Joe Fusco - VP Communications John Casella - Chairman and CEO Jim Bohlig - President and COO Richard Norris - SVP and CFO Charlie Leonard - SVP of SolidWaste Operation

Scott Levine - JP Morgan Bill Fisher - Raymond James Corey Greendale - First Analysis Eric Prouty - Canaccord Adams Joe Levitt - Banc of America Elena Gavrilova - Citi Brian Butler - FBR Matt Vittorioso - BarclaysCapital Leone Young - Citigroup

Good day everyone, and welcome tothe Casella Waste Systems' second quarter fiscal year 2008 financial resultsconference call. (Operator Instructions). At this time, I would like toturn the conference over to Mr. Joe Fusco. Please go ahead, sir.

Thank you for joining us thismorning and welcome. We're joined by John Casella, Chairman and Chief ExecutiveOfficer of Casella Waste Systems, Jim Bohlig, our President and Chief OperatingOfficer, Richard Norris, our Senior Vice President and Chief Financial Officerand Charlie Leonard, our Senior Vice President for Solid Waste Operations. Today, we will be discussing oursecond quarter fiscal year 2008 results. These results were released yesterdayafternoon. Along with a brief review of these results, and an update on thecompany's activities and business environment, we'll answer your questions aswell. But first as you know, I mustremind everyone that various remarks that we may make about the company'sfuture expectations, plans and prospects constitute forward-looking statementsfor the purposes of the SEC's Safe Harbor provisions. Actualresults may differ materially from those indicated by those forward-lookingstatements, as a result of various important factors including those discussedin our prospectus and other SEC filings. In addition, any forward-lookingstatements represent our views only as of today, and should not be relied uponas representing our views as of any subsequent date. While we may elect toupdate forward-looking statements at some point in the future, we specificallydisclaim any obligation to do so, even if our estimates change and, therefore,you should not rely on those forward-looking statements as representing ourviews as of any date subsequent to today. Also, during this call, we willbe referring to non-GAAP financial measures. These non-GAAP measures are notprepared in accordance with Generally Accepted Accounting Principles, areconciliation of the non-GAAP financial measures to the most directlycomparable GAAP measures is available in the financial table section of ourearnings release, which was distributed yesterday afternoon and is available inthe investors' section of our website at casella.com/investor. Now I'll turn it over to JohnCasella, who will begin today's discussion, John?

Thanks Joe. Good morning everyoneand welcome. The purpose today obviously is to give you some insight into oursecond quarter results. Before we go through that, though I am sure most of yousaw the announcement in the press release last night that Richard will beretiring in January. Richard will plan on going through the numbers as usualand then he will let us know how he is going to spend his time in retirement.Also Jim, will go through and give an update on the development activity andthen as usual we will answer your questions. Now to the quarter results, froman operating perspective, we had a great second quarter driven by pricing, commoditypricing, pricing programs, commodity pricing and cost reductions. During thequarter, we continued to execute well against the plan that we had laid out inthe spring. The team has given clear direction to improve the operatingefficiencies, harvest cash flows from the landfill initiative and they areexecuting very well against those objectives. Our core focus remains the same,increase shareholder returns, repay debt, increase our free cash flow. We made solidprogress on two key metrics. We've improved our free cash flow by $4.7 millionyear-over-year, and we increased our return on assets by 70 basis points.Excluding the impacts from the final accounting for Brockton closure project in the secondquarter last year, operating income was up $1.4 million or 10.1% same quarterover last year. EBITDA was up $3.5 million or 10.9% over the same quarter lastyear and EBITDA margins improved by 60 basis points. From a price and volumestandpoint, volume was up 1.2% for the quarter excluding the negative impact ofclosing Hardwick and Brocktonfacilities. This certainly continues the last quarter’s positive trends. Solid waste volume gains for thequarter were driven at the landfills with third party tonnages up 28% andoverall tonnages up 19% or 165,000 tons year-over-year at the active landfills. Solid waste pricing was flatyear-over-year, excluding the surcharges. Positive pricing at the haulingbusiness was offset by lower third-party C&D, bud and MSW pricing. As withlast quarter about one-third, approximately 60,000 tons of the lower pricedlandfill tons were taken to our Pine Tree landfill, it has no annual cap, andwill be closed in 2009. The economy, just a little bitwith regard to the economy, the northeast economy remains quite soft, impactingseasonal and permanent collection volumes, mostly noticeable from a rolloutperspective. I believe that the economic data suggests, there is stabilizationin the northeastern economy. However, we've only seen slight gains to flatnesson a year-over-year basis. It generally appears though that the brunt of thedownturn was felt in the northeast last year, and things have certainly begunto stabilize. The construction slowdown and soft economy continues tonegatively impact our collection business, and as I said, most significantlyfrom a rollout standpoint, our pulls are down slightly at about 3.5% on ayear-over-year basis. FCR Recycling business againperformed well with EBITDA up $2.4 million year-over-year for the secondquarter. The EBITDA gains were driven by higher commodity prices, increasedvolumes and lower operating cost. One of the most significantdrivers in the quarter was a 31% gain year-over-year in plastics pricing.Unlike fibers, we have no hedges in place for plastics, which led to higherrevenue share for FCR for the first quarter. Again, we continue to work toestablish fort contracts to reduce the downside risk there. A little bit in terms of our operatingstrategy that we had laid out in the spring. The plan focuses on profitable revenuegrowth, cost reductions and higher return capital deployment to generatepositive free cash flow and increase obviously returns. For this year we planto be free cash flow positive side to $8 million and next year double that freecash flow. Recap against the execution froma planned standpoint during the quarter, we made great progress towardsachieving our landfill development goals. In September, we received the annualpermit increase at Hakes for 150,000 tons. In October, we received major modificationfor 300,000 ton a year increase in Ontario.This permit increases represent roughly one half of our target in the annualcapacity increases. Both in Hakes and Ontariopermits, we issued about nine months to 12 months early than we had anticipated,it’s a great news, because the regulatory risk is gone, however our managersand sales force now need to obviously ramp these facilities up during fiscalyear '09. Also it’s important to recognize in light of the current economicconditions, traditional seasonal increases in volume during the winter and thelead time required to contract new volumes, we currently do not expect to yieldmeaningful gains from these expansions during this fiscal year. We plan to rampup these facilities during the 12 months of fiscal year '09. The other expansions are on-trackas well, and Jim will give some more detail on those through his part of thepresentation. We continue to move forward with Southbridge and the other projects as well. Tocomplete the development work our sales team has build also a tool toeffectively source and price volumes to the expansions, basically that tool hasenabled us to really understand the movement of all waste. So, with the currentsoftness in the economy, we plan to ramp up these facilities as I said in athoughtful way to maintain market pricing and achieve our goal of adding theincremental $22 million of EBITDA. Again additional recap, we aremaking good progress against our plan to eliminate $6 million of costs from thebusiness over the next 12 months to 18 months. Again the plan that we had laidout during the fourth quarter and first quarter of this year, fourth quarter oflast year and first quarter of this year, this strategic sourcing initiative ismoving forward as well. Mitchell Madison recently completed the RFP process onengineered services and have identified above $400,000 of savings. We have alsoreceived proposals for tires, fuel, legal services and have identified another$800,000 of savings. Including the $450,000 that wehad already talked about in the first quarter this is roughly $1.6 million ofthe $2 million of targeted savings that we had outlined in the first quarter.We are still working on our long haul transportation piece and expect to havethose proposals by next quarter. In March, we had laid out theplan, also from a divesture standpoint. And just to give you a little bit of anupdate in terms of where we are there. The plan that we had laid out was todivest, swap or restructure or close underperforming, non-strategic operations.With the sales of the Buffalo facilities inOctober, and the Holstein facility in April,we have divested approximately $20 million of the $22 million that we had projectedof annual revenues from the low margin operations that don't fit from a longterm strategic standpoint. So, consequently we substantiallycompleted the divestiture program that we had laid out. We are also continuingto take a look at our business units and determining if there are any otheropportunities that will also increase shareholder returns. With that, I’ll turnit over to Richard, who will go through the numbers.

Thanks, John. I’m happy to talkto everybody that my new fishing boat as you suggested, but maybe we shouldtalk about the results first. For the quarter ended October 31st, 2007 revenueincreased $8.9 million to $151.4 million or 6.2%. Internal growth for thequarter reflects slightly higher pricing across our hauling and transferoperations in the solid waste segment. However, landfill prices again showednet decrease, while MSW prices were down slightly, average C&D prices saw a5% drop. As John mentioned, we’ve limited[driving] time to fill our Pine Tree landfills, we're driving C&D volumethere to generate free cash flow. Other landfill material prices droppedsignificantly, but that was mainly due to mix. On the volume side, transferstation volumes were up and hauling volumes were down slightly, so they prettyoffset, while total landfill volumes increased. The mix change at the landfillsnoted last quarter continued, although MSW volumes were up 6% this quarter andC&D and bud increased over 30%. These increases were more than offset on adollar basis, which is how our price volume measures are computed, by theclosure of Hardwick and the non-reoccurrence at the Brockton throughout last year. Those twosites created a negative year-over-year volume variance of 2.1%. Without thosetwo items solid waste volumes would have been up 1.25% rather than down 0.85%. Moving onto FCR, FCR's volumesincreased and commodity prices again moved significantly upwards includingplastics. The fiber price increases were partially offset by the hedgingprogram put in place to minimize that volatility. So, revenue for the quarterbreaks down as follows, solid waste $111.8 million, FCR $32.0 million, andothers $7.6 million, for total of $151.4 million. Moving on to gross margins, grossmargins were down year-over-year, 90 basis points. Again in this quarter the flattransfer and hauling volumes were offset by lower operating costs, so most ofthe operating expense categories decreased. Direct labor and direct operatingcosts were down across the board. Facility cost benefited from settlement ofproperty tax disputes at North Country and MaineEnergy. Maintenance costs were upslightly due to higher parts expense. An offsetting factor was purchasedmaterials at FCR, which were up as a percentage of revenue 2.3%, mainly due tothe higher value of commodities year-over-year and consequently the higherpayments to meet all of these. Purchased material prices were up 71%. General and administrationexpense decreased as a percent of revenue year-over-year, 80 basis points andwas flat in dollars. Bad debt, audit costs, compensation, legal and consultingcosts were all down and were offset slightly by higher year-over-year bonus accruals. Moving on to EBITDA, EBITDA at$35.5 million was up $1.8 million or 5.3% versus the prior year. And EBITDAbreaks down as follows, for solid waste $27.9 million, FCR $7.5 million andother $100,000 for a total of $35.5 million. Solid waste EBITDA was down fromthe prior year and margins decreased by 90 basis points. However in the prioryear the closure of the Brocktonproject generated $1.7 million worth of EBITDA on $2.1 million of revenue. Without that adjustment, solidwaste EBITDA would have been up $800,000 or 20 basis points. Also in thecurrent quarter, we converted MTS for those processing operation to a batchmode, as well as cleaned up the site. Those actions created a negative expense varianceof another $800,000. FCR's EBITDA improved by $2.4million, the margin increased this quarter by 300 basis points to 23.5%.Average selling prices were up this quarter as outlined previously as werevolumes. Tons shipped were up 1.4%. The major factor in EBITDA increase was thenet price increases, in other words net of the hedge effect. But in addition,we reclassified the cost of operation, the cash received from the net assetsunder contractual obligation as mentioned about $640,000. Those assets were not deemed tobe a true sale at the time of the transaction, because the risks of ownership werenot transferred to the buyer. We booked essentially as a receivable the amountswe deemed realizable, which were less than the full amount collectible. Theamounts recorded in the balance sheet is being repaid for the cash received isnow reported as a reduction of expense and the minimum amount still owed to companyare $2.3 million. Depreciation and amortization,this expense was up $1.1 million year-over-year. Landfill amortization showed alarge increase over the prior year arising mainly from the higher amortizationrates at Pine Tree, because of the shorter life agreed upon with the state aswe mentioned previously. The fact that there was no amortization at Hardwickand Brocktonwas more than offset by higher amortizations at some of the other sites. Interest expense, as you heardlast quarter since the preferred shares where classified as current liabilityin the balance sheet, based on our determination that the stock would beredeemed on schedule GAAP requires that the dividend be reflected in thefinancials, as interest expense rather than a dividend, accordingly $925,000 wasclassified as interest expense in the first quarter and $113,000 in the secondquarter. Income taxes, the tax ratecontinues to be very volatile and difficult to predict, as we again saw thisquarter. The tax provision is always computed on a year-to-date basis usingyear-end estimates of taxable income. So, the quarter provision is adjusted toend up the correct year-to-date amount, hence to benefit this quarter. The ratefor the rest of the year will continue to be volatile because of the low levelof booking come anticipated. But we presently expect to end up the year with atax expense and the rate in the 60% range. Net income for the quarteramounted to $2.8 million or $0.11 per common share. And then in discontinuedoperations that we announced previously, we have sold our Buffalo operations for net proceeds of $4.8million. This created a book loss of some $400,000 after-tax. These operationshad been somewhat of a drag on earnings and represent the substantialcompletion of the previously announced divestiture program. Although we continueto look at all of our operations to ensure they fit for our long-term strategy. Some miscellaneous debtstatistics, the average interest rate for the quarter decreased slightly to 8.5%including amortization of financing costs. Net of these expenses was 8.27%. Availabilityon the revolver at the end of the quarter was $155.6 million after taking intoaccount $43.0 million of [LC standing] and our debt-to-EBITDA ratio at the endof the quarter calculated for the bank providence was 4.15 times. Free cashflow showed a $4.7 million increase for the quarter, a significant improvementover last year due mainly to lower capital expenditures and improved earnings. The change in working capital wasconsistent with changes in accruals and payable outstanding, our cashreceivable increased from higher revenues. We remain on-track to deliverpositive free cash flow this year in the $5 million range. Then a few comments about theoutlook. The second quarter came in at better than expected but we do notanticipate much year-over-year improvement for the third and fourth quarters.Earnings will continue to be depressed by U.S. GreenFiber, which we hadbudgeted to breakeven. Their current forecast for our50% for the U.S GreenFiber’s income is now in the range of $1 million to $2.0million loss, that's our 50% share. However, we do now expect both revenue andEBITDA for Casella to come in at the high end of the ranges given in guidancein other words that was for revenue $560 million to $580 million and for EBITDA$114 million to $118 million. Finally on a personal note, youread in the press release and John mentioned I should be retiring in Januaryfrom active business life. The last seven and half years have been full ofinteresting challenges and opportunities. I am exceptionally proud of ourfinance and accounting staff. We setout to build a first class accounting andfinancial reporting structure distinguished by its reliability and integrity. Ibelieve we have been successful and then some. Despite my retirementstakeholders from investors to employees should be assured that the structureand more importantly the people who will make it happen are rock solid and wellequipped to handle the challenges of the future. In any case, I’m remaining in theNew England area and I will continue to beinvolved with the company on a consulting basis, so I am confident of a smoothtransition. The company is currently conducting a nationwide search for thebest candidate for my replacement, which maybe very difficult because we allknow the best of candidates are British but prefer just moving ahead at a goodpace and we expect this to conclude in the next 30 days to 60 days. With that, I pass it over to you Jim.

Thank you, Richard. We all shouldtake a moment to take a deep breath after that one. Good morning, some commentson the economy first if we examine the dodge index its clear as John indicatedto you that New England proceed that thenational slowdown that’s underway. The current dodge index nationally indicatesa fairly substantial slowdown relatively New England and Massachusetts aresignificantly reduced half of that in terms of an impact with Massachusettsbeing essentially flat and New England being down 10%. Having said that a year ago giventhe impact that the economy had in New England our year-over-year indices areactually indicating a slight improvement and I think it’s an indicative ofwhat’s happening and what continues to happen with New England being generallya softening economy, specifically while Vermontand Massachusettsremain steady. Maine is weak and we’re seeingbeginning softening in the Western New Yorkmarket. So, overall we’re in a recovering mode in New England I am sure someprime credit issues are continuing to quench local activity and the overalleconomic activity index for the last three months is relatively flat. Relatively landfill volumesHardwick and Brocktontends to obscure what happened a quarter of 2007, but generally our volumes areup primarily driven by the CD waste that we have attracted. Our MSW volumes areup as well not surprisingly in this particular economy, it results in a priceper ton reduction that we can actually get and so we are very careful andmindful that as we search for additional volumes try to close our Pine Tree orto meet, our harvesting goals associated with the landfill expansion programsthat two aggressive program there can actually drive the market quitesubstantially and we will be careful and mindful of that as we go forward. As John indicated, we are pleasedwith the overall expansion activity and I will talk about that in a second, butas we go and seek volumes we will have to thoughtful about it. Overall,internalization is relatively flat, although we've seen some shift with decreasingin the western markets and increasing in the central region, but overallinternalization from Q2 '07 is essentially flat. From the development standpoint,as I outlined in previous discussions, we have four or five major facilities,which make up our landfill development disposal strategy. We are well overhalfway through that receiving, permitting expansion authority. Specifically,during the quarter as John mentioned, we were very successful and pleased toreceive a 300,000 ton increase. This was earlier the plan for Ontario, and thatalong with our early declined Highland helps to offset the late to plan to[modern world], we believe that permitting there will pull up sense at least a9 month to 15 month delay to our previous schedule. Net-net we still remain ahead ofour plan, and recent development to Southbridgeare also very encouraging. The permitting path in Massachusetts requires a MEPAcertification, which is basically the environmental harm of Massachusettscertifying the facility scope and range of its changes, and we've received thatnow, and that is the gating issue for the Board of Health meetings, which willbegin in the month of December in terms of its schedule to be discussed nextweek, and we believe actually in hearings early in January, and that shouldorder well for our current target of having Southbridge repositioned to acceptMSW after permitted capacity rates that we reported by the end of Q4 '08. As I mentioned to you, acquiringthese volumes we’ll need to be thoughtful. We've done quite extensive marketsurvey, we are targeting municipalities and certain waste sheds that we thinkwill not impact the market as much as others and we are using our low emissionlandfill technology to attract waste that is thought to be from the people thatown that waste, who are interested in achieving increased greenhouse gasfootprint reductions. So we are thoughtful that in '09that we'll be able to acquire the additional tons that we've now got capacityto match with, and do so in a thoughtful way that does not push the marketadversely. Moving on to SCR, another goodquarter, roughly [108 plus] points improvement in margin for this quarter overQ1 '08. Volumes are up, and the pricing was up as well. Commodity pricinggenerally PET and all the plastics were up ranging from 2% for PET to Pigmentof [HBA] about 17%, Aluminum, O&P and OCC are fairly steady or slightlystrengthening and then ferrous is undergoing some softening. We expect thatoutlook will continue as it seems to be pretty well anchored in theglobalization under way for commodities driven by Chinaand India,and we expect that overall commodity prices will continue to be fairlyconsolidated at or around the current price that they are. Our processing costs for thequarter raised about 3.5% I think even the amount of fuel and other issues thatgo into that, if that's a reasonable job in terms of controlling our dollarsreturned processing costs on the same store and our same store as our brokeragebasis. Moving onto contract renewals.FCR has recently received notification from Oakland County in Michigan which isa suburb of Detroit and then selected from southwest recycling authorityoperations of that plant there we will be negotiating a contract shortly. Asreported earlier Greensboro, Camdenand Memphis all have undergone extensions and wehave received notification at Stratfordfor final negotiations and an extension there. The cycle bank rollout in Massachusetts have been quite promising first, as youknow we've rolled out single stream in those markets and our Auburnfacility seen a nearly doubling of product into that facility. In conjunctionwith the Southbridge recycle bank rollout where we've seen roughly about a 300%increase off a very low base augurs well I think for additional opportunitieson both single stream and the application for recycle bank. Moving on the US GreenFiber,obviously housing market continues to seek a bottom. We do expect that bottomto be within the next six to nine months. There will be a very slow recovery.We do not expect to see a recovery in this business until at least 2009. Havingsaid that the new home formation is still strong, which is based on immigrationand I think the issue is affordability that continues to drop to be able to bringnew buyers back into the market. And obviously I think the recent pendingannouncement of a rate freight hike on the subprimes will certainly help some systemrecovery in that market as well. We had seen continued O&P pricingincreases, and other chemicals which have put pressures on it. We are currentlyforecasting at $5 million to $6 million bid of business for calendar year '07,as well as I believe roughly for '08 with a recovery in '09. One note, a positive theory isthat [November data] -- EBITDA will significantly strengthen over our forecast.Retail sales were up 3%, contractor was on forecast and manufacturing and housingwas up 14%. So, those might be early indicators of some recovery in the housingmarket, but I think were at least 12 points off before it's sustainable. With that I will return to backto John.

Thanks operator, we'd like toopen it up for questions.

(Operator Instructions) And ourfirst question will come from Scott Levine with JP Morgan. Scott Levine - JP Morgan: Good morning.

Good Morning. Scott Levine - JP Morgan: I was hoping now you might beable to talk a little bit more in detail on solid waste pricing trends, it'sbeing normalized for what's going on with Pine Tree anecdotally. Are you seeingany weakening in either the fraction of the disposal sites of the business in[Linear] region?

I think it's, clearly from ourperspective flat, MSW pricing is flat down slightly. I think the majority ofthe impact from a pricing standpoint is clearly on construction, demolitionside. Scott Levine - JP Morgan: So within the last cyclicalbusiness lines no appreciable change versus what we've seen in the last fewquarters.

I think that’s [area]. Scott Levine - JP Morgan: Okay.

No appreciable change on the MSWpricing. Scott Levine - JP Morgan: Got it. Could you remind us,turning to fuel, you’ve seen a move up in diesel prices, can you remind us ofyour surcharge capabilities how much you are recovering? Within what timeframe, any lags so and so forth?

Sure, our surcharge we’rerecovering the cost we’re tied to the National Diesel Index. We’ve had thesurcharge in place for 3 or 4 years now. It works very well, I think what, wecertainly recover all the cost, the issue clearly though is that you are notcovering the margins so you have slight margin deterioration even though youare recovering the cost from a fuel perspective. Scott Levine - JP Morgan: Okay, one last one. It soundedlike you said on the incremental contribution from the new landfills $22million it seems, it sounded as though you guys have been saying $24 million,has there been any change there and if so, where is that coming from?

Well, I think it's fair to saythat from an economic perspective $22 million to $24 million is still a hardtarget, perhaps from an economy standpoint we may see some weakness there,continued weakness from a C&D pricing standpoint, but I think we’reclearly, I think reflecting that from an economic standpoint particularly onthe C&D side that we're likely to be $22 million to $24 million. Scott Levine - JP Morgan: So your expectation on the volumehasn’t changed at all?

No, not all. Scott Levine - JP Morgan: Great, thank you.

As we indicated earlier, I thinkwhat we are trying to do is to be somewhat fossil in terms of how we go aboutramping up those tons, so that we don’t disrupt the marketplace.

And as both a function ofavailable tons in the marketplace, retiring capacity in the marketplace, andthe economy. And so if we integrate all three of those together, I think we areconfident that we are going to be able to harvest and utilize tonnage andexpansion for landfill. The issue is just exactly what timeframe that refersto. Scott Levine - JP Morgan: Got it. Okay, thank you.

And our next question will comefrom Raymond James from the line of Bill Fisher. Bill Fisher - Raymond James: Thank you, good morning.

Good morning, Bill. Bill Fisher - Raymond James: Hey, couple of questions, justfollowing up on the landfill side for John or Jim, I think there is somelegislation in Congress that would partially tighten the permitting on the railtransfer stations that I guess are moving waste out of the Northeast Ohio, doyou feel -- can you just update us on that and see if is that something thatcould boost maybe pricing for Ontario or something down the road?

Well, I think there is activityfrom a congressional standpoint that those facilities that are not permittedwith a solid waste permit could very well be at risk, I believe there issomething that has gone through the house in terms of a bill. So, any of thosefacilities build that would be that are not permitted from a solid wastestandpoint, that are being simply permitted from the surface transportationexemption would be at risk. Now how many of those are, I meanthat certainly is going to impact some of the transfer stations that arehandling waste coming out of northeast market, but obviously not all of thembecause some of them are permitted from a solid waste standpoint, but itcertainly could have an impact. Bill Fisher - Raymond James: Okay, and then actually forRichard, you mentioned I think it was MTS, was that 800,000 cost in thisquarter and does that go away next quarter?

Yeah, that's correct. It was aonetime issue. We have a source processing operation up in Maine and we converted it to a batch modefrom continuous feeds and also cleaned up the site, which resulted in expensesin this quarter of $800,000. So it was a onetime hit. Bill Fisher - Raymond James: Okay. And then just lastly onthat, the $6 million or so the cost savings you talked about, how much roughlyyou think is embedded in the Q2 figures? You touched on that.

I think 2.5, and do you thinkit's embedded in the second quarter. I mean probably we have to go offline togive you an actual number on that Bill. I don't know of the top of my head, butwe can certainly get you the number on that. Jim, do you have that with you?

We -- the market centralizationproject is first ahead and the cost savings associated with that are being reflectedin the numbers, but they are roughly running about $400,000 a quarter, if Iremember correctly. And the temporary labor is really only just started in thislast quarter. So, we would have seen much pick up from that. And the otherinitiatives that John mentioned, they are still in the proposal stage, so theywould be seen in the rest and the future.

Yeah, I think this is as steep,you know, a ballpark number. Let say there it is about $2 million and $2.5million of the $6 million that would be incorporated in the first and secondquarter. But we can go offline and get a better number on that. Bill Fisher - Raymond James: Okay, alright. Thank you verymuch.

(Operator Instructions).

Bill, this just to clarify, Richardjust clarified the $2 million dollars that we had touched about was actuallyfor the year, as opposed to for the quarter. So that it would have been a $1million from the first two quarters.

(Operator Instructions). Our nextquestion will come from Corey Greendale with First Analysis. Corey Greendale - First Analysis: Hi, good morning.

Hey, Corey, how are you? Corey Greendale - First Analysis: Great. Congratulations, Richard, ithas been a pleasure working with you.

Oh, thank you, Corey. It's been agreat pleasure working with you and I appreciate the time we spent together. Corey Greendale - First Analysis: Yeah, I think the biggestsurprise in the quarter is that you're going to be staying in New England.

Well, we should get into that,but maybe you should have that discussion with my wife. That was not my call. Corey Greendale - First Analysis: Let me know the number for thatconference call and I will follow up. First, I was just wondering if it soundslike the economic environment is stabilizing a bit, but has there been any aspill over at all onto the commercial line of business, you're seeing anyweakness there in relation to construction?

I think that it's fair to saythat there is some weakness there. I mean, I think you can feel that certainlyon an overall basis, but again I think if you look at where we are today on theyear-on-year basis we've got obviously significant improvement, though we feltthe brunt of that last year as well. So, I think even to the extentthat there may be some mild, some deterioration from a commercial standpoint interms of when we look at rollout pulls, Corey, clearly some of the rolloutpulls that are impacted are the commercial business as well when we have aneconomic slowdown. So, some of that activity from arollout standpoint is commercial business in terms of the rollout pulls beingdown on the year-over-year basis. I think the important thing is that, it's oursense that the bulk of that impact we felt last year and we were fundamentallyin a position where we flat to stabilizing. With some metrics that are anindication, some leading metrics indication is a slight improvement, but we arenot seeing that at this point. Corey Greendale - First Analysis: Okay. I know you've talked aboutthe impact of Pine Tree in a couple of ways. Is there anyway you could take astab at what the impact of Pine Tree was on the internal volume and pricemetrics?

I don't think -- we don't reallyhave that information. I think we would just be guessing and unfortunately it'snot something that we've looked at. I think it is a fairly significant portionthough the increase in terms of tonnages -- fairly significant increase is theC&D tonnage so it should be disportionately a larger portion of that impact[restore]. Exactly what the number is I don't know. Corey Greendale - First Analysis: Okay and then a couple ofclarifications on the guidance. First all, Richard, I think you said withGreenFiber you'd expect $1 million to $2 million loss. First of all, is thatwhat you said and what period will that before?

For our fiscal year and thatwould be our share of the loss. Corey Greendale - First Analysis: Right, so, that would suggestthere will be fairly positive in the January and April quarters to get to $1million to $2 million for the fiscal year. Is that right?

Well, this business is veryseasonal, correct?

Yeah, I mean the U.S. GreenFiberthere isn't there as soon the weather turns cold people wake up to insulationwhere at least linear fees are getting as compared to previous years is veryearly the house of winners. So not surprising retail market sales jumpedimmediately in November and this is our strong really next 5, 6 months anyway.So yes, we will -- we'll see that and its encouraging to see some stabilizationin the contractor segment and growth in the manufacture and housing segment.So, yes this is seasonally our strongest quarter. Corey Greendale - First Analysis Corp: Okay, I wanted to clarify that.And then, Richard, I was going to give, you said you’re expecting flatyear-over-year, what metrics was that?

I was talking about EBITD. I’msorry it should have been clear. Corey Greendale - First Analysis Corp: That’s fine. So, if you assumeflat EBITDA year-over-year, I am getting overall EBITDA for the year a littlebit above the high end of your range and although it's not, maybe there is some[positive] continued operation but that sounds reasonable that you are assumingflat EBITDA at year-end little bit above the high-end of the guidance range.

Anything is possible, my calculusis getting old and I am retiring so maybe it doesn’t work as properly as yours.

I think, it’s fair to say, Corey,in all fairness that what Richard has laid out is that we think they were goingto be at the high end of the range and depending upon what happens willobviously we look at that in the third quarter. But clearly, at this pointwe’re very comfortable indicating that we’re going to be at the high-end of therange and we’ll see how the, we’re coming into weakest part of our fiscal yearin terms of the third and fourth quarter the seasonal weaknesses. So, we’ll seewhere we are after the third quarter and then revisit that issue. Corey Greendale - First Analysis Corp: Okay, thanks. I try to give you ahard time one more time Richard.

No problems, Corey, I shall missyou and actually I think Pine Tree most of their tons were actually third partythat incremental C&D was third party it wasn’t internal waste to a answeryour earlier question. Corey Greendale - First Analysis Corp: Thank you.

And our next question will comefrom Eric Prouty with Canaccord Adams. Eric Prouty - Canaccord Adams: Thank you. Couple of quickquestions here, first on, you mentioned there is some of the new recycle bankprograms, have you actually started seeing a meaningful volume increase point throughthe facilities from the recycle bank and could we expect it in the future, asthose programs fully kick in and actual acceleration of your FCR volumes?

I think it’s clearly, at thispoint time Eric, it’s premature. We are seeing increases that particularly our Auburn facility as an example, the increases there arereally related to our conversion to single stream. We’ve just started therecycle bank programs. So, clearly overtime as we convert our facilities andrecycle bank is implemented in the marketplace, we will continue to seeincreased utilization and efficiencies that are existing facilities andobviously we’re looking at trying to enhance the performance of the existingfacilities first. So, I think at this point intime, the majority of the increases that we’ve seen is because of the singlestream, yet we’ve only really just begun over the last month the rollout in Southbridge. So, we willbegin to see impacts there and we’re also beginning to rollout in Chittenden CountyVermont in the month of December. So, we will begin to see improved performancecoming from the recycle bank programs, but have not yet.

It’s a two tier issue here,single stream have to be in place for recycle bank to be able to rollout. We’reseeing a real opportunity with change of dynamics to rollout more single streamand to have higher benefits from that and all of them way down the road thatwill benefit FCR and then, as a second layer on top of that, we think therecycle bank will further help. But, the first step first issingle stream and we are getting good responses out of that. And we expect tomove down that path, and we'll have some more data next quarter based from our Southbridge and Wilmingtonrollouts that we might be able to give you some more insights on that. Eric Prouty - Canaccord Adams: Great. And then on the recycling,obviously, a lot of your fibers hedged, but those hedges roll off, I mean, justas a point of references, the old hedges roll off and you would put on newhedges. How, I guess, what is the differential in pricing, what's the newversus the old hedges, given the pricing that fibers moved up here recently?

Yeah. Actually it's veryinteresting. We're in an ideal market to do hedges right now, because theseprices are high. As you know, we're hedging to do a good job on our plan, andon our budgets, we are not doing that for preparation purposes. So, what we're really doing istrading future higher prices for and given those up or a portion of those upand exchange with downside protection, so if the markets creep up, this is apositive time for us to do hedges as opposed to when the market is soft. ,: So, we're actually feeling quiterobust about our paper strategy. The issue that we do want to point out is thatthey are working hard to find plastic hedges. We don't have that, and that isdriving our prices up right now. But, also absence of volatility to that on thefuture, should plastic pricing go down, like it did 10 months ago. : So, we're actually feeling quiterobust about our paper strategy. The issue that we do want to point out is thatthey are working hard to find plastic hedges. We don't have that, and that isdriving our prices up right now. But, also absence of volatility to that on thefuture, should plastic pricing go down, like it did 10 months ago. Eric Prouty - Canaccord Adams: Just from a modeling and point ofreference standpoint, again, just a ballpark, when you are putting on these newhedges, extending them out on a bad higher prices than the older hedges by whatwould incremented etcetera any ballparks that you can give?

I think we would look at justremaining at the levels that we are out now as opposed to increasing that. Tothe extent that commodity prices continue to escalate, Eric, over time andperhaps it would make sense, but from a practical standpoint we are justprojecting the commodity prices to be flat for the next 12 months. So ratherthan increasing the modeling at this point in time I think it would probablymake more sense to look at it in terms of -- we're going to have someimprovement, but I don’t know if that improvement is going to be all thatmaterial over the next 12 months.

You know for the sake of gettingyour model more accurate we have put at risk the downside we would rather besteady state and have re-model to be conservative when we talk aboutcommodities? Eric Prouty - Canaccord Adams: Sure, hope that’s fair. Then,finally maybe just I might have missed it, but just an update side on any ofthe landfill gas projects and where we stand with those?

We've started or we nearlycompleted and Pine Tree expect to be synchronizing producing power within 30 to45 days. The Hyland facility is under construction, building is up, inches willbe moved in this month, expect to produce power probably by the end of Q4 '08or if not first part of the summer. Clinton Countyis under construction, although it's one of our constructions, so we won't seesubstantial progress there until beginning March-April, but that should beonline second quarter '09. We are actively negotiating to start theconstruction of Southbridgeonce we get the permit. And certainly have the gas well there and have a coupleof other projects lined up for start in '09 as well. So, I would say that ourproduct line landfill gas energy is doing as we have hoped in. We think thereare good opportunities out there and we are robust for that. Eric Prouty - Canaccord Adams: Great, okay. Thank you very much.

Welcome, thank you.

And our next question will comefrom the line of [Joe Levitt with Banc of America]. Joe Levitt - Banc of America: Thank you. Good morning.

Good morning. Joe Levitt - Banc of America: Just on U.S. GreenFiber, sorry togo back there, but I mean EBITDA is a roughly down quite a bit. I'm justwondering, I used free cash look positive at GreenFiber and more generallywhat's the liquidity position of GreenFiber. Are you saying risk is to marketcondition don't change I'll get earlier little worse if there -- is there arisk that you might have to --

I think there are two factorsthat drive the answer for that question. First is, where's the housing marketand has it reached the bottom? I think that we are little bit yet early todeclare that it's breadth at bottom, but we think we are essentially at thebottom. The second factor is, how well has GreenFiber how in advance of themarket the GreenFiber reacts to restructure their operations. And we've had twomajor restructurings, we've taken out about $10 million of cost over the last12 months trying to be ahead of this. We've got, like to compliment the GreenFiberguys because they did good, but difficult choice to restructure and repositionthemselves when the market turns in '09. So, I guess our hope is that they arepretty much at the bottom and they are going to live long here for a while andnow they will start to see an improvement in late '08, calendar year '08. Joe Levitt - Banc of America: Okay. So, your rate don't expectto outperform then with gas at any point.

No, we don’t. I think, as Jimsaid, what we expect is that to the extent that we see further deteriorationwe’ll look at taking more cost out, but I think it's our perspective at thispoint in time that with their current credit facilities we don’t anticipatehaving to fund. Joe Levitt - Banc of America: Okay.

And you know part of that --

They have their own, obviouslythey have their own credit facilities and so at this point we don’t anticipate.

Part of the restructuring thatwas approved by the U.S. GreenFiber Board was to restructure unless they keepthem cash flow neutral or positive. I think they’re relatively on that track.So, I don’t think there will be any funding. Joe Levitt - Banc of America: Great and then, if I see yourleverage went up a little bit to tell you, you redeemed to put share up. I meanyour guidance or you seem to guide to a little bit of free cash flow generationthis year and a little bit more next year even where your leverage is should weassume that priority now will be paid on little bit of debt and bring back theleverage in the mid threes where it has historically been.

Yeah, I think that’s the fairperspective. I think, we’ve said on a number of occasions that as for timesthat the EBITDA that’s really the threshold from our perspective. We look atdifferent mechanisms that will allow us to de-lever the balance sheet back to amore respectable level. Some of that obviously was done in the last quarter,where the divestitures that we put in place and clearly we’ll look atopportunities to continue to de-lever use of free cash flow, generate the freecash flow, use of free cash flow from a de-levering standpoint. And at the sametime, look at the asset base and make sure that any opportunities there areexecuted on as well. Joe Levitt - Banc of America: Okay great. Thank you very much.

And our next question will comefrom Leone Young with Citi. Elena Gavrilova - Citi: Hi, it’s actually [ElenaGavrilova].

Hi Elena. Elena Gavrilova - Citi: Good morning. Just wondering ifthere is anything in the energy build out further affects your operationseither positively or negatively. I mean, I think there are some incentives forrenewal energy and assuming that includes landfill gas, is that?

Yes, I think everything about theenergy bill shouldn't be viewed as positive, relative to our strategy and whatwe are trying to do, so I don't know any part of the energy bill that is goingto be viewed as [positive]. Elena Gavrilova - Citi: Okay. Alright great, thank you.

You are welcome.

And our next question will comefrom Brian Butler with FBR. Brian Butler - FBR: Good morning.

Hey, Brian. Brian Butler - FBR: Hi, I just wanted to follow-up onthe taxes and just try to get a little bit more detail, I understand it's hardto put numbers on them, but just what do you think about the rest of the year?Are you going to get a benefit for the remainder on booked taxes? And thenalso, does that rebound to some normalized level for '09?

Yeah, I indicated earlier, Brian,that it will at the end of the year for the total year land up being anexpense, because we will be adding back non deductible items, and so we willend up year with an expense, not a benefit, the benefit, which is a result ofjust making a year-to-date adjustments through the quarter numbers. And next yearobviously taxes depend on profitability and we have not yet given guidance onnext year, so we will be doing that in our June conference call. Brian Butler - FBR: Okay. But assuming if Casella wasto be profitable, would you see a more normalized tax rate, is that areasonable assumption?

Yes, I think obviously the waythe tax calculations work, the higher the profit usually the lower the taxrate. One is the function of the other, and so next years' tax rate will dependon the level of profitability and subsequent years are same. Brian Butler - FBR: Okay. Thank you very much.

You're welcome.

And our final question will comefrom Matt Vittorioso with Barclays Capital. Matt Vittorioso - Barclays Capital: Good morning. Just a little moreclarity on the free cash flow expectations, working capital's been a pretty bigburnt in first couple of quarters; I guess that's coming back in the secondhalf of the year?

Yeah, that typically comes backin the second half for the year with our seasonality, the revenues drop,receivables drop and particularly at the end of the year we, with the capitalaccruals, the working capital situation tends to reverse itself. Matt Vittorioso - Barclays Capital: And what was driving it, it seemslike it was a larger burn this year, anything in particular there that wasdriving such an increase in working capital?

The accounts payable at the endof last fiscal year were unusually high and we had significant capital accrualsat that point. And so at the end of the first and second quarters we havefallen down to a more normal level, and that's the main swing I think you'llfind. Matt Vittorioso - Barclays Capital: Okay. And have you given guidanceon what CapEx will be for this full fiscal year? I mean it should continuealong like the $20 million-ish per quarter?

I think it was 72 through to 76,wasn't it?

Yes, we can get you that number,I believe it was 72 to 76 out in that range, but we can actually get thatnumber for you, we don't have it right here. Matt Vittorioso - Barclays Capital: That's great. And just realquick, have you guys put out any kind of data on the breakdown or any kind ofbreakdown between C&D and MSW either into [end tools] or in collection orboth?

No.

No, don't report it separately. Matt Vittorioso - Barclays Capital: Do you have any color that youcan provide on that?

Well, color in terms of, I think wewent through the third party C&D has been driven, a substantial part of ourincrease was third party C&D, it was about approximately 60,000 tons andthat tonnage was all third-party, that is going to the Pine Tree facility aswe've indicated on the call, that facility will close in '09. So, that's prettymuch the driver in terms of the overall C&D increases. Matt Vittorioso - Barclays Capital: Okay. Alright. Thank you verymuch.

You're welcome.

And we just have a follow-up questionfrom Leone Young. Leone Young - Citigroup: Thanks for taking my follow-up. Iwas just wondering if you would be willing to make any comment on yourwillingness to use equity to de-lever the balance sheet?

Sure. I think we’ve said allalong, Leone, that clearly if we are able to get to the high-teens, low 20s,that we really would de-lever the balance sheet from an equity perspective. Ithink that our sense is to obviously generate the free cash flow, demonstratethe successful execution of our landfill strategy, move to the positive freecash flow to demonstrate quite frankly the value of the investment that we'vealready made and to the extent that we do that and we are able to move ourprice to as I said $18 to $20 a share then clearly we would use equity tode-lever the balance sheet. Leone Young - Citigroup: Thanks, and congratulations onyour turn so far.

Thank you.

At this time, it appears to be nofurther questions in the queue.

Great. Thank you very much. Inclosing, I would like to thank Richard for his commitment to Casella, to all ofour people and to our shareholders. I think his daily contribution andunbending commitment to the company; is clearly going to endure in the talentedfinancial team that he instilled over the last seven years. As Richard said, we have retaineda search firm and expect to have a new CFO hired in 30 days to 60 days. But Ithink most importantly, is the positive relationship that we have and in factthat he is going to work on a consulting basis to make sure that there is aclear and successful transition. In closing, I'd just like toemphasize again, we are executing against the plan that we laid out in thespring. I think that clearly the results are showing that we've a continuedfocus to drive value by harvesting, as I said before, there is a significantvalue potential of our successful landfill development strategy. And clearlysimplification of our business model, rethinking our business model to drivecost out of the business, we've got great response from all of our people, weare making great efforts and great strides in terms of rethinking that modelsto take the cost out. And then third, efficientutilization of capital and a focus on generating free cash flow -- we'd justlike to thank for your attention this morning. Our next earnings release andconference call will be in early March, when we will report our third quarter’08 results. Thank you very much everyone. Have a great day.

That does conclude ourteleconference for today. We would like to thank everyone for yourparticipation. And have a wonderful day.