PART I
ITEM 1. BUSINESS
Company Overview
We are a leading provider of services in the domestic non-hazardous solid waste industry. We provide
non-hazardous solid waste collection services for commercial, industrial, municipal and residential customers
through 140 collection companies in 22 states. We also own or operate 96 transfer stations, 58 solid waste
landÑlls and 35 recycling facilities.
As of December 31, 2004, our operations were organized into Ñve regions whose boundaries may change
from time to time: Eastern, Central, Southern, Southwestern and Western. Each region is organized into
several operating areas and each area contains a group of operating locations. Each of our regions and
substantially all our areas provide collection, transfer, recycling and disposal services. We believe that this
organizational structure facilitates the integration of our operations within each region, which is a critical
component of our operating strategy. See Note 10 of the Notes to Consolidated Financial Statements for
further discussion of operating segments.
We had revenue of $2,708.1 million and $2,517.8 million and operating income of $452.3 million and
$412.7 million for the years ended December 31, 2004 and 2003, respectively. The $190.3 million, or 7.6%,
increase in revenue from 2003 to 2004 is primarily attributable to the successful execution of our operating and
growth strategies described below. The $39.6 million, or 9.6%, increase in operating income from 2003 to 2004
is partially due to higher self-insurance expense during 2003 related to existing claims and was attributable to
the expansion of our operations and various changes in estimates as a result of continued negative trends
through the 2003 policy year. The remaining increase in operating income is due to the successful execution of
our operating and growth strategies described below.
Our presence in high growth markets throughout the Sunbelt, including California, Florida, Georgia,
Nevada, North Carolina, South Carolina and Texas, and in other domestic markets that have experienced
higher than average population growth during the past several years, supports our internal growth strategy. We
believe that our presence in these markets positions our company to experience growth at rates that are
generally higher than the industry's overall growth rate.
We continue to focus on enhancing stockholder value by implementing our Ñnancial, operating and
growth strategies as described below.
Industry Overview
Based on analysts' reports and industry trade publications, we believe that the United States non-
hazardous solid waste services industry generates annual revenue of approximately $44.0 billion, of which
approximately 50% is generated by publicly-owned waste companies, 21% is generated by privately-held waste
companies, and 29% is generated by municipal and other local governmental authorities. Three companies
generate the substantial majority of the publicly-owned companies' total revenue. However, according to
industry data, the domestic non-hazardous waste industry remains highly fragmented as privately-held
companies and municipal and other local governmental authorities generate approximately 50% of total
industry revenue. In general, growth in the solid waste industry is linked to growth in the overall economy,
including the level of new household and business formation.
The solid waste industry experienced a period of rapid consolidation in the late 1990's. During that time
we were able to grow signiÑcantly through acquisitions. However, acquisitions in the industry have slowed
considerably since late 1999. Despite this, we believe that the opportunity to grow through acquisitions still
exists, albeit at a slower pace than experienced in previous years, as a result of the following factors:
Subtitle D Regulation. Subtitle D of the Resource Conservation and Recovery Act of 1976, as