Good morning, and welcome to the Fourth Quarter and Year-End Conference Call for Investors in Republic Services. Republic Services is traded on the New York Stock Exchange under the symbol RSG. Your host this morning is Republic's Chairman and CEO, Mr. Jim O'Connor. Today's call is being recorded, and all participants are in a listen-only mode. There will be a question-and-answer session following Republic's summary of quarterly earnings. (Operator Instructions). At this time, it is my pleasure to turn the call over to Mr. O'Connor. Good morning, Mr. O'Connor.

Good morning, Charlene and welcome. Good morning and thank you for joining us. This is Jim O'Connor and I'd like to welcome everyone to Republic Services' fourth quarter conference call. In addition to reviewing our fourth quarter and full year performance, we will also discuss our guidance for 2009. Don Slager, our President and Chief Operating Officer; Tod Holmes, our Chief Financial Officer; and Ed Lang, our Treasurer are joining me as we discuss our fourth quarter and year-end performance. I'd like to take a moment to remind everyone that some of the information we discuss on today's call contains forward-looking statements, which involve risks and uncertainties, and may be materially different from our actual results. Our SEC filings discuss factors that could cause actual results to differ materially from expectations. Additionally, the material we discuss today is time sensitive. If in the future, you listen to a rebroadcast or recording of this conference call, you should be sensitive to the date of the original call, which is February 27, 2009. Please note that this call is the property of Republic Services Incorporated, any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Republic Services is strictly prohibited. I want to start this call with a review of our integration process and tell you how the merger is progressing, before Don reviews operating performance and Tod discusses financial results. We're confident in our guidance of achieving $150 million of annual run-rate synergies by the end of 2010. We expect to be on a run-rate of $100 million by the end of 2009. The cost to achieve these synergies are anticipated to be approximately $135 million in 2009 and $55 million in 2010. Our Board of Directors had established a committee to oversee the…

Thanks Jim. Our consolidated operating performance for the fourth quarter of 2008 consists of three months of Republic and one month of Allied. However, in my comments we'll look at our operating performance as if the two companies were combined for the entire fourth quarter. Tod will speak to report internal growth, but on a pro forma combined basis fourth quarter core price was strong at 4.1%, and fuel fees were 1.7%. Our landfill price improved in the fourth quarter was approximately 4%. We continue to succeed in maintaining our price strategy to achieve an appropriate return on capital. On a pro forma combined basis, the revenue impact from commodities was negative 1.8%, average price per ton of commodities decreased approximately 43% from Q4, 2007. On a pro forma combined basis fourth quarter volume loss was negative at 6.8%. If we exclude the positive volumes from Hurricane Ike, fourth quarter volumes were down 7.8% which reflects the challenging economic environment. The greatest impact of volume loss was in a temporary roll-off in landfill lines of business. Additionally, we saw decline in volumes from the third quarter 2008 to the fourth quarter 2008 in the commercial collection and permanent roll-off businesses. These volume declines are a result of the weak economy and are not a result of loss of market share. Although, we can not control the volumes that are lost as a result of a weakened economy, we're fully engaged in reducing cost to maintain our margins. On a pro forma combined basis, and excluding the unusual cost for quarter during the fourth quarter, EBITDA margins were approximately 28%. This strong operating performance in a weak economic environment, demonstrates the quality of our field organization and our financial discipline. Our Operations Controller, Jerry Clarke and I are actively engaged with…

Thank you, Don. First, there is a lot of accounting noise here and I want to remind everybody that the key premise for this merger was and continues to be cash and the generation of cash flows. We will have every year a $150 million of cash synergies upon full integration of both businesses which will occur by the end of 2010. Let me turn now to the 2008 fourth quarter results, and remind everyone that the 2008 financial results include about one month of post merger Allied results. And therefore, financial comparisons to prior years are not particularly meaningful. There are two months of Allied results that do not get reported since their last SEC filing was the September 30th Q, and then our financial results only one month of their numbers are included. So we do have some pro forma financial information which Don provided to you. Let me talk now to fourth quarter 2008 revenue. As we reported revenue rose 56.3% to $1.24 billion from $796 million last year. This increase of $448 million consisted primarily of $462 million or 58% from the merger with Allied. Again approximately, one month of revenue and a decline of about $14 million or about 1.7% for standalone Republic revenues. For Q4, we are reporting the addition of Allied revenues as acquisition growth. Accordingly, the following components of internal growth, relate only to the Republic standalone business. Republic standalone core price growth is 4.1%. Republic standalone fee increase is 1.8%. Republic standalone commodity price declines was negative 1.3%, for a total price for 4.6%. Now, Republic standalone volumes are down about 6.6%, actually as we moved through the quarter they continue to decline into the latter part of the third quarter. In addition, we had about three tenths of 1% for…

Thank you. Tod. I'd echo those comments about the financial staff of Republic Services and to the operational staff under Don. We've done a tremendous amount of work here in the last three or four months and planning for the integration, and then once the merger was closed in early December, starting to executing against that plan as well as putting the two companies together financially and then putting the '09 plan together. So again Tod your staffs and Don yours in the field are to be commended on the hard work that they put forward to put this business plan together and to which we're now are going to our guidance for 2009. 2009 assumes there will be no recovery in the economic environment. Our revenue is expected to decline approximately 10% with a 4% increase from core price, a volume decline of 8%. Our commodities will be down 2%. Fuel fees is down 2.5%, divestitures are expected to reduce revenues by 1.5%. Free cash flow from operations and before divestitures and accrued capital spending is expected to be $550 million or $650 million excluding merger related payments. Net capital expenditures are expected to be $845 million; this level of spending has been adjusted for the economic environment. With our strong capital structure and excess free cash flow, our business operations provide ongoing liquidity and we have no need to look to the debt capital markets for the next two years. EBITDA margins are expected to be approximately 28%, or approximately 29.5% before cost related to integrating our businesses. This is an improvement of 150 basis points when compared to full year. Adjusted 2008 EBITDA performance, excluding the integration impact, operating margins will be in a range of 17.5% to 18%. Earnings per share before merger and purchase accounting related expenses is expected to be $1.70 to $1.75 in 2009. As Tod noted, merger related costs will represent $0.20 of earnings per share and purchase accounting related costs will represent $0.40 earnings per share. As you know, our practice is to provide financial guidance based on current conditions and update these expectations on second quarter earnings call in July. That will be the practice that we will follow in 2009. So with that, operator I'd like now to open up the lines for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). And our first question comes from Scott Levine of JPMorgan. Your line is open.

Good morning, guys.

Good morning, Scott.

Hi, Scott.

You mentioned that you have to wait in place to kind of attract the achievement of synergies versus your targets, how would you guide investors to kind of think about how you guys are hitting your boogies there and tying in with that the idea that may be you guys will be ratcheting down your work force reflecting the work force down giving you the step drop-off in the economic environment beginning in Q4?

I think Scott going forward we will be able to separate out the synergies versus the adjustments that Don will be making in the field organizations, we'll make in a corporate related to the economy. As we move forward, I think what these synergies fall into three buckets predominantly and that's going to be the restructuring of corporate and the field organization. And that will represent the lion's share of the majority of $150 million. Actually, the plan that we're executing against is upwards to $170 million of synergies. So the way it will break out going into '09 or at the end of '09, we'll be on a run-rate going into '10 of a $100 million and about $50 million to $60 million will from reorganization and head count, transportation and disposal, which is disposal optimization, which will be another roughly $15 million to $20 million, route consolidations will also occur in the latter part of the year. Once we have the overlap markets on our systems, will represent about $5 million to $8 million, then with that procurement financing which relates to some surety and other financing that Ed Lang can talk about and then some facility consolidation. So that will comprise the $100 million. As I said we're already at the end of and online through the end of March, to have a $70 million run-rate going into '09. So significantly well into that, and again the lion's share is coming from again, the restructuring of the corporate office and the field organization. And we feel really good about this. And I think if you would talk to the Board today, they feel very good about it and Deloitte has made those same representations as they've accounted for the number of these along but our internal staff.

And can you guys provide me a quantified synergy updates quarter-to-quarter going forward or is there are not delayed expectation there?

Well, we will be quarterly reporting on our progress.

Got it. One additional one if I may, the volume guidance may be a little bit below we had anticipated but the core pricing that you guided to a little bit above what we were looking for. Could you talk about what gives you the level of confidence regarding the sustainability of pricing with the economy dropping off the way it is and also what the implications of this merger and more consolidated industry might be for this sustainability of pricing into a pretty rough economic environment?

Scott, we always said pricing is a discipline and I think we have it in Republic Services and I think Allied was practicing it. But I think the real headline here is when you continue to look at disposal pricing in the business you are seeing disposal pricing move anywhere from 3.5% to in excess of 4%. This is going to continue to sustain pricing in the marketplace. And again we feel very good about our guidance in '09 and we feel that we'll be able to retain the guidance that we given of 4% price.

If I could add on, on the trend basis to the... it's sequentially Q3 to Q4, we saw pricing move directionally right all lines of business and price per unit from Q3 to Q4 continue to move up. Our Q4 price is directly in line with the 4% that we're giving you guidance on in 2009. And also prices to customers are going to come down a little bit, because the overall reduction in the fuel recovery is weak. And so, the price of the customers will see a slight reduction because fuel is up I think in our 2009 guidance that we've given you projects fuel being kind of consistent what we're seeing here a change, what we saw a change over there.

Yeah, I guess one other thing I will just add to the Tod's comment. We've got a lot of accounting noise here related to the merger. And again the focus here should be on cash. And I think when you look at EBITDA margins, our cash flow guidance, our cash flow performance in 2008 those were all I think depicting a very strong business plan and a management team that can execute against the plan. So while the economy is weak we believe that we are adjusting the business accordingly and I think the guidance reflects it. Next question?

Thank you. Our next question comes from Michael Hoffman from WSI. Your line is open.

Good morning, Michael.

Hi, good morning. I'll pick up on your theme Jim, so free cash flow these are approximate old RSG you were steadily doing $0.10 to $0.11 on every dollar of revenue in free cash, new RSG that's less, how do we get back to, how do we and when do we get back to that 10 to 11%? And can you do better you told the combining, Tod talking up to Scott's statement this is about cash?

Sure, there is a pretty direct simple answer to that. The cash flow guidance that I gave you for 2009 has about $70 million of taxes that we paid in 2009 that relates to 2008. So that's a big step up and then of course the other thing is just the business condition with the commodity impact, that's price and that's about $80 million. So I think to look at 2008 to 2009, and the fact that if you adjusted for the timing difference on these tax payments, it's about comparable for one year to the next. The 650 plus 70 is probably about 720 and if you looked at, probably the original guidance that both companies started out with a year ago it was in that same range. So we think that's pretty good and what is a very tough economic environment and how we're achieving it, well, as Don says we're focused on productivity and scaling the business. We are looking at the capital spend to make sure that we are right sizing the capital spend for the business. We've always said that this was a business that when it slows down, the cash flow still hold up because it is scalable.

Remember, we also have a contributions coming from the volumes coming back. We are, just.on the commodity side, we are seeing a 10% volume negative year-over-year and we saw the volume slide in the latter half of '08. So I'd say we've got as we said in the notes, we are not losing market share, the economy is depressed and we are seeing the same impact on all of our competitors that is, we see going and come into our landfills. So we're seeing price pretty continued increase, we're seeing volume drop, as the volume returns, we wholly expect we'll get our fair share of that volume back and we'll get all the contribution and cash that comes with that.

Okay. I have to pick a second question, when there is kind of probably a thousand that need to be asked. I guess what's the starting revenue number for, because you've given all these percentage change numbers, but we need some starting numbers, January 1, what are starting numbers, revenues starting?

I think what you do is you looked at the third quarter, Allied's 10-Q and the third quarter Republic 10-Q. And in the fourth quarter, we on a combined basis we probably had about 4% price and we probably had something like probably between 6% or may be close to 7% volume declines, may be a little less than 7% volume declines in the fourth quarter. So I think you use those two as the math to build your baseline for January 1st. I think Michael, as in the past you can contact Ed Lang and I can assure you he can assist in helping you build your models but again the story here is about the cash and I think you need to look at the cash and for all the listeners on the call it's really about the free cash generation and that's there is a lot of moving pieces and it's not unlike any other merger that would occur. We have got a lot of moving pieces here that relates to non-cash items. So I think the focus here is on cash, that's the story line of the business it's historically been MO of Republic Services to deliver it. And I think even in these economic times the '09 forecast recognize fairly strong and sustainable free cash flows and a pricing environment that remains stable and a good outlook for it. So operator next question.

Thank you. Our next question comes from Jonathan Ellis from Merrill Lynch. Your line is open.

Thanks. And good morning, guys.

Hi, good morning, Jon.

Just wanted to first talk on the results for the fourth quarter, you talked about volumes in the residential and commercial collections line being flat to modestly down, you have rental volumes down low double digits, and given that, my understanding is that a large portion of the Waste streams that are coming you're your landfills would be considered MSW and theoretically should show similar volumes trajectory to what you're seeing on the residential and commercial collection lines, I'm wondering if you kind of help reconcile the dramatic decline in volume, the landfill vis-à-vis the volume trend on the collection side of the business?

I'll let Don chime in here Jonathan. I think a lot of what we're seeing, while we're seeing relatively slight declines in our small container business, commercial business, and continued decline in our industrial roll-off. When you look at the weight per unit, we're starting to see a decline. So when you look at weights per container yard, we're starting to see anywhere from 3 to 5% decreases that have not necessarily reflected, then totally reflected in frequencies of service to customers. But we've seen disposal decline on a unit basis. So that's kind of giving rise to our competitors, we're just sure they're seeing the same thing, which is contributing to the landfill volumes being declining faster. And what appears today are small commercial collection business. So with that, Don I don't know if you have anything you want to add to that. But, I think that's a lot other.

Yeah overall, again as I said in my comments, the roll-off industrial and temporary roll-off system took another big decline in Q4, down double digits in the fourth quarter. And as Jim said, we're starting to see declines in the commercial residential business. Jim said we track pounds per yard, pounds per home in our collection system. And we see just how much thrash our customers are throwing away. So we're starting to see those containers lighten enough, we are beginning to see some service decreases occur out there. And again that that ties with our guidance to 10% volume loss, 10% year-over-year volume change for the company in '09. So we are managing those service decreases very well, we are managing cost out of the middle in our business to deal with those volume declines. But again like I said it's not a competitive market share loss, it's just strictly economy for all that we can see.

Yeah, Jonathan I think what we are seeing C&D then predominately industrial collection of volumes in our landfills down about 9% and we are seeing special waste also down 9% fourth quarter '07 to fourth quarter '08. So again we've seen significant drop-offs in those particular areas, special waste in particular discretionary spend by business out there and in these times those particular volumes tend to dry up, they are not our regulatory driven. So again we are starting to see some of those impacts. Obviously, this economy is a lot different than the economy we experienced in 2001. We are seeing it move into our commercial collection business and in other discretionary spends that some of our customers add such as special waste. I will tell you that Don and our staff in the field have done an extraordinary job in light of kind of go through this merger and adjusting the work force. And the assets used in the business to produce the results that we are seeing and produce the guidance that we're going to be executing against in '09.

Great. That's right I appreciate the color there. My second question I'll try to make two parts out of it since you're limited is on synergies, the first part is of the 100 million run-rate for 2009, how much of that is a function of just simply closing the headquarters of Republic, really more the SG&A type savings as opposed to the cost of operation savings? And then the second part of the question is, how much of your synergy targets been impacted by the volume weakness that seems to have really intensified since you originally like your synergy targets during 2008?

Hi, this is Tod I'll take the first part and then may be Don can take the second part on the change in the economy impact on synergies. The closure of the Florida location, probably gave us about $60 million of benefit of the $100 million run-rate there. Again, we've got a lease that continues on for some period of time into 2010. And we've also got a number of people occupying space there that are involved in systems merger related activities. So while the cost that was higher than that, we expect about $60 million run-rate benefit from that this year.

And the second half of that, the synergy that relates to volume is the savings by which we move waste from one facility to another. So transportation disposal savings related to now the new larger network of landfills to transfer stations that the company has at it's disposal, we're going to create, we're going to move about 20,000 tons around to more cost effective sites. So I think that was worth about $22 million in original synergy goal, volumes are off by 10% when we put those goals together, now that synergy goal could be impacted by 2 to $2.5 million. Now by the same token, as I said in my comments, as we're going through these the actual integration process and actually working as one company now we are seeing other opportunities in it's synergy columns as well. So we've got some puts and takes in this but overall we feel very comfortable that we're able to meet the 150 and frankly out perform it.

And remember what Jim said earlier, and we knew this last summer as we started to put together the integration plan that there would be some gives and takes. We've got a detailed plan right now that if you went by location, by cost category, by activity it's approximately a $170 million so we feel very, very comfortable with the 150.

Okay, operator next question please.

Thank you. Our next question comes from Bill Fisher from Raymond James. Your line is open.

Yeah, good morning.

Good morning, Bill. How are you?

Hi, Bill.

Okay. Yeah first, just on following up on the may be the landfill pricing obviously mentioned the special waste and C&D down 9% I think you said that therefore landfill pricing was up 3.6 to 4 can you give some color on the core recurring MSW pricing, is that higher or just kind of how you look at that basket?

Yeah, MSW pricing is about the same, I mean there's as you can appreciate they are mix issues always in the business from a very high revenue East Coast side to a very low revenue per unit that's called Midwest or Midsouth site. So as all volumes move around it impacts your overall price per unit but price per unit in the MSW line is up all in the Q3 to Q4 sequentially and if you consider some of the anomalies that exist in the business. So we are confident again we are very focused on landfill pricing we continue to talk about over the years the capital intensive nature of the landfill, the fact that impacted the hard they are hard to replacing, to duplicate and we understand the return on invested capital in our business and so we're going to continue to move landfill pricing as we need to, to get those appropriate returns and we're very well poised to do that.

And you know Don, one thing to add on that is a number of the analysts, I think over the years have looked at Republic and Allied, the companies has different price volume calculations. With this merger, we are adopting the Allied methodology of calculating pricing volume. So that should give a little bit more clarity within the industry.

Okay, thanks. And a second question just on the cost side, kind of ex synergies, can you just touch on some examples of how you flex down cost like labor hours or sub-contractor hauling, when the volumes are down to 8%, just how that works?

Sure, absolutely we have very good operating metrics in the business, very good handle on productivity across each system in every division of the company. So we will get at this pace and productivity of when we see volumes fall off quickly according to sort of seasonality, the immediate thing that we do is we adjust hours, we just work hours in our drivers, in our operators. We began to do that even last year as the economy started to impact our volumes. We did things like adjust gate hours at landfills, opening half an hour later, closing half an hour earlier. But now that volumes have dropped off more dramatically. Now you can begin to actually park equipment, park trucks. So very simply in a marketplace where we have seven less roll-off hauls a day, and we average seven hauls per truck per day. We need to park the truck. We first cut back our driver hours and overtime we've got to actually park trucks along the fence. We've got to reduce our staffing levels. So we track those productivity metrics in the landfills, but with this kind of landfill volume loss, now we've got enough loss in there that we can actually park a piece of equipment. We've got very strong metrics about how many tons per hour, one bulldozer, one contractor can push, and how many people it takes to move that amount of volume. So our operating team working with the regions and their operating teams, setting goals for reduction in force of individuals at various divisions, because of the volume related. And we know we see as you can see in our guidance, that the volume is kind of a sustained issue. This is not a one month February, one month January issue, we think its year long as Jim said, we don't see the economy returning in '09. And so we're making now more and more I'd say, permanent adjustments to the work force for the new volume. Those are tracked and completely separately from the synergies. The synergies are resulting from the redesign of the organization. We've got really good clarity about what is synergy and what is volume reduction because again we track this launch pretty tightly on a provision and side by side basis. Is that helpful?

Bill wanted... just a follow-up to Don's I mean in a good economy productivity it gets somewhat skewed on a basis that you've got a lot of organic growth. When you really find out who your A team is when you are in an economy like we're in today. And I can tell you that the field organization, I have travel with Don in particular into the southern region, hours have been addressed we are now parking trucks as Don mentioned. But I think in further conversations that I have had with Don and in the eastern region in particular we are looking at other things because of the depth of this economy and where it's heading I mean things that we're looking at right now and now whether we do these or not I mean just to give you an idea of the things that we're analyzing is we are looking at the landfill landscape and determining whether or not we need to slowdown either receipts of some of these sites or in fact actually moth ball some of these sites for a period of time until volumes come back because of the proximity of some of our other landfill. So there is a lot of disposal optimization. The things that we're looking at and opportunities, and I think we'll be seizing a number of those over the next several months. One more question operator.

Thank you. Our last question comes from Corey Greendale of First Analysis. Your line is open.

Hi, good morning.

Hi, Corey, good morning, Corey.

So the first question. Actually I have a couple of questions on the cash flow. The first is, on the CapEx do you happen to have a combined number for '08 for the two companies, and relative to that number where are that savings, where are you spending less in '09 and how much is of the savings is economic versus how much is more permanent because of the acquisition opportunities?

Yeah, the '09 if you took the '09 on kind of pro forma basis it be 943 million. Now, the 845 of guidance that we gave for '09 that was '08, 943, the 845 for '09 I think there is probably about $27 million of merger related capital in there. So if you excluded that would probably be around 820 or so. And I would say that for the most part a lot of this capital is the economy going from say the 940 to 820.

Yeah, if you look at those numbers it's pretty consistent what we've really said that CapEx is going to be about 10% of revenue. So I don't think that lines are pretty well. We rephrase this we're not buying roll-off trucks in 2009 as you can appreciate with the roll-off trucks being parked because the economy is down in our line of business has impacted pretty greatly. We've re-ramped our models at our landfills as far as site developments. We've got some as Jim said, moth balling consideration that's going to impact our capital spending but with landfill development and so on.

Another point is our fleet age. We've looked at the fleet age on a combined basis. And with this $845 million goal fleet age is approximately seven years. So we feel good with the assets that we've got. Obviously, Republic had a pretty good fleet age. And over the past couple of years Allied has done a good job of putting substantial build blocks on road.

And my second question is just about kind of look at the progression through the year, since you've got a couple two-thirds of Q1 in books of Allied. I am assuming with the 8% volume decline that it's going to get better with each of your comps, as the year goes on so that may be you are seeing a more pronounced line decline 10% or something like that, now is that fair?

I think, again our guidance is the way it will, it always has been, we don't assume a second half recovery. So I'll say it's actually thoroughly flat.

Thank you, operator. At this time I will wrap up the call with a special thanks to all of our employees for their dedication and commitment to customer service. I'd specially like to thank Bill Haven, the Head of our IT department and his team who have been working on system conversions round the clock. Special thanks to all clients; Paul Novotny and Bridget Ryder, Karl Marks and their teams for their dedication over the past several months. And finally, a special thanks to Doug Brow and his team for their leadership and guidance of our integration teams. I will end our call today by reminding everybody that a recording of this call is available through March 2nd by calling area code 203-369-2017. A recording of this call is available on Republic's website at republicservices.com. And again thank you all for spending time with us today. Have a great day.

Ladies and gentlemen, this concludes the Republic Services conference call for today. Thank you for participating. You may now disconnect.