Jim Alderson – Director, IR David Steiner – CEO Bob Simpson – SVP and CFO

Hamzah Mazari – Credit Suisse Scott Levine – J.P. Morgan Jonathan Ellis – Bank of America/Merrill Lynch Al Kaschalk – Wedbush Securities Michael Hoffman – Wunderlich Securities Bill Fisher – Raymond James Vance Edelson – Morgan Stanley Rick Skidmore – Goldman Sachs

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 third quarter 2010 earnings release conference call. (Operator Instructions) I would now like to turn the call over to Jim Alderson, Director of Investor Relations. Thank you, Mr. Alderson, you may begin your conference.

Thank you, Nicole. Good morning, everyone and thank you for joining us for our third quarter of 2010 earnings conference call. With me this morning are David Steiner, Chief Executive 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. Bob will cover operating costs and the financial statements. We will conclude with questions and answers. During their statements, any comparisons made by David and Bob, unless otherwise stated, will be with the third quarter of 2009. Before we get started, let me remind you that in addition to our press release that was issued this morning, we have filed the Form 8-K that includes the press release as an attachment and is available on our website at wm.com. The Form 8-K, the press release and the schedules to the release include important information that you should refer to. During the call, David and Bob will discuss our results on an as-adjusted basis, including net income, earnings per fully diluted share, which they may refer to as EPS, operating expenses, effective tax rate and income from operations margin. These financial measures have been adjusted for items management believes do not reflect our fundamental business performance and are not indicative of our result of operations. All of these measures, in addition to free cash flow, are non-GAAP measures. Please refer to the reconciliations to the most comparable GAAP measures in the schedules to the earnings press release, which can be found attached to the Form 8-K filed today and on the company's website at wm.com. Additionally, during the call, you will hear certain forward-looking statements based on current expectations, opinion or belief about future periods. Those statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are detailed in our earnings press release this morning and in our filings with the Securities and Exchange Commission, including the Form 10-K filed for 2009. This call is being recorded and will be available 24 hours a day beginning approximately 1 PM Eastern time today until 5 PM Eastern time on November 11. To hear a replay of the call over the internet, access the Waste Management website at wm.com. To hear a telephonic replay of the call, dial 800-642-1687 and enter reservation code 15149014. Time sensitive information provided during today's call, which is occurring on October 28, 2010, may no longer be accurate at the time of a replay. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Waste Management is prohibited. Now I will turn the call over to Waste Management's CEO, David Steiner.

Thanks, Jim. Good morning from Houston. We earned $0.55 per share in the third quarter, with our collection, landfill and recycling businesses all performing very solidly. We increased operating earnings and improved operating margins in each of these lines of business. If we didn't have headwinds from areas not related to those lines of business, we would have earned $0.60 per diluted share, in line with our expectations. The headwinds come from unexpected expenses at certain of our waste energy facilities that cost us $0.02 per diluted share in the quarter and start-up costs from certain of our growth initiatives, which cost approximately $0.03 per diluted share in the quarter. The expenses of our waste-to-energy facilities primarily relate to unexpected maintenance costs, including costs to upgrade the SIPSA facility that we recently acquired. The start-up costs for our growth initiatives include our Bagster retail product and our initiatives in medical waste. We had a lot of start-up advertising and other expenses related to Bagster and the advertising is working. In April, when we started our advertising campaign, we picked up 3,800 Bags. In October, we picked up 13,000. That's a 22% per month compounded growth rate and we expect to continue to see high growth rates in the future. We have now sold over 100,000 Bags. So we expect Bagster to become profitable over the next 12 months. With respect to our medical waste initiatives, most of the additional costs relate to hiring new sales people and getting new facilities in place. Because the sales cycle in medical waste is longer than in traditional solid waste, getting to profitability takes some time. But we expect our medical waste initiatives to become profitable in the second half of 2011. We are seeing some wins in our medical waste business and we expect this to accelerate, but we expected revenue to grow faster through acquisitions. However, we do have a competitor that continues to purchase businesses at prices that we aren't willing to pay, which has hindered our efforts to enter certain strategic markets. So overall, our growth has been slower than we expected, but we still believe these customer-focused growth initiatives are the right thing to do for the long-term growth of our company. So we had some headwinds in our growth initiatives, but they're not the bulk of our business. Our business is still centered around our collection, disposal and recycling assets and these areas of the business are doing very well, driven by these lines of business, revenue for the third quarter increased by $212 million. It was the third consecutive quarter of year-over-year revenue growth. Major drivers of our revenue growth were improved recycling commodity prices, acquisitions and increases in revenue growth from yield. Internal revenue growth from yield on our collection and disposal operations was 2.3% in the third quarter. We remain committed to our pricing discipline and in the third quarter we again overcame the yield headwind we faced on the 40% of our collection revenue that has price adjustment based on a CPI index. CPI adjustments caused a drag to our revenue growth from yield of approximately 60 basis points. Despite this headwind, we met our pricing objective to achieve price increases of at least 50 to 100 basis points above CPI. The combined internal revenue growth from yield in the industrial, commercial and residential lines of our collection business was 2.5% in the third quarter. Internal revenue growth from yield in our commercial and industrial lines was 2.9% and 3.2% respectively, while internal revenue growth from yield in our residential line of business was 1.5%, reflecting the continuation of the low CPI environment. Commercial new business pricing increased for the fourth consecutive quarter. And service increases exceeded service decreases for the third consecutive quarter. On the volume side of the business, internal revenue growth from volume in our collection and disposal business declined by 0.8% in the quarter. This is the fourth quarter in a row that the year-over-year comparison has improved. Internal revenue growth from volume in our commercial and residential collection lines saw declines of 4.7% and 4% respectively. In our industrial line of business, internal revenue growth from volume was down 3.1%, which is a marked improvement from the last 2.5 years. So, as I said before, our traditional solid waste business continues to perform well. Overall, we grew income from operations in the collection line of business and increased the income from operations margin by 60 basis points, compared with the prior year period. In the land fill side of the business, third quarter 2010 internal revenue growth from volume was positive 3.6%, which is up from flat volume in the second quarter of 2010. This is the best internal revenue growth from volume performance in the landfill business since 2006. Internal revenue growth from volume for special waste was positive 16.4%. For MSW, internal revenue growth from volume was negative 5.3%. In our C&D line, internal revenue growth from volume was negative by 6.5%, a significant improvement from negative 13.7% in the second quarter of 2010. Volume comparisons have consistently improved in our C&D line since the fourth quarter of 2009. On the land fill pricing front, MSW per-unit pricing was up by 3%, reflecting our continued focus on landfill pricing. We expect this to accelerate as we move into 2011. So, our landfill business also performed well in the quarter. Overall, we grew income from operations in the landfill line of business and increased the income from operations margin by 100 basis points, compared with the prior year period. When we look at our collection and land fill business combined, income from operations grew over 6% compared with the third quarter of 2009 and our income from operations margin improved by 70 basis points. Turning to our recycling business, increased commodity prices contributed about $0.02 of positive year-over-year earnings per diluted share in the third quarter of 2010. For the fourth quarter of 2010, we expect recycling commodity prices to remain strong, which should provide a slight benefit to earnings. We received no benefit from electricity sales in the quarter and we anticipate that fourth quarter 2010 electricity prices will be about the same as in the prior year. Therefore, we do not expect electricity prices to impact earnings in the fourth quarter of 2010. So, looking at price and volume going forward, volumes were slightly lower than we expected in the third quarter, but they held up fine. And we expect them to improve and turn slightly positive in the fourth quarter. I'd certainly like to see volumes driven more by the commercial and MSW lines of business, because I think that would demonstrate a more robust economy and it would accelerate the pace of volume growth. But we still see slow but steady improvement in volumes in the fourth quarter. With respect to price, we expect CPI headwinds to continue and we will have to offset those with aggressive pricing programs. We did so in the third quarter and we will continue to do so in the fourth quarter. Consequently, we expect price to be about 2.3% in fourth quarter. When we look ahead to our earnings in the fourth quarter, we remain committed to our pricing discipline and we expect that recycling commodity prices will remain strong. We believe collection and disposal volumes will continue to improve, driven mainly by continued strength in special waste. We are also redoubling our cost control efforts and expect to see improvement in our cost structure in the fourth quarter. Given these factors, we expect the core business to continue to improve. We'll still face some headwinds from start-up costs associated with our customer focused growth initiatives, but with our continued efforts to increase revenues in our Bagster and medical waste businesses, the impact should be slightly lessened. Consequently, we expect our fully diluted adjusted earnings per share in the fourth quarter of 2010 to be between $0.54 and $0.56 per share. And we continue to expect full year 2010 free cash flow in the range of $1.2 billion to $1.3 billion. We're committed to our long-term goals of expanding margins, increasing free cash flow and improving our return on invested capital and we believe the investments we've made in our customer focus growth initiatives will help us achieve these goals. And with that, I'll turn the call over to Bob.

Thank you, David. I will begin by discussing operating costs. These costs increased in the third quarter of 2010 by $131 million. Cost of goods sold increased $67 million in the quarter, mainly because of higher recycling commodity rebates. On a net basis, earnings per diluted share increased approximately $0.02 in the quarter from higher recycling commodity prices. Subcontractor costs increased $37 million in the quarter, primarily the result of costs associated with the clean-up effort in the Gulf Coast region. Maintenance costs increased $18 million, primarily at our Wheelabrator waste-to-energy operations. Direct fuel costs increased approximately $12 million, primarily because of a 13% increase in diesel fuel prices. Fuel costs increased by more than our fuel surcharge revenue in the quarter, which caused a negative $4 million impact to income from operations and a negative 20 basis point impact on our income from operations margin. We are adjusting our fuel surcharge to do a better job of recovering increasing fuel prices, so at current prices we do not expect a negative earnings impact from fuel in the fourth quarter. Foreign currency translation for our Canadian operations accounted for an increase in operating costs of approximately $7 million. SG&A costs were $369 million in the third quarter, an increase of $30 million from the third quarter of last year. As a percent of revenue, SG&A costs were 11.4%. These costs increased primarily because of our growth initiatives and expenses to upgrade outdated IT equipment and applications. Although we expect to continue to spend to support our growth in IT initiatives, we have implemented several cost control measures to reduce costs. As anticipated, our interest expense for the third quarter increased by $22 million, compared with the prior year period. This is primarily due to an increase in our average debt balance and the increased cost of the new revolving credit facility that we executed in June. The average debt balance increased due to new debt issued in the fourth quarter of 2009 and the $600 million of 4.75 senior notes issued in June of this year. Now, we used the net proceed from the June offering to repay the $600 million 7.375 senior notes that matured in August of this year. Additionally in June, we replaced our $2.4 billion revolving credit facility with a new three year $2 billion revolver. We also added $250 million of additional letter of credit capacity in a separate facility. The cost of revolving credit has increased substantially in the past two years. As a result, our interest costs increased by about $7 million per quarter beginning in the third quarter for the revolver and letter of credit facilities. On September 30, our weighted average cost of debt was 5.4% and our debt-to-total-capital ratio for the quarter was 58.2%, consistent with our target ratio of about 60%. The floating rate portion of our total debt portfolio was 13% at the end of the quarter. Our income tax rate for the third quarter was 37.3%. After adjusting for the $4 million of income tax expense referenced in our press release, our tax rate for the third quarter was 36.3%. Turning to cash flow, third quarter 2010 net cash provided by operating activities was $677 million, an increase of $102 million compared with the third quarter of 2009. During the third quarter, we received a federal tax refund of $65 million related to a capital loss from the liquidation of an inactive foreign subsidiary. The remainder of the increase is due mainly to improved cash provided by operating activities. Over the past two years, we have managed our receivables very closely and our days sales outstanding have improved throughout the period. In the third quarter, our days sales outstanding improved by 1.3 days. We thank all of our employees who have stayed focused on managing our receivables during this downturn. In the fourth quarter of 2010, we expect a $60 million reduction in our federal income tax payment due to bonus depreciation included in recent tax legislation. This will have no effect on our reported income tax expense. Our capital expenditures for the quarter were $262 million, which is an increase of $22 million compared with the prior year period. Our free cash flow for the quarter was $424 million and was $952 million for the first nine months of 2010. In the third quarter of 2010, we paid $149 million in dividends and we repurchased $157 million of our common stock. We remain firmly on track to meet our previously disclosed full-year 2010 guidance of spending approximately $1.2 billion for capital expenditures and having a range of $1.2 billion to $1.3 billion of free cash flow. And with that, Nicole, let's open the line for questions.

(Operator Instructions) Your first question comes from the line of Hamzah Mazari with Credit Suisse.

Good morning, Hamzah. Hamzah Mazari – Credit Suisse: Good morning. Thank you. First question, you talked about landfill pricing and the pace of acceleration. How should we think about that base of acceleration going forward? Is it a gradual ramp? And how comfortable do you feel raising prices, given the volume situation right now and just the price volume trade-off that you think about in your system?

It is a great question. And I have said many times, that when you've got volumes going down fairly dramatically in landfill, you are not going be as aggressive on pricing. Now that we have seen the volumes turn, we are putting together our plans for our 2011 pricing program and we expect that 3% yield to go up. Now, at our landfills, obviously you've got a lot of volume that's contracted, so you can't hit everything in year one. But what we are doing right now, is going through every single MSW customer that we have at our landfills and we're looking at what we're going to do next year. And that's going to accelerate the pricing into 2011. Hamzah Mazari – Credit Suisse: Okay. And then, just a second question. Could you just help us understand how focused you are on your underlying business? The expectations on the medical, as well as waste to energy side. Are these more one-time issues? And how should we think about that going forward? It seems like on waste-to-energy it was.

Yeah. Certainly, on the waste-to-energy side. But we will have some more maintenance expenses to get that SIPSA plan up to speed, but it won't be as dramatic as it was this quarter. On the medical waste side, it is interesting. When we add new business on the solid waste side, it lays right in on top of our current asset structure. Obviously on the medical waste side, you have to add new sales people, because you have to have more of a specialized sales person. And so you can't use your existing infrastructure to service those customers. So we had to add facilities. We had to add sales people. And so, like any start up business, you are going to have start up costs. But we really are starting to see our value proposition take hold. We completely expect to see that business double in the next year and that will put us well on our way to hitting our goal of growing that business to $300 million over the next three or four years. Hamzah Mazari – Credit Suisse: Okay. Then just last question and I will turn it over. Are you guys beginning the see the incremental margin to pull through yet? Or is it too early?

Hamzah, the area where we've had positive margins this time was in the landfill. You may remember it at Investor Day, we talked about landfill margin, the incremental margin at the land fill being 45% to 50%, well, lesser to base on what we saw this quarter, it was at least that. And so I think that 45% to 50% number really does hold true. At least it has so far. Hamzah Mazari – Credit Suisse: Okay. Great. Thank you.

Thank you.

Your next question comes from the line of Scott Levine with J.P. Morgan.

: Scott Levine – J.P. Morgan: Good morning. Good morning, guys. Question on the investments in the growth initiatives. Without asking for guidance for next year, is your expectation regarding most of the initiatives that you highlighted at the investor day, sales floor segmentation, Medical Waste, what have you, IT? What are your preliminary expectations in terms of those investments next year versus this year? Without asking for a number, do you expect most of those types of investments to be completed this year? Do you expect some carryover into 2011 that could be meaningful?

Yeah. I wouldn't say that we've had a carry-over that would be dramatically meaningful, but we're certainly going to continue to invest in those areas where we need to invest, in order to continue to focus on our customers and see the growth that we expect. So, IT systems are certainly a part of that and we will spend on that next year. Obviously, we’ll give you some specific guidance when we look at our full-year budget and report fourth quarter earnings. Customer focused growth, the segmentation efforts that we've had, we've pretty much spent the money that we're going to spend on that. We've hired the additional people. We've done most of the additional training, so there shouldn't be significant expenditures on that side. And then on the various growth initiatives that we've talked about with Bagster and Medical Waste, you will continue to see spending on that. Look, the issue here, on both Bagster and Medical Waste, is that you have to spend that money up front, in order to get the customers to get the revenue to offset the costs. And we expect to see both of those turn positive in the second half of 2011. Scott Levine – J.P. Morgan: Got it. And then turning to your guidance. So, just putting the numbers in preliminarily for the fourth quarter, it looks like on a full-year basis, you guide your margins down flat, to maybe down very slightly for 2010. I think you'd indicated that margins being up, I think on the EBIT line, was kind of factored into a portion of your incentive program. Is it still the case? Is your expectation – what is your expectation on margins on a full year basis in 2010? I guess is the question.

I am expecting the margins to be flat to up just a little bit. Scott Levine – J.P Morgan: Okay.

So – and I am not anticipating that we will not hit that target. We have taken some cost control measures, which Dave referred to in his remarks and I did as well, to make sure that we bring our SG&A and some of our operating costs down to a level that, in the fourth quarter, will be about what we spent last year. Remember, we spent over $30 million higher in SG&A this quarter than last year. We expect to be flat to last year in the fourth quarter. And I think that will help us get to the margin number. Scott Levine – J.P. Morgan: Thanks, Bob. And maybe one other quick one. The economic data generally adheres, progresses, kind of pointed towards gradual recovery. You are still expecting volumes to be up slightly in the fourth quarter. Could you comment on how the cyclical aspect your business, in general, has performed relative to your expectation, say, six months ago? And whether there's anything you need to comment on, regarding any particular part of the country or another, whether any are particularly weak or strong in your view?

Yeah. It is really a great question. We look at that quite a bit. And so we look at it, it is a little bit of what we said in our prepared remarks which is, we would love to see the volumes bounce back more in our commercial line of business and MSW. Because that's really the lines of business that we have, that tell us that the economy is growing at a steady pace. But right now, we are seeing at the landfill it's being driven by special waste. Now, the good news with us on special waste, is that with our focus on the customers and trying to find out what our large industrial customers want, we're seeing more of that special waste become more permanent-type special waste, than episodic special waste. So, as you look at the economy going forward, for us, we think you'll see a turn in the economy, when you start to see the commercial volumes bounce back. They've basically been in that negative 3.5% to 5% range now, for a couple of years. And I think that tells you exactly what you started out with which is that we've got a muted economic recovery. But it's enough economic recovery for us to continue to grow our business. And we don't see that changing dramatically over the next two or three quarters. Scott Levine – J.P. Morgan: Understood. Thanks, Dave.

Thank you.

Your next question comes from the line of Jonathan Ellis with Bank of America Merrill Lynch.

Morning, John. Jonathan Ellis – Bank of America/Merrill Lynch: Morning guys.

Jon, how are you doing? Jonathan Ellis – Bank of America/Merrill Lynch: Morning guys. All right. So Dave, maybe just start the first question around landfill pricing. I know you gave the MSW figure. Do you have overall landfill pricing?

Yeah. Overall landfill pricing was – let me just look at my notes here. Overall land fill pricing is positive, 0.6%. When you throw in the transfer stations, it's positive 1.2%, the yield, not the per unit basis. Jonathan Ellis – Bank of America/Merrill Lynch: Sure. Okay. The MSW volumes at the land fill. If I have this correctly, there was a pretty healthy deceleration in terms of the year-over-year rate of decline between the second and third quarters. Anything that happened there, contract losses or anything else, we should be sensitive to in the third quarter, related to MSW volume?

We had a couple of contract losses in our Eastern Group up in the New York area and then we had another contract loss in Montreal. That's what drove the difference. Jonathan Ellis – Bank of America/Merrill Lynch: Okay. Okay. Great. Just turning your attention to special waste. Can you help us just to understand, when you look at the fourth quarter and you talked about the special waste being a contributing factor. How much of a benefit is it expected to be? And maybe just help us understand, if you can, parse out a permanent special waste, versus more the event type of work that you're anticipating?

You know when we look at that, you know and it is interesting. It goes back again to what we talked about before, the customer focus growth, the segmentation piece. We now have a lot of specialized sales people that are with our manufacturing industrial customers, basically on a 24 hour a day, seven day a week type of basis. So they get to know what their needs are. And it's really helped us to get a little bit better visibility on the pipeline. And so, when we look at the pipeline, at least in the fourth quarter, we expect special waste to continue to be strong. Jonathan Ellis – Bank of America/Merrill Lynch: Okay. And then just turning your attention quickly to the residential business. I think Dave, last quarter, you talked a little bit about some competitive challenges, in that business, in part, tied to where CPI is. What did you see in the third quarter? Were you still seeing some competitive challenges? Were you able to get reasonable price increases on some of those contracts?

Yeah. You're exactly right, Jonathan. The CPI certainly has hindered us there. I don't think you see a dramatic change on the residential side from the competitive point of view. I mean, you all know this business as well as I do. That is that you are always going to have, on the smaller local contracts. You are always going to have the local and regional players that sometimes are going to bid very low. But, I don't see any particular competitive change in that landscape. From a pricing point of view, obviously it's going to be driven by CPI. We've got a little bit less of a headwind of that, it went from 100 basis points to 60 basis points this quarter. But we don't see that 60 basis points really abating over the next quarter or two. Jonathan Ellis – Bank of America/Merrill Lynch: Okay. Just from a broader perspective, going into the fourth quarter – you talked to, it is helpful – I appreciate the clarity on SG&A in the forth quarter. I guess what I struggle with though, is if SG&A dollars are going to be comparable year-over-year, to get to the guidance that you've laid out, unless there's another line item that I am not forecasting accurately, that your gross margin can't really show much variation from third quarter lows. And it's given typical seasonality. I guess I'm trying to figure out how you're going to be able to hold gross margins flat quarter-over-quarter. Are you expecting some kind of volume gain in some end market, or cost savings enough to offset typical seasonal head winds in that regard?

I think it is more the latter I think, Jonathan. We're expecting to see a normal seasonality this year, which we didn't see last year really, see much of. I think it's more that the cost controls we put in place implied SG&A. But to a certain extent they played a cost of operations as well. So I think that's where your answer is. Jonathan Ellis – Bank of America/Merrill Lynch: Okay. Okay. Great. And then just my final question. Medical Waste – Dave, can you offer us any insight into where the revenue base for that stands now? And then you talked about being profitable in the second half of 2011. Do you have sort of a minimum revenue threshold you think needs be achieved in order to gain that profitability?

Yeah. It's exactly the type of thing we look at, Jonathan. So right now, we've got revenue in that line of business. And when we look at the revenue, as we move to a healthcare segment, we include a lot of our typical solid waste in that segment. But, so when I'm talking about Medical Waste, I'm talking about strictly our new medical waste initiatives, not talking about the solid waste that we might pick up from health care providers that we've done for many years. And so, in that business, it's about $20 million to $25 million of revenue, right now. Like I said, we're starting to see our value proposition take hold. We'd expect to add, probably 50 to 100 hospitals, over the next six months to that revenue base. And then next year or so, you're talking about a normalized base of about $40 million, then next year we expect that to go up somewhere between 50% to 75%. Jonathan Ellis – Bank of America/Merrill Lynch: Okay. Great. Thanks, guys.

Thank, Scott.

Thank you.

Your next question comes from the line of Al Kaschalk with Wedbush Securities.

Hello, Al. Al Kaschalk – Wedbush Securities: Morning, Bob, morning David.

Morning. Al Kaschalk – Wedbush Securities: Morning Jim as well, I guess there.

Good morning. Al Kaschalk – Wedbush Securities: I want to come back to MSW here and maybe press you, David, a little bit on this. But we're in obviously, some turning point on the volume and that positive comps, although it's not happened yet. Price, it appears, a little bit a challenge from CPI. But I was wondering if you can comment on the dynamic between your comments about aggressive pricing, the level of competition you're seeing and the ability to drive 3% yield, next year in particular. Is this –

Now remember that 3% on the land fill side. Al Kaschalk – Wedbush Securities: Okay. But overall, on MSW, what are you targeting or suggesting we look at? Because it still seems like a very challenging price environment, let alone volume environment.

There's no doubt about it. It still continues to be a challenging environment. We haven't seen the MSW turn positive. But look, you all know that landfill pricing is what drives our business. And landfill pricing, when we look at it from an internal point of view, landfill pricing is a huge cost component to our collections lines of business. So if we're going to continue to get those collection price increases that we want to get, we've got to charge ourselves more at the landfill. That applies to third parties too. So, as we look at pricing next year, we are going to take opportunities where we have both gate-rated and contracted volumes, we're going to take the opportunities to push price. When you look at our overall yield for the company, we're running in the 8% to 10% price increase on our commercial customers. On the commercial customers that we can touch, we're running about 8% to 10% price increases. Over time, I think we need to get to that point at the land fill. Now it’s going to be right. It's going to be a step process. It's going to happen – it's certainly easier to do that when the volumes turn positive. But we've got to move from that 3% yield at the landfill, we've got to start moving that toward the 8% type of price increases we're getting in our collection business. We've got to do that and we're going to do it just like we did our pricing program on our collection business. We're going to do it. And we're going to hold firm. And we may suffer some losses from it. But in the long run it's the right thing to do for our business. Al Kaschalk – Wedbush Securities: We should actually probably think about some churn in the customer level, if you hold firm on pricing.

Wouldn't surprise me. Al Kaschalk – Wedbush Securities: Right. Okay. Thank you. And then on specialty waste. It sounds as if this has become more of a permanent component to your stickiness with larger customers, particularly on commercial and industrial. And so, should we start to think about – how do we think about what would be defined as specialty waste and how that could help on volumes? Particularly as we rotate into a more seasonal pattern in the industry.

Yeah. It's a great question. And frankly, as we've started to see the changeover, we haven't done reporting to reflect the change over. In 2011, we probably ought to start looking at our special waste and trying to give you all a little bit more color around the specificity of the difference between the permanent and the temporary. I'll put that on Bob's to-do list for 2011. Al Kaschalk – Wedbush Securities: I think that would be helpful. Not for Bob's purpose, but for us. Ands then as a tie-in here on for Bob, I'm a little – maybe it is also David. It's hard to comment that this is $0.60 of EPS in the quarter, when you are making some investments and longer term strategy of value drivers. So, is this really a $0.55 quarter, in terms of kind of the normal recurring things? And then there's maybe a couple of cents of other special items? I'm concerned that we're going to start looking out forward here, with a number that's really probably more $0.55 and $0.60. I'm just wondering.

Yeah. When I look at it from an operational point of view, we have been as reported at $0.55. You've got $0.02 from Wheelabrator that should be one-time. Again, we'll have a little more of that, but not the $0.02 a quarter type of hit. So, from an operational point of view you look at it at $0.57. And then you've these growth initiatives, which we are going to have, that drag. But we're not going to have that drag forever. That is not going be a permanent part of our business. You're going to see that drag start to lesson next year and then you see it go away, in the second half of next year. So when I look at the business, what we try to do, is to say, what is the fundamental underlying nature of our Collection-Disposal business and how did that perform? And then you take out the nonrecurring piece of Wheelabrator and the piece that will recur, but not forever. It'll start to turn positive, second half of 2011. And so we were just trying to give you all a feel for the soundness of the underlying core business. Al Kaschalk – Wedbush Securities: One final thing, if I may. Are you willing to comment on the volume of bags on the Bagster that you need to drive above breakeven? I'm sure we can figure it out on some math.

Yeah. When we look at it, it's probably right around 800 to 1,000 bags per day that we need to pick up, in order to break even. The good news is, we've had an 800 bag day in the last two weeks. It'll be interesting to see, as this product develops, what effect seasonality will have on it. So we hate to predict, obviously at 800 bags a day, we've become – breakeven. The question is, when are you going to do 300 bags a day, not knowing what the effect of winter will have on this product. Is it going to act like our normal business? Or are people going to continue to buy them and have them picked up during the winter? A little early to call, but It's roughly 800 to 1,000 bags per day for us to hit, breakeven. Al Kaschalk – Wedbush Securities: Thank you very much.

Thank you.

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

Morning, Michael. Michael Hoffman – Wunderlich Securities: Hi. Good morning. If we could talk a little bit about the free cash flow outlook. If all my scribbling is right, your year-to-date, kind of a negative working capital number of about $200 million, so do we get help on that in the fourth quarter?

A little bit, Michael. That $200 million will come down $50 million to $75 million. Michael Hoffman – Wunderlich Securities: Okay. And then, in the fourth quarter, bonus depreciation should be impacted and reflect on your cash taxes. So, there's a cash tax issue that's not part of your original guidance. So, is that upside to the guidance?

Yeah. It's considered in the 1.2 to 1.3, Michael, but it's part of the reason why I think this number there's some real opportunity for upside. Michael Hoffman – Wunderlich Securities: Okay. And then, to get your target of $1.2 billion in capital spending, you've got to spend almost $500 million. Is that realistic?

Michael, we've done it before. But it – it's possible. It's very possible that we won't get it all done. But given the tax benefit we get this year, for the spending we do-do, I think it is going to – I think it's likely we'll try to get all that done. Michael Hoffman – Wunderlich Securities: Okay. And is there likely to pull anything, $500 million is hard enough to do anyway, but would you be able to pull forward, so there's some out of 11 to capture more of the benefit?

We don't really plan on doing that Michael. We've got enough to get done just with what we have on the plate right now. Michael Hoffman – Wunderlich Securities: And then, David, on the medical health care numbers, if I – I don't have it in front of me, but I remember from March. You're talking about your health care revenues were sort of 3% of a $10 billion market. So you were $300 million. And I have, in my notes that you were $75 million in what I'd call the "Red Bag business," so I'm a little confused on the data you gave today, but can you clarify that relative to sort of what we learned in March?

Yes. I'm a little bit confused on your notes. I don't think we've ever said we had $75 million of Red Bag waste. We may have said that that's our target over the next two years; frankly I don't know where that number comes from, Michael. What we've always said is, we think in the three to five year timeframe, we should have a $300 million business. Michael Hoffman – Wunderlich Securities: So it’s not $300 million yet, of total health care?

No, no doubt about it. Well, take that back, if you look at our solid waste business. Right? As I recall, Michael, if you look at just – oh you're talking about the solid waste out the back door, not the medical waste. Michael Hoffman – Wunderlich Securities: Yes. And again, I'm working without your slide presentation in front of me. But I had in my notes that you had $300 million of health care industry revenues, which is a mixture of all services.

Yes. If your numbers are correct and I don't have those numbers in front of me, but what we were talking about, is that we do business in the health care segment today. Right. We pick up solid waste from hospitals; we pick up recycling from hospitals. And so it's not like we're going into a segment where we have absolutely no business. We do have a base business that we can bundle with medical waste. Bob's looking to see what the actual number is. But certainly, we have the $300 million that you used, 3% of the market wouldn't surprise me if that's, I mean that’s… We're certainly, what I do know, Michael, is that from the Solid Waste point of view, if you look at our overall market share in business, we're at sort of 25% of the market. We are hugely under represented on the Solid Waste and Recycling side in the medical arena. So that is part of what's going on here. We're trying to beef up both our Medical Waste and our Solid Waste, in a segment where we're hugely under represented today. Michael Hoffman – Wunderlich Securities: Okay. All right. And then lastly on the landfill side on the MSW, I know this is a stretch, but if you were to pull out these contracts. And I'm not trying to make funny numbers, just that whatever the same store basis was in extra cost business, lost contracts, what's happening in MSW on the same store basis?

It's basically, flat quarter to quarter. We've been running, sort of in that negative 1% to negative 2%, the last couple of quarters at MSW. And it's basically flat. Michael Hoffman – Wunderlich Securities: Okay. So, I mean a 5% down is scary, if it was to lost three contracts, so if I pull that out, I'm really – flat is consistent with the trend of, in recurring small container business, there's been a little bit more tonnage?

That's correct. I mean, in other words, we looked at that number. And it went down fairly dramatically in the quarter. And we said, is that an economic sign or is that just losing some contracts? And after looking at it, we said, it's not an economic sign; it is more of just lost contracts. Michael Hoffman – Wunderlich Securities: Okay. So I'm not asking you to all of a sudden to go being a lawyer, to a CEO, to an economist, but when you look at your business, do you look at the U.S. economy as being stable, slow growth, but it's stable?

I think that's exactly what we see in our volume. That's why I keep saying, if there was one indicator to me that we look at in our business to say, what's going on in our economy, it'd be our commercial volumes. And again, the commercial volumes have basically been sort of flat, which tells me that what we've got is a stable, slow growth economy. Certainly what you hear from the people that are experts in the economy, which isn't me, what you hear is that they expect that to continue. Michael Hoffman – Wunderlich Securities: So In that type of business environment, that's the sort of the outlook for a while. You change how you run your company differently, as far as objectives over the next three to five years and where that goes, is the nature of the amount of free cash that can be driven out of it?

Michael, I think it causes you to do a couple of things. One is, you try to find a better way to service your customers, so that you can retain your customers and generate more revenue at a relatively flat environment. And you want to do that by the customer service, not by using price as a tool. And second, you have to really take a good hard look at your cost structure and find better ways using technology, using better processes, to bring your costs down over time. And we're actually taking a look at both of those we talked about the cost measures we took for the fourth quarter, to bring our costs better under control than they have in the past. And we'll continue to look using technology, using better process, look for better ways to run our business, to reduce our cost structure overall, so that we can generate more cash and return that cash to our shareholders. Michael Hoffman – Wunderlich Securities: All right. And then to that end. You had an internal goal, your own goal, of 9% of SG&A over the next 24 months. Do you feel good about that, still?

Actually, I do, Michael. The goal is to be at that run rate at the end of 2012. That hasn't changed. We're taking steps now to make sure we get that done. Michael Hoffman – Wunderlich Securities: All right. Thanks very much.

Thank you.

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

Hey, Bill. Bill Fisher – Raymond James: Hey, good morning. I wanted to follow up on that commercial. You've had some success on the new business ads versus losses, but I think volumes have kind of remained stubbornly negative. You mentioned you've got an 8% to 10% pricing on – this issue can raise? Is the churn a bit up there; is some of that acceptable, if you're getting that type of increase? Or, can you just touch on some of the factors that hit that volume line?

Yes. And I think you've hit the nail right on the head, Bill. The churn rate is up slightly, from 10.6% to 10.8% in the quarter. We liked to see that churn rate under 10%. But, you know, we've talked a lot about the leverage that you get on price versus volume and certainly we still see that trade-off as being positive. In other words, we're going to continue to push price because the leverage you get across your customer base, makes up for that slight increase in churn but, look we've got to work to get that churn rate below 10% and get the price. That's what our customer focus growth is all about. It's about being able to drive down the churn rate and continue get that kind of level of pricing. Bill Fisher – Raymond James: Okay. Great. And can you give us, Bob, I know you're not through '10 yet, but on 2011 CapEx, if you think about some of the things that may move that around, if your volumes stay neutral here looking forward, could that number be down? Or just some IT spending or what are some of the things that might move that around next year?

We'll give more specific guidance on that in February, but there are two things to keep in mind. Number one, we have not spent as much this year on the fleet side, because of the new engine, so we're going to want to be including that in our spend and also, I'd expect we'll spend a little bit more, continue to spend more on the growth side. Part of the way we enable growth is through IT, so I do think you'll see a little more. But I'm not saying our CapEx spending will be substantially higher. It may be we'll talk about more about that in February.

Then Bill, if we see the legislature pass, the bill where they talked about allowing companies to expense capital, which I think passed through the senate and they've got to get it through the house. But if you see that happen, which I think would be great for the economy, by the way. But if you see that happen that has the ability to change the game next year. Now for us, what does that mean? That doesn't mean we're going to double our CapEx that means incrementally, we might spend a couple of hundred million dollars more, if we can expense it. But I think Bob's right the real drivers next year are going to be, we have to put a little bit more money into our fleet. And we'll continue to spend on renewable energy and growth. Bill Fisher – Raymond James: Okay. Great. Thank you.

Thanks, Bill.

Your next question comes from the line of Vance Edelson with Morgan Stanley.

Morning, Vance. Vance Edelson – Morgan Stanley: Just following up on the last question. Given the potential spending on fleet and so forth, could you comment, in a broader sense, on the operating leverage going forward, beyond the SG&A restraint, if volumes gradually show signs of life as expected? Do you have the parked trucks and the other excess capacity that could bring positive margin implications along with it?

We've got parked trucks on the roll-off side. And I think as the roll-off, the temporary business, the permanent roll-off business picks up, I think there won't be a need for a substantial amount of fleet there. On the commercial side, we have some to use too. I don't think you'll see us having to spend too much more. The fleet spend is going to be, really in two areas, one is, replacing really out of date trucks that we need to replace and at some point in time you have – most of those have been put off to the side of the road, by the way. But there will be a need to do some of that and then we're also continuing to look at CNG fuel trucks. That's a scenario that we think has great promise we have one of the largest alternative fuel fleets in the country and we intend to continue to develop that.

But Vance, it really is a great question because, having those parked trucks does affect our capital spend. And the way I look at it is, we'd like to spend on the fleet next year but on the other hand, because of that excess capacity that we've have had in the system, because of volumes the last 2.5 years, our average fleet age is still 7.5 years. Our average fleet age really hasn't gone up, despite the fact that, as Bob said; we underinvested in the fleet because of the new engines. So, that gives us some flexibility to say, okay if volumes are flat, we may not need to invest as much in our fleet. And if volumes bounce back, we can invest in our fleet. It gives us some flexibility we aren't required to invest in our fleet next year, because using excess trucks has allowed us to keep our fleet age flat. So it gives us some great flexibility. And as Bob said, if we can – if some of our customers are demanding CNG trucks, from our point of view, those are actually less costly than a diesel truck. And so if we can move – if we can satisfy customers' needs and drive down our operating costs, that's a win-win for our investment. Vance Edelson – Morgan Stanley: Okay. That's great color. Thanks for that. And you mentioned a couple of the headwinds. The Bagster and Medical Waste have been highlighted. How about the Whole Foods kiosks or any other similar initiatives are there any start up headwinds there, or is it more the Bagster and the Medical Waste?

Yes. Certainly there's some start up costs there, but the good news about that is, those are leased facilities and so we basically get the revenue as we make the acquisition. So we haven't seen – there's not a material effect on earnings from that. Vance Edelson – Morgan Stanley: Okay. Got it. Last question from me. Regarding Bag debt, I think you mentioned the good effort being made collecting. Any changes in the bad debt profile? Has that become at all harder to contain? Especially, if we think, going forward, that might be the prospect of higher churn in the issues there?

Our performance has really – our accounts receivable performance has really been pretty remarkable over the last couple of years. And what we're finding is that our older budgets are getting better and better, they're not getting worse in this downturn. We don't see any real (inaudible). By the way, I don't know if you guys can hear static on the line, we certainly apologize for that if you… Vance Edelson – Morgan Stanley: I am getting the static too. It might be my line. Assuming that's it for my questions, hopefully the static goes away.

Thank you. Vance Edelson – Morgan Stanley: Okay. Thanks a lot.

Your next question comes from the line of Rick Skidmore with Goldman Sachs. Rick Skidmore – Goldman Sachs: Good morning. Just to follow up on a couple of points. First on the customer churn. Does a loss customer go out at a higher price in margin than the new customers come in? And ultimately does that mean you have to be more aggressive on the pricing elsewhere?

Yeah. Actually, what we’ve seen is that our new business, loss business customers this quarter on the commercial side were about equal. And when you look at our industrial side, we actually are bringing in customers at a higher rate than we're losing them, at a higher rate per unit than we're losing them. So actually that's positive. It hadn't always been the case, but that happens to be the case this quarter. Rick Skidmore – Goldman Sachs: Okay. And then just lastly, just on the SG&A maybe, if Bob could just talk about some of the key buckets that you're targeting to get to that 9%.

I think the buckets will cover, certainly paper costs and engine. All of the costs associated with processing the information that we processed today. You know, one item that we like to talk about, is that our order to cash, these numbers are representative or they're actually right. There's like 35 steps in our order to capture process and 31 of them are manual. If we could turn it to where there's only 25 steps and 21 of them only core manual, that says a lot of savings to be had there a lot less (inaudible)… Rick Skidmore – Goldman Sachs: Great. Thank you.

Thank you.

No further questions at this time. Do you have any closing remarks?

No, we apologize for the static that seems to have popped up on the phone. Thank you all for joining us and we'll see you next year (technical difficulty).

Thank you for participating in today's conference call. This call will be available for replay beginning at 1:00 o’clock pm Eastern Standard Time today, through mid-night Eastern Standard Time on Thursday, November 11th, 2010. The conference ID number for the replay is 15149014. Again, the conference ID for the replay is 15149014. This does conclude today's conference call. And you may now disconnect.