##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-25955
  Waste Services, Inc.
 (Successor registrant of Capital
    Environmental Resource Inc. now known as Waste Services (CA)
    Inc.)
 (Exact name of registrant as
    defined in its charter)
  Delaware

01-0780204State or other jurisdiction
    of
    incorporation or organization

(I.R.S. Employer
    Identification No.)1122 International Blvd.

L7L 6Z8Suite 601, Burlington, Ontario

(Zip Code)(Address of principal executive
    offices)   Registrants telephone number, including area code:
 (905) 319-1237
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share

NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of Class)
  o þ
  o þ
  o þ
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Document

Incorporated as toProxy Statement for the 2009

Part IIIAnnual Meeting of Stockholders




---



##### 





INDEX TO
    FORM 10-K
 FOR THE YEAR ENDED DECEMBER 31, 2008
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


14Item 2.


Properties


15Item 3.


Legal Proceedings


15Item 4.


Submission of Matters to a Vote of Security
    Holders


15PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


15Item 6.


Selected Financial Data


18Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


44Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


44Item 9A.


Controls and Procedures


44Item 9B.


Other Information


44PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


44Item 11.


Executive Compensation


45Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


45Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


45Item 14.


Principal Accounting Fees and Services


45PART IVItem 15.


Exhibits, Financial Statement Schedules


46EX-10.2EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1




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PART I  CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K
    
    our substantial indebtedness and the significant restrictive
    covenants in our various credit facilities and our ability to
    finance acquisitions and / or capital expenditures
    with cash on hand, debt or equity offerings;
    our ability to pay principal debt amounts due at maturity;
    our business is capital intensive and may consume cash in excess
    of cash flow from operations and borrowings;
    our ability to vertically integrate our operations;
    our ability to maintain and perform our financial assurance
    obligations;
    changes in regulations affecting our business and costs of
    compliance;
    revocation of existing permits and licenses or the refusal to
    renew or grant new permits and licenses, which are required to
    enable us to operate our business or implement our growth
    strategy;
    our domestic operations are concentrated in Florida, which may
    be subject to specific economic conditions that vary from those
    nationally as well as weather related events that may impact our
    operations;
    construction, equipment delivery or permitting delays for our
    transfer stations or landfills;
    our ability to successfully implement our corporate strategy and
    integrate any acquisitions we undertake;
    our ability to negotiate renewals of existing service agreements
    at favorable rates;
    our ability to enhance profitability of certain aspects of our
    operations in markets where we are not internalized through
    either divestiture or asset swaps;
    costs and risks associated with litigation; and
    changes in general business and economic conditions, commodity
    pricing, exchange rates, the financial markets and accounting
    standards or pronouncements.  Form 10-K
 1




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##### Table of Contents



Item 1.
    Business  Overview
          (905) 319-1237.
  Form 10-K, Form 10-Q, Form 8-K
  Form 10-K, Form 10-Q, Form 8-K
  Business
    Strategy
   2




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##### Table of Contents



Maximize Density and Vertically Integrate
    Operations.
  Provide Consistent, Superior Customer
    Service.
  Maintain a Decentralized Operating Management Structure with
    Centralized Controls and Information Systems.
    Execute a Disciplined, Disposal-Based Growth
    Strategy.
    
    are complementary to our existing infrastructure, allowing us to
    increase the density of our collection routes or enhance asset
    utilization; or
    increase the waste volume that can be internalized into our
    landfills.    
    benefit from an above-average underlying economic or population
    growth, or a changing competitive or regulatory environment that
    could lead to above-average growth for non-hazardous solid waste
    services;
    over time establish a leading market position; and
    secure a disposal facility and subsequently become vertically
    integrated through tuck-in acquisitions (with the ability to
    ultimately secure significant internalized waste volumes). 3




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##### Table of Contents



Operations
      Eastern


Western


TotalCanada


Canada


Canada


Florida


TotalCollection operations and other specialized services


14



9



23



10



33Transfer stations


10



2



12



10



22Recycling facilities


4



1



5



7



12Landfills


1



2



3



4



7   Collection
    Services
  1 2
  Commercial and Industrial Collection.
    Residential Collection.
      Transfer
    Station Services
   4




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##### Table of Contents



Commercial
    and Residential Recycling Services
    Landfill
    Disposal Services
      Other
    Specialized Services
    Local/Regional
    Operating Structure
   5




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Sales and
    Marketing
    Competition
          Government
    Regulation
   6




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7




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##### Table of Contents



Employees
    Executive
    Officers
    Name

Age

Position

SinceDavid Sutherland-Yoest


52


President and Chief Executive Officer

September 6, 2001Ivan R. Cairns


63


Executive Vice President, General Counsel and Secretary

January 5, 2004Edwin D. Johnson


52


Executive Vice President, Chief Financial Officer and Chief
    Accounting Officer

March 12, 2007William P. Hulligan


65


Executive Vice President, U.S. Operations

October 30, 2007Wayne R. Bishop


50


Senior Vice President and Controller

January 5, 2009     David Sutherland-Yoest
 8




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##### Table of Contents



2 2
  Ivan R. Cairns
  Edwin D. Johnson start-up
  William P. Hulligan
  Wayne R. Bishop
  Item 1A.
    Risk
    Factors  Our
    indebtedness may make us more vulnerable to unfavorable economic
    conditions and competitive pressures, limit our ability to
    borrow additional funds, require us to dedicate or reserve a
    large portion of cash flow from operations to service debt, and
    limit our ability to take actions that would increase our
    revenue and execute our growth strategy
  1 2
   9




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Our
    business is capital intensive and may consume cash in excess of
    cash flow from our operations and borrowings
        We may
    be unable to obtain or maintain the environmental and other
    permits, licenses and approvals we need to operate our business,
    which could adversely affect our earnings and cash
    flow
       10




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##### Table of Contents



Our
    acquisition strategy may be unsuccessful if we are unable to
    identify and complete future acquisitions and integrate acquired
    assets or businesses and this subjects us to risks that may have
    a material adverse effect on our results of
    operations
      Our
    business strategy depends in part upon vertically integrating
    our operations. If we are unable to permit, expand or renew
    permits for our existing landfill sites or enter into agreements
    that provide us with access to landfill sites and acquire, lease
    or otherwise secure access to transfer stations, this may reduce
    our profitability and cash flow
   11




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##### Table of Contents



Any
    exposure to environmental liabilities, to the extent not
    adequately covered by insurance, could result in significant
    expenses, which would reduce the funds we have available for
    other purposes, including debt service, debt reduction and
    acquisitions
      We
    face competition from large and small solid waste services
    companies and may be unable to successfully compete with them,
    reducing our operating margins
      The
    termination or non-renewal of existing customer contracts, or
    the failure to obtain new customer contracts, could result in
    declining revenue
   12




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##### Table of Contents



Labor
    unions may attempt to organize our non-unionized employees,
    which may result in increased operating expenses
    Our
    operating margins and profitability may be negatively impacted
    by increased fuel and energy costs and changes in prices for
    recycled commodities
      Our
    domestic operations are concentrated in Florida, which may be
    subject to specific economic conditions that vary from those
    nationally as well as weather related events that may impact our
    operations
  and/or
  The
    industry in which we operate is seasonal and decreases in
    revenue during winter months may have an adverse effect on our
    results of operations, particularly for our Canadian
    operations
   13




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Our
    Canadian operations subject us to currency translation risk,
    which could cause our results to fluctuate significantly from
    period to period
    Changes
    to patterns regarding disposal of waste could adversely affect
    our results of operations by reducing the volume of waste
    available for collection and disposal and thus reducing our
    earnings
    Limits
    on export of waste and any disruptions to the cross-border flow
    of waste may adversely affect our results of operations by
    increasing our costs of disposal
    Item 1B.
    Unresolved
    Staff Comments   14




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##### Table of Contents



Item 2.
    Properties      Collection


Transfer


RecyclingAdministrative


Operations


Stations


Facilities


LandfillsOwned






16



10



6



7Leased


1



17



12



6



Total


1



33



22



12



7     Item 3.
    Legal
    Proceedings      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  Market
    Information
   15




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##### Table of Contents



High


LowYear ended December 31, 2008First Quarter

$
9.76


$
7.60Second Quarter


8.42



6.75Third Quarter


9.55



6.52Fourth Quarter


8.00



5.20Year ended December 31, 2007First Quarter

$
11.92


$
9.26Second Quarter


12.46



9.40Third Quarter


12.40



9.61Fourth Quarter


10.05



8.25   Holders
    Dividends
      Repurchases
    of Securities
   16




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##### Table of Contents



Performance
    graph
    
  (1)
    
    We do not believe that there is a single published industry or
    line of business index that is appropriate for comparing
    stockholder returns. The Peer Group is comprised of
    representative companies within the solid waste management
    industry whose common stock is publicly-traded. The Peer Group
    for 2008 consists of, Casella Waste Systems, Inc., Republic
    Services, Inc., Waste Connections, Inc., and Waste Management,
    Inc. 17




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##### Table of Contents



Item 6.
    Selected
    Financial Data    For Each of the Years Ended December 31,2008


2007


2006


2005


2004(In thousands)Statement of Operations and Cash Flow Data:Revenue

$
473,029


$
461,447


$
362,672


$
327,163


$
266,292Income from operations


41,659



40,813



13,272



8,919



6,039Loss from continuing operations


(1,956
)


(14,303
)


(49,530
)


(51,596
)


(49,259
)Income from discontinued operations net of income tax provision
    of $266, nil, $652, $852 and $574 for the years ended
    December 31, 2008, 2007, 2006, 2005 and 2004, respectively


409



2,796



999



1,306



880Gain (loss) on sale of discontinued operations, net of income
    tax provision of $7,255 for the year ended December 31,
    2008 and nil for all other years


11,110



(11,607
)










Income (loss) before cumulative effect of change in accounting
    principle


9,563



(23,114
)


(48,531
)


(50,290
)


(48,379
)Cumulative effect of change in accounting principle


















225Net income (loss)


9,563



(23,114
)


(48,531
)


(50,290
)


(48,154
)Loss per share, basic and diluted  continuing
    operations

$
(0.04
)

$
(0.31
)

$
(1.40
)

$
(1.57
)

$
(1.67
)Earnings (loss) per share, basic and diluted - discontinued
    operations


0.25



(0.19
)


0.03



0.04



0.03Basic and diluted earnings (loss) per share before cumulative
    effect of change in accounting principle


0.21



(0.50
)


(1.37
)


(1.53
)


(1.64
)Cumulative effect of change in accounting principle


















0.01Earnings (loss) per share  basic and diluted


0.21



(0.50
)


(1.37
)


(1.53
)


(1.63
)Weighted average common shares outstanding  basic and
    diluted


46,079



46,007



35,354



32,880



29,410Cash flows from operating activities of continuing operations

$
56,051


$
54,677


$
26,668


$
14,372


$
24,240Capital expenditures for continuing operations


48,066



57,557



39,747



25,455



24,673Average exchange rate C$ to US$

$
0.9381


$
0.9303


$
0.8817


$
0.8255


$
0.7699   18




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##### Table of Contents



As of December 31,2008


2007


2006


2005


2004(In thousands)Balance Sheet Data:Cash and cash equivalents

$
7,227


$
20,706


$
8,532


$
8,885


$
8,473Property, equipment and landfill sites, net


385,432



383,049



322,574



219,202



220,708Goodwill and other intangible assets, net


372,886



397,766



323,939



281,287



278,869Total assets


840,927



938,488



865,063



728,389



720,583Total debt and capital lease obligations (exclusive of
    cumulative mandatorily redeemable Preferred Stock)


372,952



445,539



410,353



286,669



278,363Cumulative mandatorily redeemable Preferred Stock














84,971



64,971Total shareholders equity


335,018



350,595



339,357



264,491



298,776Year end exchange rate C$ to US$

$
0.8210


$
1.0088


$
0.8581


$
0.8598


$
0.8319   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
    Sources
    of Revenue
         19




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##### Table of Contents



Expense
    Structure
             20




---



##### Table of Contents



Recent
    Developments
  Refinancing
    of Credit Facilities
      Acquisitions
    and Dispositions
    Clean-up Clean-up),
     21




---



##### Table of Contents



22




---



##### Table of Contents



Critical
    Accounting Estimates and Policies
  General
      Revenue
    Recognition
    Accounts
    Receivable and Allowance for Doubtful Accounts
    Business
    Acquisitions and Goodwill
     23




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##### Table of Contents



twenty-day
  
    The fact that, to a significant extent, our shares are held by
    insiders and affiliates, reducing market liquidity.
    The perception that one of our larger shareholders, due to
    circumstances unrelated to us, is liquidating their position
    putting pressure on the market price of our shares.
    As of December 31, 2008 our market capitalization has been
    below our book value only in the fourth and second quarter, for
    relatively short periods of time. We believe the fourth quarter
    is due to market conditions and the second quarter is due to the
    annual rebalancing of market indexes and funds at the end of
    June.     24




---



##### Table of Contents



Long-Lived
    Assets
        Landfill
    Sites
       25




---



##### Table of Contents



December 31, 2008Balance,








Changes in





Balance,Beginning


Landfills


Landfills


Engineering


Airspace


Endof Year


Acquired


Expanded


Estimates


Consumed


of YearUnited StatesPermitted capacity


51,255



580



29,577







(1,387
)


80,025Probable expansion capacity


29,577







(29,577
)










Total available airspace


80,832



580











(1,387
)


80,025Number of sites


3



1















4CanadaPermitted capacity


11,564















(546
)


11,018Probable expansion capacity


4,709











143







4,852Total available airspace


16,273











143



(546
)


15,870Number of sites


3



















3TotalPermitted capacity


62,819



580



29,577







(1,933
)


91,043Probable expansion capacity


34,286







(29,577
)


143







4,852Total available airspace


97,105



580







143



(1,933
)


95,895Number of sites


6



1















7  26




---



##### Table of Contents



December 31, 2007Balance,








Changes in





Balance,Beginning


Landfills


Landfills


Engineering


Airspace


Endof Year


Acquired


Expanded


Estimates


Consumed


of YearUnited StatesPermitted capacity


53,792















(2,537
)


51,255Probable expansion capacity


18,300







11,277











29,577Total available airspace


72,092







11,277







(2,537
)


80,832Number of sites


3



















3CanadaPermitted capacity


11,644











533



(613
)


11,564Probable expansion capacity


4,970











(261
)






4,709Total available airspace


16,614











272



(613
)


16,273Number of sites


3



















3TotalPermitted capacity


65,436











533



(3,150
)


62,819Probable expansion capacity


23,270







11,277



(261
)






34,286Total available airspace


88,706







11,277



272



(3,150
)


97,105Number of sites


6



















6   December 31, 2006Balance,








Changes in





Balance,Beginning


Landfills


Landfills


Engineering


Airspace


Endof Year


Acquired


Expanded


Estimates


Consumed


of YearUnited StatesPermitted capacity


22,374



32,635







(359
)


(858
)


53,792Probable expansion capacity


18,300



















18,300Total available airspace


40,674



32,635







(359
)


(858
)


72,092Number of sites


1



2















3CanadaPermitted capacity


11,878











73



(307
)


11,644Probable expansion capacity










4,970











4,970Total available airspace


11,878







4,970



73



(307
)


16,614Number of sites


3



















3TotalPermitted capacity


34,252



32,635







(286
)


(1,165
)


65,436Probable expansion capacity


18,300







4,970











23,270Total available airspace


52,552



32,635



4,970



(286
)


(1,165
)


88,706Number of sites


4



2















6   Accrued
    Closure and Post-Closure Obligations
   27




---



##### Table of Contents



Accounting
    for Income Taxes
      
    an allocation or a shift of income between taxing jurisdictions,
    the characterization of income or a decision to exclude
    reporting taxable income in a tax return, or
    a decision to classify a transaction, entity, or other position
    in a tax return as tax exempt.     28




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##### Table of Contents



Risk
    Management
  U.S.-based
  Share-Based
    Payments
      96-18,
    Registration
    Payment Arrangements
  EITF 00-19-2, EITF 00-19-2). EITF 00-19-2
 29




---



##### Table of Contents



Translation
    and Re-Measurement of Foreign Currency
    Operating
    Results
  Results
    of Operations for each of the Three Years Ended
    December 31, 2008, 2007 and 2006
    2008Florida


Canada


TotalRevenue

$
231,352



100.0
%

$
241,677



100.0
%

$
473,029



100.0
%Operating expenses:Cost of operations


148,474



64.2
%


160,647



66.5
%


309,121



65.3
%Selling, general and administrative expense


30,027



13.0
%


29,576



12.2
%


59,603



12.6
%Restructuring, severance and related costs


4,673



2.0
%


2,198



0.9
%


6,871



1.5
%Landfill development project costs


10,267



4.4
%






0.0
%


10,267



2.2
%Depreciation, depletion and amortization


26,145



11.3
%


19,203



7.9
%


45,348



9.6
%Foreign exchange loss (gain) and other


(628
)


−0.3
%


788



0.4
%


160



0.0
%Income from operations

$
12,394



5.4
%

$
29,265



12.1
%

$
41,659



8.8
%   2007Florida


Canada


TotalRevenue

$
239,384



100.0
%

$
222,063



100.0
%

$
461,447



100.0
%Operating expenses:Cost of operations


154,250



64.4
%


147,323



66.3
%


301,573



65.3
%Selling, general and administrative expense


32,094



13.4
%


28,150



12.7
%


60,244



13.1
%Severance and related costs


3,995



1.7
%






0.0
%


3,995



0.9
%Depreciation, depletion and amortization


35,262



14.8
%


19,629



8.8
%


54,891



11.9
%Foreign exchange loss (gain) and other


282



0.1
%


(351
)


−0.1
%


(69
)


0.0
%Income from operations

$
13,501



5.6
%

$
27,312



12.3
%

$
40,813



8.8
%   30




---



##### Table of Contents



2006Florida


Canada


TotalRevenue

$
174,644



100.0
%

$
188,028



100.0
%

$
362,672



100.0
%Operating expenses:Cost of operations


119,377



68.4
%


128,176



68.2
%


247,553



68.3
%Selling, general and administrative expense


33,418



19.1
%


23,416



12.5
%


56,834



15.7
%Deferred acquisition costs


439



0.3
%


5,173



2.8
%


5,612



1.5
%Depreciation, depletion and amortization


20,299



11.6
%


17,382



9.1
%


37,681



10.3
%Foreign exchange loss and other


221



0.1
%


1,499



0.8
%


1,720



0.5
%Income from operations

$
890



0.5
%

$
12,382



6.6
%

$
13,272



3.7
%   Revenue
    2008


2007


2006Collection

$
390,768



74.6
%

$
371,700



72.5
%

$
299,291



76.1
%Landfill disposal


47,310



9.0
%


59,015



11.5
%


43,887



11.2
%Transfer station


65,210



12.5
%


62,096



12.1
%


40,372



10.3
%Material recovery facilities


18,531



3.5
%


18,372



3.6
%


8,758



2.2
%Other specialized services


1,760



0.4
%


1,259



0.3
%


1,108



0.2
%523,579



100.0
%


512,442



100.0
%


393,416



100.0
%Intercompany elimination


(50,550
)






(50,995
)






(30,744
)$
473,029






$
461,447






$
362,672          31




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##### Table of Contents



Cost
    of Operations
              Selling,
    General and Administrative Expense
   32




---



##### Table of Contents



Restructuring,
    Severance and Related Costs
        Landfill
    Development Project
    Deferred
    Acquisition Costs
   33




---



##### Table of Contents



Depreciation,
    Depletion and Amortization
      Foreign
    Exchange Loss (Gain) and Other
    Interest
    Expense
    2008


2007


2006Senior Secured Credit Facility and Senior Subordinated Note
    interest

$
30,033


$
36,673


$
27,704Amortization of debt issue costs and discounts


5,377



2,362



1,569Preferred Stock dividends and amortization of issue costs










18,466Loss on exchange of cumulative mandatorily redeemable Preferred
    Stock










1,187Other interest expense


2,022



1,644



1,708$
37,432


$
40,679


$
50,634    34




---



##### Table of Contents



and/or
  Income
    Tax Provision
   35




---



##### Table of Contents



Liquidity
    and Capital Resources
  and/or
  Senior
    Secured Credit Facilities
   36




---



##### Table of Contents



Maximum


Maximum


MinimumConsolidated


Consolidated


ConsolidatedLeverage


Senior Secured


InterestRatio


Leverage Ratio


Coverage RatioFourth quarter  2008


4.50 : 1.00



2.75 : 1.00



2.50 : 1.00First quarter  2009


4.50 : 1.00



2.75 : 1.00



2.50 : 1.00Second quarter  2009


4.50 : 1.00



2.75 : 1.00



2.50 : 1.00Third quarter  2009


4.25 : 1.00



2.75 : 1.00



2.75 : 1.00Fourth quarter  2009


4.25 : 1.00



2.75 : 1.00



2.75 : 1.00       Direct
    Financing Lease Facility
    Senior
    Subordinated Notes
  1 2
 37




---



##### Table of Contents



Cumulative
    Mandatory Redeemable Preferred Stock
    and/or
  Equity
    Placements
   38




---



##### Table of Contents



Migration
    Transaction
    non-U.S. residents
      Surety
    Bonds and Letters of Credit
    Cash
    Flows
    Cash
    Flows from Operating Activities
     39




---



##### Table of Contents



Cash
    Flows from Investing Activities
  Clean-up
    Cash
    Flows from Financing Activities
      New
    Accounting Pronouncements
   40




---



##### Table of Contents



1 2
        Seasonality
   41




---



##### Table of Contents



Off-Balance
    Sheet Financing
  and/or
  Tabular
    Disclosure of Contractual Obligations
    Beyond 52009


2010


2011


2012


2013


Years


TotalSenior secured credit facilities(1)

$
9,276


$
16,698


$
24,118


$
40,816


$
118,013


$



$
208,921Senior subordinated notes payable(1)






















160,000



160,000Senior subordinated notes interest commitments(1)


15,200



15,200



15,200



15,200



15,200



7,600



83,600Other secured notes payable(1)


1,609



1,595



1,500



1,500



1,500



750



8,454Capital lease obligations


360



582



















942Other subordinated notes payable(1)


217



232



247



265



283



1,151



2,395Operating lease commitments


3,625



3,038



2,856



2,544



2,347



3,754



18,164Construction commitments


1,524



42



42



42



2







1,652Asset purchase commitments


7,069























7,069Purchase obligations


1,615























1,615Closure and post-closure obligations(2)


7,589



654



493



4,166



425



125,182



138,509Deferred purchase price(3)


1,642























1,642Restructuring, severance and related(4)


3,330



2,222



699



444



387



935



8,017$
53,056


$
40,263


$
45,155


$
64,977


$
138,157


$
299,372


$
640,980     (1)
    
    Our Senior secured credit facilities are subject to variable
    rates and therefore our interest commitments are unknown.
    Additionally, amounts outstanding under our revolver facilities
    can be repaid at anytime prior to their 42




---



##### Table of Contents



maturity. As such, we have not made any estimates with regard to
    future interest payments on these facilities. Refer to the Notes
    to our Consolidated Financial Statements included elsewhere in
    this annual report for information relative to interest
    repayment provisions.(2)
    
    Future payments on closure and post-closure obligations are not
    discounted and contemplate full utilization of current and
    probable expansion airspace.(3)
    
    Relates to deferred purchase price for the acquisition of
    Commercial
    Clean-up,
    which was completed in December 2008.(4)
    
    Relates to future payments required as a result of our fourth
    quarter 2008 restructuring of corporate overhead and other
    administrative and operational functions, and remaining payments
    to Mr. Wilcox required under his separation agreement.
    Amounts in the table above are gross of estimated sublease
    rental income for our U.S. corporate office and are not
    discounted.  Other
    Contractual Arrangements
      Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk       43




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Page F-1.
  Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15).
  Changes
    in Internal Control Over Financial Reporting
    Managements
    Report on Internal Control Over Financial Reporting
    Attestation
    Report of Independent Registered Public Accounting
    Firm
    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K.
 44




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##### Table of Contents



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, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services    Audit
    Fees
    Audit
    Related Fees
    Tax
    Fees
    All
    Other Fees
    Pre-Approval
    Policies and Procedures
   45




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##### Table of Contents



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  Consolidated
    Financial Statements
  Consolidated Financial Statements
                Financial Statement Schedules
      Exhibits
    2
.1

Plan of Arrangement under Section 182 of the Business
    Corporations Act (Ontario). (Incorporated by reference to
    Exhibit 2.1 to Form 10-K (No. 000-25955) filed March 16, 2005).3
.1

Amended and Restated Certificate of Incorporation of Waste
    Services, Inc. (Incorporated by reference to Exhibit 3.1 to Form
    8-K (No. 000-25955) filed August 2, 2004).3
.2

Certificate of Amendment to Amended and Restated Certificate of
    Incorporation of Waste Services, Inc. effective June 30, 2006
    (Incorporated by reference to Exhibit 3.1 to Form 8-K (No.
    000-25955) filed July 5, 2006).3
.3

Provisions for Exchangeable Shares of Waste Services (CA) Inc.
    (Incorporated by reference to Exhibit 3.2 to Form 10-K (No.
    000-25955) filed March 16, 2005).3
.4

Amendment to Provisions for Exchangeable Shares of Waste
    Services (CA) Inc. (Incorporated by reference to Exhibit 3.3 to
    Form 8-K (No. 000-25955) filed July 5, 2006).3
.5

Certificate of Designation of Special Voting Preferred Stock of
    Waste Services, Inc. (Incorporated by reference to Exhibit 3.2
    to Form 8-K (No. 000-25955) filed August 2, 2004).3
.6

Amended Certificate of Designations of Special Voting Preferred
    Stock of Waste Services, Inc. (Incorporated by reference to
    Exhibit 3.2 to Form 8-K (No. 000-25955) filed July 5, 2006).3
.7

By-law No. 1 of Waste Services, Inc. (Incorporated by reference
    to Exhibit 3.3 to Form 8-K (No. 000-25955) filed August 2, 2004).3
.8

Certificate of Designations of Waste Services, Inc.
    (Incorporated by reference to Exhibit 1.3 to Form 20-F (No.
    000-25955) filed July 15, 2003).3
.9

Amended Certificate of Designations of Waste Services, Inc.
    (Incorporated by reference to Exhibit 4.1 to Form 8-K (No.
    000-25955) filed May 10, 2004). 46




---



##### Table of Contents



4
.1

Preferred Subscription Agreement dated as of May 6, 2003, among
    Waste Services, Inc., Capital Environmental Resource Inc., Kelso
    Investment Associates VI, L.P. and KEP VI LLC (Incorporated by
    reference to Exhibit 4.4 to Form 20-F (No. 000-25955) filed July
    15, 2003).4
.2

Amending Agreement No. 2 to Preferred Subscription Agreement
    dated June 8, 2004 (Incorporated by reference to Exhibit 4.1 to
    Form 8-K (No. 000-25955) filed June 9, 2004).4
.3

Warrant Agreement dated as of May 6, 2003, between Waste Service
    Inc., and certain holders of the Preferred Stock (Incorporated
    by reference to Exhibit 4.6 to Form 20-F (No. 000-25955) filed
    July 15, 2003).4
.4

Warrant, dated July 27, 2001 issued by us to David
    Sutherland-Yoest (Incorporated by reference to Exhibit 4.8 to
    Form 20-F (No. 000-25955) filed July 12, 2002).4
.5

Form of Warrant to Purchase Common Shares by and between Capital
    Environmental Resource Inc. and certain investors. (Incorporated
    by reference to Exhibit 4.4 to Form 8-K (No. 000-25955) filed
    May 10, 2004).4
.6

Indenture regarding
    91/2% Senior
    Subordinated Notes among Waste Services, Inc., the Guarantors
    and Wells Fargo Bank, National Association, as trustee, dated as
    of April 30, 2004 (Incorporated by reference to Exhibit 4.3 to
    Form 8-K (No. 000-25955) filed May 10, 2004).4
.7

Supplemental Indenture dated as of August 8, 2005 to the Notes
    Indenture among Sanford Recycling and Transfer, Inc., Waste
    Services, Inc., the other guarantors and Wells Fargo Bank,
    National Association, as Trustee (Incorporated by reference to
    Exhibit 4.2 to Form S-4 (No. 333-127444) filed August 11, 2005).4
.12

Supplemental Indenture dated as of June 30, 2006 to the Notes
    Indenture among Sun Country Materials, LLC., Waste Services,
    Inc., the other guarantors and Wells Fargo Bank, National
    Association, as Trustee. (Incorporated by reference to Exhibit
    4.18 to Form 10-Q (No. 000-25955) filed August 1, 2006).4
.13

Supplemental Indenture dated as of June 30, 2006, 2006 to the
    Notes Indenture among Taft Recycling, Inc., Waste Services,
    Inc., the other guarantors and Wells Fargo Bank, National
    Association, as Trustee. (Incorporated by reference to Exhibit
    4.17 to Form 10-Q (No. 000-25955) filed August 1, 2006).4
.14

Supplemental Indenture dated as of October 6, 2008 among Waste
    Services, Inc., the guarantors and Wells Fargo Bank, National
    Association, as Trustee (Incorporated by reference to Exhibit
    4.1 to Form 8-K
    (No. 000-25955)
    filed October 10, 2008).4
.15

Supplemental Indenture dated as of October 8, 2008 among Capital
    Environmental Holdings Company, Waste Services (CA) Inc.,
    Ram-Pak Compaction Systems Ltd., Waste Services, Inc.,  the
    other guarantors and Wells Fargo Bank, National Association, as
    Trustee (Incorporated by reference to Exhibit 4.2 to Form 8-K
    (No. 000-25955)  filed October 10, 2008).4
.16

Support Agreement dated July 31, 2004 among Waste Services, Inc.
    Capital Environmental Holdings Company and Capital Environmental
    Resource Inc. (Incorporated by reference to Exhibit 4.10 to
    Form 10-K
    (No. 000-25955) filed March 16, 2005).10
.1

Capital Environmental Resource Inc. 1999 Stock Option Plan
    (Incorporated by reference to Exhibit 4 to Schedule 13D (No.
    005-57445) dated February 5, 2002 and filed by certain holders
    of the Companys Common Shares with the Commission on
    February 15, 2002).10
.2

2007 Waste Services Inc. Equity and Performance Incentive Plan,
    as amended.10
.3

Credit Agreement dated as of October 8, 2008 among Waste
    Services, Inc., Waste Services (CA) Inc., the several lenders
    from time to time party hereto, Barclays Capital and Banc of
    America Securities, LLC as Joint Lead Arrangers and Joint Lead
    Bookrunners, , Bank of America, NA as Syndication Agent, Bosic
    Inc., Suntrust Bank and The Bank of Nova Scotia as
    Co-documentation Agents and The Bank of Nova Scotia as Canadian
    Agent and Canadian Collateral Agent (Incorporated by reference
    to Exhibit 99.2 to Form 8-K (No. 000-25955) filed October 10,
    2008).10
.4

Employment Agreement dated as of October 26, 2005 between Waste
    Services, Inc. and David Sutherland-Yoest (Incorporated by
    reference to Exhibit 10.1 to Form 10-Q (No. 000-25955) filed
    October 31, 2005).10
.5

Employment Agreement dated as of July 1, 2004 between Waste
    Services, Inc. and Charles A. Wilcox (Incorporated by reference
    to Exhibit 10.13 to Form 10-K (No. 000-25955) filed March 16,
    2004).10
.6

Employment Agreement dated January 5, 2004, between Capital
    Environmental Resource Inc., Waste Services, Inc. and Ivan R.
    Cairns. (Incorporated by reference to Exhibit 10.1 to Form 10-Q
    (No. 000-25955), filed May 17, 2004). 47




---



##### Table of Contents



10
.7

Employment Agreement dated as of March 12, 2007 between Waste
    Services, Inc. and Edwin D. Johnson (Incorporated by reference
    to Exhibit No. 99.2 to Form 8-K (No 000-25995) filed March 12,
    2007).10
.8

Employment Agreement dated as of August 23, 2007 between Waste
    Services, Inc. and William P. Hulligan (Incorporated
    by reference to Exhibit 10.1 to Form 10-Q (No 000-25995) filed
    November 1, 2007).10
.9

Employment Agreement dated as of July 22, 2008 between Waste
    Services,  Inc. and Brian A. Goebel (Incorporated by reference
    to Exhibit 10.1 to Form 10-Q (No. 000-25955) filed July 25,
    2008).10
.10

Employment Agreement dated as of December 22, 2008 between Waste
    Services, Inc. and Wayne R. Bishop (Incorporated by reference to
    Exhibit 99.1 to Form 8-K (No. 005-25955) filed on January 7,
    2009).10
.11

Form of Stock Option Agreement under the 2007 Equity and
    Performance Incentive Plan (Incorporated by reference to Exhibit
    10.19 to Form 10-K (No. 000-25955) filed March 11, 2008).10
.12

Form of Restricted Stock Unit Agreement under the 2007 Equity
    and Performance Incentive Plan (Incorporated by reference to
    Exhibit 10.20 to Form 10-K (No. 000-25955) filed March 11, 2008).14
.1

Code of Ethics. (Incorporated by reference to Exhibit 14.1 to
    Form 10-K for the year ended December 31, 2007 (No. 000-25955),
    filed March 11, 2008).18
.1

Letter regarding change in accounting principle executed by BDO
    Dunwoody LLP on May 12, 2004 (Incorporated by reference to
    Exhibit 18.1 to Form 10-Q for the quarterly period ended March
    31, 2004 (No. 000-25955) filed May 17, 2004).21
.1

List of Subsidiaries.23
.1

Consent of BDO Seidman, LLP.31
.1

Certification pursuant to Rule 15d-14(a) under the Securities
    Exchange Act of 1934 as amended of David Sutherland-Yoest, Chief
    Executive Officer.31
.2

Certification pursuant to Rule 15d-14(a) under the Securities
    Exchange Act of 1934 as amended of Edwin D. Johnson, Chief
    Financial Officer.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the U.S. Sarbanes-Oxley Act of 2002.  48




---



##### Table of Contents



SIGNATURES
      /s/  DAVID
    SUTHERLAND-YOEST   President, Chief Executive
    Officer and Director
      Signature

Title

Date/s/  DAVID
    SUTHERLAND-YOESTDavid
    Sutherland-Yoest

President, Chief Executive Officer and Director

February 24, 2009/s/  EDWIN
    D. JOHNSONEdwin
    D. Johnson

Executive Vice President, Chief Financial Officer and Chief
    Accounting Officer

February 24, 2009/s/  GARY
    W. DEGROOTEGary
    W. DeGroote

Director

February 24, 2009/s/  MICHAEL
    H. DEGROOTEMichael
    H. DeGroote

Director

February 24, 2009/s/  MICHAEL
    B. LAZARMichael
    B. Lazar

Director

February 24, 2009/s/  GEORGE
    E. MATELICHGeorge
    E. Matelich

Director

February 24, 2009/s/  CHARLES
    E. MCCARTHYCharles
    E. McCarthy

Director

February 24, 2009/s/  LUCIEN
    RÉMILLARDLucien
    Rémillard

Director

February 24, 2009/s/  JACK
    E. SHORTJack
    E. Short

Director

February 24, 2009 49




---



##### Table of Contents



Signature

Title

Date/s/  WALLACE
    L. TIMMENYWallace
    L. Timmeny

Director

February 24, 2009/s/  MICHAEL
    J. VERROCHIMichael
    J. Verrochi

Director

February 24, 2009  50




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 Managements Report on Internal Control Over
    Financial Reporting


F-2Reports of Independent Registered Public
    Accounting Firm


F-3Consolidated Balance Sheets


F-5Consolidated Statements of Operations and
    Comprehensive Income (Loss)


F-6Consolidated Statements of Shareholders
    Equity


F-7Consolidated Statements of Cash Flows


F-8Notes to Consolidated Financial Statements


F-9   F-1




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING  Rules 13a-15(f) 15d-15(f)
  Internal Control 
    Integrated Framework
   F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM       Internal Control  Integrated Framework
              
    F-3




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
         ,
  Internal Control  Integrated Framework
  
    F-4




---



##### Table of Contents



WASTE
    SERVICES, INC.
 CONSOLIDATED
    BALANCE SHEETS
    (In thousands of U.S. dollars, except share amounts)
    As of December 31,  2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
7,227


$
20,706Accounts receivable (net of allowance for doubtful accounts of
    $631 and $985 as of December 31, 2008 and 2007,
    respectively)


52,062



67,195Prepaid expenses and other current assets


13,672



11,338Current assets of discontinued operations






167Total current assets


72,961



99,406Property and equipment, net


188,800



192,598Landfill sites, net


196,632



190,451Goodwill and other intangible assets, net


372,886



397,766Other assets


9,648



17,741Non-current assets of discontinued operations






40,526Total assets

$
840,927


$
938,488LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
19,341


$
26,641Accrued expenses and other current liabilities


62,802



65,338Short-term financing and current portion of long-term debt


11,102



2,631Current liabilities of discontinued operations






765Total current liabilities


93,245



95,375Long-term debt


360,967



441,809Deferred income taxes


32,298



29,644Accrued closure, post-closure and other obligations


19,399



18,870Non-current liabilities of discontinued operations






2,195Total liabilities


505,909



587,893Shareholders equity:Common stock $0.01 par value: 166,666,666 shares
    authorized, 43,985,436 and 43,972,362 shares issued and
    outstanding as of December 31, 2008 and December 31,
    2007, respectively


439



439Additional paid-in capital


512,942



510,286Accumulated other comprehensive income


38,221



66,017Accumulated deficit


(216,584
)


(226,147
)Total shareholders equity


335,018



350,595Total liabilities and shareholders equity

$
840,927


$
938,488    F-5




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##### Table of Contents



WASTE
    SERVICES, INC.
 CONSOLIDATED
    STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
    (In thousands of U.S. dollars, except per share amounts)
    For the Years Ended December 31,  2008


2007


2006Revenue

$
473,029


$
461,447


$
362,672Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)


309,121



301,573



247,553Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


66,474



64,239



56,834Landfill development project costs


10,267







Deferred acquisition costs










5,612Depreciation, depletion and amortization


45,348



54,891



37,681Foreign exchange loss (gain) and other


160



(69
)


1,720Income from operations


41,659



40,813



13,272Interest expense


37,432



40,679



30,981Cumulative mandatorily redeemable preferred stock dividends and
    amortization of issue costs










19,653Income (loss) from continuing operations before income
    taxes


4,227



134



(37,362
)Income tax provision


6,183



14,437



12,168Loss from continuing operations


(1,956
)


(14,303
)


(49,530
)Income from discontinued operations, net of income tax provision
    of $266, nil and $652 for the years ended December 31,
    2008, 2007 and 2006, respectively


409



2,796



999Gain (loss) on sale of discontinued operations, net of income
    tax provision of $7,255 for the year ended December 31,
    2008 and nil for all other years


11,110



(11,607
)


Net income (loss)

$
9,563


$
(23,114
)

$
(48,531
)Basic and diluted earnings (loss) per share:Loss per share  continuing operations

$
(0.04
)

$
(0.31
)

$
(1.40
)Earnings (loss) per share  discontinued operations


0.25



(0.19
)


0.03Earnings (loss) per share  basic and diluted

$
0.21


$
(0.50
)

$
(1.37
)Weighted average common shares outstanding  basic
    and diluted


46,079



46,007



35,354Consolidated Statements of Comprehensive Income (Loss)Net income (loss)

$
9,563


$
(23,114
)

$
(48,531
)Foreign currency translation adjustment


(27,796
)


30,816



(472
)Comprehensive income (loss)

$
(18,233
)

$
7,702


$
(49,003
)    F-6




---



##### Table of Contents



WASTE
    SERVICES, INC.
 CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY  Waste








AccumulatedServices, Inc.


Additional


Treasury


Other





TotalCommon Stock


Paid-in


Stock


Comprehensive


Accumulated


ShareholdersShares


Amount


Capital


at Cost


Income


Deficit


Equity(In thousands of U.S. dollars and share amounts)Balance, December 31, 2005


93,686



937



383,618



(1,235
)


35,673



(154,502
)


264,491Common shares issued


8,154



81



25,265



1,235











26,581Exercise of warrants


28







86















86Stock-based compensation










3,089















3,089Conversion of exchangeable shares


8























Share reimbursement agreement










(929
)














(929
)Foreign currency translation adjustment


















(472
)






(472
)Effect of reverse stock split


(67,916
)


(679
)


679















Sale of common shares and retirement of cumulative mandatorily
    redeemable Preferred Stock


9,895



99



94,864















94,963Exercise of warrants


11







79















79Conversion of exchangeable shares


3























Net loss






















(48,531
)


(48,531
)Balance, December 31, 2006


43,869



438



506,751







35,201



(203,033
)


339,357Exercise of options and warrants


103



1



690















691Stock-based compensation










2,845















2,845Foreign currency translation adjustment


















30,816







30,816Net loss






















(23,114
)


(23,114
)Balance, December 31, 2007


43,972



439



510,286







66,017



(226,147
)


350,595Stock-based compensation










2,596















2,596Exercise of warrants


7







60















60Conversion of exchangeable shares


6























Foreign currency translation adjustment


















(27,796
)






(27,796
)Net income






















9,563



9,563Balance, December 31, 2008


43,985


$
439


$
512,942


$



$
38,221


$
(216,584
)

$
335,018    F-7




---



##### Table of Contents



WASTE
    SERVICES, INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS
    (In thousands of U.S. dollars)
    For the Years Ended December 31,  2008


2007


2006Cash flows from operating activities:Net income (loss)

$
9,563


$
(23,114
)

$
(48,531
)Adjustments to reconcile net income (loss) to net cash flows
    from operating activities:Net loss (income) from discontinued operations, net of tax


(11,519
)


8,811



(999
)Depreciation, depletion and amortization


45,348



54,891



37,681Amortization of debt issue costs and discounts


5,377



2,362



1,569Deferred income tax provision (benefit)


(2,577
)


5,318



10,352Non-cash stock-based compensation expense


2,596



2,845



3,089Restructuring and severance costs expensed, exclusive of
    stock-based compensation


5,286



3,252



Landfill development project costs expensed


10,267







Deferred acquisition costs expensed










5,173Cumulative mandatorily redeemable preferred stock dividends and
    amortization of issue costs










19,653Other non-cash items


105



1,164



1,910Changes in operating assets and liabilities (excluding the
    effects of acquisitions and dispositions):Accounts receivable


8,241



(1,747
)


(2,729
)Prepaid expenses and other current assets


2,330



(1,581
)


(128
)Accounts payable


(4,763
)


(182
)


(5,864
)Accrued expenses and other current liabilities


(14,203
)


2,658



5,492Net cash provided by continuing operations


56,051



54,677



26,668Net cash provided by discontinued operations


1,163



8,650



12,268Net cash provided by operating activities


57,214



63,327



38,936Cash flows from investing activities:Cash used in business combinations and significant asset
    acquisitions, net of cash acquired


(11,651
)


(32,101
)


(103,532
)Capital expenditures


(48,066
)


(57,557
)


(39,747
)Proceeds from asset sales and business divestitures


58,161



19,897



4,996Deposits for business acquisitions and other


(1,567
)


(9,796
)


(1,626
)Net cash used in continuing operations


(3,123
)


(79,557
)


(139,909
)Net cash used in discontinued operations


(43
)


(5,555
)


(9,098
)Net cash used in investing activities


(3,166
)


(85,112
)


(149,007
)Cash flows from financing activities:Proceeds from issuance of debt


217,232



84,066



157,527Principal repayments of debt and capital lease obligations


(282,390
)


(49,890
)


(37,026
)Proceeds from the exercise of options and warrants


60



691



165Sale of common shares and warrants










66,500Retirement of Preferred Stock










(75,557
)Fees paid for financing transactions


(2,373
)


(1,259
)


(1,805
)Net cash provided by (used in) financing activities 
    continuing operations


(67,471
)


33,608



109,804Effect of exchange rate changes on cash and cash equivalents


(56
)


351



(87
)Increase (decrease) in cash and cash equivalents


(13,479
)


12,174



(354
)Cash and cash equivalents at the beginning of the year


20,706



8,532



8,886Cash and cash equivalents at the end of the year

$
7,227


$
20,706


$
8,532    F-8




---



##### Table of Contents



WASTE
    SERVICES, INC.
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    Organization
    of Business and Basis of Presentation             F-9




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2.
    Summary
    of Significant Accounting Policies  Business
    Combinations and Acquisitions
  and/or
      Cash
    and Cash Equivalents
   F-10




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Concentration
    of Credit Risk
    Allowance
    for Doubtful Accounts
      2008


2007


2006Balance at the beginning of the year

$
985


$
572


$
615Provisions, net of recoveries


1,135



2,029



737Bad debts charged to reserves


(1,423
)


(1,728
)


(1,070
)Acquisitions






75



290Impact of foreign exchange rate fluctuations


(66
)


37



Balance at the end of the year

$
631


$
985


$
572   Property
    and Equipment
    Buildings

10 to 25 yearsVehicles

10 yearsContainers, compactors and landfill and recycling equipment

5 to 12 yearsFurniture, fixtures and other office equipment

3 to 5 yearsLeasehold improvements

Shorter of term of lease or estimated life   Long-Lived
    Assets
   F-11




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Landfill
    Sites
             F-12




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Goodwill
    and Other Intangible Assets
        Deferred
    Financing Costs and Debt Discounts
   F-13




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value of Financial Instruments
  1 2
  Environmental
    Costs
    Accrued
    Closure and Post-Closure Obligations
      Registration
    Payment Arrangements
  EITF 00-19-2, EITF 00-19-2). EITF 00-19-2
  Revenue
    Recognition
   F-14




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Royalty
    Arrangements
    Advertising
    Costs
    Risk
    Management
  U.S.-based
  Year Ended December 31,2008


2007


2006Balance at the beginning of the year

$
6,055


$
5,327


$
4,356Provisions


4,127



4,513



4,615Payments


(4,104
)


(3,425
)


(3,475
)Unfavorable (favorable) claim development for prior periods


427



(360
)


(169
)Balance at the end of the year

$
6,505


$
6,055


$
5,327   Share-Based
    Payments
   F-15




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  96-18,
  Income
    Taxes
    Earnings
    (Loss) Per Share Information
    Uncertainty
    in Income Taxes
    
    an allocation or a shift of income between taxing jurisdictions,
    the characterization of income or a decision to exclude
    reporting taxable income in a tax return, or
    a decision to classify a transaction, entity, or other position
    in a tax return as tax exempt.   F-16




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    Federal We are potentially subject to
    U.S. federal tax examinations by tax authorities for the
    tax years ended December 31, 2005 to 2007. We are currently
    under examination for our 2006 U.S. federal tax return.
    State We are potentially subject to state tax
    examinations by tax authorities for the tax years ended
    December 31, 2005 to 2007.
    Canada We are no longer potentially subject
    to foreign tax examinations by tax authorities for years before
    January 1, 2001.
    Provincial We are no longer potentially
    subject to foreign tax examinations by tax authorities for years
    before January 1, 2001.    Recently
    Issued Accounting Pronouncements
     F-17




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      3.
    Discontinued
    Operations     F-18




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2008


2007Jacksonville


Arizona


TexasOperations


Operations


Operations


TotalFair value of operations received

$



$
52,351


$
18,416


$
70,767Cash received, net of promissory note issued relative to the
    Texas disposal


56,696







15,638



15,638Less:Carrying value of operations sold


38,331



51,588



46,424



98,012Pre-tax gain (loss) on disposition of discontinued operations

$
18,365


$
763


$
(12,370
)

$
(11,607
)      F-19




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Prepaid expenses and other current assets

$
167Current assets of discontinued operations


167Property and equipment


7,219Landfill sites


7,610Goodwill and other intangible assets


25,697Non-current assets of discontinued operations


40,526Total assets of discontinued operations

$
40,693Accrued expenses and other current liabilities

$
765Current liabilities of discontinued operations


765Accrued closure, post closure and other obligations


2,195Non-current liabilities of discontinued operations


2,195Total liabilities of discontinued operations

$
2,960Net assets of discontinued operations

$
37,733   4.
    Business
    Combinations and Significant Asset Acquisitions         F-20




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Clean-up Clean-up),
 F-21




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Commercial Clean-Up


RIP Landfill


TotalPurchase price:Cash paid and other consideration

$
4,413


$
7,724


$
12,137Deferred purchase price


1,642







1,642Total purchase price


6,055



7,724



13,779Allocated as follows:Working capital assumed:Prepaid expenses and other current assets


1







1Accrued expenses and other current liabilities


(12
)






(12
)Net working capital


(11
)






(11
)Property and equipment


4,424



7



4,431Landfill sites






8,877



8,877Accrued closure, post-closure and other obligations assumed






(1,160
)


(1,160
)Net book value of assets acquired and liabilities assumed


4,413



7,724



12,137Excess purchase price to be allocated

$
1,642


$



$
1,642Allocated as follows:Goodwill

$
1,506


$



$
1,506Other intangible assets


136







136Total allocated

$
1,642


$



$
1,642   Clean-up Clean-up
 F-22




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Allied





USA


AllSouth Florida


WCA


Recycling


Others


TotalPurchase price:Cash paid and transaction costs

$
15,777


$
10


$
13,408


$
1,351


$
30,546Fair value of operations received


52,351



18,416











70,767Total purchase price


68,128



18,426



13,408



1,351



101,313Allocated as follows:Working capital assumed:Cash and cash equivalents


1



210



84







295Accounts receivable


7,417



868











8,285Prepaid expenses and other current assets


254















254Accrued expenses and other current liabilities


(4,090
)


(112
)






(48
)


(4,250
)Net working capital


3,582



966



84



(48
)


4,584Property and equipment


20,076



3,082



5,394



648



29,200Accrued closure, post-closure and other obligations assumed






(312
)










(312
)Net book value of assets acquired and liabilities assumed


23,658



3,736



5,478



600



33,472Excess purchase price to be allocated

$
44,470


$
14,690


$
7,930


$
751


$
67,841Allocated as follows:Goodwill

$
28,341


$
12,702


$
5,709


$
386


$
47,138Other intangible assets


16,129



1,988



2,221



365



20,703Total allocated

$
44,470


$
14,690


$
7,930


$
751


$
67,841    F-23




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Liberty Waste


SLDTaft


and Sun Country


Landfill and


AllRecycling


Materials


Pro Disposal


Others


TotalPurchase price:Cash

$
13,300


$
20,653


$
75,674


$
3,949


$
113,576Common stock


7,645



18,936











26,581Total purchase price


20,945



39,589



75,674



3,949



140,157Allocated as follows:Working capital assumed:Cash and cash equivalents


125



488



187







800Accounts receivable


952



2,126



1,650







4,728Prepaid expenses and other current assets


10



591



70







671Accounts payable


(462
)


(2,724
)


(1,889
)






(5,075
)Accrued expenses and other current liabilities


(252
)


(787
)






(143
)


(1,182
)Net working capital


373



(306
)


18



(143
)


(58
)Property and equipment


3,237



10,272



9,779



1,257



24,545Landfill sites






23,290



49,834







73,124Other assets










110







110Debt






(396
)


(422
)






(818
)Accrued closure, post-closure and other obligations assumed


(73
)


(3,796
)


(1,459
)






(5,328
)Net book value of assets acquired and liabilities assumed


3,537



29,064



57,860



1,114



91,575Excess purchase price to be allocated

$
17,408


$
10,525


$
17,814


$
2,835


$
48,582Allocated as follows:Goodwill

$
17,408


$
6,043


$
12,474


$
2,242


$
38,167Other intangible assets






4,482



5,340



593



10,415Total allocated

$
17,408


$
10,525


$
17,814


$
2,835


$
48,582    F-24




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006Weighted -





Weighted -





Weighted -Average





Average





AverageAmortization





Amortization





AmortizationAmount


Period


Amount


Period


Amount


PeriodAllocated


(Years)


Allocated


(Years)


Allocated


(Years)Customer relationships and contracts

$







$
16,852



12.5


$
9,407



11.5Non-competition agreements and other


136



5.0



3,851



5.2



1,008



5.0Total other intangible assets acquired

$
136



5.0


$
20,703



11.1


$
10,415



10.8     and/or
  Clean-up Clean-up,
  2008


2007Revenue

$
475,485


$
488,459Net loss from continuing operations

$
(2,691
)

$
(12,746
)Basic and diluted loss per share  continuing
    operations

$
(0.06
)

$
(0.28
)Basic and diluted pro forma weighted average number of common
    shares outstanding


46,079



46,007  F-25




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006Revenue

$
483,089


$
476,119Net loss from continuing operations

$
(13,068
)

$
(49,826
)Basic and diluted loss per share  continuing
    operations

$
(0.28
)

$
(1.37
)Basic and diluted pro forma weighted average number of common
    shares outstanding


46,007



36,500     5.
    Prepaid
    Expenses and Other Current Assets    2008


2007Prepaid expenses

$
9,793


$
5,808Parts and supplies


1,733



2,192Royalty receivable






1,321Other current assets


2,146



2,017$
13,672


$
11,338   6.
    Property
    and Equipment    2008


2007Land and buildings

$
74,497


$
67,088Vehicles


141,650



144,926Containers, compactors and landfill and recycling equipment


89,568



92,733Furniture, fixtures, other office equipment and leasehold
    improvements


11,060



12,449Total property and equipment


316,775



317,196Less: Accumulated depreciation


(127,975
)


(124,598
)Property and equipment, net

$
188,800


$
192,598    F-26




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    7.
    Landfill
    Sites, Accrued Closure, Post-Closure and Other
    Obligations  Landfill
    Sites
    2008


2007Landfill sites

$
262,732


$
253,266Less: Accumulated depletion


(66,100
)


(62,815
)Landfill sites, net

$
196,632


$
190,451     Year Ended December 31,2008


2007


2006Balance at the beginning of the year

$
190,451


$
187,796


$
110,613Landfill site construction costs


8,773



14,605



10,404Acquisitions


8,877







73,124Additional asset retirement obligations


1,632



2,832



1,899Depletion


(9,858
)


(16,718
)


(11,363
)Purchase price adjustments for prior acquisitions


49



505



Reclassification to conservatory






(1,028
)


Landfill site expansion costs










3,162Effect of foreign exchange rate fluctuations


(3,292
)


2,459



(43
)Balance at the end of the year

$
196,632


$
190,451


$
187,796   Accrued
    Closure, Post-Closure and Other Obligations
    2008


2007Accrued closure and post-closure obligations

$
12,749


$
14,678Accrued restructuring and severance costs


3,624



2,181Capital lease obligations


568



867Other obligations


2,458



1,144$
19,399


$
18,870  F-27




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006Current portion at the beginning of the year

$
4,153


$
5,570


$
Long-term portion at the beginning of the year


14,678



8,360



7,227Balance at the beginning of the year


18,831



13,930



7,227Additional asset retirement obligations


1,632



2,832



1,899Accretion


773



562



638Acquisitions


1,160







4,199Payments


(339
)


(1,098
)


Purchase price allocation adjustments for prior acquisitions






1,301



Effect of foreign exchange rate fluctuations


(1,719
)


1,304



(33
)Balance at the end of the year


20,338



18,831



13,930Less: Current portion


(7,589
)


(4,153
)


(5,570
)Long-term portion

$
12,749


$
14,678


$
8,360     2009

$
7,5892010


6542011


4932012


4,1662013


425Thereafter


125,182$
138,509    F-28




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Goodwill
    and Other Intangible Assets    2008


2007Other intangible assets subject to amortization:Customer relationships and contracts

$
48,997


$
51,924Non-competition agreements and other


5,629



6,01154,626



57,935Less: Accumulated amortization:Customer relationships and contracts


(26,536
)


(23,714
)Non-competition agreements and other


(2,133
)


(1,396
)Other intangible assets subject to amortization, net


25,957



32,825Goodwill


346,929



364,941Goodwill and other intangible assets, net

$
372,886


$
397,766     2008Florida


Canada


TotalBalance at the beginning of the year

$
262,338


$
102,603


$
364,941Acquisitions


1,506







1,506Purchase price allocation adjustments for prior acquisitions


(416
)






(416
)Effect of foreign exchange rate fluctuations






(19,102
)


(19,102
)Balance at the end of the year

$
263,428


$
83,501


$
346,929   2007Florida


Canada


TotalBalance at the beginning of the year

$
211,482


$
86,848


$
298,330Acquisitions


46,752



386



47,138Purchase price allocation adjustments for prior acquisitions


4,104



61



4,165Effect of foreign exchange rate fluctuations






15,308



15,308Balance at the end of the year

$
262,338


$
102,603


$
364,941    F-29




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009

$
5,4552010


4,4062011


3,6552012


2,7072013


2,236Thereafter


7,498$
25,957   9.
    Other
    Assets    2008


2007Debt issue costs, net of accumulated amortization of $3,035 and
    $5,787 as of December 31, 2008 and 2007, respectively

$
8,538


$
7,822Acquisition deposits and deferred acquisition costs


561



9,407Other assets


549



512$
9,648


$
17,741    F-30




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Accrued
    Expenses and Other Current Liabilities    2008


2007Deferred revenue

$
10,980


$
11,613Accrued waste disposal costs


7,964



6,555Accrued compensation, benefits and subcontractor costs


7,893



12,473Accrued closure and post-closure obligations


7,589



4,153Insurance reserves


6,505



6,055Accrued insurance premiums


6,123



Accrued interest


3,702



4,588Accrued restructuring and severance costs


3,183



668Accrued capital expenditures


2,204



2,233Accrued royalties and franchise fees


2,137



3,239Accrued professional fees


794



970Accrued acquisition costs


631



1,200Current portion of capital lease obligations


315



232Accrued federal and provincial current taxes payable


28



8,158Other accrued expenses and current liabilities


2,754



3,201$
62,802


$
65,338   11.
    Debt    2008


2007Credit Facilities:U.S. dollar denominated revolving credit facility, floating rate
    at 4.5% as of December 31, 2008

$
34,600


$
Canadian dollar denominated revolving credit facility, floating
    rate at 5.3% as of December 31, 2008, net of discount of
    $56 as of December 31, 2008


27,699



U.S. dollar denominated term loan facility, floating interest
    rate at 4.5% as of December 31, 2008, net of discount of
    $1,268 as of December 31, 2008


38,125



Canadian dollar denominated term loan facility, floating
    interest rate at 5.3% as of December 31, 2008, net of
    discount of $3,668 as of December 31, 2008


103,505



Prior Credit Facilities  Term loan facility, floating
    interest rate at 7.4% as of December 31, 2007, repaid
    October 2008






273,910Senior Subordinated Notes, fixed interest rate at 9.5%, due
    2014, net of discount of $1,146 and nil as of December 31,
    2008 and 2007, respectively


158,854



160,000Other secured notes payable, interest at 4.5% to 7.8%, due
    through 2025 (net of discount of $1,563 and $2,126 as of
    December 31, 2008 and 2007, respectively)


6,891



7,932Other subordinated notes payable, interest at 6.7%, due through
    2017


2,395



2,598372,069



444,440Less: Current portion


(11,102
)


(2,631
)Long-term portion

$
360,967


$
441,809  F-31




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    U.S. Dollar


Canadian DollarDenominated


DenominatedDebt (US$)


Debt (C$)2009

$
4,319


$
8,2622010


6,314



14,8712011


8,230



21,4812012


12,735



36,3532013


51,342



83,379Thereafter


161,902



Future maturities  gross


244,842



164,346Note discounts


(3,977
)


(4,536
)Future maturities  net

$
240,865


$
159,810   Senior
    Secured Credit Facilities
       F-32




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other
    Secured Notes Payable
    Senior
    Subordinated Notes
  1 2
       F-33




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    Cumulative
    Mandatorily Redeemable Preferred Shares    and/or
  13.
    Commitments
    and Contingencies  Leases
    Capital


OperatingLeases


Leases2009

$
360


$
3,6252010


582



3,0382011






2,8562012






2,5442013






2,347Thereafter






3,754942


$
18,164Less: Amount representing interest


(59
)883Less: Current portion of capital lease obligations


(315
)Long-term capital lease obligations

$
568      F-34




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Surety
    Bonds and Letters of Credit
    Environmental
    Risks
      Disposal
    Agreement
  and/or
    Collective
    Bargaining Agreements
   F-35




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Legal
    Proceedings
        Other
    Commitments
         F-36




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Balance at








Foreign


Balance atOctober 1,








Exchange


December 31,2008


Charges


Payments


and Other


2008Severance and related costs

$



$
3,596


$
(131
)

$
(227
)

$
3,238Rent






1,670







60



1,730Less: Estimated sub-let income






(746
)










(746
)Consulting






2,351



(1,539
)






812$



$
6,871


$
(1,670
)

$
(167
)

$
5,034     14.
    Capital
    Stock  Migration
    Transaction
    non-U.S. residents
      Equity
    Placements
   F-37




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Equity
    Based Compensation Plans
      
    Option Rights (either non-qualified or incentive stock options)
    Stock Appreciation Rights
    Restricted Stock
    Restricted Stock Units
    Performance Compensation Awards
    Stock Bonuses         F-38




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Number of


Weighted Average Exercise PriceShares Issuable


US$ Options


C$ Options (C$)Common shares issuable under option grants -Beginning of the year


3,558,278


$
12.38


$
20.81Granted


233,500



9.50



Exercised










Forfeited


(371,162
)


10.64



20.42Expired


(1,201,651
)


15.13



19.31End of the year


2,218,965



12.29



20.41     2008


2007


2006Annual dividend yield










Weighted average expected life (years)


7.0



3.0



3.0Risk-free interest rate


3.2
%


4.5
%


4.8
%Expected volatility


61
%


92
%


38
%      F-39




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Shares IssuableShares Issuable


for Options


Shares Issuablefor Options


Vested or


for OptionsOutstanding


Expected to Vest


ExercisableU.S. dollar denominated options


1,990,310



1,866,348



1,239,310Canadian dollar denominated options


228,655



228,655



228,655Total number of options


2,218,965



2,095,003



1,467,965Aggregate intrinsic value of options

$



$



$
Weighted average remaining contractual term (years)


1.6



1.5



0.5Weighted average exercise price  U.S. dollar
    denominated options

$
12.29


$
12.45


$
13.81Weighted average exercise price  Canadian dollar
    denominated options (C$)

$
20.41


$
20.41


$
20.41       WeightedWeighted


AverageAverage


Remaining


AggregateNumber


Grant


Contractual


Intrinsicof Shares


Value


Term (Years)


ValueUnvested restricted stock units Beginning of the year





$







$
Granted


247,489



9.02Vested






Forfeited


(18,331
)


9.02End of the year


229,158



9.02



0.25



1,508    F-40




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Warrants
    WeightedWeighted


AverageNumber


Average


Remaining


Aggregateof Shares


Exercise


Contractual


IntrinsicIssuable


Price


Term (Years)


ValueOutstanding at the beginning of the year


4,931,295


$
9.09



1.7


$
161Exercised during the year


(6,666
)


9.00Expired during the year


(1,606,934
)


9.24Outstanding at the end of the year


3,317,695



9.47



1.3



     15.
    Income
    Taxes    2008


2007


2006Current:Federal

$



$



$
State










Canada


8,760



9,119



1,816Current income tax provision


8,760



9,119



1,816Deferred:Federal and state deferred


4,493



5,257



6,436Canadian deferred


451



61



4,568Deferred income tax provision


4,944



5,318



11,004Income tax provision

$
13,704


$
14,437


$
12,820    F-41




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2008


2007


2006United States

$
(4,021
)

$
(37,114
)

$
(50,522
)Canada


27,288



28,437



14,811$
23,267


$
(8,677
)

$
(35,711
)     2008


2007


2006Provision at statutory rate

$
7,911


$
(2,950
)

$
(12,142
)Foreign rate differential


(464
)


284



239Changes in Foreign tax rate


(244
)


(922
)


State, net of federal benefit


(221
)


125



(1,787
)Non-deductible stock based compensation


458



248



140Non-deductible interest expense and preferred stock dividends






571



7,919Non-deductible foreign exchange loss (gains)


244



(29
)


538Other permanent differences


86



426



(27
)Distributed earnings in foreign subsidiary


11,363



6,645



3,033Valuation allowance


(5,429
)


10,039



14,907Income tax provision

$
13,704


$
14,437


$
12,820  F-42




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007Deferred income tax assets:Tax loss carry forward  U.S

$
42,397


$
51,969Foreign tax credit carry forward  U.S


8,535



2,682Tax basis in intangible assets in excess of book
    basis  U.S


6,326



5,777Stock-based compensation  U.S


2,362



1,899Accruals not currently deductible  U.S


9,985



4,317Tax loss carryforwards and capital loss
    carry-forwards  Canada


6,931



8,098Tax basis in assets in excess of book basis  Canada


1,107



1,233Accruals not currently deductible  Canada


2,270



2,853Less: Valuation allowance  U.S & Canada


(69,292
)


(68,764
)Net deferred tax assets


10,621



10,064Deferred income tax liabilities:Book basis in property and equipment in excess of tax
    basis  US


(7,244
)


(6,290
)Book basis in goodwill in excess of tax basis  U.S


(25,620
)


(21,128
)Book basis in property and equipment and goodwill in excess of
    tax basis  Canada


(10,055
)


(12,290
)Net deferred income tax liability

$
(32,298
)

$
(29,644
)     15-year
    2008


2007


2006Balance at the beginning of the year

$
68,764


$
55,080


$
37,692Additions to (release of) valuation allowance


(5,429
)


10,039



14,907Increase due to acquisitions, net


146



229



1,327Increase due to foreign tax credit carry-forwards


5,853



1,527



1,155Increase in (utilization of) foreign tax loss carry-forwards and
    capital-loss carry forwards


(1,167
)


2,114



969Adjustments to valuation allowance


1,125



(225
)


(970
)Balance at the end of the year

$
69,292


$
68,764


$
55,080  F-43




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  16.
    Earnings
    (Loss) Per Share Information    2008


2007


2006Numerator:Net income (loss)

$
9,563


$
(23,114
)

$
(48,531
)Denominator:Basic and diluted weighted average number of common shares
    outstanding  basic and diluted


46,079



46,007



35,354     17.
    Retirement
    Plan      18.
    Segment
    Information     F-44




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008Florida


Canada


Corporate


TotalRevenue

$
231,352


$
241,677


$



$
473,029Depreciation, depletion and amortization


25,977



18,052



1,319



45,348Income (loss) from operations


42,195



43,514



(44,050
)


41,659Capital expenditures


18,998



28,493



575



48,066Total assets


600,167



217,531



23,229



840,927   2007Florida


Canada


Corporate


TotalRevenue

$
239,384


$
222,063


$



$
461,447Depreciation, depletion and amortization


35,187



18,332



1,372



54,891Income (loss) from operations


31,296



38,759



(29,242
)


40,813Capital expenditures


29,352



26,822



1,383



57,557Total assets (excluding assets of discontinued operations)


601,181



256,570



40,044



897,795   2006Florida


Canada


Corporate


TotalRevenue

$
174,644


$
188,028


$



$
362,672Depreciation, depletion and amortization


20,258



15,981



1,442



37,681Income (loss) from operations


24,341



29,332



(40,401
)


13,272Capital expenditures


17,241



21,265



1,241



39,747Total assets (excluding assets of discontinued operations)


502,188



203,754



17,414



723,356     2008


2007


2006Collection

$
390,768



74.6
%

$
371,700



72.5
%

$
299,291



76.1
%Landfill disposal


47,310



9.0
%


59,015



11.5
%


43,887



11.2
%Transfer station


65,210



12.5
%


62,096



12.1
%


40,372



10.3
%Material recovery facilities


18,531



3.5
%


18,372



3.6
%


8,758



2.2
%Other specialized services


1,760



0.4
%


1,259



0.3
%


1,108



0.2
%523,579



100.0
%


512,442



100.0
%


393,416



100.0
%Intercompany elimination


(50,550
)






(50,995
)






(30,744
)$
473,029






$
461,447






$
362,672   19.
    Related
    Party Transactions  father-in-law
 F-45




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      1 2
      20.
    Supplementary
    Cash Flow Information    2008


2007


2006Amounts accrued for capital expenditures

$
2,204


$
2,233


$
1,655Capital expenditures financed with capital leases and notes
    payable


29



1,009



1,202Fair value of operations received for the disposition of our
    Arizona and Texas operations






70,767



Common Shares issued relative to acquisitions










26,581Other cash flow information:Cash paid for interest

$
33,287


$
37,665


$
30,191Cash paid for income taxes


17,556



3,909



853   and/or
 F-46




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  21.
    Selected
    Quarterly Financial Data (unaudited)    2008First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
116,609


$
128,282


$
125,745


$
102,393Income (loss) from operations


12,171



16,835



16,521



(3,868
)Income (loss) from continuing operations


5,330



4,030



3,469



(14,785
)Income from discontinued operations


409











Gain (loss) on sale of discontinued operations


6,969



(100
)






4,241Net income (loss)


12,708



3,930



3,469



(10,544
)Basic and diluted income (loss) per share:Income (loss) per share  continuing operations

$
0.12


$
0.09


$
0.08


$
(0.32
)Income per share  discontinued operations


0.16











0.09Income (loss) per share  basic and diluted

$
0.28


$
0.09


$
0.08


$
(0.23
)Weighted average common shares outstanding:Basic


46,075



46,075



46,079



46,082Diluted


46,093



46,075



46,116



46,082   2007First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
94,999


$
119,421


$
123,775


$
123,252Income from operations


6,983



12,174



8,820



12,836Loss from continuing operations


(4,500
)


(3,063
)


(5,897
)


(843
)Income (loss) from discontinued operations


(111
)


850



1,071



986Gain (loss) on sale of discontinued operations


938



(12,192
)


(198
)


(155
)Net loss


(3,673
)


(14,405
)


(5,024
)


(12
)Basic and diluted loss per share:Loss per share  continuing operations

$
(0.10
)

$
(0.06
)

$
(0.13
)

$
(0.02
)Income (loss) per share  discontinued operations


0.02



(0.25
)


0.02



0.02Loss per share  basic and diluted

$
(0.08
)

$
(0.31
)

$
(0.11
)

$
Weighted average common shares outstanding  basic and
    diluted


45,972



45,973



46,007



46,075  F-47




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  22.
    Condensed
    Consolidating Financial Statements    December 31, 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$
9,080


$
239


$
11,387


$



$
20,706Accounts receivable, net






30,902



36,293







67,195Prepaid expenses and other current assets


37



2,449



8,852







11,338Current assets of discontinued operations






167











167Total current assets


9,117



33,757



56,532







99,406Property and equipment, net


235



99,541



92,822







192,598Landfill sites, net






173,803



16,648







190,451Goodwill and other intangible assets, net






294,056



103,710







397,766Other assets


17,550



191











17,741Due from affiliates


1,021











(1,021
)


Investment in subsidiary


816,054











(816,054
)


Non-current assets of discontinued operations






40,526











40,526Total assets

$
843,977


$
641,874


$
269,712


$
(817,075
)

$
938,488LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
9,480


$
2,903


$
14,258


$



$
26,641Accrued expenses and other current liabilities


17,571



21,973



25,794







65,338Short-term financing and current


















portion of long-term debt


2,428



203











2,631Current liabilities of discontinued operations






765











765Total current liabilities


29,479



25,844



40,052







95,375Long-term debt


439,415



2,394











441,809Deferred income taxes, accrued closure, post-closure and
    other obligations


24,488



6,134



17,892







48,514Due to affiliates










1,021



(1,021
)


Non-current liabilities of discontinued operations






2,195











2,195Total liabilities


493,382



36,567



58,965



(1,021
)


587,893Shareholders equity:Common stock of Waste Services, Inc


439















439Other equity


350,156



605,307



210,747



(816,054
)


350,156Total shareholders equity


350,595



605,307



210,747



(816,054
)


350,595Total liabilities and shareholders equity

$
843,977


$
641,874


$
269,712


$
(817,075
)

$
938,488  F-48




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$



$
239,384


$
222,063


$



$
461,447Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)






154,250



147,323







301,573Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


17,895



18,194



28,150







64,239Depreciation, depletion and amortization


75



35,187



19,629







54,891Foreign exchange loss (gain) and other


(175
)


457



(351
)






(69
)Equity earnings in investees, net of tax


(34,645
)










34,645



Income from operations


16,850



31,296



27,312



(34,645
)


40,813Interest expense


39,964



181



534







40,679Income (loss) from continuing operations before income
    taxes


(23,114
)


31,115



26,778



(34,645
)


134Income tax provision






5,257



9,180







14,437Income (loss) from continuing operations


(23,114
)


25,858



17,598



(34,645
)


(14,303
)Income from discontinued operations






2,796











2,796Loss on sale of discontinued operations






(11,607
)










(11,607
)Net income (loss)

$
(23,114
)

$
17,047


$
17,598


$
(34,645
)

$
(23,114
)   F-49




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2006Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$



$
174,644


$
188,028


$



$
362,672Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)






119,377



128,176







247,553Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


22,209



11,209



23,416







56,834Deferred acquisition costs


439







5,173







5,612Depreciation, depletion and amortization


41



20,258



17,382







37,681Foreign exchange loss (gain) and other


762



(541
)


1,499







1,720Equity earnings in investees, net of tax


(24,979
)










24,979



Income from operations


1,528



24,341



12,382



(24,979
)


13,272Interest expense


30,406



176



399







30,981Cumulative mandatorily redeemable preferred stock dividends and
    amortization of issue costs


19,653















19,653Income (loss) from continuing operations before income
    taxes


(48,531
)


24,165



11,983



(24,979
)


(37,362
)Income tax provision






5,783



6,385







12,168Income (loss) from continuing operations


(48,531
)


18,382



5,598



(24,979
)


(49,530
)Income from discontinued operations






999











999Net income (loss)

$
(48,531
)

$
19,381


$
5,598


$
(24,979
)

$
(48,531
)  F-50




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2007Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash (used in) provided by operating activities

$
(49,057
)

$
73,343


$
39,041


$



$
63,327Cash flows from investing activities:Cash used in business combinations and significant asset
    acquisitions, net of cash acquired






(30,702
)


(1,399
)






(32,101
)Capital expenditures


(145
)


(29,352
)


(28,060
)






(57,557
)Proceeds from asset sales and business divestitures






18,099



1,798







19,897Deposits for business acquisitions and other


(8,224
)


72



(1,644
)






(9,796
)Intercompany






(26,038
)


(4,479
)


30,517



Net cash used in continuing operations


(8,369
)


(67,921
)


(33,784
)


30,517



(79,557
)Net cash used in discontinued operations






(5,555
)










(5,555
)Net cash used in investing activities


(8,369
)


(73,476
)


(33,784
)


30,517



(85,112
)Cash flows from financing activities:Proceeds from issuance of debt and draws on revolving credit
    facility


84,066















84,066Principal repayments of debt and capital lease obligations


(49,699
)


(191
)










(49,890
)Proceeds from the exercise of options and warrants


691















691Fees paid for financing transactions


(1,259
)














(1,259
)Intercompany


30,517











(30,517
)


Net cash provided by (used in) financing activities 
    continuing operations


64,316



(191
)






(30,517
)


33,608Effect of exchange rate changes on cash and cash equivalents










351







351Increase (decrease) in cash and cash equivalents


6,890



(324
)


5,608







12,174Cash and cash equivalents at the beginning of the year


2,190



563



5,779







8,532Cash and cash equivalents at the end of the year

$
9,080


$
239


$
11,387


$



$
20,706   F-51




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash (used in) provided by operating activities

$
(46,838
)

$
51,877


$
33,897


$



$
38,936Cash flows from investing activities:Cash used in business combinations and significant asset
    acquisitions, net of cash acquired






(99,583
)


(3,949
)






(103,532
)Capital expenditures


(198
)


(17,241
)


(22,308
)






(39,747
)Proceeds from asset sales and business divestitures


8



4,392



596







4,996Deposits for business acquisitions and other


(1,715
)


89











(1,626
)Intercompany


(62,642
)






(7,110
)


69,752



Net cash used in continuing operations


(64,547
)


(112,343
)


(32,771
)


69,752



(139,909
)Net cash used in discontinued operations






(9,098
)










(9,098
)Net cash used in investing activities


(64,547
)


(121,441
)


(32,771
)


69,752



(149,007
)Cash flows from financing activities:Proceeds from issuance of debt and draws on revolving credit
    facility


154,000







3,527







157,527Principal repayments of debt and capital lease obligations


(32,858
)


(175
)


(3,993
)






(37,026
)Sale of common shares and warrants


66,500















66,500Proceeds from the exercise of options and warrants


165















165Retirement of Preferred Stock


(75,557
)














(75,557
)Fees paid for financing transactions


(1,805
)














(1,805
)Intercompany






69,752







(69,752
)


Net cash provided by (used in) financing activities 
    continuing operations


110,445



69,577



(466
)


(69,752
)


109,804Effect of exchange rate changes on cash and cash equivalents










(87
)






(87
)Increase (decrease) in cash and cash equivalents


(940
)


13



573







(354
)Cash and cash equivalents at the beginning of the year


3,130



550



5,206







8,886Cash and cash equivalents at the end of the year

$
2,190


$
563


$
5,779


$



$
8,532  F-52