##### Table of Contents



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, 2005
 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.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    88-0228636(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification Number)15880 North Greenway-Hayden Loop, Suite 100Scottsdale, Arizona
    
    85260(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 C Senior Mandatory Convertible Preferred
    
    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
 þ
  Large accelerated
filer  þ
    
    Accelerated filer  o
    
    Non-accelerated filer  o
  o þ




---



##### Table of Contents



TABLE OF CONTENTS
  
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    18Item 2. Properties
    
    
    18Item 3. Legal Proceedings
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    20Item 6. Selected Financial Data
    
    
    21Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    23Item 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
    
    
    116Item 9A. Controls and Procedures
    
    
    116Item 9B. Other Information
    
    
    116PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    117Item 11. Executive Compensation
    
    
    117Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    117Item 13. Certain Relationships and Related Transactions
    
    
    117Item 14. Principal Accounting Fees and Services
    
    
    117PART IVItem 15. Exhibits and Financial Statement Schedule
    
    
    118Signatures
    
    
    169Exhibit 10.98Exhibit 10.99Exhibit 10.100Exhibit 10.101Exhibit 12.1Exhibit 14Exhibit 21Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32
 2




---



##### Table of Contents



PART I
 
 Item 1. Business
 Overview
       3




---



##### Table of Contents



Business Strategy
  Vertical integration.
  Best practices.
 Focus on customer service excellence.
 Market growth and rationalization.
 4




---



##### Table of Contents



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.
    
    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 29% of our collection
revenue, approximately 43% of which is subscription revenue and approximately 57% 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
 5




---



##### Table of Contents



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 will collect 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 31% 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 will collect the
waste from many customers before traveling to a materials recovery facility to deliver the
recyclables.
 Transfer stations
 Landfills.
  Recycling  commodity.
 6




---



##### Table of Contents



Organization, Sales and Marketing
       7




---



##### Table of Contents



Sales and Customer Service
   Employees
  Competition
   Environmental and Other Regulations
  8




---



##### Table of Contents



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).
 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).
 9




---



##### Table of Contents



The Occupational Safety and Health Act of 1970, as amended (OSHA).
 Future federal legislation.
 State regulation.
   Liability Insurance and Bonding
   10




---



##### Table of Contents



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.
  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.
  11




---



##### Table of Contents



Our goodwill may become impaired, which could result in a material non-cash charge to our results
of operations.
  Increases in the cost of fuel 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.
  12




---



##### Table of Contents



We may not realize all of the expected benefits from our market rationalization plan.
  We are subject to costly environmental regulations that may affect our operating margins, restrict
our operations and subject us to additional liability.
    We may have potential environmental liabilities that are not covered by our insurance coverage .
  13




---



##### Table of Contents



Despite our efforts, we may incur additional hazardous substances liability in excess of amounts
presently known and accrued.
 i.e.,
 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.
  14




---



##### Table of Contents



The solid waste industry is a capital-intensive industry and the amount we spend on capital
expenditures may increase, which could require us to incur additional equity or debt to fund our
operations or impair our ability to grow our business.
  Our significant 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 and capital expenditures to fund organic
growth and cash flow 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 in our industry;
    
    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
    
    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 negative effect
on us.
  15




---



##### Table of Contents



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.
   16




---



##### Table of Contents



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.
  We currently have a material disagreement with the Internal Revenue Service (IRS), which could
result in large cash expenditures and adversely affect our operating results, liquidity and
financial condition.
  There may be undisclosed liabilities associated with our acquisitions .
  17




---



##### Table of Contents



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.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   
 Item 3. Legal Proceedings
   18




---



##### Table of Contents



Securities 
 th
 Landfill permitting 
   Environmental 
  19




---



##### Table of Contents



Tax 
  
 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, 2005:First Quarter
    
    $
    9.09
    
    
    $
    6.95Second Quarter
    
    
    8.24
    
    
    
    6.98Third Quarter
    
    
    9.16
    
    
    
    7.80Fourth Quarter
    
    
    9.21
    
    
    
    7.80Year Ended December 31, 2004:First Quarter
    
    $
    14.36
    
    
    $
    11.92Second Quarter
    
    
    13.82
    
    
    
    11.94Third Quarter
    
    
    12.85
    
    
    
    8.69Fourth Quarter
    
    
    9.34
    
    
    
    8.00
  Dividend Policy
  Purchases of Equity Securities by Our Company and Affiliates
  Recent Sales of Unregistered Securities
  20




---



##### Table of Contents



Item 6. Selected Financial Data
  Year Ended December 31,2005
    
    
    2004 (2)
    
    
    2003 (2)
    
    
    2002 (2)
    
    
    2001 (2)Statement of Operations Data(1):Revenues
    
    $
    5,734.8
    
    
    $
    5,514.0
    
    
    $
    5,386.3
    
    
    $
    5,311.3
    
    
    $
    5,318.9Cost of operations
    
    
    3,745.7
    
    
    
    3,514.6
    
    
    
    3,325.5
    
    
    
    3,159.6
    
    
    
    3,051.7Selling, general and
administrative expenses
    
    
    519.2
    
    
    
    553.7
    
    
    
    480.1
    
    
    
    462.7
    
    
    
    434.7Depreciation and amortization
    
    
    554.4
    
    
    
    559.3
    
    
    
    546.0
    
    
    
    478.5
    
    
    
    448.8Goodwill amortization(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226.7Non-cash (gain) loss on
divestiture of assets(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.3
    )
    
    
    107.0Operating income
    
    
    915.5
    
    
    
    886.4
    
    
    
    1,034.7
    
    
    
    1,219.8
    
    
    
    1,050.0Equity in earnings of
unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14.1
    )Interest expense and other(5)
    
    
    588.0
    
    
    
    758.9
    
    
    
    832.9
    
    
    
    854.0
    
    
    
    866.1Income before income taxes
    
    
    327.5
    
    
    
    127.5
    
    
    
    201.8
    
    
    
    365.8
    
    
    
    198.0Income tax expense
    
    
    133.9
    
    
    
    72.2
    
    
    
    88.7
    
    
    
    165.6
    
    
    
    162.4Minority interest
    
    
    (0.2
    )
    
    
    (2.7
    )
    
    
    1.9
    
    
    
    1.9
    
    
    
    3.7Income from continuing operations
    
    $
    193.8
    
    
    $
    58.0
    
    
    $
    111.2
    
    
    $
    198.3
    
    
    $
    31.9Basic EPS:Continuing operations(6)
    
    $
    0.43
    
    
    $
    0.12
    
    
    $
    (2.36
    )
    
    $
    0.63
    
    
    $
    (0.21
    )Weighted average common shares
    
    
    326.9
    
    
    
    315.0
    
    
    
    203.8
    
    
    
    190.2
    
    
    
    189.6Diluted EPS:Continuing operations(6)
    
    $
    0.43
    
    
    $
    0.11
    
    
    $
    (2.36
    )
    
    $
    0.62
    
    
    $
    (0.21
    )Weighted average common and
common equivalent shares
    
    
    330.1
    
    
    
    319.7
    
    
    
    203.8
    
    
    
    193.5
    
    
    
    189.6Pro forma amounts, assuming a
change in accounting principle is
applied retroactively (7):Income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    186.3
    
    
    $
    20.1Basic income (loss) per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.57
    
    
    
    (0.28
    )Diluted income (loss) per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.56
    
    
    
    (0.28
    )Statement of Cash Flows Data(1):Cash flows from operating activities
    
    $
    712.6
    
    
    $
    650.0
    
    
    $
    783.9
    
    
    $
    976.6
    
    
    $
    847.6Cash flows used for investing
activities (including asset purchases
and sales, and capital expenditures)
    
    
    (683.0
    )
    
    
    (537.9
    )
    
    
    (248.4
    )
    
    
    (519.5
    )
    
    
    (432.3
    )Cash flows used for financing activities
(including debt repayments)
    
    
    (45.5
    )
    
    
    (489.2
    )
    
    
    (285.7
    )
    
    
    (487.5
    )
    
    
    (434.4
    )Cash provided by discontinued
operations
    
    
    4.0
    
    
    
    0.4
    
    
    
    15.5
    
    
    
    52.2
    
    
    
    57.5Balance Sheet Data(1):Cash and cash equivalents
    
    $
    56.1
    
    
    $
    68.0
    
    
    $
    444.7
    
    
    $
    179.4
    
    
    $
    157.6Working capital (deficit)
    
    
    (655.1
    )
    
    
    (834.1
    )
    
    
    (282.2
    )
    
    
    (377.7
    )
    
    
    (245.4
    )Property and equipment, net
    
    
    4,273.5
    
    
    
    4,129.9
    
    
    
    4,018.9
    
    
    
    4,005.7
    
    
    
    3,927.5Goodwill, net
    
    
    8,184.2
    
    
    
    8,202.0
    
    
    
    8,313.0
    
    
    
    8,530.4
    
    
    
    8,556.9Total assets
    
    
    13,625.6
    
    
    
    13,493.9
    
    
    
    13,860.9
    
    
    
    13,928.9
    
    
    
    14,347.1Total debt
    
    
    7,091.7
    
    
    
    7,757.0
    
    
    
    8,234.1
    
    
    
    8,882.2
    
    
    
    9,259.6Series A preferred stock (6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,246.9
    
    
    
    1,169.0Stockholders equity (6)
    
    
    3,439.4
    
    
    
    2,604.9
    
    
    
    2,517.7
    
    
    
    689.1
    
    
    
    585.8Total debt to total capitalization
(including preferred stock)
    
    
    67
    %
    
    
    75
    %
    
    
    77
    %
    
    
    82
    %
    
    
    84
    %
 21




---



##### Table of Contents



(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)
    
    Historically, we have reported certain taxes imposed on landfill and transfer
volumes as a reduction of revenue and we reported administrative fees billed to customers as
an offset to our administrative costs. Effective April 2005, we began recording all taxes
that create direct obligations for us as operating expenses and recording administrative fees
billed to our customers as revenue. We opted to conform the prior years presentation of our
revenues and expenses with the current years presentation by increasing revenue, cost of
operations and selling, general and administrative expenses. Revenue, cost of operations and
selling, general and administrative expenses increased by $152.0 million, $139.8 million and
$12.2 million, respectively, for the year ended 2004 and $138.6 million, $135.4 million and
$3.2 million, respectively, for the year ended 2003. Revenue and cost of operations both
increased by $120.5 million and $87.5 million for the years 2002 and 2001, respectively.
These adjustments had no impact on our consolidated operating income, net income, earnings per
share, cash flows, or any balance sheet caption for any previous periods.(3)
    
    In accordance with Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets(SFAS 142), amortization of goodwill ceased on January 1,
2002.(4)
    
    The non-cash (gain) loss on divestiture of assets relates to divestitures of certain
operations that were not operating in a manner consistent with our business model. These
divestitures are not included in discontinued operations.(5)
    
    Effective January 1, 2003, we adopted SFAS No. 145, Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections(SFAS 145).
Previously, extraordinary losses as a result of the write-off of deferred debt issuance costs
and other costs incurred in connection with the early extinguishments of debt were properly
classified as extraordinary. As a result of the adoption of SFAS 145, these expenses are now
classified in interest expense and other. The pre-tax amounts reclassified were $16.8 million
and $28.1 million for the years ended December 31, 2002 and 2001, respectively. Costs
incurred to early extinguish debt for the years ended December 31, 2005, 2004 and 2003 were
$62.6 million, $156.2 million and $108.1 million, respectively.(6)
    
    During December 2003, all of the 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.(7)
    
    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. 22




---



##### Table of Contents



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
 23




---



##### Table of Contents



Financing activities
    24




---



##### Table of Contents



Results of Operations
  Statement of Operations Data:
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    5,734.8
    
    
    
    100.0
    %
    
    $
    5,514.0
    
    
    
    100.0
    %
    
    $
    5,386.3
    
    
    
    100.0
    %Cost of operations
    
    
    3,745.7
    
    
    
    65.3
    
    
    
    3,514.6
    
    
    
    63.8
    
    
    
    3,325.5
    
    
    
    61.8Selling, general and
administrative expenses
    
    
    519.2
    
    
    
    9.1
    
    
    
    553.7
    
    
    
    10.0
    
    
    
    480.1
    
    
    
    8.9Depreciation and amortization
    
    
    554.4
    
    
    
    9.6
    
    
    
    559.3
    
    
    
    10.1
    
    
    
    546.0
    
    
    
    10.1Operating income
    
    
    915.5
    
    
    
    16.0
    
    
    
    886.4
    
    
    
    16.1
    
    
    
    1,034.7
    
    
    
    19.2Interest expense and other
    
    
    588.0
    
    
    
    10.3
    
    
    
    758.9
    
    
    
    13.8
    
    
    
    832.9
    
    
    
    15.5Income before income taxes
    
    
    327.5
    
    
    
    5.7
    
    
    
    127.5
    
    
    
    2.3
    
    
    
    201.8
    
    
    
    3.7Income tax expense
    
    
    133.9
    
    
    
    2.3
    
    
    
    72.2
    
    
    
    1.2
    
    
    
    88.7
    
    
    
    1.6Minority interest
    
    
    (0.2
    )
    
    
    (0.0
    )
    
    
    (2.7
    )
    
    
    0.0
    
    
    
    1.9
    
    
    
    0.0Income from continuing operations
    
    
    193.8
    
    
    
    3.4
    
    
    
    58.0
    
    
    
    1.1
    
    
    
    111.2
    
    
    
    2.1Discontinued operations, net of tax
    
    
    10.8
    
    
    
    0.2
    
    
    
    (8.7
    )
    
    
    (0.2
    )
    
    
    (11.5
    )
    
    
    (0.2
    )Cumulative effect of change in
accounting principle, net of tax
    
    
    (0.8
    )
    
    
    (0.0
    )
    
    
    
    
    
    
    
    
    
    
    29.0
    
    
    
    0.5Net income
    
    
    203.8
    
    
    
    3.6
    
    
    
    49.3
    
    
    
    0.9
    
    
    
    128.7
    
    
    
    2.4Dividends on preferred stock
    
    
    (52.0
    )
    
    
    (1.0
    )
    
    
    (21.6
    )
    
    
    (0.4
    )
    
    
    (95.6
    )
    
    
    (1.8
    )Non-cash conversion of
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (496.6
    )
    
    
    (9.2
    )Net income (loss) available
to common shareholders
    
    $
    151.8
    
    
    
    2.6
    %
    
    $
    27.7
    
    
    
    0.5
    %
    
    $
    (463.5
    )
    
    
    (8.6
    )%
 Revenues.
 Reporting Revenue Gross as a Principal Versus Net as an Agent.
  25




---



##### Table of Contents



Revenues by region (1) (in millions, except percentages):
 Year Ended December 31,2005
    
    
    2004 (3)
    
    
    2003 (3)Midwest
    
    $
    1,201.5
    
    
    
    21.0
    %
    
    $
    1,167.8
    
    
    
    21.2
    %
    
    $
    1,147.9
    
    
    
    21.3
    %Northeast
    
    
    1,275.2
    
    
    
    22.2
    
    
    
    1,275.9
    
    
    
    23.1
    
    
    
    1,249.9
    
    
    
    23.2Southeast
    
    
    997.1
    
    
    
    17.4
    
    
    
    953.4
    
    
    
    17.3
    
    
    
    947.0
    
    
    
    17.6Southwest
    
    
    860.3
    
    
    
    15.0
    
    
    
    803.3
    
    
    
    14.6
    
    
    
    791.5
    
    
    
    14.7West
    
    
    1,344.6
    
    
    
    23.4
    
    
    
    1,273.0
    
    
    
    23.1
    
    
    
    1,211.5
    
    
    
    22.5Other(2)
    
    
    56.1
    
    
    
    1.0
    
    
    
    40.6
    
    
    
    0.7
    
    
    
    38.5
    
    
    
    0.7Total Revenues
    
    $
    5,734.8
    
    
    
    100.0
    %
    
    $
    5,514.0
    
    
    
    100.0
    %
    
    $
    5,386.3
    
    
    
    100.0
    %
 
 (1)
    
    See discussion in Note 16 to our Consolidated Financial Statements.(2)
    
    Amounts relate primarily to our subsidiaries, which provide services throughout the
organization and not on a region basis.(3)
    
    Revenues in the prior periods have been restated to conform with our current
operating structure.  Revenues by service line (in millions):
 Year Ended December 31,2005
    
    
    2004
    
    
    2003CollectionResidential
    
    $
    1,189.8
    
    
    $
    1,166.1
    
    
    $
    1,134.1Commercial
    
    
    1,401.1
    
    
    
    1,354.0
    
    
    
    1,374.7Roll-off (1)
    
    
    1,260.3
    
    
    
    1,202.1
    
    
    
    1,186.5Recycling
    
    
    201.4
    
    
    
    209.2
    
    
    
    202.3Total Collection
    
    
    4,052.6
    
    
    
    3,931.4
    
    
    
    3,897.6DisposalLandfill
    
    
    836.7
    
    
    
    782.7
    
    
    
    768.8Transfer
    
    
    434.5
    
    
    
    436.1
    
    
    
    400.6Total Disposal
    
    
    1,271.2
    
    
    
    1,218.8
    
    
    
    1,169.4Recycling  Commodity
    
    
    225.7
    
    
    
    235.4
    
    
    
    194.8Other(2)
    
    
    185.3
    
    
    
    128.4
    
    
    
    124.5Total Revenues
    
    $
    5,734.8
    
    
    $
    5,514.0
    
    
    $
    5,386.3
 
 (1)
    
    Consists of revenue generated from commercial, industrial and residential customers
from waste collected in roll-off containers that are loaded onto collection vehicles.(2)
    
    Consists primarily of revenue from national accounts where
the work has been subcontracted, revenue generated from waste
transported via railway and revenue from liquid waste. Operating expenses labor and related benefits transfer and disposal costs maintenance and repairs transportation and subcontractor costs cost of goods
sold fuel disposal and franchise fees and taxes landfill
operating costs risk management other
 26




---



##### Table of Contents



Year Ended December 31,2005
    
    
    2004
    
    
    2003Labor and related benefits
    
    $
    1,114.1
    
    
    
    19.4
    %
    
    $
    1,071.2
    
    
    
    19.4
    %
    
    $
    1,046.5
    
    
    
    19.4
    %Transfer and disposal costs
    
    
    492.1
    
    
    
    8.6
    
    
    
    499.8
    
    
    
    9.1
    
    
    
    515.4
    
    
    
    9.6Maintenance and repairs
    
    
    490.1
    
    
    
    8.5
    
    
    
    469.5
    
    
    
    8.5
    
    
    
    423.7
    
    
    
    7.9Transportation and subcontractor
costs
    
    
    456.5
    
    
    
    8.0
    
    
    
    406.4
    
    
    
    7.4
    
    
    
    363.0
    
    
    
    6.7Cost of goods sold
    
    
    45.8
    
    
    
    0.8
    
    
    
    49.2
    
    
    
    0.9
    
    
    
    39.7
    
    
    
    0.7Fuel
    
    
    241.7
    
    
    
    4.2
    
    
    
    168.5
    
    
    
    3.1
    
    
    
    152.5
    
    
    
    2.8Disposal and franchise fees
and taxes
    
    
    353.1
    
    
    
    6.2
    
    
    
    340.2
    
    
    
    6.2
    
    
    
    324.6
    
    
    
    6.0Landfill operating costs
    
    
    150.9
    
    
    
    2.6
    
    
    
    146.1
    
    
    
    2.6
    
    
    
    123.4
    
    
    
    2.3Risk management
    
    
    175.9
    
    
    
    3.1
    
    
    
    168.8
    
    
    
    3.1
    
    
    
    161.8
    
    
    
    3.1Other
    
    
    225.5
    
    
    
    3.9
    
    
    
    194.9
    
    
    
    3.5
    
    
    
    174.9
    
    
    
    3.3Total operating expenses
    
    $
    3,745.7
    
    
    
    65.3
    %
    
    $
    3,514.6
    
    
    
    63.8
    %
    
    $
    3,325.5
    
    
    
    61.8
    %
 Selling, general and administrative expenses
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Salaries
    
    $
    324.3
    
    
    
    5.7
    %
    
    $
    318.7
    
    
    
    5.8
    %
    
    $
    282.5
    
    
    
    5.2
    %Rent and office costs
    
    
    40.8
    
    
    
    0.7
    
    
    
    42.9
    
    
    
    0.8
    
    
    
    42.2
    
    
    
    0.8Professional fees
    
    
    51.2
    
    
    
    0.9
    
    
    
    70.2
    
    
    
    1.3
    
    
    
    38.8
    
    
    
    0.7Provision for doubtful accounts
    
    
    18.8
    
    
    
    0.3
    
    
    
    18.6
    
    
    
    0.3
    
    
    
    23.6
    
    
    
    0.4Other
    
    
    84.1
    
    
    
    1.5
    
    
    
    103.3
    
    
    
    1.8
    
    
    
    93.0
    
    
    
    1.8Total selling, general and
administrative expenses
    
    $
    519.2
    
    
    
    9.1
    %
    
    $
    553.7
    
    
    
    10.0
    %
    
    $
    480.1
    
    
    
    8.9
    %
 Depreciation and amortization Critical Accounting Judgments and Estimates Landfill Accounting
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Depreciation of fixed assets
    
    $
    304.2
    
    
    
    5.3
    %
    
    $
    300.1
    
    
    
    5.4
    %
    
    $
    305.6
    
    
    
    5.7
    %Landfill and other amortization
    
    
    250.2
    
    
    
    4.3
    
    
    
    259.2
    
    
    
    4.7
    
    
    
    240.4
    
    
    
    4.4Total depreciation and
amortization
    
    $
    554.4
    
    
    
    9.6
    %
    
    $
    559.3
    
    
    
    10.1
    %
    
    $
    546.0
    
    
    
    10.1
    %
 27




---



##### Table of Contents



Landfill disposal capacity and operating lives. Critical Accounting Judgments and
Estimates Landfill Accounting
  Probable
    
    Number
    
    
    
    
    
    TotalPermitted
    
    Number
    
    Expansion
    
    of
    
    Total
    
    NumberDisposal
    
    Of
    
    Disposal
    
    Landfills
    
    Disposal
    
    ofCapacity
    
    Landfills
    
    Capacity
    
    Impacted
    
    Capacity
    
    LandfillsBalance as of December 31, 2004
    
    
    1,995.9
    
    
    
    166
    
    
    
    475.5
    
    
    
    24
    
    
    
    2,471.4
    
    
    
    166Acquisitions, divestitures and closures
    
    
    129.7
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    129.7
    
    
    
    3Additions to probable expansion disposal capacity
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    1
    
    
    
    1.7
    
    
    
    Net change to permitted disposal capacity
    
    
    75.5
    
    
    
    
    
    
    
    (32.8
    )
    
    
    (2
    )
    
    
    42.7
    
    
    
    Disposal capacity consumed
    
    
    (80.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80.0
    )
    
    
    Changes in
engineering estimates (1)
    
    
    152.8
    
    
    
    
    
    
    
    6.3
    
    
    
    
    
    
    
    159.1
    
    
    
    Balance as of December 31, 2005
    
    
    2,273.9
    
    
    
    169
    
    
    
    450.7
    
    
    
    23
    
    
    
    2,724.6
    
    
    
    169
 
 (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, 2005
    
    At December 31, 2004Number of Sites
    
    Percent of Total
    
    Number of Sites
    
    Percent of Total0 to 5 years
    
    
    32
    
    
    
    19
    %
    
    
    30
    
    
    
    18
    %5 to 10 years
    
    
    15
    
    
    
    9
    
    
    
    15
    
    
    
    910 to 20 years
    
    
    36
    
    
    
    22
    
    
    
    41
    
    
    
    2520 to 40 years
    
    
    43
    
    
    
    25
    
    
    
    38
    
    
    
    2340+ years
    
    
    43
    
    
    
    25
    
    
    
    42
    
    
    
    25Total
    
    
    169
    
    
    
    100
    %
    
    
    166
    
    
    
    100
    %
 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
 .
 28




---



##### Table of Contents



Cost of operations
  Selling, general and administrative expenses
 Depreciation and amortization.
 Interest expense and other
 Year Ended December 31,2005
    
    
    2004Interest expense and otherInterest expense, gross
    
    $
    520.2
    
    
    $
    592.7Cash settlement on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    8.5Interest income
    
    
    (3.0
    )
    
    
    (2.5
    )Interest capitalized for development projects
    
    
    (14.5
    )
    
    
    (13.0
    )Accretion of debt and amortization of debt issuance costs
    
    
    22.7
    
    
    
    27.0Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    (16.3
    )Amortization of accumulated other comprehensive loss for de-designated
interest rate swap contracts
    
    
    
    
    
    
    6.7Costs incurred to early extinguish debt
    
    
    62.6
    
    
    
    156.2Interest expense allocated to discontinued operations
    
    
    
    
    
    
    (0.4
    )Interest expense and other from continuing operations
    
    $
    588.0
    
    
    $
    758.9
 29




---



##### Table of Contents



Income tax expense
 Discontinued operations.
 Dividends on preferred stock.
 Years Ended December 31, 2004 and 2003
 Revenues
  Reported revenues in 2003
    
    $
    5,386.3Core business organic growthIncrease from average base per unit price change
    
    
    55.3Increase from volume change
    
    
    56.2Net divested revenues(1) and adjustments
    
    
    (29.5
    )Increase in commodity and other non-core revenues
    
    
    45.7Reported revenues in 2004
    
    $
    5,514.0
 
 (1)
    
    Excludes amounts reclassified to discontinued operations.  30




---



##### Table of Contents



Cost of operations
 Selling, general and administrative expenses
  Depreciation and amortization.
 Interest expense and other
 Year Ended December 31,2004
    
    
    2003Interest expense and otherInterest expense, gross
    
    $
    592.7
    
    
    $
    691.2Cash settlement on non-hedge accounting interest rate swap contracts
    
    
    8.5
    
    
    
    50.8Interest income
    
    
    (2.5
    )
    
    
    (3.4
    )Interest capitalized for development projects
    
    
    (13.0
    )
    
    
    (15.7
    )Accretion of debt and amortization of debt issuance costs
    
    
    27.0
    
    
    
    31.8Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    (16.3
    )
    
    
    (48.1
    )Amortization of accumulated other comprehensive loss for de-designated interest
rate swap contracts
    
    
    6.7
    
    
    
    23.1Costs incurred to early extinguish debt
    
    
    156.2
    
    
    
    108.1Interest expense allocated to discontinued operations
    
    
    (0.4
    )
    
    
    (4.9
    )Interest expense and other from continuing operations
    
    $
    758.9
    
    
    $
    832.9
   31




---



##### Table of Contents



Income tax expense.
 Minority interest.
 Discontinued operations.
 Dividends on preferred stock.
 Non-cash conversion of preferred stock.
 Liquidity and Capital Resources
   32




---



##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003Operating Activities:Net income
    
    $
    203.8
    
    
    $
    49.3
    
    
    $
    128.7Discontinued operations, net of tax
    
    
    (10.8
    )
    
    
    8.7
    
    
    
    11.5Non-cash expenses (1)
    
    
    714.6
    
    
    
    683.7
    
    
    
    692.8Gain on sale of fixed assets
    
    
    (3.5
    )
    
    
    (4.9
    )
    
    
    Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    (16.2
    )
    
    
    (48.1
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    6.7
    
    
    
    23.1Change in working capital
    
    
    (150.4
    )
    
    
    (34.9
    )
    
    
    6.7Capping, closure, post-closure and environmental expenditures, net of
provision and accretion
    
    
    (41.1
    )
    
    
    (42.4
    )
    
    
    (30.8
    )Cash provided by operating activities from continuing operations
    
    
    712.6
    
    
    
    650.0
    
    
    
    783.9Investing Activities:Proceeds from divestitures less the cost of acquisitions, net of cash
divested/acquired (2)
    
    
    0.9
    
    
    
    36.2
    
    
    
    250.0Proceeds from sale of fixed assets
    
    
    20.3
    
    
    
    11.0
    
    
    
    17.5Capital expenditures, excluding acquisitions
    
    
    (695.9
    )
    
    
    (582.9
    )
    
    
    (491.8
    )Capitalized interest
    
    
    (14.5
    )
    
    
    (13.0
    )
    
    
    (15.7
    )Change in deferred acquisition costs, notes receivable and other
    
    
    6.2
    
    
    
    10.8
    
    
    
    (8.4
    )Cash used for investing activities from continuing operations
    
    
    (683.0
    )
    
    
    (537.9
    )
    
    
    (248.4
    )Financing Activities:Net proceeds from sale of Series C preferred stock
    
    
    
    
    
    
    
    
    
    
    333.1Net proceeds from sale of Series D preferred stock
    
    
    580.8
    
    
    
    
    
    
    
    Proceeds from long-term debt, net of issuance costs
    
    
    3,043.5
    
    
    
    3,082.6
    
    
    
    3,037.1Payments of long-term debt
    
    
    (3,740.2
    )
    
    
    (3,609.1
    )
    
    
    (3,754.6
    )Payment of preferred stock dividends
    
    
    (48.9
    )
    
    
    (21.6
    )
    
    
    (10.2
    )Change in disbursement account
    
    
    21.9
    
    
    
    53.8
    
    
    
    10.5Net proceeds from sale of common stock, exercise of stock options and
other
    
    
    97.4
    
    
    
    5.1
    
    
    
    98.4Cash used for financing activities from continuing operations
    
    
    (45.5
    )
    
    
    (489.2
    )
    
    
    (285.7
    )Cash provided by discontinued operations
    
    
    4.0
    
    
    
    0.4
    
    
    
    15.5(Decrease)/increase in cash and cash equivalents
    
    $
    (11.9
    )
    
    $
    (376.7
    )
    
    $
    265.3
 
 (1)
    
    Consists principally of provisions for depreciation and amortization, 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 impairment, deferred income taxes and cumulative effect of change in
accounting principle, net of tax.(2)
    
    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. During 2003, we acquired solid waste operations representing approximately $42.1
million ($39.3 million, net of intercompany eliminations) in annual revenues and sold operations
representing approximately $353.3 million ($338.6 million, net of intercompany eliminations) in
annual revenues.  33




---



##### Table of Contents



Sources of cash2005
    
    
    2004Cash provided by continuing operations
    
    $
    712.6
    
    
    $
    650.0Net proceeds from issuance of common and preferred stock
    
    
    678.2
    
    
    
    5.1Decrease in cash balance
    
    
    11.9
    
    
    
    376.7Increase in disbursement account
    
    
    21.9
    
    
    
    53.8Net proceeds from divestitures, net of acquisitions
    
    
    0.9
    
    
    
    36.2Proceeds from the sale of fixed assets
    
    
    20.3
    
    
    
    11.0Total
    
    $
    1,445.8
    
    
    $
    1,132.8
 Uses of cash2005
    
    
    2004Capital expenditures
    
    $
    695.9
    
    
    $
    582.9Debt repayments, net of debt proceeds
    
    
    666.8
    
    
    
    488.2Debt issuance costs
    
    
    29.9
    
    
    
    38.3Payment of preferred stock cash dividends
    
    
    48.9
    
    
    
    21.6Other non-operating net cash outflows
    
    
    4.3
    
    
    
    1.8Total
    
    $
    1,445.8
    
    
    $
    1,132.8
 Capital expenditures.
  2005
    
    
    2004
    
    
    2003Vehicles, containers and heavy equipment
    
    $
    376.2
    
    
    $
    214.8
    
    
    $
    231.2Landfill development
    
    
    267.4
    
    
    
    297.1
    
    
    
    219.1Other (1)
    
    
    52.3
    
    
    
    71.0
    
    
    
    41.5Total capital expenditures, excluding acquisitions
    
    $
    695.9
    
    
    $
    582.9
    
    
    $
    491.8
 
 (1)
    
    Includes land and improvements, land held for permitting as landfills, buildings and
improvements, and furniture and office equipment. Financing activities. Debt Covenants
 Significant financing events in 2005.
 34




---



##### Table of Contents




    
    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.
   Capital Structure
 Financing Plan
    35




---



##### Table of Contents



Contractual Obligations and Commitments
  December 31, 2005
    
    
    December 31, 2004Ending
    
    
    Effective
    
    
    Annual
    
    
    Ending
    
    
    Effective
    
    
    AnnualDebt
    
    
    Interest
    
    
    Interest
    
    
    Debt
    
    
    Interest
    
    
    InterestDebt Instrument
    
    Balance
    
    
    Rate (1)
    
    
    Expense
    
    
    Balance
    
    
    Rate (1)
    
    
    ExpenseRevolving credit facility (2)
    
    $
    3.7
    
    
    
    9.00
    %
    
    $
    17.4
    
    
    $
    
    
    
    
    5.56
    %
    
    $
    14.8Term loans
    
    
    1,275.0
    
    
    
    6.33
    
    
    
    79.2
    
    
    
    1,555.5
    
    
    
    6.04
    
    
    
    112.3Senior secured notes
    
    
    4,644.1
    
    
    
    7.83
    
    
    
    368.7
    
    
    
    4,833.5
    
    
    
    7.81
    
    
    
    381.4Senior unsecured notes
    
    
    400.0
    
    
    
    7.55
    
    
    
    30.2
    
    
    
    400.0
    
    
    
    7.53
    
    
    
    21.0Senior subordinated
convertible debenture
    
    
    230.0
    
    
    
    4.34
    
    
    
    10.0
    
    
    
    230.0
    
    
    
    4.33
    
    
    
    7.0Senior subordinated notes
    
    
    
    
    
    
    
    
    
    
    4.5
    
    
    
    195.4
    
    
    
    10.22
    
    
    
    64.7Receivables secured loan
    
    
    230.0
    
    
    
    4.90
    
    
    
    8.9
    
    
    
    209.9
    
    
    
    3.32
    
    
    
    3.7Other
    
    
    308.9
    
    
    
    6.89
    
    
    
    22.6
    
    
    
    332.7
    
    
    
    5.36
    
    
    
    23.3Total
    
    $
    7,091.7
    
    
    
    7.29
    
    
    $
    541.5
    
    
    $
    7,757.0
    
    
    
    7.18
    
    
    $
    628.2
 
 (1)
    
    Includes the effect of interest rate swap contracts and amortization of debt
issuance costs and premiums or discounts.(2)
    
    Reflects weighted average interest rate and excludes fees. There were no borrowings
outstanding at December 31, 2004; the rate presented is the Adjusted LIBOR rate.  Debt
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalRevolving Credit Facility(1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3.7
    
    
    $
    
    
    
    $
    3.7Term loan B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    1,269.0
    
    
    
    1,275.0Receivables secured loan(2)
    
    
    230.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230.06.375% BFI Senior notes
    
    
    
    
    
    
    
    
    
    
    161.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161.28.50% Senior notes
    
    
    
    
    
    
    
    
    
    
    750.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750.08.875% Senior notes
    
    
    
    
    
    
    
    
    
    
    600.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600.06.50% Senior notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350.0
    
    
    
    
    
    
    
    350.05.75% Senior notes due 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400.0
    
    
    
    400.06.375% Senior notes due 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    600.09.25% 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
    
    
    8.5
    
    
    
    6.5
    
    
    
    1.8
    
    
    
    2.0
    
    
    
    25.4
    
    
    
    267.9
    
    
    
    312.1Total principal due
    
    $
    238.5
    
    
    $
    6.5
    
    
    $
    1,513.0
    
    
    $
    2.0
    
    
    $
    385.1
    
    
    $
    5,026.4
    
    
    $
    7,171.5Discount, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79.8
    )Total debt balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,091.7
 
 (1)
    
    At December 31, 2005, under our 2005 Credit Facility, we had revolving commitments
totaling $1.575 billion with $3.7 million in loans outstanding and $398.8 million of letters
of credit outstanding, providing us remaining availability of $1.173 billion. In addition, we
had an Institutional Letter of Credit Facility of $495.0 million available under the 2005
Credit Facility, all of which was used for letters of credit outstanding.(2)
    
    The receivables secured loan is a 364-day liquidity facility with a maturity date of
May 2006. At that time, we intend to renew the liquidity facility. If we are unable to renew
the liquidity facility, we will refinance any amounts outstanding with our 2005 Credit
Facility, which matures in 2010, or with other long-term borrowings. Although we intend to
renew the liquidity facility in May 2006 and do not expect to repay the amounts within the
next twelve months, the loan is classified as a current liability because it has a contractual
maturity of less than one year. 36




---



##### Table of Contents



Contractual Obligations
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalRecorded obligations:Long-term debt (1)
    
    $
    735.6
    
    
    $
    503.3
    
    
    $
    1,941.4
    
    
    $
    371.7
    
    
    $
    741.8
    
    
    $
    6,750.9
    
    
    $
    11,044.7Capital lease obligations
    
    
    2.1
    
    
    
    2.3
    
    
    
    1.9
    
    
    
    1.9
    
    
    
    1.9
    
    
    
    11.1
    
    
    
    21.2Capping, closure and post-
closure obligations
    
    
    72.8
    
    
    
    71.4
    
    
    
    67.2
    
    
    
    73.8
    
    
    
    58.9
    
    
    
    3,147.2
    
    
    
    3,491.3Other long-term liabilities (2)
    
    
    
    
    
    
    71.0
    
    
    
    47.5
    
    
    
    29.8
    
    
    
    20.8
    
    
    
    112.6
    
    
    
    281.7Unrecorded obligations:Operating leases
    
    
    31.0
    
    
    
    27.9
    
    
    
    23.8
    
    
    
    18.6
    
    
    
    15.3
    
    
    
    36.5
    
    
    
    153.1Purchase obligations:(3)Disposal related
    
    
    114.1
    
    
    
    98.7
    
    
    
    93.4
    
    
    
    81.1
    
    
    
    59.3
    
    
    
    537.1
    
    
    
    983.7Other
    
    
    38.1
    
    
    
    19.3
    
    
    
    14.0
    
    
    
    12.2
    
    
    
    4.6
    
    
    
    12.5
    
    
    
    100.7Total cash contractual
obligations
    
    $
    993.7
    
    
    $
    793.9
    
    
    $
    2,189.2
    
    
    $
    589.1
    
    
    $
    902.6
    
    
    $
    10,607.9
    
    
    $
    16,076.4
 
 (1)
    
    Amount represents scheduled principal and interest due and excludes discounts and
principal due on capital leases. Scheduled interest payment obligations are calculated using
stated coupons for fixed debt and interest rates effective as of December 31, 2005 for
variable rate debt.(2)
    
    The current portion of other long-term obligations is not reflected here, as it is
included in the other accrued liabilities balance.(3)
    
    Purchase obligations consist primarily of (i) disposal related agreements which
include fixed or minimum royalty and host agreements and take-or-pay and put-or-pay disposal
agreements and (ii) other obligations including a fuel contract agreement, committed capital
expenditures and consulting services arrangements. 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
 37




---



##### Table of Contents



(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
 Financial Assurances.
  38




---



##### Table of Contents



LandfillClosure/
    
    
    Contract
    
    
    Risk/Casualty
    
    
    Collateral forPost-Closure
    
    
    Performance
    
    
    Insurance
    
    
    Obligations
    
    
    TotalInsurance policies
    
    $
    642.4
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    642.4Surety bonds
    
    
    523.2
    
    
    
    485.7
    
    
    
    
    
    
    
    
    
    
    
    1,008.9Trust deposits
    
    
    82.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82.0Letters of credit (1)
    
    
    496.0
    
    
    
    46.1
    
    
    
    243.2
    
    
    
    108.5
    
    
    
    893.8Total
    
    $
    1,743.6
    
    
    $
    531.8
    
    
    $
    243.2
    
    
    $
    108.5
    
    
    $
    2,627.1
 
 (1)
    
    These amounts are issued under the 2005 Revolver and the Institutional Letter of
Credit Facility under our 2005 Credit Facility.  Off-Balance Sheet Financing
  Interest Rate Risk Management
   Contingencies
 Securities litigation 
 th
 39




---



##### Table of Contents



Landfill permitting 
   Tax 
     40




---



##### Table of Contents



Indemnification 
  Landfill costs 
  41




---



##### Table of Contents



Related Party Transactions
 Related Party Transactions
 Accounting for Stock Options Granted to Employees
 ccounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and
Disclosure
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees. Classification and Measurement of Freestanding Financial Instruments Originally Issued in
Exchange for Employee Services under FASB Statement No. 123(R) , Application of EITF Issue No. 00-19 to Freestanding Financial Instruments
Originally Issued as Employee Compensation Accounting
for Derivative Instruments and Hedging Activities Practical
Accommodation to the Application of Grant Date as Defined in FASB Statement No. 123(R) Transition Election Related to
Accounting for the Tax Effects of Share-Based Payment Awards
 Commitments and Contingencies
 42




---



##### Table of Contents



Critical Accounting Judgments and Estimates
   Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskLandfill
AccountingLandfill operations are treated as a period expense and are not
discussed further herein. Our landfill assets fall into two
categories, each of which require accounting judgments and
estimates. Landfill development coststhat are capitalized as an asset as incurred. Landfill retirement obligationthat results 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 surveys.Landfill DevelopmentSite permit and technical design

In 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.
    
    Changes in legislative
or regulatory
requirements may cause
changes in the
landfill site
permitting process.
These changes could
make it more difficult
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.
 43




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskActions 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.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 design, 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 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.Landfill 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, leachate collection system construction,
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, review changes in year over
year cost estimates for reasonableness and compare our
resulting development cost per acre with prior periods. These
development costs, together with any
    
    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.
 44




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskcosts incurred to acquire,
design and permit the landfill, including capitalized interest,
are recorded to the landfill asset on the balance sheet as
incurred.Landfill development asset amortizationIn order to match the amortization of 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 and estimated future development
costs (as described above) of the landfill by the estimated
remaining disposal capacity. The 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.
Amortization rates are influenced by the original cost basis
for 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 recent years and valued them at the time of
acquisition based upon market value. Also, per-ton rates are
influenced by site-specific engineering and cost factors.Estimate
updates
On 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 operations management annually.
Changes in the cost estimates are reflected prospectively in
the landfill amortization rates that are updated annually.
    
    Increases and
decreases in our 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 of the
landfill and result in
an asset impairment.Landfill Retirement ObligationWe have two types of retirement obligations related to
landfills: (1) capping and (2) closure and post-closure
monitoring.Landfill capping
As 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.
 45




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskClosure and post-closure monitoring

Closure costs are those costs 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. Post-closure requirements generally include maintenance
of the site and monitoring the 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 systems operations and maintenance, transportation and
disposal of leachate and erosion control costs related to the
final cap.Landfill
retirement obligation liability/asset
Estimates of the total future costs required to cap, close and
monitor the landfill as specified by each landfill permit are
developed annually. The estimates include the specific timing
of the estimated future cash outflows, considering the
anticipated waste flow into the capping events, the landfill
and inflation. Our cost estimates are inflated to the period of
performance using an estimate of inflation, which is updated
annually (2.5% in both 2005 and 2004).
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 accrued 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.

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
    
    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 future
inflation rate
projections could
impact our actual
future costs and our
total liability.
Changes in our capital
structure could result
in changes to the
credit-adjusted
risk-free rate used to
discount the
liabilities, which
could cause changes in
future recorded
liabilities 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.
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.
 46




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskobligation 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.

 The recorded 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 incurred.Estimate
updates
On 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
capacity
As 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:
    
    We may be unsuccessful
in obtaining permits
for probable expansion
disposal capacity
because of the failure
to obtain the final
local, state or
federal permit 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.
 47




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Risk1.   We have control of and access to the land where the expansion permit
is being sought.2.   All geologic and other technical siting criteria for a landfill have
been met or a variance 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 operations 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 the landfill amortization 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 LiabilitiesLiabilities arise from contamination existing at our landfills or at third-party
landfills that we (or a predecessor company) have delivered or transported waste to
and are based on our estimates of future costs that we will incur for incremental
remediation activities and the related litigation costs. To determine our ultimate
liability at these sites, we have used third-party environmental engineers and
attorneys to assist in the evaluation of several factors, including the extent of
contamination at each identified site and the most appropriate remedy. 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 increases in
the assumed accruals for environmental liabilities from the amounts recorded by the
predecessor are charged to operating expense. If the liabilities arise through the
normal course of business, the accruals are also charged to operating expense.
    
    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.
 48




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskEstimate updatesWe periodically consult with outside 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
accrued costs are not discounted. Any 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, 2005 and 2004 of approximately $272.8 million and $304.8 million,
respectively, represents the most probable outcome of these contingent matters.
Cash paid for environmental matters during 2005 and 2004 was $31.4 million and $31.8
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, we believe that it is reasonably possible that the ultimate outcome of
environmental matters, excluding capping, closure and post-closure costs could
result in approximately $23 million of additional liability. Due to the nature of
these matters, the cash flow impact would not be immediate and would most likely be
over a period greater than five years.Non-recurring Acquisition AccrualsAt the time of an acquisition accounted for under the purchase method of accounting,
we evaluate and record liabilities of the acquired company to represent our estimate
of fair value. Assumed liabilities as well as liabilities resulting directly from
the completion of the acquisition are considered in the net assets acquired and
resulting purchase price allocation.
    
    There could be changes in circumstances or estimates that cause the actual
settlement of these liabilities to be higher or lower than our original estimates.
Additional liabilities may exist that are related to the acquired operations but
that have not been identified.Liabilities related to restructuring and abandonment activities are generally
accrued through a charge to expense. Additionally, transition costs that are not
accruable at the time of acquisition, including transitional personnel costs, route
restructurings and costs associated with the consolidation of
 49




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskoperations, are expensed in the period in which the costs are incurred.Estimate updatesWe evaluate the adequacy of the non-recurring acquisition accruals at least annually
by obtaining third-party actuarial valuations of assumed self-insurance obligations,
third-party legal counsel updates for assumed litigation and field and corporate
management reviews of all acquisition related commitments. Any changes in the
liabilities resulting from these reviews are recorded in the period in which the
change in estimate is made. The adjustment is charged to either an expense or
goodwill consistent with how the original liability was established and the period
of time that has elapsed since the date of the acquisition. Generally, we do not
record adjustments to goodwill after one year from the date of the acquisition.SummaryAt December 31, 2005 and 2004, we had approximately $78.7 million and $124.6
million, respectively, of non-recurring acquisition accruals remaining on our
balance sheet, consisting primarily of loss contracts, litigation and compliance,
and risk management and insurance liabilities associated with the acquisition of
BFI. Cash paid against non-recurring acquisition accruals, including severance, in
2005 was $24.3 million and $30.0 million in 2004.Self-insurance Liabilities and Related CostsWe maintain high deductibles for commercial general liability, automobile liability
and workers compensation insurance and are fully self-insured for employee group
health claims. Deductible levels are between $1 million and $3 million. The
retained or non-insured portion of the liability for unpaid claims and associated
expenses, including incurred but not reported losses, is reflected in our balance
sheet as an accrued liability. The liability for unpaid claims and associated
expenses for commercial general liability, automobile liability and workers
compensation is actuarially determined by a third-party actuary. We use a
third-party administrator to track and evaluate actual claims experience for
consistency with the data used in the annual actuarial valuation. The expense is
charged to operating costs. The actuarially determined liability is calculated for
the most part by our past claims experience factor, which considers both the
    
    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 costs to discharge our obligations, including legal costs and health care costs,
could increase or decrease causing current and/or prior estimates of our
self-insurance liability to change.
 50




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskfrequency and settlement amount of claims.As of December 31, 2005 and 2004, we had approximately $227.5 million and $209.5
million of self-insurance liabilities on our balance sheet. Our recorded
liabilities are not discounted. Cash paid for self-insurance claims during 2005 and
2004 was $239.6 million and $216.6 million, respectively.Loss ContingenciesWe are subject to various legal proceedings and claims, the outcomes of which are
subject to significant uncertainty. We determine whether to disclose and 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 potential liability. Managements assessment is developed in consultation with
our outside 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.
    
    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 on 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.Asset ImpairmentValuation methodologyWe evaluate our long-lived assets for impairment based on projected cash flows
anticipated to be generated from the ongoing operation of those assets. Evaluation criteria
    
    If we have changes in events or circumstances, including reductions in anticipated
cash flows generated by our operations or determinations to divest of certain
assets, certain assets could be impaired which would result in a non-cash charge to earnings.We test long-lived assets for recoverability whenever events or changes in
circumstances indicate that the assets 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.
    
    Our most significant asset impairment exposure, other than goodwill (see discussion
below) is our investment in landfills. A reduction in our estimated disposal
capacity as a result of unanticipated events could trigger an impairment charge.
 51




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskRecognition criteriaIf 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 the use and
eventual disposition of the asset. We use the present value of the expected cash
flows from that asset to determine fair value.Goodwill ImpairmentValuation methodologyWe evaluate goodwill for impairment based on the 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 7.4% in 2005. In addition, consideration
is also given to an earnings multiple approach as an indicator of the reasonableness
of our discounted cash flow. Evaluation criteria
    
    The estimated fair value could change as there are future 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.Annually, we test realizability of goodwill, as described above. In addition, we
test goodwill for recoverability between annual evaluations 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,
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.Recognition criteriaWe recognize an impairment if the net book value exceeds the fair value on a
reporting unit basis. At the time of a divestiture of an individual business unit
within a reporting unit, goodwill is allocated to that business unit based on the
relative fair value of the unit being disposed to the total reporting unit and a
gain or loss on disposal is derived. Subsequently, the remaining goodwill in the
reporting unit from which the assets were divested is re-evaluated for impairment,
which could also result in an additional loss.
    
    In the past, we have incurred non-cash losses on sales of assets driven primarily by
the goodwill allocated to the assets divested. If similar divestiture decisions are
made in the future, we could incur additional non-cash losses on asset sales. A
divestiture of any individual asset below the reporting unit level could result in a
loss.
 52




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskSummaryAt December 31, 2005 and 2004, we had recorded goodwill of $8.2 billion. At December
31, 2005 and 2004, there was no impairment of goodwill upon completion of our annual
evaluation of goodwill recoverability.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 basis 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 deduction 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 business purchase
combination, resulted in approximately $6.8 billion of goodwill, $6.5 billion of
which amortization is non-deductible for tax purposes. At December 31, 2005,
approximately $5.8 billion of non-deductible goodwill remains on
our balance sheet.
Income tax expense is recorded on an interim basis based
    
    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
balance sheet reclassifications, which may include 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 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 tax credit
utilization. An increase or decrease in the tax rate could have a
material impact on our results of operations.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.SummaryAs of December 31, 2005, we have federal and state net operating loss and minimum
tax credit carryforwards with an after tax benefit totaling $339.5 million most of
which will expire if not used. Valuation allowances have been established for the
possibility that
 53




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business Riskcertain of the state carryforwards may not be used.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 actuarially determined by
an independent third-party based on actuarial 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. We recognize in our financial statements an
accrued liability (or a prepaid pension expense), for the difference between the
cost to satisfy our pension obligation and the investment income earned or
contributions to the plan. Pension income or expense is recorded to selling, general
and administrative expense.Our funding policy is to make annual contributions to the pension plan as determined
to be required by the plans actuary and to meet the minimum requirements of the
Employee Retirement Income Security Act (ERISA) and the IRC. No contributions were
required during the last three years. No contributions are anticipated for 2006.The plans policy is to invest the plans assets as determined by our Benefits
Committee. At December 31, 2005, of the total plan assets of $361.1 million,
approximately 37% was invested in fixed income bond funds and approximately 63% in
equity funds.
    
    Changes in our 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, 2005, our defined benefit retirement plan was under-funded by $16.3 million.AssumptionsThe assumptions used in the actuarially determined funded status are as follows: (weighted average assumptions as of our measurement date, September 30):
 2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    6.00
    %Expected return on plan
    
    
    8.50
    %
    
    
    8.50
    %Average rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
 
   54




---



##### Table of Contents



Accounting Policy and Process
    
    Residual Accounting andUse of Estimates
    
    Business RiskOur discount rate is based on a model which matches the timing
and amount of our expected pension plan cash outflows to maturities
of high-quality bonds as priced on our measurement date.
Where that timing is beyond a
currently published high-quality bond rate, the model uses
an expected yield curve to determine an appropriate current discount rate.
    
    Our discount rate is sensitive to changes in market based interest rates.
A decrease in the discount rate will increase the funding liability.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 evaluated an analysis
of long-term expected and
historical actual returns on the plan assets from our investment
managers, which gave consideration to our asset mix and anticipated
length of obligation of our plan.
    
    If actual return on plan assets varies from the expected returns,
the fair value of the plan assets will differ from our projections.The average rate of compensation increase applies only to
the portion of the plan that is not frozen. Less than 3% of
the plan participants continue to earn benefits. This rate
reflects our expectations of average pay
increases over the period benefits are earned.We annually review our actual asset allocation, discount rate,
expected rate of return and other actuarial assumptions and adjust
them as deemed necessary.
    
    Changes in our key assumptions could cause changes in our assets, liabilities and income or expense recorded. For example, a decrease
in the discount rate would result in a greater benefits obligation in future periods. A lower expected return on assets would also increase the amount of pension expense recorded.
 New Accounting Standards
  55




---



##### Table of Contents



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 expectation of the amounts we will spend on capital expenditures, closure,
post-closure and remediation expenditures related to landfill operations;
    
    our ability to generate cash flows from operations after funding capital expenditures;
    
    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 expectations related to severance costs;
    
    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;
    
    the expected benefits of our refinancing plan;
    
    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 a penalty by the IRS; and
    
    the ability to anticipate the impact of changes in federal, state, or local laws or regulations.
  56




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Interest rate risk.
  Fuel prices.
   Commodities prices.
 57




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 Report of Independent Registered Public Accounting Firm
    
    
    59Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    61Consolidated Statements of Operations for each of the Three Years in the Period ended December 31, 2005
    
    
    62Consolidated Statements of Stockholders Equity for the Three Years ended December 31, 2005
    
    
    63Consolidated Statements of Cash Flows for each of the Three Years in the Period ended December 31, 2005
    
    
    64Notes to Consolidated Financial Statements
    
    
    65
 58




---



##### Table of Contents



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
 59




---



##### Table of Contents



60




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in millions, except per share amounts)
 December 31,2005
    
    
    2004ASSETSCurrent Assets Cash and cash equivalents
    
    $
    56.1
    
    
    $
    68.0Accounts receivable, net of allowance of $17.8 and $17.0
    
    
    690.5
    
    
    
    668.4Prepaid and other current assets
    
    
    80.5
    
    
    
    81.9Deferred income taxes
    
    
    93.3
    
    
    
    104.3Total current assets
    
    
    920.4
    
    
    
    922.6Property and equipment, net
    
    
    4,273.5
    
    
    
    4,129.9Goodwill
    
    
    8,184.2
    
    
    
    8,202.0Other assets, net
    
    
    247.5
    
    
    
    239.4Total assets
    
    $
    13,625.6
    
    
    $
    13,493.9LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities Current portion of long-term debt
    
    $
    238.5
    
    
    $
    327.8Accounts payable
    
    
    564.8
    
    
    
    582.8Current portion of accrued capping, closure, post-closure and
environmental costs
    
    
    95.8
    
    
    
    95.0Accrued interest
    
    
    116.5
    
    
    
    140.3Other accrued liabilities
    
    
    330.5
    
    
    
    390.1Unearned revenue
    
    
    229.4
    
    
    
    220.7Total current liabilities
    
    
    1,575.5
    
    
    
    1,756.7Long-term debt, less current portion
    
    
    6,853.2
    
    
    
    7,429.2Deferred income taxes
    
    
    305.5
    
    
    
    207.7Accrued capping, closure, post-closure and environmental costs,
less current portion
    
    
    796.8
    
    
    
    839.0Other long-term obligations
    
    
    655.2
    
    
    
    656.4Commitments
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
    
    
    333.1
    
    
    
    333.1Series D senior mandatory convertible preferred stock, $0.10 par value,
2.4 million shares authorized, issued and outstanding, liquidation preference of
$250.00 per share, net of $19.2 million of issuance costs
    
    
    580.8
    
    
    
    Common stock; $0.01 par value; 525 million authorized shares; 331.2 million
and 317.5 million shares issued and outstanding
    
    
    3.3
    
    
    
    3.2Additional paid-in capital
    
    
    2,440.7
    
    
    
    2,338.0Accumulated other comprehensive loss
    
    
    (70.3
    )
    
    
    (69.4
    )Retained earnings
    
    
    151.8
    
    
    
    Total stockholders equity
    
    
    3,439.4
    
    
    
    2,604.9Total liabilities and stockholders equity
    
    $
    13,625.6
    
    
    $
    13,493.9
  61




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in millions, except per share amounts)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    5,734.8
    
    
    $
    5,514.0
    
    
    $
    5,386.3Cost of operations (exclusive of depreciation and amortization
shown below)
    
    
    3,745.7
    
    
    
    3,514.6
    
    
    
    3,325.5Selling, general and administrative expenses
    
    
    519.2
    
    
    
    553.7
    
    
    
    480.1Depreciation and amortization
    
    
    554.4
    
    
    
    559.3
    
    
    
    546.0Operating income
    
    
    915.5
    
    
    
    886.4
    
    
    
    1,034.7Interest expense and other
    
    
    588.0
    
    
    
    758.9
    
    
    
    832.9Income before income taxes
    
    
    327.5
    
    
    
    127.5
    
    
    
    201.8Income tax expense
    
    
    133.9
    
    
    
    72.2
    
    
    
    88.7Minority interest
    
    
    (0.2
    )
    
    
    (2.7
    )
    
    
    1.9Income from continuing operations
    
    
    193.8
    
    
    
    58.0
    
    
    
    111.2Income (loss) from discontinued operations, net of tax
    
    
    10.8
    
    
    
    (8.7
    )
    
    
    (11.5
    )Cumulative effect of change in accounting principle, net of tax
    
    
    (0.8
    )
    
    
    
    
    
    
    29.0Net income
    
    
    203.8
    
    
    
    49.3
    
    
    
    128.7Dividends on preferred stock
    
    
    (52.0
    )
    
    
    (21.6
    )
    
    
    (95.6
    )Non-cash conversion of Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    (496.6
    )Net income (loss) available to common shareholders
    
    $
    151.8
    
    
    $
    27.7
    
    
    $
    (463.5
    )Basic EPS:Continuing operations
    
    $
    0.43
    
    
    $
    0.12
    
    
    $
    (2.36
    )Discontinued operations
    
    
    0.03
    
    
    
    (0.03
    )
    
    
    (0.05
    )Cumulative effect of change in accounting principle
    
    
    (0.00
    )
    
    
    
    
    
    
    0.14Net income (loss) available to common shareholders
    
    $
    0.46
    
    
    $
    0.09
    
    
    $
    (2.27
    )Weighted average common shares
    
    
    326.9
    
    
    
    315.0
    
    
    
    203.8Diluted EPS:Continuing operations
    
    $
    0.43
    
    
    $
    0.11
    
    
    $
    (2.36
    )Discontinued operations
    
    
    0.03
    
    
    
    (0.02
    )
    
    
    (0.05
    )Cumulative effect of change in accounting principle
    
    
    (0.00
    )
    
    
    
    
    
    
    0.14Net income (loss) available to common shareholders
    
    $
    0.46
    
    
    $
    0.09
    
    
    $
    (2.27
    )Weighted average common and common equivalent shares
    
    
    330.1
    
    
    
    319.7
    
    
    
    203.8Pro forma amounts, assuming the 2003 change in accounting
principle is applied retroactively excluding the
cumulative effect of change in accounting principle in the
year of adoption:Net loss available to common shareholders
    
    
    
    
    
    
    
    
    
    $
    (492.5
    )Basic net loss per share
    
    
    
    
    
    
    
    
    
    $
    (2.42
    )Diluted net loss per share
    
    
    
    
    
    
    
    
    
    $
    (2.42
    )
  62




---



##### Table of Contents



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, 2002
    
    $
    
    
    
    $
    2.0
    
    
    $
    989.6
    
    
    $
    (131.2
    )
    
    $
    (171.3
    )
    
    $
    689.1Common stock issued, net
    
    
    
    
    
    
    1.2
    
    
    
    1,415.8
    
    
    
    
    
    
    
    
    
    
    
    1,417.0Stock options, net
    
    
    
    
    
    
    
    
    
    
    8.7
    
    
    
    
    
    
    
    
    
    
    
    8.7Dividends declared on Series A
senior convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    (80.0
    )
    
    
    
    
    
    
    
    
    
    
    (80.0
    )Issuance of Series C mandatory
convertible preferred stock
    
    
    333.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333.1Dividends paid on Series C mandatory
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    (15.6
    )
    
    
    
    
    
    
    
    
    
    
    (15.6
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128.7
    
    
    
    128.7Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18.8
    
    
    
    
    
    
    
    18.8Net loss on hedging derivatives
reclassified to earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.9
    
    
    
    
    
    
    
    13.9Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.0
    
    
    
    
    
    
    
    4.0Balance 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, net
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    4.3Minimum pension 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, net
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    1.3Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.2
    )
    
    
    
    
    
    
    (2.2
    )Balance as of December 31, 2005
    
    $
    913.9
    
    
    $
    3.3
    
    
    $
    2,440.7
    
    
    $
    (70.3
    )
    
    $
    151.8
    
    
    $
    3,439.4
 Comprehensive Income 
 Year ended December 31,2005
    
    
    2004
    
    
    2003Net income
    
    $
    203.8
    
    
    $
    49.3
    
    
    $
    128.7Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    1.3
    
    
    
    18.2
    
    
    
    18.8Net loss on hedging derivatives reclassified to earnings
    
    
    
    
    
    
    4.3
    
    
    
    13.9Minimum pension liability adjustment
    
    
    (2.2
    )
    
    
    2.6
    
    
    
    4.0$
    202.9
    
    
    $
    74.4
    
    
    $
    165.4
  63




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in millions)
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Operating activities Net income
    
    $
    203.8
    
    
    $
    49.3
    
    
    $
    128.7Discontinued operations, net of tax
    
    
    (10.8
    )
    
    
    8.7
    
    
    
    11.5Adjustments to reconcile net income to cash provided by operating
activities from continuing operationsProvisions for:Depreciation and amortization
    
    
    554.4
    
    
    
    559.3
    
    
    
    546.0Doubtful accounts
    
    
    18.8
    
    
    
    18.6
    
    
    
    23.6Accretion of debt and amortization of debt issuance costs
    
    
    22.7
    
    
    
    27.0
    
    
    
    31.8Deferred income tax
    
    
    119.9
    
    
    
    46.9
    
    
    
    70.6Gain on sale of fixed assets
    
    
    (3.5
    )
    
    
    (4.9
    )
    
    
    Non-cash reduction in acquisition accruals
    
    
    (21.6
    )
    
    
    (11.9
    )
    
    
    (11.2
    )Non-cash asset impairment
    
    
    5.9
    
    
    
    
    
    
    
    Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    (16.2
    )
    
    
    (48.1
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    6.7
    
    
    
    23.1Write-off of deferred debt issuance costs
    
    
    13.7
    
    
    
    26.4
    
    
    
    61.0Non-cash portion of realignment and executive departure costs
    
    
    
    
    
    
    17.4
    
    
    
    Cumulative effect of change in accounting principle, net of tax
    
    
    0.8
    
    
    
    
    
    
    
    (29.0
    )Change in operating assets and liabilities, excluding the effects
of purchase acquisitionsAccounts receivable, prepaid expenses and other assets
    
    
    (50.8
    )
    
    
    (36.8
    )
    
    
    (24.3
    )Accounts payable, accrued liabilities, unearned income and other
    
    
    (99.6
    )
    
    
    1.9
    
    
    
    31.0Capping, closure and post-closure provision and accretion
    
    
    50.3
    
    
    
    48.0
    
    
    
    44.3Capping, closure, post-closure and environmental expenditures
    
    
    (91.4
    )
    
    
    (90.4
    )
    
    
    (75.1
    )Cash provided by operating activities from continuing operations
    
    
    712.6
    
    
    
    650.0
    
    
    
    783.9Investing activities Cost of acquisitions, net of cash acquired
    
    
    (8.0
    )
    
    
    (21.5
    )
    
    
    (63.4
    )Proceeds from divestitures, net of cash divested
    
    
    8.9
    
    
    
    57.7
    
    
    
    313.4Proceeds from sale of fixed assets
    
    
    20.3
    
    
    
    11.0
    
    
    
    17.5Capital expenditures, excluding acquisitions
    
    
    (695.9
    )
    
    
    (582.9
    )
    
    
    (491.8
    )Capitalized interest
    
    
    (14.5
    )
    
    
    (13.0
    )
    
    
    (15.7
    )Change in deferred acquisition costs, notes receivable and other
    
    
    6.2
    
    
    
    10.8
    
    
    
    (8.4
    )Cash used for investing activities from continuing operations
    
    
    (683.0
    )
    
    
    (537.9
    )
    
    
    (248.4
    )Financing activities Net proceeds from sale of Series C preferred stock
    
    
    
    
    
    
    
    
    
    
    333.1Net proceeds from sale of Series D preferred stock
    
    
    580.8
    
    
    
    
    
    
    
    Proceeds from long-term debt, net of issuance costs
    
    
    3,043.5
    
    
    
    3,082.6
    
    
    
    3,037.1Payments of long-term debt
    
    
    (3,740.2
    )
    
    
    (3,609.1
    )
    
    
    (3,754.6
    )Payments of preferred stock dividends
    
    
    (48.9
    )
    
    
    (21.6
    )
    
    
    (10.2
    )Net change in disbursement account
    
    
    21.9
    
    
    
    53.8
    
    
    
    10.5Net proceeds from sale of common stock, exercise of stock options
and other
    
    
    97.4
    
    
    
    5.1
    
    
    
    98.4Cash used for financing activities from continuing operations
    
    
    (45.5
    )
    
    
    (489.2
    )
    
    
    (285.7
    )Discontinued operations:Provided by operating activities
    
    
    4.0
    
    
    
    0.4
    
    
    
    24.1Used for investing activities
    
    
    
    
    
    
    
    
    
    
    (8.6
    )Used for financing activities
    
    
    
    
    
    
    
    
    
    
    Cash provided by discontinued operations
    
    
    4.0
    
    
    
    0.4
    
    
    
    15.5(Decrease) increase in cash and cash equivalents
    
    
    (11.9
    )
    
    
    (376.7
    )
    
    
    265.3Cash and cash equivalents, beginning of year
    
    
    68.0
    
    
    
    444.7
    
    
    
    179.4Cash and cash equivalents, end of year
    
    $
    56.1
    
    
    $
    68.0
    
    
    $
    444.7
  64




---



##### 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 
   Reporting Revenue Gross as a Principal versus Net as an Agent .
  Assets held for sale -
  Accounting for Income Taxes
 Discontinued operations 
  65




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    
    
    
    $
    13.4
    
    
    $
    252.7Income (loss) before tax
    
    $
    2.7
    
    
    $
    (3.3
    )
    
    $
    28.8Gain (loss) on divestiture
    
    
    15.3
    
    
    
    4.7
    
    
    
    (28.8
    )Income tax expense
    
    
    7.2
    
    
    
    10.1
    
    
    
    11.7Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    0.2Discontinued operations, net of tax
    
    $
    10.8
    
    
    $
    (8.7
    )
    
    $
    (11.5
    )
   Allocation of Interest to Discontinued Operations
 Business combinations 
  66




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   2005
    
    
    2004
    
    
    2003Number of businesses acquired
    
    
    11
    
    
    
    17
    
    
    
    17Total consideration (in millions)
    
    $
    12.4
    
    
    $
    27.7
    
    
    $
    60.5
  Realignment 
  Cash and cash equivalents 
  Concentration of credit risk 
  Receivable realization allowance 
  67




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Other assets 
  2005
    
    
    2004Deferred financing costs
    
    $
    85.1
    
    
    $
    92.2Landfill closure
deposits
    
    
    32.8
    
    
    
    28.6Notes receivable
    
    
    15.0
    
    
    
    16.0Deferred contract costs
    
    
    3.9
    
    
    
    4.4Assets held for sale
    
    
    17.1
    
    
    
    Other
    
    
    93.6
    
    
    
    98.2Total
    
    $
    247.5
    
    
    $
    239.4
   Other accrued liabilities 
  Accrued capping, closure and post-closure costs 
  Environmental costs 
 Environmental Remediation Liabilities
 68




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Self-Insurance 
   2005 (1)
    
    
    2004 (1)
    
    
    2003 (1)Balance at beginning of year
    
    $
    209.5
    
    
    $
    193.5
    
    
    $
    146.2Expense incurred
    
    
    257.6
    
    
    
    232.6
    
    
    
    257.3Claims paid for current year program
    
    
    (173.7
    )
    
    
    (163.2
    )
    
    
    (176.0
    )Claims paid for prior years program
    
    
    (65.9
    )
    
    
    (53.4
    )
    
    
    (34.0
    )Balance at end of year
    
    $
    227.5
    
    
    $
    209.5
    
    
    $
    193.5Less: current portion
    
    
    (83.9
    )
    
    
    (77.5
    )
    
    
    (78.0
    )$
    143.6
    
    
    $
    132.0
    
    
    $
    115.5
 
 (1)
    
    Amounts exclude premium related balances, expenses and payments. Other long-term obligations 
  Contingent liabilities 
 Accounting for Contingencies Reasonable Estimation of the Amount of a Loss
 Revenue 
   69




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Loss contracts
  Non-recurring acquisition accruals 
  Interest expense and other
  Interest expense capitalized
   Statements of cash flows
  2005
    
    
    2004
    
    
    2003Supplemental disclosures -Interest paid (net of amounts capitalized)
    
    $
    528.5
    
    
    $
    620.2
    
    
    $
    726.8Income taxes paid (net of refunds)
    
    
    16.2
    
    
    
    36.6
    
    
    
    40.0Non-cash transactions -Debt incurred or assumed in acquisitions
    
    $
    3.4
    
    
    $
    
    
    
    $
    3.0Liabilities incurred or assumed in acquisitions
    
    
    1.6
    
    
    
    12.6
    
    
    
    13.9Capital lease obligations incurred
    
    
    1.5
    
    
    
    4.6
    
    
    
    8.0Dividends on preferred stock
    
    
    8.5
    
    
    
    5.4
    
    
    
    80.0Conversion of Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    496.6
 70




---



##### 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
 ccounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and
Disclosure
  Share-Based Payment
  71




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Net income (loss) available to common shareholders, as
reported
    
    $
    151.8
    
    
    $
    27.7
    
    
    $
    (463.5
    )Total stock-based employee compensation expense
determined under fair value based method, net of tax
    
    
    (4.4
    )
    
    
    (7.0
    )
    
    
    (9.5
    )Net income (loss) available to common shareholders,
pro forma
    
    $
    147.4
    
    
    $
    20.7
    
    
    $
    (473.0
    )Basic
earnings (loss) per share:  As reported
    
    $
    0.46
    
    
    $
    0.09
    
    
    $
    (2.27
    )Pro forma
    
    
    0.45
    
    
    
    0.07
    
    
    
    (2.32
    )Diluted earnings (loss) per share: As reported
    
    $
    0.46
    
    
    $
    0.09
    
    
    $
    (2.27
    )Pro forma
    
    
    0.45
    
    
    
    0.06
    
    
    
    (2.32
    )
  Year Ended December 31,2005
    
    2004
    
    2003Risk free interest rate
    
    
    3.4
    %
    
    
    2.9
    %
    
    
    3.3
    %Expected life
    
    6 years
    
    4 years
    
    4 yearsDividend rate
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    51
    %
    
    
    64
    %
    
    
    65
    %
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Pro forma diluted earnings (loss) per share
    
    $
    0.45
    
    
    $
    0.06
    
    
    $
    (2.32
    )Retirement-eligible impact
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Pro forma diluted earnings (loss) per share,
adjusted for retirement-eligible impact
    
    $
    0.45
    
    
    $
    0.06
    
    
    $
    (2.33
    )
 Change in accounting principle 
 Accounting for Conditional Asset Retirement Obligations
 an interpretation of FASB Statement No. 143 Accounting for Asset Retirement Obligations
 Recently issued accounting pronouncements 
 Accounting Changes and Error Corrections Accounting Changes , Reporting
Accounting Changes in Interim Financial Statements  An Amendment of APB Opinion No. 28
 72




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to
Employees. Classification and Measurement of Freestanding
Financial Instruments Originally Issued in Exchange for Employee Services under FASB Statement No.
123(R) , Application of EITF Issue No. 00-19
to Freestanding Financial Instruments Originally Issued as Employee Compensation Accounting for Derivative Instruments and Hedging Activities Practical Accommodation to the Application of Grant Date as
Defined in FASB Statement No. 123(R) Transition Election Related to Accounting for the Tax Effects of Share-Based Payments
Awards
 Commitments and Contingencies
 2. Property and Equipment
 Accounting for Impairment or Disposal of Long-Lived Assets
 73




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 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 31,2004
    
    
    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)
    
    Relates primarily to capitalized interest, changes in our landfill retirement
obligation asset for recognition of and adjustments to capping,
closure and post-closure liabilities
(see Note 7), reclassifications to assets held for sale and asset impairment resulting from
the Gulf Coast hurricanes. 74




---



##### 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 31,2003
    
    
    Additions
    
    
    Retirements
    
    
    Divestitures
    
    
    Other (1)
    
    
    2004Land and
improvements
    
    $
    424.3
    
    
    $
    34.1
    
    
    $
    (1.5
    )
    
    $
    0.3
    
    
    $
    4.5
    
    
    $
    461.7Land held for
permitting as landfills
    
    
    101.7
    
    
    
    17.7
    
    
    
    
    
    
    
    (1.8
    )
    
    
    (8.7
    )
    
    
    108.9Landfills
    
    
    3,304.4
    
    
    
    279.3
    
    
    
    
    
    
    
    16.6
    
    
    
    80.6
    
    
    
    3,680.9Buildings and
improvements
    
    
    466.3
    
    
    
    31.2
    
    
    
    (3.7
    )
    
    
    0.3
    
    
    
    (1.6
    )
    
    
    492.5Vehicles and equipment
    
    
    1,747.4
    
    
    
    144.0
    
    
    
    (63.7
    )
    
    
    (1.5
    )
    
    
    0.7
    
    
    
    1,826.9Containers and
compactors
    
    
    787.7
    
    
    
    70.9
    
    
    
    (13.0
    )
    
    
    (0.3
    )
    
    
    (0.9
    )
    
    
    844.4Furniture and office
equipment
    
    
    43.9
    
    
    
    5.7
    
    
    
    (1.0
    )
    
    
    
    
    
    
    1.5
    
    
    
    50.1Total
    
    $
    6,875.7
    
    
    $
    582.9
    
    
    $
    (82.9
    )
    
    $
    13.6
    
    
    $
    76.1
    
    
    $
    7,465.4
 Accumulated Depreciation and AmortizationDepreciationBalance at
    
    
    and
    
    
    
    
    
    
    Acquisitions,
    
    
    Transfers
    
    
    Balance atDecember 31,
    
    
    Amortization
    
    
    Sales and
    
    
    Net of
    
    
    and
    
    
    December 31,2003
    
    
    Expense
    
    
    Retirements
    
    
    Divestitures
    
    
    Other (1)
    
    
    2004Land and
improvements
    
    $
    (21.4
    )
    
    $
    (5.1
    )
    
    $
    0.3
    
    
    $
    
    
    
    $
    0.2
    
    
    $
    (26.0
    )Landfills
    
    
    (1,337.9
    )
    
    
    (256.8
    )
    
    
    
    
    
    
    
    
    
    
    3.6
    
    
    
    (1,591.1
    )Buildings and
improvements
    
    
    (105.6
    )
    
    
    (24.6
    )
    
    
    1.9
    
    
    
    0.3
    
    
    
    (0.1
    )
    
    
    (128.1
    )Vehicles and equipment
    
    
    (910.9
    )
    
    
    (178.7
    )
    
    
    58.2
    
    
    
    3.1
    
    
    
    (4.4
    )
    
    
    (1,032.7
    )Containers and
compactors
    
    
    (451.3
    )
    
    
    (86.0
    )
    
    
    12.5
    
    
    
    1.0
    
    
    
    0.7
    
    
    
    (523.1
    )Furniture and office
equipment
    
    
    (29.7
    )
    
    
    (5.7
    )
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    (34.5
    )Total
    
    $
    (2,856.8
    )
    
    $
    (556.9
    )
    
    $
    73.8
    
    
    $
    4.4
    
    
    $
    
    
    
    $
    (3,335.5
    )Property and
equipment, net
    
    $
    4,018.9
    
    
    $
    26.0
    
    
    $
    (9.1
    )
    
    $
    18.0
    
    
    $
    76.1
    
    
    $
    4,129.9
 
 (1)
    
    Relates primarily to (i) capitalized interest, (ii) changes in our landfill
retirement obligation asset for recognition of and adjustments to capping, closure and post-closure
costs (see Note 7) and (iii) capitalized leases. 3. Goodwill and Intangible Assets
   75




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Balance as of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as ofDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,2004
    
    
    Acquisitions
    
    
    Divestitures
    
    
    Adjustments(1)
    
    
    2005Atlantic Region
    
    $
    914.9
    
    
    $
    0.3
    
    
    $
    
    
    
    $
    (915.2
    )
    
    $
    Great Lakes Region
    
    
    1,097.7
    
    
    
    0.1
    
    
    
    
    
    
    
    (1,097.8
    )
    
    
    Midstates Region
    
    
    959.1
    
    
    
    
    
    
    
    
    
    
    
    (959.1
    )
    
    
    Mountain Region
    
    
    650.7
    
    
    
    
    
    
    
    
    
    
    
    (650.7
    )
    
    
    North Central Region
    
    
    1,193.5
    
    
    
    
    
    
    
    
    
    
    
    (1,193.5
    )
    
    
    Northeast Region (old)
    
    
    725.4
    
    
    
    
    
    
    
    
    
    
    
    (725.4
    )
    
    
    Pacific Region
    
    
    726.1
    
    
    
    
    
    
    
    
    
    
    
    (726.1
    )
    
    
    Southeast Region
(old)
    
    
    872.4
    
    
    
    1.4
    
    
    
    
    
    
    
    (873.8
    )
    
    
    Southwest Region (old)
    
    
    1,062.2
    
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    (1,062.1
    )
    
    
    Midwest Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,169.1
    
    
    
    2,169.1Northeast Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,796.5
    
    
    
    1,796.5Southeast Region
    
    
    
    
    
    
    
    
    
    
    (2.7
    )
    
    
    1,586.7
    
    
    
    1,584.0Southwest Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,316.9
    
    
    
    1,316.9West Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,317.7
    
    
    
    1,317.7Total
    
    $
    8,202.0
    
    
    $
    1.9
    
    
    $
    (2.9
    )
    
    $
    (16.8
    )
    
    $
    8,184.2
 Balance as of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance as ofDecember 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 31,2003
    
    
    Acquisitions
    
    
    Divestitures
    
    
    Adjustments(1) (2)
    
    
    2004Western Area
    
    $
    1,399.6
    
    
    $
    
    
    
    $
    (3.5
    )
    
    $
    (1,396.1
    )
    
    $
    Central Area
    
    
    1,910.9
    
    
    
    1.3
    
    
    
    
    
    
    
    (1,912.2
    )
    
    
    Eastern Area
    
    
    2,384.6
    
    
    
    3.2
    
    
    
    (1.2
    )
    
    
    (2,386.6
    )
    
    
    Southern Area
    
    
    2,617.9
    
    
    
    3.1
    
    
    
    
    
    
    
    (2,621.0
    )
    
    
    Atlantic Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    914.9
    
    
    
    914.9Great Lakes Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,097.7
    
    
    
    1,097.7Midstates Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    959.1
    
    
    
    959.1Mountain Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    650.7
    
    
    
    650.7North Central Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,193.5
    
    
    
    1,193.5Northeast Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    725.4
    
    
    
    725.4Pacific Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    726.1
    
    
    
    726.1Southeast Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    872.4
    
    
    
    872.4Southwest Region
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,062.2
    
    
    
    1,062.2Total
    
    $
    8,313.0
    
    
    $
    7.6
    
    
    $
    (4.7
    )
    
    $
    (113.9
    )
    
    $
    8,202.0
 
 (1)
    
    Amounts primarily relate to reallocation of goodwill in connection with our
realignment of field operations, reclassification of goodwill in connection with assets held
for sale accounting and purchase accounting adjustments.(2)
    
    Amounts include approximately $113.0 million of adjustments to reduce goodwill for
tax contingencies previously recorded in connection with our acquisition of BFI that were
presented in other long-term liabilities ($102.4 million) and deferred income taxes ($10.6
million). 76




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingValue
    
    
    Amortization
    
    
    ValueNon-compete agreements
    
    $
    8.0
    
    
    $
    6.8
    
    
    $
    1.2Other
    
    
    2.5
    
    
    
    0.4
    
    
    
    2.1Total
    
    $
    10.5
    
    
    $
    7.2
    
    
    $
    3.3
  4. Long-term Debt
  Debt Balance at
    
    
    Effective Interest RateDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Revolving credit facility ABR borrowings*
    
    $
    3.7
    
    
    $
    
    
    
    
    9.00
    %
    
    
    7.25
    %Revolving credit facility Adjusted LIBOR borrowings*
    
    
    
    
    
    
    
    
    
    
    7.29
    
    
    
    5.56Term loan B
    
    
    
    
    
    
    1,162.9
    
    
    
    
    
    
    
    6.07Term loan C
    
    
    
    
    
    
    245.4
    
    
    
    
    
    
    
    6.05Term loan D
    
    
    
    
    
    
    147.2
    
    
    
    
    
    
    
    5.852005 term loan B
    
    
    1,275.0
    
    
    
    
    
    
    
    6.33
    
    
    
    Receivables secured loan
    
    
    230.0
    
    
    
    209.9
    
    
    
    4.90
    
    
    
    3.327.88% senior notes due 2005
    
    
    
    
    
    
    69.4
    
    
    
    
    
    
    
    8.777.63% senior notes due 2006
    
    
    
    
    
    
    600.0
    
    
    
    
    
    
    
    7.996.38% senior notes due 2008
    
    
    154.7
    
    
    
    151.5
    
    
    
    8.34
    
    
    
    8.348.50% senior notes due 2008
    
    
    750.0
    
    
    
    750.0
    
    
    
    8.78
    
    
    
    8.788.88% senior notes due 2008
    
    
    600.0
    
    
    
    600.0
    
    
    
    9.15
    
    
    
    9.156.50% senior notes due 2010
    
    
    350.0
    
    
    
    350.0
    
    
    
    6.76
    
    
    
    4.805.75% senior notes due 2011
    
    
    400.0
    
    
    
    400.0
    
    
    
    6.00
    
    
    
    5.936.38% senior notes due 2011
    
    
    275.0
    
    
    
    275.0
    
    
    
    6.63
    
    
    
    6.609.25% senior notes due 2012
    
    
    251.1
    
    
    
    376.9
    
    
    
    9.40
    
    
    
    9.417.88% senior notes due 2013
    
    
    450.0
    
    
    
    450.0
    
    
    
    8.09
    
    
    
    8.096.13% senior notes due 2014
    
    
    425.0
    
    
    
    425.0
    
    
    
    6.30
    
    
    
    6.357.25% senior notes due 2015
    
    
    600.0
    
    
    
    
    
    
    
    7.43
    
    
    
    9.25% debentures due 2021
    
    
    96.1
    
    
    
    95.8
    
    
    
    9.47
    
    
    
    9.487.40% debentures due 2035
    
    
    292.2
    
    
    
    289.9
    
    
    
    8.03
    
    
    
    8.0310.00% senior subordinated notes due 2009
    
    
    
    
    
    
    195.4
    
    
    
    
    
    
    
    10.224.25% senior subordinated convertible
debentures due 2034
    
    
    230.0
    
    
    
    230.0
    
    
    
    4.34
    
    
    
    4.337.38% senior unsecured notes due 2014
    
    
    400.0
    
    
    
    400.0
    
    
    
    7.55
    
    
    
    7.53Solid waste revenue bond obligations,
principal payable through 2031
    
    
    283.9
    
    
    
    306.1
    
    
    
    6.81
    
    
    
    5.21Notes payable to banks, finance companies and
individuals, interest rates of 0.7% to 12.23%, and
principal payable through 2014, secured by vehicles,
equipment, real estate or accounts receivable **
    
    
    5.1
    
    
    
    8.7
    
    
    
    4.32
    
    
    
    6.07Obligations under capital leases of
vehicles and equipment**
    
    
    13.2
    
    
    
    13.5
    
    
    
    9.08
    
    
    
    9.30Notes payable to individuals and a
commercial company, interest rates of 5.99%
to 9.50%, principal payable through 2010,
unsecured**
    
    
    6.7
    
    
    
    4.4
    
    
    
    7.93
    
    
    
    6.55Total debt**
    
    
    7,091.7
    
    
    
    7,757.0
    
    
    
    7.29
    
    
    
    7.18Less: Current portion
    
    
    238.5
    
    
    
    327.8Long-term portion
    
    $
    6,853.2
    
    
    $
    7,429.2
 
 *
    
    Reflects weighted average interest rate, excludes fees**
    
    Reflects weighted average interest rate 77




---



##### 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 
    Senior notes and debentures 
 th th
 78




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 th th
 th th
 th th
 th th
 st st
 Valuation of Debt Assumed in a Purchase Business Combination
   Receivables secured loan 
   79




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities  a Replacement of FASB Statement 125
 Senior subordinated notes 
   Senior subordinated convertible debentures 
    th
 80




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Future maturities of long-term debt 
  Maturity2006 (1)
    
    $
    238.52007
    
    
    6.52008
    
    
    1,513.02009
    
    
    2.02010
    
    
    385.1Thereafter
    
    
    5,026.4Gross Principal
    
    
    7,171.5Discount, net
    
    
    (79.8
    )Total Debt
    
    $
    7,091.7
 
 (1)
    
    Includes the receivables secured loan, which is a 364-day liquidity facility with a
maturity date of May 2006 and has a balance of $230.0 million at December 31, 2005. At that
time, we intend to renew the liquidity facility. If we are unable to renew the liquidity
facility, we will refinance any amounts outstanding with our 2005 Credit Facility, which
matures in 2010 or with other long-term borrowings. Although we intend to renew the liquidity
facility in May 2006 and do not expect to repay the amounts within the next twelve months, the
loan is classified as a current liability because it has a contractual maturity of less than
one year.  Maturity
    
    Principal
    
    
    Interest
    
    
    Total2006
    
    $
    1.0
    
    
    $
    1.1
    
    
    $
    2.12007
    
    
    1.2
    
    
    
    1.1
    
    
    
    2.32008
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.92009
    
    
    1.0
    
    
    
    0.9
    
    
    
    1.92010
    
    
    1.2
    
    
    
    0.7
    
    
    
    1.9Thereafter
    
    
    7.9
    
    
    
    3.2
    
    
    
    11.1$
    13.2
    
    
    $
    8.0
    
    
    $
    21.2
 Fair value of debt and interest rate protection agreements
  Balance at
    
    Fair Value at
    
    Balance at
    
    Fair Value atDecember 31, 2005
    
    December 31, 2005
    
    December 31, 2004
    
    December 31, 2004Long-Term DebtFixed Rate Debt:Principal amount
    
    $
    5,498.3
    
    
    $
    5,555.1
    
    
    $
    5,894.8
    
    
    $
    5,994.6Weighted average interest rate
    
    
    7.44
    %
    
    
    
    
    
    
    7.61
    %Variable Rate Debt:Principal amount
    
    $
    1,593.4
    
    
    $
    1,601.4
    
    
    $
    1,862.2
    
    
    $
    1,881.8Weighted average interest rate(1)
    
    
    5.83
    %
    
    
    
    
    
    
    4.70
    %Interest Rate Swaps(2)Non-Cancelable:Notional amount
    
    $
    
    
    
    $
    
    
    
    $
    250.0
    
    
    $
    (1.8
    )Weighted average interest rate
    
    
    
    
    
    
    
    
    
    
    5.99
    %
 
 (1)
    
    Reflects the rate in effect as of December 31, 2005 and 2004 before the effects of
swaps and includes all applicable margins. Actual future rates may vary.(2)
    
    Amount represents our floating to fixed interest rate swap contracts. See Note 5
for additional discussion. 81




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 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
 (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 
 Minimum Revenue Guarantees Granted to a Business or
Its Owners  an interpretation of FASB Statement No.45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
 82




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Others
 Collateral 
   Other AlliedBFI
    
    
    Collateral
    
    
    CombinedCondensed Balance Sheet (1):Current assets
    
    $
    201.4
    
    
    $
    228.5
    
    
    $
    429.9Property and equipment, net
    
    
    1,000.9
    
    
    
    784.4
    
    
    
    1,785.3Goodwill
    
    
    3,391.0
    
    
    
    2,973.5
    
    
    
    6,364.5Other assets, net
    
    
    117.0
    
    
    
    12.1
    
    
    
    129.1Total assets
    
    $
    4,710.3
    
    
    $
    3,998.5
    
    
    $
    8,708.8Current liabilities
    
    $
    449.9
    
    
    $
    249.5
    
    
    $
    699.4Long-term debt, less current portion
    
    
    5,357.8
    
    
    
    6.5
    
    
    
    5,364.3Other long-term obligations
    
    
    672.4
    
    
    
    49.1
    
    
    
    721.5Due to/(from) parent
    
    
    (18.0
    )
    
    
    1,701.6
    
    
    
    1,683.6Total stockholders equity (deficit)
    
    
    (1,751.8
    )
    
    
    1,991.8
    
    
    
    240.0Total liabilities and stockholders
equity (deficit)
    
    $
    4,710.3
    
    
    $
    3,998.5
    
    
    $
    8,708.8
 
 (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 
  83




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
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 31,2005
    
    
    2004Minimum pension liability adjustment, net of taxes of $46.8 and $45.5
    
    $
    (70.3
    )
    
    $
    (68.1
    )Interest rate swap contracts designated, unrealized loss, net of taxes of $0.5
    
    
    
    
    
    
    (1.3
    )Accumulated other comprehensive loss
    
    $
    (70.3
    )
    
    $
    (69.4
    )
 84




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Landfill Accounting
    Change in accounting principle
    85




---



##### Table of Contents

`

ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Balance at
    
    
    
    
    
    
    Balance atDecember 31, 2002
    
    
    Change
    
    
    January 1, 2003Landfill assets
    
    $
    2,531.3
    
    
    $
    409.5
    
    
    $
    2,940.8Accumulated amortization
    
    
    (657.8
    )
    
    
    (434.6
    )
    
    
    (1,092.4
    )Net landfill assets
    
    $
    1,873.5
    
    
    $
    (25.1
    )
    
    $
    1,848.4Capping, closure and
post-closure liabilities
    
    $
    594.2
    
    
    $
    (100.4
    )
    
    $
    493.8
 Landfill assets 
  Net Book Value
    
    
    
    
    
    Capping,of Landfills
    
    Landfill
    
    Closure andNet Book Value
    
    Acquired, net of
    
    Development
    
    Post-Closure
    
    Landfill
    
    
    
    
    
    Net Book Value atat December 31, 2004
    
    Divestitures
    
    Costs
    
    Accruals
    
    Amortization
    
    Other(1)
    
    December 31, 2005$2,089.8
    
    $
    5.9
    
    
    $
    267.4
    
    
    $
    10.0
    
    
    $
    (248.8
    )
    
    $
    14.3
    
    
    $
    2,138.6
 
 (1)
    
    Relates primarily to amounts transferred from land or land held for permitting as
landfills to landfill (for projects that have met the criteria for probable expansion during
2005).   1.
    
    We have control of and access to the land where the expansion permit is being sought.2.
    
    All geologic and other technical siting criteria for a landfill have been met, or a
variance 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.
 86




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Capping, closure and post-closure
   Discounted Capping, Closure and Post-Closure Liability Recorded:Current Portion
    
    $
    72.8Non-Current Portion
    
    
    547.0Total
    
    $
    619.8Estimated Remaining Capping, Closure and Post-Closure Costs to be Expended:2006
    
    $
    72.82007
    
    
    71.42008
    
    
    67.22009
    
    
    73.82010
    
    
    58.9Thereafter
    
    
    3,147.2Estimated Remaining Undiscounted Capping, Closure and Post-Closure Costs to be Expended
    
    $
    3,491.3Estimated Remaining Discounted Capping, Closure and Post-Closure Costs to be Expended
    
    $
    1,058.2
   87




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      Landfill maintenance costs 
  Financial assurance costs
  Environmental costs -
  88




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Balance at
    
    
    Charges to
    
    
    Other
    
    
    
    
    
    
    Balance at12/31/02
    
    
    Expense
    
    
    Charges(1)
    
    
    Payments
    
    
    12/31/03Environmental accruals
    
    $
    365.1
    
    
    $
    
    
    
    $
    (2.8
    )
    
    $
    (24.9
    )
    
    $
    337.4Open landfills capping, closure
and post-closure accruals
    
    
    336.2
    
    
    
    28.0
    
    
    
    31.3
    
    
    
    (19.1
    )
    
    
    376.4Closed landfills capping, closure
and post-closure accruals
    
    
    258.0
    
    
    
    16.3
    
    
    
    (71.7
    )
    
    
    (31.1
    )
    
    
    171.5Total
    
    $
    959.3
    
    
    $
    44.3
    
    
    $
    (43.2
    )
    
    $
    (75.1
    )
    
    $
    885.3
 Balance at
    
    
    Charges to
    
    
    Other
    
    
    
    
    
    
    Balance at12/31/03
    
    
    Expense
    
    
    Charges(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
    
    
    Other
    
    
    
    
    
    
    Balance at12/31/04
    
    
    Expense
    
    
    Charges(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
 
 (1)
    
    Amounts consist primarily of liabilities related to acquired and divested companies, and
the cumulative effect of change in accounting principle related to the adoption of SFAS 143
(2003 only) and additions of and adjustments to capping, closure and post-closure liabilities
recorded to landfill assets during the period. In 2003 and prior years, liabilities and
receivables associated with two closed landfills capping, closure and post-closure
obligations that were insured or
funded in state regulated trusts were reported as a net value. During 2005 and 2004, both the
receivable and the liability are separately stated. 89




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. Employee Benefit Plans
 Defined benefit pension plans 
    .
  Employers Disclosures about Pensions and Other
Postretirement Benefits
  2005
    
    
    2004Projected benefit obligation at beginning of period
    
    $
    353.0
    
    
    $
    338.2Service cost
    
    
    0.6
    
    
    
    0.8Interest cost
    
    
    20.7
    
    
    
    20.6Curtailment loss
    
    
    
    
    
    
    1.1Actuarial loss
    
    
    20.9
    
    
    
    8.2Benefits paid
    
    
    (17.8
    )
    
    
    (15.9
    )Projected benefit obligation at end of period
    
    $
    377.4
    
    
    $
    353.0Fair value of plan assets at beginning of period
    
    $
    339.4
    
    
    $
    317.4Actual return on plan assets
    
    
    39.5
    
    
    
    37.9Benefits paid
    
    
    (17.8
    )
    
    
    (15.9
    )Fair value of plan assets at end of period
    
    $
    361.1
    
    
    $
    339.4Funded status
    
    $
    (16.3
    )
    
    $
    (13.6
    )Unrecognized net actuarial loss
    
    
    118.6
    
    
    
    115.8Unrecognized prior service cost
    
    
    0.7
    
    
    
    0.8Prepaid pension asset
    
    $
    103.0
    
    
    $
    103.0
 90




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2005
    
    
    2004Prepaid pension asset
    
    $
    103.0
    
    
    $
    103.0Accrued benefit liability
    
    
    (117.8
    )
    
    
    (114.4
    )Net pension liability
    
    
    (14.8
    )
    
    
    (11.4
    )Intangible assets
    
    
    0.7
    
    
    
    0.8Accumulated other comprehensive loss before tax benefit
    
    
    117.1
    
    
    
    113.6Net amount recognized
    
    $
    103.0
    
    
    $
    103.0
   2005
    
    
    2004
    
    
    2003Service cost
    
    $
    0.6
    
    
    $
    0.8
    
    
    $
    0.9Interest cost
    
    
    20.7
    
    
    
    20.6
    
    
    
    19.9Expected return on plan assets
    
    
    (28.2
    )
    
    
    (28.0
    )
    
    
    (25.9
    )Recognized net actuarial loss
    
    
    6.8
    
    
    
    7.2
    
    
    
    8.3Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Curtailment loss
    
    
    
    
    
    
    1.1
    
    
    
    Net periodic benefit cost
    
    $
    
    
    
    $
    1.8
    
    
    $
    3.3
  2005
    
    
    2004
    
    
    2003Increase (decrease) in minimum pension liability included
in other comprehensive income, net of tax
    
    $
    2.2
    
    
    $
    (2.6
    )
    
    $
    (4.0
    )Actual return on plan assets
    
    $
    39.5
    
    
    $
    37.8
    
    
    $
    51.6Actual rate of return on plan assets
    
    
    11.7
    %
    
    
    11.9
    %
    
    
    19.0
    %
  2005
    
    2004
    
    2003Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.25
    %Average rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Expected return on plan assets
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    9.00
    %
   91




---



##### Table of Contents



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 for2006
    
    
    2005
    
    
    2004
    
    
    calendar year 2005Equity securities
    
    
    60
    %
    
    
    63
    %
    
    
    62
    %
    
    
    9.9
    %Debt securities
    
    
    40
    %
    
    
    37
    %
    
    
    38
    %
    
    
    6.6
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    8.5
    %
  Benefit payments:2004
    
    $
    15.92005
    
    
    17.8Estimated future payments:2006
    
    $
    11.12007
    
    
    11.22008
    
    
    11.42009
    
    
    12.02010
    
    
    13.0Years 2011  2015
    
    
    80.1
 Supplemental executive retirement plan
   92




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   401(k) plan 
  Long-term incentive plan 
     93




---



##### Table of Contents



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 
  Applicable Market Value of Common Shares
    
    Conversion RateLess than or equal to $8.30
    
    6.02:1Between $8.30 and $10.13
    
    6.02:1 to 4.94:1Equal to or greater than $10.13
    
    4.94:1
  Redeemable preferred stock 
  94




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        10. Stockholders Equity
   95




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    
    317.5
    
    
    
    320.1
    
    
    
    196.2Common stock issued, net
    
    
    13.4
    
    
    
    (4.1
    )
    
    
    122.6Stock options and warrants exercised
    
    
    0.3
    
    
    
    1.5
    
    
    
    1.3Balance at end of year
    
    
    331.2
    
    
    
    317.5
    
    
    
    320.1
 11. Stock Plans
 Employee stock options 
  Non-employee director stock awards 
  96




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Year Ended December 31,2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOptions outstanding,
beginning of year
    
    
    16.7
    
    
    $
    12.42
    
    
    
    20.0
    
    
    $
    12.25
    
    
    
    19.8
    
    
    $
    12.18Options granted
    
    
    4.9
    
    
    
    8.60
    
    
    
    0.8
    
    
    
    11.44
    
    
    
    3.0
    
    
    
    11.40Options exercised
    
    
    (0.3
    )
    
    
    6.76
    
    
    
    (1.5
    )
    
    
    7.73
    
    
    
    (1.1
    )
    
    
    6.78Options forfeited
or expired
    
    
    (1.5
    )
    
    
    12.36
    
    
    
    (2.6
    )
    
    
    13.55
    
    
    
    (1.7
    )
    
    
    13.35Options outstanding,
end of year
    
    
    19.8
    
    
    
    11.57
    
    
    
    16.7
    
    
    
    12.42
    
    
    
    20.0
    
    
    
    12.25Options exercisable,
end of year
    
    
    14.2
    
    
    
    12.54
    
    
    
    13.4
    
    
    
    12.76
    
    
    
    13.9
    
    
    
    12.70
    Options Outstanding and ExercisableWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$6.00  $9.63
    
    
    1.6
    
    
    3 years
    
    $
    8.62$10.00  $13.55
    
    
    8.9
    
    
    5 years
    
    $
    11.80$15.00  $26.38
    
    
    2.3
    
    
    3 years
    
    $
    18.73
  Options OutstandingWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$9.03  $9.70
    
    
    0.6
    
    
    8 years
    
    $
    9.08$12.06  $13.78
    
    
    1.7
    
    
    8 years
    
    $
    12.35
 Options ExercisableWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$9.03  $9.70
    
    
    0.4
    
    
    8 years
    
    $
    9.08$12.06  $13.78
    
    
    1.0
    
    
    8 years
    
    $
    12.31
  Options OutstandingWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$7.68  $9.09
    
    
    4.7
    
    
    10 years
    
    $
    8.58
 97




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Employee restricted stock 
 th th
      98




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12. Net Income Per Common Share
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Basic earnings per share computation:Income from continuing operations
    
    $
    193.8
    
    
    $
    58.0
    
    
    $
    111.2Less: dividends on preferred stock
    
    
    52.0
    
    
    
    21.6
    
    
    
    95.6Less: non-cash conversion of Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    496.6Income (loss) from continuing operations available to
common shareholders
    
    $
    141.8
    
    
    $
    36.4
    
    
    $
    (481.0
    )Weighted average common shares outstanding
    
    
    326.9
    
    
    
    315.0
    
    
    
    203.8Basic earnings (loss) per share from continuing operations
    
    $
    0.43
    
    
    $
    0.12
    
    
    $
    (2.36
    )Diluted earnings per share computation:Income from continuing operations
    
    $
    193.8
    
    
    $
    58.0
    
    
    $
    111.2Less: dividends on preferred stock
    
    
    52.0
    
    
    
    21.6
    
    
    
    95.6Less: non-cash conversion of Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    496.6Income (loss) from continuing operations available to
common shareholders
    
    $
    141.8
    
    
    $
    36.4
    
    
    $
    (481.0
    )Weighted average common shares outstanding
    
    
    326.9
    
    
    
    315.0
    
    
    
    203.8Dilutive effect of stock, stock options, warrants and
contingently issuable shares
    
    
    3.2
    
    
    
    4.7
    
    
    
    Weighted average common and common equivalent shares
outstanding
    
    
    330.1
    
    
    
    319.7
    
    
    
    203.8Diluted earnings (loss) per share from continuing
operations
    
    $
    0.43
    
    
    $
    0.11
    
    
    $
    (2.36
    )
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    68.5Series C preferred stock
    
    
    38.6
    
    
    
    38.2
    
    
    
    24.8Series D preferred stock
    
    
    54.6
    
    
    
    
    
    
    
    Stock options
    
    
    18.1
    
    
    
    9.8
    
    
    
    11.7Senior subordinated convertible debentures
    
    
    11.3
    
    
    
    7.8
    
    
    
    
 13. Income Taxes
   99




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Year Ended December 31,2005
    
    
    2004
    
    
    2003Current tax provision
    
    $
    14.0
    
    
    $
    25.3
    
    
    $
    18.1Deferred tax provision
    
    119.9
    
    
    46.9
    
    
    70.6Total
    
    $
    133.9
    
    
    $
    72.2
    
    
    $
    88.7
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Federal statutory tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Consolidated state taxes, net of federal benefit
    
    
    6.7
    
    
    
    5.9
    
    
    
    5.6Interest on tax contingency, net of tax benefit
    
    
    4.0
    
    
    
    9.6
    
    
    
    3.5Tax basis in stock of assets held for sale
    
    
    (7.8
    )
    
    
    
    
    
    
    Other
    
    
    3.0
    
    
    
    5.0
    
    
    
    0.3Effective tax rate
    
    
    40.9
    %
    
    
    55.5
    %
    
    
    44.4
    %
  December 31,2005
    
    
    2004Deferred tax liability relating primarily to basis differences in
landfills, fixed assets, goodwill and other assets
    
    $
    (722.8
    )
    
    $
    (611.3
    )Deferred tax assets relating to:Environmental, capping, closure and post-closure reserves
    
    
    186.0
    
    
    
    199.3Other reserves
    
    
    52.7
    
    
    
    93.1Tax effect of capital loss on assets held for sale
    
    
    34.2
    
    
    
    Tax effect of ordinary loss on assets held for sale
    
    
    14.7
    
    
    
    Net operating loss and minimum tax credit carryforwards
    
    
    339.5
    
    
    
    322.6Valuation allowance
    
    
    (116.5
    )
    
    
    (107.1
    )Total deferred tax asset
    
    
    510.6
    
    
    
    507.9Net deferred tax liability
    
    $
    (212.2
    )
    
    $
    (103.4
    )
    100




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         101




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14. Commitments and Contingencies
 Litigation 
 Income Taxes,
 th
    102




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Royalties 
  Lease agreements 
  2006
    
    $
    31.02007
    
    
    27.92008
    
    
    23.82009
    
    
    18.62010
    
    
    15.3Thereafter
    
    
    36.5
  Employment agreements 
    103




---



##### 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
    
    $
    642.4
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    642.4Surety Bonds
    
    
    523.2
    
    
    
    485.7
    
    
    
    
    
    
    
    
    
    
    
    1,008.9Trust Deposits
    
    
    82.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82.0Letters of Credit (1)
    
    
    496.0
    
    
    
    46.1
    
    
    
    243.2
    
    
    
    108.5
    
    
    
    893.8Total
    
    $
    1,743.6
    
    
    $
    531.8
    
    
    $
    243.2
    
    
    $
    108.5
    
    
    $
    2,627.1
 
 (1)
    
    At December 31, 2005 these amounts were issued under the 2005 Revolver and the
Institutional Letter of Credit Facility under our 2005 Credit Facility.  Off-balance sheet arrangements 
  104




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Guarantees 
  Accounting for Contingencies
 15. Related Party Transactions
       105




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 16. Segment Reporting
   Operating IncomeBeforeDepreciation
    
    
    Depreciation and
    
    
    Capital
    
    
    TotalRevenues
    
    

and
Amortization (1)
    
    
    Amortization
    
    
    Expenditures
    
    
    Assets2005:Midwest
    
    $
    1,201.5
    
    
    $
    347.1
    
    
    $
    131.6
    
    
    $
    152.5
    
    
    $
    3,379.8Northeast
    
    
    1,275.2
    
    
    
    318.0
    
    
    
    116.2
    
    
    
    117.3
    
    
    
    2,644.2Southeast
    
    
    997.1
    
    
    
    278.1
    
    
    
    97.8
    
    
    
    97.5
    
    
    
    2,361.4Southwest
    
    
    860.3
    
    
    
    243.3
    
    
    
    93.1
    
    
    
    135.0
    
    
    
    2,110.2West
    
    
    1,344.6
    
    
    
    432.2
    
    
    
    107.5
    
    
    
    152.8
    
    
    
    2,598.1Total reportable segments
    
    
    5,678.7
    
    
    
    
    
    
    
    546.2
    
    
    
    655.1
    
    
    
    13,093.7Other (2)
    
    
    56.1
    
    
    
    
    
    
    
    8.2
    
    
    
    40.8
    
    
    
    531.9Total per financial
statements
    
    $
    5,734.8
    
    
    
    
    
    
    $
    554.4
    
    
    $
    695.9
    
    
    $
    13,625.62004:Midwest
    
    $
    1,167.8
    
    
    $
    367.6
    
    
    $
    146.0
    
    
    $
    144.0
    
    
    $
    3,356.8Northeast
    
    
    1,275.9
    
    
    
    320.3
    
    
    
    118.9
    
    
    
    101.8
    
    
    
    2,644.7Southeast
    
    
    953.4
    
    
    
    295.2
    
    
    
    103.3
    
    
    
    81.9
    
    
    
    2,336.2Southwest
    
    
    803.3
    
    
    
    240.7
    
    
    
    70.9
    
    
    
    92.5
    
    
    
    2,038.8West
    
    
    1,273.0
    
    
    
    419.5
    
    
    
    104.7
    
    
    
    151.5
    
    
    
    2,529.9Total reportable segments
    
    
    5,473.4
    
    
    
    
    
    
    
    543.8
    
    
    
    571.7
    
    
    
    12,906.4Other (2)
    
    
    40.6
    
    
    
    
    
    
    
    15.5
    
    
    
    11.2
    
    
    
    587.5Total per financial
statements
    
    $
    5,514.0
    
    
    
    
    
    
    $
    559.3
    
    
    $
    582.9
    
    
    $
    13,493.92003:Midwest
    
    $
    1,147.9
    
    
    $
    405.8
    
    
    $
    146.7
    
    
    $
    120.9
    
    
    $
    3,336.5Northeast
    
    
    1,249.9
    
    
    
    338.2
    
    
    
    110.3
    
    
    
    94.4
    
    
    
    2,634.1Southeast
    
    
    947.0
    
    
    
    298.3
    
    
    
    97.2
    
    
    
    76.5
    
    
    
    2,340.7Southwest
    
    
    791.5
    
    
    
    248.1
    
    
    
    86.2
    
    
    
    81.0
    
    
    
    1,993.8West
    
    
    1,211.5
    
    
    
    415.3
    
    
    
    95.7
    
    
    
    110.5
    
    
    
    2,492.1Total reportable segments
    
    
    5,347.8
    
    
    
    
    
    
    
    536.1
    
    
    
    483.3
    
    
    
    12,797.2Other (2)
    
    
    38.5
    
    
    
    
    
    
    
    9.9
    
    
    
    8.5
    
    
    
    1,063.7Total per financial
statements
    
    $
    5,386.3
    
    
    
    
    
    
    $
    546.0
    
    
    $
    491.8
    
    
    $
    13,860.9
 
 (1)
    
    See following table for reconciliation to income from continuing operations
before income taxes and minority interest per financial statements.(2)
    
    Amounts relate primarily to our subsidiaries that provide services throughout the
organization and not on a region basis. 106




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Total operating income before
depreciation and amortization
for reportable segments
    
    $
    1,618.7
    
    
    $
    1,643.3
    
    
    $
    1,705.7Other (1)
    
    
    (148.8
    )
    
    
    (197.6
    )
    
    
    (125.0
    )Depreciation and amortization
    
    
    554.4
    
    
    
    559.3
    
    
    
    546.0Interest expense and other
    
    
    588.0
    
    
    
    758.9
    
    
    
    832.9Income from continuing
operations before income taxes
and minority interest
    
    $
    327.5
    
    
    $
    127.5
    
    
    $
    201.8
 
 (1)
    
    Amounts relate primarily to our subsidiaries which provide services
throughout the organization and not on a region basis.  Year Ended December 31,2005
    
    
    2004
    
    
    2003CollectionResidential
    
    $
    1,189.8
    
    
    $
    1,166.1
    
    
    $
    1,134.1Commercial
    
    
    1,401.1
    
    
    
    1,354.0
    
    
    
    1,374.7Roll-off (1)
    
    
    1,260.3
    
    
    
    1,202.1
    
    
    
    1,186.5Recycling
    
    
    201.4
    
    
    
    209.2
    
    
    
    202.3Total Collection
    
    
    4,052.6
    
    
    
    3,931.4
    
    
    
    3,897.6DisposalLandfill
    
    
    836.7
    
    
    
    782.7
    
    
    
    768.8Transfer
    
    
    434.5
    
    
    
    436.1
    
    
    
    400.6Total Disposal
    
    
    1,271.2
    
    
    
    1,218.8
    
    
    
    1,169.4Recycling  Commodity
    
    
    225.7
    
    
    
    235.4
    
    
    
    194.8Other (2)
    
    
    185.3
    
    
    
    128.4
    
    
    
    124.5Total Revenues
    
    $
    5,734.8
    
    
    $
    5,514.0
    
    
    $
    5,386.3
 
 (1)
    
    Consists of revenue generated from commercial, industrial and residential
customers from waste collected in roll-off containers that are loaded onto collection
vehicles.(2)
    
    Consists primarily of revenue from national accounts where the work has been
subcontracted, revenue generated from waste transported via railway and revenue from liquid
waste.  OperatingIncome (Loss)Before Depreciation
    
    
    Depreciation
    
    
    CapitalRevenues
    
    
    and Amortization
    
    
    and Amortization
    
    
    Expenditures
    
    
    Total Assets2005Northeast
    
    $
    
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    
    
    
    $
    Southeast
    
    
    
    
    
    
    2.6
    
    
    
    
    
    
    
    
    
    
    
    Total reportable segments
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    2004:Northeast
    
    $
    
    
    
    $
    (0.4
    )
    
    $
    
    
    
    $
    
    
    
    $
    Southeast
    
    
    13.4
    
    
    
    (1.7
    )
    
    
    0.7
    
    
    
    
    
    
    
    Total reportable segments
    
    $
    13.4
    
    
    
    
    
    
    $
    0.7
    
    
    $
    
    
    
    $
    2003:Northeast
    
    $
    45.7
    
    
    $
    6.6
    
    
    $
    3.0
    
    
    $
    
    
    
    $
    Southeast
    
    
    200.6
    
    
    
    39.0
    
    
    
    10.1
    
    
    
    8.7
    
    
    
    44.3Southwest
    
    
    6.4
    
    
    
    1.7
    
    
    
    0.5
    
    
    
    (0.2
    )
    
    
    Total reportable segments
    
    $
    252.7
    
    
    
    
    
    
    $
    13.6
    
    
    $
    8.5
    
    
    $
    44.3
 107




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17. Selected Quarterly Financial Data (unaudited)
  First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2005Revenues (1)
    
    $
    1,341.3
    
    
    $
    1,448.6
    
    
    $
    1,476.9
    
    
    $
    1,468.0Income from continuing operations (2)
    
    
    24.7
    
    
    
    53.0
    
    
    
    49.2
    
    
    
    66.9Net income available to common shareholders (2)
    
    
    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
    
    
    
    0.152004Revenues(1)
    
    $
    1,309.1
    
    
    $
    1,401.1
    
    
    $
    1,417.2
    
    
    $
    1,386.6Income (loss) from continuing operations (2)
    
    
    5.0
    
    
    
    (9.4
    )
    
    
    45.5
    
    
    
    16.9Net income (loss) available to common shareholders (2)
    
    
    (2.4
    )
    
    
    (20.6
    )
    
    
    38.7
    
    
    
    12.0Basic earnings per common share available to common
shareholders:Income (loss) from continuing operations
    
    
    (0.00
    )
    
    
    (0.05
    )
    
    
    0.13
    
    
    
    0.04Net income (loss)
    
    
    (0.01
    )
    
    
    (0.07
    )
    
    
    0.12
    
    
    
    0.04Diluted earnings per common share available to common
shareholders:Income (loss) from continuing operations
    
    
    (0.00
    )
    
    
    (0.05
    )
    
    
    0.13
    
    
    
    0.04Net income (loss)
    
    
    (0.01
    )
    
    
    (0.07
    )
    
    
    0.12
    
    
    
    0.04
 
 (1)
    
    Historically, we have reported certain taxes imposed on landfill and transfer
volumes as a reduction of revenue and we reported administrative fees billed to customers as
an offset to our administrative costs. Effective April 2005, we began recording all taxes
that create direct obligations for us as operating expenses and recording administrative fees
billed to our customers as revenue. We opted to conform the first quarter of 2005 and the
prior years presentation of our revenues and expenses with the current years presentation by
increasing revenue, cost of operations and selling, general and administrative expenses. We
increased revenue by $36.0 million, $34.3 million, $38.8 million, $39.5 million and $39.4
million in the first quarter of 2005 and the first, second, third and fourth quarters of 2004,
respectively. These adjustments had no impact on our consolidated income from continuing
operations, net income or earnings per share.(2)
    
    The fourth quarter of 2004 included $18 million ($11 million after tax) of
realignment and executive departure costs and a $10 million ($6 million after tax) reduction
in employee health claims expense. 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 $12.6 million of income tax benefit primarily driven by state income taxes which
reduced the fourth quarter expense and relate to the current year and 2004 provision to return
adjustments. 108




---



##### 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, 2005Parent
    
    
    Issuer
    
    
    Guarantors
    
    

Non-
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
    
    
    
    9.5
    
    
    
    1,202.0
    
    
    
    (1,058.8
    )
    
    
    247.5Total assets
    
    $
    2,248.7
    
    
    $
    14,559.7
    
    
    $
    13,257.9
    
    
    $
    1,765.9
    
    
    $
    (18,206.6
    )
    
    $
    13,625.6LIABILITIES 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
    
    
    
    
    
    
    
    1,624.1
    
    
    
    72.3
    
    
    
    (1,059.8
    )
    
    
    655.2Stockholders 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
    
    
    $
    13,257.9
    
    
    $
    1,765.9
    
    
    $
    (18,206.6
    )
    
    $
    13,625.6
 109




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING BALANCE SHEETS
(in millions)
 December 31, 2004Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets Cash and cash equivalents
    
    $
    
    
    
    $
    (0.3
    )
    
    $
    66.7
    
    
    $
    1.6
    
    
    $
    
    
    
    $
    68.0Accounts receivable, net
    
    
    
    
    
    
    
    
    
    
    296.5
    
    
    
    371.9
    
    
    
    
    
    
    
    668.4Prepaid and other current assets
    
    
    
    
    
    
    0.2
    
    
    
    50.7
    
    
    
    68.6
    
    
    
    (37.6
    )
    
    
    81.9Deferred income taxes, net
    
    
    
    
    
    
    
    
    
    
    98.4
    
    
    
    5.9
    
    
    
    
    
    
    
    104.3Total current assets
    
    
    
    
    
    
    (0.1
    )
    
    
    512.3
    
    
    
    448.0
    
    
    
    (37.6
    )
    
    
    922.6Property and equipment, net
    
    
    
    
    
    
    
    
    
    
    4,106.0
    
    
    
    23.9
    
    
    
    
    
    
    
    4,129.9Goodwill
    
    
    
    
    
    
    
    
    
    
    8,129.6
    
    
    
    72.4
    
    
    
    
    
    
    
    8,202.0Investment in subsidiaries
    
    
    2,631.1
    
    
    
    14,079.8
    
    
    
    380.2
    
    
    
    
    
    
    
    (17,091.1
    )
    
    
    Other assets, net
    
    
    6.0
    
    
    
    95.5
    
    
    
    43.5
    
    
    
    1,182.2
    
    
    
    (1,087.8
    )
    
    
    239.4Total assets
    
    $
    2,637.1
    
    
    $
    14,175.2
    
    
    $
    13,171.6
    
    
    $
    1,726.5
    
    
    $
    (18,216.5
    )
    
    $
    13,493.9LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities Current portion of long-term debt
    
    $
    
    
    
    $
    20.0
    
    
    $
    97.9
    
    
    $
    209.9
    
    
    $
    
    
    
    $
    327.8Accounts payable
    
    
    
    
    
    
    0.1
    
    
    
    576.2
    
    
    
    6.5
    
    
    
    
    
    
    
    582.8Accrued closure, post-closure and
environmental costs
    
    
    
    
    
    
    
    
    
    
    19.9
    
    
    
    75.1
    
    
    
    
    
    
    
    95.0Accrued interest
    
    
    2.1
    
    
    
    117.3
    
    
    
    58.0
    
    
    
    0.5
    
    
    
    (37.6
    )
    
    
    140.3Other accrued liabilities
    
    
    54.4
    
    
    
    58.5
    
    
    
    72.0
    
    
    
    205.2
    
    
    
    
    
    
    
    390.1Unearned revenue
    
    
    
    
    
    
    
    
    
    
    216.7
    
    
    
    4.0
    
    
    
    
    
    
    
    220.7Total current liabilities
    
    
    56.5
    
    
    
    195.9
    
    
    
    1,040.7
    
    
    
    501.2
    
    
    
    (37.6
    )
    
    
    1,756.7Long-term debt, less current
portion
    
    
    230.0
    
    
    
    6,357.8
    
    
    
    841.4
    
    
    
    
    
    
    
    
    
    
    
    7,429.2Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    217.8
    
    
    
    (10.1
    )
    
    
    
    
    
    
    207.7Accrued closure, post-closure and
environmental costs
    
    
    
    
    
    
    
    
    
    
    374.3
    
    
    
    464.7
    
    
    
    
    
    
    
    839.0Due to/(from) parent
    
    
    (271.7
    )
    
    
    5,017.0
    
    
    
    (4,763.3
    )
    
    
    18.0
    
    
    
    
    
    
    
    Other long-term obligations
    
    
    17.4
    
    
    
    1.8
    
    
    
    1,658.4
    
    
    
    69.8
    
    
    
    (1,091.0
    )
    
    
    656.4Stockholders equity
    
    
    2,604.9
    
    
    
    2,602.7
    
    
    
    13,802.3
    
    
    
    682.9
    
    
    
    (17,087.9
    )
    
    
    2,604.9Total liabilities and
stockholders equity
    
    $
    2,637.1
    
    
    $
    14,175.2
    
    
    $
    13,171.6
    
    
    $
    1,726.5
    
    
    $
    (18,216.5
    )
    
    $
    13,493.9
 110




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 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 (loss) income
    
    
    (22.1
    )
    
    
    (0.5
    )
    
    
    948.2
    
    
    
    (10.1
    )
    
    
    
    
    
    
    915.5Equity in earnings of subsidiaries
    
    
    (148.0
    )
    
    
    (540.4
    )
    
    
    (25.6
    )
    
    
    
    
    
    
    714.0
    
    
    
    Interest expense (income) and other
    
    
    10.9
    
    
    
    495.5
    
    
    
    87.7
    
    
    
    (6.1
    )
    
    
    
    
    
    
    588.0Intercompany interest expense (income)
    
    
    (122.1
    )
    
    
    111.7
    
    
    
    87.1
    
    
    
    (76.7
    )
    
    
    
    
    
    
    Management fees
    
    
    (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
    
    
    
    
    
    
    
    133.9Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.2
    )Net 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
 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 (loss) income
    
    
    (42.5
    )
    
    
    0.3
    
    
    
    939.5
    
    
    
    (10.9
    )
    
    
    
    
    
    
    886.4Equity in earnings of subsidiaries
    
    
    (28.7
    )
    
    
    (485.6
    )
    
    
    (28.3
    )
    
    
    
    
    
    
    542.6
    
    
    
    Interest expense (income) and other
    
    
    7.8
    
    
    
    669.2
    
    
    
    87.9
    
    
    
    (6.0
    )
    
    
    
    
    
    
    758.9Intercompany interest expense (income)
    
    
    (84.9
    )
    
    
    54.1
    
    
    
    108.5
    
    
    
    (77.7
    )
    
    
    
    
    
    
    Management fees
    
    
    (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
    
    
    
    
    
    
    
    72.2Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.7
    )
    
    
    
    
    
    
    (2.7
    )Net 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
 111




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
 Year Ended December 31, 2003Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    5,175.6
    
    
    $
    210.7
    
    
    $
    
    
    
    $
    5,386.3Cost of operations
    
    
    
    
    
    
    (0.1
    )
    
    
    3,140.4
    
    
    
    185.2
    
    
    
    
    
    
    
    3,325.5Selling, general and administrative
expenses
    
    
    16.5
    
    
    
    
    
    
    
    449.2
    
    
    
    14.4
    
    
    
    
    
    
    
    480.1Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    541.4
    
    
    
    4.6
    
    
    
    
    
    
    
    546.0Operating (loss) income
    
    
    (16.5
    )
    
    
    0.1
    
    
    
    1,044.6
    
    
    
    6.5
    
    
    
    
    
    
    
    1,034.7Equity in earnings of subsidiaries
    
    
    (95.0
    )
    
    
    (563.0
    )
    
    
    (62.7
    )
    
    
    
    
    
    
    720.7
    
    
    
    Interest expense (income) and other
    
    
    1.2
    
    
    
    757.0
    
    
    
    81.8
    
    
    
    (7.1
    )
    
    
    
    
    
    
    832.9Intercompany interest expense (income)
    
    
    (69.7
    )
    
    
    22.9
    
    
    
    126.1
    
    
    
    (79.3
    )
    
    
    
    
    
    
    Management fees
    
    
    (5.0
    )
    
    
    
    
    
    
    4.0
    
    
    
    1.0
    
    
    
    
    
    
    
    Income (loss) before income taxes
    
    
    152.0
    
    
    
    (216.8
    )
    
    
    895.4
    
    
    
    91.9
    
    
    
    (720.7
    )
    
    
    201.8Income tax expense (benefit)
    
    
    23.3
    
    
    
    (311.9
    )
    
    
    341.0
    
    
    
    36.3
    
    
    
    
    
    
    
    88.7Minority interest
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    0.7
    
    
    
    
    
    
    
    1.9Net income from continuing operations
    
    
    128.7
    
    
    
    95.1
    
    
    
    553.2
    
    
    
    54.9
    
    
    
    (720.7
    )
    
    
    111.2Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (11.5
    )
    
    
    
    
    
    
    
    
    
    
    (11.5
    )Cumulative effect of accounting
change, net of tax
    
    
    29.0
    
    
    
    29.0
    
    
    
    (6.3
    )
    
    
    35.3
    
    
    
    (58.0
    )
    
    
    29.0Net income
    
    
    157.7
    
    
    
    124.1
    
    
    
    535.4
    
    
    
    90.2
    
    
    
    (778.7
    )
    
    
    128.7Dividends on preferred stock
    
    
    (95.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95.6
    )Non-cash conversion of Series A
preferred stock
    
    
    (496.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (496.6
    )Changes in redemption value of Class
B common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    0.6
    
    
    
    Net income (loss) available to
common shareholders
    
    $
    (434.5
    )
    
    $
    124.1
    
    
    $
    535.4
    
    
    $
    89.6
    
    
    $
    (778.1
    )
    
    $
    (463.5
    )
 112




---



##### 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
 113




---



##### 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
 114




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(in millions)
 Year Ended December 31, 2003Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash (used for) provided by operating
activities from continuing operations
    
    $
    (98.5
    )
    
    $
    (575.1
    )
    
    $
    1,350.8
    
    
    $
    106.7
    
    
    $
    
    
    
    $
    783.9Investing activities Proceed from divestitures (cost of
acquisitions), net of cash
divested/acquired
    
    
    
    
    
    
    
    
    
    
    250.0
    
    
    
    
    
    
    
    
    
    
    
    250.0Proceeds from sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    17.5
    
    
    
    
    
    
    
    
    
    
    
    17.5Capital expenditures, excluding
acquisitions
    
    
    
    
    
    
    
    
    
    
    (483.7
    )
    
    
    (8.1
    )
    
    
    
    
    
    
    (491.8
    )Capitalized interest
    
    
    
    
    
    
    
    
    
    
    (15.7
    )
    
    
    
    
    
    
    
    
    
    
    (15.7
    )Change in deferred acquisitions
costs, notes receivable and other
    
    
    
    
    
    
    
    
    
    
    (8.4
    )
    
    
    
    
    
    
    
    
    
    
    (8.4
    )Cash used for investing activities
from continuing operations
    
    
    
    
    
    
    
    
    
    
    (240.3
    )
    
    
    (8.1
    )
    
    
    
    
    
    
    (248.4
    )Financing activities Net proceeds from sale of Series C
preferred stock
    
    
    333.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333.1Proceeds from long-term debt, net of
issuance costs
    
    
    
    
    
    
    2,870.9
    
    
    
    
    
    
    
    166.2
    
    
    
    
    
    
    
    3,037.1Payments of long-term debt
    
    
    
    
    
    
    (3,570.7
    )
    
    
    (164.0
    )
    
    
    (19.9
    )
    
    
    
    
    
    
    (3,754.6
    )Payments of preferred stock dividends
    
    
    (10.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.2
    )Net change in disbursement account
    
    
    
    
    
    
    
    
    
    
    10.5
    
    
    
    
    
    
    
    
    
    
    
    10.5Net proceeds from sale of common
stock, exercise of stock options and
other
    
    
    98.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98.4Intercompany between issuer and
subsidiary
    
    
    (322.8
    )
    
    
    1,272.7
    
    
    
    (704.9
    )
    
    
    (245.0
    )
    
    
    
    
    
    
    Cash provided by (used for) financing
activities from continuing operations
    
    
    98.5
    
    
    
    572.9
    
    
    
    (858.4
    )
    
    
    (98.7
    )
    
    
    
    
    
    
    (285.7
    )Cash provided by discontinued
operations
    
    
    
    
    
    
    
    
    
    
    15.5
    
    
    
    
    
    
    
    
    
    
    
    15.5(Decrease) increase in cash and cash
equivalents
    
    
    
    
    
    
    (2.2
    )
    
    
    267.6
    
    
    
    (0.1
    )
    
    
    
    
    
    
    265.3Cash and cash equivalents, beginning
of year
    
    
    0.1
    
    
    
    5.4
    
    
    
    171.4
    
    
    
    2.5
    
    
    
    
    
    
    
    179.4Cash and cash equivalents, end of year
    
    $
    0.1
    
    
    $
    3.2
    
    
    $
    439.0
    
    
    $
    2.4
    
    
    $
    
    
    
    $
    444.7
 115




---



##### 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
  116




---



##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  117




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedule
  1. Financial Statements
  2. Financial Statement Schedule -
  Balance
    
    
    Charges
    
    
    
    
    
    
    
    
    
    
    Balanceat
    
    
    to
    
    
    Other
    
    
    Write-offs/
    
    
    at12/31/02
    
    
    Expense
    
    
    Charges(1)
    
    
    Payments
    
    
    12/31/03Receivable realization allowance
    
    $
    22.3
    
    
    $
    23.6
    
    
    $
    0.1
    
    
    $
    (23.6
    )
    
    $
    22.4Acquisition related severance and
termination costs
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    (1.4
    )
    
    
    0.6Acquisition related restructuring costs
    
    
    3.3
    
    
    
    
    
    
    
    0.3
    
    
    
    (1.3
    )
    
    
    2.3
 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
    )
    
    
    1.5
 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
    )
    
    
    0.9
 
 (1)
    
    Amounts primarily relate to acquired and divested companies.  118




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 Financial Statements of Browning-Ferris Industries, LLC-
  Restatement of Prior Years -
     119




---



##### 



BROWNING-FERRIS INDUSTRIES, LLC
 Financial Statements and Supplementary DataReport of Independent Registered Public Accounting Firm
    
    
    121Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    122Consolidated Statements of Operations for each of the Three Years in the
Period Ended December 31, 2005
    
    
    123Consolidated Statements of Members/Stockholders Deficit for each of the Three Years in
the Period Ended December 31, 2005
    
    
    124Consolidated Statements of Cash Flows for each of the Three Years in the
Period Ended December 31, 2005
    
    
    125Notes to Consolidated Financial Statements
    
    
    126Financial Statement Schedule
    
    
    157
  120




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 
 Report of Independent Registered Public Accounting Firm
 
     
 121




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED BALANCE SHEETS
(in millions)
 December 31,2005
    
    
    2004(Restated)ASSETSCurrent Assets Cash and cash equivalents
    
    $
    12.1
    
    
    $
    5.4Accounts receivable, net of allowance of $4.2 and $4.1
    
    
    170.5
    
    
    
    143.1Prepaid and other current assets
    
    
    18.8
    
    
    
    23.3Total current assets
    
    
    201.4
    
    
    
    171.8Property and equipment, net
    
    
    1,000.9
    
    
    
    937.9Goodwill
    
    
    3,391.0
    
    
    
    3,439.4Other assets, net
    
    
    117.0
    
    
    
    118.2Due from parent
    
    
    18.0
    
    
    
    949.4Total assets
    
    $
    4,728.3
    
    
    $
    5,616.7LIABILITIES AND MEMBERS/STOCKHOLDERS DEFICITCurrent Liabilities Current portion of long-term debt
    
    $
    4.4
    
    
    $
    100.7Accounts payable
    
    
    131.1
    
    
    
    136.3Current portion of accrued capping, closure, post-closure and environmental costs
    
    
    66.4
    
    
    
    62.9Accrued interest
    
    
    79.2
    
    
    
    96.5Other accrued liabilities
    
    
    106.4
    
    
    
    106.5Unearned revenue
    
    
    62.4
    
    
    
    59.4Total current liabilities
    
    
    449.9
    
    
    
    562.3Long-term debt, less current portion
    
    
    5,357.8
    
    
    
    5,934.0Accrued capping, closure, post-closure and environmental costs, less current
portion
    
    
    510.6
    
    
    
    544.1Other long-term obligations
    
    
    161.8
    
    
    
    203.4Commitments
and contingenciesMembers/Stockholders Deficit Members interest
    
    
    Common stock
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (70.3
    )
    
    
    (69.4
    )Retained deficit
    
    
    (1,681.5
    )
    
    
    (1,557.7
    )Total members/stockholders deficit
    
    
    (1,751.8
    )
    
    
    (1,627.1
    )Total liabilities and members/stockholders deficit
    
    $
    4,728.3
    
    
    $
    5,616.7
  122




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)Revenues
    
    $
    1,655.9
    
    
    $
    1,583.1
    
    
    $
    1,611.6Cost of operations (exclusive of depreciation and
amortization shown below)
    
    
    1,094.2
    
    
    
    1,037.7
    
    
    
    1,041.9Selling, general and administrative expenses
    
    
    126.5
    
    
    
    148.0
    
    
    
    145.6Depreciation and amortization
    
    
    132.6
    
    
    
    148.3
    
    
    
    131.1Operating income
    
    
    302.6
    
    
    
    249.1
    
    
    
    293.0Interest expense and other
    
    
    472.2
    
    
    
    612.8
    
    
    
    705.4Loss before income taxes
    
    
    (169.6
    )
    
    
    (363.7
    )
    
    
    (412.4
    )Income tax benefit
    
    
    (53.6
    )
    
    
    (127.5
    )
    
    
    (153.0
    )Minority interest
    
    
    (0.9
    )
    
    
    (3.4
    )
    
    
    1.2Loss from continuing operations
    
    
    (115.1
    )
    
    
    (232.8
    )
    
    
    (260.6
    )Income (loss) from discontinued operations, net of tax
    
    
    6.5
    
    
    
    (9.4
    )
    
    
    (28.2
    )Cumulative effect of change in accounting principle,
net of tax
    
    
    (0.5
    )
    
    
    
    
    
    
    44.8Net loss
    
    $
    (109.1
    )
    
    $
    (242.2
    )
    
    $
    (244.0
    )Pro forma amounts, assuming the 2003 change
in accounting principle is applied retroactively excluding the cumulative effect of change in accounting
principle in the year of adoption:Net loss
    
    
    
    
    
    
    
    
    
    $
    (288.8
    )
  123




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED STATEMENTS OF MEMBERS/STOCKHOLDERS DEFICIT
(in millions)
 Accumulated
    
    
    
    
    
    
    TotalOther
    
    
    
    
    
    
    MemberMember
    
    
    Common
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersInterest
    
    
    Stock
    
    
    Loss
    
    
    Deficit
    
    
    DeficitBalance as of December 31, 2002
    
    
    
    
    
    $
    
    
    
    $
    (131.2
    )
    
    $
    (1,041.3
    )
    
    $
    (1,172.5
    )Net loss (Restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (244.0
    )
    
    
    (244.0
    )Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    
    
    
    
    
    
    
    
    18.8
    
    
    
    
    
    
    
    18.8Net loss on hedging derivatives reclassified
to earnings
    
    
    
    
    
    
    
    
    
    
    13.9
    
    
    
    
    
    
    
    13.9Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    4.0
    
    
    
    
    
    
    
    4.0Balance as of December 31, 2003 (Restated)
    
    
    
    
    
    
    
    
    
    
    (94.5
    )
    
    
    (1,285.3
    )
    
    
    (1,379.8
    )Net loss (Restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (242.2
    )
    
    
    (242.2
    )Dividend 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 (Restated)
    
    $
    
    
    
    $
    
    
    
    
    (69.4
    )
    
    
    (1,557.7
    )
    
    
    (1,627.1
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109.1
    )
    
    
    (109.1
    )Dividend 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
    )
 Comprehensive Loss 
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)Net loss
    
    $
    (109.1
    )
    
    $
    (242.2
    )
    
    $
    (244.0
    )Other comprehensive income, net of tax:Net gain deferred on hedging derivatives
    
    
    1.3
    
    
    
    18.2
    
    
    
    18.8Net loss on hedging derivatives reclassified to earnings
    
    
    
    
    
    
    4.3
    
    
    
    13.9Minimum pension liability adjustment
    
    
    (2.2
    )
    
    
    2.6
    
    
    
    4.0$
    (110.0
    )
    
    $
    (217.1
    )
    
    $
    (207.3
    )
  124




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)Operating activities Net loss
    
    $
    (109.1
    )
    
    $
    (242.2
    )
    
    $
    (244.0
    )Discontinued operations, net of tax
    
    
    (6.5
    )
    
    
    9.4
    
    
    
    28.2Adjustments to reconcile net loss to cash used for
operating activities from continuing operationsProvisions for:Depreciation and amortization
    
    
    132.6
    
    
    
    148.3
    
    
    
    131.1Doubtful accounts
    
    
    3.8
    
    
    
    2.1
    
    
    
    6.1Accretion of debt and amortization of debt issuance costs
    
    
    19.3
    
    
    
    21.7
    
    
    
    25.9Gain on sale of fixed assets
    
    
    (0.7
    )
    
    
    (1.6
    )
    
    
    (2.1
    )Non-cash reduction in acquisition accruals
    
    
    (25.2
    )
    
    
    (12.2
    )
    
    
    (11.2
    )Loss on sale of trade receivables
    
    
    5.0
    
    
    
    13.4
    
    
    
    9.3Non-cash gain on non-hedge accounting interest rate swap contracts
    
    
    
    
    
    
    (16.2
    )
    
    
    (48.0
    )Amortization of accumulated other comprehensive loss for
de-designated interest rate swap contracts
    
    
    
    
    
    
    6.7
    
    
    
    23.1Write-off of deferred debt issuance costs
    
    
    11.9
    
    
    
    15.3
    
    
    
    61.0Cumulative effect of change in accounting principle, net of tax
    
    
    0.5
    
    
    
    
    
    
    
    (44.8
    )Change in
operating assets and liabilities, excluding the effects of purchase acquisitionsAccounts receivable, prepaid expenses and other assets
    
    
    (23.3
    )
    
    
    (22.0
    )
    
    
    53.7Accounts payable, accrued liabilities, unearned income and other
    
    
    (52.7
    )
    
    
    (22.9
    )
    
    
    (47.7
    )Capping, closure and post-closure provision and accretion
    
    
    30.3
    
    
    
    29.4
    
    
    
    28.0Capping, closure, post-closure and environmental expenditures
    
    
    (58.3
    )
    
    
    (63.3
    )
    
    
    (49.2
    )Cash used for operating activities from continuing operations
    
    
    (72.4
    )
    
    
    (134.1
    )
    
    
    (80.6
    )Investing activities Cost of acquisitions, net of cash acquired
    
    
    (0.7
    )
    
    
    (0.2
    )
    
    
    Proceeds from divestitures, net of cash divested
    
    
    2.9
    
    
    
    55.7
    
    
    
    132.0Proceeds from sale of fixed assets
    
    
    2.5
    
    
    
    3.9
    
    
    
    6.4Capital expenditures, excluding acquisitions
    
    
    (203.3
    )
    
    
    (180.5
    )
    
    
    (144.2
    )Capitalized interest
    
    
    (4.9
    )
    
    
    (4.0
    )
    
    
    (6.3
    )Change in deferred acquisition costs, notes receivable and other
    
    
    2.5
    
    
    
    2.2
    
    
    
    (0.9
    )Cash used for investing activities from continuing operations
    
    
    (201.0
    )
    
    
    (122.9
    )
    
    
    (13.0
    )Financing activities Proceeds from long-term debt, net of issuance costs
    
    
    2,083.7
    
    
    
    2,122.2
    
    
    
    2,870.2Payments of long-term debt
    
    
    (2,783.8
    )
    
    
    (2,415.5
    )
    
    
    (3,728.8
    )Net change in disbursement account
    
    
    2.2
    
    
    
    5.0
    
    
    
    Net change in due from parent
    
    
    978.5
    
    
    
    553.0
    
    
    
    988.5Cash provided by financing activities from continuing operations
    
    
    280.6
    
    
    
    264.7
    
    
    
    129.9Discontinued operations:Used for operating activities
    
    
    (0.5)
    
    
    
    (8.8
    )
    
    
    (32.8
    )Used for investing activities
    
    
    
    
    
    
    
    
    
    
    (4.6
    )Provided by financing activities
    
    
    
    
    
    
    
    
    
    
    Cash used for discontinued operations
    
    
    (0.5)
    
    
    
    (8.8
    )
    
    
    (37.4
    )Increase (decrease) in cash and cash equivalents
    
    
    6.7
    
    
    
    (1.1
    )
    
    
    (1.1
    )Cash and cash equivalents, beginning of year
    
    
    5.4
    
    
    
    6.5
    
    
    
    7.6Cash and cash equivalents, end of year
    
    $
    12.1
    
    
    $
    5.4
    
    
    $
    6.5Supplemental disclosures:Interest paid (net of amounts capitalized)
    
    $
    433.9
    
    
    $
    490.8
    
    
    $
    555.8Capital lease obligations incurred
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.2Non-cash dividend to parent
    
    
    14.7
    
    
    
    30.2
    
    
    
    
  125




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization and Summary of Significant Accounting Policies
  Purpose of financial statements 
  Transfer of assets and change in financial statement presentation 
 Accounting Changes
 Principles of consolidation and presentation 
  126




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Restatement of prior years 
   For the year ended December 31, 2004As Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedInterest expense and other
    
    $
    662.7
    
    
    $
    (49.9
    )
    
    $
    612.8Loss before income taxes
    
    
    (413.6
    )
    
    
    49.9
    
    
    
    (363.7
    )Income tax benefit
    
    
    (147.5
    )
    
    
    20.0
    
    
    
    (127.5
    )Loss from continuing operations
    
    
    (262.7
    )
    
    
    29.9
    
    
    
    (232.8
    )Net loss
    
    
    (272.1
    )
    
    
    29.9
    
    
    
    (242.2
    )
  For the year ended December 31, 2003As Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedInterest expense and other
    
    $
    726.5
    
    
    $
    (21.1
    )
    
    $
    705.4Loss before income taxes
    
    
    (433.5
    )
    
    
    21.1
    
    
    
    (412.4
    )Income tax benefit
    
    
    (161.4
    )
    
    
    8.4
    
    
    
    (153.0
    )Loss from continuing operations
    
    
    (273.3
    )
    
    
    12.7
    
    
    
    (260.6
    )Net loss
    
    
    (256.7
    )
    
    
    12.7
    
    
    
    (244.0
    )
  For the year ended December 31, 2004As Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedNet loss
    
    $
    (272.1
    )
    
    $
    29.9
    
    
    $
    (242.2
    )Cash used for operating activities
    
    
    (164.0
    )
    
    
    29.9
    
    
    
    (134.1
    )Cash provided by financing activities
    
    
    294.6
    
    
    
    (29.9
    )
    
    
    264.7
 127




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  For the year ended December 31, 2003As Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedNet loss
    
    $
    (256.7
    )
    
    $
    12.7
    
    
    $
    (244.0
    )Cash used for operating activities
    
    
    (93.3
    )
    
    
    12.7
    
    
    
    (80.6
    )Cash provided by financing activities
    
    
    142.6
    
    
    
    (12.7
    )
    
    
    129.9
  December 31, 2004As Previously
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedDue from Parent
    
    $
    906.8
    
    
    $
    42.6
    
    
    $
    949.4Total assets
    
    
    5,574.1
    
    
    
    42.6
    
    
    
    5,616.7Retained deficit
    
    
    (1,600.3
    )
    
    
    42.6
    
    
    
    (1,557.7
    )Total stockholders deficit
    
    
    (1,669.7
    )
    
    
    42.6
    
    
    
    (1,627.1
    )Total liabilities and stockholders deficit
    
    
    5,574.1
    
    
    
    42.6
    
    
    
    5,616.7
  For the three months ended March 31, 2004(unaudited)As Previously
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedInterest expense and other
    
    $
    155.4
    
    
    $
    (16.2
    )
    
    $
    139.2Loss before income taxes
    
    
    (80.3
    )
    
    
    16.2
    
    
    
    (64.1
    )Income tax benefit
    
    
    (29.2
    )
    
    
    6.5
    
    
    
    (22.7
    )Loss from continuing operations
    
    
    (51.4
    )
    
    
    9.7
    
    
    
    (41.7
    )Net loss
    
    
    (53.5
    )
    
    
    9.7
    
    
    
    (43.8
    )
  For the three months ended June 30, 2004
    
    
    For the six months ended June 30, 2004(unaudited)
    
    
    (unaudited)As Previously
    
    
    
    
    
    As
    
    
    As Previously
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    Restated
    
    
    Reported
    
    
    Adjustment
    
    
    RestatedInterest expense and other
    
    $
    246.8
    
    
    $
    (14.9
    )
    
    $
    231.9
    
    
    $
    402.2
    
    
    $
    (31.1
    )
    
    $
    371.1Loss before income taxes
    
    
    (173.5
    )
    
    
    14.9
    
    
    
    (158.6
    )
    
    
    (253.8
    )
    
    
    31.1
    
    
    
    (222.7
    )Income tax benefit
    
    
    (62.4
    )
    
    
    5.9
    
    
    
    (56.5
    )
    
    
    (91.6
    )
    
    
    12.4
    
    
    
    (79.2
    )Loss from continuing
operations
    
    
    (111.8
    )
    
    
    9.0
    
    
    
    (102.8
    )
    
    
    (163.2
    )
    
    
    18.7
    
    
    
    (144.5
    )Net loss
    
    
    (117.5
    )
    
    
    9.0
    
    
    
    (108.5
    )
    
    
    (171.0
    )
    
    
    18.7
    
    
    
    (152.3
    )
  For the three months ended March 31, 2004(unaudited)As Previously
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedNet loss
    
    $
    (53.5
    )
    
    $
    9.7
    
    
    $
    (43.8
    )Cash used for operating activities
    
    
    (46.1
    )
    
    
    9.7
    
    
    
    (36.4
    )Cash provided by financing activities
    
    
    46.1
    
    
    
    (9.7
    )
    
    
    36.4
  For the six months ended June 30, 2004(unaudited)As Previously
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    RestatedNet loss
    
    $
    (171.0
    )
    
    $
    18.7
    
    
    $
    (152.3
    )Cash used for operating activities
    
    
    (148.5
    )
    
    
    18.7
    
    
    
    (129.8
    )Cash provided by financing activities
    
    
    167.3
    
    
    
    (18.7
    )
    
    
    148.6
 Reporting Revenue Gross as a Principal versus Net as an Agent .
 128




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Discontinued operations 
    Year Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    
    
    
    $
    13.4
    
    
    $
    155.5Income (loss) before tax
    
    $
    2.8
    
    
    $
    (0.5
    )
    
    $
    12.8Gain (loss) on divestiture
    
    
    8.0
    
    
    
    0.8
    
    
    
    (14.7
    )Income tax expense
    
    
    4.3
    
    
    
    9.7
    
    
    
    26.5Cumulative effect of change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    0.2Discontinued operations, net of tax
    
    $
    6.5
    
    
    $
    (9.4
    )
    
    $
    (28.2
    )
   Allocation of Interest to Discontinued Operations
 Business combinations 
  129




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2005
    
    
    2004
    
    
    2003Number of businesses acquired
    
    
    3
    
    
    
    1
    
    
    
    1Total consideration (in millions)
    
    $
    0.7
    
    
    $
    0.2
    
    
    $
    0.0
  Cash and cash equivalents 
  Concentration of credit risk 
  Receivable realization allowance 
  Other assets 
  Other accrued liabilities 
  130




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accrued capping, closure and post-closure costs 
  Environmental costs 
 Environmental Remediation Liabilities
 Other long-term obligations 
  Contingent liabilities 
 Accounting for
Contingencies Reasonable Estimation
of the Amount of a Loss
 Revenue 
   131




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Loss contracts
  Non-recurring acquisition accruals 
  Interest expense and other 
  Interest expense capitalized 
   Use of estimates 
  132




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Fair value of financial instruments 
 Disclosures About Fair Value of Financial
Instruments
  Stock-based compensation plans
 ccounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and
Disclosure
 Share-Based Payment
  Year Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)Net loss, as reported
    
    $
    (109.1
    )
    
    $
    (242.2
    )
    
    $
    (244.0
    )Total stock-based employee compensation expense
determined under fair value based method, net of tax
    
    
    (1.2
    )
    
    
    (1.9
    )
    
    
    (3.1
    )Net loss, pro forma
    
    $
    (110.3
    )
    
    $
    (244.1
    )
    
    $
    (247.1
    )
  Year Ended December 31,2005
    
    
    2004
    
    
    2003Risk free interest rate
    
    
    3.4
    %
    
    
    2.9
    %
    
    
    3.3
    %Expected life
    
    6 years
    
    4 years
    
    4 yearsDividend rate
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    51
    %
    
    
    64
    %
    
    
    65
    %
 133




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Change in accounting principle 
 Accounting for
Conditional Asset Retirement Obligations  an interpretation of FASB Statement No. 143 Accounting for
Asset Retirement Obligations
 Recently issued accounting pronouncements
 Accounting Changes and Error Corrections Accounting Changes , Reporting Accounting
Changes in Interim Financial Statements  An Amendment of APB Opinion No. 28
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to
Employees. Classification and Measurement of Freestanding
Financial Instruments Originally Issued in Exchange for Employee Services under FASB Statement No.
123(R) , Application of EITF Issue No. 00-19
to Freestanding Financial Instruments Originally Issued as Employee Compensation Accounting for Derivative Instruments and Hedging Activities Practical Accommodation to the Application of Grant Date as
Defined in FASB Statement No. 123(R) Transition Election Related to Accounting for the Tax Effects of Share-Based Payments
Awards
 134




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2. Property and Equipment
 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
   2005
    
    
    2004Land and improvements
    
    $
    134.9
    
    
    $
    130.3Land held for permitting as landfills
    
    
    12.3
    
    
    
    13.4Landfills
    
    
    1,145.6
    
    
    
    1,064.3Buildings and improvements
    
    
    98.4
    
    
    
    96.2Vehicles, furniture and equipment
    
    
    418.7
    
    
    
    352.8Containers and compactors
    
    
    174.3
    
    
    
    146.01,984.2
    
    
    
    1,803.0Accumulated depreciation and amortization
    
    
    (983.3
    )
    
    
    (865.1
    )$
    1,000.9
    
    
    $
    937.9
 135




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3. Goodwill and Intangible Assets
      2005
    
    
    2004Beginning balance
    
    $
    3,439.4
    
    
    $
    3,630.4Acquisitions
    
    
    
    
    
    
    Divestitures
    
    
    
    
    
    
    (4.4
    )Adjustments (1)
    
    
    (48.4
    )
    
    
    (186.6
    )Ending balance
    
    $
    3,391.0
    
    
    $
    3,439.4
 
 (1)
    
    Amounts primarily relate to write-off of goodwill in connection with assets held
for sale accounting, purchase accounting adjustments and entities transferred to Allied.
 4. Long-term Debt
  136




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Debt Balance at
    
    
    Effective Interest RateDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Revolving credit facility ABR borrowings*
    
    $
    3.7
    
    
    $
    
    
    
    

    9.00
    %
    
    
    7.25
    %Revolving credit facility Adjusted LIBOR borrowings*
    
    
    
    
    
    
    
    
    
    
    7.29
    
    
    
    5.56Term loan B
    
    
    
    
    
    
    1,162.9
    
    
    
    
    
    
    
    6.07Term loan C
    
    
    
    
    
    
    245.4
    
    
    
    
    
    
    
    6.05Term loan D
    
    
    
    
    
    
    147.2
    
    
    
    
    
    
    
    5.852005 term loan B
    
    
    1,275.0
    
    
    
    
    
    
    
    6.33
    
    
    
    7.88% senior notes due 2005
    
    
    
    
    
    
    69.4
    
    
    
    
    
    
    
    8.776.38% senior notes due 2008
    
    
    154.7
    
    
    
    151.5
    
    
    
    8.34
    
    
    
    8.348.50% senior notes due 2008
    
    
    750.0
    
    
    
    750.0
    
    
    
    8.78
    
    
    
    8.788.88% senior notes due 2008
    
    
    600.0
    
    
    
    600.0
    
    
    
    9.15
    
    
    
    9.156.50% senior notes due 2010
    
    
    350.0
    
    
    
    350.0
    
    
    
    6.76
    
    
    
    4.806.38% senior notes due 2011
    
    
    275.0
    
    
    
    275.0
    
    
    
    6.63
    
    
    
    6.609.25% senior notes due 2012
    
    
    251.1
    
    
    
    376.9
    
    
    
    9.40
    
    
    
    9.417.88% senior notes due 2013
    
    
    450.0
    
    
    
    450.0
    
    
    
    8.09
    
    
    
    8.099.25% debentures due 2021
    
    
    96.1
    
    
    
    95.8
    
    
    
    9.47
    
    
    
    9.487.40% debentures due 2035
    
    
    292.2
    
    
    
    289.9
    
    
    
    8.03
    
    
    
    8.0310.00% senior subordinated notes due 2009
    
    
    
    
    
    
    195.4
    
    
    
    
    
    
    
    10.224.25% senior subordinated convertible debentures due 2034
    
    
    230.0
    
    
    
    230.0
    
    
    
    4.34
    
    
    
    4.337.38% senior unsecured notes due 2014
    
    
    400.0
    
    
    
    400.0
    
    
    
    7.55
    
    
    
    7.53Solid waste revenue bond obligations, principal payable
through 2031
    
    
    228.4
    
    
    
    239.1
    
    
    
    6.60
    
    
    
    4.66Notes payable to individuals, variable interest rate,
principal payable through 2007, secured by vehicles,
equipment, real estate, or accounts receivable**
    
    
    0.4
    
    
    
    0.7
    
    
    
    3.04
    
    
    
    3.78Obligations under capital leases of vehicles and equipment**
    
    
    3.0
    
    
    
    2.3
    
    
    
    10.22
    
    
    
    10.32Notes payable to a municipal corporation, interest at 6.0%,
principal payable through 2010, unsecured**
    
    
    2.6
    
    
    
    3.2
    
    
    
    6.00
    
    
    
    6.00Total debt
    
    
    5,362.2
    
    
    
    6,034.7Less: Current portion
    
    
    4.4
    
    
    
    100.7Long-term portion
    
    $
    5,357.8
    
    
    $
    5,934.0
 
 ***
    
    Reflects weighted average interest rate, excludes fees
 Reflects weighted average interest rate  
    
    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.The proceeds of the issuances above were used to retire the following:
    
    $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.
   137




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2005 Credit Facility 
    Senior notes and debentures 
 th th
 th th
 th th
 st st
 Valuation of Debt Assumed in a Purchase Business
Combination
 138




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Senior subordinated notes 
   Senior subordinated convertible debentures 
    th
 139




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Future maturities of long-term debt
  Maturity2006
    
    $
    4.42007
    
    
    1.12008
    
    
    1,511.82009
    
    
    0.62010
    
    
    6.8Thereafter
    
    
    3,917.3Gross Principal
    
    $
    5,442.0Discount, net
    
    
    (79.8
    )Total Debt
    
    $
    5,362.2
 Fair value of debt and interest rate protection agreements
  Balance at
    
    
    Fair Value at
    
    
    Balance at
    
    
    Fair Value atDecember 31, 2005
    
    
    December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2004Long-Term DebtFixed Rate Debt:Principal amount
    
    $
    4,004.0
    
    
    $
    4,100.3
    
    
    $
    4,399.6
    
    
    $
    4,530.9Weighted average interest rate
    
    
    7.78
    %
    
    
    
    
    
    
    7.92
    %Variable Rate Debt:Principal amount
    
    $
    1,358.2
    
    
    $
    1,366.2
    
    
    $
    1,635.1
    
    
    $
    1,654.7Weighted average interest rate(1)
    
    
    6.03
    %
    
    
    
    
    
    
    4.95
    %Interest Rate Swaps(2)Non-Cancelable:Notional amount
    
    $
    
    
    
    $
    
    
    
    $
    250.0
    
    
    $
    (1.8
    )Weighted average interest rate
    
    
    
    
    
    
    
    
    
    
    5.99
    %
 
 (1)
    
    Reflects the rate in effect as of December 31, 2005 and 2004 before the effects of
swaps and includes all applicable margins. Actual future rates may vary.
 (2)
    
    Amount represents our floating to fixed interest rate swap contracts. See Note 5
for additional discussion.
 Debt covenants
   140




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Guarantees 
 Minimum Revenue
Guarantees Granted to a Business or Its Owners  an interpretation of FASB Statement No.45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others
 Collateral 
  5. Derivative Instruments and Hedging Activities
   Designated interest rate swap contracts accounted for as hedges
  141




---



##### 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 31,2005
    
    
    2004Minimum pension liability adjustment, net of taxes of $46.8 and $45.5
    
    $
    (70.3
    )
    
    $
    (68.1
    )Interest rate swap contracts designated, unrealized loss, net of taxes of $0.5
    
    
    
    
    
    
    (1.3
    )Accumulated other comprehensive loss
    
    $
    (70.3
    )
    
    $
    (69.4
    )
 142




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7. Landfill Accounting
   Change in accounting principle
     143




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Landfill assets 
    1.
    
    We have control of and access to the land where the expansion permit is being sought.2.
    
    All geologic and other technical siting criteria for a landfill have been met, or a
variance 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.
   Capping, closure and post-closure
   144




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        Landfill maintenance costs 
  145




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Financial assurance costs
  Environmental costs
    8. Employee Benefit Plans
 Defined Benefit Pension Plans 
   146




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Employers Disclosures about Pensions and Other
Postretirement Benefits
  2005
    
    
    2004Projected benefit obligation at beginning of period
    
    $
    353.0
    
    
    $
    338.2Service cost
    
    
    0.6
    
    
    
    0.8Interest cost
    
    
    20.7
    
    
    
    20.6Curtailment loss
    
    
    
    
    
    
    1.1Actuarial loss
    
    
    20.9
    
    
    
    8.2Benefits paid
    
    
    (17.8
    )
    
    
    (15.9
    )Projected benefit obligation at end of period
    
    $
    377.4
    
    
    $
    353.0Fair value of plan assets at beginning of period
    
    $
    339.4
    
    
    $
    317.4Actual return on plan assets
    
    
    39.5
    
    
    
    37.9Benefits paid
    
    
    (17.8
    )
    
    
    (15.9
    )Fair value of plan assets at end of period
    
    $
    361.1
    
    
    $
    339.4Funded status
    
    $
    (16.3
    )
    
    $
    (13.6
    )Unrecognized net actuarial loss
    
    
    118.6
    
    
    
    115.8Unrecognized prior service cost
    
    
    0.7
    
    
    
    0.8Prepaid pension asset
    
    $
    103.0
    
    
    $
    103.0
  2005
    
    
    2004Prepaid pension asset
    
    $
    103.0
    
    
    $
    103.0Accrued benefit liability
    
    
    (117.8
    )
    
    
    (114.4
    )Net pension liability
    
    
    (14.8
    )
    
    
    (11.4
    )Intangible assets
    
    
    0.7
    
    
    
    0.8Accumulated other comprehensive loss before tax benefit
    
    
    117.1
    
    
    
    113.6Net amount recognized
    
    $
    103.0
    
    
    $
    103.0
 147




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   2005
    
    
    2004
    
    
    2003Service cost
    
    $
    0.6
    
    
    $
    0.8
    
    
    $
    0.9Interest cost
    
    
    20.7
    
    
    
    20.6
    
    
    
    19.9Expected return on plan assets
    
    
    (28.2
    )
    
    
    (28.0
    )
    
    
    (25.9
    )Recognized net actuarial loss
    
    
    6.8
    
    
    
    7.2
    
    
    
    8.3Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Curtailment loss
    
    
    
    
    
    
    1.1
    
    
    
    Net periodic benefit cost
    
    $
    
    
    
    $
    1.8
    
    
    $
    3.3
  2005
    
    
    2004
    
    
    2003Increase (decrease) in minimum pension liability
included in other comprehensive income, net of tax
    
    $
    2.2
    
    
    $
    (2.6
    )
    
    $
    (4.0
    )Actual return on plan assets
    
    $
    39.5
    
    
    $
    37.8
    
    
    $
    51.6Actual rate of return on plan assets
    
    
    11.7
    %
    
    
    11.9
    %
    
    
    19.0
    %
  2005
    
    
    2004
    
    
    2003Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.25
    %Average rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Expected return on plan assets
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    9.00
    %
    148




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Weighted averagePercentage of plan assets
    
    
    expected long-termat September 30,
    
    

rate of return forTarget allocation 2006
    
    
    2005
    
    
    2004
    
    

calendar year 2005Equity securities
    
    
    60
    %
    
    
    63
    %
    
    
    62
    %
    
    
    9.9
    %Debt securities
    
    
    40
    %
    
    
    37
    %
    
    
    38
    %
    
    
    6.6
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    8.5
    %
  Benefit payments:2004
    
    $
    15.92005
    
    
    17.8Estimated future payments:2006
    
    $
    11.12007
    
    
    11.22008
    
    
    11.42009
    
    
    12.02010
    
    
    13.0Years 2011 - 2015
    
    
    80.1
 401(k) Plan 
  9. Members Interest
  149




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. Stock Plans
 Employee stock options 
    Year Ended December 31,2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseOptions
    
    Price
    
    Options
    
    Price
    
    Options
    
    PriceOptions outstanding,
beginning of year
    
    
    2.1
    
    
    $
    12.42
    
    
    
    2.5
    
    
    $
    12.25
    
    
    
    1.4
    
    
    $
    12.18Options granted
    
    
    1.0
    
    
    
    8.60
    
    
    
    0.1
    
    
    
    11.44
    
    
    
    1.5
    
    
    
    11.40Options exercised
    
    
    
    *
    
    
    6.76
    
    
    
    (0.1
    )
    
    
    7.73
    
    
    
    (0.1
    )
    
    
    6.78Options forfeited
or expired
    
    
    (0.4
    )
    
    
    12.36
    
    
    
    (0.4
    )
    
    
    13.55
    
    
    
    (0.3
    )
    
    
    13.35Options outstanding,
end of year
    
    
    2.7
    
    
    
    11.57
    
    
    
    2.1
    
    
    
    12.42
    
    
    
    2.5
    
    
    
    12.25Options exercisable,
end of year
    
    
    1.9
    
    
    
    12.54
    
    
    
    1.7
    
    
    
    12.76
    
    
    
    1.7
    
    
    
    12.70
 
 *
    
    Amounts less than 100,000  150




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Options Outstanding and ExercisableWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$6.00
 $9.63
    
    
    0.2
    
    
    3 years
    
    $
    8.62$10.00
 $13.55
    
    
    1.2
    
    
    5 years
    
    $
    11.80$15.00
 $26.38
    
    
    0.3
    
    
    3 years
    
    $
    18.73Partially Vested:
 Options OutstandingWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$9.03
 $9.70
    
    
    0.1
    
    
    8 years
    
    $
    9.08$12.06
 $13.78
    
    
    0.2
    
    
    8 years
    
    $
    12.35
 Options ExercisableWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$9.03
 $9.70
    
    
    0.1
    
    
    8 years
    
    $
    9.08$12.06
 $13.78
    
    
    0.1
    
    
    8 years
    
    $
    12.31Non-Vested:
 Options OutstandingWeighted Average
    
    Weighted AverageRange of Exercise Prices
    
    Number Outstanding
    
    Remaining Life
    
    Exercise Price$7.68
 $9.09
    
    
    0.7
    
    
    10 years
    
    $
    8.58
 Employee restricted stock 
   11. Income Taxes
  Accounting for Income Taxes
 151




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)Current tax provision
    
    $
    8.0
    
    
    $
    17.9
    
    
    $
    19.3Balance of tax benefit
    
    
    (61.6
    )
    
    
    (145.4
    )
    
    
    (172.3
    )Total
    
    $
    (53.6
    )
    
    $
    (127.5
    )
    
    $
    (153.0
    )
   For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)Federal statutory tax benefit
    
    $
    (59.1
    )
    
    $
    (126.1
    )
    
    $
    (144.8
    )Consolidated state taxes, net of federal benefit
    
    
    (14.1
    )
    
    
    (15.8
    )
    
    
    (19.1
    )Non-deductible write-off of goodwill and
business combination costs
    
    
    
    
    
    
    1.1
    
    
    
    Effect of foreign operations
    
    
    6.1
    
    
    
    2.8
    
    
    
    4.2Interest on tax contingency, net of tax benefit
    
    
    13.0
    
    
    
    10.9
    
    
    
    6.1Other permanent differences
    
    
    0.5
    
    
    
    (0.4
    )
    
    
    0.6Income tax benefit
    
    $
    (53.6
    )
    
    $
    (127.5
    )
    
    $
    (153.0
    )
  December 31,2005
    
    
    2004Cumulative Tax-Effected Future (Taxable) Deductible Temporary Differences:Relating primarily to basis differences in landfills, fixed assets and other assets
    
    $
    (181.2
    )
    
    $
    (200.7
    )Environmental, capping, closure and post-closure reserves
    
    
    226.4
    
    
    
    221.8Other reserves
    
    
    (1.1
    )
    
    
    32.4Total
    
    $
    44.1
    
    
    $
    53.5Tax- effected state net operating loss carryforwards
    
    $
    25.2
    
    
    $
    32.3Valuation allowance
    
    
    (24.7
    )
    
    
    (30.7
    )Net carryforwards
    
    $
    0.5
    
    
    $
    1.6
   152




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          153




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  12. Commitments and Contingencies
 Litigation 
 Income Taxes,
    Royalties 
  154




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Lease agreements 
  2006
    
    $
    23.92007
    
    
    20.32008
    
    
    4.32009
    
    
    3.92010
    
    
    7.2Thereafter
    
    
    9.2
  Financial assurances 
 
 Guarantees 
  Accounting for Contingencies
 155




---



##### Table of Contents



BROWNING-FERRIS INDUSTRIES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 13. Related Party Transactions
      
 156




---



##### Table of Contents



Financial Statement Schedule -
  Balance at
    
    
    Charges to
    
    
    Other
    
    
    Write-offs/
    
    
    Balance at12/31/02
    
    
    Expense
    
    
    Charges(1)
    
    
    Payments
    
    
    12/31/03Receivable realization allowance
    
    $
    7.2
    
    
    $
    6.1
    
    
    $
    (0.2
    )
    
    $
    (5.6
    )
    
    $
    7.5Acquisition related severance
and termination costs
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    0.6Acquisition related
restructuring costs
    
    
    3.2
    
    
    
    
    
    
    
    0.4
    
    
    
    (1.3
    )
    
    
    2.3
 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
    )
    
    $
    4.1Acquisition related severance
and termination costs
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    0.2Acquisition related
restructuring costs
    
    
    2.3
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.7
    )
    
    
    1.5
 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
    )
    
    $
    4.2Acquisition related severance
and termination costs
    
    
    0.2
    
    
    
    0.2
    
    
    
    0.5
    
    
    
    (0.1
    )
    
    
    0.8Acquisition related
restructuring costs
    
    
    1.5
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )
    
    
    0.9
 
 (1)
 157




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 3. Exhibits
 Exhibit No.
    
    Description2.1
    
    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.4.1
    
    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.
 158




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.2
    
    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.4.13
    
    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.
 159




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.14
    
    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, 2002.4.18
    
    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, 2003.4.21
    
    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, 2003.4.22
    
    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, 2003.4.23
    
    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 Report on Form 10-K for the year ended December 31, 2003.4.24
    
    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.
 160




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.25
    
    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.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.4.35
    
    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 71/4% 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.
 161




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description4.37
    
    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.10.1
    
    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 of Allied. Exhibit B to
Allieds Definitive Proxy Statement in accordance with Schedule 14A dated April 28, 1994, is
incorporated herein by reference.10.3
    
    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 Directors 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s 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 Directors 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 Directors 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
    
    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.10.9
    
    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.10.10
    
    First Amendment to the 1991 Incentive Stock Plan dated August 8, 2001.10.11
    
    First Amendment to the 1994 Amended and Restated 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.10.12
    
    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 No. 1 to the 1993 Incentive Stock Option 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.
 162




---



##### Table of Contents



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
    
    Second 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
    
    First Amendment to the 1994 Incentive Stock Plan, dated June 20, 2000, is incorporated
herein by reference.10.17
    
    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.10.18
    
    Restated 1994 Non-Employee Director Stock Plan, dated April 3, 2002, is incorporated herein
by reference.10.19
    
    Sixth Amendment to the 1994 Amended and Restated Non-Employee Director Stock Plan, dated
April 3, 2002, is incorporated herein by reference.10.20
    
    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.10.21
    
    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.10.22
    
    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.10.23
    
    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.10.24
    
    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.10.25
    
    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.10.26
    
    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.10.27
    
    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.10.28
    
    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.
 163




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.29
    
    Executive Employment Agreement between the Company and Thomas W. Ryan effective August 1,
2003. Exhibit 10.1 to Allieds Report on Form 10-Q for the quarter ended September 30, 2003 is
incorporated herein by reference.10.30
    
    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.10.31
    
    Executive Employment Agreement between the Company and Thomas H. Van Weelden effective
January 1, 2004. Exhibit 10.1 to Allieds Report on Form 10-Q for the quarter ended March 31,
2004, is incorporated herein by reference.10.32
    
    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.10.33
    
    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.10.34
    
    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.10.35
    
    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.10.36
    
    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.10.37
    
    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.10.38
    
    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.10.39
    
    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.10.40
    
    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.10.41
    
    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.10.42
    
    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.10.43
    
    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.
 164




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.44
    
    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.10.45
    
    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.10.46
    
    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.10.47
    
    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.10.48
    
    Indemnification Agreement  Employees (Specimen Agreement with List of Covered Persons).
Exhibit 10.18 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004, is
incorporated herein by reference.10.49
    
    Indemnification Agreement  Employees (List of Covered Persons). Exhibit 10.2 to Allieds
Report on Form 10-Q for the quarter ended June 30, 2004, is incorporated herein by reference.10.50
    
    Indemnification Agreement  Non-Employee Directors (Specimen Agreement with List of Covered
Persons). Exhibit 10.19 to Allieds Report on Form 10-Q for the quarter ended March 31, 2004,
is incorporated herein by reference.10.51
    
    Indemnification Agreement  Non-Employee Directors (List of Covered Persons). Exhibit 10.3
to Allieds Report on Form 10-Q for the quarter ended June 30, 2004, is incorporated herein by
reference.10.52
    
    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.10.53
    
    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.10.54
    
    Executive Employment Agreement between the Company and Charles H. Cotros effective October
4, 2004. Exhibit 10.1 to Allieds Report on Form 8-K dated October 6, 2004 is incorporated
herein by reference.10.55
    
    Option Agreement between the Company and Charles H. Cotros effective October 4, 2004.
Exhibit 10.1 to Allieds Report on Form 8-K dated October 6, 2004 is incorporated herein by
reference.10.56
    
    Amendment to the Executive Employment Agreement between the Company and Thomas H. Van
Weelden effective October 4, 2004. Exhibit 10.1 to Allieds Report on Form 8-K dated October
6, 2004 is incorporated herein by reference.10.57
    
    Second Amendment to Executive Employment Agreement between Allied Waste Industries, Inc. and
Thomas H. Van Weelden, effective October 25, 2004. Exhibit 10.03 to Allieds Report on Form
8-K dated October 26, 2004 is incorporated herein by reference.
 165




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.58
    
    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.10.59
    
    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.10.60
    
    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.10.61
    
    Form of Nonqualified Stock Option Agreement under the 1994 Amended and Restated Non-Employee
Directors Stock Option Plan.10.62
    
    Form of Performance-Accelerated Restricted Stock Agreement under the Amended and Restated
1991 Incentive Stock Plan.10.63
    
    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.10.64
    
    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.10.65
    
    Form of the Restricted Stock Units Agreement under the Amended and Restated 1991 Incentive
Stock Plan.10.66
    
    Form of the Amendment to the Restricted Stock Units Agreement under the Amended and Restated
1991 Incentive Stock Plan.10.67
    
    Receivables Sale Agreement, dated as of March 7, 2003, among Allied Waste North America,
Inc, as originators and Allied Receivables Funding Incorporated as buyer.10.68
    
    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.10.69
    
    Sixth Amendment to Credit and Security Agreement, effective September 30, 2004.10.70
    
    Seventh Amendment to Receivables Sale Agreement, effective September 30, 2004.10.71
    
    2005 Executive Deferred Compensation Plan, effective December 1, 2004.10.72
    
    Executive Employment Agreement between the Company and James E. Gray, effective January 3,
2001.10.73
    
    Form of Restricted Stock Agreement under 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.10.74
    
    Form of Restricted Stock Units Agreement under 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.10.75
    
    Form of Stock Option Agreement under 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.
 166




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.76
    
    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.10.77
    
    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.10.78
    
    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.10.79
    
    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.10.80
    
    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.10.81
    
    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.10.82
    
    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.10.83
    
    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.10.84
    
    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.10.85
    
    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.10.86
    
    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.10.87
    
    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
    
    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.10.89
    
    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.
 167




---



##### Table of Contents



ALLIED WASTE INDUSTRIES, INC.
 Exhibit No.
    
    Description10.90
    
    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.10.91
    
    Amendment to Non-Qualified Stock Option Agreements dated May 23, 2005, between Allied Waste
Industries, Inc. and Warren B. Rudman. Exhibit 10.8 to Allieds Report on Form 10-Q for the
quarter ended June 30, 2005, is incorporated herein by reference.10.92
    
    First Amendment to Executive Employment Agreement effective May 27, 2005, between Allied
Waste Industries, Inc. and Charles H. Cotros. Exhibit 10.9 to Allieds Report on Form 10-Q for
the quarter ended June 30, 2005, is incorporated herein by reference.10.93
    
    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.10.94
    
    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.10.95
    
    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.10.96
    
    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.10.97
    
    Amended and Restated Schedule A, dated August 1, 2005, to the Supplemental Executive
Retirement Plan. Exhibit 10.14 to Allieds Report on Form 10-Q for the quarter ended June 30,
2005, is incorporated herein by reference.10.98*
    
    Amendment dated December 29, 2005, to the Executive Deferred Compensation Plan and 2005
Executive Deferred Compensation Plan.10.99*
    
    Form of Amendment dated December 30, 2005, to Performance-Accelerated Restricted Stock
Agreement under the Amended and Restated 1991 Incentive Stock Plan.10.100*
    
    Form of Amendment dated December 30, 2005, to Restricted Stock Units Agreement under the
Amended and Restated 1991 Incentive Stock Plan10.101*
    
    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.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
 168




---



##### Table of Contents



Signatures
  ALLIED WASTE INDUSTRIES, INC.Date:
March 3, 2006
    
    By:
    
    /s/ Peter S. HathawayPeter S. HathawayExecutive Vice President and Chief Financial Officer
  Signature
    
    Title
    
    Date/s/ John J. Zillmer
    
    Director, Chairman of the Board of Directors and
    
    3/3/06John J. Zillmer
    
    Chief Executive Officer (Principal Executive officer)/s/ Peter S. Hathaway
    
    Executive Vice President and Chief Financial Officer
    
    3/3/06Peter S. Hathaway
    
    (Principal Financial Officer)/s/ James E. Gray
    
    Senior Vice President, Controller, and
    
    3/3/06James E. Gray
    
    Chief Accounting Officer (Principal Accounting Officer)/s/ Robert Agate
    
    
    
    3/3/06Robert Agate
    
    Director/s/ Leon D. Black
    
    
    
    3/3/06Leon D. Black
    
    Director/s/ Charles H. Cotros
    
    
    
    3/3/06Charles H. Cotros
    
    Director/s/ James W. Crownover
    
    
    
    3/3/06James W. Crownover
    
    Director/s/ Joshua J. Harris
    
    
    
    3/3/06Joshua J. Harris
    
    Director/s/ Dennis Hendrix
    
    
    
    3/3/06Dennis Hendrix
    
    Director/s/ J. Tomilson Hill
    
    
    
    3/3/06J. Tomilson Hill
    
    Director/s/ Nolan Lehmann
    
    
    
    3/3/06Nolan Lehmann
    
    Director/s/ James A. Quella
    
    
    
    3/3/06James A. Quella
    
    Director/s/ Antony P. Ressler
    
    
    
    3/3/06Antony P. Ressler
    
    Director
 169




---



##### Table of Contents



Index
to Exhibits
 10.98*
    
    Amendment dated December 29, 2005, to the Executive Deferred Compensation Plan and 2005
Executive Deferred Compensation Plan.10.99*
    
    Form of Amendment dated December 30, 2005, to Performance-Accelerated Restricted Stock
Agreement under the Amended and Restated 1991 Incentive Stock Plan.10.100*
    
    Form of Amendment dated December 30, 2005, to Restricted Stock Units Agreement under the
Amended and Restated 1991 Incentive Stock Plan10.101*
    
    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.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
 170