Jim Alderson - Director of IR David Steiner - CEO Larry O'Donnell, III - President, COO Bob Simpson - CFO, SVP

Hamzah Mazari - Credit Suisse Scott Levine - JP Morgan Michael Hoffman - WSI David Feinberg - Goldman Sachs Bill fisher - Raymond James Corey Greendale - First Analysis Jonathan Ellis - Merrill Lynch Nicole DeBlase - Deutsche Bank

Good morning. My name is Nicole and I will be your conference operator today. At this time, I would like to welcome everyone to the Waste Management First Quarter 2009 Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Mr. Jim Alderson, Director of Investor Relations. Sir, you may begin your conference.

Thank you, Nicole. Good morning everyone and thank you for joining us on our first quarter 2009 earnings conference call. With me this morning are David Steiner, Chief Executive Officer; Larry O'Donnell, President and Chief Operating Officer and Bob Simpson, Senior Vice President and Chief Financial Officer. David will start things off with a summary of the financial results for the quarter and a review of the details of our revenue growth, including price and volume trends. Larry will discuss operating costs and Bob will cover the financial statements. We will conclude with questions-and-answers. Before we started let me remind you that in addition to our press release that was issued this morning, we have filed a Form 8-K that includes the press release as an attachment and is available on our website at www.wm.com the press release and schedule to the release include important information that you should refer to. That is because during these discussions of our first quarter 2009 results of operations, we will be providing estimates, projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties that are described in detail in our annual report on Form 10-K for the year ended December 31, 2008, and in our press release this morning. These risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements. During the course of the presentation, we also will discuss certain financial measures on an as-adjusted basis, just as we have presented them in our press release this morning. These measures include net income, earnings per share, income from operations, operating expenses and certain operating margins, all adjusted for items we deem unusual or non-operational in nature. We will also discuss free cash flow, all of these are non-GAAP financial measures. When David, Larry and Bob discuss the results we've presented in our press release on an as-adjusted basis, their comments will also be on an as-adjusted basis. Specifically, these adjustments include, a $23 million reduction in net income due to charges related to the restructuring announced in February 2009, and a $30 million reduction in net income related to the abandonment of the SAP software. When David discusses internal revenue growth volumes, these volumes will be adjusted to reflect one less workday during the first quarter of 2009 compared to the prior year period. We have given detailed information on all of the non-GAAP measures that will be discussed on this morning's call and have reconciled them to the most comparable GAAP measures, and you can find that information in the schedules to the earnings press release or on the Form 8-K filed today which, as I mentioned, can be found on the Company's website at www.wm.com. This call will be recorded and will be available 24 hours a day beginning approximately 1 PM Eastern Time today until 5 PM Eastern Time on May 13. To hear a replay of the call over the Internet, access the Waste Management website, at www.wm.com. To hear a telephonic replay of the call, dial 800-642-1687 and enter reservation code 90934084. Time sensitive information given during the course of today's call, which is occurring on April 29, 2009, may no longer be accurate at the time of the replay. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Waste Management is prohibited. Now I turn the call over to Waste Management's CEO, David Steiner.

Thank you, Jim. Good morning from Houston. I'm pleased with the high level of performance throughout our organization in the first quarter. We faced significant challenges as the volume declines and the drop in commodity prices that occurred in Q4 2008 continued into the first quarter. In the face of these challenges we still posted solid financial results and our strong cash generating abilities were proven once again. We earned $0.42 per share in 2009's first quarter. As we expected, for the first quarter of 2009, there was a negative impact of $0.09 per diluted share from our recycling operation. So, if we further adjust Q1 2009 for the impact of our recycling operations to make the quarter more comparable to 2008, we would have earned $0.51 in the first quarter 2009. This would be an increase of $0.04 per diluted share, or over 8.5% when compared with our adjusted first quarter 2008 results. In a slow economy, this is a significant achievement, and it's evidence that our pricing and operational excellence program continue to function well. Looking at revenue, revenue declined by $456 million in the first quarter, but most of the decline was a result of items that do not relate to the core collection and disposal operations. $202 million of the decline was due to recycling commodity revenues and energy prices. $35 million related to foreign currency exchange. $64 million related to the decline in fuel surcharge revenues as oil prices declined. And $23 million related to having one fewer workday in the quarter. This leaves a first quarter 2009 revenue decline related to our core solid waste collection and disposal business of only $132 million, or 4.7% of revenue. Looking at internal revenue growth, we're modifying the method we use to calculate internal revenue growth in order to get a truer picture of our pricing program. The old calculation didn't clearly reflect pricing in our core business because it included revenue from other parts of our business. So, for example, in calculating yield under the prior method for our solid waste business, which includes collection and disposal lines, the numerator would include only price changes for the collection and disposal line, but denominator would include revenue from recycling, electricity, fuel surcharges and other non related businesses. The new method only includes pricing and revenue that is related to that particular line of business. We've included exhibit 1 in our press release to show the calculation under both methods, but we will refer to the new method going forward. We believe our new method will give a better picture of how our pricing programs are working in each of our lines of business. So, internal revenue growth from collection and disposal yield in the first quarter was 3.1%. Internal revenue growth from yield was strongest in the three collection lines of business. Combined, the revenue growth from yield of the industrial, commercial, and residential lines of our collection business was 3.9% in the first quarter. We produced our strongest results in our commercial collection line of business, where internal revenue growth from yield was 4.2% in the quarter. The yield components of internal revenue growth in our industrial and residential lines of business were both 3.6%. In February, we announced we were setting minimum pricing targets for each of our areas, groups, and the company. We still have our normal bonus program based on margins and EBITDA, but the pricing target acts as a gate that has to be met to get into the bonus pool. If we don't meet the pricing targets, senior management will not receive an annual bonus, even if we meet our margin and EBITDA target. These price targets are based upon increases to revenue per unit, which reflect core pricing changes. The targets were set insure that we maintain our focus on pricing and continue to achieve yield at a level 50 to 100 basis points above core CPI. For the first quarter of 2009, the company met its pricing target, which is reflected in our strong yield results. We will continue to pursue pricing opportunities and believe we can continue to meet our 2009 pricing goals. Internal revenue growth from volumes declined 7.4% in the quarter. The recession resistant lines of our business, namely commercial and residential collection, saw volume declines similar to what we had seen throughout 2008, at about negative 4% each. But in our more economically sensitive lines of business we did see a decline as roll-off volumes fell 14.5%. However, we maintained our focus on roll-off pricing, which resulted in revenue growth from yield of 3.6% for the quarter. We continued to work to obtain price increases in our roll-off line despite lower volumes, and certainly we will continue that strategy in 2009. So overall, income from operations continued to increase in the collection line of business. Income from operations increased 2% in the first quarter of this year compared with the same period of 2008, and our income from operations margin in our collection business expanded by 260 basis points. Turning to yield and volume on the disposal side of the business, third party volumes at our landfills dropped 11.5% compared to the prior year period. The largest declines occurred in a more economically sensitive special waste in C and D line. The landfill volumes were somewhat lower than we expected, but they appear to have stabilized during the quarter. Given the lower volumes, we will continue our focus on pricing and flexing our costs to obtain an appropriate return on capital in this capital intensive business. On the pricing front, for the quarter our internal revenue growth from landfill yield was 1.7% and was 2.3% on MSW. Again, we will maintain our focus on disposal pricing despite the lower volumes. The recycling markets have shown extreme volatility over the last six months, and our earnings have suffered because some of our contracts are not designed to cover our processing costs when commodity prices reach low levels. We do not intend to seek financial hedges for commodities, but we can create a natural hedge by changing the way that we contract for volumes. Let me explain how. Currently, most of our contracts do not have a minimum charge for processing recyclables. Rather they call for the sharing of revenues from the sale of the recyclables. If our share of the revenue is below our processing cost we lose money. In some of our contracts we've offered a guaranteed floor for commodity prices to our customers. If commodity prices are below the floor, again, we lose money. Consequently, we're work on revising our pricing and rebate model in our recycling operations. We will not offer floor pricing to our customers. New contract pricing will also include a fee to cover our processing costs plus a fair return on our capital. When commodity prices exceed our processing costs, we would be willing to share a portion of the upside with our customers. It will take time to affect these changes with existing contracted customers but these pricing structure changes will help to ensure the long-term viability of our recycling operation by making them less exposed to cyclical markets. On the cost side, the companywide reorganization we announced in February was implemented without skipping a beat, and will produce annualized savings in excess of $120 million. Larry will give you further details in his remarks. So, we're poised to have a strong year despite the poor economy. Volumes in our residential and commercial line continue to run at a stable rate, showing their recession resistant qualities. In our more economically sensitive roll-off and landfill lines we've seen volumes flatten sequentially over the last few months and we expect to see volumes up tick over the next few months as a result of seasonality. However, until we see the size of the seasonal up tick it's still too early to predict what volumes will do for the remainder of the year. But regardless of how our volumes trend for the remainder of 2009 I want to reassure you three things that I said in February. First, we've taken the actions necessary to reduce our cost structure by over $120 million. And our field operations teams have the tools to continue to flex costs. They also have the equipment to handle volumes when they begin to grow again without adding significant new costs. So when volumes return, the leverage will be significant. Second, we will maintain our focus on growing revenue from yield in our collection and disposal lines. We've demonstrated our resolve by tying annual bonuses to the achievement of specific pricing targets, and so far this year we've exceeded our target. And third, we're very mindful of our investors' focus on cash generation, and we will ensure that we manage our capital in a manner that produces strong free cash flow. We had some carryover capital from 2008 that affected cash flow in Q1 2009, but overall, our capital expenditures for the year should still be in the $1.1 billion to $1.2 billion range. Leading to free cash flow of between $1.3 billion and $1.4 billion for the year. Finally, we do see a stronger acquisition pipeline in 2009 as valuation and prices for assets reach lower levels. There are opportunities in the core solid waste business and in other strategic businesses such as waste to energy and medical waste. These strategic business opportunities allow to us grow revenues in our more recession resistant lines of business. So, in the next 12 to 18 months we would expect to spend up to $250 million of solid waste acquisitions, up to $200 million in waste and energy investment, up to $200 million in medical waste acquisitions. Generally, we would fund any acquisitions out of free cash flow, so we will maintain our solid balance sheet. Where he think these types of opportunities will position us solidly to weather this economic downturn and to emerge stronger and poised for growth. We will also look for longer-term opportunities that would start construction in the three to five year time horizon in the waste to energy business as we bid on projects both domestically and internationally. So, we're excited by the opportunities we see and believe they will set the stage for a bright future. With that, I will turn the call over to Larry who will review our operating cost results. Larry O'Donnell: Thank you, David. Good morning. I will begin by reviewing our operating cost results for the first quarter 2009 after which I will discuss our restructuring. Operating expenses in the first quarter of 2009 were $1.725 billion, or 61.4% of revenue an improvement of $367 million from the first quarter 2008, or 270 basis points as a percent of revenue. This is a strong performance given the decline in revenue. The cost reduction is due primarily to four factors. First, flexing down costs and executing our restructuring plan. Second, lower recycling commodity prices, which result in lower rebates we pay to our customers. Third, lower fuel costs from the decline in diesel fuel prices. And fourth, the decline in the exchange rate of the Canadian dollar. Adjusting for the impacts of commodities and fuel on both our revenues and expenses, operating costs improved 140 basis points as a percent of revenue. We lowered first quarter 2009 operating costs in nine of the 10 cost categories that we break out in our financial statement. I'm pleased with the disciplined approach exhibited by our team in managing our controllable operating costs during tough economic conditions. We demonstrated the value of our operational excellence initiative by flexing down our costs in reaction to the current economic downturn. I will now review our performance for the first quarter of 2009 compared to the prior year period in a number of the cost categories. Labor and employee benefit costs improve by $37 million in the quarter. This improvement is the result primarily of reducing routes and improving asset efficiency in reaction to the volume decline, productivity improvements achieved in all three of our collection lines of business, as well as labor cost savings that resulted from our restructuring announced in February of this year. We reduced our driver hours by about 859,000 hours. Over 70% of this reduction was due to reducing our capacity by taking trucks off the road as volumes declined. In the remainder was primarily due to productivity improvement. Our total reportable injury rate was reduced to 3.1% in the first quarter, a 24.4% improvement compared to the prior year period. We're very pleased with this achievement, which demonstrates our leadership in protecting the health and safety of our employees and our community. Cost of goods sold decreased by $120 million, or 320 basis points as a percent of revenue. Principally due to the reduction of recycling commodity rebates. In January, we saw recycling commodity prices stabilize and begin to improve in February and March. We would expect recycling commodity prices to continue to improve moderately, and so the year-over-year loss would moderate in the second and third quarters and actually turn positive for the fourth quarter because of the easier fourth quarter year-over-year comps. Even if recycling commodity prices don't get any better than the March levels, we would expect to see a full year negative impact on earnings of about $0.20 per diluted share. Transfer and disposal expenses, which include those costs that our collection companies paid to third-party landfills and transfer stations, improved by $41 million, or almost 20 basis points as a percent of revenue, primarily due to volume declines. In addition, our internalization rate hit 70% in the quarter. We lowered our maintenance and repair costs in total by $10 million in the first quarter of 2009 compared with the prior year period. Collection and heavy equipment fleet maintenance improved by $16 million while the timing of our scheduled maintenance at some of our facilities partially offset some of this improvement. The efforts we've made to standardize our fleet and institute a cost effective preventive maintenance program continue to contribute to our improved operating costs. Compared to Q1 2008, falling diesel fuel prices lowered our direct fuel costs by approximately $55 million, and lowered indirect fuel costs charged to us by our subcontract transportation haulers by approximately $8 million. The change in fuel surcharge revenue closely matched the change in fuel cost during the first quarter 2009. Subcontractor costs improved by $47 million, or almost 60 basis points due to achieving fewer third-party contractors as a result of lower volumes and the decrease in indirect fuel costs passed on to us by our subcontract haulers. Landfill operating costs improved by $21 million in the first quarter 2009 compared with the prior year period. Primarily as a result of the accounting impact from the effect of higher interest rates on our remediation liability and as a result of operational improvements at our landfill. As mentioned by David, I want to give you an update on the restructuring of our operation that we announced in February. We incurred charges during the first quarter of approximately $38 million for this restructuring. The majority of this cost relates to employee severance. We expect to incur up to $15 million of additional restructuring costs in Q2 and Q3. We realize total cost savings of approximately $21 million for February and March, or about $10 million per month. Consequently, we expect the annualized savings from the restructuring to exceed $120 million. I would like to congratulate our entire team on the outstanding work they did implementing the reorganization plan. They achieved our objectives on time while maintaining our high standards of service to our customers. We spent several months putting together our restructuring plan, and it's gratifying to see how quickly and efficiently our organization executed the plan. It demonstrates to me how flexible our team has become and how well they all work together to continue to improve our company and our service to our customers in spite of the challenges from the current economic environment. With that, I will turn the call over to Bob.

Thank you, Larry. I like to start out by discussing SG&A costs. These costs decreased by $31 million to $337 million during first quarter of 2009 versus the same quarter 2008. This decrease is due primarily to labor cost savings that resulted from our restructuring announced in February of this year, lower long-term incentive plan expenses, and reductions in travel and entertainment partially offset by higher bad debt expense. David and Larry both spoke about the restructuring, and I would like to point out that approximately 70% of the restructuring cost savings in the first quarter were realized in SG&A categories. We believe this new level of SG&A will be able to support our business going forward, even when the economy turns around and volumes grow. Bad debt expense increased by $6 million for the quarter, approximately 40% of this increase comes from our recycling operations, largely as a result of bankruptcies by certain domestic paper companies. As we saw the economy weaken, we managed our receivables with these paper companies very closely and reduced our exposure by over 85% compared with the prior year period. We continued managing all of our receivables very closely and actually improved our day sales outstanding by almost one full day compared to the prior year period. Depreciation and amortization expense for the first quarter of 2009 declined $8 million when compared with the first quarter of 2008 principally as a result of lower landfill volumes. As a percent of revenue, depreciation and amortization expense was 10.3% compared with 9.1% in the prior year quarter, primarily due to the decline revenue. Interest expense for the first quarter was $105 million, a $17 million decrease from the prior year period. This decrease is due primarily to lower interest rates, which impact the interest expense associated with our interest rate swaps and our variable rate debt. Our debt to total capital ratio was 58.7%, and the floating rate portion of our total debt portfolio was 32% at the end of the quarter. We expect our floating rate percentage to drop under 30% in the second quarter when we pay our $500 million of notes due in May, which is fully swapped to floating. Moving to income taxes, for the first quarter of 2009, our effective tax rate was approximately 37.2%. We expect our effective rate for the full year to be 38.1%. During the first quarter we wrote off our investment in SAP software. We are aggressively pursuing damages for fraud against SAP not only for the cash we spent on the software and SAP's failed implementation but also for the loss benefits promised by SAP. The case is set for a jury trial of State Court in Houston in March 2010. Turning to cash flow, first quarter 2009 net cash provided by operating activities was $519 million. Our capital expenditures for the quarter were about $325 million, an increase of $112 million compared with, to the prior year period. Included in this capital is approximately $30 million relating to the purchase of a permanent landfill in our southern group. The remaining increase in capital expenditures when comparing with the prior year period can generally be attributed to paying in 2009 capital expenditures incurred in the fourth quarter 2008. So this is a timing difference. Our free cash flow for the quarter was approximately $200 million. We are targeting our full year free cash flow to be in the range of $1.3 to $1.4 billion, and we still expect capital expenditures to be $1.1 to $1.2 billion. Our capital spending has some flexibility and can be adjusted if circumstances warrant. We paid $143 million in dividends in the quarter. Our dividend yield is currently 4%. And in the recent fortune 500 rankings, Waste Management was ranked 18 in total shareholder return in 2008. In February, we issued $800 million of senior notes, $350 million at at 6 3/8, due March 2015 and $450 million at 7 3/8 due March 2019. The proceeds were used to repay $300 million of outstanding borrowings under our revolving credit facility, and we plan to use the balance to repay $500 million of 6 7/8 senior notes that mature in May 2009. We're very pleased to have refinanced this debt under favorable terms in this environment. And we believe this emphasizes the financial strength of our company. And with that Nicole, let's open the line for questions.

(Operator Instructions) Your first question comes from the line Hamzah Mazari with Credit Suisse. Hamzah Mazari - Credit Suisse: Thank you. Just a couple questions. Could you comment on how scalable is your business and how much room do you have to go before you cannot flex down on the cost side any more, if, for example, volumes take another leg down, and how much of the work that you've already done on the cost side so far is permanent versus temporary? How should we be thinking about that?

Yeah in terms of flex down, you kind of look at two ways. One, on the collection side, it's really just a matter of rerouting trucks and pulling trucks off the road, and our team has the tools out there. We've developed some routing tools as well as some efficiency tools that all our field operations now have. They're utilizing those tools, and you've seen it in action in the last quarter. You can see the impact of that. On the landfill side, there's not as many people out there that work at our landfills, so it is a little more difficult to actually flex down those costs in accordance with the actual volume decline. You can do things like not open the landfill as early in the morning, and perhaps there's some places even that we've looked at not being as open as long or even all day on Saturday. So there are some things that we can do that we have done, and that we can continue to do. So if we do see volumes decline further, there are actions that we can take to further flex down. The second part of your question I've forgotten already. Hamzah Mazari - Credit Suisse: Yeah the second part is just,

The statements that we got should all be permanent. That $120 million that we talk about, obviously there's two pieces. There's the flex, and then there's the 120 million. The 120 million we believe should be permanent. We think it makes us a more efficient organization and we think that it right sizes the company, both for today's business level and if we decide to add business in the future as the economy comes back. Hamzah Mazari - Credit Suisse: How much of your volume declines, you guys saw volume declines a little sooner than some of your competitors did. How much of that was just getting rid of low margin business versus, go ahead.

I think it was predominantly that, us getting rid of low-margin business. I think that as you've seen us work through that process, I think you've seen that we've had more normalized volumes when you look at the industry. Now, look long term, our goal is to both increase yield and increase volumes. So that's what we're all about. Hamzah Mazari - Credit Suisse: Got you. And just last question. On, you provided some detail on your acquisition spend with valuations coming off. We all know why the valuations have come off on the solid waste side, but we still see quite a few bidders on the waste to energy side. Medical waste is still holding up. How much have valuations really come off in those two sub sectors?

Yeah that's a great point. The reason why we are adding business in those sectors is because of their recession resistant qualities, and so you are absolutely right, it's a great point that, that valuations have not come down as much in those sectors because they are recession resistant. That's exactly why we're going to add that business. Hamzah Mazari - Credit Suisse: Okay perfect, thanks a lot, guys.

Thank you.

Your next question comes from the line of Scott Levine with JP Morgan. Scott Levine - JP Morgan: Good morning, guys.

Good morning.

Good morning. Scott Levine - JP Morgan: On the pricing side, looks like you saw acceleration quarter-on-quarter, pricing has been strong for some time now, but I think that's noteworthy given the current economic circumstance. Did that surprise you, and or could you talk about using your new yield methodology sequential trends in your key business lines, any that struck you as surprising to the up side?

Yeah, when we saw the economic downturn coming, in the fourth quarter of '08, we recognized that one of the first things that was going to come under pressure was pricing, and that we had to get our costs under control. And so what you saw in the first quarter were two actions that we took that set us up well for the year. We set the pricing gate. We said, look, we're going keep our normal bonus program based on EBITDA and margins, but we're going to put a gate. We're going to put a pricing gate there that says if you can't get through the pricing gate you don't get a bonus at all. And so we wanted to maintain the focus on pricing, and I think which you have seen this quarter is the reflection of that. The second thing we did is we said we've got to flex down our costs to right-size the business, because we think this is going to be a year-long economic downturn, and we did just that through the restructuring. So we got proactive towards the end of 2008, and I think that's what you are seeing this quarter. You are seeing the results of that proactive action. Scott Levine - JP Morgan: And you raised the savings target by what looks to me about 20 million on the restructuring program. The timing on that is that effective the incremental 20 million called by the middle of the year or is that later in the year?

What we saw as you saw in the press release, we saw about $10 million a month of savings in February and March, and so we annualized that as we certainly don't expect to get any of those savings back. When we announced in February we knew it would be in excess of 100 million, so I'm not sure that we particularly changed the target. We always said it would be in excess of 100 million. We just tried to get a little bit more precise as we saw how it played out in February and March. Scott Levine - JP Morgan: Understood turning to the acquisition side, in a little bit more detail. Could you differentiate maybe with regard to your profile and waste energy overseas versus what you are pursuing in the US sort of differences with regard to capital deployment and there are any other differences with regard to strategies you'd deploy overseas versus in the US.

Yeah when we talk overseas there's two pieces, there's Europe and then there is potentially China. In Europe we would, we're bidding on projects just like we're bidding in the United States. Now some of those projects will require, will be what we call design, build, and operate where, we design it, we build it, we operate it, but we don't actually to have pay the cost to build it. That's paid by the municipality. And there are those that will be DBOO which design, build own and operate where we will put up the cost of capital to build the plant. And so in Europe they probably tend more toward DBOO than in the United States. China is a different situation. In China we would not look to get in to China without a Chinese partner. We will not go in de novo waste to energy plants. If we can find the right partner that has great market presence and have the same goals that we have. We would look at making an investment in China, but again that investment would be what we've said is up to $200 million of investments in waste energy, so it would be an investment in a joint venture which would then self fund the building of the projects. Scott Levine - JP Morgan: Okay. And then turning to medical waste, you made some comments on your last earnings call regarding what your profile is. Any additional narrowing down of the focus and or there are any additional comments with regard to what your interests are there?

What we're looking to do in 2009 is to take the first steps toward creating a national footprint in medical waste. We didn't have a large presence in medical waste. We're going to increase that presence this year. We've fully expect by the end of the year we'll be the second largest medical waste player in the industry, and that we'll have taken some nice steps towards creating the national footprint. Look, our solid waste business has a national footprint. The idea of getting into medical waste is not only is it a great business for medical waste but its a great way for us to offer our other services, like solid waste, recycling, LampTracker, all the different things that we do, we can offer sort of a one-stop shop to the hospitals and to the medical communities. So it's a matter of not only getting in for the medical waste but getting in for the other waste streams that come out, medical service providers. And so we need to make sure that our medical waste footprint mirrors our solid waste footprint. And that’s what we are going to be working on in 2009. We think we'll make some great progress towards that end. Scott Levine - JP Morgan: All right, thank you.

Thank you.

Your next question comes from the line of Michael Hoffman with WSI. Michael Hoffman - WSI: Good morning. Couple things on the nonrecurring cash outflows in the first quarter, can you quantify those for us in the first quarter can quantify those for us so we can get a better feel of what that operating rate of free cash flow would have looked like?

The nonrecurring cash flow meaning that the two items we mentioned, well, the SAP charge was already incurred, so that's just an accounting adjustment and the $23 million restructuring charge is really related, has really relates to severances that have been paid in the quarter. Michael Hoffman - WSI: Okay so SAP is not cash but the restructuring is cash.

Correct. Michael Hoffman - WSI: So you would, so it's basically take $200 million and add 23 to the it.

Correct. Michael Hoffman - WSI: Okay. Then when you when you, somebody asked with regards to valuations of acquisitions, a correct statement is that all valuations across all of these various businesses are down on a relative basis. So its where they have been historically solid waste ones may be down proportionally greater, but when waste energy was trading and the ten times range and greater around the world now, in this sort of seven and eight times. So everything's down. That's a correct statement, I think, right?

No doubt about it. Michael Hoffman - WSI: Okay. Which is breeding part of the opportunity to take advantage of that.

Absolutely. Michael Hoffman - WSI: Okay. On the medical waste side, there is one very dominant player in the marketplace, had a strategy going for all of the sort of small market players and collect all those all together, and you all as a business model are more in it then towards the bigger volume players, towards the hospitals. That's just sort of a just a legacy issue. One could argue that the other player has shown a lot more interest in going other places in the world because the opportunity to do a lot more, again, growth in the US is, organic or consolidation growth is not as robust as it will be in other places of the world. So help us understand how you grow your business without having to use price to do it.

Yeah, and that's the beauty of it, Michael it is that we're the only integrated player in the, that covers various waste streams. That player that you are talking about offers medical waste disposal. They don't offer fluorescent bulb disposal. They don't offer recycling services they don't offer solid waste services. And so when we look at the market, and the potential growth in the market we look at all the other waste streams and all the other services that we provide, and we see tremendous growth, because we're not just growing in one segment in that hospital, we're growing across various segments. We think that's an offering that hospitals will look at very favorably, because rather than having to go to a variety of different providers, they can go to the one stop shop, the only company that's going to be able to offer integrated services throughout the country. Michael Hoffman - WSI: Okay. So again, you're bundling services, and that allows to you bundle twice, so that’s more attractive than adding them up separately is what your saying.

And it gives us more growth. Our market share on the solid waste side in the hospitals is much lower than our overall solid waste market share. So there's a huge opportunity for us to pick that business too Michael Hoffman - WSI: Ok I’ll repeat it just so to make sure I understand. Your 80% share in garbage, your less share in medical, and you want to match up the medical share against the garbage in those markets.

I'm not sure that 80% is a correct number, Michael. Michael Hoffman - WSI: I made a number up. Can you tell me what the average value of the commodities were in 1Q '08?

Average value toward the end of March, it was $77 for the average of all commodities, but what was it during the quarter? Larry O'Donnell: Let's say for the news in cardboard, what we ended up receiving was about high 40s to 50 bucks for news and cardboard was our average. Michael Hoffman - WSI: Okay, that's 1Q '09. What was it in 1Q '08?

About 60 to… I'm sorry, 135 to 140. Michael Hoffman - WSI: It is the average 135 to 140.

News and cardboards. Michael Hoffman - WSI: Okay and if you look back over a four or five-year period, I mean, I get that we ended up having this extraordinary growth in the economy and it drives and the Asian marketplace drives the price but if you thought about it as an average over a sustainable basis what you think that average returns to, that you would build a business model around.

We've looked at anywhere, $55 to 65 on cardboard. Michael Hoffman - WSI: That low, really. Okay. And then the last question, I just want to make sure there's no confusion, you are absolutely reaffirming your guidance on a free cash flow of 1.3 billion or better, there's no deviation from that?

That's correct. Michael Hoffman - WSI: Okay.

And Michael, the $23 million restructuring charge, 14 million was actually spent in the first quarter and the rest will be spent in the second and third quarter, but there it will be more incurred as we finish up the charge. Michael Hoffman - WSI: Okay. So if I'm looking at it from a free cash flow spend, you're telling me free cash flow would have been sort of 215 to instead of 200.

Correct. Michael Hoffman - WSI: Okay. Great. Well, nice job folks maintaining price. Keep it up.

Thank you, Michael. Michael Hoffman - WSI: Thanks.

Your next question comes from the line of David Feinberg with Goldman Sachs. David Feinberg - Goldman Sachs: Good morning.

Hello, David.

Good morning David. David Feinberg - Goldman Sachs: Few questions can you talk first about volume trends by month and maybe how April started off here, both in across all lines of business, give us a sense of how the quarter shaped up?

I think like a lot of American businesses we sort of saw a January starting out weak, volumes sort of bottomed and the February timeframe and then we started to see the up tick from there. It's hard to tell. You all know that for us, because of the seasonality, and because of weather in the first quarter, it's always a little to tell what's going on between the seasonality and actual volumes. Throw into that the uncertainty around the economy, and that's why we say we think it’s just a little bit too early to call the year on volumes. But what we saw was that the volumes sort of bottomed in February, they stabilized after that. And we started to see some seasonal up tick. We just don’t now quite yet we had some weather events in April, particularly through the Midwest. So we're not ready to say that what the magnitude of the seasonal uptick is going to be this year. David Feinberg - Goldman Sachs: Although, weather events, though, wouldn't they hurt you in the near term but might help you in the long term in terms of cleanup effects, or were they not big enough to move the needle?

Well, generally, the yes, some of the floods maybe in the Midwest, that long term might help, but I was talking more about the snowstorms that we had that moved through the Midwest in April. So some unusual timing for snow storms, and that type of volume generally doesn't come back. David Feinberg - Goldman Sachs: Okay, all right, and then a few follow-up questions on restructuring. You talked about the cash component here in the first quarter, and I just want to make sure I understood. The $15 million of additional restructuring charges, is that $15 million in 2Q and $15 million in 3Q, or it's $15 million spread over the two? Larry O'Donnell: No, that's total in those two quarters. David Feinberg - Goldman Sachs: And the total it will be $15 million cash, it might be spread over a longer period of time is that safe to say?

Yes probably right because the severances are generally paid is, over the term of their severance plan. So severance payment will be longer than just one quarter.

Yeah some of that is lease termination, so there might be a little bit less net cash if we could sub lease the property. But otherwise there would be cash outlet here in lease. David Feinberg - Goldman Sachs: Got you. You had mentioned nine out of ten cost items were down year-over-year, which the one that was up probably if you mentioned it, I missed it.

It was other. And it's really relates to some gains on sale last year. So it's, I didn't talk about it because it's so small. David Feinberg - Goldman Sachs: Fair enough. And then following up on first question from today's call, maybe just to get to the point, can you tell us what your fixed versus variable cost structure is on either on the collection or landfill side? I've looked at it on a blended basis and said its more probably like a 50/50 mix. First of all is that a good starting point, and then how would you differentiate between the two sides?

50/50 is a good place to start. On the collection side it's somewhat more variable than that on the landfill said it's probably a lot less fixed, its all a matter of, a lot more fixed, excuse me, much higher rate, and it’s more a matter of, I mean, everything is variable at some level, but I would say it's closer to 65/35 on the landfill side fixed variable that will be a good starting point to do the work. David Feinberg - Goldman Sachs: Great, and then one last question. You talked about CapEx being flexible. We have new deal regulations coming effect here in 2010. I was trying to get a sense, I think you had talked in the past about not doing pre buy. But what is the absolute minimum amount you have to spend each year to adhere to the new maintenance plans and some of the other operational savings that you put in place? I'm trying to get a sense of what is maintenance versus, I don't know if growth is the right word, but what's optional? Larry O'Donnell: Well, certainly, we'd like to keep decent average fleet age, but if we absolutely had to, we could go a year and not buy trucks. I wouldn't want to do that. But if we had to, in fact, we faced that a little bit with the 2007 engine. We had a lot of problems with that engine when they first came out, and we curtailed our buy significantly as a result of that. So that's we do have the flexibility to do that now, we are working with the manufacturers right now on 2010 technology. It appears to me that the manufacturers are in a little better position at this point in time compared to where we were in 2007. So hopefully, knock on wood, we won't experience the kind of problems we had in 2007 when we start bringing on the 2010 technology.

Generally, what we've said, David is that of our CapEx is about 40% is dedicated to our landfill. We are going to spend that now obviously if volumes come down you don't have to spend as much but there's not a lot of variation there. About 40% of our capital is allocated to trucks and containers. Obviously we can flex that we've already flexed on the container side, we can certainly flex in other areas and about 20% of our CapEx relates to other types of projects, things like landfill gas to energy, and other things like that but its totally discretionary, great investments but as totally discretionary. So when you look at the CapEx budget, there's one component that there is not much movement in. There's another one that's more and a third that's almost purely discretionary. David Feinberg - Goldman Sachs: Great, that's very helpful. Thank you.

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

Good morning Bill. Bill fisher - Raymond James: Add just on the pricing incentives, you obviously stressed that that’s big much great weight on the bonuses this year. Are there any specific things, like pushing the environmental surcharge more some other things that you could touch that may have an incremental impact, as well?

Yeah, it’s a great point, Bill, when we put the pricing gate out there, we didn't want to just put the pricing gate out and say here's a pricing gate good luck meeting it. We put the pricing gate out and then we also put out a lot of different tools on how folks can meet the pricing gate, the environmental fee being a great example, where we raise the environment fee to 6%. But, there is a lot of other things that drive the overall pricing, too, things like our retention, things like new business pricing. So we sent out the toolbox out to the field to say, here's the tools that you can use to meet those pricing target. It's a great point. We don't want to set a pricing target without showing folks ways they can get there, the environmental fee obviously being a great example that. Bill fisher - Raymond James: Okay. Did that go up from 4%? Or

It went up from 4.2 to 6. Bill fisher - Raymond James: Okay. I guess, on recycling, I think, Larry, you mentioned the March pricing, I think was 77. Is that kind of an all-in thing including plastic and aluminum and everything? Larry O'Donnell: Yeah, that would be fully blended with everything, aluminum, plastic everything. Bill fisher - Raymond James: Was that up a decent amount from January, February? Larry O'Donnell: Yes, what we saw is sequentially, January, February went up a little bit, then March went up a little bit. So it has been an upward trend.

Bill, when we gave guidance at the beginning of the year, obviously there was some expectation on what pricing was going to do, if we were going to hit that $0.15 to $0.20 negative impact from recycling. It's encouraging to note that if prices just stay where they are today, now that we've had three months to look at it, pricing has come up, and if pricing stays as bad as it is today, which we don't expect, we expect it to get better during the year, but if it stays where it is today we've got about $0.20 effect on earnings. So we think that we've seen the worst and that our $0.20 is a worst-case scenario. Bill fisher - Raymond James: Okay, great. And then just on that, you mentioned you're also looking at changing the contract terms as they roll over, and getting more upfront fees or processing fees. Is there any estimate you have of what percentage of contracts you can cycle through over the next year or two years, or get that in place? Larry O'Donnell, III,: Yeah. Some of those contracts, particularly the ones with municipalities, sometimes they're tied to a little longer term contract. So the ones that we have that are not municipalities, those we can get through in the next two to three years. Some of the municipal contracts they might be a little longer term. It could take us a little longer. But for the most part, other than a small group of contracts that were still sort of tied into floor or fixed prices, I think in the first quarter those ended up costing us about $5 million in EBIT, so we've already started work our way through those, and we'll continue to do so.

You know, Bill the concept here is, as commodity prices go down obviously you lose money in recycling. We can weather that storm. We a big enought company that we can weather that storm. But the fear is that you are going to start to lose recycling infrastructure throughout the country when folks that can't weather that storm start going out of business. And our communities, we think our dedicated to recycling they don't want to see that happen. And so this is not just for us to maintain our viability frankly this is something that I think the industry have to look at to maintain the viability of the infrastructure. Because you are seeing a lot of communities that are stopping recycling, you are seeing a lot of businesses that are in distress, and certainly some businesses that are going out of business because of the low commodity prices. I think that the community that are dedicated to recycling need that take a relook at it so that long-term they can make sure they have the infrastructure to continue to recycle materials. Bill fisher - Raymond James: Okay. And just to follow up on that, on some of the contracts you're able to go into existing contracts and maybe change the terms, in others you have to kind of wait until the contract itself expires?

That's correct. Bill fisher - Raymond James: Okay, perfect. All right, thank you very much.

Thank you, Bill.

Your next question comes from the line of Corey Greendale with First Analysis. Corey Greendale - First Analysis: Thanks.

Good morning, Cor. Corey Greendale - First Analysis: Good morning. Just continuing the recycling contract conversation Larry, I think you said that those discussions have already started, how are the discussions going and how willing are customers to give back more given that I imagine they are herding right now. Larry O'Donnell: Well, its like David said, some of them certainly understand that companies can't just continue to lose money, and if they want to have recycling program, we’ve got to work to try to come up with the way that works everyone. So some have been receptive, I am not going to tell you all of them. Some of them know that we've got a contract and we’ve got to honor that contract. So the key is the approach that we're going forward with new contracts, and we're not going to offer floor pricing. We're going to make sure that the way we set up our contracts we get paid for our processing, plus something to cover our cost of capital, decent return on that, and then we'll share the up side, part of the up side with our customers as commodity prices allow to us do that. And people with the new approach, people seem fine with that approach. That makes sense to them. Corey Greendale - First Analysis: Okay. And David, on the solid waste pricing, you reiterated that go goal is 50, 100 basis points above core CPI. If we're in a negative CPI environment, do you think that pricing could be zero or negative and that would be okay in negative CPI or is there some floor you would set on that regardless?

Yeah, what we've said in the past, if it goes negative, we have no doubt that we will not go negative with it. That we sort of view 2% as a floor that we wouldn't want to see us go below. Corey Greendale - First Analysis: Okay. I think, you commented earlier that you last year identified pricing as potentially at risk given the economic environment, what and looking at public companies, we're not seeing a lot of diminution and price growth, what do you think from smaller competitors? And are you seeing any changes in behavior now versus six months ago?

Yeah, I really don’t think, we are seeing much difference than we did six months ago, whether you talk about the locals or the nationals or the regionals, you usually have different pockets of pricing activity, and I don't think that's changed. Corey Greendale - First Analysis: And on the landfill side, are you seeing any regional difference? We just heard like in the northeast, for example that pricing was weaker than in some other areas in the country.

Yes, I think that's probably consistent with what we're seeing, that the Northeast, because of the amount of capacity they have up there is probably under the most pressure. Corey Greendale - First Analysis: Okay. And then just one clarification on the guidance. The 1.1 million to 1.2 million CapEx does that include the amounts that were incurred in Q1 relative to '08 expenditures?

You have to expect it, that's a normal. We generally have an accrual at the end of the year that carries over to the first quarter and we'll expect to have an accrual at the end of the, this year that will carry over to first quarter next year. So it should anticipate that. Corey Greendale - First Analysis: And the fact that you are not giving EPS guidance, does that suggest that you still feel like you don't have the kind of visibility into the year that would you ordinarily have, or is visibility improving and you just feel philosophically that there's not a lot of motivation to give EPS guidance?

As we've said in the past, until we sort of see the magnitude of the seasonal uptick it's sort of hard to predict the entire year. And in April, particularly when we've had the weather events we've had, it's always difficult after just the first few weeks of April to call the seasonal uptick, the magnitude of the seasonal uptick. And so, then when you layer onto that the uncertainty around the economy, you are absolutely right, we thought it was prudent to wait and see how the volumes shape up in the second quarter. Corey Greendale - First Analysis: Okay. Thank you very much.

Thank you.

Your next question comes from the line of Jonathan Ellis with Merrill Lynch. Jonathan Ellis - Merrill Lynch: Thanks, and good morning, guys.

Good morning. Jonathan Ellis - Merrill Lynch: Apologize for the noise in the background here. Just first off, you talked a little bit about pricing, and I appreciate the detail you gave on your calculation of pricing in the press release. But just to be clear, the volume figures that you quote, is that just off of the revenue base in collection disposal, or is that off the total revenue base for the Company?

The volume is off the total revenue base of the company. Jonathan Ellis - Merrill Lynch: Okay. So obviously the volume declines would have looked a little bit more severe if just using the revenue base and collection disposal as you talked about for the pricing side.

Well, we looked at it a little bit differently. When we talked about that $456 million decrease in revenue, over 70% of that came from things outside of solid waste, and so when you looked at the overall revenue decline, only about 4.7% of the revenue decline actually related to solid waste. Jonathan Ellis - Merrill Lynch: Okay, great. And just on the, you gave some detail on commercial and residential volumes not showing much of a deterioration from last quarter, so down around 4% I think you said, but noted that landfill volumes are down low double digits. I guess just in thinking about it, because I know that volumes in residential and commercial markets are measured not based off of weight but are based off container size and frequency of pickup. But what gives you confidence that over time you may not see the volume declines, particularly in the commercial market, perhaps start to trend more towards the kind of volume declines you are seeing on the landfill side of the business right now?

Yeah, it was, the commercial line of business is going to be driven mostly by companies, if they go out of business. Right, on the landfill side, it can be driven by general economic activity. So if there's less commercial construction, if there's less residential construction, you are going to see lower volumes into the landfill. But generally, if there's a lower amount of commercial activity, they still to have to have a container. And so that's why we call that recession resistant, because unless and until that business actually goes out of business, you are not going to see the volume decline. Certainly we've seen an uptick in companies that are going out of business, but it still maintained that volume at around negative 4%. I don't think you are going to see a huge shutdown of businesses if the economy continues to weaken. So you just have a different dynamic working in the commercial market where with the landfill side, it is binary. They're either doing the project or they're not, and sometimes they can opt to not do the project. It's not binary at the commercial level. If your doors are open, you need a bin. That's why we think it's more recession resistant. Jonathan Ellis - Merrill Lynch: Okay. That's helpful, appreciate that. On the bonus targets you've talked about earlier and the price gates in place, and I realize it's a market by market dynamic. But anything you can quantity in terms of in aggregate, what kind of price targets you've put in place?

Yes, as I mentioned, we did it based on revenue per unit, which is not the way we measure yield, but we thought that revenue per unit is an easier method for folks, how they can actually control it at their market areas. But it was designed in order to ensure that we maintain that pricing at 50 to 100 basis points above core CPI. So it should work out that way. Certainly we saw it work out better than that in the first quarter. Jonathan Ellis - Merrill Lynch: Okay. And then just you spoke a little bit earlier about this bundling strategy potentially with medical waste and solid waste and recycling services. And just thinking back, if we look at history, one of the challenges that the company faced in the past is offering bundled services, but actually still achieving appropriate pricing on each of those services, an adequate return on capital. And so, I guess, what I would ask is how do you think about pursuing a bundling strategy but not getting lulled into a scenario where you make compromise on price in order to make inroads with customers from a bundled basis?

Yeah, that is a great point. There is two pieces that go into the price, and that obviously is the price that you charge and your cost of service, right. I think we've demonstrated over the last five years that we are not going to take on business that is dilutive to our margin. And so there is really two sides to it. There is what price do you charge for the bundled service, then how can you drive efficiencies into the system so that you can drive your cost of service down and make a higher margin on that business. And so there's only one thing I can promise you, and that is that we will not lead with price. We're going to make sure that we get the returns on this business that are accretive to our overall margin. Jonathan Ellis - Merrill Lynch: Thanks. Appreciate that. And then just my final question, given holding the line on the free cash flow guidance for the year, and the debt refinancing has been completed and you have already laid out what you plan to spend on acquisitions over the next few years, the residual free cash thats available, any thoughts there on reinitiating a share buyback program?

Yeah, I think, Jonathan, as we said at the beginning of the year, we got ourselves into a very good position at the end of 2008 from a cash point of view. Issuing the notes got us into an even stronger cash position. But until we are willing to say that the economy has turned around, we want to maintain that cash position. And so I don't think that we'll be in the market short term, long term we have told our shareholders that we're going allocate the capital either to dividends or to paying down debt or doing acquisitions or doing share repurchases. We obviously see a little bit more opportunity on the acquisition side. And so after acquisitions and after we get the balance sheet in shape, I think the next area that we would look would be looking at share repurchase. But in the meantime, I think maintaining a solid balance sheet, maintaining that cash so that we can do acquisitions out of free cash rather than borrowing, I think is the prudent approach. Jonathan Ellis - Merrill Lynch: Great, thanks, guys.

Thank you.

Your final question comes from the line of Nicole DeBlase with Deutsche Bank. Nicole DeBlase - Deutsche Bank: Hi.

Good morning. Nicole DeBlase - Deutsche Bank: Okay. So just a couple. Most of mine have been answered. But first of all, on the restructuring, can you give some color into how that would phase between the two quarters? Would it be an equal split or more heavily weighted towards the second quarter?

The benefits, Nicole? Nicole DeBlase - Deutsche Bank: No, the costs.

The costs are more heavily into the first quarter from an earnings side. From a cash side, it will be spread out over the rest of the year. Nicole DeBlase - Deutsche Bank: Okay. Great, and then obviously you guys had some really great pricing performance this quarter. Given that your customers are clearly looking for ways to cut their costs, too, have you seen an uptick in customer attrition quarter-over-quarter?

Not really. The attrition rate, the defection rate this quarter was 10.6%, which is basically flat with last year. Nicole DeBlase - Deutsche Bank: Okay, that's all I had. Thanks, guys.

As we looked at the beginning of the year, we asked our folks in the company to focus on two things, because we knew the economy was going to be soft. We asked them to focus on pricing, and we asked them to focus on cost controls. I think this quarter demonstrates that they're firing on all cylinders in those regards, and frankly, it shows why we believe we have the best people in this industry. And with that thank you all for having us, and we'll see you next quarter.

Thank you for participating in today's Waste Management first quarter 2009 earnings release. Today's call will be available for replay beginning at 1:00 p.m. eastern standard time today through 11:59 p.m. eastern standard time on May 13, 2009. The conference ID number for the replay is 90934084. Again, the conference ID number for the replay is 90934084. The number to dial for the replay is 1-800-642-1687, or 706-645-9291. Thank you. You may now disconnect.