Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2008 Waste Connections Earnings Conference Call. (Operator Instructions). I would now like to turn the presentation over to your host for today's call, Mr. Ron Mittelstaedt. Please proceed, sir.

Okay. Thank you, operator, and good morning. I'd like to welcome everyone to our conference call to discuss fourth quarter 2008 results, provide our detailed outlook for the first quarter and the full year for 2009, and comment on the announced agreement to acquire certain divested assets from Republic Services. I am joined this morning by Steve Bouck, our President, Worthing Jackman, CFO, and several other members of our senior management team. As stated in our earnings release, we are extremely pleased with our performance in the fourth quarter. The economy fell off a cliff during Q4. But despite the most difficult economic environment we have ever experienced, operating income before depreciation and amortization, excluding acquisition-related costs, as a percentage of revenue, exceeded our expectations by about 100 basis points. Additionally, free cash flow was a record $48 million or 18.5% of revenue. Most notably, we achieved this record free cash flow in spite of several factors; weaker than expected revenue due to the contracting economy; a 60% decline in recycled commodity revenue due to the precipitous drop in commodity prices; and severe weather conditions in the Pacific Northwest that shut down many of our operations for five to seven days. In fact, 2008 was a record year for free cash flow in the face of record fuel prices, and a deteriorating macro economy. The recession-resilient nature of our business is best demonstrated through the stability and growth in free cash flow. Before we get into a more detailed discussion of our performance, our outlook and the announced deal with Republic Services, let me turn the call over to Worthing for our forward-looking disclaimer and other housekeeping items.

Thank you, Ron. Good morning, everyone. We must inform those listening that certain matters discussed in this conference call are forward-looking statements intended to qualify for the Safe Harbors from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. These risks and uncertainties are set forth in the company's periodic filings with the Securities and Exchange Commission. Shareholders, potential investors and other participants are urged to consider these factors carefully in evaluating the forward-looking statements, and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this conference call, and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. On the call we may discuss non-GAAP measures such as operating income before depreciation and amortization, free cash flow, cash earnings and adjusted cash earnings. Please refer to our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measure. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate such non-GAAP measures differently. Now, I'll turn the call back over to Ron.

Thank you, Worthing. As previously stated, we were extremely pleased with how we finished the year. When the economy contracts by the magnitude it did, volumes get impacted. When ice and snow shut down operations for up to a week, volumes also get impacted. This one-two punch along with the precipitous decline in recycled commodity prices in November and lower intermodal cargo activity resulted in weaker than expected revenue. Though these items impacted revenue, we are pleased to report that continued pricing strength and our unwavering commitment to drive operating improvements in our business resulted in better than expected margins, net income and free cash flow. Revenue was $259.6 million, up 4.8% over the prior year period. Organic growth was a negative 3.9%, broken down as follows; a positive 5.9% price, a negative 5.8% volume and negative 4% for recycling, intermodal and other services. Although pricing in the quarter remained consistent with Q3 at 5.9%, the mix between core price and surcharges shifted, not surprisingly, to more core pricing. Core pricing was 5.2%, which is up about 120 basis points from Q3 and consistent with our focus on core price. Core pricing for the year was about 4.3%. It's important that core pricing increased in Q4 as this was the jumping-off point going into 2009. We expect core pricing to remain strong in 2009, averaging between 4.5% to 5% for the year, with Q1 starting in the range of 5.5% to 6%. Surcharges in selected markets due to changes in certain costs such as fuel decreased from 1.9% in Q3 to about 0.7% in Q4, due primarily to the lower fuel prices and our shift to hire core pricing in the quarter. We believe surcharges in 2009 will range between a negative 1.5% to a negative 2% to reflect the…

Okay, Ron. You can breathe now. All right. Thank you, Ron. In the fourth quarter, revenue increased 4.8% to $259.6 million, and operating income before depreciation and amortization, excluding $1.5 million of acquisition-related costs, increased 5.2% to $76.6 million. As a percentage of revenue, operating income before depreciation and amortization for the quarter was 29.5% of revenue, a 10 basis point increase over the year ago period. Margins held up in the period as continued strength in pricing helped offset the impact from declines in higher margin landfill revenue and recycled commodity sales. The following line items in the quarter moved a notable amount year-over-year as a percentage of revenue. Insurance costs declined about 160 basis points from a combination of reduced incident frequency and a reduction in actuarial expected development costs for outstanding claims. SG&A, net of the $1.5 million of acquisition-related costs rose about 80 basis points, primarily due to increased incentive and equity-based compensation costs. And fuel costs, as Ron noted, increased about 50 basis points due both to a change in revenue mix and higher average year-over-year fuel prices. Acquisitions closed since the year ago period accounted for about a 10 basis points impact to reported year-over-year margins in the current year period. For full year 2008, operating income before depreciation and amortization, again, excluding the $1.5 million of acquisition-related costs, was $311.9 million or 29.7% of revenue, which compares to $292.9 million or 30.6% of revenue in the year ago period. Fuel expense as a percentage of revenue increased 205 basis points to about 8.2% of revenue in 2008. We were able to offset over 55% of this margin hit as reported margins declined 90 basis points year-over-year. On a reported basis, the following line items in the full year moved a notable amount year-over-year…

Okay. Thank you, Worthing. In closing, again, we are extremely pleased with our results in Q4 and all of 2008. Not only did we post record results in an extremely difficult environment, we kept our eyes on the future to position the company for continued growth and shareholder value creation. We opportunistically expanded our credit facility, issued long-term notes and raised almost $400 million in equity during turbulent capital markets in the belief that the strong gets stronger in periods such as we are in today. The Republic deal and other potential acquisitions that may be completed in the year would not have been possible without this foresight. One final nostalgic note, somewhat linked to growth, we are relocating our corporate office later this month. Our new space, which should accommodate us up to about $3 billion in revenue, contains larger state-of-the-art employee training and meeting facilities. This will be the fourth time since our founding in 1997 that we have relocated the corporate office, and the company's revenue has more than doubled while at each location. So the good news is we are moving once again. We appreciate your time today, and I will now turn the call over to the operator to open up the lines for your questions. Operator?

(Operator Instructions). Your first question comes from the line of David Feinberg from Goldman Sachs.

Good morning, everyone.

Good morning.

If I heard the guidance correctly, I think you are looking for 5% volume declines in the first quarter, but to exit the time year at a run rate or for the full year 2009 of a 3% to 4% decline in volumes. Was that correct?

That is correct. We were expecting a sequential better second half than the first half, especially in the fourth quarter as we comp a difficult fourth quarter of 2008.

I guess my question is what gets you confident in the back half; is it just the comps, is it looking at past cycles and how these things play out, do you get any sort of visibility from customers, what is it you are looking at?

I would not judge it on past cycles. This is a unique cycle. It is more the confidence in comping primarily, again, in our exclusive markets, comping the difficult fourth quarter in 2008.

And the January trends, I just want to make sure I understood you correctly, the 4% decline that I think Ron referenced in his script, that relates specifically to Washington state, correct?

The 4% was system-wide. The landfill volume declined in the month of January on a day count adjusted basis.

Any indication how February is shaping up? I know we are only 10 days into it.

No, I haven't come up (inaudible) February.

And one question as it relates to the Republic divestitures of assets; so you have made the announcement on this first round of assets, any expectation on timing when the other ones would come up for sale or when you or Republic would be comfortable making an announcement?

Number one, David, as far as any others, the vast majority of the assets that fit our model and our footprint were in the larger bundle of assets that Republic packaged that we have just announced. They are packaging other assets and individual bundles for the remaining markets that they have. I think they told me that they still hope to complete those or announce those sometime at the end of Q1 or the beginning of Q2 with all of them closing before the end of Q2.

One last question on pricing: As it relates to your competitive markets, not your franchise, any indication of year-over-year base price declines? In other words, is it becoming that competitive that year-over-year you're getting base price declines due to competitive pressures?

No, we are not really seeing that, as we said. The good news is that price is holding up. If anything, the core price has moved up nominally. There are pockets where that is not completely true, but on the aggregate in our competitive footprint pricing is at or ahead of last year.

Wonderful. I will turn it over. Thank you.

Thank you.

Your next question comes from the line of Scott Levine from JPMorgan.

Good morning, guys.

Good morning, Scott.

Regarding the mix of competitive versus franchise, I think pro forma for LeMay you guys are moving into the high 50% franchise. Could you talk a little about what you look like post the Republic acquisition era, and then what are your thoughts on whether that mix will hold from there forward with the acquisition pipeline you see outside of Republic?

Yes. Scott, the Republic deal really will not move the needle much. I mean, you take $110 million of revenue on $1.2 billion; it's 8% or 9% increase in total revenues. The largest piece of that is in California at Chiquita; by far the largest piece. So I think when you do the math it might move us from 57%, 58% down to maybe 55% to 56% mathematically post Republic deal in terms of exclusive markets. And then, as far as in the backlog, I would tell that you currently the backlog is more weighted to our exclusive markets. That could change somewhat post Republic deal, as we look to do some tuck-ins around some of those newly acquired markets, but I would tell you I think staying between 55% and 58% this year is highly likely.

Okay. And I think, Ron, you mentioned in the past, looking at the acquisition activity into economic slowdowns, you have seen a bit of a slowdown in prior downturns. However, it sounds like you expect outside of Republic the typical acquisition year. Could you tell us maybe what is a little bit different about the environment now that gives you that level of confidence?

Obama. One word. The fear by the private sector of what the current White House intends to do to capital gains. That is just purely and simply the answer.

Okay. And then, turning to volume outlook, could you comment on maybe any differences you are seeing across your geographic footprint? Are you seeing a slowdown broaden across your footprint, or are you still seeing more acute weakness in the same types of markets you have seen looking back the last couple of quarters?

Yes. The reality is that the weakness is broad based and there is no geography that is immune. It spread relatively quickly. It was mostly on the West Coast and a few parts of the Southeast at the end of Q3 of last year, and then just a rapid decline in Q4 across all of our geography. If there is any silver lining, and I think it is far too early to say that, last time in the 2001 to 2003 contraction, our Midwest and Plain states went into the contraction first and they came out of it first. In Q4 and in Q1 so far, our Plain states are showing the least decline, and they had the highest decline going into it. So we don't think that means anything because the numbers are very close to each other geographically, but it's very broad based.

Got it, okay. One last one, if I may. Following up on the question that was asked about franchise versus competitive market pricing, do you have those numbers or could you say roughly about franchise, was it double, less than double, what you saw, or the reverse being true with the competitive markets? Do you have percentage price growth in each of those two?

Yes. I will link it back. It is almost the inverse of volumes. We said volumes were weaker in our competitive markets, but the converse is true. Pricing was stronger in our competitive markets in Q4. And, again, we said volumes held up relatively better in the franchise markets and franchise markets were below the corporate average in Q4.

Great. Thanks. Nice quarter.

Thank you.

Your next question comes from the line of Corey Greendale from First Analysis.

Good morning.

Hi, Corey.

I also wanted to ask you about the franchise versus competitive markets. I understand what the numbers are, but can you just talk about how it is that that is true? You think just logically that smaller companies would be hurting for volumes, would be lowering price, so are you not seeing that, or are you seeing that and you are just not following and willing to give up volumes, so you do not have to lower price?

With regards to franchise markets or competitive markets?

Competitive markets.

Yes. On competitive markets, again, our strategy is looking at secondary and suburban markets where we can get a good asset position. When you have a good asset position, you are able to move price without as much risk of losing volume relative to more competitive urban markets when pushing price in this kind of environment has a much more pronounced impact on volumes.

I would say the other thing with regard to that, Corey, is that to take volumes for a private, smaller competitor in a competitive market, you need capital. And the reality is that they have no access to it at this point in time. So, as far as additional trucks, additional containers, those kinds of things, that is just locked down for most players right now.

Okay. Can you speak to your commercial business; just what volumes did in that part of the business and to what extent you are seeing people downsizing their service levels?

Well, we saw a reasonably pronounced increase in Q4 that has continued into Q1 in our small container service which is our commercial rear load and our commercial front load service. We measure that monthly, and it definitely started to jump downward in September and through Q4, both service decreases, customers going to a lower service frequency and business closures, bankruptcies and business closures. Anecdotally, I will also tell that you that historically in this sector, at the end of downturns; I don't know how long that you would pronounce the end, but that is when we have seen the largest acceleration into service decreases and business closures. It is sort of the last quartile of the contractions we have seen in the past.

Okay. And then, I just had a question about the Republic acquisition. First of all, can you give us any indication of the magnitude of the assets that you are still discussing with them? I was just wondering on the CapEx for 2009, if there is anything unusual in that related to the Republic assets or if the $125 million is a good base line to model from going forward?

Number one, as far as the CapEx, I think the $125 million is a decent number to model from going forward. There will be some larger than normal permitting costs at some of the sites over the next few years. That could affect that number from a baseline standpoint. We would call that out in any given quarter or year, however. As far as the first comment, I would rather not comment on what we are not in discussion. I mean, we have announced $45 million to $47 million approximately of EBITDA. I think the entirety of what Republic was looking to sell was $70 million to $75 million of EBITDA, and we have said that much of that does not fit our strategy or our footprint. So, obviously, the number is well south of the difference between $70 million, $75 million and $45 million.

Great. Thank you.

Your next question comes from the line of Bill Fisher from Raymond James.

Good morning.

Good morning, Bill.

Just to follow-up to clarify on the landfill volume, I think you said, that it was down 4% in January. Was the overall volume down roughly 5%?

No. Volume in January was down slightly less than 5%.

Okay. And just on the Republic landfill site, you mentioned Chiquita as an example, but to the extent you have daily or annual limits, would you characterize it like are you at 60% of capacity, the potential there that you could fill in overtime with open market or tuck-ins or whatnot; if you could give color on that?

I have not looked at it specifically in total that way, but I would estimate that that number is somewhere between 50% and 60% of where the sites are relative to their daily caps or their weekly, in some cases, caps right now.

Okay. Great. Actually just one other for Worthing, on your free cash estimate does that include the IRS ruling, and if not, what kind of magnitude could that have?

It does not include the IRS ruling; do not want to be presumptuous about getting it. If we do get it, that would reduce cash tax in the period that we receive it by $11 million to $12 million.

Okay, great. Thank you.

Thanks, Bill.

And your next question is from the line of Jonathan Ellis from Merrill Lynch.

Thanks and good morning, guys.

Hey, good morning, Jon.

Wanted to talk first about just landfill pricing in your competitive markets. Obviously, you touched on volumes, but could you talk a little about pricing both for MSW, C&D, and also special waste?

Yes, John, I would say that there has not been any material change in landfill pricing from our standpoint. Again, in our model, that is not nearly as big an overall price driver as it is on the collection side relative to the competitive market peer group we have. But landfill pricing has remained in that 2% to 3% range on MSW. It has come down somewhat in C&D. And special waste, it really has remained fairly consistent across all our geographies. Obviously, on an individual job basis, that can move 10% to 20% because they are singular project jobs by geography, but overall, very consistent throughout 2008 and into the first quarter of 2009. Having said that, very, very limited special waste projects are being bid on in Q1.

Sure. And just to clarify, you said C&D pricing coming down. Is that a deceleration, or it is actually a year-over-year declines you are seeing there now?

I would say that that is a deceleration, not year-over-year decline.

Okay. All right, great. Just on fuel surcharge vis-à-vis core pricing, it looks like you were fairly successful in the quarter in converting some of that fuel surcharge into core pricing. As you look out into 2009, is there an expectation that there's going to be further opportunities to the extent there is surcharge fees still left out there to convert those into core price or basically whatever you have converted as of 4Q is going to have some flow through to 2009, but that is really the extent of it.

Yeah, I would say that the latter part of what you said is most accurate. We did most of that conversion in Q4 when there was some decline in the fuel pricing. There will be some that is left in Q1, but I would expect it to, assuming fuel stabilizes at these levels, I would expect you to see the reduction or the conversion in Q1, and then stabilize for the balance of the year at approximately that level.

Okay.

Hey, Jon, just one other item of color here. And as you move through 2009 on the core pricing side, you should expect that core pricing starts declining sequentially as we move throughout the year because as you get, especially, in the second half of the year, you are comping quarters in the prior year which are much higher on a dollar revenue basis. But most, again, the core price has also been done. And so the same dollar impact on quarter-to-quarter basis becomes a lower percentage basis year-over-year as you move through with the higher denominator.

Right. Okay, great. And just on the outlook for the year, on price and volume, I know you gave some kind of qualitative commentary on the competitive versus franchise market in 4Q, but would you be willing to offer for your 2009 outlook? What your underlying assumptions are for price and volume in competitive versus franchise markets?

Yes, I would say that our current expectation, and I say that because much of it is done, but our current expectation is that our franchise is between 3% and 3.5% all in and that our competitive is between 5.5% and 6.5%.

And on the volume side?

On the volume side, I don't have specifics, but I can tell you that our exclusive has about one-third less decline.

Okay. Great. And then just my final question. With respect to the RSG assets that you have announced for purchase, where you do have some existing overlap, what kind of cost savings are you factoring into your 2009 outlook?

None.

Okay. Great. Thanks, guys.

All right.

Your next question comes from the line of Michael Hoffman from Wunderlich.

Hi, guys.

Good morning.

Hey, Michael.

Wunderlich, but whatever. So a couple questions. On CapEx growth versus maintenance on the CapEx on the 125, can you give us a sense of that?

Yes. If you look at it, probably 8.5% of CapEx, as a percentage of revenue, is maintenance CapEx. There were a couple of one-time items in the year including the completion of a facility being built out for LeMay. There is another start-up capital for a contract that we are commencing in Washington. So, if you strip those items out and strip out the RSG, you are about 8.5% of revenue.

Okay. Then are you seeing any benefits from lower aggregates prices and steel prices, yet, in your thinking about your capital spending or is that something that iss yet to come, too?

We really have not seen much there, Michael. We saw a little bit of come down in the middle part of 2008 in those areas on some of our construction, but the vast majority of our construction is airspace. And so really, the impact there is to the geosynthetics as a petroleum-based product. We do not have a lot of cement or a lot of aggregates or steel in our construction costs.

Yes. We started seeing some better bids on the excavation side within landfills. Well, obviously from equipment, both the yellow iron and trucks, the prices in the used market and the auction markets have come way down as excess capacity has been put on the market. And as you have seen a lot of companies canceling a lot of new orders, it is just continued to put additional used supply and un-bought that new inventory on the market at lower prices.

Okay. Share buyback, you put it on hold with LeMay and Republic. The big chunks of this are behind you. Where is your head on the buyback?

Well, our head is still getting some clarity around how much more we will be spending in capital and acquisitions in the year. We will balance that obviously with continued look at the buybacks as we move throughout the year, as well. We still have about $80 million to $90 million of remaining capacity through 2009 on our pre-approved buyback program. But I would say right now, much like in 2008, we are preserving capital for acquisitions.

Interestingly enough, on a relative basis, your company is trading at the lowest premium spread as it has ever, I think, experienced. So on a make versus buy you are pretty cheap.

We do similar analysis, Michael.

Just to dig a little bit deeper on the volume issues that have been discussed, am I right thinking that sort of the front-end loader side is down in the 2 to 5 range when you look at a container where roll-off's the bigger play, so that is 10 to 20. And then your landfill is a blend of the impact of third-party front-end loader and an impact of third-party roll-off?

I think all of that is a fair assumption, Michael. I mean using roll-offs down 10 to 20, it was, I think, the number you said. I would tell that you that that is right in the range of what we are at least seeing in January, probably closer to that, 14% to 18% range in most markets on at least a pull basis, not a revenue basis, but a pull basis. On a revenue basis, it is a little less than that, because revenue per pull has still remained positive year-over-year and sequentially. And, yes, I would say that your number is a little high on the commercial reduction. We are not quite seeing that type of a macro decline yet. So all in, I think you are close.

Okay. And then with the service agreement changes and some closures, bankruptcies, have you seen an uptick in your bad debt allowance?

We have seen a nominal uptick. Q4 was the highest we've seen in all of 2008. And we've incorporated a higher run rate of bad debt expense in our outlook for 2009.

Okay. And then one other question on the behavior in markets, specifically it is the competitive markets. Some of our network shows that the independents seem to be predisposed that the major landfill owners, predominantly public companies, are going to raise landfill pricing and they are going to pass it through. Do you see anything to indicate that that is not the case?

We have not seen anything to indicate that is not the case.

Okay. If you go to the Justice Department decree for Republic, one of the things that was in the bundle was the San Francisco landfill. So that is the obvious sort of open question of, is that something you would be interested in, and therefore that is one of the things to continue a dialog about?

Yes, I think you are speaking of the Potrero Hills Landfill in Fairfield in Northern California, and that was in a singular bundle. It was not in the packaged larger asset bundle. That was a request, I believe, by the California AG of Republic and the Justice Department. And so that is why that was not in the bundle. That was not something [real] or Republic chose to remove. It was something that was requested in the process. So that is an asset that we are taking a look at and would fit our strategy and we would have interest in, obviously, under the right structure.

Okay. And then is there anything that you had to buy because you had to take the bundle that you might consider selling? I mean, Flint comes to mind, for instance.

Yes, you and all two people that remain there, yes, I would say that Flint, obviously, would not have been an optimal choice for us. But the reality is, is that it is a good site. It is performing well. It has a mix of municipal solid waste, special as well as Canadian flows that are not subject to any type of restriction between the US and Canada because of the type of waste it takes. It is exempt from that, so, we believe that we can make that a very successful site. I and our COO, Darrell Chambliss, have a lot of experience operating in Flint and Michigan, so we know the market well. So, yes, while it would not have been our first choice, it is one we are very committed to and we can make very successful, we believe.

Okay. And then do you have any exposure to the Smurfit bankruptcy vis-à-vis your recycling?

Yes

No?

Yes, we do.

While we have exposure to it, we are not expecting an impact in Q1. As you look at that relationship, they act more as a broker for us, and brokerage relationships generally are protected in the bankruptcy filing. And so, most of our outstanding receivables have actually been collected.

Cool. And lastly, can you talk a little bit of any of the key triggers that are driving incentive comp in 2009, such things that we can look at, what are your measures, what you manage, and influencing behavior?

Michael, we really have not changed. We've made some nominal tweaks to it for 2009. Our incentive comp is weighted, but it is tied most heavily to free cash flow, second to operating income, third to EBITDA, and fourth to capital deployed relative to plan. So if you look at those four measures, what it is really saying is, it is tied to return on invested capital, and what is the trajectory of returns against the investment basis we have. So that is really how it is measured. At the field level, we have put some additional incentives this year for organic volume growth, trying to do whatever we can with the discipline of pricing staying in place to pursue some additional bid works, some additional special waste work to minimize negative volumes, but, we are heavy cash focused and return on capital focus. That just has not changed.

Okay. Great. Nice quarter, guys, thanks.

Thank you.

And your next question comes from the line of Justin Maurer from Lord Abbett.

Good morning, guys. Worthing, on the interest expense income, obviously you explained the delta between what you are paying and what you are earning, but I think you guys, if you go back to when you raised the money, you thought that between the capital raised plus the debt capacity it might give you about a $900 million war chest. And maybe, correct me if I'm wrong, between what you just bought or are buying from RSG plus a little more, you are only getting to about half of what you thought maybe was on the list. Are there other assets of size, as opposed to the normal tuck-in type stuff you guys are doing, that make sense there, or would you contemplate doing something with that excess cash potentially?

Justin this is Ron. I think what you are referring to is the following. And I think your numbers are relatively accurate. It is just that there are some assumptions that have changed. When we did the capital raise in September, the end of September, what we said is that it was our belief that Republic would divest somewhere between $100 million and $150 million of EBITDA, so the midpoint of that was $125 million of EBITDA, and that based on the overlap analysis we had done, that about two-thirds of that $100 million to $125 million in divestitures or expected divestitures would fit our model. So that left you a number between, call it $75 million and $100 million of EBITDA. What has changed is that Republic did a very good job in its process with the Justice Department, and I think is divesting only about $75 million to $80 million of total EBITDA, not $100 million to $150 million. Then you take a look at that and I think still north of that two-thirds, will ultimately fit our profile. We've announced $45 million of that, and have said that there are others that potentially do that. So if we were to get to the $55 million to $65 million number, not that we will, but if we were able to pick some additional amount that made sense to us from Republic, and get to that, that would be likely the totality out of Republic. So, no, there are not other larger pieces that are out there, either from Republic or third parties that we're missing. It's that the number that they were required to divest was dramatically lower.

Right. So I guess that being the case, though, and even take the high-end of that, say just throw out a number, even with some smaller type stuff you guys would normally do, say $70 million, and you are paying seven times, so you are close to, call it $500 million, you still have $400 million of excess capacity. Now, granted, in this day and age, the more the better, right? But I'm just wondering, particularly with the, "dilution," just simply on the interest expense/income line, fortuitously I guess, you guys raised it at a price higher than where the stock is trading, so it would be accretive on that basis to do that. Right?

Usually not the reason you sell equity, but I think what we would say, Justin, is we believe that over the course of the first two quarters and at most into the third quarter that any outsized acquisition opportunities, be they sort of one-off or out of Republic, we will have visibility on and know. Once we know that then the deployment of additional capital to both buyback as well as potentially the dividend, once, if there is any clarity on the tax treatment of dividend, we would obviously make that decision, because debt reduction in this environment, we do not have a leverage issue, so that is not where it would be. So, obviously, the uses of cash would be in buyback first, then dividend second.

And Justin, I will remind everyone that in the fourth quarter and with the announced RSG deal, so given the acquisitions we have already closed and the upcoming RSG deal, we would have deployed about $650 million of capital since our equity raise in late September, and we're sitting still with about $300 million plus of capacity to spend which gets us to $900 million, plus you've got the free cash flow of about $170 million on top of that. So we are still sitting with almost a $0.5 billion of capacity, including the forecasted free cash flow in 2009, despite spending $650 million since the equity offering in late September.

Because that included also what we have spent on LeMay, which was known at the time of the equity offering but not yet spent.

Right. Okay. Just on the converts, what is your effective interest rate now on the convert?

Well the cash interest is 3.75%, which gets to you to about $7.5 million of cash outflow. Then on top of that you have got the $4.5 million of non-cash on the change in accounting, and you have got about $1 million of amortization of financing costs on that. So you add another $5.5 million of non-cash outflow on top of that and that's about 2.75% on top of the 3.75%, so special the all-in rate in the P&L is about 6.5%.

So it doesn't make sense, and in fact, it looks like it is trading a little bit above par, so it doesn't make sense to do anything with that then.

I think if we saw any appreciable dip below par we would look at that.

Okay. Thanks, guys.

Thanks, Justin.

We have no further questions at this time.

Okay. Well, if there are no further questions, on behalf of our entire Management team, we appreciate your listening and interest in our call today. Worthing, Steve, and I will be in the office for three to four hours today before heading out traveling. If there are any direct questions that we did not cover that we are allowed to answer under Regulation FD and Regulation G we will be happy to do so. Thank you. We look forward to speaking with you at upcoming investor conferences or on our next quarterly call.

Thank you for your participation in today's conference. This concludes the presentation. You can now disconnect. Have a good day.