40.8
    
    
    
    576.0Total per financial statements
    
    $
    5,734.8
    
    
    
    
    
    
    $
    554.4
    
    
    $
    695.9
    
    
    $
    13,661.32004:Midwestern
    
    $
    1,167.8
    
    
    $
    367.6
    
    
    $
    146.0
    
    
    $
    144.0
    
    
    $
    3,356.0Northeastern
    
    
    1,252.8
    
    
    
    319.6
    
    
    
    118.8
    
    
    
    101.8
    
    
    
    2,636.8Southeastern
    
    
    953.4
    
    
    
    295.2
    
    
    
    103.3
    
    
    
    81.9
    
    
    
    2,336.6Southwestern
    
    
    884.6
    
    
    
    260.0
    
    
    
    79.0
    
    
    
    97.5
    
    
    
    2,202.2Western
    
    
    1,191.6
    
    
    
    400.2
    
    
    
    96.6
    
    
    
    146.5
    
    
    
    2,367.8Total reportable segments
    
    
    5,450.2
    
    
    
    
    
    
    
    543.7
    
    
    
    571.7
    
    
    
    12,899.4Other (3)
    
    
    63.8
    
    
    
    
    
    
    
    15.6
    
    
    
    11.2
    
    
    
    639.8Total per financial statements
    
    $
    5,514.0
    
    
    
    
    
    
    $
    559.3
    
    
    $
    582.9
    
    
    $
    13,539.2
 107




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 (1)
    
    See following table for reconciliation to income from continuing operations
before income taxes and minority interest per the consolidated statements of operations.(2)
    
    Operating income before depreciation and amortization for 2006 includes $8.5 million
($6.5 million in Midwestern and $2.0 million in Southwestern) of asset impairments relating to
management decisions to discontinue the operations or development of certain landfill
facilities. The impairment charge is included in Loss from divestitures and asset
impairments on the consolidated statement of operations.(3)
    
    Amounts relate primarily to our subsidiaries that provide services throughout the
organization and not on a regional basis.  Year Ended December 31,2006
    
    
    2005
    
    
    2004Total operating income before
depreciation and amortization
for reportable segments
    
    $
    1,742.7
    
    
    $
    1,619.3
    
    
    $
    1,642.6Depreciation and amortization
    
    
    (569.3
    )
    
    
    (554.4
    )
    
    
    (559.3
    )Interest expense
    
    
    (567.9
    )
    
    
    (588.0
    )
    
    
    (758.9
    )Other (1)
    
    
    (206.0
    )
    
    
    (149.4
    )
    
    
    (196.9
    )Income from continuing
operations before income taxes
and minority interest
    
    $
    399.5
    
    
    $
    327.5
    
    
    $
    127.5
 
 (1)
    
    Amounts relate primarily to our subsidiaries which provide services
throughout the organization and not on a regional basis including national accounts where work
has been subcontracted. Amounts for 2006 include $7.6 million from loss on divestitures, $1.2
million of asset impairment relating to managements decision to discontinue operations at a
landfill facility, and $5.2 million impairment charge related to
the relocation of our operations support
center. These charges are reported on the consolidated statement of operations as a part of
Loss from divestitures and asset impairments.  Year Ended December 31,2006
    
    
    2005(1)
    
    
    2004(1)CollectionResidential
    
    $
    1,205.2
    
    
    $
    1,188.1
    
    
    $
    1,164.5Commercial
    
    
    1,502.0
    
    
    
    1,398.0
    
    
    
    1,349.9Roll-off (2)
    
    
    1,333.3
    
    
    
    1,251.3
    
    
    
    1,190.4Recycling
    
    
    202.4
    
    
    
    198.4
    
    
    
    205.7Total Collection
    
    
    4,242.9
    
    
    
    4,035.8
    
    
    
    3,910.5DisposalLandfill
    
    
    850.7
    
    
    
    812.2
    
    
    
    763.7Transfer
    
    
    424.4
    
    
    
    422.5
    
    
    
    420.0Total Disposal
    
    
    1,275.1
    
    
    
    1,234.7
    
    
    
    1,183.7Recycling  Commodity
    
    
    217.5
    
    
    
    225.6
    
    
    
    235.4Other (3)
    
    
    293.3
    
    
    
    238.7
    
    
    
    184.4Total Revenues
    
    $
    6,028.8
    
    
    $
    5,734.8
    
    
    $
    5,514.0
 
 (1)
    
    The revenue mix for 2005 and 2004 reflects the reclassification of transportation
revenue out of collection, disposal and recycling commodity revenue to other revenue.(2)
    
    Consists of revenue generated from commercial, industrial and residential customers
from waste collected in roll-off containers that are loaded onto collection vehicles.(3)
    
    Consists primarily of revenue from national accounts where the work has been
subcontracted, revenue generated from transporting waste via railway and revenue from liquid
waste. 108




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ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  OperatingIncome (Loss)Before
    
    
    DepreciationDepreciation and
    
    
    and
    
    
    CapitalRevenues
    
    
    Amortization
    
    
    Amortization
    
    
    Expenditures
    
    
    Total Assets2005Northeastern
    
    $
    
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    
    
    
    $
    Southeastern
    
    
    
    
    
    
    2.6
    
    
    
    
    
    
    
    
    
    
    
    Total reportable segments
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2004:Northeastern
    
    $
    
    
    
    $
    (0.4
    )
    
    $
    
    
    
    $
    
    
    
    $
    Southeastern
    
    
    13.4
    
    
    
    (1.7
    )
    
    
    0.7
    
    
    
    
    
    
    
    Total reportable segments
    
    $
    13.4
    
    
    
    
    
    
    $
    0.7
    
    
    $
    
    
    
    $
    
 17. Selected Quarterly Financial Data (unaudited)
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter2006Revenues
    
    $
    1,438.7
    
    
    $
    1,540.6
    
    
    $
    1,555.2
    
    
    $
    1,494.3Income from continuing operations (1)
    
    
    41.2
    
    
    
    37.6
    
    
    
    72.3
    
    
    
    9.8Net income available to common shareholders (1)
    
    
    26.5
    
    
    
    28.2
    
    
    
    62.9
    
    
    
    0.4Basic earnings per common share available to common
shareholders:Income from continuing operations
    
    
    0.08
    
    
    
    0.08
    
    
    
    0.17
    
    
    
    0.00Net income
    
    
    0.08
    
    
    
    0.08
    
    
    
    0.17
    
    
    
    0.00Diluted earnings per common share available to common
shareholders:Income from continuing operations
    
    
    0.08
    
    
    
    0.08
    
    
    
    0.17
    
    
    
    0.00Net income
    
    
    0.08
    
    
    
    0.08
    
    
    
    0.17
    
    
    
    0.002005Revenues
    
    $
    1,341.3
    
    
    $
    1,448.6
    
    
    $
    1,476.9
    
    
    $
    1,468.0Income from continuing operations (1)
    
    
    24.7
    
    
    
    53.0
    
    
    
    49.2
    
    
    
    66.9Net income available to common shareholders (1)
    
    
    17.0
    
    
    
    39.3
    
    
    
    43.6
    
    
    
    51.9Basic earnings per common share available to common
shareholders:Income from continuing operations
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.10
    
    
    
    0.16Net income
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.13
    
    
    
    0.16Diluted earnings per common share available to common
shareholders:Income from continuing operations
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.10
    
    
    
    0.15Net income
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.13
    
    
    
    0.15
 
 (1)
    
    The fourth quarter of 2006 included income tax of $58 million consisting of: $21
million of interest charges on previously recorded liabilities currently under review by the
applicable taxing authorities, $14 million in adjustments relating to state tax matters
attributable to prior years, a $12 million increase in our valuation allowance for state net
operating loss carry-forwards, and $11 million relating primarily to adjustments of state
income taxes. The first quarter of 2005 included $25.5 million of income tax benefit related
to a divestiture pending at December 31, 2005 that was completed in February 2006. The fourth
quarter of 2005 included a $12.6 million income tax benefit primarily driven by state
income taxes and provision to return adjustments. 109




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 18. Condensed Consolidating Financial Statements
  CONDENSED CONSOLIDATING BALANCE SHEETS
(in millions)
 December 31, 2006Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    68.3
    
    
    $
    25.8
    
    
    $
    
    
    
    $
    94.1Accounts receivable, net
    
    
    
    
    
    
    
    
    
    
    331.0
    
    
    
    370.3
    
    
    
    
    
    
    
    701.3Prepaid and other current assets
    
    
    
    
    
    
    0.1
    
    
    
    55.3
    
    
    
    63.7
    
    
    
    (39.3
    )
    
    
    79.8Deferred income taxes, net
    
    
    
    
    
    
    
    
    
    
    163.0
    
    
    
    9.5
    
    
    
    
    
    
    
    172.5Total current assets
    
    
    
    
    
    
    0.1
    
    
    
    617.6
    
    
    
    469.3
    
    
    
    (39.3
    )
    
    
    1,047.7Property and equipment, net
    
    
    
    
    
    
    
    
    
    
    4,332.6
    
    
    
    21.4
    
    
    
    
    
    
    
    4,354.0Goodwill
    
    
    
    
    
    
    
    
    
    
    8,053.7
    
    
    
    72.4
    
    
    
    
    
    
    
    8,126.1Investment in subsidiaries
    
    
    2,334.6
    
    
    
    14,898.3
    
    
    
    423.6
    
    
    
    
    
    
    
    (17,656.5
    )
    
    
    Other assets, net
    
    
    5.6
    
    
    
    81.1
    
    
    
    176.9
    
    
    
    1,217.6
    
    
    
    (1,198.0
    )
    
    
    283.2Total assets
    
    $
    2,340.2
    
    
    $
    14,979.5
    
    
    $
    13,604.4
    
    
    $
    1,780.7
    
    
    $
    (18,893.8
    )
    
    $
    13,811.0LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities Current portion of long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    6.6
    
    
    $
    230.0
    
    
    $
    
    
    
    $
    236.6Accounts payable
    
    
    
    
    
    
    
    
    
    
    497.1
    
    
    
    5.7
    
    
    
    
    
    
    
    502.8Accrued closure, post-closure and
environmental costs
    
    
    
    
    
    
    
    
    
    
    20.7
    
    
    
    75.1
    
    
    
    
    
    
    
    95.8Accrued interest
    
    
    2.0
    
    
    
    83.6
    
    
    
    58.9
    
    
    
    1.7
    
    
    
    (39.3
    )
    
    
    106.9Other accrued liabilities
    
    
    88.4
    
    
    
    6.1
    
    
    
    41.1
    
    
    
    220.9
    
    
    
    
    
    
    
    356.5Unearned revenue
    
    
    
    
    
    
    
    
    
    
    225.3
    
    
    
    8.8
    
    
    
    
    
    
    
    234.1Total current liabilities
    
    
    90.4
    
    
    
    89.7
    
    
    
    849.7
    
    
    
    542.2
    
    
    
    (39.3
    )
    
    
    1,532.7Long-term debt, less current portion
    
    
    230.0
    
    
    
    5,601.0
    
    
    
    843.0
    
    
    
    
    
    
    
    
    
    
    
    6,674.0Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    362.1
    
    
    
    (4.8
    )
    
    
    
    
    
    
    357.3Accrued closure, post-closure and
environmental costs
    
    
    
    
    
    
    
    
    
    
    342.3
    
    
    
    427.2
    
    
    
    
    
    
    
    769.5Due to/(from) parent
    
    
    (1,598.7
    )
    
    
    6,988.2
    
    
    
    (5,339.8
    )
    
    
    (49.7
    )
    
    
    
    
    
    
    Other long-term obligations
    
    
    19.6
    
    
    
    
    
    
    
    1,994.7
    
    
    
    63.4
    
    
    
    (1,199.1
    )
    
    
    878.6Stockholders equity
    
    
    3,598.9
    
    
    
    2,300.6
    
    
    
    14,552.4
    
    
    
    802.4
    
    
    
    (17,655.4
    )
    
    
    3,598.9Total liabilities and
stockholders equity
    
    $
    2,340.2
    
    
    $
    14,979.5
    
    
    $
    13,604.4
    
    
    $
    1,780.7
    
    
    $
    (18,893.8
    )
    
    $
    13,811.0
 110




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING BALANCE SHEETS
(in millions)
 December 31, 2005Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    53.1
    
    
    $
    3.0
    
    
    $
    
    
    
    $
    56.1Accounts receivable, net
    
    
    
    
    
    
    
    
    
    
    302.6
    
    
    
    387.9
    
    
    
    
    
    
    
    690.5Prepaid and other current assets
    
    
    
    
    
    
    0.1
    
    
    
    52.2
    
    
    
    67.4
    
    
    
    (39.2
    )
    
    
    80.5Deferred income taxes, net
    
    
    
    
    
    
    
    
    
    
    87.4
    
    
    
    5.9
    
    
    
    
    
    
    
    93.3Total current assets
    
    
    
    
    
    
    0.1
    
    
    
    495.3
    
    
    
    464.2
    
    
    
    (39.2
    )
    
    
    920.4Property and equipment, net
    
    
    
    
    
    
    1.4
    
    
    
    4,244.8
    
    
    
    27.3
    
    
    
    
    
    
    
    4,273.5Goodwill
    
    
    
    
    
    
    
    
    
    
    8,111.8
    
    
    
    72.4
    
    
    
    
    
    
    
    8,184.2Investment in subsidiaries
    
    
    2,242.9
    
    
    
    14,469.2
    
    
    
    396.5
    
    
    
    
    
    
    
    (17,108.6
    )
    
    
    Other assets, net
    
    
    5.8
    
    
    
    89.0
    
    
    
    45.2
    
    
    
    1,202.0
    
    
    
    (1,058.8
    )
    
    
    283.2Total assets
    
    $
    2,248.7
    
    
    $
    14,559.7
    
    
    $
    13,293.6
    
    
    $
    1,765.9
    
    
    $
    (18,206.6
    )
    
    $
    13,661.3LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities Current portion of long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    8.5
    
    
    $
    230.0
    
    
    $
    
    
    
    $
    238.5Accounts payable
    
    
    
    
    
    
    0.1
    
    
    
    559.3
    
    
    
    5.4
    
    
    
    
    
    
    
    564.8Accrued closure, post-closure and
environmental costs
    
    
    
    
    
    
    
    
    
    
    20.7
    
    
    
    75.1
    
    
    
    
    
    
    
    95.8Accrued interest
    
    
    2.1
    
    
    
    93.6
    
    
    
    58.8
    
    
    
    1.2
    
    
    
    (39.2
    )
    
    
    116.5Other accrued liabilities
    
    
    90.2
    
    
    
    9.3
    
    
    
    7.6
    
    
    
    223.4
    
    
    
    
    
    
    
    330.5Unearned revenue
    
    
    
    
    
    
    
    
    
    
    222.9
    
    
    
    6.5
    
    
    
    
    
    
    
    229.4Total current liabilities
    
    
    92.3
    
    
    
    103.0
    
    
    
    877.8
    
    
    
    541.6
    
    
    
    (39.2
    )
    
    
    1,575.5Long-term debt, less current
portion
    
    
    230.0
    
    
    
    5,779.8
    
    
    
    843.4
    
    
    
    
    
    
    
    
    
    
    
    6,853.2Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    315.5
    
    
    
    (10.0
    )
    
    
    
    
    
    
    305.5Accrued closure, post-closure and
environmental costs
    
    
    
    
    
    
    
    
    
    
    348.1
    
    
    
    448.7
    
    
    
    
    
    
    
    796.8Due to/(from) parent
    
    
    (1,531.6
    )
    
    
    6,457.5
    
    
    
    (4,893.6
    )
    
    
    (32.3
    )
    
    
    
    
    
    
    Other long-term obligations
    
    
    18.6
    
    
    
    
    
    
    
    1,659.8
    
    
    
    72.3
    
    
    
    (1,059.8
    )
    
    
    690.9Stockholders equity
    
    
    3,439.4
    
    
    
    2,219.4
    
    
    
    14,142.6
    
    
    
    745.6
    
    
    
    (17,107.6
    )
    
    
    3,439.4Total liabilities and stockholders
equity
    
    $
    2,248.7
    
    
    $
    14,559.7
    
    
    $
    13,293.6
    
    
    $
    1,765.9
    
    
    $
    (18,206.6
    )
    
    $
    13,661.3
 111




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
 Year Ended December 31, 2006Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    5,806.7
    
    
    $
    222.1
    
    
    $
    
    
    
    $
    6,028.8Cost of operations
    
    
    
    
    
    
    (0.2
    )
    
    
    3,685.4
    
    
    
    189.1
    
    
    
    
    
    
    
    3,874.3Selling, general and administrative
expenses
    
    
    20.9
    
    
    
    
    
    
    
    560.9
    
    
    
    13.5
    
    
    
    
    
    
    
    595.3Depreciation and amortization
    
    
    
    
    
    
    1.0
    
    
    
    560.0
    
    
    
    8.3
    
    
    
    
    
    
    
    569.3Loss from divestitures and asset
impairments
    
    
    
    
    
    
    
    
    
    
    22.5
    
    
    
    
    
    
    
    
    
    
    
    22.5Operating income (loss)
    
    
    (20.9
    )
    
    
    (0.8
    )
    
    
    977.9
    
    
    
    11.2
    
    
    
    
    
    
    
    967.4Equity in earnings (losses) of
subsidiaries
    
    
    87.1
    
    
    
    427.4
    
    
    
    33.3
    
    
    
    
    
    
    
    (547.8
    )
    
    
    Interest income (expense) and other
    
    
    (11.0
    )
    
    
    (473.4
    )
    
    
    (86.3
    )
    
    
    2.8
    
    
    
    
    
    
    
    (567.9
    )Intercompany interest income
(expense)
    
    
    140.9
    
    
    
    (104.0
    )
    
    
    (115.1
    )
    
    
    78.2
    
    
    
    
    
    
    
    Management fee income (expense)
    
    
    8.2
    
    
    
    
    
    
    
    (6.6
    )
    
    
    (1.6
    )
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    204.3
    
    
    
    (150.8
    )
    
    
    803.2
    
    
    
    90.6
    
    
    
    (547.8
    )
    
    
    399.5Income tax (expense) benefit
    
    
    (43.4
    )
    
    
    232.0
    
    
    
    (393.4
    )
    
    
    (33.7
    )
    
    
    
    
    
    
    (238.5
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )Net income
    
    
    160.9
    
    
    
    81.2
    
    
    
    409.8
    
    
    
    56.8
    
    
    
    (547.8
    )
    
    
    160.9Dividends on preferred stock
    
    
    (42.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42.9
    )Net income available to
common shareholders
    
    $
    118.0
    
    
    $
    81.2
    
    
    $
    409.8
    
    
    $
    56.8
    
    
    $
    (547.8
    )
    
    $
    118.0
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
 Year Ended December 31, 2005Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    5,518.8
    
    
    $
    216.0
    
    
    $
    
    
    
    $
    5,734.8Cost of operations
    
    
    
    
    
    
    (0.2
    )
    
    
    3,540.3
    
    
    
    205.6
    
    
    
    
    
    
    
    3,745.7Selling, general and administrative
expenses
    
    
    22.1
    
    
    
    
    
    
    
    483.6
    
    
    
    13.5
    
    
    
    
    
    
    
    519.2Depreciation and amortization
    
    
    
    
    
    
    0.7
    
    
    
    546.7
    
    
    
    7.0
    
    
    
    
    
    
    
    554.4Operating income (loss)
    
    
    (22.1
    )
    
    
    (0.5
    )
    
    
    948.2
    
    
    
    (10.1
    )
    
    
    
    
    
    
    915.5Equity in earnings (losses) of
subsidiaries
    
    
    148.0
    
    
    
    540.4
    
    
    
    25.6
    
    
    
    
    
    
    
    (714.0
    )
    
    
    Interest income (expense) and other
    
    
    (10.9
    )
    
    
    (495.5
    )
    
    
    (87.7
    )
    
    
    6.1
    
    
    
    
    
    
    
    (588.0
    )Intercompany interest income
(expense)
    
    
    122.1
    
    
    
    (111.7
    )
    
    
    (87.1
    )
    
    
    76.7
    
    
    
    
    
    
    
    Management fee income (expense)
    
    
    5.0
    
    
    
    
    
    
    
    (3.5
    )
    
    
    (1.5
    )
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    242.1
    
    
    
    (67.3
    )
    
    
    795.5
    
    
    
    71.2
    
    
    
    (714.0
    )
    
    
    327.5Income tax (expense) benefit
    
    
    (38.3
    )
    
    
    243.1
    
    
    
    (310.4
    )
    
    
    (28.3
    )
    
    
    
    
    
    
    (133.9
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2Net income from continuing
operations
    
    
    203.8
    
    
    
    175.8
    
    
    
    485.1
    
    
    
    43.1
    
    
    
    (714.0
    )
    
    
    193.8Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    10.8Cumulative effect of accounting
change, net of tax
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    
    
    
    
    
    
    
    
    (0.8
    )Net income
    
    
    203.8
    
    
    
    175.8
    
    
    
    495.1
    
    
    
    43.1
    
    
    
    (714.0
    )
    
    
    203.8Dividends on preferred stock
    
    
    (52.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52.0
    )Net income available to
common shareholders
    
    $
    151.8
    
    
    $
    175.8
    
    
    $
    495.1
    
    
    $
    43.1
    
    
    $
    (714.0
    )
    
    $
    151.8
 112




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
 Year Ended December 31, 2004Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    5,292.5
    
    
    $
    221.5
    
    
    $
    
    
    
    $
    5,514.0Cost of operations
    
    
    
    
    
    
    (0.3
    )
    
    
    3,333.8
    
    
    
    181.1
    
    
    
    
    
    
    
    3,514.6Selling, general and administrative
expenses
    
    
    42.5
    
    
    
    
    
    
    
    468.1
    
    
    
    43.1
    
    
    
    
    
    
    
    553.7Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    551.1
    
    
    
    8.2
    
    
    
    
    
    
    
    559.3Operating income (loss)
    
    
    (42.5
    )
    
    
    0.3
    
    
    
    939.5
    
    
    
    (10.9
    )
    
    
    
    
    
    
    886.4Equity in earnings (losses) of
subsidiaries
    
    
    28.7
    
    
    
    485.6
    
    
    
    28.3
    
    
    
    
    
    
    
    (542.6
    )
    
    
    Interest income (expense) and other
    
    
    (7.8
    )
    
    
    (669.2
    )
    
    
    (87.9
    )
    
    
    6.0
    
    
    
    
    
    
    
    (758.9
    )Intercompany interest income
(expense)
    
    
    84.9
    
    
    
    (54.1
    )
    
    
    (108.5
    )
    
    
    77.7
    
    
    
    
    
    
    
    Management fee income (expense)
    
    
    5.0
    
    
    
    
    
    
    
    (3.6
    )
    
    
    (1.4
    )
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    68.3
    
    
    
    (237.4
    )
    
    
    767.8
    
    
    
    71.4
    
    
    
    (542.6
    )
    
    
    127.5Income tax (expense) benefit
    
    
    (19.0
    )
    
    
    291.9
    
    
    
    (315.6
    )
    
    
    (29.5
    )
    
    
    
    
    
    
    (72.2
    )Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.7
    
    
    
    
    
    
    
    2.7Net income from continuing
operations
    
    
    49.3
    
    
    
    54.5
    
    
    
    452.2
    
    
    
    44.6
    
    
    
    (542.6
    )
    
    
    58.0Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (8.7
    )
    
    
    
    
    
    
    
    
    
    
    (8.7
    )Net income
    
    
    49.3
    
    
    
    54.5
    
    
    
    443.5
    
    
    
    44.6
    
    
    
    (542.6
    )
    
    
    49.3Dividends on preferred stock
    
    
    (21.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.6
    )Net income available to
common shareholders
    
    $
    27.7
    
    
    $
    54.5
    
    
    $
    443.5
    
    
    $
    44.6
    
    
    $
    (542.6
    )
    
    $
    27.7
 113




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(in millions)
 Year Ended December 31, 2006Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash (used for) provided by operating
activities from continuing operations
    
    $
    (19.9
    )
    
    $
    (524.0
    )
    
    $
    1,414.5
    
    
    $
    51.0
    
    
    $
    
    
    
    $
    921.6Investing activities Proceeds from divestitures (cost
of acquisitions), net of cash
divested/acquired
    
    
    
    
    
    
    
    
    
    
    51.1
    
    
    
    
    
    
    
    
    
    
    
    51.1Proceeds from sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    22.3
    
    
    
    0.1
    
    
    
    
    
    
    
    22.4Capital expenditures, excluding
acquisitions
    
    
    
    
    
    
    
    
    
    
    (661.9
    )
    
    
    (7.4
    )
    
    
    
    
    
    
    (669.3
    )Capitalized interest
    
    
    
    
    
    
    
    
    
    
    (17.6
    )
    
    
    
    
    
    
    
    
    
    
    (17.6
    )Change in deferred acquisition
costs, notes receivable and other
    
    
    
    
    
    
    
    
    
    
    4.6
    
    
    
    
    
    
    
    
    
    
    
    4.6Cash used for investing activities
from continuing operations
    
    
    
    
    
    
    
    
    
    
    (601.5
    )
    
    
    (7.3
    )
    
    
    
    
    
    
    (608.8
    )Financing activities Proceeds from long-term debt,
net of issuance costs
    
    
    
    
    
    
    1,200.2
    
    
    
    0.1
    
    
    
    39.0
    
    
    
    
    
    
    
    1,239.3Payments of long-term debt
    
    
    
    
    
    
    (1,390.9
    )
    
    
    (8.5
    )
    
    
    (39.0
    )
    
    
    
    
    
    
    (1,438.4
    )Payments of preferred stock
dividends
    
    
    (48.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48.3
    )Net change in disbursement account
    
    
    
    
    
    
    
    
    
    
    (47.3
    )
    
    
    
    
    
    
    
    
    
    
    (47.3
    )Net proceeds from sale of common
stock, exercise of stock options and
other
    
    
    19.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19.9Intercompany between issuer
and subsidiaries
    
    
    48.3
    
    
    
    714.7
    
    
    
    (742.1
    )
    
    
    (20.9
    )
    
    
    
    
    
    
    Cash provided by (used for) financing
activities from continuing operations
    
    
    19.9
    
    
    
    524.0
    
    
    
    (797.8
    )
    
    
    (20.9
    )
    
    
    
    
    
    
    (274.8
    )Increase in cash and cash
equivalents
    
    
    
    
    
    
    
    
    
    
    15.2
    
    
    
    22.8
    
    
    
    
    
    
    
    38.0Cash and cash equivalents,
beginning of year
    
    
    
    
    
    
    
    
    
    
    53.1
    
    
    
    3.0
    
    
    
    
    
    
    
    56.1Cash and cash equivalents, end of
year
    
    $
    
    
    
    $
    
    
    
    $
    68.3
    
    
    $
    25.8
    
    
    $
    
    
    
    $
    94.1
 114




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(in millions)
 Year Ended December 31, 2005Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash (used for) provided by operating
activities from continuing operations
    
    $
    (97.5
    )
    
    $
    (1,086.5
    )
    
    $
    1,851.1
    
    
    $
    45.5
    
    
    $
    
    
    
    $
    712.6Investing activities Proceeds from divestitures (cost
of acquisitions), net of cash
divested/acquired
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    0.9Proceeds from sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    20.3
    
    
    
    
    
    
    
    
    
    
    
    20.3Capital expenditures, excluding
acquisitions
    
    
    
    
    
    
    
    
    
    
    (689.7
    )
    
    
    (6.2
    )
    
    
    
    
    
    
    (695.9
    )Capitalized interest
    
    
    
    
    
    
    
    
    
    
    (14.5
    )
    
    
    
    
    
    
    
    
    
    
    (14.5
    )Change in deferred acquisition
costs, notes receivable and other
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    
    
    
    
    
    
    
    
    6.2Cash used for investing activities
from continuing operations
    
    
    
    
    
    
    
    
    
    
    (676.8
    )
    
    
    (6.2
    )
    
    
    
    
    
    
    (683.0
    )Financing activities Net proceeds from sale of Series D
preferred stock
    
    
    580.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    580.8Proceeds from long-term debt,
net of issuance costs
    
    
    
    
    
    
    2,965.1
    
    
    
    
    
    
    
    78.4
    
    
    
    
    
    
    
    3,043.5Payments of long-term debt
    
    
    
    
    
    
    (3,583.9
    )
    
    
    (98.1
    )
    
    
    (58.2
    )
    
    
    
    
    
    
    (3,740.2
    )Payments of preferred stock
dividends
    
    
    (48.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48.9
    )Net change in disbursement account
    
    
    
    
    
    
    
    
    
    
    21.9
    
    
    
    
    
    
    
    
    
    
    
    21.9Net proceeds from sale of common
stock, exercise of stock options and
other
    
    
    97.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97.4Intercompany between issuer
and subsidiaries
    
    
    (531.8
    )
    
    
    1,705.6
    
    
    
    (1,115.7
    )
    
    
    (58.1
    )
    
    
    
    
    
    
    Cash provided by (used for) financing
activities from continuing operations
    
    
    97.5
    
    
    
    1,086.8
    
    
    
    (1,191.9
    )
    
    
    (37.9
    )
    
    
    
    
    
    
    (45.5
    )Cash provided by discontinued
operations
    
    
    
    
    
    
    
    
    
    
    4.0
    
    
    
    
    
    
    
    
    
    
    
    4.0Increase (decrease) in cash and cash
equivalents
    
    
    
    
    
    
    0.3
    
    
    
    (13.6
    )
    
    
    1.4
    
    
    
    
    
    
    
    (11.9
    )Cash and cash equivalents,
beginning of year
    
    
    
    
    
    
    (0.3
    )
    
    
    66.7
    
    
    
    1.6
    
    
    
    
    
    
    
    68.0Cash and cash equivalents, end of
year
    
    $
    
    
    
    $
    
    
    
    $
    53.1
    
    
    $
    3.0
    
    
    $
    
    
    
    $
    56.1
 115




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(in millions)
 Year Ended December 31, 2004Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash (used for) provided by operating
activities from continuing operations
    
    $
    (10.0
    )
    
    $
    (1,089.6
    )
    
    $
    1,714.4
    
    
    $
    35.2
    
    
    $
    
    
    
    $
    650.0Investing activities Proceeds from divestitures (cost
of acquisitions), net of cash
divested/acquired
    
    
    
    
    
    
    
    
    
    
    36.2
    
    
    
    
    
    
    
    
    
    
    
    36.2Proceeds from sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    10.9
    
    
    
    0.1
    
    
    
    
    
    
    
    11.0Capital expenditures, excluding
acquisitions
    
    
    
    
    
    
    
    
    
    
    (573.8
    )
    
    
    (9.1
    )
    
    
    
    
    
    
    (582.9
    )Capitalized interest
    
    
    
    
    
    
    
    
    
    
    (13.0
    )
    
    
    
    
    
    
    
    
    
    
    (13.0
    )Change in deferred acquisition
costs, notes receivable and other
    
    
    
    
    
    
    
    
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    10.8Cash used for investing activities
from continuing operations
    
    
    
    
    
    
    
    
    
    
    (528.9
    )
    
    
    (9.0
    )
    
    
    
    
    
    
    (537.9
    )Financing activities Proceeds from long-term debt, net of
issuance costs
    
    
    236.2
    
    
    
    2,694.9
    
    
    
    
    
    
    
    151.5
    
    
    
    
    
    
    
    3,082.6Payments of long-term debt
    
    
    
    
    
    
    (3,514.5
    )
    
    
    (6.7
    )
    
    
    (87.9
    )
    
    
    
    
    
    
    (3,609.1
    )Payments of preferred stock dividends
    
    
    (21.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.6
    )Net change in disbursement account
    
    
    
    
    
    
    
    
    
    
    53.8
    
    
    
    
    
    
    
    
    
    
    
    53.8Net proceeds from exercise of stock
options and other, net
    
    
    5.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.1Intercompany between issuer
and subsidiaries
    
    
    (209.8
    )
    
    
    1,905.7
    
    
    
    (1,605.3
    )
    
    
    (90.6
    )
    
    
    
    
    
    
    Cash provided by (used for) financing
activities from continuing operations
    
    
    9.9
    
    
    
    1,086.1
    
    
    
    (1,558.2
    )
    
    
    (27.0
    )
    
    
    
    
    
    
    (489.2
    )Cash provided by discontinued
operations
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4Decrease in cash and
cash equivalents
    
    
    (0.1
    )
    
    
    (3.5
    )
    
    
    (372.3
    )
    
    
    (0.8
    )
    
    
    
    
    
    
    (376.7
    )Cash and cash equivalents,
beginning of year
    
    
    0.1
    
    
    
    3.2
    
    
    
    439.0
    
    
    
    2.4
    
    
    
    
    
    
    
    444.7Cash and cash equivalents, end of year
    
    $
    
    
    
    $
    (0.3
    )
    
    $
    66.7
    
    
    $
    1.6
    
    
    $
    
    
    
    $
    68.0
 116




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
 Report on Internal Control over Financial Reporting
  
 Item 9B. Other Information
  
    
    Approved salary increases for certain of our companys management personnel, with such
increases to be effective March 1, 2007. See Item 11, Executive Compensation 
Compensation Discussion and Analysis  The Elements of Our Executive Compensation Program
 Cash Compensation.
    
    Approved the 2007 Senior Management Incentive Plan, which established the 2007
performance goals under our companys Executive Incentive Compensation Plan. See Item 11,
Executive Compensation  Narrative to Summary Compensation Table and Plan-Based Awards
Table  Annual Cash Incentive Compensation.
  117




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##### Table of Contents



Part III
 
 Item 10. Directors and Executive Officers of the Registrant
 Our Board of Directors
  Director Name
    
    Position Held
    
    Age
    
    Director SinceJohn J. Zillmer
    
    Chairman of the Board of Directors
and Chief Executive Officer
    
    
    51
    
    
    
    2005Robert M. Agate
    
    Director
    
    
    70
    
    
    
    2000Charles H. Cotros
    
    Director
    
    
    69
    
    
    
    2004James W. Crownover
    
    Director
    
    
    63
    
    
    
    2002Stephanie Drescher
    
    Director
    
    
    33
    
    
    
    2006William J. Flynn
    
    Director
    
    
    53
    
    
    
    2007David I. Foley
    
    Director
    
    
    39
    
    
    
    2006Dennis R. Hendrix (1)
    
    Director
    
    
    67
    
    
    
    1997Nolan Lehmann
    
    Director
    
    
    62
    
    
    
    1990Steven Martinez
    
    Director
    
    
    38
    
    
    
    2006James A. Quella
    
    Director
    
    
    57
    
    
    
    2005John M. Trani
    
    Director
    
    
    61
    
    
    
    2007
 
 (1)
    
    On August 4, 2006, Mr. Hendrix notified our company that he will not be standing for
re-election as a director when his term expires at the 2007 Annual Meeting of Stockholders. John J. Zillmer
 Robert M. Agate
 Charles H. Cotros
 118




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##### Table of Contents



James W. Crownover
 Stephanie Drescher
 William J. Flynn
 David I. Foley
 Dennis R. Hendrix
 Nolan Lehmann
 Steven Martinez
 James A. Quella
 119




---



##### Table of Contents



John M. Trani
 Voting Agreements Regarding the Election of Directors
     120




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##### Table of Contents



Our Executive Officers
  Name
    
    Age
    
    Position HeldJohn J. Zillmer
    
    
    51
    
    
    Chairman of the Board of Directors and Chief Executive OfficerDonald W. Slager
    
    
    44
    
    
    President and Chief Operating OfficerPeter S. Hathaway
    
    
    51
    
    
    Executive Vice President and Chief Financial OfficerEdward A. Evans
    
    
    54
    
    
    Executive Vice President and Chief Personnel Officer
  Donald W. Slager
 Peter S. Hathaway
 Edward A. Evans
 121




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##### Table of Contents



Lead Director
 
    
    The Board established the position of Lead Director in 2002.
    
    The Lead Director chairs all executive sessions of the Board, separate from management,
and acts as a liaison between the non-management and management members of the Board with
respect to matters addressed in the executive sessions.
    
    The Lead Director acts as a resource to our Chairman and CEO.
    
    The Lead Director further provides our Chairman with input on scheduling of Board
meetings and preparing agendas and materials for Board meetings, and recommends the
retention of advisors and consultants who report directly to the Board, as necessary.
    
    Dennis R. Hendrix served as Lead Director from December 2002 until February 2007.
    
    Nolan Lehmann was appointed Lead Director in February 2007 and currently serves as our
Lead Director.
 Board Committees
  ManagementDevelopment/Name
    
    Executive
    
    Audit
    
    Governance
    
    CompensationRobert M. Agate
    
    
    
    
    
    
    Ö
    *
    
    
    ÖLeon D. Black (1)
    
    
    
    
    
    
    
    
    
    
    ÖCharles H. Cotros
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ÖJames W. Crownover
    
    
    
    
    
    
    Ö
    
    
    
    Ö
    *Stephanie Drescher (2)
    
    
    Ö
    
    
    
    
    
    
    
    
    
    
    
    ÖDavid I. Foley (3)
    
    
    
    
    
    
    
    
    
    
    ÖJoshua J. Harris (4)
    
    
    
    
    
    
    
    
    
    
    ÖDennis R. Hendrix
    
    
    Ö
    
    
    
    Ö
    
    
    
    ÖJ. Tomilson Hill (3)
    
    
    
    
    
    
    
    
    
    
    ÖNolan Lehmann
    
    
    
    
    
    
    Ö
    
    
    
    
    
    
    
    Ö
    *Steven Martinez (1)
    
    
    
    
    
    
    
    
    
    
    ÖJames A. Quella
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ÖAntony P. Ressler (2)
    
    
    Ö
    
    
    
    
    
    
    
    
    
    
    
    ÖJohn J. Zillmer
    
    
    Ö
    *
 
 *
    
    Indicates Chairperson.(1)
    
    On March 16, 2006, the Board elected Mr. Martinez to fill the vacancy created by the
resignation of Mr. Black from the Board on March 16, 2006.(2)
    
    On August 25, 2006, the Board elected Ms. Drescher to fill the vacancy created by
the resignation of Mr. Ressler from the Board on July 28, 2006.(3)
    
    On March 16, 2006, the Board elected Mr. Foley to fill the vacancy created by the
resignation of Mr. Hill from the Board on March 16, 2006.(4)
    
    Mr. Harris resigned from the Board on November 21, 2006. 122




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##### Table of Contents



The Executive Committee
  The Audit Committee
  Audit Committee Financial Expert
  The Governance Committee
  The Management Development/Compensation Committee
 /
 123




---



##### Table of Contents



Composition and Scope of Authority of the Compensation Committee.
  The Role of Management in Determining or Recommending Executive Compensation.
  Role of Compensation Consultants in Determining or Recommending Executive Compensation.
  124




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##### Table of Contents



Code of Ethics
   Section 16(a) Beneficial Ownership Reporting Compliance
   
 Item 11. Executive Compensation
 Compensation Discussion And Analysis
   125




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##### Table of Contents



Objectives of Our Compensation Program
  The Compensation Program for Our NEOs Should Enable Us to Compete for First-Rate Executive Talent. th th th
  Industry Peer Group
    
    Revenue Peer GroupAleris International, Inc.
    
    Automatic Data Processing, Inc.Casella Waste Systems,
Inc.
    
    Aramark CorporationMetal Management, Inc.
    
    The Brinks CompanyRepublic Services, Inc.
    
    C. H. Robinson Worldwide, Inc.Waste Connections, Inc.
    
    Cintas CorporationWaste Industries USA, Inc.
    
    CSX CorporationWaste Management, Inc.
    
    Norfolk Southern CorporationWaste Services, Inc.
    
    Pitney Bowes, Inc.WCA Waste Corporation
    
    Ryder System, Inc.Telephone & Data Systems, Inc.United Auto Group, Inc.YRC Worldwide, Inc.
  i.e
 126




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##### Table of Contents



A Substantial Portion of NEO Compensation Should Be Performance-Based.
 A Substantial Portion of NEO Compensation Should Be Delivered in the Form of Equity Awards.
 Our Compensation Program for NEOs Should Be Fair and Should Be Perceived as Such, Both Internally
and Externally.
 Our Compensation Programs are Designed to Reward Overall Company Performance
    127




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##### Table of Contents



The Elements of Our Executive Compensation Program
  
    
    Cash compensation in the form of base salary and incentive compensation (performance-
based bonuses);
    
    Equity-based awards;
    
    Deferred compensation plans; and
    
    Other components of compensation.
  Cash Compensation.
 Base Salary.
 2006-2007
    
    2007-2008Name
    
    Base Salary
    
    Base SalaryJohn Zillmer
    
    $
    875,500
    
    
    $
    925,000Donald Slager
    
    
    772,500
    
    
    
    800,000Peter Hathaway
    
    
    597,400
    
    
    
    615,000Edward Evans
    
    
    432,600
    
    
    
    446,000Steven Helm
    
    
    433,527
    
    
    
    
    *
 
 *
    
    Mr. Helm retired in August 2006.  Cash Incentive Compensation.
 128




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(i)
    
    the target incentives set, and actual incentives paid, in recent years;(ii)
    
    the desire to ensure that a substantial portion of total compensation is
performance-based; and(iii)
    
    the advice of Cook as to compensation practices at other companies in the Peer Group.
   
    
    Year-over-year Company Consolidated EBITDA Growth: 70%
    
    Return on Invested Capital: 15%
    
    Free Cash Flow: 15%
    
    
    Threshold performance goals for each of the financial measures were set at levels that
reflected a slight improvement over our companys actual results in fiscal 2005;
    
    Target performance goals were set at levels that corresponded to the fiscal 2006 budget
amounts for each of the financial measures; and
    
    Stretch performance goals were set at levels that were higher than the budget amounts
for each of the financial measures. The Compensation Committee believed that each of the
stretch performance goals was aggressive but attainable by our company.
 129




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130




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##### Table of Contents



Equity Compensation.
     131




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##### Table of Contents



Practices Regarding the Grant of Options and Other Equity-Based Awards.
  Deferred Compensation Plans.
 Other Components of Compensation.
 Perquisites.
  132




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4 01(k) Plan.
 Supplemental Retirement Compensation.
  Post-Termination Compensation.
   Stock Ownership and Retention Guidelines
  133




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##### Table of Contents



The Effect of Regulatory Requirements on Our Executive Compensation
 Code Section 162(m) .
   John J. Zillmer
    
    $
    420,298Donald W. Slager
    
    
    593,515Peter S. Hathaway
    
    
    516,071Edward A. Evans
    
    
    70,716Steven M. Helm
    
    
    
  Code Section 409A.
 Code Sections 280G and 4999.
 Accounting Rules.
 134




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##### Table of Contents



Conclusions
  
    
    utilizing stock options exclusively for NEO equity-based compensation for 2007 because
they are inherently more performance-based than RSUs;
    
    focusing on company-wide financial performance goals and measures and eliminating
individual objectives for NEOs because of the difficulty in measuring achievement of an
individuals objectives;
    
    adding the feature in the 2007 Senior MIP that allows participants to convert up to 40%
of their incentive compensation into RSUs, with an additional 50% matching contribution by
our company; and
    
    deciding not to implement any further LTIP performance cycles in favor of a greater
emphasis on equity awards.
  
    
    Each NEOs total compensation, including the value of all outstanding equity awards
granted to the NEO, and future compensation opportunities;
    
    Internal pay equity;
    
    Our stock ownership and retention policies;
    
    The competitive environment for recruiting NEOs, including what the relevant competitors
pay; and
    
    The need to provide each element of compensation and the amounts targeted and
delivered.
  135




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Compensation Committee Interlocks And Insider Participation
  Compensation Committee Report
   
 136




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##### Table of Contents



Summary Compensation Table
  Summary Compensation Table
 Non-EquityName and Principal
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Incentive Plan
    
    
    Change in
    
    
    All OtherPosition(s)
    
    Year
    
    
    Salary
    
    
    Awards (1)
    
    
    Awards (2)
    
    

Compensation (3)
    
    

Pension Value (4)
    
    
    Compensation(5)
    
    
    TotalJohn J. Zillmer
Chairman of the
Board of Directors
and Chief Executive
Officer
    
    
    2006
    
    
    $
    869,125
    
    
    $
    524,279
    
    
    $
    1,275,512
    
    
    $
    1,650,500
    
    
    $
    385,826
    
    
    $
    184,313
    
    
    $
    4,889,555Donald W. Slager
President and Chief
Operating Officer
    
    
    2006
    
    
    
    766,875
    
    
    
    507,910
    
    
    
    248,660
    
    
    
    1,019,400
    
    
    
    509,958
    
    
    
    38,909
    
    
    
    3,091,712Peter S. Hathaway
Executive Vice
President and Chief
Financial Officer
    
    
    2006
    
    
    
    593,050
    
    
    
    416,740
    
    
    
    139,186
    
    
    
    788,400
    
    
    
    583,880
    
    
    
    36,604
    
    
    
    2,557,860Edward A. Evans
Executive Vice
President and Chief
Personnel Officer
    
    
    2006
    
    
    
    429,450
    
    
    
    70,716
    
    
    
    269,494
    
    
    
    570,900
    
    
    
    140,759
    
    
    
    113,775
    
    
    
    1,595,094Steven M. Helm
Executive Vice
President, General
Counsel and
Corporate Secretary
(6)
    
    
    2006
    
    
    
    303,647
    
    
    
    1,257,970
    
    
    
    634,984
    
    
    
    
    
    
    
    270,875
    
    
    
    140,729
    
    
    
    2,608,205
 
 (1)
    
    The amounts shown in this column represent the dollar amounts recognized for
financial statement reporting purposes in fiscal 2006 with respect to shares of restricted
stock and restricted stock units, as determined pursuant to Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment
(SFAS 123(R)). See Note 11 to the Consolidated Financial Statements included in this Form
10-K for a discussion of the relevant assumptions used in calculating grant date fair value
pursuant to SFAS 123(R). For further information on these awards, see the Grants of
Plan-Based Awards table in this Summary Compensation Section of this Form 10-K. Under the
terms of his employment, Mr. Helm forfeited 18,805 RSUs when he retired. There were no other
forfeitures of RSUs by any of the NEOs in 2006.(2)
    
    The amounts shown in this column represent the dollar amount recognized for
financial statement reporting purposes in each fiscal year with respect to options granted, as
determined pursuant to SFAS 123(R). See Note 11 to the Consolidated Financial Statements
included in this Form 10-K for a discussion of the relevant assumptions used in calculating
grant date fair value pursuant to SFAS 123(R). For further information on these awards, see
the Grants of Plan-Based Awards table in this Summary Compensation Section of this Form 10-K.
There were no forfeitures of options by any of the NEOs in 2006.(3)
    
    The amounts shown in this column constitute payments made under the 2006 Senior MIP.
Awards under the 2006 Senior MIP were calculated and paid in 2007 but are included in
compensation for 2006, the year in which they were earned. See Item 11, Executive
Compensation  Narrative to Summary Compensation Table and Plan-Based Awards Table for more
information regarding the 2006 Senior MIP.(4)
    
    The amounts shown in this column represent the increase in actuarial values of each
of the executive officers benefits under our SERP during fiscal 2006. In addition, Mr.
Hathaway participates in a tax-qualified pension plan sponsored by Browning-Ferris Industries,
Inc., under which no new benefits have been earned since the plan was frozen in 1999. The
change in actuarial value of this benefit is included for Mr. Hathaway.(5)
    
    A breakdown of the amounts shown in this column for 2006 for each of the NEOs is set
forth in the following table. Amounts shown below for 401(k) matching contributions are
subject to change when the results of nondiscrimination tests for the plan year ending
December 31, 2006 are finalized. 137




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Mr. Zillmer
    
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans
    
    
    Mr. HelmPerquisites and other
personal benefits
    
    $
    178,813
    
    
    $
    33,409
    
    
    $
    31,104
    
    
    $
    108,275
    
    
    $
    16,791Payments in connection with
retirement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,306401(k) matching contribution
    
    
    5,500
    
    
    
    5,500
    
    
    
    5,500
    
    
    
    5,500
    
    
    
    5,055Tax gross-up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,577Total
    
    $
    184,313
    
    
    $
    38,909
    
    
    $
    36,604
    
    
    $
    113,775
    
    
    $
    140,729
  Mr. Zillmer
    
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans
    
    
    Mr. HelmPersonal use of company aircraft
    
    $
    168,517
    
    
    $
    12,292
    
    
    $
    
    
    
    $
    91,918
    
    
    $
    Automobile allowance
    
    
    7,200
    
    
    
    7,200
    
    
    
    7,200
    
    
    
    7,200
    
    
    
    4,985Club dues
    
    
    3,096
    
    
    
    3,800
    
    
    
    4,016
    
    
    
    2,320
    
    
    
    1,207Income tax and planning services
    
    
    
    
    
    
    10,117
    
    
    
    19,888
    
    
    
    6,837
    
    
    
    2,599Other personal benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000Total
    
    $
    178,813
    
    
    $
    33,409
    
    
    $
    31,104
    
    
    $
    108,275
    
    
    $
    16,791
 (6)
    
    Mr. Helm retired from his position with the company effective August 31, 2006. See
Item 11, Executive Compensation  Potential Payments upon Termination or Change-in-Control
for further discussion regarding the terms of Mr. Helms retirement.
 Plan-Based Awards During 2006
  Grants Of Plan-Based Awards  2006
 All Other
    
    All OtherStock
    
    OptionAwards:
    
    Awards:
    
    Exercise or
    
    Grant DateNumber of
    
    Number of
    
    Base Price of
    
    Fair Value ofEstimated Possible Payouts Under Non-
    
    Shares of
    
    Securities
    
    Option
    
    Stock andGrant
    
    Action
    

Equity Incentive Plan Awards (1)
    
    Stock or
    
    Underlying
    
    Awards
    
    OptionName
    
    Date
    
    Date
    
    Threshold ($)
    
    Target ($)
    
    Maximum ($)
    
    Units (#)
    
    Options (#)
    
    ($/Sh)
    
    Awards ($) (2)John J. Zillmer
    
    
    01/03/06
    
    
    
    12/30/05
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    160,000
    (3)
    
    
    
    
    
    $
    
    
    
    $
    1,424,00001/03/06
    
    
    
    12/30/05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    495,000
    (4)
    
    
    8.90
    
    
    
    2,128,50002/09/06
    
    
    
    02/09/06
    
    
    
    50,341
    
    
    
    1,006,825
    
    
    
    2,013,650
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12/05/06
    
    
    
    12/05/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425,000
    (5)
    
    
    12.91
    
    
    
    2,486,250Donald W.
 Slager
    
    
    02/09/06
    
    
    
    02/09/06
    
    
    
    38,625
    
    
    
    772,500
    
    
    
    1,158,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12/05/06
    
    
    
    12/05/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,600
    (5)
    
    
    12.91
    
    
    
    974,610Peter S. Hathaway
    
    
    02/09/06
    
    
    
    02/09/06
    
    
    
    29,870
    
    
    
    597,400
    
    
    
    896,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12/05/06
    
    
    
    12/05/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,300
    (5)
    
    
    12.91
    
    
    
    487,305Edward A.
 Evans
    
    
    02/09/06
    
    
    
    02/09/06
    
    
    
    21,630
    
    
    
    432,600
    
    
    
    648,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12/05/06
    
    
    
    12/05/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,300
    (5)
    
    
    12.91
    
    
    
    487,305Steven M.
 Helm (6)
    
    
    02/09/06
    
    
    
    02/09/06
    
    
    
    21,676
    
    
    
    433,527
    
    
    
    650,291
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Amounts shown represent awards granted under the 2006 Senior MIP, which was
established pursuant to the EICP. The amount actually earned by each NEO is reported as
Non-Equity Incentive Plan Compensation in the Summary Compensation Table. Amounts are
considered earned in 2006 although they were not paid until 2007.(2)
    
    Represents the grant date fair value of each award as determined pursuant to SFAS
123(R).(3)
    
    Consists of RSUs awarded as part of our annual grant for 2006. The RSUs granted to
the other NEOs as part of the annual grant for 2006 were made effective December 30, 2005 and,
therefore, do not appear on this table. All of such RSUs were granted under the 2006 Stock
Plan and vest at the rate of 20% per year on each of the first through fifth anniversaries of
the grant date. 138




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(4)
    
    Consists of options to purchase shares of our common stock awarded as part of our
annual grant for 2006. The options granted to the other NEOs as part of the annual grant for
2006 were made effective December 30, 2005 and, therefore, do not appear on this table. All
of such options were granted under the 2006 Stock Plan and vest at the rate of 20% per year on
each of the first through fifth anniversaries of the grant date.(5)
    
    Consists of options to purchase shares of our common stock awarded as part of our
annual grant for 2007 compensation. The options were granted under the 2006 Stock Plan and
vest at the rate of 25% per year on each of the first through fourth anniversaries of the
grant date.(6)
    
    Mr. Helm retired from his position with our company effective August 31, 2006. Under
the terms of his employment, he forfeited any payment under the 2006 Senior MIP when he
retired. Narrative to Summary Compensation Table and Plan-Based Awards Table
 Employment Agreements.
      139




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Annual Cash Incentive Compensation.
   1.
    
    Overall Company Performance Goals: Achievement of overall company performance goals
(Company Goals) was measured based on: (a) year-over-year Company Consolidated EBITDA
Growth (b) Return on Invested Capital, and (c) Free Cash Flow. EBITDA and EBIT were
adjusted to remove the impact of restructuring and severance charges in either 2005 or
2006 to the extent that these charges were included in the results of the corporate
office. Company Consolidated EBITDA Growth means the aggregate EBITDA for the entire
company (i.e., including all subsidiaries and divisions, and all organizational levels).
Return on Invested Capital means EBIT for the year less taxes at an assumed rate of 40%,
divided by the average (based on year-end results) Net Tangible Assets (NTA). NTA means
(x) total assets less cash, goodwill, and investments in consolidated subsidiaries, minus
(y) liabilities excluding all debt, and accrued balances for insurance reserves, interest,
closure and post-closure, remediation, derivative liabilities and deferred tax
obligations. Free Cash Flow means cash flow from operations, less capital expenditures,
plus proceeds from fixed asset sales and plus or minus any change in disbursement account.
EBIT, Free Cash Flow, and EBITDA include all accruals necessary to pay out Annual
Incentives, and were adjusted for material items at the discretion of the committee.
 140




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##### Table of Contents



2.
    
    Individual Objectives:Achievement of individual objectives was measured with
respect to each participant. Each participant had two individual objectives that were
appropriate for the participants position.
    
    
    Earnings before interest, taxes, depreciation and amortization (EBITDA): 70%
 -
    
    For the purposes of the 2007 Senior MIP, EBITDA means the aggregate
EBITDA for the entire company (i.e., including all subsidiaries,
divisions, and organizational levels). EBITDA will be adjusted to remove
the impact of (a) restructuring charges and severance charges to the
extent that these were included in the results of the Operations Support
Center (only), and (b) gains and losses on divestitures, discontinued
operations, and non-cash impairments. All adjustments remain at the
discretion of the Compensation Committee.
 
    
    Return on Invested Capital: 15%
 -
    
    Return on Invested Capital means Earnings Before Interest and Taxes
(EBIT) for the year less taxes at an assumed rate of 40%, divided by
the average (based on year-end results) Net Tangible Assets (NTA). NTA
means (x) total assets less cash, goodwill, contra receivables related to
insurance reserves, any assets arising out of the pension plans, and
investments in consolidated subsidiaries, minus (y) liabilities excluding
all debt and accrued balances for insurance reserves, pension plans,
interest, closure and post-closure remediation, derivative liabilities,
and deferred income taxes. EBIT and NTA will be adjusted for the same
items as EBITDA.
 
    
    Free Cash Flow: 15%
 -
    
    Free Cash Flow means cash flow from operations, less capital
expenditures, plus proceeds from fixed asset sales plus or minus the
change in disbursement account.
  141




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Estimated Possible Payouts Under the 2007 Senior MIP (1)Name
    
    Threshold
    
    
    Target
    
    
    MaximumJohn J. Zillmer
    
    $
    53,188
    
    
    $
    1,063,750
    
    
    $
    2,127,500Donald W. Slager
    
    
    40,000
    
    
    
    800,000
    
    
    
    1,200,000Peter S. Hathaway
    
    
    30,750
    
    
    
    615,000
    
    
    
    922,500Edward A. Evans
    
    
    22,300
    
    
    
    446,000
    
    
    
    669,000
 
 (1)
    
    The maximum annual incentive that may be paid to any participant under the 2007
Senior MIP cannot exceed the lesser of (a) 150% (230% in the case of the CEO) of the
participants annual base salary, or (b) $3,000,000 ($5,000,000 in the case of the CEO).   Long-Term Cash Incentive Compensation.
    142




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Equity-Based Awards.
 Number of Restricted
    
    Number of Stock
    
    Exercise Price ofName
    
    Stock Units
    
    Options
    
    Stock OptionsMr. Zillmer
    
    
    160,000
    
    
    
    495,000
    
    
    $
    8.90Mr. Slager
    
    
    20,000
    
    
    
    133,000
    
    
    $
    8.74Mr. Hathaway
    
    
    9,000
    
    
    
    63,000
    
    
    $
    8.74Mr. Evans
    
    
    17,000
    
    
    
    111,000
    
    
    $
    8.74Mr. Helm
    
    
    9,000
    
    
    
    63,000
    
    
    $
    8.74
   Stock Ownership and Retention Guidelines for Executive Officers.
 Multiple ofPosition (1)
    
    Base Salary (2)Chairman of the Board
    
    
    3xChief Executive Officer
    
    
    3xPresident
    
    
    3xExecutive Vice President
    
    
    2.5x
 
 (1)
    
    An officers highest position will determine the ownership guideline that he must
attain.(2)
    
    Base salary is determined as of the date the guidelines were adopted and
thereafter at the beginning of each year of the executives employment term. The stock price
initially was a fixed price of $8.00 per share. The stock price was reviewed in December 2006
and adjusted to $11.50. The impact of changes in both base salary and stock price will be
reviewed at least annually. 143




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Salary and Cash Incentive Awards in Proportion to Total Compensation.
 Percentage of TotalName
    
    CompensationMr. Zillmer
    
    
    52
    %Mr. Slager
    
    
    58
    %Mr. Hathaway
    
    
    54
    %Mr. Evans
    
    
    63
    %Mr. Helm
    
    
    12
    %
 Fiscal Year-End Holdings of Equity-Based Awards
  Outstanding Equity Awards at Fiscal Year-End  2006
 Option Awards
    
    Stock AwardsUnearned Shares, Units orNumber of Unexercised
    
    
    
    
    
    
    
    
    
    Units of Stock That Have
    
    Other Rights That Have NotOptions (#)
    
    
    
    
    
    
    
    
    
    Not Vested
    
    VestedEquity
    
    Equity IncentiveIncentive
    
    Plan Awards:Option
    
    Option
    
    
    
    
    
    Market
    
    Plan
    
    Market orExercise
    
    Expiration
    
    Number of
    
    Value of
    
    Awards:
    
    Payout ValueName
    
    Exercisable
    
    Unexercisable
    
    Price ($)
    
    Date
    
    Shares (#)
    
    Shares ($)(1)
    
    Number (#)
    
    ($) (1)John J. Zillmer
    
    
    316,669
    
    
    
    683,331
    (2)
    
    $
    7.68
    
    
    
    05/27/2015
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    495,000
    (3)
    
    
    8.90
    
    
    
    01/03/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425,000
    (4)
    
    
    12.91
    
    
    
    12/05/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,169
    (5)
    
    
    419,937
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160,000
    (3)
    
    
    1,966,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    (6)
    
    
    614,500Donald W. Slager
    
    
    30,000
    
    
    
    
    
    
    $
    21.19
    
    
    
    02/26/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    
    
    
    
    21.06
    
    
    
    12/29/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,000
    
    
    
    
    
    
    
    13.31
    
    
    
    04/06/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000
    
    
    
    
    
    
    
    10.32
    
    
    
    12/11/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    9.03
    
    
    
    05/22/2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,600
    
    
    
    106,400
    (7)
    
    
    8.74
    
    
    
    12/30/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,600
    (4)
    
    
    12.91
    
    
    
    12/05/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194,287
    (8)
    
    
    2,387,787
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,889
    (9)
    
    
    170,696
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,000
    (10)
    
    
    442,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,000
    (7)
    
    
    196,640
    
    
    
    
    
    
    
    Peter S. Hathaway
    
    
    125,000
    (11)
    
    
    
    
    
    $
    21.06
    
    
    
    12/29/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    13.31
    
    
    
    04/06/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    
    
    
    
    10.32
    
    
    
    12/11/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    9.03
    
    
    
    05/22/2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,600
    
    
    
    50,400
    (7)
    
    
    8.74
    
    
    
    12/30/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,300
    (4)
    
    
    12.91
    
    
    
    12/05/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145,713
    (8)
    
    
    1,790,813
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,571
    (12)
    
    
    596,938
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,334
    (9)
    
    
    102,425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    (10)
    
    
    294,960
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,200
    (7)
    
    
    88,488
    
    
    
    
    
    
    
    Edward A. Evans
    
    
    37,500
    
    
    
    112,500
    (13)
    
    $
    8.20
    
    
    
    09/19/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,200
    
    
    
    88,800
    (7)
    
    
    8.74
    
    
    
    12/30/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,300
    (4)
    
    
    12.91
    
    
    
    12/05/2016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    (13)
    
    
    184,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,600
    (7)
    
    
    167,144
    
    
    
    
    
    
    
    Steven M. Helm
    
    
    40,000
    
    
    
    
    
    
    $
    21.06
    
    
    
    12/29/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    13.31
    
    
    
    04/06/2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,618
    (8)
    
    
    413,165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,445
    (9)
    
    
    54,629
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000
    (10)
    
    
    147,480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,600
    (7)
    
    
    44,244
    
    
    
    
    
    
    
    
 144




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##### Table of Contents



(1)
    
    Calculated based upon the closing market price of our common stock on December
29, 2006, which was $12.29 per share.(2)
    
    Pursuant to his employment agreement, we granted to Mr. Zillmer options to acquire
up to 1,000,000 shares of common stock on May 27, 2005. An aggregate of 200,000 options
vested on May 27, 2006, and the remainder vest pro rata each month thereafter over a period of
four years. Therefore, 16,667 of these options continue to vest each month.(3)
    
    These awards were granted to Mr. Zillmer on January 3, 2006, and vest as follows: Award Type
    
    1/3/2007
    
    1/3/2008
    
    1/3/2009
    
    1/3/2010
    
    1/3/2011Stock Options
    
    
    99,000
    
    
    
    99,000
    
    
    
    99,000
    
    
    
    99,000
    
    
    
    99,000RSUs
    
    
    32,000
    
    
    
    32,000
    
    
    
    32,000
    
    
    
    32,000
    
    
    
    32,000
 (4)
    
    These options were granted to the NEOs on December 5, 2006, and vest as follows:
 Name
    
    12/5/2007
    
    12/5/2008
    
    12/5/2009
    
    12/5/2010John J. Zillmer
    
    
    106,250
    
    
    
    106,250
    
    
    
    106,250
    
    
    
    106,250Donald W. Slager
    
    
    41,650
    
    
    
    41,650
    
    
    
    41,650
    
    
    
    41,650Peter S. Hathaway
    
    
    20,825
    
    
    
    20,825
    
    
    
    20,825
    
    
    
    20,825Edward A. Evans
    
    
    20,825
    
    
    
    20,825
    
    
    
    20,825
    
    
    
    20,825
 (5)
    
    Pursuant to his employment agreement, we granted to Mr. Zillmer 50,000 shares of
restricted stock on May 27, 2005. An aggregate of 10,000 shares vested on May 27, 2006, and
the remainder vest pro rata each month thereafter over a period of four years. Therefore, 833
shares of restricted stock continue to vest each month.(6)
    
    Pursuant to his employment agreement, we granted to Mr. Zillmer 50,000 shares of
restricted stock on May 27, 2005, which vest based upon the attainment of certain levels of
EBITDA over a period of not longer than seven years beginning on January 1, 2006. The first
one-third of these shares vested on February 14, 2007 as the result of the achievement of the
target EBITDA specified in Mr. Zillmers restricted stock agreement.(7)
    
    These awards were granted on December 30, 2005. The first tranche of these awards
vested on December 30, 2006. The remaining awards vest as follows:
 Name
    
    Award Type
    
    12/30/07
    
    12/30/08
    
    12/30/09
    
    12/30/10Donald W. Slager
    
    Stock Options
    
    
    26,600
    
    
    
    26,600
    
    
    
    26,600
    
    
    
    26,600Donald W. Slager
    
    RSUs
    
    
    4,000
    
    
    
    4,000
    
    
    
    4,000
    
    
    
    4,000Peter S. Hathaway
    
    Stock Options
    
    
    12,600
    
    
    
    12,600
    
    
    
    12,600
    
    
    
    12,600Peter S. Hathaway
    
    RSUs
    
    
    1,800
    
    
    
    1,800
    
    
    
    1,800
    
    
    
    1,800Edward A. Evans
    
    Stock Options
    
    
    22,200
    
    
    
    22,200
    
    
    
    22,200
    
    
    
    22,200Edward A. Evans
    
    RSUs
    
    
    3,400
    
    
    
    3,400
    
    
    
    3,400
    
    
    
    3,400Steven M. Helm
    
    RSUs
    
    
    1,800
    
    
    
    1,800
    
    
    
    
    
    
    
    
 (8)
    
    These RSUs were granted to the following NEOs on April 27, 2000, and vest as
follows:
 Name
    
    4/27/2007
    
    4/27/2008
    
    4/27/2009
    
    4/27/2010Donald W. Slager
    
    
    48,571
    
    
    
    48,571
    
    
    
    48,571
    
    
    
    48,574Peter S. Hathaway
    
    
    36,429
    
    
    
    36,429
    
    
    
    36,429
    
    
    
    36,426Steven M. Helm
    
    
    11,206
    
    
    
    11,206
    
    
    
    11,206
    
    
    
    
 (9)
    
    These RSUs were granted on February 5, 2004, and vested on February 5, 2007.(10)
    
    These RSUs were granted on January 3, 2005. The first tranche of these RSUs vested
on January 3, 2006. The remaining RSUs vest as follows:
 Name
    
    1/3/2007
    
    1/3/2008
    
    1/3/2009
    
    1/3/2010Donald W. Slager
    
    
    9,000
    
    
    
    9,000
    
    
    
    9,000
    
    
    
    9,000Peter S. Hathaway
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000Steven M. Helm
    
    
    4,000
    
    
    
    4,000
    
    
    
    4,000
    
    
    
    
 (11)
    
    The number shown includes 25,000 options held by the Hathaway Family Limited
Partnership (the Hathaway FLP). Mr. Hathaway is a General Partner and a Limited Partner of
the Hathaway FLP.(12)
    
    These RSUs were granted on July 26, 2000, and vest as follows:
 7/26/2007
    
    
    
    7/26/2008
    
    
    
    7/26/2009
    
    
    
    7/26/201012,143
    
    
    
    12,143
    
    
    
    12,143
    
    
    
    12,142
 (13)
    
    These awards were granted on September 19, 2005. The first tranche of these awards
vested on September 19, 2006, and the remaining awards vest as follows:
 Award Type
    
    9/19/2007
    
    9/19/2008
    
    9/19/2009Stock Options
    
    
    37,500
    
    
    
    37,500
    
    
    
    37,500RSUs
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000
 145




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##### Table of Contents



Option Exercises and Vesting of Stock-Based Awards During Fiscal 2006
  Option Exercises And Stock Vested  2006
 Option Awards
    
    Stock AwardsNumber ofShares
    
    
    
    
    
    Number ofAcquired on
    
    Value Realized on
    
    Shares Acquired
    
    Value Realized onName
    
    Exercise (#)
    
    Exercise ($) (1)
    
    on Vesting (#) (2)
    
    Vesting ($) (3)John J. Zillmer
    
    
    
    
    
    $
    
    
    
    
    15,831
    
    
    $
    187,582Donald W. Slager
    
    
    96,533
    
    
    
    144,800
    
    
    
    75,460
    
    
    
    950,426Peter S. Hathaway (4)
    
    
    100,667
    
    
    
    280,097
    
    
    
    64,705
    
    
    
    797,462Edward A. Evans
    
    
    
    
    
    
    
    
    
    
    8,400
    
    
    
    94,486Steven M. Helm
    
    
    290,090
    
    
    
    913,983
    
    
    
    116,849
    
    
    
    1,319,426
 
 (1)
    
    Calculated based upon the closing market price of our common stock on the date of
exercise less the exercise price for such shares, but excluding any tax obligation incurred in
connection with the exercise.(2)
    
    Represents the vesting of restricted stock and RSUs.(3)
    
    Calculated by multiplying the number of shares or RSUs vested by the closing market
price of our common stock on the vesting date, but excluding any tax obligation incurred in
connection with such vesting.(4)
    
    The amounts shown include 28,691 shares acquired upon exercise of options held by
the Hathaway FLP, with a value of $76,669 realized upon such exercises. Retirement Plans
  SERP Qualification RequirementsYears of
    
    
    
    
    
    Sum of Age andName
    
    Service
    
    Age
    
    Years of ServiceMr. Zillmer
    
    
    10
    
    
    
    N/A
    
    
    
    N/AMr. Slager
    
    
    20
    
    
    
    55
    
    
    
    63Mr. Hathaway
    
    
    9
    
    
    
    55
    
    
    
    63Mr. Evans
    
    
    10
    
    
    
    N/A
    
    
    
    N/AMr. Helm (1)
    
    
    9
    
    
    
    55
    
    
    
    63
 
 (1)
    
    Mr. Helm retired from our company on August 31, 2006. See Item 11, Executive
Compensation  Potential Payments upon Termination or Change-in-Control  Retirement of Steven
M. Helm.  146




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##### Table of Contents



Pension Benefits  2006
 Number of
    
    Present Value
    
    PaymentsYears Credited
    
    of Accumulated
    
    During LastName
    
    Plan Name
    
    Service (#)
    

Benefit
($) (1)
    
    Fiscal Year ($)John J. Zillmer
    
    SERP
    
    
    1
    
    
    $
    385,826
    
    
    $
    Donald W. Slager
    
    SERP
    
    
    21
    
    
    
    1,961,223
    
    
    
    Peter A. Hathaway
    
    SERP
    
    
    15
    
    
    
    2,151,439
    
    
    
    BFI Pension Plan
    
    
    15
    
    
    
    46,195
    
    
    
    Edward A. Evans
    
    SERP
    
    
    1
    
    
    
    140,759
    
    
    
    Steven M. Helm
    
    SERP
    
    
    10
    
    
    
    2,052,389
    
    
    
    81,957
 
 (1)
    
    The amounts shown in this column represent the actuarial
present value of each executives accumulated benefit under the
SERP and, in the case of Mr. Hathaway, the BFI Pension Plan. These
amounts are as determined pursuant to SFAS No. 158,
Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans  an amendment of FASB Statements No. 87,
88, 106 and 132 (R) (SFAS 158). See Note 8 to the consolidated
financial statements included in this Form 10-K for a discussion of
the relevant assumptions used in calculating the accumulated benefit
obligation pursuant to SFAS 158. Nonqualified Deferred Compensation
   Nonqualified Deferred Compensation  2006
 Aggregate
    
    AggregateEarnings in
    
    BalanceLast Fiscal
    
    at Last FiscalName
    
    Year ($) (1)
    
    Year-End ($)John J. Zillmer
    
    $
    
    
    
    $
    Donald W. Slager
    
    
    
    
    
    
    Peter S. Hathaway
    
    
    78,049
    
    
    
    753,841Edward A. Evans
    
    
    
    
    
    
    Steven M. Helm
    
    
    
    
    
    
    
 
 (1)
    
    Amounts in this column are not included in the Summary Compensation Table. Potential Payments upon Termination or Change-in-Control
  
    
    We have Causeto terminate the NEO if the NEO has engaged in any of a list of specified
activities, including the conviction of a felony or any other crime involving our company,
the
 147




---



##### Table of Contents



breach of any material term of his employment agreement, the violation of any
policies, rules, or regulations of our company, willful or deliberate conduct that exposes
our company to potential financial or other injury, fraud, misappropriation of assets, or
embezzlement, the failure or refusal to perform his assigned duties, or the breach of any
duty of loyalty to our company.
    
    The NEO is said to have Good Reasonto terminate his employment (and thereby receive
the benefits described below) if we assign the NEO duties that are materially inconsistent
with his position, materially diminish the NEOs position, materially breach any of the
provisions of the employment agreement, materially reduce the NEOs compensation or
benefits, require that the NEO relocate permanently to any location without his consent,
except where the majority of our executive officers are relocated, or fail to comply with,
or prevent or impede the NEO from complying with any legal obligation in a manner that
would subject the NEO to liability.
    
    The NEOs employment is said to have been terminated on account of Disabilityif the
NEO has an illness or other disability that prevents the executive from discharging his
responsibilities under his employment agreement for a period of 180 consecutive calendar
days, or an aggregate of 180 calendar days in any calendar year.
  
    
    prohibit the executive from disclosing our companys confidential information to any
person or entity at any time during or after the term of his employment with our company
other than as may be necessary to carry out his duties and responsibilities under the
agreement or with our companys prior written consent;
    
    require the executive to disclose and assign to our company any information, ideas,
concepts, improvements, discoveries, and inventions related to our business, products, or
services; and
    
    prohibit the executive, during the term of his employment and for a period of up to
three years (two years in the case of Mr. Evans) after termination of his employment, from
(a) engaging in certain activities that are competitive with our business, (b) soliciting
any of our employees to leave his employment with our company, (c) soliciting any
customer, potential customer, or acquisition prospect for the purpose of ending or
avoiding a business relationship, or (d) using any information regarding actual or
potential customers or acquisition targets for any purpose other than to perform his
duties under the employment agreement.
   148




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##### Table of Contents



Termination as a Result ofGoodFor Cause or

    
    
    
    
    
    Reason orWithout Good

    
    Death or
    
    Without
    
    

    
    Change inReason

    
    Disability
    
    Cause
    
    Retirement
    
    Control(1)Unpaid base salary through date of termination
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    XAccrued but unpaid vacation or paid leave
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    XEarned but unpaid annual incentive compensation
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    XUnpaid deferred compensation
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    XReimbursements
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    XMultiple of
(a) base salary in effect at termination plus (b) target annual incentive compensation for year in which termination occurs
    
    
    
    
    
    
    X
    (2)
    
    
    X
    (3)
    
    
    
    
    
    
    X

    (4)Continued medical, dental, and vision benefits (5)
    
    
    
    
    
    
    X
    
    
    
    X
    
    
    
    X
    
    
    
    XContinued vesting under stock plans (6)
    
    
    
    
    
    
    X
    
    
    
    X
    
    
    
    XFull and immediate vesting under stock plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    X

    (7)Retirement benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    X

    (8)Outplacement benefits (9)
    
    
    
    
    
    
    
    
    
    
    X
    
    
    
    
    
    
    
    X
 
 (1)
    
    Messrs. Slager and Hathaway will be entitled to these payments if the executives
employment agreement is terminated by the executive for good reason or by our company
without cause within one year preceding or 18 months following the date on which a change
in control (as defined in their respective employment agreements) occurs. Messrs. Zillmer
and Evans will be entitled to these payments if the executives employment agreement is
terminated by the executive for good reason or by our company without cause within six
months preceding or 12 months following the date on which a change in control occurs.(2)
    
    The multiple is 2x in the case of death or disability and the payments are to be
made in substantially equal bi-weekly installments beginning as of the first payroll date
immediately following the six-month anniversary of the date of termination and continuing
until the first payroll date immediately following the two-year anniversary of the date of
termination, except that the first payment will include the amount that would have been paid
prior to the actual first payment date if payments began on the first payroll date immediately
following the date of termination. The following table sets forth the incremental payment
obligations of our company for each of the officers named in the table based on salaries and
annual incentive compensation targets for fiscal 2006, assuming the termination occurred on
December 31, 2006. Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$3,764,650
    
    $
    3,090,000
    
    
    $
    2,389,600
    
    
    $
    1,730,400
 
 (3)
    
    The multiple is 2x for Messrs. Zillmer and Evans and the multiple is 3x for Messrs.
Slager and Hathaway. The payments are to be made in substantially equal bi-weekly
installments beginning as of the first payroll date immediately following the six-month
anniversary of the date of termination and continuing until the first payroll date immediately
following the two-year anniversary (for Messrs. Zillmer and Evans) or the three-year
anniversary (for Messrs. Slager and Hathaway) of the executives date of termination;
provided, however, that the first payment will include the amount that would have been paid
prior to the actual first payment date if payments began on the first payroll date immediately
following the date of termination. The following table sets forth the incremental payment
obligations of our company for each of the officers named in the table based on salaries and
annual incentive compensation targets for fiscal 2006, assuming the termination occurred on
December 31, 2006. Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$3,764,650
    
    $
    4,635,000
    
    
    $
    3,584,400
    
    
    $
    1,730,400
 
 (4)
    
    The multiple is 3x for Messrs. Zillmer, Slager, Hathaway, and Evans. Such payments
in connection with a change in control are to be paid in a lump sum within 30 days after the
later of (a) the date of the change in control or (b) the six-month anniversary of the date of
termination. The following table sets forth the incremental payment obligations of our
company for each of the officers named in the table based on salaries and annual incentive
compensation paid for fiscal 2006, assuming a change in control and termination of employment
occurred on December 31, 2006. Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$5,646,975
    
    $
    4,635,000
    
    
    $
    3,584,400
    
    
    $
    2,595,600
  149




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##### Table of Contents



Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$2,622,384
    
    $
    1,911,228
    
    
    $
    1,439,303
    
    
    $
    1,097,790
 
 (5)
    
    The executive employment agreements generally provide that our company will continue
providing medical, dental, and/or vision coverage to the executive and/or the executives
spouse and dependents at least equal to that which would have been provided if the executives
employment had not terminated, if such coverage continues to be available to our company,
until the earlier of (a) the date the executive becomes eligible for any comparable medical,
dental, or vision coverage provided by any other employer, (b) the date the executive becomes
eligible for Medicare or any similar government-sponsored or provided health care program, or
(c) in the case of termination as a result of death, disability, for good reason or without
cause, the fifth anniversary of the executives date of termination. The following table sets
forth the estimated incremental lump sum present value of the payment obligations of our
company with respect to continued medical, dental, and/or vision coverage for each of the
officers named in the table, calculated in accordance with generally accepted accounting
principles for financial reporting purposes assuming (a) termination occurred on December 31,
2006, (b) termination was as a result of death, disability, for good reason or without cause
(i.e., a maximum payment obligation of five years), (c) a 6% discount rate, and (d) increases
in the cost of coverage trending from 11% to 5% over the five-year coverage term. Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$104,832
    
    $
    88,956
    
    
    $
    104,832
    
    
    $
    116,954
 
 (6)
    
    For Messrs. Slager and Hathaway, the continued vesting period is three years after
the date of termination. For Messrs. Zillmer and Evans, the continued vesting period is two
years after the date of termination. In all cases, if the remaining term of the rights or
interests is shorter than the continued vesting period, the continued vesting is limited by
the remaining term. The following table sets forth the incremental value of such continued
vesting with respect to each of the officers named in the table assuming termination occurred
on December 31, 2006. Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$3,752,356
    
    $
    2,724,109
    
    
    $
    2,315,050
    
    
    $
    670,842
 
 (7)
    
    The following table sets forth the incremental value of accelerated vesting of stock
options (calculated based on the excess of the closing market price of our common stock on
December 29, 2006, over the exercise prices of such options) and the accelerated vesting of
restricted stock and RSUs (calculated based on the closing market price of our common stock on
December 29, 2006) for each of the officers named in the table, assuming termination occurred
on December 31, 2006. These incremental amounts are in addition to the value of vested
options as reflected in the Outstanding Equity Awards at Fiscal Year-End table. Mr. Zillmer
    
    Mr. Slager
    
    
    Mr. Hathaway
    
    
    Mr. Evans$7,829,043
    
    $
    3,575,283
    
    
    $
    3,052,544
    
    
    $
    1,126,859
 
 (8)
    
    If the employment agreement is terminated upon the executives retirement, he may be
eligible to participate in the SERP. See Item 11, Executive Compensation  Retirement
Plans.(9)
    
    The employment agreements require our company to provide outplacement services
through an agency of our choosing for one year after the date of termination, provided that
the cost of such services cannot exceed $50,000 for each executive unless the Board or a Board
committee approves a higher amount.  150




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##### Table of Contents



Retirement of Steven M. Helm.
 Compensation of Directors
 Cash Compensation.
 Equity-Based Compensation.
 151




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##### Table of Contents



Director Compensation  2006
 Fees Earned or
    
    
    Stock AwardsName
    

Paid in Cash(1)
    
    
    (2) (3)
    
    
    TotalRobert M. Agate
    
    $
    81,875
    
    
    $
    55,000
    
    
    $
    136,875Leon D. Black (4)
    
    
    10,000
    
    
    
    
    
    
    
    10,000Charles H. Cotros
    
    
    61,000
    
    
    
    55,000
    
    
    
    116,000James W. Crownover
    
    
    75,500
    
    
    
    55,000
    
    
    
    130,500Stephanie Drescher (5)
    
    
    22,333
    
    
    
    
    
    
    
    22,333David I. Foley (6)
    
    
    48,000
    
    
    
    55,000
    
    
    
    103,000Joshua J. Harris (7)
    
    
    49,000
    
    
    
    55,000
    
    
    
    104,000Dennis R. Hendrix
    
    
    67,000
    
    
    
    55,000
    
    
    
    122,000J. Tomilson Hill (6)
    
    
    11,000
    
    
    
    
    
    
    
    11,000Nolan Lehmann
    
    
    81,875
    
    
    
    55,000
    
    
    
    136,875Steven Martinez (4)
    
    
    46,000
    
    
    
    55,000
    
    
    
    101,000James A. Quella
    
    
    60,000
    
    
    
    55,000
    
    
    
    115,000Antony P. Ressler (5)
    
    
    31,666
    
    
    
    55,000
    
    
    
    86,666Total
    
    $
    645,249
    
    
    $
    550,000
    
    
    $
    1,195,249
 
 (1)
    
    Consists of the cash fees paid to each director, as described under Cash
Compensation, above. The annual retainer is pro rated for directors who served during a
portion of 2006. Cash fees and stock awards paid or payable to Messrs. Foley, Hill, and
Quella were paid directly to Blackstone Management Partners III, L.L.C. Messrs. Agate, Black,
and Ressler elected to convert all of their cash fees into 6,952, 816 and 2,702 shares of our
common stock, respectively.(2)
    
    For each director other than Messrs. Black and Hill and Ms. Drescher, the amounts
shown represent the grant date fair value computed in accordance with SFAS 123(R), of 4,568
shares of restricted stock granted on May 25, 2006, pursuant to the 2005 Directors Plan. See
Equity-Based Compensation, above. These shares of restricted stock vest on May 17, 2007.
As described under Equity-Based Compensation, awards granted under the 2005 Directors Plan
that are attributable to Messrs. Foley and Quella, as the Blackstone Shareholder Designees,
were instead granted to Blackstone. The following table sets forth (a) the grant date fair
value of RSUs granted to each director in 2006, as computed in accordance with SFAS 123(R),
and (b) the aggregate number of unvested shares of restricted stock held by each of our
non-employee directors at December 31, 2006: 152




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##### Table of Contents



Market Value ofGrant Date
    
    
    Number of Shares of
    
    
    Shares of StockFair Value of
    
    
    Stock That Have Not
    
    
    That Have NotName
    
    Restricted Stock
    
    
    Vested (#)
    
    

Vested ($) (a)Robert M. Agate
    
    $
    55,000
    
    
    
    4,568
    
    
    $
    56,141Leon D. Black
    
    
    
    
    
    
    
    
    
    
    Charles H. Cotros
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141James W. Crownover
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141Stephanie Drescher
    
    
    
    
    
    
    
    
    
    
    David I. Foley
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141Joshua J. Harris (b)
    
    
    55,000
    
    
    
    
    
    
    
    Dennis R. Hendrix
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141J. Tomilson Hill
    
    
    
    
    
    
    
    
    
    
    Nolan Lehmann
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141Steven Martinez
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141James A. Quella
    
    
    55,000
    
    
    
    4,568
    
    
    
    56,141Antony P. Ressler (b)
    
    
    55,000
    
    
    
    
    
    
    
    
 (a)
    
    Calculated based upon the closing market price of our common stock on December
29, 2006, which was $12.29 per share.(b)
    
    Messrs. Harris and Ressler resigned as directors during 2006 and forfeited their
2006 unvested restricted stock grant under the 2005 Directors Plan upon resignation.
 (3)
    


    See Note 11 to our Consolidated Financial Statements included in this Form 10-K for
a discussion of the relevant assumptions used in calculating grant date fair value pursuant to
SFAS 123(R). The following table sets forth the aggregate number of vested stock options held
by each of our non-employee directors as of December 31, 2006. There were no unvested stock
options held by our non-employee directors as of December 31, 2006.


Number ofSecuritiesUnderlyingUnexercisedOptions (#)
    
    
    Option Exercise
    
    
    Option ExpirationName
    

Exercisable
    
    
    Price ($)
    
    
    DateRobert M. Agate
    
    
    25,000
    
    
    $
    8.00
    
    
    
    05/18/201010,000
    
    
    
    17.01
    
    
    
    05/23/201110,000
    
    
    
    11.08
    
    
    
    05/29/201210,000
    
    
    
    8.83
    
    
    
    05/21/201310,000
    
    
    
    12.60
    
    
    
    05/21/2014Leon D. Black
    
    
    
    
    
    
    
    
    
    
    Charles H. Cotros
    
    
    25,000
    
    
    
    12.34
    
    
    
    07/22/2014240,000
    
    
    
    9.06
    
    
    
    10/04/2010James W. Crownover
    
    
    25,000
    
    
    
    10.19
    
    
    
    12/12/201210,000
    
    
    
    8.83
    
    
    
    05/21/201310,000
    
    
    
    12.60
    
    
    
    05/21/2014Stephanie Drescher
    
    
    
    
    
    
    
    
    
    
    David I. Foley
    
    
    
    
    
    
    
    
    
    
    Joshua J. Harris
    
    
    
    
    
    
    
    
    
    
    Dennis R. Hendrix
    
    
    25,000
    
    
    
    16.88
    
    
    
    07/02/200710,000
    
    
    
    26.38
    
    
    
    05/28/200810,000
    
    
    
    19.81
    
    
    
    06/29/200910,000
    
    
    
    6.00
    
    
    
    05/03/201010,000
    
    
    
    17.01
    
    
    
    05/23/201110,000
    
    
    
    11.08
    
    
    
    05/29/201210,000
    
    
    
    8.83
    
    
    
    05/21/201310,000
    
    
    
    12.60
    
    
    
    05/21/2014J. Tomilson Hill
    
    
    
    
    
    
    
    
    
    
    Nolan Lehmann
    
    
    10,000
    
    
    
    16.88
    
    
    
    07/02/200710,000
    
    
    
    26.38
    
    
    
    05/28/200810,000
    
    
    
    19.81
    
    
    
    06/29/200910,000
    
    
    
    6.00
    
    
    
    05/03/201010,000
    
    
    
    17.01
    
    
    
    05/23/201110,000
    
    
    
    11.08
    
    
    
    05/29/201210,000
    
    
    
    8.83
    
    
    
    05/21/201310,000
    
    
    
    12.60
    
    
    
    05/21/2014Steven Martinez
    
    
    
    
    
    
    
    
    
    
    James A. Quella
    
    
    
    
    
    
    
    
    
    
    Antony P. Ressler
    
    
    
    
    
    
    
    
    
    
    


|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) |  | Mr. Black resigned as a director on March 16, 2006. Mr. Blacks annual cash retainer
for 2006 was pro-rated through his date of resignation. On March 16, 2006, the Board elected
Mr. Martinez to fill the vacancy created by Mr. Blacks resignation. Mr. Martinezs annual
cash retainer for 2006 was pro rated to correspond to the date of his election to the Board.
Mr. Black was and Mr. Martinez is a Shareholder Designee appointed by Apollo. See Item 10,
Directors and Executive Officers of the Registrant  Voting Agreements Regarding the Election
of Directors.

153



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(5)
    
    Mr. Ressler resigned as a director on July 28, 2006. Mr. Resslers annual cash
retainer for 2006 was pro rated through his date of resignation and he forfeited his 2006
unvested restricted stock grant under the 2005 Directors Plan upon resignation. On August
26, 2006, the Board elected Ms. Drescher to fill the vacancy created by Mr. Resslers
resignation. Ms. Dreschers annual cash retainer for 2006 was pro rated to correspond to the
date of her election to the Board. Mr. Ressler was and Ms. Drescher is a Shareholder Designee
appointed by Apollo. See Item 10, Directors and Executive Officers of the Registrant  Voting
Agreements Regarding the Election of Directors.(6)
    
    Mr. Hill resigned as a director on March 16, 2006. Mr. Hills annual cash retainer
for 2006 was pro rated through his date of resignation. On March 16, 2006, the Board elected
Mr. Foley to fill the vacancy created by Mr. Hills resignation. Mr. Foleys annual cash
retainer for 2006 was pro rated to correspond to the date of his election to the Board. Mr.
Hill was and Mr. Foley is a Blackstone Shareholder Designee. See Item 10, Directors and
Executive Officers of the Registrant  Voting Agreements
Regarding the Election of Directors.(7)
    
    Mr. Harris resigned as a director effective November 21, 2006. Mr. Harris annual
cash retainer for 2006 was pro rated through his date of resignation and he forfeited his 2006
unvested restricted stock grant under the 2005 Directors Plan upon resignation. See Item 10,
Directors and Executive Officers of the Registrant  Voting Agreements Regarding the Election
of Directors. Stock Ownership and Retention Guidelines for Directors.
 154




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Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 Security Ownership Of Certain Beneficial Owners And Management
  Common Stock and CommonName of Person or Identity of Group (1)
    
    Stock Equivalents (2)
    
    PercentageApollo Investment Fund III, L.P.Apollo Overseas Partners III, L.P.Apollo (U.K.) Partners III, L.P.Apollo Investment Fund IV, L.P.Apollo Overseas Partners IV, L.P.Apollo/AW LLC
c/o Apollo Advisors, II, L.P.10250 Constellation Blvd, Suite 2900
Los Angeles, CA 90067
    
    
    32,764,897
    (3)
    
    
    8.9
    %Blackstone Capital Partners II and III Merchant Banking Fund L.P.Blackstone Offshore Capital Partners II and III L.P.Blackstone Family Investment Partnership II and III L.P.
c/o Blackstone Management Associates II L.L.C.345 Park Avenue, 31st Floor
New York, NY 10154
    
    
    47,920,880
    (4)
    
    
    13.0
    %Capital Research and Management Company333 South Hope Street
Los Angeles, CA 90071
    
    
    29,212,760
    
    
    
    7.9
    %FMR Corporation82 Devonshire St.
Boston, MA 02109
    
    
    23,335,192
    
    
    
    6.3
    %Goldman Sachs Asset Mgmt., L.P.32 Old Slip
New York, NY 10005
    
    
    20,095,782
    
    
    
    5.5
    %EARNEST
Partners, LLC.1180 Peachtree Street NE, Suite 2300
Atlanta, GA 30309
    
    
    22,616,340
    
    
    
    6.1
    %John J. Zillmer
    
    
    681,598
    (5)
    
    
    *Robert M. Agate
    
    
    121,605
    (6)
    
    
    *Charles H. Cotros
    
    
    279,568
    (7)
    
    
    *James W. Crownover
    
    
    68,574
    (8)
    
    
    *Stephanie Drescher
    
    
    32,764,897
    (9)
    
    
    8.9
    %Edward A. Evans
    
    
    79,102
    (10)
    
    
    *William J. Flynn
    
    
    11,511
    (11)David I. Foley
    
    
    47,925,448
    (12)
    
    
    13.0
    %Peter S. Hathaway
    
    
    556,613
    (13)
    
    
    *Dennis R. Hendrix
    
    
    153,113
    (14)
    
    
    *Nolan Lehmann
    
    
    190,130
    (15)
    
    
    *Steven Martinez
    
    
    32,769,465
    (9)
    
    
    8.9
    %James A. Quella
    
    
    47,925,448
    (12)
    
    
    13.0
    %Donald W. Slager
    
    
    654,602
    (16)
    
    
    *John M. Trani
    
    
    11,511
    (17)All directors and executive officers as a group (15 persons)
    
    
    83,507,408
    
    
    
    22.5
    %
 
 *
    
    Does not exceed one percent.(1)
    
    Unless otherwise indicated, the address of each person or group listed above is
18500 North Allied Way, Phoenix, AZ 85054.(2)
    
    Includes shares of common stock that may be acquired upon the exercise of options
within 60 days of February 19, 2007, restricted stock units that will vest within 60 days of
February 19, 2007, and shares of restricted stock outstanding as of February 19, 2007 as to
which the holder has the right to vote.(3)
    
    This total represents shares held by Apollo Investment Fund III, L.P. (12,685,315
shares, representing 39%), Apollo Overseas Partners III, L.P. (833,180 shares, representing
3%), Apollo (UK) Partners III, L.P. (515,943 shares, representing 2%), Apollo Investment Fund
IV, L.P. (15,644,540 shares, representing 48%), Apollo Overseas 155




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##### Table of Contents



Partners IV, L.P. (871,206 shares, representing 3%), and Apollo/AW LLC (2,202,099 shares,
representing 7%), (collectively, the Apollo Investors). Apollo Advisors II, L.P., Apollo
Advisors IV, L.P. and/or Apollo Management, L.P. (and together with affiliated investment
managers, Apollo Advisors) which serve as general partner and/or manager for each of the
Apollo Investors, each of which is affiliated with one another. Ms. Drescher and Mr. Martinez
are principals of Apollo Advisors and each disclaims beneficial ownership of the indicated
shares.(4)
    
    This total represents shares held by Blackstone Management Associates II L.L.C.
(Blackstone Associates) which serves as general partner for each of Blackstone Capital
Partners II Merchant Banking Fund L.P. (6,611,545 shares, representing 14%), Blackstone
Offshore Capital Partners II L.P. (1,962,386 shares, representing 4%), Blackstone Family
Investment Partnership II L.P. (657,937 shares, representing 1%), Blackstone Capital Partners
III Merchant Banking Fund L.P. (30,668,235 shares, representing 64%), Blackstone Family
Investment Partnership III L.P. (2,320,500 shares, representing 5%), and Blackstone Offshore
Capital Partners III L.P. (5,686,265 shares, representing 12%) (collectively, the Blackstone
Investors). The total also includes 14,012 shares of restricted stock issued to Blackstone
Management Partners III L.L.C. (Blackstone Advisor), the investment advisor to certain of
the Blackstone Investors, and 125,000 shares that may be acquired on the exercise of options
by Blackstone Advisor.(5)
    
    Includes (a) 467,336 shares of common stock that may be acquired on the exercise of
options; and (b) 66,670 shares of restricted stock that are not yet vested but that Mr.
Zillmer has the right to vote.(6)
    
    Includes (a) 65,000 shares of common stock that may be acquired on the exercise of
options; and (b) 4,568 shares of restricted stock that are not yet vested but that Mr. Agate
has the right to vote.(7)
    
    Includes (a) 265,000 shares of common stock that may be acquired on the exercise of
options; and (b) 4,568 shares of restricted stock that are not yet vested but that Mr. Cotros
has the right to vote.(8)
    
    Includes (a) 45,000 shares of common stock that may be acquired on the exercise of
options; and (b) 4,568 shares of restricted stock that are not yet vested but that Mr.
Crownover has the right to vote.(9)
    
    Includes (i) 32,764,897 shares beneficially owned by the Apollo Investors; and (ii)
4,568 shares of restricted stock that are not yet vested but that Mr. Martinez has the right
to vote. Each of Ms. Drescher and Mr. Martinez disclaim beneficial
ownership of shares owned by the Apollo Investors.(10)
    
    Includes 59,700 shares of common stock that may be acquired on the exercise of
options held by Mr. Evans.(11)
    
    Represents 11,511 shares of restricted stock that are not yet vested but that Mr.
Flynn has the right to vote.(12)
    
    Includes (i) 47,906,868 shares beneficially owned by the Blackstone Investors,
(ii) 14,012 shares of restricted stock issued to Blackstone Management Partners III, LLC, and
(iii) 4,568 shares of restricted stock issued to Blackstone Advisors. Messrs. Foley and
Quella are principals of Blackstone Associates and each disclaims beneficial ownership of the
shares owned by the Blackstone Investors and Blackstone Advisors.(13)
    
    Includes (a) 422,600 shares of common stock that may be acquired on the exercise of
options held by Mr. Hathaway, and (b) 25,000 shares of common stock that may be acquired on
the exercise of options held by the Hathaway FLP. Mr. Hathaway disclaims beneficial ownership
of shares underlying the options held by the Hathaway FLP except to the extent of his
pecuniary interest therein.(14)
    
    Includes (a) 95,000 shares of common stock that may be acquired on the exercise of
options; and (b) 4,568 shares of restricted stock that are not yet vested but that Mr. Hendrix
has the right to vote.(15)
    
    Includes (a) 80,000 shares of common stock that may be acquired on the exercise of
options; and (b) 4,568 shares of restricted stock that are not yet vested but that Mr. Lehmann
has the right to vote.(16)
    
    Includes 536,600 shares of common stock that may be acquired on the exercise of
options held by Mr. Slager.(17)
    
    Represents 11,511 shares of restricted stock that are not yet vested but that Mr.
Trani has the right to vote. Equity Compensation Plan Information as of Fiscal Year-End
   156




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Equity Compensation Plan Information
 (c)Number of Securities(a)
    
    (b)
    
    Remaining AvailableNumber of Securities to
    
    Weighted-Average
    
    For Future IssuanceBe Issued upon Exercise
    
    Exercise Price of
    
    Under EquityOf Outstanding Options,
    
    Outstanding
    
    Compensation PlansRSUs, Warrants and
    
    Options, Warrants
    
    (excluding securitiesPlan Category
    
    Rights (1)
    
    and Rights (1)
    
    reflected in column (a))Equity compensation
plans approved by
security holders
(1)
    
    
    22,757,622
    
    
    $
    11.77
    
    
    
    34,274,673Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    22,757,622
    
    
    
    
    
    
    
    34,274,673
 
 (1)
    
    There are 74,930 stock options outstanding under the American Disposal Services,
Inc. 1996 Stock Option Plan (the American Disposal Plan), which were assumed as part of the
merger of American Disposal and our company in October 1998. These stock options are held by
8 former employees and consultants of American Disposal and are
exercisable for 123,635
shares of our common stock (after giving effect to the exchange ratio provided in the merger).
These 123,635 shares are included in column (a), and are reflected in the weighted average
exercise price in column (b). These options have a weighted average
exercise price of $19.86
per share. No further awards will be made under the American Disposal Plan.  157




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Item 13. Certain Relationships and Related Transactions, and Director Independence
 Certain Relationships and Related Transactions
     158




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##### Table of Contents



Director Independence
 10-K:
 Robert M. Agate
    
    Dennis R. HendrixCharles H. Cotros
    
    Nolan LehmannJames W. Crownover
    
    Steven MartinezStephanie Drescher
    
    James A. QuellaWilliam J. Flynn
    
    John M. TraniDavid I. Foley
  Leon D. Black
    
    J. Tomilson HillJoshua J. Harris
    
    Antony P. Ressler
  
    
    If any of our directors is an executive officer of another company that is indebted to
us, or to which we are indebted, and the total amount of either companys indebtedness to
the other is less than 1% of the consolidated assets of our company and of the company for
which the director serves as an executive officer.
    
    If any of our directors or a member of a directors immediate family serves as an
officer, director or trustee of a charitable organization, and our companys discretionary
charitable contributions to the organization are less than 2% of that organizations total
annual charitable receipts.
    
    A passive investment by any of our directors, or member of a directors immediate
family, in a stockholder that owns less than 45% of our outstanding common stock, as long
as that passive investment does not exceed 5% of the directors net worth.
    
    Affiliation or employment by any of our directors, or member of a directors immediate
family, with an entity that beneficially owns up to 45% of our outstanding common stock.
   159




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Item 14. Principal Accounting Fees and Services
  2006
    
    2005Audit Fees (1)
    
    $
    2,942.0
    
    
    $
    2,560.7Audit-Related Fees (2)
    
    
    366.3
    
    
    
    170.5Tax Fees (3)
    
    
    21.2
    
    
    
    12.0All Other Fees (4)
    
    
    6.5
    
    
    
    3.2
 
 (1)
    
    Audit Fees for the years ended December 31, 2006 and 2005 related to
services rendered for the integrated audit of the consolidated financial statements and
internal control over financial reporting included in our Form 10-K, for the reviews of the
financial statements included in our Form 10-Qs, in connection with capital markets
transactions such as comfort letters and consents, and in connection with reviews of other
documents filed with the SEC.(2)
    
    Audit-Related Fees for the years ended December 31, 2006 and 2005 were
primarily for related services with respect to employee benefit plan audits, subsidiary
financial statement audits, and agreed-upon procedures engagements.(3)
    
    Tax Fees for the years ended December 31, 2006 and 2005 were for assistance
with tax compliance requests.(4)
    
    All Other Fees for the year ended December 31, 2006 and 2005 pertained to an
annual license for access to a financial reporting accounting literature research database.  
 Part IV
 
 Item 15. Exhibits, Financial Statement Schedule
  1. Financial Statements
  2. Financial Statement Schedule -
  Balance
    
    Charges
    
    
    
    
    
    
    
    
    
    Balanceat
    
    to
    
    Other
    
    Write-offs/
    
    at12/31/03
    
    Expense
    
    Charges(1)
    
    Payments
    
    12/31/04Receivable realization allowance
    
    $
    22.4
    
    
    $
    20.0
    
    
    $
    (0.3
    )
    
    $
    (25.1
    )
    
    $
    17.0Acquisition related severance
and termination costs
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    0.2Acquisition related restructuring costs
    
    
    2.3
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.7
    )
    
    
    1.5Allowance
for deferred tax assets
    
    
    91.7
    
    
    
    15.4
    
    
    
    
    
    
    
    
    
    
    
    107.1
 Balance
    
    Charges
    
    
    
    
    
    
    
    
    
    Balanceat
    
    to
    
    Other
    
    Write-offs/
    
    at12/31/04
    

Expense
    
    Charges(1)
    
    Payments
    
    12/31/05Receivable realization allowance
    
    $
    17.0
    
    
    $
    18.8
    
    
    $
    (0.2
    )
    
    $
    (17.8
    )
    
    $
    17.8Acquisition related severance
and termination costs
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.5
    
    
    
    (0.1
    )
    
    
    0.8Acquisition related restructuring costs
    
    
    1.5
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    0.9Allowance
for deferred tax assets
    
    
    107.1
    
    
    
    9.4
    
    
    
    
    
    
    
    
    
    
    
    116.5
 Balance
    
    Charges
    
    
    
    
    
    
    
    
    
    Balanceat
    
    to
    
    Other
    
    Write-offs/
    
    at12/31/05
    
    Expense
    
    Charges(1)
    
    Payments
    
    12/31/06Receivable realization allowance
    
    $
    17.8
    
    
    $
    18.6
    
    
    $
    0.2
    
    
    $
    (17.4
    )
    
    $
    19.2Acquisition related severance
and termination costs
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    0.6Acquisition related restructuring costs
    
    
    0.9
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    0.3Allowance
for deferred tax assets
    
    
    116.5
    
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    117.4
 
 (1)
    
    Amounts primarily relate to acquired and divested companies.  160




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BROWNING-FERRIS INDUSTRIES, LLC
 Financial Statements of Browning-Ferris Industries, LLC -
  161




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BROWNING-FERRIS INDUSTRIES, LLC
 Financial Statements and Supplementary DataReport of Independent Registered Public Accounting Firm
    
    
    163Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    164Consolidated Statements of Operations for each of the Three Years in the
Period Ended December 31, 2006
    
    
    165Consolidated Statements of Members Deficit for each of the Three Years in
the Period Ended December 31, 2006
    
    
    166Consolidated Statements of Cash Flows for each of the Three Years in the
Period Ended December 31, 2006
    
    
    167Notes to Consolidated Financial Statements
    
    
    168Financial Statement Schedule
    
    
    195
 162




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Report of Independent Registered Public Accounting Firm
 
   
 163




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BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED BALANCE SHEETS
 (in millions)
 December 31,2006
    
    
    2005ASSETSCurrent Assets Cash and cash equivalents
    
    $
    10.1
    
    
    $
    12.1Accounts receivable, net of allowance of $4.8 and $4.2
    
    
    200.2
    
    
    
    170.5Prepaid and other current assets
    
    
    19.6
    
    
    
    18.8Total current assets
    
    
    229.9
    
    
    
    201.4Property and equipment, net
    
    
    1,037.0
    
    
    
    1,000.9Goodwill
    
    
    3,322.3
    
    
    
    3,391.0Other assets, net
    
    
    131.2
    
    
    
    132.8Due from parent
    
    
    
    
    
    
    18.0Total assets
    
    $
    4,720.4
    
    
    $
    4,744.1LIABILITIES AND MEMBERS DEFICITCurrent Liabilities Current portion of long-term debt
    
    $
    1.2
    
    
    $
    4.4Accounts payable
    
    
    124.3
    
    
    
    131.1Current portion of accrued capping, closure, post-closure and environmental costs
    
    
    62.3
    
    
    
    66.4Accrued interest
    
    
    71.2
    
    
    
    79.2Other accrued liabilities
    
    
    114.7
    
    
    
    106.4Unearned revenue
    
    
    68.6
    
    
    
    62.4Total current liabilities
    
    
    442.3
    
    
    
    449.9Long-term debt, less current portion
    
    
    5,183.9
    
    
    
    5,357.8Accrued capping, closure, post-closure and environmental costs, less current
portion
    
    
    493.2
    
    
    
    510.6Due to parent
    
    
    401.6
    
    
    
    Other long-term obligations
    
    
    146.0
    
    
    
    177.6Commitments and ContingenciesMembers Deficit Members interest
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (54.9
    )
    
    
    (70.3
    )Retained deficit
    
    
    (1,891.7
    )
    
    
    (1,681.5
    )Total members deficit
    
    
    (1,946.6
    )
    
    
    (1,751.8
    )Total liabilities and members deficit
    
    $
    4,720.4
    
    
    $
    4,744.1
  164




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BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in millions)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Revenues
    
    $
    1,803.6
    
    
    $
    1,655.9
    
    
    $
    1,583.1Cost of operations (exclusive of depreciation and
amortization shown below)
    
    
    1,223.6
    
    
    
    1,094.2
    
    
    
    1,037.7Selling, general and administrative expenses
    
    
    167.9
    
    
    
    126.5
    
    
    
    148.0Depreciation and amortization
    
    
    142.6
    
    
    
    132.6
    
    
    
    148.3Operating income
    
    
    269.5
    
    
    
    302.6
    
    
    
    249.1Interest expense and other
    
    
    468.0
    
    
    
    472.2
    
    
    
    612.8Loss before income taxes
    
    
    (198.5
    )
    
    
    (169.6
    )
    
    
    (363.7
    )Income tax benefit
    
    
    (18.7
    )
    
    
    (53.6
    )
    
    
    (127.5
    )Minority interest
    
    
    0.2
    
    
    
    (0.9
    )
    
    
    (3.4
    )Loss from continuing operations
    
    
    (180.0
    )
    
    
    (115.1
    )
    
    
    (232.8
    )Income (loss) from discontinued operations, net of tax
    
    
    
    
    
    
    6.5
    
    
    
    (9.4
    )Cumulative effect of change in accounting principle,
net of tax
    
    
    
    
    
    
    (0.5
    )
    
    
    Net loss
    
    $
    (180.0
    )
    
    $
    (109.1
    )
    
    $
    (242.2
    )
  165




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BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED STATEMENTS OF MEMBERS DEFICIT
 (in millions)
 AccumulatedOther
    
    
    
    
    
    
    TotalMembers
    
    
    Comprehensive
    
    
    Retained
    
    
    MembersInterest
    
    
    Loss
    
    
    Deficit
    
    
    DeficitBalance as of December 31, 2003
    
$
    
    
    
    $
    (94.5
    )
    
    $
    (1,285.3
    )
    
    $
    (1,379.8
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (242.2
    )
    
    
    (242.2
    )Distribution to parent
    
    
    
    
    
    
    
    
    
    
    (30.2
    )
    
    
    (30.2
    )Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    18.2
    
    
    
    
    
    
    
    18.2Net loss on hedging derivatives reclassified
to earnings
    
    
    
    
    
    
    4.3
    
    
    
    
    
    
    
    4.3Minimum pension liability adjustment
    
    
    
    
    
    
    2.6
    
    
    
    
    
    
    
    2.6Balance as of December 31, 2004
    
    
    
    
    
    
    (69.4
    )
    
    
    (1,557.7
    )
    
    
    (1,627.1
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (109.1
    )
    
    
    (109.1
    )Distribution to parent
    
    
    
    
    
    
    
    
    
    
    (14.7
    )
    
    
    (14.7
    )Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    1.3Minimum pension liability adjustment
    
    
    
    
    
    
    (2.2
    )
    
    
    
    
    
    
    (2.2
    )Balance as of December 31, 2005
    
    
    
    
    
    
    (70.3
    )
    
    
    (1,681.5
    )
    
    
    (1,751.8
    )Net loss
    
    
    
    
    
    
    
    
    
    
    (180.0
    )
    
    
    (180.0
    )Distribution to parent
    
    
    
    
    
    
    
    
    
    
    (30.2
    )
    
    
    (30.2
    )Other comprehensive income, net of tax:Minimum pension liability adjustment
    
    
    
    
    
    
    70.3
    
    
    
    
    
    
    
    70.3Adjustment to initially apply SFAS 158
    
    
    
    
    
    
    (54.9
    )
    
    
    
    
    
    
    (54.9
    )Balance as of December 31, 2006
    
    $
    
    
    
    $
    (54.9
    )
    
    $
    (1,891.7
    )
    
    $
    (1,946.6
    )
 Comprehensive Loss 
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Net loss
    
    $
    (180.0
    )
    
    $
    (109.1
    )
    
    $
    (242.2
    )Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    1.3
    
    
    
    18.2Net loss on hedging derivatives reclassified to earnings
    
    
    
    
    
    
    
    
    
    
    4.3Minimum pension liability adjustment
    
    
    70.3
    
    
    
    (2.2
    )
    
    
    2.6$
    (109.7
    )
    
    $
    (110.0
    )
    
    $
    (217.1
    )
  166




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BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in millions)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Operating activities Net loss
    
    $
    (180.0
    )
    
    $
    (109.1
    )
    
    $
    (242.2
    )Discontinued operations, net of tax
    
    
    
    
    
    
    (6.5
    )
    
    
    9.4Adjustments to reconcile net loss to cash used for
operating activities from continuing operationsProvisions for:Depreciation and amortization
    
    
    142.6
    
    
    
    132.6
    
    
    
    148.3Doubtful accounts
    
    
    3.8
    
    
    
    3.8
    
    
    
    2.1Accretion of debt and amortization of debt issuance costs
    
    
    18.8
    
    
    
    19.3
    
    
    
    21.7Gain on sale of fixed assets
    
    
    (4.4
    )
    
    
    (0.7
    )
    
    
    (1.6
    )Non-cash reduction in acquisition and environmental accruals
    
    
    (7.2
    )
    
    
    (25.2
    )
    
    
    (12.2
    )Loss on sale of trade receivables
    
    
    5.8
    
    
    
    5.0
    
    
    
    13.4Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    (16.2
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    
    
    
    
    6.7Write-off of deferred debt issuance costs
    
    
    4.1
    
    
    
    11.9
    
    
    
    15.3Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    0.5
    
    
    
    Change in operating assets and liabilities, excluding the effects
of acquisitionsAccounts receivable, prepaid expenses and other assets
    
    
    (39.1
    )
    
    
    (23.3
    )
    
    
    (22.0
    )Accounts payable, accrued liabilities, unearned income and other
    
    
    (14.4
    )
    
    
    (52.7
    )
    
    
    (22.9
    )Capping, closure and post-closure accretion
    
    
    29.4
    
    
    
    30.3
    
    
    
    29.4Capping, closure, post-closure and environmental expenditures
    
    
    (58.2
    )
    
    
    (58.3
    )
    
    
    (63.3
    )Cash used for operating activities from continuing operations
    
    
    (98.8
    )
    
    
    (72.4
    )
    
    
    (134.1
    )Investing activities Cost of acquisitions, net of cash acquired
    
    
    
    
    
    
    (0.7
    )
    
    
    (0.2
    )Proceeds from divestitures, net of cash divested
    
    
    0.2
    
    
    
    2.9
    
    
    
    55.7Proceeds from sale of fixed assets
    
    
    7.7
    
    
    
    2.5
    
    
    
    3.9Capital expenditures, excluding acquisitions
    
    
    (188.2
    )
    
    
    (203.3
    )
    
    
    (180.5
    )Capitalized interest
    
    
    (5.3
    )
    
    
    (4.9
    )
    
    
    (4.0
    )Other
    
    
    
    
    
    
    2.5
    
    
    
    2.2Cash used for investing activities from continuing operations
    
    
    (185.6
    )
    
    
    (201.0
    )
    
    
    (122.9
    )Financing activities Proceeds from long-term debt, net of issuance costs
    
    
    1,200.4
    
    
    
    2,083.7
    
    
    
    2,122.2Payments of long-term debt
    
    
    (1,395.3
    )
    
    
    (2,783.8
    )
    
    
    (2,415.5
    )Net change in disbursement account
    
    
    (2.3
    )
    
    
    2.2
    
    
    
    5.0Net change in due to/from parent
    
    
    479.6
    
    
    
    978.5
    
    
    
    553.0Cash provided by financing activities from continuing operations
    
    
    282.4
    
    
    
    280.6
    
    
    
    264.7Discontinued operations:Used for operating activities
    
    
    
    
    
    
    (0.5
    )
    
    
    (8.8
    )Cash used for discontinued operations
    
    
    
    
    
    
    (0.5
    )
    
    
    (8.8
    )Increase (decrease) in cash and cash equivalents
    
    
    (2.0
    )
    
    
    6.7
    
    
    
    (1.1
    )Cash and cash equivalents, beginning of year
    
    
    12.1
    
    
    
    5.4
    
    
    
    6.5Cash and cash equivalents, end of year
    
    $
    10.1
    
    
    $
    12.1
    
    
    $
    5.4Supplemental disclosures:Interest paid (net of amounts capitalized)
    
    $
    417.1
    
    
    $
    426.3
    
    
    $
    490.8Debt incurred or assumed in acquisitions
    
    
    
    
    
    
    
    
    
    
    Capital lease obligations incurred
    
    
    
    
    
    
    0.3
    
    
    
    0.1Non-cash dividend to parent
    
    
    30.2
    
    
    
    14.7
    
    
    
    30.2
  167




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BROWNING-FERRIS INDUSTRIES, LLC
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Summary of Significant Accounting Policies
   Purpose of financial statements 
   Principles of consolidation and presentation 
  168




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Discontinued operations 
   Year Ended December 31,2005
    
    
    2004Revenues
    
    $
    
    
    
    $
    13.4Income (loss) before tax
    
    $
    2.8
    
    
    $
    (0.5
    )Gain on divestiture
    
    
    8.0
    
    
    
    0.8Income tax (benefit) expense
    
    
    4.3
    
    
    
    9.7Discontinued operations, net of tax
    
    $
    6.5
    
    
    $
    (9.4
    )
   Allocation of Interest to Discontinued Operations
 Business combinations 
  Cash and cash equivalents 
 169




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Concentration of credit risk 
  Receivable realization allowance 
  Other assets 
  Other accrued liabilities 
  Accrued capping, closure and post-closure costs 
  170




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Environmental costs 
 Environmental
Remediation Liabilities
 Other long-term obligations 
  Contingent liabilities 
 Accounting for
Contingencies Reasonable Estimation of the Amount of a
Loss.
 Revenue 
  Non-recurring acquisition accruals 
   Interest expense and other 
  171




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Interest expense capitalized 
   Use of estimates 
  Fair value of financial instruments 
 Disclosures About Fair Value of Financial
Instruments
  Stock-based compensation plans
 Share-Based Payment Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation
 Change in accounting principles 
 172




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for Conditional Asset
Retirement Obligations  an interpretation of FASB Statement No. 143 Accounting for Asset Retirement Obligations
 Recently issued accounting pronouncements 
 Fair Value
Measurements
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R) Employee
Benefit Plans
 Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement No. 109 .
 2. Property and Equipment
  173




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for
Impairment or Disposal of Long-Lived Assets
 The Treatment of Certain Site Restoration/Environmental Exit Costs When
Testing a Long-Lived Asset for Impairment
   2006
    
    
    2005Land and improvements
    
    $
    135.7
    
    
    $
    134.9Land held for permitting as landfills
    
    
    13.4
    
    
    
    12.3Landfills
    
    
    1,219.7
    
    
    
    1,145.6Buildings and improvements
    
    
    99.1
    
    
    
    98.4Vehicles, furniture and equipment
    
    
    487.2
    
    
    
    418.7Containers and compactors
    
    
    194.0
    
    
    
    174.32,149.1
    
    
    
    1,984.2Accumulated depreciation and amortization
    
    
    (1,112.1
    )
    
    
    (983.3
    )$
    1,037.0
    
    
    $
    1,000.9
 3. Goodwill and Intangible Assets
    174




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   2006
    
    
    2005Beginning balance
    
    $
    3,391.0
    
    
    $
    3,439.4Acquisitions
    
    
    
    
    
    
    Divestitures
    
    
    
    
    
    
    Adjustments (1)
    
    
    (68.7
    )
    
    
    (48.4
    )Ending balance
    
    $
    3,322.3
    
    
    $
    3,391.0
 
 (1)
    
    Primarily relates to reclassification of goodwill in connection with
 entities distributed to Allied. 4. Long-term Debt
   Debt Balance at
    
    
    Effective Interest RateDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Revolving credit facility ABR borrowings*
    
    $
    
    
    
    $
    3.7
    
    
    
    9.75
    %
    
    
    9.00
    %Revolving credit facility Adjusted LIBOR borrowings*
    
    
    
    
    
    
    
    
    
    
    7.86
    
    
    
    7.292005 Term Loan B due 2012
    
    
    1,105.0
    
    
    
    1,275.0
    
    
    
    7.34
    
    
    
    6.336.375% senior notes due 2008
    
    
    157.9
    
    
    
    154.7
    
    
    
    8.34
    
    
    
    8.348.50% senior notes due 2008
    
    
    750.0
    
    
    
    750.0
    
    
    
    8.78
    
    
    
    8.788.875% senior notes due 2008
    
    
    
    
    
    
    600.0
    
    
    
    
    
    
    
    9.156.50% senior notes due 2010
    
    
    350.0
    
    
    
    350.0
    
    
    
    6.76
    
    
    
    6.766.375% senior notes due 2011
    
    
    275.0
    
    
    
    275.0
    
    
    
    6.63
    
    
    
    6.639.25% senior notes due 2012
    
    
    250.9
    
    
    
    251.1
    
    
    
    9.40
    
    
    
    9.407.875% senior notes due 2013
    
    
    450.0
    
    
    
    450.0
    
    
    
    8.09
    
    
    
    8.097.125% senior notes due 2016
    
    
    595.1
    
    
    
    
    
    
    
    7.38
    
    
    
    9.25% debentures due 2021
    
    
    96.3
    
    
    
    96.1
    
    
    
    9.47
    
    
    
    9.477.40% debentures due 2035
    
    
    294.4
    
    
    
    292.2
    
    
    
    8.03
    
    
    
    8.034.25% senior subordinated convertible debentures due 2034
    
    
    230.0
    
    
    
    230.0
    
    
    
    4.34
    
    
    
    4.347.375% senior unsecured notes due 2014
    
    
    400.0
    
    
    
    400.0
    
    
    
    7.55
    
    
    
    7.55Solid waste revenue bond obligations, principal payable
through 2031
    
    
    225.2
    
    
    
    228.4
    
    
    
    6.68
    
    
    
    6.60Notes payable to individuals, variable interest rate, and
principal payable through 2007, secured by vehicles,
equipment, real estate, or accounts receivable**
    
    
    0.2
    
    
    
    0.4
    
    
    
    3.00
    
    
    
    3.04Obligations under capital leases of vehicles and equipment**
    
    
    2.9
    
    
    
    3.0
    
    
    
    9.96
    
    
    
    10.22Notes payable to a municipal corporation, interest at 6.0%,
principal payable through 2010, unsecured**
    
    
    2.2
    
    
    
    2.6
    
    
    
    6.00
    
    
    
    6.00Total debt**
    
    
    5,185.1
    
    
    
    5,362.2
    
    
    
    7.61
    %
    
    
    7.55
    %Less: Current portion
    
    
    1.2
    
    
    
    4.4
 175




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Debt Balance at
    
    
    Effective Interest RateDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Long-term portion
    
    $
    5,183.9
    
    
    $
    5,357.8
 
 *
    
    Excludes fees**
    
    Reflects weighted average interest rate 176




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Refinancings 
    
    
    the issuance of 12.75 million shares of common stock for $101 million;
    
    the issuance of 6.25% mandatory convertible preferred stock with a conversion premium
of 25% for $600 million; and
    
    the issuance of 7.25% senior notes due 2015 for $600 million.
  
    
    $195 million of the remaining 10% senior subordinated notes due 2009;
    
    $125 million of the 9.25% senior notes due 2012;
    
    $600 million 7.625% senior notes due 2006;
    
    $206 million of term loans; and
    
    $70 million of the 7.875% senior notes due 2005.
    2005 Credit Facility 
   177




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Senior notes and debentures 
 th th
 th th
 th th
 th th
 st st
 st st
 st st
 Valuation of Debt Assumed in a Purchase
Business Combination
 178




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Senior subordinated notes 
   Senior subordinated convertible debentures 
 Accounting for Derivative Instruments
and Hedging Activities
   th
 179




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Future maturities of long-term debt
  Maturity2007
    
    $
    1.22008
    
    
    911.82009
    
    
    0.62010
    
    
    350.82011
    
    
    275.1Thereafter
    
    
    3,724.5Gross Principal
    
    
    5,264.0Discount, net
    
    
    (78.9
    )Total Debt
    
    $
    5,185.1
 Fair value of debt
  Balance at
    
    Fair Value at
    
    Balance at
    
    Fair Value atDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,2006
    
    2006
    
    2005
    
    2005Fixed Rate Debt:Principal amount
    
    $
    4,000.5
    
    
    $
    4,103.8
    
    
    $
    4,004.0
    
    
    $
    4,100.3Weighted average interest rate
    
    
    7.52
    %
    
    
    
    
    
    
    7.78
    %Variable Rate Debt:Principal amount
    
    $
    1,184.6
    
    
    $
    1,188.7
    
    
    $
    1,358.2
    
    
    $
    1,366.2Weighted average interest rate(1)
    
    
    6.97
    %
    
    
    
    
    
    
    6.03
    %
 
 (1)

    Reflects the rate in effect as of December 31, 2006 and 2005 and includes all
applicable margins. Actual future rates may vary. Debt covenants
   Guarantees 
  180




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others
 Collateral 
   Other AlliedBFI
    
    
    Collateral
    
    
    CombinedCondensed Balance Sheet (1):Current assets
    
    $
    229.9
    
    
    $
    237.3
    
    
    $
    467.2Property and equipment, net
    
    
    1,037.0
    
    
    
    823.0
    
    
    
    1,860.0Goodwill
    
    
    3,322.3
    
    
    
    3,010.9
    
    
    
    6,333.2Other assets, net
    
    
    131.2
    
    
    
    35.3
    
    
    
    166.5Total assets
    
    $
    4,720.4
    
    
    $
    4,106.5
    
    
    $
    8,826.9Current liabilities
    
    $
    442.3
    
    
    $
    257.2
    
    
    $
    699.5Long-term debt, less current portion
    
    
    5,183.9
    
    
    
    6.0
    
    
    
    5,189.9Other long-term obligations
    
    
    639.2
    
    
    
    66.6
    
    
    
    705.8Due to parent
    
    
    401.6
    
    
    
    1,565.4
    
    
    
    1,967.0Total equity (deficit)
    
    
    (1,946.6
    )
    
    
    2,211.3
    
    
    
    264.7Total liabilities and equity (deficit)
    
    $
    4,720.4
    
    
    $
    4,106.5
    
    
    $
    8,826.9
 
 (1)
    
    All transactions between BFI and the Other Allied Collateral have been eliminated. 5. Derivative Instruments and Hedging Activities
   Designated interest rate swap contracts accounted for as hedges
  181




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Non-hedge accounting interest rate swap contracts 
  De-designated interest rate swap contracts.
  Fair value interest rate swap contracts.
 6. Accumulated Other Comprehensive Loss
  December 31,
    
    
    December 31,2006
    
    
    2005Employee benefits plan liability adjustment, net of taxes of $46.8
    
    $
    
    
    
    $
    (70.3
    )Adjustment to initially apply SFAS 158, net of taxes of $37.7
    
    
    (54.9
    )
    
    
    Accumulated other comprehensive loss
    
    $
    (54.9
    )
    
    $
    (70.3
    )
 182




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Landfill Accounting
     Landfill assets 
    1.
    
    We have control of and access to the land where the expansion permit is being sought.2.
    
    All geological and other technical siting criteria for a landfill have been met, or
an exception from such requirements has been received (or can reasonably be expected to be
received).3.
    
    The political process has been assessed and there are no identified impediments that
cannot be resolved.4.
    
    We are actively pursuing the expansion permit and have an expectation that the final
local, state and federal permits will be received within the next five years.5.
    
    Senior operations management approval has been obtained.
 183




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
   Capping, closure and post-closure
      184




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Landfill maintenance costs 
  Financial assurance costs 
  Environmental costs
    185




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  8. Employee Benefit Plans
 Defined benefit pension plan 
    .
  Employers Disclosures about Pensions and Other
Postretirement Benefits
  186




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2006
    
    
    2005Projected benefit obligation at beginning of period
    
    $
    377.4
    
    
    $
    353.0Service cost
    
    
    0.2
    
    
    
    0.6Interest cost
    
    
    21.1
    
    
    
    20.7Curtailment loss
    
    
    (0.7
    )
    
    
    Actuarial (gain) loss
    
    
    (22.7
    )
    
    
    20.9Benefits paid
    
    
    (16.0
    )
    
    
    (17.8
    )Projected benefit obligation at end of period
    
    $
    359.3
    
    
    $
    377.4Fair value of plan assets at beginning of period
    
    $
    361.1
    
    
    $
    339.4Actual return on plan assets
    
    
    25.8
    
    
    
    39.5Benefits paid
    
    
    (16.0
    )
    
    
    (17.8
    )Fair value of plan assets at end of period
    
    $
    370.9
    
    
    $
    361.1The following table provides the funded status of the plan and amounts recognized in the
balance sheets as of December 31 (in millions):2006
    
    2005Funded status
    
    $
    11.6
    
    
    $
    (16.3
    )Non-current asset
    
    $
    11.6
    
    
    $
    103.7Non-current liabilities
    
    
    
    
    
    
    (117.8
    )
  12/31/06
    
    
    
    
    
    12/31/06
    
    
    
    
    
    12/31/06Balance
    
    AML
    
    Balance
    
    Adjustment
    
    BalancePrior to AML
    
    Adjustment
    
    Post AML
    
    to Initially
    
    Post AML& SFAS 158
    
    Per
    
    Pre-SFAS 158
    
    Apply
    
    & SFAS 158Adjustment
    
    SFAS 87
    
    Adjustment
    
    SFAS 158
    
    AdjustmentPrepaid pension asset
    
    $
    104.1
    
    
    $
    0.4
    
    
    $
    104.5
    
    
    $
    (104.5
    )
    
    $
    Accrued pension
liability
    
    
    (117.8
    )
    
    
    117.8
    
    
    
    
    
    
    
    
    
    
    
    Intangible asset
    
    
    0.7
    
    
    
    (0.7
    )
    
    
    
    
    
    
    
    
    
    
    Non-current asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.6
    
    
    
    11.6Deferred tax asset
    
    
    46.8
    
    
    
    (46.8
    )
    
    
    
    
    
    
    37.8
    
    
    
    37.8AOCI, net of taxes
    
    
    70.3
    
    
    
    (70.3
    )
    
    
    
    
    
    
    55.1
    
    
    
    55.1
  2006Net actuarial loss
    
    $
    92.3Prior service cost
    
    
    0.6Total AOCI before tax benefit
    
    $
    92.9
  187




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2007
    
    
    2006
    
    
    2005
    
    
    2004Service cost
    
    $
    0.2
    
    
    $
    0.2
    
    
    $
    0.6
    
    
    $
    0.8Interest cost
    
    
    21.1
    
    
    
    21.1
    
    
    
    20.7
    
    
    
    20.6Expected return on plan assets
    
    
    (29.9
    )
    
    
    (29.9
    )
    
    
    (28.2
    )
    
    
    (28.0
    )Recognized net actuarial loss
    
    
    5.0
    
    
    
    6.9
    
    
    
    6.8
    
    
    
    7.2Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Curtailment loss (gain)
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    1.1Net periodic benefit cost
    
    $
    (3.5
    )
    
    $
    (1.5
    )
    
    $
    
    
    
    $
    1.8
  2006
    
    2005
    
    2004Actual return on plan assets
    
    $
    25.8
    
    
    $
    39.5
    
    
    $
    37.8Actual rate of return on plan assets
    
    
    7.2
    %
    
    
    11.7
    %
    
    
    11.9
    %
  2006
    
    2005
    
    2004Discount rate
    
    
    6.00
    %
    
    
    5.75
    %
    
    
    6.00
    %Average rate of compensation increase
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %Expected return on plan assets
    
    
    8.25
    %
    
    
    8.50
    %
    
    
    8.50
    %
    188




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BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Target
    
    
    Percentage of plan assets
    
    
    Weighted average expectedallocation
    
    
    at September 30,
    
    
    long-term rate of return for2007
    
    

    2006
    
    
    2005

    
    
    calendar year 2006Equity securities
    
    
    60
    %
    
    
    59
    %
    
    
    63
    %
    
    
    5.86
    %Debt securities
    
    
    40
    %
    
    
    41
    %
    
    
    37
    %
    
    
    2.34
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Estimated future payments:2007
    
    $
    15.52008
    
    
    14.22009
    
    
    15.72010
    
    
    17.42011
    
    
    18.4Thereafter
    
    
    130.3
 BFI Post Retirement Healthcare Plan
  401(k) plan 
  9. Income Taxes
  Accounting for Income Taxes
  189




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   For the Year Ended December 31,2006
    
    
    2005
    
    
    2004Federal statutory tax benefit
    
    $
    (69.5
    )
    
    $
    (59.1
    )
    
    $
    (126.1
    )Consolidated state taxes, net of federal benefit
    
    
    (3.2
    )
    
    
    (14.1
    )
    
    
    (15.8
    )Non-deductible write-off of goodwill and
business combination costs
    
    
    
    
    
    
    
    
    
    
    1.1Effect of foreign operations
    
    
    4.0
    
    
    
    6.1
    
    
    
    2.8Interest on tax contingencies, net of tax benefit
    
    
    37.1
    
    
    
    13.0
    
    
    
    10.9Prior year state matters
    
    
    13.4
    
    
    
    
    
    
    
    Other
    
    
    (0.5
    )
    
    
    0.5
    
    
    
    (0.4
    )Income tax benefit
    
    $
    (18.7
    )
    
    $
    (53.6
    )
    
    $
    (127.5
    )
     190




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Coltec v. United States
 Coltec
    191




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Commitments and Contingencies
 Litigation 
 , Income Taxes
  192




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Royalties 
  193




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Lease agreements 
  2007
    
    $
    18.72008
    
    
    5.72009
    
    
    5.22010
    
    
    4.92011
    
    
    4.3Thereafter
    
    
    20.8Total
    
    $
    59.6
  Financial assurances 
   Guarantees 
   194




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##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11. Related Party Transactions
      
 Financial Statement Schedule -
  Balance at
    
    Charges to
    
    Other
    
    Write-offs/
    
    Balance at12/31/03
    
    Expense
    
    Charges(1)
    
    Payments
    
    12/31/04Receivable realization allowance
    
    $
    7.5
    
    
    $
    2.1
    
    
    $
    0.8
    
    
    $
    (6.3
    )
    
    $
    4.1
 Balance at
    
    Charges to
    
    Other
    
    Write-offs/
    
    Balance at12/31/04
    
    Expense
    
    Charges(1)
    
    Payments
    
    12/31/05Receivable realization allowance
    
    $
    4.1
    
    
    $
    3.8
    
    
    $
    
    
    
    $
    (3.7
    )
    
    $
    4.2
 Balance at
    
    Charges to
    
    Other
    
    Write-offs/
    
    Balance at12/31/05
    
    Expense
    
    Charges(1)
    
    Payments
    
    12/31/06Receivable realization allowance
    
    $
    4.2
    
    
    $
    3.9
    
    
    $
    
    
    
    $
    (3.3
    )
    
    $
    4.8
 
 (1)
    
    Amounts primarily relate to acquired and divested companies. 195




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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 3. Exhibits
 Exhibit No.
    
    Description1.1
    
    Underwriting Agreement dated November 16, 2006, among Allied Waste Industries, Inc., the
selling stockholders listed on Schedule B thereto, and UBS Securities LLC. Exhibit 1.1 to
Allieds Report on Form 8-K dated November 22, 2006, is incorporated by reference herein.2.1
    
    Amended and Restated Agreement and Plan of Reorganization between Allied Waste Industries,
Inc. and Rabanco Acquisition Company, Rabanco Acquisition Company Two, Rabanco Acquisition
Company Three, Rabanco Acquisition Company Four, Rabanco Acquisition Company Five, Rabanco
Acquisition Company Six, Rabanco Acquisition Company Seven, Rabanco Acquisition Company Eight,
Rabanco Acquisition Company Nine, Rabanco Acquisition Company Ten, Rabanco Acquisition Company
Eleven, and Rabanco Acquisition Company Twelve. Exhibit 2.4 to Allieds Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 is incorporated herein by reference.2.2
    
    Agreement and Plan of Merger dated as of August 10, 1998 by and among Allied Waste
Industries, Inc., AWIN II Acquisition Corporation and American Disposal Services, Inc. Exhibit
2 to Allieds Report on Form 8-K filed August 21, 1998 is incorporated herein by reference.2.3
    
    Agreement and Plan of Merger dated as of March 7, 1999 by and among Allied Waste Industries,
Inc., AWIN I Acquisition Corporation and Browning-Ferris Industries, Inc. Exhibit 2 to
Allieds Report on Form 8-K filed March 16, 1999 is incorporated herein by reference.3.1
    
    Amended Certificate of Incorporation of Allied. Exhibit 3.1 to the Companys Report on Form
10-K/A for the fiscal year ended December 31, 1996 is incorporated herein by reference.3.1(i)
    
    Amendment to Amended Certificate of Incorporation of Allied dated October 15, 1998. Exhibit
3.4 to the Companys Report on Form 10-Q for the quarter ended September 30, 1998 is
incorporated herein by reference.3.1(ii)
    
    Certificate of Amendment of Restated Certificate of Incorporation of Allied dated January
23, 2003. Exhibit 3.1(ii) to the Companys Report on Form 10-K for the year ended December
31, 2002 is incorporated herein by reference.3.2
    
    Amended and Restated Bylaws of the Company as of May 13, 1997. Exhibit 3.2 to the Companys
Report on Form 10-Q for the quarter ended June 30, 1997 is incorporated herein by reference.3.2(i)
    
    Amendment to the Amended and Restated Bylaws of the Company, effective June 30, 1999.
Exhibit 3.2 to Allieds Report on Form 10-K for the year ended December 31, 1999 is
incorporated herein by reference.3.2(ii)
    
    Amendment No. 2 to the Amended and Restated Bylaws of Allied Waste Industries, Inc.,
effective June 24, 2003. Exhibit 3.2 to Allieds Report on Form 10-Q for the quarter ended
September 30, 2003 is incorporated herein by reference.3.3
    
    Certificate of Designations of 6 1/4% Series C Senior Mandatory Convertible Preferred Stock
of Allied Waste Industries, Inc., as filed with the Delaware Secretary of State on April 8,
2003. Exhibit 3.01 to Allieds Current Report on Form 8-K dated April 10, 2003 is incorporated
by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.1
    
    Eighth Supplemental Indenture relating to the 8 1/2% Senior Notes due 2008, dated November
27, 2001, among Allied NA, certain guarantors signature thereto, and U.S. Bank National
Association, formerly U.S. Bank Trust National Association, as Trustee. Exhibit 4.1 to
Allieds Registration Statement on Form S-4 (No. 333-82362) is incorporated by reference.4.2
    
    Sixth Supplemental Indenture relating to the 8 7/8% Senior Notes 2008, dated January 30,
2001, among Allied NA, certain guarantors signatory thereto, and U.S. Bank Trust National
Association, as Trustee. Exhibit 4.1 to Allieds Report on Form 10-Q for the quarter ended
March 31, 2001 is incorporated herein by reference.4.3
    
    Amendment No. 1 to Sixth Supplemental Indenture relating to the 8 7/8% Senior Notes due 2008,
dated as of June 29, 2001, among Allied NA, certain guarantors signatory thereto, and U.S.
Bank Trust National Association, as Trustee. Exhibit 4.2 to Allieds Registration Statement
on Form S-4 (No. 333-61744) is incorporated herein by reference.4.4
    
    Senior Indenture relating to the 1998 Senior Notes dated as of December 23, 1998, by and
among Allied NA and U.S. Bank Trust National Association, as Trustee, with respect to the 1998
Senior Notes and Exchange Notes. Exhibit 4.1 to Allieds Registration Statement on Form S-4
(No. 333-70709) is incorporated herein by reference.4.5
    
    Seven Year Series Supplemental Indenture relating to the 1998 Seven Year Notes, dated
December 23, 1998, among Allied NA, the Guarantors and the Trustee. Exhibit 4.4 to Allieds
Registration Statement on Form S-4 (No. 333-70709) is incorporated herein by reference.4.6
    
    Form of Series B Seven Year Notes. Exhibit 4.25 to Allieds Report on Form 10Q for the
quarter ended March 31, 2004 is incorporated herein by reference.4.7
    
    Ten Year Series Supplemental Indenture relating to the 1998 Ten Year Notes, dated December
23, 1998, among Allied NA, the Guarantors and the Trustee. Exhibit 4.6 to Allieds
Registration Statement on Form S-4 (No. 333-70709) is incorporated herein by reference.4.8
    
    Form of Series B Ten Year Notes. Exhibit 4.7 to Allieds Registration Statement on Form S-4
(No. 333-70709) is incorporated herein by reference.4.9
    
    Fourth Supplemental Indenture relating to the 1998 Senior Notes, dated as of July 30, 1999,
among Allied NA, certain guarantors signatory thereto, and U.S. Bank Trust National
Association, as Trustee. Exhibit 4.26 to Allieds Report on Form 10-Q for the quarter ended
June 30, 2000 is incorporated herein by reference.4.10
    
    Fifth Supplemental Indenture relating to the 1998 Senior Notes, dated as of December 29,
1999, among Allied NA, certain guarantors signatory thereto, and U.S. Bank Trust National
Association, as Trustee. Exhibit 4.27 to Allieds Report on Form 10-Q for the quarter ended
June 30, 2000 is incorporated herein by reference.4.11
    
    Seventh Supplemental Indenture relating to the 1998 Senior Notes and the 8 7/8% Senior Notes
due 2008, dated as of June 29, 2001, among Allied NA, certain guarantors signatory thereto and
U.S. Bank Trust National Association, as Trustee. Exhibit 4.21 to Allieds Registration
Statement on Form S-4 (No. 333-61744) is incorporated herein by reference.4.12
    
    Restated Indenture relating to debt issued by Browning-Ferris Industries, Inc., dated
September 1, 1991, among BFI and First City, Texas-Houston, National Association, as Trustee.
Exhibit 4.22 to Allieds Registration Statement on Form S-4 (No. 333-61744) is incorporated
herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.13
    
    First Supplemental Indenture relating to the debt issued by Browning-Ferris Industries, Inc.,
dated July 30, 1999, among Allied, Allied NA, Browning-Ferris Industries, Inc. and Chase Bank
of Texas, National Association, as Trustee. Exhibit 4.23 to Allieds Registration Statement on
Form S-4 (No. 333-61744) is incorporated herein by reference.4.14
    
    Subordinated Indenture, dated July 30, 1999, among Allied NA, certain guarantors signatory
thereto, and U.S. Bank Trust National Association, as Trustee, regarding the 10% Senior
Subordinated Notes due 2009 of Allied NA. Exhibit 4.1 to Allieds Registration Statement on
Form S-4 (No. 333-91539) is incorporated herein by reference.4.15
    
    First Supplemental Indenture, dated July 30, 1999 among Allied NA, certain subsidiaries of
Allied NA and U.S. Bank Trust, National Association, as Trustee, regarding 10% Senior
Subordinated Notes due 2009 of Allied NA. Exhibit 4.3 to Allieds Report on Form 8-K dated
August 10, 1999 is incorporated herein by reference.4.16
    
    Second Supplemental Subordinated Indenture relating to the 10% Senior Subordinated Notes due
2009 of Allied NA, dated December 29, 1999, among Allied NA, certain guarantors signatory
thereto, and U.S. Bank Trust National Association, as Trustee. Exhibit 4.2 to Allieds
Registration Statement on Form S-4 (No. 333-91539) is incorporated herein by reference.4.17
    
    Ninth Supplemental Indenture relating to the 91/4% Senior Notes due 2012, dated November 15,
2002, among Allied NA, certain guarantors signatory thereto, and U.S. Bank National
Association as Trustee. Exhibit 10.75 to Allieds Report on Form 10-K for the year ended
December 31, 2002 is incorporated herein by reference.4.18
    
    Registration Rights Agreement, dated as of November 10, 2003, by and among the Company, the
Guarantors and the initial purchasers, relating to $350 million aggregate principal amount of
6-1/2% Senior Notes due 2010. Exhibit 10.4 to Allieds Report on Form 10-Q for the quarter
ended September 30, 2003 is incorporated herein by reference.4.19
    
    Eleventh Supplemental Indenture relating to the 6 1/2% Senior Notes due 2010, dated November
10, 2003, among Allied NA, certain guarantors signatory thereto, and U.S. Bank National
Association as Trustee. Exhibit 10.5 to Allieds Report on Form 10-Q for the quarter ended
September 30, 2003 is incorporated herein by reference.4.20
    
    Twelfth Supplemental Indenture governing the 5 3/4% Series A Senior Notes due 2011, dated
January 27, 2004, among Allied Waste North America, Inc., Allied Waste Industries, Inc., the
guarantors party thereto, and U.S. Bank National Association as Trustee. Exhibit 10.58 to
Allied Report on Form 10-K for the year ended December 31, 2003 is incorporated herein by
reference.4.21
    
    Thirteenth Supplemental Indenture governing the 6 1/8% Series A Senior Notes due 2014, dated
January 27, 2004, among Allied Waste North America, Inc., Allied Waste Industries, Inc., the
guarantors party thereto, and U.S. Bank National Association as Trustee. Exhibit 10.59 to
Allied Report on Form 10-K for the year ended December 31, 2003 is incorporated herein by
reference.4.22
    
    Second Amended and Restated Registration Rights Agreement, dated as of December 18, 2003,
between Allied and the purchasers of the Series A Convertible Preferred Stock and related
parties. Exhibit 10.60 to Allied Report on Form 10-K for the year ended December 31, 2003 is
incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.23
    
    Third Amended and Restated Shareholders Agreement, dated as of December 18, 2003, between
Allied and the purchasers of the Series A Senior Convertible Preferred Stock and related
parties. Exhibit 10.61 to Allieds Report on Form 10-K for the year ended December 31, 2003
is incorporated herein by reference.4.24
    
    Registration Rights Agreement, dated as of April 20, 2004, by and among the Company, the
Guarantors and the initial purchasers, relating to $275 million aggregate principal amount of
6 3/8% Senior Notes due 2011. Exhibit 10.20 to Allieds Report on Form 10-Q for the quarter
ended March 31, 2004 is incorporated herein by reference.4.25
    
    Registration Rights Agreement, dated as of April 20, 2004, by and among the Company, the
Guarantors and the initial purchasers, relating to $400 million aggregate principal amount of
7 3/8% Senior Notes due 2014. Exhibit 10.21 to Allieds Report on Form 10-Q for the quarter
ended March 31, 2004, is incorporated herein by reference.4.26
    
    Fourteenth Supplemental Indenture governing the 7 3/8% Series A Senior Notes due 2014, dated
April 20, 2004, among Allied Waste North America, Inc., Allied Waste Industries, Inc., the
guarantors party thereto, and U.S. Bank National Association as Trustee. Exhibit 10.22 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.4.27
    
    Fifteenth Supplemental Indenture governing the 6 3/8% Series A Senior Notes due 2011, dated
April 20, 2004, among Allied Waste North America, Inc., Allied Waste Industries, Inc., the
guarantors party thereto, and U.S. Bank National Association as Trustee. Exhibit 10.23 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.4.28
    
    Indenture, dated as of April 20, 2004, among Allied Waste Industries, Inc., and U.S. Bank
Trust National Association, as Trustee, regarding the 4 1/4% Senior Subordinated Convertible
Debentures due 2034 of Allied Waste Industries, Inc. Exhibit 10.24 to Allieds Report on Form
10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.4.29
    
    Tenth Supplemental Indenture governing the 7 7/8% Senior Notes due 2013, dated April 9, 2003,
among Allied Waste North America, Inc., Allied Waste Industries, Inc., the guarantors party
thereto, and U.S. Bank National Association as Trustee. Exhibit 10.01 to Allieds Current
Report on Form 8-K dated April 10, 2003 is incorporated by reference.4.30
    
    Form of 8 1/2% Senior Notes due 2008 (included in Exhibit 4.1).4.31
    
    Form of 8 7/8% Senior Notes due 2008. Exhibit 4.3 to Allieds Registration Statement on Form
S-4 (No. 333-61744) is incorporated herein by reference.4.32
    
    Form of 10% Series B Senior Subordinated Notes due 2009 (included in Exhibit 4.14) is
incorporated herein by reference.4.33
    
    First Supplemental Indenture, dated as of December 31, 2004, between Browning-Ferris
Industries, Inc., BBCO, and JP Morgan Chase Bank, National Association as trustee. Exhibit
4.33 to Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by
reference.4.34
    
    Sixteenth Supplemental Indenture, dated as of March 9, 2005, among the Registrant, Allied
Waste North America, Inc., and U.S. Bank National Association, to the Indenture dated as of
December 23, 1998 concerning the issuance of Senior Notes due 2015. Exhibit 1.01 to Allieds
Current Report on Form 8-K dated March 10, 2005 is incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.35
    
    Registration Rights Agreement, dated as of March 9, 2005, among the Registrant, Allied Waste
North America, Inc., J.P. Morgan Securities Inc., UBS Securities LLC, Credit Suisse First
Boston LLC, Wachovia Capital Markets, LLC, Banc of America Securities LLC, BNP Paribas
Securities Corp., Calyon Securities (USA) and Scotia Capital (USA) Inc. concerning the
registration of the 7 1/4% Senior Notes due 2015. Exhibit 1.02 to Allieds Current Report on
Form 8-K dated March 10, 2005 is incorporated herein by reference.4.36
    
    Supplemental Indenture to the Subordinated Supplemental Indenture, dated as of March 9, 2005,
among Allied Waste North America, Inc., certain guarantors and U.S. Bank National Association,
concerning the 10% Senior Subordinated Notes due 2009. Exhibit 1.03 to Allieds Current
Report on Form 8-K dated March 10, 2005 is incorporated herein by reference.4.37
    
    Supplemental Indenture to the Second Supplemental Indenture, dated as of March 9, 2005, among
Allied Waste North America, Inc., certain guarantors and U.S. Bank National Association,
concerning the 7 5/8% Senior Notes due 2006. Exhibit 1.04 to Allieds Current Report on Form
8-K dated March 10, 2005 is incorporated herein by reference.4.38
    
    Form of Certificate of Designations of Series D Senior Mandatory Convertible Preferred Stock
of Allied Waste Industries, Inc. Exhibit 2 to Allied Waste Industries, Inc.s Report on Form
8-A dated March 3, 2005 is incorporated herein by reference.4.39
    
    Seventeenth Supplemental Indenture governing the 7 1/8% Senior Notes due 2016, dated May 17,
2006, by and among Allied Waste North America, Inc., Allied Waste Industries, Inc., the
guarantors party thereto and U.S. Bank National Association, as trustee. Exhibit 1.01 to
Allieds Current Report on Form 8-K dated May 17, 2006 is incorporated herein by reference.4.40
    
    Second supplemental indenture to the sixth supplemental indenture governing the 8 7/8% Senior
Notes due 2008, dated May 17, 2006, by and among Allied Waste North America, Inc., the
guarantors signatory thereto and U.S. Bank National Association, as trustee. Exhibit 1.03 to
Allieds Current Report on Form 8-K dated May 17, 2006 is incorporated herein by reference.4.41
    
    Registration Rights Agreement, dated as of May 17, 2006, by and among Allied Waste North
America, Inc., Allied Waste Industries, Inc., the guarantors party thereto, and the initial
purchasers of the 7 1/8% Senior Notes due 2016. Exhibit 1.02 to Allieds Current Report on
Form 8-K dated May 17, 2006 is incorporated herein by reference.4.42
    
    Form of First Amendment, dated as of December 28, 2006, to the Third Amended and Restated
Shareholders Agreement, dated as of December 18, 2003. Exhibit 10.1 to Allieds Current
Report on Form 8-K dated January 3, 2007 is incorporated herein by reference.4.43
    
    Form of First Amendment, dated as of December 28, 2006, to the Second Amended and Restated
Registration Rights Agreement, dated as of December 18, 2003. Exhibit 10.2 to Allieds
Current Report on Form 8-K dated January 3, 2007 is incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.1
    
    Securities Purchase Agreement dated April 21, 1997 between Apollo Investment Fund III, L.P.,
Apollo Overseas Partners III, L.P., and Apollo (U.K.) Partners III, L.P.; Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II L.P. and
Blackstone Family Investment Partnership II L.P.; Laidlaw Inc. and Laidlaw Transportation,
Inc.; and Allied Waste Industries, Inc. Exhibit 10.1 to Allieds Report on Form 10-Q for the
quarter ended March 31, 1997 is incorporated herein by reference.10.2
    
    1994 Amended and Restated Non-Employee Director Stock Option Plan. Exhibit B to Allieds
Definitive Proxy Statement in accordance with Schedule 14A dated April 28, 1994 is
incorporated herein by reference.10.3
    
    First Amendment to the 1994 Amended and Restated Non-Employee Director Stock Option Plan.
Exhibit 10.2 to Allieds Quarterly Report on Form 10-Q dated August 10, 1995 is incorporated
herein by reference.10.4
    
    Second Amendment to the 1994 Amended and Restated Non-Employee Director Stock Option Plan of
Allied. Exhibit A to Allieds Definitive Proxy Statement in accordance with Schedule 14A
dated April 25, 1995 is incorporated herein by reference.10.5
    
    Third Amendment to the 1994 Amended and Restated Non-Employee Director Stock Option Plan
dated January 1, 1998. Exhibit 4.41 to Allieds Quarterly Report on Form 10-Q dated May 15,
2002 is incorporated herein by reference.10.6
    
    Fourth Amendment to the 1994 Amended and Restated Non-Employee Director Stock Option Plan
dated January 1, 1998. Exhibit 4.42 to Allieds Quarterly Report on Form 10-Q dated May 15,
2002 is incorporated herein by reference.10.7
    
    Fifth Amendment to the 1994 Amended and Restated Non-Employee Director Stock Option Plan
dated May 26, 1999. Exhibit 4.43 to Allieds Quarterly Report on Form 10-Q dated May 15, 2002
is incorporated herein by reference.10.8
    
    Sixth Amendment to the 1994 Amended and Restated Non-Employee Director Stock Option Plan,
dated April 3, 2002. Exhibit 1 to Allieds Definitive Proxy Statement in accordance with
Schedule 14A dated April 12, 2002 is incorporated herein by reference.10.9
    
    Restated 1994 Non-Employee Director Stock Option Plan, dated April 3, 2002. Exhibit 2 to
Allieds Definitive Proxy Statement in accordance with Schedule 14A dated April 12, 2002 is
incorporated herein by reference.10.10
    
    Restated 1994 Non-Employee Director Stock Plan effective February 5, 2004. Exhibit 10.17 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.10.11
    
    Form of Nonqualified Stock Option Agreement under the Restated 1994 Non-Employee Director
Stock Option Plan. Exhibit 10.61 to Allieds Form 10-K for the year ended December 31, 2004
is incorporated herein by reference.10.12
    
    1993 Incentive Stock Plan of Allied. Exhibit 10.3 to Allieds Registration Statement on Form
S-1 (No. 33-73110) is incorporated herein by reference.10.13
    
    Amendment to the 1993 Incentive Stock Plan dated January 1, 1998. Exhibit 4.45 to Allieds
Quarterly Report on Form 10-Q dated May 15, 2002 is incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.14
    
    Amendment to the Allied Waste Industries, Inc. 1993 Incentive Stock Plan dated June 20,
2000. Exhibit 4.46 to Allieds Quarterly Report on Form 10-Q dated May 15, 2002 is
incorporated herein by reference.10.15
    
    Amendment to the 1993 Incentive Stock Plan dated December 12, 2002. Exhibit 10.44 to
Allieds Annual Report on Form 10-K, dated March 26, 2003 is incorporated herein by reference.10.16
    
    Amendment to the 1993 Incentive Stock Plan  2004-1, effective February 5, 2004. Exhibit
10.11 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated
herein by reference.10.17
    
    Amendment to the 1993 Incentive Stock Plan  2004-2, effective February 5, 2004. Exhibit
10.12 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated
herein by reference.10.18
    
    Restated 1993 Incentive Stock Plan effective February 5, 2004. Exhibit 10.13 to Allieds
Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.10.19
    
    Amended and Restated 1994 Incentive Stock Plan. Exhibit 10.1 to Allieds Quarterly Report on
Form 10-Q dated May 31, 1996 is incorporated herein by reference.10.20
    
    First Amendment to the Amended and Restated 1994 Incentive Stock Plan dated January 1, 1998.
Exhibit 4.44 to Allieds Quarterly Report on Form 10-Q dated May 15, 2002 is incorporated
herein by reference.10.21
    
    Second Amendment to the 1994 Incentive Stock Plan dated December 12, 2002. Exhibit 10.46
to Allieds Annual Report on Form 10-K dated March 26, 2003 is incorporated herein by
reference.10.22
    
    Amendment to the 1994 Incentive Stock Plan  2004-1, effective February 5, 2004. Exhibit
10.14 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated
herein by reference.10.23
    
    Amendment to the 1994 Incentive Stock Plan  2004-2, effective February 5, 2004. Exhibit
10.15 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated
herein by reference.10.24
    
    Restated 1994 Incentive Stock Plan effective February 5, 2004. Exhibit 10.16 to Allieds
Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.10.25
    
    Amended and Restated 1991 Incentive Stock Plan. Exhibit 3 to Allieds Definitive Proxy
Statement in accordance with Schedule 14A dated April 18, 2001 is incorporated herein by
reference.10.26
    
    First Amendment to the 1991 Incentive Stock Plan dated August 8, 2001. Exhibit 4.14 to
Allieds Form 10-K for the year ended December 31, 2001 is incorporated herein by reference.10.27
    
    Second Amendment to Restated 1991 Incentive Stock Plan dated December 12, 2002. Exhibit
10.49 to Allieds Annual Report on Form 10-K dated March 26, 2003 is incorporated herein by
reference.10.28
    
    Third Amendment to the 1991 Incentive Stock Plan effective February 5, 2004. Exhibit 10.6 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.29
    
    Fourth Amendment to the 1991 Incentive Stock Plan effective February 5, 2004. Exhibit 10.7
to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.10.30
    
    Amended and Restated 1991 Incentive Stock Plan effective February 5, 2004. Exhibit 10.8 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.10.31
    
    First Amendment to the Amended and Restated 1991 Incentive Stock Plan (As Amended and
Restated effective February 5, 2004). Exhibit 10.03 to Allieds Report on Form 8-K dated
December 10, 2004 is incorporated herein by reference.10.32
    
    Form of Nonqualified Stock Option Agreement under the Amended and Restated 1991 Incentive
Stock Plan. Exhibit 10.01 to Allieds Report on Form 8-K dated December 10, 2004 is
incorporated herein by reference.10.33
    
    Form of Performance-Accelerated Restricted Stock Agreement under the Amended and Restated
1991 Incentive Stock Plan. Exhibit 10.62 to Allieds Form 10-K for the year ended December
31, 2004 is incorporated herein by reference.10.34
    
    Form of the First Amendment to the Performance-Accelerated Restricted Stock Agreement, dated
January 1, 2002, under the Amended and Restated 1991 Incentive Stock Plan. Exhibit 10.63 to
Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by reference.10.35
    
    Form of the Second Amendment to the Performance-Accelerated Restricted Stock Agreement,
dated July 1, 2004, under the Amended and Restated 1991 Incentive Stock Plan. Exhibit 10.64
to Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by
reference.10.36
    
    Form of Amendment dated December 30, 2005, to Performance-Accelerated Restricted Stock
Agreement under the Amended and Restated 1991 Incentive Stock Plan. Exhibit 10.99 to Allieds
Annual Report on Form 10-K dated December 31, 2005 is incorporated herein by reference.10.37
    
    Form of Restricted Stock Units Agreement under the Amended and Restated 1991 Incentive Stock
Plan. Exhibit 10.02 to Allieds Report on Form 8-K dated December 10, 2004 is incorporated
herein by reference.10.38
    
    Form of Restricted Stock Units Agreement under the Amended and Restated 1991 Incentive Stock
Plan. Exhibit 10.65 to Allieds Form 10-K for the year ended December 31, 2004 is
incorporated herein by reference.10.39
    
    Form of the Amendment to the Restricted Stock Units Agreement under the Amended and Restated
1991 Incentive Stock Plan. Exhibit 10.66 to Allieds Form 10-K for the year ended December
31, 2004 is incorporated herein by reference.10.40
    
    Form of Amendment dated December 30, 2005, to Restricted Stock Units Agreement under the
Amended and Restated 1991 Incentive Stock Plan. Exhibit 10.100 to Allieds Form 10-K for the
year ended December 31, 2005 is incorporated herein by reference.10.41
    
    Form of Nonqualified Stock Option Agreement under the Amended and Restated 1991 Incentive
Stock Plan. Exhibit 10.01 to Allieds Current Report on Form 8-K dated December 30, 2005 is
incorporated herein by reference.10.42
    
    Form of Restricted Stock Units Agreement under the Amended and Restated 1991 Incentive Stock
Plan. Exhibit 10.02 to Allieds Current Report on Form 8-K dated December 30, 2005 is
incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.43
    
    Form of Nonqualified Stock Option Agreement under the Amended and Restated 1991 Incentive
Stock Option Plan. Exhibit 10.01 to Allieds Report on Form 8-K dated December 10, 2004 is
incorporated herein by reference.10.44
    
    2006 Incentive Stock Plan. Exhibit 10.2 to Allieds Form 10-Q for the quarter ended June
30, 2006 is incorporated herein by reference.10.45
    
    First Amendment to the Allied Waste Industries, Inc., 2006 Incentive Stock Plan dated July
27, 2006. Exhibit 10.1 to Allieds Form 10-Q for the quarter ended September 30, 2006 is
incorporated herein by reference.10.46
    
    Amended and Restated Allied Waste Industries, Inc., 2006 Incentive Stock Plan dated July 27,
2006. Exhibit 10.2 to Allieds Form 10-Q for the quarter ended September 30, 2006 is
incorporated herein by reference.10.47*
    
    First Amendment to the Amended and Restated Allied Waste Industries, Inc., 2006 Incentive
Stock Plan dated July 27, 2006.10.48
    
    Form of Nonqualified Stock Option Agreement under the 2006 Incentive Stock Plan. Exhibit
10.3 to Allieds Form 10-Q for the quarter ended September 30, 2006 is incorporated herein by
reference.10.49
    
    Form of Restricted Stock Agreement under the 2006 Incentive Stock Plan. Exhibit 10.4 to
Allieds Form 10-Q for the quarter ended September 30, 2006 is incorporated herein by
reference.10.50
    
    Form of Restricted Stock Units Agreement under the 2006 Incentive Stock Plan. Exhibit 10.5
to Allieds Form 10-Q for the quarter ended September 30, 2006 is incorporated herein by
reference.10.51
    
    2005 Non-Employee Director Equity Compensation Plan.Exhibit 10.7 to Allieds
Report on Form 10-Q for the quarter ended June 30, 2005 is incorporated herein by reference.10.52
    
    First Amendment to the Allied Waste Industries, Inc. 2005 Non-Employee Director Equity
Compensation Plan. Exhibit 10.02 to Allieds Current Report on Form 8-K dated February 9, 2006
is incorporated herein by reference.10.53
    
    Form of Restricted Stock Agreement under the 2005 Non-Employee Director Equity Compensation
Plan. Exhibit 10.2 to Allieds Report on Form 10-Q for the quarter ended March 31, 2005 is
incorporated herein by reference.10.54
    
    Form of Restricted Stock Units Agreement under the 2005 Non-Employee Director Equity
Compensation Plan. Exhibit 10.3 to Allieds Report on Form 10-Q for the quarter ended March
31, 2005 is incorporated herein by reference.10.55
    
    Form of Stock Option Agreement under the 2005 Non-Employee Director Equity Compensation
Plan. Exhibit 10.4 to Allieds Report on Form 10-Q for the quarter ended March 31, 2005 is
incorporated herein by reference.10.56
    
    Form of Restricted Stock Units Agreement under the 2005 Non-Employee Director Equity
Compensation Plan. Exhibit 10.03 to Allieds Current Report on Form 8-K dated December 30,
2005 is incorporated herein by reference.10.57
    
    Executive Deferred Compensation Plan effective February 5, 2004. Exhibit 10.9 to Allieds
Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.58
    
    2005 Executive Deferred Compensation Plan, effective December 1, 2004. Exhibit 10.71 to
Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by reference.10.59
    
    Amendment dated December 29, 2005, to the Executive Deferred Compensation Plan and 2005
Executive Deferred Compensation Plan. Exhibit 10.98 to Allieds Annual Report on Form 10-K
dated December 31, 2005 is incorporated herein by reference.10.60
    
    Supplemental Executive Retirement Plan effective August 1, 2003. Exhibit 10.10 to Allieds
Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.10.61
    
    Allied Waste Industries, Inc. Supplemental Executive Retirement Plan, Restated Effective
January 1, 2006. Exhibit 10.03 to Allieds Current Report on Form 8-K dated February 9, 2006
is incorporated herein by reference.10.62*
    
    Amended and Restated Schedule A, dated November 1, 2006, to the Supplemental Executive
Retirement Plan.10.63
    
    Long-Term Incentive Plan effective January 1, 2004. Exhibit 10.5 to Allieds Report on Form
10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.10.64
    
    First Amendment to Allied Waste Industries, Inc. Long-Term Incentive Plan. Exhibit 10.9 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2005 is incorporated herein by
reference.10.65
    
    Form of Award Letter under Allied Waste Industries, Inc. Long-Term Incentive Plan. Exhibit
10.10 to Allieds Report on Form 10-Q for the quarter ended March 31, 2005 is incorporated
herein by reference.10.66
    
    2005 Senior Management Incentive Plan. Exhibit 10.5 to Allieds Report on Form 10-Q for the
quarter ended March 31, 2005 is incorporated herein by reference.10.67
    
    Form of Participation Letter under 2005 Senior Management Incentive Plan. Exhibit 10.6 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2005 is incorporated herein by
reference.10.68
    
    Summary of Individual Performance Goals under Senior Management Incentive Plan, as approved
on August 1, 2005. Exhibit 10.11 to Allieds Report on Form 10-Q for the quarter ended June
30, 2005 is incorporated herein by reference.10.69
    
    2005 Transition Plan for Senior and Key Management Employees. Exhibit 10.7 to Allieds
Report on Form 10-Q for the quarter ended March 31, 2005 is incorporated herein by reference.10.70
    
    Form of Participation Letter under 2005 Transition Plan for Senior and Key Management
Employees. Exhibit 10.8 to Allieds Report on Form 10-Q for the quarter ended March 31, 2005
is incorporated herein by reference.10.71
    
    2006 Executive Incentive Compensation Plan. Exhibit 10.10 to Allieds Report on Form 10-Q
for the quarter ended June 30, 2006 is incorporated herein by reference.10.72
    
    2006 Senior Management Incentive Plan. Exhibit 10.01 to Allieds Current Report on Form 8-K
dated February 9, 2006 is incorporated herein by reference.10.73
    
    Indemnification Agreement  Employees (Specimen Agreement). Exhibit 10.18 to Allieds Report
on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.74*
    
    Indemnification Agreement  Employees (List of Covered Persons).10.75
    
    Indemnification Agreement  Non-Employee Directors (Specimen Agreement). Exhibit 10.19 to
Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is incorporated herein by
reference.10.76*
    
    Indemnification Agreement  Non-Employee Directors (List of Covered Persons).10.77
    
    Executive Employment Agreement between the Company and James E. Gray, effective January 3,
2001.10.78
    
    Executive Employment Agreement between the Company and Donald W. Slager effective January 1,
2004. Exhibit 10.2 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is
incorporated herein by reference.10.79
    
    Executive Employment Agreement between the Company and Peter S. Hathaway effective January
1, 2004. Exhibit 10.3 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is
incorporated herein by reference.10.80
    
    Executive Employment Agreement between the Company and Steven M. Helm effective January 1,
2004. Exhibit 10.4 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004 is
incorporated herein by reference.10.81
    
    Separation Agreement and Release between the Company and Steven M. Helm effective August 31,
2006. Exhibit 10.7 to Allieds Report on Form 10-Q for the quarter ended September 30, 2006
is incorporated herein by reference.10.82
    
    Executive Employment Agreement for Donald A. Swierenga. Exhibit 10.12 to Allieds Report on
Form 10-Q for the quarter ended March 31, 2005 is incorporated herein by reference.10.83
    
    Executive Employment Agreement between the Company and John J. Zillmer, dated May 27, 2005.
Exhibit 10.01 to Allieds Current Report on Form 8-K dated May 27, 2005 is incorporated herein
by reference.10.84
    
    Option Agreement between the Company and John J. Zillmer, dated May 27, 2005. Exhibit 10.02
to Allieds Current Report on Form 8-K dated May 27, 2005 is incorporated herein by reference.10.85
    
    Restricted Stock Agreement between the Company and John J. Zillmer, dated May 27, 2005.
Exhibit 10.03 to Allieds Current Report on Form 8-K dated May 27, 2005 is incorporated herein
by reference.10.86
    
    Summary of Performance Goals Under Restricted Stock Agreement between the Company and John
J. Zillmer. Exhibit 10.12 to Allieds Report on Form 10-Q for the quarter ended June 30, 2005
is incorporated herein by reference.10.87
    
    Indemnity Agreement between the Company and John J. Zillmer, dated May 27, 2005. Exhibit
10.04 to Allieds Current Report on Form 8-K dated May 27, 2005 is incorporated herein by
reference.10.88
    
    Summary of terms of interim housing arrangements, as approved on August 1, 2005, between the
Company and John J. Zillmer. Exhibit 10.10 to Allieds Report on Form 10-Q for the quarter
ended June 30, 2005 is incorporated herein by reference.10.89
    
    Summary of Compensatory Elements of Amended and Restated Airplane Policy dated August 1,
2005. Exhibit 10.13 to Allieds Report on Form 10-Q for the quarter ended June 30, 2005 is
incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.90
    
    Executive Employment Agreement between the Company and John S. Quinn effective November 30,
2001. Exhibit 10.8 to Allieds Report on Form 10-Q for the quarter ended September 30, 2006
is incorporated herein by reference.10.91
    
    Amended and Restated Credit Agreement, dated April 29, 2003. Exhibit 10.1 to Allieds Report
on Form 10-Q for the quarter ended March 31, 2003 is incorporated herein by reference.10.92
    
    Amended and Restated Collateral Trust Agreement, dated April 29, 2003, among Allied NA,
certain of its subsidiaries, and JPMorgan Chase Bank, as Collateral Trustee. Exhibit 10.14 to
Allieds Registration Statement on Form S-4 (No. 333-104451) is incorporated herein by
reference.10.93
    
    Amended and Restated Shared Collateral Pledge Agreement, dated April 29, 2003, among Allied
NA, certain of its subsidiaries, and JP Morgan Chase Bank, as Collateral Trustee. Exhibit
10.13 to Allieds Registration Statement on Form S-4 (No. 333-104451) is incorporated herein
by reference.10.94
    
    Amended and Restated Shared Collateral Security Agreement, dated April 29, 2003, among
Allied NA, certain of its subsidiaries, and JP Morgan Chase Bank, as Collateral Trustee.
Exhibit 10.12 to Allieds Registration Statement on Form S-4 (No. 333-104451) is incorporated
herein by reference.10.95
    
    Amended and Restated Non-Shared Collateral Security Agreement, dated April 29, 2003, among
Allied, Allied NA, certain of its subsidiaries, and JP Morgan Chase Bank, as Collateral Agent.
Exhibit 10.10 to Allieds Registration Statement on Form S-4 (No. 333-104451) is incorporated
herein by reference.10.96
    
    Amended and Restated Non-Shared Collateral Pledge Agreement, dated April 29, 2003, among
Allied, Allied NA, certain of its subsidiaries, and JP Morgan Chase Bank, as Collateral Agent.
Exhibit 10.11 to Allieds Registration Statement on Form S-4 (No. 333-104451) is incorporated
herein by reference.10.97
    
    Amendment to Amended and Restated Credit Agreement, dated as of August 20, 2003. Exhibit
10.01 to Allieds Current Report on Form 8-K dated August 25, 2003 is incorporated by
reference.10.98
    
    Amendment to Amended and Restated Credit Agreement, dated November 20, 2003. Exhibit 99.1
to Allieds Current Report on Form 8-K dated November 26, 2003 is incorporated by reference.10.99
    
    Third Amendment and Restatement, dated March 30, 2004, to the Credit Agreement, dated as of
July 21, 1999, as amended and restated as of August 20, 2003, and further amended and restated
as of November 20, 2003. Exhibit 99.1 to Allieds Current Report on Form 8-K dated April 15,
2004 is incorporated herein by reference.10.100
    
    Fourth Amendment dated as of June 16, 2004, to the Credit Agreement dated as of July 21,
1999, as amended and restated as of March 30, 2004. Exhibit 10.1 to Allieds Report on Form
10-Q for the quarter ended June 30, 2004 is incorporated herein by reference.10.101
    
    Credit Agreement dated as of July 21, 1999, as amended and restated as of March 21, 2005.
Exhibit 10.11 to Allieds Report on Form 10-Q for the quarter ended March 31, 2005 is
incorporated herein by reference.
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ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.102
    
    Amendment dated as of November 14, 2005, to the Credit Agreement dated as of July 21, 1999
as amended and restated as of March 21, 2005, among Allied Waste Industries, Inc., Allied
Waste North America, Inc.; the lenders part thereto; and JPMorgan Chase Bank, N.A., as
administrative agent. Exhibit 10.101 to Allieds Annual Report on Form 10-K dated December
31, 2005 is incorporated herein by reference.10.103
    
    Second amendment dated as of March 30, 2006, to the Credit Agreement dated as of July 21,
1999, as amended and restated as of March 21, 2005, among Allied Waste Industries, Inc.,
Allied Waste North America, Inc., the lenders party thereto, and JPMorgan Chase Bank, N.A., as
administrative agent and collateral agent for the Lenders and as Collateral Trustee for the
Shared Collateral Secured Parties. Exhibit 10.1 to Allieds Report on Form 10-Q for the
quarter ended June 30, 2006 is incorporated herein by reference.10.104
    
    Third amendment dated as of July 26, 2006, to the Credit Agreement dated as of July 21,
1999, as amended and restated as of March 21, 2005, among Allied Waste Industries, Inc.,
Allied Waste North America, Inc., the lenders party thereto, and JPMorgan Chase Bank, N.A., as
administrative agent and collateral agent for the Lenders and as collateral trustee for the
Shared Collateral Secured Parties. Exhibit 10.6 to Allieds Report on Form 10-Q for the
quarter ended September 30, 2006 is incorporated herein by reference.10.105
    
    Exchange Agreement, dated July 31, 2003, by and among Allied Waste Industries, Inc., and the
Parties Listed on Schedule I thereto. Exhibit 1.01 to Allieds Current Report on Form 8-K
dated August 6, 2003 is incorporated by reference.10.106
    
    Receivables Sale Agreement, dated as of March 7, 2003, among Allied Waste North America,
Inc, as originators and Allied Receivables Funding Incorporated as buyer. Exhibit 10.67 to
Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by reference.10.107
    
    Credit and Security Agreement, dated as of March 7, 2003, among Allied Receivables Funding
Incorporated as borrower, Allied Waste North America, Inc. as servicer, Blue Ridge Asset
Funding Corporation as a lender, Wachovia Bank, National Association as a lender group agent
and Wachovia Bank, National Association as agent. Exhibit 10.68 to Allieds Form 10-K for the
year ended December 31, 2004 is incorporated herein by reference.10.108
    
    Sixth Amendment to Receivables Sale Agreement, effective September 30, 2004. Exhibit 10.69
to Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by
reference.10.109
    
    Seventh Amendment to Credit and Security Agreement, effective September 30, 2004. Exhibit
10.70 to Allieds Form 10-K for the year ended December 31, 2004 is incorporated herein by
reference.10.110
    
    Eighth Amendment to the Receivables Sale Agreement, dated May 31, 2005 among Allied Waste
North America, Inc., as originators and Allied Receivables Funding Incorporated as buyer.
Exhibit 10.53 to Allieds Registration Statement on Form S-4 (No. 333-126239) is incorporated
herein by reference.
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##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.111
    
    Ninth Amendment to the Credit and Security Agreement, dated May 31, 2005 among Allied
Receivables Funding Incorporated as borrower, Allied Waste North America, Inc. as servicer,
Blue Ridge Asset Funding Corporation as a lender, Wachovia Bank, National Association as
agent, liquidity bank and lender group agent, Atlantic Asset Securitization Corp., as a lender
and Calyon New York Branch, as Atlantic group agent and as Atlantic liquidity bank. Exhibit
10.54 to Allieds Registration Statement on Form S-4 (No. 333-126239) is incorporated herein
by reference.10.112
    
    Participation Agreement between the Company and CoreTrust Purchasing Group LLC, the
exclusive agent, for the purchase by the Company of certain goods and services effective July
1, 2006. Exhibit 10.4 to Allieds Report on Form 10-Q for the quarter ended June 30, 2006 is
incorporated herein by reference.10.113*
    
    Amended and Restated Credit and Security Agreement Dated as of May 30, 2006 among Allied
Receivables Funding Incorporated as borrower, Allied Waste North America, Inc., as servicer,
Variable Funding Capital Company LLC, as a lender, Wachovia Bank National Association, as
agent, liquidity bank and lender group agent, Atlantic Asset Securitization Corp., as a lender
and Calyon New York Branch, as Atlantic group agent and as Atlantic liquidity bank.12.1*
    
    Ratio of earnings to fixed charges and preferred stock dividends.14*
    
    Allied Waste Industries Code of Ethics.21*
    
    Subsidiaries of the Registrant.23.1*
    
    Consent of PricewaterhouseCoopers LLP.31.1*
    
    Section 302 Certifications of John J. Zillmer, Chairman of the Board of Directors and Chief
Executive Officer.31.2*
    
    Section 302 Certifications of Peter S. Hathaway, Executive Vice President and Chief
Financial Officer.32*
    
    Certification Pursuant to 18 U.S.C.§1350 of John J. Zillmer, Chairman of the Board of
Directors and Chief Executive Officer and Peter S. Hathaway, Executive Vice President and
Chief Financial Officer.
 
 *
    
    Filed herewith 209




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##### Table of Contents



Signatures
  ALLIED WASTE INDUSTRIES, INC.Date:  February 22, 2007
    By:
    /s/ Peter S. HathawayPeter S. HathawayExecutive Vice President and Chief Financial Officer  Signature
    
    Title
    
    DateChairman of the Board of Directors and/s/ John J. Zillmer
    
    Chief Executive Officer
    
    2/22/07John J. Zillmer
    
    (Principal Executive Officer)Executive Vice President and/s/ Peter S. Hathaway
    
    Chief Financial Officer
    
    2/22/07Peter S. Hathaway
    
    (Principal Financial Officer)Senior Vice President, Controller, and/s/ John S. Quinn
    
    Chief Accounting Officer
    
    2/22/07John S. Quinn
    
    (Principal Accounting Officer)/s/ Robert Agate
    
    
    
    2/21/07Robert Agate
    
    Director/s/ Charles H. Cotros
    
    
    
    2/21/07Charles H. Cotros
    
    Director/s/ James W. Crownover
    
    
    
    2/21/07James W. Crownover
    
    Director/s/ Stephanie Drescher
    
    
    
    2/21/07Stephanie Drescher
    
    Director/s/ David I. Foley
    
    
    
    2/21/07David I. Foley
    
    Director/s/ William J. Flynn
    
    
    
    2/21/07William J. Flynn
    
    Director/s/ Dennis Hendrix
    
    
    
    2/21/07Dennis Hendrix
    
    Director/s/ Nolan Lehmann
    
    
    
    2/21/07Nolan Lehmann
    
    Director/s/ Steven Martinez
    
    
    
    2/21/07Steven Martinez
    
    Director/s/ James A. Quella
    
    
    
    2/21/07James A. Quella
    
    Director/s/ John M. Trani
    
    
    
    2/21/07John M. Trani
    
    Director
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10.47*
    
    First Amendment to the Amended and Restated Allied Waste Industries, Inc., 2006 Incentive
Stock Plan dated July 27, 2006.10.62*
    
    Amended and Restated Schedule A, dated November 1, 2006, to the Supplemental Executive
Retirement Plan.10.74*
    
    Indemnification Agreement  Employees (List of Covered Persons).10.76*
    
    Indemnification Agreement  Non-Employee Directors (List of Covered Persons).10.77
    
    Executive Employment Agreement between the Company and James E. Gray, effective January 3,
2001.10.113*
    
    Amended and Restated Credit and Security Agreement Dated as of May 30, 2006 among Allied
Receivables Funding Incorporated as borrower, Allied Waste North America, Inc., as servicer,
Variable Funding Capital Company LLC, as a lender, Wachovia Bank National Association, as
agent, liquidity bank and lender group agent, Atlantic Asset Securitization Corp., as a lender
and Calyon New York Branch, as Atlantic group agent and as Atlantic liquidity bank.12.1*
    
    Ratio of earnings to fixed charges and preferred stock dividends.14*
    
    Allied Waste Industries Code of Ethics.21*
    
    Subsidiaries of the Registrant.23.1*
    
    Consent of PricewaterhouseCoopers LLP.31.1*
    
    Section 302 Certifications of John J. Zillmer, Chairman of the Board of Directors and Chief
Executive Officer.31.2*
    
    Section 302 Certifications of Peter S. Hathaway, Executive Vice President and Chief
Financial Officer.32*
    
    Certification Pursuant to 18 U.S.C.§1350 of John J. Zillmer, Chairman of the Board of
Directors and Chief Executive Officer and Peter S. Hathaway, Executive Vice President and
Chief Financial Officer.
 
 *