The following discussion of our financial condition and results of operations should be read together with the historical consolidated financial statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. For additional information regarding some of the risks and uncertainties that affect our business and the industry in which we operate, please read "Risk Factors" included elsewhere in this report and "-Cautionary Statement About Forward-Looking Statements" below.

Executive Overview

General Overview of Our Business

Our operations consist of the collection, transfer, processing and disposal of
non-hazardous solid waste. Our revenue is generated primarily from our landfill
disposal services and our collection operations provided to residential,
commercial and roll-off customers. Roll-off service is the hauling and disposal
of large waste containers (typically between 10 and 50 cubic yards) that are
loaded on to and off of the collection vehicle. The following table reflects our
total revenue by source for the previous three years (dollars in thousands):

                                   2008                      2007                      2006
                               $            %            $            %            $            %
 Collection:
 Residential               $  50,433        24.2 %   $  41,647        22.5 %   $  25,385        17.0 %
 Commercial                   21,607        10.4 %      19,069        10.3 %      15,876        10.6 %
 Roll-off                     57,756        27.8 %      53,501        28.9 %      44,539        29.8 %
 Total collection            129,796        62.4 %     114,217        61.7 %      85,800        57.4 %
 Disposal                     75,456                    70,797                    60,767
 Less intercompany            29,527                    26,994                    21,701
 Disposal, net                45,929        22.1 %      43,803        23.7 %      39,066        26.1 %
 Transfer and other           46,413                    40,986                    37,872
 Less intercompany            14,129                    14,066                    13,241
 Transfer and other, net      32,284        15.5 %      26,920        14.6 %      24,631        16.5 %
 Total revenue             $ 208,009       100.0 %   $ 184,940       100.0 %   $ 149,497       100.0 %

2008 Financial Objectives

Before the impact of potential acquisitions, we anticipated 2008 to be a year with improving operating results which included moderate increases in revenue resulting from a balance of price increases and organic volume growth and corresponding EBITDA growth. Earnings per share prior to the effect of potential acquisitions were expected to increase as well. We also expected to selectively invest at least $60 million on acquisitions and other growth opportunities during 2008.

2008 Business Performance

During 2008, our revenue was $208.0 million, which represents a 12.5% increase over 2007. Our operating income (loss) was $(15.3) million in 2008, compared to $26.1 million in 2007. Net loss available to common stockholders for 2008 was $31.8 million, or $1.96 per share, compared to $1.0 million, or $0.06 per share, for 2007. EBITDA for the year was $53.7 million, an increase of 5.9% over 2007. We recorded charges of $4.7 million and $2.7 million (net of tax) due to the impact of interest rate swap agreements in 2008 and 2007, respectively. Our net loss in 2008 also included an expense of $27.0 million (net of tax) related to the impairment of goodwill and a net loss of $0.1 million (net of tax) associated with the early disposition of notes receivable/payable.

Our earnings in 2008 was impacted by the existence of our interest rate swap arrangement with Comerica. Our swap agreement resulted in limiting the underlying base interest rate for $150 million of our debt to 5.64% plus any applicable margin. However, with the reduction in interest rates that began in September 2007, we were obligated to fund the difference between 5.64% and the market rate for three-month floating rate LIBOR. This reduced our cash flow and negatively impacted our pre-tax earnings by $3.2 million in 2008. Considering the rates in effect at December 31, 2008, the impact of the swap agreement is estimated to result in a pre-tax cash cost of $6.3 million in 2009.

During 2008, the total PIK dividend on preferred stock was $4.1 million. In 2009, the PIK preferred dividend will be $4.3 million. For more information regarding the PIK dividend associated with the private placement of our preferred stock, please read "-Liquidity and Capital Resources-Preferred Stock."

We invested approximately $12.5 million on a combination of newly acquired companies and similar expansion and growth expenditures, including $8.1 million of cash and $0.2 million of accrued future payments in the three acquisitions in 2008. The accrued future payments were made in February 2009. The remaining $4.2 million was related to initial capital expenditures associated with acquisitions. As of December 31, 2008, we had approximately $115.1 million available under our existing credit facility. We believe that our available capacity will enable us to remain opportunistic in potential acquisitions, including the acquisition of distressed companies at lower valuations if such opportunities present themselves. These opportunities may or may not present themselves, and, as such, we do not have a 2009 acquisition goal.

Non-GAAP Measures

Our management evaluates our performance based on non-GAAP measures, of which the primary performance measure is EBITDA. EBITDA consists of earnings (net income or loss) available to common stockholders before preferred stock dividend, interest expense (including write-off of deferred financing costs and debt discount), impact of interest rate swap agreements, income tax expense, depreciation and amortization, impairment of goodwill, and net loss on early disposition of notes receivable/payable. We also use these same measures when evaluating potential acquisition candidates.

We believe EBITDA is useful to an investor in evaluating our operating performance because:

· it is widely used by investors in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, financing methods, capital structure and the method by which assets were acquired;

· it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest charges from our outstanding debt and the impact of our interest rate swap agreements and payment-in-kind (PIK) dividend) and asset base (primarily depreciation and amortization of our landfills and vehicles) from our operating results; and

· it helps investors identify items that are within our operational control. Depreciation charges, while a component of operating income, are fixed at the time of the asset purchase in accordance with the depreciable lives of the related asset and as such are not a directly controllable period operating charge.

Our management uses EBITDA:

· as a measure of operating performance because it assists us in comparing our performance on a consistent basis as it removes the impact of our capital structure and asset base from our operating results;

· as one method to estimate a purchase price (often expressed as a multiple of EBITDA) for solid waste companies we intend to acquire. The appropriate EBITDA multiple will vary from acquisition to acquisition depending on factors such as the size of the operation, the type of operation, the anticipated growth in the market, the strategic location of the operation in its market as well as other considerations;

· in presentations to our board of directors to enable them to have the same consistent measurement basis of operating performance used by management;

· as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations;

· in evaluations of field operations since it represents operational performance and takes into account financial measures within the control of the field operating units;

· as a component of incentive cash bonuses paid to our executive officers and other employees;

· to assess compliance with financial ratios and covenants included in our credit agreements; and

· in communications with investors, lenders, and others, concerning our financial performance.

The following presents a reconciliation of our total EBITDA to net income (loss) available to common stockholders (in thousands):

                                                       2008          2007          2006
Total EBITDA                                         $  53,704     $  50,706     $  42,688
Depreciation and amortization                          (27,151 )     (24,234 )     (19,070 )
Impairment of goodwill                                 (41,725 )           -             -
Interest expense, net                                  (18,560 )     (16,765 )     (15,385 )
Write-off of deferred financing costs and debt
discount                                                     -             -        (3,240 )
Impact of interest rate swap                            (7,547 )      (4,442 )         340
Net loss on early disposition of notes
receivable/payable                                        (221 )           -             -
Income tax (provision) benefit                          13,737        (2,343 )      (2,313 )
Accrued payment-in-kind dividend on preferred
stock                                                   (4,076 )      (3,876 )      (1,603 )
Net income (loss) available to common stockholders   $ (31,839 )   $    (954 )   $   1,417

Our EBITDA, as we define it, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDA should not be considered in isolation or as substitutes for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.

Other Considerations

Costs of services include, but are not limited to, labor, fuel and other operating expenses, equipment maintenance, disposal fees paid to third-party disposal facilities, insurance premiums and claims expense, selling expenses, wages and salaries of field personnel located at operating facilities, third-party transportation expense and state and local waste taxes. We are self-insured for up to $100,000, $250,000 and $250,000 of our general liability, workers' compensation and automobile liability per claim, respectively. The frequency and amount of claims or incidents could vary significantly from quarter-to-quarter and/or year-to-year, resulting in increased volatility of our costs of services.

General and administrative expenses include the salaries and benefits of our corporate management, certain centralized reporting, information technology and cash management costs and other overhead costs associated with our corporate office.

Depreciation and amortization expense includes depreciation of fixed assets over their estimated useful lives using the straight-line method and amortization of landfill costs and asset retirement costs based on the consumption of airspace.

In the past, we capitalized third-party expenditures related to pending acquisitions, such as legal, engineering, and accounting expenses, and certain direct expenditures such as travel costs. We expensed indirect acquisition costs, such as salaries, commissions and other corporate services, as we incurred them. We routinely evaluated all capitalized costs, and expensed those related to projects that we believed were not likely to succeed. Starting in 2009, all acquisition-related transaction and restructuring costs will be expensed as incurred rather than capitalized as part of the acquisition costs.

After an acquisition is completed, we incur integration expenses related to (i) incorporating newly-acquired truck fleets into our preventative maintenance program, (ii) testing new employees to comply with Department of Transportation regulations, (iii) implementing our safety program, (iv) re-routing trucks and equipment to assure maximization of routing efficiencies and disposal internalization, and (v) converting customers to our billing system. We generally expect that the costs of acquiring and integrating an acquired business will be incurred primarily during the first 12 months after acquisition. Synergies from tuck-in acquisitions can also take as long as 12 months to be realized.

Goodwill represents the excess of the purchase price over the fair value of the net assets of the acquired entities. In allocating the purchase price of an acquired company among its assets, we first assign value to the tangible assets, followed by intangible assets such as covenants not-to-compete and any remaining amounts are then allocated to goodwill.

Acquisitions

As we discussed in "Business-Integration and Acquisitions," any acquisitions that we may make will target operations that will benefit from our core operating strategy of maximizing the internalization of waste. In markets where we already own a landfill, we intend to focus on expanding our presence by tuck-in acquisitions. Tuck-in acquisitions are sought to provide growth in revenue and increase market share and enable disposal internalization and consolidation of duplicative facilities and functions to maximize cost efficiencies and economies of scale. If we find an attractive new market, we seek to enter that market by acquiring a permitted landfill, followed by acquiring collection and/or transfer operations and internalizing waste into the landfill.

Any acquisition we make would be financed by cash on hand and available capacity under our revolving credit facility, and through additional debt, and/or additional equity, including common stock or preferred stock.

Since completing our initial public offering in June 2004 through the year ended December 31, 2008, we have completed 34 acquisitions. The purchase price for these acquisitions consisted of approximately $233.7 million of cash and accrued future payments, $1.3 million of prepaid airspace, $6.1 million of convertible debt, $11.9 million of assumed debt (net of $0.5 million of debt discount), $4.4 million of assumed deferred tax liabilities and 1,726,336 shares of our common stock, less a note receivable valued at $7.2 million. The note receivable was a $10.5 million non-interest bearing promissory note with payments to us in the amount of $125,000 per month for 84 months through June 2014. In May 2008, we sold the note receivable with the carrying value of approximately $6.5 million for approximately $6.2 million.

We completed three acquisitions during the year ended December 31, 2008, which was less than originally anticipated due to weakening economic and market conditions. Total consideration for these acquisitions included $8.1 million of cash and $0.2 million of accrued future payments. The accrued future payments were made in February 2009. Information concerning our acquisitions may be found in the table below and in our previously filed periodic and current reports and in note 3 to our consolidated financial statements.

The following sets forth additional information regarding the acquisitions since our initial public offering through December 31, 2008:

                                                    Completion
Company              Location              Region   Date          Operations
Texas                Houston, TX           II       July 13,      Collection
Environmental                                       2004
Waste
Ashley Trash         Springfield, MO       I        August 17,    Collection
Service                                             2004
Power Waste          Birmingham, AL        III      August 31,    Collection
                                                    2004
Blount Recycling     Birmingham, AL        III      September     Collection,
                                                    3, 2004       Landfill & Transfer
                                                                  Station
Translift, Inc.      Little Rock, AR       III      September     Collection
                                                    17, 2004
Rural Disposal,      Willow Springs, MO    I        November      Collection
Inc.                                                12, 2004
Trash Away, Inc.     Piedmont, SC          III      November      Collection &
                                                    30, 2004      Transfer Station
Gecko Investments    St. Louis, MO         I        January 11,   Collection &
(Eagle Ridge)                                       2005          Landfill
MRR Southern, LLC    High Point/Raleigh,   III      April 1,      Landfill, Transfer
                     NC                             2005          Station & MRF
Triangle             Raleigh, NC           III      May 16,       Collection
Environmental                                       2005
Foster Ferguson      El Dorado Springs,    I        May 16,       Collection
                     MO                             2005
Triad Waste          High Point, NC        III      May 31,       Collection
                                                    2005
Proper Disposal      Chanute, KS           I        May 31,       Collection
                                                    2005
Fort Meade           Fort Meade, FL        II       October 3,    Landfill
Landfill                                            2005
Meyer & Gabbert      Sarasota/Arcadia,     II       October 3,    Collection,
                     FL                             2005          Landfill & Transfer
                                                                  Station
Pendergrass Refuse   Springfield, MO       I        October 4,    Collection
                                                    2005
Andy's Hauling       Sarasota, FL          II       October 21,   Collection
                                                    2005
Transit Waste        Durango,              II       February      Collection &
                     CO/Bloomfield, NM              10, 2006      Landfill
Fort Myers           Fort Myers, FL        II       August 10,    Transfer Station
Transfer Station                                    2006
(*)
WCA of St. Lucie,    St. Lucie, FL         II       October 2,    Transfer Station
LLC                                                 2006
Sunrise Disposal,    Springfield, MO       I        December      Collection
LLC                                                 28, 2006
Southwest            Fort Myers, FL        II       January 3,    Collection
Dumpster, Inc. (*)                                  2007
American Waste,      Oklahoma City, OK     II       February      Collection &
Inc.                                                21, 2007      Landfill
Klean Way            Springfield, MO       I        March 30,     Collection
Disposal, Inc.                                      2007
Carpenter Waste      Oklahoma City, OK     II       May 31,       Collection
Systems, LLC                                        2007
Fort Bend Regional   Houston, TX           II       June 29,      Collection,
Landfill                                            2007          Landfill & Transfer
                                                                  Station
Big Red              Ardmore, OK           II       August 14,    Collection
Containers, Inc.                                    2007
Roll-Off Rentals     Huntsville, AL        III      September     Collection
                                                    4, 2007
Waste Pro            Houston, TX           II       October 1,    Collection
Services, LLC                                       2007
DH Griffin           Greensboro, NC        III      October 1,    Collection
Container                                           2007
Services, LLC
DH Griffin           Raleigh, NC           III      October 1,    Collection
Container of                                        2007
Raleigh, LLC
Maguire Disposal,    Oklahoma City, OK     II       January 2,    Collection
Inc.                                                2008
Advantage Waste      Springfield/Verona,   I        October 1,    Collection &
Services             MO                             2008          Transfer Station
Advanced Waste       Houston, TX           II       October 31,   Collection
Services                                            2008

(*) These assets were exchanged as part of the consideration for the acquisition of Fort Bend Regional Landfill.

At December 31, 2008, we owned and/or operated a total of 24 landfills, 26 collection operations and 24 transfer stations/MRFs, had approximately 375 routes and handled approximately 13,500 landfill tons per day at our landfills.

On January 15, 2009, we consummated the purchase of a transfer station permit and a 6.2 acre tract of land in Greensboro, North Carolina for the future construction and operation of a transfer station from MRR Southern, LLC and its affiliate. The purchase consisted of $1.0 million in cash at closing and two future payments of $0.5 million. The two remaining installments of $0.5 million are due on January 15, 2010 and 2011, respectively.

Although we have reduced our acquisition efforts due to current market conditions, we intend to pursue selective acquisitions by focusing on those opportunities that most effectively leverage our existing infrastructure and maximize the internalization of waste.

For a description of our accounting for acquisitions and acquisition-related expenses, please read "-Executive Overview-Other Considerations" above and notes 1 and 3 to the consolidated financial statements.

Results of Operations

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

The following table sets forth the components of operating income (loss) by
major operating segments (Region I: Kansas, Missouri; Region II: Colorado,
Florida, New Mexico, Oklahoma, Texas; Region III: Alabama, Arkansas, North
Carolina, South Carolina, Tennessee) for the years ended December 31, 2008 and
2007 and the changes between the segments for each category (dollars in
thousands):

                         Region I      Region II       Region III       Corporate        Total       % of Revenue
Year ended December
31, 2008:
Revenue                 $   53,773     $  104,550     $     49,686     $         -     $ 208,009             100.0
Cost of services            38,676         68,256           35,197               -       142,129              68.3
Depreciation and
amortization                 5,415         13,195            8,041             500        27,151              13.1
Impairment of
goodwill                         -         25,944           15,781               -        41,725              20.1
General and
administrative               3,375          7,262            3,816          (2,118 )      12,335               5.9
Operating income
(loss)                  $    6,307     $  (10,107 )   $    (13,149 )   $     1,618     $ (15,331 )            (7.4 )
Year ended December
31, 2007:
Revenue                 $   52,543     $   84,917     $     47,480     $         -     $ 184,940             100.0
Cost of services            35,040         54,757           32,056               -       121,853              65.9
Depreciation and
amortization                 5,261         11,079            7,460             434        24,234              13.1
General and
administrative               3,945          4,756            3,379             688        12,768               6.9
Operating income
(loss)                  $    8,297     $   14,325     $      4,585     $    (1,122 )   $  26,085              14.1
Increase/(decrease)
in 2008 compared to
2007:
Revenue                 $    1,230     $   19,633     $      2,206     $         -     $  23,069
Cost of services             3,636         13,499            3,141               -        20,276
Depreciation and
amortization                   154          2,116              581              66         2,917
Impairment of
goodwill                         -         25,944           15,781               -        41,725
General and
administrative                (570 )        2,506              437          (2,806 )        (433 )
Operating income
(loss)                  $   (1,990 )   $  (24,432 )   $    (17,734 )   $     2,740     $ (41,416 )

Revenue. Total revenue for the year ended December 31, 2008 increased $23.1 million, or 12.5%, to $208.0 million from $184.9 million for the year ended December 31, 2007. Our growth in revenue between the years has been primarily driven by acquisitions. We estimate that acquisitions contributed $15.1 million of the revenue increase in 2008 while internal volume decreased $5.3 million, operational price increases contributed $7.9 million, and pricing from fuel surcharges contributed $5.4 million. The above table reflects the change in revenue in each operating region. The financial results of completed acquisitions are generally blended with existing operations and do not have separate financial information available with the exception of new regions acquired which can be analyzed individually. The revenue increase of $19.6 million in Region II was primarily attributable to the revenue increase in Texas of $23.3 million. Such revenue increase was driven by volume and price increases associated with new collection and hauling contracts in our Texas residential operations as well as the acquisition of a landfill and a transfer station in late June of 2007. We acquired a majority of our Oklahoma operations in Region II in February 2007. Those operations were not fully integrated until the second quarter of 2007. We estimate that the Oklahoma acquisition contributed $4.6 million of the increase in revenue. There was also a $8.3 million revenue decrease in Region II as a result of weakening general economic conditions in Florida and our divestiture of a transfer station and collection operations in Fort Myers, Florida. The revenue increase of $2.2 million in Region III was mainly due to the two North Carolina acquisitions completed in October 2007. Future changes in revenue and cost of services (discussed below) may be impacted by volume changes as a result of market conditions. For more information on the factors affecting our estimates, please see "-Executive Overview-Acquisitions" above.

Cost of services. Total cost of services for the year ended December 31, 2008 increased by 16.6% to $142.1 million from $121.9 million for the year ended December 31, 2007. We believe that our acquisition program accounted for most of the increase in cost of services. Fuel prices, which increased 32.1% nationally from the year ended December 31, 2007 to the year ended December 31, 2008, was the largest non-acquisition related component of the increase in cost of . . .