##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from           to
 Commission File Number: 000-25955
 Waste Services, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    01-0780204(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 1122 International Blvd., Suite 601, Burlington, Ontario, Canada L7L 6Z8  (Address of principal executive offices) (Zip Code)
 (905) 319-1237  (Registrants telephone number, including area code)
 þ o
 o þ
  Large
accelerated filer o
    
    Accelerated
filer þ
    
    Non-accelerated filer   o(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008
    
    
    2Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and 2008
    
    
    3Unaudited Condensed Consolidated Statement of Shareholders Equity for the Six Months Ended June 30, 2009
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 4. Controls and Procedures
    
    
    45PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    45Item 1A. Risk Factors
    
    
    45Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    45Item 3. Defaults Upon Senior Securities
    
    
    45Item 4. Submission of Matters to a Vote of Security Holders
    
    
    46Item 5. Other Information
    
    
    46Item 6. Exhibits
    
    
    46Signatures
    
    
    47EX-31.1EX-31.2EX-32.1
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 WASTE SERVICES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash
    
    $
    4,128
    
    
    $
    7,227Accounts receivable (net of allowance for doubtful accounts of $636
and $631 as of June 30, 2009 and December 31, 2008, respectively)
    
    
    53,670
    
    
    
    52,062Prepaid expenses and other current assets
    
    
    12,194
    
    
    
    13,672Total current assets
    
    
    69,992
    
    
    
    72,961Property and equipment, net
    
    
    189,588
    
    
    
    188,800Landfill sites, net
    
    
    194,970
    
    
    
    196,632Goodwill and other intangible assets, net
    
    
    375,018
    
    
    
    372,886Other assets
    
    
    9,119
    
    
    
    9,648Total assets
    
    $
    838,687
    
    
    $
    840,927LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    21,301
    
    
    $
    19,341Accrued expenses and other current liabilities
    
    
    51,753
    
    
    
    62,802Short-term financing and current portion of long-term debt
    
    
    14,824
    
    
    
    11,102Total current liabilities
    
    
    87,878
    
    
    
    93,245Long-term debt
    
    
    350,198
    
    
    
    360,967Deferred income taxes
    
    
    35,609
    
    
    
    32,298Accrued closure, post-closure and other obligations
    
    
    20,566
    
    
    
    19,399Total liabilities
    
    
    494,251
    
    
    
    505,909Shareholders equity:Common stock $0.01 par value: 166,666,666 shares authorized, 46,253,515
and 43,985,436 shares issued and outstanding as of June 30, 2009
and December 31, 2008, respectively
    
    
    462
    
    
    
    439Additional paid-in capital
    
    
    500,882
    
    
    
    512,942Accumulated other comprehensive income
    
    
    40,841
    
    
    
    38,221Accumulated deficit
    
    
    (197,749
    )
    
    
    (216,584
    )Total shareholders equity
    
    
    344,436
    
    
    
    335,018Total liabilities and shareholders equity
    
    $
    838,687
    
    
    $
    840,927
  2




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WASTE SERVICES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    107,485
    
    
    $
    128,282
    
    
    $
    203,277
    
    
    $
    244,890Operating and other expenses:Cost of operations (exclusive of depreciation, depletion
and amortization)
    
    
    69,484
    
    
    
    83,605
    
    
    
    132,692
    
    
    
    160,149Selling, general and administrative expense (exclusive of
depreciation, depletion and amortization)
    
    
    12,740
    
    
    
    16,505
    
    
    
    25,949
    
    
    
    32,869Depreciation, depletion and amortization
    
    
    10,716
    
    
    
    11,620
    
    
    
    21,076
    
    
    
    23,322Loss (gain) on sale of property and equipment, foreign exchange and other
    
    
    784
    
    
    
    (283
    )
    
    
    (2,526
    )
    
    
    (457
    )Income from operations
    
    
    13,761
    
    
    
    16,835
    
    
    
    26,086
    
    
    
    29,007Interest expense
    
    
    7,392
    
    
    
    7,802
    
    
    
    14,890
    
    
    
    18,040Change in fair value of warrants
    
    
    356
    
    
    
    
    
    
    
    (1,415
    )
    
    
    Income from continuing operations before income taxes
    
    
    6,013
    
    
    
    9,033
    
    
    
    12,611
    
    
    
    10,967Income tax provision
    
    
    2,567
    
    
    
    5,003
    
    
    
    5,155
    
    
    
    1,604Income from continuing operations
    
    
    3,446
    
    
    
    4,030
    
    
    
    7,456
    
    
    
    9,363Income from discontinued operations, net of income tax
provision of $267 for the six months ended June 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    407Gain (loss) on sale of discontinued operations, net of income tax
provision (benefit) of $(64) and $4,485 for the three and
six months ended June 30, 2008, respectively
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    6,869Net income
    
    $
    3,446
    
    
    $
    3,930
    
    
    $
    7,456
    
    
    $
    16,639Basic and diluted earnings per share:Earnings per share  continuing operations
    
    $
    0.07
    
    
    $
    0.09
    
    
    $
    0.16
    
    
    $
    0.20Earnings per share  discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.16Earnings per share  basic and diluted
    
    $
    0.07
    
    
    $
    0.09
    
    
    $
    0.16
    
    
    $
    0.36Weighted average common shares outstanding  basic
    
    
    46,254
    
    
    
    46,075
    
    
    
    46,182
    
    
    
    46,075Weighted average common shares outstanding  diluted
    
    
    46,254
    
    
    
    46,075
    
    
    
    46,195
    
    
    
    46,084
  3




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WASTE SERVICES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
 For the Six Months Ended June 30, 2009
 (In thousands)
 AccumulatedWaste Services, Inc.
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    EquityBalance, December 31, 2008, as previously reported
    
    
    43,985
    
    
    $
    439
    
    
    $
    512,942
    
    
    $
    38,221
    
    
    $
    (216,584
    )
    
    $
    335,018Cumulative effect of reclassification of warrants
    
    
    
    
    
    
    
    
    
    
    (13,774
    )
    
    
    
    
    
    
    11,379
    
    
    
    (2,395
    )Balance, January 1, 2009, as adjusted
    
    
    43,985
    
    
    
    439
    
    
    
    499,168
    
    
    
    38,221
    
    
    
    (205,205
    )
    
    
    332,623Stock-based compensation
    
    
    172
    
    
    
    2
    
    
    
    1,735
    
    
    
    
    
    
    
    
    
    
    
    1,737Conversion of exchangeable shares
    
    
    2,096
    
    
    
    21
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,620
    
    
    
    
    
    
    
    2,620Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,456
    
    
    
    7,456Balance, June 30, 2009
    
    
    46,253
    
    
    $
    462
    
    
    $
    500,882
    
    
    $
    40,841
    
    
    $
    (197,749
    )
    
    $
    344,436
  4




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WASTE SERVICES, INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Six Months Ended June 30,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    7,456
    
    
    $
    16,639Adjustments to reconcile net income to net cash flows
from operating activities:Income from discontinued operations, net of tax
    
    
    
    
    
    
    (7,276
    )Depreciation, depletion and amortization
    
    
    21,076
    
    
    
    23,322Amortization of debt issue costs and discounts
    
    
    1,697
    
    
    
    1,516Deferred income tax provision (benefit)
    
    
    1,991
    
    
    
    (3,711
    )Non-cash stock-based compensation expense
    
    
    1,737
    
    
    
    1,994Change in fair value of warrants
    
    
    (1,415
    )
    
    
    Gain on sale of property and equipment and other non-cash items
    
    
    (2,036
    )
    
    
    (50
    )Changes in operating assets and liabilities (excluding
the effects of acquisitions and dispositions):Accounts receivable
    
    
    (204
    )
    
    
    426Prepaid expenses and other current assets
    
    
    2,880
    
    
    
    1,929Accounts payable
    
    
    1,410
    
    
    
    (4,434
    )Accrued expenses and other current liabilities
    
    
    (11,977
    )
    
    
    (8,874
    )Net cash provided by continuing operations
    
    
    22,615
    
    
    
    21,481Net cash provided by discontinued operations
    
    
    
    
    
    
    1,163Net cash provided by operating activities
    
    
    22,615
    
    
    
    22,644Cash flows from investing activities:Cash used in business combinations
    
    
    (1,836
    )
    
    
    Capital expenditures
    
    
    (16,347
    )
    
    
    (20,399
    )Proceeds from asset sales and business divestitures
    
    
    6,696
    
    
    
    57,567Deposits for business acquisitions and other
    
    
    (200
    )
    
    
    (3,401
    )Net cash provided by (used in) continuing operations
    
    
    (11,687
    )
    
    
    33,767Net cash used in discontinued operations
    
    
    
    
    
    
    (43
    )Net cash provided by (used in) investing activities
    
    
    (11,687
    )
    
    
    33,724Cash flows from financing activities:Draw on revolving credit facility
    
    
    19,021
    
    
    
    Principal repayments of debt and capital lease obligations
    
    
    (33,458
    )
    
    
    (43,225
    )Fees paid for financing transactions
    
    
    (62
    )
    
    
    Net cash used in financing activities  continuing operations
    
    
    (14,499
    )
    
    
    (43,225
    )Effect of exchange rate changes on cash
    
    
    472
    
    
    
    (301
    )Increase (decrease) in cash
    
    
    (3,099
    )
    
    
    12,842Cash at the beginning of the period
    
    
    7,227
    
    
    
    20,706Cash at the end of the period
    
    $
    4,128
    
    
    $
    33,548
  5




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WASTE SERVICES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization of Business and Basis of Presentation
     6




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    2. Recently Issued Accounting Pronouncements and Adopted Accounting
 FASB Accounting Standards
Codification TM
  7




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
       June 30,
    
    January 1,2009
    
    2009Annual dividend
yield
    
    
    
    
    
    
    Expected life (years)
    
    
    0.8
    
    
    
    1.4Risk-free interest
rate
    
    
    0.6
    %
    
    
    0.4
    %Expected
volatility
    
    
    66
    %
    
    
    56
    %
 8




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  1 2
  
    
    Level one  Quoted market prices in active markets for identical assets or liabilities;
    
    Level two  Inputs other than level one inputs that are either directly or indirectly
observable; and
    
    Level three  Unobservable inputs developed using estimates and assumptions, which are
developed by the reporting entity and reflect those assumptions that a market participant
would use.
  June 30,Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    2009Accrued closure and post-closure obligations
    
    $
    
    
    
    $
    
    
    
    $
    19,349
    
    
    $
    19,349Accrued rent relative to October 2008 restructuring
    
    
    
    
    
    
    
    
    
    
    842
    
    
    
    842Fair value of warrants
    
    
    
    
    
    
    980
    
    
    
    
    
    
    
    980Total
    
    $
    
    
    
    $
    980
    
    
    $
    20,191
    
    
    $
    21,171
  9




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   3. Share-Based Payments
    WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateNumber
    
    Grant
    
    Contractual
    
    Intrinsicof Shares
    
    Value
    
    Term (Years)
    
    ValueNonvested restricted stock units -Beginning of the
period
    
    
    229,158
    
    
    $
    9.02
    
    
    
    0.3
    
    
    $
    1,508Granted
    
    
    438,669
    
    
    
    4.55Vested
    
    
    (171,875
    )
    
    
    9.02Forfeited
    
    
    (3,751
    )
    
    
    5.04End of the
period
    
    
    492,201
    
    
    
    5.07
    
    
    
    0.7
    
    
    
    2,550
 10




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Six Months Ended June 30,2009
    
    2008Annual dividend
yield
    
    
    
    
    
    
    Weighted average expected life
(years)
    
    
    7.0
    
    
    
    7.0Risk-free interest
rate
    
    
    2.6
    %
    
    
    3.2
    %Expected
volatility
    
    
    52
    %
    
    
    61
    %
    Number of
    
    
    Weighted Average Exercise PriceShares Issuable
    
    
    US$ Options
    
    C$ Options (C$)Options outstanding at the beginning of the
period
    
    
    2,218,965
    
    
    $
    12.29
    
    
    $
    20.41Granted
    
    
    282,500
    
    
    
    4.33
    
    
    
    Forfeited
    
    
    (29,668
    )
    
    
    8.40
    
    
    
    Expired
    
    
    (1,308,151
    )
    
    
    14.21
    
    
    
    20.41Options outstanding at the end of the period
    
    
    1,163,646
    
    
    
    8.67
    
    
    
    18.13Options vested or expected to vest at the end of the period
    
    
    1,064,828
    
    
    
    8.93
    
    
    
    18.13Options exercisable at the end of the period
    
    
    784,610
    
    
    
    10.08
    
    
    
    18.13
  11




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 4. Discontinued Operations
   5. Business Combinations and Significant Asset Acquisitions
   TotalPurchase price  cash paid and other consideration
    
    $
    1,890Allocated as follows:Accounts receivable
    
    $
    21Property and equipment
    
    
    954Other intangible assets
    
    
    613Fair value of assets acquired
    
    
    1,588Goodwill allocation
    
    
    302$
    1,890
  12




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2009
    
    
    June 30, 2009Revenue
    
    $
    107,913
    
    
    $
    203,863Income from continuing operations
    
    $
    3,451
    
    
    $
    7,477Basic and diluted earnings per share  continuing operations
    
    $
    0.07
    
    
    $
    0.16Pro forma weighted average number of common shares outstanding:Basic
    
    
    46,254
    
    
    
    46,182Diluted
    
    
    46,254
    
    
    
    46,195
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2008
    
    
    June 30, 2008Revenue
    
    $
    129,947
    
    
    $
    248,218Income from continuing operations
    
    $
    3,627
    
    
    $
    8,499Basic and diluted earnings per share  continuing operations
    
    $
    0.08
    
    
    $
    0.18Pro forma weighted average number of common shares outstanding:Basic
    
    
    46,075
    
    
    
    46,075Diluted
    
    
    46,075
    
    
    
    46,084
  13




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 6. Prepaid Expenses and Other Current Assets
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Prepaid expenses
    
    $
    7,548
    
    
    $
    9,793Parts and supplies
    
    
    1,832
    
    
    
    1,733Deferred income
taxes
    
    
    1,060
    
    
    
    Other current assets
    
    
    1,754
    
    
    
    2,146$
    12,194
    
    
    $
    13,672
  7. Property and Equipment
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Land and buildings
    
    $
    76,509
    
    
    $
    74,497Vehicles
    
    
    147,959
    
    
    
    141,650Containers, compactors and landfill and recycling equipment
    
    
    96,828
    
    
    
    89,568Furniture, fixtures, other office equipment and leasehold
improvements
    
    
    11,793
    
    
    
    11,060Total property and equipment
    
    
    333,089
    
    
    
    316,775Less: Accumulated depreciation
    
    
    (143,501
    )
    
    
    (127,975
    )Property and equipment, net
    
    $
    189,588
    
    
    $
    188,800
 8. Landfill Sites, Accrued Closure, Post-Closure and Other Obligations
 Landfill Sites
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Landfill sites
    
    $
    266,977
    
    
    $
    262,732Less: Accumulated depletion
    
    
    (72,007
    )
    
    
    (66,100
    )Landfill
sites, net
    
    $
    194,970
    
    
    $
    196,632
 14




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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Six Months Ended June 30,2009
    
    
    2008Balance at the beginning of the period
    
    $
    196,632
    
    
    $
    190,451Landfill site construction costs
    
    
    1,498
    
    
    
    4,505Additional asset retirement obligations
    
    
    666
    
    
    
    856Depletion
    
    
    (4,485
    )
    
    
    (5,214
    )Purchase price adjustments for prior
acquisitions
    
    
    9
    
    
    
    50Effect of foreign exchange rate fluctuations
    
    
    650
    
    
    
    (472
    )Balance at the end of the period
    
    $
    194,970
    
    
    $
    190,176
 Accrued Closure, Post-Closure and Other Obligations
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Accrued closure and post-closure obligations
    
    $
    14,994
    
    
    $
    12,749Accrued restructuring and severance costs
    
    
    2,805
    
    
    
    3,624Capital lease obligations
    
    
    5
    
    
    
    568Other obligations
    
    
    2,762
    
    
    
    2,458$
    20,566
    
    
    $
    19,399
   Six Months Ended June 30,2009
    
    
    2008Current portion at the beginning of the period
    
    $
    7,589
    
    
    $
    4,153Long-term portion at the beginning of the period
    
    
    12,749
    
    
    
    14,678Balance at the beginning of the period
    
    
    20,338
    
    
    
    18,831Additional asset retirement obligations
    
    
    666
    
    
    
    856Accretion
    
    
    316
    
    
    
    395Payments
    
    
    (2,486
    )
    
    
    (152
    )Other additions
    
    
    150
    
    
    
    300Effect of foreign exchange rate fluctuations
    
    
    365
    
    
    
    (260
    )Balance at the end of the period
    
    
    19,349
    
    
    
    19,970Less: Current portion
    
    
    (4,355
    )
    
    
    (4,279
    )Long-term portion
    
    $
    14,994
    
    
    $
    15,691
 15




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 9. Goodwill and Other Intangible Assets
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Other intangible assets subject to amortization:Customer relationships and contracts
    
    $
    48,959
    
    
    $
    48,997Non-competition agreements and other
    
    
    6,271
    
    
    
    5,62955,230
    
    
    
    54,626Less: Accumulated amortization:Customer relationships and contracts
    
    
    (28,631
    )
    
    
    (26,536
    )Non-competition agreements and other
    
    
    (2,758
    )
    
    
    (2,133
    )Other intangible assets subject to amortization, net
    
    
    23,841
    
    
    
    25,957Goodwill
    
    
    351,177
    
    
    
    346,929Goodwill and other intangible assets, net
    
    $
    375,018
    
    
    $
    372,886
  Six Months Ended June 30, 2009Florida
    
    
    Canada
    
    
    TotalBalance at the beginning of the period
    
    $
    263,428
    
    
    $
    83,501
    
    
    $
    346,929Acquisitions
    
    
    302
    
    
    
    
    
    
    
    302Effect of foreign exchange rate
fluctuations
    
    
    
    
    
    
    3,946
    
    
    
    3,946Balance at the end of the period
    
    $
    263,730
    
    
    $
    87,447
    
    
    $
    351,177
 Six Months Ended June 30, 2008Florida
    
    
    Canada
    
    
    TotalBalance at the beginning of the period
    
    $
    262,338
    
    
    $
    102,603
    
    
    $
    364,941Effect of foreign exchange rate
fluctuations
    
    
    
    
    
    
    (2,858
    )
    
    
    (2,858
    )Balance at the end of the
period
    
    $
    262,338
    
    
    $
    99,745
    
    
    $
    362,083
 10. Other Assets
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Debt issue costs, net of accumulated amortization of $3,953 and $3,035
as of June 30, 2009 and December 31, 2008, respectively
    
    $
    7,833
    
    
    $
    8,538Acquisition deposits
    
    
    761
    
    
    
    561Other assets
    
    
    525
    
    
    
    549$
    9,119
    
    
    $
    9,648
 16




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Accrued Expenses and Other Current Liabilities
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Deferred revenue
    
    $
    11,059
    
    
    $
    10,980Insurance reserves
    
    
    6,546
    
    
    
    6,505Accrued waste disposal costs
    
    
    6,090
    
    
    
    7,964Accrued compensation, benefits and subcontractor costs
    
    
    5,129
    
    
    
    7,893Accrued closure and post-closure obligations
    
    
    4,355
    
    
    
    7,589Accrued interest
    
    
    3,677
    
    
    
    3,702Accrued insurance premiums
    
    
    2,732
    
    
    
    6,123Accrued restructuring and severance
costs
    
    
    2,049
    
    
    
    3,183Accrued royalties and franchise fees
    
    
    1,823
    
    
    
    2,137Accrued capital expenditures
    
    
    1,452
    
    
    
    2,204Fair value of warrants
    
    
    980
    
    
    
    Current portion of capital lease obligations
    
    
    754
    
    
    
    315Accrued professional fees
    
    
    728
    
    
    
    794Accrued acquisition costs
    
    
    220
    
    
    
    631Other accrued expenses and current liabilities
    
    
    4,159
    
    
    
    2,782$
    51,753
    
    
    $
    62,802
 12. Debt
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Credit Facilities:U.S. dollar denominated revolving credit facility, floating interest rate at 3.8%
and 4.5% as of June 30, 2009 and December 31, 2008,
respectively
    
    $
    18,000
    
    
    $
    34,600Canadian dollar denominated revolving credit facility, floating interest rate at 4.0%
and 5.3%, net of discount of $71 and $56, as of June 30, 2009 and
December 31, 2008, respectively
    
    
    36,040
    
    
    
    27,699U.S. dollar denominated term loan facility, floating interest rate at 3.8%
and 4.5%, net of discount of $1,084 and $1,268, as of June 30, 2009 and
December 31, 2008, respectively
    
    
    37,310
    
    
    
    38,125Canadian dollar denominated term loan facility, floating interest rate at 4.0%
and 5.3%, net of discount of $3,314 and $3,668, as of June 30, 2009 and
as of December 31, 2008, respectively
    
    
    106,081
    
    
    
    103,505Senior Subordinated Notes, fixed interest rate at 9.5%, due 2014, net of discount
of $1,039 and $1,146 as of June 30, 2009 and December 31, 2008, respectively
    
    
    158,961
    
    
    
    158,854Other secured notes payable, interest at 4.5% to 7.8%, due through
2025, net of discount of $1,309 and $1,563 as of June 30, 2009 and
December 31, 2008, respectively
    
    
    6,341
    
    
    
    6,891Other subordinated notes payable, interest at 6.7%, due through 2017
    
    
    2,289
    
    
    
    2,395365,022
    
    
    
    372,069Less: Current portion
    
    
    (14,824
    )
    
    
    (11,102
    )Long-term portion
    
    $
    350,198
    
    
    $
    360,967
 17




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Senior Secured Credit Facilities
   Other Secured Notes Payable
  Senior Subordinated Notes
 1 2
   Direct Financing Lease Facility
  18




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 13. Commitments and Contingencies
 Environmental Risks
   Legal Proceedings
   Surety Bonds, Letters of Credit and Insurance
   19




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Six Months Ended June 30,2009
    
    
    2008Balance at the beginning of the period
    
    $
    6,505
    
    
    $
    6,055Provisions
    
    
    1,372
    
    
    
    2,921Payments
    
    
    (1,514
    )
    
    
    (2,742
    )Unfavorable claim development for prior
periods
    
    
    183
    
    
    
    362Balance at the end of the period
    
    $
    6,546
    
    
    $
    6,596
 Disposal Agreement
   Purchase Agreement
  20




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Contractual Arrangements
  Severanceand RelatedCosts
    
    
    Rent
    
    
    Consulting
    
    
    TotalBalance at the beginning of the
period
    
    $
    3,238
    
    
    $
    984
    
    
    $
    812
    
    
    $
    5,034Provisions
    
    
    94
    
    
    
    41
    
    
    
    
    
    
    
    135Payments
    
    
    (1,506
    )
    
    
    (183
    )
    
    
    (125
    )
    
    
    (1,814
    )Foreign exchange and other
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    58Balance at the end of the period
    
    $
    1,884
    
    
    $
    842
    
    
    $
    687
    
    
    $
    3,413
   14. Authorized Capital Stock and Migration Transaction
 Total Shares
  
    
    166,666,666 shares of common stock, par value 0.01 per share; and
    
    5,000,000 shares of preferred stock, par value 0.01 per share, of which 100,000 shares
have been designated as Series A Preferred Stock.
 Preferred Stock
  21




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Migration Transaction
      Warrants
  WeightedWeighted
    
    AverageNumber
    
    Average
    
    Remaining
    
    Aggregateof Shares
    
    Exercise
    
    Contractual
    
    IntrinsicIssuable
    
    Price
    
    Term (Years)
    
    ValueOutstanding at the beginning of the period
    
    
    3,317,695
    
    
    $
    9.47
    
    
    
    1.3
    
    
    $
    Expired during the period
    
    
    (513,000
    )
    
    
    12.68Outstanding at the end of the period
    
    
    2,804,695
    
    
    $
    8.88
    
    
    
    1.0
    
    
    $
    
 22




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 15. Comprehensive Income (Loss)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    3,446
    
    
    $
    3,930
    
    
    $
    7,456
    
    
    $
    16,639Foreign currency translation adjustment
    
    
    3,989
    
    
    
    1,270
    
    
    
    2,620
    
    
    
    (6,031
    )Comprehensive income
    
    $
    7,435
    
    
    $
    5,200
    
    
    $
    10,076
    
    
    $
    10,608
 16. Segment Information
    Three Months Ended June 30, 2009Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    50,737
    
    
    $
    56,748
    
    
    $
    
    
    
    $
    107,485Depreciation, depletion and
amortization
    
    
    6,336
    
    
    
    4,160
    
    
    
    220
    
    
    
    10,716Income (loss) from operations
    
    
    7,715
    
    
    
    10,471
    
    
    
    (4,425
    )
    
    
    13,761Capital expenditures
    
    
    5,585
    
    
    
    3,677
    
    
    
    141
    
    
    
    9,403
 Three Months Ended June 30, 2008Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    60,774
    
    
    $
    67,508
    
    
    $
    
    
    
    $
    128,282Depreciation, depletion and
amortization
    
    
    6,610
    
    
    
    4,671
    
    
    
    339
    
    
    
    11,620Income (loss) from operations
    
    
    10,099
    
    
    
    13,509
    
    
    
    (6,773
    )
    
    
    16,835Capital expenditures
    
    
    5,819
    
    
    
    3,879
    
    
    
    294
    
    
    
    9,992
 Six Months Ended June 30, 2009Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    100,980
    
    
    $
    102,297
    
    
    $
    
    
    
    $
    203,277Depreciation, depletion and
amortization
    
    
    12,680
    
    
    
    7,938
    
    
    
    458
    
    
    
    21,076Income (loss) from operations
    
    
    19,081
    
    
    
    17,196
    
    
    
    (10,191
    )
    
    
    26,086Capital expenditures
    
    
    8,231
    
    
    
    7,864
    
    
    
    252
    
    
    
    16,347
 23




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Six Months Ended June 30, 2008Florida
    
    Canada
    
    Corporate
    
    TotalRevenue
    
    $
    120,862
    
    
    $
    124,028
    
    
    $
    
    
    
    $
    244,890Depreciation, depletion and
amortization
    
    
    13,345
    
    
    
    9,282
    
    
    
    695
    
    
    
    23,322Income (loss) from operations
    
    
    20,302
    
    
    
    22,851
    
    
    
    (14,146
    )
    
    
    29,007Capital expenditures
    
    
    7,501
    
    
    
    12,492
    
    
    
    406
    
    
    
    20,399
 17. Condensed Consolidating Financial Statements
   Three Months Ended June 30, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenue
    
    $
    
    
    
    $
    60,774
    
    
    $
    67,508
    
    
    $
    
    
    
    $
    128,282Operating and other expenses:Cost of operations (exclusive of depreciation,
depletion and amortization)
    
    
    
    
    
    
    39,468
    
    
    
    44,137
    
    
    
    
    
    
    
    83,605Selling, general and administrative expense (exclusive
of depreciation, depletion and
amortization)
    
    
    3,430
    
    
    
    4,879
    
    
    
    8,196
    
    
    
    
    
    
    
    16,505Depreciation, depletion and amortization
    
    
    25
    
    
    
    6,610
    
    
    
    4,985
    
    
    
    
    
    
    
    11,620Foreign exchange gain and other
    
    
    
    
    
    
    (282
    )
    
    
    (1
    )
    
    
    
    
    
    
    (283
    )Equity earnings in investees, net of tax
    
    
    (15,063
    )
    
    
    
    
    
    
    
    
    
    
    15,063
    
    
    
    Income from operations
    
    
    11,608
    
    
    
    10,099
    
    
    
    10,191
    
    
    
    (15,063
    )
    
    
    16,835Interest expense
    
    
    7,678
    
    
    
    42
    
    
    
    82
    
    
    
    
    
    
    
    7,802Income from continuing operations
before income taxes
    
    
    3,930
    
    
    
    10,057
    
    
    
    10,109
    
    
    
    (15,063
    )
    
    
    9,033Income tax provision
    
    
    
    
    
    
    1,804
    
    
    
    3,199
    
    
    
    
    
    
    
    5,003Net income from continuing operations
    
    
    3,930
    
    
    
    8,253
    
    
    
    6,910
    
    
    
    (15,063
    )
    
    
    4,030Loss on sale of discontinued operations,
net of income tax benefit of $64
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    (100
    )Net income
    
    $
    3,930
    
    
    $
    8,153
    
    
    $
    6,910
    
    
    $
    (15,063
    )
    
    $
    3,930
 24




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Six Months Ended June 30, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenue
    
    $
    
    
    
    $
    120,862
    
    
    $
    124,028
    
    
    $
    
    
    
    $
    244,890Operating and other expenses:Cost of operations (exclusive of depreciation,
depletion and amortization)
    
    
    
    
    
    
    78,384
    
    
    
    81,765
    
    
    
    
    
    
    
    160,149Selling, general and administrative expense (exclusive
of depreciation, depletion and amortization)
    
    
    7,094
    
    
    
    9,314
    
    
    
    16,461
    
    
    
    
    
    
    
    32,869Depreciation, depletion and amortization
    
    
    49
    
    
    
    13,345
    
    
    
    9,928
    
    
    
    
    
    
    
    23,322Foreign exchange loss (gain) and other
    
    
    1
    
    
    
    (483
    )
    
    
    25
    
    
    
    
    
    
    
    (457
    )Equity earnings in investees, net of tax
    
    
    (41,606
    )
    
    
    
    
    
    
    
    
    
    
    41,606
    
    
    
    Income from operations
    
    
    34,462
    
    
    
    20,302
    
    
    
    15,849
    
    
    
    (41,606
    )
    
    
    29,007Interest expense
    
    
    17,823
    
    
    
    93
    
    
    
    124
    
    
    
    
    
    
    
    18,040Income from continuing operations
before income taxes
    
    
    16,639
    
    
    
    20,209
    
    
    
    15,725
    
    
    
    (41,606
    )
    
    
    10,967Income tax provision (benefit)
    
    
    
    
    
    
    (3,683
    )
    
    
    5,287
    
    
    
    
    
    
    
    1,604Net income from continuing operations
    
    
    16,639
    
    
    
    23,892
    
    
    
    10,438
    
    
    
    (41,606
    )
    
    
    9,363Net income from discontinued operations,
net of income tax provision of $267
    
    
    
    
    
    
    407
    
    
    
    
    
    
    
    
    
    
    
    407Gain on sale of discontinued operations,
net of income tax provision of $4,485
    
    
    
    
    
    
    6,869
    
    
    
    
    
    
    
    
    
    
    
    6,869Net income
    
    $
    16,639
    
    
    $
    31,168
    
    
    $
    10,438
    
    
    $
    (41,606
    )
    
    $
    16,639
 25




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##### Table of Contents



WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Six Months Ended June 30, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in) operating activities
    
    $
    (20,397
    )
    
    $
    31,008
    
    
    $
    12,033
    
    
    $
    
    
    
    $
    22,644Cash flows from investing activities:Capital expenditures
    
    
    (29
    )
    
    
    (7,501
    )
    
    
    (12,869
    )
    
    
    
    
    
    
    (20,399
    )Proceeds from asset sales and business divestitures
    
    
    10
    
    
    
    57,458
    
    
    
    99
    
    
    
    
    
    
    
    57,567Deposits for business acquisitions and other
    
    
    (3,351
    )
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (3,401
    )Intercompany
    
    
    80,100
    
    
    
    
    
    
    
    
    
    
    
    (80,100
    )
    
    
    Net cash provided by (used in) continuing operations
    
    
    76,730
    
    
    
    49,957
    
    
    
    (12,820
    )
    
    
    (80,100
    )
    
    
    33,767Net cash used in discontinued operations
    
    
    
    
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    (43
    )Net cash provided by (used in) investing activities
    
    
    76,730
    
    
    
    49,914
    
    
    
    (12,820
    )
    
    
    (80,100
    )
    
    
    33,724Cash flows from financing activities:Principal repayments of debt and capital lease obligations
    
    
    (43,126
    )
    
    
    (99
    )
    
    
    
    
    
    
    
    
    
    
    (43,225
    )Intercompany
    
    
    
    
    
    
    (80,863
    )
    
    
    763
    
    
    
    80,100
    
    
    
    Net cash provided by (used in) financing
activities  continuing operations
    
    
    (43,126
    )
    
    
    (80,962
    )
    
    
    763
    
    
    
    80,100
    
    
    
    (43,225
    )Effect of exchange rate changes
on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (301
    )
    
    
    
    
    
    
    (301
    )Increase (decrease) in cash and cash equivalents
    
    
    13,207
    
    
    
    (40
    )
    
    
    (325
    )
    
    
    
    
    
    
    12,842Cash and cash equivalents at the beginning of the period
    
    
    9,080
    
    
    
    239
    
    
    
    11,387
    
    
    
    
    
    
    
    20,706Cash and cash equivalents at the end of the period
    
    $
    22,287
    
    
    $
    199
    
    
    $
    11,062
    
    
    $
    
    
    
    $
    33,548
 26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
  Sources of Revenue
       27




---



##### Table of Contents



Expense Structure
       Recent Developments
 Acquisitions and Dispositions
    28




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##### Table of Contents



Goodwill
  29




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##### Table of Contents




    
    The fact that, to a significant extent, our shares are held by insiders and affiliates,
reducing market liquidity.
    
    One of our larger shareholders, due to circumstances unrelated to us, is liquidating their
position putting pressure on the market price of our shares.
    
    We believe that in general, the market continues to discount the value of common equity,
believing that current leverage ratios are not sustainable and companies will be required to
refinance debt at higher rates and / or issue additional equity thereby diluting current
shareholders. However, as a result of the October 2008 refinancing of our Senior Secured
Credit Facilities, we believe our capital structure to be stable, but such stability is not
reflected in our share price.
   30




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##### Table of Contents



Results of Operations for the Three and Six Months Ended June 30, 2009 and 2008
   As of:June 30,
2009
    
    $
    0.8598December 31,
2008
    
    
    0.8210For the three months ended:June 30,
2009
    
    $
    0.8570June 30,
2008
    
    
    0.9900For the six months ended:June 30,
2009
    
    $
    0.8294June 30,
2008
    
    
    0.9927
  Three Months Ended June 30, 2009Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    50,737
    
    
    
    100.0
    %
    
    $
    56,748
    
    
    
    100.0
    %
    
    $
    107,485
    
    
    
    100.0
    %Operating expenses:Cost of operations
    
    
    31,540
    
    
    
    62.2
    %
    
    
    37,944
    
    
    
    66.9
    %
    
    
    69,484
    
    
    
    64.6
    %Selling, general and administrative expense
    
    
    6,321
    
    
    
    12.5
    %
    
    
    6,419
    
    
    
    11.3
    %
    
    
    12,740
    
    
    
    11.9
    %Depreciation, depletion and amortization
    
    
    6,358
    
    
    
    12.5
    %
    
    
    4,358
    
    
    
    7.7
    %
    
    
    10,716
    
    
    
    10.0
    %Loss (gain) on sale of property and equipment,
foreign exchange and other
    
    
    1,277
    
    
    
    2.5
    %
    
    
    (493
    )
    
    
    -0.9
    %
    
    
    784
    
    
    
    0.7
    %Income from operations
    
    $
    5,241
    
    
    
    10.3
    %
    
    $
    8,520
    
    
    
    15.0
    %
    
    $
    13,761
    
    
    
    12.8
    %Three Months Ended June 30, 2008Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    60,774
    
    
    
    100.0
    %
    
    $
    67,508
    
    
    
    100.0
    %
    
    $
    128,282
    
    
    
    100.0
    %Operating expenses:Cost of operations
    
    
    39,468
    
    
    
    64.9
    %
    
    
    44,137
    
    
    
    65.4
    %
    
    
    83,605
    
    
    
    65.2
    %Selling, general and administrative expense
    
    
    8,309
    
    
    
    13.7
    %
    
    
    8,196
    
    
    
    12.1
    %
    
    
    16,505
    
    
    
    12.9
    %Depreciation, depletion and amortization
    
    
    6,635
    
    
    
    10.9
    %
    
    
    4,985
    
    
    
    7.4
    %
    
    
    11,620
    
    
    
    9.1
    %Gain on sale of property and equipment,
foreign exchange and other
    
    
    (282
    )
    
    
    -0.4
    %
    
    
    (1
    )
    
    
    0.0
    %
    
    
    (283
    )
    
    
    -0.3
    %Income from operations
    
    $
    6,644
    
    
    
    10.9
    %
    
    $
    10,191
    
    
    
    15.1
    %
    
    $
    16,835
    
    
    
    13.1
    %
 31




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##### Table of Contents



Six Months Ended June 30, 2009Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    100,980
    
    
    
    100.0
    %
    
    $
    102,297
    
    
    
    100.0
    %
    
    $
    203,277
    
    
    
    100.0
    %Operating expenses:Cost of operations
    
    
    63,515
    
    
    
    62.9
    %
    
    
    69,177
    
    
    
    67.6
    %
    
    
    132,692
    
    
    
    65.3
    %Selling, general and administrative expense
    
    
    12,767
    
    
    
    12.6
    %
    
    
    13,182
    
    
    
    12.9
    %
    
    
    25,949
    
    
    
    12.8
    %Depreciation, depletion and amortization
    
    
    12,722
    
    
    
    12.6
    %
    
    
    8,354
    
    
    
    8.2
    %
    
    
    21,076
    
    
    
    10.4
    %Gain on sale of property and equipment,
foreign exchange and other
    
    
    (2,197
    )
    
    
    -2.1
    %
    
    
    (329
    )
    
    
    -0.3
    %
    
    
    (2,526
    )
    
    
    -1.3
    %Income from operations
    
    $
    14,173
    
    
    
    14.0
    %
    
    $
    11,913
    
    
    
    11.6
    %
    
    $
    26,086
    
    
    
    12.8
    %Six Months Ended June 30, 2008Florida
    
    
    Canada
    
    
    TotalRevenue
    
    $
    120,862
    
    
    
    100.0
    %
    
    $
    124,028
    
    
    
    100.0
    %
    
    $
    244,890
    
    
    
    100.0
    %Operating expenses:Cost of operations
    
    
    78,384
    
    
    
    64.9
    %
    
    
    81,765
    
    
    
    65.9
    %
    
    
    160,149
    
    
    
    65.4
    %Selling, general and administrative expense
    
    
    16,408
    
    
    
    13.6
    %
    
    
    16,461
    
    
    
    13.3
    %
    
    
    32,869
    
    
    
    13.4
    %Depreciation, depletion and amortization
    
    
    13,394
    
    
    
    11.1
    %
    
    
    9,928
    
    
    
    8.0
    %
    
    
    23,322
    
    
    
    9.6
    %Loss (gain) on sale of property and equipment,
foreign exchange and other
    
    
    (482
    )
    
    
    -0.5
    %
    
    
    25
    
    
    
    0.0
    %
    
    
    (457
    )
    
    
    -0.2
    %Income from operations
    
    $
    13,158
    
    
    
    10.9
    %
    
    $
    15,849
    
    
    
    12.8
    %
    
    $
    29,007
    
    
    
    11.8
    %
 32




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##### Table of Contents



Revenue
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Collection
    
    $
    90,470
    
    
    
    75.7
    %
    
    $
    104,865
    
    
    
    74.0
    %
    
    $
    172,731
    
    
    
    76.4
    %
    
    $
    201,370
    
    
    
    74.4
    %Landfill disposal
    
    
    10,912
    
    
    
    9.1
    %
    
    
    12,757
    
    
    
    9.0
    %
    
    
    20,486
    
    
    
    9.1
    %
    
    
    24,586
    
    
    
    9.1
    %Transfer station
    
    
    15,804
    
    
    
    13.2
    %
    
    
    17,896
    
    
    
    12.6
    %
    
    
    28,778
    
    
    
    12.7
    %
    
    
    32,567
    
    
    
    12.0
    %Material recovery facilities
    
    
    2,070
    
    
    
    1.7
    %
    
    
    5,607
    
    
    
    4.0
    %
    
    
    3,642
    
    
    
    1.6
    %
    
    
    11,393
    
    
    
    4.2
    %Other specialized services
    
    
    245
    
    
    
    0.3
    %
    
    
    633
    
    
    
    0.4
    %
    
    
    446
    
    
    
    0.2
    %
    
    
    824
    
    
    
    0.3
    %119,501
    
    
    
    100.0
    %
    
    
    141,758
    
    
    
    100.0
    %
    
    
    226,083
    
    
    
    100.0
    %
    
    
    270,740
    
    
    
    100.0
    %Intercompany elimination
    
    
    (12,016
    )
    
    
    
    
    
    
    (13,476
    )
    
    
    
    
    
    
    (22,806
    )
    
    
    
    
    
    
    (25,850
    )$
    107,485
    
    
    
    
    
    
    $
    128,282
    
    
    
    
    
    
    $
    203,277
    
    
    
    
    
    
    $
    244,890
     Cost of Operations
  33




---



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Selling, General and Administrative Expense
  34




---



##### Table of Contents



Depreciation, Depletion and Amortization
   Loss (Gain) on Sale of Property and Equipment, Foreign Exchange and Other
    35




---



##### Table of Contents



Interest Expense
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Senior Secured Credit Facilities
    
    $
    2,153
    
    
    $
    3,027
    
    
    $
    4,412
    
    
    $
    7,935Senior Subordinated Notes
    
    
    3,800
    
    
    
    3,800
    
    
    
    7,600
    
    
    
    7,600Amortization of debt issue costs and discounts
    
    
    858
    
    
    
    478
    
    
    
    1,697
    
    
    
    1,516Other interest expense
    
    
    581
    
    
    
    497
    
    
    
    1,181
    
    
    
    989$
    7,392
    
    
    $
    7,802
    
    
    $
    14,890
    
    
    $
    18,040
    Change in Fair Value of Warrants
  36




---



##### Table of Contents



Income Tax Provision (Benefit)
    Liquidity and Capital Resources
  37




---



##### Table of Contents



Senior Secured Credit Facilities
   Maximum
    
    Maximum
    
    MinimumConsolidated
    
    Consolidated
    
    ConsolidatedLeverage
    
    Senior Secured
    
    InterestRatio
    
    Leverage Ratio
    
    Coverage RatioSecond quarter - 2009
    
    
    4.50 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.50 : 1.00Third quarter - 2009
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00Fourth quarter - 2009
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00First quarter - 2010
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00Second quarter - 2010
    
    
    4.25 : 1.00
    
    
    
    2.75 : 1.00
    
    
    
    2.75 : 1.00
  Other Secured Notes Payable
  Senior Subordinated Notes
 1 2
 38




---



##### Table of Contents



Direct Financing Lease Facility
  Surety Bonds, Letters of Credit and Insurance
   Cash Flows
  Cash Flows from Operating Activities
  39




---



##### Table of Contents



Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  Cash Flow from Discontinued Operations
  Off-Balance Sheet Financing
  40




---



##### Table of Contents



Landfill Sites
  Balance,
    
    
    
    
    
    Balance,Beginning
    
    Airspace
    
    Endof Period
    
    Consumed
    
    of PeriodUnited StatesPermitted capacity
    
    
    80,025
    
    
    
    (960
    )
    
    
    79,065Probable expansion capacity
    
    
    
    
    
    
    
    
    
    
    Total available airspace
    
    
    80,025
    
    
    
    (960
    )
    
    
    79,065Number of sites
    
    
    4
    
    
    
    
    
    
    
    4CanadaPermitted capacity
    
    
    11,018
    
    
    
    (210
    )
    
    
    10,808Probable expansion capacity
    
    
    4,852
    
    
    
    
    
    
    
    4,852Total available airspace
    
    
    15,870
    
    
    
    (210
    )
    
    
    15,660Number of sites
    
    
    3
    
    
    
    
    
    
    
    3TotalPermitted capacity
    
    
    91,043
    
    
    
    (1,170
    )
    
    
    89,873Probable expansion capacity
    
    
    4,852
    
    
    
    
    
    
    
    4,852Total available airspace
    
    
    95,895
    
    
    
    (1,170
    )
    
    
    94,725Number of sites
    
    
    7
    
    
    
    
    
    
    
    7
 Trend Information
 Seasonality
  
    
    Less solid waste is generated during the late fall, winter and early spring because of
decreased construction and demolition activity.
    
    Certain operating costs are higher in the winter months because winter weather conditions
slow waste collection activities, resulting in higher labor costs, and rain and snow
increase the weight of collected waste, resulting in higher disposal costs, which are
calculated on a per ton basis.
    
    During the summer months, there are more tourists and part-time residents in some of our
service areas, resulting in more residential and commercial collection.
  41




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##### Table of Contents



New Accounting Pronouncements
 FASB Accounting Standards
Codification TM
      42




---



##### Table of Contents



1 2
   Disclosure Regarding Forward-Looking Statements and Factors Affecting Future Results
   
    
    our substantial indebtedness and the significant restrictive covenants in our various
credit facilities and our ability to finance acquisitions and / or capital expenditures with
cash on hand, debt or equity offerings;
    
    our ability to pay principal debt amounts due at maturity;
    
    our business is capital intensive and may consume cash in excess of cash flow from
operations and borrowings;
    
    our ability to vertically integrate our operations;
    
    our ability to maintain and perform our financial assurance obligations;
    
    changes in regulations affecting our business and costs of compliance;
 43




---



##### Table of Contents




    
    revocation of existing permits and licenses or the refusal to renew or grant new permits
and licenses, which are required to enable us to operate our business or implement our
growth strategy;
    
    our domestic operations are concentrated in Florida, which may be subject to specific
economic conditions that vary from those nationally as well as weather related events that
may impact our operations;
    
    construction, equipment delivery or permitting delays for our transfer stations or
landfills;
    
    our ability to successfully implement our corporate strategy and integrate any
acquisitions we undertake;
    
    our ability to negotiate renewals of existing service agreements at favorable rates;
    
    our ability to enhance profitability of certain aspects of our operations in markets
where we are not internalized through either divestiture or asset swaps;
    
    costs and risks associated with litigation; and
    
    changes in general business and economic conditions, commodity pricing, exchange rates,
the financial markets and accounting standards or pronouncements.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   44




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##### Table of Contents



Item 4. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  45




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
   Number ofVotesDirector
    
    Number of Votes For
    
    WithheldMichael H. De Groote
    
    
    41,182,962
    
    
    
    1,607,726Wallace L. Timmeny
    
    
    41,349,779
    
    
    
    1,440,909Michael J. Verrochi
    
    
    41,341,689
    
    
    
    1,448,999
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit 31.1
    
    Section 302 Certification of David Sutherland-Yoest, Chief Executive Officer.Exhibit 31.2
    
    Section 302 Certification of Edwin D. Johnson, Chief Financial Officer.Exhibit 32.1
    
    Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
 46




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##### Table of Contents



SIGNATURES
  WASTE SERVICES, INC.Date: July 23, 2009By:
    /s/ DAVID SUTHERLAND-YOESTDavid Sutherland-YoestPresident and Chief Executive OfficerBy:
    /s/ EDWIN D. JOHNSONEdwin D. JohnsonExecutive Vice President, Chief Financial Officer 47




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No
    
    DescriptionExhibit 31.1
    
    Section 302 Certification of David Sutherland-Yoest, Chief Executive Officer.Exhibit 31.2
    
    Section 302 Certification of Edwin D. Johnson, Chief Financial Officer.Exhibit 32.1
    
    Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
 48