##### 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, 2007oro

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
  þ o
  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 2008
    Annual Meeting of Stockholders

Part III




---



##### 





INDEX TO
    FORM 10-K
    FOR THE YEAR ENDED DECEMBER 31, 2007
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


14Item 2.


Properties


14Item 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


44Item 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-10.19 Form of Stock Option AgreementEX-10.20 Form of Restricted Stock Unit AgreementEX-14.1 Code of EthicsEX-21.1 List of SubsidiariesEX-23.1 Consent of BDO Seidman, LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certifications of CEO and CFO




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##### Table of Contents



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 refinance our existing debt obligations to pay
    principal 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, exchange
    rates and 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 ultimately the
    ability to 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


15



9



24



11



35Transfer stations


11



3



14



8



22Recycling facilities


5



1



6



8



14Landfills


1



2



3



4



7   Collection
    Services
    Commercial and Industrial Collection.
    Residential Collection.
     4




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##### Table of Contents



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




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##### Table of Contents



Sales and
    Marketing
    Competition
          Government
    Regulation
   6




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##### Table of Contents



7




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##### Table of Contents



Employees
    Executive
    Officers
    Name

Age

Position

SinceDavid Sutherland-Yoest


51


Chairman, President and Chief Executive Officer

September 6, 2001Ivan R. Cairns


62


Executive Vice President and General Counsel and Secretary

January 5, 2004Edwin D. Johnson


51


Executive Vice President and Chief Financial Officer

March 12, 2007William P. Hulligan


64


Executive Vice President, U.S. Operations

October 30, 2007Brian A. Goebel


40


Vice President, Corporate Controller and Chief Accounting Officer

October 1, 2003     David Sutherland-Yoest
 8




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##### Table of Contents



2 2
  Ivan R. Cairns
  Edwin D. Johnson start-up
  William P. Hulligan
  Brian A. Goebel
  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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##### Table of Contents



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
     12




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##### Table of Contents



The
    termination or non-renewal of existing customer contracts, or
    the failure to obtain new customer contracts, could result in
    declining revenue
          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
    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
    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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##### Table of Contents



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    Item 2.
    Properties   14




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##### Table of Contents



Collection


Transfer


RecyclingAdministrative


Operations


Stations


Facilities


LandfillsOwned






16



9



7



7Leased


2



19



13



7



Total


2



35



22



14



7     Item 3.
    Legal
    Proceedings      Item 4.
    Submission
    of Matters to a Vote of Security Holders    For

Against

Abstentions

Broker Non-Votes29,303,681

1,453,352

28,771

0  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, 2007First Quarter

$
11.92


$
9.26Second Quarter


12.46



9.40Third Quarter


12.40



9.61Fourth Quarter


10.05



8.25Year ended December 31, 2006First Quarter

$
10.62


$
8.40Second Quarter


10.11



7.98Third Quarter


10.26



8.10Fourth Quarter


11.00



8.80   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
    consists of Allied Waste Industries, Inc., Casella Waste
    Systems, Inc., Republic Services, Inc., Waste Connections, Inc.,
    Waste Industries USA, 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 31,2007


2006


2005


2004


2003(In thousands)Statement of Operations and Cash Flow Data:Revenue

$
488,294


$
391,409


$
353,372


$
286,807


$
124,985Income (loss) from operations


44,739



16,705



11,974



8,472



(4,888
)Net loss from continuing operations


(10,377
)


(46,749
)


(49,393
)


(47,400
)


(22,740
)Net loss from discontinued operations


(1,130
)


(1,782
)


(897
)


(979
)


(158
)Loss on sale of discontinued operations


(11,607
)














Loss before cumulative effect of change in accounting principle


(23,114
)


(48,531
)


(50,290
)


(48,379
)


(22,898
)Cumulative effect of change in accounting principle














225



518Net loss


(23,114
)


(48,531
)


(50,290
)


(48,154
)


(22,380
)Net loss attributable to common shareholders


(23,114
)


(48,531
)


(50,290
)


(48,154
)


(76,952
)Loss per share, basic and diluted  continuing
    operations

$
(0.22
)

$
(1.32
)

$
(1.50
)

$
(1.61
)

$
(5.97
)Loss per share, basic and diluted  discontinued
    operations


(0.28
)


(0.05
)


(0.03
)


(0.03
)


(0.02
)Basic and diluted loss per share before cumulative effect of
    change in accounting principle


(0.50
)


(1.37
)


(1.53
)


(1.64
)


(5.99
)Cumulative effect of change in accounting principle














0.01



0.04Loss per
    share-basic
    and diluted


(0.50
)


(1.37
)


(1.53
)


(1.63
)


(5.95
)Weighted average common shares outstanding  basic and
    diluted


46,007



35,354



32,880



29,410



12,927Cash flows from operating activities of continuing operations

$
61,760


$
34,005


$
21,080


$
26,665


$
10,024Capital expenditures for continuing operations


60,949



44,662



27,970



28,030



22,106Average exchange rate C$ to US$

$
0.9303


$
0.8817


$
0.8255


$
0.7699


$
0.7160   18




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##### Table of Contents



As of December 31,2007


2006


2005


2004


2003(In thousands)Balance Sheet Data:Cash and cash equivalents

$
20,706


$
8,532


$
8,885


$
8,473


$
21,048Property, equipment and landfill sites, net


397,878



336,554



231,447



232,754



178,148Goodwill and other intangible assets, net


423,463



350,035



307,869



305,994



160,296Total assets


938,488



865,063



728,389



720,583



470,998Total debt and capital lease obligations (exclusive of
    cumulative mandatorily redeemable Preferred Stock)


445,539



410,353



286,669



278,363



177,449Cumulative mandatorily redeemable Preferred Stock










84,971



64,971



48,205Total shareholders equity


350,595



339,357



264,491



298,776



201,117Year end exchange rate C$ to US$

$
1.0088


$
0.8581


$
0.8598


$
0.8319


$
0.7713   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



Acquisitions
    and Recent Developments
  Subsequent
    Events
    2007
    Acquisitions and Dispositions
         21




---



##### Table of Contents



Critical
    Accounting Estimates and Policies
  General
      Revenue
    Recognition
    Accounts
    Receivable and Allowance for Doubtful Accounts
   22




---



##### Table of Contents



Business
    Acquisitions and Goodwill
          Long-Lived
    Assets
   23




---



##### Table of Contents



Landfill
    Sites
             24




---



##### Table of Contents



December 31, 2007Balance,








Changes in





Balance,Beginning


Landfills


Landfills


Engineering


Airspace


Endof Year


Acquired


Expanded


Estimates


Consumed


of YearUnited StatesPermitted capacity


54,993















(2,763
)


52,230Probable expansion capacity


18,300







13,724











32,024Total available airspace


73,293







13,724







(2,763
)


84,254Number of sites


4



















4CanadaPermitted 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


66,637











533



(3,376
)


63,794Probable expansion capacity


23,270







13,724



(261
)






36,733Total available airspace


89,907







13,724



272



(3,376
)


100,527Number of sites


7



















7   25




---



##### Table of Contents



December 31, 2006Balance,








Changes in





Balance,Beginning


Landfills


Landfills


Engineering


Airspace


Endof Year


Acquired


Expanded


Estimates


Consumed


of YearUnited StatesPermitted capacity


23,957



32,635







(359
)


(1,240
)


54,993Probable expansion capacity


18,300



















18,300Total available airspace


42,257



32,635







(359
)


(1,240
)


73,293Number of sites


2



2















4CanadaPermitted 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


35,835



32,635







(286
)


(1,547
)


66,637Probable expansion capacity


18,300







4,970











23,270Total available airspace


54,135



32,635



4,970



(286
)


(1,547
)


89,907Number of sites


5



2















7   December 31, 2005Balance,








Changes in





Balance,Beginning


Landfills


Landfills


Engineering


Airspace


Endof Year


Acquired


Expanded


Estimates


Consumed


of YearUnited StatesPermitted capacity


25,504











(414
)


(1,133
)


23,957Probable expansion capacity


18,300



















18,300Total available airspace


43,804











(414
)


(1,133
)


42,257Number of sites


2



















2CanadaPermitted capacity


11,642











1,115



(879
)


11,878Probable expansion capacity






















Total available airspace


11,642











1,115



(879
)


11,878Number of sites


3



















3TotalPermitted capacity


37,146











701



(2,012
)


35,835Probable expansion capacity


18,300



















18,300Total available airspace


55,446











701



(2,012
)


54,135Number of sites


5



















5   Accrued
    Closure and Post-Closure Obligations
   26




---



##### 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.     27




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##### Table of Contents



Risk
    Management
  U.S.-based
  Stock-Based
    Compensation
       28




---



##### Table of Contents



96-18,
    Translation
    and Re-Measurement of Foreign Currency
   29




---



##### Table of Contents



Operating
    Results
  Results
    of Operations for each of the Three Years Ended
    December 31, 2007, 2006 and 2005
    2007Florida


Canada


TotalRevenue

$
266,231



100.0
%

$
222,063



100.0
%

$
488,294



100.0
%Operating expenses:Cost of operations


172,417



64.8
%


147,323



66.3
%


319,740



65.5
%Selling, general and administrative expense


33,707



12.7
%


28,150



12.7
%


61,857



12.7
%Severance and related costs


3,995



1.5
%






0.0
%


3,995



0.8
%Depreciation, depletion and amortization


38,415



14.4
%


19,629



8.8
%


58,044



11.9
%Foreign exchange loss (gain) and other


270



0.1
%


(351
)


-0.1
%


(81
)


-0.1
%Income from operations

$
17,427



6.5
%

$
27,312



12.3
%

$
44,739



9.2
%   2006Florida


Canada


TotalRevenue

$
203,381



100.0
%

$
188,028



100.0
%

$
391,409



100.0
%Operating expenses:Cost of operations


139,425



68.6
%


128,176



68.2
%


267,601



68.4
%Selling, general and administrative expense


34,946



17.2
%


23,416



12.5
%


58,362



14.9
%Deferred acquisition costs


439



0.2
%


5,173



2.8
%


5,612



1.4
%Depreciation, depletion and amortization


23,803



11.7
%


17,382



9.1
%


41,185



10.5
%Foreign exchange loss and other


445



0.2
%


1,499



0.8
%


1,944



0.5
%Income from operations

$
4,323



2.1
%

$
12,382



6.6
%

$
16,705



4.3
%   2005Florida


Canada


TotalRevenue

$
187,041



100.0
%

$
166,331



100.0
%

$
353,372



100.0
%Operating expenses:Cost of operations


142,563



76.2
%


111,013



66.8
%


253,576



71.8
%Selling, general and administrative expense


29,250



15.6
%


23,197



14.0
%


52,447



14.8
%Settlement with sellers of Florida Recycling


(4,120
)


-2.2
%






0.0
%


(4,120
)


-1.2
%Depreciation, depletion and amortization


20,313



10.9
%


19,356



11.6
%


39,669



11.2
%Foreign exchange loss (gain) and other


(745
)


-0.4
%


571



0.3
%


(174
)


0.0
%Income (loss) from operations

$
(220
)


-0.1
%

$
12,194



7.3
%

$
11,974



3.4
%  30




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##### Table of Contents



Revenue
    2007


2006


2005Collection

$
391,988



72.6
%

$
321,150



76.0
%

$
295,183



78.8
%Landfill disposal


63,438



11.7
%


49,113



11.6
%


38,512



10.3
%Transfer station


62,096



11.5
%


40,371



9.6
%


28,729



7.7
%Material recovery facilities


21,136



3.9
%


10,931



2.6
%


10,306



2.7
%Other specialized services


1,260



0.3
%


1,108



0.2
%


1,967



0.5
%539,918



100.0
%


422,673



100.0
%


374,697



100.0
%Intercompany elimination


(51,624
)






(31,264
)






(21,325
)$
488,294






$
391,409






$
353,372               Cost
    of Operations
     31




---



##### Table of Contents



Selling,
    General and Administrative Expense
     32




---



##### Table of Contents



Severance
    and Related Costs
    Deferred
    Acquisition Costs
    Settlement
    with sellers of Florida Recycling
    Depreciation,
    Depletion and Amortization
     33




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##### Table of Contents



Foreign
    Exchange Loss (Gain) and Other
    Interest
    Expense
    2007


2006


2005Credit Facility and Senior Subordinated Note interest

$
36,673


$
27,704


$
25,374Amortization of debt issue costs


2,362



1,569



1,408Preferred Stock dividends and amortization of issue costs






18,466



20,984Loss on exchange of cumulative mandatorily redeemablePreferred Stock






1,187



Other interest expense


1,644



1,708



1,465$
40,679


$
50,634


$
49,231        34




---



##### Table of Contents



Income
    Tax Provision
  start-up
      Liquidity
    and Capital Resources
    Senior
    Secured Credit Facilities
   35




---



##### Table of Contents



Maximum


Maximum


MaximumConsolidated


Consolidated


ConsolidatedLeverage


Senior Secured


InterestRatio


Leverage Ratio


Coverage RatioFirst quarter


4.00 : 1.00



2.75 : 1.00



2.50 : 1.00Second quarter


4.00 : 1.00



2.50 : 1.00



2.50 : 1.00Third quarter


4.00 : 1.00



2.50 : 1.00



2.50 : 1.00Fourth quarter


4.00 : 1.00



2.00 : 1.00



2.50 : 1.00     Direct
    Financing Lease Facility
    Senior
    Subordinated Notes
  1 2
 36




---



##### Table of Contents



Cumulative
    Mandatory Redeemable Preferred Stock
    and/or
  Equity
    Placements
   37




---



##### Table of Contents



Migration
    Transaction
    non-U.S. residents
      Surety
    Bonds and Letters of Credit
    Cash
    Flows
   38




---



##### Table of Contents



Cash
    Flows from Operating Activities
        Cash
    Flows from Investing Activities
      Cash
    Flows from Financing Activities
     39




---



##### Table of Contents



New
    Accounting Pronouncements
         40




---



##### Table of Contents



Seasonality
    Off-Balance
    Sheet Financing
  and/or
 41




---



##### Table of Contents



Tabular
    Disclosure of Contractual Obligations
    Beyond 52008


2009


2010


2011


2012


Years


TotalSenior secured credit facilities(1)

$
1,387


$
2,774


$
202,485


$
67,264


$



$



$
273,910Senior subordinated notes payable(1)






















160,000



160,000Other secured notes payable(1)


1,041



1,121



1,190



1,184



1,280



2,116



7,932Capital lease obligations


290



351



572















1,213Other subordinated notes payable(1)


203



217



232



247



264



1,435



2,598Operating lease commitments


4,794



3,328



2,690



2,516



2,300



6,475



22,103Construction commitments


5,877



44



44



44



44







6,053Asset purchase commitments


184



7,408



83















7,675Deferred acquisition costs(3)


1,000



18,500



















19,500Closure and post-closure obligations(2)


4,153



2,515



2,817



795



7,560



136,221



154,061$
18,929


$
36,258


$
210,113


$
72,050


$
11,448


$
306,247


$
655,045     (1)
    
    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 the acquisition of a landfill development project in
    southwest Florida.  Other
    Contractual Arrangements
     42




---



##### Table of Contents



Registration
    Rights Agreements
        Form S-3
  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.
  Item 11.
    Executive
    Compensation   44




---



##### Table of Contents



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




---



##### 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, 2004).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 of Amended and Restated Credit
    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, 2004).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).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. 1 to Preferred Subscription
    Agreement dated as of February 13, 2003, among Waste
    Services, Inc., Capital Environmental Resource Inc., Kelso
    Investment Associates VI, L.P. and KEP VI, LLC (Incorporated by
    reference to Exhibit 4.1 to
    Form 6-K
    (No. 000-25955)
    filed February 26, 2004).4
.3

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). 46




---



##### Table of Contents



4
.4

Agreement effective as of December 28, 2005 between Waste
    Services, Inc. and Kelso Investment Associates VI, L.P. and KEP
    VI, LLC. (Incorporated by reference to Exhibit 4.4 to
    Form 10-K
    (No. 000-25955)
    filed March 14, 2006).4
.5

Agreement effective as of March 30, 2006 among Waste
    Service, Inc. and Kelso Investment Associates VI, L.P. and KEP
    VI, LLC (Incorporated by reference to Exhibit 20.3 to
    Form 8-K
    ((No. 000-25955)
    filed on April 5, 2006).4
.6

Form of Warrants to Purchase Common Stock by and between the
    Company and certain investors (Incorporated by reference to
    Exhibit 4.2 to
    Form 20-F
    (No. 000-25955)
    filed July 15, 2003).4
.7

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
.8

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
.9

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
.10

Indenture regarding 9
    1/2% 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
.11

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

Support Agreement among Waste Services, Inc. Capital
    Environmental Resource Inc. (Incorporated by reference to
    Exhibit 4.9 to
    Form 10-K
    (No. 000-25955)
    filed March 16, 2004).4
.15

Support Agreement dated July 31, 2004, among Waste
    Services, Inc. and Michael DeGroote (Incorporated by reference
    to Exhibit 10 to
    Form 8-K
    (No. 000-25955)
    filed March 16, 2004).4
.16

Standby Purchase Agreement dated as of September 30, 2004
    between Waste Services, Inc. and Michael DeGroote (Incorporated
    by reference to Exhibit 10.2 to
    Form 8-K
    (No. 000-25955)
    filed on October 5, 2004).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
    (Incorporated by reference to Appendix A to Form DEF
    14-A
    (No. 000-25995)
    filed October 9, 2007).10
.3

Form of Subscription Agreement dated as of April 30,
    2004,between Capital Environmental Resource Inc. and certain
    investors. (Incorporated by reference to Exhibit 10.1 to
    Form 8-K
    (No. 000-25955)
    filed May 10, 2004).10
.4

Form of Registration Rights Agreement dated as of
    April 30,2004, among us and certain investors.
    (Incorporated by Reference to Exhibit 10.2 to
    Form 8-K
    (No. 000-25955)
    filed May 10, 2004).10
.5

9
    1/2% Senior
    Subordinated Notes Registration Rights Agreement dated
    April 20, 2004. (Incorporated by reference to
    Exhibit 10.3 to
    Form 8-K
    (No. 000-25955)
    filed May 10, 2004).10
.6

Second Amended and Restated Credit Agreement dated as of
    December 28,2006 among Waste Services, Inc., Waste Services
    (CA) Inc., the several lenders from time to time parties
    thereto, Lehman Brothers Inc., as Arranger, CIBC World Markets
    Corp., as Syndication Agent, Bank of America, N.A., as
    Documentation Agent, Canadian Imperial Bank of Commerce, as
    Canadian Agent, and Lehman Commercial Paper Inc., as
    Administrative Agent. (Incorporated by reference to
    Exhibit 20.1 to
    Form 8-K
    (No. 000-25955)
    filed January 3, 2007). 47




---



##### Table of Contents



10
.7

First Amendment to Second Amended and Restated Credit Agreement
    dated as of April 12, 2007 among Waste Services (CA) Inc.,
    Waste Services, Inc. and Lehman Commercial Paper Inc.
    (Incorporated by reference to Exhibit 20.1 to
    Form 8-K
    (No. 000-25995)
    filed April 13, 2007).10
.8

Lender Addendum dated as of August 14, 2007 to the Second
    Amended and Restated Credit Agreement among Bank of America,
    N.A., Waste Services (CA) Inc., Waste Services, Inc., Lehman
    Commercial Paper Inc., and Canadian Imperial Bank of Commerce
    (Incorporated by reference to Exhibit 4.2 to
    Form 10-Q
    (No. 000-25995)
    filed November 1, 2007).10
.9

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
.10

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
.11

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).10
.12

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
.13

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
.14

Employment Agreement dated October 1, 2003, between Capital
    Environmental Resource Inc. and Brian A. Goebel (Incorporated by
    reference to Exhibit 4.27 to
    Form 20-F
    for the year ended December 31, 2003
    (No. 000-25955),
    filed March 31, 2004).10
.15

Subscription Agreement dated as of November 8, 2006 by and
    among Waste Services, Inc., Westbury (Bermuda) Limited and
    Prides Capital Fund, LP. (Incorporated by reference to
    Exhibit 20.1 to
    Form 8-K
    (No. 000-25955)
    filed on November 9, 2006).10
.16

Exchange and Redemption Agreement dated as of
    November 8, 2006 by and among Waste Services, Inc. and
    Kelso Investment Associates VI, L.P. and KEP VI, LLC.
    (Incorporated by reference to Exhibit No. 20.2 to
    Form 8-K
    (No. 000-25955)
    filed on November 9, 2006).10
.17

Form of Registration Rights Agreement dated as of
    November 8, 2006 by and among Waste Services, Inc.,
    Westbury (Bermuda) Limited and Prides Capital Fund, LP.
    (Incorporated by reference to Exhibit No. 20.3 to
    Form 8-K
    (No. 000-25955)
    filed on November 9, 2006).10
.18

Form of Registration Rights Agreement dated as of
    November 8, 2006 by and among Waste Services, Inc. and
    Kelso Investment Associates VI, L.P. and KEP VI, LLC.
    (Incorporated by reference to Exhibit No. 20.3 to
    Form 8-K
    (No. 000-25955)
    filed on November 9, 2006).10
.19

Form of Stock Option Agreement under the 2007 Equity and
    Performance Incentive Plan.10
.20

Form of Restricted Stock Unit Agreement under the 2007 Equity
    and Performance Incentive Plan.14
.1

Code of Ethics.16
.1

Letter from BDO Dunwoody LLP to the Securities and Exchange
    Commission dated July 27, 2004 (Incorporated by reference
    to Exhibit 16.1 to
    Form 8-K
    (No. 000-25955),
    filed July 27, 2004).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   Chairman of the Board, President,
    Chief Executive Officer and Director
      Signature

Title

Date/s/  DAVID
    SUTHERLAND-YOESTDavid
    Sutherland-Yoest

Chairman of the Board, President, Chief Executive Officer and
    Director

March 7, 2008/s/  EDWIN
    D. JOHNSONEdwin
    D. Johnson

Executive Vice President and Chief Financial Officer

March 7, 2008/s/  GARY
    W. DEGROOTEGary
    W. DeGroote

Director

March 7, 2008/s/  MICHAEL
    B. LAZARMichael
    B. Lazar

Director

March 7, 2008/s/  GEORGE
    E. MATELICHGeorge
    E. Matelich

Director

March 7, 2008/s/  CHARLES
    E. MCCARTHYCharles
    E. McCarthy

Director

March 7, 2008/s/  LUCIEN
    RÉMILLARDLucien
    Rémillard

Director

March 7, 2008/s/  JACK
    E. SHORTJack
    E. Short

Director

March 7, 2008/s/  WALLACE
    L. TIMMENYWallace
    L. Timmeny

Director

March 7, 2008/s/  MICHAEL
    J. VERROCHIMichael
    J. Verrochi

Director

March 7, 2008  49




---



##### 



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




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##### 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 Form 10-K.
              
    F-3




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
         ,
      
    F-4




---



##### Table of Contents



WASTE
    SERVICES, INC.CONSOLIDATED BALANCE SHEETS(In thousands of U.S. dollars, except share amounts)
    As of December 31,
  2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
20,706


$
8,532Accounts receivable (net of allowance for doubtful accounts of
    $985 and $572 as of December 31, 2007 and 2006,
    respectively)


67,195



51,804Prepaid expenses and other current assets


11,505



6,224Current assets of discontinued operations






4,559Total current assets


99,406



71,119Property and equipment, net


199,817



140,673Landfill sites, net


198,061



195,881Goodwill and other intangible assets, net


423,463



350,035Other assets


17,741



10,667Non-current assets of discontinued operations






96,688Total assets

$
938,488


$
865,063LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
26,641


$
24,033Accrued expenses and other current liabilities


66,103



53,566Short-term financing and current portion of long-term debt


2,631



3,975Current liabilities of discontinued operations






4,784Total current liabilities


95,375



86,358Long-term debt


441,809



406,113Deferred income taxes, accrued closure, post-closure and
    other obligations


50,709



32,625Non-current liabilities of discontinued operations






610Total liabilities


587,893



525,706Shareholders equity:Common stock $0.01 par value: 166,666,666 shares
    authorized, 43,972,362 and 43,868,606 shares issued and
    outstanding as of December 31, 2007 and December 31,
    2006, respectively


439



438Additional paid-in capital


510,286



506,751Accumulated other comprehensive income


66,017



35,201Accumulated deficit


(226,147
)


(203,033
)Total shareholders equity


350,595



339,357Total liabilities and shareholders equity

$
938,488


$
865,063    F-5




---



##### 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,
  2007


2006


2005Revenue

$
488,294


$
391,409


$
353,372Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)


319,740



267,601



253,576Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


65,852



58,362



52,447Deferred acquisition costs






5,612



Settlement with sellers of Florida Recycling










(4,120
)Depreciation, depletion and amortization


58,044



41,185



39,669Foreign exchange loss (gain) and other


(81
)


1,944



(174
)Income from operations


44,739



16,705



11,974Interest expense


40,679



30,981



28,247Cumulative mandatorily redeemable preferred stock dividends and
    amortization of issue costs






19,653



20,984Income (loss) from continuing operations before income
    taxes


4,060



(33,929
)


(37,257
)Income tax provision


14,437



12,820



12,136Net loss from continuing operations


(10,377
)


(46,749
)


(49,393
)Net loss from discontinued operations, net of tax of $0


(1,130
)


(1,782
)


(897
)Loss on sale of discontinued operations, net of tax of $0


(11,607
)






Net loss

$
(23,114
)

$
(48,531
)

$
(50,290
)Basic and diluted loss per share:Loss per share  continuing operations

$
(0.22
)

$
(1.32
)

$
(1.50
)Loss per share  discontinued operations


(0.28
)


(0.05
)


(0.03
)Loss per share  basic and diluted

$
(0.50
)

$
(1.37
)

$
(1.53
)Weighted average common shares outstanding  basic and
    diluted


46,007



35,354



32,880Consolidated Statements of Comprehensive Income (Loss)Net loss

$
(23,114
)

$
(48,531
)

$
(50,290
)Foreign currency translation adjustment


30,816



(472
)


6,540Comprehensive income (loss)

$
7,702


$
(49,003
)

$
(43,750
)    F-6




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##### 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, 2004


90,358


$
904


$
374,186


$
(1,235
)

$
29,133


$
(104,212
)

$
298,776Common shares and warrants issued


2,926



29



7,881















7,910Exercise of options and warrants


162



2



519















521Stock-based compensation










1,060















1,060Conversion of exchangeable shares


240



2



(2
)














Other paid-in capital










(26
)














(26
)Foreign currency translation adjustment


















6,540







6,540Net loss






















(50,290
)


(50,290
)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
)

$
350,595    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,
  2007


2006


2005Cash flows from operating activities:Net loss

$
(23,114
)

$
(48,531
)

$
(50,290
)Adjustments to reconcile net loss to net cash flows from
    operating activities:Net loss from discontinued operations


12,737



1,782



897Depreciation, depletion and amortization


58,044



41,185



39,669Non-cash component of settlement with sellers of Florida
    Recycling










(4,120
)Cumulative mandatorily redeemable preferred stock dividends and
    amortization of issue costs






19,653



20,984Amortization of debt issue costs


2,362



1,569



1,408Deferred income tax provision


5,318



11,004



11,581Non-cash stock-based compensation expense


2,845



3,089



1,060Severance costs expensed, exclusive of stock-based compensation


3,252







Deferred acquisition costs expensed






5,173



Foreign exchange loss and loss on disposal of property and
    equipment


584



1,511



755Other non-cash items


734



783



(429
)Changes in operating assets and liabilities (excluding the
    effects of acquisitions and dispositions):Accounts receivable


(1,971
)


(2,207
)


(1,111
)Prepaid expenses and other current assets


(1,263
)


(74
)


4,360Accounts payable


(223
)


(6,103
)


(1,910
)Accrued expenses and other current liabilities


2,455



5,171



(1,774
)Net cash provided by continuing operations


61,760



34,005



21,080Net cash provided by discontinued operations


1,567



4,931



3,573Net cash provided by operating activities


63,327



38,936



24,653Cash flows from investing activities:Cash used in business combinations and significant asset
    acquisitions, net of cash acquired


(32,101
)


(103,532
)


(4,465
)Capital expenditures


(60,949
)


(44,662
)


(27,970
)Proceeds from asset sales and business divestitures


19,921



5,144



3,198Deposits for business acquisitions and other


(9,796
)


(1,626
)


(1,046
)Net cash used in continuing operations


(82,925
)


(144,676
)


(30,283
)Net cash used in discontinued operations


(2,187
)


(4,331
)


(9,228
)Net cash used in investing activities


(85,112
)


(149,007
)


(39,511
)Cash flows from financing activities:Proceeds from issuance of debt and draw on revolving credit
    facility


84,066



157,527



25,000Principal repayments of debt and capital lease obligations


(49,890
)


(37,026
)


(16,704
)Sale of common shares and warrants






66,500



7,125Proceeds from the exercise of options and warrants


691



165



521Retirement of Preferred Stock






(75,557
)


Fees paid for financing transactions


(1,259
)


(1,805
)


(995
)Net cash provided by financing activities  continuing
    operations


33,608



109,804



14,947Effect of exchange rate changes on cash and cash equivalents


351



(87
)


321Increase (decrease) in cash and cash equivalents


12,174



(354
)


410Cash and cash equivalents at the beginning of the year


8,532



8,886



8,476Cash and cash equivalents at the end of the year

$
20,706


$
8,532


$
8,886    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
    Concentration
    of Credit Risk
    Allowance
    for Doubtful Accounts
   F-10




---



##### Table of Contents



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


2006


2005Balance at the beginning of the year

$
572


$
615


$
545Provisions, net of recoveries


2,029



737



842Bad debts charged to reserves


(1,728
)


(1,070
)


(777
)Acquisitions


75



290



Impact of foreign exchange rate fluctuations


37







5Balance at the end of the year

$
985


$
572


$
615   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
        Other
    Non-Current Assets
      Fair
    Value of Financial Instruments
  1 2
  Environmental
    Costs
   F-13




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accrued
    Closure and Post-Closure Obligations
      Revenue
    Recognition
    Royalty
    Arrangements
    Advertising
    Costs
    Risk
    Management
  U.S.-based
 F-14




---



##### Table of Contents



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


2006


2005Balance at the beginning of the year

$
5,327


$
4,356


$
2,426Provisions


4,513



4,615



4,419Payments


(3,425
)


(3,475
)


(2,210
)Favorable claim development for prior periods


(360
)


(169
)


(279
)Balance at the end of the year

$
6,055


$
5,327


$
4,356   Stock-Based
    Compensation
        96-18,
 F-15




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Taxes
    Net
    Income (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, 2004 to 2006.
    State We are potentially subject to state tax
    examinations by tax authorities for the tax years ended
    December 31, 2004 to 2006.
    Canada  We are no longer potentially subject
    to foreign tax examinations by tax authorities for years before
    January 1, 2000.
    Provincial  We are no longer potentially
    subject to foreign tax examinations by tax authorities for years
    before January 1, 2000.    Recently
    Issued Accounting Pronouncements
       F-17




---



##### Table of Contents



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




---



##### Table of Contents



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


TexasOperations


Operations


TotalFair value of operations received

$
52,351


$
18,416


$
70,767Cash received, net of promissory note issued






15,638



15,638Less:Carrying value of operations sold


51,588



46,424



98,012Gain (loss) on disposition of discontinued operations

$
763


$
(12,370
)

$
(11,607
)       Arizona


TexasOperations


Operations


TotalAccounts receivable

$
3,418


$
658


$
4,076Prepaid expenses and other current assets


452



31



483Current assets of discontinued operations


3,870



689



4,559Property and equipment


11,803



4,646



16,449Landfill sites


17,229



41,456



58,685Goodwill and other intangible assets


21,433







21,433Other assets


121







121Non-current assets of discontinued operations


50,586



46,102



96,688Total assets of discontinued operations

$
54,456


$
46,791


$
101,247Accounts payable

$
356


$



$
356Accrued expenses and other current liabilities


3,518



910



4,428Current liabilities of discontinued operations


3,874



910



4,784Accrued closure, post closure and other obligations


336



274



610Non-current liabilities of discontinued operations


336



274



610Total liabilities of discontinued operations

$
4,210


$
1,184


$
5,394Net assets of discontinued operations

$
50,246


$
45,607


$
95,853   4.
    Business
    Combinations and Significant Asset Acquisitions   F-19




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
               F-20




---



##### 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-21




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006Liberty Waste


SLDTaft


and Sun Country


Landfill and


AllRecycling


Materials


Pro Disposal


Others


Total


2005Purchase price:Cash

$
13,300


$
20,653


$
75,674


$
3,949


$
113,576


$
1,122Common stock


7,645



18,936











26,581



Total purchase price


20,945



39,589



75,674



3,949



140,157



1,122Allocated as follows:Working capital assumed:Cash and cash equivalents


125



488



187







800



Accounts receivable


952



2,126



1,650







4,728



Prepaid expenses and other current assets


10



591



70







671



25Accounts payable


(462
)


(2,724
)


(1,889
)






(5,075
)


Accrued expenses and other current liabilities


(252
)


(787
)






(143
)


(1,182
)


(8
)Net working capital


373



(306
)


18



(143
)


(58
)


17Property and equipment


3,237



10,272



9,779



1,257



24,545



810Landfill sites






23,290



49,834







73,124



Other assets










110







110



Debt






(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



91,575



827Excess purchase price to be allocated

$
17,408


$
10,525


$
17,814


$
2,835


$
48,582


$
295Allocated as follows:Goodwill

$
17,408


$
6,043


$
12,474


$
2,242


$
38,167


$
172Other intangible assets






4,482



5,340



593



10,415



123Total allocated

$
17,408


$
10,525


$
17,814


$
2,835


$
48,582


$
295      F-22




---



##### Table of Contents



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


2006Weighted -





Weighted -Average





AverageAmount


Amortization


Amount


AmortizationAllocated


Period (Years)


Allocated


Period (Years)Customer relationships and contracts

$
16,852



12.5


$
9,407



11.5Non-competition agreements and other


3,851



5.2



1,008



5.0Total other intangible assets acquired

$
20,703



11.1


$
10,415



10.8     and/or
    2007


2006Revenue

$
509,936


$
504,856Net loss from continuing operations

$
(9,142
)

$
(47,045
)Basic and diluted loss per share  continuing
    operations

$
(0.20
)

$
(1.29
)Basic and diluted pro forma weighted average number of common
    shares outstanding


46,007



36,500  F-23




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006


2005Revenue

$
427,116


$
403,291Net loss from continuing operations

$
(48,690
)

$
(53,025
)Basic and diluted loss per share  continuing
    operations

$
(1.33
)

$
(1.48
)Basic and diluted pro forma weighted average number of common
    shares outstanding


36,500



35,765     5.
    Prepaid
    Expenses and Other Current Assets    2007


2006Prepaid expenses

$
5,886


$
2,969Parts and supplies


2,285



1,710Royalty receivable


1,321



Other current assets


2,013



1,545$
11,505


$
6,224   6.
    Property
    and Equipment    2007


2006Land and buildings

$
67,119


$
31,470Vehicles


151,257



116,436Containers, compactors and landfill and recycling equipment


98,041



74,597Furniture, fixtures, other office equipment and leasehold
    improvements


12,502



10,272Total property and equipment


328,919



232,775Less: Accumulated depreciation


(129,102
)


(92,102
)Property and equipment, net

$
199,817


$
140,673    F-24




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Landfill
    Sites, Accrued Closure, Post-Closure and Other
    Obligations  Landfill
    Sites
    2007


2006Landfill sites

$
265,823


$
240,938Less: Accumulated depletion


(67,762
)


(45,057
)Landfill sites, net

$
198,061


$
195,881     2007


2006


2005Balance at the beginning of the year

$
195,881


$
116,781


$
119,441Landfill site construction costs


15,092



13,556



7,732Landfill site expansion costs






3,162



Acquisitions






73,124



Purchase price allocation adjustments for prior acquisitions


505







99Additional asset retirement obligations


3,060



2,138



1,683Depletion


(17,908
)


(12,837
)


(12,469
)Reclassification to conservatory


(1,028
)






Effect of foreign exchange rate fluctuations


2,459



(43
)


295Balance at the end of the year

$
198,061


$
195,881


$
116,781   Deferred
    Income Taxes, Accrued Closure, Post-Closure and Other
    Obligations
    2007


2006Accrued closure and post-closure obligations

$
16,873


$
9,667Deferred income tax liability


29,644



22,322Accrued severance


2,181



Capital lease obligations


867



186Other obligations


1,144



450$
50,709


$
32,625  F-25




---



##### Table of Contents



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


2006


2005Current portion at the beginning of year

$
6,258


$



$
Long-term portion at the beginning of year


9,667



8,971



6,366Balance at the beginning of period


15,925



8,971



6,366Additional asset retirement obligations


3,060



2,138



1,683Accretion


734



797



707Acquisitions






4,199



Payments


(1,298
)


(147
)


Purchase price allocation adjustments for prior acquisitions


1,301







Effect of foreign exchange rate fluctuations


1,304



(33
)


215Balance at the end of year


21,026



15,925



8,971Less: Current portion


(4,153
)


(6,258
)


Long-term portion

$
16,873


$
9,667


$
8,971     2008

$
4,1532009


2,5152010


2,8172011


7952012


7,560Thereafter


136,221$
154,061    F-26




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Goodwill
    and Other Intangible Assets    2007


2006Other intangible assets subject to amortization:Customer relationships and contracts

$
55,426


$
43,964Non-competition agreements and other


6,011



3,69461,437



47,658Less: Accumulated amortization:Customer relationships and contracts


(25,081
)


(17,080
)Non-competition agreements and other


(1,396
)


(2,435
)Other intangible assets subject to amortization, net


34,960



28,143Goodwill


388,503



321,892Goodwill and other intangible assets, net

$
423,463


$
350,035     2007Florida


Canada


TotalBalance at the beginning of the year

$
235,044


$
86,848


$
321,892Acquisitions


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

$
285,900


$
102,603


$
388,503   2006Florida


Canada


TotalBalance at the beginning of the year

$
199,377


$
84,869


$
284,246Acquisitions


35,925



2,242



38,167Purchase price allocation adjustments for prior acquisitions


(258
)






(258
)Effect of foreign exchange rate fluctuations






(263
)


(263
)Balance at the end of the year

$
235,044


$
86,848


$
321,892    F-27




---



##### Table of Contents



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

$
7,2412009


5,7982010


4,6842011


3,9402012


2,837Thereafter


10,460$
34,960   9.
    Other
    Assets    2007


2006Debt issue costs, net of accumulated amortization of $5,787 and
    $3,853 as of December 31, 2007 and 2006, respectively

$
7,822


$
9,060Acquisition deposits and deferred acquisition costs


9,407



1,048Other assets


512



559$
17,741


$
10,667     10.
    Accrued
    Expenses and Other Current Liabilities    2007


2006Deferred revenue

$
12,378


$
8,658Accrued compensation, benefits and subcontractor costs


13,141



9,670Accrued federal and provincial current taxes payable


8,158



1,379Accrued waste disposal costs


6,555



6,405Accrued insurance


6,055



5,327Accrued interest


4,588



3,557Accrued closure and post-closure obligations


4,153



6,258Accrued royalties and franchise fees


3,239



1,660Accrued capital expenditures


2,233



1,683Accrued acquisition costs


1,200



3,651Accrued professional fees


970



2,829Current portion of capital lease obligations


232



79Other accrued expenses and current liabilities


3,201



2,410$
66,103


$
53,566  F-28




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Debt    2007


2006Senior Secured Credit Facilities:Revolving credit facility

$



$
Term loan facility, floating interest rate at 7.4% and 10.0%
    (adjusted to 8.1% in January 2007) as of December 31,
    2007 and 2006, respectively, due $693 per quarter from September
    2008 through March 2010, $67,264 per quarter thereafter, due
    March 2011


273,910



245,260Senior Subordinated Notes, fixed interest rate at 9.5%, due 2014


160,000



160,000Other secured notes payable, interest at 4.5% to 7.8%, due
    through 2025 (net of discount of $2,126 and $0 at
    December 31, 2007 and 2006, respectively)


7,932



2,041Other subordinated notes payable, interest at 6.7%, due through
    2017


2,598



2,787444,440



410,088Less: Current portion


(2,631
)


(3,975
)Long-term portion

$
441,809


$
406,113     2008

$
2,6312009


4,1122010


203,9072011


68,6952012


1,544Thereafter


163,551$
444,440   Senior
    Secured Credit Facilities
     F-29




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Other
    Secured Notes Payable
    Senior
    Subordinated Notes
  1 2
 F-30




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          12.
    Cumulative
    Mandatorily Redeemable Preferred Shares    and/or
 F-31




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Commitments
    and Contingencies  Leases
    Capital


OperatingLeases


Leases2008

$
290


$
4,7942009


351



3,3282010


572



2,6902011






2,5162012






2,300Thereafter






6,4751,213


$
22,103Less: Amount representing interest


(114
)1,099Less: Current portion of capital lease obligations


(232
)Long-term capital lease obligations

$
867       Surety
    Bonds and Letters of Credit
    Environmental
    Risks
   F-32




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Disposal
    Agreement
  and/or
    Collective
    Bargaining Agreements
    Legal
    Proceedings
     F-33




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Registration
    Rights Agreements
      Form S-3
  Other
    Commitments
     F-34




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14.
    Capital
    Stock  Migration
    Transaction
    non-U.S. residents
      Equity
    Placements
     F-35




---



##### 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-36




---



##### 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


3,115,500


$
13.35


$
20.55Granted


822,000



9.87



Exercised


(71,666
)


9.46



Forfeited


(206,067
)


12.97



20.61Expired


(101,489
)


10.74



17.81End of the year


3,558,278



12.38



20.81     2007

2006

2005Annual dividend yield










Weighted average expected life (years)


3.0



3.0



2.8Risk-free interest rate


4.50%



4.83%



2.57% - 4.62%Expected volatility


92%



38%



39%    F-37




---



##### 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


2,596,304



2,481,271



1,750,472Canadian dollar denominated options


961,974



961,974



961,974Total number of options


3,558,278



3,443,245



2,712,446Aggregate intrinsic value of options

$



$



$
Weighted average remaining contractual term (years)


1.8



1.8



1.1Weighted average exercise price  U.S. dollar
    denominated options

$
12.38


$
12.50


$
13.60Weighted average exercise price  Canadian dollar
    denominated options

$
20.81


$
20.81


$
20.81       Net loss as reported

$
(50,290
)Add: Employee compensation expense (benefit) for equity awards
    included in the determination of net loss as reported


344Less: Stock based employee compensation expense for equity
    awards determined by the fair value based method prescribed
    under SFAS 123


(9,994
)Pro forma net loss

$
(59,940
)Basic and diluted loss per share:As reported

$
(1.53
)Pro forma

$
(1.82
)  F-38




---



##### Table of Contents



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


AverageNumber


Average


Remaining


Aggregateof Shares


Exercise


Contractual


IntrinsicIssuable


Price


Term


ValueOutstanding at the beginning of the year


5,044,406


$
9.36



2.7


$
3,796Exercised during the year


(113,111
)


9.01Outstanding at the end of the year


4,931,295



9.09



1.7



161     15.
    Income
    Taxes    2007


2006


2005Current:Federal

$



$



$
State










Canada


9,119



1,816



555Current income tax provision


9,119



1,816



555Deferred:Federal and state deferred


5,257



6,436



5,452Canadian deferred


61



4,568



6,129Deferred income tax provision


5,318



11,004



11,581Income tax provision

$
14,437


$
12,820


$
12,136    F-39




---



##### Table of Contents



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


2006


2005United States

$
(37,114
)

$
(50,522
)

$
(52,930
)Canada


28,437



14,811



14,776$
(8,677
)

$
(35,711
)

$
(38,154
)     2007


2006


2005Provision at statutory rate

$
(2,950
)

$
(12,142
)

$
(12,973
)Foreign rate differential


284



239



239Changes in Foreign tax rate


(922
)






State, net of federal benefit


125



(1,787
)


(1,912
)Non-deductible stock based compensation


248



140



377Non-deductible interest expense and preferred stock dividends


571



7,919



7,490Non-deductible foreign exchange (gains) and loss


(29
)


538



146Other permanent differences


426



(27
)


181Distributed earnings in foreign subsidiary


6,645



3,033



2,430Valuation allowance


10,039



14,907



15,922Large corporations tax










236Income tax provision

$
14,437


$
12,820


$
12,136  F-40




---



##### Table of Contents



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


2006Deferred income tax assets:Tax loss carry forward  U.S.

$
51,969


$
43,675Foreign tax credit carry forward  U.S.


2,682



1,155Tax basis in intangible assets in excess of book
    basis  U.S.


5,777



3,820Stock-based compensation  U.S.


1,899



1,080Accruals not currently deductible  U.S.


4,317



4,627Tax loss carryforwards and capital loss
    carry-forwards  Canada


8,098



5,984Tax basis in assets in excess of book basis  Canada


1,233



2,281Accruals not currently deductible  Canada


2,853



2,478Less: Valuation allowance  U.S. and Canada


(68,764
)


(55,080
)Net deferred tax assets


10,064



10,020Deferred income tax liabilities:Book basis in property and equipment in excess of tax
    basis  U.S.


(6,290
)


(5,261
)Book basis in goodwill in excess of tax basis 
    U.S.


(21,128
)


(15,872
)Book basis in property and equipment and goodwill in excess of
    tax basis  Canada


(12,290
)


(11,209
)Net deferred income tax liability

$
(29,644
)

$
(22,322
)     15-year
 F-41




---



##### Table of Contents



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


2006


2005Balance at the beginning of the year

$
55,080


$
37,692


$
22,312Additions to valuation allowance


10,039



14,907



15,922Increase due to acquisitions


229



1,327



Increase due to foreign tax credit carry-forwards


1,527



1,155



Increase due to foreign tax loss carry-forwards and capital-loss
    carry forwards


2,114



969



1,078Adjustments to valuation allowance


(225
)


(970
)


(1,620
)Balance at the end of the year

$
68,764


$
55,080


$
37,692   16.
    Net Loss
    Per Share Information    2007


2006


2005Numerator:Net loss

$
(23,114
)

$
(48,531
)

$
(50,290
)Denominator:Basic and diluted weighted average number of common shares
    outstanding


46,007



35,354



32,880Antidilutive securities not included in the diluted earnings per
    share calculation:Common shares issuable under option grants


17



1



14Common shares issuable under warrants outstanding


496



245



719513



246



733   17.
    Retirement
    Plan     F-42




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    Segment
    Information        2007Florida


Canada


Corporate


TotalRevenue

$
266,231


$
222,063


$



$
488,294Depreciation, depletion and amortization


38,340



18,332



1,372



58,044Income (loss) from operations


35,222



38,759



(29,242
)


44,739Capital expenditures


32,744



26,822



1,383



60,949Total assets


641,874



256,570



40,044



938,488   2006Florida


Canada


Corporate


TotalRevenue

$
203,381


$
188,028


$



$
391,409Depreciation, depletion and amortization


23,762



15,981



1,442



41,185Income (loss) from operations


27,774



29,332



(40,401
)


16,705Capital expenditures


22,156



21,265



1,241



44,662Total assets


542,648



203,754



17,414



763,816   2005Florida


Canada


Corporate


TotalRevenue

$
187,041


$
166,331


$



$
353,372Depreciation, depletion and amortization


20,044



18,045



1,580



39,669Income (loss) from operations


11,652



23,622



(23,300
)


11,974Capital expenditures


16,581



9,670



1,719



27,970Total assets


398,255



191,108



37,665



627,028  F-43




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Related
    Party Transactions  father-in-law
          20.
    Supplementary
    Cash Flow Information    2007


2006


2005Fair value of operations received for the disposition of our
    Arizona and Texas operations

$
70,767


$



$
Common Shares issued relative to acquisitions






26,581



1,146Amounts accrued for capital expenditures


2,233



1,683



896Capital expenditures financed with capital leases and notes
    payable


1,009



1,202



Other cash flow information:Cash paid for interest

$
37,286


$
30,062


$
27,394Cash paid for income taxes


3,909



853



683   and/or
 F-44




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    21.
    Selected
    Quarterly Financial Data (unaudited)    2007First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
101,314


$
126,239


$
130,605


$
130,136Income from operations


7,914



13,111



9,891



13,823Net income (loss) from continuing operations


(3,568
)


(2,126
)


(4,826
)


143Net loss from discontinued operations


(1,043
)


(87
)






Gain (loss) on sale of discontinued operations, net of tax of $0


938



(12,192
)


(198
)


(155
)Net loss


(3,673
)


(14,405
)


(5,024
)


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

$
(0.08
)

$
(0.05
)

$
(0.11
)

$
Loss per share  discontinued operations






(0.27
)






Loss per share  basic and diluted

$
(0.08
)

$
(0.32
)

$
(0.11
)

$
Shares used in computing per share amounts:Basic


45,972



45,973



46,007



46,075Diluted


45,972



45,973



46,007



46,163   2006First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterRevenue

$
87,484


$
100,480


$
103,739


$
99,706Income (loss) from operations


(4,172
)


4,925



8,164



7,788Net loss from continuing operations


(17,896
)


(11,109
)


(8,133
)


(9,611
)Net income (loss) from discontinued operations


(872
)


35



(460
)


(485
)Net loss


(18,768
)


(11,074
)


(8,593
)


(10,096
)Basic and diluted loss per share:Loss per share  continuing operations

$
(0.53
)

$
(0.33
)

$
(0.23
)

$
(0.25
)Loss per share  discontinued operations


(0.03
)






(0.01
)


(0.02
)Loss per share  basic and diluted

$
(0.56
)

$
(0.33
)

$
(0.24
)

$
(0.27
)Shares used in computing per share amounts,
    basic and diluted


33,377



34,130



36,066



37,788   22.
    Condensed
    Consolidating Financial Statements   F-45




---



##### Table of Contents



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



2,616



8,852







11,505Total current assets


9,117



33,757



56,532







99,406Property and equipment, net


235



106,760



92,822







199,817Landfill sites, net






181,413



16,648







198,061Goodwill and other intangible assets, net






319,753



103,710







423,463Other assets


17,550



191











17,741Due from affiliates


1,021











(1,021
)


Investment in subsidiary


816,054











(816,054
)


Total 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



22,738



25,794







66,103Short-term financing and current portion of long-term debt


2,428



203











2,631Total current liabilities


29,479



25,844



40,052







95,375Long-term debt


439,415



2,394











441,809Accrued closure, post-closure and other obligations


24,488



8,329



17,892







50,709Due to affiliates










1,021



(1,021
)


Total 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-46




---



##### Table of Contents



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


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$
2,190


$
563


$
5,779


$



$
8,532Accounts receivable, net






24,144



27,660







51,804Prepaid expenses and other current assets


570



2,292



3,362







6,224Current assets of discontinued operations






4,559











4,559Total current assets


2,760



31,558



36,801







71,119Property and equipment, net


167



71,305



69,201







140,673Landfill sites, net






182,050



13,831







195,881Goodwill and other intangible assets, net






262,056



87,979







350,035Other assets


10,429



238











10,667Due from affiliates










344



(344
)


Investment in subsidiary


777,619











(777,619
)


Non-current assets of discontinued operations






96,688











96,688Total assets

$
790,975


$
643,895


$
208,156


$
(777,963
)

$
865,063LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
9,411


$
3,189


$
11,433


$



$
24,033Accrued expenses and other current liabilities


18,503



19,600



15,463







53,566Short-term financing and current portion of long-term debt


3,786



189











3,975Current liabilities of discontinued operations






4,784











4,784Total current liabilities


31,700



27,762



26,896







86,358Long-term debt


403,516



2,597











406,113Accrued closure, post-closure and other obligations


16,058



2,755



13,812







32,625Due to affiliates


344











(344
)


Non-current liabilities of discontinued operations






610











610Total liabilities


451,618



33,724



40,708



(344
)


525,706Shareholders equity:Common stock of Waste Services, Inc


438















438Other equity


338,919



610,171



167,448



(777,619
)


338,919Total shareholders equity


339,357



610,171



167,448



(777,619
)


339,357Total liabilities and shareholders equity

$
790,975


$
643,895


$
208,156


$
(777,963
)

$
865,063   F-47




---



##### Table of Contents



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


Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$



$
266,231


$
222,063


$



$
488,294Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)






172,417



147,323







319,740Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


17,895



19,807



28,150







65,852Depreciation, depletion and amortization


75



38,340



19,629







58,044Foreign exchange loss (gain) and other


(175
)


445



(351
)






(81
)Equity earnings in investees, net of tax


(34,645
)










34,645



Income from operations


16,850



35,222



27,312



(34,645
)


44,739Interest expense


39,964



181



534







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


(23,114
)


35,041



26,778



(34,645
)


4,060Income tax provision






5,257



9,180







14,437Net income (loss) from continuing operations


(23,114
)


29,784



17,598



(34,645
)


(10,377
)Net loss from discontinued operations






(1,130
)










(1,130
)Loss on sale of discontinued operations






(11,607
)










(11,607
)Net income (loss)

$
(23,114
)

$
17,047


$
17,598


$
(34,645
)

$
(23,114
)   F-48




---



##### Table of Contents



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


Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$



$
203,381


$
188,028


$



$
391,409Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)






139,425



128,176







267,601Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


22,209



12,737



23,416







58,362Deferred acquisition costs


439







5,173







5,612Depreciation, depletion and amortization


41



23,762



17,382







41,185Foreign exchange loss (gain) and other


762



(317
)


1,499







1,944Equity earnings in investees, net of tax


(24,979
)










24,979



Income from operations


1,528



27,774



12,382



(24,979
)


16,705Interest 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
)


27,598



11,983



(24,979
)


(33,929
)Income tax provision






6,435



6,385







12,820Net income (loss) from continuing operations


(48,531
)


21,163



5,598



(24,979
)


(46,749
)Net loss from discontinued operations






(1,782
)










(1,782
)Net income (loss)

$
(48,531
)

$
19,381


$
5,598


$
(24,979
)

$
(48,531
)   F-49




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2005Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedRevenue

$



$
187,041


$
166,331


$



$
353,372Operating and other expenses:Cost of operations (exclusive of depreciation, depletion and
    amortization)






142,563



111,013







253,576Selling, general and administrative expense (exclusive of
    depreciation, depletion and amortization)


16,272



12,978



23,197







52,447Settlement with sellers of Florida Recycling


(4,120
)














(4,120
)Depreciation, depletion and amortization


269



20,044



19,356







39,669Foreign exchange loss (gain) and other


(549
)


(196
)


571







(174
)Equity earnings in investees, net of tax


(10,381
)










10,381



Income from operations


(1,491
)


11,652



12,194



(10,381
)


11,974Interest expense


27,815



186



246







28,247Cumulative mandatorily redeemable preferred stock dividends and
    amortization of issue costs


20,984















20,984Income (loss) from continuing operations before income
    taxes


(50,290
)


11,466



11,948



(10,381
)


(37,257
)Income tax provision






5,452



6,684







12,136Net income (loss) from continuing operations


(50,290
)


6,014



5,264



(10,381
)


(49,393
)Net loss from discontinued operations






(897
)










(897
)Net income (loss)

$
(50,290
)

$
5,117


$
5,264


$
(10,381
)

$
(50,290
)   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
)


(32,744
)


(28,060
)






(60,949
)Proceeds from asset sales and business divestitures






18,123



1,798







19,921Deposits 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
)


(71,289
)


(33,784
)


30,517



(82,925
)Net cash used in discontinued operations






(2,187
)










(2,187
)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 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
)


(22,156
)


(22,308
)






(44,662
)Proceeds from asset sales and business divestitures


8



4,540



596







5,144Deposits 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
)


(117,110
)


(32,771
)


69,752



(144,676
)Net cash used in discontinued operations






(4,331
)










(4,331
)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 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




---



##### Table of Contents



WASTE
    SERVICES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2005Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet cash (used in) provided by operating activities

$
(37,326
)

$
26,242


$
35,737


$



$
24,653Cash flows from investing activities:Cash used in business combinations and significant asset
    acquisitions, net of cash acquired






(3,968
)


(497
)






(4,465
)Capital expenditures


(22
)


(16,581
)


(11,367
)






(27,970
)Proceeds from asset sales and business divestitures






2,487



711







3,198Deposits for business acquisitions and other


(89
)


16



(973
)






(1,046
)Intercompany










(20,472
)


20,472



Net cash used in continuing operations


(111
)


(18,046
)


(32,598
)


20,472



(30,283
)Net cash used in discontinued operations






(9,228
)










(9,228
)Net cash used in investing activities


(111
)


(27,274
)


(32,598
)


20,472



(39,511
)Cash flows from financing activities:Cash used in business combinations and significant asset
    acquisitions, net of cash acquired


25,000















25,000Principal repayments of debt and capital lease obligations


(16,000
)


(166
)


(538
)






(16,704
)Sale of common shares and warrants


7,125















7,125Proceeds from the exercise of options and warrants


521















521Fees paid for financing transactions


(995
)














(995
)Intercompany


18,787



1,685







(20,472
)


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


34,438



1,519



(538
)


(20,472
)


14,947Effect of exchange rate changes on cash and cash equivalents










321







321Increase (decrease) in cash and cash equivalents


(2,999
)


487



2,922







410Cash and cash equivalents at the beginning of the year


6,129



63



2,284







8,476Cash and cash equivalents at the end of the year

$
3,130


$
550


$
5,206


$



$
8,886  F-53